Chapter 1: Introduction & Methodology

1. Introduction:
HEIDELBERGCEMENT BANGLADESH LTD. (HCBL) has been our selected co!an"# $h%ch
%s the lead%n& ceent co!an" %n Ban&ladesh under the ubrella o' He%delber&ceent &rou! o'
Geran". HCBL has %ts un%(ueness %n o!erat%ons# ar)et%n& * sales# lo&%st%cs# IT# HR# +%nance
and ,ar%ous soc%al res!ons%b%l%t%es.
2. Objective:
-ur bas%c ob.ect%,e $ould be to anal"/e $hether the ar)et !r%ce %s &o%n& to re,eal &ood or bad
ne$s %n ters o' Mar)et 0alue (M0) and Boo) 0alue (B0). As lon& as M01B0# %t $ould re,eal
&ood ne$s and ,%ce ,ersa.
3. Methodology:
a) Statistical echni!ues: +or s%!l%c%t" o' understand%n&# $e rel%ed on colun and l%ne
chart# as $ell as scatter chart to soe e2tent.

b) "ature o# data: 3e ha,e used e!%r%cal data 'or our re!ort. Those are secondar" %n
nature.
c) Sources o# data: 3e ha,e a%nl" ta)en data 'ro annual re!orts.
d) i$e period consideration & justi#ication: +or our calculat%on !ur!ose# $e ha,e ta)en
data 'ro 4554 t%ll 4556. In order to anal"/e a co!an"7s '%nanc%al !er'orance# atleast
89"ear trend has to be ta)en care# bes%de that 'or calculat%n& cash 'lo$ and soe o' the
rat%os# $e had to ta)e data a "ear be'ore# %.e. 4554.
e) "ature o# analysis: -ur anal"s%s# es!ec%all" $%th the rat%o !art cons%dered both t%e
ser%es and cross sect%on. In add%t%on# benchar) $as o' cons%derat%on 'or the current#
(u%c) and debt rat%o anal"s%s.
') Standard o# co$parison: 3e ha,e chosen La'ar&e Sura Ceent Ltd as our standard o'
co!ar%son# another !ro%s%n& co!an" %n the ceent %ndustr" o' Ban&ladesh. Because#
%t also has alost s%%lar &ood$%ll# state9o'9art !roduct%on and ar)et%n& !lants# un%(ue
!er'orance and h%&h &ro$th '%r# $h%ch %s ,er" close o!!onent o' He%delber&.
%. &i$itation:
:n!ubl%shed annual re!ort o' 455; (latest data) o' He%delber&
D%''%cult" %n re,eal%n& HCBL and La'ar&e annual re!orts
Lac) o' T%e
Lac) o' techn%cal )no$9ho$ %n h%&her9le,el stat%st%cal techn%(ues# %.e.# re&ress%on
Chapter 2: 'nalysis & Interpretation
1. 'nalysis o# (alance Sheet:
)econstruction o# (alance Sheet (ased on (oo* +alue & Mar*et +alue o# Share
,ear on -ocus: 2../ & 2..0
In 2../1 Mar)et <r%ce o' He%delber& $as BDT =458 $hereas the boo) ,alue o' the co!an" $as
BDT 85>. In 455># Mar)et <r%ce o' He%delber& $as BDT >?6 $hereas the boo) ,alue o' the
co!an" $as BDT ?@=.Hence# the balance sheet o' He%delber& %n 4556 * 455> %s reconstructed
belo$ to .ust%'" the ar)et !r%ce.
Original & )econstructed (alance Sheet: 2../
Calculations: 2../
Original & )econstructed (alance Sheet: 2..0
Calculations: 2..0
The chan&es ade %n the reconstruct%on are# a reduct%on o' debt 'ro re!orted '%&ure# %ncrease %n
tan&%ble asset as $ell as %ntroduct%on o' Good$%ll as an %ntan&%ble asset.
)eduction o# 2ebt in )econstructed (alance Sheet:
The debt o' reconstructed balance sheet %s reduced b" BDT=@6# A55 thousand %n both 455> *
4556. Th%s %s the aount due to BCIC b" the co!an" %n the 'or o' su!!l%er7s cred%t# Buas%
E(u%t" loan * AD< %nterest e2cess !ro,%s%on. At the t%e o' trans'er o' 8=C shares held b" BCIC
to TD -%l Re'%ner" Ltd dur%n& Eune# =AA@# the co!an" %ssued =@.8C debenture to !a" th%s
aount. The %nor%t" shareholders (?AC) '%led a case $%th sub .ud&e court# a&a%nst %ssue o'
debentures. The .ud&ent $as %n 'a,or o' the %nor%t" shareholders $h%ch eans the ent%re
l%ab%l%t" $%ll not e !a"able to BCIC. The &o,ernent a!!ealed to h%&h court and the .ud&ent
$as a&a%n %n 'a,or o' the %nor%t" shareholders. The &o,ernent a&a%n '%led an a!!eal %n the
A!!ellate D%,%s%on o' Su!ree Court and the case has alread" been heard * a$a%t%n& .ud&ent.
The assu!t%on to reduce debt b" th%s aount %s the A!!ellate d%,%s%on o' Su!ree Court $%ll
also be %n 'a,or o' the %nor%t" share holders * th%s aount $%ll not be !a"able to BCIC b" the
co!an".
Increase o# angible 'ssets in )econstructed (alance Sheet:
The tan&%ble asset o' the reconstructed balance sheet %s %ncreased b" BDT ;6A#@@8 thousand %n
4556 * %ncreased b" BDT ;86#;;; %n 455>. The tan&%ble '%2ed assets are re!orted %n the or%&%nal
balance sheet at h%stor%cal cost or re,aluat%on (ade %n =A;;). Loo)%n& bac) 'ro 455>94556
there %s no doubt that these tan&%ble assets es!ec%all" the Land !ort%on has a!!rec%ated. Land *
Bu%ld%n& cons%sts o' @8C o' '%2ed asset %n 4556. Land %n'orat%on %s not &%,en se!aratel" %n
Balance Sheet. Hence# the a!!rec%at%on aount %s calculated assu%n& ?5C o' Land * Bu%ld%n&
cost %s 'or Land * land a!!rec%ates at 4.8C rate !er "ear.
Introduction o# 3ood4ill in )econstructed (alance Sheet:
The %ntan&%ble asset o' the reconstructed balance sheet %s %ncreased b" BDT 4#A@?#>?= thousand
%n 4556 * BDT =>?#8?5 as %ntroduct%on o' &ood$%ll. Th%s %s the a%n reason $h" boo) ,alue o'
He%delber& share d%''ers 'ro Mar)et 0alue. It sees the shareholders are ha!!" $%th the
co!an"7s !er'orance $h%ch %ncreased &ood$%ll * ar)et !r%ce.
Reasons 'or the %ncreased &ood$%ll can be 'ound %n the co!an"7s Brand Ia&e# <roduct# R*D
and Good !er'orance %n rat%o anal"s%s.
(rand I$age: He%delber& Ceent stands 'or (ual%t" %n construct%on %n ore than 85 countr%es %n
the $orld. It started %ts bus%ness %n =;6@ %n Geran" * bu%lt u! %ts re!utat%on %n (ual%t" *
co%tent o,er the "ears. It has a lon& * success'ul h%stor" %n ceent %ndustr" all o,er the
$orld. More than =55 "ears o' e2!er%ence * success %n the ceent %ndustr" creates a Brand
Ia&e 'or the co!an" that %s unr%,aled %n Ban&ladesh% ceent ar)et. Th%s as $ell as %ts
success %n th%s countr" creates &ood$%ll 'or the co!an" unr%,alled %n the ar)et. The brand
%a&e a)es shares o' He%delber& !erce%,ed as ore ,aluable b" the shareholders * the
co!an"7s &ood$%ll !erce!t%on %ncreases.
5roduct: He%delber& Ceent %s the ar)et leader %n Ban&ladesh. Not onl" that# the" are also the
!r%ce leaders b" !ro,%d%n& (ual%t" !roduct %n ce%l%n& !r%ce b" a%nta%n%n& un%nterru!ted su!!l".
The%r !roducts# Rub" Ceent * Scan Ceent are the ost !re'erred brand o' ceent %n
Ban&ladesh. He%delber&7s !os%t%on o' ar)et leader as $ell as cost leader a)es the &ood$%ll o'
the co!an" h%&her than %ts co!et%tors.
)&2: The Co!an" &ets bene'%ted b" R*D done b" the other brand. Hence# state9o'9the9art
technolo&" %s read%l" a,a%lable 'or the local co!an". He%delber& %s reall" ad,anced %n
%nno,at%on $h%ch $%ll !ro,%de %ts Ban&ladesh% counter!art concrete co!et%t%,e ed&e %n the
'uture. Soe o' the latest %nno,at%ons done b" He%delber& are9
3aste Heat <o$erF 3%th the a%d o' th%s technolo&"# $aste heat 9 be%n& &enerated dur%n& the
ceent !roduct%on !rocess 9 can be used 'or electr%c%t" &enerat%on. Th%s %!l%es not onl" cost
sa,%n&s but es!ec%all" bene'%ts the en,%ronent b" reduc%n& the use o' natural resources. Th%s
can be reall" bene'%cent %' %!leented %n Ban&ladesh. The '%rs %n our countr" 'aces d%sru!ted
!o$er su!!l". Th%s technolo&" can !ro,%de un%nterru!ted !o$er su!!l" 'or He%delber& %n
Ban&ladesh * create co!et%t%,e ed&e 'or %t.
T%o CeF The ne$ ceent ade b" He%delber&Ceent a)es an act%,e contr%but%on to
en,%ronental !rotect%on. T%oCe %s able to deco!ose !ollutants G %n a sa'e# rel%able and
substant%al $a". Ban&ladesh %s a countr" !la&ued b" !ollut%on. Hence th%s ceent can be
!o!ular%/ed here. :rban%/at%on $%ll be able to !os%t%,el" contr%bute to en,%ronent 'or a chan&e
a&a%nst %ts re!utat%on o' ne&at%,e e''ect on en,%ronent.
67pansion o# 5roduction Capacity: The Co!an" has ta)en u! to set u! another un%t that $%ll
ha,e a ca!ac%t" o' ?85#555 MT !er "ear. The contract o' the un%t $as started %n Mar756 * $as
due to end %n = "ear. Ho$e,er# the construct%on '%n%shed %n record t%e * the un%t $ent to
!roduct%on 'ro A!r75;. The %ncrease %n !roduct%on ca!ac%t" 'or 455; %nd%cates that the re,enue
$%ll &ro$ e,en 'urther as !roduct%on $%ll %ncrease. Ceent !r%ce does not sho$ a trend o'
co%n& do$n %n 455; as $ell. Th%s !ro%ses s%&n%'%cant %ncrease %n re,enue 'or 455;. Th%s
s!eculat%on also hel!s to %ncrease &ood$%ll o' the co!an" * %ts share !r%ce.
5er#or$ance )atios: The re'lect%on o' reasons 'or %ncreased &ood$%ll %s ,%s%ble %n the
co!an"7s rat%os. No$ let us see %' the rat%os o' the co!an" .ust%'" th%s sta&&er%n& &ood$%ll.
5ro#itability )atio: The !ro'%tab%l%t" Rat%os sho$ that <ro'%t Mar&%n# R-A# and R-E all are on
the %ncrease 'ro last "ear. Not onl" that# &ro$th o' <ro'%t ar&%n %s h%&hest co!ared to last ?
"ears.
The co!an"7s !ro'%tab%l%t" rat%os are ar)edl" better %n 455>956 co!ared to 455@94558. Th%s
%s also re'lected %n the !r%ce le,el o' the co!an"7s share.
Mar*et +alue )atio: Mar)et ,alue rat%os also are ,er" !ro%s%n& 'or the co!an". The earn%n&
!er share %s ==5 'or 4556 * A6 'or 455> $h%ch %s %ndeed %!ress%,e. E<S has not onl" %ncreased
'ro "ear to "ear# %t %s also the h%&hest %n the last 8 "ears %n 4556. The Boo)90alue !er share has
also %ncreased 'ro last "ear * %s h%&hest %n the last '%,e "ears.
About the E<S# %t %s the h%&hest %n the ceent %ndustr" o' Ban&ladesh %n 4556. There are ;
ceent co!an%es l%sted $%th Dha)a Stoc) e2chan&e. -ut o' the# onl" ? co!an%es
e2!er%enced !os%t%,e E<S %nclud%n& He%delber&. Cons%der%n& the E<S o' these co!an%es * <HE
Rat%o# the ar)et !r%ce o' He%delber& at BDT =458 sees .ust%'%ed. The table belo$ sho$s that
aon& these co!an%es althou&h He%delber&7s E<S %s h%&hest %ts <HE rat%o %s =5.A8 $here the
ar)et %s e2h%b%t%n& <HE rat%o o' as h%&h as =8.5>.
+urther %nd%cat%on 'or the reason o' shareholder7s sat%s'act%on can be seen %n d%,%dend !a"ent.
In 4556# the co!an" declared d%,%dend !er share o' BDT48 * %n 455> BDT 4=. Th%s %s h%&her
than last "ear as $ell as the h%&hest d%,%dend !er share declared b" He%delber& %n last 8 "ears.
D%,%dend !er share sho$s %ncreas%n& trend 'ro "ear to "ear. The co!an" has &one to
e2!ans%on %n 4556# has stron& cash base 'or the "ear as $ell as ana&ed to !a" h%&h d%,%dend !er
share. These had !os%t%,e e''ect on the shareholders !erce!t%on o' the co!an".
The u!$ard trend o' Mar)et to Boo) rat%o re,eal the 'act that# the %n,estors are $%ll%n& to !a"
ore 'or He%delber& than 'or the other ceent '%rsI hence He%delber& should sell !r%ces $ell %n
e2cess o' the%r boo) ,alues as %t earns h%&h rates o' return.
'sset Manage$ent )atio: The Co!an" %s sho$%n& &ood results %n these rat%os as $ell.
In,entor" turno,er has %ncreased co!ared to last "ear %nd%cat%n& &ood sales. DS- has decreased
co!ared to last "ear as $ell %nd%cat%n& better cred%t sales reco,er". These rat%os are better 'or
4556 co!ared to last "ear. Total asset turno,er rat%o has decreased 'ro last "ear but due to
h%&her current asset than be'ore. I' +%2ed Asset Turno,er %s scrut%n%/ed# then th%s has %ncreased
'ro last "ear as $ell as last 8 "ears. Hence# ut%l%/at%on o' '%2ed assets has becoe better %n
recent "ears. Th%s &%,es %n,estors con'%dence that the assets o' the '%r %s be%n& used !ro!erl".
2ebt Manage$ent )atio: These rat%os %nd%cate %' the co!an" can eet %ts debt obl%&at%on as
'a%lure to do so leads to Ban)ru!tc". T%es %nterest Earned * Cash Co,era&e rat%o both sho$s
better !er'orance %n 4556 * 455> than !re,%ous "ears. These rat%os are also best 'or 4556
co!ared to last 8 "ears.
Ho$e,er# debt rat%o sho$s that 'ro 455> on$ards# the debt C has decreased s%&n%'%cantl" * the
co!an" e2!er%enced %ncreased E<S. The ca!%tal structure $as chan&ed b" ta)%n& short ter
loans * not lon& ter loans. +urtherore# TIE * Cash co,era&e has %!ro,ed. Hence %n,estors
should be ha!!" $%th the s%tuat%on. The sudden decrease %n debt 'ro 455> on$ards can be
e2!la%ned b" %ncrease %n cash %n'lo$ %n the recent "ears. Th%s %ncreased the !a"%n& ca!ac%t" o' the
co!an". Thus the" !re'er short9ter loan to lon&9ter loans.

Short er$ Solvency )atio: The short ter sol,enc" rat%os o' He%delber& also sho$ &ood
!er'orance. Cons%der%n& the current rat%o# (u%c) rat%o * cash rat%o He%delber& %s ore than $ell
e(u%!!ed to eet %ts short ter obl%&at%ons. Thus the co!an" %s %n stron& !os%t%on * has no
chance o' %ed%ate Ban)ru!tc". Th%s also boosts %n,estors7 con'%dence * .ust%'%es the %ncrease
ar)et !r%ce o' He%delber&.
The co!an"7s !er'orances %n all rat%os sho$ s%&n%'%cant %!ro,eent 'ro 455> on$ards.
Th%s had a !os%t%,e %!act on %ts shareholders as a'ter 455> the ar)et !r%ce o' th%s share reall"
escalated a%nta%ned a stead" le,el t%ll no$. Th%s .ust%'%es the %nclus%on o' Good$%ll %n the
Reconstructed Balance Sheet.
2. 'nalysis o# Cash #lo4 State$ent:
,ear -ocus 2..382../
Operating 'ctivities:
Cash 'lo$ 'ro o!erat%n& act%,%t%es sho$s cash %n'lo$ %n the last ? "ears $%th s%&n%'%cant
%ncrease %n 455> * 4556.
The %ncrease %n cash %n'lo$ can be contr%buted to %ncrease %n Net Incoe o,er the "ears. The
co!an" e2!er%enced net loss %n "ear 455@ * 455?. +ro then on$ards# %ts Net Incoe
&raduall" %ncreased o,er the "ears. The real cash %n'lo$ o' the co!an" (Net Incoe !lus
De!rec%at%on) has %ncreased o,er the "ears. Althou&h the co!an" e2!er%enced loss %n 455@ *
455?# %ts net %ncoe be'ore de!rec%at%on $as !os%t%,e 'or the ent%oned "ears.
The %ncrease %n the o!erat%n& cash 'lo$ can be contr%buted to re,enue &enerated 'ro %ncreased
sales. Loo)%n& at the &ross !ro'%t 'or the last 8 "ears %nd%cates s%&n%'%cant %ncrease 'ro 455>
on$ards. The net sales %ncreased b" @6C %n 455> * =4C %n 4556. Th%s %s the result o' %ncreased
!roduct%on ca!ac%t" 'ro 455> on$ards. Also %ncrease %n !r%ce o' ceent %n the ar)et
contr%buted to the re,enue %ncrease.
The &ra!h abo,e sho$s that the co!an" reached a record !roduct%on le,el o' =#555#555 MT 'or
the '%rst t%e %n 455> * a%nta%ned %t %n 4556 as $ell.
The &ra!h abo,e sho$s %ncrease %n !r%ce le,el o' ceent o,er the "ears. Cons%der%n& the !r%ce
%ncrease# re,enue should ha,e been h%&her than $hat actual%/ed %n 4556. The reason can be
contr%buted to %ncrease %n the cost o' ra$ ater%als * %nternat%onal 're%&ht cost.
Cash %n'lo$Hout'lo$ o' %n,entor" $%ll &%,e us a better !%cture here. The out'lo$s 'or %n,entor"
sho$ decrease %n %n,entor" %n 455>.
Th%s can be e2!la%ned $%th the hel! o' ra$ ater%als consued# cost !er un%t o' ra$ ater%als
consued * %n,entor" turno,er rat%o.

:n%ts consued o' ra$ ater%als sho$ s%&n%'%cant %ncrease 'ro 455> on$ards. Th%s can be
e2!la%ned b" the 'act that !roduct%on e2ceeded =555#555 MT 'or the '%rst t%e %n 455> *
cont%nued %n 4556. 3%th &radual %ncrease %n :n%t cost# 'ro 455> on$ards the co!an" tr%ed *
succeeded %n %ncreas%n& %n,entor" turno,er rat%o 'ro ?.4 %n 4558 to >.@8 %n 455>n* >.8= %n
4556.E''%c%enc" %n %n,entor" ana&eent caused the clos%n& %n,entor" %n 455> to decrease 'ro
4558. Another reason 'or better %n,entor" rat%o can be the s!eculat%on o' the ana&eent that
ra$ ater%al costs $%ll reduce %n the 'uture.
Trade * other rece%,ables out'lo$ o' the co!an" sho$s &radual decrease o,er the "ears. Th%s
%nd%cates cred%t sale outstand%n& o' the co!an" %s decreas%n& o,er the "ears.
I' $e loo) at accounts rece%,ables as !ercenta&e o' total sales# then $e see that the !ercenta&e o'
sales outstand%n& %s &raduall" decreas%n&. DS- has also decreased 'or the co!an" 'ro 455>
on$ards to @6.4; %n 455> * @>.>@ %n 4556 'ro ?8.4A %n 455?. DS- $as as h%&h as 8?.56 %n
455@ e2!la%n%n& the hu&e out'lo$ assoc%ated $%th the "ear.
Invest$ent 'ctivities:
Cash 'lo$ 'ro %n,estent act%,%t%es sho$s the co!an" a)es re&ular %n,estents. The &ra!h
belo$ sho$s a s%&n%'%cant cash out'lo$ %n 4556. ;5C o' th%s out'lo$ %s contr%buted to e2!ans%on
!ro&ra ta)en u! to set u! another un%t that $%ll ha,e a "earl" ca!ac%t" o' ?85#555 MT ca!ac%t".
The contract o' the un%t $as started %n Mar756 * $as due to end %n = "ear. Ho$e,er# the
construct%on '%n%shed %n record t%e * the un%t $ent to !roduct%on 'ro A!r75;.

-inancing 'ctivities:
Cash 'lo$ 'ro '%nanc%n& act%,%t%es sho$ the co!an" has a hu&e %n'lo$ o' cash %n 455@. Th%s
$as used to !a" current l%ab%l%t%es# to !a" out d%,%dend o' BDT =4#665 thousand as $ell as to
%ncrease '%2ed asset throu&h %n,estent %n !ro!ert" !lant * ach%ner%es. The co!an" too) a
short ter loan o' BDT 6A5#555 thousand 'ro standard chartered ban). Bes%des th%s# the" also
rece%,ed BDT =?4#54? thousand 'ro N-RAD * BDT ?>8#=@? thousand 'ro Internat%onal
+%nance Cor!orat%on 'or establ%sh%n& a cl%n)er &r%nd%n& * !ac)a&%n& !lant %n Dha)a.
+ro the %n,estent act%,%t%es d%scussed earl%er an e2!ans%on !lan e2ecut%on $as %dent%'%ed %n
4556. Th%s $as '%nanced b" short ter loan o' BDT =;>#886 thousand# cash %n hand * net
$or)%n& ca!%tal $%thout resort%n& to ta)e loan 'ro Ban). The e,%dence can be seen %n %ncrease
%n '%2ed assets %n 455@. Th%s %nd%cates the hu&e loan $as ta)en to %n,est %n '%2ed asset. The
%n,estent %n 4556 %s sho$n as %ncrease %n ca!%tal $or) %n !ro&ress %n balance sheet.
The &ra!h abo,e sho$s# the co!an" ta)es re&ular short ter loan 'or '%nanc%n& e2ce!t %n 4558.
Ho$e,er# lon& ter loan $as ta)en on 455@ * a'ter that there $as no necess%t" 'or ta)%n& lon&
ter loans.
The lon& ter loan $as used to %ncrease !ro!ert" !lant * e(u%!ent that %s ,%s%ble %n the &ra!h
belo$ o' !ro!ert" !lant * e(u%!ent %n balance sheet 'ro 455494556.
The e2!ans%on %n%t%at%,e on 4556 that $as %dent%'%ed can be seen %n ca!%tal $or) %n !ro&ress as
re!orted %n balance sheet.
In suar"# cash 'lo$ anal"s%s sho$s h%&her cash %n'lo$ due to h%&her %ncoe due to %ncreased
!r%ce * !roduct%on. The co!an" had ta)en lon& ter debt %n 455@ * success'ull" !a%d the loan
%n the subse(uent "ears. <resent need 'or l%(u%d%t" %s be%n& ana&ed b" short ter loan des!%te
e2!ans%on !lan * !a"ent o' d%,%dend due to &ood l%(u%d%t" cond%t%on result%n& 'ro h%&h
%ncoe.
3. )atio 'nalysis
1. Short8er$ Solvency:
The anal"s%s coences $%th d%scuss%on o' He%delber&7s Jl%(u%d !os%t%on7 $%th res!ect to %ts
trends and %ts co!et%tor La'ar&e Sura Ceent Ltd.
Current )atio:
Bench ar) anal"s%sF
+ro 455@94556# He%delber& has been ha,%n& a current rat%o less than the Bench ar) 4.5. A
!ort%on o' current asset (cash) has been reduced %n the e2!ans%on !lann%n& o' the co!an".
T%e ser%es anal"s%sF
He%delber&7s current rat%o e2h%b%ts a &ro$%n& trendI there'ore# %t %s h%&hl" !robable that current
asset $ould be l%(u%dated %n near 'uture at close to the%r stated ,alue. E,en %n 4556# He%delber&
$%th current rat%o o' =.5@# could l%(u%date %t current asset at (=H=.5@) A6.5AC o' %ts boo) ,alue
and !a" o'' %ts current debtors %n 'ull.
Cross sect%on anal"s%sF
La'ar&e Sura had h%&her current rat%o than He%delber& dur%n& 45549455?# as ean%n& La'ar&e7s
h%&her current asset be'ore %n,est%n& %t %n lon&9ter !ro.ects or e2!ans%on !lann%n&. Ho$e,er# %t
'ell 'ro that o' He%delber&7s 'ro 4558# %nd%cat%n& He%delber&7s stron&er l%(u%d%t" !os%t%on.
9uic* :acid8test; )atio:
Bench ar) anal"s%sF
E2ce!t 4554# the trend 'or (u%c) rat%o de!%cts lo$er !%cture than bench ar) rat%o =.5.
T%e ser%es anal"s%sF
He%delber&7s (u%c) rat%o sho$s an %ncreas%n& trend 'ro 455? t%ll 4556# ean%n& He%delber& %s
%n !os%t%on to !a" o'' %ts current l%ab%l%t%es $%thout ha,%n& to l%(u%date %ts %n,entor%es.
Cross sect%on anal"s%sF
La'ar&e Sura d%d not sell %ts !roducts t%ll 4558# so %t used to !%le u! %n,entor%es 'or ra$
ater%als onl". The %n,entor" had %ncreased on 455> as unsold !roducts ha,e been added# and
resulted a !oorer (u%c) rat%o than He%delber&. There'ore# He%delber&7s current asset has been
ore l%(u%d %n ters o' ac%d9test too.
Cash )atio:

T%e
ser%es anal"s%sF
S%nce 4558# He%delber&7s cash rat%o had an u!$ard trend# $h%ch denotes He%delber& has been
ut%l%/ed e''ect%,el" %ts cash %n'lo$ echan%s !robabl" $%th cash sales 'ro %ts debtors.
There'ore# He%delber& %s %n a &ood !os%t%on to eet %ts current l%ab%l%t%es# and ade(uatel" l%(u%d.

Cross sect%on anal"s%sF
La'ar&e Sura7s cash rat%o lean%n& dur%n& 455>94556 has been threaten%n&. Thou&h not the core
eleent to a)e '%nanc%all" sol,ent# st%ll a co!an" ust ha,e su''%c%ent cash or cash
e(u%,alents at all t%es. In add%t%on# the '%&ure dur%n& 455494558 re,ealed La'ar&e7s unused
cash# $h%ch $as not &ood e%ther. Co!ar%n& th%s $%th He%delber&# the later %s %n a better !os%t%on
%n ters o' o,erall l%(u%d%t" ana&eent.
-,erall coents on L%(u%d%t" <os%t%onF
Heidelberg has been investing in long term projects, paying off its debts and still have been
sufficiently liquid in terms of its short-term asset and working capital management and is in a
mush better position than its industry-opponent Lafarge.
2. 2ebt Manage$ent:
Th%s un%t %n,ol,es the del%berat%on on the e2tend to $h%ch He%delber& and La'ar&e used debt# and
%' the" are bene'%tted 'ro the le,era&eF
otal 2ebt:

Bench
ar)
anal"s%sF
The Bench ar) debt rat%o %s 85C and He%delber& had a h%&her rat%o 'ro 455?94556# $h%ch
%&ht be alar%n& %' not ana&ed !ro!erl".
T%e ser%es anal"s%sF
Thou&h the debt '%&ures are $orsen%n& each "ear# %t %&ht a)e He%delber& Jle,era&ed7# as %ts
%nterests on the debts en.o" ta2 ad,anta&es and an %ncreased trend o' E<S a" rat%onal%/e the
'act. Ho$e,er# $%th an %!ress%,e l%(u%d%t" !os%t%on# He%delber& %s ha,%n& &reater cush%on
a&a%nst cred%tors7 losses %n the e,ent o' l%(u%dat%on.
Cross sect%on anal"s%sF
<r%or 455># La'ar&e7s no lon& ter loan &a,e ne&at%,e debt rat%o '%&ures. Ho$e,er# the rat%o has
been (u%te h%&h and &ro$%n& 'urther# !ro,%ded b" t%&ht l%(u%d%t"# %t %&ht !ose a !roble 'or
La'ar&e. -n the contrar"# thou&h He%delber& %s ha,%n& a sl%&ht h%&her rat%o than La'ar&e dur%n&
455>956# La'ar&e %s an"ho$ $orse o'' $%th ne&at%,e E<S.
I6:
T%e ser%es anal"s%sF
Thou&h dur%n& 455@94558# He%delber& had ne&at%,e TIE (due to lo$er EBIT than %nterest
char&es)# 'ro 455># the '%&ures denote He%delber& has been !a"%n& o'' %ts co!ulsor"
obl%&at%on !ro!erl".
Cross sect%on anal"s%sF
As co!ared to La'ar&e7s ne&at%,e TIE rat%os# He%delber& has undoubtedl" a!!eared $%th a
h%&her ar&%n o' sa'el" and !la"ed sa'e b" a)%n& t%el" %nterest !a"ents and boost%n&
cred%tors7 con'%dence.
Cash Coverage:
T%e ser%es anal"s%sF
Add%n& u! the non9cash %te Jde!rec%at%on7 $%th the EBIT also re,ealed the 'act o' He%delber&7s
ha,%n& !ro%nent cash co,era&e rat%o dur%n& 455>956. A&a%n then# th%s %!l%es He%delber& has
been a t%el" !a"er o' %ts debt obl%&at%ons.
Cross sect%on anal"s%sF
E,en add%n& u! de!rec%at%on $%th EBIT# La'ar&e7s cash rat%os don7t !ro,%de uch %!ro,eent
%n %t# $h%ch !ose the threat o' ban)ru!tc" to soe e2tent. Ho$e,er# He%delber&7s h%&her ar&%n
o' sa'el" has re'lected as co!ared to La'ar&e.
-,erall coents on Debt <os%t%onF
With an impressive liquidity position, Heidelberg is having greater cushion compared to
Lafarge against creditors losses in the event of liquidation and higher margin of safety from its
rival firm Lafarge.
3. 'sset Manage$ent:
+ollo$%n& sect%on anal"/es the e''ect%,eness o' the ana&%n& assets b" He%delber& and La'ar&e.
Inventory urnover:
T%e ser%es anal"s%sF
+ro 455894556# the %n,entor" turno,er rat%os d%,ul&e that He%delber&7s ra$ ater%als and
ceent has been sold out and restoc)ed $%th a decent &ro$th. Des!%te the 'act that# He%delber&7s
%n,entor" %n 455> has been co!arat%,el" lo$er than 4558I but a h%&her turno,er re,eals that
the" are e''%c%entl" sell%n& and restoc)%n& the%r !roducts.
Cross sect%on anal"s%sF
La'ar&e had started sell%n& ceent onl" s%nce 455>94556I there'ore# the %n,entor" %s 'resh and
not '%lled $%th u! $%th old .un) o' !roducts and ra$ ater%als. Hence# the %n,entor" turno,er
rat%o %s lo$er than that o' He%delber& des!%te a &ro$%n& trend. Ne,ertheless# He%delber& %s
a)%n& %n,estent $%th h%&her rate o' returns co!ared to La'ar&e throu&hout th%s !er%od.

2SO:
T%e ser%es anal"s%sF
S%nce 4558 on$ards# He%delber&7s DS- has been %!os%n& a decreased trend %nd%cat%n& better
cred%t sales reco,er" as $ell as !ra%se9$orth" collect%on !er'orance. The co!an" thou&h
collects sales but %t needs to do %t %n $%th%n the onth# %.e.# @5 $or)%n& da"s 'or an %!ress%,e
clos%n& o' accounts 'or each onth.
Cross sect%on anal"s%sF
La'ar&e has substant%all" reduced %ts collect%on t%e 'ro 455> to 4556I those are also re'lected
%n the%r res!ect%,e DS-s. Ho$e,er# He%delber&7s DS- has been o,ers%/ed co!ared to La'ar&e
because o' %ts hu&e ,olue o' sales as co!ared to La'ar&e %n 4556.
otal 'sset urnover:

T%e ser%es anal"s%sF

Total asset turno,er rat%o has decreased %n 4556 than 455> due to h%&her current asset. Ho$e,er#
s%nce 455@# TAT ahs been en.o"%n& a !rol%'%c &ro$th %ncl%nat%on unt%l 455># ean%n& the
co!an" has been &enerat%n& su''%c%ent ,olue o' bus%ness &%,en %ts %n,estent %n total assets.
Cross sect%on anal"s%sF
The TAT has been obser,ed to ha,e a &%&ant%c &ro$th (=?8>C) 'or La'ar&e %n 4556 s%nce %t7s
coence o' sales# %.e.# 455>. E,en so# %t $%ll not hurt He%delber& $h%ch %s alread" stand%n&
$%th a TAT o' =.5A as co!ared to 5.=? o' La'ar&e.
-i7ed 'sset urnover:
T%e ser%es anal"s%sF
The +%2ed asset turno,er rat%o has an %ncreas%n& trend dur%n& 455@94556# as a'ter 455@ the '%2ed
asset started be%n& ut%l%/ed !ro!erl". +urtherore# the ut%l%/at%on has been e,en enhanced %n t%e#
$h%ch denotes about the co!an"7s !ro&ress on ut%l%/%n& %ts !lant and e(u%!ents to su!!ort
&enerat%n& hu&e sales
Cross sect%on anal"s%sF
La'ar&e7s +AT has also been obser,ed to ha,e a ass%,e &ro$th (=?55C) 'ro 455> to 4556.
Ne,ertheless# the rat%o %s st%ll lo$er 'or He%delber& $%th h%&h ,olue o' '%2ed assets 'or the
!er%od o' 455> to 4556.
-,erall coents on the asset ana&eentF
With a right amount of stocks in inventory and ideal utili!ation of total asset "especially fi#ed
asset$, Heidelberg has been managing its asset properly. However, %&' can be improved
further by adopting aggressive market campaign and learn Lafarges (market intelligence
strategy for lowering %&' to the utmost e#tent.
%. 5ro#itability 5er#or$ance:
5ro#it Margin:
T%e ser%es anal"s%sF
He%delber&7s &ro$%n& tendenc" o,er the "ears 455494556 denotes %ts h%&h sales and lo$ costs.
+urtherore# as the TIE rat%o su&&ests# the %nterest !a"ents on debt are co,ered e''ect%,el"#
$h%ch a)es the !ro'%t ar&%n h%&h. The a!!arent bene'%t o' le,era&e %n ters o' ta2 e2e!t%on
%s also e,%dent%al %n !ro'%t !root%on.
Cross sect%on anal"s%sF
He%delber&7s -!erat%n& <ro'%t Mar&%n (EBITHSales) 'or the "ear 4556 %s =@C# $h%ch %s
s%&n%'%cantl" h%&her than La'ar&e Sura7s -<M 9A8C (due to h%&her cost %ncurred %n 455>96).
Rat%onall" stat%n&# the belo$9a,era&e debt led He%delber& en.o"%n& the h%&her <ro'%t ar&%n.
)O':
T%e ser%es anal"s%sF
The e2cellent l%(u%d%t" !os%t%on# su!er%or asset ana&eent# and belo$ a,era&e debt led o,erall
R-A o' He%delber& &ro$ 'ro 455@9455>. In 4556# the R-A 'ell a l%ttle due to Total asset
reduct%on ('or co!an" $or)9%n9!ro&ress). Rat%onal beh%nd th%s $ould be He%delber& re(u%re to
ha,e h%&her !r%,%le&e %n near 'uture.
Cross sect%on anal"s%sF
La'ar&e Sura7s 'luctuat%n& trend o' R-A %s not &ood ne$s 'or the# $h%ch a" %nd%cate the%r
!oor asset ana&eent and h%&h debt. Ho$e,er# He%delber& %s better o'' %n th%s re&ard.
)O6:
T%e ser%es anal"s%sF
Dur%n& 455@95># the R-E !os%t%on o' He%delber& sho$ed a sooth u!$ard trend# $h%ch %s due
to the e''%c%ent le,era&%n& 'ro debt. The belo$ a,era&e debt led o,erall R-E to ha,e th%s trend.
Thou&h# R-E 'ell a l%ttle %n 4556 ('ro 44C to 4=.;C o' 455>)# ha,%n& the rat%onal o'
substant%all" hu&e reta%ned earn%n&s %n 4556 co!ared to 455> !robabl" 'or soe 'uture !lan.
Cross sect%on anal"s%sF
Dur%n& 455? to 4556# La'ar&e Sura7s do$n$ard trend o' R-E %s alar%n& 'or the co!an"#
$h%ch %s due to ,er" h%&h use o' debt. He%delber& %s certa%nl" better o'' %n th%s re&ard.
-,erall coents on !ro'%tab%l%t" !er'oranceF
)long with a prominent benefit out of the *gearing+, the superior liquidity position, e#cellent
asset management and below-average debt had played key roles in ranking outstanding
profitability performance of Heidelberg.
<. Mar*et +alue Measures:
65S:
T%e ser%es anal"s%sF
The earn%n& !er share# %.e.# NI 'or each share outstand%n& o' He%delber& has been T). ==5 %n 4556
'ro T). A6 %n !re,%ous "ear# $h%ch %s (u%te lucrat%,e 'or the !resent and !otent%al shareholders.
Des!%te ha,%n& ne&at%,e E<S %n 455@95?# He%delber&7s E<S has not onl" %ncreased 'ro "ear to
"ear# %t %s also the h%&hest %n the last 8 "ears %n 4556.
Cross sect%on anal"s%sF
As the E<S o' La'ar&e %s ne&at%,e# co!ar%n& $%th all e%&ht !la"ers %n the ceent %ndustr" (DSE9
l%sted) He%delber&7s E<S has been the a2%u %n 4556. Moreo,er# out o' the e%&ht co!an%es#
onl" 'our ha,e e2!er%enced !os%t%,e E<S so 'ar# He%delber& has been one o' those.
586 )atio:
T%e ser%es anal"s%sF
3%th the h%&hest E<S %n the %ndustr"# He%delber& <9E rat%o %s =5.A8 %n 4556# $h%ch has been
%!ro,ed 'ro that o' !re,%ous "ear o' >.>6# but 455> <9E has deter%orated than the "ear be'ore
o' =>.@4. Be'ore 4558# the net loss led the <HE to be ne&at%,e as $ell. Th%s a" re,eal a 'act that#
e%ther He%delber& %s r%s)%er or ha,e lo$ &ro$th !ros!ects. S%nce# the debt '%&ures rule out the
!oss%b%l%t" o' %ts be%n& ban)ru!t# the '%r a" be a!!roach%n& the KCash Co$L SB: sta&e# $h%ch
$%ll be en.o"%n& %ts out&ro$th %n near 'uture.

Cross sect%on anal"s%sF
As !er 4556 data# La'ar&e had a <9E o' 946.;@# e,en the ar)et e2h%b%ts <9E rat%o o' as h%&h as
=8.5>. He%delber&7s h%&h E<S led the <9E to be lo$er than ar)et# ho$e,er h%&her than La'ar&e.
(+=share:
T%e ser%es anal"s%sF
The Boo) 0alue !er share o' He%delber& has also %ncreased %n 4556 (t). 858.>@) 'ro !re,%ous
"ears# bes%des that# %t has been the h%&hest %n the last '%,e "ears.
Cross sect%on anal"s%sF
La'ar&e7s B90Hshare dro!!ed to 65.4> %n 4556 'ro ;5.>; %n 455>. Ho$e,er# the rat%o %s uch
lo$er than that o' He%delber&.
M8( )atio:
T%e ser%es anal"s%sF
The Mar)et to Boo) rat%o o' He%delber& had an u!$ard trend throu&h out the !er%od o' 455@ to
4556# e2ce!t a decl%ne %n 4558. The M9B %s h%&hest %n 4556 (4.@;) aon& last '%,e "ears.
Cross sect%on anal"s%sF
3%th an M9B o' 5.?5 %n 4556# La'ar&e7s M9B rat%o has been substant%all" lo$er than that o'
He%delber& o' the sae "ear. Th%s lead to the 'act that# !resent and !otent%al %n,estors are $%ll%n&
to !a" ore 'or He%delber& than 'or the other ceent '%rsI hence %t should sell !r%ces $ell %n
e2cess o' the%r boo) ,alues as %t earns h%&h rates o' return.
2ividend 5ayout )atio:
T%e ser%es anal"s%sF
In 4556# He%delber& had declared d%,%dend !er share o' BDT48 * %n 455> BDT 4=. Th%s %s
h%&her than last "ear as $ell as the h%&hest d%,%dend !er share declared b" He%delber& %n last 8
"ears. D%,%dend !er share sho$s %ncreas%n& trend 'ro 455> to 4556 &ro$%n& 'ro 44C to 4@C.
Cross sect%on anal"s%sF
Throu&h out the !er%od# La'ar&e couldn7t declare an" d%,%dend to %ts shareholders# because %t had
to %ncur a net loss $%th hu&e ,ar%able cost o' !roduct%on b" %!ort%n& costl" cl%n)er 'ro
abroad. There'ore# no d%,%dend !a"out rat%o $ould ha,e been calculated 'or La'ar&e and thus no
co!ar%son $as !oss%ble $%th He%delber&.
-,erall coents on the ar)et ,alue easuresF
%espite lower ,--, with highest and most impressive -,&, .-/ and 0-/ among rivals, yield the
fact that Heidelberg has gained investors trust. 1t has good news that is reflected in almost all
ratios of liquidity, debt, asset, profitability and investors know that too.

Chapter 3: -inding & Conclusion