In this presentation, we have discussed on the financial performance of the Beximco Pharmaceuticals Limited. Firstly, the corporate goal of this firm has been stated. Secondly, the market value and book value of the firm has been showed with calculation. Relative valuation gives us a picture of what the value of Beximco pharmaceuticals should be relative to its peers. Using the P/E and EV/EBITDA we found out Beximco pharmaceuticals to be undervalued. The capital structure of the company is not at the optimum level. Both peer analysis and quantitative analysis has been used to analyze and identify an optimal capital structure to maximize the value of the firm Beximco follows a Stable dividend policy as it pays stable dividends regardless of earnings and free cash flows and the managers of the firms are making the best use of the retained earnings as it is generating better ROE and ROC.

2. Names ID
Pantho Sarker 20-033
Md. Gulam Kibria 20-075
Ummey Salma 20-125
MD. Al-Amin 20-155
Sheikh Sajid Hasan 20-181

3. A Presentation on

4. Now Presenting …..
Pantho
Sarker
ID: 20-033

5. Name of the Company BEXIMCO Pharmaceuticals Limited
Status Public Limited Company
Industry Pharmaceuticals
Year of Establishment 1976
Year of Commercial Production 1980
Registered office Tongi, Gazipur, Bangladesh
Authorized Capital BDT 2,000 million
Paid Up Capital 1,145.07 million
Numbers of the shareholders Around 54,000
Numbers of the employees 2,384
Web Page http://www.beximco-pharma.com
Chairman A S F Rahman

6.  The corporate goal of Beximco Pharmaceuticals Limited is – “ Creating value for
all our customers and shareholders”.
 They are always focused on their strategic and aspirational targets, enabling then
to maintain their strong sales growth and achieve milestone events like approval
from US Food and Drug Administration (US FDA)
 Opinion on Corporate goal of Beximco Pharmaceuticals Limited:
 The value creation for customers is possible for developing and providing high
quality drugs to their customers. So, the major focus of this company remains on
Research & Development to provide high quality differentiated product to market.
 Management team is focused to drive sustainable long-term growth and value
enhancement of the shareholders value .

7. Some CSR activities of the BEXIMCO are mentioned below:
CSR Activities
Research Project of a professor of
the University of Dhaka
Supporting the victims of the Rana Plaza Free Medical Campaign
Provided free technical support to
world renowned research
institutes
Working together with non-profit organizations who
work to improve people's lives
Medical Awareness Campaign
ARV drugs donation to local
NGOs for treating AIDS patients
in Bangladesh
Supporting to Mobile Alliance for Maternal Action
(MAMA) in Bangladesh
Provide medical consultation and
diagnostic support both for its
employees and general people at a
nominal cost through FRF
Foundation
Plays an important part in
promoting Maternal and Newborn
Health in partnership
Support the JAAGO Foundation

8. Particular 2012 ( Dec) 2013 (Dec) 2014 (Dec) 2015 (Dec) 2016 (June)
Short Term Borrowings (Secured) 1,526,449,91
8
2,776,266,12
5
3,153,121,29
3
3,163,551,47
5
1,109,644,27
0
Long Term Borrowings-Current Maturity (Secured) 572,381,042 652,689,720 536,347,056 566,057,233 763,008,456
Project Loan - Local Banks 568,588,942 652,689,720 536,347,056 530,674,236 444,621,118
Project Loan - BHF Bank, Germany 35,382,997 41,054,236
AB Bank 277,333,102
Interest and PAD Block 3,792,100
Long Term Borrowings-Net off Current Maturity
(Secured)
1,336,416,54
5
1,001,325,04
0
608,901,223 477,848,224 1,953,756,20
3
Project Loan - Local Banks 1,336,416,54
5
1,001,325,04
0
608,901,223 156,856,364
Project Loan - BHF Bank, Germany 320,991,860 469,408,422
AB Bank 1,484,347,78
1
Total BV of Debt 3,435,247,50 4,430,280,88 4,298,369,57 4,207,456,93 3,826,408,92

9. 3,435.25
4,430.28
4,298.37
4,207.46
3,826.41
17,128.13
18,408.16
19,775.55
20,920.19
23,059.41
20,563
22,838
24,074
25,128
26,886
- 5,000.00 10,000.00 15,000.00 20,000.00 25,000.00 30,000.00
2012 ( Dec)
2013 (Dec)
2014 (Dec)
2015 (Dec)
2016 (June)
BDT'mn
Year
BV of Debt, Equity and Firm of Beximco Pharmaceuticals Limited
Total Book Value of Firm Total BV of Equity Total BV of Debt

10. 3,435.25
4,430.28
4,298.37
4,207.46
3,826.41
17,029.32
16,535.81
21,592.89
32,483.14
32,251.39
20,464.57
20,966.09
25,891.26
36,690.60
36,077.80
- 5,000.00 10,000.00 15,000.00 20,000.00 25,000.00 30,000.00 35,000.00 40,000.00
2012 ( Dec)
2013 (Dec)
2014 (Dec)
2015 (Dec)
2016 (June)
BDT'mn
Year
MV of Debt, Equity and Firm of Beximco Pharmaceuticals Limited
Total MV of Firm Market Value of Equity Total BV Or MV of Debt

11. RELATIVE VALUATION OF BEXIMCO
PHARMACEUTICALS LIMITED
 A method of valuing an asset based on comparing some fundamental characteristics
and assessed market value of comparable assets.
 We have focused on two multiples to assess the market value of Beximco
Pharmaceuticals limited -
EV/EBITDA
Multiple
P/E Multiple

12. PRICE DETERMINATION USING
P/E MULTIPLE
Company P/E (TTM)
Acme 25.42
Ambee 184.09
Central 34.04
GSK 41.60
Orion 13.09
Pharma aid 62.61
Renata 30.32
Square 25.89
IBN SINA 31.17
Median 31.17
Median P/E based on comparables
Price based on P/E (TTM)
P/E (TTM) 31.17
EPS of Beximco 5.09
Price 158.54
Price based on P/E multiple

13. PRICE DETERMINATION USING
EV/EBITDA MULTIPLE
Company EV/EBITDA (TTM)
Acme 1.87
Ambee 45.55
Central 27.10
GSK 24.80
Orion 15.54
Pharma aid 40.11
Renata 21.33
Square 18.07
IBN SINA 23.39
Median 23.39
Price based on EV/EBITDA(TTM)
EV/EBITDA 23.39
EBITDA of Beximco 4,010,279,943
EV 93,804,676,746
Equity value 90,199,389,046
Shares outstanding 405,556,445
Price 222.41
Median EV/EBITDA based on
comparables
Price based on EV/EBITDA
multiple

14. FINAL PRICE FROM RELATIVE
VALUATION
Target price based on relative valuation
Method Price Weight
EV/EBITDA 222.41 0.3
P/E (TTM) 158.54 0.7
Current
market price 100.80
Target price 177.70
Undervalued
 We have reached the target price through weighted average of the price obtained from P/E
and EV/EBITDA multiples.

15. Now Presenting …..
Md. Gulam
Kibria
ID: 20-075

16. 2.14 2.32 2.53 2.79
3.90
9.50 9.02 8.97 9.28
11.92
9.35
12.02
15.93
19.47
23.80
0.00
5.00
10.00
15.00
20.00
25.00
2012 2013 2014 2015 2016
Times
Years
Activity Ratio
Inventory Turnover Receivable Turnover Payables Turnover
2.06
2.04
2.48
3.54
3.61
0.58
0.64
0.60
0.63
0.89
0.40
0.43
0.41
0.45
0.64
2012 2013 2014 2015 2016
YEARS
Activity Ratio
Working Capital Turnover Fixed Asset Turnover Total Asset Turnover

17. 2.70 2.67
2.03
1.78
2.86
1.71 1.75
1.38
1.13
1.72
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
2012 2013 2014 2015 2016
Times
Years
Current & Quick Ratio
Current Ratio Quick Ratio
168 165
160
149
107
0
20
40
60
80
100
120
140
160
180
2012 2013 2014 2015 2016
Days
Years
Cash Conversion Cycle

18. 47.25% 46.12% 45.55% 46.28% 46.09%
23.77% 22.16% 21.58% 21.99% 22.25%
14.20% 13.39% 13.64% 15.07% 14.71%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
2012 2013 2014 2015 2016
Profitability Ratio (Return on Sales)
Gross Profit Margin Operating Profit Margin Net Profit Margin
9.59%
9.45%
8.80%
9.83%
14.31%
5.73%
5.71%
5.56%
6.74%
9.46%
10.74%
10.18%
10.04%
11.35%
16.58%
7.70%
7.63%
7.73%
9.34%
12.78%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
2012 2013 2014 2015 2016
Profitability Ratio (Return on Investment)
Operating Return on Asset Return on Asset Return on Total Capital Return on Equity
PROFITABILITY RATIO

19. 14.91%
18.02%
15.65%
14.51%
12.28%
16.71%
19.40%
17.85%
16.74%
14.23%
20.06%
24.07%
21.74%
20.11%
16.59%
0.00%
5.00%
10.00%
15.00%
20.00%
25.00%
30.00%
2012 2013 2014 2015 2016
Solvency Ratio (Debt Ratios)
Debt to Asset Ratio Debt to Capital Ratio Debt to Equity Ratio
3.60
3.80
4.00
4.20
4.40
4.60
4.80
2012 2013 2014 2015 2016
4.11
4.45
4.06
4.46
4.73
Times
Years
Interest Coverage

20. Now Presenting …..
Ummey
Salma
ID: 20-125

21. 1.00
1.09
0.93
0.68
0.75
0.00
0.20
0.40
0.60
0.80
1.00
1.20
2012 2013 2014 2015 2016
Times
Years
Book Value to Market Value Ratio
0.89 0.85
0.94
1.27
1.16
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
2012 2013 2014 2015 2016
Times
Years
TOBIN's Q Ratio

22. Beximco Pharma
DuPont Analysis
2 Factor Decomposition
Particulars 2012 2013 2014 2015 2016
ROA Net Income/ Average Total Assets 5.73% 5.71% 5.56% 6.74% 9.46%
Leverage Average Total Assets/ Average Shareholders Equity 1.34 1.34 1.39 1.39 1.35
ROE Net Income/ Average Shareholders Equity 7.70% 7.63% 7.73% 9.34% 12.78%
3 Factor Decomposition
Particulars 2012 2013 2014 2015 2016
Net Profit Margin Net Income/ Revenue 14.20% 13.39% 13.64% 15.07% 14.71%
Asset Turnover Revenue/ Average Total Assets 0.40 0.43 0.41 0.45 0.64
Leverage Average Total Assets/ Average Shareholders Equity 1.34 1.34 1.39 1.39 1.35
ROE Net Income/ Average Shareholders Equity 7.70% 7.63% 7.73% 9.34% 12.78%
5 Factor Decomposition
Particulars 2012 2013 2014 2015 2016
Tax Burden Net Income/ EBT 0.69 0.67 0.72 0.84 0.81
Interest Burden EBT/ EBIT 0.87 0.90 0.87 0.82 0.82
EBIT Margin EBIT/ Revenue 24% 22% 22% 22% 22%
Asset Turnover Revenue/ Average Total Assets 0.40 0.43 0.41 0.45 0.64
Leverage Average Total Assets/ Average Shareholders Equity 1.34 1.34 1.39 1.39 1.35
ROE Net Income/ Average Shareholders Equity 7.70% 7.63% 7.73% 9.34% 12.78%

23. Sensitivity of Return on Equity (ROE)
Sensitivity
Factor
Coefficient of
Variation
Asset
Turnover 4.28
Tax Burden 2.16
Leverage 1.58
Interest
Burden 1.51
EBIT Margin 1.04
Ways to Improve ROE
•Improve Asset Turnover
•Reduce Tax Burden
•Increase Leverage Factor
•Reduce Interest Burden
•Increase EBIT Margin

24. Particulars 2012 2013 2014 2015 2016 Trend
ANALYSIS OF FINANCIAL LEVERAGE
ROCE Comprehensive Income/CSE 7.70% 7.63% 7.73% 9.34% 12.78%
RNOA OI AFTER TAX/NOA 0.1049 0.1054 0.1111 0.1243 0.1494
FLEV NFO/CSE 0.0033 -0.0302 -0.0569 -0.0437 0.0799
NBC NFE/NFO 8.5005 -0.8591 -0.4829 -0.5810 0.4193
SPREAD RNOA-NBC -8.3956 0.9646 0.5940 0.7052 -0.2699
FLEV*SPREAD -0.0279 -0.0291 -0.0338 -0.0309 -0.0216
ROCE RNOA+FLEV(RNOA-NBC) 7.70% 7.63% 7.73% 9.34% 12.78%
TRUE TRUE TRUE TRUE TRUE
First-Level Breakdown
Particulars 2012 2013 2014 2015 2016 Trend
ANALYSIS OF OPERATING LEVERAGE
RNOA OI AFTER TAX/NOA 10.49% 10.54% 11.11% 12.43% 14.94%
ROOA OI+II on OL/OA 0.0953 0.0952 0.0966 0.1060 0.1333
OLLEV OL/NOA 0.2124 0.2266 0.3103 0.3256 0.1929
OLSPREAD ROOA-STBR 0.0453 0.0452 0.0466 0.0560 0.0833
OLLEV*OLSPREAD 0.0096 0.0102 0.0145 0.0182 0.0161
RNOA ROOA+OLLEV(ROOA-STBR) 10.49% 10.54% 11.11% 12.43% 14.94%
TRUE TRUE TRUE TRUE TRUE
Second-Level Breakdown
Particulars 2012 2013 2014 2015 2016 Trend
Profit Margin OI/SALES 19.41% 17.94% 18.48% 19.17% 18.57%
Asset Turnover SALES/NOA 0.540491 0.5876 0.6008521 0.6481 0.804521
RNOA PM*ATO 10.49% 10.54% 11.11% 12.43% 14.94%
TRUE TRUE TRUE TRUE TRUE
Third-Level Breakdown

25. Particular 2016 (June) Weight Interest
Rate
Short Term Borrowings (Secured) 1,109,644,270 0.29
Long Term Borrowings-Current Maturity (Secured) 763008456 0.20
Project Loan - Local Banks 444,621,118 0.12 12.25%
Project Loan - BHF Bank, Germany 41,054,236 0.01 3.83%
AB Bank 277,333,102 0.07 13%
Long Term Borrowings-Net off Current Maturity (Secured) 1,953,756,203 0.51
Project Loan - BHF Bank, Germany 469,408,422 0.12 3.83%
AB Bank 1,484,347,781 0.39 13%
Total BV of Debt 3,826,408,929
Cost of Debt, 𝑲 𝒅
7.88%
AB Bank's Lending rate Oct-17
Term Loan to large &
medium scale industry
(average)
13%
Working Capital to Large &
Medium Scale Industry
12.5%
Particular 2012 2013 2014 2015 2016 June
Interest rate on Project loan
-local banks
13% -
15.5%
13% -15.5% 13% -15.5% 13%-14.5% 11.5%- 13%
Interest rate on the
Project Loan from
BHF Bank,
Germany is
6 month’s USD
LIBOR +2.25%

26.  The formula to calculate cost of equity using CAPM model is-
 𝐶𝑜𝑠𝑡 𝑜𝑓 𝑒𝑞𝑢𝑖𝑡𝑦 = 𝑅𝑓 + 𝛽(𝑅 𝑚 − 𝑅𝑓)
 𝑅𝑓 = the cut of yield of 364 days treasury bill of Bangladesh Bank issued on
18/09/2017
 𝛽𝑖 =
𝐶𝑜𝑣 (𝑅 𝑚,𝑅 𝑖)
𝑉𝑎𝑟(𝑅 𝑚)
=
0.003487313
0.002788213
=1.250734338
 Adjusted beta = (1.250734338*2/3) + 1*(1/3) = 1.167156226
 𝑪𝒐𝒔𝒕 𝒐𝒇 𝒆𝒒𝒖𝒊𝒕𝒚, 𝐾𝑒 = 𝟒. 𝟐𝟖% + 𝟏. 𝟏𝟔𝟕𝟏𝟓𝟔𝟐𝟐𝟔 𝟖. 𝟎𝟗% − 𝟒. 𝟐𝟖% = 𝟖. 𝟕𝟑%
Market Return 0.67%
Market Return - Yearly 8.09%

27.  The formula to calculate WACC is as follows-
 𝐶𝑜𝑠𝑡 𝑜𝑓 𝐶𝑎𝑝𝑖𝑡𝑎𝑙 𝐾 𝑤𝑎𝑐𝑐 = 𝐾𝑒 × 𝑊𝑒 + 𝐾 𝑑 × 𝑊𝑑 (1 − 𝑇)
 = 8.73% × 0.91 + 7.88% × 0.09 (1 − 0.25)
 = 8.47%
 The weighted average cost of capital of Beximco Pharmaceuticals Limited is
8.47%.
Tax rate, 𝑇 (Statutory rate) 25%
Market price BDT 100.2
Number of shares 405,566,445
Market value of equity BDT 40637757789
Book or market value of debt 4,039,552,765
Weight – equity, 𝑊𝑒 0.91
Weight –debt, 𝑊𝑑 0.09

28. Now Presenting …..
Md. Al-Amin
ID: 20-155

29. Annual GDP
195.08 Billion
USD
GDP Growth Rate
6.9%
(ADB Forecast, FY17)
Total Export Target
37.0 Billion
USD
FOREX Reserve
32.09 Billion
USD
RMG Export Target
30.3 Billion
USD

30. Inflation Rate Trend: Decreasing Export Growth: Decreasing
0.00%
1.00%
2.00%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
2012 2013 2014 2015 2016
Inflation 3.85% 7.54% 7.00% 6.19% 5.52%
3.85%
7.54%
7.00%
6.19%
5.52%
Years
Inflation Rate

31. Pharmaceuticals Industry Overview
Highly
Concentrated
Industry
Last 10 year’s
sales revenue
swelled up to
177.42
85% of the
industry is
driven by
generic drugs
Highly
Regulated
Industry
Porter’s Five Forces Analysis
High
High
Low
High
High

32. Particulars 2016 A 2017 E 2018 E 2019 E 2020 E 2021 E
EBIT 4,228,735,313 4,492,323,206 4,764,639,572 5,041,537,639 5,319,097,229
Tax rate 25.43% 25.43% 25.43% 25.43% 25.43%
EBIT (1-tc) 3,153,310,664 3,349,864,587 3,552,927,214 3,759,406,353 3,966,378,781
Plus: Depreciation 945,578,143 1,048,771,156 1,118,324,354 1,229,132,294 1,384,821,743
Less: Capital investment 2,001,230,352 2,290,408,138 2,632,194,292 3,038,042,460 3,522,292,946
Less: Change in WC 844,273,653 814,893,969 863,848,269 1,339,344,979 1,716,509,128
FCF 1,253,384,802 1,293,333,636 1,175,209,006 611,151,208 112,398,449
Cost of capital 8.47% 8.47% 8.47% 8.47% 8.47%
Year 1 2 3 4 5
PV of discount factor 0.9219 0.8499 0.7835 0.7223 0.6659
PV of FCF 1155489621 1099192664 920788706 441443546 74845973
Summation of PV of FCF 3,691,760,510
Terminal growth rate 1.8%
Terminal value 1141953306.68
PV of terminal value 760,425,142
Enterprise value 4,452,185,652
Less: Interest bearing debt 4,396,039,400
Equity value 56,146,252
Number of shares outstanding 405,566,445
Value per share 138.44

33. OPTIMAL CAPITAL STRUCTURE OF
BEXIMCO PHARMACEUTICALS
LIMITED Optimal capital structure for a company refers to the mix of debt and equity of the company
at which the value of the firm is maximized
 We have followed two approaches to
determine the optimal capital structure of
Beximco pharmaceuticals limited-
Peer
company
analysis
Quantitative
analysis
14.23%
85.77%
Current capital structure of Beximco
Pharmaceuticals limited
Debt Equity

34. PEER COMPANY ANALYSIS
 We have calculated Debt to capital ratios of peer companies of Beximco pharmaceuticals
limited and selected the median value as the optimal capital structure-
Particulars
Book value of
debt
Book value of
equity D/E D/C
Beximco 3,826,408,929 23,056,412,409 0.1660 14.234%
Central 210,384,974 1,631,717,942 0.1289 11.4209%
GSK 9,600,000 2,585,803,000 0.0037 0.3699%
Orion 5,759,216,467 17,216,126,018 0.3345 25.0669%
Pharma aid 12,860,664 132,445,394 0.0971 8.8507%
Renata 3,005,218,454 10,543,077,114 0.2850 22.1815%
Square 2,693,932 40,557,494,698 0.0001 0.0066%
Median 0.1289 11.4209%
 Based on peer company analysis the optimal capital structure should be 11% debt and
89% equity.

35. Now Presenting …..
Sheikh
Sajid Hasan
ID: 20-181

36. QUANTITATIVE ANALYSIS
 Based on this method we have calculated WACC for varying levels of debt to equity ratio and
tried to determine the optimal capital structure for Beximco pharmaceutical limited-
Interest Coverage
ratio
Estimated
bond rating
Spread over
ratings
>8.50 AAA 0.05%
6.50 - 8.50 AA 0.10%
5.50 - 6.50 A+ 0.15%
4.25 - 5.50 A `0.50%
3.00 - 4.25 A- 0.55%
2.50 - 3.00 BBB 0.60%
2.00 - 2.50 BB 0.65%
1.75 - 2.00 B+ 0.70%
1.50 - 1.75 B 2.50%
1.25 - 1.50 B- 3.00%
0.80 - 1.25 CCC 4.00%
0.65 - 0.80 CC 5.00%
0.20 - 0.65 C 6.50%
< 0.20 D 8.00%
Calculation of marginal cost of debt
We have assigned arbitrary ratings for different
level of interest coverage ratio based on our
assumption
Unlevering the current Beta
calculated on the basis of CAPM
Selecting the desired Debt to equity
ratio
Levering the Beta based on new
Debt to equity ratio and calculating
cost of equity using CAPM
Calculation of marginal cost of
equity

37. OPTIMAL CAPITAL STRUCTURE
BASED ON QUANTITATIVE
ANALYSISWd We D/E
Unlevered
beta (βu)
Levered
beta (βL)
Average
tax rate (T)
Cost of
equity(Re)
Cost of
debt(R
d) WACC
0.00 1.00 0.00 1.11 1.11 0.25 0.09 0.00 0.0852
0.10 0.90 0.11 1.11 1.21 0.25 0.09 0.06 0.0843
0.14 0.86 0.17 1.11 1.25 0.25 0.09 0.08 0.0860
0.20 0.80 0.25 1.11 1.32 0.25 0.09 0.08 0.0864
0.30 0.70 0.43 1.11 1.47 0.25 0.10 0.08 0.0874
0.40 0.60 0.67 1.11 1.67 0.25 0.11 0.08 0.0891
0.50 0.50 1.00 1.11 1.95 0.25 0.12 0.09 0.0915
0.60 0.40 1.50 1.11 2.37 0.25 0.13 0.11 0.1040
0.70 0.30 2.33 1.11 3.06 0.25 0.16 0.14 0.1229
0.80 0.20 4.00 1.11 4.45 0.25 0.21 0.18 0.1523
0.90 0.10 9.00 1.11 8.63 0.25 0.37 0.23 0.1944
 Based on this method the optimal capital structure for Beximco pharmaceuticals limited is
10% debt and 90% equity

38. OPTIMAL CAPITAL STRUCTURE FOR
BEXIMCO PHARMACEUTICALS
LIMITED
 Based on the previous two method we have decided to take the average of the two methods as the
optimal capital structure-
14.23%
85.77%
Current capital structure of
Beximco Pharmaceuticals limited
Debt Equity
10.50%
89.50%
Optimal capital structure for Beximco
pharmaceuticals limited
Debt Equity
Why go for higher equity financing?
 As being a defensive company and having lower correlation with market the cost of equity is
significantly lower for Beximco pharmaceuticals limited.
 Peer companies operating in the industry also follow similar capital structure.

39. DIVIDEND POLICY OF BEXIMCO
PHARMACEUTICALS LIMITED
 Dividend payment pattern of Beximco pharmaceuticals limited-
15%
10% 10%
0% 0%
5% 5% 5%
15%
21%
0%
5%
10%
15%
20%
25%
2016(18
months)
2015 2014 2013 2012
Dividend payment pattern
Cash dividend Stock dividend
 Beximco pharmaceuticals pays stable amount of dividend on a cumulative basis (Cash and
Stock)
 Before 2013 Beximco pharmaceuticals mostly paid stock dividends.

40. DETERMINATION OF DIVIDEND
POLICY THOUGH KEY PARAMETERS
2.1 1.5 1.5 1.5 2
4.33
4.01 4.15
5.06
7.27
48.49%
37.41% 36.10%
29.65% 27.51%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
0
1
2
3
4
5
6
7
8
9
10
2012 2013 2014 2015 2016
Amountintaka
year
Dividend per share and Earnings per
share and dividend payout ratio
DPS EPS DPR
7.95
7.11
7.87
8.81
11.56
0.00
2.00
4.00
6.00
8.00
10.00
12.00
14.00
2012 2013 2014 2015 2016
Amountsintaka
Year
OCF per share
 Dividend per share of is stable even though
the earnings per share has varied over the
years.
 Decreasing payout ratio and increasing
EPS implies Beximco wants to pay stable
dividends regardless of earnings.
 Increasing OCF per share implies
improving earnings from core operations
and earnings quality.
 Better dividend paying capability

41. 5.78 4.86 4.47 4.13 3.75
19.33 19.13
20.84
22.49
26.42
0.00
5.00
10.00
15.00
20.00
25.00
30.00
2012 2013 2014 2015 2016
Year
Reserve and retained earnings per
share
Reserve per share RE per share
DETERMINATION OF DIVIDEND POLICY
THOUGH KEY PARAMETERS
3.04
1.42
-0.13
0.18
7.73
2.10
1.50
1.50
1.50
2.00
-2.00 0.00 2.00 4.00 6.00 8.00 10.00
2012
2013
2014
2015
2016
Amounts in taka
Year
FCFE and dividend per share
DPS FCFE per share
 As a manufacturing company its has no
statutory requirements for reserves.
 High amounts of Retained earnings per share
imply strong solvency and better capability to
observe shocks and pay dividends
 FCFE per share implies how much the company
can afford to pay dividends where as DPS shows
how much it pays.
 Even though FCFE per share was negative in
2012 it paid stable dividends
From this analysis we can confirm that Beximco pharmaceutical limited follows a
“Stable dividend policy”

42. ANALYSIS OF DIVIDEND POLICY AND MANAGEMENT
PERFORMANCE
The amount Beximco could have
afforded to pay-
Average FCFE per share – Tk 2.45
The amount Beximco actually paid-
Average Dividend per share – Tk
1.72
Firm pay out too little as-
FCFE > Dividend
How managers are doing with the excess cash?
Average ROE = 9.04% Average return on capital = 11.78%
Cost of equity=8.73% WACC = 8.32%
ROE>Cost of equity ROC > WACC
Managers have good history of project choice and likely in the future.
So managers should be given the flexibility to keep cash and set
dividends