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Table of Contents
1. Introduction.............................................................................................................................................2
Table 1.1 Revenue growths in 2012 to 2017 fiscal year...........................................................................2
Table1.2 Net Profit earning in 2012 to 2017............................................................................................3
Table1.3 Profitability ratios during 2012 to 2017....................................................................................4
Table 1.4 Financial ratios in 2012 to 2017...............................................................................................5
2. Strategy and forward planning................................................................................................................6
Strategy...................................................................................................................................................6
Forward planning.....................................................................................................................................6
3.Ratio Analysis............................................................................................................................................7
Table3.1 Ratio analysis between 2016 to 2017.......................................................................................7
Profitability & Efficient ratio..................................................................................................................11
Liquidity.................................................................................................................................................11
Financial Structure:................................................................................................................................11
Table3.2 Competitors Analysis..............................................................................................................12
4. Cash Flow...............................................................................................................................................13
5. Operating Cost Structure (2017)............................................................................................................14
6. Conclusion.............................................................................................................................................15
7. References.............................................................................................................................................15

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1. Introduction
Khulna Power Company Ltd. (KPCL) is the first Independent Power Producer (IPP) in the
country, established under the Private Sector Power Generation Policy of Bangladesh. KPCL
was incorporated on October 15, 1997 as a private limited company. On July 19, 2009 the
company was converted into a public limited company. KPCL was formed with a paid-up
capital of BDT 2,085.93 million (US$ 44.10 million) and the initial project cost was US$
96.07 million. KPCL commenced its full commercial operation on October 13, 1998 and
since then, it has been supplying uninterrupted reliable power to the national grid. The
formation of KPCL Project was initially sponsored by Summit Group and United Group
along with their foreign partner El Paso Corporation (El Paso), USA, one of the world’s
largest and most diversified natural gas exploration and pipeline companies and Wartsila
Corporation (Wartsila), Finland, a leading power plant manufacturer of the world. In 2008, El
Paso, as part of its global repositioning strategy disposed of its shares in KPCL to Summit
Group and United Group. Later in 2009 Wartsila’s share was also acquired by Summit and
United. Khulna Power Company Ltd. has two subsidiary companies named as: i) Khulna
Power Company Unit II Ltd.; and ii) Khanjahan Ali Power Company Ltd.

Table 1.1 Revenue growths in 2012 to 2017 fiscal year.

Year of operation revenue (Taka)

2011-2012 2012-2013 2013-2014 2015-2016 2016-2017

7,678,624,899 7,697,168,662 7,413,311,440 4,614,656,432 10,034,160,075
12,000,000,000
10,034,160,075
10,000,000,000

8,000,000,000
7,678,624, 7,697,168, 7,413,311,
Taka

6,000,000,000 899 662 440

4,614,656,432
4,000,000,000

2,000,000,000

0
2011-2012 2012-2013 2013-2014 2015-2016 2016-2017
Year

Graph1.1 Graphical representation of Revenue growth from 2011 to 2015.

Khulna Power Company Ltd has recorded robust revenue growth in recent five years. The
company’s revenue is increased by 235 crores in Taka during that time period.
Table1.2 Net Profit earning in 2012 to 2017.
Year of 2011-2012 2012-2013 2013-2014 2015-2016 2016-2017
operation
Net 683,583,996 1,134,977,922 963,929,857 1,259,735,189 2,051,634,211
Profit
Source: http://www.khulnapower.com

2,500,000,000

2,051,634,211
2,000,000,000

1,500,000,000
Taka

1,259,735,189
1,134,977,922
963,929,857
1,000,000,000 Net Profit
683,583,996

500,000,000

0
2011-20122012-20132013-20142015-20162016-2017
Year

Net profit is grown by 136 crores over the last five years.
Table1.3 Profitability ratios during 2012 to 2017.
Year 2012 2013 2014 2016 2017
Return on 17% 24% 10% 13% 19%
Equity
Return on 7% 14% 6% 8% 13%
Assets
Source: http://www.khulnapower.com

40% 14%

35% 13%
Parcentage

30%
7% 24%
25% 8%
19%
20% 17% 6%
13%
15%
10%
10%
5%
0%
2012 2013 2014 2016 2017
Year

Return on Equity Return on Assets

Graph 1.3 Graphical representation of ROCE during 2014 to 2018.

ROCE is not steady during 2014 to 2018. Return on equity is also not steady over the five
years’ time period. Return on assets changes between 7% to 13% last five years.
Table 1.4 Financial ratios in 2012 to 2017.
Year 2012 2013 2014 2016 2017
Gearing 128% 70% 74% 58% 49%
ratio
Interest 367% 3249% 486% 2596% 1525%
Ration
Source: http://www.khulnapower.com

3500% 3249%

3000% 2596%
Percentage

2500%

2000% 1525%
1500%

1000% 486%
367%
500% 128% 70% 74% 58% 49%
0%
2012 2013 2014 2016 2017
Year

Gearing ratio Interest Ration

Graph1.4: Gearing ratio during 2012 to 2017.

During last five years gearing ratio tremendously improved due to the increase in shareholders
equity. But the interest rate is volatile because of inconstant long- and short-term borrowing.
Overall, all analysis reflecting Khulna Power Company Ltd is high profit generating company.
2. Strategy and forward planning
Strategy:

1. More FDI for the company.

2. Exporting Energy in Future
3. Solar Energy Investment
4. Liaison with the government
5. New markets penetration
6. Working on data safety
7. Prepayment meters installation
8. Investment though stock market

Forward planning:

There are some common promotional strategies followed by organizations. These are:

1. Public Relations on their achievements: Involves developing positive relationships with the
organization media public. The art of good public relations is not only to obtain favorable
publicity within the media, but it is also involves being able to handle successfully negative
attention. it is their future plan they will do public relations on their achievements. By this they
will grebe new customers for future business.

2. Contributions to the society: it can contribute to the society by reducing the pressure to
government power supply by providing energy to the remote areas.

3. Liaison with government officials: Khulna power company ltd is a privet company and
doing very well. So, they are planning to liaison with government officials to sustain in the
market.

4. International presence for more FDI: they are trying to take foreign investment in order to
minimize their risk and secure their investment.
3. Ratio Analysis
Table3.1 Ratio analysis between 2016 to 2017.

(2015-2016)

Total current assets/Total current

Current Ratio liabilities
6011594326/4903303278
1.226029471

Quick Assets Current assets-inventories

6011594326-1412512087
4599082239

Quick Ratio Quick assets/Total current liabilities

4599082239/4903303278
0.9379559

Cash Ratio Cash/Current Liabilities

1706533141/4903303278
0.348037444

Networking capital/Total assets

Net Working Capital to Total assets 1108291048/14078063016
0.078724683

Total Asset Turnover Operating revenues/Total assets

4614656432/14078063016
0.327790579
Operating revenues/Average
Receiveables turnover receiveables
4614656432/0
#DIV/0!

Average collection period Days/Receivables turnover

-
-

PAyable Turnover Total Purchase/Accounts payable

3248347623/3353470736
 0.968652444

Average pay period Days/Payable turnover

365/0.968652
376.8123124

Inventory turnover Cost of goods sold/Average inventory

3248347623/1412512087
2.299695452

Days in inventory Days/Inventory turnover

365/2.29969
158.7170445

Debtratio Total debt/Total assets

5179794144/14078063016
0.367933723

Equity Multiplier Total assets/Total equity

14078063016/8898268872
1.582112568

Interest Coverage EBIT/Interest expense

1259735189/48528070
2596%

Long term debt to equity Long term debt/Equity

276490866/8898268872
0.031072433

Cash Coverage Ratio EBIT+Depreciation/Interest

1259735189/49956598
25.21659279

Net Profit Margin Net income/Total Operating Revenue

1142775834/4614656432
0.247640502

Return on assets Profit margin*Assets turnover

0.24764*0.32779
8%
 (2016-2017)

Total current assets/Total current

Current Ratio liabilities
6333717765/4290625194
148%

Quick Assets Current assets-inventories

6333717765-1173104874
5160612891

Quick Ratio Quick assets/Total current liabilities

5160612891/4290625194
120%

Cash Ratio Cash/Current Liabilities

1790755001/4290625194
0.417364584

Networking capital/Total assets

Net Working Capital to Total assets 2043092571/14069215865
0.145217231

Total Asset Turnover Operating revenues/Total assets

10034160075/14069215865
0.713199667
Operating revenues/Average
Receiveables turnover receiveables
10034160075/3020402695
3.32212658

Average collection period Days/Receivables turnover

365/3.32212
109.8696013

PAyable Turnover Total Purchase/Accounts payable

-
-
Average pay period Days/Payable turnover
-
-

Inventory turnover Cost of goods sold/Average inventory

7784511206/1173104874
6.635818654

Days in inventory Days/Inventory turnover

365/6.63581
55.00458874

Debtratio Total debt/Total assets

4605173625/14069215865
0.33

Equity Multiplier Total assets/Total equity

14069215865/9464042240
1.486596901

Interest Coverage EBIT/Interest expense

2051634211/134550232
1525%

Long term debt to equity Long term debt/Equity

9464042240/314548431
30.08771085

Cash Coverage Ratio EBIT+Depreciation/Interest

2051634211/86970802
23.58991942

Net Profit Margin Net income/Total Operating Revenue

1830269849/10034160075
18%

Return on assets Profit margin*Assets turnover

0.18240*0.71319
13%
Profitability & Efficient ratio:

Khulna Power Company Ltd total revenue has increased by 54% in 2017 than compare to
2016.Also the operating cost is grown by 41%, indicating that total operating cost is lower than
total revenue in 2017.Due to the increase in price of the raw materials and transportation costs
the expenses has Been increased. Also, business incurring higher inventories purchasing cost
comparative to sales revenue which also push down the percentage of ROE and ROA ratio is
increased. I believe it has happened because of the poor inventory system.

Another finding is the payable ratio has been same which means the payable time has been same
in 2017. Now the company will get the payment before 100 days compared to the preceding
year.

Liquidity:
The company’s Current and Quick assets ratios are both higher than the typical level of the
industry. The company has drastically increased its current assets and the liquidity of this
company is getting better day by day. As the payment of the dealers are now getting faster than
before. And the company has more cash in hand than before.

Financial Structure:
The gearing ratio and interest cover ratios are slightly improving and Khulna Power Company
Ltd is capable to repay loan and interest owing to decrease the amount of short-term liabilities
and increase the figure of equity as well as raise the amount of profit before tax and interest. But
if the company fail to generate higher profit rapidly than Khulna Power Company Ltd might face
financial difficulties in the short-term period. In these circumstances, Khulna Power Company
Ltd can ask shareholders to invest more capital on retain dividend to mitigate any financial crisis.
After analyzing all the ratios, I believe that Khulna Power Company Ltd has drastically
improved from year to year. And it is maintaining ratios up to the mark. It means it performing
well in the market.
Some ratios in global business browser are not same as of mine because of using different
accounting principles.
Table3.2 Competitors Analysis
Based on 2017 annual reports.

Profitability Ratios Khulna Power Ltd DESCO

Return on Capital 21% 1%

Return on funds 19% 1%

Net profit 18% 18%

Current Ratio 148% 225%

Quick Ratio 120% 168%

Stock holding ratio Not Given Not Given

Debt pay ratio 109days 1602Days

Credit pay ratio Not Given 75 Days

Gearing 33% 69%

Interest cover 2.74 9.69 Times

EPS 5.07 0.44

Capital Spending 5Years 5Years

Growth Rate 117% 9%

Source: http://www.khulnapower.com
Khulna Power Company Ltd.’s Gross profit earning in 2017 is same as the DESCO. The
percentage gross profit of these companies consecutively is 18% and 18%. They both have the
same percentage.

On the other hand, the Khulna Power Company Ltd has current and quick ratio lower than
DESCO. Which is vital to survive in future business from uncertainty of Khulna Power
Company Ltd rather than DESCO. On the other hand, DESCO is financial much stronger than
Khulna Power Company Ltd. That indicates a future threat in the business farm in the future.
On the other hand, the Khulna Power Company Ltd have a much higher EPS growth than other
company.
4. Cash Flow
OPERATING ACTIVITIES TAKA (2017)
Cash flow from operating activities:
Collection from BPDB 9,326,091,076
Cash paid to suppliers and employees -7,732,160,520
Cash generated from operations 16,081,784
Finance income received -166,122,482
Interest and other financial charges paid -26,486,517
Net cash provided by operating activities 1,417,403,342

Cash flow from investing activities:

Payment for acquisition of property, plant and -6,497,645
equipment
Proceeds from disposal of fixed assets 1,780,000
Interest received 71,136,203
Loan to subsidiaries -
Net cash provided by investing activities 66,418,558

Cash flow from financing activities:

Term loan received -
Repayment of term loan -363,836,559
Short term loan received 11,233,928,609
Repayment of short-term loan -10,924,063,549
Working capital loan received -
Repayment of working capital loan -
Inter-company loan received -
Repayment of inter-company loan -
Redemption of cumulative preference shares -
Dividend paid to ordinary shareholders -1,345,628,540
Net cash used in financing activities -1,399,600,039

Net cash inflow/(outflow) for the year 84,221,860

Opening cash and cash equivalents 1,706,533,141

More cash is received from sales revenue and other trades, and few cash are on credit for
example, customer deposits, assumed that would be settled down on year 2018.
A significant amount of money is invested to increase property and equipment and to meet other
investment activities. short-term loan is injected to makeup financial activities.
Beginning of the year 2017 the cash was 84,221,860 Taka but at the end of the period the figure
was 1,706,533,141
5. Operating Cost Structure (2017)
Operating expenses 107,638,353

Selling and distribution expenses 7,784,511,206

Other income 6,407,342

Others expense --

Financial expenses 134,550,232

Net profit before WPPF 2,051,634,211

Allocation for WPPF 221,364,362

The most of the expenses go for the rent of the space or workstation. The employee salaries,
wages of the daily labors. And another big amount goes to the bank as a part of the loan. Like
giving interest to the bank.
For selling the products the company have to spend a lot of money. Commissions, the marketing
people and other promotional activities.
There are also some other operating costs, these include repairs, renovation entertainment for the
employees and insurance.
Suggestion: Khulna Power Company Ltd can reduce the cost by making pre-paid card system.
6. Conclusion
Khulna Power Company Ltd is a highly profitable company in this diligence. And day by day it
is becoming a renowned company of Bangladesh. Asia and all over the world that reflects to
increase a number of customers which is really considerable for their future business growth.
Khulna Power Company Ltd management is spreading up their business in outside of Khulna.
They are also coming up with some new ideas. But it may face some difficulties as its current
and quick ratio is declining in recent year.

Khulna Power Company Ltd success is noticeable as its continuous growth of business,
unbreakable growth of profit margin, continuous expansion amount of assets. Moreover, the
company might need some reformation to get more benefited and maximize profit like inventory
management system and credit control management system.

7. References
Most of the information has been collected using secondary media. And some of the
information’s has been collected from the newspaper. Some of the websites are.

1. Lankabd.com
2. Dhaka Stock Exchange
3. https://www.desco.org.bd/bangla
4. http://www.khulnapower.com