CHAPTER 1

INTRODUCTION

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1.1 INTRODUCTION
Bangladesh cement industry has developed to the early-fifties but its growth in real sense started
only about a decade. The country has been experiencing an upsurge in cement consumption for
the last five years. Government gave permission for establishing cement industries in Bangladesh
in FY1995. Initially the cement industry took place without the proper analysis of the demand and
supply of cement in the country. Within the span of the two to three years, industry attained
expanded capacity of the product with stable growth rate of consumption. Some enthusiastic
entrepreneurs ventured into setting up cement plants during 1997 to 2000 which opened a new era
in this sector.

Prior to inception, Bangladesh used to import cement from global market. As new players entered
into the market with no participants, they tapped into the already existing huge demand for cement.
The dependency on import lowered in the following years. Currently local producers and
multinational companies have engaged in cement production to fulfill the local demand.

There were mainly four dominant players in the cement industry in the year 1998 that produced
their own cement to meet the demand of their customers. These companies were:

1. Meghna Cement (owned by Bashundhara group)

2. Eastern Cement (currently known as Seven Horse)
3. Chatok Cement
4. Chittagong Cement (taken over by Heidelberg where the local brand is called Ruby).

After a decade, currently 123 companies are listed as cement manufacturers in the country. Among
them 63 have actual production capacity while 32 are in operation. The current installed capacity
of the industry is 20.0 mn MT. This installed capacity has been calculated under two conditions
(a). all factories are in operation (b) production is at its peak season Though the installed capacity
is 20.0 mn MT, currently the acutal capacity is about 13.96 mn MT due to supply constraints for
power and clinkers.

Today many local cement manufacturer companies are exporting cement to India and other
countries in the world. Leading cement manufacturers are now going for expansion. It is expected
that if the ongoing expansion plans complete within FY2020, the total production capacity of the

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industry will rise by 75%. Cement industry expects the consumption to rise by 35% (it will be
much higher if Government projects come on stream)

1.2 The Report Paper

We, the student of Bachelor of business Administration (BBA) Major in Accounting &
Information Systems, study the subject related to business. As the students of Accounting &
Information Systems, we must analyze about companies in real world. The report helps us to get
this type of practical knowledge on doing analysis of a company. University helps its students by
providing this type of opportunity. There are lots of financial institutions, business firms, industries
etc. at home and abroad which provide us this facility. If we do not attain this opportunity then
there will be a huge gap between our study and experience. This is a valuable art of study for us.
We, the business students, usually do this by taking 3-4 months. There are many organizations
particularly the private sectors and multinational business firms provide us this opportunity. In this
respect, we have done our report on Performance Analysis of Cement Industries and comparison
with Lafarge-Holcim Bangladesh Cement Ltd. In the business environment, at home and abroad
there are lots of financial institution, businesses, firms, and industries, which provide this facility
towards us. If we could not get this facility of doing a report then a wide gap will take place
between our study and experience, we think this is a valuable part of study for us. We the students
of business do this usually by taking three months. In our country, there are many organizations
particularly the esteemed in the private sectors and elite business firms provide this. In this respect,
we have done our report on Financial Performance Analysis on Lafarge-Holcim Cement
Bangladesh Limited, one of the most renowned companies in Bangladesh. We are thankful to our
honorable course teacher for giving us the opportunity.

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1.3 ORIGIN OF THE REPORT
The report is required for the students of BBA. It is a program with duration of six months. In the
program, students can choose any of them. As a compulsory part of our course ‘’Working Capital
Management”, this particular report is being prepared on the proposed topic “Financial
Performance Analysis on Pharmaceutical Industries and comparison with ACI Pharmaceutical
Limited”. The intention was to give an opportunity to the students to gain some real-world
knowledge and we have learned how the organization works.

1.4 OBJECTIVE OF THE STUDY

 To fulfill the partial requirement of the BBA in the Department of Accounting and
Information Systems at University Of Barisal.
 To gather knowledge about Bangladesh Cement industry.
 To know about the History of the origin Cement industry.
 To inform about efficiency and performance analysis of Bangladesh cement industry
 To understand and analyze the financial performance of Lafarge-Holcim Bangladesh
Cement Ltd.
 To study the operational efficiency of Lafarge-Holcim Bangladesh Cement Ltd.
 To get an overall idea about the financial performance of Lafarge-Holcim Bangladesh
Cement Ltd.
 To get an overview of the financial ratios of industry comparison with Lafarge-Holcim
Bangladesh Cement Ltd

1.5 SCOPE OF THE REPORT

The basic area for the report is analyzing the activities and financial performance of
pharmaceuticals industries and comparing with ACI pharmaceuticals. In this work the overall view
of the financial performance in according to pharmaceutical industry, history and Mechanism,
policies of ACI Pharmaceutical Limited and other activities are extensively analyzed and the
finding are clarified along with depth study.

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1.6 METHODOLOGY
The Methodology of the study is to collect data, processing the data in a very systemic form so
that it can be possible to predict something about the company based on the analysis. Data can be
collected from primary level and secondary level. But it is true that primary data collection is much
more difficult due to time constraints and the information is sometimes confidential to the
company itself.

This report has been prepared based on experience gathered during the period of project paper. For
preparing this report, we studied different circulars and files of the organization. As well as, we
have searched about other organizations in this industry and collect financial data. We hope this
criterion will be enough to find out different picture of cement industry as well as and financial
performance of the selected organization.

The Relevant Information and data for this paper has been collected form secondary sources. The
secondary sources of information are reports, article, websites and different manuals.

Primary Data: There is no primary data available for preparing the report.

Secondary Data:

 Annual reports of 07 companies of Cement industry

 Lanka-Bangla Finance Limited website

 Other information related to performance analysis from DSE

 Different books, training papers, manuals etc. related to the topic Product details given by
the organization

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1.7 LIMITATIONS OF THE STUDY
The report has certain limitations, which must be mentioned for the sake of understandability and
achieving transparency. As most of data were taken from the web sites, though the cross check
was conducted; still the depth of reliability varies as by the nature of web sites. Most of the data
used in this paper are government published data, so the verification of this data was not possible.
Lastly for the limited knowledge of the human being some error can be possible.

 The report has been conducted within a limited time frame. Due to time constraints, the
study has been focused on some descriptive issues of Bangladesh cement industry based
on secondary information.
 Another limitation is collecting the data from the organizations in the industry. It was hard
to collect all information of every organization within the stipulated time.
 Because of the limitations of various sources of information, the report does not contain
many important information and data.

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 CHAPTER 2
INDUSTRY OVERVIEW

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2.1 BANGLADESH CEMENT INDUSTRY OVERVIEW
Cement industry of Bangladesh placed 40th largest market in the world. Currently capacity of the
industry is about 20 mn (MT). Top 13 players are alone controlling over 78% of the total industry
capacity. However, the balance capacity still remains quite fragmented. Per capita consumption
remains poor when compared with the world average; only 65 kg while our neighboring countries,
India and Pakistan, have per capita consumption of 135kg and 130kg respectively. This underlines
tremendous scope for growth in the Bangladesh cement industry in the long term.

Cement, being a bulk commodity, is a freight intensive industry and transporting it over long
distances can prove to be uneconomical. For that reason, industry is regional in nature. It’s also
seasonal in nature, during Monsoon industry suffers from low demand. Four major costs are
associated with the production of cement as provided:

The pricing of cement of various players in the industry are very close to one another. The factories
which would be using captive power (which is cheaper and more reliable than grid power) and
backed by uninterrupted clinker supply at competitive price, are likely to be more cost efficient to
emerge as the market leader. Currently, the standard price of one bag of cement produced by the
multinational cement companies ranges within BDT 370 to BDT 410 per bag.

2.2 INDUSTRY BACKGROUND

The development of cement industry in Bangladesh dates back to the early-fifties. Till 1990 about
95% of the country's demand for cement had been met through import. Some enthusiastic
entrepreneurs ventured into setting up cement plants during 1997 to 2000 which opened a new era
in this sector. Prior to inception, Bangladesh used to import cement from global market. As new
players entered into the market with no participants, they tapped into the already existing huge
demand for cement. The dependency on import lowered in the following years. Currently local
producers and multinational companies have engaged in cement production to fulfill the local
demand.

8|Page
There were mainly four dominant players in the cement industry in the year 1998 that produced
their own cement to meet the demand of their customers. These companies were:

1. Meghna Cement (owned by Bashundhara group)

2. Eastern Cement (currently known as Seven Horse)
3. Chatok Cement
4. Chittagong Cement (taken over by Heidelberg where the local brand is called Ruby).

During the 2010, many small local manufacturers like Premier, Seven Circle, Crown, Fresh and
King cement increased their sales drastically riding on their benefits of economies of scale,
backward linkage and aggressive marketing effort. The common technology which is widely used
in our industry from the year 2003 is Portland Composite Cement (PCC) which is made following
European Standard Methods (ESM). Earlier, Ordinary Portland Cement (OPC) had been used
which was made following the American Standard Method (ASM). PCC gives equal strength and
durability like OPC. The basic difference between them is in the manufacturing technology. Only
65%-80% of clinker is required to produce PCC while 95% of clinker is required to produce OPC.
So, worldwide PCC has become popular which requires less clinker.

Currently, Heidelberg, Holcim and Lafarge are the leaders among multinational cement
manufacturers and Shah and Meghna are the leading domestic manufacturers. Shah cement is the
market leader with close to 14.20% of the market share, followed by Heidelberg with about 9.30%
of the market share

Today many local cement manufacturer companies are exporting cement to India and other
countries in the world. Leading cement manufacturers are now going for expansion. It is expected
that if the ongoing expansion plans complete within FY2020, the total production capacity of the
industry will rise by 75%. Cement industry expects the consumption to rise by 35% (it will be
much higher if Government projects come on stream).

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 CHAPTER 3
Ratio Analysis of Cement
Industry

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3.1 Current ratio:
Current ratio is an indication of a company's ability to meet short-term debt obligations, the higher the ratio,
the more liquid the company .current ratio is calculated by dividing current assets by current liabilities. .
Generally current ratio are acceptable of short term creditors for any company.

Serial Company Name 2017 2016 2015 2014 2013

No. Ratio Ratio Ratio Ratio Ratio
1 Aramit Cement Limited 0.98 1.19 0.92 0.67 0.68
2 Confidence Cement Ltd. 0.84 1.01 1.91 1.39 1.52
3 Heidelberg Cement Bangladesh Ltd. 1.59 1.73 1.96 2.32 2.91
4 LafargeHolcim Bangladesh Limited 2.24 2.54 1.99 1.42 1.27
5 Meghna Cement Mills Ltd. 1.05 1.07 1.2 1.29 1.25
6 M.I. Cement Factory Limited 1.21 1.28 1.45 1.65 1.23
7 Premier Cement Mills Limited 0.88 1.06 0.87 0.77 0.74

Average= 1.255714 1.411429 1.471429 1.358571 1.371429

Here we can see, in 2017 the Industry Current Ratio Average was 1.255. In 2016 It was 1.411
which was a little bit higher than 2017. In 2015 the industry average current ratio was 1.471, which
is higher than 2016. In 2014 it was 1.358, which is lower than 2015. In 2013 the industry current
ratio average was 1.371. That is, we can see the current ratio of the industry was raising until 2016.
In 2017 it decreased. We can see the graphical presentation of this change.

Current Ratio

1.5
1.45
1.4
1.35
1.3
1.25
1.2
1.15
1.1
2013 2014 2015 2016 2017

Current Ratio

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3.2 Quick ratio:
Quick ratio or acid test ratio is estimating the current assets minus inventories then divide by
current liabilities. It is easily converted into cash at turn to their book values and it also indicates
the ability of a company to use its near cash. The quick ratio measures a company’s ability to meet
its short-term obligations with its most liquid assets. Acid Test ratio is calculated by dividing firm’s
quick asset by its quick liability.
Serial Company Name 2017 2016 2015 2014 2013
No. Ratio Ratio Ratio Ratio Ratio
1 Aramit Cement Limited 0.94 1.07 0.78 0.59 0.57
2 Confidence Cement Ltd. 0.7 0.87 1.04 1.16 1.34
3 Heidelberg Cement Bangladesh Ltd. 1.53 1.67 1.46 2.22 2.75
4 LafargeHolcim Bangladesh Limited 1.9 2.16 1.63 1.08 0.88
5 Meghna Cement Mills Ltd. 0.09 0.85 0.9 1.01 1.07
6 M.I. Cement Factory Limited 1.09 1.16 1.31 1.51 2.05
7 Premier Cement Mills Limited 0.72 0.82 0.59 0.51 0.56

Average= 0.995714 1.228571 1.101429 1.154286 1.317143

Here, we can see in 2017 the Average Industry Quick Ratio0.9957. In 2016 It was 1.2285. In 2015
it was 1.1014. In 2014 it was 1.1542. In 2013 it was 1.3171. It was an upward trend until 2015.
We will show the graphical representation of this.

Quick Ratio

1.4

1.2

0.8

0.6

0.4

0.2

0
2013 2014 2015 2016 2017

Quick Ratio

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3.3 Account Receivable Turnover Ratio:
The Accounts receivable turnover is comparison of the size of the company sales and uncollected
bills from customers. If any company is difficult to collect money so it has large account receivable
and also indicates the low ratio. This ratio measures the number of times is collected during the
period. Account receivable turnover ratio formula is: -
Accounts receivable turnover = Sales / Accounts receivable.
Serial Company Name 2017 2016 2015 2014 2013
No. Ratio Ratio Ratio Ratio Ratio
1 Aramit Cement Limited 5.08 4.68 4.85 3.91 3.68
2 Confidence Cement Ltd. 4.22 4.73 4.77 4.9 5.96
3 Heidelberg Cement Bangladesh 6.9 6.8 7.7 8.5 9.8
Ltd.
4 LafargeHolcim Bangladesh 7.07 7.88 12.08 13.39 10.42
Limited
5 Meghna Cement Mills Ltd. 3.75 8.55 4.86 5.52 5.92
6 M.I. Cement Factory Limited 5.86 8.46 7.06 6.83 10.22
7 Premier Cement Mills Limited 5 5 6 6 6
Average= 5.411429 6.585714 6.76 7.007143 7.428571

We can see in 2013 the ratio was7.4285. In 2014 it was7.0071. In 2015 it was 6.76. In 2016 it was
6.5857. In 2017 it was 5.4114. That is the higher Account Receivable Turnover ratio was in 2013.
We can see the graphical presentation of the data below.

Accounts Receivble Turnover

0
2013 2014 2015 2016 2017

Accounts Receivble Turnover

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3.4 Accounts Payable Turnover Ratio:
The accounts payable turnover ratio is computed by account payable to sale. It measures the
tendency of a company credit policy whether extend account payable or not. The account payable
turnover ratio equation is as follow as;
Accounts Payable turnover = Sales / Accounts Payable.

Serial Company Name 2017 2016 2015 2014 2013

No. Ratio Ratio Ratio Ratio Ratio
1 Aramit Cement Limited 5.65 4.05 2 1.47 1.85
2 Confidence Cement Ltd. 0.52 7.35 8.45 6.22 4.98
3 Heidelberg Cement Bangladesh Ltd. 0.07 0.06 0.57 0.12 0.18
4 LafargeHolcim Bangladesh Limited 0.81 0.95 0.42 0.54 0.59
5 Meghna Cement Mills Ltd. 9.35 8.33 6.77 13.39 26.68
6 M.I. Cement Factory Limited 30.3 17.5 48.7 35 36.7
7 Premier Cement Mills Limited 0.16 0.09 0.15 1.98 0.34
Average= 6.694286 5.475714 9.58 8.388571 10.18857

Here we can see that in 2013 the industry account payable ratio was 10.18857 and in 2014 it was
8.388571. In 2015 it was 9.58. In 2016 it was 5.475714 and in 2017 it was 6.694286. That is it
increased in 2013. If there is an increase in account payable turnover ratio that means the
companies are paying the account payable slowly that results in cash in hand which we can see
in recent years. We can see that in graphical representation.

Accounts Payable Turnover Ratio

12
10
8
6
4
2
0
2013 2014 2015 2016 2017

Accounts Payable Turnover Ratio

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3.5 Inventory Turnover Ratio:
The inventory turnover ratio measures the number of times on average the inventory was sold during the
period. The ratio is calculate the cost of goods sold by divide into average inventory. . Inventory turnover
ratio is also known as inventory turns ratio and stock turnover ratio.
Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory.
Serial Company Name 2017 2016 2015 2014 2013
No. Ratio Ratio Ratio Ratio Ratio
1 Aramit Cement Limited 13.3 5.08 3.17 7.43 6.3
2 Confidence Cement Ltd. 7.78 8.25 6.38 7.2 7.8
3 Heidelberg Cement Bangladesh Ltd. 6.7 5.25 8 8.27 6.98
4 LafargeHolcim Bangladesh Limited 6.11 5.59 4.93 4.55 4.98
5 Meghna Cement Mills Ltd. 8.35 9.37 4.36 6.37 13.42
6 M.I. Cement Factory Limited 7.98 9.22 9.48 10.74 13.24
7 Premier Cement Mills Limited 8.67 7.47 5.26 4.86 6.67

Average= 8.412857 7.175714 5.94 7.06 8.484286

Here, we can see the Inventory turnover ratio of cement industry was decreasing from 2103 to
2014. And it was lower in 2015 comparison with previous year. Then in 2016 it was increasing
with the amount of1.235714. Then in 2017 it was increased to 8.412857. Here we understand that
the cost of goods sold is increasing day by day as well as the turnover is also increasing because
the increasing rate of sales is higher than average inventory. Generally, it is important that they are
holding much more inventory, which has made up the cash balance. We can see the graphical
presentation of this number.

Inventory Turnover Ratio

10

0
2013 2014 2015 2016 2017

Inventory Turnover Ratio

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3.6 Cash Conversion Cycle:
Cash conversion cycle (ccc) is a metric that expresses the length of time (in days) that it takes for a
company to convert its investments in inventory and other resources into cash flows from sales. Also called
the Net Operating Cycle or Simply Cash Cycle.
Serial Company Name 2017 2016 2015 2014 2013
No. Ratio Ratio Ratio Ratio Ratio
1 Aramit Cement Limited 43.32 56.6 -74.42 84.76 51.13
2 Confidence Cement Ltd. -48 -50 45.1 -47.45 -50.45
3 Heidelberg Cement Bangladesh Ltd. 358 218 176 137 123
4 LafargeHolcim Bangladesh Limited -39 -30 -41 40 40
5 Meghna Cement Mills Ltd. 90.07 60.04 138.97 69.11 54.96
6 M.I. Cement Factory Limited 94.22 62.8 80.41 75.94 52.24
7 Premier Cement Mills Limited 105 99.27 113.19 86.2 52.72

Average= 86.23 59.53 62.60714 63.65143 46.22857

Here, we can see in 2017 the Average CCC was 46.22857. In 2016 It was 63.60714. In 2015 it
was62.60714. In 2014 it was59.53. In 2013 it was 86.23. The cash conversion cycle should be
lower because it converted investments into cash flows from sales. We will show the graphical
representation of this.

Cash Conversion Cycle

90
80
70
60
50
40
30
20
10
0
2013 2014 2015 2016 2017

Cash Conversion Cycle

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3.7 Comprehensive Liquidity Index Ratio:
This is a liquidity weighted version of the popular current ratio. Here all the current assets & liabilities is
treat as equal liquidity. CLI is calculated by the amount of each current asset or liability is multiplied by
one minus the inverse of the asset or liability’s turnover ratio.
Serial Company Name 2017 2016 2015 2014 2013
No.
Ratio Ratio Ratio Ratio Ratio
1 Aramit Cement Limited 16.65 14.78 18.77 22.65 19.54
2 Confidence Cement Ltd. 10.28 8.8 8.75 7.25 7
3 Heidelberg Cement Bangladesh Ltd. 9.6 1.06 2.76 3.32 2.42
4 LafargeHolcim Bangladesh Limited 6.42 6.37 2.73 2.55 0.72
5 Meghna Cement Mills Ltd. 4.41 8.12 12.07 4.83 7.48
6 M.I. Cement Factory Limited 13.22 15.76 12.96 15.03 18.49
7 Premier Cement Mills Limited 12.25 11.22 10.16 12.56 11.65
Average= 10.40429 9.444286 9.742857 9.741429 9.614286

Here we can see in 2017 the Average CLI ratio was 9.614286. In 2016 It was9.741429. In 2015 it was
9.742857. In 2014 it was9.444286. In 2013 it was 10.40429. We will show the graphical representation of
this.

Comprehensive Liquidity Index Ratio

10.6
10.4
10.2
10
9.8
9.6
9.4
9.2
9
8.8
2017 2016 2015 2014 2013

Comprehensive Liquidity Index Ratio

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3.8 Net Liquid Balance:
Net liquid Balance is a ratio that shows how the organization can meet its current liabilities. The net
liquid balance is defined as:
NLB= (cash + marketable securities – Notes payable)/ Total Assets.

Serial Company Name 2017 2016 2015 2014 2013

No. Ratio Ratio Ratio Ratio Ratio
1 Aramit Cement Limited -0.03 -0.05 -0.14 -0.26 -0.29
2 Confidence Cement Ltd. 0.57 0.4 0.68 0.45 0.5
3 Heidelberg Cement Bangladesh Ltd. 0.32 0.37 0.41 0.43 0.47
4 LafargeHolcim Bangladesh Limited 0.17 0.18 0.16 0.09 0.07
5 Meghna Cement Mills Ltd. 0.0419 0.0496 0.0383 0.0461 0.0377
6 M.I. Cement Factory Limited 0.39 0.32 0.29 0.22 0.15
7 Premier Cement Mills Limited -0.03 0.02 -0.01 -0.03 -0.04

Average= 0.204557 0.184229 0.204043 0.135157 0.128243

Here we can see in 2017 the Average NLB Ratio was 0.128243. In 2016 It was 0.135157. In 2015
it was 0.204043. In 2014 it was 0.184229. In 2013 it was 0.204557. And it was an upward trend
until 2016. We will show the graphical representation of this.

Net Liquid Balance

0.25

0.2

0.15

0.1

0.05

0
2013 2014 2015 2016 2017

Net Liquid Balance

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 Chapter 4
LafargeHolcim Bangladesh
Limited Overview
&
Analyzing Its Financial
Performance with Industry
Financial Analysis.

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4.1 About the Company:
LafargeHolcim Bangladesh Ltd., a joint venture of LafargeHolcim and Cementos Molins is the
only fully integrated cement company in Bangladesh producing clinker and cement of high
premium quality. Since the beginning in 1997, Lafarge Surma Cement has contributed to millions
of lives by providing durable, affordable and accessible building materials and solutions as well
as by undertaking initiatives for the betterment of the economy, society and environment.
LafargeHolcim Bangladesh Ltd. (LHBL) is a frontline cement producer in Bangladesh. Operating
for more than a decade, it has made about US$ 500 million investment in building one fully
integrated cement plant and three grinding plants --- the largest foreign direct investment in the
sector. It is a joint venture of LafargeHolcim and Cementos Molins. With state-of-the art
technology and well-groomed staff, the company produces world class cement to meet the growing
demand generated by massive infrastructure development programs and improved socio-economic
conditions.

4.2 VISION & COMMITMENT

4.2.1 VISION:
To be the undisputed leader in building materials in Bangladesh through;

• Excellence in all areas of operations with world class standards

• Harnessing our strengths as the only cement producer in Bangladesh and
• Sustainable growth that respects the environment and the community

4.2.2 COMMITMENTS:
• Offering highest quality of product and services that exceed our customers expectation
• Giving our people an enabling environment that nurtures their talents and opportunity to
give the best for the organization
• Contribute to building a better world for our communities
• Delivering the value creation that our shareholders expect.

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4.3 Strategy 2022 - "Building for Growth":
LafargeHolcim’s new Strategy 2022, "Building for Growth", aims to drive profitable growth and
simplify the business to deliver resilient returns and attractive value to stakeholders. The new
strategy will shift gears towards growth of the top and bottom line over the next five years.

4.4 Marketplace of LafargeHolcim:

Faced with rapid urbanization, climate change and related environmental regulation, as well as a
growing number of emerging markets, evolving stakeholder expectations and the increasing
digitalization of sector, they are motivated to go beyond simply meeting the demands of their
customers.

LafargeHolcim enjoys a top three position in 80% of markets. Their global presence allows them
to disseminate best practices and innovative products, while their R&D teams develop products
and solutions that deliver more to their customers. LafargeHolcim is actively engaged in driving
sustainable practices.

Financial data:

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4.5 Ratio Analysis of LafargeHolcim Bangladesh Limited
Comparison with Industry

4.5.1 Current Ratio:

3
2.54
2.5 2.24
1.99
2

1.4114 1.4714 1.42

1.3585 1.3714
1.5 1.2557 1.27

0.5

0
2017 2016 2015 2014 2013
Lafarge Holcim Bangladesh
2.24 2.54 1.99 1.42 1.27
Limited
Industry Avearge 1.2557 1.4114 1.4714 1.3585 1.3714

The Graphical Presentation shows the company’s current ratio. As we have taken five other
companies as competitors, we got the industry average. So, we can evaluate this ratio by
intercompany comparisons as well as industry average. In 2013, there are 1.27 Taka current assets
against 1 Taka liability. It has increased in 2014 and 2015 which is better for 2014 and 2015 than
2013 and it is increased from 2015 to 2016 which means it is better for the company liquidity.
Farther we can analysis its ability to pay the liability with industry average which identifies that it
is doing better. So, from the comparison of industry average and competitors’ average, it can be
said that company is doing better in the consecutive years which indicates that Lafarge Holcim
Bangladesh Ltd. has more current assets against the current liabilities. The company is doing better
day by day against industry current ratio average.

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4.5.2 Quick Ratio/ Acid Test Ratio:

2.5

2.16

2 1.9

1.63

1.5 1.3171
1.2285
1.1542
1.1014 1.08
0.9957
1 0.88

0.5

0
2017 2016 2015 2014 2013
Lafarge Holcim Bangladesh Limited 1.9 2.16 1.63 1.08 0.88
Industry Avearge 0.9957 1.2285 1.1014 1.1542 1.3171

The Graphical Presentation shows the company’s acid test ratio. In 2013, there are 0.88 Taka
current assets except inventories against 1 Taka liability. If we compare within the company, it is
better because it is increasing in consecutive years. In 2017 it is higher than the industry average
which indicates the liquidity position of Lafarge Holcim Bangladesh Ltd. is better than its
competitors but in other years it was also lower/higher than the industry average which indicates
that the liquidity position of Lafarge Holcim Bangladesh Ltd. is better than its competitors except
2014 & 2013.

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4.5.3 Account Receivable Turnover:

16
13.39
14
12.08
12 10.42
10
7.88
7.07 7.0071 7.4285
8 6.5857 6.76
5.4114
6

0
2017 2016 2015 2014 2013
Lafarge Holcim Bangladesh
7.07 7.88 12.08 13.39 10.42
Limited
Industry Avearge 5.4114 6.5857 6.76 7.0071 7.4285

The Graphical Presentation shows the company’s receivables collection. In 2013, the company
can collect 10.42 times the receivables through the year which is better than the industry average.
It has increased in following years which indicates that company is collecting its receivables
against the sales very fast than other companies. But in 2016, its ratio gets lower than year 2015
but still is higher than the industry average. It indicates that there is an overall impact of account
receivable turnover ratio. Farther we can analysis its receivables collection, the collection with
industry average which identifies that it is good according to industry.

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4.5.4 Account Payable Turnover:

12
10.1885
9.58
10
8.3885
8
6.6942
5.4757
6

2 0.81 0.95
0.42 0.54 0.59

0
2017 2016 2015 2014 2013
Lafarge Holcim Bangladesh
0.81 0.95 0.42 0.54 0.59
Limited
Industry Avearge 6.6942 5.4757 9.58 8.3885 10.1885

The graphical representation indicates that in 2013 the company APT ratio was 0.59 and in
following year 2014 it was 0.54 it has decreased that is the company was taking longer to pay off
its suppliers than in previous period. In 2015 the company APT ratio was decreased to 0.42 that
means, the company is paying off suppliers at a slower rate than in previous periods. But in 2016
it has increased than its previous year that means paying off suppliers at a higher rate. In 2017,
again the ratio has decreased. In terms of industry average APT ratio is always lower than the
industry average. It indicates Lafarge Holcim is in a good position.

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4.5.5 Inventory Turnover:

9 8.4128 8.4842

8 7.1757 7.06
7 6.11 5.94
5.59
6
4.93 4.98
5 4.55

0
2017 2016 2015 2014 2013
LafargeHolcim Bangladesh
6.11 5.59 4.93 4.55 4.98
Limited
Industry Avearge 8.4128 7.1757 5.94 7.06 8.4842

The Graphical Presentation shows the company’s inventories turnover ratio. In 2013, the company
can collect 0.72 times the inventories through the year. It has increased in following years which
indicates that company is not selling its inventories fast and they remain in stock. Also, in
comparing with industry and competitors, it is worse because of Lafarge Holcim Bangladesh Ltd.
Is stocking its inventory.

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4.5.6 Cash Conversion Cycle:

100 86.23

80
59.53 62.6071 63.6514
60 46.22
40 40
40

20

-20 -30
-39 -41
-40

-60
2017 2016 2015 2014 2013
LafargeHolcim Bangladesh
-39 -30 -41 40 40
Limited
Industry Avearge 86.23 59.53 62.6071 63.6514 46.22

The Graphical Presentation shows the company’s cash conversion cycle period. In 2013 it is
negative, it indicates that Lafarge has to pay off quickly but collect receivables in late & so as in
2014 also. But in 2015 it gets positive (-41). It indicates that collection of receivables is faster than
its payment. In terms of industry average Lafarge is not in a good position. Industry average is
much higher than Lafarge cycle period.

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4.5.7 Comprehensive Liquidity Index:
12
10.4
9.44 9.7428 9.7414 9.6142
10

8
6.42 6.37
6

4
2.73 2.55

2
0.72

0
2017 2016 2015 2014 2013
Lafarge Holcim Bangladesh
6.42 6.37 2.73 2.55 0.72
Limited
Industry Avearge 10.4 9.44 9.7428 9.7414 9.6142

The Graphical Presentation shows the company’s comprehensive liquidity index. In 2013 the
Lafarge’s CLI ratio is very poor than industry average. It is the adjusted current asset/liability ratio.
But in the following years its index is gradually increased. But it is not in a good position in terms
of industry average in last 5 years.

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4.5.8 Net Liquid Balance Ratio:

0.25

0.2 0.204
0.2 0.18
0.17
0.16

0.15 0.135
0.128

0.09
0.1
0.07

0.05

0
2017 2016 2015 2014 2013
LafargeHolcim Bangladesh
0.17 0.18 0.16 0.09 0.07
Limited
Industry Avearge 0.2 0.18 0.204 0.135 0.128

The Graphical Presentation shows the company’s net liquid balance ratio. It indicates how fast the
company can liquid its assets. In 2013, Lafarge NLB ratio is 0.07 which is poor than industry
average but gradually in the consecutive years it begins to increase also gets higher and equal to
industry average. In 2017, there is a little bit of decrease in ratio but it is comparatively good than
industry average.

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 Chapter 5
Findings & Recommendations

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5.1 Findings and recommendation of the study:
5.1.1 General Findings:
• This report is done only on the information from 2013 to 2017 and with 7 major listed
companies. So, outcome of the report can be different if there is taken more companies and
more years.
• The industry average for all ratios are moderate. The leading LafargeHolcim performance
was far better than other companies as it is leading in the industry.
• The Government earn 40% of total tax from manufacturing companies.
• Industry current ratio average is in good position.
• The Industry should concentrate on the collection of receivables as well as selling the
inventories.
• The Industry should focus on the operating expenses.
• Industry quick ratio average is growing very fast up to 2016 but it gets lower in 2017.
• The industry should Liquate and long-term solvency is satisfactory and the company
should try to keep more liquate assets.
• The industry overall accounts payable ratio is in fluctuating situation.
• The industry should focus on the collecting the accounts receivables for reducing the
uncertainty of bad debt collection.
• The industry average ratio is decreased up to 2015 but it again begins to increase in 2017.
• The Industry should increase its liquid assets because it is lower than the current assets as
the company meet the liability by liquid assets.
• The industry cash conversion cycle also in fluctuating position.
• The industry comprehensive liquidity index is increasing day by day.
• The industry net liquid balance is in good position.

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5.2 FINDINGS FROM COMPARING INDUSTRY RATIO’S with
the LafargeHolcim Bangladesh LTD.
• Among the cement companies, LafargeHolcim Ltd is in the top position according to the
EBL Securities Limited Research.
• LafargeHolcim has very high market capitalization ratio.
• Company is doing better in compare with the industry in Current and Acid Test Ratios.
• In 2016, company account receivable turnover ratio is very poor as well in 2017.
• Payable ratio is in good position comparative to industry average.
• Company inventory turnover ratio is increasing year by year but in comparative to industry
average it is not in good position.
• Cash conversion cycle of the company indicates that the cash is converting too faster than
industry average and payment pattern is slow.
• It also indicates that the business is generating more revenue. If we look over the Acid test
ratio, we can find out that company has more liquid assets than the industry against the
current liability.
• In 2017, net liquid balance is little bit of lower than the previous year and in relative to
industry average also.

5.3 Recommendations
• The company should concentrate on the collection of receivables as well as selling the
inventories and to reduce the uncertainty of bad debt collection.
• The company should focus on the operating expenses.
• Liquate and long-term solvency is satisfactory and the company should try to keep more
liquate assets.
• Company should also increase its liquid assets because it is lower than the current assets
as the company meet the liability by liquid assets.
• Company should also focus on its cash conversion cycle period because it is not as good
as the industry average.
• As net liquid balance of Lafarge in good position but they should give more emphasis on
this because they are not in good position in comparative to industry average in 2017.

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 Chapter 6
Conclusion & References

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6.1 Conclusion:

The cement industry is a good indicator of the growth and progress of a country as cement
consumption is closely linked to per capita income. The cement industry has changed significantly
in recent years through trans-national consolidations and cooperation. To sustain in this
competitive market a company have to be profitable in the long run. . If we see the ratios of
Lafarge, we can see that the overall performance of the company is high compared to the average
industry performance. Although LafargeHolcim is in the top position in market the top
management should think about the high costs that reduces the profit margin of the company. They
should encourage the investors by offering them good return. If Lafarge can make the best use of
its opportunities and strengths, in future it will contribute more to the economy of Bangladesh by
expanding business.

6.2 References:
1. Aramit Cement Limited Annual Report (2013-2017)

2. Confidence Cement Ltd Annual Report (2013-2017)

3. Heidelberg Cement Bangladesh Ltd Annual Report (2013-2017)

4. LafargeHolcim Bangladesh Limited Annual Report (2013-2017)

5. Meghna Cement Mills Ltd Annual Report (2013-2017)

6. M.I. Cement Factory Limited Annual Report (2013-2017)

7. Premier Cement Mills Limited Annual Report (2013-2017)

https://www.lafargeholcim.com/lafargeholcim-at-a-glance

https://www.lafargeholcim.com.bd/vision-commitment

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