BRAC UNIVERSITY

Cost of Capital And Financial Analysis of Beximco Pharmaceuticals LTD.

Internship Report Course Code- Bus 699 Submitted To: Ms. Mahatab Faruqui
Senior Lecturer Faculty of BRAC Business School.

Submitted By: Marshal Richard

MBA

ID# 10364057

Date Of Submission 20 December 2012

Letter of Transmittal
20 December 2012 Ms. Mahatab Faruqui Senior Lecturer BRAC BUSINESS SCHOOL BRAC University 66, Mohakhali Dhaka-1212 Subject: Submission of Internship Report Dear Sir I am submitting an internship report titled for Cost of Capital And Financial Analysis of Beximco Pharmaceuticals LTD. Your guideline has been followed in every aspect of preparing this report. I have really enjoyed working on this project and I hope that my work would meet the level of your expectation. Any query on this report is appreciated. Thank You.

Yours Sincerely

Marshal Richard
ID#10364057 Brac Universiry

ACKNOWLEDGEMENT
Its difficult for me to thank all of those marvelous people who have contributed something of them to this report. There are of course some very special people who cannot go without mention. At first I express my gratitude and indebtedness to my academic supervisor Ms. Mahatab Faruqui for her continuous guidance, important advice, encouragement and suggestion during the preparation of the report. I thank of her for sparing her valuable time to read the report. Then, I express my sincere gratitude to Mr. Jamal Ahmed Choudhury, Executive Director, of BPL for his guidance, constants supervision and constructive suggestions. Without his help this report might not have been a comprehensive one. I would also like to thank Mr. Kamal Uddin Ahamed, Manager, Accounts and Finance. Without his help I cannot prepare my report so informative. I have bothered him so many times in connection with my works, both during and after normal working hours. Finally I am grateful to all the cooperative staffs of the Accounts Department of BPL. As also I would like to give thanks especially to my friends & many individuals, for their enthusiastic encouragements and helps during the preparation of this report and for their assistance in typing and proof reading this manuscript.

EXECUTIVE SUMMERY
This internship report includes the process of reviewing and evaluating a Beximco Pharmaceuticals Ltds cost of capital and measuring ratios, thereby gaining an understanding of the financial shape of the company and enabling more effective decision making. Cost of capital analysis of Beximco Pharmaceuticals express the companies cost of using funds provided by creditors and share holders. This analysis belongs to two so called method- 1. Capital asset pricing (CAPM) method and another is 2. Dividend growth model. By analyzing CAPM method lots of factors have considered such as Beta factor, risk free rates, interest rates and weighted of the capital structure of BPL and so on. On the other hands, by analyzing dividend growth model; dividend of 2000 to 2011 and its growth rates has been considered as also the current market price of BPls share. This report prepared to make a thorough analysis of the annual report of Beximco Pharmaceuticals Ltd (BPL). The report mainly highlights the results of various ratio analysis of the company. In order to make the analysis more informative, inter-firm comparisons have also been provided by performing ratio analysis of other leading pharmaceutical companies in Bangladesh. It is hoped that the report would provide a reliable & effective insight into the performance of the particular company. I have taken all the reasonable care to ensure the quality of the report and I hope that it includes all the necessary information which is in the scope of my ability. I would like to express that my effort for this report will provide a better picture regarding the subject matter of the study. Finally I come up for some recommendation which is suitable for Beximco Pharmaceuticals future prospect.

TABLE OF CONTENT
CHAPTER ONE: INTRODUCTION.............................................................................................................. 6 ORIGIN OF THE REPORT: .................................................................................................................................. 7 OBJECTIVE OF THE REPORT: ............................................................................................................................ 7 SCOPE OF THE REPORT: .................................................................................................................................... 7 METHODOLOGY OF THE REPORT: .................................................................................................................... 7 ORGANIZATION OF THE STUDY ........................................................................................................................ 8 LIMITATIONS OF THE REPORT: ......................................................................................................................... 8 CHAPTER TWO: OVERVIEW OF THE COMPANY ................................................................................ 9 HISTORICAL BACKGROUND:.......................................................................................................................... 10 VISION: .......................................................................................................................................................... 11 MISSION: ........................................................................................................................................................ 11 CORE VALUES: .............................................................................................................................................. 11 BOARD AND MANAGEMENT .......................................................................................................................... 12 PRODUCTS: .................................................................................................................................................... 13 CORPORATE STRATEGIES: ............................................................................................................................. 13 CORPORATE SOCIAL RESPONSIBILITY: .......................................................................................................... 16 THE REASONS BEHIND BEXIMCO PHARMACEUTICALS LIMITED SUCCESS: ................................................... 17 CHAPTER THREE: DESCRIPTION OF JOBS ......................................................................................... 19 DEPARTMENTS OF BEXIMCO PHARMA .......................................................................................................... 20 BRIEF DESCRIPTION OF ACCOUNTS & FINANCE DEPARTMENT ..................................................................... 20 HIGHER AUTHORITY OF ACCOUNTS AND FINANCE DEPARTMENT: .............................................................. 21 WORK EXPERIENCE IN BPL ........................................................................................................................... 23 CHAPTER FOUR: COST OF CAPITAL AND RATIO ANALYSIS........................................................ 24 COST OF CAPITAL ANALYSIS: ........................................................................................................................ 25 RATIO ANALYSIS: .......................................................................................................................................... 30 COMPARATIVE ANALYSIS ............................................................................................................................. 35 CONCLUSION ........................................................................................................................................ 37 KEY FINDINGS ...................................................................................................................................... 38 RECOMMENDATION .......................................................................................................................... 39 REFERENCES ........................................................................................................................................ 40

CHAPTER ONE INTRODUCTION

ORIGIN OF THE REPORT:

The report is originated to make a study on the Accounts and Finance procedure and the Cost of capital and Profitability Analysis of Beximco Pharmaceuticals Limited as a part of the fulfillment of internship program required for the completion of MBA program of BRAC University. As the part of MBA curriculum this project is assigned to me by Jamal Ahmed Choudhury, Executive Director, Accounts & Finance and Kamal Uddin Ahmed, Manager. Accounts & Finance of Beximco Pharmaceuticals Ltd and approved by the academic Supervisor Ms. Mahatab Faruqui, Senior lecturer of BRAC School of Business.

OBJECTIVE OF THE REPORT:

The general objective of the study is to fulfill the requirement of the Post Graduation under the Masters of Business Administration program of BRAC University as per university policy. To be more specific, this study entails the Financial Analysis of Beximco Pharmaceuticals Limited to figure out and observe the financial performance of Beximco Pharmaceuticals Limited over the past 4 years as also find out the Cost of Capital of this well known company.

SCOPE OF THE REPORT:

There were huge scopes to work in the field of the report. Considering the dead line, the scope and exposure of the paper has been wide-ranging. The study, Cost of Capital and Profitability analysis of Beximco pharmaceuticals Limited has covered Beximco Pharmaceuticals Ltd. profit flows. The impact of different external and internal factors on the flow of profit by BPL has been showed in this report. The Cost of Capital of BPL has also been showed in this report. By preparing this report it becomes more understandable about the real condition of the pharmaceutical industry in Bangladesh and the flow of profit through the different challenge.

METHODOLOGY OF THE REPORT:

The following methodology was followed throughout the study .The study is based on both primary as well as secondary data. Data regarding the organization profile collected in the following ways:

Primary Source
Careful observation of various activities of related section of that particular department. Discussions with the officials of Accounting and Finance department.

Secondary Source
Organizational Brochures/ Annual Reports. Online information. Different BPL publications. Other relevant written materials.

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Data Collection Techniques:

Some of the primary data were collected by observing others doing their jobs. Much of the primary data were collected by the informal interviewing of the company officials. Most of the secondary data were collected by the review and study of relevant reports and documents.

ORGANIZATION OF THE STUDY

The report is divided into five parts. The first part is the introductory chapter. The second part covers organizational part (a brief overview of Beximco Pharmaceutical Limited). The Third part deals with report part. The fourth part includes overall findings with concluding remarks. The last part provides references.

LIMITATIONS OF THE REPORT:

An enthusiastic effort was applied to conduct the study work and to bring a reliable and successful result from which proper strategy can be adopted to this report. Some limitations were faced while preparing this report. Some of those limitations are highlighted below: All the comments made, conclusion reached and suggestions for possible improvement provided are purely based on my level of understanding, knowledge and my way of interpreting a particular statement. Unable to collect specific information of BPL. To protect the organizational confidentiality some parts of the report are not in depth. The report covers only profitability analysis. It does not cover management, marketing, HRM or other business related issues. Ratio analysis is done only based on Annual Report.

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CHAPTER TWO OVERVIEW OF THE COMPANY

HISTORICAL BACKGROUND:
Beximco Pharmaceutical Ltd. is a leading edge pharmaceutical company based in Dhaka, Bangladesh and is a member of the Beximco Group. The history of pharmaceutical business of the company dates back to the early 70s, when it started to import market and distribute medicines from world renowned companies like Upjohn Inc. of USA and Bayer AG of Germany. Since the very beginning, the company was highly successful in generating increased demand for its products which eventually justified local production. It completed its registration in 1976 and started its operation in 1980 by manufacturing and marketing licensee products of Bayer AG of Germany and Upjohn Inc. of USA. After its initial years of struggle it broke ground with the launching of its own products in 1983. In 1985 BPL was listed in Dhaka Stock Exchange (DSE) as a Public Limited Company. The journey continued and barrier after barrier were crossed, challenges were faced and overcome to transform BPL into what it is at present. Now it has grown to become nation's one of the leading pharmaceutical companies, supplying more than 10% of the country's total medicine need. In the process, it was enlisted in Chittagong and London Stock Exchange. Today Beximco manufactures and markets its own `branded generics' for almost all diseases from AIDS to cancer, from infection to asthma, from hypertension to diabetes for both national and international markets. It manufactures a range of dosage forms including tablets, capsules, dry syrup, powder, cream, ointment, suppositories, large volume intravenous fluids, metered dose inhalers etc. in several world-class manufacturing plants, ensuring high quality standards complying with the World Health Organization (WHO) approved current Good Manufacturing Practices (cGMP). Beximco also contract manufactures for major international brands of leading multinational companies. Beximco has a strong market focus and is anticipating continued future growth by leveraging business capabilities and developing superior product brands and markets. In particular it is very interested in developing a strong export market in USA and Europe. To meet the future demand it has invested over US 50 million dollar to build a new state-of-the-art manufacturing plant, confirming to USFDA and UK MHRA standards. This new plant will also offer contract-manufacturing facility to leading pharmaceutical companies, especially from Europe and US.

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VISION:
Be one of the most trusted, admired and successful pharmaceutical companies in the region with a focus on strengthening research and development capabilities, creating partnerships and building presence across the globe.

MISSION:
Committed to enhancing human health and well being by providing contemporary and affordable medicines, manufactured in full compliance with global quality standards. Do continually strive to improve its core capabilities to address the unmet medical needs of patients and to deliver outstanding results for shareholders.

CORE VALUES:
Its core values define who they are; those guide themselves to take decisions and help realize their individual and corporate aspirations. Commitment to quality: They adopt industry best practices in all their operations to ensure highest quality standards of their products. Customer satisfaction: They are committed to satisfying the needs of their customers, both internal and external. People focus: They give high priority on building capabilities of our employees and empower them to realize their full potential. Accountability: They encourage transparency in everything they do and strictly adhere to the highest ethical standards. They are accountable for their own actions and responsible for sustaining corporate reputation. Corporate social responsibility: They actively take part in initiatives that benefit society and contribute to the welfare of people. They take great care in managing their operations with high concern for safety and environment.

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BOARD AND MANAGEMENT

Beximco Pharmaceuticals Ltd. is managed by the Board of Directors, an Executive Committee and a Management Committee. Board of Directors is responsible for the corporate governance. It consists of ten members including the Chairman, A S F Rahman and the Vice Chairman, Salman F Rahman. The five-member Executive Committee is headed by Mr. Osman Kaiser Chowdhury who is also a member of the Board of Directors. The Executive Committee is accountable for both operational and financial performance of the company. This committee is also responsible for budget approval, policy adoption or changes, new project review, compliance audit etc. The Management Committee comprises of eleven professionals who are one of the bests in Bangladesh in their own fields. This committee is leaded by Mr. Nazmul Hasan (MP), Managing Director (MD) who is responsible for the overall management of the business. This committee reviews and manages day-to-day business operation and recommends strategy options to the Executive Committee.

The Board of Directors:A S F Rahman Salman F Rahman Nazmul Hassan MP Iqbal Ahmed Mohammad Abul Qasem Osman Kaiser Chowdhury Abu Bakar Siddiqur Rahman Advocate Ahsanul Karim Dr. Abdul Alim Khan Md. Asad Ullah, FCS Chairman Vice Chairman Managing Director Director Director Director Director Director Independent Director Company Secretary

The Executive Committee:Osman Kaiser Chowdhury Nazmul Hassan MP Ali Nawaz Afsar Uddin Ahmed Member of the Board of Directors Managing Director Chief Financial Officer Director, Commercial

The Management Committee:Nazmul Hassan MP Osman Kaiser Chowdhury Rabbur Reza Ali Nawaz Afsar Uddin Ahmed Lutfur Rahman Zakaria Seraj Chowdhury A R M Zahidur Rahman Shamim Momtaz Mohd. Tahir Siddique Jamal Ahmed Choudhury Managing Director Member of the Board of Directors Chief Operating Officer Chief Financial Officer Director, Commercial Director, Manufacturing Director, International Marketing Executive Director, Production Executive Director, Manufacturing Executive Director, Quality Executive Director, Accounts & Finance

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PRODUCTS:
The companys diverse product portfolio encompasses a wide variety of therapeutic categories, including antibiotics, analgesics, respiratory, cardiovascular, central nervous system, dermatology, gastrointestinal etc. BPL currently produces 235 generics in 426 strengths and dosage forms and many of the companys brands are consistently occupying leading positions in their respective therapeutic categories. In 2011 Beximco Pharma introduced 40 new generics in a total of 55 presentations, five of which were launched for the first time in Bangladesh. Also included seven ophthalmic drops, three HFA asthma inhalers and also drugs in categories such as, three cardiovascular, two multivitamins, two musculoskeletal, two antiinfective, and one anti-diabetic, among others. The three HFA-based inhalers which were launched for the first time in Bangladesh in 2010. Also introduce for first time into the market was a formulation of Paracetamol 665 mg. Napa Extend. Beximco Pharmas Growth prospects remain excellent with key blockbuster products such as Napa and Neoceptin-R in its portfolio. In 2010 Napa and Neoceptin R ranked 2nd and 4th respectively on the national Top Five list. More over ten of BPLs brands have annual sales in excess of BDT 100 million each.

Block Buster product:

Napa Neoceptin-R Bextrum/Bextrum Gold Amdocal Tofen Azmasol Highest selling drug in Bangladesh pharmaceutical market in terms of unit. Highest selling drug in Bangladesh pharmaceutical market in terms of value. Emerged as the most admired and highest selling nutritional supplement in Bangladesh Market in just one year. Highest selling cardiovascular drug in BD in terms of value. Highest selling oral anti-asthma drug in BD in terms of value. Highest selling mastered dose inhaler in Bangladesh in terms of value.

CORPORATE STRATEGIES:
Distinguished Manufacturing Capability
In 1980 it was small in operation but big in dreams and passionate with its vision - building a healthier tomorrow where people will live longer, healthier and happier. Located at Tongi, near the capital city Dhaka, BPLs manufacturing site is spread over an area of 20 acres, which houses a number of self-contained production units including oral solids, metered dose inhalers, intravenous fluids, liquids, ointments, creams, suppositories, ophthalmic drops, injectables, nebulizer solutions etc. (<http://www.sagia.gov.sa/en/Archive/SAGIA/Partner-companies/Beximco-Pharmaceuticals-Ltd-/ >) The

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bulk drug unit for producing paracetamol is also located within this site. Companys penicillin API and formulation units are situated at Kaliakoir, a few kms from the main site. The plant and machinery throughout the site have been designed by and procured mostly from renowned European companies. Beximco Pharma has its own utility infrastructure to ensure adequate generation and distribution of purified water at all times. The installed capacity of power generation is 8MW. There is also liquid nitrogen generation facility on site.

Consistently Delivering High Quality Products

Today, the name Beximco Pharma has become synonymous with trust and reliability. Quality is its relentless passion. Quality is ingrained in our values and in all that it does. Beximco Pharmas business processes and practices are designed to achieve quality results that would meet the expectations of patients and physicians by getting the highest quality products, and of shareholders and stakeholders through achieving returns. Their three brands - Neoceptin R (Ranitidine), Napa (Paracetamol) and Amdocal are the top three selling brands in the Bangladesh Pharmaceutical market (Annual Report, 2010). There were also 55 new product launched in 2011, (Annual Report, 2011).

Adopting Innovation In Manufacturing Process

Beximco Pharma has always been the pioneer in adopting innovative technologies that introduced both sophistication and scale in our business processes. It also focuses on improving manufacturing efficiency to meet the challenge of maintaining the bottom line of the business in an ever-changing competitive market place. (Annual Report, 2011)

R&D Capability in Both Formulation And API (Active Pharmaceutical Ingredients)

R&D is another area where Beximco Pharma has already shown capability and led the Bangladesh Pharmaceutical Market in both formulation R&D and API R&D. Its formulation R&D capability is proven not only by the consistent quality of its products but also by its ability to introduce hi-tech, specialized products and dosage forms. The reverse engineering capability of the R&D team has enabled it to introduce innovative new products to serve the ailing people at home and abroad. (Annual Report, 2011)

Domestic and Existing Export Markets

Its past and present performances clearly suggest that it has ample scope to grow even in the domestic as well as in our existing export markets. Beximco Pharma has already identified some attractive niche markets where the investment is negligible as compared to its expected returns in terms of profitability. Once the new OSD (Oral Solide Dosage) plant is operational and it has the capacity, confidently, it will be able to capitalize on these opportunities and increase its market share in the domestic market as well as in other existing export markets, (Annual Report, 2010).

Professional Management Capability

Beximco Pharma is the pioneer in implementing corporate governance to professionally run a company in Bangladesh. Beximco Pharma provides an environment which fosters creativity, innovation, self-development and entrepreneurship. (Annual Report, 2010)

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Sales & Marketing Capability Focused On Brand Building

The major source of competitive advantages of Beximco Pharma is its sales and marketing team. Its marketing team is composed of innovative people from diverse discipline. Because of the innovative & creative approach adopted by its marketing team, it has been able to create many vibrant brands like Napa, NeoceptinR, Amdocal, Neofloxin, Tycil, Omastin, Azmasol, Bexitrol-F, Atova, Bextram Gold etc. Infact, the ability of its sales & marketing team to differentiate our brands even in a crowded generic market is Beximco Pharmas major competitive advantage. (Annual Report, 2010)

Global Strategy
Beximco Pharma always took the leading, proactive and pioneering role in exporting pharmaceuticals from Bangladesh. Beximco Pharma commenced its international operations with the export of API to Hong Kong in 1992 and formulation products to Russia in 1993. The company has received the National Export Trophy (Gold) for an impressive three times. Since then, BPL has taken greater strides over the years to increase its footprints in international markets. In 2010, BPL successfully ventured into several new countries including South Africa (via contract manufacturing) and Netherlands Antilles, and registered 45 products in overseas markets. The company achieved export revenues of Tk 330.54 million, up 21.47% over 2009. The current expansion of this overseas portfolio includes prioritizing and directing marketing operations to focus more on highly regulated markets such as the European Union (EU), USA, Australia and GCC member countries for value added generics. As of 2010 Beximco Pharma has 322 products registered in Asia, 91 in Africa, five in Central and Latin America, and 22 in Middle East, while we are actively taking measures to register our products in attractive branded generic markets such as the CIS states and the EU countries. BPLs products are highly trusted for their quality by physicians and consumers at home and abroad. With this acclamation BPL is supplying different formulations from its portfolio to renowned hospitals and institutions including Raffles Hospital, Heathway Medical Group & K. K. Women and Children Hospital in Singapore; Asthma Drug Facility (ADF) in France; CENABAST in Chile; and MEDS and Kenyatta National Hospital in Kenya. BPL is constantly investing in its state-of-the-art manufacturing facilities to significantly expand its capabilities to meet the regulatory requirements of developed countries. (Annual Report, 2010). BPL has pursued approvals from different drug regulatory authorities, e.g. TGA (Australia), GCC (Gulf Council), ANVISA (Brazil) and INVIMA (Colombia), which highlights BPLs credentials as it explores new opportunities in the export arena.

National Wide Distribution Network

BPL is found to be performing much better than most others in the industry. Beximco Pharma distribution network is relatively more extensive in comparison to the top industry players. It covers whole Bangladesh. Bangladesh has area of 147,570 square-km with over 150 million populations, (Annual Report, 2010). Therefore, national wide distribution Network serves a huge number of target customers and end users (patients). National wide distribution network is definitely a strong favorable key success factor for Beximco Pharmaceutical Limited on its own and also relative to its rivals.

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Relationship with The Doctors

When it comes to physician relationship management, BPL is performing better than most but is still not performing well enough to take the number one position in this respect. Square Pharmaceuticals Limited, BPLs biggest competitor has taken the lead in this respect.

Financial Strength
BPL has considerable financial strength in comparison to most but Incepta is not far behind while Square Pharmaceuticals has substantial financial strength as well. Relative Financial strength is something that BPL should always try to monitor after all this the criteria on which corporations choose financial decisions regarding its debt/equity mix (capital structure of a firm),maturity structure (maturity of assetsand liability), method of financing investment projects (project appraisal or capital budgeting) and other decisions with a goal of maximizing the value of the firm i.e. the value of the shareholders wealth.

Strong Relationships
Through Beximco Pharmas eyes, at the core of every successful partnership is a professional relationship based on mutual trust and respect. Beximco Pharma recognizes and understands that Its alliances and partnerships are a core component to accomplishing its strategic global aspirations. Beximco Pharma believe that the right alliances can contribute appreciably to the achievements of Its partners as well as to its own vision and sustainable growth. Beximco Pharma has a successful track record of partnerships and alliances with global MNCs such as GSK, Aventis, Bayer AG, Upjohn Inc and Ciba. The company has successfully established its brand value within the medical community. The company seeks to further reinforce its relationships with all major stakeholders in the healthcare value chain. BPL differentiates itself by providing value added, academic services to the medical community in the form of seminars and symposia, clinical meetings, scientific publications and the like. Beximco Pharma engaged in constant communication with doctors to ensure prompt feedback and meet any requests for academic services, (Annual Report, 2010).

CORPORATE SOCIAL RESPONSIBILITY:

Corporate social responsibility (CSR), also known as corporate responsibility, corporate citizenship, responsible business, sustainable responsible business (SRB), or corporate social performance, is a form of corporate self-regulation integrated into a business model. Ideally, CSR policy would function as a built-in, self-regulating mechanism whereby business would monitor and ensure its adherence to law, ethical standards, and international norms. Business would embrace responsibility for the impact of their activities on the environment, consumers, employees, communities, stakeholders and all other members of the public sphere. Furthermore, business would proactively promote the public interest by encouraging community growth and development, and voluntarily eliminating practices that harm the public sphere, regardless of legality. Essentially, CSR is the deliberate inclusion of public interest into corporate decision-making, and the honoring of a triple bottom line: People, Planet and Profit. Corporate Social Responsibility (CSR) is an integral part of Beximco Pharmaceuticals business strategy. Some of the CSR activities undertaken by the company are showing as follows: As a first Bangladeshi Pharma company BPL introducing anti-retroviral medicines for HIV/AIDS treatment, medicine to combat the virus of bird flu and an oral anti-smoking drug to help chronic smokers quit smoking.

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Food and Medicine donation during different natural disasters. Sponsoring, organizing & participating many cultural and sports events like Corporate Cricket League, SAAF Football Championship, Inter-School Handball tournament, Open air concert etc. Publishing posters-banners-festoons, arranging rallies-seminars-conference etc. on AIDS, Diabetes, Smoking, Cancer, Asthma, Birds Flu etc. Beximco Pharmaceuticals Ltd. manufactures CFC-free Metered Dose Inhalers among the few pharmaceuticals in the world.

THE REASONS BEHIND BEXIMCO PHARMACEUTICALS LIMITED SUCCESS:

Sales and Profitability:
With an uninterrupted growth, achieving a 21.6% increase in sales to Tk. 7,890.24 million (2010: Tk. 6,490.85 million). In 2011, BPL significantly enhanced its prescription share in sales of the formulation products and maintained, as expected, growth in all its key therapeutic segments. Sales of BPL; Active Pharmaceutical Ingredients (APIs) also recorded a significant 37.1% growth to reach Tk. 486.91 million (2010: Tk. 355.24 million). However, its impact on the overall profitability of the company is currently low because of a low gross margin predominantly due to the high cost of import of intermediate materials to manufacture these APIs. In 2011, export sales grew by 18.1% to Tk. 390.32 million (2010: Tk. 330.54 million). Along with sales growth, Beximco Pharma also achieved a marked growth in profit in 2011. BPLs pre-tax profit increased 23.2% to Tk. 1,677.85 million (2010: Tk. 1,361.53 million). Gross margin as percentage of sales however, slightly declined to 48% as against 48.9% for the prior period. This was due principally to depreciation in the value of the Taka against the Dollar and the high level of domestic inflation. However, with BPLs constant drive to contain costs and effective profit optimization strategies, the negative impact of rising cost on profit has been kept to the practicable minimum. (<http://www.advfn.com/news_Beximco-Pharmaceuticals-Ltd-AGM-Statement_52957815.html>)

Overseas Business:
Certification of the relevant manufacturing facility by the duly accredited authorities is the first step of the enduring process of the export of pharmaceutical products. Our manufacturing facilities have been approved by a number of major regulatory authorities. In 2011 we received GMP (Good Manufacturing Practice) accreditation from the Austrian Agency for Health and Food Safety (AGES) for our oral solid dosage and ophthalmic manufacturing facilities. This is another testimony of our manufacturing excellence and important progress towards achieving targeted exports into the regulated European markets.

Research & Development (R&D) and New Products

Beximco Pharma continuously focused on strengthening its R&D capabilities. There have been a series of positive developments in the year under review. BPL has inducted in our existing pool of talent two highly experienced professionals from overseas.

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BPLs R&D team successfully introduced 40 new generic formulations in 55 different dosage forms and strengths. During this year Beximco Pharma launched combination therapies such as NapaDol(R) (Paracetamol+Tramadol), Dinovo(R) (Naproxen+Esomeprazole) and Glipitia(R)M (Sitagliptin+Metformin). Beximco also outsourced some R&D services to develop certain specialized products for regulated markets, (Annual Report, 2010).

Investments for Sustainable Growth

Expansion of metered dose inhaler (MDI) plant has added significant further capacity raising the total manufacturing capacity to 20 million canisters. Two other projects, namely facilities for dry powder inhalers (DPI) and pre-filled syringe products were also successfully completed and became operational. Amino acid unit also started commercial operation in 2011. Facilities for liquid lyophilized products and powder for suspensions and sachets are nearing completion. Other projects are progressing as planned. Beximco Pharma has always been a pioneer in adopting innovative technologies. This brings both sophistication and the potential to sustain growth to our business. Over the past couple of years BPL have made considerable investments in facilities and processes to improve productivity, drive growth and achieve excellence in operations. A number of such projects that can drive future growth are in its investment plan. Alongside investment in manufacturing facilities, BPL are equally focused on investing in products, markets and most importantly our human resource to ensure both the sustainable growth of our business and a meaningful return for its valued shareholders.

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CHAPTER THREE DESCRIPTION OF JOBS

DEPARTMENTS OF BEXIMCO PHARMA

BPL operates its business through extensive departmentalization as needed for specified effectiveness of the tasks. The business activities of BPL are directed, controlled and monitored from the head office of Beximco Pharmaceuticals Ltd. Being a leading Pharmaceutical company in the country it employs a good number of people in different departments to keeps its business thriving. The major operational departments of BPL are as follows:

Manufacturing:
Production Quality Control Quality Assurance Production Planning Research and Developments Engineering Warehouse General Admin Project

Distribution Inventory Planning International Regulatory Affairs

Other Departments:
General Management Accounts and Finance Corporate Secretarial Service Procurements Internal Audit Human Recourses Project Management and Business Developments Department of Engineering and Technology

Selling, Manufacturing and Distribution:

Domestic Marketing International Marketing Sales

BRIEF DESCRIPTION OF ACCOUNTS & FINANCE DEPARTMENT

The activities of the Accounts and finance department are carried over by talented and adequate person. The functions of Accounts and Finance department are carried over five sections. Actually proper control purpose, they subdivide their functions to the several sections. The sections of Accounts and Finance department are as follows: IOC&BP Financial Accounts- Strategic Business Unit (SBU) Financial Accounts- Non- Strategic Business Unit Treasury Tax and Payroll Leasing and Legal Affairs

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HIGHER AUTHORITY OF ACCOUNTS AND FINANCE DEPARTMENT :

Chief Financial Officer

Executive Director

Manager, Financial Accounts (SBU)

Deputy Manager, IOC & BP

Manager, Treasury

Senior Manager, Tax and Trust

Manager, Legal and Compliances

Sr.Asst. Manager, Financial Account (Non SBU)

IOC&BP:
The extended form of IOC& BP is Industrial operation control & budget planning. This section does the Costing and Budgeting of BPL. Their work is not bounded to the costing and budgeting functions only. They provide information to the planning, marketing, purchasing and others departments for proper decision making. This section of accounts and finance department does the reporting to the management. They prepare different types of cost reports. Activities of this department are as follows: Prepare imported material cost sheet. Allocate Overhead to the product. Determine Manufacturing cost of a product. Prepare different types of budgets such as Production budget, Purchase budget, Departmental budget etc. Prepare different types of report such as imported report, COGS report & Production report. Product profitability report, biggest loser report etc. Provide proper data to the planning department relating to costing. Help to control inventory. Identifies the cost centers. Does the inventory valuation. Etc.

Financial Accounts SBU:

The major function of this section is to prepare financial report. They prepare the financial report of Beximco Pharma. There is a manager to monitoring the activities of this section. The major activities of these sections are as follows: Preparation of Financial Report for External Reporting. Preparation of Monthly Financial Report. Preparation and publishing quarterly, half yearly and yearly Financial Report.

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Recording of Export Sales Earnings.

Financial Accounts Non SBU:

This section does the works of some associate company of Beximco Pharma. These supporting companies are as follows: Shuktara Printing Ltd.: Shuktara Printing Ltd. supplies the printing materials to the BPL. For leaflet and other printing materials are needed for drug are supplied by Shuktara printing Ltd. though it is unable to supply all printing materials needed. Bangladesh Antibiotic Industry Ltd.: Bangladesh Antibiotic Industry Ltd. (BAIL) supplies basic chemicals to the BPL. There is a manufacturing unit to Kaliakoir near to Gazipur to produce antibiotic. There is a responsible person who prepares financial reports and all recording related to BAIL. They also deal with the other pharmaceutical company to supply materials. This services also known astoll services. I & I services Ltd.: I&I services Ltd. provides distribution services to the BPL. Through 20 depots they deliver drugs to the chemist. There is a central depot to control all the depot and services. Pharmatek chemicals Ltd.: They provide Chemicals to the BPL. Pharmatek supplies Napa raw materials to the BPL. There is a responsible person to control, reporting and recording all transactions relating the Pharmateck chemicals Ltd.

Tax and Trust:

The Tax and Payroll section of Accounts and Finance department deals with the taxation and Payroll services to the company. The major activities are as follows: Salary disbursement to the employee. Loan against salary to the employee. Provident fund related activities. Salary Tax. Income tax of the company.

Legal and Compliances:

This section of Accounts and Finance deals with the legal issue of the BPL. The Major activities of this section are as follows: Trade license of the company including the International selling. Value added tax related activities. Drag license related activities. New product Copyright. Trademark related activities. Boiler permission Renewal. Chemical Certificate related issue. Land related activities

Treasury:
Treasury dept deals with banks and bill it also looks after the cash planning and management. Core Function of Treasury Accounts Wing: Fund management. Maintaining banking transactions loan and leases.

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Party payments employee payroll.

WORK EXPERIENCE IN BPL

I worked in the Accounts and Finance department as an intern for about two months in Beximco Pharmaceuticals Ltd (BPL). During my internship in BPL, I was not only got the work experience which I expected but also the opportunity to take a close look at BPL's business as well as its culture and values, which helped me to further understand how a established company works. During this period of internship, I have experienced different aspects of the accounts work, including the internal control, industrial costing, daily receives and payments system, payroll accounts, LC monitoring, Bill of entry, MRR, PTG file maintenance, Budgeted Product price entry, Payment clearance etc. Every day I have new things to learn and work on. My Supervisor and mentors review my work during the internship. My supervisor gave suggestions and feedback on my work almost every day, helping me to do the work better. I also communicated with my fellow interns to listen to their suggestions and comments on my work. In this process of learning, I gradually enriched my knowledge in Accounts and Finance and improved my communication skills. At the very beginning of my internship, I was not that clear about my future and my career. After the internship experience at BPL, I felt more confident in my future. In a word, my intern experience at BPL was fascinating, interesting and valuable.

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CHAPTER FOUR COST OF CAPITAL AND RATIO ANALYSIS

COST OF CAPITAL ANALYSIS:

The cost of capital is the companies cost of using funds provided by creditors and share holders. A companys cost of capital is the cost of its long time sources of fund: common share holder equity, debt and preferred equity. The cost of each sources reflect the risk of the invested in. A company that invested in assets having little risk in producing income will be able to bear lower costs of capital then a company that invests in assets having a higher risk of producing income.

Method:
1. Capital Assets Pricing Model ( CAPM) 2. Dividend Growth Model

1. The Capital Asset Pricing Model (CAPM):

The process of estimating cost of capital

Determine the proportion of each sources of the capital that will be raised. Estimate the marginal cost of each sources of capital.

Calculate the weighted avg. cost of capital.

Cost of Equity:

r = + ( )
Where: r = the return from the investment. = the risk free rate of return. = the beta value of the investment, a measure of the systematic risk of the investment. = the return from the market.

Essentially, the equation is saying that the required return depends on the risk of an investment. The starting point for the rate of return is the risk free rate (Rf), to which you need to add a premium relating to the risk.

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Calculation:
Risk Free Rate of Return:
The rate of interest on a security that is free of all risk. The market risk free rate of return is the return an investor could reasonably expect if they invested their money in a riskless investment. As the market rarely offers a riskless investment, a proxy for the risk free rate is applied. Most commonly, the return that investors can receive on government bonds is used as a proxy.

Beta (Systematic Risk):

Beta measures the responsiveness of a security to movements in the market portfolio (i.e., systematic risk).To better understand the relationship with the market index and the stock price volatility, Beta calculation is commonly used by the financial analysts. Beta can be thought of as the tendency of a security's returns to respond to swings in the market. A beta of 1 indicates that the security's price will move with the market. A beta of less than 1 means that the security will be less volatile than the market. A beta of greater than 1 indicates that the security's price will be more volatile than the market.

Market Risk Premium:

Cov( Ri , RM )

2 ( RM )

The market risk premium is the rate of return earned on a well-diversified portfolio of assets over the risk free rate. The market risk premium is scaled (using CAPM) measuring the risk of the asset relative to a market index. For My calculation; I took weekly closing stock price and closing index price of DSE for 2011. The beta value of Beximco Pharmaceuticals Ltd was as determined to be 0.87 for 2011. As calculating covariance of a security with the market = 0.00325814 and the variance of the market return = 0.003759528. The weekly closing stock return of BPL and weekly market returns of DSE data of 2011 are as follows This data considers on 29 December 2011 to 02 January 2011.

Excess Stock return

-0.95% -0.52% 1.71% -3.21% -3.99% 11.93% 1.01% -1.88% -7.64% -0.21% -4.10% -5.00%

Excess Market return

0.48% 4.64% 1.38% -5.81% -2.54% 3.99% -0.81% -1.88% -4.26% -0.42% -2.78% -3.09%

Excess Stock return

0.80% -5.99% 3.22% 1.04% -7.13% 1.09% -7.18% -7.04% 1.61% -2.86% -4.86% 0.58%

Excess Market return

1.23% -3.76% 4.15% 6.76% -5.60% 1.88% -4.86% -2.50% -2.29% -3.03% -2.36% 2.97%

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9.21% -1.01% 4.06% 0.84% -2.25% -2.80% -3.38% -9.60% 5.43% 8.58% 8.57% 14.67% 5.80%

4.56% -5.27% -1.82% -2.17% 1.54% -1.53% -0.75% -4.98% -1.10% 1.26% 4.22% 3.18% 4.62%

1.27% -3.41% -3.59% 15.42% 0.37% 1.18% -7.62% -6.19% -7.70% 18.51% -13.33% -0.37% -5.93%

3.04% -3.85% -3.42% 22.30% -6.42% -2.12% -9.21% -8.39% -3.53% 16.75% -16.49% -2.06% -6.86%

Avg. market return

-1%
Weekly Stock and Market Return

0.25 0.2

Weekly Stock Return

0.15 0.1 0.05 0 -0.05 -0.1 -0.15

Weekly Market Return

I consider Govt Treasury bill rate as a risk free rate which is 5.67%. As we know that last 3 years market index fall rapidly and daily closing index rates shows unstable, so that market return is -1%. Final calculation is as follows:

Cost of Equity of BPL; K = 5.67% + 0.87[-1% - (5.67%)] = 0.09%

Cost of Debt:
By definition cost of debt is the amount of interest being paid by a company on all of the debts that it has incurred. Company will use various bonds, loans and other forms of debt, so this measure is useful for giving an idea as to the overall rate being paid by the company to use debt financing. The measure can also give investors an idea as to the riskiness of the company compared to others, because riskier companies generally have a higher cost of debt.

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Formula:

Kd = kd (1-T)
Here,

Kd = Cost of debt kd = Before tax % cost of debt T = Tax rate

To calculate cost of debt of Beximco Pharmaceuticals I was analyzed its annual report of 2011. Here I found that BPL has three secured long terms borrowings- (a) Project Loan; (b) Interest and PAD Block and c) Obligation under Finance Leases. Those Loans carrying interest at 13% to 15% per annum, is repayable in quarterly installments ending by 2017. For my own calculation I assume, kd = 15%. As we know that Beximco is a publicly traded company hence the applicable Tax Rate is 27.50%.

Cost of Debt of BPL; Kd = 15 %( 1 27.50%) = 11%

Cost of preference share: Kp =

For BPL perspective, Dividend = 5% of Tk.100 = Tk. 5 Price of share = Tk. 100 Cost of preference share; Kp

= 5/100 = 5%.

Capital Structure of 2011

Capital Share capital Long term debt Preference share Total Amount 2,517,678,100 1,890,074,651 4,100,000,000 8507752751 Weight 30% 22% 48% 100%

Weighted Avg. Cost of capital: WACC = We*Ke+ Wd*Kd + Wp* Kp

Here,

We = Weighted of equity

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Wd = Weighted of debt Wp = Weighted of preference share For BPLs WACC = 30%*0.09%* + 22%*11% + 48%*5% = 4.9% 2. Dividend Growth Model:
The second is Dividend growth model of dividend discount model.

P0=

Here, P0 = Current share price D0 = Current dividend g = Expected growth rate of dividends r = Required rate of return on the market

Calculation:
Year 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 Dividend rate 21.00% 20.00% 15.00% 30.00% 15.00% 15.00% 15.00% 30.00% 20.00% 20.00% 15.00% 20.00% Amount 2.1 2 1.5 3 1.5 1.5 1.5 3 2 2 1.5 2 Dividend growth 5% 33% -50% 100% 0% 0% -50% 50% 0% 33% -25%

Avg. growth

9%

P0 = Tk. 93.6 (Market price as per annual report 2011) D0 = 2.1 g = 9% r=?

Required Rate of Return of BPL; r = [2.1(1+9%) /93.6] + 9% = 11.45%.

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For BPLs WACC = We*Ke+ Wd*Kd + Wp* Kp = 30%*11.45% + 22%*11% + 48%*5% = 8.26%

Summary of cost of capital

Cost of capital of Beximco Pharmaceuticals Ltd.
CAPM Method
Cost of equity = 0.09% Cost of debt = 11% Cost of preference share = 5% WACC = 4.9%

Dividend growth method

Cost of equity = 11.45% Cost of debt = 11% Cost of preference share = 5% WACC = 8.26%

RATIO ANALYSIS:
1. Liquidity Ratio:
Liquidity ratio measures the ability of the firm to meet its obligations. These ratios establish relation between cash and other current asset and current liabilities. Creditors to evaluate the creditworthiness of the firm use these ratios. These ratios also provide revels managements policy in managing liquidity position of the firm. The Liquidity ratio we can satisfy on the three ratios, those are: Current ratio Quick ratio or acid test

Current Ratio:
Current Ratio indicates the ability of a company to achieve its short-term obligations, where short-term obligations indicate those obligations that are due within a year or within the operating cycle. Current ratios are extent to which the assets that are expected to cash cover the claims of short-term creditors. Current Ratio = Current Assets / Current Liabilities

Ratio Current ratio

2011 2.70

2010 2.46

2009 2.98

2008 1.10

Analysis: In the table we see that in 2008 the ratio is only 1.10 times, in the 2009 increases to 2.98 times and in the 2010 decreases to 2.46 times and again increase in 2011 by 2.70. This ratio gives us a gross idea of

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liquidity position of the company. This ratio includes Inventory, which is considered two steps from cash. Thats why it doesnt tell us the actual liquidity position of the firm to meet its obligations.

Quick Ratio:
Quick ratio is most important measure of liquidity than the current ratio. Because inventories which are the least liquid of the current assets from the ratio. It is essential for a company to realize its ability to pay the short-term obligation, without knowing on the sales of inventory because they are the assets on which losses are mostly in the event of liquidation. Quick ratio = (Current assets - Inventory) / Current Liabilities

Ratio Quick ratio

2011 1.83

2010 1.67

2009 2.24

2008 0.52

Analysis: The quick ratio has increase over the year 2009 than 2010 decreases aging 2011 increases. Thus, it would seem that in the last year BPL was much better position in 2011.

2. Activity Ratio:
Activity ratios are used to evaluate the competence, which the company manages and utilizes on its asset. This ratio also calls the turnover ratios because they indicate the speed with which the assets are transformed or turnover into sales. A proper balance between assets and sales generally reflects on that the assets. The Activity ratio we can satisfy on the three ratios, those are: Receivable turnover Inventory turnover Assets turnover

Receivable Turnover:
Receivable turnover ratio indicates the rate of receivable to turn into cash. It indicates the level of outlay in receivables wanted to continue the company's sale stage. This also events of the helpfulness of the company's credit strategy. Receivable turnover (RT) = Sales / Accounts Receivable Receivable turnover in Days= 365 days/ RT

Ratio Receivable turnover Receivable turnover in Days

2011 8.07 45.25

2010 7.90 46.19

2009 7.01 52.04

2008 7.96 45.87

Analysis: For Beximco, Receivable Turnover is 7.96 times in 2008 and 2011 is 8.07. Also Receivable

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Turnover in Days has decreased in 2011. So BPLs receivables are now considerably quicker in turning over than before and this is good news for investors and the internal management.

Inventory Turnover:
The liquidity of the companys register can be considered by this ratio. Its ratio indicates how many periods it is needed to twist inventory of sales on a standard. This event on the efficiency of the companys inventory organization. Inventory Turnover (IT) = Cost of goods sold / Avg. inventory average Inventory Turnover in Days (ITD) = 365 Days/ IT

Ratio Inventory Turnover (IT) Inventory Turnover in Days (ITD)

2011 1.92 190.15

2010 1.79 203.91

2009 1.59 229.58

2008 1.35 271.12

Analysis: For Beximco Pharma, the average IT value is about 1.66. From 2008 to 2011 the ITD value decreased in 2011 and the value was 190.15 days. ITD is decreased in 2011 at a satisfactory level which is also indicates better performance in that years.

Assets Turnover:
Assets turnover ratio indicates to the capability of the companys to create sales using the asset appropriately. The underutilized assets raise the companies require for the expensive finance. By the achieving a skyscraping turnover a companies cut cost and increase final profit of the proprietorship. Assets Turnover = Sales / Average Total Assets Average Total Assets = (Beginning Total Assets + Ending Total Assets)/2

Ratio Asset turnover

2011 0.36

2010 0.31

2009 0.28

2008 0.30

Analysis: Here we see that total assets turnover has decreased in 2010 and 2009 compare to 2011. Sales and total assets increase in 2011, 2010. But compare to 2009 and 2008; ratio is slightly dropped in 2009. After that it was recovered marginally.

3. Profitability Ratio:
There are many measures of profitability, which relate the returns of the firm to its sales, assets, or equity. As a group, these measures allow the analyst to evaluate the firms earnings with respect to a given level of sales, a certain level of assets, or the owners investment. This ratio specify the capacity of the company to survive difficult circumstances, which might occur from a number of basis, such as declining price, increasing cost and declining sale. The Profitability ratio we can justify on the three ratios, those are as follows:

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Gross Profit margin on sales. Return on asset or Return on Investment. Return on common stock equity. Price earnings ratio

Gross & Profit Margin:

Profit margin on sales ratio offered information as regards a companys success from the action of core trade. Ratio gives you an idea about the success relation to sales on after the cost of goods sold is removing. Its could be used as a pointer of the good organization of the manufacture action and relationship between cost of manufacturing goods and selling price. Gross Profit margin = Gross Profit / Sales Net Profit Margin= Net Profit after Tax/ Sales

Ratio Gross Profit Margin Net Profit Margin

2011 48% 15.19%

2010 49% 16.20%

2009 47% 12.83%

2008 50% 13.60%

Analysis: In this case the gross profit margin ratio has little bit fluctuated throughout the year of 2008 to 2011, but at the same times net profit margin shows quite stabile, which is very good sign from on investors point of view. It means that management has able to handle the operating cost and other cost. As a result company has generated more profit.

Return on Investment/ Asset (ROI):

Return on asset compute the success of a company by using the advantage to create to get self-governing of the financing of those assets. Its compute consequently divides financing action from working and invests tricks. Return on Investment = Net Profit after Taxes / Average Total Assets

Ratio Return on Investment

2011 5%

2010 5%

2009 4%

2008 4%

Analysis: In that particular segment we see that, return percentage is same in 2011 to 2010 and 2009 to 2008. That indicates Beximco Pharma doing well return for investors.

Return on common stock equity (ROE):

Return on common stock ratio indicates the amount of, which the company is capable to exchange in service income into an after tax income that finally can be maintain by the investor. It is a helpful ratio for investigate the capability of the companys administration to understand a sufficient come back on the capital invest by

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the proprietors of the company. Return on common stock equity = Net Profit after tax / Common stockholders equity

Ratio Return on common stock equity

2011 7%

2010 7%

2009 6%

2008 5%

Analysis: Return on equity increased from 2008 and after 2009 return shows 7%. So, its good news for BPL that its present ROE is better than previous year.

Price earnings ratio (P/E):

Price earnings ratio does analysis in discussing the investment possibility of a given enterprise uses an offquoted statistic? This is computed by dividing the market price of stock by its earnings per share. Price earnings ratio = Market price of stock / Earning per share

Ratio Market Price of Stock Earnings per share Price earnings ratio

2011 93.6 4.76 19.66

2010 135.1 4.18 32.32

2009 155.8 3.5 44.51

2008 167.7 3.61 46.45

Analysis: As a well-established organization its earning per share is increasing day by day. We see that after 2009 EPS is increasing; in 2011 it reaches Tk 4.76. Its a good sign for company reputation and investors will be interested to invest on this company. But at the same time P/E ratio dropped significantly. This is a bad sign for Beximco. So company should aware of their P/E ratio.

4. Debt Coverage Ratio

Debt ratios are calculated to judgment the long-term financial position of the company. This ratio indicate, mix of funds provided by owners and lenders, the manner in which the assets are finance, the extent of earning that is magnified or leveraged by use of debt and finally the extent of limited stakeholders control over the company. The Debt-coverage ratio we can satisfy on the three ratios, those are: Debt to total assets. Time interest earned.

Debt to total assets:

Debt ratio maintain how much of the companys total assets have been financed by the lending.

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Debt to total asset = Total debt / Total Asset

Ratio Debt to total asset

2011 17%

2010 18%

2009 19%

2008 24%

Analysis: we see that the percentage of ratio has decreased from 2008 to 2011 in the Beximco Pharma Company because their asset was increased at a higher rate than from the last year. If any company debt ratio decreases day by day it is a good position for those for the company.

Time interest earned:

This ratio provides an indication of the margin of safety between financial obligations and the net income thus it provides an indication of the available protection to creditors. Failure to meet this obligation can bring legal action by the companys creditors, possibly resulting in bankruptcy. Time interest earned (TIE) = Profit before interest and Tax / Interest charged

Ratio Times interest earned

2011 2.96

2010 2.68

2009 3.49

2008 3.34

Analysis: In this dissuasion we realize that the higher ratio of time interest earned, it indicated the Company has higher ability to pay the interest from their opportunity income. We see that ratio is quite fluctuating over the last few periods. So Beximco Pharma should aware of it.

COMPARATIVE ANALYSIS
Ratios in 2011 Current Ratio Quick Ratio Beximco
2.70 1.83

Liquidity Ratio

Square
1.50 0.96

Renata
0.73 0.26

Glaxco
2.05 0.95

Activity Ratio

Ratios in 2011 Receivable Turnover

Inventory Turnover Assets Turnover

Beximco
8.07 times 1.92 times 0.36

Square
15.06 times 2.22 times 0.78

Reneta
8.06 times 1.48 times 0.73

Glaxco
8.33 times 1.89 times 1.97

Profita bility Ratio

Ratios in 2011
Gross Profit Margin Net Profit Margin

Beximco
48% 15.19%

Square
43% 43%

Reneta
52% 17%

Glaxco
28% 6%

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Return on Investment 5% Return on common stock 7% equity Price earnings ratio 19.66

10.16% 18% 25.25

12.12% 27% 25.03

11.71% 20% 28.37

Debt Covera ge Ratio

Ratios in 2011
Debt to total assets Time interest earned

Beximco
17% 2.96

Square
30% 9.42

Reneta
0 0

Glaxco
45% 150.39

As comparison, we see that above the ratios comparatively BPL doing better performance than the other three establishes company. Although BPL should be more focused on their liquidity ratio because their ratio says they have enough idle money in hand.

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CONCLUSION
Beximco Pharmaceuticals LTD is a well-established and leading Pharmaceuticals company of our country. The company is run by an experienced and innovative management group, who utilize their knowledge, talent and experience to the best of their ability for the development of the company. So far my report I have tried my level best to identify the actual cost of capital and the profitability analysis of BPL. I have tried to imply my acquired knowledge from the Investment Management and Managerial Finance course and also tried to comply with theoretical technique, procedure and system utilized with the practical scenario. This Report evaluative method of determining the past, current and projected performance of BPL along with the comparative analysis of the related rival company like Square Pharma, Renata and GlaxcoSmith Kline. My analysis enables organizations to assess their current operating performance, review the state of the economy and determine how they will perform in the future.

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KEY FINDINGS
Work related:
Accounts and Finance Department run by high professionals, experience and skill personals. Accounts maintained by modern tools such as MAPICS" for its transaction processing purpose. "MAPICS" is the acronym of "Management Accounting Planning Information Control System". It is a DOS based Modular software introduced by IBM Corporation. BPL uses the following modules of MAPICS: General Ledger. Budget Preparation. Financial Ratio Analysis. Fixed Asset Accounting. Accounts Receivable. L C Monitoring System.

In addition, MS Excel2007 is broadly used by the accounts department for various purposes; such as: Payroll account maintenance Daily receives and payments maintenance; Financial reporting; LC monitoring ( Mastering files) Forecasted Product rate Pending bill List Departmental Budget Sister concern transactions and so on.

Finance and Accounting department is one of the most important departments of BPL, they are responsible to make profit for the organization. Finance and Accounting department maintain the entire legal requirement in processing all the transactions.

Financial:
There are positive relationship exists among assets, sales and net income. The recent liquidity position of BPL is very high, which reflect company has more idle money. Growth rate of the BPL is satisfactory. BPL should concern about their falling market price of share. The recent liquidity position of BPL is very high, which reflect company has more idle money.

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RECOMMENDATION
It is not easy to recommend some suggestion to enhance the performance level of the organization like BPL. Although I have tried to find out some shortcoming regarding operational and other aspects. On the basis of my observation I would like to present the following recommendations: BPL should utilize their assets properly by investing them in more profitable projects as there liquidity is higher than actual need. They should increase their dividend payout ratio, to maximize the wealth of shareholders. They should be careful about the market price of share, because the price of share would decrease. BPL should make a proper budget plan for further investment. Inventory turnover ratio of BPL is quite low. The company could compute turnover of the major categories of inventory to see if there is excessive investment in any specific components of the inventory and then take the appropriate action to rectify the problem. BPL needs to strike a healthy balance between debt and equity; too much debt financing would mean a high financial risk, while too little debt financing would mean that the company may have difficulty raising sufficient funds. BPL needs to be more efficient in collecting receivables. It should review its credit policy and make any necessary adjustments to encourage prompt payment. Further improve its return on investment (ROE), the company needs to take advantage of profitable investment opportunities and be more efficient at managing its expenses.

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REFERENCES
Beximco Pharmaceuticals Limited: <http://www.beximco-pharma.com/ > Beximco Pharmaceuticals Limited: Annual Report 2007-2011. [Online]Available at: < http://www.beximco-pharma.com/investor-relations/financial-reports/annual-report.html > Square Pharmaceuticals Limited: Annual Report 2011. [Online] Available at: < http://www.squarepharma.com.bd/financial-reports.php > Beximco Pharmaceuticals Ltd: Building A Healthier Tomorrow. Articles Base. August 04, 2010. [Online]Available at: < http://www.articlesbase.com/medicine-articles/beximcopharmaceuticals-ltd-building-a-healthier-tomorrow-2956604.html > Habib, Anamul & Alam, Zahedul. (2011) Business Analysis of Pharmaceutical Firms in Bangladesh: Problems and Prospects VolumeVI, Number01, January-June, 2011. Fisher,D.E & Jordan,R.J (2012). Security Analysis and Portfolio Management (6th Edition). Prentice-Hall. Riley,F & Brown,K (2011). Investment Analysis and Portfolio Management (8th Edition). China Renmin University Press Pub. CliffsNotes.com. Ratio Analysis. 14 Dec 2012 <http://www.cliffsnotes.com/study_guide/topicArticleId-21248,articleId-21213.html>. Majumder, T.H & Rahman,M.M(2009) Financial Analysis of Selected Pharmaceutical Companies in Bangladesh. European Journal of Business and Management ISSN 22221905 (Paper) ISSN 2222-2839 (Online).

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