Ratio Analysis of Three Mills under BJMC

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CHAPTER ONE

INTRODUCTION

Bangladesh Jute Mills Corporation (BJMC), the sole jute mills
conglomerate of the govt. republic
of Bangladesh
, presents a
significant role for the jute market here and abroad.  It plays an important role for the economic
development of Bangladesh.
BJMC acts as a commercial consideration with due regard to the interest of
industry, commerce, depositors, and investors and to the public in general. As
an investment bank BJMC plays a vital role in the economic development process
of the country. To play this vital role effectively as well as for providing better
customer services to clients, adequate disclosure of information is necessary
and to what extend to what extend BJMC in Bangladesh should disclose the
required information is a matter of deep concern.

 

Objectives of the Report-

The main objectives of education are to acquire the knowledge. To acquire
the knowledge ultimately we must do some practical applications in addition to
theoretical knowledge. Thus the following are the important objectives:

(i) Acquiring experience
that will help in future working life.

(ii)   To get aware about the
working environment in advance that will

help to adjust us with
the future working life.

(iii) To know the activities
of the BJMC.

(iv)   To know how BJMC play an
important role in the Jute market.

(v)   To
know the contribution of BJMC to the Gross Domestic Product.

(vi) To
know the association of BJMC with other macro economic

Variables.

(Vii)   To
evaluate the trend growth rate and acceleration of

Industrialization.

(Viii) To
get overall idea about the operation of BJMC.

Methodology
of the study:

In order to prepare the assigned
project paper I have collected necessary

information from three types of
sources as follows.

a. Primary
sources of information.

b.   Secondary
sources of information and

c.   Statistical
sources

a.
  Primary sources of information:

I have collected primary information
from various sources which are given bellow:

1. Direct interviews

III.
Official records

b. Secondary information:

I
have collected secondary Information from various sources which are given
bellow-.

(I)
Annual reports of selected mills of BJMC.

(II)
Materials & document of BJMC.

(III
General Information

(IV)Bangladesh
Bureau of Statistics; and

c. Statistical information:

I
have collected statistical information from various sources which are given
bellow:

I. Graphical presentation,

II. Growth rate and

III. Trend analysis.

For
some certain causes I could not afford to conduct my study properly. I have
considered these causes as my limitation of the study which are follows-.

I. The authority did not provide us some
significant information because of their internal confidentiality.

II.
  Political instability such as
hartal during our internship.

VII. The individual department does not
maintain any summary of their work..

IX. BJMC is a large institution and it is
very difficult to understand each  and
every aspect of its operation within a very short time.

Chapter Two

Overview of BJMC and its three selected
mills

Background of Jute industry

Jute
was the principal cash crop of Bangladesh.
Considering the importance of Jute. to the national economy, the Ministry of Jute
(now defunct and merged as Basra o Pat Ministry)
was created in 1976 as a separate ministry through elevating the Jute Division.
Bangladesh
is the only country in the world having an exclusive ministry to look after the
cause of jute.

In
the past, jute sector was the major foreign exchange earner, contributing more
than 80 percent of the total foreign exchange of the country. But the share of
jute sector towards foreign exchange earning started to decline due to the
inroad of various synthetic substitutes and artificial fibers. Nevertheless,
the importance of Jute in the national economy of Bangladesh can hardly be
overemphasized, as it is still the third important source of foreign exchange.
Jute is the major cash crop of the country and about 3-3.5 million farmers are
associated with production of Jute. Almost one fifth of the total population of
the country is directly or indirectly involved in Jute production,
transportation, processing and marketing. The jute sector provides about 10 per
cent of total employment in the economy.

The
Ministry of Jute is responsible for overall development of the jute sector. As
per the work distributions, the following are the functions of the ministry of
Jute:

* Jute policy.

* Administration of Jute Ordinance.

* Internal and external marketing of
jute.

* Determination and control of prices of
raw jute and jute goods and export price checks.

* Collection and publication of
statistics in respect of jute production, jute marketing and export thereof.

* Coordination and monitoring export of
jute and related matters.

* Formulation and administration of Jute industry’s policy.

* Collection and publication of
statistics in respect to the jute industry, production and exports, etc.

* Promotion and development of foreign
investment in jute industries and employment of foreigners in Jute industry and
trade.

* Correspondence, contracts and
agreements with international organization and other countries for technical
cooperation and assistance and promotion of Jute industry.

* Regulation and control of the standard
and quality of jute products in the Jute industry.

* Determination of the requirements of
spare parts and raw materials for Jute industries and reviewing- the -idling,
policies thereof

* Research on and development of Jute
industry.

* Administration of loan and government
subsidy to Jute industry.

* Fixation and control of price of jute
goods.

* Protection of Bangladesh shareholding interests
in Jute mills abroad.

* Collaboration in establishment of jute
industry with foreign countries.

* Super-vision and regulation of dealing
in jute and jute manufactures.

* Agreement for transports and shipments
of jute and jute manufactured within the country and to foreign countries.

* Regulation and issue of licenses to
dealers in or exporters of jute and jute manufactures and occupiers of jute
mills and if necessary, suspension and cancellation of such license,

* No matters, relating to jute and jute
products.

* Secretariat administration including
financial matters.

* Administration and control of
subordinate offices and organizations under this Ministry.

* Liaison with international
organizations and matters relating to treaties and agreements with other
countries and world bodies relating to subjects allotted to this Ministry.

* All laws on subjects allotted to this
Ministry.

* Inquiries and statistics on any of the
subjects allotted to this ministry.

* Fees in respect of any of the subjects
allotted to this ministry except fees taken in courts.

Information Chart on Jute Goods for the
Last 5 Years:

(Volume
in thousand MT)

Year

Production
(in thousand MT)

Internal
use  (in thousands (MT)

11997-98

544

102

354(65%)

9358.2

$205,872

1998-99

516

93

440(85%)

11296.9

$235.037

1999-2000

498

93

414(85%)

11330.7

$225.212

2000-2001

483

87

426(88%)

12040.1

$233.133

2001-2002

536

81

42
1 (79%)

1260
1.2

$219.999

2002-2003

548

80

423(82%)

12846.50

$221.483

Figure: Export Earnings

Departments/Corporations working under
the Ministry of Jute:

• Department
of Jute*.

• Bangladesh
Jute Mills Corporation (BJMC)

• Bangladesh
Jute Corporation (BJC)

• Jute
Diversification Promotion Centre (JDPC)

Jute Related Private Associations’.

Bangladesh Jute Mills Associations
(BJMA)

Bangladesh Jute Spinners’
Association (BJSA)

Bangladesh Jute Association (BJA)

Department of Jute:

The
Department of Jute is relatively a new establishment, which was set up in

1992
through Merger of the then Directorate of jute and Directorate of Inspection

for
Jute and Jute Goods. The functions and responsibilities of the directorate are
as

follow:
3. Undertake
control measures in accordance with the Jute Growers’ (Borders   Areas) Act 1974.
4. Identify
the businessmen engaged in illegal trading of Jute and jute goods   without trade license and punish them as
per the existing rules.
6. Collect
revenue from issuance and renewal of license in trading of jute and   jute goods.
8. Inspect
and evaluate quality of jute goods produced by the Jute mills.
9. Supervise
standard testing methods of jute mills.
10. Assist
the jute mills in the inspection and maintaining quality control aspects.
11. Prepare
audit of annual stock of jute and Jute goods and maintain it for use by concerned agencies.

Bangladesh Jute Mills Corporation (BJMC)

The Bangladesh Jute Mills Corporation
(BJMC) was established as a statutory body under the Presidential Order 27 of
26 March 1972. Through this
order, the overall operation, management, maintenance and future development
agenda of all the jute mills of
Bangladesh
under private ownership and erstwhile East Pakistan Industrial Development
Corporation (EPIDC) were placed under BJMC.
The main objectives of the
organization were to run the jute mills under a single organization and to
expand the industry towards augmenting foreign exchange earning from jute goods.
At the time of nationalization, there were a total of 77 jute mills in the
country. But subsequently, it was evident that the nationalization attempt did
not really help improve the performance of the jute mills. Rather, their
performance marked continuous deterioration, which called for the necessity of
privatization of Jute industry of the 77 nationalized jute mills, 35 mills were
transferred to their original owners in between 1982-1983, leaving the rest to
continue under BJMC. Presently BJMC has an installed loom capacity of over
13,000 of which around 70-75 % remain in operation.
On an average, BJMC produces about
200-250 thousand metric tons of jute goods
annually of which almost 85 percent
are exported fetching about Tk. 6000 million on an annual basis. The products
are mainly Hessian, Sacking, CBC, Carpets, Mats, Felts, Yarn/Twine, etc. The
non-traditional product range includes natural, Bleached and Colored Finer Jute
Fabric (FJF) and products thereof, such as decorative fabric, household  items, carry bags, fashion bags, purses and
other consumer items, BJMC also produces Food-Grade Jute Bags, Jute
Intermediate Bulk Container (JIBC), Geo-jute (Soil saver), and various rot
proof fabrics, sacks and sheets.
The production and export figures of
BJMC products during the last 5 years are as follows:

Year

Production

(in.000
MT)

(in
.000 MT)

(in
million Taka)

1997-98

255

160

4620

1998-99

236

220

5614

1999-00

235

202

5411

2000-01

246

223

5996

2001-02

249

217

6474

12002-03

252

220

6528

(Source:
BJMC / MIS)

Figure: Exports Earnings

The Bangladesh Jute Corporation (BJC-
Liquidated)

The Bangladesh jute corporation (BJC)
was established in 1985 thought merger of the erstwhile Jute Marketing
Corporation (JMC), Jute Trading Corporation (JTC), Bangladesh Jute Exporting
Corporation (BJEC) and APC Rally to conduct jute-trading activities on a
commercial basis both in domestic and international market under public sector.
The operation and management of the organization was vested on a management
board headed by a Chairman and assisted by, among others, three regular
directors and two directors nominated by the Ministry of Jute and Ministry of
Finance.
But in view of continuous loss
incurred by the organization, the government decided to abolish the same
through liquidation of its physical assets spreading over various parts of the
country through competitive bidding. Although started much earlier, the
progress of disposal of the assets is very slow as yet. The details of assets
of BJC and the progress of liquidation are as follows:

Jute Diversification Promotion Centre:

The Ministry of Jute, Government of
Bangladesh has set up Jute Diversification Promotion Centre (JDPC) through an
Office Memorandum on
31st
October, 2002
. The JDPC has been created with the VISION of
reviving the past glory of Jute as “Golden Fiber” through extension
of uses of Jute by vertical and horizontal diversification and thereby
improving the socio-economic conditions of the all section of people involved
directly and indirectly with the Jute Sector. The major objectives of the
Centre are as follows

Objectives

To explore and promote new
technologies for production of high value added diversified Jute products by
maintaining, close contact with various R & D organizations and by way of
conducting feasibility studies, surveys etc. and disseminate those to the
prospective entrepreneurs,
To review and formulate appropriate
policies for diversification of jute, goods on a continuous basis.
To facilitate quick implementation of
identified diversified projects.
To explore market potentials for
diversified products both at home and abroad.
To explore possibility of
manufacturing high value added diversified jute products in the existing
“jute mills and if possible, promote and provided support for it.
To make in-depth evaluation of Jute
diversified products and of projects submitted to the JDPC.
To arrange financing for diversified
Jute projects. The Jute Diversification Promotion Centre (JDPC) is comprised of
the following three sections-
(i) Technology transfer and project
feasibility section,
(iii) Programme and project monitoring section.
List of potential technologies//
project areas so far identified for establishing diversified Jute industries
with the help of JDPC and private entrepreneurs’.
(1) Chemical
Treatment of Jute for Dezincification.
(2) Mini
Spinning of Jute Blended Yarns.
(3) Fine
Yarn Spinning of Jute Blended with other Fibers.
(4) Integrated
Wet Processing Plant.
(5) Jute
Reinforced Plastics Granules.
(6) Flexible
Jute Bags for Tea Packaging.
(7) Non-Woven
Jute Products.
(8) Friction
Spinning Technology.
(9) Wood
Substitute from Jute. Sliver.
(11) Jute Products from Pultrusion
Technology.
In addition, search of technology for diversification of Jute uses are
going on both nationally and internationally through constant contact with
R&D organizations like BJRI, BCSIR, URIA, IFIH, IJSG etc. Moreover various
information about wet processing technologies is available for ready reference.
A total of 16 Jute diversified industrial projects were submitted to
different Banks for sanctioning loans. Out of those, 2 projects designed for
producing Jute blended fine yam and linoleum have been sanctioned with loans
and implementation of one of the projects is nearing completion. Two other
diversified pr Jests Outer blended denim and Jute blended yam) are in the
process of granting loans by the Bank. Two other diversified projects aiming,
at producing blanket and fine yarn for household textiles are under active
considerations of the JDPC. Other prospective entrepreneurs, who are lacking
zeal and enthusiasm, are under scrutiny and continuous touch of the JDPC and
different commercial banks. However, at the same time the JDPC is looking for
new entrepreneurs.
Jute
Related Private Associations

Bangladesh Jute Mills Association (BJMA):

The Bangladesh Jute Mills Association (BJMA) is an organized body of the
owners of the private Jute mills operating in the country. The organization was
created for sharing the problems and prospects in running the Jute mills under
private sector smoothly. There are 35 Jute mills under the organization having
a bristled loom capacity of more than 10 thousand. But for various reasons, 10
jute mills are currently running with 25 percent of the installed loom in
operation. Having more than 40 percent of the loom capacity in case of
composite mills, BJMA mills are contributing20-25 of the total production of
the traditional jute goods. The BJMA produces about 60-70 thousand metric tons
of jute goods annually, of which 50-60 percent is exported, earning about Tk
1300-1400 million in foreign exchange on an annual basis. The products are
mainly Hessian, sacking and CBC.
The production and export volume of BJMA products during the last five
years are as follows:

Year

Production (in thousand MT)

Actual Export(in thousand MT)

Export earnings in million taka (in
million US dollars)

1997-98

154

76

2209.0(48.60)

1998-99

132

79

2011.6(41.84)

1999-2000

104

68

1904.6(37.86)

2000-2001

82

43

1344.2(24.91)

2001-2002

72

40

1362.50(23.79)

2002-2003

75

43

1564.84(25.68)

 

This association was formed and
started activities in 1950 and was registered in 1959 in the name of ‘Pakistan
Jute Association’. After the emergence of
Bangladesh
it has become
Bangladesh
jute association (BJA).
The main objects of this Association are the following:

To
promote and protect the Jute Trade in
Bangladesh.

To watch over and protect the general
commercial interests in every sphere of the jute trade of
Bangladesh or any part thereof and the interest
of persons engaged in the jute trade in
Bangladesh.  To take up., consider and discuss questions
connected with or affecting, the jute trade.
To promote or oppose legislative and
other matters affecting the jute trade. 
To collect and circulate statistics and other information relating to
the jute trade.  To make adjustment if
controversies arise between members of the Association,  To arbitrate and settle the disputes arising
out of the commercial transactions of all kinds and grades of raw jute referred
to the Association by the buyers’ sellers (both at home and abroad).  To establish Just and equitable principles in
the jute trade.
To form a code or codes of practice
to simplify and facilitate transaction of business in jute.

INSTITUTIONAL OVERVIEW

Name-
THE CRESCENT JUTE MILLS LTD., Situation- It established in town khalishpur,
khulna dated on January 15,1962. Area-
58.40 Acres

Introduction:

THE
CRESCENT JUTE MILLS LTD. is a prestigious mill of the Bangladesh Jute Mills
Corporations (BJMC).  It has five units
as under:

Unit
No.

No.
of Machinery

Types
of Machinery

Established

1.

506

Narrow
looms 

1953

2.

200

Narrow
looms

1956

3.

100

Broad
looms

1970

4.

10

Premier
Lamination plant

2002

5

20

Looms
Associate ABC

2003

Manpower
as on
26 September, 2004:

[
Types

Set
up 

Existing

Short

Excess

a.
Officers

170

131

39

0

b.
Staffs

445

378

67

0

Total

615

509

106

0

c.
Workers:

i)
Permanent

ii
Badli

4734

0

3536

2073

1198

0

0

Grand
-Total

5469

5604

1304

0

 Raw materials:

 Machinery and spares: 85% of spares are manufactured in
mills own general workshops. The rest quantities are purchased from local
market or imported from foreign market.
Trade
Union: There are four registered trade unions in the mill compound as
under-.
CRESCENT
Jute Mills Sramik Shangha Registered No. 190
CRESCENT Jute Mills Sramik Unions Registered No. 86.
CRESCENT
Jute Mills Sramik Parishad Registered No. 145.
CRESCENT Jute Mills Sramik Kallayan
Parishad Registered No.
Among the unions Srarmk Shangha has
been elected as Collective Bargaining Agent (CBA) through election for a period
of two years.These unions maintained good relation with the mill’s management.
In most cases, the leaders trade union play constructive role to improve the
performance of the mill.
Welfare Activities:

Types of Employee

Family Accommodation

Bachelor Accommodation

II. Officers

53

29

11I, Staffs

35

54

III Workers

4

1660

Total

92

1743

Secondary High School
is run by mill’s management, which extends free education to children of
workers, staffs and officers.

Club: The mill has separate clubs for officers, staffs and
workers for entertainment. The working environment o f the mill is
satisfactory. If the manufactured goods Could be marketed in time at a good
competitive price the mill would be viable.

Accounting System of TCJML:

Most of government organization,
there are used the manual accounting system. All the document of the accounts
and audit section are maintained on the basis of manual accounting system even
section of Management Information System. Manual based accounting system is not
converted into the computer based accounting because of various reasons which
are~
I.
Lack of skilled manpower.
ii. Lack
of financial resources.
III Lack
of willingness of the general manager and also employee to change the accounting system of organization.
v. Intervention
of the leader of trade union.
All documents keep in according to
the ancient method. They prepare all document and even financial statement
through the typewriter and also the hand writing rather than computer-based
system. There is no changed o f recording system of BJMC after the liberation
of
Bangladesh.
As a result, documents of BJMC are stored in a room for the purposes of future
needs. If accounting system is computer based there are many benefit on behalf
of organization, which are~
I. Reduce
the employee of TCJML.
11. Together
the skilled manpower.
III. To
reduce the time consumption.
iv. To
reduce the costs of recording document.
vi. There
is no need of physical storage room.

vii.
To make financial statement easily

RAJSHSHI JUTE MILLS LIMITED

Name:
Rajshshi Jute mills Limited. Situation- It established at SHYMPUR  in RAJSHAHI

Introduction:

Rajshshi
Jute Mills Limited is a prestigious mill of the Bangladesh Jute Mills
Corporations (BJMC).  It has five units
as under

Unit
No.

No.
of Machinery

Types
of Machinery

Established

1.

385

Narrow
looms 

1953

2.

113

Narrow
looms

1956

3.

58

Broad
looms

1970

4.

5

Premier
Lamination plant

2002

5

15

Looms
Associate ABC

2003

Manpower as on 26 September, 2004:

[
Types

Set
up 

Existing

Short

Excess

a.
Officers

105

95

24

0

b.
Staffs

340

278

62

0

Total

395

209

86

0

c.
Workers:

i)
Permanent

ii
Badli

2120

0

1006

2073

2564

0

0

Grand
–Total

0

RJM fixed up the production budget of
21862 million ton and 7359 million ton per day for the financial year
2004-2005. The mill runs three shifts (A, &C), in mill inside and two in
factory side. The mill produces mainly Hessian , Sacking and Carpet Backing
Cloth (CBC) and all types of bags.

Raw materials:

Machinery and spares: 85% of spares are manufactured in mills own general workshops. The rest
quantities are purchased from local market or imported from foreign market.

Sales and export: The manufactured jute goods of the mill are being, sold by BJMC
marketing division. 90% of the finished goods are exported to foreign countries
and rests 10% are sold all over the country.

Rajshshi Jute Mills Sramik Shangha
Registered No. 23.
Rajshshi Jute Mills Sramik Unions
Registered No. 106.
Rajshshi Jute Mills Sramik Parishad
Registered No. 1515.
Rajshshi Jute Mills Sramik Kallayan
Parishad Registered No. 1248.
Among the unions Srarmk Shangha has
been elected as Collective Bargaining Agent (CBA) through election for a period
of two years. These unions maintained good relation with the mill’s management.
In most cases, the leaders trade union play constructive role to improve the
performance of the mill.
Medical: The mill provides
free medical facilities or treatment form its medical center to workers, staff,
officers and their family members.

Types of Employee

Family Accommodation

Bachelor Accommodation

I.
Officers

38

19

II.
Staffs

51

44

III.
Workers

9

792

Total

There
are canteens where form workers are supplied with food and breakfast at
subsidized rate.

Secondary High School is run by mill’s management,
which extends free education to children of workers, staffs and officers.

The
mill has separate clubs for officers, staffs and workers for entertainment.

Most of government organization,
there are used the manual accounting system. All the document of the accounts
and audit section are maintained on the basis of manual accounting system even
section of Management Information System. Manual based accounting system is not
converted into the computer based accounting because of various reasons which
are:
I.
Lack of skilled manpower.
ii. Lack
of financial resources.
III Lack of willingness of the general
manager and also employee to change the accounting system of organization.
v. Intervention
of the leader of trade union.
All documents keep in according to
the ancient method. They prepare all document and even financial statement
through the typewriter and also the hand writing rather than computer-based
system. There is no changed o f recording system of BJMC after the liberation
of
Bangladesh.
As a result, documents of BJMC are stored in a room for the purposes of future
needs. If accounting system is computer based there are many benefits on behalf
of organization, which are:
I. Reduce
the employee of RJM.
11. Together
the skilled manpower.
III. To
reduce the time consumption.
iv. To
reduce the costs of recording document.
vi. There
is no need of physical storage room.
vii. To
make financial statement easily.
ALIM JUTE MILLS LIMETED
Name: ALIM Jute mills Limited.
Situation: It established at atra in khulna
Introduction:
ALIM Jute Mills Limited is a
prestigious mill of the Bangladesh Jute Mills Corporations (BJMC). It has five
units as under

Unit No.

No. of Machinery

Types of Machinery

Established

1.

292

1973

2.

159

Narrow looms

1973

3.

67

Broad looms

1980

4.

8

Premier Lamination plant

2002

5

10

Looms Associate ABC

2003

Manpower as on 26 September, 2004:

[ Types

Set up

Existing

Short

Excess

a. Officers

110

102

18

0

b. Staffs

310

202

28

0

Total

410

304

56

0

c. Workers:

i) Permanent

ii Badli

1150

0

788

558

962

0

0

Grand -Total

0

AJML has fixed up the production
budget of 5862 million ton and 959 million ton per day for the financial year
2004-2005. The mill runs three shifts (A-B&C), in mill inside and two in
factory side. The mill produces mainly Hessian -, Sacking and Carpet Backing
Cloth (CBC) and all types of bags.
 Raw materials:
Machinery and spares: 95% of spares are manufactured in mills own general workshops. The rest
quantities are purchased form local market or imported form foreign market.
Trade
Union: There are four registered trade unions in the mill compound as
under-.
ALIM Jute Mills Sramik Unions Registered No.
796.
 ALIM Jute
Mills Sramik Kallayan Parishad Registered No.196.
Among the unions Srarmk Shangha has
been elected as Collective Bargaining Agent (CBA) through election for a period
of two years. These unions maintained good relation with the mill’s management.
In most cases, the leaders trade union play constructive role to improve the
performance of the mill.

Welfare Activities:

Types of Employee

Family Accommodation

Bachelor Accommodation

I.
Officers

44

22

II.
Staffs

35

54

III.
Workers

4

1021

Total

83

1097

There
are canteens where form workers are supplied with food and breakfast at
subsidized rate.

A
Secondary High School is run by mill’s management,
which extends free education to children of workers, staffs and officers.

The
mill has separate clubs for officers, staffs and workers for entertainment.

Most of government organization,
there are used the manual accounting system. All the document of the accounts
and audit section are maintained on the basis of manual accounting system even
section of Management Information System. Manual based accounting system is not
converted into the computer based accounting because of various reasons which
are~

I. Lack of skilled manpower.

ii. Lack of financial resources.

III Lack
of willingness of the general manager and also employee to change the
accounting system of organization.

v. Intervention of the leader of trade
union.

All documents keep in according to
the ancient method. They prepare all document and even financial statement
through the typewriter and also the hand writing rather than computer-based
system. There is no changed o f recording system of BJMC after the liberation
of
Bangladesh.
As a result, documents of AJML are stored in a room for the purposes of future
needs. If accounting system is computer based there are many benefits on behalf
of organization, which are:
I. Reduce
the employee of AJML.
ii. Together
the skilled manpower.
iii. To
reduce the time consumption.
iv. To
reduce the costs of recording document.
vi. There
is no need of physical storage room.
vii. To
make financial statement easily

CHAPTER THREE

FINANCIAL STATEMENT ANALYSIS

Analyzing financial statement
involves evaluating three characteristics of a company:
its liquidity, its profitability and its solvency. A short-term
creditor, such as a bank, is primarily interested in the ability of the
borrower to pay the obligations when they come due. The liquidity of a borrower
is extremely important in evaluating the safety of a loan. A long-term
creditor, such as a bondholder however looks to profitability and solvency
measures that indicate the company’s ability to survive over a long period of
time. Long-term creditors consider such measures as the amount of debt in the
company’s capital structure and its ability to meet interest payments.
Similarly, stockholders are interested in the profitability and solvency of the
company. They want to assess the likelihood of the dividend and the growth
potential of the stock.

NEED FOR COMPARATIVE ANALYSIS

Every item reported in a financial
statement has significance. When a company reports cash of $120 million on its
balance sheet, we know the company had that amount of cash on the balance sheet
date. But, we do not know whether the amount represents an increase over prior
years, or whether it is adequate in relation to the company’s cash. To obtain
such information, it is necessary to compare the amount of cash with other
financial statement data.
Comparisons can be made on a number
of different bases. Three are illustrated in this chapter.
1. Intracompany basis. The
basis compares an item or financial relationship within a company in the
current year with the same item or relationship in one or more prior years. Intercompany
comparisons are useful in detecting changes in financial relationships and
significant trends.
2. Industry averages. This
basis compares an item or financial relationship of a company with industry
averages (or norms) published ratings organizations. Comparisons with industry
averages provide information as to a company’s relative performance within the
industry.
3. Intercompany basis. This basis
compares an item or financial relationship of one company with the same item or
relationship in one or more competing companies. The comparisons are made on
the basis of the published financial statements of the individual companies. Intercompany
comparisons are useful in determining a company’s competitive position.

TOOLS OF FINANCIAL STATEMENT ANALYSIS:

Various tools are used to evaluate
the significance of financial statement data. Three commonly used tools are
these:
Horizontal analysis evaluates a series
of financial statement data over a period of time.
Vertical analysis evaluates financial
statement data by expressing each item in a financial statement as a percent of
a vase amount.
● Ratio analysis expresses the relationship
among selected items of financial statement data.
Horizontal analysis is used primarily
in intra-company comparisons. Two features in published financial statements
facilitate this type of comparison: First, each of the basic financial
statements is presented on a comparative basis for a minimum of two years.
Second, a summary of selected financial data is presented on a comparative
basis for a minimum of two years or more. Vertical analysis is used in both
intra and intercompany comparisons. Ratio analysis is used in all three types
of comparisons.
In the following sections, we will
explain and illustrate only ratio analysis because it covers the previous two
analyses i.e. the horizontal analysis and vertical analysis.

RATIO ANALYSIS

Meaning and rationale

Ratio analysis expresses the
relationship among selected items of financial statement data. A ratio
expresses the mathematical relationship between one quantity and another.
Ratio analysis is a widely used tool
of financial analysis. It is defined as the systematic use of ratio to
interpret the financial statements so that the strengths and weaknesses of a
firm as well as its historical performance and current financial condition can
be determined. The term ratio refers to the numerical or quantitative
relationship between two items or variables. The relationship is expressed in
terms of a percentage, a rate, or a simple proportion.
For analysis of the primary financial
statements, ratios can be used to evaluate liquidity, profitability, and
solvency. Ratios can provide clues to underlying conditions that may not be
apparent from individual financial statement components. However, a single
ratio by itself is not very meaningful. Accordingly, in the discussion of
ratios we will use the following types of ratios.

IMPORTANCE OF RATIO ANAOYSIS:

The importance of ratio analysis lies
in the fact that it presents facts on a comparative basis and enables the
drawings of inferences regarding the performance of a firm. Ratio analysis is
relevant in assessing the performance of a firm in respect of the following
aspects.
: With the help of ratio analysis
conclusion can be drawn regarding the liquidity position of a firm. The
liquidity position of a firm would be satisfactory if it is able to meet
current obligations when they become due. This ability is reflected in the
liquidity ratios of a firm. The liquidity ratios are particularly useful in
credit analysis by bands and other suppliers of short-term loans.
: Ratio analysis is equally useful
for assessing the long-term financial viability of a firm. This aspect of the
financial position of a borrower is of concern to the long-term creditors,
security analysts and the present and potential owners of a business. The
long-term solvency is measured by the leverage and profitability ratios, which
focus on earning power and operating efficiency.
: Yet another dimension of the useful
of the ratio analysis, relevant from the viewpoint of management, is that it
throws light on the degree of efficiency in the management and utilization of
assets.
: Unlike the outside parties, which
are interested in one aspect of the financial position of a firm, the
management is constantly concerned about the over-all profitability of the
enterprise.
: Ratio analysis not only throws
light on the financial position of a firm but also serves as a stepping stone
to remedial measures. This is made possible due to inter-firm, comparison with
industry averages. A single figure of particular ratio is meaningless unless it
is related to some standard or norm.
: Finally, ratio analysis enables a
firm to take the time dimension into account. In other words, whether the
financial position of a firm is improving or deteriorating over the years. This
is made possible by the use of trend analysis.

Ratios
can be classified, for purposes of exposition, into three broad groups:

1.
Liquidity ratios

2. Profitability Ratios
3. Solvency Ratios
Liquidity ratios measure the
short-term ability of the enterprise to pay its maturing obligations and to
meet unexpected need for cash. Short-term creditors such as bankers and
suppliers are particularly interested in assessing liquidity. The ratios can
be used to determine the enterprise’s
short-term debt-paying ability are the current ratio, the acid test ratio, the
current cash debt coverage ratio, receivables turnover, and inventory turnover.
The current ratio is a widely used
measure for evaluating a company’s liquidity and short term debt-paying
ability. The ratio is computed by dividing current assets by current
liabilities.
The current ratio is sometimes
referred to as the working capital ratio because working capital is the excess
of current assets over current liabilities. The current ratio is amore
dependable indicator of liquidity than working capital. Two companies with the
same amount of working capital may have significantly different current ratios.
The current ratio is only one measure
of liquidity. It does not take into account the composition of the current
assets. For example, a satisfactory current ratio does not disclose the fact
that a portion of the current assets may be tied up in slow-moving inventory. A
dollar of cash would be more readily available to pay the bills than a dollar
of slow-moving inventory.

Current
Ratio =

Current
Liabilities

Acid-Test Ratio:

The acid-test (quick) ratio is a measure of a company’s
immediate short-term liquidity. It is computed by dividing the sum of cash,
short-term investments, and net receivables by current liabilities. Thus it is
an important complement to the current ratio.
Cash, short-term investments, and
receivables (net) are highly liquid compared to inventory and prepaid expenses.
The inventory may not be readily saleable, and the prepaid expenses may not be
transferable to others. Thus the acid-test ratio measures immediate liquidity. 

Acid-test
ratio =

Current
Liability

A disadvantage of the current and
acid test ratios is that they use year-end balances of current assets and
current liability accounts. These balances may not represent the company’s
current position during most of the year. A ratio that partially corrects for
this problem is the
current cash debt
coverage ratio
. It is calculated by dividing net cash provided by operating
activities by average current liabilities. Because it uses net cash provided by
operating activities rather than a balance at a point in time, it may provide a
better idea of a company’s liquidity.
Net cash
provided by 

Current
Cash Debt Coverage Ratio =

Average current liabilities

Liquidity may be measured by how quickly certain assets can
be converted to cash. How liquid, for example, are the receivables? The ratio
used to assess the liquidity of the receivables is receivables turnover. It
measures the number of times, on average, receivables are collected during the
period. Receivables turnover is computed by dividing net credit sales (net sales
by cash sales) by the average net receivables. Unless seasonal factors are
significant, average net receivables outstanding can be computed from the
beginning and ending balances of the net receivables.

Net Credit Sales
Receivables Turnover =
Average Net Receivables
A popular variant of the receivables
turnover ratio is to convert it to an average collection period in terms of
days. This is done by dividing the receivables turnover ratio into 365 days.
For example, the receivable turnover of 10.2 times is divided into 365 days to
obtain approximately 35.8 days. This means that receivables are collected on
average every 36 days, or about every 5 weeks. The average collection period is
frequently used to assess the effectiveness of a company’s credit and
collection policies. The general rule is that the collection period should not
greatly exceed the credit term period (the time allowed for payment).

Cost of Goods Sold

Inventory
Turnover:

Average Inventory

A
variant of inventory turnover is the average days to sell the inventory. It is
calculated by dividing the inventory turnover ratio by 365 days.

PROFITABILITY RATIOS:

 Profitability ratios measure the income or operating
success of an enterprise for a given period of time. Income or lack of it
affects the company’s ability to obtain debt and equity financing. It also
affects the company’s ability to obtain debt and equity financing. It also
affects the company’s liquidity position and the company’s ability to grow. As
a consequence, both creditors and investors are interested in evaluating
earning power – profitability. Profitability is frequently used as the ultimate
test of management’s operating effectiveness.
Profit Margin:
Profit margin is a measure of the
percentage of each dolor of sales that results in net income. It is computed by
dividing net income by net sales.

Net Income 

Profit
margin on sales =

Sale:

Profit margin, discussed above, is an
accrual-based ratio, using net income as the numerator. The cash-basis
counterpart is the cash return on sales. It uses net cash provided by operating
activities as the numerator and net sales as the denominator. The difference
between these two ratios relates to differences between accrual-basis
accounting and cash-basis accounting, that is, differences in the timing of
revenue and expense recognition.

Net Cash Provided By Operating Activities

Cash
Return On Sales =

Net Sales

Asset
Turnover =

Average Assets

Return on Assets:

An overall measure of pro9fitability
is return on assets. This ratio is computed by dividing net income by average
assets.

Return
on Assets =

Average
Assets

Another widely used profitability
ratio is return on common stockholders equity. It measures profitability from
the common stockholder’s viewpoint. These ratio shows how many dollars of net
income were earned for each dollar invested by the owners. It is computed by
dividing net income by average common stockholders equity.
When preferred stock is present,
preferred dividend requirements are deducted from net income to compute income
available to common stockholders.

Net Income         

Return
on Common 

Stockholder’s
Equity =

Similarly the par value of preferred
stock must be deducted from total stockholders equity to determine the amount
of common stock equity used in this ratio. The ratio than appears as follows

Net Income – Preferred Dividends

Rate
of Return on 

Common
Stockholders Equity =

Average Common

Stockholders Equity

Earnings per share (EPS) are a
measure of the net income earned on each share of common stock. It is computed
by dividing net income by the number of weighted average common shares
outstanding during the year. A measure of net income earned on a per share
basis provides a useful perspective for determining profitability. 

Earning
per Share (EPS) =

Weighted average common shares outstanding

The terms “earnings per share” and
“net income per share” refer to the amount of net income applicable to each
share of common stock. Therefore, in computing EPS if there are preferred
dividends declared for the period, they must be deducted from net income to
determine income available to the common stockholders

Price-Earnings
Ratio:

The price-earning (P-E) ratio is an
oft-quoted measure of the ratio of the market price of each share of common
stock to the earnings per share. The price-earnings (PE) ratio reflects
investors’ assessments of a company’s future earnings. It is computed by
dividing the market price per share of the stock by earnings per share.

Price-earnings
ratio =

EPS

Payout
Ratio:

The payout ratio measures the
percentage of earnings distributed in the form of cash dividends. It is
computed by dividing cash dividends by net income. Companies that have high
growth rates generally have low payout ratios because they reinvest most of
their net income into the business.

Payout
Ratio =

SOLVENCY RATIOS:

Solvency ratios measure the ability
of the company to survive over a long period of time. Long-term creditors and
stockholders are particularly interested in a company’s
ability to pay interest as it comes
due and to repay the face value of debt at maturity. Debt to total assets,
times interest earned, and cash debt coverage are three ratios that provide information
about debt paying ability.

Debt to Total Assets Ratio:

The debt to total assets ratio
measures the percentage of the total assets provided by creditors. It is
computed by dividing total debt by total assets. This ratio indicates the
company’s degree of leverage. It also provides some indication of the company’s
of the company’s ability to withstand losses without impairing the interests of
creditors. The higher the percentage of debt to total assets, the greater the
risk that the company may be unable to meet its maturing obligations.

Debt to
Total Assets =

Total Assets

The adequacy of this ratio is often
judged in the light of the company’s earnings. Generally, companies with
relatively stable earnings (such as public utilities) have higher debt to total
assets ratios than cyclical companies with widely fluctuating earnings (such as
many high tech companies).
Times interest earned provides an
indication of the company’s ability to meet interest payments as they come due.
It is computed by dividing income before interest expense and income taxes by
interest expense.

Times
Interest Earned =

Interest expense

Cash
Debt Coverage Ratio:

The ratio of net cash provided by
operating activities to average total liabilities is the cash debt coverage
ratio. This ratio is a cash basis measure of solvency. It demonstrates a
company’s ability to repay its liabilities from cash generated by operating
activities, without having to liquidate assets.

Cash
Debt Net cash provided by
operating activities

Coverage
Ratio =

Average total
liabilities

LIMITATINS OF RATIO ANALYSIS:

Ratio analysis is as already
mentioned, a widely used tool of financial analysis. Yet it suffers from
various limitations. The operational implications of this are that while using
ratios, the conclusions should not be taken on their face value. Some of the
limitations, which characterize ratio analysis, are:

Difficulty in Comparison:

One serious limitation of ratio
analysis arises out of the difficulty associated with their comparison to draw
inferences. One technique that is employed is inter-firm comparison. But some
comparisons are vitiated by the different procedures adopted by different
procedures adopted by various firms. The differences may relate to:

* Differences in
the basis of inventory valuation (e.g., LIFO, FIFO, Average cost and costs).

* Different
depreciation methods (i.e., straight line vs. accelerated basis);

* Estimated
working life of assets, particularly of plant and assets;

* Amortization of
intangible assets like goodwill, patents and so on;

* Amortization of
deferred revenue expenditure such as preliminary expenditure and discount on
issue of share;

* Capitalization
of lease;

* Treatments of
extraordinary items of income and expenditure; and so on.

apart from different accounting
procedures, companies may have different accounting periods, implying
differences in the composition of the assets, particularly current assets. For
these reasons the ratios of two firms may not be strictly comparable.
Another basis of comparison is the
industry average. This presupposes the availability on a comprehensive scale of
various ratios for each industry group over a period of time. If however, as is
likely, such information were not compiled and available, the utility of ratio
analysis would be limited.
Impact of inflation:
The second major limitation of the
ratio analysis, as a tool of financial analysis is associated with price level
changes. This, in fact is a weakness of the traditional financial statements,
which are based on historical costs. The one implication of this feature of the
financial statements as regards ratio analysis is that assets acquired at
different periods are, in effect, shown at different prices in the balance
sheet, as they are not adjusted for changes in the price level. As a result,
ratio analysis will not yield strictly comparable and, therefore, dependable
results.
:
Yet another factor which affects the
usefulness of ratios is that there is difference of opinion regarding the
various concepts used to compute the ratios.
Reliance on a single ratio for a
particular purpose may not be a conclusive indicator. For instance, the current
ratio alone is not an adequate measure of short-term financial strength; it
should be supplemented by the acid test ratio, debtors turnover ratio and
inventory turnover ratio to have a real insight into the liquidity aspect.
ratios are only a post-mortem of
what has happened between two balance sheet dates. For one thing the position
in the interim period is not revealed by the interim period is not revealed by
the ratio analysis. More over they give no clue to the future.
In brief, ratio analysis suffers from
serious limitations. The analyst should not be carried away by its
oversimplified nature, easy computation with a high degree of precision. The
reliability and significance attached to ratios will largely depend upon the
quality of data on which they are based. They are as good as the data itself.
Nevertheless, they are an important tool of financial analysis.

CHAPTER FOUR

ACTUAL ANALYSIS

In this chapter, first of all I would
like to calculate the ratios of three selected mills.  . The names of the mills are THE CRESCENT
JUTE MILLS CO LIMITED, ALIM JUTE MILLS LIMITED & RAJSHAHI  JUTE 
MILS  LIMITED

LIQUIDITY RATIOS

Ratio

Formula

CJMCL

RJM

AJML

Current

Ratio

Current
Assets
Current Liabilities

746451714

1643410107

=.454

210818751

335853718

=.627

72351835

443542387

=1.631

Quick
Ratio

Quick
Assets

Current
Liabilities

462363559

1643410107

=0.281

132692547

335853718

=.395

29676886

443542387

=1.166

Current
Cash Debt Coverage Ratio

Net
cash provided by operating activities

Average
Current Liabilities

(2079451632)

1643410107

=
(1.265)

N/A

(131,263,641)

406,487,759

=(0.323)

Receivables
Turnover

Net
Credit Sales

Average
Net Receivables

652898916

339194993

=1.924

157659147

102794819

=1.533

339,616,394

393,344,309

=0.863

Inventory
Turnover

COGS

Average
Inventory

769089237

284052155

=2.707

N/A

121151926

42674949

=2.838

PROFITABILITY RATIOS

Ratio

Formula

CJMCL

RJM

AJML

Profit Margin

Net Income

Net Sales

(227113386)

652898916

=(.347)

(24552660)

158106784

=(.155)

(5878738)

83385589

=(.07)

Cash Return on Sales

Net cash provided by operating
activities



Net Sales

(169,896,891)

2079451632

.0816

(33,659,501)

329,349,173

=(0.102)

N/A

Asset
Turnover

Net
Sales

Average
Assets

652898916

1781581559

=.0366

158106784

210818751

=0.750

83385589

443542378

=0.188

Return on Assets

Net Income

Average Assets

(227113386)

1781581559

=(0.036)

(24552660)

210818751

=(0.1162)

(58,78738)

443542378

=(0..01325)

Ratio

Formula

CJMCL

RJM

Debt
to Total Assets Ratio

Total
Debt

Total
Assets

827515327

1781581559

=0.46

638781232

4616782682

=.184

908867162

507415154

Cash
Debt Coverage Ratio

Net
cash provided by operating activities

Average
total Liabilities

(207945132)

1781581559

=(0.116)

N/A

N/A








LIQUIDITY RATIOS

Current Ratio

Definition: The ratio between all current assets and all current liabilities
another way to expressing liquidity.

Formula: Current Assets

Current Liabilities

Analysis: 0.949 current ratio for TCJML,
3.915for RJM and 1.590 for AJML means the company has $0.949, 3.91and 1.590 in
current assets respectively to cover each $ 1.00 in current liabilities. Look
for a current ratio above. 1:1 and standard current ratio is 2:1 as possible.
Here only RJM is capable enough to pay its debts as its current ratio is above
standard and AJML is also solvent enough to in terms of its current ratio. One
problem with the current ratio is that it ignores timing of cash received and
paid out. For Example, if all the bills are due this week, and inventory is the
only current asset, but won’t be sold until the end of the month, the current
ratio tells very little about the company’s ability to survive.

Quick Ratio

Definition: The ratio between all
assets quickly convertible into cash and all current liabilities. Specifically
excludes inventory.

Formula: Cash + Accounts Receivable

Analysis:inventory to pay the bills. Here RJM
and AJML are up to the standard and TCJML are below the standard. Although a
little better than the Current Ratio, the Quick ratio still ignores timing of
receipts and payments.

SAFETY: Indicator of the businesses’
vulnerability to risk. These ratios are often used by creditors to determine
the ability of the business to repay loans.

Current Cash Debt Coverage Ratio

This ratio measure the capability of
current assets to pay the debt of the company by dividing net cash provided by
operating activities by average current liabilities. Here the ratio is negative
for all the companies. This indicates that none of the mill is capable enough
to pay current liabilities by its current assets. Here this ratio is (.211) for
TCJML, (.493) for RJM and (.323) for AJML.

Receivables Turnover

Definition: This calculation shows
the amount of credit sale duly collected as receivables.

Formula: Net Credit Sales

Average Net Receivables

Analysis: Here the receivables turnover is
satisfactory for all the three factory and the ratios are 1.164for TCJML, 4.415
for RJM and .836 for AJML. Look for trends that indicate a change in your
customers’ payment habits. Compare the calculated days in receivables to your
stated terms. Compare to industry standards. Review an Aging of Receivables and
be familiar with your customer’s payment habits and watch for any changes that
might indicate a problem.

Inventory Turnover

Definition: Number of times that you
turn over (or sell) inventory during the year.

Formula: Cost of Goods Sold

Analysis: Generally, a high inventory turnover
-is an indicator of good inventory management. But a high ratio can also mean
there is a shortage of inventory. A low turnover may indicate overstocking, or
obsolete inventory. Compare to industry standards.

PROFITABILITY RATIOS

The ratios in this section measure
the ability of the business to make a

profit.

Profit Margin

Definition:
Shows how much profit comes from every dollar of sales.

Formula: Net Profit

Total Sales

Analysis:
Compare to other businesses in the same industry to see if your business is operating as profitably as it
should be. Look at the trend from month
to month. Is it staying the same? Improving? Deteriorating Are you generating enough sales to
leave an acceptable profit?   Trend
from month to month can show how well you are managing  your operating or overhead costs. Here the
ratios are negative like (.184) for TCJML, (.369) for RJM and (.171) for AJML.
So it proves that these are the loosing concern.

Cash Return on Sale

This ratio measures the return of
cash trough selling of goods. The higher the

ratio is the effective selling
technique the mills adopt.

Formula: Net
cash provided by operating activities

Net
Sales

Analysis: Here
the mills show their poor performance by negative ratios. The ratios are (.297)
for TCJML, (0.102) for RJM and (0.386) for AJML.

Asset Turnover

This measures the capability of
assets to generate sales. It is an important ratio to measure the performance
of assets to earn profit.

Formula:

Average Assets

Analysis: Here the ratios for three
selected mills are 0.196 for TCJML, 0.278 for RJM and 0.192 for AJML. These
indicate that the performance of assets to generate profit is moderate.

Return on Assets

Definition: Considered a measure of
how effectively assets are used to generate a return. (This ratio is not very
useful for most businesses.)

Formula: Net Profit

Total Assets

Analysis: ROA shows the amount of income for
every dollar tied up in assets. Year to year trends may be an indicator … but
watch out for changes in the total asset figure as you depreciate your assets
(a decrease or increase in the denominator can affect the ratio and doesn’t
necessarily mean the business is improving or declining.

SOLVENCY RATIOS

These ratio measures the overall
solvency of the firm.

Debt to Total Assets Ratio

It is an indicator of the solvency by
relating two vital aspect of the business the asset and the debt.

Formula:
Total Debt

Total Assets

Analysis: Here
these ratios are .063 for TCJML, .713 for RJM and .557 for AJML. These indicate
that assets are sufficient to cover the debts. But these ratios are not well
enough for the solvency because it should be more less than the existing one.

Cash Debt Coverage Ratio

This
ratio indicates the sufficiency of cash to cover debts.

Formula:

Average total Liabilities

Here the ratios for three selected
mills are (.047) for TCJML, (.037) for RJM and (.095) for AJML. Here the ratios
are negatives it means there is no cash available to cover the debt of the
mills.

CHAPTER FIVE

RECOMMENDATION AND CONCLUDING REMARK

Suggested Recommendation:

* Govt. policy
should be jute industry oriented.

* BMRE of the jute
mills;

* Encourage new
investment in jute industry;

* Encourage jute
growers;

* Encourage
innovation in jute goods;

* Marketing of
jute should be reshuffled;

* Adopt
computerized accounting systems and use of computer in other official
procedures;

* The promotion
system should be fair.

* The service
rules should be strictly maintained.

* The new
appointment is essential for organization.

* The vacant
position should be filled up within short time.

* There should be
monitoring systems of administration department who try implementing the
service rules.

* The political
influence relating to trade union should be banned.

* Every department
should keep same business.

* Reforms to
change political economy

* Creation of
enabling business environment through improved governance, transparency and
accountability,

* To create an
enabling legal environment by thoroughly recasting existing obsolete labor laws
and creating new ones to stay with time,

* To establish
rule of law in order to bring about healthy growth of private investment;

* To undertake
extensive training programme for updating skill of the retrenched workers.

* To ensure fair
wage and fringe benefits to the workers through collective bargaining;

* To provide
social security to the workers in terms of adequate provident fund, gratuity,
group insurance, pension benefits etc.;

* To practice
corporate culture in management, production chain and distribution network; and

* To establish
mutual trust, respect and understanding between the workers and employers
through transparency and accountability.

* Capacity
building through social compact/dialogues;

* Working out
clear agenda;

* To be proactive
(through social dialogues) rather than reactive;

* To strengthen
labor movement ‘in terms of improved capability of the workers through new
knowledge and skill up gradation,

* To refrain from
confronting the employers and to cooperate with them in achieving shared goals
in order to ensure common good and job security of the workers;

* To eliminate multiplicity of trade unions
to unify and establish workers’ rights;

Concluding
Remark

in spite of a developing country
much depends on agro-based products. In order for its industrialization, the
country should build up a strong base upon which industrialization will be
grown up. For this reason Government should take forward step considering all
sorts of threats and opportunities. BJMC can play a very important role in this
respect, for it is the prime development socio-economic institution of the
country. Over the past the BJMC is showing a deteriorating trend in
profitability. The main reason for loses is the huge amount of non-performing
employees for which the BJMC has to maintain large amount of provision from its
profit each year. Borrowed funds constitute a major source of the bank’s
lending assets and posting of accrued interest in interest suspense account has
higher interest rates. This is constantly creating a huge problem for BJMC’s
overall operation and deteriorating performance

While
working in BJMC I have discovered some major problems associated with different
departments in this organization. These problems can be classified from
bureaucratic, political as well as financial perspective. Since this
organization is now fully owned by government, political pressure is always
create some problems against its smooth operation. During the last three years
a number of steps have been taken to strengthen the country’s organizational
system. These include improvement of the regulatory environment, enforcement of
group classification guidelines and recapitalization of nationalized lute
mills. I have already given some recommendations for jute mills of BJMC which
are attached previously. If the recommendations are to be followed by the
government and BJMC, I think this organization will be able to improve its
performance which in turn will contribute to the industrialization and
development of the country to a very treat extent.

Bibliography

2. Annul
Report, Rajshshi Jute Mills Limited.

3.
Annual Report, ALIM Jute Mills Limited.

4
Wagnant and Keiso, Principles of Accounting, ninth edition.

managerial
emphasis, Tenth Edition, Prentice Hall of India Private limited, 2000.

Dhaka
University, Volume xiii,
No.2, December

1992.

10. Planning
Commission, a Study on Jute and Cotton Textile, Volume 1.

11. Bangladesh
Bank, Economic Trends, October 1992

13. Bangladesh Bureau of Statistics, Statistical
Pocket Book of Bangladesh
1992,

Government
of Bangladesh,
December 1992

14. World
Bank: Survey of Fifth Credit Program