Professional Documents
Culture Documents
North South University
Finance 254
Section: 4
Summer 2010
Submitted To:
AHR Karim
13 August, 2010
Background and structure
During the last 10 years Bangladesh’s economy has regained pace and GDP
grew at a consistent rate. Increased economic activity, reflected in the GDP
growth, is the key driver behind the increase in the business expansion; the country
has also seen an emergence of progressive entrepreneurs. Overall, GDP growth in
FY09 is likely to be around 6.0 percent and if no drastic shock affects the economy
and business confidence and investment climate improve further, the economy
could grow faster. The growth rate of industry and service sector stands at 6.9%
and 6.7% respectively against 7.4% for industry in 2007-08. The broader industry
sector includes manufacturing, mineral resources, electricity, gas & water and
construction sector. Telecommunication sector shows steady growth during the last
couple of years. The telecommunication industry of Bangladesh as a whole
possesses great potential. Penetration rate of 32.04% of wireless as of June 2008,
indicates it’s comparability to other neighboring countries. At the very inception,
cell phone usage was expensive and could only be afforded by the affluent. Well-
established foreign and local companies have invested heavily for the development
of the telecommunication infrastructure of Bangladesh thereby creating a
competitive environment, which has eventually led to drastic reduction in tariffs.
Telecommunications is a highly capital intensive industry. The significant
investment in network infrastructure for maintenance and the introduction of new
services to replace declining legacy products is likely to be permanent
characteristics of all sectors of the telecommunications industry, worldwide.
Despite the expanding use of telecommunications networks to deliver a broader
array of service offerings, telecom revenue growth rates are multiple of GDP
growth. Furthermore, fast moving technological trends have generally reduced
asset life cycles. Together with increased competition, the return on investment in
future will be under more pressure than has been the case for the industry
historically.
Performance at a Glance 2009
Statement of Financial Position
(as at 31st December, 2009)
Financial Summery of 2009 & 2008
Operational Results (in million BDT) 2009 2008
Revenue 65,300 61,359
Gross Profit 32,222 28,667
Operating Profit 20,518 15,350
Profit before tax 18,596 11,579
Net Profit after tax 14,968 2,984
The rating also recognizes GP‟s profitability and operating cash flows,
which along with expected inflow from its proposed IPO would improve its credit
metrics.
Rating also considers the future growth potential of GP; effective and
efficient allocation and utilization of resources; shareholding structure,
composition of Board as well as willingness and ability of the shareholders to bail
out the company in case of need; high profitability level and leadership process.
The rating also draws comfort from the fact the organizational structure and
practices of the company avoids dependence of management team on one or a few
persons as well as coherence of the team, the independence of the management
from the Board of Directors, and good track record of the management till date in
terms of building up solid business mix, and maintaining operating efficiency.
CRAB also views Corporate Social Responsibility of GP as a positive factor to its
rating. GP adopted a framework approach in CSR whereby it aims to play a role in
the development process of Bangladesh by, on the other hand, introducing
services, which will ensure higher access to information and public services and on
the other, launching development projects to provide assistance in meeting the
basic needs of the poor people. In the process, to bring about sustainable change,
GP identified 4 focus areas for possible intervention, i.e. Poverty alleviation,
Healthcare, Empowerment, and Education.
Corporate rated 'AAA' has extremely strong capacity to meet its financial
commitments. 'AAA' is the highest issuer credit rating assigned by CRAB. AAA is
judged to be of the highest quality, with minimal credit risk.