AN OVERVIEW ON GPH ISPAT

AND BSRM STEEL

 Course Name: Business Finance
Course title: FIN201

Submitted to:
Md. Humayun Kabir
Lecturer,
Department of Business Administration
East West University, Aftabnagar, Dhaka

Submitted By:
NAME ID SIGNATURE
Amir Foysal 2017-3-10-046
Mushfiqur Rahaman 2016-1-18-042
Soaib Al Mukshid 2017-3-10-089
Rita Islam 2017-3-10-035
Umme Salma Pinkey 2017-1-10-050

Date of Submission: December 5, 2019

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 Letter of Transmission
5 december, 2019

Md. Humayun Kabir

Lecturer,

Department of Business Administration,

East West University.

Subject: Submission of term paper on the topic called “an overview on GPH Ispat and BSRM
Steel”.

Dear Sir,

It is indeed a great pleasure to present in front of you the overall finding information of the
term paper on the topic named “an overview on GPH Ispat and BSRM Steel”. We have tried as
far as it was possible for us to meet all the specification and instructions given by you for the
term paper and necessary to prepare it.

We appreciate having a chance to prepare this paper. We have tried our best to prepare this
project in a proper way in spite of various constraints like time and complications in
understanding.

We, hereby request your approval for our research proposal. If you wish us to modify our
proposal, we will submit it after incorporating the necessary changes. We would also be
grateful for your advice and help in conducting our research and completing the project.

Yours Sincerely,

Soaib Al Mukshid Umme Salma Pinkey

Amir Foysal Mushfiqur Rahaman Rita Islam

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 Acknowledgement
We would like to start by expressing our sincere gratitude to Allah, the graceful for giving us the
chance to complete the research on ‘’an overview on GPH Ispat and BSRM steel due time.
Many people assist us for completing our research paper successfully. There are some valuable
people behind this research paper whom we want to admire.

First of all, we would like to specially thank our course instructor Md. Humayun Kabir for his
sincere help and instructions from the beginning till the end of the research. Then we would
like to thank the city bank website from where we took the necessary information. Without it,
we would not be able to complete our research.

At last but not the least, we would like to thank internet which provides us a lots of information
and idea about our research paper.

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TABLE 0F CONTENTS

Executive summary.......................................................................................................................................................vii

Objectives of the study.................................................................................................................................................viii

limitation of the study....................................................................................................................................................ix

introduction....................................................................................................................................................................1

company overview..........................................................................................................................................................2

Gph ispat ltd................................................................................................................................................................2

products..................................................................................................................................................................2

Bsrm ltd.......................................................................................................................................................................3

PRODUCTS...............................................................................................................................................................3

Ratio Analysis..................................................................................................................................................................4

Liquidity Ratio.............................................................................................................................................................4

Current Ratio...........................................................................................................................................................4

Quick Ratio..............................................................................................................................................................5

Asset Management Ratio...........................................................................................................................................6

Inventory Turnover Ratio.......................................................................................................................................7

Days sales Outstanding Ratio..................................................................................................................................8

Fixed Asset Turnover Ratio.....................................................................................................................................9

Total Asset Turnover Ratio...................................................................................................................................10

Debt Management Ratio..........................................................................................................................................11

Debt Ratio.............................................................................................................................................................12

Times Interest Earned (TIE) Ratio.........................................................................................................................13

Profitability Ratio......................................................................................................................................................14

Profit Margin on Sales:..........................................................................................................................................14

Return on Asset (ROA):.........................................................................................................................................16

Return on Equity (ROE):........................................................................................................................................17

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 Market Value Ratios..................................................................................................................................................18

:Price/Earning (P/E) Ratio.....................................................................................................................................19

Market/Book (M/B) Ratio:....................................................................................................................................20

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EXECUTIVE SUMMARY

In the present situation, companies like GPS Ispat and BSRM Steel are walking with competitive
advantage, inspired way, just like a panorama of a race to reach the leading position in their
sector. Most of the companies now concentrates of marketing feasibility to earn and generate
opportunity to hold existing to keep loyal customers, in the business humanity believed that
loyal customers increase the forthcoming gainful revenue. In this report we are trying to focus
on the overall GPS Ispat and BSRM Steel activities which includes the introduction topics like
objective, background, limitation of the study. Basically it defines the way and background of
the study to prepare the report. In the next part of the report highlights a brief background of
GPS Ispat and BSRM Steel which includes company overview. Next and most important part of
the report is analyzing of the ratio of 15 accounts. This report is also consists of some findings of
GPS Ispat and BSRM Steel provided with some recommendation in order to improve customer
service quality as well as customer satisfaction level based on the observation and work
experience.

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OBJECTIVES OF THE STUDY

The objectives of this report are:-

 To provide an overview of the company.

 To calculate the ratio analysis of 15 accounts of GPH Ispat limited and BSRM limited.

 To identify liquidity, asset management, debt, as well as profitability GPH Ispat limited
and BSRM limited.

 To offer suggestions for the improvement of their performance.

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LIMITATION OF THE STUDY
From the intention to make the report properly accepted this report has been conducted.
However, many problems appeared in the way of conducting the study. All the given
information is not fully complete. Some information are company secret and only provided to
some persons to know about it.

However, we tried our best to settle the report before the due date and hope it is satisfied. The
study considers following limitations:

 Lack of in depth knowledge and analytical ability for writing such report.

 Another limitation of this study is companies policy of not discussing some data and
information for obvious reasons.

 Lack of experience to analyze data.

 Time limitation is also big factor, which hinders the data collection process. Due to time
limitation many aspects could not be discussed in the study.

 Poor conception of the discussed group was another problem that created a lot of
confusion in some cases more than one person were participated to clarify each
concept.

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INTRODUCTION

The prosperity of a country depends upon its economic activities. Like other companies, GPS
Ispat limited and BSRM limited are also contributing in the economic development of
Bangladesh. GPH Ispat Ltd. One of the leaders of Bangladesh in manufacturing steel promises a
super strong future and economy with its world class products. Not only structural bar, but GPH
Ispat Ltd. is also one of the producers of low & medium carbon and low alloy steel billets in
Bangladesh, the main ingredient of manufacturing graded steel bar. As GPH is ensuring the
highest quality products in Bangladesh as per various international and national standards, GPH
steel billets and Bars is getting exported to other countries after nourishing national demand.
The introduction of GPH Ispat Ltd. has all the potentials to take Bangladesh quite a few steps
forward to a stronger, brighter tomorrow. [ CITATION Placeholder2 \l 1033 ]

BSRM is the leading steel manufacturing company and one of the prominent corporate houses
in Bangladesh. Over the years, BSRM steel products have been chosen solely for building major
National landmarks and infrastructures. To name a few, the Padma Bridge, Rooppur Neuclear
Power Plant, Hatirjheel Project, Zillur Rahman Flyover, Mayor Hanif Flyover and Shah Amanat
Bridge were built with BSRM. [ CITATION BSR191 \l 1033 ]

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COMPANY OVERVIEW

GPH ISPAT LTD.

GPH Ispat was founded on 17 May 2006 and started its operation in 2008. It was listed as
a public limited company in 2009. Managing director of GPH Ispat is Mohammad Jahngir Alam.
He is the Chairman of M. I. Cement Factory Limited, Crown Power Generation Limited, Crown
Polymer Bagging Limited, Crown Mariners Limited, Crown Transportation & Logistics Limited.

He is the Managing Director of GPH Ispat Limited, GPH Power Generation Limited, Indo Steel
Re-Rolling Industries Limited, Jahangir & Others Limited, and Chittagong Capital Limited.

In 2016, the company started its expansion project in Sitakunda, Chittagong in association
with Primetals Technologies, a joint venture of Siemens VAI and Mitsubishi Heavy Industries &
Partners as the equipment supplier. The company invested around US$200 million for the 0.8
MTPY steel manufacturing facility. The new mill will use a Quantum electric arc furnace, a ladle
furnace, a three-strand, high-speed continuous billet caster, and a bar and section mill. It will
use WinLink Flex technology for rolling mill for the first time in world. The company raised
US$154 million from 12 financial institutions for its expansion project in May 2016. [ CITATION
GPH19 \l 1033 ]

GPH Ispat Ltd. One of the leaders of Bangladesh in manufacturing steel promises a super strong
future and economy with its world –class products. Not only structural bar, but GPH Ispat Ltd. is
also one of the producers of low & medium carbon and low alloy steel billets in Bangladesh, the
main ingredient of manufacturing graded steel bar. As GPH is ensuring the highest quality
products in Bangladesh as per various international and national standards, GPH steel billets
and Bars is getting exported to other countries after nourishing national demand. The
introduction of GPH Ispat Ltd. has all the potentials to take Bangladesh quite a few steps
forward to a stronger, brighter tomorrow.

PRODUCTS

TWO TYPES OF PRODUCTS ARE MANUFACTURED AT GPH ISPAT LTD.

1. BILLET: Size - 100mm X 100mm, 110mm X 110mm, 130mm X 130mm and as per

customers’ requirements).

2. REBAR:

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  Deformed bar (available in sizes 8mm, 10mm, 12mm, 14mm, 16mm, 18mm, 20mm,
22mm, 25mm, 28mm, 32mm, 36mm and as per customers’ requirements).

 Plain bar (available in sizes 8mm, 10mm, 12mm, 14mm, 16mm, 18mm, 20mm, 22mm,
25mm, 28mm, 32mm, 36mm and as per customers’ requirements).

[ CITATION GPH191 \l 1033 ]

BSRM LTD.

BSRM is the leading steel manufacturing company and one of the prominent corporate houses
in Bangladesh. Over the years, BSRM steel products have been chosen solely for building major
National landmarks and infrastructures. To name a few, the Padma Bridge, Rooppur Neuclear
Power Plant, Hatirjheel Project, Zillur Rahman Flyover, Mayor Hanif Flyover and Shah Amanat
Bridge were built with BSRM.

BSRM Xtreme is a product that was introduced when there were no graded steel in Bangladesh.
It was a major change in the steel industry of Bangladesh. The core driver was the belief in
evolution in steel products, which resulted in bringing the first EMF tested rod, the first steel
brand that passed 5 million cyclic loading Fatigue testing in the U.K. and conformed to 10 global
standards. With the largest steel producing factory in the country and employing the best
technology from Europe, the company maintains volume with uncompromising quality. BSRM is
dedicated to providing the best solution for the construction industry. The first ever 50 mm rod
was specially designed and rolled for the deep pilling requirements of Padma Bridge. Various
specialized products of BSRM are also designed to meet special needs for the construction
industry.

PRODUCTS

BSRM is country’s first producer of 500 MPa yield strength re-bar, branded and marketed as
Xtreme 500W, proving BSRM’s quest for continuous innovation as nation building partner.
Beside re-bar production, BSRM rolls and markets sectional steels such as angles and channels
and ribbed wire which are manufactured in separate plants of BSRM. The bars, specially Xtreme
500 W and sectional products ranging in various sizes conforming to ISO 6935-2:2015 and ISO
630-3:2012(E) respectively which are the lawful standard of the country. BSRM’s steel products
are inside Buildings, Bridges, and National Infrastructures all of which are made to
internationally accepted construction codes. The codes in turn specify engineering materials
conforming to various global standards.

[ CITATION BSR191 \l 1033 ]

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RATIO ANALYSIS

LIQUIDITY RATIO

A liquid asset is one that can be easily converted to cash without significant loss of its originalvalue. Liquidity or
Short Term Solvency ratios are used to determine a company's ability to payoff its short-terms debts obligations.
The higher the value of the ratios, the larger will be themargin of safety that the company possesses to cover
short-term debts. It shows the relationshipof a firm’s cash and other current assets to its current liabilities.
Different types of liquidity ratios are discussed below

CURRENT RATIO

Current Ratio is the ratio of current assets to current liabilities. The current ratio indicates theability of a company
to pay its current liabilities from current assets that shows the strength ofthe company’s working capital position.
Current ratio of 2:1 is considered to be a healthycondition for most business organization.

Current Ratio = Current Assets / Current Liabilities

Table: Current Ratios of GPH Ispat & BSRM Steel

Year GPH Ispat BSRM Steel

2014 1.04 1.008

2015 1.28 0.73

2016 1.63 1.12

2017 1.38 1.10

2018 1.002 0.84

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Figure:

Current Ratio
1.8 1.63
1.6
1.38
1.4
1.28 1.12 1.1
1.2 1.04
1.01 1 GPH Ispat
1 0.84 BSRM Steel
0.8 0.73

0.6
0.4
0.2
0
2013 2014 2015 2016 2017 2018 2019

QUICK RATIO

he Quick ratio or acid-test measures a company's ability to meet its short-term obligations withits most liquid
assets. Inventories typically are the least liquid of a firm’s current assets – theyare the assets on which require
more time to be sold and losses are most likely to occur in theevent of liquidation. Therefore, it is important to
measure the firm’s ability to pay off short termobligations without having to rely on the sale of inventories. Quick
ratio of 1:1 is considered to be a healthy condition for most businesses. It is calculated as follows.

Quick Ratio= (Current Assets- Inventories)/ Current Liabilities

Table: Quick Ratio of GPH ispat and BSRM Steel

Year GPH Ispat BSRM Steel

2014 0.4 0.3

2015 0.5 0.3

2016 0.01 0.8

2017 0.9 0.75

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 2018 0.6 0.35

Figure:

Quick Ratio
1 0.9
0.9 0.8
0.8
0.75
0.7 0.6
0.6 GPH Ispat
0.5 BSRM Steel
0.5 0.4
0.4 0.3 0.3 0.35
0.3
0.2
0.1 0.01
0
2013 2014 2015 2016 2017 2018 2019

ASSET MANAGEMENT RATIO

A set of ratios that measure how effectively a firm manages its assets compared to its [Link] ratios are
designed to find out whether the total amount of each type of asset as reportedon the balance sheet appear
reasonable, too high, or too low considering current and projectedsales levels. Asset Management Ratio is done
based on inventory turnover ratio, day’s salesoutstanding and fixed asset and total asset turnover ratio.

INVENTORY TURNOVER RATIO

Inventory Turnover Ratio tells how often a business's inventory turns over during the course ofthe year.
Inventories are the least liquid form of asset and a high inventory turnover ratio isgenerally positive. On the other
hand, an unusually high ratio compared to the average for theindustry could mean that the business is losing sales
because of inadequate stock on hand. Theratio is calculated as follows:

Inventory turnover ratio= Cost of goods sold /Inventories

Table: Inventory Turnover Ratio of GPH ispat and BSRM Steel

Year GPH Ispat BSRM Steel

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 2014 1.5 3.16

2015 2.25 1.4

2016 1.5 2.5

2017 2.6 2.2

2018 2.86 2.5

Figure:

Inventory Turnover Ratio

3.5
3.16
3
2.6 2.86
2.5 2.5
2.5 2.25 2.2
GPH Ispat
2 BSRM Steel
1.5 1.5
1.5 1.4
1

0.5

0
2013 2014 2015 2016 2017 2018 2019

DAYS SALES OUTSTANDING RATIO

DSO is called the average collection period, is used to evaluate the firm’s ability to collect
itscredit sales in a timely manner. It is calculated by dividing accounts receivable by average
salesper day which indicates the average length of time it takes the firm to collect its credit
[Link] is calculated as follows:

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Daily Sales Outstanding (DSO)=Receivables/Average sales per day =Receivables/ [Annual
sales/360]

Table: Days sale outstanding of GPH Ispat amd BSRM Steel

Year GPH Ispat BSRM Steel

2014 79.03 27.7

2015 58.6 22.2

2016 69.18 53.6

2017 81.44 37.9

2018 59.2 42.7

Figure:

Days Selling Outstanding

90 81.44
79.03
80
69.18
70
58.6 59.2
60
53.6 GPH Ispat
50 BSRM Steel
37.9 42.7
40
27.7
30
20 22.2

10
0
2013 2014 2015 2016 2017 2018 2019

FIXED ASSET TURNOVER RATIO

Fixed assets turnover ratio measures how effectively the firm uses its plant and equipment
tohelp generate sales. So, fixed Asset Turnover ratio measures the amount of sales generated

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forevery dollar's worth of fixed assets. The fixed asset turnover ratio is calculated by dividing
sale by total fixed assets. It is calculated as follows:

Fixed Asset Turnover= sales/Net Fixed Asset

Table: Fixed Asset Turnover of GPH Ispat and BSRM Steel

Year GPG Ispat BSRM Steel

2014 2.5 4.41

2015 3.4 0.42

2016 2.7 1.6

2017 1.6 1.11

2018 0.7 1.9

Figure:

Fixed Assets Turnover Ratio

5
4.5 4.41
4
3.4
3.5
3 GPG Ispat
2.5 2.7 BSRM Steel
2.5
2 1.6 1.6 1.9
1.5 1.11
1
0.7
0.5 0.42
0
2013 2014 2015 2016 2017 2018 2019

TOTAL ASSET TURNOVER RATIO

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Total Asset Turnover ratio measures the amount of sales generated for every dollar's worth
oftotal assets. The total asset turnover ratio is calculated by dividing sale by total assets. It
iscalculated as follows:

Total Assets Turnover Ratio = Sales/ Total Assets

Table3.2.4: Total Asset Turnover of GPH ispat and BSRM Steel

Year GPH Ispat BSRM Steel

2014 0.80 1.4

2015 1.10 0.28

2016 0.56 0.59

2017 0.6 0.61

2018 0.43 0.82

Figure:

Total Asset Turnover Ratio

1.6
1.4
1.4
1.2
1.1
1 GPH Ispat
0.8 0.82
BSRM Steel
0.8
0.59
0.56 0.61
0.6
0.6
0.43
0.4
0.28
0.2
0
2013 2014 2015 2016 2017 2018 2019

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DEBT MANAGEMENT RATIO

Debt Management ratios help to evaluate a company's long-term solvency measuring the
extentto which the company is using long-term debt. This ratio reflects how effectively a firm
ismanaging its debts.

DEBT RATIO

The debt ratio indicates how much of a company's assets are provided through debt or
thepercentage of the firm’s assets financed by creditors. Total debt includes both current
liabilitiesand long term liabilities. Creditors prefer low debt ratios, because the lower the ratio,
thegreater the cushion against creditor’s losses in the event of liquidation. The owners on the
otherhand can benefit from leverage because it magnifies earnings, and thus the return
tostockholder. But, too much debt often leads to financial difficulty, which eventually might
cause bankruptcy. It is calculated as follows:

Table: Debt Ratio of GPH ispat and BSRM Steel

Year GPH Ispat BSRM Steel

2014 1.4 1.3

2015 1.5 1.5

2016 1.8 1.4

2017 1.6 1.4

2018 1.3 1.2

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Figure:

Debt Ratio
2 1.8
1.8 1.6
1.6 1.5
1.4 1.4 1.4
1.4 1.3 1.3
1.2
1.2 GPH Ispat
BSRM Steel
1
0.8
0.6
0.4
0.2
0
2013 2014 2015 2016 2017 2018 2019

TIMES INTEREST EARNED (TIE) RATIO

The TIE ratio measures the extent to which earnings before interest and taxes (EBIT), also
calledoperating income, can decline before the firm is unable to meet its annual interest cost.
Failureto meet this obligation can bring legal action by the firm’s creditor, possibly resulting in
bankruptcy. The TIE ratio is computed by dividing earnings before interest and taxes (EBIT)
byinterest charges. It measures the ability of the firm to meet its annual interest payments. The
TIEratio is calculated as follows:

Time interest earned ratio = EBIT/ Interest charge

Table: TIE of GPH ispat and BSRM Steel

Year GPH Ispat BSRM Steel

2014 2.23 2.92

2015 2.18 0.30

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 2016 1.89 2.01

2017 2.48 1.15

2018 2.25 1.87

Figure:

Time Interest Earning

3.5

3 2.92
2.48
2.5 2.23 2.18
2.01 2.25 GPH Ispat
1.89
2 BSRM Steel
1.87
1.5
1.15
1

0.5
0.3
0
2013 2014 2015 2016 2017 2018 2019

PROFITABILITY RATIO

A group of ratios that show the combined effect of liquidity, asset management, and
debtmanagement on operating results .It is the net result of a number of policies and decisions.

PROFIT MARGIN ON SALES:

Profit Margin is the ratio measures net income per dollar of sales and is calculated as net
incomedivided by revenues, or net profits divided by sales. It measures how much out of every
dollarof sales a company actually keeps in earnings. Profit margin is very useful when
comparingcompanies in similar industries. A higher profit margin indicates a more profitable
companythat has better control over its costs compared to its competitors. Profit margin is
displayed as apercentage; a 20% profit margin, for example, means the company has a net
income of $0.20 foreach dollar of sales. It is calculated as follows:

Profit margin on sales = Net Income/ Sale

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Table: Profit Margin of GPH ispat and BSRM Steel

Year GPH ispat BSRM Steel

2014 5.9% 1.3%

2015 4.8% 10.6%

2016 5.0% 6.3%

2017 7.3% 4.5%

2018 6.6% 3.7%

Figure:

Profit Margin Ratio

12.00%
10.60%
10.00%

8.00% 7.30%
GPH ispat
5.90% 6.30%
6.60% BSRM Steel
6.00% 4.80% 5.00% 4.50%
3.70%
4.00%

2.00%
1.30%
0.00%
2013 2014 2015 2016 2017 2018 2019

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RETURN ON ASSET (ROA):

Return on Asset (ROA) is an indicator of a company which deals with profit relative to its
totalassets. It gives an idea as to how efficient management is at using its assets to generate
[Link] is calculated by dividing a company's annual earnings by its total assets, ROA is
displayed as apercentage. Sometimes this is referred to as "return on investment". The ROA
after interest andtaxes are computed as follows:

Return on Asset (ROA) = Net Income / Total Assets

Table: ROA of GPH ispat and BSRM Steel

Year GPH ispat BSRM Steel

2014 4.7% 0.1%

2015 4.9% 2.9%

2016 2.8% 3.7%

2017 4.4% 2.9%

2018 2.8% 3%

Figure:

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 Return on Total Assets
6.00%
4.90%
5.00% 4.70%
4.40%

4.00% 3.70%
GPH ispat
2.90% 2.90% 3.00% BSRM Steel
2.80% 2.80%
3.00%

2.00%

1.00%
0.10%
0.00%
2013 2014 2015 2016 2017 2018 2019

RETURN ON EQUITY (ROE):

Return on Equity (ROE) measures the rate of return on common stockholders’ equity.
Itmeasures a company's profitability by revealing how much profit a company generates with
themoney shareholders have invested. The return on equity (ROE) is measured as follows:

Return on Equity (ROE) = Net income / Total Shareholders’ Equity

Table: Return on Equity of GPH ispat and BSRM Steel

Year GPH ispat BSRM Steel

2014 14.3% 14.2%

2015 14.5% 8.4%

2016 11.4% 22.5%

2017 13.7% 10.9%

2018 11.6% 19.3%

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Figure:

Return on Equity
25.00% 22.50%
19.30%
20.00%

14.20% 14.50%
14.30% 13.70% GPH ispat
15.00%
11.40% 11.60% BSRM Steel

8.40% 10.90%
10.00%

5.00%

0.00%
2013 2014 2015 2016 2017 2018 2019

MARKET VALUE RATIOS

Market value ratio is a set of ratio that relates the firm’s stock price to its earnings and
bookvalue per share. These ratios give management an indication of what investors think of
thecompany’s past performance and future prospect. If the firm’s liquidity, asset management,
debtmanagement, and profitability ratios are all good then market value ratios will be high
whichwill lead to an increase in the stock price of the company.

:PRICE/EARNING (P/E) RATIO

This is the ratio of the price per share to earnings per share. It shows how much investors
arewilling to pay per dollar of reported profit. It is calculated as follows:

P/E Ratio = Market Price per Share/ Earnings per Share

Table: Price/Earning Ratio of GPH ispat and BSRM Steel

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 Year GPH Ispat BSRM Steel

2014 2.34 3.63

2015 2.35 4.78

2016 2.06 3.84

2017 1.83 3.53

2018 1.97 12.95

Figure:

Earning Per Ratio

14
12.95
12

10
GPH Ispat
8 BSRM Steel
6 4.78
3.63 3.84
4
2.34 2.35 3.53
2.06 1.83 1.97
2

0
2013 2014 2015 2016 2017 2018 2019

MARKET/BOOK (M/B) RATIO:

The ratio of a stock’s market price to its book value gives another suggestion of how
investorsregard the company. Companies with relatively high rates of return on equity
generally sell athigher multiples of book value than those with low returns. The formula for
Market/BookValue is given below:

Market /Book Ratio = Market Price per Share / Book Value per Share

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Table: Market/Book Ratio of GPH ispat and BSRM Steel

Year GPH ispat BSRM Steel

2014

2015

2016

2017

2018

Figure:

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