Working Capital Management of Heidelberg Cement Bangladesh

Working capital administration of Heidelberg Cement Bangladesh Limited (HCBL) Executive Summary: In this report we have introduced the general working capital administration of Heidelberg Cement Bangladesh Limited (HCBL). We have accumulate most extreme data from the yearly reports and by taking meeting of Board of Director, M. Abul Hashem; Company Secretary. In this report we have attempted to coordinate the terms and conditions that we learned in FIN340 with HCBL’s working capital administration. We have done budgetary examination and gave recommendation.Company Overview: Heidelberg Cement Bangladesh is one the biggest makers of value concrete in Bangladesh. Heidelberg Cement Group from Germany, one of the world’s pioneers in development and building material with activities in excess of 50 nations, possesses 61% portions of the organization. In 1998 Heidelberg Cement Group set up its essence in Bangladesh by setting up a skimming terminal with on board sacking office s in the port of Chittagong and by appropriating the concrete to the key markets of Dhaka and Chittagong.In 1999 the gathering additionally reinforced its situation in Bangladesh and assembled a greenfield producing plant close to Dhaka to be specific â€Å"Scancement International Limited† with an introduced limit of 0. 750 million tons for every year. In 2000 Heidelberg Cement bunch additionally purchased a minority position in Chittagong based organization in particular â€Å"Chittagong Cement Clinker Griding Co. Restricted (CCCGCL)† immediately followed by the obtaining of an in controlling stake. The plant in Chittagong has an introduced limit of 0. 7 million ton for every year. In 2003, the two organizations were amalgamated and the company’s name was changed to Heidelberg Cement Bangladesh Limited.Corporate Mission: The Corporate Image : Building overall development by building a superior world. Business Culture : Building on neighborhood duty regarding g lobal achievement Employee Policy : Building our business on the information on our kin Market Strategy : Building our development on a strong base of income Customer Philosophy : Building consumer loyalty Quality Standard : Building on quality items to construct notoriety Commitment to Innovation : Building on new advances decides our future successBrief History Heidelberg Cement Bangladesh Limited meets 13% of the Bangladesh interest for concrete from two plants situated at Dhaka and Chittagong. Heidelberg Cement Bangladesh Limited utilizes 260 individuals the nation over. The organization with 1. 5 million tones yearly concrete creation has become a significant power in the Bangladesh Cement industry throughout the most recent eight years. In Bangladesh, Heidelberg bunch is one of the biggest remote speculators having a venture of 100 million US$ with in excess of 260 representatives working nonstop to appear the strategic this incredible worldwide company.By fulfilling the requi rements and goals of its clients, workers, investors and the more extensive network, the organization can keep up its situation of solidarity as a feasible concrete supplier without trading off duty to long haul solidness and natural obligation. Heidelberg Cement Bangladesh Limited is a sister worry of Heidelberg Cement Group. Ecological Policy Heidelberg Cement Bangladesh Limited Protection of the earth is a necessary piece of Heidelberg Cement Group’s methodology. As regular assets are the premise of concrete, measures for supportable ecological consideration are received in all our operations.In Bangladesh, our arrangement is to deliver top notch concrete, streamline tasks to save money on normal assets and forestall contamination so as to make a cleaner and more secure condition. Items and Innovation Portland Composite Cement (PCC) As a feature of its persistent interest for development and steady drive to improve quality, HeidelbergCement has presented Portland Composite Cement (PCC) during 2003. Engrossing European Norms in concrete delivering made HeidelbergCement Bangladesh Ltd. the pioneer in this area. Presently a-days all the concrete processing plants of Bangladesh are creating concrete according to European Norm.The class Portland Composite Cement (CEM II) is the market head in Europe. Concrete created by the BDS EN ScanCement and RubyCement are intended to accomplish the best attributes for its clients; this outcome is accomplished by configuration utilizing clinker and great different constituents. PCC has the ideal of: Durability, Long-term quality and usefulness. ScanCement and RubyCement are delivered by the European standards BDS EN 197-1:2003. Attributes of ScanCement/RubyCement: Higher Strength ScanCement and RubyCement have higher long haul quality than a standard Portland Cement (OPC).The slag part in the structure contributes that the hole in long haul quality with OPC is extending as time advances. Higher Durability The plan of ScanCement and RubyCement expands the thickness of solid (lower penetrability). Littler voids are the impact of the response between the clinker and the slag. This thickness adds to the toughness and lifetime of the development. Better Workability To improve the nature of mortar and workmanship work Limestone is added to the plan of ScanCement and RubyCement. This improves firmly the usefulness of the solid. Putting will look smoother, better and more beautiful.The concrete is simpler to utilize. Different Improvements on the previously mentioned upgrades ScanCement and RubyCement decreases warm splitting. Because of the slag in the structure less warmth is produced which lessens the danger of warm breaks. Besides our brands utilize less water to accomplish the necessary usefulness. This adds to the quality and nature of the development. Day by day Cash Inflow and Cash Outflow: Here we have introduced the day by day money inflow and outpouring of HCBL. 200820072006 Cash got from cus tomers6,332,191,0005,573,231,0004,963,425,000 Cash got from other working income84,205,00049,963,00014,630,000Cash Inflow all through the year6,416,396,000. 00 5,623,194,000. 00 4,978,055,000. 00 Daily Cash Inflow17,579,167. 12 15,406,010. 96 13,638,506. 85 200820072006 Payment for money related expense(68,293,000)(55,096,000)(96,760,000) Income charge paid(206,802,000)(96,947,000)(35,495,000) Cash paid to suppliers(5,480,284,000)(3,835,873,000)(3,334,740,000) Cash paid for working expenses(628,326,000)(507,571,000)(501,761,000) Cash outpouring all through the year(6,383,702,992. 00)(4,495,484,993. 00)(3,968,753,994. 00) Daily Cash outflow(17,489,597. 24)(12,316,397. 24)(10,873,298. 1) Net Daily Cash Inflow89,569. 883,089,613. 722,765,208. 24 Cash inflows and surges are not consummately synchronized. Here we have net money inflows in 3 years; it shows that HCBL had adequate cash gracefully to fund its activity proficiently. Changes in Short Term Loan Account: The HCBL don’t h ave any attractive protections account in asset report. In 2006 the organization has a momentary credit of 467884000 and in 2007 and 2008 the organization has transient advances of 654441000 and 829715000. From 2006 to 2007 there is an expansion in Short term credit record of tk. 186557000.And from 2007 to 2008 the momentary advance has increment by Tk. 175274000. Over the period the transient credit has expanded over the period. The advances were predominantly taken from their sister concern Meghna Energy Limited. Regularity sway in Cash Inflow and Cash Outflow: Seasonality Variations in Cash streams from deals: Highest deals: We have come to know from our meeting that there is regularity is available in Heidelberg concrete. Their top in deals and variety in income is around quarterly premise. It has pinnacle of the deals during January to March. In this time they need to keep up huge inventory.At these time their business increment, thus net benefit and income increment and money inflow likewise increments in this first quarter. They have likewise great deals from October to April. Ordinary money inflow comes during this time. From May to September their deals for the most part decline as a result of blustery season. Money Outflow: When deals increment showcasing and transportation costs increment. Therefore, money outpouring increments as of now. As crude materials are essentially imported from that point bury organization exchange that’s why they don’t need to pay promptly a gigantic cash when they import RM. They get an adaptable credit term.Geographical Spread and Customers: Heidelberg Cement has partitioned their business in 6 divisions in Bangladesh. They have two principle branches in Dhaka and Chittagong. They have likewise deals operators in other four divisions. Be that as it may, the vast majority of the deals create from Dhaka and Chittagong divisions. At that point Sylhet and deals in other 3 divisions are roughly same. They don't have any physical fare of products. In the event that they offer products to EPZ region and on the off chance that they get paid in dollars, this is named as fare. The over all piece of the pie of Heidelberg Cement is 13%. The business soaked. Still they have opportunity to accumulate more piece of the overall industry in the industry.They are confronting some limitation since they are worldwide organization. They have 3 sorts of clients: 1. Vendors 2. Corporate clients (e. g. engineers, contractual workers) 3. Government ventures (e. g. Mohakhali Flyover, Lalon Shah Bridge, Karnafuli Bridge, Banani Bridge) Except these they have additionally not very many retailers who are exceptionally near them. Be that as it may, ordinarily they don't manage retailers. Assortment Procedure: Checks/pay request: Most of the time, they get installments through checks. They likewise get installments by pay request which is restricted. By and large, they don't permit some other methods of payments.Th ey don’t have any money exchange. Assortment Points , Concentration Banks, Deposit banks, Lock Box: There are assortment focuses. The clients pay through the neighborhood offices of Dhaka Bank, Dutch Bangla Bank and Marcentile Bank. These banks fill in as assortment focuses. As these neighborhood banks have bunches of branches in Bangladesh it enables a ton in assortment to process. Thro