Introduction

United Power Generation & Distribution Company Ltd. (UPGDCL) formerly known as Malancha
Holdings Ltd. (MHL) was incorporated in Bangladesh on 15th January 2007 as a subsidiary
company of United Group in order to produce and supply electricity. The Company changed the
existing name and style on 1st October 2009 as a private limited company under the Companies
Act 1994 and converted into public limited company by Shares on 22 December 2010. The
Company has developed two power plants. One of them with capacity of 41 MW at Dhaka Export
Processing Zone (DEPZ) premises and another with capacity of 44 MW at Chittagong Export
Processing Zone (CEPZ) premises, under two agreements with Bangladesh Export Processing
Zones Authority (BEPZA) signed on May 6, 2007 and May 16, 2007 respectively. Both plant
DEPZ and CEPZ came into commercial operation on 26th December 2008 and 12 August 2009
respectively. The address of the company’s registered office is United Center, Road No. 51, and
House No. NW (J) 6, Gulshan-2, Dhaka-1212, Bangladesh. The authorized share capital of the
Company is Tk. 10,000,000,000 (Taka One Thousand crore) only divided into 1,000,000,000 (One
hundred crore) shares of Tk. 10 (Ten) each.

1.1 About Market Share

It is a broadly described current market information of UPGDCL. In the recent time the company
Last Trade Price (LTP) is 308Tk on 26th September 2019 and change percentage is 1.25%. Open
price is 304.20 and days range is 307.50-310.00. Market capital of UPGDCL is 147989.947TK

Considering the overall financial position of the Company the Board of Directors has
recommended 10% (Ten percent) stock dividend for all Shareholders for approval in the 12th
Annual General Meeting. These financial statements are presented in Bangladesh Taka which is
the company’s functional currency. All financial information presented in Taka has been rounded
off to the nearest Taka.

The earning per share for 2018 was 11.51 and the earning per share for 2017 was 10.46. So, the
difference between 2018 and 2017 decrease to 1.05. For this reason, the earning per share for 2018
is better than 2017 and the financial position also better 2018 than 2017.
1.1.1 Product Analysis
United Power Generation & Distribution Co. Ltd is a public ltd companies, incorporated with joint
stock companies and Firm Bangladesh also publicly listed with Dhaka Stock Exchange Ltd and
Chittagong Stock Exchange Ltd.

Since inception UPGDCL introduces different pack items like Dry ice, Argon, Lamp gas, LPG,
Refrigerant gases, Hydrogen Mild steel electrodes, Low hydrogen/low alloy electrodes, cast iron
electrodes, Hard surfacing electrodes Medical oxygen compressed, Nitrous oxide, Entonox,
Sterilizing gases, Medical gases cylinders, Anesthesia machines, Anesthesia ventilators etc. and
were appreciated throughout the globe.

1.1.2 Distinguishing features

There are certain characteristics that distinguish a good company from an average one. Such
qualities help keep a good company’s tables filled with satisfied customers. If your small business
owns a company, understanding some of the qualities it should have will increase its chances of
creating repeat business and consistent profits.

1. Oil & Gas are exploration & discovery process whereas power it has none.
2. Oil & Gas are a processing element, whereas power has none
3. Oil & Gas Can be scattered across a geographical region, whereas Electrical power
industry has designated locations
4. Both have a distribution network & metering elements
5. Oil & Gas has extensive maintenance element, whereas Electrical in comparison has
none
6. Power limited equipment categorization - turbine, transformer, switchgears, circuit
breakers, distribution network, metering stations all of these fall under low voltage,
medium voltage, high voltage, transmission voltage categories and products are
manufactured, in each category without a worry of its end users in great production
numbers.
7. Oil & Gas are the list runs into thousands - drill pipes (casings, conductors, tubing)
normal pipes, fittings, pressure vessels, distillation column, pumps, compressors, valves,
etc. Though there is standardization, yet they are special & needs to be customized to a
situation / specification, mostly made to order unlike in electrical where one size fits all.
Due to this customization one cannot maintain inventories as in Electrical industry
8. Power once installed & running, have an easy time, unlike oil & gas which also has
streamlined processes, yet it has to be managed every minute, to avoid fire, environment
& accidents risks.
9. Both have distributed assets all over the geographical region
1.1.3 Industry Life Cycle
Industry Life Cycle refers to the five stages an industry goes through: startup, Growth, Shakeout, Maturity,
Decline.

Startup Stage
At the startup stage, customer demand is limited due to unfamiliarity with the new product’s
features and performance. Distribution channels are still underdeveloped, so there are very few
product supply and promotional activities. There are also lack of complementary products which
add value to the customers, limiting the profitability of the new product.

Companies at the startup stage are likely to generate zero or very low revenue and experience
negative cash flows and profits due to large amount of capital initially invested in technology,
equipment and other fixed costs.

Growth Stage
As the product slowly attracts attention from a bigger market segment, the industry moves on to
the growth stage where profitability starts to rise. Improvement in product features leads to
easiness to use, thus increasing value to customers. Complementary products also start to become
available in the market so people have greater benefits purchasing the product and its
complements. As demand increases, product price goes down which further increase customer
demand.

At the growth stage, revenue continues to rise and companies start generating positive cash flows
and profits as product revenue and costs break-even.

Shakeout Stage
Shakeout usually refers to the consolidation of an industry. Some businesses are naturally
eliminated because they are unable to grow along with the industry or are still generating negative
cash flows. Some companies merged with competitors or are acquired by those which were able
to obtain bigger market shares at the growth stage.

At the shakeout stage, growth of revenue, cash flows and profit start slowing down as industry
approaches maturity.
Maturity Stage
At the maturity stage, majority of the companies in the industry are well-established and the
industry reaches it saturation point. These companies collectively attempt to moderate the intensity
of industry competition to protect themselves and maintain profitability by adopting strategies to
deter entry of new competitors into the industry. They also develop strategies to become a
dominant player and reduce rivalry.

At this stage, companies realize maximum revenue, profits and cash flows because customer
demand is fairly high and consistent. Products become more common and popular among the
general public, and the prices are fairly reasonable compared to new products.

Decline Stage
Decline stage is the last stage of an industry life cycle. The intensity of competition in a declining
industry depends on several factors: sped of decline, height of exit barriers and level of fixed costs.
To deal with decline, some companies might choose to focus on their most profitable product lines
or services in order to maximize profits and stay in the industry. Some larger companies will
attempt to acquire smaller or failing competitors to become the dominant player. For those who
are facing huge losses and do not believe there are opportunities to survive, divestment will be
their optimal choice.

INDUSTRY LIFE CYCLE FOR UPGDCL

UPGDCL mainly focus on growth stage of industry life cycle. As the product slowly attracts
attention from a bigger market segment, the industry moves on to the growth stage where
profitability starts to rise. Improvement in product features leads to easiness to use, thus increasing
value to customers. Complementary products also start to become available in the market so people
have greater benefits purchasing the product and its complements. As demand increases, product
price goes down which further increase customer demand.

At the growth stage, revenue continues to rise and companies start generating positive cash flows
and profits as product revenue and costs break-even.
1.1.4 Financing and Dividend policy
DIVIDEND POLICY:

Considering the overall financial position of the company the board of director has recommended
10% ten percent stock dividend for all the shareholders for approval in the 12st general meeting.

FINANCING POLICY:

The United Power Generation & Distribution Company Limited witnessed a steady growth in its
net profit and emerged the fourth largest market cap listed company. The power generation
company's total market capitalization surpassed US$ 1.0 billion recently.

Total revenue of the company stood at Tk 5.74 billion for the year ended on June 30 2017 on
account of sale of electricity.

"United Power is now a completely debt-free company," Mr. Mubeen stated.

Total equity of the company reached Tk 14.96 billion bolstered by retained earnings growth of 38
per cent compared to the last reporting period. Shareholders' value addition has been adequately
reflected in the market capitalization growth of nearly 25 per cent at the end of FY 2016-17.

The share price of the power generation company closed at Tk 262.80 on Thursday at the Dhaka
bourse.

United Power, which was listed with the Dhaka bourse in 2015 under the book building method,
disbursed 90 per cent cash and 10 per cent stock dividends for the year ended on June 30, 2017.

The company's paid-up capital is Tk 3.99 billion, authorized capital Tk 8.0 billion and the total
number of securities 399.24 million. Sponsor-directors own 90 per cent stake in the company and
institutional investors 5.77 per cent and the general investors 4.23 per cent as of May 31, 2018.The
company maintained a healthy gross profit margin of 70 per cent.

The company's earnings per share (EPS) for nine months from July 2017 to March 2018 stood at
Tk 8.41 against Tk 8.05 for the corresponding period of the previous fiscal. United Power also
supplies and sells electricity directly to private companies. Dhaka and Chittagong export
processing zones and Bangladesh Power Development Board are the major revenue contributors.
1.2 Industry Analysis
1.2.1 Porters Five Factors model
Threat of New Entrants in Oil and Gas Industry
The factors that affect the newest companies to enter oil and gas business, especially the upstream
segment are:

 Huge capital required

 National Oil Companies control more than 90% of the proven oil and gas reserves
 Increase of the internal competition within the industry
 The big oil and gas companies can increase their R&D spending which will give them a boost
regarding innovation and improve existing technologies. This strategy will give them a
competitive advantage over new oil and gas companies which now enter the industry. Also, to
mention that this whole strategy of the big IOCs can force the new competitors to spend more
money
 The big IOCs or as we call it Integrated Oil and Gas Companies which can easy compete with
new competitors due to economics of scale
 Oil and Gas prices volatility
 Oil and Gas Reserves are usually located in war zones or geographical areas with geopolitical
conflicts or political instability
 National and international law restrictions which can affect the new entrance of a company in
the oil and gas business

Threats of Substitutes in Oil and Gas Industry

The main alternatives source to oil and gas for producing energy which used for electricity,
transportation, heating, etc. are:

 Nuclear Energy
 Coal
 Hydrogen
 Biofuels and other renewables sources such as solar and wind energy

These alternative sources of energy can replace a high amount of hydrocarbons use in the global energy
mix according to their performance, quality and price of course. This strategy requires a big amount of
investments in R&D and producing procedures, so the possibility for substitutes to dominate the global
energy mix until 2040 is very small.
Bargaining Power of Buyers in Oil and Gas Industry
The main buyers of oil and gas products are:

 Refineries
 National Oil Companies
 International Oil and Gas companies
 Distribution companies
 Traders
 Countries (USA, China, Japan, countries of the EU, etc.)

The bargaining power of buyers in oil and gas industry is relatively small due to the nature of this
industry. Buyers are interested in the price and the quality of a product. It is known, that global oil
benchmarks determine the oil price, the main oil benchmarks are:

 Brent Blend
 West Texas Intermediate (WTI)
 Dubai/Oman

Bargaining Power of supplies in Oil and Gas Industry

Based on the following parameters it can be assessed that the supplier Power in High.

Supplier size – Very Large as the suppliers are Large PSEs.

Oligopoly threat – Small number of suppliers enjoy monopoly, thereby contributing to the supplier
power.

Switching costs – Very high, as only large govt. companies are the suppliers.

Player independence – Low

Substitute inputs – As no substitute inputs, so the firms have no choice.

Player dispensability – High

Differentiated input- Inputs are same i.e. electricity in case of company buying electricity from
wholesale market and selling to the end-users, and coal or gas in case the company is in power
generation field.
1.2.2 PEST Analysis
Political Factors
The threats for the business of oil and gas companies which are influenced by political factor and
decisions are many, the main of them are:

 Geopolitical conflicts.
 Political Instability
 The majority of the governments of the oil producing countries through their National Oil
Companies control more than 90% of the proven oil reserves and over 75% of global oil and
gas production.


Economic Factors
The connection between petroleum industry and the global economy is significantly important and for
that reason are heavily interact each other. It is known that global economic growth drives the global
consumption of oil and gas. Also, to mention that oil price is firmly connected with oil supply and
demand as every commodity nowadays. Besides, oil and gas industry must be concerned for the below
economic factors that can affect the global economy, these are:

 Global Economic crisis.

 The bankruptcy of the large commercial banks due to their significant investment in dangerous
bank products such as derivatives.
 Over debt public and private sector in many countries of OECD.
 Shadow banking system in emerging economies, China for example.

The oil and gas prices are the primary factor in deciding whether a reserve is economically feasible.
Unconventional and offshore oil and gas fields have the highest costs of extraction among the reserves.

Social factors
These factors express migration, culture, religion, demography, income and ideological views on an
issue. Some current social trends and beliefs that can affect significantly the oil and industry are:

 Increasing awareness and focus on more friendly fuels and decreasing in the use of “dirty” fossil
fuels such as oil sands, coal, and shale gas.
 Technological Factors

Technology is fast disrupting various industries across the board. Transportation industry is a good
case to illustrate this point. Over the last 5 years the industry has been transforming really fast, not
even giving chance to the established players to cope with the changes. Taxi industry is now
dominated by players like Uber and Lyft. Car industry is fast moving toward automation led by
technology firm such as Google & manufacturing is disrupted by Tesla, which has stated an
electronic car revolution.

A firm should not only do technological analysis of the industry but also the speed at which
technology disrupts that industry. Slow speed will give more time while fast speed of technological
disruption may give a firm little time to cope and be profitable. Technology analysis involves
understanding the following impacts -

 Recent technological developments by American Electric Power Company, Inc. competitors

 Technology's impact on product offering
 Impact on value chain structure in Utilities sector
 Increasing global oil and gas consumption levels until 2040 due to the global increasing population.
 Natural gas is considered the cleanest fuel among the fossil fuels.
 National political/social debate among the society of many oil and gas rich countries will set the
dilemma between energy security/profits from the extraction of oil and gas resources and protection of
the environ

1.3 BCG Matrix United Power Generation &

distribution Company ltd.
BCG matrix was developed by, Boston based private consulting firm; “Boston consulting group”.
Name of the Matrix is derived from the firm name. BCG matrix framework has been designed for
the companies which operate in different industries, to analyze the potential of the company’s each
segment This framework is depicting with the help market share and industry sales growth rate,
where industry sales growth is plotted on the on the Y-axis, vertically and market share is plotted
on X-axis, horizontally. The four quadrant framework characterize segments in to the following
categories; Dogs, Question mark, Cash Cows and Stars. Each category suggests different strategies
for the segment. In this article we will be discussing the detailed BCG matrix of United Power
Generation & distribution Company ltd.
UPGDCL has four segments namely; reportable segment, Health care segment; The healthcare
segments include all services related to supply of medical gas such as medical oxygen & nitrous
oxide, cylinders and accessories, supply and installation of medical gas pipeline system and
maintenance of medical equipment. Package gases and products (PG&P) segment; Manufacturing
and supply of industrial compressed packaged gases and wielding goods which includes
compressed industrial oxygen, dissolved acetylene, nitrogen, argon, Carbon dioxide and
electrodes, Bulk gases segment, Manufacturing and supply of industrial liquid gases, oxygen,
nitrogen, argon and Carbon dioxide.
Question Mark
Question mark are those segments which have low relative market share and operates in high sales
growth industry. UPGDCL reportable segment fall into the category of question mark. reportable
segment market share of UPGDCL is declining every year, despite of high industry sales growth
rate. UPGDCL has to focus on this segment to turn this division into star because the industry has
the potential to grow in terms of sales. Company ought to invest more on product development to
beat its competitor and increase its market share in this industry. In terms of geographical segment
Europe comes into the category of question mark because Europe contribute the lowest share in
company revenue.

Stars
Those segments are considered to be Stars, which have high relative market share and compete in
high sale growth industry. UPGDCL Healthcare segment is considered to be stars because its
market share is growing every year and mentioned division generate highest chunk of revenue for
the company. In terms of geographical segment Asia segment is producing highest revenue around
40% of company total revenue. Asia geographical division also comes into the fold of stars.

Cash Cows
Cash cows can be characterized as those segment, which have high relative market share and
competing in the low sale growth industry. Bulk gases segments of UPGDCL can be labelled as
Cash cows because it has high market share in low growth industry. This industry has witnesses
decline in sales. Such segments are crucial for the company and plays a vital role in the sustenance
of company. In terms of geographical segment America segment comes into the category of cash
cows around 33% of company revenue is generated by America segment each year.

Dogs
Dogs are those segment which have low relative market share and are operating in high sale growth
industry. Fortunately, UPGDCL has no such segment which fall into the category of Dogs.
UPGDCL is one of the largest producer of consumer goods and mostly such companies do not
have Dogs in their company. However, such segment, which fall into the category of dogs, better
be sold.