Monno Ceramic Valuation

A
REPORT ON
Monno Ceramic Valuation
Financial Analysis & Control
COURSE CODE:FIN-4207
Submitted To:
Md. Hashibul Hassan
Assistant Professor
Department of Finance
Jagannath University
Submitted By: Group-17

NAME ID NO.
MD.ABUL KALAM AZAD B-120203023

MD. ABU SAYED B-120203026
MOHAMMAD RUHUL AMIN B-120203062
MAHMUDUL HASSAN B-120203102
Dated: January 29, 2017

Investment Recommendation: Sell (Over valued)
DSE (28/01/17) Taka: 41.20
52 Week Range Taka: 34-46.90
Revenue Taka: 757.385
Market Capitalization Taka: 985.83 million
Share Outstanding Taka: 23.928 million
Avg Daily Trading Volume 20,144
Book Value per Share Taka: 95.19
Return on Equity 0.13%
Return on Assets 0.10%
DCF Valuation Taka: 15.91
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Table of Contents
I. Executive Summary ......................................................................................................................... 1
II. Business Overview .......................................................................................................................... 2
A. SWOT Analysis............................................................................................................................. 3
a) Strengths ................................................................................................................................. 3
b) Weaknesses ............................................................................................................................ 4
c) Opportunities .......................................................................................................................... 4
d) Threats .................................................................................................................................... 4
III. Industry Overview ....................................................................................................................... 4
A. PEST Analysis ............................................................................................................................... 5
a) Political factors........................................................................................................................ 5
b) Economic factors..................................................................................................................... 6
c) Social factors ........................................................................................................................... 6
d) Technological factors .............................................................................................................. 6
B. Porter's five forces model ........................................................................................................... 7
a) Bargaining power of Buyers ........................................................................................................ 7
b) Bargaining power of Suppliers ................................................................................................ 7
c) Rivalry among existing firms ................................................................................................... 8
d) Threat of new entrants ........................................................................................................... 8
e) Threat of substitute products ................................................................................................. 8
f) Analysis of Porter Model......................................................................................................... 8
IV. Accounting Analysis .................................................................................................................... 9
A. Potential Red Flags ...................................................................................................................... 9
V. Financial Analysis .......................................................................................................................... 10
A. Ratio Analysis ............................................................................................................................ 10
a) Profitability............................................................................................................................ 10
b) Asset Management ............................................................................................................... 10
c) Liquidity Ratios ...................................................................................................................... 11
d) Debt and Coverage Ratios..................................................................................................... 11
e) Sustainable Growth Rate ...................................................................................................... 11
B. Horizontal Analysis .................................................................................................................... 11
C. Vertical Analysis ........................................................................................................................ 12
D. Z –Score ..................................................................................................................................... 13
VI. Valuation Analysis ..................................................................................................................... 15
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A. Assumption ............................................................................................................................... 15
B. Cost of Equity ............................................................................................................................ 16
C. Cost of Debt .............................................................................................................................. 17
D. Weighted Average Cost of Capital ............................................................................................ 17
E. Unlevered Free Cash Flow ........................................................................................................ 17
F. Present value of free cash flow ................................................................................................. 17
G. Terminal Value .......................................................................................................................... 18
H. Enterprise value and Implied Share Price ................................................................................. 18
I. Valuation Findings ..................................................................................................................... 18
J. Sensitivity Analysis .................................................................................................................... 19
K. Monte Carlo Simulation Analysis .............................................................................................. 19
VII. Appendices ................................................................................................................................ 21
VIII. References ................................................................................................................................ 43
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I. Executive Summary
Monno Ceramics is one of the leading ceramics manufacturing companies in Bangladesh.

The company mainly produced bone china, ivory china and porcelain table wares. Monno
ceramic is only company in Bangladesh, who used Royal Albert patterns with gold rime.
Their exquisite design with high quality materials made them one leading ceramic table
wares producer in South- Asia. Monno’s paid up capital is 239.28 million with total
outstanding share of 23.93 million. Monno has 30 years of experience in ceramic table
wares market. Monno has strong distribution network in more than 13 countries. Monno
only produces table wares which make them backward position in time of global crisis. They
are mainly dependent on export and they sales more than 70% produced product in
international market. Due to global crisis from 2013 to 2015, monno’s sales reduced
significantly. According to Global Industry Analysts Inc, the global ceramic tableware market
will be $41 billion by 2020. Ceramic table industry buyer has less bargaining power than
seller. But supplier has high bargaining power than companies.
Monno’s financial position like liquidity, asset management, profitability, debt coverage is in
moderate position. From our analysis of financial statements, we saw some distortions in
financial statements, where we made some key assumptions to deduct those distortions in
valuing monno. For valuation of monno ceramic, we used historical data to make pro forma
income statement and pro forma balance sheet. Then we used those data to derive the free
cash flow, which is a key part in DCF valuation. After getting free cash flow, we discount
them using weighted average cost of capital. We also determined terminal value of monno
ceramic using Gordon model. Then we calculated enterprise value by summing free cash
flows with terminal value.
Our valuation shows a reduced share price than the actual share price in market. From our
analysis we made a recommendation to buy/ sell of monno’s share. All the assumption
made during the valuation is derived using historical financial data, financial analysis, and
industry analysis.
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II. Business Overview
Monno Ceramic Industries Limited was incorporated in Bangladesh on 21st April, 1981 as a
Public Limited Company under The Companies Act, 1913. The Company went for public
issue of shares in 1985 and its shares are listed with the Dhaka Stock Exchange Limited &
Chittagong Stock Exchange Limited since 1983 and 1995 respectively.
The Company owns and operates modern ceramic wares factory and produces high quality
Porcelain and Bone China tableware’s products and sells them in the local as well as in
foreign markets. Monno Porcelain & Bone China factories are unique in being able to offer
under one roof the flexibility and versatility of many manufacturing methods for various size
or nature of the product. Monno has invested in modern machinery like High Pressure
Casting, Isostatic Pressing, Auto Cup Lines, Auto Dip Glazing, Spray Drying, and an open
firing system tunnel kilns that ensures the perfect vitrification of Porcelain & Bone China
wares to produce the superior glossy finish. One of Monno’s greatest strength is Spray
Colored Porcelain and Bone China. Monno is capable of producing any color that you desire.
All color pigments are imported from Germany which complies with FDA & EU standards
and California Prop.
Manufacturing capacity is 2 Million pieces per month where Bone china is 15,000 Pcs and
Porcelain 75,000 Pcs per day. Lead & Cadmium free color pigments from Ferro GmbH are
used to produce the finest in-glaze and on-glaze decals that bring any designer's artwork to
life. In-house Mould production and Sagger making ensures that the production lead-time is
minimized. Monno is not dependent on outside suppliers for labels or packaging, which
helps to ensure orders are available on time.
World’s best designers are working with Monno since last 25 years where they have
designed some of the best selling Porcelain and Bone China ranges of Monno, which are
being sold by prestigious retailers in the Europe, Australia and USA.
Monno offers products in Porcelain, New Bone China, Ivory China, and real Bone China. Due
to its unique body composition, made from the highest quality of raw materials from around
the globe. This company has done well in the export market with its sales office in London
and a permanent stall in the Frankfurt House-wares show.
Date of Incorporation : April 21, 1981
Listed with Stock Exchanges : 1983 (DSE), 1995(CSE)
Market Category : ‘B’
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Authorized Capital (BDT) : 500 million
Paid-up Capital (BDT) : 239.28 million
Total Shares : 23,928,020
Book Value Per Share (BDT) : 95.19
EPS (BDT) : 0.11
Audited P/E (x) : 477.78
Market Lot :1
Credit Rating : BBB+
Last Dividend Declaration Date : Oct 25, 2016
AGM Date : Dec 11, 2016
Name of Chairman : Mr. Harunar Rashid Khan
Name of Managing Director : Mrs. Afroza Khan
Number of Employees : 2,160
* As per latest data available by 17 Jan, 2017.
A. SWOT Analysis
a) Strengths
Monno ceramic has strong brand name with 30 years of experience in producing ceramic
tableware like bone china, ivory china and porcelain. They are only ceramic tableware
company in Bangladesh who using royal Albert patterns. Royal Albert patterns are a very
prestigious design collection. Monno produces ceramic tableware with or without gold
rimes. They have modern machinery like High pressure casting, Isostatic pressing, Auto cup
lines, Auto dip glazing, Spray drying and an open firing system. They also have treaty with
renowned hotels and fast food chains. Monno ceramic manufacturing capacity is 2 million
pcs per month which give them a competitive advantage than other local sellers. Monno
have strong distribution network both national and international market. They have own
show room and retail shops in most cities in Bangladesh, also in other 13 countries.
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b) Weaknesses
Monno ceramic has narrow product lines; they only produce ceramic table wares.
Dependency only in ceramic table wares making them vulnerable in global crisis. Another
weakness for monno is too much effort on export, for this reason they lost 25% market
share to shinepukur ceramic in recent year. But they still more concern about export than
national sells.Monno ceramic another weakness is they target higher middle class and
higher (elite) class only, which reduces their total sales volume.
c) Opportunities
Due to global financial crisis and rising labor cost developed countries switching to lower
cost countries like Bangladesh for importing ceramic table wares. This is increasing the
global market for monno ceramic. There are also continuous rises of middle income groups
which may help to expand national sells. Government declares a possible increase in
imported ceramic goods which also will increase local market sells for monno ceramic.
There are an increase in construction industry which making an opportunity for monno to
expand their product lines. They can use their brand name and experience in new ceramic
product lines like tiles and sanitary wares.
d) Threats
Emergence of substitute products like melamine wares, Aluminum wares, Steel kitchen
wares, Glass wares and Plastic wares reducing total sales.Monno ceramic also face
advertising challenge from sharif melamine, Bangladesh melamine, RFL, BRB, and Gazi.
Another threat for monno is shifting consumer tastes away from firm’s product to substitute
products. Though ceramic market is expanding, new entrants of national and international
may become a threat for monno by providing low cost ceramic table wares. Competitor
using higher technology like fine cut technology with decorated borders also can reduce
monno’s sales. Government making new embargo on cutting hills, making harder to gather
raw materials for ceramic table wares.
III. Industry Overview
Ceramic industry is a competitive industry, where quality is the main factor to differentiate
between various products. In Bangladesh, there are six companies who participate in
ceramic table ware business. They are Monno Ceramic, Shinepukur Ceramic, Paragon
Ceramic, Faar Ceramic, People Ceramic and Standard Ceramic. Among all monno and
shinepukur is the main competitor and market leader in ceramic table wares. There are also
some international competitor Lenox, Spode, Nikko and U.P Ceramic. According to Global
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Industry Analysts Inc, the global ceramic tableware market will be $41 billion by 2020. Now
it is more than $25 billion. As this market is in growth stage, more companies are coming to
capture market. Bangladesh being a gas rich and low labor country has great advantage than
other international competitor. Over the years, Bangladesh tableware ceramic companies
have gained international recognition for their high quality bone china technology.
Therefore international buying order is increasing day by day. Ceramic industry of
Bangladesh has great opportunity for lower cost labor and natural gas. The natural gas of
Bangladesh is good for producing bone china products. Ceramic products need a 400 degree
celsius continuous temperature to produce bone china products. Which give local
companies a greater advantage than international companies. There are also higher rates of
import tax in ceramic goods which securing national market for local companies.
Government has a greater role in increasing export of ceramic goods. Government can make
new treaty with USA and EU to decrease export tax, which may give bigger advantage to
local companies.
A. PEST Analysis
a) Political factors
Political factors consist with government policies, international relation, tax policy, labor
laws, tariffs, trade restrictions. Political factors mainly focus how government interacts with
other factors of an economy. Ceramic industry of Bangladesh has faces many problems
which may be reduced by government intervention. One of them is government embargo
on cutting hills, which making import dependency for raw materials.
Ceramic industry gives higher import duty on certain raw materials from 7.5 percent to 15
percent, also high value added tax 15 percent plus, than other industry. The export always
delay for BSTI certificate and PSI (Pre Shipment Inspection), because BSTI certificate and PSI
certificate is required to export in many countries. If government make special department
for export in BSTI, this problem can be solved. The irregular power and gas supply is a big
problem for ceramic industry. Government should make future plans to increase power
supply and also should search for new gas area to increase ceramic production. The
suspension of GSP (Generalized System of Preferences) is reducing export in USA.
Government should make good relation with USA to decline this suspension. Government
also can make good relation with other European countries to expand the export. Duty free
export in EU also may be suspended for poor factory condition of Bangladesh. So there are a
important aspect of government in increasing the export and maintain the quality of labor
force in ceramic industry.
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b) Economic factors
Economic factors include exchange rates, inflation rates, interest rates and economic
growth. Ceramic industries future prospects are very good. According to Industry Analysts
Inc, the global ceramic tableware market will be $41 billion by 2020. Now it is more than
$25 billion. This approximate major growth will increase the sell in global markets. Currency
exchange rate is another important factor in economy. Fluctuate of Dollar-Taka rate may
hamper import of raw materials and export of finished goods of ceramic industry.
Continuous rise of middle income groups may help to expand national sells. Interest rate
should be at minimum level so ceramic companies can take loan from bans in lower
interest.
c) Social factors
Social factors include lifestyle trends, consumer attitudes and opinions, advertising-publicity
and brand image. Ceramic industry is a competitive industry where people choose quality
products rather than low cost products. But due to exquisite designs of substitute products,
people tastes are changes to plastic, melamine, steel products. Advertising is another big
factor in any industry. Ceramic industry lags behind in advertising than Sharif melamine,
Bangladesh melamine, BRB, RFL and Gazi products.
d) Technological factors
Technological factors include manufacturing maturity and capacity, Intellectual property

issues, PatentsReplacement technology/solutions. Ceramic industry is a technology based
industry. Here new technology helps to reduce production cost and also help to increase the
quality and make new delightful designs. The trend of fashionable table wares makes the
industry more concern about new technology. Ceramic industry uses many intellectual
properties like patterns or designs which make different between two companies. Therefore
to use pattern of another company, a company must give some money and may have to
lease patent.
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B. Porter's five forces model
a) Bargaining power of Buyers
Bargaining power of buyers is moderately low in ceramic table ware industry. The number
of buyers in local and international market is high for ceramic table wares, which reduces
buyer power to bargain. So the company can target customers according to their products
and quality. To get bargaining power, buyer must buy products in high volume. But ceramic
table wares purchases by buyer in low volume, which reduce buyer bargaining power. Buyer
is not price sensitive, because ceramic table wares like porcelain, ivory china, and bonechina
are produced in different style and design in different ceramic companies. If one buyer likes
a design and style of one company, he will not go for another company’s product.
b) Bargaining power of Suppliers
In ceramic table wares industry bargaining power of suppliers is moderately high. Because
ceramic raw materials (china clay, ball clay, fire clay and aluminum)suppliers are very low
compare to companies. There are also differences between different countries raw
materials. The costs of switching from one supplier’s product to another supplier’s product
arealso high. Buyer must think about exchange rate also to switch between different
countries. Suppliers can easily forward integrate or produce ceramic table wares. Because of
their advantage of low cost raw materials and good technology, they can also produce
ceramic goods. Supplier’s raw materials are highly differentiated, which give supplier a big
advantage. If we one to produce bone china, we cannot use ivory china materials. That’s
why supplier bargaining power is high in this industry.
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c) Rivalry among existing firms
Rivalry among existing firms in ceramic table ware industry is in moderate position. Because
number of competitors is high.Ceramic table wares companycannot exit easily, as initial
investment in plant and machinery is high. Plant and equipment is highly specialized, these
assets cannot easily be sold to other buyers in another industry.Ceramic industry is growing
approximate 29%, and the monetary value is approximate US $20 billion plus and growing
rapidly, (Daily Ittefaq). Although the number of competitor is high but for its rapid growth,
we think the rivalry is at moderate level.
d) Threat of new entrants
In ceramic table wares industry threat of new entrants is in moderate position. Scale
economics is present in ceramic table wares industry as producing higher products in
ceramic industry reduce the production cost.Accessing distribution channel is difficult for
new entrants, as this industry highly dependent in exports.Capital requirements for making
plant is high, as required 500 crore initial investment. The proprietary technology is an issue.
Because every firms making their own patent on design and style to differentiate
themselves from other firms. The increasing market is attracting new companies to enter in
ceramic table wares. That’s why we are saying that the threat of new entrants is in
moderate position.
e) Threat of substitute products
In ceramic industry threat of substitute product is in moderate position.Different kind of

substitute products for ceramic tableware such as melamine wares, aluminum wares, steel
kitchen wares, glass wares and plastic wares are rising. There are also enormous advertising
of substitute product shifting people tastes from ceramic products. Substitute product price
is comparatively low, which may reduce the revenue of ceramic industry. The market has
good growth; therefore we think threat of substitute is in moderate position.
f) Analysis of Porter Model
Bangladesh, being a gas rich, low-labor cost economy and having advanced ‘bone china’
technology, is perfectly positioned to produce and export ceramic goods.
After analyzing porter’s five competitive forces, we see though bargaining power of
suppliers is high, but the industry is still moderately highly profitable for its high growth.
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IV. Accounting Analysis
A. Potential Red Flags
Red Flag 1: Rising account receivable in relation to sales
Issue: Form the income statement and balance sheet we see that accounts receivable are
rising faster than sales, it indicates that customers are taking longer to give cash for
products. This red flag can indicate poor account receivable management. It also indicates
that monno may show uncollectible account receivable or bad debts as accounting
receivable. Maybe monno showing overstated assets by not writing off bad debts.
Red Flag 2: Decreasing gross profit margin
Issue: Monno Ceramic gross profit margin is decreasing from year to year. This may indicate
that raw materials & others auxiliary materials price are increasing but company still sell
product at lower price. It also may indicate that management is not efficient in locating
suppliers.
Red Flag 3: Poor cash flow patterns
Issue: Monno’s cash flow from operating activities is mainly negative from year to year. It
may indicate that cash management is very poor. It also indicates that monno is not good in
collecting account receivable in times and managing supplier’s payment and interest
payment.
Red Flag 4: Understated Tax Liability
Issue: It maybe a potential red flag for Monno Ceramic. Income tax case is pending in the
High Court for final settlement. It may increase tax liability for Monno Ceramic. It also
indicates that monno showing understated liability from year to year statements.
Red Flag 5: Revaluation of Assets
Issue: In 2012, Monno Ceramic revalued their land, building and plant and showing 200%
increase from prior period. It may indicate that they are overstating asset than actual asset.
It also indicates that they are using wrong depreciation method for plant and building. It
also indicates they are using higher depreciation to hide their revenue in income statement.
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V. Financial Analysis
A. Ratio Analysis
Ratio analysis is an important aspect to know about firm’s financial position. There are
liquidity ratios, profitability ratios, assets management ratios, debt and coverage and
sustainable growth rate. Every ratio tells about different factors of a firm. The liquidity ratios
tells about how liquid a firm and how much their ability to repay any loans or payables. If
one firm does not have enough liquidity, they may face investment risk. The profitability
ratio tells about the profitability in terms of current years. Asset management ratio tells
about firm’s potentiality in managing different assets and liabilities. Debt and coverage ratio
analysis the debt portion of a firm and its ability to repay debt and possibility to take new
debt. The sustainable growth rate show how much growth a firm can predict from its
current position.
a) Profitability
Monno Ceramic profitability ratios were very volatile throughout these years. This volatility
in profit margin, indicate that maybe management is losing their efficiency in gathering raw
materials and labor for the production, which reducing gross profit margin.Both EBITDA
margin and NOPAT margin is quite stable throughout these years, which indicate that
management is efficient in operating activities like selling and administrative. Net income
margin for monno is very unstable. Management should take a closer look to identify
possible reason of this instability. Return on Assets (ROA) change indicates that monno is
not efficiently using their assets to generate revenue.The overall profitability margin, like
Gross profit margin, ROA margin and ROE margin are decreasing but Operating margin,
EBITDA margin and Net operating margin still stable. This helps monno to maintain their
profitability status.
b) Asset Management
Account receivable turnover indicates that we are taking longer time to turn our a/c
receivable to real money. The collection days of a/c receivable increased from 32.19 days to
66.50 days. Account payable turnover was decreased from 7.51x to 6.07x. This is good for
monno ceramic, as we can take more advantage from supplier money. The other asset
management ratio like inventory turnover, working capital turnover and pp&e turnover is
not good, which indicate management is not efficient in managing these assets. As monno is
paying later to supplier but taking longer to get money from customer, the overall position
in asset management margin is very poor.
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c) Liquidity Ratios
Due to continuous repayment of long term loan and short term loan, the liquidity position
of monno ceramic is very bad. Though the current ratio is stable throughout the years but
other liquidity ratio like quick ratio, cash ratio and operating cash flow ratio was very
unstable. The overall liquidity position of monnoceramie indicates that its ability to repay
current liabilities is not satisfactory and also income generating from operating activities is
not satisfactory.
d) Debt and Coverage Ratios
Monno management is trying to achieve a debt free capital structure, so they repaying all
long term and short term loan. This is reducing the overall debt ratio for the business. Debt
to capital ratio was 0.62 in 2009-10 and became 0.16 in 2014-15. Net debt to net capital
also decreased significantly. Monno has already paid all long term loans and paying back its
short term loan, which reduced both ratios throughout the years. Interest coverage from
both earning based and cash flow based was stable throughout years. Monno has ability to
pay its loan, lease payment from its earnings. But has fewer amounts from cash flow to pay,
loan and lease, as monno is already liquidity crisis. It also can take loan at cheaper rate from
banks and other financial institutions for its equity based capital structure.
e) Sustainable Growth Rate
Average sustainable growth rate for monno was 0.93% throughout the years. Sustainable
growth rate is the rate at which a firm can grow while keeping its profitability and financial
policies are unchanged. From the above we can see that the company has a lower ROE and
a higher dividend payout ratio which leads to a significantly lower sustainable growth rate.
So the company should change their several policies like payout policies, financial leverages
policies etc.We think monno needs to sustain a higher growth rate than its current SGR in
order to compete in the highly competitive markets of the industry.
B. Horizontal Analysis
We took Year 2009-10 as base year for horizontal analysis. First we common size all year
data using 2009-10 data as base year. For this we use this formula:
Year 2010−11 (Actual Year)

For year 2010-11 = year 2009−10(Base Year)
For common sizing every year data, we divided individual year data by base year data.
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After common sizing 2009-10 to 2014-15 income statement and balance sheet, we
calculated the increase/ decrease from year to year. For this we use this formula:
This year data

For calculating difference = Previous year data– 1
From horizontal analysis in income statement, we see monno sales from 2011-12 to 2014-15
decreasing significantly. Other accounts like cost of goods sold and operating expenses
decreasing as same percentage like sales. It indicates our efficiency in collecting raw
materials and managing operating expenses same as before. But monno is losing its market
to other or the market is decreasing due to global crisis. For this reason in 2014-15, profit
from operation became 58% than 100% in 2009-10. When market will start to boom again,
monno will get more profit as before.
From horizontal analysis in balance sheet, we see monnohad made a significant investment
in its fixed assets in 2011-12, which is 582% than previous year. This reflects that monno
thinking that market is in growth stage and they want to increase their production. It also
reflects that with investing in new technology, they can reduce their production cost and get
efficiency in production. Another big concern for monno is their increasing account
receivable, which reflects bulk sales in trade credit or bad debts.
From the analysis, we see that monno is repaying its debt year to year and became an
equity based company in 2014-15. Trade & others payable and accrued expenses were in a
stable level from year to year, which show monno cash payable abilities through 2009 to
2015.
C. Vertical Analysis
Vertical analysis is known as common size analysis. Vertical analysis is the proportional
analysis of a financial statement, where each line item on a financial statement is listed as a
percentage of a base item.
To conduct a vertical analysis of balance sheet, the total of assets and the total of liabilities
and stockholders’ equity are generally used as base figures. All individual assets (or groups
of assets if condensed form balance sheet is used) are shown as a percentage of total assets.
The current liabilities, long term debts and equities are shown as a percentage of the total
liabilities and stockholders’ equity.
To conduct a vertical analysis of income statement, sales figure is generally used as the base
and all other components of income statement like cost of sales, gross profit, operating
expenses, income tax, and net income etc. are shown as a percentage of sales.
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In a vertical analysis the percentage is computed by using the following formula:
Amount of individual item

Percentage of base = ∗ 100
Amount of base
From vertical analysis of income statement, we see there are no significant variances from
the base item (sales) in year 2009-10 to 2014-15. Which indicate if we increase the sales, the
profit will also increase at same percentage. Monno is repaying its loan and interest which
made some variances in middle years due to increasing finance cost.
From vertical analysis of balance sheet, we see monno is investing more in fixed assets than
current assets. There are also significant decreases in inventories, which reflect monno is
gaining efficiency in inventory management from year to year. Monno was reducing their
long term debt from 2009-10 to 2014-15. Now they have no long term debt or 0% long term
debt than Total liabilities and shareholder equity. But in 2009-10, they had 8% long term
debt.
D. Z –Score
The Altman Z- Score model, weights five variables to compute a bankruptcy score.The
formula can be used to predict the probability that a firm will go into bankruptcy within two
years. Z-scores are used to predict corporate defaults and an easy-to-calculate control
measure for the financial distress status of companies. The Z-score uses multiple corporate
income and balance sheet values to measure the financial health of a company.
The model is as follows: Z= 1.2 (X1 ) + 1.4 (X2 ) +3.3(X3 ) + 0.6 (X4 ) + 1.0 (X5 )
Where, X1 = Net working capital/ Total assets
X2 = Retained earnings/ Total assets
X3 = EBIT/ Total assets
X4 = Market value of equity/ Book value of total liabilities
X5 = Sales/ Total sales
The model predicts bankruptcy when Z<1.81. The range between 1.81 and 2.67 is labeled
the “gray area”. The model predicts safe zone when Z > 2.99.
For Monno ceramic:
X1 = Net working capital/ Total assets
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= 20.41/3050.664
= 0.006691
X2 = Retained earnings/ Total assets
=2036.553/3050.664
=0.6676
X3 = EBIT/ Total assets
=55.501/3050.664
=0.01819
X4 = Market value of equity/ Book value of total liabilities
=1028.91/774.831
=1.328
X5 = Sales/ Total assets
=757.385/3050.664
=0.24827
So, Z-Score for Monno ceramic: Z= 1.2 (X1 ) + 1.4 (X 2 ) +3.3(X3 ) + 0.6 (X4 ) + 1.0 (X5 )
=1.2*0.006691+1.4*0.6676+3.3*0.01819+0.6*1.328+1.0*0.24827
=2.04
The Z score for monno ceramic fall in gray area, which means company, is in real danger in
upcoming 2 years if proper steps not take to increase its earnings before tax. All the
variables are good but low EBIT made the Z score worse.
This observation of Monno Z-score predicts distress in company. The reason for monno
apparent low financial performance and low market valuation is due to the low number in
earnings before tax. In the first component, there isno deepening trouble with regard to
repeated operating losses which would show areduction in working capital relative to total
assets. The second component shows thecompany’s history in its ability to reinvest earnings
in itself. This is good for monno because of accumulated earnings through years.
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Ratio three, which show earnings before tax is very low in this year due to global crisis and
low sales volume.
The fourth component is a good indicator of the extent to which thecompany’s assets can
decline before debts may exceed assets. The final componentpoints out the profitability of
monno assets relative to the amount of sales generatedper asset.
VI. Valuation Analysis
In valuing Monno ceramic a combination of historical and forecasted data are used to
predict the firm’s overall value. We used DCF (Discounted Cash Flow) method to valuing the
company. Discounted cash flow (DCF) is a valuation method used to estimate the
attractiveness of an investment opportunity. DCF analysis uses future free cash flow
projections and discounts them to arrive at a present value, which is then used to evaluate
the potential for investment.Valuing the price of the firm is important toshareholders as
well as potential shareholder so they are able to determine if the companyis worth what
they are paying for it. If a company is overvalued then it is a good time tosell shares as well
as vice versa, when it is undervalued it is a good time to buy shares.This is important to the
company as well because they may be willing to buy back shareswhen the price is low.
A. Assumption
For making a good valuation, it is very important to make some key assumption regarding
future forecast. We used discounted cash flow method for valuation. In discounted cash
flows valuation make using discounted free cash flow. To do the valuation process more
realistic, we first made pro forma income statement and pro forma balance sheet. Then we
use DCF method to forecast future data. The key assumptions in the whole process of
valuation are:
 We take sales growth for monno ceramic is 2.25%. This sales growth assumed by
taking all historical sales data from 2004-2013 as a base. We did a trend analysis of
sales from 2004-2013 and then calculate average to get the ultimate growth rate.
We also take our financial position and market condition to understand the possible
sales growth. In 2014-15 we made a 9.38% growth from 2013-14. But from 2010 to
2015, our average sale growth was -1.24%. We determined that this average is
happened because of distortion in 2012 and 2014. So we wanted to make a safe
assumption and take 2.25% which we got from our trend analysis. We think it is the
best safe assumption regarding sales of monno ceramic, taking all the analysis we
made like SWOT analysis, Porter forces analysis and Financial analysis.
Page | 15
 Another important assumption was EBIT % of sales. We all know how much we sales
do not mean our earnings. We must deduct total cost from sales to get earnings
before interest and tax. The average EBIT % of sales was 10.50% from 2010-2015.
But our last actual year 2015 EBIT % of sales was 7.33%. From our financial analysis,
we saw that monno has potentiality in managing assets. So taking all the analysis in
mind, we take EBIT % of sales is 8%. We wanted to deduct last year distortion and
make a safe assumption to make valuation more realistic.
 Depreciation & amortization percentage is another important assumption; we take
to value monno ceramic. Our average D&A percentage was 3.03% from 2010-15. In
last year 2015, D&A percentage was 6.07%. This happened due to revaluation and
dispose of some assets. So we wanted to take a safe assumption bearing all analysis
in mind. We take D%A for monno ceramic is 4%. This is between the average and 5
years average deducting the distortions.
 Another key assumption is the tax rate. From our calculation in historical data, we
saw 22% tax in income statement with provisions rate include. But due to new tax
law impose in raw materials importation. We take the average rate of 32.5% for less
than 10% Dividend Company. This assumption is taken to reduce the overvaluation
of company because of upcoming changes in future tax policy.
 The risk free rate is taken from Bangladesh bank 20 years Treasury bond interest
rate. Because Treasury bond is seemed as a no risk investment.
 The market risk premium 4.84% derived from the spread between risk free interest
rate and market rate of interest rate.
 Monno ceramic is a medium size company. That’s why we taken size premium 2% for
determining cost of equity.
 The perpetuity growth we taken for monno ceramic is 3.05%. This percentage we
derive from the GDP. We know no company can outperform GDP, That’s why we
take half of GDP as a perpetuity growth rate for valuing monno ceramic. It is a
realistic and safe assumption regarding valuation.
B. Cost of Equity
Monno has an estimated cost of equity of 12.98%. This figure was generated byusing a risk
free rate of 7.94%, which is the rate on the twenty year treasury bonds. There are also a
market risk premium of 4.84%, levered beta 0.63 and size premium 2%. The market risk
premium is collected from Bangladesh bank interest spread table. Thebeta used was
calculated using market closing price and DSEX index of July, 2014 to June, 2015. The cost of
equity was calculated as follows:
Page | 16
Cost of equity = Risk free rate of return + (Market risk premium * Levered beta) + Size
premium
C. Cost of Debt
Monno’s cost of debt is estimated to be 8.1%; this figure was calculatedusing 10-20 years
bond rate of 12% and tax rate of 32.5%. The cost of debt was calculated as follows:
After tax Cost of debt= Cost of debt (1-Tax rate)
D. Weighted Average Cost of Capital
Monno’s Weighted Average Cost of Capital (WACC) is estimated to be 12.98%, in making

these calculations it was determined that Monno is comprised of 0% debt and 100 % equity.
Monno has nodebt to total capitalization, whichfrees it from having to worry much about
debt covenants and interest payments. WACC was calculated as follows:
WACC= (Debt to total capitalization * After tax cost of debt) + (Equity to total capitalization
* Cost of equity)
E. Unlevered Free Cash Flow
Monno’sunlevered free cash flow is the gross free cash flow generated by monno; it is the
free cash flow available to pay all stakeholders. The unlevered free cash flow computed as
follows:
Unlevered Free Cash Flow = EBITDA - CAPEX - Working Capital – Taxes
F. Present value of free cash flow
After we calculated unlevered free cash flow for forecasted years 2015-16 to 2019-20. We
discounted that future cash flow to get the present value of free cash flow. Free cash flow
computed as follows:
1
Present value of free cash flow = Unlevered future free cash flow * (1+WACC)^discount
period
Page | 17
G. Terminal Value
Monno’s terminal value calculated applying Gordon growth model. The terminal value of
monno is the present value of all future cash flows where we expect stable growth rate
forever. Terminal value calculated as follows:
Terminal year free cash flow∗(1+Perpetuity Growth Rate)

Terminal value = (WACC−Perpetuity Growth Rate)
Then terminal value discounted using discount factor to get the present value of terminal
value. Here terminal year free cash flow was 87.32 million, WACC was 12.98% and
Perpetuity growth 3.53%.
H. Enterprise value and Implied Share Price
Monno’s enterprise value is 804.40 million, which is computed with Present value of free
cash flows from 2015-16 to 2019-20 plus Present value of terminal value.
After we calculated enterprise value, we calculated implied equity value. Implied equity
value is calculated using this formula.
Implied equity value = (Enterprise value – Total debt + Cash and cash equivalent)
Monno’s implied equity value is 381 million with outstanding shares of 23.93 million. Then
we calculated implied share price using this formula:
Implied share price = (Implied equity value / Outstanding shares)
Monno’s implied share price is 15.91 taka per share.
I. Valuation Findings
Monno’s current share price in share market is 41.20 taka per share. According to DCF
valuation share price is 15.91 taka per share, which is 25.29 taka less than market value of
per share.
So, according to our valuation Monno’s share price is overvalued in market. For this reason
if one has monno’s share now he should sell the share before the price fall.
Our valuation process might have some limitation due to some key assumption. But still we
can say the share price is overvalued. Because monno has a z-score 2.04, which show a
distress in financial position in current year. We saw sales was decreased from 2011-12 to
Page | 18
2013-14 due to global crisis and a 9.38% increased in 2014-15. There are also increasing
competition in both local and international market. There are also possibilities to a 102%
increase in ceramic market among tableware, sanitary and other sector. If monno can
capture those new markets, they will be in good position in future. We make our
recommendation using actual data and some assumption base on actual data. So, DCF may
not be predicted future exactly. But still we think the share price is overvalued in respect to
their financial position.
J. Sensitivity Analysis
From the sensitivity analysis between Perpetuity growth and WACC, we see that Perpetuity
growth is more sensitive than WACC. If WACC is 11% enterprise value will be 929 million, a
1% increase in WACC decrease 10.65% enterprise value. WACC is used in DCF to discount
the future values, so any increase in WACC will decrease the amount of enterprise value. On
the other hand Perpetuity growth is used to forecast future growth in terminal value, so any
increase in perpetuity growth will increase the amount of enterprise value. The relationship
between Perpetuity growth and WACC is negative. Hence it increases the sensitivity
between this two. The average standard deviation of WACC is 52; on the other hand the
average standard deviation of perpetuity growth is 143. Which describe the higher
variability of perpetuity growth rather than WACC.
From the sensitivity analysis between Annual sales growth and WACC, we see sales growth
is more sensitive than WACC. There are negative relationship between Annual sales growth
and WACC. The average standard deviation of WACC is 32, on the other hand the average
standard deviation of annual sales growth is 141. Which describe the higher variability and
sensitivity of annual sales growth rather than WACC. From this analysis we can conclude
that we must increase sales to increase the enterprise value, with current financial position.
K. Monte Carlo Simulation Analysis
Monte Carlo simulation is a computerized mathematical technique that allows people to

account for risk in quantitative analysis and decision making. The technique is used by
professionals in such widely disparate fields as finance, project management, energy,
manufacturing, engineering, research and development, insurance, oil & gas,
transportation, and the environment.
From our simulation test of 1000 trials we see that between 781.60 million to 820.11
million, there are 61.5% certainty base on our assumption of sales growth, perpetuity
growth rata and WACC. The variance between total forecast is 21.42. There are 50%
Page | 19
possibilities that the enterprise value will be 805 plus. From the sensitivity chart of
montecarlo simulation, we can see sales growth is 81.5% sensitive and perpetuity growth
rate is 14.9 % and WACC is .6% sensitive. So our recommendation stills same as before. We
must increase sales promotion and enormous advertising strategy to capture more sales in
both national and international market.
Page | 20
Appendices
Cash Flow Statement For the Financial Year 2010-2015 (in million BDT)
2009- 2010- 2011- 2012- 2013- 2014-
Particulars
2010 2011 2012 2013 2014 2015
Cash Flows from Operating Activities (13.535) 86.007 (5.218) 12.233 36.325 (11.196)
Cash Receipts from Customers and Others 819.314 822.662 732.288 754.111 719.230 760.834
Cash Paid to Suppliers, Employees and others 775.320 684.121 684.407 682.905 628.117 724.168
Interest Paid 57.529 52.534 53.099 58.973 54.788 47.862
Cash Flows from Investing Activities (0.088) (8.292) (0.489) (2.143) (6.847) (38.806)
Acquisition of Property, Plant and Equipment 0.088 8.292 0.489 2.143 6.847 38.806
Cash Flows From Financing Activities 29.676 (74.228) (11.834) (6.131) (23.785) 29.572
Decrease in Long Term Borrowings 3.525 26.601 17.694 9.492 14.575 19.167
Increase in Short Term Borrowings 46.413 - 6.475 7.250 - 53.683
Decrease in Short Term Borrowings - 42.100 - - 5.390 -
Dividend Paid 13.061 5.175 0.462 3.889 3.669 3.769
Deferred Liability 0.151 0.352 0.153 - 0.151 1.175
Increase/ (Decrease) in cash & cash equivalents 16.053 3.487 (17.541) 3.959 5.693 (20.430)
Cash and Cash Equivalents at Beginning of Year 17.833 33.886 37.373 19.833 23.793 29.485
Cash and Cash Equivalents at end of Year 33.886 37.373 19.832 23.792 29.486 9.055
Net operating cash flows per share (10.03) 53.09 (0.22) 0.51 1.52 (0.47)
Numbers of Outstanding Shares (in million format) 1.35 1.62 23.93 23.93 23.93 23.93
Numbers of Outstanding Shares 1350000 1620000 23928020 23928020 23928020 23928020
Page 21
Profit and Loss Account For the Financial Year 2010-2015 (in million BDT)
2009- 2010-
Particulars 2011-2012 2012-2013 2013-2014 2014-2015
2010 2011
Net Revenue 813.787 826.089 778.624 753.990 692.428 757.385
Cost of Goods Sold 644.055 648.470 620.436 610.074 546.208 617.335
Gross Profit 169.732 177.619 158.188 143.916 146.220 140.050
Operating Expenses 74.178 74.143 69.307 65.281 76.900 84.313
Administrative Expenses 39.384 43.100 39.244 37.590 42.461 47.454
Selling and Distribution Expenses 34.794 31.043 30.063 27.691 34.439 36.859
Profit from Operations 95.554 103.476 88.881 78.635 69.320 55.737
Finance Cost 90.491 67.809 68.667 67.322 65.609 50.791
Net Profit Before Contribution to WPPF 5.063 35.667 20.214 11.313 3.711 4.946
Contribution to WPPF & WWF 0.241 1.698 0.963 0.539 0.177 0.236
Net Profit Before Tax 4.822 33.969 19.251 10.774 3.534 4.710
Income Tax Provision (Current & deferred) 0.984 3.772 2.335 2.431 0.989 1.641
Net Profit after Tax-Transferred to Statement of
3.838 30.197 16.916 8.343 2.545 3.069
Changes in Equity
Basic Earnings per share (Par Value Tk. 100/10.00) 2.84 18.64 0.71 0.35 0.11 0.13
Numbers of Shares used to Compute EPS (in
1.350 1.620 23.928 23.928 23.928 23.928
million format)
Numbers of Shares used to Compute EPS 1350000 1620000 23928020 23928020 23928020 23928020
Page 22
Pro forma profit and loss account Actual Percentage
2015- 2016- 2017- 2018- 2019- 2009- 2010- 2011- 2012- 2013- 2014- Actual Used
Particulars
2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 Avg Parameter
Net Revenue 712.651 701.785 774.000 871.127 835.118 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Cost of Goods Sold 568.493 559.825 617.433 694.913 666.188 79.14% 78.50% 79.68% 80.91% 78.88% 81.51% 79.77% 79.77%
Gross Profit 144.158 141.960 156.568 176.215 168.931 20.86% 21.50% 20.32% 19.09% 21.12% 18.49% 20.23%
Operating Expenses 68.756 67.708 74.675 84.046 80.572 9.12% 8.98% 8.90% 8.66% 11.11% 11.13% 9.65%
Administrative Expenses 38.579 37.990 41.900 47.157 45.208 4.84% 5.22% 5.04% 4.99% 6.13% 6.27% 5.41% 5.41%
Selling and Distribution Expenses 30.178 29.717 32.775 36.888 35.364 4.28% 3.76% 3.86% 3.67% 4.97% 4.87% 4.23% 4.23%
Profit from Operations 75.401 74.252 81.892 92.169 88.359 11.74% 12.53% 11.42% 10.43% 10.01% 7.36% 10.58%
Finance Cost 63.256 62.292 68.702 77.323 74.127 11.12% 8.21% 8.82% 8.93% 9.48% 6.71% 8.88% 8.88%
Net Profit Before Contribution to WPPF 12.145 11.960 13.191 14.846 14.232 0.62% 4.32% 2.60% 1.50% 0.54% 0.65% 1.70%
Contribution to WPPF & WWF 0.578 0.570 0.628 0.707 0.678 0.03% 0.21% 0.12% 0.07% 0.03% 0.03% 0.08% 0.08%
Net Profit Before Tax 11.567 11.390 12.562 14.139 13.554 0.59% 4.11% 2.47% 1.43% 0.51% 0.62% 1.62%
Income Tax Provision (Current & deferred) 2.487 2.449 2.701 3.040 2.914 20.41% 11.10% 12.13% 22.56% 27.99% 34.84% 21.50% 21.50%
Net Profit after Tax-Transferred to Statement of
9.080 8.941 9.861 11.099 10.640 0.47% 3.66% 2.17% 1.11% 0.37% 0.41% 1.36%
Changes in Equity
Basic Earnings per share (Par Value Tk. 100/10.00)
Numbers of Shares used to Compute EPS (in
million format)
Numbers of Shares used to Compute EPS
Page 23
Horizontal Analysis
2009- 2010- 2011- 2012- 2013- 2014- 2009- 2010- 2011- 2012- 2013- 2014-
Particulars
2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015
Net Revenue 100% 102% 96% 93% 85% 93% 1.51% -5.75% -3.16% -8.16% 9.38%
Cost of Goods Sold 100% 101% 96% 95% 85% 96% 0.69% -4.32% -1.67% -10.47% 13.02%
Gross Profit 100% 105% 93% 85% 86% 83% 4.65% -10.94% -9.02% 1.60% -4.22%
Operating Expenses 100% 100% 93% 88% 104% 114% -0.05% -6.52% -5.81% 17.80% 9.64%
Administrative Expenses 100% 109% 100% 95% 108% 120% 9.44% -8.95% -4.21% 12.96% 11.76%
Selling and Distribution Expenses 100% 89% 86% 80% 99% 106% -10.78% -3.16% -7.89% 24.37% 7.03%
Profit from Operations 100% 108% 93% 82% 73% 58% 8.29% -14.10% -11.53% -11.85% -19.59%
Finance Cost 100% 75% 76% 74% 73% 56% -25.07% 1.27% -1.96% -2.54% -22.59%
Net Profit Before Contribution to WPPF 100% 704% 399% 223% 73% 98% 604.46% -43.33% -44.03% -67.20% 33.28%
Contribution to WPPF & WWF 100% 705% 400% 224% 73% 98% 604.56% -43.29% -44.03% -67.16% 33.33%
Net Profit Before Tax 100% 704% 399% 223% 73% 98% 604.46% -43.33% -44.03% -67.20% 33.28%
Income Tax Provision (Current & deferred) 100% 383% 237% 247% 101% 167% 283.33% -38.10% 4.11% -59.32% 65.93%
Net Profit after Tax-Transferred to Statement of Changes in
Equity 100% 787% 441% 217% 66% 80% 686.79% -43.98% -50.68% -69.50% 20.59%
Numbers of Shares used to Compute EPS (in million format)
Page 24
Vertical Analysis
2009- 2010- 2011- 2012- 2013- 2014-

Particulars
2010 2011 2012 2013 2014 2015
Net Revenue 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Cost of Goods Sold 79.14% 78.50% 79.68% 80.91% 78.88% 81.51%
Gross Profit 20.86% 21.50% 20.32% 19.09% 21.12% 18.49%
Operating Expenses 9.12% 8.98% 8.90% 8.66% 11.11% 11.13%
Administrative Expenses 4.84% 5.22% 5.04% 4.99% 6.13% 6.27%
Selling and Distribution Expenses 4.28% 3.76% 3.86% 3.67% 4.97% 4.87%
Profit from Operations 11.74% 12.53% 11.42% 10.43% 10.01% 7.36%
Finance Cost 11.12% 8.21% 8.82% 8.93% 9.48% 6.71%
Net Profit Before Contribution to WPPF 0.62% 4.32% 2.60% 1.50% 0.54% 0.65%
Contribution to WPPF & WWF 0.03% 0.21% 0.12% 0.07% 0.03% 0.03%
Net Profit Before Tax 0.59% 4.11% 2.47% 1.43% 0.51% 0.62%
Income Tax Provision (Current & deferred) 0.12% 0.46% 0.30% 0.32% 0.14% 0.22%
Net Profit after Tax-Transferred to Statement of Changes in
Equity 0.47% 3.66% 2.17% 1.11% 0.37% 0.41%
Numbers of Shares used to Compute EPS (in million format)
Page 25
Balance Sheets For the Financial Year 2010-2015 (in million BDT)
Particulars 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
ASSETS
NON-CURRENT ASSETS 388.794 401.347 2272.545 2283.611 2274.486 2267.283
Property, Plant and Equipment - At cost Less Deprecitation 304.294 316.847 2159.349 2170.415 2161.290 2154.087
Investments 84.500 84.500 113.196 113.196 113.196 113.196
CURRENT ASSETS 533.096 610.417 767.636 759.953 793.939 783.381
Inventories 328.572 342.480 281.849 297.664 347.165 333.781
Trade & other Receivables 75.132 78.559 173.021 172.899 146.097 142.648
Advance, Deposits & Pre-payments 95.506 152.005 292.933 265.597 271.192 297.896
Cash and cash Equivalents 33.886 37.373 19.833 23.793 29.485 9.056
TOTAL ASSETS 921.890 1011.764 3040.181 3043.564 3068.425 3050.664
Annual Asset Growth 9.75% 200.48% 0.11% 0.82% -0.58%
EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY 281.554 311.752 2305.078 2308.374 2277.809 2275.833
Issued and Paid-up Share Capital 135.000 162.000 239.280 239.280 239.280 239.280
Revenue Reserve & Surplus 146.554 149.752 2065.798 2069.094 2038.529 2036.553
NON-CURRENT LIABILITIES 85.799 56.845 40.557 32.498 17.772 11.863
Long Term Borrowing (Secured) 75.096 46.495 27.368 19.309 4.734
Deferred Liability 10.703 10.350 13.189 13.189 13.038 11.863
CURRENT LIABILITIES 554.536 643.167 694.546 702.692 772.844 762.968
Short Term Borrowings 361.562 319.462 374.927 382.177 376.787 430.470
Long Term Loans (Current portion) 14.744 16.744 18.177 16.744 16.744 2.312
Trade & other Payables 85.789 175.103 110.137 74.944 120.402 101.690
Accrued Expenses 17.709 25.530 39.017 35.663 24.618 20.771
Unclaimed Dividend 13.335 8.160 7.886 9.044 10.422 11.699
Provision for Income Tax (Current & deferred) 11.632 15.404 23.070 25.501 26.490 28.131
Liabilities for other Finance 49.765 82.764 121.332 158.619 197.381 167.895
Total Liabilities 640.335 700.012 735.103 735.190 790.616 774.831
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 921.889 1011.764 3040.181 3043.564 3068.425 3050.664
Net Assets Value 281.555 311.752 2305.078 2308.374 2277.809 2275.833
Net Assets Value per share 208.56 192.44 96.33 96.47 95.19 95.11
Numbers of Outstanding Shares (in million format) 1.350 1.620 23.928 23.928 23.928 23.928
Page 26
Pro forma balance sheets Actual Percentage
2015- 2016- 2017- 2018- 2019- 2009- 2010- 2011- 2012- 2013- 2014- Actual Used
Particulars
2016 2017 2018 2019 2020 2010 2011 2012 2013 2014 2015 Avg Parameter
ASSETS
NON-CURRENT ASSETS 2291.370 2334.934 2379.368 2424.692 2470.922 42.17% 39.67% 74.75% 75.03% 74.13% 74.32% 63.34%
Property, Plant and Equipment - At cost Less Deprecitation 2178.174 2221.738 2266.172 2311.496 2357.726 33.01% 31.32% 71.03% 71.31% 70.44% 70.61% 57.95% 70%
Investments 113.196 113.196 113.196 113.196 113.196 9.17% 8.35% 3.72% 3.72% 3.69% 3.71% 5.39% Fixed
CURRENT ASSETS 820.307 838.977 858.021 877.445 897.258 57.83% 60.33% 25.25% 24.97% 25.87% 25.68% 36.66%
Inventories 35.64% 33.85% 9.27% 9.78% 11.31% 10.94%
Trade & other Receivables 8.15% 7.76% 5.69% 5.68% 4.76% 4.68%
Advance, Deposits & Pre-payments 10.36% 15.02% 9.64% 8.73% 8.84% 9.76%
Cash and cash Equivalents 3.68% 3.69% 0.65% 0.78% 0.96% 0.30%
TOTAL ASSETS 3111.677 3173.911 3237.389 3302.137 3368.180 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 27.04% 2%
Annual Asset Growth 42.12%
SHAREHOLDERS' EQUITY 2284.913 2293.854 2303.715 2314.814 2325.454 30.54% 30.81% 75.82% 75.84% 74.23% 74.60% 60.31%
Issued and Paid-up Share Capital 239.280 239.280 239.280 239.280 239.280 14.64% 16.01% 7.87% 7.86% 7.80% 7.84% 10.34% Fixed
Revenue Reserve & Surplus 2045.633 2054.574 2064.435 2075.534 2086.174 15.90% 14.80% 67.95% 67.98% 66.44% 66.76% 49.97%
NON-CURRENT LIABILITIES 31.117 31.739 32.374 33.021 33.682 9.31% 5.62% 1.33% 1.07% 0.58% 0.39% 3.05%
No
0 0 0 0 0 8.15% 4.60% 0.90% 0.63% 0.15% 0.00% 2.41%
Long Term Borrowing (Secured) borrowing
Deferred Liability 31.117 31.739 32.374 33.021 33.682
1.16% 1.02% 0.43% 0.43% 0.42% 0.39% 0.64% 1%
CURRENT LIABILITIES 795.648 848.318 901.300 954.301 1009.043
60.15% 63.57% 22.85% 23.09% 25.19% 25.01% 36.64%
Short Term Borrowings 39.22% 31.57% 12.33% 12.56% 12.28% 14.11% 20.35%
Long Term Loans (Current portion) 1.60% 1.65% 0.60% 0.55% 0.55% 0.08% 0.84%
Trade & other Payables 9.31% 17.31% 3.62% 2.46% 3.92% 3.33% 6.66%
Accrued Expenses 1.92% 2.52% 1.28% 1.17% 0.80% 0.68% 1.40%
Unclaimed Dividend 1.45% 0.81% 0.26% 0.30% 0.34% 0.38% 0.59%
Provision for Income Tax (Current & deferred) 1.26% 1.52% 0.76% 0.84% 0.86% 0.92% 1.03%
Liabilities for other Finance 5.40% 8.18% 3.99% 5.21% 6.43% 5.50% 5.79%
Total Liabilities 826.765 880.057 933.674 987.323 1042.725 69.46% 69.19% 24.18% 24.16% 25.77% 25.40% 39.69%
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 3111.677 3173.911 3237.389 3302.137 3368.180 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Page 27
Horizontal Analysis
2009- 2010- 2011- 2012- 2013- 2014- 2009- 2010- 2011- 2012- 2013- 2014-
Particulars
2010 2011 2012 2013 2014 2015 2010 2011 2012 2013 2014 2015
ASSETS
NON-CURRENT ASSETS 100.00% 103.23% 584.51% 587.36% 585.01% 583.16% 3.23% 466.23% 0.49% -0.40% -0.32%
Property, Plant and Equipment - At cost Less
100.00% 104.13% 709.63% 713.26% 710.26% 707.90%
Deprecitation 4.13% 581.51% 0.51% -0.42% -0.33%
Investments 100.00% 100.00% 133.96% 133.96% 133.96% 133.96% 0.00% 33.96% 0.00% 0.00% 0.00%
CURRENT ASSETS 100.00% 114.50% 144.00% 142.55% 148.93% 146.95% 14.50% 25.76% -1.00% 4.47% -1.33%
Inventories 100.00% 104.23% 85.78% 90.59% 105.66% 101.59% 4.23% -17.70% 5.61% 16.63% -3.86%
Trade & other Receivables 100.00% 104.56% 230.29% 230.13% 194.45% 189.86% 4.56% 120.24% -0.07% -15.50% -2.36%
Advance, Deposits & Pre-payments 100.00% 159.16% 306.72% 278.09% 283.95% 311.91% 59.16% 92.71% -9.33% 2.11% 9.85%
Cash and cash Equivalents 100.00% 110.29% 58.53% 70.21% 87.01% 26.72% 10.29% -46.93% 19.97% 23.92% -69.29%
TOTAL ASSETS 100.00% 109.75% 329.78% 330.14% 332.84% 330.91% 9.75% 200.48% 0.11% 0.82% -0.58%
Annual Asset Growth
SHAREHOLDERS' EQUITY 100.00% 110.73% 818.70% 819.87% 809.01% 808.31% 10.73% 639.39% 0.14% -1.32% -0.09%
Issued and Paid-up Share Capital 100.00% 120.00% 177.24% 177.24% 177.24% 177.24% 20.00% 47.70% 0.00% 0.00% 0.00%
Revenue Reserve & Surplus 100.00% 102.18% 1409.58% 1411.83% 1390.97% 1389.63% 2.18% 1279.48% 0.16% -1.48% -0.10%
NON-CURRENT LIABILITIES 100.00% 66.25% 47.27% 37.88% 20.71% 13.83% -33.75% -28.65% -19.87% -45.31% -33.25%
100.00% 61.91% 36.44% 25.71% 6.30% 0.00%
Long Term Borrowing (Secured) -38.09% -41.14% -29.45% -75.48% -100.00%
Deferred Liability 100.00% 96.70% 123.23% 123.23% 121.82% 110.84% -3.30% 27.43% 0.00% -1.14% -9.01%
CURRENT LIABILITIES 100.00% 115.98% 125.25% 126.72% 139.37% 137.59% 15.98% 7.99% 1.17% 9.98% -1.28%
Short Term Borrowings 100.00% 88.36% 103.70% 105.70% 104.21% 119.06% -11.64% 17.36% 1.93% -1.41% 14.25%
Long Term Loans (Current portion) 100.00% 113.56% 123.28% 113.56% 113.56% 15.68% 13.56% 8.56% -7.88% 0.00% -86.19%
Trade & other Payables 100.00% 204.11% 128.38% 87.36% 140.35% 118.54% 104.11% -37.10% -31.95% 60.66% -15.54%
Accrued Expenses 100.00% 144.16% 220.32% 201.38% 139.01% 117.29% 44.16% 52.83% -8.60% -30.97% -15.63%
Unclaimed Dividend 100.00% 61.19% 59.14% 67.82% 78.16% 87.73% -38.81% -3.36% 14.68% 15.24% 12.25%
Provision for Income Tax (Current & deferred) 100.00% 132.43% 198.33% 219.23% 227.73% 241.84% 32.43% 49.77% 10.54% 3.88% 6.19%
Liabilities for other Finance 100.00% 166.31% 243.81% 318.74% 396.63% 337.38% 66.31% 46.60% 30.73% 24.44% -14.94%
Total Liabilities 100.00% 109.32% 114.80% 114.81% 123.47% 121.00% 9.32% 5.01% 0.01% 7.54% -2.00%
100.00% 109.75% 329.78% 330.14% 332.84% 330.91%
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 9.75% 200.48% 0.11% 0.82% -0.58%
Page 28
Vertical Analysis
2009- 2010- 2011- 2012- 2013- 2014-
Particulars
2010 2011 2012 2013 2014 2015
ASSETS
NON-CURRENT ASSETS 42.17% 39.67% 74.75% 75.03% 74.13% 74.32%
Property, Plant and Equipment - At cost Less
Deprecitation 33.01% 31.32% 71.03% 71.31% 70.44% 70.61%
Investments 9.17% 8.35% 3.72% 3.72% 3.69% 3.71%
CURRENT ASSETS 57.83% 60.33% 25.25% 24.97% 25.87% 25.68%
Inventories 35.64% 33.85% 9.27% 9.78% 11.31% 10.94%
Trade & other Receivables 8.15% 7.76% 5.69% 5.68% 4.76% 4.68%
Advance, Deposits & Pre-payments 10.36% 15.02% 9.64% 8.73% 8.84% 9.76%
Cash and cash Equivalents 3.68% 3.69% 0.65% 0.78% 0.96% 0.30%
TOTAL ASSETS 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Annual Asset Growth
SHAREHOLDERS' EQUITY 30.54% 30.81% 75.82% 75.84% 74.23% 74.60%
Issued and Paid-up Share Capital 14.64% 16.01% 7.87% 7.86% 7.80% 7.84%
Revenue Reserve & Surplus 15.90% 14.80% 67.95% 67.98% 66.44% 66.76%
NON-CURRENT LIABILITIES 9.31% 5.62% 1.33% 1.07% 0.58% 0.39%
Long Term Borrowing (Secured) 8.15% 4.60% 0.90% 0.63% 0.15% 0.00%
Deferred Liability 1.16% 1.02% 0.43% 0.43% 0.42% 0.39%
CURRENT LIABILITIES 60.15% 63.57% 22.85% 23.09% 25.19% 25.01%
Short Term Borrowings 39.22% 31.57% 12.33% 12.56% 12.28% 14.11%
Long Term Loans (Current portion) 1.60% 1.65% 0.60% 0.55% 0.55% 0.08%
Trade & other Payables 9.31% 17.31% 3.62% 2.46% 3.92% 3.33%
Accrued Expenses 1.92% 2.52% 1.28% 1.17% 0.80% 0.68%
Unclaimed Dividend 1.45% 0.81% 0.26% 0.30% 0.34% 0.38%
Provision for Income Tax (Current & deferred) 1.26% 1.52% 0.76% 0.84% 0.86% 0.92%
Liabilities for other Finance 5.40% 8.18% 3.99% 5.21% 6.43% 5.50%
Total Liabilities 69.46% 69.19% 24.18% 24.16% 25.77% 25.40%
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Page 29
Levered Beta Calculation
TRADEDATE CLSPRC DSEX RMonno RDSEX TRADEDATE CLSPRC DSEX RMonno RDSEX
02-07-2014 28.5 4466.62 10-09-2014 29.00 4663.14 1.05% 0.34%
03-07-2014 28.4 4436.21 -0.35% -0.68% 11-09-2014 28.50 4675.92 -1.72% 0.27%
06-07-2014 27.5 4411.16 -3.17% -0.56% 14-09-2014 28.50 4713.58 0.00% 0.81%
07-07-2014 27.3 4376.77 -0.73% -0.78% 15-09-2014 27.90 4709.92 -2.11% -0.08%
08-07-2014 27.2 4376.52 -0.37% -0.01% 16-09-2014 27.50 4759.40 -1.43% 1.05%
09-07-2014 27.2 4371.00 0.00% -0.13% 17-09-2014 27.30 4798.40 -0.73% 0.82%
10-07-2014 27.3 4363.09 0.37% -0.18% 18-09-2014 28.20 4866.19 3.30% 1.41%
13-07-2014 26.2 4344.37 -4.03% -0.43% 21-09-2014 29.20 4913.24 3.55% 0.97%
14-07-2014 26.8 4376.90 2.29% 0.75% 22-09-2014 29.10 4924.53 -0.34% 0.23%
15-07-2014 26.6 4362.79 -0.75% -0.32% 23-09-2014 28.90 4967.11 -0.69% 0.86%
16-07-2014 26.4 4389.36 -0.75% 0.61% 24-09-2014 28.20 4979.72 -2.42% 0.25%
17-07-2014 26.9 4392.15 1.89% 0.06% 25-09-2014 28.10 5026.93 -0.35% 0.95%
20-07-2014 26.7 4374.19 -0.74% -0.41% 28-09-2014 28.20 5072.20 0.36% 0.90%
21-07-2014 27 4394.95 1.12% 0.47% 29-09-2014 28.00 5050.35 -0.71% -0.43%
22-07-2014 27.1 4424.60 0.37% 0.67% 30-09-2014 28.80 5074.31 2.86% 0.47%
23-07-2014 26.7 4388.69 -1.48% -0.81% 01-10-2014 29.70 5153.27 3.13% 1.56%
24-07-2014 26.6 4427.16 -0.37% 0.88% 02-10-2014 29.50 5237.72 -0.67% 1.64%
03-08-2014 26.3 4420.62 -1.13% -0.15% 12-10-2014 29.20 5334.04 -1.02% 1.84%
04-08-2014 26.4 4467.00 0.38% 1.05% 13-10-2014 29.20 5309.24 0.00% -0.46%
05-08-2014 26.6 4472.18 0.76% 0.12% 14-10-2014 29.70 5292.61 1.71% -0.31%
06-08-2014 27.4 4484.90 3.01% 0.28% 15-10-2014 31.40 5315.12 5.72% 0.43%
07-08-2014 28.9 4486.20 5.47% 0.03% 16-10-2014 30.90 5285.84 -1.59% -0.55%
10-08-2014 29.5 4530.84 2.08% 1.00% 19-10-2014 30.10 5176.75 -2.59% -2.06%
11-08-2014 28.3 4565.14 -4.07% 0.76% 20-10-2014 29.80 5144.50 -1.00% -0.62%
12-08-2014 27.8 4526.50 -1.77% -0.85% 21-10-2014 29.90 5233.82 0.34% 1.74%
13-08-2014 28 4527.21 0.72% 0.02% 22-10-2014 29.50 5170.15 -1.34% -1.22%
14-08-2014 27.9 4554.51 -0.36% 0.60% 23-10-2014 29.30 5154.11 -0.68% -0.31%
18-08-2014 27.7 4554.15 -0.72% -0.01% 26-10-2014 28.00 5111.64 -4.44% -0.82%
19-08-2014 27.1 4576.37 -2.17% 0.49% 27-10-2014 28.40 5157.24 1.43% 0.89%
20-08-2014 27.1 4553.87 0.00% -0.49% 28-10-2014 27.30 5128.84 -3.87% -0.55%
21-08-2014 27.3 4547.06 0.74% -0.15% 29-10-2014 27.60 5109.43 1.10% -0.38%
24-08-2014 26.9 4540.61 -1.47% -0.14% 30-10-2014 28.00 5173.23 1.45% 1.25%
25-08-2014 27.1 4564.35 0.74% 0.52% 02-11-2014 27.60 5105.22 -1.43% -1.31%
26-08-2014 27.5 4590.65 1.48% 0.58% 03-11-2014 28.30 5065.14 2.54% -0.78%
27-08-2014 27.4 4599.47 -0.36% 0.19% 05-11-2014 28.70 5017.22 1.41% -0.95%
28-08-2014 28.1 4578.00 2.55% -0.47% 06-11-2014 28.30 5025.10 -1.39% 0.16%
31-08-2014 27.8 4549.52 -1.07% -0.62% 09-11-2014 27.40 4938.65 -3.18% -1.72%
01-09-2014 27.90 4554.98 0.36% 0.12% 10-11-2014 27.50 4914.71 0.36% -0.48%
02-09-2014 29.00 4602.44 3.94% 1.04% 11-11-2014 28.00 4934.78 1.82% 0.41%
03-09-2014 30.10 4632.46 3.79% 0.65% 12-11-2014 28.10 5005.66 0.36% 1.44%
04-09-2014 30.70 4642.38 1.99% 0.21% 13-11-2014 28.20 4984.46 0.36% -0.42%
07-09-2014 30.10 4641.45 -1.95% -0.02% 16-11-2014 28.20 4963.90 0.00% -0.41%
08-09-2014 28.60 4608.96 -4.98% -0.70% 18-11-2014 28.40 4898.82 0.71% -1.31%
09-09-2014 28.70 4647.43 0.35% 0.83% 19-11-2014 28.80 4926.24 1.41% 0.56%
Page 30
20-11-2014 30.10 4899.61 4.51% -0.54% 29-01-2015 28.90 4724.05 0.35% -0.50%
23-11-2014 29.90 4838.11 -0.66% -1.26% 01-02-2015 28.80 4654.95 -0.35% -1.46%
24-11-2014 29.90 4768.90 0.00% -1.43% 02-02-2015 28.80 4618.43 0.00% -0.78%
25-11-2014 29.00 4804.45 -3.01% 0.75% 03-02-2015 29.00 4656.47 0.69% 0.82%
26-11-2014 28.90 4756.61 -0.34% -1.00% 04-02-2015 29.30 4668.06 1.03% 0.25%
27-11-2014 28.80 4772.56 -0.35% 0.34% 05-02-2015 29.40 4685.04 0.34% 0.36%
30-11-2014 28.70 4769.43 -0.35% -0.07% 08-02-2015 29.60 4701.60 0.68% 0.35%
01-12-2014 28.70 4868.65 0.00% 2.08% 09-02-2015 29.60 4712.57 0.00% 0.23%
02-12-2014 28.90 4932.89 0.70% 1.32% 10-02-2015 29.80 4786.69 0.68% 1.57%
03-12-2014 29.70 4992.00 2.77% 1.20% 11-02-2015 29.40 4810.54 -1.34% 0.50%
04-12-2014 28.80 4961.85 -3.03% -0.60% 12-02-2015 28.80 4841.72 -2.04% 0.65%
07-12-2014 29.00 4930.37 0.69% -0.63% 15-02-2015 28.90 4831.18 0.35% -0.22%
08-12-2014 29.00 4930.82 0.00% 0.01% 16-02-2015 28.50 4769.47 -1.38% -1.28%
09-12-2014 29.20 4944.03 0.69% 0.27% 17-02-2015 29.00 4800.41 1.75% 0.65%
10-12-2014 29.00 4943.73 -0.68% -0.01% 18-02-2015 28.80 4802.27 -0.69% 0.04%
11-12-2014 29.00 4933.03 0.00% -0.22% 19-02-2015 28.00 4788.23 -2.78% -0.29%
14-12-2014 29.20 4892.96 0.69% -0.81% 22-02-2015 28.00 4802.18 0.00% 0.29%
15-12-2014 29.20 4878.65 0.00% -0.29% 23-02-2015 27.90 4808.64 -0.36% 0.13%
17-12-2014 29.90 4837.93 2.40% -0.83% 24-02-2015 28.60 4801.15 2.51% -0.16%
18-12-2014 29.90 4856.42 0.00% 0.38% 25-02-2015 27.80 4742.22 -2.80% -1.23%
21-12-2014 29.90 4849.69 0.00% -0.14% 26-02-2015 27.60 4763.22 -0.72% 0.44%
22-12-2014 29.80 4868.47 -0.33% 0.39% 01-03-2015 27.80 4739.65 0.72% -0.49%
23-12-2014 29.40 4838.64 -1.34% -0.61% 02-03-2015 27.20 4719.41 -2.16% -0.43%
24-12-2014 29.00 4823.57 -1.36% -0.31% 03-03-2015 26.60 4695.80 -2.21% -0.50%
28-12-2014 29.10 4801.35 0.34% -0.46% 04-03-2015 27.50 4681.54 3.38% -0.30%
29-12-2014 29.30 4814.16 0.69% 0.27% 05-03-2015 27.30 4664.91 -0.73% -0.36%
30-12-2014 29.70 4864.96 1.37% 1.06% 08-03-2015 27.70 4624.95 1.47% -0.86%
01-01-2015 30.00 4941.52 1.01% 1.57% 09-03-2015 27.30 4626.23 -1.44% 0.03%
05-01-2015 29.50 4926.41 -1.67% -0.31% 10-03-2015 27.30 4649.30 0.00% 0.50%
06-01-2015 29.90 4969.67 1.36% 0.88% 11-03-2015 27.00 4585.73 -1.10% -1.37%
07-01-2015 29.80 4963.66 -0.33% -0.12% 12-03-2015 26.80 4556.94 -0.74% -0.63%
08-01-2015 29.90 4968.71 0.34% 0.10% 15-03-2015 25.90 4536.40 -3.36% -0.45%
11-01-2015 29.60 4943.99 -1.00% -0.50% 18-03-2015 25.30 4442.82 -2.32% -2.06%
12-01-2015 29.50 4956.93 -0.34% 0.26% 19-03-2015 24.40 4468.02 -3.56% 0.57%
13-01-2015 29.30 4969.73 -0.68% 0.26% 22-03-2015 24.90 4533.21 2.05% 1.46%
14-01-2015 29.30 4951.69 0.00% -0.36% 23-03-2015 26.60 4506.56 6.83% -0.59%
15-01-2015 29.70 4956.09 1.37% 0.09% 25-03-2015 26.20 4509.30 -1.50% 0.06%
18-01-2015 29.40 4917.38 -1.01% -0.78% 29-03-2015 26.10 4558.08 -0.38% 1.08%
19-01-2015 29.50 4867.08 0.34% -1.02% 30-03-2015 26.00 4509.28 -0.38% -1.07%
20-01-2015 29.10 4856.95 -1.36% -0.21% 31-03-2015 25.00 4530.48 -3.85% 0.47%
21-01-2015 28.10 4783.21 -3.44% -1.52% 01-04-2015 25.80 4513.11 3.20% -0.38%
22-01-2015 29.10 4797.96 3.56% 0.31% 02-04-2015 25.70 4472.14 -0.39% -0.91%
25-01-2015 28.50 4716.76 -2.06% -1.69% 05-04-2015 26.10 4431.11 1.56% -0.92%
26-01-2015 28.20 4708.33 -1.05% -0.18% 06-04-2015 26.90 4397.26 3.07% -0.76%
27-01-2015 28.90 4757.10 2.48% 1.04% 07-04-2015 25.70 4345.03 -4.46% -1.19%
28-01-2015 28.80 4747.64 -0.35% -0.20% 08-04-2015 25.70 4347.14 0.00% 0.05%
Page 31
09-04-2015 26.00 4345.89 1.17% -0.03% 18-06-2015 25.60 4519.85 9.87% -0.17%
12-04-2015 24.90 4305.27 -4.23% -0.93% 21-06-2015 27.20 4511.47 6.25% -0.19%
13-04-2015 24.20 4291.63 -2.81% -0.32% 22-06-2015 26.80 4503.99 -1.47% -0.17%
15-04-2015 25.10 4360.50 3.72% 1.60% 23-06-2015 27.10 4489.46 1.12% -0.32%
16-04-2015 25.70 4373.34 2.39% 0.29% 24-06-2015 28.00 4455.28 3.32% -0.76%
19-04-2015 25.80 4373.66 0.39% 0.01% 25-06-2015 28.00 4455.28 0.00% 0.00%
20-04-2015 25.90 4308.45 0.39% -1.49% 28-06-2015 26.90 4502.22 -3.93% 1.05%
21-04-2015 25.10 4283.25 -3.09% -0.58% 29-06-2015 25.50 4531.99 -5.20% 0.66%
22-04-2015 24.40 4252.95 -2.79% -0.71% 30-06-2015 24.80 4583.11 -2.75% 1.13%
23-04-2015 24.00 4192.21 -1.64% -1.43%
Average
26-04-2015 24.10 4094.48 0.42% -2.33% Return 27.40 4675.50 -0.04% 0.02%
27-04-2015 23.90 4118.49 -0.83% 0.59% Variance 0.046% 0.01%
29-04-2015 24.00 4099.21 0.42% -0.47% Covariance 0.005%
30-04-2015 22.90 4047.29 -4.58% -1.27% Beta 0.63
04-05-2015 22.80 3959.74 -0.44% -2.16%
05-05-2015 23.50 4014.37 3.07% 1.38%
06-05-2015 23.50 4089.88 0.00% 1.88%
07-05-2015 23.80 4122.32 1.28% 0.79%
10-05-2015 24.40 4277.05 2.52% 3.75%
11-05-2015 24.80 4349.22 1.64% 1.69%
12-05-2015 24.10 4326.61 -2.82% -0.52%
13-05-2015 24.40 4342.66 1.24% 0.37%
14-05-2015 24.00 4314.89 -1.64% -0.64%
17-05-2015 23.80 4316.00 -0.83% 0.03%
18-05-2015 24.90 4407.43 4.62% 2.12%
19-05-2015 24.80 4459.29 -0.40% 1.18%
20-05-2015 24.60 4455.57 -0.81% -0.08%
21-05-2015 24.70 4483.28 0.41% 0.62%
25-05-2015 24.40 4615.02 -1.21% 2.94%
26-05-2015 24.90 4627.17 2.05% 0.26%
27-05-2015 24.40 4616.12 -2.01% -0.24%
28-05-2015 24.40 4544.71 0.00% -1.55%
31-05-2015 24.20 4586.95 -0.82% 0.93%
01-06-2015 24.00 4623.63 -0.83% 0.80%
02-06-2015 24.30 4586.85 1.25% -0.80%
04-06-2015 23.30 4591.43 -4.12% 0.10%
07-06-2015 23.30 4617.70 0.00% 0.57%
08-06-2015 23.00 4542.27 -1.29% -1.63%
09-06-2015 22.90 4513.98 -0.43% -0.62%
10-06-2015 22.90 4556.69 0.00% 0.95%
11-06-2015 22.70 4515.14 -0.87% -0.91%
14-06-2015 22.60 4453.37 -0.44% -1.37%
15-06-2015 22.70 4477.56 0.44% 0.54%
16-06-2015 23.60 4506.72 3.96% 0.65%
17-06-2015 23.30 4527.42 -1.27% 0.46%
Page 32
Financial (Ratio) Analysis
2009- 2010- 2011- 2012- 2013- 2014-
Particulars Average
2010 2011 2012 2013 2014 2015
Profitability Ratios
Gross profit margin 20.86% 21.50% 20.32% 19.09% 21.12% 18.49% 20.23%
EBITDA margin 15.89% 13.96% 13.14% 12.42% 12.38% 13.40% 13.53%
NOPAT margin 7.93% 8.46% 7.71% 7.04% 6.76% 4.97% 7.14%
Net Income Margin 0.47% 3.66% 2.17% 1.11% 0.37% 0.41% 1.36%
Return on assets (ROA) 0.42% 2.98% 0.56% 0.27% 0.08% 0.10% 0.74%
Return on equity (ROE) 1.36% 9.69% 0.73% 0.36% 0.11% 0.13% 2.07%
Asset Management Ratios

Operating working capital to sales 39.44% 32.21% 57.33% 57.35% 55.62% 58.64% 50.10%
Net long-term assets to sales 46.46% 47.33% 290.17% 301.12% 326.60% 297.79% 218.25%
PP&E to Sales 37.39% 38.36% 277.33% 287.86% 312.13% 284.41% 206.25%
Operating working capital turnover 2.54x 3.10x 1.74x 1.74x 1.80x 1.71x 2.11x
Net long-term assets turnover 2.15x 2.11x 0.34x 0.33x 0.31x 0.34x 0.93x
PP&E turnover 2.67x 2.61x 0.36x 0.35x 0.32x 0.35x 1.11x
Accounts receivable turnover 11.34x 10.99x 4.65x 4.47x 4.84x 5.49x 6.96x
Inventory turnover 1.96x 1.89x 2.20x 2.05x 1.57x 1.85x 1.92x
Accounts payable turnover 7.51x 3.70x 5.63x 8.14x 4.54x 6.07x 5.93x
Day's accounts receivable 32.19 33.23 78.56 81.61 75.39 66.50 61.25
Day's inventory 186.21 192.77 165.81 178.09 231.99 197.35 192.04
Day's accounts payable 48.62 98.56 64.79 44.84 80.46 60.12 66.23
Liquidity Ratios
Current ratio 0.96 0.95 1.11 1.08 1.03 1.03 1.03
Quick ratio 0.19 0.18 0.27 0.27 0.22 0.19 0.22
Cash ratio 0.06 0.06 0.03 0.03 0.04 0.01 0.04
Operating cash flow ratio -0.02 0.13 -0.01 0.02 0.05 -0.01 0.03
Debt and Coverage Ratios

Liabilities to equity 2.27 2.25 0.32 0.32 0.35 0.34 0.97
Debt to equity 1.60 1.23 0.18 0.18 0.17 0.19 0.59
Net debt to equity 1.48 1.11 0.17 0.17 0.16 0.19 0.55
Debt to capital 0.62 0.55 0.15 0.15 0.15 0.16 0.30
Net debt to net capital 0.60 0.53 0.15 0.15 0.14 0.16 0.29
Interest coverage (earnings based) 1.05 1.50 1.28 1.16 1.05 1.09 1.19
Interest coverage (cash flow based) 0.86 2.32 0.96 1.22 1.57 0.81 1.29
Sustainable Growth Rate

ROE 1.36% 9.69% 0.73% 0.36% 0.11% 0.13% 2.07%
Dividend payout ratio 340% 17% 3% 47% 144% 123% 112.29%
Sustainable growth rate -3.28% 8.03% 0.71% 0.19% -0.05% -0.03% 0.93%
Page 33
(in million BDT) Actual Forecast period
2009- 2010- 2011- 2012- 2013- 2014- 2015- 2016- 2017- 2018- 2019-
Particulars
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Inventories 328.572 342.48 281.849 297.664 347.165 333.781

Trade & other Receivables 75.132 78.559 173.021 172.899 146.097 142.648
Advance, Deposits & Pre-
payments 95.506 152.005 292.933 265.597 271.192 297.896
Cash and cash Equivalents 33.886 37.373 19.833 23.793 29.485 9.056
Total Current Assets 533.096 610.417 767.636 759.953 793.939 783.381 820.307 838.977 858.021 877.445 897.258
Short Term Borrowings 361.562 319.462 374.927 382.177 376.787 430.470

Long Term Loans (Current
portion) 14.744 16.744 18.177 16.744 16.744 2.312
Trade & other Payables 85.789 175.103 110.137 74.944 120.402 101.690
Accrued Expenses 17.709 25.530 39.017 35.663 24.618 20.771
Unclaimed Dividend 13.335 8.160 7.886 9.044 10.422 11.699
Provision for Income Tax
(Current & deferred) 11.632 15.404 23.070 25.501 26.490 28.131
Liabilities for other Finance 49.765 82.764 121.332 158.619 197.381 167.895
Total Current Liabilities 554.536 643.167 694.546 702.692 772.844 762.968 795.648 848.318 901.300 954.301 1009.043
Net Working Capital -21.44 -32.75 73.09 57.26 21.10 20.41 24.66 -9.34 -43.28 -76.86 -111.79
Change in Net Working

-11.31 105.84 -15.83 -36.17 -0.68 4.25 -34.00 -33.94 -33.58 -34.93
Capital
Page 34
DCF Model- WACC Calculation DCF model - Sensitivity Analysis
Input Output Sensitivity Analysis
Wacc Calculation Enterprise value Perpetuity growth % Mean SD
Present value of Free Cash

Target Capital Structure 285
Flow 804 804 2.5% 3.0% 3.53% 4.0% 4.5%
Debt to Total Capitalization 0.0% 11.0% 929 971 1,020 1,075 1,139 1,027 83
Equity to Total Capitalization 100% Terminal Value 956
12.0% 830 863 899 941 987 904 62
WACC
Debt to Equity Ratio 19.0% Discount Factor 0.54 13.0% 750 776 804 836 871 808 48
Present Value of Terminal
519
Value 14.0% 684 705 728 752 780 730 38
Cost of Equity % of Enterprise Value 65% 15.0% 629 646 664 684 706 666 30
Risk-free rate 7.94% Mean 764 792 823 858 897 52
Market risk Premium 4.84% Enterprise value 804.40 SD 118 129 141 155 172 143
Levered Beta 0.63 Less: Total debt 433
Size Premium 2.0% Plus: Cash and Cash Equi. 9 Annual sales growth % Mean SD
Cost of Equity 13.0% Net Debt 424 804 1.3% 1.8% 2.3% 2.8% 3.3%
11.0% 970 995 1,020 1,046 1,072 1,020 40
WACC %
Cost of Debt Implied Equity Value 381 12.0% 856 877 899 922 944 900 35
Cost of Debt 12.0% Outstanding shares 23.93 13.0% 766 785 804 824 844 805 31
Taxes 32.5% Implied share price 15.91 14.0% 694 710 728 745 763 728 27
After Tax Cost of Debt 8.1% 15.0% 634 649 664 680 696 664 25
Implied multiples Mean 634 649 664 680 696 32
WACC 12.98%
Enterprise Value 804 SD 133 137 141 145 149 141
SALES 2016 774
EBITDA 2016 93
Implied EV/SALES 1.0x
Implied EV/EBITDA 8.7x
Page 35
Monno Ceramic Industries Limited
(in million BDT) Actual CAGR Forecast period
2009- 2010- 2011- 2012- 2013- 2014- (2009/10 - 2015- 2016- 2017- 2018- 2019-
2010 2011 2012 2013 2014 2015 2014/15) 2016 2017 2018 2019 2020
Sales
813.787 826.089 778.624 753.99 692.428 757.385 -1.43% 774.426 791.851 809.667 827.885 846.512
% growth 1.51% -5.75% -3.16% -8.16% 9.38% -1.24% 2.25% 2.25% 2.25% 2.25% 2.25%
Total costs
718.474 724.311 690.706 675.894 623.285 701.884 712.472 728.503 744.894 761.654 778.791
Total Cost % Sales 88% 88% 89% 90% 90% 93%
EBIT
95.313 101.778 87.918 78.096 69.143 55.501 61.954 63.348 64.773 66.231 67.721
EBIT as % of Sales 11.71% 12.32% 11.29% 10.36% 9.99% 7.33% 10.50% 8% 8% 8% 8% 8%
Deprecition 34.035 13.585 14.362 15.559 16.582 46.010 30.977 31.674 32.387 33.115 33.860
Amortization 0.000 0.000 0.000 0.000 0.000 0.000
D&A as % of sales 4.18% 1.64% 1.84% 2.06% 2.39% 6.07% 3.03% 4% 4% 4% 4% 4%
EBITDA 129.348 115.363 102.280 93.655 85.725 101.511 92.931 95.022 97.160 99.346 101.581
% margin 15.89% 13.96% 13.14% 12.42% 12.38% 13.40% 12.00% 12.00% 12.00% 12.00% 12.00%
Taxes (32.5%) 1.567 11.040 6.257 3.502 1.149 1.531 3.759 3.702 4.083 4.595 4.405
Taxes as % of sales 0.19% 1.34% 0.80% 0.46% 0.17% 0.20% 0.53% 1.50% 1.50% 1.50% 1.50% 1.50%
Capex -7.897 1843.279 12.263 -8.102 22.225 6.583 43.129 47.323 49.209 44.790
% sales -0.96% 236.74% 1.63% -1.17% 2.93% 0.85% 5.45% 5.84% 5.94% 5.29%
Increase/Decrease in NWC
-11.310 105.840 -15.829 -36.166 -0.682 4.246 -34.000 -33.939 -33.577 -34.929
Unlevered Free Cash Flow

123.530 -1853.096 93.719 128.844 78.437 78.342 82.191 79.693 79.120 87.316
Page 36
2015- 2016- 2017- 2018- 2019-
2016 2017 2018 2019 2020
WACC 12.98%
Discount Period 1 2 3 4 5
Discount Factor 0.885 0.783 0.693 0.614 0.543
Present value of free cash
flow 69.342 64.391 55.261 48.561 47.435
Terminal Value
Terminal Year Free Cash
87.32
Flow
Perpetuity Growth Rate 3.53%
Terminal Year EBITDA 101.58
Terminal Value 956.11
Implied Exit Multiple 10.6x
Discount Period 5.0
Discount Factor 0.54
Present Value of
519.41
Terminal Value
% of Enterprise Value 65%
Page 37
Monno Ceramic
Crystal Ball Report - Full

Simulation started on 28-Jan-17 at 10:58 PM
Simulation stopped on 28-Jan-17 at 10:58 PM
Run preferences:
Number of trials run 1,000
Extreme speed
Monte Carlo
Random seed
Precision control on
Confidence level 95.00%
Run statistics:
Total running time (sec) 0.17
Trials/second (average) 6,060
Random numbers per sec 18,180
Crystal Ball data:

Assumptions 3
Correlations 0
Correlation matrices 0
Decision variables 0
Forecasts 1
Page 1
Page 38
Monno Ceramic
Forecasts
Worksheet: [G-17 Analysis - Copy (2).xlsx]Monno DCF
Forecast: Enterprise value Cell: S12
Summary:
Certainty level is 61.5%
Certainty range is from 781.60 to 820.11
Entire range is from 732.54 to 866.78
Base case is 804.40
After 1,000 trials, the std. error of the mean is 0.68
Statistics: Forecast values

Trials 1,000
Base Case 804.40
Mean 804.73
Median 805.09
Mode ---
Standard Deviation 21.42
Variance 458.61
Skewness -0.0923
Kurtosis 2.94
Coeff. of Variation 0.0266
Minimum 732.54
Maximum 866.78
Range Width 134.24
Mean Std. Error 0.68
Page 2
Page 39
Monno Ceramic
Forecast: Enterprise value (cont'd) Cell: S12
Percentiles: Forecast values

0% 732.54
10% 777.63
20% 786.25
30% 793.25
40% 798.99
50% 805.07
60% 810.18
70% 816.47
80% 823.10
90% 832.57
100% 866.78
End of Forecasts
Page 3
Page 40
Monno Ceramic
Assumptions
Worksheet: [G-17 Analysis - Copy (2).xlsx]Monno DCF
Assumption: Perpetuity Growth Rate Cell: B32
Triangular distribution with parameters:

Minimum 3.17%
Likeliest 3.53%
Maximum 3.88%
Assumption: Sales growth Cell: I5
Normal distribution with parameters:

Mean 2.25%
Std. Dev. 0.50%
Assumption: WACC Cell: B25
Normal distribution with parameters:

Mean 12.98%
Std. Dev. 0.05%
End of Assumptions
Page 4
Page 41
Monno Ceramic
Sensitivity Charts
End of Sensitivity Charts
Page 5
Page 42
References
1. https://www.bb.org.bd
2. https://researchgate.com
3. https:// tradingeconomics.com/bangladesh/
4. https:// www.google.com
5. https://www.yahoofinance.com
6. https://www.monno.com
7. https://www.lankabd.com
Page 43

Monno Ceramic Valuation

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A

Submitted By: Group-17

MD.ABUL KALAM AZAD B-120203023

MAHMUDUL HASSAN B-120203102

Dated: January 29, 2017

52 Week Range Taka: 34-46.90

Revenue Taka: 757.385

Market Capitalization Taka: 985.83 million

Share Outstanding Taka: 23.928 million

Avg Daily Trading Volume 20,144

Book Value per Share Taka: 95.19

Return on Equity 0.13%

Return on Assets 0.10%

DCF Valuation Taka: 15.91

Monno Ceramics is one of the leading ceramics manufacturing companies in Bangladesh.

Date of Incorporation : April 21, 1981

Listed with Stock Exchanges : 1983 (DSE), 1995(CSE)

Market Category : ‘B’

Paid-up Capital (BDT) : 239.28 million

Total Shares : 23,928,020

Book Value Per Share (BDT) : 95.19

EPS (BDT) : 0.11

Audited P/E (x) : 477.78

Credit Rating : BBB+

Last Dividend Declaration Date : Oct 25, 2016

AGM Date : Dec 11, 2016

Name of Chairman : Mr. Harunar Rashid Khan

Name of Managing Director : Mrs. Afroza Khan

Number of Employees : 2,160

* As per latest data available by 17 Jan, 2017.

III. Industry Overview

Technological factors include manufacturing maturity and capacity, Intellectual property

a) Bargaining power of Buyers

b) Bargaining power of Suppliers

d) Threat of new entrants

e) Threat of substitute products

In ceramic industry threat of substitute product is in moderate position.Different kind of

f) Analysis of Porter Model

A. Potential Red Flags

Red Flag 1: Rising account receivable in relation to sales

Red Flag 2: Decreasing gross profit margin

Red Flag 3: Poor cash flow patterns

Red Flag 4: Understated Tax Liability

Red Flag 5: Revaluation of Assets

d) Debt and Coverage Ratios

e) Sustainable Growth Rate

Year 2010−11 (Actual Year)

This year data

Amount of individual item

Where, X1 = Net working capital/ Total assets

X2 = Retained earnings/ Total assets

X3 = EBIT/ Total assets

X4 = Market value of equity/ Book value of total liabilities

X5 = Sales/ Total sales

For Monno ceramic:

X1 = Net working capital/ Total assets

X2 = Retained earnings/ Total assets

X3 = EBIT/ Total assets

X4 = Market value of equity/ Book value of total liabilities

X5 = Sales/ Total assets

VI. Valuation Analysis

After tax Cost of debt= Cost of debt (1-Tax rate)

D. Weighted Average Cost of Capital