Linde Bangladesh Limited

Credit Rating Report

Short
Rating Long Term
Valid From Valid Till Term Outlook
Action Rating
Rating
September September
Initial AA+ ST-1 Stable
04, 2019 03, 2020

Year of Incorporation : 1973 (Bangladesh Oxygen Limited)

Managing Director : Mr. Mohsin Uddin Ahmed

Authorized Capital : BDT 200.00 million

Paid up Capital : BDT 152.18 million

Bank : Standard Chartered Bank

The Hong Kong & Shanghai Banking Corporation Ltd.

Bank Loan : Working Capital BDT 1,810.25 million (As on 31 December, 2018)

Contact Analysts : Md. Shaiful Hasan shaiful@emergingrating.com

Fahd Bin Ramiz fahd@emergingrating.com

Credit
Analysis
Unsolicited Rating
 Emerging Credit Rating Ltd

CREDIT ANALYSIS
Unsolicited Rating

2019 Initial Review

Linde Bangladesh Limited
Major Rating Factors
Strengths Strong Group support and experienced management
Strong client base and good brand image
Good relationship with buyers
Reliable & efficient after sales service
High capital intensive setup
Market pioneer and leader in the industrial gas & chemical industry in the country
Increased production capacity

Challenge/ Existence of low quality products in the market

Risks High fluctuation of raw material prices
Changes in any government or international policy

Rationale Emerging Credit Rating Limited (ECRL) has assigned long term credit rating AA+
(Pronounced as double A plus) and short term credit rating of ST-1 for Linde
Bangladesh Limited (Hereinafter referred as ‘LNBL’ or ‘the company’ or ‘the concern’).
The outlook on the rating is Stable. The ratings are consistent with ECRL’s
methodology for this type of company. The rating takes into account business profile,
past records and trend of operating performance, balance sheet strength, bank
information and loan repayment history of the company. The rating is based on the
audited financial statements of FY2016-FY2018, 2nd quarter unaudited financial
statements of FY2019 and other relevant quantitative and qualitative information
available till the date of the rating.
Linde Bangladesh Limited, a member of the Linde Group, has been contributing to the
economy of Bangladesh since before the country’s independence. However, the
company was incorporated as Bangladesh Oxygen Limited in 1973. Eventually, the
concern changed the name to Linde Bangladesh Limited in 1995. LNBL sells products
to more than 35,000 customers from a wide spectrum of industries running from
chemicals and petrochemicals to steel. The concern operates their business from three
major locations across the country to support their customers. LNBL has been
expanding its business operations for the last 60 years.
LNBL primarily engages in the production and distribution of industrial and medical
gases, anesthesia, welding products and equipment, and ancillary equipment. It also
engages in the rental of cylinders for vacuum insulated evaporators. The company
operates through the following segments: Industrial gases, Hard-goods, and
Healthcare. The Bulk segment comprises of liquid industrial oxygen, liquid nitrogen and
carbon dioxide. The Hard-goods segment contains industrial compressed packaged
gases and welding products. The Healthcare segment includes all services related to
the supply of medical gases, such as medical oxygen and nitrous oxide, cylinders and
accessories, supply and installation of medical gas pipeline systems and maintenance of
medical equipment.
The business performance in FY2018 was satisfactory. Revenue grew by 10.50% over
the previous year due to growth in all business segments. However, primarily because
of sharp rise in the price of imported raw material for hard goods, profits rose by a
modest 5.40%. Since LNBL set up an ASU plant in 2017 it has adequate production of
air gases to meet current demands and maintain emergency reserves. This has enabled

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 the company to serve its customers better without resorting to imports. Discontinuation
of import of Liquid Oxygen and Nitrogen increased the concern’s profitability.
Production of hard goods was also satisfactory in 2018. Bulk gas business grew by
9.00% over the previous year. Most importantly, with product availability and the
elimination of import and trunking costs for gases, profits increased. Supported largely
by the Livestock and Food & Beverage sectors, Liquid Nitrogen volumes grew by
28.00% over the previous year. The company secured new contracts in the beverage
industry and started supplying Liquid CO2. Healthcare business registered an
impressive 20.00% growth over 2017, mainly from new customer acquisition in Bulk
Medical Oxygen. Hard goods sales recorded a growth of 10.00% in 2018 from 2017
with major contribution from the shipbuilding industry, which grew 24.00% over the
previous year and contributed 47.00% of the total revenue of the hard goods segment.
Interest income for the year was higher than the previous year mainly due to
management of short term funds. Working Capital was higher than the previous year
because of higher inventories. The cash position of the company increased 42.00%
compared to the previous year, reflecting close monitoring of stock position and
debtors’ balance by the concern. Trade payables were also managed adequately.
Surplus liquid funds were placed in fixed deposit to earn interest income. In the same
line, the ongoing investments in major projects were managed from the company’s
own resources, without availing any major interest bearing borrowing from external
sources. As a result, LNBL has no debt outstanding at the end of FY2018.
LNBL has been using upgraded software (Telematics and GOLD) and keen guidelines in
their distribution channels and claimed achieving the “No stock out” position
throughout the year. In addition, safety of operations and all stakeholders is a top
priority of the company.
LNBL has been maintaining banking relationship with Standard Chartered Bank (SCB)
and The Hong Kong & Shanghai Banking Corporation Ltd. (HSBC). LNBL has short-term
credit facilities in the form of working capital, BDT 1200.00 million and BDT 610.25
million respectively. However, the company has no outstanding during the financial
reporting period analyzed, hence the debt equity ratio is nil for the time being.
Moreover, LNBL shows strong profitability and net asset value per share over the
period, therefore the performance of LNBL in the stock market was satisfactory even
though there were a lot of issues in the market in recent times.
ECRL views Linde Bangladesh Limited’s outlook as Stable due to present business
setup, business opportunities, and group strength.
Exhibit 1: Audited Financial Highlights: Linde Bangladesh Limited
FYE : December 2019* 2018 2017 2016
2,834.9
Revenue (BDT in Millions) 5,460.19 4,941.80 4,270.59
7
Revenue Growth (%) - 10.49 15.72 -
1,609.1
COGS (BDT in Millions) 3,177.10 2,632.23 2,290.43
1
Net Profit After Tax (BDT in
559.37 1,003.77 952.74 881.20
Millions)
Gross Profit Margin (%) 43.24 41.81 46.74 46.37
Operating Profit Margin (%) 28.01 25.77 27.46 28.89
Net Profit Margin (%) 19.73 18.38 19.28 20.63
Current Ratio (x) 1.93 2.01 1.67 1.55
Cash Conversion Cycle (Days) 124 114 103 101
Debt-to-Equity (x) - - - -
Return on Assets (%) 8.01 14.66 16.03 16.08
Return on Equity (%) 12.53 22.44 25.92 27.67
CFO (BDT in millions) 812.57 1,169.78 1,158.58 1,113.69
FY2016-2018 data obtained from audited financial statements
*FY2019 data obtained from semi-annual unaudited data.

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Linde Bangladesh Limited Page 4 of 14
 A. BUSINESS DESCRIPTION
A.1. Company Background
Linde Bangladesh Limited is a member of the Linde Group that has been present in Bangladesh for
over 60 years with continuous expansion in operations and business and incorporated in 1973 as
Bangladesh Oxygen Limited. The company eventually changed its name to Linde Bangladesh limited
in 1995. As a pioneer multinational company in the gas sector, Linde Bangladesh has 3 major
locations or installations at Tejgaon, Rupganj and Shitalpur. Other than that, it has 18 sales centers
spread throughout the country serving a customer base of over 35,000 clients. The company is
currently capable of producing 80 tons of liquid ASU gases per day and 23,100 MT of welding
electrodes per year. LNBL is committed to maintaining the quality of its product & services. Their
motto is to ensure optimum conditions in health, safety and the environment for its employees,
customers and stakeholders. LNBL secured customer preference by its efficient management with in
time delivery facilities.
A.2. Group Profile
The Linde Group has a history of over 130 years built on a heritage of innovation with a strong focus
on technology. The company’s founder, Professor Doctor Carl von Linde, invented refrigeration
technology and pioneered a process of air separation. Today, the group is a global market leader in
gases and engineering solutions. The Linde Group is a market leading gases and engineering
company with approximately 58,000 employees working in more than 100 countries worldwide. The
group has 2 major divisions; such as
Gases Division: The Linde Group is a world leader in the international gases market. The company
offers a wide range of compressed and liquefied gases as well as chemicals, and is the partner of
choice across a huge variety of industries.
Engineering Division: Linde’s Engineering Division is successful throughout the world, with its
focus on promising market segments such as olefin, natural gas, air separation, hydrogen and
synthesis gas plants. In contrast to virtually all competitors, the company can rely on its own
extensive process engineering know-how in the planning, project development and construction of
turnkey industrial plants.
A.3. Products portfolio
LNBL sells products to more than 35,000 customers from a wide spectrum of industries running from
chemicals and petrochemicals to steel. The company operates through the following segments: Bulk
Gases, Packaged Gases & Products, and Healthcare.

Industrial gases Hard-goods Filler Materials Medical gases &

& Equipment equipment

Liquid oxygen Mild steel electrodes Medical oxygen liquid

Liquid nitrogen
Liquid argon
Liquid carbon dioxide
Compressed oxygen
Compressed nitrogen
Compressed argon
CORGON (Shielding Gas)
Lamp gas
Dissolved acetylene
Carbon dioxide
Dry ice
Low hydrogen/low alloy Medical oxygen compressed
electrodes
Nitrous oxide
Cast iron electrodes
Entonox
Hard surfacing electrodes
Sterilizing gases
Stainless steel electrodes
Medical Carbon–di–Oxide
AC Arc welding equipment &
Medical Compressed Air
accessories
Medical Gases Cylinders
DC Arc welding equipment &
accessories Oxytherapy Set
Gas welding and cutting Oxygen Concentrator
equipment &
Humidifier
accessories
Medical Gases Pipeline Items

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 Hydrogen MIG welding equipment & Other Medical Gases on
accessories Request
Compressed air
TIG welding equipment &
Refrigerant gases
accessories
Fire suppression gas & system
Gas welding rod & flux
Helium
Gas welding and cutting
Sulphur hexafluoride equipment &
Sulphur dioxide accessories
Special gases & gas mixtures
Any other gas on request

A.4. Future Plan:

In 2018, the board approved an investment of BDT 582.43 million for a new Merchant Carbon–
dioxide plant at Rupganj, Bangladesh. The total production capacity of the plant is expected to be
around 36.00 ton per day. Expected date of commercialization is by July 2019. To optimize the power
cost, an investment of BDT 299.00 million is being made to set up a 2X5 MW captive generator. With
these investments, it is expected that the financial strength of the company will be enhanced; giving
it a solid foundation with high cash flow and enabling it to invest in future profitable and sustainable
strategies for growth.

B. INDUSTRY ANALYSIS
The Country’s economic growth remained robust at 7.86% in 2018, among the highest ever. This was
underpinned by stable political environment, strong domestic demand, continuous infrastructural
development, rise in electricity generation and growing RMG market. The investment ratio to GDP hit
31.2% in 2018 vs 30.5% in previous year. In 2018, the GDP per capita reached $ 1,752 and poverty
rate below 9%, all favoring an exceptional industrial growth rate at above 12%.
Chemical Industry:
Chemical industry is one of the most promising industrial sectors of Bangladesh. Global chemical
industry is estimated to be USD 4.2 trillion and considered as one of the fastest growing sectors of
the manufacturing industry. Global chemical production continues to be dominated by US and China,
which have a 19.5 and 18.5% share of the global market, respectively. Outlook of the chemical
industry of Bangladesh is positive. Riding on rising garment export, Bangladesh's textile chemicals
market is forecast to grow to $1.38 billion by 2024 from $864 million last year registering an 8
percent compounded annual growth rate. A global market research company based in Ireland,
unveiled the info in a recent report titled “Bangladesh textile chemicals market by product type, by
cluster, by application, competition, forecast & opportunities, 2013-2024”. The company has 450 of
the Fortune 500 companies in the list of its clients and the market insights and analysis it presents
comes from 1,700 research teams based across 81 countries. Bangladesh, the second largest apparel
exporter, is witnessing high growth in the sector. Moreover, export duty exemptions, favorable
policies and availability of labor at lower wages are attracting foreign investors towards Bangladesh's
textile sector, which in turn is catalyzing the demand for textile chemicals. Textile colorants dominate
the markets for textile chemicals owing to their properties of imparting aesthetic appearance and
value to the finished textile products. Dhaka is the largest demand-generating region for textile
chemicals in Bangladesh, backed by the presence of a large number of textile mills. The Company
continued to be the market leader in Bulk and Medical gases, Welding Electrode and Compressed
gases leveraging from Linde group`s technological support in establishing new plants, distribution
capacity enhancement and superior product at competitive price. The Government led mega projects
accelerated the production enhancement in the Steel sectors which provided Linde Bulk Gases
opportunities.
Shipbuilding Industry:

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 In ship building, material imputes accounts for usually 25% to 30% of value of a repair, remaining is
for the service as financial cost, facility cost, and utility and manpower expenses. Thus, people have
specific interest in developing ship repair facility; however, such facility needs comparatively high
investment and specialized manpower. Repair industry generally follows a reasonably grown new
building sector. Having 20 dockyards having ability to serve 50 ships annually at minimum and billing
USD 5.00 million for each ship served. Bangladesh may earn USD 5 billion retaining about USD 3.5
billion. A direct employment opportunity of around 80,000 workforces is foreseen. The inland
waterways include some 11 major and over 100 minor ports and about 700,000 river vessels are
operating in the country. Most of these ports are impaired by inadequate facilities for mooring and
unloading vessels and for storage of goods as well as by siltation of approach channels. These
problems are compounded by the changing morphology and unpredictability of the rivers, which often
change course, erode embankments and generally endanger fixed riverfront infrastructure.
Substantial increases in budgetary allocations for dredging and in the productivity of the dredging
fleet are needed. The country where rivers carry 2,000 – 2,500 million tons of silt a year in that
country there has not been added even a single new dredger in last 24 years’ time. There are
altogether 35 dredgers, of which 27 are under Bangladesh. Major export and import of Bangladesh
(about 85%) is also travelled by sea. At present more than 5,000 inland/coastal ships have been
playing all over the country, which carry more than 90% of total oil product, 70% of cargo and 35%
of passengers. More than 100,000 skilled workers and 150,000 semi-skilled workers are employed in
this labour intensive industry. The steady growth in Boat building industry also enabled Linde to
attract business opportunity in Electrode Business. Investment in energy sector is another key area
where Linde Bangladesh explored opportunities through process improvement.
Healthcare Industry:
Bangladesh has achieved remarkable progress in the health sector, particularly in reducing maternal
and infant/child mortality rates significantly. Life expectancy at birth increased significantly from 44
years in 2018. Interestingly, Bangladesh has made much improvement in the health sector with
relatively low level of health expenditure. Since Bangladesh has made spectacular progress toward
achieving millennium development goals (MDGs), the country is now looking forward to achieving
sustainable development goals (SDGs) and making significant improvement in the quality of life for
the people by ensuring healthy life and promoting well-being for all at all ages (SDG 3) in the coming
years. There are different categories of health care in Bangladesh, such as, primary health care (e.g.,
community clinic, Union health center), secondary health care (e.g. certified physicians in
Upazila/District heath complexes) and tertiary health care services (e.g., specialist physicians). Health
care services are being provided by both public and private health service providers.
Country Health Insight
Continent Asia
Population Adjusted (in thousands)1 160 000
Gross national income per capita ($)2 1 580
Adult literacy rate (%)1 53.5
1
Life expectancy at birth (years) 65
Infant mortality rate (per 1,000 live birth)1 43
Under-5 mortality rate (per 1,000 live birth)1 54
Maternal mortality ratio (per 100,000 live birth)1 340
Per capita total expenditure on health (PPP int. $)1 42
Government expenditure on health as percentage of total health expenditure 1 33.6
Government expenditure on health as percentage of total govt. expenditure 1 8
Hospital beds (per 10,000 population) 1 4
3
HRH (physicians, nurses and midwives) density (per 10,000 population) 5.8
Density of physicians (per 10,000 population) 3 3
Density of nurses and midwives (per 10,000 population) 3 2.8
Life expectancy at birth m/f (years)5 66/69

1
WHO: Global Health Observatory;
2
World Bank: Data;
3
WHO: Global Atlas of the Health Workforce
4
Progress report on the Kampala Declaration and Agenda for Global Action
5
2011 Population & Housing Census: Preliminary Results, Bangladesh Bureau of Statistics

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 PPP int. ($, international dollar purchasing power parity)
The growth in Healthcare sector resulted in expansion in public and private hospitals, a competitive
industry where Linde thrives by offering comprehensive products and services.
Steel Industry:
Bangladesh is one of Asia's leading emerging steel markets
and has a growing need for raw materials and steelmaking
technologies. Steel is a basic raw material for infrastructural Per capita steel
development and multiple other uses. The demand for steel use in KG
will inevitably grow in line with the country's economic and 60
infrastructural development. Major buyers of mild steel and 40
re-rolled products include individuals, government and 20 45 37 35 33.
7 32
institutional buyers in the real estate sector. Implementation 0
of the government’s huge infrastructural development plans 2018 2017 2016 2015 2014
have been driving the double digit growth rate in the
country’s steel industry and the growth is expected to persist for the next two decades amid
ambitious development initiatives by the government. Currently, in Bangladesh, there are more than
400 steel, rerolling and auto-re-rolling mills. However, most of the millers produce steel through
conventional process of re-rolling ship cutting plates. The per capita steel consumption in Bangladesh
is the lowest among the South Asian countries. Most of the steel makers have started eyeing for
explosive investment in the country. Linde can leverage this opportunity.
Linde has managed to sustain the existing customer base by offering superior quality products at
competitive price. Linde Bangladesh Limited focused on the expansion of its business through product
and service innovation for its customers to meet future challenges. The reputation of product
reliability and safety measures played a vital role in satisfying the evolving customer expectation. As
of late, Linde Bangladesh Limited possesses a diverse product base with integrated production
facilities and offices across the country. In addition, it is equipped to provide a wide range of services
including purging jobs at oil fields, installation of Medical Oxygen Pipeline, supply of special gases in
various industrial sectors. Linde Bangladesh Limited continues to invest in its people, helping them
build and improve their capabilities. In all its activities, Linde adheres to its core values: safety,
integrity, respect and sustainability and its responsibilities to the people and the environment. Linde
Bangladesh Limited always focuses on achieving profitable growth to add value for the company and
its shareholders. The recent investment in Distribution Fleet,100 TPD ASU, 36 TPD Carbon di oxide
Plant are examples of the Board’s commitment for Linde as the most preferred suppliers to the
customers. Linde Bangladesh Limited has faced intense competition in a highly competitive business
environment where formal and informal competitors continuously pursue market shares with various
activities including price reduction, quality revision and other incentives. Linde has managed to
sustain the existing customer base by offering superior quality products at competitive price. The
company continued to improve product quality taking the feedback from the customers and the end
users. Over the years, Linde Bangladesh Limited has partnered in the country’s economic growth,
backed by investment in process and developed own brands where lower cost base was subsequently
passed on to customers.

C. BUSINESS RISK ANALYSIS

C.1. Market risk
Market risk is the risk that any change in market conditions, such as foreign exchange rates, interest
rates and commodity prices that will affect the Company's profit or the value of its holdings of
financial instruments. The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimizing the return. The Company is exposed to
currency risk on certain revenues and purchases that are denominated in foreign currencies. Majority
of the company's foreign currency transactions are denominated in USD, Euro, SGD and GBP and
relate to procurement of raw materials, capital items from abroad. The Company also has exposure in
foreign currencies relating to some services.

C.2. Commodity Risk

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 Commodity risk refers to the uncertainties of future market values and of the size of the future
income, caused by the fluctuation in the prices of commodities. As the Company purchases MS wire,
blended power, calcium carbide and other raw materials, it is exposed to risks arising from the
purchase of these materials for use in production. Commodity price risk is managed by supply
contracts with suppliers.
C.3. Industry Risk
Competition among the major players in the market plays a key role in determining the status of how
each of them has positioned itself in the market. Companies with vast financial resources, up-to-date
technology, quality production process may gain competitive advantage over the competitors as those
enables them to produce products on more quality or to invest large amount of capital into the
business. The competitors may limit the opportunity to expand its market share and may compete
with it on quality and pricing of products. The financial position and prospects of the company can be
adversely affected if it would unable to sell the products at competitive prices. At present, there are
some players in the chemical industry like; Bangla Chemical, Elite Chemical Industries Ltd, Falcon
Business Intl Ltd, Ideal Chemical Industry Ltd etc. LNBL plans to stay in the competition within the
country by minimizing cost, raising production efficiency, reducing wastage, and keeping quality,
maintaining a good understanding relation with the existing buyer & so on.
C.4. Operational Risk
Industrial Gas and chemical producing companies are highly capital intensive in modern countries.
Even though, Bangladesh is an agricultural country, this kind of business requires huge area for
infrastructures including- warehouse, transport; moreover the machineries used for production are
also heavy & highly expensive. Above all, capital investments are high & any kind of expansion also
requires more capital or cash injection. So, business requires more capital to support the business
from time to time. The company is also exposed to interruption in the production process due to lack
of power supply. In Bangladesh, load shedding is a common phenomenon that hampers production of
many factories, especially in rural areas. Currently with the power crisis the country is facing, it is
unlikely that the plants will be able to function in full capacity. Disruption of power supply resulted in
increase in wastage. For smoothing the production process Linde Bangladesh Limited has two 5MW
own power station.
C.5. Government Policy Risk
There is a risk that an investment's returns could suffer as a result of political changes or instability in
the country. Instability affecting investment returns could stem from a change in Government,
legislative bodies, other foreign policy makers or military control. Government may change the import
duty on raw materials which will affect all the industrial gas manufacturing companies.
C.6. Technological Risk
LNBL uses modern technology for its production and all of the machineries and equipment are
imported from different parts of the world mostly from German to ensure superior quality with better
output. LNBL already has developed its human resource base for in-house servicing of plant and
machinery and it also takes help from outside consultants in case of necessity. ECRL views that LNBL
does not possess any major technological risk in near future.

D. FINANCIAL RISK ANALYSIS

The rating process was based on qualitative aspects which are based on the company’s policies in
relation with the operating strategies, financial leverage, and ultimate financial goals of the
companies. For this purpose of the overall financial risk assessment of the company, ECRL divided the
financial portion into five different criteria which are Profitability Analysis, Liquidity Analysis, Cash flow
Analysis, Asset Management, Capital Structure, and overall Financial Flexibility. Detailed analysis is
presented below:

D.1. Profitability

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 Exhibit 2: Selected Indicators: Linde Bangladesh Limited.
FYE: December 2019* 2018 2017 2016
Revenue (BDT in Millions ) 2,834.97 5,460.19 4,941.80 4,270.59
Revenue Growth (%) - 10.49 15.72 -
COGS (BDT in Millions) 1,609.11 3,177.10 2,632.23 2,290.43
COGS Growth (%) 1.29 20.70 14.92 -
Gross Profit (BDT in millions) 1,225.85 2,283.09 2,309.57 1,980.16
Operating Profit (BDT in millions) 794.15 1,406.95 1,356.90 1,233.67
Net Profit After Tax (BDT in millions) 559.37 1,003.77 952.74 881.20
Gross Profit Margin (%) 43.24 41.81 46.74 46.37
Operating Profit Margin (%) 28.01 25.77 27.46 28.89
Net Profit Margin (%) 19.73 18.38 19.28 20.63
Return on Assets (%) 11.49 26.37 27.60 52.39
Return on Equity (%) 12.52 24.64 27.77 55.34
FY2016-2018 data obtained from audited financial statements
*FY2019 data obtained from semi-annually unaudited data.

Revenue to Profit margins

6,000.00 50.0%
Revenue
45.0%
5,000.00 COGS
40.0%
Gross Profit
35.0% margin
4,000.00
BDT in millions

30.0% Operating Profit

3,000.00 25.0% margin
20.0% Net Profit margin
2,000.00
15.0%
10.0%
1,000.00
5.0%
0.00 0.0%
FY 2016 FY 2017 FY 2018 FY 2019

Both political and economic condition of Bangladesh has improved in the last two years. This stability
has resulted in a growth in the country’s overall business condition as a whole which had a positive
impact for manufacturers like Linde Bangladesh Limited (LNBL). Revenue of LNBL comprises of selling
of Industrial Gases, Engineering products and Healthcare products where revenue from ASU gases,
Dissolved acetylene and Electrodes occupies the majority of total revenue. The rising demand for
Industrial Gas and Hard goods Filler Materials & Equipment is helping the industrial sector expand fast
contributed by the on-going large infrastructure projects and construction of several economic zones
in the country. The consumption of huge amount of Industrial Gas and Equipment every year has
made Bangladesh a huge potential market for the concern industries. As per financial statements, the
company has reported revenue of BDT 5,460.19 million with a growth rate of 10.49% in FY 2018.
During the period, it managed to increase the sales quantity to 20,931,000 M 3 ASU gases, 205,000 M3
Dissolved acetylene and 20,000 MT Electrodes along with some other products from its bucket. Cost
of production has been kept at an acceptable level thus triggering a similar GP margin which stood at
41.81 % in FY2018. Other than that, administrative cost of running the operations and financial
expenses seems to be steady thus having a similar impact on both Operating profit margin of 25.77%
and Net Profit margin of 18.38% in FY 2018. Moreover, in 2018 the concern was performed well.
Revenue grew by 10.50% over the previous year, with growth in all business segments. However,
primarily because of sharp rise in the price of imported raw material for hard goods, profits rose by a
modest 5.40%.

D.2. Liquidity Analysis

Exhibit 3: Selected Indicators: Linde Bangladesh Limited.

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 FYE: December 2019* 2018 2017 2016
Current Ratio (x) 1.93 2.01 1.67 1.55
Quick Asset Ratio (x) 1.41 1.49 1.24 1.15
Days Receivables (days) 40 41 40 42
Days Payables (days) 16 15 35 57
Inventory Turnover (Days) 100 88 98 116
Cash Conversion Cycle (Days) 124 114 103 101
FY2016-2018 data obtained from audited financial statements
*FY2019 data obtained from semi-annually unaudited data.

Liquidity position of a concern is the representation of the ability of the firm to pay off its debt using
its assets. Current ratio of the concern were reported at 1.93 times in FY 2018 which is seen to be
improving year on year from that reported in FY 2016. High level of stock is kept to avoid adverse
effect of price fluctuation as well as to meet the buyer necessity. As a result, there is a sizeable gap
between current and quick asset ratio. On the other hand, longer inventory turnover and longer
receivable days due to extended credit facilities provided to customers led to a rise in the company’s
cash conversion cycle to 114 days in FY 2018. Such cash conversion cycle may create liquidity crisis in
the long run which may create pressure to be more reliant on debt.
D.3. Cash-flow Coverage
Exhibit 4: Selected Indicators: Linde Bangladesh Limited
FYE: December 2019* 2018 2017 2016
CFO (BDT in millions) 812.57 1,169.78 1,158.58 1,113.69
CFO Interest Coverage (x) 57,928.8
- 1,249.76 9,600.78
0
CFO Debt Coverage (x) - - - -
CFO Short term debt coverage(x) - - - -
FY2016-2018 data obtained from audited financial statements
*FY2019 data obtained from semi-annually unaudited data.

Cash flow from operation is one of the most important parameter to measure financial stability of any
organization. During analysis it has been observed that cash flow from operation has increased in FY
2018 compared to the prior year. As a result, the company’s ability to pay off its finance obligation
from its operating cash flow has also increased. However, cash flow from operation is positive which
effectively means that the concern is able to run the operation without any additional finance if the
business operates at current level in future. In the same side, the concern has no debt outstanding at
the time of reporting; however, during the period the company availed some working capital loan,
afterwards they paid the loan with a short span of time which may reflected through the small
interest amount.
D.4. Leverage & Capital Structure
Exhibit 5: Selected Indicators: Linde Bangladesh Limited
FYE: December 2019* 2018 2017 2016
Debt-to-Equity (x) - - - -
Interest Coverage Ratio (x) - 1,802.37 78,827.3 12,375.3
5 2
Total Liabilities to Total Assets (x) 0.36 0.35 0.38 0.42
Long Term Debt Ratio (x) - - - -
Short Term Debt Ratio - - - -
Debt to OPBITDA (X) - - - -
FY2016-2018 data obtained from audited financial statements
*FY2019 data obtained from semi-annually unaudited data.

The capital structure of LNBL is made up of both debt and equity financing. However, at the time of
reporting the company has no debt obligations; hence, the company shows no debt-equity ratios,
meanwhile, the company is fully reliant on internal source of financing. However, interest coverage
ratio is overstated during the period due to low interest paid which indicates the company’s strong
ability to pay off its obligation. On the other hand, total liabilities to total assets ratio represents that

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 the business has sufficient assets to pay off its entire liabilities as per the reported financial statement
and it stood at 35% which indicates, 35% of total assets are financed through debt.
D.5. Bank Facilities & Credit History
Exhibit 6: Bank Loan: Linde Bangladesh Limited (As on 31 December 2018)

Total limit
Financial Institutions Mode
(BDT in Millions)

Standard Chartered Bank (SCB) Working capital 1,200

The Hong Kong & Shanghai Banking
Working capital 610.25
Corporation Ltd. (HSBC)
Total 1,810.25

Linde Bangladesh Limited has been maintaining banking relationship Standard Chartered Bank (SCB)
and The Hong Kong & Shanghai Banking Corporation Ltd. (HSBC) since long time. LNBL has availed
short-term credit facility in the form of working capital which includes bank guarantees to third
parties, shipping guarantees, others guarantee, utility guarantee, performance bond, security bond,
import bill, import receivables and bank acceptance. As on December 31, 2018, the concern has no
outstanding liabilities.
D.6. Shareholder’s Profitability:
Exhibit 7: shareholders earning: Linde Bangladesh Limited
FYE: December 2018 2017 2016
Earnings per share 65.96 62.60 57.90
Price earnings ratio–times (X) 18.00 21.00 22.00
Dividend per share 37.50 34 31
Dividend percentage (%) 375.00 340.00 310.00
Net assets per share 293.90 241.54 209.28
Linde Bangladesh Limited plays a vital role in the capital market with a sustainable economic growth.
The Company also continues to have regular communication with Shareholders through the websites
updates and media publications. The Company conducts Annual General Meeting and publication of
Annual Report, Quarterly updates on financial performance. The top practices are monitored by the
Company which supports investors to hold up their belief and confidence in the Company. On the
same side, LNBL offer satisfactory dividend to its shareholders; hence, dividend per share shows
37.50 BDT in FY 2018 where per share value is 10 BDT. Besides, LNBL has lucrative P/E ratio which
indicates the higher demand of the share of the company. DSEX, the key index of the DSE, ended at
5,386 points on the last trading day of 2018, down by 13.89% from 6,254 points from beginning of
the year. DSE-30, the key index of the DSE, ended at 1,881 points on the last trading day of 2018,
down by 17.57% from 2,282 points from beginning of the year. Moreover, LNBL shows strong
profitability and net asset value per share over the period; hence, the performance of LNBL in the
stock market was satisfactory even though there are a lot of issues in the market.

E. MANAGEMENT AND OTHER QUALITATIVE FACTORS

E.1 Corporate Governance
Sound corporate governance is fundamental to a company’s long–term success. The Board of
directors of Linde Bangladesh Limited is firmly committed to upholding principles of sound corporate
governance. The Board‘s Management and supervision of actions are always guided by a strong
sense of responsibility. Board of Directors continues to follow developments in this area and adapt
corporate governance practices as appropriate and beneficial for the Company. The main objective of
corporate governance is creation of lasting value for stakeholders. Linde’s success has always been
built on close and effective cooperation between Board of Directors ability to serve shareholder
interest, open communication with in the company, proper accounting and auditing and responsible
approach to risk, statutory regulations and internal control practices. Linde Bangladesh Limited
follows the Corporate Governance Code promulgated by the Bangladesh Securities and Exchange
Commission.

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 Exhibit 8: Board of Directors: Linde Bangladesh Limited
Name Designation Duration
Mr. Ayub Quadri Chairman since 2011
Mr. Mohsin Uddin Ahmed Country Head & Managing Director since 2017
Mr. Moloy Banerjee Director since 2015
Ms. Desiree Bacher Director since 2012
Mr. Kazi Sanaul Hoq Director since 2017
Ms. Parveen Mahmud Independent Director since 2011
Ms. Rupali H Chowdhury Independent Director Since 2018
Ms. Indranil Bagchi Director since 2016
With a total staff number of approximately 317 well trained permanent employees, LNBL is managing
its business. The company recruited number of experienced professionals who have long experience
in this line of business. The performance of the employees is evaluated from time to time and proper
training is provided to improve their skill.
E.2 Role of the Board of Directors:
The Board of Linde Bangladesh Limited is responsible for managing the company and overseeing its
general business activities. Its action and decisions are made in the best interests of the company,
which includes the interests of shareholders, employees, customers and other stakeholder groups. Its
aim is to create lasting value for stakeholders. Responsibilities of the Board is steered by the
regulations contained in the Memorandum and Articles of Association of the Company, the Companies
Act 1994, relevant valid regulations, Codes of Corporate Governance of BSEC, Listing Regulations of
Exchanges, corporate best practices of the Country and Company's Codes of Conduct. The Board
members include persons of high caliber with professional and academic qualification having
experience in private and public sector operations. The Board of Directors reviews business
performance in each meeting and approves periodical and annual financial results for publication.
Board approves annual plan, capital expenditure for the year and passes resolution at meetings held
on a regular basis.
E.3 Percentage of shareholdings:

22.2

The BOC Group Limited

1.3 Investment Corporation of
1.7 Bangladesh
LANKABANGLA Securities Ltd.
Sadharan Bima Corporation
60 Other Shareholders
14.8

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 F. BUSINESS INFORMATION
Corporate Office and Tejgaon Site
285 Tejgaon Industrial Area,
Dhaka – 1208
Phone: +880.2.8870-322
Fax: +880.2.8870-336
Email: info.bd@linde.com

Shitalpur Site
Shitalpur, Shitakund,
Chittagong
Phone: +880.3.1751-485
Email: info.bd@linde.com

Rupgonj Site
P.O. Dhuptara, P.S. Rupgonj, Narayangonj
Phone: +880.11.9985-172
Email: info.bd@linde.com

Auditor
Hoda Vasi Chowdhury & Co.
Chartered Accountants

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