Summary

• Page properties (1 modified, 0 added, 0 removed)

Details

Page properties

Content

...	...	@@ -129,8 +129,55 @@
129	129
130	130	= Industry Analysis =
131	131
132		-The paint industry in Bangladesh has about 45 players with a market size of Tk 3,700 crore as of 2019.{{footnote}}https://www.thedailystar.net/business/news/prospects-paint-industry-1772083{{/footnote}}
	132	+The paint industry in Bangladesh has about 45 players with a market size of Tk 3,700 crore as of 2019.{{footnote}}https://www.thedailystar.net/business/news/prospects-paint-industry-1772083{{/footnote}} The industry is playing a key role in facilitating the rapid urbanisation of the country of 167.8 million people. It is protecting the fixed assets from being rusted and increasing the longevity of them. The paint coatings add longevity to the structures and ensure lesser maintenance costs thus contribute to the economy.
133	133
	134	+In mid-2018, Japanese company Kansai Nerolac entered the Bangladeshi market. During the same time, Berger Paints has entered into three new ventures with leading international companies (vide company overview section). Kansai Nerolac entered the Bangladeshi market by acquiring 55% stake at RAK Paints for Tk 572.6 million. The CEO of the acquiring company commented that they have chosen RAK because it is a good and compliant company in Bangladesh.
134	134
	136	+Among the companies, Berger Paints is the market leader and more than 80% of the country’s paint market is in the hands of foreign brands including Berger, Asian, Roxy, Pailac, Aqua, and Elite. According to Bangladesh Paint Manufacturers Association, Berger Paints leads the market with 48% share, followed by Asian Paints’ 18%, Roxy and Elite’s 7%, Pailac’s 5% and Aqua Paint’s 2%. Other local companies (a total of around 30) hold 13% of the market share. Yet other small companies hold the rest 7% market share.
135	135
	138	+[[image:market share.png||alt="market share of the major industry players" height="348" width="580"]]
	139	+
	140	+Some of the key players in the industry are listed below –
	141	+
	142	+* Ujala Paints Bangladesh
	143	+* Berger Paints Bangladesh
	144	+* RAK Paints (Pvt) Ltd
	145	+* Roxy Paints Ltd
	146	+* Asian Paints (Bangladesh) Ltd
	147	+* Elite Paint & Chemical Industries Ltd.
	148	+* BD Paints Ltd.
	149	+
	150	+According to reports, the industry has virtually doubled in the last 10 years and creating employment opportunity to many in the country. The industry has recorded over 6% growth in the recent times and the industry experts believe that it will gain 7-8% annual growth in the near future. However, other estimations show that the industry is expected to grow by 8 to 10 percent per annum as there is scope for increase in consumption backed by economic growth.
	151	+
	152	+The growth is supported by high concentration in the real estate sector recently in the country. The consumer awareness is increasing about the need for protection of houses and increased urbanisation. The availability of house loans, boom in the shipbuilding industry, and consistent economic growth are the drivers of high growth in the paint industry.
	153	+
	154	+The industry in Bangladesh is hailing towards a greater value creation which is evident from the agreement between Berger Paints and Chugoku Marine Paints Ltd (CMP) of Japan on January 1, 2020 to produce marine and industrial paints. Berger Paints is first of its kind in producing marine paints in Bangladesh. On another development at a later date on 4 December, 2021, the oldest and leading brand in the industry of Bangladesh Elite Paint and Chemical Industries Ltd joined hands with Transocean Coatings to manufacture internationally certified high performance industrial and marine coatings in Bangladesh.
	155	+
	156	+Thus, different players of the industry are entering into agreements with different companies to introduce newer product lines, updated technologies, and efficient operational procedures. A boom in the real estate sector is happening in Bangladesh. This paves a solid road for this industry to reach its peak.
	157	+
	158	+= Business Overview =
	159	+
	160	+The financial year of the company ends on 31 March of the year. The company has generated a revenue of Tk 1,666.98 crores for the year 2020-2021, which was Tk 1,621.90 crore (a 2.78% increase year-on-year). It is notable that in Bangladesh, the pandemic made its way on March, 2020. Despite the lockdowns and strict measures from the government to curb the infectious disease, the company maintained a sales growth, whereas many other companies experienced a dip in sales.
	161	+
	162	+Gross profit of the company during FY21 has been Tk 663 crore, while it was Tk 624 crore during the previous year. The company has experienced a gross profit growth of 6.25% in the financial year 2021 (April to March). However, net profit of the company for the year has been Tk 254 crore which was Tk 229 crore, a growth of 10.92%. The results are an outcome of the cost control since it is evident from the figures that the company has incurred total expense of 18.6% in 2020-21 of total sales which was 19.6% in the previous year.
	163	+
	164	+[[image:Revenue and gross profit .png||alt="revenue and gross profit growth" height="342" width="590"]]
	165	+
	166	+In the previous 5 years, the company has persistently maintained a positive growth of revenue and gross profit. In the most recent year, finance cost has increased significantly compared to that of the previous year. The company has incurred a cost of Tk 30 lakhs in the year 2019-20 but incurred a finance cost of Tk 364 lakhs in 2020-21. The reasons are unexplained since the company has not borrowed long-term fund from anywhere except for some lease obligations. The notes of the company to the finance cost head in the income statement does not provide any detail.
	167	+
	168	+Earnings per share (EPS) of the company is Tk 54.96 in FY21 which was Tk 49.43 in the previous year. The company had a balance of retained earnings of Tk 824.43 crore on 01 April, 2020. During the year it has distributed cash dividend of Tk 136.81 crore and newly added profit after tax to the retained earnings is Tk 254.88 crore. Thus, total equity of the company stands, along with the share capital of Tk 46.38 crore, at Tk 942.69 crore. Closing balance of net cash and cash equivalents stands at Tk 409.99 crore during FY21 which was Tk 337.31 crore in the previous year. Here it is mentionable that the company has distributed cash dividend of Tk 115.94 crore in the year 2020-19, which is less than that of the current year. Again, it has not generated any positive cash flow from financing activities. It could have been concluded that the improved cash position is purely from operational efficiency of the company. But a closer inspection shows that cash flow from operation has in fact declined from Tk 360 crore to Tk 332 crore. But the improved cash position is a result of carried forward balance of the previous year. The opening balance of cash flows for the company was Tk 337.31 crore compared to the opening balance of the previous year which was Tk 229 crore.
	169	+
	170	+The company has increased its investment in property, plant and equipment during this year. Total non-current assets have also increased by about Tk 83 crore. The company has started a term deposit of Tk 10 crore during FY21. Total current assets of the company have also increased by Tk 174 crore. Size of the company in terms of total assets is Tk 1,530 in 2020-21. Total non-current liabilities of the company have decreased from Tk 73.78 crore to Tk 67.89 crore. But total current liabilities of the company have increased from Tk 348 crore to Tk 473 crore. It is notable that the working capital of the company is high. The long-term assets as well as long-term liabilities of the company is way lower than the current assets and current liabilities.
	171	+
	172	+Current ratio of the company during FY21 is 2, which was 2.22 in the previous year. It can be loosely argued that the company has used more cash in investment; that is, the profitability of the company will increase as it has reduced its current ratio. Is it arguably true that the company may fall in a liquidity crisis? The answer is ‘no’ because the current ratio is well above 1. However, it is also true that the company has increased its investment as it is evident from the cash flow statement that net cash used in investing activities increased from Tk 90.48 crore to Tk 115.83 crore. The company has net asset value (NAV) per share is Tk 213.26, which was Tk 187.77 a year earlier.
	173	+
	174	+Authorized capital of Berger Paints is Tk 1,000 million. Paid-up capital is Tk 463.78 million and face value per share is Tk 10. Total number of outstanding securities is 46,377,880. Latest P/E ratio based on audited financial statements of the company on March 24, 2022 is 30.23. The share of the company is trading at Tk 1,766 on March 24, 2022.
	175	+
	176	+= Recent developments =
	177	+
	178	+* Bangladesh Economic Zone Authority (BEZA) has allotted an industrial plot at Mirsarai & Feni Economic Zones to Berger Paints Bangladesh Ltd. The company has taken possession of the plot. This land will help the company optimize manufacturing process and support the growing demand for paints in Bangladesh market.
	179	+* Berger Paints has signed an agreement with Amin Mohammad Constructions Ltd (AMCL) to provide all kinds of paints and construction chemical-related solution to the Airport Extension Project.
	180	+* Berger Pains has become the most loved brand in Bangladesh 11^^th^^ times in a row.
	181	+
	182	+
136	136	{{putFootnotes/}}