PROFILE OF A COMPANY

PANNA BATTERY LIMITED

BUS 101
Group Report

Section 05
Prepared For
Mr. Anwar Sadat Shimul (AwS)
Lecturer
Department: School of Business

Prepared By
Salman Rashid

1220444630

Md. Ziaul Islam

1221019030

Md. Rabius Suny

1220287037

Naushin Nusrat

1220121030

Nabila Nur Us Saba

1221030030

Oli Ullah Chowdhury

1220357030

Letter of Transmittal

July 31, 2012

Mr. Anwar Sadat Shimul,
Here is the group report on the Company profile and its current problem & solution that
you asked us to prepare as a part of requirement for our BUS 101 course.
In presenting this report, we have our level best to include all information and explanation to
make the report informative and comprehensive.
It was a very enriching and enthralling for us to prepare this report. Our report writing skills
have improved a lot while doing it. If further any report is required, we will be available by
any means.
Thank you sir for believing in us and giving us this opportunity.
Sincerely,

______________

______________

Naushin Nusrat

Md. Ziaul Islam

______________

______________

Salman Rashid

Rabius Suny

________________

_______________

Oli Ullah Chowdhury

Nabila Nur Us Saba

Acknowledgment

We would like to acknowledge and extend our heartfelt gratitude to the following persons
who have made the completion of this report possible:
Our faculty, Mr. Anwar Sadat Shimul, for his in valuable guidance, encouragement and
support.
Mr. Animesh Samaddar, Deputy Manager[accounts and finance] of Panna Battery without
whom this report would not have been a success. His invaluable suggestions and information
have taught us much and as a result our preparing this report has been a very positive and up
lifting experience.
Our friend, Naushin Nusrat who helps us a lot to make this report easier.
Most especially Allah, who made all the things possible.

Table of Contents
3

Serial No.
0

Article
Letter of Transmittal

Page No.
2

Acknowledgment

Company Profile

1.1

Mission

1.2

Vision

1.3

Corporate objective

1.4

Activities

1.5

Initial Finance

1.6

Market Review

1.7

Market Share

Business Analysis

Risk Management

Problem

10

Solution

11

Conclusion

12

Reference

12

2
2.1

1. Company Profile
Panna Battery Limited (hereinafter referred to as 'PBL' or 'the company') is involved in
manufacturing batteries for using in the house hold appliances, motor vehicles including car
battery and rechargeable batteries. PBL is one of the business units of Panna Group. The
company was incorporated as a private limited company on July 13, 2006 under the
Companies Act, 1994 with authorized and paid capital of Tk. 30.00 million and Tk. 1.00
4

million respectively and started its commercial operation since its incorporation. Presently the
company distributes under different brand names called VOLVO,PANNA and GREEN
POWER through Panna Distributions Ltd. (PDL). Being a private limited company, the
ownership is concentrated within the family members of the entrepreneur Mr. Al-Haj Md.
Lokman Hossain who has around three decades of business experience in Battery
manufacturing sector. The ownership of PBL is shared by Mr. Al-Haj Md. Lokman Hossain
(70%), Mrs. Jonaky Begum (10%), Mr, Md. Abul Bashar Khan (10%) and Mr. Md. Shahid
Khan (10%). PBL is controlled under a common management structure which is guided and
supervised by the Managing Director, Mr, Lokman Hossain. The factory is located at
Kamrangirchar, Dhaka and the Head Office of the company is located at Nasir Trade Centre
(Level - 12), 89 Bir Uttam C.R. Datta Road, Dhaka - 1205.
1.1 Mission
Panna Group is committed to provide quality products to its customers as per international
standards and best suited to local environment at affordable prices.
1.2 Vision
To make concentrated efforts for improvements in productivity and elimination of wastages
by total quality control.
1.3 Corporate objective

Panna has adopted the strategy of developing a major Bangladesh-based manufacturing

business through procurement of raw materials locally and from abroad. They continuously
make concentrated efforts for improvement in productivity and elimination of wastages by
total quality control.The business unit originally penetrated the group by participating in a
syndication Term Loan arrangement in financing Altu Khan Jute Mills Ltd, a Composite Jute
manufacturing unit for processing of raw jute and manufacturing of different jute goods like
Jute yarn of different counts, Hessian cloths & Sacking cloths. The ultimate target was to get
into Panna Battery business, the highest revenue generating unit of the group. At present,
EBL will share business with Prime Bank, IDLC and BRAC Bank, with the long term plan to
maximize EBLs share in business.
1.4 Activities
Panna Battery Ltd (PBL) is the battery manufacturing unit of the group and one of the leaders
in the battery manufacturing industry in Bangladesh. For PBL battery, containers are made
initially by Panna Plastic Ltd, one of the concerns of the Group with well equipped technical
support from Europe and Taiwan. The market for electronics goods are growing day by day.
Especially the battery market has been enhanced significantly. Due to the growth of solar
energy, battery requirement has increased significantly since battery is the key element to
store solar energy. Moreover use of battery driven motorbike & three-wheelers are increasing
day by day. Thus battery requirement is increasing at the same pace.
1.5 Initial Finance
Al-Haj Md. Lokman Hossain, Managing Director is the key person and founder of Panna
Group. He started business in 1980 under the name of Lokman Traders where his main
business was trading of raw lead. Later he formed the company Panna Battery Limited in
2006 which is involved in manufacturing all kinds and sizes of battery for household
appliances, automobiles and industrial battery for different uses. Later the company expanded
its business by forming other sister concerns in the name of Panna Plastic Limited (2008),
Panna Distribution Limited (2009), Panna Powertech Limited (2008) to streamline its
business processes. Currently Panna Group has banking facilities with a number of banks in
the form of long-term finance as well as working capital facilities. However, the initial
finance mainly came from contribution of their sponsors. Later when the business grew, it
was a necessity to go for debt-financing to expand its business.
6

1.6 Market Review

The history of battery industry is not so long as Bangladesh is known as an importer of
battery products until the mid 80s. Up to the pre-liberation war/ the domestic demand of
battery products was fulfilled by importing from outside. Basically we had number of
distributors of batteries in our country that used to market the products. There were numerous
reasons for that but the most likely were the lack of motivation from the govt. policy makers
in that era and the absence of proper expertise to make the battery products. But it does not
mean that we did not have any battery producer in our country at that time. Rather the
manufacturers did not have the adequate funding or financing through which this sector could
get a momentum. After such a slow start for such a vital product, the need to have a fullfledged battery manufacturer is pronounced as the demand started to rise sharply and
eventually after post liberation war, the renowned battery producer, Rahimafrooz emerged
with the acquisition of Bangladesh operations of Lucas UK in 1980. They were the only
company that produced the industrial batteries in 1985. At that time the battery they
produced, were completely absorbed by the local customers and in 1992 for the first time
Bangladesh was able to export home-made batteries, manufactured by the Rahimafrooz. The
Bangladesh Accumulated Battery Manufacturer Association (BABMA), the apex body of the
country's battery manufacturers/ has 24 members across the country. Bangladesh currently
produces 1 million battery products every year. At present, after meeting the domestic
demand, Bangladesh has been exporting to about 12 countries. The cost of production is still
high as most raw materials of this product are imported and 45 per cent are value added. If
the manufacturer can reduce the production cost then they can increase our export volume
quickly as the demand for our products is increasing day by day. Lead acid batteries find
wide application in motor cars, trucks, aircrafts, ships, submarines, railways etc. The major
user of the product is in automobiles for providing energy for ignition of the engine and
lighting. In addition it is also used for uninterrupted power supply for computers/ emergency
lights for houses, telephone systems, power tools, communication devices, as power source
for mining and material handling equipments, hospitals etc. A new application of the product
has emerged today in electric vehicles. The average life of this battery is approximately 1 to 2
years but batteries will be needed throughout the life of the vehicle or the machineries in use.
This indicates that ready market of the product will always exist.
1.7 Market Share
7

The market for electronics goods are growing day by day. Especially the battery market has
been enhanced significantly. Due to the growth of solar energy, battery requirement has
increased significantly since battery is the key element to store solar energy. Moreover use of
battery driven motorbike & three-wheelers are increasing day by day. Thus battery
requirement is increasing at the same pace.

Market Share of Battery:

Competitors
Rahimafrooz
Navana
Panna Battery
Hamco
White
Products
Others

Market Share
%
45%
12%
12%
11%
15%
5%

Source: White Products & Electronics Ltd. Year 2011

1. Business Analysis
Lead acid batteries are the most commonly used rechargeable batteries today. Batteries are
made of five basic components, i.e. a resilient plastic container; positive and negative internal
plates made of lead, plate separators made of porous synthetic material; electrolyte, a dilute
solution of sulfuric acid and water, better known as battery acid; lead terminals and the
connection point in the battery. Lead acid battery manufacturing plants are equipped with all
facilities for battery manufacturing. Battery assembly combines the plates, container, and
other parts into a functional battery. Battery charging is also an important part of assembly.
The plates are stacked either by hand or by machine so that positive and negative plates
alternate with an insulating separator in between. After the plates have been stacked, they are
joined with small connecting parts and burned together to form cell elements or groups. After
workers place all the groups in the battery case, the straps are fused together using a torch or
high electrical power source. After that the battery is packed and placed in a plastic case. As
PBL procures the major raw materials from its allied concern for which the company enjoys
8

uninterrupted supply of raw materials. PBL has huge land area at its production site which
provides good storing capacities that facilitates the company to provide uninterrupted supply
throughout the year against fluctuating and seasonal demand of battery.
As a manufacturing company, PBL produces lead acid battery, automotive dry charge battery,
inverter battery, UPS battery, solar battery, electric vehicle battery, IPS and pure lead as a
finished product. PBL distributes all its finished products through its distribution company
PDL (sister concern). But PBL has no formal agreement with PDL for purchasing of battery
and IPS only for onward sale and marketing of the same products as a sole distributor. Thus,
the ultimate relationship of PBL with PDL is seller and buyer respectively. PDL collects the
order from the customer and quote a price to PBL. The PBL in turn supplies the finished
goods as per that quotation. The pricing strategy for outsider is based on market price
however; the price for internal transfer is certain percentage lower than market price. PBL
supplied goods to sister concerns with 30 days credit facilities and it receives the cash within
the stipulated time period. PBL's payment policy is in line with receivable policy i.e, within
30 days which it tries to clear the payable. All kinds of product distribution, marketing and
selling are responsible by the PDL. PBL receives its cash after receiving final bills from end
users.
1.1 Risk Management
Currently most of the part of the country has been facing gas crisis which is very essential for
manufacturing industry for uninterrupted production. However, at present the plant has
sufficient gas pressure. As per Government decision of limiting the gas supply throughout the
week, the company might face difficulties.
PBL's basic raw materials are lead metal, container, separator, plate and others. Lead
poisoning is considered the most serious environmental health hazard to children and it is one
of the most significant contributors to occupational diseases. Lead causes symptoms ranging
from loss of neurological function to death depending upon the extent of exposure. On the
environmental aspects lead smelter are the causes of soil, water and air pollution. PBL has
taken steps to reduce the environmental hazard by establishing on ETP plant.
PBL sources of basic raw materials are from local and international market. It collects
wastage battery and recycles it for reuse. PBL also recycle Rahimafrooz batteries and it takes
just processing fees. However, it can collect raw materials from international market also. So
it has less raw material supply risk.
9

2. Problem
Panna Group started its journey in 1980 with trading wood coal under the name of
Lokman Traders, a proprietorship concern of Al-Haj Md. Lokman Hossain, who is the key
person and founder of Panna Group. After that they started the business of Processing of
Lead/Oxide from scrap battery under the name of Medina Metal & Chemical. Then they
extended the business to the manufacturing of Batteries under the name of Panna Battery
Co. in the year 2005 which was converted to a Limited Liability Company in the name of
Panna Battery Ltd. in the year of 2006. PBL markets its product in the name of VOLVO.
VOLVO battery has marked its strong presence in the market for quality and reliability in a
short span of time. Panna Group has now Panna Distribution Ltd, Panna Plastic Ltd, Panna
Powertech Ltd under its umbrella. They decided to diversify their business by establishing a
jute mill to produce primarily jute yarn seeing its strong growth potential.
ALTU KHAN JUTE MILLS LTD (AKJML), a sister concern of PANNA Group, was
established as a private limited company in July 06, 2008 located at Parikkhitpur,
Modhukhali, Faridpur. The cost of the project and its mean of finance is given in the next
page:

Fig in million Taka

Particulars
Syndicated Term Loan (Including IDCP)
Equity
Total Project cost

Amount
649.08
278.16
927.24

%
70%
30%
100%

The project cost was supposed to be financed by Syndication Loan led by a leading private
commercial bank. However, the lead bank couldnt manage the syndication in due course and
thus the management of Panna Group decided to fund the project from own source. The
problem aroused when they actually diverted fund from Panna Battery Limited to fund the
project. Most of the fund came from Panna Battery Limiteds financial partners which were
actually disbursed as working capital facilities for Panna Battery.
10

The project has gone into commercial operation partially from September 2011. Almost 80%
Machinery has been installed, few in the pipeline. At 100% capacity utilization, the proposed
unit would be capable to produce 19500 MT of jute yarn per year in 300 working days and 3shifts per day basis.
The problem however was caused because of a significant portion of fund being diverted
from their main battery business. When you invest your short term loan i.e working capital
for long term purpose, the chance of repaying the loan within the stipulated time becomes
impossible because there is no chance of cash flow from a long term project which is yet to
see light of commercial operation and thus revenue generation.
The result was obvious and most of the loans disbursed on account of Panna Battery Limited
and its different sister concerns were not repaid in due time and thus got classified. As per
Bangladesh Bank guidelines, if a short term loan is not repaid within 90 days from the date of
its expiry, it is considered to be classified. As the loans got classified, the banks were more
cautious in disbursement of fund to the group concerns. Some of their financial partners even
froze their accounts. Thus Panna Battery Limited was hugely hampered in their day to day
business as bank financing was hard to get by. The battery business mainly depends upon
purchase of raw lead/scrap battery from different suppliers for which huge cash is required.
Thus it is not possible to meet up the huge demand of the market in the peak season i.e
summer if sufficient purchase of raw materials is not done. This is one of the problems that
Panna Battery Limited was facing due to poor management and diversion of the fund to a
new project.
3. Solution
As per discussion with Panna Battery officials, we have come to find out that the situation is
improving. The jute mill project has already gone into commercial operation in 2011 and they
have already exported jute yarns to Russia and other European countries. More export orders
are at hand and with the present capacity, its becoming hard for them to meet the existing
orders. In the meantime, they are in process of availing re-financing for the capital investment
from a state-owned commercial bank. The government is currently emphasizing on more jute
mill projects to increase the export of jute products and thus getting financing from stateowned commercial bank will be easier now. If the loan is sanctioned, they could easily repay
their existing overdue loans and the freeze on disbursement will be withdrawn with
immediate effect. Considering the peak season of battery and IPS sales, they are emphasizing
on making the most in this season by investing more in battery production to meet the current
market demand.

11

4. Conclusion
Whenever a company tries to diversify their business portfolio from the existing line of
business, they need to be more cautious. First of all, the group was specialized in battery
production and sales as the sponsors had lots of experience in this sector. Then they tried to
expand their business to a completely new industry where they had no experience at all which
can be risky as the projects viability mainly depends upon the management and experience
of the sponsors. Secondly, investing a huge amount of money in the jute mill, mostly by
diverting fund was risky as it hampered their existing business. Although a new project
depends both upon equity and bank finance, it was unwise to divert fund from one business to
the other. Panna Group has a good reputation in the market for their quality products which
they should to try to capitalize by expanding their business and cater the increasing the
market demand. They share the 2nd spot with Navana Battery right behind Rahimafrooz. They
should try to grab the business of Rahimafrooz by not only meeting the demand of the local
market, but also cater the demand of international market by emphasizing more on exporting.
Similarly, Altu Khan Jute Mills can also be a success if they can diversify their product line
from jute yarns to jute sacks, gunny bags, jute hessian cloths etc. as these products have huge
demand both in the local market as well as abroad.

Reference:
-

Term paper format, http://www.experiment-resources.com/research-paperoutline.html

Company profile and business analysis, http://pannagroupbd.com/
Risk management, Contemporary Business 13th edition.
Market review and analysis, Annual report[2010-2011] Panna Group of Industries

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