The Internship Report entitled “Over all Non Banking financial Activities &

performance of IDLC finance Ltd.” has been submitted to the Office of The
Dean, in partial fulfillment of the requirements for the degree of Bachelor of
Business Administration, Major in Accounting and Information System (School
of Business Administration on 31st December, 2012 by Md. Masud Al Mamun,
ID # 081-32-810-074. The report has been accepted and may be presented to
the Internship Defense Committee for evaluation.

(Any opinions, suggestions made in this report are entirely that of the author of
the report. The University does not condone nor reject any of these opinions or
suggestions).

1. 1. 1 : Introduction

One of the renowned names in Bangladesh financial market is Industrial

Development

Leasing Company (IDLC) Limited. It started operation in the year 1985 as the
pioneer leasing company as to facilitate lease- financing and capital investment
in industrial sector, with the view of “Become the best performing and most
innovative solutions provider in the country”. For introducing new multitude of
diverse financial products and services in 2007 the company changed its name
to IDLC Finance Ltd. Over the last two decades IDLC has contributed relentlessly
in the country’s transition into a developing country and has emerged as
Bangladesh’s leading multi product financial institution. The company now offers
financial and technological solutions to both institutional and individual clients to
cater for their unique requirement.

1. 1. 2: Origin of the Report

I have been assigned to do my Internship program in the IDLC Finance Limited,

Consumer Division, in Mirpur as a partial requirement of the B.B.A Program. It is
a three credit course to complete the B.B.A program of the Department
of Accounting & Information System. I prepared this report on direction of my
supervisor Prof. Dr. Md. Ashraf Ali Khan, Department of Accounting,
ShaikhBorhanuddinPostGraduateCollege, on “Over All Non Banking Financial
Activities & Performance of IDLC Finance Ltd.”. This report has been prepared
on the basis of information that I have known from the secondary information and
the information I have collected during my internship from IDLC Finance Ltd.
 1. 1. 3: Objectives of the Report

The report purports to focus on two aspects:

1. The organization and

2. The project;

1.1. 4: Objective of the organization

The purpose of the organizational part is to demonstrate the experience of the

twelve week internship program and analyze the activities, performances and
also to demonstrate their strength, weakness, opportunities, threats and other
business affairs of IDLC Finance Ltd.

1.1.5: Objective of the project

This part of the report encompasses a brief rundown on the various functions and
operations of the Consumer Division of IDLC. I was allowed to have a practical
orientation in Credit and Collection Department of IDLC. Thus, all practical
information used in this is more or less collected through the day to day
orientation.

1. 2. 1: Scope

The report will attempt to present IDLC of Bangladesh Ltd. since its inception
with a brief introduction of its sponsors. Apart from the internal practice and
company philosophy, a brief introduction will be provided on the industry as a
whole and the macro and micro economic variables shaping the industry. The
researcher will try to identify corporate philosophy as well as customer opinion on
what constitutes a better service. Lastly, an attempt will be made to find out
various problems hindering the growth of the NBFI. The researcher will attempt
to present an overview of Consumer Divisions different operations. After
analyzing analogous situation in other areas a steps will be suggested to
overcome the barriers to progress.

1. 2. 2: Methodology
The paper will be written on the basis of information collected from primary and
secondary sources. The primary information has been collected from the
Institution and as well as some general clients of the Non Banking Financial
Institution.

The secondary information has been collected from the company’s annual report,
corporate newsletter, branches manuals, and intranet of the company, different
websites and various publications of the institution.

Some opinions and ideas have been incorporated in the paper through
interactive sessions, interviews and informal discussion with the company
officials. The officials interviewed included the HOCCD (Head of Credit and
Control Division), Head of Liability Operations, different managers, executives
and high officials.

1. 2. 3: Limitations

During my orientation I am able to learn a lot of things but still it was not enough.
There are some limitations that I can’t ignore. The main limitations were:

 The time span was not sufficient enough to learn all the activities of the
organization properly. Therefore, it was very difficult to carry out the whole
analysis.
 Data unavailability was the constraint. Official documents on the detail activities
of the department were not available.
 For business secrecy confidential information, which could have enriched this
report could not be given.
 I was There Placed For Three month But In Working days I had to spend all days
for organizing there customer undertaking so I couldn’t get enough time for
collecting data for my internship report.
 The organization is very conservative about there information, collecting primary
data was very heard for me. So I have to prepare most of the part of my report
based on secondary report.

2.1.1 The Pioneer

IDLC Finance Ltd commenced its journey, in 1985, as the first ever leasing
company of the country with multinational collaboration and the lead sponsorship
of the International Finance Corporation (IFC) of The World Bank Group.
Technical assistance was provided by Korea Development Leasing Corporation
(KDLC), the largest leasing company of the Republic of South Korea.

IDLC, which has now emerged as Bangladesh’s leading multi-product financial

institution, has amongst its external share-holders, international development
agencies such as the Aga Khan Fund for Economic Development (AKFED) and
German Investment and Development Company (DEG) besides the IFC. The
other foreign sponsors include Kookmin Bank of the Republic of Korea in addition
to KDLC and, all these institutions together hold 45% of the Company’s shares.

Three Bangladeshi financial institutions – IPDC of Bangladesh Limited, The City

Bank Limited, Sadharan Bima Corporation and the general public hold the
remaining 55% of the shareholding in this public limited company listed with the
Dhaka & Chittagong Stock Exchange. IDLC is on the list of the twenty (20)
largest capitalized companies in the country.

The unique institutional shareholding structure comprising mostly of financial

institutions helps the company to constantly develop through sharing of
experience and professional approach at the highest policy making level.

IDLC, as a multi-product financial institution, offers a diverse array of financial

services and solutions to institutional and individual clients to meet their diverse
and unique requirements. The product offerings include Lease Finance, Term
Finance, Real Estate Finance, Short Term Finance, Corporate Finance,
Syndicate Finance, Merchant Banking, Term Deposit Schemes, Debentures and
Corporate Advisory Services.

IDLC’s vision is to be Bangladesh’s best multi-product financial institution. In

achieving this vision and goal, we realize the importance of taking due care of all
of our constituents, particularly the share-holders, customers and workforce. The
corporate philosophy is to perform with proper accountability and achieve highest
ethical standards in all our activities.

IDLC’s unique institutional shareholding structure, compromising mostly of

financial institutions, helps the company to constantly develop through sharing of
experience and professional approach at the highest policy making level. IDLC
has also established two wholly owned subsidiaries, IDLC Securities Limited and
IDLC Investments Limited to provide customers with security brokerage solutions
and IT solutions, respectively.
International Sponsors
Korea Development Leasing Corporation (KDLC), South Korea
Kookmin Bank, South Korea
Domestic Sponsors
The City Bank Limited
Sadharan Bima Coporation
General Public
Institutions
v Mercantile Bank Ltd.

v Eskayef Bangladesh Ltd.

v Reliance Insurance Ltd.

v Investment Corporation of Bangladesh (ICB)

Authorized Capital BDT 10000000 SHARES (100 Each)

Paid-up Capital (including share premium) BDT 6000000

SHARES (100 Each)

2. 1. 3:Capital Structure

2.1.4: Shareholding Structure

1985 Incorporation of the Company
1986 Commencement of Leasing Business
1986 Signing of First Lease
1990 Establishment of branch in the port city Chittagong
1993 Listing in Dhaka Stock Exchange
1994 Licensed by Bangladesh Bank for deposit taking
1995 Licensed as Non-Banking Financial Institution under the Financial Institutions Act, 1993 of
Bangladesh Bank
1995 Licensed by Bangladesh Bank as off-shore financier in Export Processing Zones
1996 Listing in Chittagong Stock Exchange
1997 Commencement of House Finance and Short Term Finance operations
1998 Licensed as Merchant Banker by Securities and Exchange Commission
1999 Commencement of Corporate Financing and Merchant Banking operation
2002 Launching of Retail Deposit Products
2004 Opening of First Retail Focused Branch in Dhaka
2004 Launching of Cap Invest
2005 Introducing Securitization by securitizing BDT 190 million (US $ 3.01 million)
2005 Strategic Alliance with SBI Capital Markets Ltd.
2005 Introduction of Home Loan Shield – the first in the market
2006 Opening Merchant Banking Branch in the port city Chittagong
2006 Relocation of company’s Registered and Corporate Head Office at own premises
2006 Commencement of operation of IDLC Securities Limited, a wholly owned subsidiary of
IDLC.
2007 Launching of Discretionary Portfolio Management Service “ Managed Cap Invest”
2007 Company name changed to IDLC Finance Limited
2007 IDLC Securities Limited Chittagong Branch Opened
2007 IDLC bags ICAB national award 2006
2007 IDLC Receives first ICMAB National best corporate award 2007
2007 IDLC Securities Limited Mohakhali Branch Opened
2008 IDLC Finance & Securities Sylhet Branch Opened

2.1. 5: Company Chronicle

2009 IDLC finance Ltd. Sylhet branch opened

2009 Gazipur SME Booth is opened

2009 Imamganj SME Booth is opened

2010 Narayanganj Branch is opened

2010 Comilla Branch is opened

2010 Narshingdi Branch is opened

2010 Keraniganj Branch is opened

2011 Opening of Branch at mirpur

2011 Opening of Branch at Tongi

2011 IDLC Investent Ltd. Comences oprations

2012 Jessore Branch is opened

2012 IDLC Finance Ltd. Achieved “AAA” credit rating.

 2.2.1: Guiding Principles

IDLC is a multi-product financial institution offering an array of diverse financial

services and solutions to institutional and individual clients to meet their diverse
and unique requirements. Following are the guiding principles that shape the
organizational practice of IDLC

Customer first: IDLC has grown with its customers, who are believed to be the
center of all actions. As the crux of IDLC’s corporate philosophy, customer
service gets the highest priority.

Innovation: IDLC has continuously introduced new financial products for

meeting the needs of the entrepreneurs in a complex & challenging business
environment. The concept of innovation is in-built into the working culture.

Professional Knowledge: IDLC is staffed with qualified professionals and

innovative minds in the country. Years of operational experience, large industrial
database and competent workforce have gives them unparalleled advantages.

Professional ethics: The professional at IDLC maintain the highest degree of

financial and business ethics in all transactions with the clients. Over the last two
decades, IDLC have put in bets efforts to meet the expectations of the clients
and investors.

One stop solution: Work at IDLC begins with the idea generation, then goes on
into the feasibility study followed by arrangement of financing to implement the
project. IDLC advises the clients, finance them and even arrange financing for
them via different financing modes, namely: lease financing, term loan, bridge
loan, syndication, bridge loan, syndication, ordinary shares, preferred shares and
debentures.

2.2.2: Vision

Become the best performing and most innovative financial solutions provider in
the country

2.2.3: Mission
Create maximum possible values for all the stakeholders by adhering to the
highest ethical standards

For the Company: Relentless pursuit of customer satisfaction through

delivery of top quality services.

For the Shareholders: Maximize shareholders’ wealth through a sustained

return on the investment.

For the employees: Provide job satisfaction by making IDLC a center of

excellence with opportunity of career development.

For the society: Contribute to the well-being of the society, in general, by acting
as a responsible corporate citizen.

Goal: Long term maximization of Stakeholders’ value.

Corporate Philosophy: Discharge the functions with proper accountability for all
actions and results and bind to the highest ethical standards.

2.3.1 : Organization Structure

Particulars 2007 2008 2009 2010

3.1.2: IDLC PRODUCT AND SERVICES :

3.2.1: Loan Products

 Lease Finance;
 Domestic Factoring of account receivables;
 Real Estate Developer Finance;
 Home Equity Finance;
 Personal Lone;
 Business Lone;
 Term Finance;
 Bill/ Invoice Discounting;
 Corporate Real Estate Finance;
 Home lone with home lone shield;
  Car lone for individuals;
 Machinery lone;

3.2.2: Investment Products

 Common equity products;

 Bonds;
 Preferred Equity investment;

3.2.3: Liability Products

 Term Deposit schemes ;

 Debentures;
 Securitized Bonds;

3.2.4: Corporate Services

 Project Finance Appraisal;

 Working Capital arrangements;
 Refinancing arrangements;
 Securitization of Receivables;
 Personal Supports to SMEs ;

3.2.5: Merchant Banking and Portfolio Management Services

 Cap Investment ;
 IPO;
 Underwriting;
 Placement of Equity, Debentures, Bonds;
 Maximum capital Investment;
 Issue Management;
 Investment advisory;

4.1.1 : Non performIng lone Ratio:

Here we can see that non performing loan ratios are decreasing each year. And
in 2011 it is 3.07 % which is a good sign for IDLC Finance ltd. The ratio of

non performing loan has been further reduced from 4.5% in 2009 and 3.62 % in
2010 to 3.07% in 2011, mainly through strengthening of the credit and collections
teams and relevant process. IDLC has continued with its prudential policy of
building adequate provision for doubtful accounts and future losses.
 4.1.2: Market capitalization of idlc finance limited

In this graph we can see their market capitalization is highest in 2011. Higher
market capitalization means expansion of business and as result IDLC opened
their twelve new branches in recent two years. The company had to relay mainly
on profit retention to support enhanced capital requirements arising from asset
growth, capital adequacy. The Bangladesh Bank adoption of Basel II accord for
NBFI from January 01, 2012 is also likely to exert added pressure on companies
capital adequacy.

4.1.3: Book Value:

Market value added statement reflects the company’s performance evaluated by

the market through the share price of the company. This statement shows the
difference between the market value of the company and the capital contributed
by investors.

Particulars 2011 (BDT in millions) 2010 (BDT in millions)

Market value of share outstanding 27888.00 22218.00
Book value of shares outstanding 3690.19 2393.09
Market value added 24197.81 2393.91

This statement shows how the MVA has been calculated for the year ended 31
December, 2011 and 2010.

4.1.4: Debt to equity ratio:

IDLC finance limited is a strong equity based company. Emerging Credit Rating
Agency of Bangladesh rated IDLC in long term rating at “AAA” and sort term
rating as “ST -1”. Institution rating in this category characterized with excellent
position. As in December 31, 2011 total equity of IDLC finance stands at BDT
3690 million and 2010 it was BDT 2393 million. This means the company has a
strong equity against its debt. And the graph also show that the ratio of debt to
equity ratio is decreasing in each year. And that is a good sign for the company
to meet its obligation. The company’s equity had increased by 54% over the
previous year.

4.2.1: earning per share:

The company believes that superior service, diversification of client segment and
business strong risk management, performance focus, ensuring sustaining
financial performance and those results an increasing rate of earning per share.
This graph shows every year this rate is increasing. Consorted earning per share
grew by 61% to BDT 221.8 compared to previous year.

4.2.2: dividend per share:

IDLC finance has been paying dividend consistently to its shareholders over the
years. But they pay dividend randomly according to their business policy.

This graph highlights their dividend payment per share. Moreover the company
has paid 110% in 2010 and 100 % in 2011.

The following tables shows the five years ratios,

2007 2008 2009 2010 2011 Growth

Particulars

Dividend per 38.33 40.00 35.00 110.00 100.00 -9.09%

share (%)

Dividend 4.89 2.63 1.53 2.97 2.15 -0.82

yield (%)
Dividend 36.62 26.40 21.55 40.10 45.21 5.07
 payout ratio
(%)

4.2.3: price earning ratio:

Price earnings ratios are 21.01 that indicate a good sign for the company. We
know that lower price earning ratio means earring per share is more than the
market value of the company. In 2011 IDLC Finance has decreased by 6.02%
against 2010.

4.2.4: Operating income

Above graph shows in Each year their operating income growth increased
rapidly. In 2011 operating revenue grew 58% to reach BDT 3027 million against
the year 2011.

Though the amount of BDT million increase in 2011 but the growth shows that
there is negative growth in percentage in 2010 to2011, here the growth is 58%
but the previous year growth is 62% which indicated that the operating expenses
also increased. So the company should try to reduce their operating cost
expenses.

4.3.1: Total asset

IDLC consolidated asset at 2011 year end stood at BDT 26.9 billion a 19 %
growth over 2010. An aggressive deposit program was initiated in the second
half of 2011 and by year end. So from the above graph I can say they has a
optimum level of asset.

That means they have the ability to meet its long term as well as short term
obligations with adequate asset.

4.3.2 Return on total assets

The return on asset ratio of IDLC finance ltd also improved in 2011 over other
four years. That we can see on this graph and the annual report of 2011. The
ROA increased means the net income also increased and in 2011 their return on
asset is 5.35 with a growth of 1.24%.

4.3.3: Profit
In 2011 IDLC Financed Limited posted an operating profit of BDT 1956 million as
against BDT 1273 million in 2010 with a spectacular growth of 53.65 percent over
the

preceding year. After having made necessary provisions for loans and
advances, accordance with the instruction of Bangladesh bank net income
before tax (NIBT) stood at BDT 1327million in the year under review against TK
822 million in the preceding year registering a growth of 61.47 percent.

4.3.4: Shareholder’s equity

This graph shows that shareholders equity in 2011 is BDT 3690 million with a
growth of 54 percent against BDT 2393 in the 2010. This graph also shows the
share holder’s equity was in a steady growth 2007 to 2008. And the growth rate
2008 to 2009 was reduced against 2007 to 2008. But from 2009 it is again with
positive growth.

4.3.5: Return on shareholders equity

Return on share holders’ equity rose to 43.64% with a growth of 2.59% and 2011
it is the largest percentage on five financial years. And it is undoubtedly good
sign for the company. This positive growth means shareholders got their optimize
return on their capital. This scenario also attracts other investors to invest in the
company.

4.4.1 Current Ratio:

The current ratio of IDLC finance in 2011 is 1.39:1 with a growth of .35 times.
IDLC has a optimum current ratio over the last few years. It means the company
has the ability to face its short term liabilities successfully with their short term
asset.

5.1.1: Sector wise exposure June 2012:

 5.1.2: Risk Management of IDLC Finance Limited:

Risk is the element of uncertainty or possibility of loss that prevail in any

business transaction in any place, in any mode and at any time. Risk is an
integral part of financing business. Risk management entails the adoption of
several measures to strengthen the ability of an organization to cope with the
vagaries of the complex business environment in which it operates.

IDLC always concentrates on delivering high value its stakeholders through

appropriate tread off between risk and return. A well structured and proactive risk
management system is in place within the company to address risk relating to
credit, market, liquidity and operations. Risk grading is assigned at acceptation of
lending considering the industry, business financial and management risk
associated with financing. The company has different committees for risk
management and appropriate internal control measures are also in place to
mitigate risk.

5.1.3 : Major Risks at IDLC:

Major risks that IDLC identifies detrimental to its return and market reputation
is as follows:

Credit Risk:

Credit risk is the possibility that a borrower or country party will fail to meet
agreed obligations. Thus managing credit risk for efficient management of a
financial institution (FI) has become the most crucial task. Given the fast
changing, dynamic global economy and the increasing pressure of globalization,
liberalization , and consolidation it is essential that FIs have robust credit risk
management policies and producers those are sensitive and responsive to these
changes. At IDLC, credit risk may arise in the following forms:

 Default risk
 Exposure risk
 Recovery risk
 Country party risk
 Related party risk
 Legal risk
 Political risk

Market Risk:

Market risk refers to the risk of fluctuation in a variety of markets such as interest
rates, prices of securities where the values of assets and liabilities can change
and there exists the risk of incurring losses.

Liquidity Risk

Liquidity risk arises when a company is unable to meet the short term obligation
to its lenders and stakeholders. This arises from the adverse mismatch of
maturities of assets and liabilities.

Operational Risk

Operational risk is the potential loss arising from a break down in company’s
system and producers, internal control, compliance requirements or corporate
governance practices that results in human error, fraud, failure, damage of
reputations, delay to perform or compromise of the company’s interests by
employees. Operational risk may also arise from the following:

Turnover of trained stuff;

  Risk of insider dealings;
 Leakage of sensitive information;
 Shortcomings of organizational structure;
 Risk of falling in credit ratings;
 Money laundering;
 Changes in statutory requirements
 Technological obsolescence;
 Business Volume Risks

At IDLC, business volume risk may arise in the form of risk of falling business
volumes and market share, risk of being overtaken and losing leadership position
and risk of over trading which may affect profitably due to volatile revenues and
reduced spread earnings, credit rating and reputation. Risk of over trading may
lead to insufficient capital.

5.1.4: Implementation of various strategies to minimize Risk

 Looking the payment performance of customers before financing.

 Annual review of clients.
 Adequate insurance coverage for funded asset.
 Vigorous monitoring of and follow up by special assets management team.
 Strong follow up of compliance of credit policy by credit admin department.
 Taking collateral and performing valuation and legal vetting on the proposed

collateral.

 Seeking legal opinion from internal external lawyer for any legal issues.
  Maintaining neutrally in politics and following arms length approach in
related party approach.
 Regular review of market situation and industry exposure.

5.2.1: Industry Analysis

Strategy analysis involves three types of analysis. These are: Industry analysis,
competitive analysis and Corporate Strategy Analysis. The vast research reveals
that the average profitability of an industry is influenced by the “Five Forces
“which are as follows:

1. Rivalry among the existing firms.

2. Threats of new entrants.
3. Threats of substitute products
4. Bargaining power of buyers
5. Bargaining power of suppliers

5.2.2: Five forces analysis of the Banking and non Banking financial
industry

A) Intra industry rivalry:

 Number of competitors: In banking and non banking financial institution

industry, the number of firms is high. So, the intra-industry rivalry is high.
 Industry growth: The industry is growing fast in Bangladesh. From this point of
view, intra-industry rivalry is low.
 Concentration and Balance of Competitors: As there are other dominant firms
except IDLC finance ltd. in this type of industry, it cannot set and enforce the
rules of competition, it can only cooperate with other players to avoid destructive
competition.
 Degree of Differentiation and switching costs: For most of the category
degree of differentiation and switching costs are low. Therefore, there exists price
competition.
 Fixed rate: In this industry, large percentage of cost is fixed. So, the intra-
industry rivalry is high.
 Exit barriers: Exit barrier is high in banking industry .So, the intra-industry rivalry
is high.

By considering all the points, we found that the intra-industry rivalry in sector is
high.

(B) Threat of new entrants:

  Economies of scale: This industry has high economies of scale. So, the threat
of new entrants is low.
 First mover advantage: Banking industry has first mover advantage. So, early
firms have absolute advantage over new firms. Thus, the threat of new entrant is
low.
 Legal Barriers: The threat of new entrants is low because of high legal
restrictions.
 Access to channels of distribution and relationships: Existing good
relationships between companies and customers in Banking industry will make it
difficult for new companies to enter in this industry.

Overall consideration shows that the average threat of new entrant in Banking
industry is low.

(C) Bargaining power of buyers:

 Buying volume: For Some buyers who can invest in large volume have the
bargaining power very high.
 Product differentiation: Most of the products offered by different firms in the
industry are virtually identical. So, here the bargaining power of buyer is high.
 Production costs: As the buyers are aware of cost, the bargaining power of
buyers is high.

By considering all the points, we found that the Bargaining power of buyers in
banking and non banking financial institution industry is high.

D) Bargaining power of suppliers:

 Level of concentration: As the suppliers are highly concentrated, the bargaining

power of suppliers of this industry is high.
 Forward integrate: As the Suppliers can forward integrate, the bargaining power
of suppliers is high.
 Percentage of suppliers’ business: As the big depositors are low in number,
the bargaining power of suppliers is high.
 Product differentiation: Some of the products of suppliers are highly
differentiated. So, in this case, the bargaining power of suppliers is high.
 Switching among suppliers: In this industry, switching between suppliers is not
easy and costly. Thus, the bargaining power of suppliers is high.

By considering all the points, we found that the Bargaining power of supplier in
Banking industry is high.

E) Threat of substitutes:
  Whether industry-producing substitutes are profitable or not: In banking non
banking financial institution industry, the substitute product can be profitable.
 Price/performance relationship of substitute products: In Banking non
banking financial institution industry, substitute product or service is improving in
its price /performance relationship.

By considering all the points, we found that the threat of substitute in banking non
banking financial institution industry is high.

6.1.1: Operational Performance of IDLC During 2011

The Company’s diversified operations and subsidiary saw a handsome growth

during the year 2011. SMEs in Bangladesh have been making a significant
contribution to the country’s economy. However, there is large gap between their
needs and access to reasonably priced fund. Under this backdrop, they have
taken an initiative to aggressively increase investment in this segment, in a
structured manner to cater to the financing needs to small and medium sized
business enterprise. IDLC’s SME focused branches have strengthened its
financing activities in this growing sector of the country.

As a part of business expansion, during 2011, they opened several branches

across the country which, we believe, will contribute significantly to the
management’s effort for increasing SME clients at that mobilization in that region
to increase their business and provide better services to their SME clients at that
region. They have also planned to set up more Branches in different locations of
the country during the year 2011.

They believe that setting up of these branches will help us to generate business
volumes from SME markets which are mostly untapped by us, establish their
permanent presence in different areas, give faster service delivery and cross
selling opportunities of all their other financial products and services. Setting up
of these branches, they believe, will also broaden their deposit mobilization effort.

The mode of financing of SME Division of IDLC includes lease, term loans, short
term financing through factoring, bill discounting, etc. During 2011 SME Division
has disbursed BDT 2,712 million against BDT 1,820 million in 2010 showing a
robust growth of 63%. As on December 31, 2011 the SME asset size of the
Company stands at BDT 4,144 million compared to BDT 2,544 million at
December 31, 2010.

Company’s Corporate Finance Division which provides mainly lease and term
loans to large corporate houses has disbursed BDT 1,633 million during 2011
compared to BDT 1,929 million during 2010. The year end asset of the division
stands at BDT 4,638 million. As the corporate financing continued to face stiff
competition from commercial banks as regard to the pricing, they are focusing
more on other financing where return is comparatively better to increase the
overall value for shareholders. The Personal Finance Division of the Company
deals mainly with real estate finance and also provides personal and car loans to
some very selective clients. During 2011, this division disbursed BDT 2,439
million compared to BDT 2,066 million in 2010. The total asset portfolio of the
division at the year end stands at BDT 6,611.

6.1.2: Real Estate Finance

Although the real estate and housing industry experienced a setback during 2011
with fall sales due to non-availability of electricity and gas connections as per
government decision and hike in apartment price, IDLC’s housing finance
operation witnessed a reasonable growth of 15%. The in disbursements.

6.1.3: Car Loans

During the year under report, their company disbursed BDT 150 million against
previous year’s disbursement of BDT 148 million. This operation has, however,
earned revenue of BDT 56.09 million during the period. This business is facing
enormous competition from commercial banks, which are able to offer lower
rates and spend large amounts of money on aggressive marketing campaigns in
conjunction with a large sales force and branch network. They provide car loans
to very selective and mostly clients having other business relationship with them.

6.1.4: Merchant Banking Operation

During 2011, IDLC’s merchant Banking Operation earned BDT 1,314 million in
revenues, which is a hefty 61% higher than the previous year. The operation has
earned an operating profit of BDT 616 million, compared to previous year’s BDT
190 million, marking a robust growth of 224%. At the end of December 2011,
total portfolio value at cost was BDT 15,803 million (BDT 17,951 million at the
market price) and balance of margin loan was BDT 5,633 million. During the year
this operation has also successfully managed three issue management.

6.2.1: Treasury

Their priorities are to reduce funding cost, diversify funding avenues, reliance on
conventional their and manage balance sheet gaps in a way that enable IDLC to
achieve significant progress.

6.2.2: Human Capital

IDLC continued to implement appropriate human resource management policies
and practices to develop its employees, and to ensure their optimum contribution
towards the achievement of corporate goals. At IDLC, we believe that their
Human Resource (HR) give the organization a significant competitive edge in
terms of knowledge and experience. Keeping this in mind, they continued their
policy of recruiting the best people and implementing programs to develop and
retain high quality human resource.

6.2.3: Contribution to National Economy

IDLC Finance Limited commended its journey in 1985 as the first leasing
Company in the country. With its pioneering role, IDLC has made the lease
financing popular in the country and developed the leasing industry, which has
total investment more than BDT 250 billion now, as a vibrant financial
intermediary in the medium term financing segment in the country. IDLC is
continuously increasing its focus on financing to small and medium enterprises
(SME’s) the engine for growth for any developing economy.

During the year under report, the Company has deposited BDT 575 million to the
Government Exchequer as corporate income tax, withholding tax and VAT.

Conclusion

The importance of sustaining and improving performance is increasing day by

day particularly in an environment which is characterized by rapidly flourishing
technology and its growing application to banking and non banking financial
institution tremendous competition, product development, shift in marketing
strategy, deregulation & globalization on the one hand, and escalation in the
number of bank failures accompanied by mergers and mega mergers on the
contrary. In order to keep abreast with the prevailing market scenario it is
necessary to develop a comprehensive performance evaluation system.

Performance Evaluation System means a mechanism for improving the likelihood

of the organization successfully implementing its strategy. It is a process to have
the goal of strategy implementation. In this process senior management selects a
series of measures that best represent the organization’s strategy.

The current report aimed at critically examining the Performance of a private

financial institution. The main objective of this report was to evaluate the financial
analysis of IDLC finance ltd. along with how efficiently are providing services to
its customer. From Financial Analysis it has been seen that the performance of
IDLC finance ltd is really satisfactory.
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