Chapter One: Introduction: Financial Performance Analysis of Gas Sector in Bangladesh

Financial Performance Analysis of Gas Sector in Bangladesh
Chapter One: Introduction
1
1.1 Background
In the globalized environment of trade and investments it is most important for countries to
be competitive and the quality of infrastructure is a key input for it. Energy and power are
essential elements to increase global economy. The energy sector consists of electricity, gas,
coal, liquid fuel, wind energy, solar and other non-petroleum fuel. But gas and electricity are
very much important to enhance production ability, and transportation systems. Its
importance is increase day by day in housing, transportation, industry area and production of
electricity. So developing country must concentrate to maintain proper recording system to
know actual financial position of this sector.
Bangladesh Minerals, Oil and Gas Corporation (BMOGC) was established pursuant to
President’s Order no. 27 of 26 March, 1972 for dealing with the exploration and development
of oil, gas and mineral resources of the country. The activities of the Corporation relating to
minerals was segregated and placed under a new organisation named Bangladesh Mineral
Exploration and Development Corporation (BMEDC) formed by President’s Order no. 120 of
27 September, 1972. The reconstituted Bangladesh Oil and Gas Corporation (BOGC) was
short-named “Petrobangla” by Ordinance no. XV of 22 August, 1974. Through the repeal of
ordinance no LXX of 1974, Oil and Gas Development Corporation were abolished and all its
assets and liabilities were vested in Petrobangla. (Energy and Mineral Resources Division,
2000).
It was noticed that limited studies are devoted to integrated oil companies’ performance.
Several studies are followed to perform this study, Where Lameira (2012) and Olivier (2014)
conducted studies by applying standard financial ratios and multiple regression analysis in
relation to price volatility showing negative effect of financial crisis on international oil
companies in Eurozone.
In the world all the people are engage or depend directly or indirectly on gas, oil, and other
natural resource to improve or enhance better life. So it is very much important to know
about natural resources, mainly about gas sector of a country. At present our living standard
are directly depend on gas. The industries, houses and the vehicle are using the gas to
complete general function or activities. So its value is increasing day by day in our life. But
we are not conscious to use the gas in our area. We have to increase our knowledge, and
consciousness to use properly. Gas sector is one of the profitable business sectors in a country
2
if that has to properly utilized and use or reduce more wastes. To improve our gas sector not
only needed reduce wastes also need to proper monitoring, reporting and analyzing actual
defaults.
Bangladesh gas sector started its journey in the 1960s, but its expansion and integration
started to accelerate in the early 70s, spurred by the rising oil prices. Till now, 27 gas fields
have been discovered. Total recoverable proven and probable gas reserve of 27 gas fields has
been estimated to be at 27.12 TCF out of which estimated proven recoverable reserve (P1) is
20.77 TCF and the recoverable probable reserve is 6.35 TCF. Up to December, 2016 as much
as 12.57 TCF gas was produced, leaving only 14.55 TCF of recoverable gas. Currently, 20
gas fields are in production and out of 128 wells located in these gas fields, 98 are on stream.
(FAO, 2016)
Annual gas production report is based on gas and condensate production data received from
gas exploration, production, transmission and distribution companies. Information on gas
sales and purchase by the producers and distributers is collected from Annual and MIS report
of Petrobangla within a financial chart probable user may understand of gas sector of
Bangladesh at a glance. So every gas company should provide financial position to probable
user at a glance in the annual report.
As an industry, we are facing formidable challenges. In recent years, the demand for natural
gas has seen a sharp rise outpacing supply. Consequently, the gap between supply and
demand is increasing day by day at a higher rate persistently despite marked increase in
production. It may be noted that the country’s gas requirement is mounting keeping pace with
the growth in economic activity which averages 6% or above per annum. With rising
demand, the known reserve of natural gas in the country is depleting at increasing rates.
(Financial Annual Reporting, 2016)
The Government of Bangladesh has identified gas supply as a major constraint on GDP
growth, private investment and overall economic development. The Ministry of Power,
Energy and Mineral Resource are maintained annual report or financial statement to justify
their present position rather than previous year.
3
1.2 Statement of the Problem

Gas sector is very much valuable sector to creating or increasing the economic position of a
country. The developing country like our country gas and fuel is an important resource to
generate industrial production sector. When it is used and utilized properly than it makes or
creates more earnings and enhance economic value of a country. However the gas sector of
our country recently reveals its importance by providing its very much needy arena. Gas and
fuel is an important material for infrastructural development, for power generation, for
production related area. Though it has enough demand but production and distribution
channel fail to meet this demand. It may have several reasons. One may be technological
insufficiency, scarcity of resources and another may be lack of proper management and
accountability. This study is conducted to reveal the financial performance of the gas sector
of Bangladesh.
However, in our country gas sector does not provide high level of profitability scenario of
previous year. This sector does not add any influential economic value in present situation.
The study helps to find out the weakness of the financial position. The study covers to
analyze the financial performance of gas sector in Bangladesh.
1.3 Purpose of the Study

The study will help to understand the financial performance of gas sector of Bangladesh. A
brief but complete idea about the financial performance is provided in this study, which
includes the problems and prospects in this regard that is very useful for the customer,
stakeholders, investors, shareholders, creditors and suppliers, banks, clients’ probable or
potential investor and Government. The study target is to identify the corporate failure of the
company and depicts the overall view in regard to the solvency position of the gas sector.
1.4 Objectives of the study

1. Board objective: The Board objective of the study is to get asses the financial
performance of Gas Companies in Bangladesh.
2. Specific objective:
 To know the financial performance of gas Companies in Bangladesh.
 To explore of capitalised, investment and risk position through ratio analysis.
 To analysis the financial performance of various gas Companies in Bangladesh.
 To make some recommendations and put forward suggestions on the basis of the
findings of the study.
4
1.5 Significance of the study

Gas is potential and demandable natural resources. Scarcity of this resource is an
important issue in the world. Proper management of this resource can create economic
value to the country. The financial performance evaluation reveals the trend of
profitability and its earnings capacity.
Therefore this paper contributes to the enhancement of financial knowledge about this
sector in our country and provides an overview of its performance. Thus from the
findings of this study may benefit to management body and its related parties.
1.6 Scope of the Study

The title financial statement analysis of gas sector in Bangladesh denotes the scope of the
study.This report has been prepared according to extensive analysis of financial statements
and review of literatures. Also, the report has been prepared by the analysis of general gas
Companies in Bangladesh. Market information is considered for the Stock evaluation. The
study almost involves a series of years from 2012 to 2016
1.7 Limitations of the Study
 There were several departments for that reason I faced difficulties while collecting
information from those departments
 It was very difficult to collect the information from various incumbents for the job
restrictions.
 It is too much difficult to comment & suggest based on only the annual report &
information collected from written document.
 The report was limited by the size of sample.
 In case of performance analysis secondary data are used.
 Only five years accounting data are considered for financial analysis.
 The study completely depended on official records and annual reports.
5
1.8 Literature Review
Wadud et al. (2011) conducted study on Modeling and Forecasting Natural Gas Demand in
Bangladesh. This study reveals that, natural gas is the major indigenous source of energy in
Bangladesh and accounts for almost one-half of all primary energy used in the country. Per
capita and total energy use in Bangladesh is still very small, and it is important to understand
how energy, and natural gas, demand will evolve in the future. The study develops a dynamic
econometric model to understand the natural gas demand in Bangladesh, both in the national
level, and also for a few sub-sectors. This demand model shows large long run income
elasticity around 1.5 for aggregate demand for natural gas and the study also shows that a
larger demand in the future than predicted by various national and multilateral organizations.
Iskakov & Yilmaz (2015) conducted study on performance evaluation of major integrated oil
and gas companies. The research included Financial, Energy ratios analysis and Data
Envelopment Analysis (DEA), in which non-parametric method evaluated the performance
efficiencies of related companies. The study is conducted on four major oil companies (BP,
Exxon Mobil, Chevron, and Royal Dutch Shell. Findings of the research have revealed that
out of four analyzed companies, three of them have shown satisfactory level of performance.
However, among all given corporations, results verified that Exxon Mobil found to be the
most outstanding one. Because, notwithstanding to Global tough economic condition,
followed by low crude oil price, it has shown the excellence from both its financial and
operational aspects.
Hazarika (2015), the study has been undertaken to analyze the profitability, liquidity,
financial health and efficiency of top five oil and gas companies worldwide based on
revenue, net income and market value as per the values stated in the 2014 Financial Times,
Global 500 list and principal operations with reference to crude oil prices from 2007 to 2014.
Simple linear regression analysis has been employed to determine the statistical significance
and degree of dependence between fluctuating crude oil prices and financial performance
indicators. However, the study revealed that fluctuating oil prices do not significantly impact
on the profitability, liquidity, efficiency and financial health of top oil and gas companies.
Huang et.al (1996) states that at the micro level, changes in the price of oil, a key factor in the
production process, affect financial performance or cash flows of firms, in turn influencing
6
firms' dividend payments, retained earnings, and equity prices. Sadorsky (1999) documents
the fact that if the volatility of either demand shocks or supply shocks increases, this will
yield higher volatility in both aggregate stock market returns and oil prices.
Innocent, Enekwe (2015), the study was conducted to ascertain the relationship between
financial ratio analysis and corporate profitability in oil and gas sector in Nigeria. In
conducting this research work, the available data on the study are secondary source of data.
The population of quoted oil and gas companies in Nigeria stock exchange (NSE) at the end
of 2013 was fifteen (15). This work provides the relationship between financial ratio analysis
and corporate profitability. This work employed five (5) financial ratio analysis such as total
assets turnover ratio (TATR), debt equity ratio (DER), debtor’s turnover ratio (DTR), interest
coverage (IC) and creditors’ turnover ratio (CTR) in determining their relationship and effect
on corporate profitability (Return on assets) of oil and gas companies in Nigeria.
Aleisa et al. (2003) also examines the equity returns of firms operating in oil exploration,
refinery and marketing. Giovannini, Grasso, Lanza and Manera (2004) investigates the
correlations of volatilities in the stock price returns and their determinants for the most
important integrated oil companies, namely Bp (BP), Chevron-Texaco (CVX), Eni (ENI),
Exxon-Mobil (XOM), Royal Dutch (RD) and Total-Fina Elf (TFE). They measure the actual
co-risk in stock returns and their determinants “within” and “between” the different oil
companies.
Lofi (2009), states on the study paper that the financial ratios are calculated measurements
taken to analyze the economic welfare of a business. The ratios often compare financial
statement data with stock market trading information for published traded companies.
Financial ratios are important tool of economic decision making for all business.
7
Chapter Two: Methodology
8
Methodology
In order to generate this report only secondary data has been used. The source that have been
used to gather and collect data is given below-
2.1 Sample
Three gas company of Bangladesh are selected as sample for the periods 2012, 2013, 2014,
2015 and 2016. However it is mentioned that, gas companies have been selected based on the
availability of data.
2.2 Secondary Sources of Data

The necessary data will be collected from secondary sources such as:
 Website of Ltd Ministry of Power, Energy and Mineral Resource

 Annual report of Ministry of Power, Energy and Mineral Resource
 Website of Petrobangla Ltd.
 Annual Report of Petrobangla Ltd.
 Annual report of Titas Gas company Ltd.
 Annual report of Bangladesh Gas Field
 Annual report of BAPEX
 Published sources, like: Scheduled Bank Statistics,
 Different international statistical organizations
 Daily News Paper, Article etc.
2.3 Tools of analyzing data:

To analyse the Financial Performance Analysis of Gas sector the following tools are used:
1. Trend analysis,
2. Growth analysis
3. Percentage analysis and
4. Ratio analysis.
5. Modern technique
9
Chapter Three: Discussion & Analysis
10
3.1. Current ratio
Current ratio = current assets / current liability
Table 3.1.1: Current ratio analysis of sample Gas Company in Bangladesh
Year 2012 2013 2014 2015 2016
Titas gas com. Ltd 1.20:1 1.24:1 1.18:1 1.46:1 1.45:1

Bangladesh gas fields com.
1.18:1 1.78:1 1.31:1 1.48:1 1.35:1
Ltd
BAPEX com. Ltd 5.38:1 5.17:1 6.48:1 5.13:1 6.85:1
Source: Data from sample gas company Ltd’s Annual Report 2012 - 2016
Current ratio is a measure of a company’s short-term liquidity position. This ratio reveals the
company’s ability to meet its short- term obligations. A standard of 2:1 has been prescribed
as the ideal current ratio. From the above table shows that, Titas Gas Company’s highest
current ratio was in 2015 and it was 1.46:1 but in 2016 it was slightly dropped at 1.45:1. The
current ratio of Bangladesh gas Field Company was high in 2013 and it was 1.78:1 and in
2016 it decreased at 1.35:1 which is lower than the rule of thumb (2:1). The scenario of
BAPEX Company is in satisfactory position regarding this current ratio and it attained
highest ratio in 2016 and that is 6.85:1. Therefore the current ratio position of the gas sector
in 2016 maintained a sound short-term liquidity position.
11
3.2. Quick ratio
Quick ratio = Quick assets / Quick liability
Table 3.1.2: Quick ratio analysis of sample Gas Company
Year 2012 2013 2014 2015 2016
Titas gas com. Ltd 1.24:1 1.29:1 1.11:1 1.14:1 1.24:1
Bangladesh gas fields com. Ltd 2.42:1 2.24:1 1.56:1 1.58:1 1.36:1
BAPEX com. Ltd 3.78:1 3.47:1 4.01:1 3.34:1 4.06:1
It is also called acid-test ratio. It also acts as a stringent measure of the company’s short-term
liquidity position. A standard ratio of 1:1 is considered as an ideal quick ratio. The quick ratio
position of the three sample company has maintained well above the rule of thumb of 1:1 and
in case of BAPEX the ratio is marginally above than the other two sample company.
However it proves that the gas sector of Bangladesh has the ability to convert its current asset
quickly into cash so as to it can meet its current liabilities.
12
3.3. Return on Investment Ratio
ROI = (PAT/ Sales × Sales/ total assets) 100
Table 3.1.3: Return on Investment analysis of sample Gas Company
Year 2012 2013 2014 2015 2016
Titas gas com. Ltd 21.22% 24.29% 23.14% 19.66% 21.23%

5.08% 4.27% 4.48% 5.35% 4.42%
Ltd
BAPEX com. Ltd 3.26% 2.92% 1.31% 3.36% 3.66%
30.00%
25.00%
20.00%
Titas gas com. Ltd

15.00%
Bangladesh gas fields com. Ltd
BAPEX com. Ltd
10.00%
5.00%
0.00%
2012 2013 2014 2015 2016
Figure 3.1.1: Return on Investment analysis as percentage
13
The overall profitability is measured by the return on investment, which is the product of net
profit ratio and investment turnover. It is a central measure of the earning power or operating
efficiency of a company. The earning capacity of Titas Gas Company is performing well
rather than other two sample companies. The highest position was in 2013 (24.29%) but it
was quite decreased in 2016 (21.23%). The lowest position was in 2014 by BAPEX Gas
Company and in 2016 it was increased at 3.66%. There is no rule of thumb for the ROI but a
higher ratio is preferred to a lower ratio. The overall scenario reveals that the average
profitability position of gas sector just maintain a marginal ratio not so good performer in
industrial sector.
3.4. Net Profit Ratio
NPR= (PAT/ Sales) 100
Table 3.1.4: Net profit ratio analysis of sample Gas Company
Year 2012 2013 2014 2015 2016
Titas gas com. Ltd 13.72% 13.53% 12.31% 12.19% 13.11%
Bangladesh gas fields com. Ltd 5.88% 5.04% 5.29% 7.18% 6.01%
BAPEX com. Ltd 87.12% 89.98% 43.28% 80.24% 97.76%

14
120.00%
100.00%
80.00%
Titas gas com. Ltd

60.00%
BAPEX com. Ltd
40.00%
20.00%
0.00%
2012 2013 2014 2015 2016
Figure 3.1.2: Net profit ratio analysis as a percentage
Net profit ratio is a measure of the company’s managerial ability to provide reasonable
compensation to the owner for providing their capital at risk and also to withstand adverse
economic conditions due to falling demand, reduce selling price and increased cost of
production. BAPEX maintain a high net profit ratio and it attain highest ratio in 2016. The net
profit ratio of Titas and Bangladesh gas field is lower rather than BAPEX. A higher net profit
ratio denotes that higher managerial efficiency and better ability of the company to recover
from its revenues the cost of services, the operating expenses and the cost of borrowed funds,
leaving reasonable margin on the capital invested. In 2014 BAPEX was dropped at 43.8% but
over the next two years it was succeed to overcome its failure.
15
3.5. Return on Total Capital Employed
ROCE = (PAT/ Average shareholder equity) 100
Table 3.1.5: Return on total capital Employed analysis of sample Gas Company
Year 2012 2013 2014 2015 2016
Titas gas com. Ltd 42.6% 40.65% 31.57% 26.04% 25.28%
Bangladesh gas fields com. Ltd 9.23% 9.88% 9.22% 11.78% 9.36%
BAPEX com. Ltd 6.64% 5.54% 2.31% 6.10% 5.73%

ROCE Analysis
45.00%
40.00%
35.00%
percentage of ROCE value
30.00%
Titas gas com. Ltd
25.00% Bangladesh gas fields com. Ltd
BAPEX com. Ltd
20.00%
15.00%
10.00%
5.00%
0.00%
2012 2013 2014 2015 2016
Figure 3.1.3: Return on total capital Employed analysis as percentage
16
ROCE is a measure of the company’s profitability based on long-term capital employed

contrary to total assets. Higher the ROCE more efficient is the company’s management in the
use of long-term capital. In 2016 highest ROCE was maintained by Titas gas company and
that was 25.28% and lowest by BAPEX which was 5.73%. Titas attained highest ROCE in
2012 but it was deceased year by year. The above analysis disclosed that the ROCE position
of the gas sector was decreased rather than the previous year.
3.6. Debt Equity Ratio
Debt equity ratio = long term debt / shareholder equity
Table 3.1.6: Debt Equity ratio analysis of sample Gas Company
Year 2012 2013 2014 2015 2016
Titas gas com. Ltd 10:90 07:93 05:95 03:97 02:98
Bangladesh gas fields

14:86 13:87 17:83 16:84 27:73
com. Ltd
8.34:91.6
BAPEX com. Ltd 7.65:92.35 6.10:93.9 7.0:93 3.4:65.6
6
Debt-Equity is ratio widely used to judge the long-term liquidity position of the company. It
throws light on the long term solvency of the company. It represents the relationship between
the firm’s borrowed capital and its ownership capital. A debt equity ratio of 1:1 is considered
to be ideal for both the debt holders and the equity holders as their stakes in the business are
equal. Any alternation to this such as a debt equity ratio of 2:1 or 3:1 would mean the debt
holders’ stake in the business is half or one third of that of the debt holder.
17
A higher debt equity ratio is favored by the equity holders in order to derive the benefits
associated with financial leverage the debt holder would, however, favor inclusion of more
and more equity capital in the capital structure so that their investments are safe, should the
firm go for liquidation. In the above analysis are showing that, the debt equity ratio not
satisfy the standard and the sample company so much flexible the debt equity of particular
year.
3.7. Return on Average Fixed Assets
RAFA= (PAT *100 / Operating Average Fixed assets)
Table 3.1.7: Return on Average Fixed Assets analysis of sample Gas Company
Year
2012 2013 2014 2015 2016
Titas gas com. Ltd 64.54
82.27% 81.33% 84.05% 96.82%
%
Bangladesh gas fields com. Ltd 25.78
20.70% 21.25% 28.91% 20.34%
%
BAPEX com. Ltd 11.46
10.25% 8.65% 20.96% 27.92%
%
18
2.5
1.5
Titas gas com. Ltd
BAPEX com. Ltd
1
0.5
0
2012 2013 2014 2015 2016
Figure 3.1.4: Return on Average Fixed Assets analysis as a percentage
The return on average fixed asset of the gas field scenario is better in Titas Gas Company. In
2016 it was 96.82% which is greater than the other previous year. The table shows that the
company increase its return on average fixed asset year by year. On the other hand
Bangladesh gas field was attained highest return in 2015 and it was 28.91% and it was
decreased in 2016 by 8.57%. BAPEX company’s highest return on fixed asset was in 2016
27.92%. So the overall return from the fixed asset in gas sector was satisfactory position in
2016.
19
3.8. Debt to Total Assets Ratio
Table 3.1.8: Debt to total Assets ratio analysis of sample Gas Company
Year 2012 2013 2014 2015 2016
Titas gas com. Ltd 6.22% 5.53% 4.90% 2.89% 2.40%

7.20% 6.41% 8.21% 7.31% 18.51%
Ltd
BAPEX com. Ltd 8.08% 8.11% 5.61% 8.43% 31.80%

35.00%
30.00%
25.00%
20.00%
Titas gas com. Ltd
15.00% BAPEX com. Ltd
10.00%
5.00%
0.00%
2012 2013 2014 2015 2016
Figure 3.1.5: Debt to total Assets ratio as a percentage
Debt to Total assets ratio is calculated by dividing total debt by total assets is a measure of
the portion of total assets financed by debt. In case of Titas gas company ltd, the said ratio is
found to be 6.22%, 5.53%, 4.90%, 2.89% and 2.40% respectively for the years 2012 through
2016. The higher ratio of debt to total assets means the higher the degree of leverage, and
20
consequently, financial risk. In other words, this shows how many assets the company must
sell in order to pay off all of its liabilities. In case of debt to total assets ratio Titas Gas
Company belong to a secure position and consistently it provides lower ratio rather than the
other two sample companies.
3.9. MDA (Multiple Discriminate Analysis)
Z= 0.012x1 +0.014x2+ 0.033x3+ 0.006x4+ 0.999x5
Here,
X1= working capital / total assets
X2= Retained earnings / total assets
X3= EBIT / total assets
X4= Market value of equity / Book Value of total debt
X5= sales / total assets
Z= (comment) total solvency position
2.99 Or above = healthy,
1.88 Or less = sick,
1.88 to 2.99 = risk zone
21
Table 3.1.9: Multiple Discriminate Analysis of sample Gas Company
Year 2012 2013 2014 2015 2016

Titas gas com. Ltd 1.62 1.89 2.01 1.83 1.91
0.911 0.90 0.90 0.81 0.77
Ltd
BAPEX com. Ltd 0.096 0.096 0.12 0.10 0.05
MDA Analysis
2.5
Titas gas com. Ltd

1.5 Bangladesh gas fields com. Ltd
BAPEX com. Ltd
0.5
0
2012 2013 2014 2015 2016
Figure 3.1.6: Multiple Discriminate Analysis of sample as a percentage
Multiple Discriminate Analysis or MDA is a multivariation technique used by Altman to

predict corporate failure. Under this technique, a single discriminate score, called Z, is
calculated for each year by using five financial ratios variables.
As regards prediction of corporate bankruptcy, firms having a Z score of 2.99 and above are
considered to be healthy and those having a Z score of 1.81 or less are considered to be
22
potentially sick, Firm operating within the Z score of 1.81 to 2.99 is taken as operating in the
risk zone. Altman’s MDA is thus a very useful technique which can be applied to judging the
firm’s total solvency position.
The above calculation reveals that Titas gas co’s Z score for the year 2012 and 2015 was in
sick zone and from the year 2013, 2014 and 2016 Z score was above 1.88 which denote a risk
zone of the company and in future it may enter in sick zone. Another two sample company
resided at potentially sick zone because the Z score was under 1.88. So from the observation
of the sample company analysis the gas sector of Bangladesh is in sick zone.
3.10. Total assets growth analysis
Table 3.1.10: Total Assets Growth analysis of sample Gas Company (crore)
Year 2012 2013 2014 2015 2016
Titas gas com. Ltd 3452.63 3776.86 3849.94 4626.26 4835.18
Growth 9.39% 1.93% 20.16% 4.51%

2230.18 2357.86 2745.19 3376.36 3546.76
Ltd
Growth 5.72% 16.42% 22.99% 5.04%
BAPEX com. Ltd 1676.48 1789.32 1848.34 2296.20 3288.84
Growth 6.73% 3.29% 24.23% 43.22%
23
Total assets growth analysis

50.00%
45.00%
43.22%
40.00%
35.00%
Titas gas com. Ltd
30.00% Bangladesh Gas Fields com. Ltd
25.00%
22.99%
20.00% 20.16%
16.42%
15.00%
9.39%
10.00% 6.73%
5.72% 5.04%
3.29% 4.15%
5.00% 1.93%
0.00%
2012 2013 2014 2015 2016
Figure 3.1.7: Total Assets Growth analysis as a percentage
The growth of total asset was highest in 2015. All the sample company show rising trend
during this year. The growth percentage was 20.16%, 22.99% and 24.23% of the Titas Gas
Company, Bangladesh gas field and BAPEX respectively. In 2016 BAPEX was in highest
position in growth percentage of total asset and it was 43.22%.
24
3.11. Sales growth analysis
Table 3.1.11 Sales Growth analysis of sample Gas Company (crore)
Year 2012 2013 2014 2015 2016
5343.8
Titas gas com. Ltd 6,781.37 7237.51 7462.55 7832.08
4
Growth 26.90% 6.72% 3.10% 4.95%
Bangladesh gas fields com. 1927.6
1999.59 2324.42 2516.31 2611.02
Ltd 6
Growth 3.73% 16.24% 8.25% 3.76%
BAPEX com. Ltd 62.84 58.23 56.14 96.32 123.23
Growth (7.33%) (3.58%) 71.57% 27.93%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00% Titas gas com. Ltd
20.00%
BAPEX com. Ltd
10.00%
0.00%
2012 2013 2014 2015 2016
-10.00%
-20.00%
Figure 3.1.8: sales Growth as a percentage
25
The sales growth percent of Titas was followed by a decreasing trend. In 2013 where the
percentage was 26.90%, in 2016 it was stood at 4.95%. In case of Bangladesh gas Fields
Company the highest rate was in 2014 and it was 16.24% but it also decreased at 3.76% in
2016. In 2013, 2014 BAPEX was in negative growth trend and in 2015 it achieved 71.57%
which is highest percentage level in selected gas companies.
3.12. EBIT growth analysis
Table 3.1.12 EBIT growth analysis of sample company (crore)
Year 2012 2013 2014 2015 2016
Titas gas com. Ltd 986.01 1,233.14 1,201.17 1226.54 1379.84
Growth 25.06% (2.59)% 2.11% 12.50%

181.53 161.46 196.99 289.09 310.10
Ltd
Growth (11.06)% 22.01% 46.75% 7.27%
BAPEX com. Ltd 87.61 83.84 38.89 123.66 173.32

217.97
Growth (4.30)% (53.61)% 40.16%
%
26
EBIT Growth Analysis

300.00%
217.97%
250.00%
200.00%
BAPEX com. Ltd
150.00%
Titas gas com. Ltd
100.00%
40.16%
50.00% 46.75%
25.06% 22.01% 7.27%
-11.06%
-4.30% 12.50%
-2.59%
0.00% 0.00% 2.11%
2012 2013 2014
-53.61% 2015 2016
-50.00%
Figure 3.1.9: EBIT Growth Analysis as a percentage
The Earnings before interest and taxes of the selected gas company was increased year after
year. But growth rate are not increase at equal level year after year. The titas Gas company
highest growth level 25.06% in 2014, at this time another two sample Gas company are not
increase the EBIT. The BAPEX was not maintaining at growth level consistency year after
year. In case of Bangladesh gas Fields Company the highest rate was in 2015 and it was
46.75% but it also decreased at 7.27% in 2016. In 2013, 2014 BAPEX was in negative
growth trend and in 2015 it achieved 217.97% which is highest percentage level in selected
gas companies. Overall Gas Company was not portfolio at growth level of percentage.
27
3.13. PAT Growth of sample gas company Ltd.
Table 3.1.13: PAT Growth analysis of sample Gas Company (crore)
Year 2012 2013 2014 2015 2016
Titas gas com. Ltd 733.31 917.75 891.21 909.64 1026.89
Growth 25.15% (2.91%) 2.06% 12.88%

Bangladesh gas
113.45 100.91 123.14 180.70 156.99
fields com. Ltd
Growth (11.05%) 22.03% 46.74% (13.12%)
BAPEX com. Ltd 54.75 52.40 24.30 77.29 120.47
Growth (4.29%) (53.66%) 218.06% 55.86%

250.00%
200.00%
150.00%
100.00% Titas gas com. Ltd

0.00%
2012 2013 2014 2015 2016
-50.00%
-100.00%
Figure 3.1.10: PAT Growth analysis as a percentage
In 2016 growth rate of Titas Gas Company was 12.88% and in 2015 it was only 2.06% in
2015. It highest was in 2013(25.15%). BAPEX Company’s growth trend was followed by a
28
negative figure in 2013 and 2014. In 2015 it was increased at a high level of significance and
it was around 218.06%. The growth rate of Bangladesh gas field in 2016 was -13.12%.
3.14. Retained Earnings Growth Analysis
Table 3.1.14: Retained earnings analysis of sample Gas Company (crore)
Year 2012 2013 2014 2015 2016
Titas gas com. Ltd 1167.16 1804.12 2368.85 3280.73 3960.52

Growth 54.57% 31.30% 38.49% 20.72%
976.53 1246.26 1736.35 2154.95 2748.65
Ltd
Growth 27.62% 39.32% 24.10% 27.55%
BAPEX com. Ltd 34.53 32.57 (37.69) 30.59 173.14
(215.72%
Growth (5.67%) (181.162) 466.00%
)
Retained earnings growth analysis

600.00%
500.00% 466.00%
400.00%

Titas gas com. Ltd
200.00%
48.90%
27.62% 39.32%
100.00% 54.57% 24.10% 27.55%
31.39% 38.49% 20.72%
0.00% 0.00%
2012 2013 2014 2015 2016
-100.00% -215.72% -181.16%
-200.00%
Source: Data from sample gas company Ltd’s Annual Report 2012 – 2016
Figure 3.1.11: Retained earnings growth analysis as percentage
29
The retained earnings of BAPEX Gas Company is increased huge in 2016 and from the year
2012 to 2015 it was in negative trend. Bangladesh Gas Fields Company depicts an average
view in maintaining retained earnings.
30
Chapter Four:
Findings and Recommendation
31
4.1 Major findings of Analysis:

This study of the overall performance and activities of Gas Company Limited in Bangladesh
have got some major findings, which are given below:
 The financial performance of the sample Gas Company does not satisfactory;
 Reserve& Retained Surplus of the gas was favourable (Figure 3.1.2);
 Shareholders ‘equity is increasing year by year.
 The total assets of the Gas sector are increased. But increasing level or growth level of
activity are not satisfactory. The large growth rate of assets of Sample Company is in
BAPEX (43.22%) in 2016 and others are in average level.
 The current ratio of the Gas sector is not satisfying the standard. Among the sample
Gas Companies, BAPEX Company limited is in good position and it is 6.85: 1 in
2016, but other sample Gas Companies are below the rule of thumb (2:1).
 The gas sector of Bangladesh has the ability to convert its current asset quickly into
cash so as to it can meet its current liabilities it is measured through the quick ratio
analysis. All sample company provide a satisfactory result regarding this ratio.
 The overall scenario reveals that the average profitability position of gas sector just
maintain a marginal ratio not so good performer in industrial sector.
 The ROA position of Titas Gas Company provides better performance rather than the
others.
 Net Profit after Tax of BAPEX achieved 97.76% and the others also have average
ratio. So it is to be said that the overall managerial ability of the gas sector is quite
well.
 The higher the ratio, the higher the degree of leverage, and consequently, financial
risk. In other words, this shows how many assets the company must sell in order to
pay off all of its liabilities. In case of debt to total assets ratio Titas Gas Company
belong to a secure position and consistently it provides lower ratio rather than the
other two sample companies.
 Titas gas company maintained a sound ratio in ROCE and ROA.
 The solvency position of the gas sector of Bangladesh is not in satisfactory level. The
observation from the analysis of the sample company, the gas sector of Bangladesh is
in sick zone.
 The growths of total assets of the sample companies show a rising trend during 2016.
The growth percentage was 20.16%, 22.99% and 24.23% of the Titas Gas Company,
32
Bangladesh gas field and BAPEX respectively. Among them BAPEX is in good
performance.
 Overall performance in sales increasing percentage shows a fluctuated scenario but
the sales position the sample companies is in good position.
 In case of Bangladesh gas Fields Company the highest EBIT was in 2015 and it was
46.75% but it decreased at 7.27% in 2016. In 2013, 2014 BAPEX was in negative
growth trend and in 2015 it achieved 217.97% which is highest percentage level in
selected gas companies. During 2016 BAPEX secure the highest position.
 The PAT of the selected gas companies is satisfactory except BAPEX in 2014. But
after 2014 BAPEX increase the PAT and PAT growth level is 55.86%.
4.2 Recommendation
The Gas sectors of Bangladesh are facing some problems but it is also true that these
problems may be turned into opportunity if the authority takes some initiatives. The
initiatives may be as follows:
1. The working condition should be improved; employees must be provided with
adequate working equipment and technological support in order to achieve better
performance
2. Though capital adequacy ratio of the gas sector was higher than the minimum
required capital adequacy ratio; it has to be improved more;
3. The growth of PAT has to be increased;
4. Sound portfolio has to be maintained to enhance financial performance of the gas
sector;
5. Profitability of the gas sector has to be enhanced to achieve targeted goals and
objectives;
6. Return on asset and Return on equity have to be increased to ensure sustainable
profitability;
7. The trend of Earnings per share (EPS) have to be increased consistently;
8. Higher current ratio indicates that the gas sectors are in strong position to meet its
current obligations. So the gas sectors have to try for maintaining this increasing
trend of current ratio;
9. The gas sectors should recruit experienced personnel in order to provide better and
efficient services and ensuring growth;
33
10. Ensure collection of periodical reports, returns and information about the activities of
projects financed;
11. The competing gas sector performance should be carefully monitored regularly;
12. New profitable sector should be opened in the economically promising area;
13. Political and organizational pressure should be eliminated in this sector;
14. Correct and faithful information presentation should be enhanced so that the
information made available to its interested users;
15. The gas company should be listed to the BSEC;
16. Developing an webpage and make available interim and annual financial report
through the website;
17. New and modern equipment should be arranged for providing better services;
18. The gas sectors should regularly review and update the present marketing strategy.
19. Maintain various models to reduce cost of production, and distribution.
20. The increase the sales of gas and distribution in customer and also need to increase
the production and maintain minimum wastage.
21. The Gas sector should increase PAT and maintain a consistency in growth level year
after year.
4.3. Conclusion
As an industry, we are facing formidable challenges. In recent years, the demand for natural
gas has seen a sharp rise outpacing supply. Consequently, the gap between supply and
demand is increasing day by day at a higher rate persistently despite marked increase in
34
production. It may be noted that the country’s gas requirement is mounting keeping pace with
the growth in economic activity which averages 6% or above per annum. With rising
demand, the known reserve of natural gas in the country is depleting at increasing rates.
Today the gas sector of a country is mostly influenced by price, government regulations,
supply and demand and geological conditions. With given volatile economic and geopolitical
condition prevailed in the world, it is no doubt gives a premise to wonder of whether the
global gas companies are able to sustain this performance efficiencies in the energy market.
The study reveals that, the gas sector of Bangladesh has good future and proper attention is
needed to get more profit from this sector. The financial performance of the sample Gas
Company does not satisfactory.
35
References
Annual Report of Bangladesh Power Development Board (BPDB), 2007
Hanif Mohammed, Mukherjee Amitabha, Modern Accountancy, New Delhi: Tata Mcgraw
Hill
http://energy.ihs.com/News/publishedarticles/articles/bangladesh-natural-gas perspective.htm
http://www.energycommunity.orgAnnual report of Petrobangla
Kothari C.R., Research methodology Method & Techniques, 2nd edition, New Delhi: New
Age
Ministry of Power, Energy and Mineral Resources 2012. National Energy Policy, Draft
report, Dhaka
Ministry of Power, Energy and Mineral Resources 2013. Renewable energy policy 2013.
Power Division, Dhaka
Petrobangla 2009. Annual Report 2008. Bangladesh Oil, Gas and Mineral Corporation,
Dhaka
Dhaka
Dhaka
Dhaka
Dhaka
Dhaka
Iskakov, Komssuogluyilmaz.N, (2015). PERFORMANCE EVALUATION OF MAJOR

INTEGRATED OIL & GAS COMPANIES. International Journal of Economics, Commerce
and Management, vol.3(6)
36
Journal Fortune, “Global 500”. Exxon Mobil Corporation’s profile. 17.08.2016,

http://fortune.com/global500/exxon-mobil-5/
Saul B. S. “Uncertainty and Risk Analysis in Petroleum Exploration and Production”.

23.02.2015, http://www.ige.unicamp.br/terrae/V6/PDF-N6/T-a3i.pdf
Simkins, B.J. (2013). Energy finance and economics: analysis and valuation, risk
management, and the future of energy. Kolb Series in Finance. Published by John Wiley &
Sons Inc. New Jersey.
Talevski, D. (2009) “Strategic and Financial Analysis in the oil Industry. Petrobras
Shareholders value potential and fair value of stock”. Aurus School of Business. MC in
Finance and International Business.
Vause, B. (2009). Guide to Analysing Companies. Published by profile books ltd. 3a

Exmouth House, Pine Street, London.
Wadud Z, Graham DJ and Noland RB 2010. Gasoline Demand with Heterogeneity in

Household Responses. The Energy Journal 31(1), 47-73
Websites: various publications by Dhaka Stock Exchange (www.dsebd.org)
Websites: various publications by Titas Gas Company Ltd (www.titasgas.org.bd)
Yunging. D.T, (2008) “Investing in Oil: an assessment of Oil companies’ stock performance
outlook”. B.A., California State University, Sacramento.
37
Appendix 1
Name of Ratio Company Name 2012 2013 2014 2015 2016

Titas gas com. Ltd 1.20:1 1.24:1 1.18:1 1.46:1 1.45:1
Current Ratio
BGF com. Ltd 1.18:1 1.78:1 1.31:1 1.48:1 1.35:1
(2:1)
BAPEX com. Ltd 5.38:1 5.17:1 6.48:1 5.13:1 6.85:1
Titas gas com. Ltd 1.24:1 1.29:1 1.11:1 1.14:1 1.24:1
Quick Ratio
BGF com. Ltd 2.42:1 2.24:1 1.56:1 1.58:1 1.36:1
(1:1)
BAPEX com. Ltd 3.78:1 3.47:1 4.01:1 3.34:1 4.06:1
Return on Titas gas com. Ltd 21.22% 24.29% 23.14% 19.66% 21.23%
Investment BGF com. Ltd 5.08% 4.27% 4.48% 5.35% 4.42%
Ratio ( Higher
Ratio) BAPEX com. Ltd 3.26% 2.92% 1.31% 3.36% 3.66%
Titas gas com. Ltd 13.72% 13.53% 12.31% 12.19% 13.11%
Net Profit Ratio BGF com. Ltd 5.88% 5.04% 5.29% 7.18% 6.01%
BAPEX com. Ltd 87.12% 89.98% 43.28% 80.24% 97.76%
Return on Total Titas gas com. Ltd 42.6% 40.65% 31.57% 26.04% 25.28%
capital BGF com. Ltd 9.23% 9.88% 9.22% 11.78% 9.36%
Employed BAPEX com. Ltd 6.64% 5.54% 2.31% 6.10% 5.73%
Titas gas com. Ltd 10:90 07:93 05:95 03:97 02:98
Debt Equity
BGF com. Ltd 14:86 13:87 17:83 16:84 27:73
Ratio (60:40)
BAPEX com. Ltd 8.34:91.66 7.65:92.35 6.10:93.9 7.0:93 3.4:65.6
Return on Titas gas com. Ltd 64.54% 82.27% 81.33% 84.05% 96.82%
Average Fixed BGF com. Ltd 25.78% 20.70% 21.25% 28.91% 20.34%
Assets BAPEX com. Ltd 11.46% 10.25% 8.65% 20.96% 27.92%
Titas gas com. Ltd 6.22% 5.53% 4.90% 2.89% 2.40%
Debt to Total
BGF com. Ltd 7.20% 6.41% 8.21% 7.31% 18.51%
Assets Ratio
BAPEX com. Ltd 8.08% 8.11% 5.61% 8.43% 31.80%
MDA (2.99 Or
Titas gas com. Ltd 1.62 1.89 2.01 1.83 1.91
above = healthy,
1.88 Or less =
sick, 1.88 to BGF com. Ltd 0.911 0.90 0.90 0.81 0.77
2.99 = risk
zone ) BAPEX com. Ltd 0.096 0.096 0.12 0.10 0.05
APPENDIX 2
Titas yearly Z value
Year 2012 2013 2014 2015 2016
working capital 385.37 521.75 416.57 1113.32 1179.63
retained earning 1167.16 1804.12 2368.85 3280.73 3960.52
EBIT 986.01 1,233.14 1,201.17 1226.54 1379.84
market value of equity 2099.79 2824.64 3616.32 4575.67 5255.66
Sales 5343.84 6,781.37 7237.51 7462.55 7832.08
total assets 3452.63 3776.86 3849.94 4626.26 4835.18
book value of debt 214.87 208.88 188.85 133.97 116.28
x1 * 0.012 0.001339 0.001658 0.001298 0.002888 0.002928
38
x2* 0.014 0.004733 0.006687 0.008614 0.009928 0.011467

x3* 0.033 0.009424 0.010774 0.010296 0.008749 0.009417
x4* 0.006 0.058634 0.081137 0.114895 0.204927 0.27119
x5* 0.999 1.546211 1.793709 1.878022 1.611472 1.618192
Z 1.620342 1.893966 2.013126 1.837964 1.913194
BGF yearly Z value

Year 2012 2013 2014 2015 2016
working capital 248.88 325.62 297.02 811.67 865.05
retained earning 976.53 1246.26 1736.35 2154.95 2748.65
EBIT 181.53 161.46 196.99 289.09 310.1
Sales 1927.66 1999.59 2324.42 2516.31 2611.02
total assets 2230.18 2357.86 2745.19 3376.36 3546.76
x1 * 0.012 0.001339 0.001657 0.001298 0.002885 0.002927
x2* 0.014 0.00613 0.0074 0.008855 0.008935 0.01085
x3* 0.033 0.002686 0.00226 0.002368 0.002826 0.002885
x4* 0.006 0.037499 0.050792 0.048634 0.055872 0.025802
x5* 0.999 0.863487 0.847205 0.845878 0.744528 0.735434

Z 0.911141 0.909314 0.907033 0.815045 0.777898
BAPEX yearly Z value

Year 2012 2013 2014 2015 2016
working capital 425.63 753.26 908.43 1111.25 1533.02
retained earning 34.53 32.57 -37.69 30.59 173.14
EBIT 87.61 83.84 38.89 123.66 173.32
Sales 62.84 58.23 56.14 96.32 123.23
total assets 1676.48 1789.32 1848.34 2296.2 3288.84
X1 * 0.012 0.003047 0.005052 0.005898 0.005807 0.005594
X2* 0.014 0.000288 0.000255 -0.00029 0.000187 0.000737
X3* 0.033 0.001725 0.001546 0.000694 0.001777 0.001739
X4* 0.006 0.053757 0.056817 0.091993 0.05724 0.011439
X5* 0.999 0.037446 0.032511 0.030343 0.041906 0.037432
Z 0.096262 0.09618 0.128643 0.106917 0.056941
39

Chapter One: Introduction: Financial Performance Analysis of Gas Sector in Bangladesh

Uploaded by

Copyright:

Available Formats

You might also like

Chapter One: Introduction: Financial Performance Analysis of Gas Sector in Bangladesh

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Chapter One: Introduction: Financial Performance Analysis of Gas Sector in Bangladesh

Uploaded by

Copyright:

Available Formats

Financial Performance Analysis of Gas Sector in Bangladesh

Chapter One: Introduction

1.2 Statement of the Problem

1.3 Purpose of the Study

1.4 Objectives of the study

1.5 Significance of the study

1.6 Scope of the Study

1.7 Limitations of the Study

1.8 Literature Review

Chapter Two: Methodology

2.2 Secondary Sources of Data

 Website of Ltd Ministry of Power, Energy and Mineral Resource

2.3 Tools of analyzing data:

Chapter Three: Discussion & Analysis

3.1. Current ratio

Current ratio = current assets / current liability

Table 3.1.1: Current ratio analysis of sample Gas Company in Bangladesh

Year 2012 2013 2014 2015 2016

Titas gas com. Ltd 1.20:1 1.24:1 1.18:1 1.46:1 1.45:1

3.2. Quick ratio

Quick ratio = Quick assets / Quick liability

Table 3.1.2: Quick ratio analysis of sample Gas Company

Year 2012 2013 2014 2015 2016

Titas gas com. Ltd 1.24:1 1.29:1 1.11:1 1.14:1 1.24:1

BAPEX com. Ltd 3.78:1 3.47:1 4.01:1 3.34:1 4.06:1

3.3. Return on Investment Ratio

ROI = (PAT/ Sales × Sales/ total assets) 100

Table 3.1.3: Return on Investment analysis of sample Gas Company

Year 2012 2013 2014 2015 2016

Titas gas com. Ltd 21.22% 24.29% 23.14% 19.66% 21.23%

Bangladesh gas fields com.

BAPEX com. Ltd 3.26% 2.92% 1.31% 3.36% 3.66%

Titas gas com. Ltd

Figure 3.1.1: Return on Investment analysis as percentage

3.4. Net Profit Ratio

NPR= (PAT/ Sales) 100

Table 3.1.4: Net profit ratio analysis of sample Gas Company

Year 2012 2013 2014 2015 2016

Titas gas com. Ltd 13.72% 13.53% 12.31% 12.19% 13.11%

BAPEX com. Ltd 87.12% 89.98% 43.28% 80.24% 97.76%

Titas gas com. Ltd

Figure 3.1.2: Net profit ratio analysis as a percentage

3.5. Return on Total Capital Employed

ROCE = (PAT/ Average shareholder equity) 100

Year 2012 2013 2014 2015 2016

Titas gas com. Ltd 42.6% 40.65% 31.57% 26.04% 25.28%

BAPEX com. Ltd 6.64% 5.54% 2.31% 6.10% 5.73%

Figure 3.1.3: Return on total capital Employed analysis as percentage

ROCE is a measure of the company’s profitability based on long-term capital employed

3.6. Debt Equity Ratio

Debt equity ratio = long term debt / shareholder equity

Table 3.1.6: Debt Equity ratio analysis of sample Gas Company

Year 2012 2013 2014 2015 2016

Titas gas com. Ltd 10:90 07:93 05:95 03:97 02:98

Bangladesh gas fields

3.7. Return on Average Fixed Assets

RAFA= (PAT *100 / Operating Average Fixed assets)

Figure 3.1.4: Return on Average Fixed Assets analysis as a percentage