FIN440.3.KHT. Navana AND BD Autocars LTD PDF

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Investors make investment decision based on several characteristics. Navana has managed to utilize their resources better than BD autocars 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...

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FIN440: Corporate Finance Section: 06 Report on: Navana CNG Ltd. Bangladesh Autocars Ltd. Submitted To: Mr Kamrul Huda Talukdar [KHT] Senior Lecturer Department of Accounting and Finance, SBE-NSU

Submitted By:

Titon Saha- 1712411030 Tanjimus Sakin- 1711066630 Md. Asiful Alam- 1721426630 Safkat-ul Islam Saif- 1411168630

Date of submission: 26th August 2019 (Monday)

Letter of Transmittal 26th August, 2019 To, Mr. Kamrul Huda Talukdar Senior Lecturer, Department of Accounting & Finance School of Business and Economics, North South University Subject: Submission of financial report on Navana CNG Ltd and Bangladesh Autocars Ltd. Dear Sir, It is a great pleasure and privilege for us to present you with the report. The Pro-forma statements, WACC and Valuation 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 Pro forma statements, WACC and Valuation 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, Titon Saha- 1712411030 Tanjimus Sakin- 1711066630 Md. Asiful Alam- 1721426630 Safkat-ul Islam Saif- 1411168630

Table of Contents Introduction........................................................................................................................................... 4 About Navana CNG Limited: ........................................................................................................... 4 About Bangladesh Autocars Limited: ............................................................................................... 5 Forecasting ............................................................................................................................................ 6 Navana CNG Ltd. Pro-Forma Statements ........................................................................................ 6 Determining the growth rate: ........................................................................................................ 6 Proforma Income Statement: ........................................................................................................ 7 Projected Pro Forma Balance sheet: ............................................................................................. 8 Final Pro Forma Balance sheet: ....................................................................................................... 9 Bangladesh Autocars Ltd. Pro-Forma Statements ......................................................................... 10 Determining the growth rate: ...................................................................................................... 10 Proforma Income Statement: ...................................................................................................... 11 Projected Pro Forma Balance sheet: ........................................................................................... 12 Final Pro Forma Balance sheet: .................................................................................................. 13 Forecasting process: ............................................................................................................................ 15 Calculation of returns and WACC ..................................................................................................... 16 The process: ..................................................................................................................................... 17 Company Valuation............................................................................................................................. 20 Navana CNG Ltd. Cashflows .......................................................................................................... 20 Bangladesh Autocars Ltd. Cashflows ............................................................................................. 20 Interpret: ............................................................................................................................................. 21 Conclusion: .......................................................................................................................................... 22 References ............................................................................................................................................ 23 Appendices: ......................................................................................................................................... 24

Introduction About Navana CNG Limited: Navana CNG Limited, a sister concern of Navana Group, is the leading CNG service provider in Bangladesh. its years of experience are the standard-setter of the CNG industry. At present Navana CNG has around 800 personnel in various departments and branches. Navana CNG provides the following services: ➢ Petrol /Octane driven vehicle conversion into CNG. ➢ Diesel driven vehicle conversion into CNG. ➢ Diesel Generator conversion into Diesel Gas System. ➢ 4-stroke 3-Wheeler conversion into CNG. ➢ Selling gas through CNG refueling station. ➢ Selling CNG re-fueling station on a turn-key basis. ➢ Selling CNG conversion kit, cylinder, cylinder shut-off valve and refueling nozzle,

receptacle, etc. ➢ Offering package maintenance program for CNG refueling station. ➢ CNG cylinder Re-testing facility. ➢ Providing training on CNG conversion and refueling station.

Navana CNG Limited is the sole distributor of world-famous CNG and LPG conversion kit manufacturer LANDIRENZO, s.p.a, Italy. Navana CNG Limited solely represents the renowned manufacturer of CNG re-fueling station technology Safe s.r.l, Italy. It has also collaboration with OMNITEK, USA for diesel-driven vehicle conversion into CNG. For fast filling system Navana CNG represents WEH, Germany and OMB Saleri, Italy makes products in Bangladesh. It has set up a modern CNG cylinder re-testing center in collaboration with AirBlast S.A, Argentina. Navana CNG Limited has also collaboration with NGV Motori, Italy for diesel driven Generator conversion into diesel gas system.

At present, Navana CNG Limited is running 19 Refueling stations and 8 conversion workshops located at various locations in Bangladesh. (NAVANA CNG Ltd., n.d.) About Bangladesh Autocars Limited: Bangladesh Autocars Ltd. Was incorporated on 01 August 1979 in Bangladesh as a Public Limited company under the Company Act, 1913 (Replaced in 1994) and its shares are listed in the Dhaka Stock Exchange Ltd. The Company produced three Wheelers Auto Tempo under technical Collaboration of Piaggio & C s.p.a (manufacturer of world-famous Vespa Brand). Due to the government policy to ban two stoke three-wheeled vehicles; the company had to stop production of three-wheelers Auto Tempo during the year 1999. Now, the company has CNG Convert Workshop for the Vehicles and CNG Refueling station. (Bangladesh Autocars Ltd., n.d.)

Bangladesh Autocars Limited provides the following services: ➢ CNG Refueling - CNG Refueling Machine ➢ CNG Conversion - CNG Conversion Materials

Forecasting Navana CNG Ltd. Pro-Forma Statements

Determining the growth rate:

Year

Sales

Growth Rate

2014

1,606,179,151

2015

1,950,669,640

0.214478247

2016

2,604,766,755

0.335319268

2017

2,596,522,783

-0.003164956

2018

4,045,370,113

0.557995231

2019

4,217,972,208

0.042666577

2020

4,875,622,848

0.155916305

2021

5,516,999,425

0.131547619

2022

6,251,859,282

0.13319919

2023

6,695,166,442

0.070908052

Sources: (Navana CNG Ltd., 2018)

Proforma Income Statement:

2019 4,217,972,208 Sales

2020

2021

2022

2023

4,875,622,848

5,516,999,425

6,251,859,282

6,695,166,442

Cost of sales

3,137,531,230

3,626,723,505

4,103,810,347

4,650,434,563

4,980,187,816

Gross profit Less: Administrative &selling expenses

1,080,440,978

1,248,899,343

1,413,189,078

1,601,424,719

1,714,978,626

129,561,936

149,762,755

169,463,689

192,036,115

205,653,021

Less: Interest expenses

269,621,157

269,621,157

269,621,157

269,621,157

269,621,157

Operating profit

681,257,885

829,515,431

974,104,233

1,139,767,448

1,239,704,447

4,988,363

4,988,363

4,988,363

4,988,363

4,988,363

290,687

336,010

380,211

430,855

461,406

685,955,561

834,167,784

978,712,384

1,144,324,955

1,244,231,404

Add: Other income Less: Foreign exchange loss Profit before contribution to WPPF Less: Contribution to WPPF Net profit before tax holiday reserve Net profit after tax holiday reserve

19,085,922

22,061,728

24,963,896

28,289,067

30,294,990

666,869,639

812,106,056

953,748,488

1,116,035,888

1,213,936,414

666,869,639

812,106,056

953,748,488

1,116,035,888

1,213,936,414

Less: Income tax expenses

183,389,151

223,329,165

262,280,834

306,909,869

333,832,514

Net profit after tax

483,480,488

588,776,891

691,467,654

809,126,019

880,103,900

EBIT

686,246,248

834,503,794

979,092,596

1,144,755,811

1,244,692,810

Source: (Navana CNG Ltd., 2018)

Projected Pro Forma Balance sheet: . Property, plant & equipment Non current assets held for transfer Intangible Assets Capital Work-in-process Long-term security deposit Investment in shares Total Non-current assets Inventories Accounts receivable Others Receivable Advance against land Advances, deposits & prepayments Cash & bank balances Total Current assets Total assets Share capital Tax holiday reserve AFS Reserve Retained earnings Equity attributable to owners of Company Non-controlling interest Total equity Deferred tax liabilities Security Retention Money Loan from others Long term loan- Net of current portion Total Non-current liabilities Long term loan- Current portion Short-term loans Provision for income tax Current account with Aftab Automobiles limited Payables to sister concern Bills paybles Inter company payable Payables and accruals Total Current liabilities Total equity and liabilities EFN

2019 5,649,987,200

2020 6,530,912,325

2021 7,390,038,292

2022 8,374,385,410

2023 8,968,196,762

202,773,512 20,007,751 1,676,489,780 50,849,172 21,235,467 7,621,342,881 1,986,331,078 445,985,619 205,351,313 15,000,000

234,389,208 23,127,285 1,937,881,871 58,777,387 24,546,422 8,809,634,500 2,296,032,480 515,522,049 237,368,931 15,000,000

265,222,550 26,169,625 2,192,805,617 66,509,413 27,775,446 9,968,520,943 2,598,070,086 583,337,747 268,594,248 15,000,000

300,549,979 29,655,398 2,484,885,550 75,368,413 31,475,113 11,296,319,862 2,944,130,918 661,037,862 304,370,785 15,000,000

321,861,393 31,758,204 2,661,083,943 80,712,640 33,706,951 12,097,319,893 3,152,893,505 707,910,769 325,953,124 15,000,000

692,596,282 243,581,685 3,588,845,977 11,210,188,858 685,285,920 216,004,824 7,798,771 4,076,745,492

800,583,335 281,560,041 4,146,066,835 12,955,701,335 685,285,920 216,004,824 9,014,726 4,964,613,037

905,898,166 318,598,594 4,689,498,841 14,658,019,784 685,285,920 216,004,824 10,200,592 5,830,509,627

1,026,563,068 361,035,669 5,312,138,302 16,608,458,165 685,285,920 216,004,824 11,559,302 6,822,614,215

1,099,354,655 386,636,005 5,687,748,058 17,785,067,951 685,285,920 216,004,824 12,378,950 7,421,105,292

4,985,835,007 2,945 4,985,832,062 108,057,251 738,573,789 52,133,329

5,874,918,507 2,945 5,874,915,562 108,057,251 853,729,485 60,261,765

6,742,000,963 2,945 6,741,998,018 108,057,251 966,035,566 68,189,057

7,735,464,262 2,945 7,735,461,317 108,057,251 1,094,710,722 77,271,784

8,334,774,986 2,945 8,334,772,041 108,057,251 1,172,334,526 82,750,975

4,033,196,192 4,931,960,561

4,033,196,192 5,055,244,693

4,033,196,192 5,175,478,066

4,033,196,192 5,313,235,948

4,033,196,192 5,396,338,944

631,658,521 1,707,852,632 178,247,055

730,144,383 1,974,134,703 206,038,678

826,193,138 2,233,827,423 233,142,575

936,241,396 2,531,371,427 264,196,977

1,002,628,449 2,710,866,043 282,930,670

62,560,234 70,000,000 276,002,440 278,293,561 357,216,707 3,561,831,150 13,479,623,773 -2269434916

72,314,395 70,000,000 276,002,440 321,684,064 412,912,616 4,063,231,279 14,993,391,535 -2037690200

81,827,181 70,000,000 276,002,440 364,000,837 467,230,287 4,552,223,882 16,469,699,967 -1811680183

92,726,496 70,000,000 276,002,440 412,485,454 529,464,983 5,112,489,173 18,161,186,438 -1552728274

99,301,551 70,000,000 276,002,440 441,733,994 567,008,314 5,450,471,460 19,181,582,446 -1396514495

Final Pro Forma Bala Balance nce sheet:

Property, plant & equipment Non current assets held for transfer Intangible Assets Capital Work-in-process Long-term security deposit Investment in shares Total Non-current assets Inventories Acoounts receivable Others Receivable Advance against land Advances, deposits & pre-payments Cash & bank balances Total Current assets Total assets Share capital Tax holiday reserve AFS Reserve Retained earnings Equity attributable to owners of Company Non-controlling interest Total equity Deferred tax liabilities Security Retention Money Loan from others Long term loan- Net of current portion Total Non-current liabilities Long term loan- Current portion Short-term loans Provision for income tax Current account with Aftab Automobiles limited Payables to sister concern Bills paybles Inter company payable Payables and accruals Total Current liabilities Total equity and liabilities EFN

2019 5649987200 202773511.6 20007750.84 1676489780 2320284088 21235466.75 9890777797 1986331078 445985619.1 205351312.8 15000000 692596281.6 243581684.9 3588845977 13479623773 685285920 216004824 7798770.635 4076745492

2020 2021 2022 2023 6530912325 7390038292 8374385410 8968196762 234389208.2 265222550.4 300549979.4 321861392.9 23127285.42 26169624.75 29655397.58 31758204.04 1937881871 2192805617 2484885550 2661083943 2096467587 1878189595 1628096686 1477227135 24546422.26 27775445.66 31475112.54 33706951.44 10847324700 11780201126 12849048136 13493834388 2296032480 2598070086 2944130918 3152893505 515522048.8 583337746.8 661037862.5 707910769.3 237368930.7 268594248.3 304370784.8 325953124.1 15000000 15000000 15000000 15000000 800583334.5 905898166 1026563068 1099354655 281560041.1 318598594.1 361035668.9 386636004.7 4146066835 4689498841 5312138302 5687748058 14993391535 16469699967 18161186438 19181582446 685285920 685285920 685285920 685285920 216004824 216004824 216004824 216004824 9014726.134 10200591.89 11559302.48 12378950.09 4964613037 5830509627 6822614215 7421105292

4985835007 2945 4985832062 108057251 738573789.4 52133328.84 4033196192 4931960561 631658520.9 1707852632 178247055.4

5874918507 2945 5874915562 108057251 853729485.4 60261764.83 4033196192 5055244693 730144383.3 1974134703 206038677.6

6742000963 2945 6741998018 108057251 966035566.5 68189056.51 4033196192 5175478066 826193138.4 2233827423 233142575.1

7735464262 2945 7735461317 108057251 1094710722 77271783.64 4033196192 5313235948 936241395.6 2531371427 264196977.4

8334774986 2945 8334772041 108057251 1172334526 82750975.25 4033196192 5396338944 1002628449 2710866043 282930670.3

62560234.43 70000000 276002440 278293560.8 357216707 3561831150 13479623773 0

72314395 70000000 276002440 321684064.4 412912615.9 4063231279 14993391535 0

81827181.48 70000000 276002440 364000837.2 467230287.4 4552223882 16469699967 0

92726495.81 70000000 276002440 412485454 529464983.4 5112489173 18161186438 0

99301550.96 70000000 276002440 441733993.9 567008313.7 5450471460 19181582446 0

Bangladesh Autocars Ltd. Pro-Forma Statements Determining the growth rate:

Year

Sales

Growth Rate

2014

75,027,480

2015

77,813,112

0.037128156

2016

89,313,905

0.147800193

2017

101,412,294

0.135459187

2018

109,221,196

0.077001532

2019

118,153,582

0.081782529

2020

129,359,287

0.094840165

2021

138,541,668

0.070983549

2022

147,656,657

0.0657924

2023

157,764,180

0.06845288

Sources: (Bangladesh Autocars Ltd, 2018)

Proforma Income Statement:

Sales

2019 118,153,582

2020 129,359,287

2021 138,541,668

2022 147,656,657

2023 157,764,180

Cost of sales

103,675,938

113,508,581

121,565,823

129,563,930

138,432,954

Gross profit

14,477,644

15,850,706

16,975,845

18,092,727

19,331,226

725,304

794,092

850,460

906,413

968,460

Operating profit Add: Other income Less: Foreign exchange loss

13,752,340

15,056,614

16,125,386

17,186,314

18,362,766

Profit before contribution to WPPF

13,752,340

15,056,614

16,125,386

17,186,314

18,362,766

407,541

446,192

477,865

509,304

544,168

Net profit before tax holiday reserve

13,344,799

14,610,422

15,647,521

16,677,009

17,818,598

Net profit after tax holiday reserve

13,344,799

14,610,422

15,647,521

16,677,009

17,818,598

Less: Income tax expenses

3,669,820

4,017,866

4,303,068

4,586,178

4,900,115

Net profit after tax

9,674,979

10,592,556

11,...