GSP Finance Company (Bangladesh) Limited (GSPB)

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GSP Finance Company (Bangladesh) Limited (GSPB)


Various important steps towards financial reform were initiated by the Government of Bangladesh to bring its economy in line with global expansion of the free market and international trading. To streamline the financial sector, the government introduced Financial Institution Act 1993 (Act 27). As a result, a healthy and stable atmosphere has been created, allowing private sector financial companies to operate smoothly and profitably, in the emerging economy of Bangladesh.

There are now 50 commercial banks of which 4 are Nationalized Banks (NBC), 30 Private Commercial Banks (PCB), 11 Foreign Commercial Banks (FCB) and Development Financial Institutions (DFI). These banks are controlled by the Bangladesh Bank Act 1991.

The county also has non-banking financial institutions (NBFI), 18 merchant banks, 6 Managers to Issue and 1 Issue Manager and Underwrite to promote its growing economy. The Financial Institution Act 1993 and Merchant Banks and Portfolio Managers Regulations govern these institutes 1996 respectively.

All these have taken place in the backdrop of an increasing demand for a more developing financial sector with more financial products to cater to the needs of increasing private sector investments. The Government’s liberalized investment policy together with the promising resources of the country is attracting investors from all over the world.

The favorable climate for financial institutions that would meet the requirements and challenges of the twenty first century in providing adequate lease financing and expertise in the industrial sector was keenly felt.

Few entrepreneurs from overseas with a vision to take up the challenges to provide the necessary financial needs and to work as an industrial development partner with a global outlook came forward to open a financial company in Bangladesh.

GSP Finance Company (Bangladesh) Limited (GSPB) was born drawing on the age-old experience rooted in the economies of the Far East. Her traditional expertise in the field of lease financing is being continually reviewed to adapt to current times and places. GSPB works with its clients changing needs into the future. At the interface between the clients and GSPB, is a team of experts, who are friendly and understanding to their needs.

The scenario in the specialized finance institutions and banking sector in providing adequate and medium to long term industrial credit has certainly increased the prospects of lease financing in Bangladesh. Growth potential is evident from the fact that leased assets as a percentage of total industrial advance are very low (around 4.5%) comparing the other countries in the region. GSPB is committed to enhance the contribution of NBFIs towards a sustainable industrial development by participating in the areas of lease financing, merchant banking and other financial services.

GSP Finance Company (Bangladesh) Limited (GSPB) was incorporated in Dhaka, Bangladesh on 29th October 1995 with the Registrar of Joint Stock Companies and Firms. It started its commercial operation from 17th April 1996 under license granted by Bangladesh Bank (Central Bank) in accordance with the Non-Banking Financial Institution Act of 1993.Mission Statement

“To be among the top rated financial institutions assisting in the industrial in the industrial development of Bangladesh by efficient providing a wide range of financial products and services to selected clients.”

at a

Incorporated in Bangladesh as Financial Institutions on October 29, 1995 as a Public Limited Company under the Companies Act 1994.

· Received Certificate of Commencement of Business in January 14, 1996 & its license on March 04, 1996 as required under Section 4(1) of the Financial Institution Act 1993.

· Started commercial operation on April 17, 1996

· Started Merchant banking operation on August 24, 1999

· Lease Assets as at December 2004 was Tk. 1349 million (apprx.)

· Number of Management Staff: 28

· Number of Secretarial/ Supporting Staff: 12

· Auditor: A. Quasem & Co.

· Legal Advisor: Lee Khan & Associates

· Tax Consultant: Adil & Associates

· Paid up capital of Tk. 170 million. Paid Up Capital of Taka 170 million.

· Current Shareholders Equity Tk. 361.52 million. There has been an enormous growth in shareholders equity since 1996. It started with Tk.150 million and gradually progressed to Tk. 333.16 million in 2003. On 31st December, 2005, shareholders equity stood at Tk. 361.52 million.

· 62.08% Shareholding is foreign, of which 42.95% are from financial institutions.

· Balanced percentage of lending exposures in diversified sectors and in quality names.

· Senior management from international banking background. Mid and junior management are professional bankers or professionals in their own fields.

· Local management empowered by the Board of Directors to act independently.

· Foreign directors from financial centers of the Far East have vast experience in international finance and capable of rendering technical/financial support.

· The company has already fulfilled the requirements of FID Circular # 02 dated 29th June 2003 of Bangladesh Bank regarding the paid up capital & statutory reserves. Company’s paid up capital & statutory reserves stand at Tk. 268.3 million as against the required amount of Tk. 250.00 million as at December 31, 2004.

Share Holing Structu

Mr. Feroz U. Haider 14.12%
Mr. Sutham Chansrichawla


GSP Finance Company Limited, Hong Kong 11.95%
GSP International Bank Limited 25.00%
Mr. Wolf-Peter Berthold 6.18%
Mr. Shareq Rahman 1.07%
Mr. Siraj U. Haider 1.67%
S. F. Haider Foundation Limited 1. 37%
Col. M. Nurul Islam ( Retd. ) 13.48%
AVM Altaf H. Choudhury ( Retd. ), NDU, M.P 0.62%
Mr. Moin U. Haider 2.35%
Non-Resident Bangladeshi 3.54%
Interfox Holdings Limited 0.86%
Total: 100.00%

List of Directors:

SL Name Status
01 Mr.Sutham Chansrichawla Chairman
02 Mr. Feroz U. Haider Managing Director
03 Mr. Gurdist Malhotra


GSP Finance Company Limited (Hong Kong)

04 Mr. Ramaswamy Soundaranjan


GSP International Bank, Vanuatu

05 Mr. Wolf Peter Berthold Director
06 Mr. Shareq Rahman Director
07 Mr. Siraj U. Haider Director
08 Ms. Silwat A. Haider


SF Haider Foundation Ltd.

09 Colonel M Nurul Islam Psc (Retd.) Director
10 Mr. Moin U. Haider Director


  • Long/Mid-Term Finance
        • Lease
        • Term Loan
  • Short Term Finance
        • Factoring of Accounts Receivables
        • Work Order Financing
        • Bridge Finance
  • Real Estate Finance
        • Individual House Loan Scheme
        • Developers Finance Scheme
        • Corporate Finance Scheme
  • Corporate Finance
        • Syndication
        • Merger & Acquisition
        • Corporate Counseling
        • Project Counseling
  • Merchant Banking
        • Issue Management
        • Underwriting
        • Private Placement
  • The Board: Institutions nominated members; responsible for establishing the Company’s strategic policies and reviewing the operating performance of the Company.
  • The Management Committee (MC): The Board appoints Management Committee; authorized to review and oversee day-to-day operational functions.
  • The Credit Evaluation Committee (CEC): Consists of the Managing Director, Deputy Managing Director(s) and the three Department heads. All proposals are first placed, before CEC, for clearance and then climbs to MC and the Board, depending upon the amount of sanction.
  • GSP Finance Company (Bangladesh) Limited follows an exhaustive credit appraisal process in making financing decisions.


Name Designation
Mr. Feroz U. Haider Managing Director & CEO
Mr. Helal Uddin Executive Director
Colonel M Nurul Islam Psc (Retd) Executive Director
Mr. M A Jalil Consultant
Mr. Harun-or-Rashid Controller, F&A
Mr. Bakhtiar Khalid DGM, C & M


  • Market penetration of leasing is above 4% of capital formation in the country vis-à-vis 20-25% in USA and Europe.
  • The leasing industry is growing, at a rate of 27.68% per annum and reached BDT9.75 Billion in the year 2003, in terms of lease execution.
  • There are 29 leasing companies in the country.
  • GSP Finance Company (Bangladesh) Limited has competitive edge in the market because of foreign institutional shareholding, good track record of growth & profitability, well diversified business, professional management team and impeccable credit standing.

For financing its business activities, GSP Finance Company (Bangladesh) Limited primarily utilizes the following sources:

  • Deposits
  • Privately placed debenture
  • Term Loan from international financial institutions
  • Term Loan from commercial banks
  • Securitization

As on December 31, 2004, total Long Term Secured Term Loan is Tk. 698,702,174.00 & total Unsecured Long Term Loan is Tk. 42,646,197.00. Current portion of Long Term Debt as is Tk. 240,998,370.00.

Since its inception, GSP Finance Company (Bangladesh) Limited has satisfied each and every liability on time.

GSPB – at a glance:

As on 31st December, 2005 (Audit conducted by A. Quasem & Co.)

SL Particulars Amount in Taka
01 Operating Revenue 234651519
02 Operating Expense 186217453
03 Profit for the Year 66200284
04 Shareholders’ Equity 361523554
05 Paid Up Capital 170,000,000
06 Long Term Loan (Secured) 622511538
07 Long Term Loan (Unsecured) 27265350
08 Current Portion of Long Term Debt 762930716
09 Lease Finance & Advances (Long Term) 52627616
10 Current Portion of Lease Assets 421301017
11 Account Receivables & Advances 76131469
12 Cash & Bank Balance 45963168
13 Fixed Assets 55589128
14 Net Current Assets 30221325


Departmentalization of GSPB

GSPB has 6 departments, which together is the main driver or backbone of organization. All the products and services are offered through and the help of these departments. The departments are:

  • Credit & Marketing Department
  • Merchant Baking Unit
  • Financial Administration Department
  • Internal Control Department
  • Human Resources
  • IT Department

The aim of GSPB is to provide quick and quality service to their both internal and external clients through the help of abovementioned departments.

The Credit & Marketing (C & M) department is related to “Lease”. Lease is the main product of GSPB and for that C & M is the most important department of GSPB (although term loan also facilitated, its portion in the total portfolio is negligible). This department does all the marketing for the organization. The “Relationship Officer” (RO) contact with the potential clients who are interested to acquire lease facilities from GSPB and collect primary information about the clients. ROs also visit the client’s business premises for which the lease finance will sanction. Based on his /her experience RO’s prepare a call report. Decision regarding whether to proceed with the lease or not is taken based on this report.

If the proposal is accepted, RO’s are also responsible for preparing credit memorandum, sanction letter, sanction advice and conduct other formalities for sanctioning the lease and close the deal.

Merchant Baking Unit

Merchant banking unit (MBU) is established in 1999, till today its operation is very limited. The only activity of this unit is to buy and sell stocks on behalf of its clients. But the list of clients is very limited. Main client of this department is GSPB itself. MBU has some selected clients for whom they trade stocks. As a result its profit contribution is also very limited. In near future this department will involve in underwriting.

Financial Administration Department

Financial Administration Department (FAD) is a supporting department of GSPB. The main activity of this department is to give financial support to C & M and MBU. As Non-Banking Financial Institution FAD does not have any activity with clients directly. Rather it is concerned with internal financial matters.

Internal Control Department

Internal Control Department (ICD) acts as an internal auditor. The major activities if ICD are to check and recheck the documents check the clients’ repayment patterns and monitor intra office activities. If there are any documents or required papers missed by the C & M department then ICD inform the RO to collect those documents. If there is any overdue occur then ICD inform the C & M to take necessary steps to collect the overdue. It can also check belonging of the officials to maintain discipline.

Executive Director (ED) is in-charge of Human Resources department. The major task of this department is recruitment, yearly evaluation of employees, increase the benefit of employees and provide training to increase the efficiency of human resources in every level.

IT Department

IT Department is support the whole operation process by developing software for C & M, MBU and FAD. It is also responsible for maintenance of equipment. The company is in process of computerizing its entire leasing process i.e. the jobs done by the C&M and accounts department will be done through computer. IT will not only save precious time but also increase employee’s efficiency. So, the responsibility of the department will enhance even more in the near future.

anization Structure

As a private limited company the Board of Directors leads by Chairman and Managing director. Managing Director (MD) also heads both Credit & Marketing (C & M) Department and Internal Control Department (ICD). Assistant General Manager (AGM) heads Financial Administration Department (FAD). Executive Director (ED) is in the in the charge of Human Resource activities and overall administration. There are 21 management staffs who are supported by 12 supporting staffs.

Share holding structure of GSPB

GSPB’s authorized capital is Tk. 1000 million of which Tk. 170 million is fully paid-up. As at 31st December 2004, shareholders equity stood at Tk. 337 million. 10% of the total shareholding is earmarked for future public offering within the next year or so.

Products of GSPB

The market is very competitive and the requirements of clients are increasing very rapidly. GSPB starts its operation with lease financing, as the market and clients demand dictate the activities of GSPB increasing to meet the need of its valuable clients as well as to stay in the market

At present GSPB focused on the following activities.

1. Lease Financing & Term Lending
2. Merchant Banking Operation
3. Money Market Operation
4. Other Financial Market Operations

Table: Lists of Products

Lease Financing

The principal focus of the company is on the business of lease financing of capital goods for industries such as plant, machinery and equipment, construction equipment, marine/road transport, medical equipment, office equipment, power generator, boiler etc.

GSPB emphasized strongly on diversifying its sector wise portfolio and identifying the optimum strategies for the top end of corporate business houses, private entrepreneurs and keen desire to expand the portfolio between small and medium business houses.

Its aims at assisting clients to understand the dynamism and flexibility of lease finance and identify the characteristics of the market for exploiting dormant opportunities.

Under this activity, GSPB’s principal focus is on Financial Capital Market such as Mutual fund, Bridging Loans, Underwriting, Issue Management, Pre IPO Placement Management, Portfolio Management and Investment in Shares, Stocks, Bonds, Debentures or Debenture Stocks.

Among these above activities Merchant Banking Operation only does investment in Shares, Stocks, Bonds, Debentures or Debenture Stocks. But very recently the company will introduce portfolio management to its clients.

Money Market Operation

The company is engage in money market activities (placing and accepting Term Deposit) primarily in connection with its lending/funding operations.

In October 2002 GSPB introduced debenture for its clients. Till date only few commercial banks are availing this facility. The portion of debenture in the portfolio is very small. The tenure for debenture is 3 (three) years. The funding rise by debenture in added to the working capital of GSPB.

Other Financial Market Operations

GSPB plans to focus on diverse financial services like Hire Purchase, Venture Capital to finance medium sized companies with clean record, good and sound management.

Significant Policies:

Basis of Accounting

The accounting have been prepared based on the operating method of lease under historical cost convention of GAAP (General Accepted Accounting Principal)

Accounting for Lease

Operational revenue consists of lease rental receivable on monthly installment while depreciation on lease is accounted for as operational expenses.


Property, Plant and equipments for company’s own use is depreciated based on Straight-line Method from the date of their acquisition.

Lease assets are depreciated over the lease period.


The company has enjoyed tax exemption facilities for a period of five years commencing from April 17, 1996 to April 16, 2001.

Accounting Practice:

On accounting of lease different countries have different standards but Bangladesh does not follow any specific standard. In this sub-continent normally following two are referred:

  • International Act Standard 17, issued by International Accounting Standard Committee (IASC)
  • Statement of Standard Accounting Practice 21, issued by Accounting Standard Committee (ASC)
  • Both ICAB and ICMAB have not yet established any accounting standard for leasing. In Bangladesh legally or ethically no binding for following the standard published by IASC. But in view of membership of IASC it can be anticipated that accounting for leasing in Bangladesh should be guided by IAS 17.

As per IAS 17 most of the lease financed by the leasing companies in Bangladesh can be classified as a finance lease for which lessee is entitle to show the lease asset in their book and also entitle to change depreciation thereon. But existing tax laws do not support this treatment. As per law the legal owner of the asset is only entitled to show the assets in their books and changing depreciation thereon. So to avoid complicacy with the tax department and for other legal purpose leasing companies in Bangladesh are following the operating method of accounting. Differences are shown as under:

Item As per IAS – 17 Bangladesh Practice
Income Statement Initial Direct Cost to be charged to income as the inception of lease.

Finance income to be associated to produce a constant periodic return on outstanding net investment.

a. Lease rentals as income on straight line or other systematic basis representing the time pattern of rental schedule.

Depreciation as an expense as pre interest method matching with rental schedule.

Balance Sheet Gross investment in lease (Minimum Lease Payment + Unguaranted Residual Value).

Unearned income (Gross Investment in Lease – Present Value of Gross Investment in Lease) as liability.

Lease equipment under lease asset caption as asset after deducting accumulated depreciation thereon.
Disclosure Basis used for allocating income to produce a constant rate of return. Basis or charging depreciation of lease assets

Table 2.3 Different Methods of Accounting


As present the borrowed funds of GSPB consists of 6 (six) instruments, which are follows:

  • Term Loan
  • Term Deposit
  • Overnight Borrowing/Call Money
  • Lease Deposit
  • Overdraft Facilities
  • CBSF (Credit Bridge Standby Facility) Fund

The company has over Tk. 337 million on its equity. As on December 31, 2004 total borrowing of GSPB is estimated to be Tk. 1332 million.

Major portion of fund collected from the term loan from different banks. The cost of term loan (floating rate) from banks is now as high as 11.5% – 14%, which is a serious impediment for any leasing company to compete with the commercial banks leasing. The World Bank’s CBSF project helps GSPB to some extent to get fund at lower cost. Including GSPB only 5 (five) leasing companies are currently eligible for this fund. These companies are allowed to get fund of $4.00 million. GSPB has by this time used the 80% of the allocated fund.

The credit facility extended to GSPB by the following banks:

  • Standard Chartered Bank
  • BRAC Bank
  • Basic Bank
  • Export Import Bank of Bangladesh (EXIM Bank)
  • Pubali Bank Ltd.
  • Prime Bank Ltd.
  • Southeast Bank Ltd.
  • The City Bank Ltd.
  • United Commercial Bank Ltd. (UCBL)

The credit lines from banks are taken in the form of term loan of 5 (five) years and also as a continuous loan in which the debt portion is changed continuously as the leasing firms repaying the loan. Among the total borrowed fund term loan is 23.

Financial Analysis

GSP Finance Company (Bangladesh) Ltd.
Profit & Loss Account
Particulars 2005 2004 2003 2002 Trend
Operating Revenue
Lease Rental 198462776 467,021,281 501,509,917 391,281,996 Fluctuating
Other Income 36188743 45,718,645 22,592,949 19,635,582 Increasing
Total Operating Income 234651519 512,739,926 524,102,866 410,917,578 Fluctuating
Operating Expenses 186217453 446,787,517 445,414,605 303,710,462 Increasing
Profit for the Year 66200284 65,952,409 78,688,261 107,207,116 Decreasing
Balance Sheet
Particulars 2005 2,004 2,003 2,002 Trend
Sources of Fund
Equity Position
Share Capital 170,000,000 170,000,000 170,000,000 170,000,000 Constant
Statutory Reserve 111511276 98,271,219 85,080,737 69,343,085 Increasing
General Reserve 26202708 26,202,708 16,117,566 14,867,566 Increasing
Retained Earnings 53809570 42,924,343 61,957,558 38,506,949 Fluctuating
Total Equity 361523554 337,398,270 333,155,861 292,717,600 Increasing
Liability Position
Long Term Liability 762930716 873,763,817 726,227,590 750,724,853 Fluctuating
Current Liabilities 674538290 458,601,699 322,954,670 98,054,765 Increasing
Total Liability 1437469006 1,332,365,516 1,049,182,260 848,779,618 Increasing
Total Sources of Fund 1439946670 1,669,763,786 1,382,338,121 1,141,497,219 Increasing
Applications of Fund
Lease Finance & Advances 52627617 1,137,205,549 935,402,846 948,044,261 Fluctuating
Current Assets 704759615 477,237,612 392,244,967 139,096,453 Increasing
Fixed Assets 55598128 55,320,625 54,690,307 54,356,505 Increasing
Total Assets 1764565126 1,669,763,786 1,382,338,120 1,141,497,219 Increasing
Total Applications of Fund 1764565126 1,669,763,786 1,382,338,120 1,141,497,219 Increasing
Particulars 2005 2,004 2,003 2,002 Trend
Current Ratio 1.045 1.04 1.21 1.42 Decreasing
Debt-Equity Ratio 3.98 3.95 3.15 2.90 Increasing
Operating Profit Margin 9.17% 14.12% 15.69% 27.40% Decreasing
Return on Equity 14.88% 19.55% 23.62% 36.62% Decreasing
Sales to Total Assets 0.41 0.28 0.36 0.34 Fluctuating
Total Asset to Total Liabilities 1.22 1.25 1.32 1.34 Decreasing
Return on Total Assets 3.75% 3.95% 5.69% 9.39% Decreasing
Earnings Per Share 38.94 38.80 46.29 63.06 Decreasing
  • There is a fluctuating trend in the Lease Rental figures over the years 2002, 2003, 2004 & 2005. Though Lease Rental went up in 2003, it went bit down in 2004 & 2005. The reason behind the decreased lease rental is less aggressive business in 2004 & 2005, particularly for higher interest rate, low volume business in early 2005.
  • Other Income has a constant positive growth over the last 03 years except 2005. Other income consists Interest on Loan, Interest on Bank Account & Miscellaneous Income particularly from Merchant Banking Unit.
  • Total operating income has a fluctuating trend over the last 03 years 2002, 2003, 2004 & 2005 due to fluctuating mood in Lease Rental.
  • Operating Expenses has a positive trend over the last 03 years, which is quite normal for a growing company. But in 2005 it tends to decrease.
  • Share Capital of Tk. 17.00 crore is constant and no additional shares have been issued meanwhile. Both the statutory Reserve & General Reserve have an increasing trend over the last three years 2002, 2003, 2004 & 2005. Retained Earnings is in a fluctuating mood over the years (2002, 2003 & 2004) having a fall in 2004. Lower profit during the year 2004 is the reason behind the scene. It has increased in 2005.
  • Total Equity position has an increasing trend over the last four years.
  • Long Term Liabilities has fluctuating trend over the years 2002, 2003, 2004 & 2005. Long Term Liability position goes up in 2004. Long Term Liabilities comprise Lease Advances, Advance Lease Rental, Secured Term Loan, Un-secured Term Loan & Term Deposits.
  • Current Liabilities has an increasing trend over the years which make the total Liability Position increasing over the said 04 years 2002, 2003, 2004 & 2005. Current Liabilities comprise Payable & Accrued Expenses, Short Term Loans & the current portion of Long Term Loans.
  • Total Sources of Fund is creasing over the years due to steady growth in Equity Position & Total Liability Position.
  • Lease Finance & Advances have a fluctuation trend over the four years. Though it goes bit down in 2003, it further increases in 2004 and again goes down in 2005.
  • Current Assets have an increasing trend over the years except 2005 at which rapid decrease in asset has been occurred. Current Assets mainly comprise Investment in Shares, Accounts Receivables & Advances, Current Portion of Lease Assets, Cash & Bank Balance. The increasing trend is due to higher Investment in Shares net of provision & current portion of Lease Assets over the years.
  • Fixed Assets has an increasing trend over the years.
  • Total Asset Position has an increasing trend which ultimately causes the total application of fund increasing over the years.

Ratio Analysis:

Ratio A

  • Liquidity Ratio

Liquidity Ratio measures the extent to which the firm can service its immediate obligation in effect assessing the firm’s ability to meet short run financial contingencies. In this case only the current ratio is calculated for the company to assess its ability to meet the short-term obligations since the company does not have inventory or other less liquid asset.

First of all, liquidity ratios in the form of current ratio, which will state the liquidity position of the company to meet short-term obligations. As a conventional rule, a current ratio of to 1 or more is considered satisfactory for the leasing company i.e. the higher the current ratio, the larger the amount of taka available per taka of current liability, the more the firms ability to meet the current obligation and the greater the safety of fund of short term creditors. But the too high a current ratio implies that more assets are in liquid form, which can otherwise be used to get higher return.

Current Ratio for GSPB though satisfactory; i.e, greater than 1, it has an decreasing trend over the years. This is due to higher percentage change in current liability than that of current assets.

Leverage Ratio

Leverage Ratio indicates in what extant the firm has financed its investment by borrowing. These ratios focus on the firm’s financial structure. The issues are the amount of debt the firm is using and the firm’s ability to serve its debt. To judge these two issues debt equity ratio and financial expenses coverage ratios are calculated respectively.

Debt equity ratio indicates the relation that exists between long-term debt and equity. It is computed by dividing long-term debt by equity. The ratio is considered a very important tool for the analysis of the long-term financial solvency of any concern. It indicates the relative proportion of long-term debt and proprietors fund to the total assets of the business. The conventional ratio is 1:2, i.e., for every one taka of equity; long-tern debt should be 50 paisa. The debt equity ratio of 5 times is acceptable for the leasing company. High ratio indicates too much dependence over long-term debts and low ratio is the symptoms of much conservatism to the owner’s fund. The debt equity ratio has increased in every succeeding years under study but the ratio of GSPB is within the acceptable limit.

The ratio has an increasing trend over the years 2002, 2003 & 2004.

The Debt-Service Coverage Ratio is analyzed at our subsequent chapter when analyzing the CBSF ongoing eligibility.

  • Profitability Ratio

Profitability Ratio measures the profit of the firm relative to sales, assets or equity. Profitability ratios describe the past profitability of the firm. Profitability of a firm can be judge through several ratios like; Return on Equity (ROE), Profit Margin, Earning Per Share (EPS) etc.

The Return on Equity standard is at least 10% as per our observation, though there is no hard &fast rule practiced in Bangladesh. The ratio shows GSPB is maintaining a standard ROE (though decreasing over the last three years), 36.62%, 23.62% & 19.55% for the years 2002, 2003 & 2003 respectively. The reason is the decreasing trend in available profit.

The standard Operating profit margin, as per our observation is 12%, which is followed by many leasing companies. GSPB, though having a decreasing trend, has been maintaining the standard ratio.

EPS also reflects the upright performance with the expansion of shareholders equity. In Bangladesh, many assumes 10% earrings per share is standard. GSPB’s EPS much higher than the standard (Tk. 63.06, Tk. 46.29 & Tk. 38.80 / share over the years 2002, 2003 & 2003 respectively) though having a decreasing trend.

  • Operational Efficiency

The trend in cost income ratio shows decrease in the cost as a proportion to income over time, which is a good indication for the profitability of the firm. This is due to good increase in the earning power of the company and lesser growth in the cost component.

ROA can be used to state the operational efficiency of the assets. For ROA no standard is used but the higher the ratio the better it is. Over the last three years the ROA position of GSPB is going down ranging from 9.39% to 3.95% from 2002 to 03.

Cash Flow Position
Particulars 2005 2004 2003
Net Cash Provided by operating Activities 6901098 192,387,172 276,005,597
Net Cash Used in Investment Activities (36965772) (460,047,635) (435,765,853)
Net Cash Provided by Financing Activities 54486735 268,918,549 155,230,403
Net Increase/Decrease in Cash & Bank Balance 24422061 1,258,086 (4,529,853)
Add. Opening Cash & Bank Balance 21541706 20,283,021 24,812,874
Closing Cash & Bank Balance 45963168 21,541,107 20,283,021

Cash Flow Analysis:

  • The cash generated from the operating activities is positive for the years 2005, 2004 & 2003, which is positive sign of the company. The positive cash flow from operating activities indicates that GSPB is efficient in its operation.
  • Negative Cash Flow from Investment Activities implies the client is expending more on Fixed Assets, Investment etc than that of selling.
  • The positive cash flow from Financing Activities implies the company is having more loans / advances than that of interest payment or dividend payment.
  • The overall cash flow is positive for the years 2002, 2003 & 2004 though net change in 2003 was negative.
  • Based on above calculations, it can be concluded that the company is still growing, which is proved by high investment.

GSP Finance Company (Bangladesh) Ltd. has been availing Funds under CBSF (Credit, Bridge & Standby Facility), a project funded by World Bank IDA funded project under Bangladesh Bank-GoB supervision managed by Vinster, New Zealand. Only 05 companies in Bangladesh has been availing the facility. They are IPDC, ULC, IDLC, Prime Finance & GSP Finance Company (Bangladesh) Ltd. The major facility under the project us availing credit facility at a very lower rate 7% to 8% on an average.

To be eligible for the CBSF Funding, Participating Financial Institutions (PFIs) must comply with some criteria followed by CBSF. The ratios & all the figures asked for CBSF are of their own standard. All the criteria & GSP’s financial figures (based on 2003 audited statement) are presented as below.




Sl. Criteria Requirement Actual Compliance Status Comment
Compliance with relevant and prudential regulations of Bangladesh FI shall comply with applicable laws and Bangladesh Bank Prudential regulations. Complied. Company was incorporated under Companies Act 1994. Guided by Financial Institution Act, 1993 and all NBFI circulars / instructions followed meticulously. Merchant Banks and Portfolio managers’ regulation, 1996 and SEC rules are followed. Date of Incorporation is October 29, 1995. Commercial Operation started from April 17, 1996. BB license received on March 04, 1996. Permission for Merchant Banking received on August 24, 1999. Legally it’s a public company limited by shares (not listed). IPO is under process. List of directors is attached. OK
Adequacy of Provisions Comparison of provision required by BB regulations and the amount of provision made by FI BB Circular No. FID/14/2000 for Financial Institutions.

(Detail break-down attached as per Annexure ‘A’)

GSPB maintains a General provision on Principal Outstanding to follow prudent accounting. GSPB made provision on (02) two classified A/C as per BB circular.
Rate of Real Return Positive Real Rate of Return 26.72%

(Working pape