Financial Activities of Bhai Bhai Spinning mills Limited

Financial Highlights of Bhai Bhai Spinning mills Limited

Financial Highlights Tk.
In Million
Particulars 2014 2013 2012 2011 2010
Interest income 22,822 16,709 12,147 10,856 9,096
Interest expenses 17,410 12,648 7,824 8,426 7,126
Net interest expenses 5,411 4,061 4,323 2,430 1,970
Investment Income 4,633 4,157 2,632 3,372 1,744
Commission,exchange and brokerage 2,429 2,689 2,262 1,749 1,437
Other operating income 1,018 652 579 644 628
Operating income 13,492 11,559 9,795 8,196 5,778
Operating expenses 4,941 4,132 3,618 2,907 1,931
Profit before provision and tax 8,551 7,427 6,176 5,289 3,847
Provision for loans and tax 3,216 661 540 700 1,384
Profit after provision before tax 5,335 6,766 5,636 4,589 2,463
Tax including defferred tax 2,636 3,132 2,535 1,805 1,232
Profit after tax 2,699 3,634 3,101 2,784 1,232

Balance Sheet
Authorized capital 25,000 10,000 10,000 10,000 10,000
Paid up capital 9,358 7,798 5,776 3,555 2,844
Total Shareholders’ equity 20,787 19,095 16,908 11,745 6,697
Deposits 182,053 159,816 124,574 106,956 88,021
Long term liabilities 84,827 63,379 47,918 38,209 31,044
Loans and advances 160,890 138,848 116,057 89,252 75,156
Investments 49,670 39,172 20,484 19,934 23,103
Property,Plant and Equipment 4,363 3,975 1,695 1,573 1,375
Earning assets 212,204 179,537 137,577 109,905 100,261
Net current assets 2,735 2,262 7,349 3,435 9,962
Total assets 236,833 199,950 154,342 124,806 110,437
Total liabilities 216,046 180,856 137,434 113,061 103,740
Current ratio 1.02 1.02 1.09 1.05 1.14
Gearing ratio(%) 80.97 77.88 76.98 80.56 83.84
Quick ratio 0.77 0.78 0.84 0.8 0.93
Statutory liquidity ratio(%) 35.54 32.96 30.6 28.5 19.86
Equity debt ratio(%) 9.62 10.56 12.3 10.39 6.45
Other Business
Import 168,532 174,384 147,704 96,452 91,424
Export 143,612 133,396 106,943 76,097 68,550
Remittance 42,443 36,890 28,433 26,447 22,669
Guarantee Business 29,391 27,844 29,000 13,673 10,010

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Share Information
Market price per share(Tk) 37 44.5 94.45 65.3 53.98
No. of shares outstanding(Million) 935.77 799.81 577.64 355.47 284.38
No. of shareholders outstanding(actual) 23964 26030 19748 10339 9180
Earnings per share(Taka) 2.88 4.7 5.69 7.83 4.33
Dividend: 20% 30% 40% 40% 25%
Cash 10% 10% 5% 10% 0%
Bonus 10% 20% 35% 30% 25%
Effective dividend ratio(%) 21.82 40.21 49.52 44.44 27.78
Dividend cover ratio(times) 1.44 1.57 1.42 1.96 1.73
Dividend yield(%) 5.41 6.74 4.23 6.13 4.63
Market capitalization 34,624 34,702 54,572 23,212 15,349
Net asset value per share(Tk) 22.21 24.49 29.27 33.04 23.55
Price Earning Ratio(times) 12.85 9.47 16.6 8.34 12.46
Operating performance ratio(%)
Net interest margin on average earning assets 2.76 2.56 3.49 2.31 2.28
Net non-interest margin on average earning 1.6 2.1 1.5 2.72 2.17
assets
Earning base in assets(average) 89.69 89.51 88.66 89.34 91.07
Gross profit ratio 43.66 47.75 55.59 49.31 44.77
Net interest income as a percentage of working 2.48 2.29 3.1 2.07 2.07
funds
Profit per employee 3.36 3.24 2.89 2.87 2.48
Operating profit as a percentage of working 3.92 4.19 4.43 4.5 4.05
funds
Cost-income ratio 36.62 35.75 36.94 35.47 33.42
Credit-deposit ratio 88.38 86.88 93.16 83.45 85.38
Cost of funds on average deposits 8.75 8.15 6.39 8.41 8.55
Yield on average advance 15.17 13.09 11.76 13.16 13.52
Return on average assets 1.24 2.05 2.22 2.37 1.3
Return on average equity 13.53 20.19 21.65 30.19 20.58

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Balance Sheet
As at 31 December 2014
Particulars 2014 2013(Restated
)
Property and Assets
Cash:
In hand(including foreign currencies) 2,059,503,576 1,464,103,675
Balance with Bangladesh Bhai Bhai Spinning mills Limited and its agent Bhai Bhai 14,117,939,937 12,032,573,269
Spinning mills Limited (s)(including foreign currencies)
16,177,443,513 13,496,676,944
Balance with other Bhai Bhai Spinning mills Limited s and financial institutions:
in Bangladesh 251,389,642 377,477,308
Outside Bangladesh 1,392,741,405 1,138,637,962
1,644,131,047 1,516,115,270
Money at call and short notice
Investments:
Government 44,936,697,967 34,395,651,805
Others 4,733,737,225 4,776,646,818
49,670,435,192 39,172,298,623
Loans,advances and lease/investments:
Loans,cash credits,overdrafts etc/investments 153,440,706,958 132,028,898,117
Bills purchased and discounted 7,449,141,605 6,819,531,891
160,889,848,563 138,848,430,008
Fixed assets including premises furniture and fixtures 4,363,349,270 3,975,458,490
Other assets 4,087,797,994 2,941,514,147
Non Bhai Bhai Spinning mills Limited ing assets - -
236,833,005,579 199,950,493,482
Liabilities and capital
Liabilities:
Borrowing from other Bhai Bhai Spinning mills Limited s and financial institutions and 20,681,977,457 10969847805
agents
Deposits and other accounts:
Current/Al-wadeeah current deposits 27,373,823,258 23628852206
Bills payable 3,421,438,111 2992596076
Current/Mudaraba savings deposits 19,188,831,632 17943888911
Term deposits/Mudaraba term deposits 132,088,779,059 115,250,383,776
Bearer certificate of deposit - -
other deposits - -
182,052,872,060 159,815,720,972
Other liabilities 1,331,117,157 10069949491
Total liabilities 216,045,966,674 180,855,518,268
Capital/Shareholders equity
Paid up capital 9,357,714,690 7798095580
Share premium 2,241,230,396 2241230396
Statutory reserve 6,839,527,566 5772590105
Revaluation gain/(loss) on investment 19,719,692 243159736
Revaluation reserve 251,603,567 251603567
Foreign currency transaction gain 5,015,711 8,694,724
Other reserve - -
Surplus in profit and loss account/retained earnings 2,072,227,283 2,779,682,107
Total shareholders’ equity 20,787,038,905 19,094,975,214
Total liabilities and shareholders’ equity 236,833,055,579 199,950,493,482

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Balance Sheet
As at 31 December 2014
Particulars 2014 2013(Restated
)
OFF-BALANCE SHEET EXPOSURES
Contingent liabilities
Acceptances and endorsements 26,979,335,910 28,963,416,330
Letters of guarantee 42,846,572,774 34,955,284,339
Irrecoverable letters of credit 28,353,752,325 29,706,663,305
Bills for collection 10,007,661,530 7,429,741,406
Others contingent liabilities - -
108,187,322,539 101,055,105,380
Other commitments
Documentary credits and short term trade-related transactions - -
Forward assets purchased and forward deposits placed - -
Undrawn note issuance and revolving underwriting facilities - -
Undrawn formal standby facilities,credit lines and other commitments - -
Liabilities against forward purchase and sale - -

Total off-Balance Sheet exposures including contingent liabilities 108,187,322,539 101,055,105,380

4
Income Statement
For the year ended 31 December 2014
Particulars 2014 2013(Restated
)
Interest income/Profit on investment 22,821,500,674 16,708,767,903
Interest/net profit paid on deposits,borrowings,etc (174,102,661,240) (12,647,982,518)
Net interest/net profit on investments 5,411,214,550 4,060,785,385
Investment income 4,633,326,302 4,157,293,110
Commission,exchange and brokarage 2,429,444,757 2,688,928,970
Other Operating income 1,017,962,459 652,092,975
Total operating income(A) 13,491,948,068 11,559,100,440
Salaries and allowances 2,673,292,974 2,057,720,184
Rent,taxes,insurance,electricity,etc 430,873,148 367,568,017
Legal expenses 28,570,418 16,312,942
Postage,stamp,telecommunication,etc 127,601,535 132,056,013
Stationary,printing,advertisement,etc 304,366,321 298,731,953
Managing director's salary and fees 11,448,000 9,192,067
Directors fees 5,152,571 3,569,924
Auditors fees 575,000 522,500
Charges and on loan losses - -
Depriciation and labour expenses 331,708,120 271,478,216
Other expenses 1,027,527,828 974,998,715
Total operating expenses(B) 4,941,115,915 4,132,150,531
Profit/(loss)before provision(C=A-B) 8,550,832,153 7,426,949,909
Provision for loans/investments
Specific provision 1,490,000,000 226,000,000
General provision 240,000,000 305,000,000
Provision for off-Shore Bhai Bhai Spinning mills Limited ing Units - -
Provision for off-balance sheet exposures 140,000,000 130,000,000
1,870,000,000 661,000,000
Provision for diminution in value of investments 43,797,548 -
Other provision 1,301,942,300 -
Total provision(D) 3,215,739,848 661,000,000
Total profit/(loss)before taxes(C-D) 5,335,092,305 6,765,949,909
Provision for taxation
Current tax 2,449,800,000 2,907,320,000
Deferred tax 186,300,000 224,500,000
2,636,100,000 3,131,820,000
Net profit after taxation 2,698,992,305 3,634,129,909
Retained earnings brought forward from previous years 440,253,439 498,742,179
3,139,245,744 413,872,089
Appropriations
Statutory reserve 1,067,018,461 1,353,189,982
General reserve - -
1,067,018,461 1,353,189,982
Retained surplus 2,072,227,283 2,779,682,107
Earnings per share(EPS) 2.88 3.88

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Financial Activities of Bhai Bhai Spinning mills Limited:
Operating Profit:

2014 2013
2012
2011 2010

Figure 1:Operating Profit

The above graphical presentation on operating profit of Bhai Bhai Spinning Mills Limited
from year 2011 to 2014 show that Bhai Bhai Spinning Mills Limited operating profit is much
higher in recent years in comparison with the situation of last five years. In the year 2013 the
operating profit was 11559 Million Taka where it became 13492 Million Taka at the end of
December 2014.The current study shows that 2014 will also be a good year for Bhai Bhai
Spinning Mills Limited in terms of operating profit.

Return on Equity:

2014 2013 2012 2011 2010

Figure 2:Return on Equity

Return on Equity has reduced to 13.53% in 2014 against 20.19% in 2011.Due to the
decrease in net income,return on equity has decreased in 2014 as compared to 2011.In
another way,we can say that the Bhai Bhai Spinning mills Limited was unable to generate

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more return from its equity capital which caused the return on equity to decline in 2014 as
compared to previous year.

Return on Asset:

2014 2013 2012

2011 2010

Figure 3:Return on Asset

Return on asset has reduced to 1.3% in 2014 against 2.05% in 2013.Although there was a
11.16% increase in total asset in 2014 as compared to 2013,but in 2014 the Bhai Bhai
Spinning mills Limited didn’t well at using its assets efficiently to generate higher return to
gain greater ROA.

Earnings per Share:

Earnings per Share has decreased to 2.88 in 2014 against 4.70 on 2013.This decrease in the
Earnings per Share in 2014 indicates that Bhai Bhai Spinning mills Limited ’s income for
common Shareholders has decreased in higher proportion in 2014 as compared to previous
years.

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 2010 2011 2012 2013 2014

Figure 4:Earnings per Share

Debt Equity Ratio:

2010
2011 2012
2013 2014

Figure 5:Debt Equity Ratio

In 2014 Debt Equity Ratio is 9.62%,it is 0.94% less than 2010 and also it is less than that of
last few years. So we can say that Bhai Bhai Spining mills Limited is less dependable on
outside debt.
.

Market Price per Share:

2010
 2011 2012
2013 2014

Figure 6:Market Price per Share

Since profit after tax is 2699 Million and it is less than that of 2013 even less than last few
years, for that reason the Market Price per Share decreased.

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Price Earning Ratio :

2010 2011 2012 2013 2014

Figure 7:Price Earning Ratio

In 2014 Price Earning has increased to 12.85 times in 2014 against 9.47 times in 2011.In the
chart we see that the Price Earning Ratio is continuously rise and fall from last four years.

Dividend Yield Ratio:

2010 2011 2012 2013 2014

Figure 8:Dividend Yield Ratio

Dividend Yield Ratio of Bhai Bhai Spinning mills Limited decreased to 5.41% in 2012 in
against of 6.74% in2011.It was 4.23% in 2010 and 6.13% in 2009.We can say that the
dividend Yield of prime Bhai Bhai Spinning mills Limited has variation from year to year.

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Gross Profit Ratio:
The above graphical presentation on Gross Profit of Bhai Bhai Spinning Mills Limited from
year 2011 to 2014 show that Bhai Bhai Spinning Mills Limited ’s gross profit is decreased
in recent years comparison with situation few years ago. In year 2013,the gross profit was
47.75% where it became 43.66% in 2014.

2014 2013 2012 2011 2010

Figure 9:Gross Profit Ratio

Capital Gearing Ratio:

2010 2011 2012 2013 2014

Figure 10:Capital Gearing Ratio

Capital Gearing Ratio 0f Bhai Bhai Spining mills Limited has increased to 80.97% in 2014
against 77.88% in 2013.It also increase from the ratio of 2014 an 2013.

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Dividend Payment:

2010 2011 2012 2013 2014

Figure 11:Dividend Payment

Bhai Bhai Spining mills Limited paid 20% dividend to its Shareholders in 2014, it is 10%
less than that of 2014 and 20% less than the dividend paid by Bhai Bhai Spining mills
Limited.

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 CHAPTER: FOUR
FINDINGS OF THE REPORT

4.0 Findings of the Report

In general, actual accounting and disclosure practices in Bangladesh fall far short of
the applicable requirements. Some examples follow:
 Consolidated financial statements.
It is common practice not to comply with the IAS Requirements on consolidation.
 Statement of changes in equity.
Many companies' financial statements did not include this.
 Statement of Cash Flows
A statement of Cash Flows which classifies cash flows during the period from operating,
investing and financing activities. Cash flows are inflows and outflows of cash and
equivalents. Cash comprises cash on hand and demand deposits. Cash equivalents are short-
term, highly liquid investments that are readily convertible
 Segment reporting.
Few companies reported segment sales and only one company disclosed segment assets and
liabilities in addition to segment income and expenditure. Most companies that apparently
had business segments and geographical segments did not comply with the segment
reporting requirements.
 Effects of changes in foreign exchange rates.
Some companies that had exchange difference arising on outstanding foreign currency loans
on the balance sheet date adopted a capitalization method instead of expensing. Although this
is permitted under Companies Act 1994, it is a violation of IAS. In other cases, export
receivables were disclosed at the exchange rate prevailing on transaction date instead of balance
sheet date as required by IAS.
 Related party transactions.
Detailed disclosures in accordance with IAS requirements were
7
not found in any sets of financial statements. For instance, the ownership structure of
many companies suggested that related parties and related party transactions existed, but in most
cases there were limited or no disclosures.

 Revenue recognition.
Many companies did not properly disclose the accounting policy on

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revenue recognition. It is common practice for installment sale business in Bangladesh to
recognize sales on cash rather than accrual basis as required by IAS.
 Property, plant, and equipment.
In cases where fixed assess wife revalued, detailed disclosures required under the IAS
were not available. Moreover, none of the companies addressed the IAS requirements on
impairment of assets.
 Employee benefits.
Many companies disclosed the existence of employee pension benefits but failed to disclose
information required by the relevant IAS. In many cases, the liability for
employee benefit expenses was not recognized on an accrual basis. No disclosure was made as to
whether actuarial or any other forms of valuations had been made to quantify outstanding
liabilities for employees' post-employment benefits. One of the major listed companies in
Bangladesh was discovered to have appropriated loans from the employee provident fond and
the workers' profit participation fond. The loans outstanding are several times the annual
contributions made to these funds. Details of the terms and conditions of these loans and
reconciliation of the movements of these funds were not disclosed.
 Dividends.
Many companies did not disclose the amount of dividend per share; some merely stated the
rate of dividend.
 Earnings per share (EPS).
Many companies did not disclose EPS. Companies that showed EPS did not disclose the
numerator or denominator, or both.
 Pre-operating expenses.
Bangladesh accounting practice generally treats pre-operational expenses as assets on the
face of the balance sheet, and then writes off these expenses over several years. These assets
are not intangible and should have been expensed.
 Taxation.
The general practice in Bangladesh is not to account for deferred taxes.
 Contingencies.
Many reviewed companies do not disclose contingent liabilities for obligations that may arise
from past events.

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Leases.
There are a number of leasing companies operating in Bangladesh. The principal business
operations are in the nature of finance leases, but very attractive fiscal incentives
encourage lassoers and lessees to treat them as operating leases, contrary to IAS requirements.

 Interim financial reporting.

While presenting half-yearly reports, all companies failed to present the Statement of
Changes in Equity and Notes to the Financial Statements.

 Additional disclosure by Bhai Bhai Spinning mills Limited s.

Bhai Bhai Spinning mills Limited s did not disclose aggregate amounts included hi the
balance sheet for loans and advances on which interest is not being accrued. Bhai Bhai
Spinning mills Limited s provided no information or commentary on the risk management
policy. For financial instruments, terms and conditions, particularly the rate of interest and
security for financial assets and liabilities, were
not disclosed. Several Bhai Bhai Spinning mills Limited s included as assets in their
financial statements large amounts as "suspense accounts "and "inter-branch balances"
(unrecognized differences), and no explanation was provided for such treatment.

Higher authorities like ICAB need to monitor those problems.

15
 CHAPTER: FIVE
RECOMMENDATION & CONCLUSION
Recommendation
Bhai Bhai Spining mills Limited has been successful in all of its operation since its inception.
It has outperformed all its peer and competitor and peer Bhai Bhai Spinning mills Limited s
in virtually all area of its activities. Still there is scope for improvement for the Bhai Bhai
Spinning mills Limited and the any or all of the following could be which Bhai Bhai Spining
mills Limited can implement to better its performance:

i. The Bhai Bhai Spinning mills Limited should employ an outside company for
recovery of its dues because it takes a huge of time for the Bhai Bhai Spinning mills Limited
’s employees to recover stuck up loans.
ii. The Bhai Bhai Spinning mills Limited can increase its retail credit loan by allowing
credit to more customers. This can be possible through relaxation of credit norms like waiver
of guarantee from third parties.
iii. The Bhai Bhai Spinning mills Limited can attract more lease finance customer
through reduction of cost of borrowing on the part of the customer. This can be made possible
through return of a fraction of the lease deposit taken by the Bhai Bhai Spinning mills
Limited at the time of sanction and disbursement. Similarly the Bhai Bhai Spinning mills
Limited can return the risk fund realized from retail credit customers in case of timely and
smooth adjustment of the loan by the customers. This will provoke customers to repay the
loan timely.
iv. The Bhai Bhai Spinning mills Limited can enhance its asset quality through offering
rebate on interest rate and hence provocation of timely repayment by the customers. This will
be offered only to regular customers.
v. Management may create a post for telephone call services & related staff should be
trained about the A B C of all departments as he could give information to customers.
vi. Customer must be convinced to use token system, which will help the personnel of
the customer service work smoothly.
vii. Bhai Bhai Spining mills Limited should update its brochure and to be made
advertisement on TV so that every initiative of the Bhai Bhai Spinning mills Limited can go
at the door of the customers.

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viii. They should increase the marketing activities.
ix. Bhai Bhai Spining mills Limited has to ensure employee satisfaction.
x. More training facilities should be introduced for the junior Officers
xi. Limit of Credit Card facility should be increased within short period.
xii. To arrange more employee for reducing the pressure.

Conclusion

Now a day the all the Bhai Bhai Spinning mills Limited s are contributing much than the
previous years for the growth and development of the country. Bhai Bhai Spinning mills
Limited ing industry is now much organized because of strong vigilance and supervision of
Bangladesh Bhai Bhai Spinning mills Limited . In the industry, Bhai Bhai Spining mills
Limited is one of the pioneers in many criteria. BHAI BHAI SPINNING MILLS LIMITED
is committed towards the excellence in the service with efficiency, accuracy and proficiency.

Bhai Bhai Spining mills Limited is one of the most renowned private Bhai Bhai Spinning
mills Limited s in the country, and has been ranked no.1 Bhai Bhai Spinning mills Limited in
our country last year. The credit portfolio management of Bhai Bhai Spining mills Limited is
quit well as well as their customer service. They have strengthens their credit portfolio
management through diversification of its investment among the different industries. But they
have lots of other sectors to improve. They have to be more conscious about decision making
and asset utilization; because they are investing more money but generating less profit from
this. And to do this the managers has to make wise choices in allocating its resources.

With in such a short period of time in internship program, it is not possible to find out all the
problems. In spite of shortcomings I tried my level best to make the report Fruitful. I
apologize for making errors in the report.

I wish total success of Bhai Bhai Spining mills Limited, and Special thanks to all the
Employees of Mirpur-10 Branch, Dhaka.

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 Bibliography

International Financial Reporting Standards Edition 2011.

Wikipedia the free encyclopedia and measurement of IFRS.

Accounting Principles, Kieso & Kimmel ninth edition2008.

www.wilev.com/college/weygndt an original resources. Annual

report- 2011 of Bhai Bhai Spining mills Limited

Accounting principles form Accounting Journal of Business School of NewYork University.

Accounting Principles, Syed Masud Hossain 2012 edition.

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