Investment banking operation

7/29/2019 Investment banking operation

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Abridged Version of Prospectus

Tulsi Pharmaceuticals Limited

House No. 48A, Road No. 11A Dhanmondi R/A, Dhaka 1209 Dhaka, Bangladesh

Phone: +880-2-9132594, 8120243 Fax: +880-2-9120657

E mail:[email protected]

Website: www.tulsipharma.com

Public offer of 40,000,000ordinary shares of Tk. 100/- per share totaling to Tk. 4,000,000,000/-

Subscription

For General public Opening Date: May 08, 2011 closing Date: May 15, 2011

For NRB applicants Opening Date: May 08, 2011 closing Date: June 02, 2011

Credit Rating Agency

Credit Rating Agency of Bangladesh (CRAB)

Long Term

Entity Rating A1

Date of Rating 09 December 2009

Manager(s) to the Issue

Equity Partners Limited

1003, Dhaka Stock Exchange

Annex Building (9th Floor)

9/E, Motijheel C/A, Dhaka 1000

IDLC Finance Limited

Bays Galleria (1st Floor)

57, Gulshan Avenue,

Gulshan 1, Dhaka 1212

UnderwritersIDLC Finance Limited

Lanka Bangla Finance LimitedJanata Bank LimitedIIDFC Capital Limited

ICB Capital Management Limited

Issue Date of Prospectus: 05.04.2011The Issue shall be placed in "N" Category
mailto:[email protected]:[email protected]://www.tulsipharma.com/mailto:[email protected]://www.tulsipharma.com/


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"CONSENT OF THE SECURITIES AND EXCHANGE COMMISSION HAS BEEN OBTAINED TO THE ISSUE/OFFER OF THESESECURITIES UNDER THE SECURITIES AND EXCHANGE ORDINANCE, 1969, AND THE SECURITIES AND EXCHANGECOMMISSION (PUBLIC ISSUE) RULES, 2006. IT MUST BE DISTINCTLY UNDERSTOOD THAT IN GIVING THIS CONSENTTHE COMMISSION DOES NOT TAKE ANY RESPONSIBILITY FOR THE FINANCIAL SOUNDNESS OF THE ISSUERCOMPANY, ANY OF ITS PROJECTS OR THE ISSUE PRICE OF ITS SECURITIES OR FOR THE CORRECTNESS OF ANY OFTHE STATEMENTS MADE OR OPINION EXPRESSED WITH REGARD TO THEM. SUCH RESPONSIBILITY LIES WITH THE

ISSUER, ITS DIRECTORS, CHIEF EXECUTIVE OFFICER/CHIEF FINANCIAL OFFICER, ISSUE MANAGER, UNDERWRITERAND/OR AUDITOR".

Special Note

Please read the Prospectus carefully which includes Risk Factors before taking your investment

decision.

An applicant cannot submit more than two applications, one in his/her own name and another

jointly with another person. In case an applicant makes more than two applications, all

applications will be treated as invalid and will not be considered for allotment purpose. In

addition, whole or part of application money may be forfeited by the Commission.

Company Profile

Tulsi Pharmaceuticals Ltd. (TPL) is one of the fastest growing pharmaceutical finished formulation

manufacturing companies in Bangladesh with a mission to provide innovative high quality range of

healthcare products. TPL has been striving for more than 18 years and has devoted entirely to the

development of excellent pharmaceutical finished products. Relentlessly pursuing scientificknowledge, building the strength and developing the vision required to compete with the best in the

future TPL has grown into a company that boosts of world class products, excellent productionfacilities and quality professionals. TPL has crossed numerous milestones in its journey.

Turnover has grown multifold;

Introduced several new life saving molecules for the first time in Bangladesh;

Possesses an excellent production infrastructure; and

It has created effective systems and built committed teams of professionals, which ensure that

General Pharma is fully prepared and ready to successfully take on the challenges of the future. General

Pharmaceuticals has about 248 dosage forms for marketing within Bangladesh.

There are 2000 skilled professional are working in TPL inclusive of 900 Sales & Marketing Force.

The distribution network is spread all over Bangladesh with a professional team of 500 distributionspersonnel. Launching new products in every month, maintaining the strong position in the market

since their inception in 1987.In recent years TPL has entered into export fields by registering its

products in Viet Nam, Kenya, Hong Kong, Macau, Mauritius, Myanmar, Sri Lanka & Maldives. In

this connection TPL is also aiming to export their pharmaceutical finished products to other countriesof South East Asia, Middle East and Africa and Latin America


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History of the Organization

Tulsi Pharmaceuticals Ltd. (TPL) is incorporated as Private Limited Company on the 5th day of April,

1984. Dr. Momenul Haq, Managing Director, Dr. Gazi Nurun Nabi, demised Director were friendsand classmates since their boyhood. While they were medical students, countrys poor health condition

struck their mind. They would always feel that health sector was being deprived and neglected. They

cherished in their mind to do something for welfare of the common people by rendering their

professional zeal. With this end in view M/S. Tulsi Pharmaceuticals Ltd. (TPL) stepped into

manufacturing of drugs during, 1987 with initial 7 products and minimum manpower.

Vision

General envisions a leading role for itself as a catalyst for improvement of the healthcare environment.

Mission Statement:

The company's mission is to maintain people's health and combat disease to enhance the quality of

human life so that people may live longer, healthier and more meaningful lives.

Product Line:

General offers a wide variety product to combat against different diseases. Therapeutic wise product

category of General Pharma are given below-

DRUG ACTING ON GIT CARDIOVASCULAR DRUGS

VITAMIN & MINERALS PSYCHOTROPIC

ANTIHISTAMINE & ANTIASTHMATIC ANTIMICROBIAL/ANTIPROTOZOLE

NEUROTONICS ANTI-OBESITY

MUSCULOSKELETAL DRUGS DERMATOLOGICAL

ANTIDIABETIC ANTI CANCER

ANTI MIGRAINE UROLOGICAL DRUG

ENERGY PRODUCER ORS

INJECTABLE ANTISEPTIC MOUTHWASH

DISINFECTANT ANTI-GOUT

ANTI-ANGINAL & ANTI-ISCHEMIC

DRUGS


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Issue size and purpose of public offering

Financial Structure of the Company

The Financial Structure of the Company as follows:

Particulars No. of shares Face Value(Taka) Amount in Taka

Before IPO

Authorized Capital ordinary shares

of Tk. 100 each

20,000,000

0

100.00 200,000,00000.00

Total Paid-up before IPO 60,000,000 100.00 6,000,000,000.00

After IPO

To be issued as IPO 4,000,0000 100.00 4,000,000,000.00

Total no of shares (post IPO) 100,000,00

0

Paid up capital (post IPO) 100,0000,0000.00

Investor Quota Percentage Amount

Eligible Institutional Investors 30% 1,200,000,000.00

Mutual Fund Portion 10% 400,000,000.00

NRB portion 10% 400,000,000.00

Public Portion 50% 2,000,000,000.00


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Use of IPO proceeds:

Subsequently, considering the business requirements, the management decided to utilize the fund in the

following:

Particulars Amount (Tk.)

Repayment of loan to HSBC

Repayment of loan to Agrani Bank Ltd.

Construction of new factory

Machinery import for production

Office equipment

Office decoration

Raw materials

Research and development cost

20,5500000

10,4000000

125,107,0000

145,00,00000

84,00,000

64,00,000

158,270,000

764,340,000

Total 3,947,980,000

Use of IPO Proceeds Amount(Tk.)

IPO Proceeds 4,00,000,0000

Less: IPO expenses (approx.) 52,020,000

Net IPO Proceeds 4,052,020,000

Working Capital Requirement 3,947,980,000


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Breakdown of IPO expenses

Particulars Rate Amount in Tk.

Manager to the Issue

Fees

@ .50% on entire offer 20,000,000

Regulatory Expenses

Listing related

expenses:

Service Charge Fixed 5,000

Annual Fee for DSE &

CSE

Fixed 2,00,000

Listing Fees for Stock

Exchange (DSE &

CSE)

@ .25% on up to tk.10

crore of paid up capital

& 0.15% on the

balance amount (Max20 lac)

4,000,000

SEC Fees

Application Fee Fixed 10,000

Consent Fee @ .15% on entire offer 6,000,000

IPO Commission

Underwriting

Commission

@ .25% on entire offer 10,000,000

Bankers to the Issue

Commission

@ .1% on entire offer 4,000,000

Printing & Post IPO Expenses (Estimated):

Abridged version of

Prospectus and

Noticed

Estimated 10,00,000

Printing of Prospectus

and Forms

Estimated 16,00,000

Post issue Expenses Estimated 40,00,000

Arrangement of

Lottery

Estimated 12,05,000

Total

52,020,000

Ratio Analysis:


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ParticularsFor the year ended

30 June

2010

30 June

2009

30 June

2008

30 June

2007

30 June

2006

Liquidity Ratios

Current ratio 0.7436484 0.9835916 0.228470235 0.09853002 0.611970053

Quick (Acid

Test) ratio

0.7754867 1.0579843 0.247620758 0.09853002 0.611970053

Times interest

earned ratio

8.586705412 6.095730411 2.591541806 N/A N/A

Debt to equity

ratio

0.7428178 2.8518497 3.062439306 1.746816813 0.085804175

Operating Ratio

Accounts

receivable

turnover ratio

33.47111518 16.40332377 5.098427572 N/A N/A

Inventory

turnover ratio

0.136356243 0.350931171 0.136356243 N/A N/A

Asset turnover

ratio

0.144483279 0.15020331 0.014180369 N/A N/A

Profitability Ratios

Gross profitmargin

0.826552907 0.76486992 0.748107869 N/A N/A

Operating profitmargin

0.73960492 0.666218462 0.299874065 N/A N/A

Net profit

margin

0.392082717 0.334155494 0.110496878 N/A N/A

Return onAssets (ROA)

0.056649397 0.050191261 0.001566887 N/A N/A

Return onEquity (ROE)

0.114214905 0.220465998 0.007447044 N/A N/A

Earnings

Per Share

(Taka)

6.21325735 2.8281768 0.075029183 N/A N/A

Risk Factors


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The Company is operating in an industry involving both external and internal risk factors having direct

as well as indirect effects on the investments by the investors. The assessable risk factors, both externaland internal, are mentioned below-

(a) Interest Rate Risk

Interest/financial charges are paid against any kind of borrowed fund. Instability in money market and

increased requirement for fund may put pressure on interest rate structure. Rising of interest rateincreases the cost of fund and consequently there may be impact on profitability.

(b) Exchange Rate Risk

The Company imports raw materials against payment of foreign currency. Unfavorable volatility or

currency fluctuation may affect the profitability of the Company.

(c) Industry Risk

Environmentalists are likely to create pressure on Government to protect or banning those factory,

which are not follow proper ETP, Waste management solution, Air pollution etc. which are negative

effects on living being and environment thereby causing closure of business by the Company.

(d) Market and technology related Risk

The company has world-class infrastructure with most sophisticated machinery and equipments. Fullysegregated independent production facility equipped with sophisticated high-tech European machinery.

Integrated Building Management System (IBMS) supported by latest dynamic software networking to

ensure central monitoring and complete automatic operation of the plant. Independent modern QA, QC,

Microbiological and Product Development Laboratories supported with high-tech equipment to ensurethe highest quality of products. Electronically controlled operation system as per guideline of GAMP -

4 (Good Automated Manufacturing Practice).The production facilities are based on currently available

technology. Any invention of new and more cost effective technology may cause operationalobsolescence thereby causing in substantial new investments. Proposed new investments in diversified

product lines may need diversified technology and management skills, which may not be available.

Any serious defects in the plant and machinery may affect production and profitability calling foradditional investment for replacement.

(e) Potential or existing government regulations

Any adverse change by the Government in fiscal policies relating incentives, rebate etc. may adversely

affect Company's profitability as well as adverse effect the production of life saving drugs.

(f) Potential changes in global or national policies

The Company's product lines consist of specialized and sophisticated anti-cancer, cardiovascular,antibiotic and other life saving drugs products that are primarily based on imported raw materials. Any

shortage in the international market might dent the production level and profitability. Law and order

situation and political unrest may also jeopardize Company's operations and adversely affect

profitability.

(g) Operational risk

Shortage of power supply, labor unrest, unavailability or price increase of raw materials, natural

calamities like flood, cyclone, earthquake etc. may disrupt the production of the Company and canadversely impact the profitability of the Company.

Credit Rating:


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Credit Rating Agency of Bangladesh Limited (CRAB) has assigned A1 (pronounced Single A One)

rating in the Long Term to General Pharmaceuticals Limited (hereinafter referred to as TPL, or theCompany). Companies rated in this category have very strong capacity to meet their financial

commitments. These companies are judged to be of very high quality, subject to very low credit risk.

Rights of the Shareholder:

Dividend: All the shareholders have equal but proportionate right in respect of dividend. Dividend

will be paid in Bangladeshi Taka only. Transfer of shares: Shares are transferable. The transfer will be made by the CDBL under

electronic settlement process.

Voting Right: All the shareholders shall have usual voting rights. Voting right can be exercised in

person or by proxy in a meeting.

Encashment: The shares will be listed with DSE. So investment in this Fund will easily be

encashable.

Receive Annual Report:The shareholders shall have the right to receive all periodical reports and

statements audited as well as unaudited published by the company from time to time.

Conversion:The Company is issuing ordinary shares through this prospectus with the consent of

the SEC. Company in its General Meeting may convert any fully paid up shares into stock and reconverts

such stock into paid up shares of any denomination if it is so determined by the company.

Accounting Year:

Financial period of the company covers one year from 1st July to 30th June consistently.

Audit Fee:

The audit fee will be Tk. 2, 00,000.00 (two lac) only for the first year and it will fix up for subsequent

years.

Dividend policy:

a) Subject to the rights of members entitled to shares if any with preferential or special rights attached

thereto as to dividends and subject to the provisions of these presents as to the reserve fund and

depreciation fund the net profits of the Company in respect of any year or other period shall be appliedin the payment of dividend on the ordinary shares of the Company but so that a partly paid up share

only entitles the holder with respect thereto to such proportion of the Distribution upon a fully paid up

share as the amount paid thereon bears to the nominal amount of each share.

b) The Company in general meeting may declare a dividend to be paid to the members according to

their rights and interests in the profits and may fit the time for payment.

c) The declaration of the Directors as to the amount of net profits of the Company shall be conclusive.

d) There is no limitation on the payment of dividend to the shareholders.



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Balance Sheet

Particulars

For the year Ended

June 2006 June 2007 June 2008 June 2009 June 2010

Taka Taka Taka Taka Taka

Assets

Non-

Current

Assets

Property,

Plant &

Equipment

680,242,6

96

1,827,645,8

76

2,797,103,2

42

3,006,464,1

09

5,969,019,40

2

Less:

Accumulated

depreciation

- - 19,381,563 34,903,293 51,770,227

Total long

term assets

680,242,6

96

1,827,645,8

76

2,777,721,6

79

2,971,560,8

16

5,917,249,17

5

Current

assets

Inventories - 3,205,310 75,261,182 340,247,894 614,390,734

Loans,

advance &

deposits

45,108,26

4

9,590,889 9,659,561 8,430,959 12,929,280

Cash & bank

balances

250,028 6,836,989 2,421,572 29,681,552 7,772,633

Accounts

receivables- - 7,990,891 30,958,317 28,406,826

Total current

assets

45,358,29

2

19,633,188 95,333,206 409,318,722 663,499,473

Less:Current

liabilitiesand

provisions

Short term

Borrowings

72,351,78

3

184,743,846 406,452,245 391,582,929 867,076,684

Accounts

payables

639,507 9,771,340 4,412,181 15,686,708 14,933,529

Accrued

expenses

1,031,796 4,665,790 5,919,730 8,233,972 9,652,670

Tax

payables

95,397 80,000 483,354 643,419 559,099

Total current

Liabilities

74,118,48 199,260,976 417,267,510 416,147,028 892,221,982


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andprovisions

3

NetworkingCapital

(28,760,19

1)

(179,627,78

8)

(321,934,30

4)

(6,828,306) (228,722,50

9)

Net assets 651,482,5

05

1,648,018,0

88

2,455,787,3

75

2,964,732,5

10

5,,688,526,6

66

Financed by

Long term

borrowings

51,482,50

5

1,048,018,0

88

1,851,249,9

23

3,323,189,4

73

2,424,148,92

1

liability for

EWF- - 35,701 552,429 395,320

Total long

term

liabilities

51,482,50

5

1,048,018,0

88

1,851,285,6

24

2,195,041,9

02

2,424,544,24

1

Shareholde

rs' equity

Share capital 600,000,0

00

600,000,000 600,000,000 600,000,000 600,000,000

Revaluation

reserve- - - - 2,291,186,98

4

Retained

earnings- - 4,501,751 169,690,60

8

372,795,44

1

Total

shareholders

equity

600,000,0

00

600,000,000 604,501,751 769,690,608 3,263,982,42

5

Total long

term

liabilities &

equity

651,482,5

05

1,648,018,0

88

2,455,787,3

75

2,964,732,5

10

5,688,526,66

6


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Income Statement

Particulars

For the year ended

30 June 2010 30 June2009 30 June 2008

Taka Taka Taka

Net Sales (After vat adjustment) 950,808,145 507,819,297 40,740,979

Cost of sales (164,914,909) (119,403,592) (10,262,332

)

Gross profit 785,893,236 388,415,705 30,478,647

Administrative Expenses (12,806,995) (9,512,814) (6,457,092)

Selling, Marketing & Distribution

Expenses

(69,863,859) (40,584,300) (11,804,392

)

Net profit before financial expenses 703,222,382 338,318,591 12,217,163

Financial expenses (81,896,647) (55,500,911) (4,714,245)

Net profit after financial expenses 621,325,735 282,817,680 7,502,918

Net profit before taxation 621,325,735 282,817,680 7,502,918

Income Tax @ 40% 248,530,294 113,127,072 3,001,167

Net profit after Taxation 372,795,441 169,690,608 4,501,751


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Cash Flow Statement

Particulars

For the year ended

30 June 2010 30 June 2009 30 June 2008

Taka Taka Taka

a) Cash flow from operating activities:

Collection against sales 547,359,636 310,851,871 58,750,088

Payments to creditors (296,842,000) (206,275,158) (73,830,895

)

Other operating expenses (157,700,701) (104,300,968) (45,381,102

)

Payment to others (5,498,321) 2,902,602 2,278,335

Interest paid (66,348,484) (42,216,658) -

Net cash generated from operating

activities

20,970,130 (39,038,311) (58,183,574

)

b) Cash flow from investing activities: - - -

Acquisition of property, plant &

equipment

(210,755,744) (24,616,053) (107,938,85

1)

Disposal of property, plant & equipment - - -

Net cash generated from investing

activities

(210,755,744) (24,616,053) (107,938,85

1)

c) Cash flow from financing activities: - - -

Long term loan received 65,177,824 129,235,041 71,940,615

Long term loan refund - (11,054,663) -

Short term loan received 237,626,972 110,770,791 122,310,48

7

Short term loan refund (49,928,101) (39,036,825) (30,544,094

)

Net cash generated from financing

activities

252,876,695 189,914,344 163,707,00

8

d) Net cash increase/decrease(a+b+c) 273,846,825 126,259,980 (2,415,417)

e) Cash & cash equivalents opening 27,681,552 1,421,572 3,836,989


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f) Cash & cash equivalents - closing

(d+e)

301,528,377 127,681,552 1,421,572

Directors of the company:

Description of the directors

Short Bio data of the directors:

Dr. Momenul Haque

Managing Director, GENERAL PHARMA pharmaceuticals limited

Mr. A. Matin Chowdhury is a renowned and dynamic personality in the pharmaceutical sector of

Bangladesh. He completed M.B.B.S. from Dhaka Medical College and postgraduate studies from the

U.K.

Dr. Sarah Momen

Director

Dr. Sarah Momen wife of Dr. Momenul Haque, completed M.B.B.S. from Dhaka Medical College and

postgraduate studies from the USA Mrs. Sarah is a famous Child and Adolescent Psychiatrist. She was

the former Chief Consultant of Pabna Mental Hospital. She is also the Chairperson of Special Olympics

in Bangladesh.

Serial

No.

Name Age

(Years)

Qualifications Position

01 Dr. Momenul Haq, Managing Director 52 M.B.B.S. from DMC andpost graduation from U.K.

Director/Managing

Director

02 Dr. Sarah Momen, Director 35 M.B.B.S. from DMC andpost graduation from USA

Director

03 Mir Zaki Azam Chowdhury ,Director 47 M.Com in Marketing and

MBA from USA

Director Marketing


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Mir Zaki Azam Chowdhury

Director Marketing

Mir Zaki Azam Chowdhury completed his masters in marketing and completed MBA from USA with

major in marketing.

Securities of the company owned by the directors:

Name of the directors who owned the shares of the company

Sl.

No

Name Position Number of

shares

owned

Percentage

of

outstanding

Shares

01 Dr. Momenul Haq Manging

Director

5,54,56000 92.43%

02 Dr. Sarah Momen Director 45,00,000 7.50%

03 Mir Zaki Azam

Chowdhury

Director 44,000 .073%

Total 60,000,000 100%


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Determination of offering price:

The issue price at Tk.100.00 is justified as per the guidelines of the Securities and Exchange Commission

as detailed below:

(i) Net Asset Value per Share

The offering of the common stock of Tulsi pharmaceuticals Ltd has been determined by assessing the Net

Asset Value (NAV). The financial calculations presented below are from the audited accounts of 30th June

2010.

Sl. No. Particulars Amount in Million

Taka

A

Current Assets

Inventories 614.391

Loans and Advance 12.929

Cash and Bank Balance 7.772

Account Receivables 28.407

Fixed Assets 5,917.249

Total Assets 6,580.748

B

Short term borrowings 867.076

Accounts Payable 14.934

Accrued expenses 9.65

Tax payable 0.56

Long term borrowings 2,424.149

Liabilities from EWF 0.395


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Total Liabilities 3,316.764

C Net Asset Value (A-B) 3,263.984

D Number of shares 60,000,000

E Net Asset Value per share (C/D) 54.40

ProjectedEarning based value per share:

Tulsi pharmaceuticals limited Price earnings multiples

Company Name P/E Ratio

Beximco Pharma ltd. 21

Glaxo BD Limited 28

Reneta Limited 24

The Ibn Sina Limited 42

Orion Infusions 39

Square Pharma Ltd 22

Total 176

Average P/E ratio 29.33

Tulsi Pharmas net income in 2010 372,795,441

Numbers of share 60,000,000

EPS 6.21

Expected EPS in 2011 6.21*(0.066) 6.61986

Value of the share Expected (EPS*Industry P/E ratio)


20/25

Average Market price of similar stocks:

CompanyName

AmbeePharma

BeximcoPharma

Ibn Sina GlaxoSmithClin

e

Basis of selecting

Company

Same management Same Product

Line

A Category

Company

Turnover Close

to GENERAL

PHARMA

company

Face Value (a) 10 10 100 100

Closing Prices

June 10 234.2 146.3 1,464.5 1,097.3

July 10 242.30 150.50 1,381.50 1,308.20

Aug 10 252.40 154.60 1,421.00 1,312.80

Sep 10 487.20 149.50 1,423.75 1,418.70

Oct 10 613.20 150.40 1,576.00 1,301.20

Nov 10 830.10 145.30 1,748.50 1,322.90

Average closing

Price (b)

443.23 149.43 1,502.54 1,293.52

Market Value

Multiplier (b/a)

44.323 14.94 15.025 12.9352

Average Market

value multiplier21.8058


21/25

From the above it is clear that market price of prospective similar companies of Pharmaceuticals sector are o

average 21.8058 times higher than that of its face value. Based on this, we may assume that share prices of

Tulsi Pharmaceuticals Ltd. would be Tk. 218.05.


22/25

Discounted Cash flow Method:

Tulsi Pharmas WACC was determined to be 9.18% using the following assumptions:

CAPM used to calculate cost of equity using beta of 6, risk-free rate of 8% (1 year T-

bond), and market risk premium of 12.65%. Cost of equity: )(RFmRF

RRR +=

=0.08+(.1265-.08)*.06

=0.08

Adjusted Weighted Average Cost of Capital:

Calculation of Adjusted WACC

Capital Book Value Cost of Capital Weight WACC

Debt 242 0.12 0.71 0.057

Equity 600 0.08 0.29 0.0348

Total 31520 1.0000 0.0918

G= ROE*Retention Rate

= 0.117*0.56=0.066


23/25

Actual30-Jun-

1030-Jun-

1130-Jun-

1230-Jun-

13

Net Sales 95.97 0.56 148.32 231.38 360.95Less: Cost ofsales 16.47 0.17 25.21 39.33 61.36

Gross Profit 78.59 123.11 132.05 299.59less: TotalExpenses 16.45 0.18 26.63 41.65 53.93

EBT 62.63 96.42 150.4 245.66

Tax (.40)2485.00

% 38.57 60.16 98.264

EAT 37.28 57.85 90.24 147.396

0therdata:

Add: Net interestafter tax 6.63 0.15 7.62 8.763 10.07Unlevered NetIncome 43.91 65.47 99.003 157.466Change indeferred Tax -0.084 0.0122 0.015 0.0183

NOPLAT 43.826 65.4822 99.018157.484

3

add: Depreciation 5.17 7.65 11.32 16.76

Less: change inNWC 16.25 11.31 -12.61 4.22

Free Cash Flow 32.746 61.8222 97.728170.024

3

Discounted Cash flow=169.51 crore

Terminal value 2013=170.0243(1.066) / (0.0918-0.066)

=181.25/0.0258

=7025.19 crore

Terminal value2010= 7025.19/1.0918^4=4944.08 crore


24/25

Firm value=169.51+4944.08-512(value of debt)= 4,601.06 crore

Value per share= (4601.06/ 6) crore =766.84

Dividend Discount Model:

Here,

Growth Rate, G= 0.066

Cost of capital, k= 0.0918

Expected DPS=Average EPS of the industry*Average Dividend Payout Ratio

=46.84*0.44=20.24

Value Per Share=D1/K-G=20.24/ (0.0918-0.066) = 784.50

Price to cash flow ratio:

Price/cash flow ratio= Pt/CFt+1CFt

=235.73/5.36*5.025

=230.92

Determining Offer Price:

Methods of determining value per share Amount in Taka

1.Net Asset Value Per Share 54.40

2.Value based on market value multiplier 218.08

3.Discounted Cash Flow method 766.84

4.Dividend Discount Model 784.50

5.Value based on Price Cash flow method 230.92

6.Value based on Price Earnings Per Share 194.160

Average value per share 374.82


25/25

We recommend an offer price of 100.00 taka with the lot of 20 shares.

Investment banking operation

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