8/20/2017

School of Business
Accounting & Finance
Prepared For
Shahran Abu Sayeed (ASy)
Course Instructor
Course: FIN340
Sec- 03
COMPANY NAME
RATANPUR STEEL RE-ROLLING MILLS LTD
(RSRM)
 Prepared By

Name ID
Abid Hasan Roman 1330807630
Jafrin Sultana 1420263030
Sharmin Akther Prema 1430449030
Sabrina Shams Hiya 1430128020
 Individual Contributions

1. Abid Hasan Roman

ID: 1330807630

Contribution:
DIH, DSO, DPO (Interpretation) and Liquidity Ratios (Interpretation and Graphs),
Paper editing & format.

2. Jafrin Sultana
ID: 1420263030

Contribution:
DIH, DSO, DPO Calculation and Liquidity Ratios calculation.
3. Sharmin Akther Prema
ID: 1430449030

Contribution:
NPV Calculation, NPV Perpetuity and Solvency Ratios Calculation.

4. Sabrina Shams Hiya

ID: 1430128020

Contribution:
Brief introduction & credit policy for the customers. NPV, NPV Perpetuity
(Interpretation) and Solvency Ratios (Interpretation and Graphs).

Letter of transmittal
August 20, 2017
Shahran Abu Sayeed
Course Instructor, FIN340
Dept. Accounting & Finance
School of Business
North South University

Subject: Submission of the Group report.

Dear Sir,
With due respect, we would like to inform you that it is a great pleasure for us to submit the
group report on RSRM as requirement for BBA program. Throughout the completion of the
report, we came to know about many things regarding the current world of managing the
companies efficiently and how the legendary people works.

Therefore, we firmly believe that this report will meet your approval. We would genuinely
appreciate and keen enough to make further corrections where you think it is necessary.
Your kind advice will encourage us to do further research in future.

Sincerely Yours,

Name ID
Abid Hasan Roman 1330807630
Jafrin Sultana 1420263030
Sharmin Akther Prema 1430449030
Sabrina Shams Hiya 1430128020

Acknowledgement
We would like to take this opportunity to express our sincere gratitude to those without
their blessings and cooperation this report would not have been possible.
First of all we are grateful to Almighty Allah for finishing this report on time.

We would like to take this opportunity to thank Sir Shahran Abu Sayeed, our instructor for
the course of FIN340, section 03, North South University, for his valuable support and
encouragement which he has offered. The knowledge of management that he has imparted
would go a long way in making future good managers or entrepreneurs and also it will help
us all through our professional career. Without his help this report could not have been a
comprehensive one.

This report cannot be solely attributed to only ones effort, but it is indeed the joint effort of
all the fellow members of the group. There were times in the course of preparing this report,
when things were tough and future seemed dark. It could not have been possible to write it,
without the immense help of all the group members, so we all have a great deal of gratitude
towards each other.

RATANPUR STEEL RE-ROLLING MILLS LTD (RSRM)

INTRODUCTION
Ratanpur Steel Re-Rolling Mills Ltd (RSRM) was established in January 1984 to meet the
growing demand for high quality M.S. deformed bars in the country. The mill is situated in
the heart of the progressive Baizid Bostami Industrial Area, Chittagong. Creating new steel
from recycled steel reduces CO2. In 2003 they started to manufacture quality billets from
recycled scrap under their go green initiative. In 2006 throughout the world recycled steel
made up more than 496 million metric tons, this saved an estimated 894 million metric tons
of CO2. Today, RSRM is widely recognized as one of the leading steel manufacturers in the
country and has embarked upon a series of initiatives aimed at increasing its production
capacity of world class products. Other necessary ancillaries like main power sub-station and
emergency water supply, natural gas supply station, machine shop with CNC machine,
pollution control system, well equipped quality control department, cranes of different
capacities including crawler cranes for material handling etc. RSRM rebars are supplied in
size 8,10,12,16,20,25,32,40 and 50 mm diameters and also in a fixed length of 12 meters.
RSRM provides bars of different size, length & grade as required by client.
MISSION:
Their mission is being more than a company, it is a mission that understands its
responsibility in contributing to a better tomorrow and a strong tomorrow. They will
continue to be the first name in the regions steel industry by harnessing our assets and
resources to achieve profitable growth, operational and organizational excellence and good
corporate citizenship.
VISION:
Their vision is to be the trend setter and the power force of the steel re-rolling industry with
education, training and skills development.
They have six board of members. Mrs. Shamsun Nahar Rahman is the chairman and Mr.
Maksudur Rahman is the managing director. They have a authorized capital of BDT 100 crore
and a paid up capital of BDT 78.62 crore. The Company earned pre-tax profit of
Tk.371,608,018.00 while after tax net profit stood at Tk.271,226,431.00 with EPS of Tk.3.45
for the year as against pre-tax profit and after tax profit respectively of Tk. 269,424,867.00
and Tk. 272,583,080.00 with EPS of Tk. 4.36 for the previous year. The Net Asset Value (NAV)
and the Net Operating Cash Flow Per Share (NOCFPS) for the year stood at Tk.41.06 and Tk.
1.45 respectively before consideration of dividend as against that for the previous year Tk.
45.63 and (15.17) respectively.

CREDIT POLICY
Management has a credit policy in place and the exposure to credit risk is monitored on an
ongoing basis. Credit evaluations are performed on all customers requiring credit over a
certain amount. At the reporting date there were no significant concentrations of credit risk.
The maximum exposure to credit risk is represented by the carrying amount of each financial
asset in the statement of financial position. However, due to the large number of parties
comprising the group's customer base, management does not anticipate material losses
from its debt collection.
 SOURCES OF SHORT TERM WORKING CAPITAL
The main sources of short term working capitals of RSRM are short term loans, accruals, tax
liability etc. The detailed informations are provided in the below balances of each year from
2012 to 2016 (5years).

Year 2016 Year

2015

Year 2014 Year 2013

Year 2013 Year 2012
 INVESTMENTS IN MARKETABLE SECURITIES

Rather than let cash reserves build up in excess of daily cash requirements, many firms
invest in interest -bearing short -term marketable securities. Determining the level of liquid
assets that should be invested in marketable securities depends on several factors.
The company is exposed to normal business risks from changes in market interest rates and
currency exchange rates and from non-performance of contractual obligations by
counterparties. The company does not hold or issue derivative financial instruments for
speculative or trading purposes.
 TIME SERIES ANALYSIS
Liquidity Ratios:

INTERPRETATION:

For each increase in current liability of TK 1 in 2011-12 to 2015-2016, the current asset is
increased by 0.75, then in 2012-2013 it increased by 0.89 and gradually it increased up to
1.85 in 2015-2016. That means the current asset is 0.75, 0.89, 0.96, 1.68, 1.85 times higher
than its current liability in the consecutive years. The current ratio is been seen to be at an
increasing trend. From the period 2011-12 to the period 2015-16 it has been rising. From
2012 to 2013 it increased by 0.14 then it increased by 0.07 in between the year 2013 to
2014 and gradually the rise that took place within 2015 to 2016 was 0.17.
INTERPRETATION:

For each TK of current liabilities in 2011 to 2016, the current asset decreased by 0.19, 0.23,
0.34, 0.64, 0.85 consecutively. That means, the current asset is 0.19, 0.23, 0.34, 0.64, 0.85
times lower than the current liabilities except inventory.

The quick ratio is not so good in the beginning of 2011 but gradually it seems to increase in
2016 it is 0.85 which is close to 1 where the current liability and current asset except
inventories gap is lesser.
INTERPRETATION:

The working capital which is the difference between current asset and current liability was at
negative in the year 2011-2012. Till 2013-2014 it was at a negative value of 101,492,583.
Then in 2014-2015 it rose to 1,130,959,923 and in 2015-2016 it was 1,376,673,928.

Before the year 2014-2015 the current liability was a lot higher than the companys current
asset. The gap increased positively which means the current asset value exceeded current
liability value in 2014-2015 and again in 2015-2016 the current asset was higher than
current liability by 245,714,005. Such situation is good for a company.
Solvency Ratios:

INTERPRETATION:

In 2011-2012 the debt to equity ratio was 1.67 which is higher than 1 which means that the
debt of the company financed was higher than the equity liability of the company. It was at
an increasing trend till 2013-2014 which was 1.72. In the year 2014-2015 the ratio fell to
0.61 which means it had a lower debt to be financed than the equity liability. In 2015-2016 it
became lesser which was at 0.55. Such falling ratio is usually a positive thing for a company.
But it is not necessarily concluded as a positive thing.
INTERPRETATION: The equity was consistent at a rate of 0.37 throughout the years beginning
from 2011 to 2014. It then rose to 0.62 in 2014-2015 and it again increased slightly to 0.65 in
2015-2016.
INTERPRETATION: The debt ratio says how much of the total asset of the company was being
financed by debt. From the year 2011 to 2014 the debt ratio was 0.63 which means 63% of
the companys total assets were financed though debt. It then fell to 0.38 in 2014-2015 and
again fell to 0.35 in 2015-2016. The debt ratio fell which Is assumed to be a positive thing for
a company but it is still a high percentage.
 SUMMARY
After the observation of the liquidity and solvency ratios, the overall current ratio is getting
better in every year. That means the current asset is getting better every year. The liability is
still high though it is reducing every period.. So the company is managing well. In the
solvency ratios it has been interpreted that in 2014-15 the shortcomings were being corrected.
Net working capital was really poor in 2011 till 2014 but then it was really very good. From
that year they were exceeding current asset over current liability. The total asset position of
the company is well. If we think about the debt ratio, the debt percentage is higher though it
is decreasing after 2014. So the company needs to borrow less to maintain a good position in
the market. The debt ratio should be reduced more. So the company needs improvement in
debt sector. Everything other than seems alright. The overall condition of the company is fine.
They should try to maintain such a strong position.
 NPV CALCULATIONS
Figures from RSRM Annual Reports
Year Inventories A/R Sales COGS A/P
2011-2012 1,247,611,813 361,585,394 5,936,058,395 5,352,343,023 798,370,654
2012-2013 1,613,125,611 489,946,817 5,253,806,261 4,738,541,235 937,053,485
2013-2014 1,751,235,595 787,647,565 4,766,995,506 4,301,993,578 1,187,432,131
2014-2015 1,739,842,561 913,387,690 5,503,171,247 4,953,728,278 201,282,584
2015-2016 1,613,896,280 1,286,718,741 5,377,411,796 4,726,865,604 117,726,179

DIH Calculation

Year Inventories COGS Days

2011-2012 1,247,611,813 5,352,343,023 85.08018073 85
2012-2013 1,613,125,611 4,738,541,235 124.255719 124
2013-2014 1,751,235,595 4,301,993,578 148.5825073 149
2014-2015 1,739,842,561 4,953,728,278 128.1948664 128
2015-2016 1,613,896,280 4,726,865,604 124.6221474 125

DSO Calculation

Year A/R Sales Days

2011-2012 361,585,394 5,936,058,395 22.23338452 22
2012-2013 489,946,817 5,253,806,261 34.03829135 34
2013-2014 787,647,565 4,766,995,506 60.30871245 60
2014-2015 913,387,690 5,503,171,247 60.58079821 61
2015-2016 1,286,718,741 5,377,411,796 87.33799052 87

DPO Calculation
 Year A/P COGS Days
2011-2012 798,370,654 5,352,343,023 54.44443442 54
2012-2013 937,053,485 4,738,541,235 72.17928579 72
2013-2014 1,187,432,131 4,301,993,578 100.746949 101
2014-2015 201,282,584 4,953,728,278 14.83087869 15
2015-2016 117,726,179 4,726,865,604 9.090602301 9

NPV Calculation

Year COGS DPO

2011-2012 5,352,343,023 54 -5274312104
2012-2013 4,738,541,235 72 -4646876816
2013-2014 4,301,993,578 101 -4186157441
2014-2015 4,953,728,278 15 -4933453810
2015-2016 4,726,865,604 9 -4715238987

Sales (DIH+DSO) Total Taka

5,936,058,395 107 5766998441 492686336.5
5,253,806,261 158 5035817451 388940635.2
4,766,995,506 209 4508819279 322661838.2
5,503,171,247 189 5232241483 298787672.3
5,377,411,796 212 5082225027 366986040

NPV Calculation
Perp.

Year Total Taka Perpetuity

2011-2012 492686336.5 13498255.79
2012-2013 388940635.2 10655907.81
2013-2014 322661838.2 8840050.362
2014-2015 298787672.3 8185963.624
2015-2016 366986040 10054412.05