Financial report on Keya Cosmetics Ltd.

& Kohinoor Chemicals Company (Bangladesh) Ltd

FIN440: Corporate Finance

Section: 07

Report on:
Keya Cosmetics Ltd.
Kohinoor Chemicals Company (Bangladesh) Ltd.

Submitted to:

Mr. Mohammad Sarwar Jahan Rekabder [MRE]

Lecturer
Department of Accounting and Finance, SBE-NSU

Submitted By:

Sheikh Shahrukh Hossain-1611276030

Sharaban Sakin Oni-1430794630
Raian Ahmed-1320427030
Date of submission: 12th September, 2018

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Financial report on Keya Cosmetics Ltd. & Kohinoor Chemicals Company (Bangladesh) Ltd

Letter of Transmittal

12th September, 2018

To,

Mr. Mohammad Sarwar Jahan Rekabder

Lecturer, Department of Accounting & Finance

School of Business and Economics, North South University

Subject: Submission of financial report on Keya Cosmetics Ltd. & Kohinoor Chemicals
Company (Bangladesh) Ltd.

Dear Sir,
It is a great pleasure and privilege for us to present you the report. The Analysis of financial
ratios, pro-forma statements, WACC for the two companies was assigned to us as a requirement
of the course completion of FIN440.
Throughout the assignment we had to research a lot which helped us to gain an in-depth
knowledge on the analyzing of financial ratios, pro forma statements, WACC etc. We have tried
our best to accommodate as much as information and facts as possible following the guidelines
you have provided for us. We have tried to make this report as relevant as we could.
We are grateful to you for your kind cooperation at every step of our journey in making this
report. We hope you find this report useful and find our hard work and dedication while
evaluating the report.

Sincerely,

Sheikh Shahrukh Hossain-1611276030

Sharaban Sakin Oni-1430794630

Raian Ahmed-1320427030

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Financial report on Keya Cosmetics Ltd. & Kohinoor Chemicals Company (Bangladesh) Ltd

Table of Contents

Introduction and Background:

Kohinoor Chemicals Company (Bangladesh) Ltd. ............................................... 4

Keya Cosmetics Ltd. ................................................................................................ 5

Financial Statement Analysis with Ratios and DuPont Identity:

Ratio Analysis ........................................................................................................... 6

DuPont Identity Analysis ...................................................................................... 17

Forecasting .............................................................................................................. 18

Calculation of returns and WACC....................................................................... 24

Company Valuation ............................................................................................... 28

Conclusion............................................................................................................... 30

Appendix ................................................................................................................. 31

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Financial report on Keya Cosmetics Ltd. & Kohinoor Chemicals Company (Bangladesh) Ltd

Kohinoor Chemicals Company (Bangladesh) Ltd.

Introduction: Kohinoor Chemicals Cosmetics Limited (KCCL) was established in 1956. The
management of KCCL completed an arduous BMRE program with the technical collaboration of
a reputed industrial conglomerate of Europe. It is a Public Limited Company, listed with both the
bourses of Bangladesh, DSE and CSE.

Most of the products of KCCL are known by the legendary brand, named Tibet. A number of its
other brands, such as Sandalina, Bactrol, Ice Cool, Heel Guard, and Clean Master are equally
famous in Bangladesh.

To strengthening the marketing activities of KCCL, the management has re-arranged its
distribution system to deliver quality products throughout the country, as well as looking for
regional and overseas markets.

Kohinoor Chemicals Cosmetics Limited has not only emerged as a potential industrial entity, but
also represents the brand of the mass people.

Objectives: KCCL popularly known by its beauty products under the brand “Tibet”. KCCL
always care about their customers and always are determined to count extra mileage to meet their
daily needs. And it is always trying to explore beyond the boundaries of possibilities.

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Financial report on Keya Cosmetics Ltd. & Kohinoor Chemicals Company (Bangladesh) Ltd

Keya Cosmetics Ltd.

Introduction: Keya Group (KG) is one of the renowned conglomerates in Bangladesh. Boasting
3 spinning mills, KG holds a leading position in the manufacturing and exporting of knitted
garments. At present, KG operates 6 industries and employs more than 10000 people. For more
than 20 years KG has proudly made its presence felt, both in Bangladesh and abroad in countries
like Europe, Australia, China, USA and other countries in the Southeast Asian region.

In 1983, Mr. Abdul Khaleque Pathan, a visionary in the business realm of Bangladesh, formed a
small company called Khaleque & Co. Clearly a farsighted entrepreneur, Mr. Pathan took
Khaleque & Co. from its humble beginnings with Keya Super Beauty soap and built it up into
what is today known as the Keya Group of Industries. KG currently runs 9 industrial units over
acres of land. A true patriot, Mr. Pathan wanted to contribute toward the development of the
industrial, medical, educational, sports, social welfare and other sectors of Bangladesh. His
philanthropy and sincere dedication to this mission has helped Keya Group to build the private
sector and boost the country’s economic and industrial development.

Objective: Keya Cosmetics Limited always inspires and encourages the youths to become future
leaders. With such aim in mind, Keya arranges talent searching program – Talent Takeoff. Since
2015, Keya arranges this program in universities throughout the country in search of New Talent.
Keya Cosmetics Limited manufactures and sells cosmetic and toiletry products in Bangladesh. It
operates in four divisions: Cosmetics, Knit Composite, Spinning, and Cotton. The company
offers beauty, laundry, and ball soaps; coconut oils, shaving creams, prickly heat and body cooler
powders, natural care shampoos, tooth pastes, petroleum jellies, lip gels, glycerin, pomade
products, etc.; and detergent powders and soap noodles. It also provides readymade garments,
such as T-shirts, shirts, sweat shirts, tank top/vests, and various knitted garments for men, ladies,
and kids; and cotton yarns and yarn rotors. The company also exports its products to India,
Bhutan, Qatar, West Africa, North Korea, the Kingdom of Saudi Arabia, Belgium, Germany,
Spain, France, Italy, the United Kingdom, the United States, and Europe. Keya Cosmetics
Limited was founded in 1996 and is based in Dhaka, Bangladesh.

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Financial report on Keya Cosmetics Ltd. & Kohinoor Chemicals Company (Bangladesh) Ltd

Financial Statement Analysis with Ratios and Du Pont Identity

❖ Gross Profit Margin:

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

Keya 0.230821759 0.247041419 0.1898257 0.261955 0.28683644
Cosmetics
Ltd
Kohinoor 0.173089417 0.179453099 0.179763687 0.179544758 0.179416567
Chemicals
Company

Interpretation:

In 2012 Keya had 0.23 gross profit margins. In 2013 to 2016 Gross Profit margin was increased.
It had 0.29 gross profit margins which indicate the efficiency of the company. So, in 2016 it can
make 0.29 profits after paying off its COGS. On the other hand, Kohinoor experienced a lower
gross profit margin in 2012 and onwards. So, the overall performance shows us Keya Cosmetics
Ltd is in a better position than Kohinoor.

❖ Quick Ratio:

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

Keya 3.463323358 3.515907879 1.948655339 2.512718886 2.107022204
Cosmetics
Ltd
Kohinoor 0.36792207 0.421942308 0.645592801 0.663206059 1.211426448
Chemicals
Company

Interpretation:

Here we can see that, Keya Cosmetics Ltd had experienced an increase in 2013 due to an
increase in current assets. They have good flow of liquidity to cover each taka of current

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Financial report on Keya Cosmetics Ltd. & Kohinoor Chemicals Company (Bangladesh) Ltd

liabilities. In 2014 quick ratio declined due to an increase in current liabilities. But in 2015 again
it increased and in 2016 again it declined. On the other hand, Kohinoor Chemicals Company had
experienced an increase in 2013 comparing in 2012. And in 2014-2016 there is a significant
increase of Quick ratio. Most especially in 2016 it has higher quick ratio comparing the previous
years. It indicates us that this company has a good flow of liquidity to cover its current liabilities.
So, it could be said that Keya Cosmetics Ltd is better than Kohinoor Chemicals Company.

❖ Average Inventory Turnover Ratio:

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

Keya 1.971805249 0.996381261 0.834455014 0.814045386
Cosmetics
Ltd
Kohinoor 2.584510867 2.572184282 3.281336191 4.471750645
Chemicals
Company
Interpretation:

The Inventory Turnover of Keya Cosmetics Ltd. in 2013 is 1.97 which is higher and a higher
inventory turnover indicates a good inventory management. But in 2014 to 2016 it was lower
which indicates not good inventory management. On the other hand, Kohinoor Chemicals
Company is in a good position. The inventory turnover ratio of KCCL has drastically risen to
3.28 in 2015 and 2016. This drastic rise might cause the rise of COGS. So the overall
performance of Kohinoor Chemicals Company was superior to that of Keya Cosmetics Ltd.

❖ Net Profit Margin:

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

Keya 0.090031981 0.102195809 0.030364569 0.143038335 0.160959218
Cosmetic Ltd
Kohinoor 0.03425114 0.036211342 0.034422607 0.039815927 0.043261887
Chemicals
Company

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Financial report on Keya Cosmetics Ltd. & Kohinoor Chemicals Company (Bangladesh) Ltd

Interpretation:

In 2012 Keya generates 09 paisa in profit for every taka in sales. In 2013 and onwards it
generates 10, 03, 14, 16 paisa simultaneously. It could be said that the profit margin in 2016
shows better performance than the previous years. On the other hand, Kohinoor generates 03
paisa in 2012 which very low. In the year of 2013, 2014 and onwards the performance of
Kohinoor is not so much satisfied. Therefore, the overall performance of profit margin
throughout these 5 years shows better in Keya Cosmetics Ltd than in Kohinoor Chemicals
Company.

❖ Current Ratio:

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

Keya 5.002546583 5.046102113 3.485516227 4.238602245 3.526008035
Cosmetics
Ltd
Kohinoor 1.15742624 1.274931781 1.412901653 1.499436555 2.001850984
Chemicals

Interpretation:

We can see here the Current Ratio of Keya Cosmetics Ltd from 2012- 2016 is more than 1,
which indicates they have more than 1 taka of current assets for every 1 taka current liabilities
and they also have enough liquidity to run their short term activities. On the other hand, the
current ratio of Kohinoor is not so much satisfied. Though it has experienced an increase of
current ratio in 2013 to 2016, its lower than the ratio of Keya Cosmetics Ltd. So the liquidity
performance of Keya Cosmetics Ltd is better than Kohinoor Chemicals Company.

❖ Accounts Receivable Turnover:

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

Keya
Cosmetics 2.854512614 0.661512433 0.765191267 1.055873532
Ltd

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Financial report on Keya Cosmetics Ltd. & Kohinoor Chemicals Company (Bangladesh) Ltd

Kohinoor 329.4059575 356.7102996 341.7742073 632.4340322

Chemicals
Company

Interpretation:

Accounts receivables turnover ratio of Keya Cosmetics Ltd was more or less stable from 2013 to
2016 which was 2.85 to 1.05. Most specifically it has a lower receivables turnover ratio. But on
the other hand, accounts Receivables turnover of Kohinoor has drastically raised to 632.43 in
2016 from 329.40 in 2013. It indicates Kohinoor was superior to that of Keya. It can collect its
debt more efficiently than Keya Cos.

❖ Debt to Equity Ratio:

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

Keya 0.199901823 0.175956321 1.321239046 1.195459387 1.231543834
Cosmetics
Ltd
Kohinoor 11.83899094 6.35985153 4.040914991 3.092171105 1.762827419
Chemicals
Company

Interpretation:

For every 1 taka Keya has 0.19 debts. In the year 2013 it decreased to 0.17 and the same thing
happened in the 2014 to 2016. So it has lower debt which is good for the company. On the other
hand, Kohinoor experienced a higher debt and equity ratio which is not good for a company. We
can see in 2012 for every 1 taka it had 11.83 debt which is very high. But it was able to decrease
its Debt to Equity ratio in 2013 to 2016 which is better for their company. So, the overall
performance shows us that Keya Cosmetics Ltd is good comparing Kohinoor.

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Financial report on Keya Cosmetics Ltd. & Kohinoor Chemicals Company (Bangladesh) Ltd

❖ Earnings per Share:

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

Keya 1.55 1.51 0.29 1.87 2.01
Cosmetics
Ltd
Kohinoor 14.33 13.2 9.01 11.75 12.04
Chemicals
Company

Interpretation:

The EPS of Keya in 2012 was 1.55 but in 2013 and 2014 it decreased. In 2015 and 2016 it has
experienced an increase of EPS. In 2016 it was 2.01 of EPS which was quite satisfied. On the
other hand, Kohinoor experienced a satisfied amount of EPS. In 2012 it had 14.33 EPS which is
good for their company. Comparatively Kohinoor was performing better as over the time its EPS
increased more than that of Keya.

❖ Accounts Payable Turnover:

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

Keya Cosmetics 35.45914113 35.58139267 50.13249379 84.06254144
Ltd
Kohinoor 4.339970589 4.376752615 5.512798423 6.401556388
Chemicals Ltd

Interpretation: It measures the number days required to pay the creditors during a period. Here
we can see that, the accounts payable turnover of Keya Cosmetics has been increasing very high
every year which means the company couldn’t pay its bills regularly and frequently. On the other
side the accounts payable turnover ratios of Kohinoor have been increased gradually every year
which means the company is paying off suppliers at a faster rate. So in that case it could be said
that Kohinoor chemicals is doing better than Keya Cosmetics.

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❖ Total Asset turnover Ratio:

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

Keya Cosmetics 0.665621328 0.595196056 0.244854434 0.378315346 0.363376243
Ltd
Kohinoor 1.629903252 1.696409063 1.603954941 1.754024137 2.216595157
Chemicals Ltd
Interpretation:

This ratio shows how efficiently a company can use its assets to generate sales. Here we can see
that, the asset turnover ratio of Keya Cosmetics was 0.67 in 2012 but it decreased in 2013 and in
2014 it decreased significantly to 0.24 which means company couldn’t use its assets efficiently.
In 2015 the ratio increased to 0.38 which indicates that, the company improved their efficiency
in managing assets but in 2016 the ratio declined again indicating that the company couldn’t fix
their management and production problem.

On the other hand the asset turnover ratio of Kohinoor was 1.63 and it increased in 2013 to 1.70
which means the company managed its assets efficiently but 2014 it decreased to 1.60 indicating
there were problem in management. The company succeeded to improve the ratio in 2015 and in
2016 the ratio was 2.22 which is really good. It means Kohinoor Chemical is managing its assets
better and efficiently than Keya Cosmetics.

❖ Return on Asset:

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

Keya Cosmetics 0.059927207 0.060826543 0.007434899 0.054113597 0.058488756
Ltd
Kohinoor 0.055826045 0.061429248 0.055212311 0.069838098 0.095894089
Chemicals Ltd

Interpretation: It is a Profitability ratio which indicates the net income produced by total asset
by comparing net income to the average total assets during a period. Here we can see that the
ROA of Keya Cosmetics and Kohinoor Chemicals increased in 2013 which means both company
were efficiently managing their assets so that they can produce greater amount of net income.

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But in 2014 the ratio of both companies decreased indicating the inefficiency of both company in
managing their assets. Again in 2015 the ratio increased and it continued to increase in 2016 as
well but the ratio of Kohinoor Chemicals increased significantly than Keya Cosmetics which
indicates an upward trend in profit in both companies. But we can conclude that Kohinoor
Chemicals is doing better as their ratio is significantly higher.

❖ Return on Equity:

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

Keya Cosmetics 0.071906765 0.071529357 0.017258179 0.118804205 0.130520223
Ltd
Kohinoor 0.716750089 0.452110145 0.278320564 0.285789446 0.264938818
Chemicals Ltd

Interpretation: It measures profitability of a corporation with the money shareholders have

invested. Here we can see that the ROE of Keya Cosmetics was 0.072 in 2012 and it has been
decreased a bit in 2013 but it decreased drastically in 2014 to 0.017 which means the company
couldn’t use its investor’s funds effectively. But in 2015 the ratio increased to 0.12 and in 2016 it
increased again indicating the company is making efficient use of the funds.

On the other hand, the ROE of Kohinoor Chemicals was 0.72 in 2012 and then it decreased
significantly in 2013 to 0.45 and 0.28 in 2014 which means the company failed to manage its
shareholders capital effectively. In 2015 it increased a little bit but unfortunately it again
decreased in 2016.Falling ROE is usually a problem. So it could be concluded that Keya is
performing better compared to Kohinoor in this case.

❖ Equity Multiplier:

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

Keya Cosmetics 1.199901823 1.175956321 2.321239046 2.195459387 2.231543834
Ltd
Kohinoor 12.83899095 7.359851525 5.040914991 4.092171105 2.762827419
Chemicals Ltd

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Interpretation: The equity multiplier is used to measure a company’s financial leverage.

Here we can see that, the equity multiplier of Keya Cosmetics was 1.20 in 2012 and it decreased
in 2013 to 1.18 which means the company was taking less debt to finance its assets. In 2014 it
increased to 2.32 indicating the company was using more debt but in 2015 it decreased to 2.20
and in 2016 it tended to increase again which means the company was still using more debt to
finance its assets purchases.

On the other hand the equity multiplier of Kohinoor Chemical was really high in 2012 to 12.84
which means the company was using huge amount of debt but it has been decreased gradually
every year and in 2016 it was 2.76 which means the company was taking less debt which is
really good. So, in that case Kohinoor Chemicals is doing better than Keya Cosmetics.

❖ Retention Ratio:

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

Keya Cosmetics 4.325890413 4.433712456 2.263877827 1.000000003 1.030933476
Ltd
Kohinoor 0.620512872 1.387411444 2.40438155 2.587867026 2.895556696
Chemicals Ltd

Interpretation: It is the amount of retain earnings relative to earnings. Here we can see that, the
retention ratio of Keya Cosmetics increased in 2013 from 2012 which means the company might
use cash internally so that it can provide a rate of return higher than the cost of capital. However
in 2014 and 2015 the retention ratio decreased indicating a recognition of managers that there
were no further profitable investment opportunities for the company. But in 2016 it increased a
little bit. On the other hand, the retention ratio of Kohinoor Chemicals was very low in 2012 but
it gradually increased every year which indicates the company uses cash internally so that it can
provide a rate of return higher than the cost of capital. However, if management is retaining
money for which there no good use then investors may end up earning a negative return.

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❖ Internal Growth Rate:

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

Keya Cosmetics 0.349962222 0.369276662 0.01711986 0.057209404 0.06416717
Ltd
Kohinoor 0.035883823 0.093168143 0.153071991 0.220601374 0.384402599
Chemicals Ltd

Interpretation: In 2012 the internal growth rate of Keya Cosmetics Ltd was 0.35 and in 2013 it
was 0.36 both them were quite similar. But in 2014 and onwards the internal growth rate was
gradually decreased, which was not a good indication for the company. In 2016 it’s 0.06 which
was very low comparing the previous years. And because of low internal rate the company might
require the extra financing for achieving the highest level of growth of the company. On the
other hand, Kohinoor seems quite good comparing Keya. Though its rate was 0.03 which was
very low but it had experienced an increase. In 20114 and onwards the Internal rate was
increasing in a satisfied way. In 2016 it is 0.38 which is a good sign. So after observing the
overall performance it could be said that Kohinoor is in a better position comparing Keya
Cosmetics.

❖ Sustainable Growth Rate:

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

Keya Cosmetics 0.451506864 0.46443031 0.04065897 0.134821576 0.15547849
Ltd
Kohinoor 0.80099916 1.682855293 2.022872524 2.840025792 3.294524825
Chemicals Ltd

Interpretation: Here we can see that, in 2012 the sustainable growth rate of Keya Cosmetics
was 0.45 and in 2013 it was 0.46 which is quite similar with the rate of 2012. But in 2014 and
onwards the sustainable growth rate was gradually decreased. In 2016 it was 0.15 which was
high comparing the previous years but it’s not so much satisfied. The higher the sustainable
growth rate, it’s better for the company because that company can sustain without the help of

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other financial leverage. On the other hand, Kohinoor is in a good position comparing Keya.
Though in 2012 the rate was 0.80 and its rate was continuously increasing which is a good sign
for company. In 2016 its sustainable growth rate was 3.29 which was quite satisfied. So it could
be concluded that Kohinoor is doing better than Keya.

❖ Debt Ratio:

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

Keya 0.166598483 0.149628279 0.569195598 0.544514462 0.551879741
Cosmetics
Ltd
Kohinoor 0.922112259 0.864127694 0.801623316 0.755630942 0.638051949
Chemicals
Ltd

Interpretation: The higher the debt ratio, the more leveraged a company is, implying greater
financial risk.

In 2012-2013 and in 2013-2014 we can see that the debt ratio of Keya Cosmetics Ltd. is 16.6%
and 15% respectively, which are low. But in the last 3 years we can see the debt ratio drastically
increased to 56%, 54% and 55% respectively meaning the company had more debt in the last
three years than the previous two years.

On the other hand we can see that the debt ratio of debt ratio of Kohinoor was too high in 2012
and it kept decreasing for the next years. Although in 2016-2017 the debt ratio decreased to
63.8% it is still higher than the debt ratio of Keya Cosmetics Ltd in that year.

Therefore, it can be said that Kohinoor Chemicals Ltd is at high risk and it may not be able to
generate enough cash to satisfy its debt obligation. However, Keya Cosmetic Ltd having a low
debt ratio might also mean that they are not taking advantage of the increased profit that financial
leverage is bringing.

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❖ Price Earnings Ratio:

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

Keya Cosmetics 6.516129032 6.688741722 34.82758621 5.401069519 5.024875622
Ltd
Kohinoor 26.82484299 29.12121212 42.66370699 32.71489362 31.9269103
Chemicals Ltd

Interpretation: Generally, a high P/E ratio means that investors are anticipating higher growth
in the future. We can see that the PE ratio of Keya Cosmetics Ltd in the year 2012-2013 and
2013-2014 was almost the same. But in the year 2014-2015 we can see the P/E ratio of Keya
Cosmetics Ltd. Increased to 34.83 and in the year 2015-2016 it again dropped significantly to
5.40 and in 2016-2017 it decreased more to 5.02.

On the other hand, the P/E ratio of Kohinoor Chemicals Ltd. In the first two year was 26.82 and
29.12 respectively. On the year 2014-2015 the P/E ratio of Kohinoor Chemicals Ltd also
increased a lot and then it falls in the last two years. But the P/E ratio is still way more compared
to Keya Cosmetics Ltd. Meaning that the investors will be expecting higher earnings from
Kohinoor Chemicals Ltd. And having such low P/E ratio we can say that Keya Cosmetics Ltd. It
is currently undervalued.

❖ Market-Book Ratio:

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

Keya Cosmetics 0.468895079 0.478899953 0.605878824 0.640456563 0.657124268
Ltd
Kohinoor 19.22961481 13.16889346 11.88253478 9.352798054 8.455785306
Chemicals Ltd

Interpretation: Market to Book ratio seeks to evaluate whether the stock of a company is
overvalued or undervalued.

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We can see that the Market to Book Ratio kept on increasing each year for Keya Cosmetics Ltd
meaning that the price of the stock is increasing. But from 2012-2016 we can see that the M/B
ratio is below 1 although it kept increasing per year.

On the other hand the ratio kept decreasing each year for Kohinoor Chemicals Ltd. But the ratio
is above 1 meaning that the stock price is overvalued for the company.

Therefore we can say that investors are willing to pay for the stocks of Kohinoor Chemicals Ltd
and are willing to pay less for Keya Cosmetics Ltd.’s stock.

DuPont Identity Analysis

2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Keya Cosmetics 0.071906765 0.071529357 0.017258179 0.118804205 0.130520223
Ltd
Kohinoor 0.716750089 0.452110145 0.278320564 0.285789446 0.264938818
Chemicals Ltd

Interpretation: To calculate DuPont we need three things. They are Profit Margin, Total Asset
Turnover and Equity Multiplier. By using this formula (Net Income/ Sales * Sales/ Total assets *
Total Assets/ Total Equity) we can get DuPont equation.

From previous analysis we found that the profit margin of Keya was better than Kohinoor. It
could generate more comparing Kohinoor. If we focus on Total Assets Turnover ratio, there we
can see that Kohinoor has a better efficiency than Keya. It can manage its assets in a better way
than Keya Cosmetics. Last but not the least, if we concentrate on Equity Multiplier we can see
that the equity multiplier of Kohinoor decreased gradually which means it was taking less debt
which very good for a company. So in this case Kohinoor is in a Better position comparing
Keya.

Now it is time to focus our DuPont analysis, we can see that in 2012 Keya had 0.07 and we
found that the operating efficiency and the efficiency of the use of assets is better than Kohinoor
But the financial leverage of Keya is not satisfied comparing Kohinoor. In this case Kohinoor is
in a better position. Though Kohinoor’s operating efficiency and the use of assets efficiency is

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not satisfied comparing Keya but it has a low equity multiplier which is obviously a good sign
for a company. So to make a decision on the basis of DuPont equation a company must be
analysis these three things. Thus, we can conclude that overall Kohinoor is performing much
better in terms of solvency, liquidity, growth, and profit generation than Keya.

Forecasting

Keya Cosmetics Ltd. Pro-Forma Statements

Pro Forma Income Statement

2018 2019 2020 2021 2022
1269267499 1559500508 1774140291 1978129967 2238283256
Turnover 2 3 1 5 6
1112178934 1265252206 1410730210 1596262056
Cost of goods sold 9051953286 6 3 1 0
Gross profit 3640721706 4473215737 5088880848 5673997574 6420212006
Operating expenses 425071724 522269395.6 594151250.8 662466435.3 749590549.9
Selling and distribution expenses 222742818.5 273675595.4 311342572.8 347140570.8 392794679.9
Administrative expenses 202328905.6 248593800.2 282808678 315325864.5 356795870
Profit from operations 850143448.1 1044538791 1188302502 1324932871 1499181100
Other income 159211869 159211869 159211869 159211869 159211869
Financial expenses 884832907 884832907 884832907 884832907 884832907

Net profit before WPPF 124522410.1 318917753.3 462681463.6 599311832.6 773560061.9

Allocation for WPPF 111852804.5 137429269.7 156344164.9 174320531.1 197246254
Net profit before tax 12669605.53 181488483.5 306337298.7 424991301.5 576313807.9
Provision for income tax 3484141.522 49909332.97 84242757.13 116872607.9 158486297.2
Provision for deferred income
tax 1789395 1789395 1789395 1789395 1789395
Profit/(loss) brought forward
Net profit after tax 7396069.012 129789755.6 220305146.5 306329298.6 416038115.7
Profit for the year 7396069.012 129789755.6 220305146.5 306329298.6 416038115.7
Earnings Per Share 0.007380521 0.129516908 0.219842014 0.305685324 0.415163508
EBIT 1009355317 1203750660 1347514371 1484144740 1658392969

Projected Pro Forma Balance sheet

2018 2019 2020 2021 2022
474565144
Non Current Assets 5 5830800715 6633315233 7396010175 8368694683
455927675
Property, Plant and Equipment 5 5601809250 6372806832 7105548661 8040033193
Investment in Subsidiary 186374689. 228991464.7 260508401 290461513.9 328661490.4

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9
Other Investment
Deferred Expenses
301841911 3708616310 4219046794 4704150477 5322815701
Current Assets: 83 1 1 4 4
121471474 1492473625 1697888252 1893110511 2142082487
Inventories 77 7 5 3 0
121582734 1493840635 1699443409 1894844479 2144044497
Trade Debtors & Other Receivables 85 9 3 1 2
Advance, Deposits and 195678281
Prepayments 3 2404224321 2735126544 3049609892 3450678607
748339617.
Goods in Transit 9 919456312.6 1046004462 1166273481 1319655658
55438093.8
Cash and Cash equivalents 4 68114668.96 77489541.03 86399245.9 97762022.04
716969614.
Others Receivable 6 880913187.4 1002156505 1117383909 1264336387
240124008
Inter-company receivables 2 2950311995 3356374271 3742288342 4234454497
349298426 4291696381 4882378317 5443751495 6159685169
Total Assets 29 5 4 0 7
111143306 1124051039 1133382574 1142251092 1153561341
Shareholders' Equity 46 5 2 0 2
835088883
Share Capital 0 8350888830 8350888830 8350888830 8350888830
Share Premium 4615642 4615642 4615642 4615642 4615642
Tax Holiday Reserve 45744731 45744731 45744731 45744731 45744731
Revaluation Reserve 468576 468576 468576 468576 468576
270498801
Capital Reserve 2 2704988012 2704988012 2704988012 2704988012
7624855.13
Retained Earnings 7 133804603.9 227119950.5 315805128.6 428907620.8
878646409
Non-Current Liabilities 6 8786464096 8786464096 8786464096 8786464096
859851323
Long term loans secured 2 8598513232 8598513232 8598513232 8598513232

Deferred tax liability 187950864 187950864 187950864 187950864 187950864

714301867
Current Liabilities 1 7171462265 7192497524 7212489045 7237984747
124391530.
Creditors for goods 5 152835123.5 173870382.9 193861904.1 219357606
634452076
Bank Overdraft 2 6344520762 6344520762 6344520762 6344520762
Unclaimed Dividend 7936784 7936784 7936784 7936784 7936784
Provision for employee benefit 49902332 49902332 49902332 49902332 49902332
Income Tax Payable 466599966 466599966 466599966 466599966 466599966
Liabilities for other finance
Interest payable 101987451 101987451 101987451 101987451 101987451

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Others Liabilities 47679846 47679846 47679846 47679846 47679846

Total Liabilities & Shareholder’s 270438134 2719843675 2731278736 2742146406 2756006225
Equity 14 5 1 1 5

78860292 157185270 215109958 270160508 340367894

EFN 15 60 12 89 42

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Final Pro Forma Balance sheet

2018 2019 2020 2021 2022
Non Current Assets 4745651445 5830800715 6633315233 7396010175 8368694683
Property, Plant and Equipment 4559276755 5601809250 6372806832 7105548661 8040033193
186374689. 228991464. 290461513. 328661490.
Investment in Subsidiary 9 7 260508401 9 4
Other Investment
Deferred Expenses
3018419118 3708616310 4219046794 4704150477 5322815701
Current Assets: 3 1 1 4 4
1214714747 1492473625 1697888252 1893110511 2142082487
Inventories 7 7 5 3 0
1215827348 1493840635 1699443409 1894844479 2144044497
Trade Debtors & Other Receivables 5 9 3 1 2
Advance, Deposits and Prepayments 1956782813 2404224321 2735126544 3049609892 3450678607
748339617. 919456312.
Goods in Transit 9 6 1046004462 1166273481 1319655658
55438093.8 68114668.9 77489541.0 97762022.0
Cash and Cash equivalents 4 6 3 86399245.9 4
716969614. 880913187.
Others Receivable 6 4 1002156505 1117383909 1264336387
Inter-company receivables 2401240082 2950311995 3356374271 3742288342 4234454497
3492984262 4291696381 4882378317 5443751495 6159685169
Total Assets 9 5 4 0 7
1111433064 1124051039 1133382574 1142251092 1153561341
Shareholders' Equity 6 5 2 0 2
Share Capital 8350888830 8350888830 8350888830 8350888830 8350888830
Share Premium 4615642 4615642 4615642 4615642 4615642
Tax Holiday Reserve 45744731 45744731 45744731 45744731 45744731
Revaluation Reserve 468576 468576 468576 468576 468576
Capital Reserve 2704988012 2704988012 2704988012 2704988012 2704988012
7624855.13 133804603. 227119950. 315805128. 428907620.
Retained Earnings 7 9 5 6 8
1068632297 1164529249 1235449166 1302850143 1388808344
Non Current Liabilities 4 5 6 1 6
1049837211 1145734163 1216654080 1284055056 1370013258
Required Long term loans secured 0 1 2 7 2

Deferred tax liability 187950864 187950864 187950864 187950864 187950864

1312918900 2003116092 2513546576 2998650259 3617315483
Current Liabilities 8 6 6 9 9
124391530. 152835123. 173870382. 193861904.
Creditors for goods 5 5 9 1 219357606
1233069109 1920421942 2428748900 2911853431 3527969085
Required Bank Overdraft 9 3 4 6 4
Unclaimed Dividend 7936784 7936784 7936784 7936784 7936784
Provision for employee benefit 49902332 49902332 49902332 49902332 49902332
Income Tax Payable 466599966 466599966 466599966 466599966 466599966

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Liabilities for other finance

Interest payable 101987451 101987451 101987451 101987451 101987451
Others Liabilities 47679846 47679846 47679846 47679846 47679846
Total Liabilities & Shareholder’s 3492984262 4291696381 4882378317 5443751495 6159685169
Equity 9 5 4 0 7

EFN 0 0 0 0 0

Kohinoor Chemicals Company (Bangladesh) Ltd. Pro-Forma Statements

Pro Forma Income Statement

2018 2019 2020 2021 2022
Turnover 3360378301 3534110840 0.081949686 0.035715969 0.033663006
Cost of goods sold 2757470761 2900032804 3137689583 3249755206 3359151733
Gross profit 602907539.8 634078035.6 -3137689583 -3249755206 -3359151733
Operating expenses 396376006.7 416868762 451031026.3 467140036.3 482865374
Selling and distribution expenses 342023199.7 359705899 389183684.6 403083756.8 416652767.6
Administrative expenses 54352807.07 57162863.07 61847341.77 64056279.48 66212606.37
Profit from operations 792752013.5 833737524.1 902062052.7 934280072.6 965730747.9
Other income 7851077 7851077 7851077 7851077 7851077
Financial expenses 7759766 7759766 7759766 7759766 7759766
Written off expenses 2381466 2381466 2381466 2381466 2381466
Net profit before WPPF 790461858.5 831447369.1 899771897.7 931989917.6 963440592.9
Allocation for WPPF 9726834.545 10229714.73 11068036.65 11463342.29 11849232.85
Net profit before tax 780735023.9 821217654.3 888703861.1 920526575.3 951591360.1
Provision for income tax 214702131.6 225834854.9 244393561.8 253144808.2 261687624
Provision for deferred income tax 932223 932223 932223 932223 932223
Profit/(loss) brought forward
Net profit after tax 565100669.4 594450576.4 643378076.3 666449544.1 688971513.1
Profit for the year 565100669.4 594450576.4 643378076.3 666449544.1 688971513.1
Earnings Per Share 40.31933427 42.41341905 45.90434435 47.55046915 49.15738778
EBIT 1357852683 1428188100 1545440129 1600729617 1654702261

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Projected and Final Balance sheet

2018 2019 2020 2021 2022
Non-Current Assets 316900017.7 333283841.1 360596347.4 373475395.2 386047699.5
Property, Plant and Equipment 309824693.6 325842720.7 352545429.5 365136931 377428537.5
Intangible asset
Other Investment 7075324.07 7441120.39 8050917.873 8338464.202 8619161.969
Deferred Expenses
Current Assets: 1199109024 1261103311 1364450332 1413182997 1460754984
Inventories 473464409.7 497942657.9 538748902.5 557990841.4 576774490.2
Trade Debtors & Other Receivables 2146066.096 2257018.34 2441980.285 2529197.976 2614338.381
Advance, Deposits and
Prepayments 312920191.5 329098256.7 356067755.7 368785060.4 381199474
Term and Fixed Deposit receive 28402854.77 29871290.66 32319233.56 33473546.29 34600366.46
Cash and Cash equivalents 232206681.2 244211834.5 264224917.7 273661966.6 282874250.9
Investment in marketable
securities 146115835.6 153670066.9 166263280.7 172201534.8 177998356.1
Inter-company receivables 3852985.552 4052186.03 4384261.404 4540849.547 4693708.19
Total Assets 1516009042 1594387152 1725046679 1786658392 1846802684
Shareholders' Equity 1765299632 1850283952 1991956302 2058761045 2123974683
Share Capital 121875000 121875000 121875000 121875000 121875000
Share Premium
Tax Holiday Reserve
Revaluation Reserve 7143605 7143605 7143605 7143605 7143605
Capital Reserve
Retained Earnings 1636281027 1721265347 1862937697 1929742440 1994956078
Non-Current Liabilities 371887996 371887996 371887996 371887996 371887996
Long term loans secured 326089784 326089784 326089784 326089784 326089784
Liability for gratuity & WPPF 16780235 16780235 16780235 16780235 16780235
Deferred tax liability 29017977 29017977 29017977 29017977 29017977
Current Liabilities 600934887.3 621657795.6 656203734.4 672493663.7 688395611.7
Creditors for goods 400827683.3 421550591.6 456096530.4 472386459.7 488288407.7
Bank Overdraft
Dividend Payable 13733281 13733281 13733281 13733281 13733281
Provision for employee benefit
Income Tax Payable
Short term borrowing 30888539 30888539 30888539 30888539 30888539
Interest payable
Accrued Expense 155485384 155485384 155485384 155485384 155485384
Total Liabilities & Shareholder’s
Equity 2738122515 2843829744 3020048032 3103142705 3184258291

- - - - -
122211347 124944259 129500135 131648431 133745560
EFN 3 1 3 2 7

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Financial report on Keya Cosmetics Ltd. & Kohinoor Chemicals Company (Bangladesh) Ltd

Forecasting process:

To find out the forecasted sales, we have used the reported sales in Balance Sheet from the year
2013 to 2017 to find the growth rate for the next 5 year. Here the formula used for growth rate,
(Previous year’s sales- current year’s sales)/ Current year’s sales. Using the growth rate, we have
forecasted sales for the year till 2022.

We have calculated the NWC for the year 2016-2017 and kept the NWC & Debt Ratio constant.
Later we have compared the NWC with the Current Asset and Current liabilities. For Keya
Cosmetics, we have planned to use 100% debt finance by banking on the notes payable. The
formula used for Projected Current Liability is, Current Asset- NWC. Notes payable/ Bank
overdraft is kept constant to make sure the NWC remain the same. In addition to that, the
forecasted bank Overdraft is compared with the newly targeted bank overdraft and, as the long-
term debt secured is a non-current liability, so we added the additional bank overdraft with the
long term debt secured.

For each forecasted year, the Current Liability and Shareholder’s equity has increased and the
retained earning has gone upward with respect to the retention ratio. For Kohinoor Chemicals the
EFN is negative as the total liabilities and Stockholders’ equity> Total Assets for the forecasted
year 2018. On the other hand, for Keya Cosmetics the External Financing is positive, thus it
indicates the dependence on debt to attain the expected growth in the forecasted years. The
wealth< Debt making the debt-equity ratio quite high in compare to Kohinoor resulting in high
risk and Decrease in Share Value.

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Calculation of returns and WACC

Risk free rate, Rf(avg 10 years 0.07463243
T-bill ratre)
Rate of Market return, Rm 0.78810209
Market variance, Var(Rm) 21.0139947
Table: Market & T bill rates

Kohinoor Keya
Avg return rate, Ri 2.49929742 Avg return rate, Ri 0.129786485
Covarience -0.8358969 Covarience 24.91827417
Variance 100.500877 Variance 134.6497014
Standard Deviation 10.0250126 Standard deviation 11.6038658
Kohinoor Beta, Bi -0.0397781 Keya Beta, Bi 1.185794254
CAPM, R(e) 0.046252 CAPM, R(e) 0.92066066

Table: CAPM of Kohinoor Chemicals Ltd & Keya Cosmetics Ltd

Kohinoor: WACC for 2016-17 Keya: WACC for 2016-17

Total Debt, D 976736138 Total Debt, D 15805091237
Total Equity, E 554073602 Total Equity, E 12833559638
Total debt and equity, V 1530809740 Total debt and equity, V 28638650875
Weight of Debt, W(d) 0.63805195 Weight of Debt, W(d) 0.551879741
Weight of Equity, W(e) 0.36194805 Weight of Equity, W(e) 0.448120259
Corporate Tax Rate 0.275 Corporate Tax Rate 0.275
Total interest or financial 7759766 Total interest or financial 884832907
expense expense
Cost of Debt, R(d) 0.00794459 Cost of Debt, R(d) 0.055984043
Cost of Equity or CAPM, R(e) 0.04625196 Cost of Equity or CAPM, R(e) 0.920660657
WACC 0.0204159 WACC 0.43496662

Table: WACC of Kohinoor Chemicals Ltd & Keya Cosmetics Ltd

❖ We have collected 5 years monthly historical data of Kohinoor Chemicals

Company Ltd, Keya Cosmetic Ltd and for market price we took the price of
DSEX from www.investing.com.
❖ We have collected the change in price of the DSEX, Kohinoor Chemicals Ltd &
Keya Cosmetics Ltd. And used it to find the return rates and the average return
rates.
❖ For the risk free rate, we used the 10 year Treasury bond monthly rates to find the
average return rate of Bangladesh.

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❖ Beta: Beta plays a vital role in influencing the investment decision. The
systematic risk is associated with the stock is determined by the beta. To calculate
the beta it is needed to know the covariance between the return of the company
and the return of market must be known, as well as the variance of the market
returns.
Here, the negative covariance of Kohinoor Chemicals Company Ltd (-0.8358969) means the
stocks move opposite of each other. And the positive covariance of Keya Cosmetics Ltd
(24.91827417) means the stocks tend to move together when their prices go up and down.

• The formula of calculating beta: Covariance/ variance

➢ Here, the beta of Kohinoor Chemicals Company Ltd is -0.039
➢ The beta of Keya Cosmetics Ltd is 1.186
But the beta of Kohinoor Chemicals Company Ltd. is negative which is, -0.039. A beta less than
0, which would indicate an inverse relation to the market is possible but highly unlikely. But this
thing happens with the beta of Kohinoor Chemicals. It indicates it has tended to do better when
the stock market declines.

If the betas for both companies are compared Keya Cosmetics Ltd has a higher beta than that of
Kohinoor Chemicals Company. So, here the systematic risk is higher. A risk seeking company
wants to invest in Keya Cosmetics Ltd. and the risk adverse investor would like to invest in
Kohinoor Chemicals Company Ltd.

Now we have used the CAPM model: For this reason, we have taken last 5 years monthly
historical data of DSE x index, market price of two companies Keya Cosmetics stock and
Kohinoor Chemicals Ltd. stock from a website which is www.investing.com. From there we
have calculated average, Standard deviation, and variance for Rm, return of Keya Cosmetics Ltd.
(Re) and return of Kohinoor Chemicals Company Ltd. (Re). Then we calculated the Covariance
(Rs, Rm).

We also have taken the T-bill rate from the same website (www.investing.com) and Bangladesh
Bank website. We have taken this as risk free rate for our CAPM model. And then we have used
the CAPM formula, CAPM= Rf + B*(Rm-Rf) to calculate the cost of equity for both companies.

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• CAPM/Cost of Equity = Risk-Free Rate of Return + Beta * (Market Rate of

Return – Risk-free Rate of Return)

Finding value: Type the formula for CAPM in the cell adjacent. Type =O7 + (O8-O7)
*O16 for Kohinoor and press the enter button for CAPM. We have repeated the same
process for Keya. Type =O7+ (O8-O7) *R16 and press the enter button.
➢ CAPM of Kohinoor Chemicals Company Ltd: 0.07463243+ (0.78810209- 0.07463243) *
-0.0397781= 0.046252
➢ CAPM of Keya Cosmetics Ltd: 0.07463243+( 0.78810209- 0.07463243) * 1.185794254=
0.92066066
❖ Calculating WACC:
• We*Re + Wd*Rd(1-Tc)
Here,

Re = cost of equity

Rd = cost of debt

We=Weight of equity

Wd= Weight of debt

Tc= corporate tax rate

For the total equity we took total shareholder’s equity of 2016-2017. For total debt we took the
total current and non-current liabilities of 2016-2017. We have used the total Equity (E) + Debt
(D) and found out the weights of equity and debts.

For calculating cost of debt, we have considered 2016-2017’s debt or total liabilities and
financial expenses or interest expenses for both companies. We also calculated the interest
expenses to total debt ratio which is known as cost of debt for both companies. We could take
the average cost of debt for the last 5 years but it would give us a large cost of debt which is time
consuming.

• For Keya Cosmetics Ltd we have got, Cost of Debt = 5.59%

• And for Kohinoor Chemicals Company Ltd we got, Cost of debt = 0.79%

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For calculating the cost of Equity we have used the CAPM model.

• Cost of equity of Kohinoor Chemicals Company Ltd: 0.04625196

• Cost of equity of Keya Cosmetics Ltd: 0.920660657

The tax rate was given 27.5%.We used it to find after tax-debt.

So,

➢ WACC for Kohinoor Chemicals Company Ltd = (O25*O29) + ((O24*O28) *(1-O26))

(0.36194805 * 0.04625196) + ((0.63805195 *0.00794459) * (1- 0.275)) = 0.0204159

➢ WACC for Keya Cosmetics Ltd= (R25*R29) + ((R24*R28) *(1-R26))

(0.448120259* 0.920660657) + ((0.551879741* 0.055984043) * (1- 0.275)) =0.43496662

High weighted average cost of capital or WACC is a signal of higher risk associated with a
firm's operations. The lower a company's WACC, the cheaper it is for a company to fund new
projects and it also means that the company has lower risk associated with a firm’s operations.
Companies always look for ways to decrease their WACC for better operation.

Here we the WACC of Keya Cosmetics Ltd is higher and the WACC of Kohinoor Chemicals
Company Ltd is lower which means Keya Cosmetics Ltd has higher risk and Kohinoor chemical
has lower risk associated with their operation. So, for better operation Keya Cosmetics Ltd
should find new ways to decrease their WACC through cheaper source of financing. The lower
WACC, the better it is for a company.

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Company Valuation

Keya Cosmetics Limited (KEYACOSMET) Cashflows

2018 2019 2020 2021 2022

EBIT 1009355317 1203750660 1347514371 1484144740 1658392969
263807722. 324130474. 368741742. 411139465. 465210373.
Add: Depreciation* 2 5 2 2 6
277572712. 331031431. 370566451. 408139803. 456058066.
Less: Taxes 2 6 9 4 4
Operating Cash Flow 995590327 1196849703 1345689661 1487144401 1667545276
Ending Net Fixed Assets 4559276755 5601809250 6372806832 7105548661 8040033193
Less: Beginning Net Fixed
Assets 3738108317 4559276755 5601809250 6372806832 7105548661
821168438. 770997581. 732741829. 934484531.
Net Capital Spending 5 1042532495 8 7 2
1705500217 1705500217 1705500217 1705500217 1705500217
Ending NWC 5 5 5 5 5
1772910855 1705500217 1705500217 1705500217 1705500217
Less: Beginning NWC 4 5 5 5 5
Changes in NWC -674106379 0 0 0 0
848528267. 154317208. 574692079. 754402571. 733060744.
Cash Flow from Assets 6 7 1 7 8

Kohinoor Chemicals Limited (KOHINOOR) Cashflows

2018 2019 2020 2021 2022

135785268 142818810 154544012 160072961 165470226
EBIT 3 0 9 7 1
23660293.0 24883537.1 26922735.2 27884306.7 28822976.3
Add: Depreciation* 9 5 2 9 6
373409487. 392751727. 424996035. 440200644. 455043121.
Less: Taxes 8 6 5 6 8
100810348 106031991 114736682 118841327 122848211
Operating Cash Flow 8 0 9 9 6
309824693. 325842720. 352545429. 377428537.
Ending Net Fixed Assets 6 7 5 365136931 5

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Less: Beginning Net Fixed 309824693. 325842720. 352545429.

Assets 312849492 6 7 5 365136931
16018027.1 26702708.7 12591501.4 12291606.5
Net Capital Spending -3024798.4 3 7 9 4
639445515. 708246597. 740689333. 772359372.
Ending NWC 598174137 5 5 4 4
639445515. 708246597. 740689333.
Less: Beginning NWC 605967706 598174137 5 5 4
- 41271378.4 68801082.0 32442735.8 31670039.0
Changes in NWC 7793568.98 4 6 4 8
101892185 100303050 105186303 114337904 118452047
Cash Flow from Assets 6 4 8 2 0

Keya Enterprise Value Kohinoor Enterprise Value

Market
50545473728
Market Capitalization
Capitalization -14147806194

Total Debt 1060283608

Total Debt 15929482767
Minority Interest
Minority Interest 101987451
Cash & Investments 282874250.9
Cash & Investments 97762022.04
Enterprise Value 51322883085
Enterprise Value 1785902002

The proper valuation of the company depends on the present value of all future cash flows. We
have calculated the present value of Cash Flow from Asset (CFFA) for each of the companies
using discounted cash flow method. The WACC is based on the data 2016-2017 and it is based
on the weighted Cost of Capital of the firm.

The formula used to find the total present value of the company is the sum of the all present
value of the cash flow from asset and the present value in 2017, using the constant growth
formula. The total debt used in here is the long- and short-term debt calculated in WACC for the
year 2016-17. Here, the Market Capitalization = share price* number of outstanding shares. To

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calculate the Enterprise Value, we have added Total debt to the Market capitalization and
Minority Interest and later subtracted the Cash and Cash Equivalent from it. The Enterprise value
of Keya is 1785902002 BDT and for Kohinoor, it is 51322883085 BDT.

We have calculated the value of the company using the formula= Present Value of all forecasted
future cash flow + Enterprise value.

The, per share value of Keya is -14.11806425 BDT and for Kohinoor it is 3606.37 BDT.

Conclusion
Investors make investment decision based on several characteristics. The investor using the
ratios would invest in Kohinoor rather than Keya. Kohinoor was able to have better liquidity and
profitability ratios than Keya. Kohinoor has managed to utilize their resources better than Keya.
An investor investing in Kohinoor would have a higher return than investing in Keya. Stocks can
bring gain to an investor in two forms, in form of capital gain when investors gain from the
movement of share prices and from dividend when a company decides to distribute their income
among shareholders. Therefore, investors are also interested in payment of dividend. In case of
dividend, Keya pays significant amount of dividend if compared to Kohinoor. Investors seeking
dividend from their investment would definitely invest in Keya as dividend payment is higher.
The valuation of the company is calculated by adding the future expected cash flows. The stock
of Kohinoor has a lower systematic risk than Keya; Kohinoor has a negative beta. It depends on
the risk taking level of the investor which stock the investor would invest in. The valuation of the
company suggests the existing value determined by the CFFA, where Kohinoor has a higher
valuation. The share prices derived from the valuation of the company shows that they numbers
differs highly between the two companies, and Kohinoor has a much better figure than Keya.

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Financial report on Keya Cosmetics Ltd. & Kohinoor Chemicals Company (Bangladesh) Ltd

Appendix:

Keya Cosmetics Limited (KEYACOSMET)

Balance sheet
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
124628343
Non-Current Assets 794646537 5 4409012785 4176538958 3890915180
123571398
Property, Plant and Equipment 776314589 5 4227217321 3979370530 3738108317
Investment in Subsidiary -- 10569450 181795464 197168428 152806863
Other Investment 10569821 -- -- -- --
Deferred Expenses 7762127 -- -- -- --
341212094 319415455 1841536261 2032153977 2474773569
Current Assets: 0 1 9 9 5
104986844
Inventories 4 968604433 8119844723 8274569142 9959332466
Trade Debtors & Other Receivables 991834353 970051637 7020519791 7586676525 9968454576
Advance, Deposits and Prepayments 546027460 556587395 1132576710 1573991884 1604347904
Goods in Transit 5674463 239192 158632885 454808007 613556645
Cash and Cash equivalents 21020774 20797676 25369020 37728472 45453174
Others Receivable 797695446 3316048 6100000 417923646 587836673
Inter-company receivables -- 674558170 1952319490 1975842103 1968754257
420676747 444043798 2282437540 2449807873 2863865087
Total Assets 7 6 4 7 5
350592639 377602289 1115852057 1283355963
Shareholders' Equity 9 0 9832841405 2 8
162787886 179066674
Share Capital 0 0 5897520370 7077024440 8350888830
Share Premium 741746592 741746592 799946592 4615642 4615642
Tax Holiday Reserve 45744731 45744731 45744731 45744731 45744731
Revaluation Reserve -- 334655 468576 468576 468576
Capital Reserve -- -- 2704988012 2704988012 2704988012
109055621 119753017
Retained Earnings 6 2 384173124 1325679171 1726853847
Non-Current Liabilities 18764284 31420662 7708137964 8545161663 8786464096
Long term loans secured -- -- 7524832919 8359000194 8598513232
Deferred tax liability 18764284 31420662 183305045 186161469 187950864
Current Liabilities 682076795 632994434 5283396036 4794396502 7018627141
Creditors for goods 56038944 56203916 198298782 74586124 101987451
Bank Overdraft 421039210 326581285 4641020849 4201428984 6344520762
Unclaimed Dividend 4000384 4000384 7936784 7936784 7936784
Provision for employee benefit 22732985 27181870 25186920 55341611 49902332
Income Tax Payable 159129323 209835412 317105530 420034625 466599966

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Financial report on Keya Cosmetics Ltd. & Kohinoor Chemicals Company (Bangladesh) Ltd

Liabilities for other finance -- 9191567 93847171 -- --

Interest payable -- -- -- -- --
Others Liabilities 19135949 -- -- 35068374 47679846
Book Value Per Share 21.54 21.09 16.67 15.77 15.37
Total Liabilities & Shareholders’ 420676747 444043798 2282437540 2449807873 2863865087
Equity 8 6 5 7 5

Income Statement
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
280011415 264293117 1040660536
Turnover 3 5 5588649526 9267999144 7
215378687 199001770
Cost of goods sold 8 7 4527780216 6840200428 7421611733
Gross profit 646327275 652913468 1060869310 2427798716 2984993634
Operating expenses 204319664 222663187 336842457 422679029 348512326
Selling and distribution expenses 204319664 146537603 175087917 220078740 182624751
Administrative expenses -- 76125584 161754540 202600289 165887575
Profit from operations 442007611 430250281 724026853 2005119687 2636481308
Other income 16741256 27140110 45354533 588769311 159211869
Financial expenses 67333441 50831484 583581078 1022683668 884832907
Net profit before WPPF 391415426 406558907 185800308 1571205330 1910860270
Allocation for WPPF 18638830 19359948 9290015 74819301 91707067
Net profit before tax 372776596 387198959 176510293 1496386029 1819153203
Provision for income tax 101912487 104446090 6813360 167850438 142324742
Provision for deferred income tax 18764284 12656379 -- 2856424 1789395
Profit/(loss) brought forward 120676771 -- -- -- --
Net profit after tax 252099825 270096490 169696933 1325679167 1675039066
Profit for the year 252099825 270096490 169696933 1325679167 1675039066
Earnings Per Share 1.55 1.51 0.29 1.87 2.01
EBIT 458748867 457390391 769381386 2593888998 2795693177

21629348
Depreciation for the year 2016-2017
1

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Financial report on Keya Cosmetics Ltd. & Kohinoor Chemicals Company (Bangladesh) Ltd

Kohinoor Chemicals Limited (KOHINOOR)

Balance sheet
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Non-Current Assets 324326938 305415286 310229902 332484961 319993892
Property, Plant and Equipment 312419606 293507954 298322570 322959095 312849492
Intangible assets -- 11907332 11907332 -- --
Other Investment 11907332 -- -- 9525866 7144400
Current Assets: 1343850500 1439953271 1346238431 1375727403 1210815848
Inventories 916667980 963396630 731105851 767238337 478086812
Trade Debtors & Other Receivables 8146823 8361487 8239430 7308265 2167018
Advance, Deposits and Prepayments 253282702 271257925 300373494 346425721 315975211
Term and Fixed Deposit receive 19984615 22201755 24599302 26728944 28680150
Investment in marketable securities 72381968 72372295 147551754 147546916 147542355
Cash and Cash equivalents 67803136 96779903 128543724 76824199 234473700
Advance Income Tax -- -- -- -- --
Inter-company receivables 5583276 5583276 5824876 3655021 3890602
Total Assets 1668177438 1745368557 1656468333 1708212364 1530809740
Shareholders' Equity 129930572 237147251 328604695 417434247 554073602
Share Capital 65000000 81250000 101562500 101562500 121875000
Revaluation Reserve 7143605 7143605 7143604 7143605 7143605
Provision for Gratuity -- -- -- -- --
Retained Earnings 57786967 148753646 219898591 308728142 425054997
Non-Controlling Interest -- -- -- -- --
Non-Current Liabilities 377178925 378785762 375045423 373281876 371887996
Long term loans secured -- -- -- -- 326089784
Debenture Current maturity 326089784 326089784 326089784 326089784 --
Deferred tax liability 31143750 33339847 30203335 29950199 29017977
Liability for gratuity & WPPF 19945391 19356131 18752304 17241893 16780235
Current Liabilities 1161067940 1129435545 952818215 917496241 604848142
Creditors for goods 550434270 569169496 426676747 465169940 404740938
Short term borrowing 454594521 379737853 337223833 264979129 30888539
Bank Overdraft -- -- -- -- --
Accrued Expense 145809547 169850698 177837941 174602274 155485384
Income Tax Payable -- -- -- -- --
Payable to Holding Company -- -- -- -- --
Dividend Payable 10229602 10677498 11079694 12744898 13733281
Interest payable -- -- -- -- --
Book Value Per Share 19.99 29.19 32.35 41.1 45.46
Total Liabilities & Shareholders’ Equity 1668177437 1745368558 1656468333 1708212364 1530809740

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Financial report on Keya Cosmetics Ltd. & Kohinoor Chemicals Company (Bangladesh) Ltd

Income Statement
2012-2013 2013-2014 2014-2015 2015-2016 2016-2017
Turnover 2718967831 2960859038 2656900567 2996245717 3393185456
Cost of goods sold 2248343275 2429523708 2179286324 2458285505 2784391769
Gross profit 470624556 531335330 477614243 537960212 608793687
Operating expenses 290921012 146131843 158546881 346710706 400245800
Selling and distribution expenses 123162176 135486307 148925845 299938833 345362350
Administrative expenses 167758836 10645536 9621036 46771873 54883450
Profit from operations 179703544 385203487 319067362 191249506 208547887
Other income 4974483 3244426 9662874 5018970 7851077
Written off expenses -- -- -- 2381466 2381466
Others expense -- 162080802 166417853 -- --
Financial expenses 52947364 64843857 38207325 25081141 7759766
Net profit before WPPF 131730663 161523254 124105058 168805869 206257732
Allocation for WPPF 6272889 7691584 5909765 8038375 9821797
Net profit before tax 125457774 153831670 118195293 160767494 196435935
Provision for income tax 32603339 44418895 29874361 41722328 50572553
Provision for deferred income tax 273314 2196097 3136512 253136 932223
Profit/(loss) brought forward 32330025 107216678 -- -- --
Net profit after tax 93127749 107216678 91457444 119298302 146795605
Earnings Per Share 14.33 13.2 9.01 11.75 12.04

Depreciation for the year 2016-2017 23891287

➢ Reference links and websites:

• http://www.dsebd.org
• http://lankabd.com/
• http://www.keyagroupbd.com/
• http://www.kohinoor-bd.com/
• https://www.investing.com/
• https://www.investopedia.com/

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