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RSRM
RSR
M
INDUSTRIAL TOUR
REPORT
Submitted To:
Mrs. Nasrin Jahan Nasu
Lecturer
Department of Accounting and Information Systems
University of Chittagong
Submitted By:
Abu Hasan Al-Nahiyan
ID No: 09301120
Session: 2008 -09
Department of Accounting and Information Systems
University of Chittagong
SUPERVISORS CERTIFICATE
This is to certify that Abu Hasan Al-Nahiyan bearing ID
No09301120
has
completed
his
Industrial
Tour
Report
Signature
Mrs. Nasrin Jahan Nasu
Lecturer
Department of Accounting & Information Systems
University Of Chittagong
LETTER OF SUBMISSION
Date: 31st December, 2014.
Mrs. Nasrin Jahan Nasu
Lecturer
Department of Accounting & Information Systems
University of Chittagong
Subject:Submission of Industrial Tour Report.
Dear Madam,
With an enormous pleasure, I would like to submit my industrial
tour report on Ratanpur Steel Re-Rolling Mills Limited to
fulfill the requirement of the BBA Program. In preparing this
report, the relevant information related to this paper is collected
and integrated accordingly. It is highly pleasure for me to get you
as a supervisor of my theoretical with pragmatic experience work,
which is an integral part of my BBA Program.In every segment of
this report, I have made an honest endeavor to present it as good
combination of my knowledge, intelligence and the information
gathered from the research paper.
In preparing this report, perhaps some mistakes are there. You, I
hope, will consider these mistakes clemently. I also expect your
cooperation whenever I require.
Thanking You,
Yours faithfully,
.
PREFACE
Now in the world competition is increasing smoothly. New types of
business are emerging day by day. Every single enterprise has to
complete several national and multinational organizations. To face
this competition business enterprise needs highly educated
employees who have knowledge about all the aspects influencing
the activities of business.
Field work is considered as a bridge between academic knowledge
and practical field. Practical knowledge is imperative for the
Business students especially BBA students. The business world is
going more critical in this new millennium & the practical
situations are changing day by day. For that, by doing this sort of
assignment task students can have first-hand idea about
organization and can get practical exposure by doing industrial
tour in different organizations. In developed countries, the
business schools give more preference to practical knowledge
than theoretical knowledge. That is why; the program on any
practical aspect is conducted for the BBA students of Faculty of
Business Administration, Chittagong University. Here students are
assigned with practical topics to prepare study report conducted
on the organization. In this respect, I have been assigned to
prepare industrial tour report on RATANPUR STEEL RE-ROLLING
MILLS LIMITED. The core object of such type of program is to
familiarize the students with the real life business situations.
This report represents the findings of short study onFinancial
Performance of RSRM. The report has been prepared by
collecting information from practical working, reference books,
newspaper and various web sites. Then I have analyzed collected
data and included only those data which are appropriate for my
paper.
Extreme care has been taken in explaining the theoretical and
statistical aspects in a most logical manner. All the different items
have been systematically arranged under different headings.
Finally, I take entire responsibility of any deficiency that might
have in the report.
ACKNOWLEDGEMENT
In the commencement, I would like to say that, all praise due to
Almighty ALLAH. All the progress, achievement and success
throughout our life are His blessing. With His inestimable mercy
and sympathy we are alive.
Now, I would like to convey my heartiest gratitude to our
honorable Chairperson Professor Dr. Abdur Rahaman for
providing us forwarding letter by which we have officially visited
Ratanpur Steel Re-Rolling Mills Ltd. And I also indebted and
grateful to Mrs. Nasrin Jahan Nasu for helping me
momentously in conducting the tour and preparing this report
successfully.
To accomplish this sort of report visiting of industry is mandatory
and to visit and preparing this kind of report many officials and
persons help is needed. And the respondents of the questionnaire
are the main key of this report. Without their friendly cooperation
there might be no primary data. And exclusive of primary data the
report could be meaningless. So we all, the members of the tour
group are very much thankful to Mr. Md. Mostafa Kamal, AGM
of HR& Admin, Mr. Md. Farid Iqbal, Assistant Manager of HR and
Mr. Subash Chad Shivdaras Sharma, In-charge Production of
RSRM who sacrifice their valuable time for answering the
questionnaire and shared their personal experience about overall
ABSTRACT
Keeping pace with globalization, Bangladesh is experiencing rapid
infrastructural development. In this situation iron & steel industry
has a bright growth prospect & Ratanpur Steel Re-Rolling
Mills Ltd. is pioneer in this industry. The slogan of the RSRM is
Steel for the nation.
In this competitive market RSRM using most advanced and latest
technology suitable for the production of TermoMechanically
Treated (TMT) reinforcement bar renowned worldwide for its
special features of having strength with high elongation percent
and toughness which is not possible in other ordinary
reinforcement bars of conventional processes.
Ratanpur Steel Re-Rolling Mills Ltd. was incorporated in
Bangladesh as private limited company on 22 April, 1986 as
company limited by shares under the Companies Act, 1913 and
converted into public limited company on 26 June 2012 under the
Companies Act, 1994. The Company is engaged in the
manufacturing process of producing various grades of M.S.
Deformed Bar (300W/40 Grade, 400W/60 Grade and 500W/TMT)
from M.S.Billet and sakes/export of the products and other
business related thereto. The Company has set up its Re-Rolling
Mills factory at 176, BaizidBostami I/A, BaizidBostami road,
Nasirabad, Chittagong, and commenced commercial production
from 1986. The Company is listed with Dhaka Stock Exchange
(DSE) and Chittagong Stock Exchange (CSE) as a publicly quoted
company. Trading of the shares of the company started in two
stock exchanges from 22 September 2014.
TABLE OF CONTENTS
1 INTRODUCTION-------------------------------------------------------9
1.1PRELUDE--------------------------------------------------------------9
1.2STATEMENT OF THE PROBLEMS------------------------------10
1.3OBJECTIVES OF THE STUDY------------------------------------11
1.4METHODOLOGY OF THE STUDY-------------------------------12
1.5LIMITATIONS OF THE STUDY-----------------------------------13
2 AN OVERVIEW OF RSRM-----------------------------------------14
2.1COMPANY PROFILE-----------------------------------------------14
2.2BUSINESS PRINCIPLES------------------------------------------15
2.2.1------------------------------------------------------------------------VISSION:
15
2.2.2------------------------------------------------------------------------MISSION:
15
2.2.3-------------------------------------------------------------------OBJECTIVES:
15
2.2.4--------------------------------------------------------CORPORATE FOCUS:
15
2.2.5------------------------------------------------------------------------- VALUES:
16
2.2.6--------------------------------------------------------PRODUCT OF RSRM:
17
2.2.7-------------------------------------------------------STRENGTH OF RSRM:
17
2.3MANAGING BODY OF RSRM------------------------------------17
3 FINDINGS & ANALYSIS ON FINANCIAL PERFORMANCE OF
RSRM---------------------------------------------------------------------18
3.1LIQUIDITY RATIOS:-----------------------------------------------18
3.1.1-------------------------------------------------------------CURRENT RATIO:
19
3.1.2------------------------------------------------------------ACID TEST RATIO:
20
3.2LEVERAGE RATIOS:-----------------------------------------------21
3.2.1--------------------------------------------------------DEBT-EQUITY RATIO:
21
3.2.2-----------------------------------------------------------COVERAGE RATIO:
22
3.3ACTIVITY RATIOS:------------------------------------------------23
3.3.1------------------------------------------INVENTORY TURNOVER RATIO:
23
3.3.2--------------------------------------TOTAL ASSETS TURNOVER RATIO:
24
3.3.3-----------------------------------------------DEBTOR TURNOVER RATIO:
25
3.3.4--------------------------------------------CREDITOR TURNOVER RATIO:
26
3.4PROFITABILITY RATIOS:-----------------------------------------27
3.4.1------------------------------------------------------GROSS PROFIT RATIO:
27
3.4.2------------------------------------------------OPERATING PROFIT RATIO:
28
3.4.3----------------------------------------------------------NET PROFIT RATIO:
29
3.4.4-----------------------------------------------EBITDA MARGIN TO SALES:
30
3.4.5--------------------------------RETURN ON SHAREHOLDERS EQUITY:
31
10
11
1 . INTRODUCTION
1.1 PRELUDE
The basis of financial planning, analysis and decision-making is
the financial information. Financial information is needed to
predict, compare and evaluate the firms earning ability. It is also
required to aid in economic decision-making and investment &
financial decision-making. The financial information of an
enterprise is contained in the financial statements or accounting
reports.
Financial analysis is the process of identifying the financial
strengths and weaknesses of the firm by properly establishing
relationships between the items of the balance sheet and the
profit & loss account. Financial analysis can be undertaken by
management of the firm, or by parties outside the firm, viz.
owner, creditors, investors and others. Management, creditors,
investors and others to form judgment about the operating
performance and financial position of the firm use the information
contained in these statements.
A financial ratio is a relationship between two financial variables.
It helps to ascertain the financial condition and performance of a
firm. Ratio analysis is a process of identifying the financial
strengths and weakness of the firm. This may accomplish either
through a trend analysis of the firms ratios over the period of the
time or through a comparison of the firms ratios with its nearest
competitors and with the industry averages.
12
13
14
15
16
17
2 . AN OVERVIEW OF RSRM
2.1 COMPANY PROFILE
Ratanpur Steel Re- rolling Mill (RSRM) is a local company has
launched finest quality rod in the country as Bangladeshs
construction industry looks for quake-resistance steel for
increasing number of high-rise buildings.Ratanpur Steel Re- rolling
Mill (RSRM) is one of well-known steel mill in steel re-rolling
sector. It has 24 years experience exclusively in steel making. It
is one of the
biggest steel
18
The
factory
of
this
company
is
located
at
NasirabadbesideBaizidBostamiroad
in
Chittagong.
The
company is using latest and sophisticated technology to
manufacture product. Ratanpur steel mill has a modern chemical
analysis and physical testing lab to ensure the quality of the
product.
19
2.2.4
CORPORATE FOCUS:
Our vision, our mission and our objectives are to emphasize on
the quality of product, process and services leading to
augmentation of the company with corporate governance
practices.
20
2.2.5
VALUES:
QUALITY:
Providing products & services to our customers.
Constantly improving our processes reducing wastage.
Minimizing costs of products & services.
Developing our resources for creating skilled workforce.
TRUST:
Preserve the faith & goodwill of all our shareholders by
adopting ethical and transparent business practices.
Being fair and honest in all our dealing and good
governance and risk management process.
BUSINESS RELATIONSHIP:
By offering quality product.
By providing our best & timely service.
By honoring all our commitments even with challenges.
LEADERSHIP:
By setting landmark though our products, processes &
people.
By persistently moving ahead of competition by
differencing our products and processes.
By increasing our market share.
BUSINESS AUGMENTATION:
Improving the efficiency of processes.
By anticipating & responding to the changing business
and the environmental needs using experience within
the organization.
SOCIAL CARE:
Tree plantation program
Earthquake campaign
Building passenger shade in bus stands
Providing safety road sign
Scholarship program
21
22
2.2.6
PRODUCT OF RSRM:
RSRM mainly produces 500W (TMT), 400W (60 Grade) and 300W
(40 Grade). Grade steel using most advanced and latest
technology suitable for the production of TMT bar which is
renowned worldwide for its special features of having high
strength with high elongation percent and toughness which is not
possible in other ordinary reinforcement bars of conventional
processes.
2.2.7
STRENGTH OF RSRM:
Greater Ductility
Superior Bendability
Better Weld ability
High Corrosion-Resistance
Ideal Property Balance
ObaidurRahman FCA
Md. Jafar Imam
Md. Serajul Islam
Mohammad Ali
TapanKantiMajumder
Md. Mostafa Kamal
Md. FaridIqbal
Md. DewanMabood Ahmed
Subash Chad Shivdaras
DESIGNATION
Chairman
Director& Managing Director
Director
Director
Director
Independent Director
Executive Director-Marketing &
Sales
Chief Financial Officer
Company Secretary
Consultant-Quality Control
Chief Electrical Engineer
Chief Mechanical Engineer
AGM, HR & Admin
Assistant Manager of HR
Manager-Commercial
In-Charge Production
23
24
Current assets
Current liabilities
Times
0.96
2013
2,192,672,783
= 2,474,310,829
Current Ratio
Times
1
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
0
2013
2014
Times
0.89
25
2014
Times
2013
0.34
2,684,574,0701,751,235,595
2,786,066,653
2,192,672,7831,613,125,611
2,474,310,829
Time
s
0.23
26
0.2
0.15
0.1
0.05
0
2013
2014
27
Total debt
Shareholder s ' equity
Times
1.72
2013
2,721,373,158
= 1,589,320,327
Times
1.71
Debt-Equity Ratio
Times
2013
2014
28
2014
209,829,235
= 169,083,190
Times
1.24
2013
279,533,824
= 159,680,646
Times
1.75
Coverage Ratio
Times
2
1.8
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
0
2013
2014
29
Times
2.5
4,301,993,578
1,613125,611+1,751,235,595
2
2013
=
Times
3.31
4,738,541,235
1,250,041,298+1,613,125,611
2
1.5
1
0.5
0
2013
2014
30
Times
1.05
0.6
0.4
0.2
0
2013
2014
Times
1.30
31
receivable
turnover
Sales/Credit Sales
Average accountsreceivable
Times
7.46
Days
49
Opening A . R .+Closing A . R .
2
2013
5,253,806,261
= 489,946,817
Times
10.72
365
Debtor turnover
2013
365
= 10.72
Days
34
32
6
4
2
0
2013
2014
Times
4.21
Days
Opening A . P+Closing A . P .
2
2013
4,876,651,219
= 937,053,485
Times
5.20
365
Creditor turnover
2013
Days
87
365
= 5.20
33
70
3
2
1
0
2013
2014
Gross profit
100
Net sales
Percentag
e
9.75
2013
515,265,026
= 5,253,806,261 100
9.76%
9.74%
9.72%
9.70%
34
2013
2014
Percenta
ge
9.81
35
Operating profit
100
Net sales
Percenta
ge
8.16
2013
453,643,321
= 5,253,806,261 100
8.30%
8.20%
8.10%
8.00%
7.90%
2013
2014
Percenta
ge
8.63
36
3.4.3
NET PROFIT RATIO:
Net Profit ratio indicates the overall efficiency of the management
inmanufacturing, administering and selling the products. It also
indicates the firms capacity to withstand adverse economic
conditions.
Net profit ratio =
2014
154,957,856
= 4,766,995,506 100
2013
166,740,993
= 5,253,806,261 100
Percenta
ge
3.17
37
3.18%
3.16%
3.14%
3.12%
3.10%
2013
2014
3.4.4
EBITDA MARGIN TO SALES:
EBITDA means Earnings Before Income Tax & Depreciation
Allowance. It measures the overall profit before income tax &
depreciation margin on sales.
EBITDA margin to sales =
2014
Percentag
e
EBITDA
100
Net sales
2013
Percentag
e
9.36
38
9.67
507,791,687
100
5,253,806,261
9.45%
9.40%
9.35%
9.30%
9.25%
9.20%
2013
2014
3.4.5
RETURN ON SHAREHOLDERS EQUITY:
It measures the rate of return on the book value of shareholders
total investment in the company. It indicates how well the firm
has used the resources of owners.
Return on shareholders equity =
Percentag
e
8.88
2013
39
Percentag
e
10.49
=
166,740,993
100
1,589,320,327
9.50%
9.00%
8.50%
8.00%
2013
2014
3.4.6
RETURN ON CAPITAL EMPLOYED:
Another way to calculate return on investment is through capital
employed or net assets. Net assets are equal to net fixed assets
plus current assets minus current liabilities. Net assets andcapital
employed convey the same meaning, though called differently.
Percentag
e
10.69
40
Percentag
e
15.22
=
279,533,834
100
1,836,382,657
8.00%
6.00%
4.00%
2.00%
0.00%
2013
2014
41
3.4.7
EARNING PER SHARE:
It indicates the profitability of the firm on a per share basis, it
does not reflect how much is paid as dividend and how much is
retained in the business.
Earnings per share =
2014
154,957,856
= 29,600,000
Taka
5.24
Taka
5.63
5.3
5.2
5.1
5
2013
2014
42
3.4.8
DIVIDEND PER SHARE:
It is the earning distributed to ordinary shareholders. A large
number of present and potential investors may be interested in
DPS rather than EPS.
Dividend
per
share
Dividend distributed
equity shareholders
No . of ordinary shares outstanding
2014
74,000,000
= 29,600,000
Taka
2.5
2013
0
= 29,600,000
Taka
0
1.5
1
0.5
0
2013
2014
43
5.24 earned per share. The difference per share is retained in the
business. While in 2013 RSRM retained Tk. 5.63 earned per share
fully.
44
2014
2,684,574,070
2,786,066,653
4,749,536,683
3,005,258,500
1,613,125,611
1,751,235,595
1,682,180,603
787,647,565
638,797,191
1,173,343,220
1,055,198,353
4,766,995,506
2013
2,192,672,783
2,474,310,829
4,310,693,485
2,721,373,158
1,250,041,298
1,613,125,611
1,431,583,455
489,946,817
489,946,817*
937,053,485
937,053485*
5,253,806,261
4,301,993,578
4,440,103,562
4,738,541,235
4,876,651,219
465,001,928
389,122,952
446,180,514
209,829,235
515,265,026
453,643,321
507,791,687
279,533,824
154,957,856
1,744,278,182
74,000,000
169,083,190
1,963,470,029
29,600,000
166,740,993
1,589,320,327
0
159,680,646
1,836,382,657
29,600,000
45
46
4 . RECOMMENDATION
Though the Ratanpur Steel Re-rolling Mills Ltd. is undoubtedly a
benefited company for the country, we recommend some
particular factors which, we think can make some more
betterment for the company in the practice of financial policies
and programs. The recommendations are given:
They should utilize maximum amount of its production
capacity which leads to increase annual turnover as well as
profit margin.
The industry should increase its channels of distribution of
products which helps to meet local demand as result
revenue will increase.
The company should increase the production volume by
installing new machine as it has been informed that
Government takes some big project which will increase
demand in near future such as Padma Multipurpose Bridge,
Metro rail, Tunnel under the Karnaphuli River etc.
They should maintain proper balance between high liquidity
& lack of liquidity.
They should have short-term as well as long-term solvency
for financial strength.
They should improveits operational efficiency or retire the
debt, early, to have a coverage ratio, comparable to the
industry if the coverage ratio is low.
They should compare the collection period of the firm with
the industrys average collection periodand decide whether
the firm has to make any change in credit policy.
They should have to paid creditors within the assured period.
They should increase earnings per share to attract the
shareholders.
47
5 . CONCLUSION
RSRM is one of the biggest steel manufacturing companies in the
private sector in Bangladesh. RSRM has strong customer
relationship with a local image and always sensitive about
competitors price. RSRM also gives honorarium to the engineers
to encourage further purchase. It is one of potential steel mill
among the graded bar producer because they have huge financial
strength and long experience in producing no graded bar. The
slogan of the Ratanpur steel mill is Steel for the nation.
And finally, we are hopeful to see that the construction sector of
Bangladesh has grown at a calculated average growth rate of
12.2% over the last 10 years and it is expected to continue in the
coming years. The real estate sector also tries to recover slowly
after temporary slowdown of demand due to overall
macroeconomic pressure and contraction policy of government.
Government also undertakes some big project which will increase
demand in near future which is the great opportunity for steel
industries like RSRM to meet the incremental demand of MS
Deformed Bar.
Hence the Government should come forward to ensure bright
future of this sector of industry.
48
7 . APPENDICES
QUESTIONNAIRE
(Information collected by questionnaire will be used for academic
purpose only)
49
Yearly Turnover
50
2013
2014
8 . REFERENCES
Websites:
www.rsrmbd.com
www.investopedia.com
www.businessdictionary.com
Books:
I. M. Pandey Financial Management.
Weygandt, Kieso & Kimmel Accounting Principles.
George Foster Financial Statement Analysis.
Annual Report of RSRM.
Miller, H. Merton. Debt and taxes. The Journal of Finance
(May, 1977).