27 August, 2018

Dr. Mahmood Osman Imam

Professor
Department of Finance
Faculty of Business Studies
University of Dhaka

Subject: Submission of report on Corporate Finance.

Dear Sir,

I want to inform you that I took a great pleasure in preparing the report on Corporate
Finance. I have collected the annual reports of Beadon Pharma & Ambee
Pharmaceutical for preparing this report. During preparing the report, I have gained
lots of experience contrary to the limited theoretical knowledge on various aspects.

Your crafted guidance made it possible for me to prepare this report successfully.

Yours Truly,

_______________

Mukit Ul Hasan

Id# 34053
 Acknowledgement

I am deeply grateful to Prof. Dr. Mahmood Osman Imam for his inspiring and
invaluable guidance throughout the work. I would like to thank him for all the
advice, encouragement, help and everything that we learnt from him. Without him
this report would not have been possible.

It is my great privilege to express gratitude to all who helped me to complete my

assigned report as on the topic.

_________________________
Mukit Ul Hasan
ID# 34053
ABSTRACT

The term Paper applies performance evaluation of Pharmacy industry in Bangladesh.

It compares how well the company performs. The main aim is to achieve through
ratio analysis of Beacon Pharma comparing with Ambee Pharmaceutical as a peer
company in Bangladesh. The main challenges are in data collection from the annual
financial reports on Beacon Pharma and Ambee Pharmaceutical during 2013 to
2017. Cost of equity and WACC of these two firms are calculated from the available
financial information. Different financial ratios from two concepts (stock & flow)
along with checklists are calculated to measure comparative performance. The
mathematical calculation was established for ratio analysis between two
companies.It is most important factors for performance evaluation. The graphical
analysis and comparisons are applied between two companies for measurement of
all types of financial ratio analysis. Dividend policy that the company is following
also tried to be figured out. Analysis is done to know whether the companies are
following the standard dividend policy and financing policy (pecking order theory).
Finally company’s growth and current market position (over/ under priced) is also
tried to be understood.
CHAPTER-1: INTRODUCTION

1.1 Introduction:
Corporate finance is the area of finance dealing with the sources of funding and the capital structure
of corporations and the actions that managers take to increase the value of the firm to the
shareholders, as well as the tools and analysis used to allocate financial resources. The primary
goal of corporate finance is to maximize or increase shareholders’ value. Principles that govern
corporate finance -The investment principle specifies that businesses invest only in projects that
yield a return that exceeds the expected rate. The financing principle suggests that the right
financing mix for a firm is one that maximizes the value of the investments made. The dividend
principle requires that cash generated in excess of good project needs to be returned to the owners.
These principles are the core for corporate finance.
To analyze different aspects of corporate finance of a company industry analysis is done to
compare financial position (debt-asset-equity). I have been assigned two(2) companies from Fuel
& Power Industries named Orion Pharma and IBN Sina Pharmaceutical. There after all possible
aspects of corporate finance of aforesaid companies are analyzed and evaluated to employ the
bookish knowledge in empirical arena.
1.2 Objectives:
The specific objectives are as follows:
 To analyze the capital structure pattern of the aforesaid companies.
 To evaluate the divided policy and dividend pattern of the companies.
 To analyze the financial statements of the selected Companies.
 To analyze the corporate goal/objectives & CSR activities of the selected Companies.

1.3.1 Data Source:

This report is mostly based on secondary data which were available on the web. My main source
of secondary data was the DSE (web) and company’s web, Lankabd.com and
stockbangladesh.com.

1.3.2 Time Frame

This report is based on 5 years data (for Beacon Pharma (January 2013 to July 2017) and for
Ambee Pharmaceutical (January 2013 to July 2017).

1.4 Scope of Report

Our main focus of this report is to analyze:
 Cost of Capital and Capital Structure
 Dividend Policy
 Financial and Statement and Performance Analysis
 Corporate Goal

1.5 Limitation
Financial analysis needs lots of time & due procedure. Due to time constraint and knowledge
constraint right procedure may be missing in some cases.
CHAPTER-2: INDUSTRY PROFILE AND COMPANY OVERVIEW
2.1 Ambee pharmaceuticals Ltd.:
AMBEE PHARMACEUTICALS LTD. was founded in 1976 in Bangladesh. This company was
registered under the companies Act, 1913 and started operation in Bangladesh on 4th February
1976. Ambee is a joint venture with Medimpex of Hungary, a multinational company. Ambee
has collaboration with a 17 joint ventured products and is now running with 76 products. They
have tablets, capsules, liquids, gel and injectables. Ambee was listed in Dhaka Stock Exchange
in 1986 named as AMBEEPHA. The company maintains four depots located at Khulna, Bogra,
Chittagong and Sylhet, besides its National Distribution Cell in Dhaka.

Ambee aims to achieve business excellence through quality by satisfying customer expectations.
They follow Quality Management System to ensure consistent quality of products. Follow Good
Manufacturing Practices (GMP) which is recommended by World Health Organization (WHO)
for its pharmaceutical operations.

Ambee Pharmaceuticals Ltd. became an ISO 9001 certified company in in 2001. ISO 9001
certificate is an international recognition of the quality management system of this organization
that complies with the standard of ISO 9001 system. This is a certificate which was awarded by
United Registrar of Systems Ltd. (URS) of UK. Among 250 pharmaceutical companies only few
have become ISO 9001 certified and Ambee is one of them.

Mission:
A public limited company working for the nation as a whole with pertinacious incitement and firm
determination to ensure the quality and ethical standing attributing the sustainable growth and
developing to serve the mankind.

2,2 Beacon Pharmaceutical Limited

Beacon pharmaceuticals ltd. A leading pharmaceutical company in Bangladesh in respect of
producing high-tech products like anticancer and cardiovascular portfolio. Beacon is a public
limited company listed with Dhaka and Chittagong Stock Exchange, Which was incorporated on
12 September, 2001 as a private limited company with the Registrar of Joint Stock Companies
and Firms, Dhaka, Bangladesh under the company’s act on 1994 and subsequently converted
into a Public Limited Company.

Beacon is the first anticancer drug manufacturing company in Bangladesh and has also been
producing Bio-tech products and various types of other life saving drugs to serve the ailing
humanity of Bangladesh. Beacon was listed in Dhaka Stock Exchange in 2010 as
BEACONPHAR.

Beacon manufactures more than 200 generic drugs and 65 oncology products. In each year,
Beacon is introducing more than 15-20 Hi-Tech new products. By the virtue of strong R & D
team, Beacon has introduced a number of global first generic, which makes Beacon popular to
the pharmaceutical arena of the world.

After meeting the local demand, Beacon is exporting its medicine to many countries of Asia,
Africa, Europe & Latin America

Beacon is public limited company listed in Dhaka & Chittagong stock exchange. About 2000
people are working in this company.

Mission

To improve the quality of human life by providing innovative pharmaceuticals products through
continues research and development ensuring stakeholder satisfaction.

Vision

To be regarded and recognized as one of the most value driven pharmaceuticals company in the
country. Beacon Pharmaceuticals Limited has started its business operation in 2006 with a vision
to become a global company that will meet world’s greatest health needs.
Beacon at a glance:

Pharmaceutical Industry In Bangladesh:

Industry analysis

The pharmaceutical industry is one of the most dynamic and powerful sectors in Bangladesh.

It is technologically one of the most developed manufacturing industries and currently

contributes about one percent to total GDP with great potential for expansion. Increased
education levels, enhanced awareness of healthcare, growing per capita incomes, the emergence
of private health care services and the government’s expanding public expenditures in this sector
continue to stimulate rise in demand.
Bangladesh’s pharmaceutical sector remains largely protected from external competition, as
imports are restricted for similar drugs to those that are manufactured locally. The World Trade
Organization's (WTO) Trade -Related Aspects of Intellectual Property Rights (TRIPs) agreement
permits Bangladesh to reverse-engineer patented generic pharmaceutical products to sell locally
and export to markets around the world.

The TRIPs agreement is turning Bangladesh into a hub for affordable and high-quality generic

Medicines and contract manufacturing, with exports to potentially more than 85 countries across
the world. More than ten leading Bangladeshi pharmaceutical companies are exporting generics
international markets. Some of these companies are also emerging as competitors to Indian firms
in certain areas. Bangladeshi pharmaceutical companies are investing heavily in upgrading
manufacturing plants and obtaining certifications from the United States, Australia, Canada and
Europe. Beximco Pharma and Square Pharma both successfully completed FDA inspection of
their oral solid dosage manufacturing facilities and received notification in June 2015.The top-
ranking companies have already developed world-class pharmaceutical plants with state-of-the-
art technology.

Bangladeshi pharmaceutical companies focus primarily on branded generic final formulations,

Using both imported and domestically produced Active Pharmaceutical Ingredients (APIs).

About 85 percent of the drugs sold in Bangladesh are generic and 15 percent ar e patented
drugs.

Bangladesh manufactures morethan450 generic drugs for5, 300 registered brands, which
have 8,300 different forms of dosages and strengths. These include a wide range of products
from anti-ulcerates, anti-rheumatic on-steroid drugs, non-narcotic analgesics, antihistamines,
and diabetic drugs. Bangladesh also produces high-tech medicines such as anticancer
treatments, hormonal products, enzymes and co enzymes on a limited scale, but it is currently
only able to meet four percent of local requirements.

There are currently around 100 Bangladeshi pharmaceutical companies in operation. The
industry is highly concentrated as the top20 companies generate 85 percent of the revenue.
The top ten manufacturers by share of market revenue are as follows: Square (19percent),
Incepta(9.5percent), Beximco(9percent), Opsonin(5percent), Renata(4.9percent),
Eskayef(4.7percent), ACI(4.3percent), ACME(4.1percent), Aritstopharma(4percent), and
Drug International (3.7percent) .Local manufacturers dominate the industry, enjoying about
90 percent market share while multinationals hold 10percent.The Drug (Control)
Ordinancein1982 was the key factor of success of pharmaceutical industries in Bangladesh
(Rich, 1994). Two decades ago, most of the drugs needed to be imported. According to are
port of the International Management System (IMS) published in June2016, the size of the
pharmaceutical market of Bangladesh is estimated to be approximate 135 billion taka, with
an annual growth rate of about 11.37%. Of the total pharmaceutical market of Bangladesh,
the local companies are enjoying a market share reaching around75%, while the MNCs are
having a market share of 25%.Domestically, Bangladeshi firms generate 82% of the market
in pharmaceuticals; locally based MNCs account for 13%, and the final5% is imported.