Daffodil International University

Assignment
Course name: Working capital Management

Course Code: FIN-408

Submitted To
Sabrina Akter

Assistant Professor

Department of Business Administration

Submitted By

Name ID
Md Motiur Rahman Emon 171-11-5477
Md Nasim Ali 171-11-5435

Date of submission: 20-04-2020

 Contents

 Introduction
 Approaches of Working Capital
 About Square Pharma
 Vision and Mission
 Corporate History

 Chronology since inception

 Global Operations of SPL

 Partnership and agreement with different world players
 Manufacturing Facilities

 Square Pharma Milestone at a glance

 Shareholding pattern
 Financial statement analysis
 Square pharma current asset calculation
 Ratio Analysis
 Working capital analysis
 Introduction
Effective financial management is the outcome of proper management of investment of funds in
business. Management of working capital is not a least important part of it. It is being increasingly
realized that inadequacy or mismanagement of working capital is the leading cause of business failures.
It is the investment needed for carrying our day-to-day operations of the business smoothly. Let’s have a
word on it, before paving ahead.

Approaches of Working Capital:

There are two approaches, generally followed for:
1. The Conventional Approach: The Conventional Approach implies managing the
individual components of working capital (i.e. inventory, receivables, payables, etc.) so
that neither idle funds nor paucity of funds is there. In India, more emphasis is given to
the management of debtors because they generally constitute the largest share of the
investment in working capital. Whereas, inventory control has not yet been practiced on
a wide scale, perhaps caused due to the scarcity of commodities and ever rising prices.
2. The Operating Cycle Approach: The Operating Cycle Approach views working capital as
a function of the volume of operating expenses. Under this approach, the working
capital is determined by the duration of the operating cycle and the operating expenses
needed for completing the cycle. The optimum level of working capital will be the
requirement of operating expenses for an operating cycle, calculated on the basis of
operating expenses required for a year.

In Bangladesh, most of the organizations use to follow the conventional approach

earlier, but now the practice is shifting in favor of operating cycle approach. Banks
usually apply this approach while granting credit facilities to their clients.

The Risk-Return Trade-off:

Risk is defined as the probability that the firm will become technically insolvent, so that
it will not be able to meet its obligations as and when they become due for payments.
This relationship between risk and return can be expressed as:
Return = risk-free rate + risk premium
Here the risk-free rate is a compensation for time and risk premium for risk coverage.
About square pharma
SQUARE today symbolizes a name – a state of mind. But its journey to the growth and
prosperity has been no bed of roses. From the inception in 1958, it has today burgeoned into
one of the top line conglomerates in Bangladesh. Square Pharmaceuticals Ltd., the flagship
company, is holding the strong leadership position in the pharmaceutical industry of
Bangladesh since 1985 and is now on its way to becoming a high-performance global player.
SQUARE Pharmaceuticals Limited is the largest pharmaceutical company in Bangladesh and it
has been continuously in the 1st position among all national and multinational companies since
1985. It was established in 1958, converted into a public limited company in 1991 and listed
with stock exchanges in 1995. The turnover of Square Pharma was BDT 50.87 Billion (US$
609.18 million) with about 16.95% market share having a growth rate of about 10.85% (July
2018– June 2019).

Looking beyond the horizon

SQUARE Pharmaceuticals Limited has extended its range of services towards the highway of
global market. It pioneered exports of medicines from Bangladesh in 1987 and has been
exporting antibiotics and other pharmaceutical products. Present export market covers 42
countries. This extension in business and services has manifested the credibility of Square
Pharmaceuticals Limited.

Vision:
They view business as a means to the material and social wellbeing of the investors, employees
and the society at large, leading to accretion of wealth through financial and moral gains as a
part of the process of the human civilization.

Mission

Their Mission is to produce and provide quality & innovative healthcare relief for people,
maintain stringently ethical standard in business operation also ensuring benefit to the
shareholders, stakeholders and the society at large.
Objectives

Their objectives are to conduct transparent business operation based on market mechanism
within the legal & social frame work with aims to attain the mission reflected by our vision.

Corporate Focus

Their vision, our mission and our objectives are to emphasize on the quality of product, process
and services leading to growth of the company imbibed with good governance practices.
SQUARE Pharmaceuticals Limited is the largest pharmaceutical company in
Bangladesh and it has been continuously in the 1st position among all national and
multinational companies since 1985. It was established in 1958, converted into a public
limited company in 1991 and listed with stock exchanges in 1995.

Chronology since inception

Year                       Events                                                                 

Debut of Square Pharma as a Partnership Firm.

1958:
Converted into a Private Limited Company.
1964:
Technical Collaboration with Janssen Pharmaceutical, Belgium, a subsidiary of Johnson
1974:
and Johnson International, USA.

Licensing Agreement signed with F. Hoffmann-La Roche Ltd., Switzerland.

1982:
Achieved first position in the Pharmaceutical Market of Bangladesh among all national
1985:
and multinational companies.

Pioneer in pharmaceutical export from Bangladesh.

1987:
Converted in to a Public Limited Company
1991:
Initial Public Offering of Square Pharmaceutical Shares.
1994:
Chemical Division of Square Pharmaceuticals Ltd. starts production of pharmaceutical
1995:
bulk products (API).
 Won the National Export trophy for exporting pharmaceuticals.
1997:
Agro-chemicals & Veterinary Products Division of Square Pharma starts its operation.
1998:
US FDA/UK MCA standard new Pharmaceutical factory goes into operation built under
2001:
the supervision of Bovis Lend Lease, UK.

Signing of agreement with ROVIPHARM, Vietnam to manufacture and

2004:
market SQUARE products under license in Vietnam.

Secured the top position for the best published accounts and report for 2003 in the
 
manufacturing category for transparency and excellence in corporate reporting.

New State-of- the-Art Square Cephalosporins Ltd. goes into operation; built under the
2005
supervision of TELSTAR S.A. of Spain as per US FDA/ UK MHRA requirements.

Global Operations of SPL

SQUARE has extended its range of services towards the highway of global market. It pioneered
exports of medicines from Bangladesh in 1987. Through its extended marketing operations,
SQUARE is now selling its finished goods in many countries of Asia and Europe including:

 Cambodia
 Myanmar
 Nepal
 Pakistan
 Russia
 Sri Lanka
 Ukraine
 Yemen

In addition, registration of many of SQUARE’s finished goods in other countries of Asia, Europe,
and Africa is now under process.
Partnership and agreement with different world players

1974: Technical Collaboration with Janssen Pharmaceutical, Belgium, a subsidiary of Johnson &
Johnson International, USA
1982: Agreement signed with F. Hoffmann-La Roche Ltd., Switzerland
1999: Agreement with Bayer AG, Germany
1999: Agreement with Eisai Co. Ltd., Japan
1999: Technical know-how transfer to foreign pharmaceutical company
2000:  Establishment of Square Spinnings Limited.
2001:  Operation of new factory with a view to get USFDA/MCA approval and production
support for      expanding export operations.
2002:  Establishment of Square – Fashions Limited and Square – Knit fabrics Limited.
2003:  Turnover crosses Four Billion Taka mark.
Overview of Square Pharmaceuticals Ltd.

Manufacturing Facilities

SQUARE is committed to ensure strict compliance with CGMP norms and regulatory

requirements in every phase of manufacturing, quality assurance, and distribution of
medicines. To comply with CGMP SQUARE has state-of-the-art technology in
production and quality control. In addition, USFDA/MCA standard new plant is now at
the completion stage.
 
Documented Quality Management System (QMS) is integral part of all of SPL
operations. People at all levels are committed to adopt advanced technology for
continuous development. Being confident with the sophisticated manufacturing and
quality assurance technology of SQUARE, multinationals from industrialized countries
now have agreements with Square for having their products manufactured in
Bangladesh.
Product Mix

SQUARE has latest technologies for production of a wide varieties of dosage forms

including Tablet, Sustained Release formulation, Capsule, Metered Dose Inhaler (MDI),
Injectable, Syrup (liquid and dry), Suspension (liquid and dry), Pediatric Drops, Nasal &
Ophthalmic formulations, Topical Gel/Ointment/Cream, and oral care formulations.
Current product mix of Square Pharmaceuticals Ltd. comprised of products from the
following types of Drug Delivery Systems:

Milestones
Shareholding Pattern:

The owners

10%
General Public
36% Sponsors/Directors
20% Foreigners
Institutions

34%

Profitability:

Series 1

50.00%
45.00%
40.00%
35.00%
30.00%
25.00%
20.00%
15.00%
10.00%
5.00%
0.00%
Gross margin operating margin Pretax margin Net profit margin

Series 1
 Series 1
Series 1

19.98%

18.25%

16.89%

R et u r n o n eq u i t y R et u r n o n Asset s R et u r n o n I n v est m en t

Management effectiveness:
 Rati os
Ratios

6.00% 6.87%

0.00% 0.00%

Q u i c k r a ti o C u r r e n t r a ti o D e b t t o e q u i t y r a ti o T o t a l d e b t t o e q u i t y

Ratios:
Efficiency:

Asset Turnover 0.62

Inventory Turnover 4.43
Revenue/ Employee 4.89M
Net Income/ Employee 1.33M
Receivable Ratio 26.42

Conclusion:

Square Pharma Ltd. Is a very well-known national figure in Bangladesh. They are the biggest organization
in Bangladesh. Square pharma has a very well reputation for their work environment. Usually they only
recruit people for all level jobs because they believe in the internal growth of their current employees.
So, it easily understandable that SPL prefers their current employees first. That is why employees do not
leave this company. They have very good communication skills. Before taking employees, they analyse
on those position. They find out that what are the responsibility. They conduct the processes in different
steps. For this reason, they have to spend time but finally they are being able to get the most perfect
employees for their organization.