A case Study of Navana Biponon Limited

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A case Study of Navana Biponon Limited

Company Introduction

Biponon Limited came into being in 1996 as a specialized company in the field on Medical & Health Sector. This company comprises a team of experienced & trained Bio-Medical & Electro-Medical Engineers and also a group of skilled marketing professionals. Within a short span of time Biponon has already positioned itself as market leader in medical and scientific equipment. Also it has proved its reliability by providing its customer prompt and satisfactory after sales service. The area and departments where this company is doing business are Medical & Health Sector and has been successfully doing business in Ministry of Health, CMSD, DGMS, DGDP, Atomic Energy Commission, Probin Hospital, ICMH, Diabetic Association of Bangladesh, etc.

Biponon Limited has commenced its proceedings with a great motto to contribute in the countries Health Sector to improve its quality of various Diagnostics, Medical & Laboratory Equipment by supplying them various advanced and sophisticated scientific and medical equipment. The company has already executed a good number of supplies and an EC funded project worth approximately US $ 5.0 million, which is considered to be the largest single project of its kind.

Historical Backgrounds

Navana Limited, the flagship company of the Navana Group (previously Islam Group) was established in 1964 by then Group’s founder Mr. Jahurul Islam and had an auspicious step into the business under an exclusive distributorship agreement with TOYOTA of Japan to market Toyota cars in the then East Pakistan.

In the trading front, the Group has brought into existence a separate trading unit in 1996 namely Biponon Limited. This company commenced business in the potential field of Health and Medical Equipment Sector. And within a short span of one year since its commencement it was awarded with one of the biggest single tender under the Ministry of Family & Welfare, worth of US $ of 5.0 million to supply $ installation of Medical Equipment under EC finance.

The Management of the Navana Biponon Limited

Navana Biponon Limited is managed by the Board of Directors, a technical personnel and a Management Committee. The management of is simply exceptional in comparison to any other listed companies in this country. It has a blend of professionalism and wisdom, which plays a key role in managing the champion organization.

The Board of Directors includes:

  1. Mr. Shafiul Islam Kamal- Chairman
  2. Mrs. Khaleda Islam – Director
  3. Mr. Saiful Islam Shuman- Director
  4. Mr. Sajedul Islam- Director
Technical Personnel

The Technical personnel are accountable for both operational and Technical performance of the company. This committee is also responsible for policy adoption or changes, new project review, their technique.

Technical Personnel:

  1. Engr. Mahabub Quddus- Deputy Manager
  2. Md. Shahidul Islam- Service-Engineer
  3. Mr. Md. Nazmul Hasan- Service-Engineer
  4. Mr. Md. Mohiuddin- Assistant Service-Engineer
  5. Mr. Md. Asif Iqbal- Assistant Service-Engineer

The Management Committee

The management committee reviews and manages day-to-day business operation and recommends strategy options to the Technical personnel.

The Management Committee:

  1. Mr. Shafiul Islam Kamal- Chairman
  2. Mr. Saiful Islam Sumon- Director
  3. Engr. Malaya Mahanta- General Manager

Mission & Vision

Every organization has got mission & vision Navana Biponon Limited is not in difference. Its mission & vision have been given bellow:

Mission

“Each of the activities must benefit and add value to the common wealth of the society. We firmly believe that in the final analysis we are accountable to each of the constituents with whom we interact namely our employees our customers, our business associates, our fellow citizens and shareholders.

Vision

“Our vision building a healthier tomorrow where our fellow citizens will live longer, healthier and happier. Our activities have always been centered on developed core competencies to deliver the best in the industry ensuring superior value and return to our customers.”

Product / Services

Product:

The company aims to import the most robust equipment in the domestic market. In 2006 twenty (20) products were launched in the domestic market. Some major are given bellow-

  1. M.R.I
  2. C.T. Scan
  3. X-ray
  4. Colour Dropler
  5. Ultra Sound
  6. C.R. Machine
  7. AGFA Flim

NAVANA BIPONON LTD.

BALANCE SHEET

At the End of June 30, 2003

Particular Amount
Non – Current Assets 290,233,403
Property, Plant & Equipment 163,623,850
Investment 124,745,734
Pre- Production Expenses 1,863,819
Current Assets 97,242,746
Inventories 67,769,429
Accounts Receivables 4,943,237
Inter Project Current Account 112,544,564
Advance, Deposit & Prepayments 9,809,058
Cash and Bank Balances 2,176,458
Total assets 387,476,149
EQUITY AND LIABILITIES
Capital and reserves (316,892,790)
Issued Capital 203,597,600
Tax- holiday Reserve 4,156,589
Retained Earnings (524,646,979)
Non Current Liabilities
Long Term Borrowings – Net of Current
Maturity ( Secured )
Current Liabilities 704,368,939
Short Term Borrowings – Secured 370,571,751
Long Term Borrowings – Current
Maturity ( Secured)
Inter Project Current Account
Creditors and Others Payable 291,051317
Accrued Expenses 3,089,711
Dividend Payable 39,656,160
Total Liabilities and Shareholders’
Equity 387,476,149

NAVANA BIPONON LTD.

BALANCE SHEET

At the End of June 30, 2004

Particular Amount
Non – Current Assets 282,402,881
Property, Plant & Equipment 156,725,237
Investment 124,745,734
Pre- Production Expenses 931,910
Current Assets 71,015,513
Inventories 30,932,924
Accounts Receivables 14,715,007
Inter Project Current Account 13,116,534
Advance, Deposit & Prepayments 9,026,618,
Cash and Bank Balances 3,224,430
Total assets 353,418,394
EQUITY AND LIABILITIES
Capital and reserves (41,087,336)
Issued Capital 203,597,600
Tax- holiday Reserve 4,156,589
Retained Earnings (248,841,525)
Non Current Liabilities
Long Term Borrowings – Net of Current
Maturity ( Secured ) 180,052,000
Current Liabilities 214,453,730
Short Term Borrowings – Secured 136,766,833
Long Term Borrowings – Current
Maturity ( Secured) 22,504,000
Inter Project Current Account
Creditors and Others Payable 27,119,019
Accrued Expenses 3,498,470
Dividend Payable 24,565,408
Total Liabilities and Shareholders’
Equity 353,418,394

NAVANA BIPONON LTD.

BALANCE SHEET

At the End of June 30, 2005

Particular Amount
Non – Current Assets 360,292,059
Property, Plant & Equipment 264,467,064
Investment 95,824,995
Pre- Production Expenses
Current Assets 91,254,406
Inventories 44,036,877
Accounts Receivables 16,791,135
Inter Project Current Account 5,204,324
Advance, Deposit & Prepayments 20,132,387
Cash and Bank Balances 5,089,683
Total assets 451,546,465
EQUITY AND LIABILITIES
Capital and reserves (37,124,233)
Issued Capital 203,597,600
Tax- holiday Reserve
Retained Earnings (240,721,833)
Non Current Liabilities
Long Term Borrowings – Net of Current
Maturity ( Secured ) 315,650,415
Current Liabilities 173,020,283
Short Term Borrowings – Secured 136,982,667
Long Term Borrowings – Current
Maturity ( Secured)
Inter Project Current Account
Creditors and Others Payables 15,69,489
Accrued Expenses 4,551,555
Dividend Payable 15,836,572
Total Liabilities and Shareholders’
Equity 451,546,465

NAVANA BIPONON LTD.

BALANCE SHEET

At the End of June 30, 2006

Particular Amount
Non – Current Assets 344,147,713
Property, Plant & Equipment 268,322,718
Investment 75,824,995
Pre- Production Expenses
Current Assets 150,587,991
Inventories 78,205,428
Accounts Receivables 32,779,422
Inter Project Current Account
Advance, Deposit & Prepayments 24,799,183
Cash and Bank Balances 14,803,958
Total assets 494,735,704
EQUITY AND LIABILITIES
Capital and reserves (25,741,388)
Issued Capital 203,597,600
Tax- holiday Reserve
Retained Earnings (229,338,988)
Non Current Liabilities
Long Term Borrowings – Net of Current
Maturity ( Secured ) 296,406,348
Current Liabilities 224,070,744
Short Term Borrowings – Secured 149,053,596
Long Term Borrowings – Current
Maturity ( Secured) 32,713,514
Inter Project Current Account 2,524,387
Creditors and Others Payables 23,447,449
Accrued Expenses 4,352,357
Dividend Payable 11,979,441
Total Liabilities and Shareholders’
Equity 494,735,704

NAVANA BIPONON LTD.

PROFIT & LOSS ACCOUNT

At the End of June 30, 2003

Particular Amount
Net Sales Revenue 45,624,741
Cost of Goods Sold (36,986,928)
Gross Profit 8,637,813
Operating Expenses (30,433,928)
Administrative Expenses (10,613,442)
Selling & Distribution Expenses (19,819,734)
(21,795,363)
Finance Cost (95,095,576)
Profit /( Loss) from Operation (116,890,939)
Add Other Income
Net Profit ( Loss) for the Year (116,890,939)
Contribute to Workers’ Profit
Participation Fund
Net Profit before Income Tax ((116,890,939)
Profit/ ( Loss) brought forward (407,756,040)
Profit/ ( Loss) carried forward (524,646,979)
Earnings Per Share (57.41)
Number of Shares used to compute
EPS 2,035,976

NAVANA BIPONON LTD.

PROFIT & LOSS ACCOUNT

At the End of June 30, 2004

Particular Amount
Net Sales Revenue 66,825,568
Cost of Goods Sold (48,924,408)
Gross Profit 17,901,160
Operating Expenses (31,573,182)
Administrative Expenses (7,730,336)
Selling & Distribution Expenses (23,842,846)
(13,672,022)
Finance Cost (7,764,038)
Profit /( Loss) from Operation (21,436,060)
Add Other Income
Net Profit ( Loss) for the Year (21,436,060)
Contribute to Workers’ Profit
Participation Fund
Net Profit before Income Tax (21,436,060)
Profit/ ( Loss) brought forward (227,405,465)
Profit/ ( Loss) carried forward (248,841,525)
Earnings Per Share (10.53)
Number of Shares used to compute
EPS 2,035,976

NAVANA BIPONON LTD.

PROFIT & LOSS ACCOUNT

At the End of June 30, 2005

Particular Amount
Net Sales Revenue 159,766,207
Cost of Goods Sold (102,764,066)
Gross Profit 57,002,141
Operating Expenses (44,958,594)
Administrative Expenses (9,222,754)
Selling & Distribution Expenses (35,735,840)
12,043,547
Finance Cost (5,537,092)
Profit /( Loss) from Operation 6,506,455
Add Other Income 840,342
Net Profit ( Loss) for the Year 7,346,797
Contribute to Workers’ Profit
Participation Fund
Net Profit before Income Tax 7,346,797
Profit/ ( Loss) brought forward (248,068,630)
Profit/ ( Loss) carried forward (240,721,833)
Earnings Per Share 3.61
Number of Shares used to compute
EPS 2,035,976

NAVANA BIPONON LTD.

PROFIT & LOSS ACCOUNT

At the End of June 30, 2006

Particular Amount
Net Sales Revenue 249,846,035
Cost of Goods Sold (155,278,202)
Gross Profit 94,567,833
Operating Expenses (67,200,531)
Administrative Expenses (12,866,157)
Selling & Distribution Expenses (54,334,374)
27,367,302
Finance Cost (15,783,912)
Profit /( Loss) from Operation 11,583,390
Add Other Income 735,937
Net Profit ( Loss) for the Year 12,319,327
Contribute to Workers’ Profit
Participation Fund 586,635
Net Profit before Income Tax 11,732,692
Profit/ ( Loss) brought forward (241,071,680)
Profit/ ( Loss) carried forward (229,338,988)
Earnings Per Share 5.76
Number of Shares used to compute
EPS 2,036,976

NAVANA BIPONON LTD.

Statement of Changes in Equity

Particular Amount in Taka

30.06.2003

Amount in Taka

30.06.2004

Amount in Taka

30.06.2005

Amount in Taka

30.06.2006

Issued Capital 203,597,600 203,597,600 203,597,600 203,597,600
Tax- holiday Reserve 4,156,589 4,156,589
Retained Earnings :
Net Accumulated Profit

( Loss)

(407,756,040) (227,405,465) (248,068,630) (241,071,680)
Net Profit /(Loss) for the Year (116,890,939) (21,436,060) 7,346,797 11,732,692
Net Accumulated Profit

( Loss)

(524,646,979) (248,841,525) (240,721,833) (229,338,988)
( Balance Transferred to balance Sheet )
Shareholders’ Equity at the end of the Year (316,892,790) (41,087,336) (37,124,233) (25,741,388)
No. of Ordinary Shares 2,035,976 2,035,976 2,035,976 2,035,976
Face Value Per Share 100 100 100 100
Shareholders’ Equity Per Share (155.65) (20.18) (18.23) (12.64)

NAVANA BIPONON LTD.

Cash Flow Statement

Particular Amount in Taka

30.06.2003

Amount in Taka

30.06.2004

Amount in Taka

30.06.2005

Amount in Taka

30.06.2006

Cash Flows from Operating Activities :
Cash Received from Customers 57,256.646 57,053,798 157,690,079 233,857,748
Cash Paid to Suppliers and Employees (54,062,358) (37,964,612) (189,758,159) (240,996,835)
Cash Generated from Operation 3,194,288 19,089,186 (32,068,080) (7,139,087)
Other income
Income Tax Paid and Deducted at Source (460,219) (1,031,321) (1,732,478) (2,667,797)
Net Cash Generated from
Operating Activities 2,734,069 18,057,865 (32,960,216) (9,070,947)
Cash Flows from Investing Activates :
Acquisition of Property, Plant & Equipment (4,437,024) (4,434,767) (124,881,747) (30,626,734)
Invest Liquidate (Net ) (10,783,015) 28,920,739 20,000,000
Net Cash Used in Investing Activities : (15,220,039) (4,434,767) (95,961,008) (10,626,734)
Cash Flows: from Financing Activities :
Received from Associated 12,46,855 19,364,544 (11,383,585) 7,728,11
Companies & others
Dividend Paid & Written Off 116,480 (15,090,752) (8,728,836) (3,857,131)
Bank Loans Received ( Repaid ) 1,711,562 (16,848,918) 113,310,249 25,540,376
Net Cash Used in Financing Activates: 13,874,897 (12,575,126) 93,797,828 29,411,956
Net Increase/ Decrease) in Cash & Cash Equivalents 1,155,967 1,047,972 1,865,253 9,714,275
Cash & Cash Equivalents at the beginning of the Year 1,020,491 1,276,458 3,224,430 5,089,683
Cash & Cash Equivalents at the End of the Year 2,176,458 2,324,430 5,089,683 14,803,958

NAVANA BIPONON LTD.

Performances at a Glance

Amount in Core Taka

SL. No. Particular 2006 2005 2004 2003
1 Sales 24.98 15.97 6.68 4.56
2 Gross Profit /( Loss) 9.46 5.7 1.79 0.86
3 Operating Profit / (Loss) 2.74 1.2 (1.37) (2.18)
4 Net Profit /(Loss) 1.17 0.73 (2.14) (11.69)
5 Earning Per Share (EPS) 5.76 3.61 (10.53) (57.41)
6 Dividend Per Share 10.00
7 Fixed Asset 26.83 26.45 15.67 16.36
8 Investment 7.58 9.58 12.47 12.47
9 Net Working Capital (7.35) (8.18) (14.34) (60.71)
10 No. of Shareholders. 8,212 8,451 8,8920 6.578

Ratio Analyses

Ratio analysis expresses the relationship among selected items of financial statement data. A ratio analysis expresses the mathematical relationship between one quantity and another. The relationship is expressed in terms of either a percentage a rate, or a simple proportion.

  1. Liquidity Ratio: Measure of short-term ability of the enterprise to pay its maturing obligations and to meet unexpected needs for cash.
  2. Profitability Ratio: Measures of the income or operating success of an enterprise for a given period of times.
  3. Solvency Ratio: Measures of the ability of the enterprise to survive over a long period of times.

For performance analysis of Navana Biponon Limited. Above of all ratios can be analysis and interoperate in the following ways-

Performances Analysis

Financial Performances of a company needs the assistance of its financial statement to measure the this type of performance at first we have to establish the following parameters using the balance sheet and profit & loss accounts of a financial statement.

A. Liquidity Ratio:

Feature 2006 2005 2004 2003
i) Current Ratio : Total Current Asset/ Total Current Liabilities 0.67 0.53 0.33 0.14
ii) Acid Test Ratio: Total Current Asset- Inventories / total Current Liabilities 0.32 0.27 0.19 0.04
iii) Accounts Receivable Turnover : Total Credit Sale / Accounts Receivable 7.62 9.51 4.54 9.23
iv) Inventory Turnover : Cost of Goods Sold/ Average Inventory 1.99 2.33 1.58 0.55

B. Market Measurements:

Feature 2006 2005 2004 2003
i) Price Earning Ratio : Make Price Per share

Earning Per Share

17.35 27.71 (9.50) (1.74)
ii) Earning Yield: Earning Per Share / Market Price Per Share 0.06 0.04 (0.11) (0.57)
iii) Dividend Yield Dividend Per Share

Market Price Per Share

0.10
iv) Dividend Payout Raito: Dividend Per Share / Earning Per Share 1.74

C. Asset Utilization ratio:

Feature 2006 2005 2004 2003
i) Sales to Cash : Sales / Cash Balance 16.88 31.39 20.72 20.96
ii) Sales to Accounts Receivable Sales / Accounts Receivable 7.62 9.51 4.54 9.23
iii) Sales to Inventories Sales / Inventories 3.19 3.63 -2.16 0.67
iv) Sales to Total Asset : Sales / Fixed Asset 0.51 0.35 -0.19 0.12

D. Profitability:

Feature 2006 2005 2004 2003
i) Gross Profit Margin : Gross Profit / Sales 37.85 35.68 26.79 18.93
ii) Operating Profit to Sales Operating Profit / Sales 4.70 4.60 (32.08) (256.20)
iii) Net Income to Sales After Tax Profit / Sales (91.79) (150.67) (37.37) (1,149.92)

E. Solvency Ratio:

Feature 2006 2005 2004 2003
i) Total Debt to Capital : Total Liabilities / T. Liabilities + Equity Capital 105.20 108.22 111.63 181.78
ii) Long Term Debt to Equity Capital: Long Term Debt/Equity Capital : (1,151.48) (850.25) (438.22)

A. Liquidity Ratio

1. Current Ratio:

It shows the amount of available meet current liabilities of the company. It also shows the short term liquidity of the company. High current ration means high current assets compared to current liabilities. Having high current liability is risky but if the proper matching is possible the company. Should go for high current liability and reduce financial cost. Navane Biponon Limited’s current ration is between .14 to .67. This is not a good current ration because the current liabilities is higher than that of current assets.

2. Acid Test Ratio:

If the sales stops at any moment how much of the current liabilities company can meet from its current asset. The difference CR and ATR is due to cash & marketable securities. Keeping huge cash balance is not good for the company. Because cash is a non earning asset unless it is deposited in to interest earning accounts. So the difference between CR & ATR should not be large.

The difference between Navana Biponon Limited’s is quite high. It means that they maintain a high balance, which is not good for the company.

B. Activity Ratio:

  1. Inventory Turnover:

It shows that how many times the company transforms its inventory in to cash. It measures the efficiency of the company. Illogic turnover means more quickly the company is able to convert its inventory in to cash. It means the company requires less capital to invest for the same amount of sales if it can ensure inventory turnover .

Inventory turnover for Navana Biponon Limited varied form 0.67 in year 2003, 2.16 in year 2004 3.19 in year 2006 is not good for the company. IT lf 2005 is good for the company.

2. Fixed Assets Turnover Ratio :

The Fixed assets turnover Ratio measure how effectively the firm uses its plant and equipment to helf generate sales. The ratio of Navana Biponon Ltd. Shows an Increasing trend from the year 2003 to 2006. This indicating that the company is using its fixed assets efficiently.

3. Receivable Turnover Ratio:

Receivable turnover ratio measures liquidity of receivable. Receivable turnover of year 2005 is better because RTR is 3.63

C. Market Measurement Ratio:

  1. Price earning Ratio:

The Price earning ratio measures the amount that investors are willing to pay for each taka of a firm’s earnings. The level of the price Earning ratio indicates the degree of confidence that inventories have in the company’s future performance. the higher price earning ratio, the higher is investor confidence. Price earning ratio of 2005 is higher than that of others. But the position of year 2004 and 2003 are Negative figure.

D.Profitability Ratio

1. Gross Profit Margin

Measures Profit generated after consideration of cost of Products Sold. This ratio actually measure the firm controls the cost of inventory or manufacturing the Products and to pass along Price Increases through the Sales of Customers. Navana Biponon Limited’s Gross Profit Ratio is 37.85 that is good sign for the company.

2. Operating Profit Margin Ratio

The Operating Profit margin measures the Percentage of each Sales Taka remaining after all costs and expenses other than interest, taxes and Preferred stock dividends are deducted. It re present the “ pure profit” earned on each Sales taka. Operating Profit are “pure” because they measure only the profit earned on operations and ignore interest, taxes and preferred stock dividends. A higher operat9ing profit margin preferred. Navana Bipnon Limited’s Operating Profit Margin in 2006 is higher than that of others.

E. Solvency ratio:

1. Total Debt Equity Ratio:

Year

Debt equity ratio measures debt to equity base use the debt carriers risk because is require the interest as well as the principal payment.

Findings

Considering all those data collect and calculated at last we came to know the about the following situation:

Ø Navana Biponon Limited is in serious liquidity crisis.

Ø It is not highly efficient in dealings with accounts receivables and inventory management.

Ø Navana Biponon Limited should increase its sales & improve its Credit policies.

Ø Gross profit is not bad but it is underweighted due to maintain a huge liabilities.

Ø Operating profit is too poor considering its huge investment.

Ø The company is maintaining a huge loss year after year, but the situation is changing very slowly.

Ø Navana Biponon Limited Maintaining a huge debt capital in comparison with its equity capital, which is also a very bad sign.

Conclusion

It is not easy task to overcome all those disaster situations at a time. But Navana Biponon Limited trying heart & soul to solve those successfully by utilizing its efficient man power, friendly environment at its office & maintaining world class qualities in its products. Now it is the time to take care the following situation pungently:

ü Improving its liquidity condition by increasing sales & improving receivables collection.

ü Improving its long term solvency problems by generating equity capital.

If Navana Biponon Limited can do so, then why not we hope for the best?

Bibliography

· The Annual Report of the Navana Biponon Limited for the year 2006

· The Annual Report of the Navana Biponon Limited for the year 2005

· The Annual Report of the Navana Biponon Limited for the year 2004

· The Annual Report of the Navana Biponon Limited for the year 2003

· Official web site of Navan Biponon Limited

http://www.navana .com

· Lawrence J. Gitman-Principles of Financial Management

· Leopold A. Bernstein John J.wild-Financial Statement Analysis