report BCIC2003.doc

Assessment of Financial Performance of State Owned Enterprise: A Study on Selected Units of BCIC

1.0. Introduction:

Performance evaluation of an organization means how the organization performs in terms

of all the financial aspects. Normally organizations evaluate their performance by ratio

analysis and trend analysis. A number of financial ratios are used to assess how well a

company is doing. Trend analysis includes analyzing the financial data over time. In this

report the assets, sales, net income and cash inflows and out flows of three units of

Bangladesh Chemical Industries Corporation (BCIC) has been focused. From these we can

get an idea about the capital budgeting decisions and investment decisions of the three

units.

1.1. Background:

Most of the government industries have to maintain government rules and regulations

very strictly. That is why it is not always possible to do business in the way they want. In

June, 1993 the Government decided to further activate and strengthen the role of private

sector in trade and industry with a view to accelerating economic development. With this

end in view the Government adopted a comprehensive privatization policy and laid down

detailed procedure to facilitate the process of privatization. The policy is aimed at

relieving the financial and administrative burden of government, improving efficiency and

productivity, facilitating economic growth, reducing the size and presence of the public

sector in the economy and help meeting the national economic goals. There are two

methods of privatization:

Sale by international tender

Sale by public offer of shares (Business info Bangladesh, n.d.)

In present times many government organizations are turning into private organizations

following these procedures. In this study three units of BCIC: Ashuganj Fertilizer &

Chemical Co. Ltd.(AFCCL), Chittagong Urea Fertilizer Factory Ltd.(CUFFL), and Jamuna

Fertilizer Company Limited(JFCL.) have been chosen. An analysis on the financial

performance of these three units will help to find out if it will be better to turn them into

private organizations.

1.2. Objectives:

1.2.1. Broad Objective:

The general purpose of this study is the performance evaluation of these three units.

1.2.2. Specific Objective:

1. To evaluate the financial performance of the selected companies.

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2. To find out suitable strategies for those companies.

1.3. Methodology:

There are 13 units under BCIC. Three units will be focused in this report, because

information on these three units was highly available. Data has been collected from the

annual report and official documents. In the study, trend analysis has been shown

focusing the assets, sales, net income, cash inflows and outflows. From these variables

(assets, sales, net income, cash inflows and outflows) the financial performance and

condition of an organization can be judged easily. Stakeholders also emphasize on these

variables to judge an organization for further investment. In the ratio analysis part

current ratio, acid test ratio, working capital ratio asset turnover ratio, net profit ratio

return on equity, return on capital employed, return on equity employed and debt equity

ratio has calculated. In this context what kind of business strategy could help the units to

do well that has been suggested.

1.3.1. Data Sources:

The data will be collected from the annual report of the mentioned units and documents

from the head office. Though these three units of BCIC are state owned, they do not

publish their annual report every year. Among all financial data, most of the data have

been collected from the balance sheet , cash flow statement and income statement.

These balance sheets, cash flow statements and income statements have been collected

from the head office with the permission of respected authority. The background of the

organizations has been collected from the annual reports. No primary data has been used

in this study.

1.3.2. Research Approaches:

Research approach of the report will be exploratory in nature. From the annual financial

data of the units, their performance will be evaluated.

1.3.3. Research Instruments:

1.3.3.1. Annual Report:

Secondary data has been collected from the annual report.

1.3.3.2. Official Documents:

As these three units are state owned, they do not publish their annual report every year.

The other information is collected from the official documents from BCIC.

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2.0. Bangladesh Chemical Industries Corporation (BCIC):

Bangladesh Chemical Industries Corporation (BCIC), fully owned by the Government, was

established in July, 1976 under the provision of Presidential Order 27 of 1972(Bangladesh

Industrial Enterprises Nationalization Order).The Corporation is now managing 13 large

and medium size industrial enterprises engaged in producing a wide range of products

like Urea, TSP, Paper, Cement, Insulator, Sanitary ware etc. They are:

Enterprise Name Product Installed capacity

(M.T./ Year)

Established

Year

1. Chittagong Urea Fertilizer Factory

Ltd.

Urea 5,61,000 1987

2. Jamuna Fertilizer Company Ltd. Urea 5,61,000 1989

3. Ashuganj Fertilizer & Chemical Co.

Ltd.

Urea 5,28,000 1981

4. Urea Fertilizer Factory Ltd. Urea 4,70,000 1970

5. Polash Urea Fertilizer Factory Ltd. Urea 95,000 1985

6. Natural Gas Fertilizer Factory Ltd. Urea, ASP 1,06,000 (Urea) 1961

7. Karnaphuli Paper Mills Ltd. Paper 30,000 1953

8. Khulna Hardboard Mills Ltd. Hardboard 300 Lac Sft. 1964

9. Chhatak Cement Co. Ltd. Cement 1,90,000 1938

10. Bangladesh Insulator &

Sanitaryware Factory Ltd.

Sanitary

ware &

Insulator

3,400 1979

11. Usmania Glass Sheet Factory Ltd. Glass

Sheet

18.67

Lac.Sq.M./Year

1959

12. TSP Complex Ltd. TSP, SSP 1,00,000 M.T. (TSP) 1976

13. DAP Fertilizer Co.Ltd. DAP 5,28,000 M.T./Year 2006

Besides, BCIC is involved in 10 joint venture enterprises to a varying degree of success

with local entrepreneurs and foreign investors having equity participation ranging from

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20% to 40%. The joint venture enterprises are engaged in the manufacture of medicine,

insecticides, safety matches, paper, packaging, paper converting, etc.

BCIC has joint venture programme with the following enterprises:

Enterprise Name Equity Held By BCIC

1. KARNAPHULI FERTILIZER CO.LTD. (KAFCO) Equity 43.51 %

2. AVENTIS LTD. Equity 40.00 %

3. BAYER CROP SCIENCE (BANGLADESH) LTD. Equity 40.00 %

4. NOVERTIES (BANGLADESH) LTD. Equity 40.00 %

5. SYNGENTA BANGLADESH LTD. Equity 40.00 %

6. DHAKA MATCH INDUSTRIES CO. LTD. Equity 30.00 %

7. BUKL MANAGEMENT (BD) LTD. Equity 30.00 %

8. MIRACLE INDUSTRIES LTD. Equity 20.00 %

9. MAGURA PAPER MILLS LTD. Equity 49.76 %

2.1. Aims and Objectives of BCIC:

The basic objective of BCIC is to help building the national economy through:

Implementation of industrial policy to develop socio-economic condition.

Developing socio-economic infrastructure.

Ensuring operation of the enterprises at the optimum level of efficiency and

productivity.

Making available import substitute and products at reasonable prices.

Achieving the country towards food autarky by producing and supplying

agricultural inputs at the door steps of the people all over the country.

Earning foreign exchange through export of surplus industrial products after

meeting domestic demand.

Extending necessary techno-financial assistance to both local and foreign

entrepreneurs and establishing new industries as joint venture in chemical and

allied sectors and making optimum use of the natural and human resources of the

country.

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2.2. Organization Structure of BCIC:

2.3. Facilities for The Employees:

All of the units of BCIC have their own compound with residential areas. They have

following welfare activities for their officers and stuffs:

1. Resident

2. School – college

3. Library

4. Mosque

5. Medical Facilities

6. Entertainment Facilities

7. Projects for family planning & socio-economic development

8. Loan Facility

9. Subsidy

10. Cooperative Society

There are resident and club facilities for the officers and stuffs of BCIC. There are also

school, college, hospital and library. (Bangladesh Chemical Industries Corporation)

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Chairman

Director (Finance)

Director (Production & Research)

Director (Commercial)

Director (Planning & Implementation)

Director (Technical & Engineering)

BCIC Board of Directors


2.4. Ashuganj Fertilizer & Chemical Co. Ltd. (AFCCL):

Ashuganj Fertilizer & Chemical Co. Ltd.(AFCCL) has been established in 1981.It is situated

in Ashuganj, Brahmanbaria . The name of this industry was Zia Fertilizer & Chemical Co.

Ltd.(ZFCL), but this year its name has been changed into Ashuganj Fertilizer & Chemical

Co. Ltd.(AFCCL).The factory has an annual production capacity of 5,28,000 MT urea.

Organization chart

(Source: Annual Report of Ashuganj Fertilizer & Chemical Co. Ltd.)

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AFCCL Board

Managing Director

Administration

Production

Finance MTS Technical Commerce

General

Stuffs

Medical

College

Urea

Ammonia

Utility

Finishing

Finance, money & tax, pay & bill, salary, insurance, fund trust management

Cost & budget, MIS, company

Store & sell account

Instrument

Electrical

Plant

Machinery

Workshop

Civil

Research & quality control

Human resource development

Planning & development

Fire & safety

Purchase

Sell

MPIC


2.5. Chittagong Urea Fertilizer Factory Ltd.(CUFFL):

Chittagong Urea Fertilizer Factory Ltd.(CUFL) is Situated in Rangadia, Anwara,

Chittagong. This fertilizer factory of the country has an annual production capacity of

5,61,000 MT Urea went on stream in October,1987.

Organization chart

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CUFFL Board

Managing Director

Chief Medical Officer

General Manager Administration

General Manager Accounts & Finance

General Manager Comme

General Manager (Operation)

General Manager (Construction)

Common Service

Personnel

Security

School& College

Cash, Bank & Finance

Bill Pay & P.F Fund

Cost, Budget & MIS

Computer

Local Sale

Export Sale

Purchase (Import)

Inspection

Quality Contr

Technical Library

Training

Technical Service

Finished Product Mainte

Ammonia Plant

Urea Plant

Utility

Finished Product

General Manager Technical

General Manager (MTS)

General Accounts, Tax & Audit

Store Accounts & Insurance

Purchase (Local)

Material P & I Control

Stores

Machinery Maintenance

P & S Maintenance

Instrument

Fire & Safety

Electrical & Power Generation


(Source: Annual Report of Chittagong Urea Fertilizer Factory Ltd.)

2.6. Jamuna Fertilizer Company Limited (JFCL.) :

Jamuna Fertilizer Company Limited(JFCL.) is situated in Tarakandi, Jamalpur, this factory

has annual production capacity of 5,61,000 MT. With the commissioning of the 6th Urea

Fertilizer plant Jamuna Fertilizer Company Ltd., Bangladesh has not only attained self-

sufficiency in meeting a vital agriculture input, the country has attained the capability of

producing high quality granular urea.

Organization chart

(Source: Annual Report of Jamuna Fertilizer Company Ltd.)

Page 8 of 22

JFCL Board

Managing Director

Administration

Production

Finance MTS Technical Commerce

General

Stuffs

Medical

College

Urea

Ammonia

Utility

Finishing

Finance, money & tax, pay & bill, salary, insurance, fund trust management

Cost & budget, MIS, company

Store & sell account

Instrument

Electrical

Plant

Machinery

Workshop

Civil

Research & quality control

Human resource development

Planning & development

Fire & safety

Purchase

Sell

MPIC


3.0. Introduction:

In this part of the study the trend analysis and ratio analysis have been presented. Trend

analysis has been done focusing asset, sales, net income, cash inflows and cash outflows.

These variables have been focused because they are very important to assess the

financial condition of an organization. The growth rate of these factors has been showed

in a trend over time. Ratio analysis focused the current ratio, acid test ratio, working

capital ratio asset turnover ratio, net profit ratio return on equity, return on capital

employed, return on equity employed and debt equity ratio. A suitable business strategy

has been suggested for the units of BCIC.

3.1. Trend Analysis:

A trend analysis has been done by 6 years financial information of the three units focused

on assets, sales, net income cash inflows and outflows. The trend of the variables has

been shown separately. The year to year change on the variable has been given in

percentage. The amount of taka has been given in million.

3.1.1. Assets:

First of all the assets of the three units have been focused. Which factors affected the

change of the asset that also has been also focused here.

Table 1: Assets

AFCCL CUFFL JFCL

Year Asset(tk. in

million)

Growth Asset(tk. in

million)

Growth Asset(tk. in

million)

Growth

2003-

04

8761 12967 17754

2004-

05

8304 (5)% 12209 (6)% 18390 (4)%

2005-

06

8095 (3)% 11553 (5)% 18556 1%

2006- 7863 (3)% 10919 (5)% 17483 (6)%

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07

2007-

08

8010 (2)% 10522 (4)% 11397 (35)%

2008-

09

9042 (13)% 10877 3% 11593 2%

(Source: Balance sheet of Ashuganj Fertilizer & Chemical Co. Ltd., Chittagong Urea

Fertilizer Factory Ltd., Jamuna Fertilizer Company Ltd.)

Figure 1 : Assets

From the chart (Figure 1) it can be seen that AFCCL ‘s asset growth rate is declining. In

the year 2004-05 the fixed assets and deferred expense was lower than year 2003-

04.Same situation followed the year 2005-06 and 2006-07. The long term loans and

advances increased in year 2007-08 and 2008-09.CUFFL’s asset growth rate is declining.

The amount of cash, fixed deposit and deferred expenses is lower than the year 2003-

04.Fixed deposit is also lower in 2005-06.Loan to projects has been increased in the year

2006-07.Same situation followed the year 2007-08 and 2008-09. JFCL’s asset growth rate

decreased in 2004-05, increased in 2005-06,again decreased in 2006-07 and 2007-08

and increased in 2008-09.In 2004-05 fixed asset decreased. Deferred expense and fixed

assets decreased in 2005-06. Same situation followed in 2006-07 and 2007-08.

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3.1.2. Sales:

The sales have been focused next. As these are government industries, they have to sell

the products in the price set by the government. That’s why most of the cases they faces

loss.

Table 2: Sales

AFCCL CUFFL JFCL

Year Sales(tk. in

million)

Growth Sales(tk. in

million)

Growth Sales(tk. in

million)

Growth

2003-

04

2009 2984 2625

2004-

05

2102 5% 2190 (27)% 2601 (1)%

2005-

06

1785 (18)% 2052 (6)% 2235 (14)%

2006-

07

1703 (5)% 1988 (3)% 2352 5%

2007-

08

2253 32% 2084 5% 2872 22%

2008-

09

3122 38% 3601 73% 4188 46%

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(Source: Income statement of Ashuganj Fertilizer & Chemical Co. Ltd., Chittagong Urea


Figure 2: Sales

From the chart it can be seen that AFCCL’s sales percentage increased in 2004-05,

declined in the year 2005-06 and 2006-07 then again increased in the year 2007-08 and

208-09. CUFFL’s sales percentage has been declined for 4 years and increased in the year

2008-09. JFCL’s sales percentage has declined for first 3 years then increased in the last

two years.

3.1.3. Net Income:

The growth rate of net income has been shown below.

Table 3: Net Income

AFCCL CUFFL JFCL

Year Net

income(tk in

million)

Growth Net

income(tk in

million)

Growth Net income(tk

in million)

Growth

2003-

04 100 57 (131)

2004-

05 177 77% (106) (285)% (440) (235)%

2005-

06 115 (35)% (219) (106)% (668) (51)%

2006- 119 3% (405) (84)% (729) (9)%

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07

2007-

08 28 (76)% (330) (18)% (780) (7)%

2008-

09 877 532% 755 116% 637 108%

(Source: Income statement of Ashuganj Fertilizer & Chemical Co. Ltd., Chittagong Urea


Figure 3: Net Income

From the chart (Figure 3: Net Income) we can see that AFCCL’s net income growth rate

followed a jig jag trend while CUFL and JFCL followed a downfall trend. We can also see

that in the year 2008-09 all the three units made profit.

3.1.4. Cash Inflow:

Cash inflow indicates how much cash is in hand. It has been given below:

Table 4: Cash Inflow

AFCCL CUFFL JFCL

Year Cash Inflow

(tk in

million)

Growth Cash Inflow

(tk in

million)

Growth Cash Inflow

(tk in million)

Growth

2003- 3618 1356 2009

Page 13 of 22


04

2004-

05 3139 (13)% 1164 (14)% 3555 77%

2005-

06 3234 3% 1517 30% 3108 (12)%

2006-

07 2691 (16)% 1494 (1)% 2724 (12)%

2007-

08 3041 13% 1565 4% 2821 3%

2008-

09 4663 53% 2898 85% 5947 110%

(Source: Cash flow statement of Ashuganj Fertilizer & Chemical Co. Ltd., Chittagong Urea


Figure 4: Cash Inflow

We can see from the chart (Figure 3) AFCCL’s cash inflow growth rate decreased and

increased in the last two years. CUFL is also in the same condition. First the growth

rate decreased then increased in the last two years. JFCL’s growth rate increased in

the first year but decreased in the following two years and again increased in the last

two years.

3.1.5. Cash Outflow:

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Cash outflow indicates the out flow of cash in an organization. The growth rate of Cash

out flow of AFCCL, CUFL and JFCL has been given below:

Table 5: Cash Outflow

AFCCL CUFFL JFCL

Year Cash

Outflow (tk

in million)

Growth Cash

Outflow (tk

in million)

Growth Cash Outflow

(tk in million)

Growth

2003-

04 1404 1191 765

2004-

05 4576 225% 1269 6% 1790 133%

2005-

06 1372 (70)% 1203 (5)% 1727 (3)%

2006-

07 979 (28)% 1336 11% 1554 (10)%

2007-

08 682 (30)% 1182 (11)% 1644 5%

2008-

09 1737 154% 2208 86% 1241 (24)%

(Source: Cash flow statement of Ashuganj Fertilizer & Chemical Co. Ltd., Chittagong Urea


Figure 5: Cash Outflow

Page 15 of 22


The chart (Figure 5 ) is showing that the growth rate of all the three units are high in

the first year then decreased with a very big difference then the previous years. In the

last year again the entire units cash outflow growth rate was high.

3.2. Ratio Analysis:

We know that ratio analysis is a widely used method to evaluate organizational

performance. Here current ratio, acid test ratio and working capital ratio has been

calculated to analyze the liquidity performance of the three units. Asset turnover has

been calculated to evaluate the business activities efficiency. Net profit ratio, return on

capital employed and return on equity employed has been calculated to assess the

profitability situation. Lastly the debt equity ratio has been calculated to evaluate the

leverage situation.

3.2.1. Ratio analysis of AFCCL:

Table 6: Ratio analysis of AFCCL

Ratios 2003-

04

2004-

05

2005-

06

2006-

07

2007-

08

2008-

09

Liquidity

Ratio:

Current Ratio 5.92:1 8.80:1 7.69:1 6.64:1 10.31:1 4.16:1

Acid Test 4.16:1 3.9:1 5.4:1 4.6:1 5.8:1 3.07:1

Working Capital 0.47:1 0.48:1 0.54:1 0.46:1 0.55:1 0.54:1

Inventory

Ratio:

Asset Turnover 23% 25% 22% 21% 28% 34%

Profitabilit

y Ratio:

Net Profit Ratio 1.14% 4.47% 3.36% 4.81% 0.88% 47.27%

Return on

Capital

Employed

2.63% (1.13)

%

(0.74)

%

(1.04)

%

(0.24)

%

16.32%

Return on

Equity

Employed

0.28% (1.23)

%

(0.78)

%

(1.07)

%

(0.26)

%

17.26%

Leverage

Ratio:

Debt Equity

Ratio

0.10:1 0.07:1 0.56:1 0.05:1 0.05:1 0.05:1

(Source: Balance sheet, cash flow statement and income statement of Ashuganj Fertilizer

& Chemical Co. Ltd.)

Page 16 of 22


From the table we can see that AFCCL’s current ratio, acid test ratio and working capital

ratio is high all through 6 years. It means the company’s ability to meet short term debt is

high. Inventory ratio, profitability ratio and leverage ratios are not very satisfactory. The

higher the ratio the better is the profitability. Return on capital employed and equity

employed is negative almost all the years.

3.2.2. Ratio analysis of CUFFL:

Table 7: Ratio analysis of CUFFL

Ratios 2003-

04

2004-

05

2005-

06

2006-

07

2007-

08

2008-

09

Liquidity

Ratio:

Current Ratio 9.56:1 9.47:1 7.59:1 6.14:1 6.41:1 4.62:1

Acid Test 6.80:1 6.71:1 5.65:1 4.32:1 4.85:1 3.66:1

Working Capital 0.34:1 0.36:1 0.37:1 0.38:1 0.43:1 0.51:1

Inventory

Ratio:

Asset Turnover 23% 17% 17% 18% 19% 33%

Profitabilit

y Ratio:

Net Profit Ratio 1.91% 4.84% 10.18

%

20.12

%

15.83

%

33.54%

Return on

Capital

Employed

0.43% 0.86% 1.80% 3.66% 3.13% 11.10%

Return on Equity

Employed

0.71% 1.34% 2.73% 5.53% 4.78% 15.78%

Leverage

Ratio:

Debt Equity

Ratio

0.62:1 0.55:1 0.51:1 0.51:1 0.52:1 0.42:1

(Source: Balance sheet,cashflow statement and income statement of Chittagong Urea

Fertilizer Factory Ltd.)

CUFL’s ability to meet short term debt is also high as the liquidity ratios are high. Debt

equity ratio is satisfactory. The net profit ratio tells us about how the company's profits

relate to their sales. The higher the ratio the better is the profitability. Here, the ratio is

high in the year 2003-04 and 2008-09.

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The return on equity indicates how much profit a company generates with the money

invested by the shareholders. The return on equity ratio is low. The inventory ratio is not

very high. A higher asset turnover ratio symbolizes greater shareholder wealth.

3.2.3. Ratio analysis of JFCL:

Table 8: Ratio analysis of JFCL

Ratios 2003-

04

2004-

05

2005-06 2006-07 2007-08 2008-

09

Liquidity

Ratio:

Current Ratio 7.75:1 7.50:1 6.65:1 6.07:1 6.89:1 4.20:1

Acid Test 5.17:1 5.48:1 4.37:1 3.95:1 4.34:1 4.20:1

Working

Capital

0.13:1 0.14:1 0.15:1 0.24:1 0.14:1 0.14:1

Inventory

Ratio:

Asset Turnover 14% 14% 20% 21% 14% 20%

Profitabilit

y Ratio:

Net Profit Ratio 10% 16% (29)% (30)% (27)% (24)%

Return on

Capital

Employed

1.59% 2.39% (3.59)% (4.07)% (4.05)% (4.92)

%

Return on

Equity

Employed

4.3% 6.69% (10.16)

%

(10.82)

%

(11.64)

%

14.83%

Leverage

Ratio:

Debt Equity

Ratio

0.27:1 0.27:1 0.28:1 0.26:1 0.181 0.20:1

(Source: Balance sheet, cash flow statement and income statement of Jamuna Fertilizer

Company Ltd.)

Page 18 of 22


JFCL’s liquidity ratio is also high. Debt equity ratio is satisfactory. Profitability ratios are

negative in the last 4 years. Low net profit ratio means the firm shall not be able to

achieve a satisfactory return on its investment. This ratio also indicates the firm's

capacity to face adverse economic conditions such as price competition, low demand,

etc. Here, the low return on capital employed and equity employed indicates the

organization failed to generate enough money from the capital and equity invested by

the shareholders. Financial leverage situation is not very satisfactory.

3.3. Suitable Business Strategy :

Recently government is emphasizing on privatization process of the public companies.

Many public companies have already been privatized. Government adopted a

comprehensive privatization policy and laid down detailed procedure to facilitate the

process of privatization. (Business info Bangladesh, n.d.) The organization may follow

particular business strategy to achieve better performance.

The financial performance evaluation shows that the three units of BCIC: Ashuganj

Fertilizer & Chemical Co. Ltd. (AFCCL), Chittagong Urea Fertilizer Factory Ltd.(CUFL) and

Jamuna Fertilizer Company Limited(JFCL.) can do much better business as they are doing

now. From the ratio analysis it can be seen that all the company’s short term debt

repaying ability is high. But they not doing very well in earning profit from the equity

invested by the shareholders. AFCCL and CUFFL is doing well in earning profit related to

their sales but JFCL is not doing very well in earning profit.

In this situation, for the three units of BCIC divestiture can be a suitable business strategy

which means to sell of a firm or a major component of the firm. As their profit earning

situation and leverage situation is not very well they can sell the whole firm to any

private organization or sell a part of their firm. It could recover its financial efficiency and

stabilize the situation.

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4.0. Findings:

The trend analysis showed the growth rate of asset, sales, net income, cash in

flows and cash out flows of AFCCL, CUFL and JFCL for 6 years. Asset trend of all the

three units are declining. Sales trend is downward for the first 2-3 years and then

up warding. Net income trend is also the same. Cash inflow trend is up warding

and down warding for the first 3 years and then increased highly in the last 2

years. Cash outflow trend increased and decreased in a very up warding and down

warding way.

Ratio analysis focused the liquidity, inventory, profitability and leverage situation

of AFCCL, CUFL and JFCL. AFCCL’s liquidity situation and inventory situation is

satisfactory but profitability situation and leverage situation is not satisfactory.

The negative return on capital employed and equity employed indicates that the

company failed to generate enough profit by the equity and capital invested by

the shareholders. CUFL’s liquidity, inventory, profitability and leverage situation is

normal. JFCL’s profitability situation is not satisfactory. Net profit ratio, return on

capital employed and return on equity employed is negative in most of the years.

In this situation of business the units can adopt divestiture strategy to do better

business in future. It may help them to earn more profit and increase their

production.

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5.0. Conclusion:

BCIC is a state owned organization. All the units have to maintain strict rules and

regulations. Decision making process is very lengthy. So, it is not always possible to take

the right decision in the right time. Many units are closed because they lack of proper

production materials and marketing activities. It also has been seen that they have to

import products to meet the local demand because they failed to meet the targeted

production. It these barriers are removed BCIC could do better business than the

present situation .Govt. could take initiative to improve the situation by analyzing the

problems properly. Investment in this sector can be encouraged. New business strategy

can be adopted. Privatization can also help the circumstances to improve.

Page 21 of 22


References:

1. Bangladesh Chemical Industries Corporation. (2010).Annual Report of Ashuganj

Fertilizer & Chemical Company Limited, Chittagong Urea Fertilizer

Limited .Retrieved June 10, 2010 from BCIC Head Office.

2. Bangladesh Chemical Industries Corporation. (2003-2008).Balance Sheet, Cash

flow Statement and Income Statement of Ashuganj Fertilizer & Chemical Company

Limited, Chittagong Urea Fertilizer Limited & Jamuna Fertilizer Company Limited

year. Retrieved June 12, 2010 from BCIC Head Office.

3. Business info Bangladesh (n.d.) Privatization Policy : Bangladesh Retrieved June

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