report on Shepherd industries ltd , management accounting

1. SHEPHERD INDUSTRIES LTD.
Company Profile:
Shepherd Industries Limited has been incorporated with the Registrar of Joint Stock
Companies and Firms (RJSCF) with registration no. C-41066(425)/2000 dated August
21, 2000 as a Private Lim ted Company by shares namely Shepherd industries Limited
and after that it is converted in to a Public Limited Company on June 0B, 2015, The
company has been amalgamated by the scheme of amalgamation with Shepherd Yarn
Limited by the order of the Honorable High Court Division of The Supreme Court of
Bangladesh dated December 15, 2014: with effect from April 01,2015. The registered
office of the company is situated at House #24, Road # 04, Sector # 04, Uttara, Dhaka-
1230, Bangladesh and the manufacturing establishment is located at Bagrapara,
Kathalia, Bhaluka, Mymensingh.
Shepherd Industries Ltd. specializes in fancy yarn, yarn-dyeing, garment dyeing,
garment washing, jean washing, auto stripe knitting fabrics, all kinds of knitting fabrics.
Shepherd Industries Ltd. is one of the pioneers in introducing Taiwanese advanced
yarn, textile technology into Bangladesh and also has been contributing huge financial
earnings into Bangladesh’s economy both by global sales and foreign investments.
Our philosophy is to collaborate seamlessly with our clients to create the highest value
in products and services by providing consistent product quality in the most efficient
manner with the most competitive price in the local marketplace. This philosophy has
lead Shepherd Group to form strategic partnerships with our clients in creating win-win
business models. Today Shepherd Group is working closely with many world-class
fashion brands.
SIL’s main products includes: Various types of cotton, Acrylic, Wool, Nylon, and Viscose
blended dyed yarn.
Mission & Vision of Shepherd Industries Ltd.
Our Mission:
Our target is the best product at a lower price, with the guarantee and respect for
people and their job and the satisfaction of customers. To reach this mission our
company follows these goals:
 We put customers at the heart of our business.
 We achieve our goals through teamwork.
 We recognize and appreciate a job well done.

2.  We communicate clearly and listen to one another.
 Speed and respect of delivery time.
 We are committed to the business and work hard to succeed.
 We invest in manpower to reach their full potential
Our Vision:
Our conception of business germinated from our vision which sees it as a means to
the well-being of the investors, stakeholders, employees and members of the society
at large by creating new wealth in the form of goods and services that go to satisfy
the wants of all of them without distributing or damaging the socio-ecological
balance of the mother earth and the process of human civilization leading to
peaceful Co-existence of all the living beings.
Products & Customers Of Shepherd Industries Ltd.
Products:
 Cotton Yarn Dying
 Acrylic Yarn Dying
 Garment Piece Dying
 100% Nilon Dying
 Garments Wash
Our Prominent Customers:
1. Walmart
2. Lee Cooper
3. C&A
4. GAP
5. MARK & SPENCER
6. PRIMARK
7. S.Oliver
8. ALDI
9. H&M
10.MANGO
11.TESC

3. Board Of Directors
Chung Wen Kuei
Chairman & Director
Md. Monzur Alam Khan Kao Wen Fu
Managing Director Independent Director
Yang Ming Te
Representative of Eternal Flame Int’l Co. Inc

4. Message from Managing Director
'' We are sharpening our strategy to be one of the world’s most
valuable, most innovative and most admired companies. Our goal is
to be an unstoppable company that creates enormous value for our
shareholders, stakeholders, and the economy.''

5. Industry Analysis of ShepherdIndustries Ltd.
Shepherd Industries Ltd. (SIL) was established in 2000 in Bangladesh as a private
limited company. SIL has commenced its operation on October 18, 2001. With nearly 16
years of sweater yarn dye experience and innovation Shepherd Industries limited grown
up in times. Production machineries of the company are equipped with the State of the
art technology. The laboratory is monitored by expert technicians.
Today Shepherd Group is working closely with many world-class fashion brands. SIL’s
main products includes: Various types of cotton, Acrylic, Wool, Nylon, and Viscose
blended dyed yarn. The company is committed with quality control, accurate time
delivery, and large production capacity. Garment wash is a new segment of business of
the company which comes into the light by the way of Initial Public Offering (IPO). Our
yarn and garment washing quality remains one of the highest satisfactions in the market
as well as we are also capable of providing huge production with very short lead time to
meet customers' delivery deadlines. Our machineries are equipped with the latest
technology and our laboratory is monitored by foreign technicians we are committed
with quality control, accurate time delivery, and large production capacity.
Porter's Five Forces Analysis of Shepherd Industries Ltd.
Porter's Five Forces is a simple but powerful tool for understanding the
competitiveness of your business environment, and for identifying your strategy's
potential profitability.
This is useful, because, when you understand the forces in your environment or industry
that can affect your profitability, you'll be able to adjust your strategy accordingly. For
example, you could take fair advantage of a strong position or improve a weak one, and
avoid taking wrong steps in future.
The tool was created by Harvard Business School professor Michael Porter, to analyze
an industry's attractiveness and likely profitability. Since its publication in 1979, it has
become one of the most popular and highly regarded business strategy tools.
Porter recognized that organizations likely keep a close watch on their rivals, but he
encouraged them to look beyond the actions of their competitors and examine what

6. other factors could impact the business environment. He identified five forces that make
up the competitive environment, and which can erode your profitability.
Rivalry AmonExisting Firms:
Rivalry among existing Yarn and Dying industry firms is fierce in Bangladesh. Shepherd
Industry’s major competitors include Shasha Denims Limited, Simtex Industries Limited,
Pacific Denims Limited, Far East Knitting & Dyeing Industries Limited and others. It is
important to note that “despite being one of the bigger apparel players in Bangladesh,
Shepherd Industry Ltd holds less than 5% market share, which clearly indicates the
diverse nature of the U.S. apparel industry.
In Bangladesh SIL is very popular dying & garment washing company among the buyer.
There are so many rivalry company of SIL but there capacity of production is poor, so
currently SIL is leading the dying & garments washing industry in Bangladesh.

7. Threatof new entrantsinto dying Industry:
Shepherd industry LTD. is very established dying company in Bangladesh but threat of
new entrants always exist in market. Threat of new entrants is serious topic for a
company. Some key point about threat of new entrants in dying industry is given below:
 Low barriers in the domestic market
 Economies of scale are high
 Brand identity of a company in this industry is high
 Capital requirements to establish a regional or a national level operation are high
 Thisindustryisnot lucrative.
 The companiesoperatingatthe national leveldomanage tomake economicprofitbutentry
barriersat thisstage are veryhigh.
 Highcapital requirementisnotanissue forthe international playersandthusthe entryof
stronginternational brandsinthe domesticmarketisinevitable.
 Thus the threatof newentrantsisHigh
Bargaining power of Shepherdindustry’s Suppliers:
Bargaining of Suppliersislow forshepherdindustry.The companypurchases raw materials fromabout
1000 supplierinBangladesh.The companyhasenoughnumberof supplierssocompanyeasilycanshift
fromone suppliertoanothersupplier.
Furthermore,forthe majorityof suppliersitiscriticallyimportanttohave businesswithSILdue tothe
highvolume of itsorders.Additional factorsthatcontribute tothe bargainingpowerof the apparel and
accessoriesretailerindealingwithitssuppliersinclude itsabilitytosubstitute suppliersandminimum
suppliersubstitutioncostsinmostcases.
Some KeyPointaboutBargainingPowerof SuppliersisGivenBelow :
 Highavailabilityof cotton
 Low cost of labor
 Differentiationof inputisprettylow
 Presence of substituteinputstocottonlike polyester, wool,lycraetcare present.
 Importance of volume tosuppliersisvery high.
 Industryislowsuppliersisveryhigh.
 Thus bargainingpowerof suppliersislow.
Bargaining Power of Buyers:
Shepherdindustryisahighcapacityproducingcompanyamongthere competitors. Anassessmentof
howeasyit isfor buyerstodrive pricesdown.Thisisdrivenbythe:numberof buyersinthe market;
importance of each individual buyer to the organization; and cost to the buyer of

8. switching from one supplier to another. If a business has just a few powerful buyers,
they are often able to dictate terms.
Some key Terms about barraging power of buyers is given below:
 High demand for apparels and home textiles
 Product differences and brand identity are quite high.
 Buyer concentration is very low
 Ability to backward integrate is very low
 Thus the bargaining power of buyers are low
Threat of Substitute of SIL:
Threat of substitutes is very important term for a company. There are many substitute
company of SIL. Where close substitute products exist in a market, it increases the
likelihood of customers switching to alternatives in response to price increases. This
reduces both the power of suppliers and the attractiveness of the market.
Some key Terms about Threat of Substitute is given below:
 Competition from low cost producing
 The threat of substitution from the garments provided by the unorganized sector
is high
 Week supply chain management
 Increasing competition in domestic market

9. SWOT Analysis of SIL:
SWOT analysisisa frameworkusedtoevaluate acompany'scompetitive positionbyidentifyingits
strengths,weaknesses,opportunitiesandthreats.Specifically,SWOTanalysisisafoundational
assessmentmodelthatmeasureswhatanorganizationcanand cannotdo, andits potential
opportunitiesandthreats.
SWOT ANALYSIS OF SIL
SWOT Variables Description
Strengths
Brand loyalty The Quality of Company’s products to its
customers have enabled the company to capture
significant market share in the sector. We have a
very strong customer base and healthy business
relationship and doing business for a long time.
Market share We have good market share in the export oriented
sweater industry.
Mass production setup High volume production capacity per unit time.
Costconscious business Productcosting in all the aspects (Production cost,
purchasing cost, market selling price and cost
involved in the entire supply chain is properly
maintained to provide quality product to its
customer at a reasonable price.
Strong R & D for
dyeing and finishing
Research and Development activities for new
product development and existing product
improvement, SIL has a state of the art laboratory
with experienced technician.
Low labor cost Countrywide low labor cost has enabled us to
compete with foreign competitors outside
Bangladesh.
Capital investment
availability
SIL Always keen to develop new products and
invest in new profitable venture.

10. Raw material supply Trouble free supply of input materials for
processing with a wide range of dedicated
manufacturers and suppliers.
Supportive management Support from the management for the managerial
decision making.
High performance
machineries
State of the art high performance machinery for
production
Production of value
added quality products
SIL produces quality dyed yarn for 100% export
oriented sweater industries.
Weakness
Slim profit margin Since SIL is engaged in producing single
component of production for sweater industries
profit is relatively lower than the composite
sweater industry.
Work environment High temperature, heat, RH inside the production
plant due to processing machines exhaust except
for the factory Office and Lab as well head office
which are properly air-conditioned.
Physical Hazards Chances of accidents, physical damage to the
workers, process hazards such as Chemical
Explosion etc.
Operatives fatigue Tiredness of operatives due to movement of
materials
Fragmented company Different geographical location of value chain of
the company
Costof maintenance
and spare parts
High cost of new spare parts and high cost of
maintenance (Consumables and technician)
Helped by the
government policy
All the Garments, Textile and backward linkage
industries enjoy special tax rates, Tax holidays and
subsidies from the government forthe development
of this sector.
Easy Bank loan All the industries involved in this sector to get
finance easily form any financial institute.

11. Opportunity
Market orders exports Huge volumes of orders from export oriented
textile industries
New developments in
dyes, pigments and
chemicals
New developments in dye stuff, pigments for
coloring of yarn, also in chemicals for less effluent
loads and faster lead time of production
Low costdyes and
chemicals
Low costof dyes and chemicals available in due to
the high competition in the dyestuff manufacturer
Mass production
capacity
Mass production capacity for different count of
yarn is available and the factory runs 24 hours and
required power for productionis generated through
gas generator.
Threats
Intense competition Global competition in this sector may affect the
profitability of the company.
Government regulation Government’s restriction if imposed will create
new complications.
Political unrest Political unrest is a big threat for any company. A
sound political environment is required for a
sustainable growth in this sector.
Availability fuel for
steam generation
Bangladesh is going through natural GAS crisis
which might causeproblem in textile and garments
sector.
Social awareness Social and employee welfare
High water
consumption
/ effluent generation
High water consumption and effluent generation
per unit of product
Disposal of solid waste
generated from effluent
Sludge waste as by product during the effluent
treatment.
High inventory cost Inventory costgoes high if exchange rate fluctuates
since raw material for production is mostly
imported from abroad.

12. Chances of high
environment pollution
The company established effluent treatment plant
to control pollution.
Balance Sheet Analysis of SIL :
SHEPHERD INDUSTRY LIMITED
Statement of Profit or Loss Other Comprehensive Income
For the year ended June 30, 2018
Particulars Revenue/Cost
Function
Actual
Amount (TK.)
Planned
Amount (Tk.)
Variance
Quantity(pounds) 51,852,301 51,500,000
Revenue (50Q) 2,578,968,478 2,575,000,000 3,968,478 U
Less: cost of goods sold 43.897Q) (2,263,558,771) (2,260,695,500) 2,863,271 U
Gross profit 315,409,707 314,304,500 1,105,207 F
Add: Foreign currency gain (.0708Q) 3,339,623 3,646,200 3,06,577 F
Add: Others income (.1753Q 9,971,374 90,27,950 943424 F
Total Income 328,720,704 326,978,650 1,742,054
Less: Operating expense
Selling& Distribution
Exp.
(7.5m+.0379Q) 9,415,643 9,451,850 36,207 F
Administrative Exp. (3.75c+.1701Q) 46,966,406 46,260,150 7,06,256 U
Profit from Operation 272,338,665 271,266,650 1,122,015 F
Less: Financial Expenses (fixed) 91,107,381 91,107,381 -
Less: IPO Expenses (fixed) 17,806,177 17,806,177 -
Net Profit before tax 163,425,600 162,353,092 1072508 F
Less :Tax Expense (.6932Q) (35,932,600) (35,696,786) 235814 F
Net Profit after tax for the 127,992,497 126,656,305 1336192 F
Basic EPS (Per value tk.10/) 1.14 1.13

13. SHEPHERD INDUSTRY LIMITED
Statement of Profit or Loss Other Comprehensive Income
For the year ended June 30, 2018
Particulars Revenue/Cost
Function
Actual
Amount(TK.)
Flexible
Amount(Tk.)
Rev.& Spe.
Variance
Quantity(pounds) 51,852,301 51,852,301
Revenue (50Q) 2,578,968,478 2,592,615,050 13,646,572 U
Less:cost of goodssold 43.897Q) (2,263,558,771) (2,276,160,457) 12,601,686 F
Gross profit 315,409,707 316,454,593 1,044,886 U
Add:Foreigncurrencygain (.0708Q) 3,339,623 3,671,142 3,31,519 U
Add:Others income (.1753Q 9,971,374 9,089,708 8,81,666 F
Total Income 328,720,704 329,215,444 4,94,740 U
Less:Operatingexpense
Selling&Distribution
Exp.
(7.5m+.0379Q) 9,415,643 9,465,202 49559 F
AdministrativeExp. (3.75c+.1701Q) 46,966,406 46,320,076 6,44,630 U
ProfitfromOperation 272,338,665 273,430,166 10,00,001 U
Less:Financial Expenses (fixed) 91,107,381 91,107,381 -
Less:IPO Expenses (fixed) 17,806,177 17,806,177 -
NetProfitbefore tax 163,425,600 164,516,608 1,091,008 U
Less:Tax Expense (.6932Q) (35,932,600) 36,172,481 2,39,881 F
NetProfitafterTax forthe 127,992,497 128,944,127 1,001,630 U
Basic EPS(Pervalue tk.10/) 1.14 1.15

14. SHEPHERD INDUSTRY LIMITED
Statement of Profit or Loss Other Comprehensive Income
For the year ended June 30, 2018
Particulars Revenue/Cost
Function
Flexible
Amount(Tk.)
Planned
Amount (Tk.)
Activity
Variance
Quantity(pounds) 51,852,301 51,500,000
Revenue (50Q) 2,592,615,050 2,575,000,000 17,615,050 F
Less:cost of goodssold 43.897Q) (2,276,160,457) (2,260,695,500) 15,464,957 U
Gross profit 316,454,593 314,304,500 2,150,093 F
Add:Foreigncurrencygain (.0708Q) 3,671,142 3,646,200 24,942 F
Add:Others income (.1753Q 9,089,708 90,27,950 61,758 F
Total Income 329,215,444 326,978,650 2,236,794 F
Less:Operatingexpense
Selling&Distribution
Exp.
(7.5m+.0379Q) 9,465,202 9,451,850 13,352 U
AdministrativeExp. (3.75c+.1701Q) 46,320,076 46,260,150 13,352 U
ProfitfromOperation 273,430,166 271,266,650 2,163,516 F
Less:Financial Expenses (fixed) 91,107,381 91,107,381 -
Less:IPO Expenses (fixed) 17,806,177 17,806,177 -
NetProfitbefore tax 164,516,608 162,353,092 2,163,516 F
Less:Tax Expense (.6932Q) 36,172,481 (35,696,786) 4,75,695 U
NetProfitafter-tax forthe 128,944,127 126,656,305 2,287,822 F
Basic EPS(Pervalue tk.10/) 1.15 1.13
Findings:
First of all SHEPHERD INDUSTRY LTD is an established yarn & dying company in Bangladesh.
They are providing best quality product among their competitors. According to this report SIL is
very successful in their business and there is a chance of established other business. According
to revenue & spending variance , activity variance the is growing day by day. According to net
profit variance the company is in very good position.
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