2015

M/S Momin Traders

Assigned Rating:

Summary:
CRAB has assigned CRAB ME-3 rating to M/S
Momin Traders. This rating reflects adequate
credit worthiness and overall performance of the
unit regarding its business, operation, financial
and management structures and functioning.
According to CRAB SME Rating comparative
analysis M/S Momin Traders exceeds the average
performance of the SME Universe of CRAB as
regards its commitment to lenders.

Date of Rating: 17 December 2015

Validity: 16 December 2016

Analysts:
Muntasir Mamun Chowdhury
muntasir@crab.com.bd
Mohammed Nazrul Islam Bhuiyan
nazrul@crab.com.bd
10P Spider Model:

Profile:
M/s Momin Traders involves in trading of womens
wear such as different kinds of share, salwar and
three pieces which started its business in 1995.
The Firm has one sales centers at Narshindi Bazar.
Methodology:
CRAB was appointed by the management of M/S
Momin Traders to assess its current credit
worthiness and workings. CRAB conducts its
analysis from a position of independence and
objectivity. The rating is based on public and nonpublic information provided by M/S Momin Traders
as well as on one-to-one interviews with
proprietor and banker. The SME Rating is pursued
with reference to CRAB SME Rating standards
(hereafter, the Standard). The Standard is
established according to a methodology based on
internationally accepted SME rating standards,
developed and continuously updated with market
feedback from stakeholders. The Standard places
CRAB in a unique position to assess the credit
worthiness of SME unit and ensures that the
services conducted by CRAB are closely tied to
market expectations. The Rating & Rating Report
is based on current information provided to CRAB
until 14 December 2015. The Rating & Rating
Report may be changed, suspended or withdrawn
as a result of changes in or unavailability of such
information.
The CRAB SME Rating methodology is available at
www.crabrating.com

KEY RATING DRIVERS

Comfort

Strong networking and relationship with suppliers and buyers which generates regular
business

Diversity of products reduces product risk to some extent

Low leverage and moderate coverage position comforts the firm.

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M/S Momin Traders

Credit Rating Report

M/S Momin Traders

Experience of the promoter in the trading business helps him understand the cycle of the
cloth trading business.

Challenges

May face distressed situation on working capital management as long receivable collection
period due to business nature.

High competition in trading business and entrance of new Indian and Pakistani products
may create stress profitability condition.

BACKGROUND

M/S Momin Traders is a wholesaler of stitch and unstitches Salwar Kameez, sharee and and Hijab. It
runs its operations from Narshindi Bazar, Narshindi on total 900 sq. feet shop space and 60 sq. feet
warehouse. All of these facilities are owned by the proprietor and which seems adequate to support
the present scale of the business. MT is engaged in trading of womens wear. The Firm mainly sells
Sharee and Salwar Kamiz. MT sells different types of Sharees i.e. Tangail Sharee, Jamdani Sharee,
Indian Sharee, Benaroshi, Printed Sharee. Pakistani Sharee, Neted sharee etc. It also sells stitched
and un-stitched Salwar Kamiz.
Associated Concerns
The proprietor is also involved textile business of manufacturing Grey Fabrics. He owns three
textiles named Momin Textile, China Bangla Textile, Bismillah Textile with total production capacity
1 million yards per month.
Business Model of M/S Momin Traders

1. OPERATION & BUSINESS RISK PROFILE

M/S Momin Traders is a wholesaler of stitch and unstitches Salwar Kameez, sharee and and Hijab. It
runs its operations from Narshindi Bazar, Narshindi on total 900 sq. feet shop space and 60 sq. feet
warehouse. All of these facilities are owned by the proprietor and which seems adequate to support
the present scale of the business. MT is engaged in trading of womens wear. The Firm mainly sells
Sharee and Salwar Kamiz. MT sells different types of Sharees i.e. Tangail Sharee, Jamdani Sharee,
Indian Sharee, Benaroshi, Printed Sharee. Pakistani Sharee, Neted sharee etc. It also sells stitched
and un-stitched Salwar Kamiz. The products have demand throughout the year.

CRAB ICRAB Ratings on SME Credit Digest I 17 December, 2015

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M/S Momin Traders

Table: Product wise Selling Portion

Product Type
Sharee
Salwar Kameez
Hijab & others

Category
~20
~5
N/A

Selling Portion
85%
10%
5%

The products have low possibility to outdated but easily imitated by the rivals which increases
product risk. At the same time small number of wholesaler and long tradition of doing business has
helped building relationship with buyer supplier and this relation helps to mitigate risk to some
extent. During eid season the business experienced huge market demand.
The Firm procures different types of Sharees from Tarabo, Demra, Benaroshi from Mirpur and
Issordi, Printed Sharee from Baburhat, Narshindi etc. Besides, the firm collects Indian and Pakistani
share directly from importer. MT procures stitched and un-stitched Salwar Kamiz from Chandni
Chawk, New Market, Islampur. The Proprietor manages the procurement process by maintaining a
good relationship with suppliers. The buyers of the Firm come from different locations i.e.
Narayangonj, Gazipur, Islampur, Tangail, Borishal, Narshindi etc. Procurement consists of 50% in
cash and 50% in credit with sixty to one twenty days of credit term. On the other hand the firm
sells 30% in cash and rests are in credit which is collected all through the year.
The top tier management of MT includes the Proprietor named as Mr. Md. Eyanus Mollah. He is 50
years old with 30 years experience in the trading business. The Proprietor monitors and controls
the overall business as he is the key person of the business. At his absence, his manager takes
care of day-to-day business. The Firm employs four staffs including one manager at sales center.
Manager maintains account of the business.
MT has insurance with Bangladesh National Insurance Company Limited for sum insured amount of
BDT 8.8 million. Insurance covers the risk on stock of Readymade Garments, Sharee,. The risks
associated with Fire and Lightening is also covered.
2. FINANCIAL RISK PROFILE
Financial analysis is based on audited consolidated financial statement of all associate concern of
M/S Momin Traders.
In 2014 the firm has generated BDT 544.3 million sales compared to BDT 374.3 million in 2013 and
BDT 425.3 million in 2012. Mt has started one new grey fabric manufacturing textile in 2014 and
the firm has started the process of setting up two new textiles. Due to political instability business
was little down in 2013. COGS has increased to 92.5% in 2014 compared to 90% in previous years
and so EBITDA margin has decreased to 7.1% in 2014 from 9.5% in 2013 and 2012.
The firm made net profit of BDT 28.2 million in 2014 having 5.2% net profit margin. Moreover, the
firm is expected to generate more profit in coming year since installations of two new factoris are
in the process. Mt had gross profit margin and operating profit margin of 7.5% and 7.1% in 2014
respectively. The firm is importing new machine from china for improving capacity and utilization
and so profitability might increase in future.

CRAB ICRAB Ratings on SME Credit Digest I 17 December, 2015

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M/S Momin Traders

Inventory handling of MT became more efficient in 2014. Inventory turnover ratio and inventory
processing period was 11.8x and 31 days respectively in 2014 compared to 9.2x and 40 days in
2013. Average receivable collection period and average payment period remained almost same.
Due to increased efficiency in inventory handling operating cycle reduced to 47 days in 2014 from
57 days in 2013.
Borrowed fund amount increased significantly to BDT 3.5 million in 2014 since the firm is setting up
two new factories and importing new machineries from china. But the proprietor has net worth
amount of BDT 122.66 million and total net worth to borrowed fund ratio is 3.50 which pose
moderate leverage position. Besides MT had EBIT to interest expense ratio of 41.5x in 2014
showing strong coverage position. Moreover, according to bank, the firm has relationship with bank
since 2012 and loan repayment history is satisfactory with no default history.

SUMMARY
CRAB finds that the major operational and business risks arise from high competition & large
inventory conversion period of the company which leads to stressed cash flow and unpredictable
profitability consideration to an extent. This industry is vulnerable to political situation; seasonal
variation. As a result to remain competitive and to reduce production cost the firm has no other
way than to get converted in to more scientific & modern production method and utilizes full
production capacity. It also needs to apply better sales and marketing strategy to increase its sales
volume.

Appendix - 1: FACT SHEET

Background
Name of the Firm
Year of Commencement
Business Address
Initial Investment
Legal status
Legal history
Number of employees

M/S Momin Traders

1995
Narshindi Bazar, Narshindi
N/A
Proprietorship
Founded b in 1995 by the proprietor
5

Key Person Profile

Proprietors Name
Age
Qualification
Designation/responsibilities
Previous experience
Equity
Proprietors residence address
Ownership of residence
Vehicles used

Sales Office

Business Addresses
Address
Telephone No
Occupied Area
Land-use Right
Address

CRAB ICRAB Ratings on SME Credit Digest I 17 December, 2015

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Manufacturing &

M/S Momin Traders

Telephone No
Occupied Area

Storage Unit

Land-use Right

Banking and Insurance

Name of the Banker
Loan Repayment Behavior
History of Reschedule
Purpose of Bank loan
Name of the Insurer
Sum Insured
Insurance Coverage

Sonali Bank Limited

Good
No
Working Capital purpose
N/A
N/A
N/A

Source: The Proprietor, Bank and based on some relevant documents

CRAB ICRAB Ratings on SME Credit Digest I 17 December, 2015

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M/S Momin Traders

Appendix - 2: Details of Credit Facilities of M/S Momin Traders.

Details of Credit Facilities of M/S Momin Traders. as on 15 December 2015 (Amount in BDT

Loan Type
Short Term

Natur

Bank

Facility

Limit

Trust Bank Limited

OD

10.0

0.96

Total

10.0

0.96

e
Funded

Outstandi
ng

Short Term

Funded

Trust Bank Limited

Time Loan

5.0

5.0

Short Term

Funded

Trust Bank Limited

LTR

25.0

25.0

Total

30.0

30.0

1 yr. Debit Sum

BDT 470.65 Million

1 yr. Credit Sum

BDT 471.22 Million

Debit sum to Limit

47.07x

Million)
Limit
Expiry
1-Apr.-2016
1- Apr.2016
1- Apr.2016

Credit Sum to Limit

47.12x

Appendix-4: Key Financial Indicator of M/S Momin Traders

Financial Highlights
Year Ended December 31
(Mil. BDT)
Net Sales

2014

2013

2012

544.3

374.9

425.3

Sales Growth (%)

45.2%

-11.8%

N/A

CoGS as % of Sales

92.5%

89.9%

90.0%

EBITDA

38.5

35.4

40.5

Net Profit after tax

28.2

25.8

28.7

Net profit after tax growth (%)

9.1%

-10.0%

N/A

Gross Profit Margin

7.5%

10.1%

10.0%

Operating Profit Margin

7.1%

9.5%

9.5%

Net Profit Margin

5.2%

6.9%

6.7%

31

40

19

Average Inventory Processing Period (Days)

Operating Cycle (Days)

47

57

26

Total Borrowed Fund

35.0

10.9

10.0

EBIT to Interest expense ()

41.5

35.2

18.2

CRAB ICRAB Ratings on SME Credit Digest I 17 December, 2015

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M/S Momin Traders

SME Rating Scale

Rating

Rating definition

CRAB SE1/ME 1

The highest credit-quality rating assigned by CRAB to an SME

CRAB SE2/ME 2

The high credit-quality rating assigned by CRAB to an SME

CRAB SE3/ME 3

The adequate credit-quality rating assigned by CRAB to an

CRAB SE4/ME 4

SME
The moderate credit-quality rating assigned by CRAB to an

CRAB SE5/ME 5

SME
The inadequate credit-quality rating assigned by CRAB to an

CRAB SE6/ME 6

SME
The risk prone credit-quality rating assigned by CRAB to an

CRAB SE7/ME 7

SME
The poor credit-quality rating assigned by CRAB to an SME

CRAB SE8/ME 8

The lowest credit-quality rating assigned by CRAB to an SME

DISCLAIMER
Copyright 2015, CREDIT RATING AGENCY OF BANGLADESH LIMITED ("CRAB"). All rights reserved.
ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH
INFORMATION

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OTHERWISE

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CRAB ICRAB Ratings on SME Credit Digest I 17 December, 2015

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