1. Presentation onA Study on Working Capital Management of Public Limited Pharmaceuticals Company (Beximco Pharmaceuticals limited)

2. To find out the existing working capital planning processof the company To find out the existing working capital controlling systemof the company. To detect the bottlenecks involved in the process ofworking capital i.e. Planning and Controlling. To advocate the steps to be taken to increase theefficiency in management of working capital 3. Methodology of the Study Literature study Analysis of secondary data of financial report of the company by calculating ratiosLimitations of the StudyThe study duration was very short and it was not possible to cover and analyzeevery part of the working capital management practice 4. Rational of the StudyThe investment of the company are made in two ways in anorganization that is-a)Working Capitalb)Fixed Investment or Long Term InvestmentEfficient management of working capital as wellas fixed investment are equally important to achieve the desired objective of the company 5. Beximco Pharmaceuticals Limited Registered as a company in 1976 as a member of Beximco Group Began in 1980 when BPLs first product made under license of Bayer AG,Germany rolled out of a small manufacturing plant in Tongi, Dhaka. Launching of its own products in 1983 Listing in the Dhaka Stock Exchange as a Public Limited Company as wellas the member of Chittagong Stock Exchange Won the first prize of ICAB National Awards 2000 for Best PublishedAccounts and Reports in Non-Financial Sector Category in 2002 Listing in the London Stock Exchange (LSE) in 2005 Blockbuster Products are Neoceptin R, Napa, Amdocal, Filmet, Neoflox,Azmasol 6. Accounts Payable Value AdditionRawWIP MaterialsTHE WORKING CAPITALCash CYCLEFinished (OPERATING CYCLE) goods AccountsSALES Receivable 7. Data AnalysisInventory Management 8. Inventory ManagementInventory as a proportion of Current Asset of BEXIMCO Pharmaceuticals Limited SL Current Asset20112010 2009 200820071 Inventories36.64 36.5 28.5060.94 56.512 Accounts Receivable13.68 13.2610.0317.00 17.093 Loans, Advances & Deposits 11.75 12.6010.1019.02 22.534 Short-Term Investment30.68 13.8836.07 0.1-5 Cash & Cash Equivalents 7.25 23.7615.03 2.94 2.936 Gross Working Capital 100100 100100 100 9. Inventory ManagementComposition of Inventory Name of elements in SL. 2011 2010200920082007 Inventory 1 Finished Goods27.9029.14 32.17 23.78 22.54 2 Work in Process 7.38 9.8311.00 11.40 9.70 3 Raw Material64.724 62.66 56.83 64.82 67.73 4 Stores & Spares 3.95 3.9 3.5 5.024.23 4 Total Inventory 100100 100 100 100 10. Raw Materials Storage PeriodRaw Materials Storage Period= Average stock of Raw Materials/ Average cost of raw materials per dayParticulars 201120102009 20082007Average Stock Raw295163921 286673911 284271612 278681856 235556789 Material5 9 1 4 9 Average Cost of Raw 78540807854080 65718637635119 6453611 Material per day Raw Material Storage 376 365433 365365Period (Days) 11. Finished Goods Conversion Period Finished goods conversion period= Average stock of finished goods/Average cost of goods sold per dayParticulars 20112010 2009 2008Average Stock of finished goods559721452 456201878.53447243563647704936259010.69Average Cost of goods sold per day 101662328060064.219 5438878.3 5Finished Goods Conversion Period (days) 55.0656.60 55.0867.07 12. Stores & Spares Conversion PeriodStores and spares conversion period= Average stock of Stores and spares/Average consumption per day Particulars2011 2010 20092008Average Stock of store and spares215036533183998556168056628150397257Average Consumption per day589141.19502597.066 460429.12412047.28Store & spares conversion period 365.00 366.10365.00365.00(days) 13. W-I-P Holding PeriodW-I-P Holding Period= Average w-i-p in inventory/ average cost of production per day2011 201020092008 182228787103280829 180522329157195606Average W-I-P in InventoryAverage Cost of Production10567895.77 8574498.421 6715980.675488502.937per DayW-I-P Holding period (days) 17.2412.0526.8828.64 14. Comment about InventoryManagement 15. Credit Management 16. Average Collection periodAverage Collection Period= 365 days/ Accounts Receivable Turnover 2011201020092008 2007=365/8.7689 =365/8.5661 =365/8.1271 =365/7.9915 =365/7.7361=41.62 days =42.61days=44.91days=45.67days=47.18 Days 17. Return on InvestmentReturn on Investment = Net Profit Before Taxes/ Total assets 2011 2010 200920082007=1198525342/ =1051648808/ =624740307/ =545341273/ =353067878/230933405332137239950919891933422 14819665441 11953418940 5.19%4.92% 3.14% 3.68% 2.95% 18. Z -Score Analysis Z= 1.2T1+ 1.4T2 + 3.3T3 + 0.6T4 +0.999T5T1= Working Capital/ Total Asset (Working Capital= Current Assets Current Liabilities)T2= Retained Earnings/ Total AsstsT3= Earnings before Income Tax/ Total AssetsT4=Market value of equity/ Total liabilities [Number of Shares * Current Share Price]T5= Sales/ Total Assts.Formula =If (B9>2.99,"SAFEzone", IF (B9>1.81,"GREYZone","DISTRESS"))YearZ-Score Value Remarks20111.1269Distress20101.0445Distress20090.9840Distress20080.5828Distress20070.8800Distress 19. Findings BEXIMCO Pharmaceuticals has large amount of capital; According to ratio analysis the companys stand on acomparatively weak position in 2011 than previous year To some extent Inefficient management of working capitalespecially on inventory part From the result of Z -Score model, BEXIMCO Pharma places onDISTRESS zone After analysis the financial data, the company is ruling themarket by their brand name, not by their performance They are lagging behind for time management about collectingmoney from the creditors Its also bearing a large amount of money in inventory sector,which create an impact on product price 20. SWOT Analysis Strengths Weakness Opportunities Threats Recommendations Reduce the days of collection period to collect money from creditors Efficient management should be ensured for operating inventory sector Proper utilization of liquid asset to ensure maximum profitability; Keep concentration on every part of operations viz: cash management, sale increase, credit terms; Proper measures should be taken to invest in different assets (current and fixed). 21. Question???