International Fishing and Holding Company - Coursework Example

International fishing and holding company report. Name: Institution: Instructors name: Date: Table of contents. Executive summary…………………………………………………………………………3 Introduction………………………………………………………………………………….4 Company background………………………………………………………………………..5 Company strategies…………………………………………………………………………….6 Economic environment…………………………………………………………………………7 Industry environment and risk…………………………………………………………………8 Marketing activities……………………………………………………………………………9 Swot analysis…………………………………………………………………………………….9 Strengths………………………………………………………………………………………..9 Weaknesses…………………………………………………………………………………….11 Opportunities…………………………………………………………………………………12 Threats………………………………………………………………………………………..14 Ownership and management…………………………………………………………………15 Financial statement analysis…………………………………………………………………..16 Analysis of the company financial position and available resources……………………… 16 Ratio analysis……………………………………………………………………………………17 Opportunities for banking services now or in future to the company………………………17 Conclusion………………………………………………………………………………………18 References. ……………………………………………………………………………………..19 List of tables Appendix………………………………………………………………………………………20 Ratio analysis charts…………………………………………………………………………..22 Executive Summary Different companies have different banking needs which require being solved differently. International fishing and holding company has been one of the companies which have been spotted as potential prospects clients for the commercial bank in Abu Dhabi. For the company to be offered financial assistance or any other form of banking services critical analysis of the company is necessary to have a clear picture of what the business deals in and how it has been performing for the last few years. The analysis provides and overview of the international fishing and holding company on its operation as well as its performance for the last two years. The analysis shows that the company is in needs of the banking services which should further be discussed with the top managers of the international fishing and holding company to identify further the company banking needs. Introduction. The bank has been performing well for the past one year; this triggered the need for the bank to look for the potential clients to offer financial assistant to improve the organization performance as the bank benefit indirectly. Different clients have been identified who are prospective customers for our company financial services especially financial assistant through loan disbursement. This necessitated the need to identify the company’s bank ground, resources available, projects it has been undertaking, achievements as well as analyzing their financial position and resources to identify whether it could be in a position to repay the loan if offered the services. Different companies have financial needs but their credit worthy is very low as the company performance is a bit poor in the market. In identifying the company’s potential needs it is therefore necessary to understand it better to ensure that the company is performing well in the market and it has anticipated growth in the future. Hospitality and tourism industry has been one of the growing markets in Middle East though National Corporation for tourism and hotels has been affected adversely by the global economic crisis but the company has strategic strategy for dealing with adverse economic situations. This memo provides an overview of the National Corporation for tourism and Hotels Company who is one of our banks prospective customers because the company have had tremendous growth since it started hence our services could be of great use to the company. Company background. International fish holding company as established in may 1999 after its initial public offer in January the same year; under UAE offset group efforts with Abu Dhabi government support with paid in capital of AED 300millions. The company capital was raised by offering 45% of the shares to the original owners and offering 55% to the UAE citizens under the IPOs. International fish holding company has been aiming at becoming the market leader and the best aquaculture company in the united emirates and expanding its operations throughout united Arabic emirates as well as internationally. There had been a traditional fishing in the Gulf corporation council states like UIAE, Arabia Kuwait, Oman and Qatar. Particularly UAE had been practicing fishing hub for long period with fish being very crucial food stuff and a trade commodity which raised the highest per capita consumption in the world with more than 50 kg par capita per annum. ASMAK has therefore been promoting fishing culture in the UAE countries and other states as destructive and excessive fishing done by common fishermen had jeopardized the marine system making several fish species to be endangered. 1 International fish and holding company objectives and purposes. Establishing scrimp and fish hatcheries and on the firms which are growing in UAE and internationally. To have fish processing as well as fish packaging plant in UAE especially on the Indian ocean shore to enhance provision of their product to the regions and internationally. To have integrated and well established seafood venture with local and international participation in marketing aquaculture, aquaculture fish and fish products as well as aquaculture related expertise and equipment. Improving UAE wealth by developing new venture to expand the business and maximizing the profit. International fishing holding company has grown in the region and international through strategic investments and associates in the aquaculture sector. The company has grown from hatcheries to expertise which has enhanced its popularity and performance in the region. The company has subsidiaries in UAE and Oman. In United Arab Emirates the subsidiaries are alliance Food Company. LLC, ASMAK food processing company. WLL and ASMAK consulting company. LLC. And ASMAK Quriat International Co. LLC, in Oman. The subsidiaries are involved in different activities related to aquaculture and seafood business industry. 2 Company Strategies. International fishing and holding company has been operating under unique strategies which have enhanced the company performance in the market. The company have had a long term continues improvement of the product quality and its management processes. This has assisted in capturing the market share and ensuring that new and existing customers are satisfied to the fullest to maintain its market share. The company is ever committed to integrity and they attend clients in a hospital manner which has enhanced its market performance for the last few years. The company employs workforce who are highly qualified and trained. Employees have also been motivated adequately to enhance the way they handle customer. The company has been operating by ensuring that it refines its technology and adjusts to the newt technology which had been developing tremendously especially in aquaculture and sea food business sector. The companies pricing strategy enhances its performance as it offers its services at competitive price to the clients. Lastly the company has strategy of ensuring that it maintains its financials strength by ensuring that it retains its capital structure to avoid running short of resources. 3 Economic environment and its impact. ASMAK Company has been operating tremendously though the company has been impacted fully by the increasing changes in economic environment in different countries. Global economic crises impact the ASMAK company negatively as it affects its overall performance in the market, where by global recession impacts both regional and international performance. Changes in currency exchange rates in the country have been affecting the financial position of the company. Industry environment and risk. Aquaculture and seafood business industry environment is neither certain nor dynamic which makes it very difficult in anticipating either long or short growth in the industry. In Aquaculture and seafood business industry competition is very extensive in regard to product quality, price, cost of operation and production schedule because it is very difficult to anticipate the customers needs as different customers value aquaculture products differently. International fishing and holding company has been operating in different regions to ensure that the company is protected from economic fluctuations in different countries. ASMAK has been operating and attending clients with integrity and offering excellence services to them which have led to increase in market share improving the company’s profitability and expanding to different regions to capture large market share of potential clients. However anticipating for the clients need has tremendously been a problem in the industry though strategic measures have been put in place to ensure that customers are attended to effectively. Marketing activities. Sea food marketing has been one of the most growing international businesses globally. International fish holding company works together with its subsidiaries and associates in enhancing its market activities. The marketing activities involve managing and operating fish firms, processing producing and preserving fish products. It also undertakes trading in fish and fish products in the market as well as undertaking real estate management especially purchasing, selling, managing, and leasing the real estates properties. It also involves fish farming, distribution of aquaculture, sales and marketing, consultancy as well as investing in aquaculture. ASMAK Company operates by providing the best quality services to the customers in the market at competitive prices. Customer satisfaction has been one of the prime motto of the ASMAK Company this is achieved as the company ensures quality and professional services to customers. The company offers marketing services ranging from whole sale to retail. The company has marketing team which enhances distribution of the commodities regionally as well as internationally. The international fishing and holding company also offers consultancy services to the new ventures ranging from feasibility study to marketing of the new venture products. The services involve site sourcing, license and funding proposals, environmental evaluation, research and development, and sourcing of bloodstock. Therefore the company has wide range of marketing activities. 4 SWOT analysis. Strength. Strong global network. The company has great international operation with customers from different countries both local and foreign. The company subsidiaries which operate in different parts of unite Arabic emirates and other regions like Oman. The company operates at the shore of Indian Ocean which makes it possible for it to reach different customers internationally. International fishing and holding company has been in associate with companies which are powerful hence enhancing its performance. Increase in global populations and need for the health products as people have started realizing the need for healthy. This has enhanced global position of the international fishing and holding company making it to establish very strong roots internationally. International fishing and holding company manages its logistic and distribution networking for both local and international purposes. It has established its own distribution networking attending to the needs of the local and international demand as well as undertaking Commercial Corporation throughout the world. Broad product line that cover the product niche. International fishing holding company offers wide range of products and services to the customers. The company offers consultancy services, management services and offering fish and fish products in the market. The company offers differed product categories from fresh, frozen and live seafood. The company product lien is still continuing to increase which makes it possible for the company to operate effectively. The company has improved its product line by identifying different needs for the aquaculture companies as well as for aquaculture products consumers. The company also provides aquaculture products to other firms. International fishing and holding company has been a market leader in aquaculture and seafood business industry in UAE, in offering high quality and variety of product in the market. Company Resources. ASMAK Company has adequate resources which makes it operate adequately in the market. The company has been employed improved technology in its business operation. This has helped the company not to be impacted by the completion from similar global industries. Advanced technology in the company enhances the way the company operates its primary and secondary tasks in providing quality services to the potential clients. The company management is very strong and has expert staffs who enhance the company performance. It employs qualified personnel who offer adequate services to the clients. In addition to that its resources have made it to be strategically positioned as all other ventures have to consult from the fishing company before investing in a new venture. Diversified operations. International fishing and holding company have diversified operations which enhances its competitive edge in the market. The company have been currying out different operations which makes it stand out from the rest in the industry. Fishing, processing fish product, aquaculture, providing aquaculture equipments to aquaculture companies in offering services as well as partnering in different investments Business location. International fishing and holding company is strategically positioned as it operates at the show of Indian Ocean. The company strategic position makes it to have access to the international and local market. Business location has enhanced its product distribution to other parts on the world due to transport availability hence capacity to reach different clients internationally. Weaknesses. Management style. International fishing and holding company has hierarchical, semi autocratic and ringed from of management. Employers have the right to make decisions as employees follow, little input is regarded from employees as much of the input should be from the strategic management. The management system is not adequate in international fish holding company and especially in the modern society as it posses several problem to the organization, which includes racial discrimination in the organization, tussling with the workers union and high labor turnover especially in management team who flee away from being questioned about their responsibility; this impact the organization competitive edge especially in work force. Labor problem. International fishing and holding company is experiencing labor problems due to increased demand of its product in different regions as extensive personnel’s are required to have an improved performance in the industry. Local region labor availability is minimal which has triggered the need for the company to acquire labor internationally. Employees in the organization are unqualified hence incapacitated in enhancing the organization performance by making the strategic decision of the organization complex to be implemented. Labor issues have led to increased customer complaints. High production cost. Aquaculture and fishing products requires intensive technology and expert personnel’s in the organization. International fish holding company has been operating at very high cost due to its business requirements. This has affected the business performance in the market. Similar to competitor services and product. International holding company has been operating in product and services which are provided by the competitors within the same region. This could impact the organization performance due to increased competition in the industry. In addition to that the company performance has not been favorable for the last three years as the company has not been paying dividends. Opportunities. Competitive. International fishing and holding company has remained to be the market leader in aquaculture and seafood business industry. The company has enhanced its competitive edge by holding different subsidiaries which are fully owned in the region. The company has been offering services to the clients, which are of very high quality and ensuring that it stands to be consulted by each and every new venture in the industry for best consultation services. The company has price competition in both local and global market as it offers its services to the customers at unique prices which are below its competitors’ price. Offering high quality products and services at reasonable prices as made the company to have increased competition hence increased market share. Technology development. Development of new technology has enhanced the business performance especially in its primary operations. Technology has improved packaging system, fishing and provision of services to the clients. The company has been used technology in selling and distributing its products online enhancing e-commerce in the organization. Growing trend and customer base. International fishing and holding company has experienced growth in its customer’s base recently. Global population has established the need for the healthy food leading to increased demand for the fish and fish products in the company. The company has also increased operations in different regions and established venture internationally which assist in distribution of the companies products. The company has subsidiaries which increases and has improved its operations and enhanced its growth in the aquaculture and seafood business industry. The organization has been offering extensive quality services in the market which has helped it stand out as a competitive company offering extremely high quality therefore out increasing its market base. ASMAK company demand has increased tremendously both locally and internationally which enhances the company growth. Holding subsidiaries and associates. International fishing and holding company has been operating by holding subsidiaries and associates. This enhances the company operation as well as operating in different locations and countries by holding subsidiaries and associates. The company is also venturing in investments as a partner improving its operation s base. Using subsidiaries and associated the company has an opportunity of entering into global market at ease by establishing associates or subsidiaries in different countries hence improving its global performance in the aquaculture industry. Threats. New entrants and venture. There have been increased new entrants and ventures in the aquaculture and seafood business industry. New entrants increase competition to the industry. The emergent of industries would result to emergence of new substitute products which could affect the organizations performance in the market. New entrants and venture will dilute international fishing and holding company market share. Slow down of the aquaculture and seafood business. International global crises have been affecting business in its performance negatively. Currently decline in value of euro has enhanced slowing down of business operations in the organ9izatio especially in the areas of operation whose base currency is euro. Marine features could be impacted by environmental factors leading to decline in volume of the company produce in the market. Uncertain market. Aquaculture and marine industry is very dynamic and the competition in the industry is very extensive in relation to price, production cost and production scheduling. Major producers in the industry are teaming up with global suppliers to reduce their risks, reduce cost and boost profitability. Besides, new ventures are increasing its market share, remained profitable and are increasing its product line. Economic pressure. Economic environment have been impacting industries positively or negatively depending on the situation. Global crises pose threat to industries as it causes organizations from aquaculture and seafood business industry out of market. Fluctuations in exchange rate on the other hand impact the company’s performance and growth in the industry. Currency depreciations and appreciations impact the demand of the product locally and internationally. Currency depreciation makes imports cheaper hence customers switch to cheaper imports. Currency appreciation makers the imports expensive hence make it hard for the local people to purchase products hence reduction in demand for exported product. Ownership and management. International fishing and holding company is owned by the public with major shareholders being Infinity TV, Shemeera Financial Investments and Hydra Properties Company which hold 45% of the shares while 55% is UAE citizens. The company is lead by board of directors and managed by Mohamed Yassin Bin, who is the general manager. Financial statement overview and analysis Overview and analysis of company’s financial position and resources. Comparing 2010 and 2011 audited financial statements revealed that the company total revenue reduced in 2011 by 25.76%, gross profit reduced by 62.49%, earning before interest and tax reduced by 34.62%, tangible book value increased by 206.54% while diluted earning per share reduced by 66.77%. Total assets increased by 66.52% in 2011. Accounts receivable reduced in 2011 by 15.29%. In 2011 the companies current liability reduced by as non current liability increasing by 36011.74%. Shareholders equity increased by 185.68% and cash increased by 518.9% based on the previous year. Ratio Analysis of the company financial statement for the past two years. Liquidity, profitability and efficiency ratios as indicated in Appendix 1 reveal that the company performance has been changing for the last two year. Profitability ratio: Return on assets has decreased in 2011to 1.33% from 7,44% in 2010., return on equity decreased from 20.53% to 2.14% in 2011. This could be anticipated as being due to poor management of resources. Efficiency ratio: inventory turn over reduced from 32.39% to 5.78%, current asset turnover reduced from 1.09x to 0.32x while fixed asst turn reduced from 1.03x to 0.54x. This indicates that the company did not manage its working capital resources effectively. Liquidity ratios: current ratio in 2010 was 76.96% while in 2011 was 57.66% this indicates that the company is not in a position to clear its current liabilities. On top of that the company quick ratio reduced in 2010 from 74.36 in 2010 to 53.57 in 2011. On top of that debt equity ratio was very high in 2010 with 175.92% and 60.83% in 2011 meaning that the company is majorly financed by debt. The debt to total asset ratio was 63.76 in 2010 and 37.83% in 2011. the company has been performing poorly according to Abu Dhabi stock exchange market as their share price have been ranging between 15.00 and 17.00 for the last three months. Opportunities for servicing the prospective client. The company performance in the market has been growing tremendously though not reflected fully in the financial statements. The business have been having great opportunities to excel in future given that it operates in a very strategic place which is the best location for enhancing its performance by increasing the sales volume through distributing internationally. International fishing and holding company has competitive edge as it is the market leader in the aquaculture and business industry though its performance is not in accordance with its potentiality. The company needs to venture in different opportunities to increase their market base which could be an opportunity for offering financial services to the organization. Currently international fishing and holding company is not performing as required as the financial statements have indicated that the company might not be in a position to service most of its debts given the fact that it is mostly operating by debt resources. Liquidity ratios have evidenced that the company is not performing and its current assets are lower than current liabilities meaning that it can’t fully settle the current liabilities. Efficiency ratios have also indicated that the company resources are not used effectively hence disbursing loan to the company it will be very risky. Offering loan to the company might occur in future as the company growth is anticipated in the near future as it is venturing in different activities and opening up subsidiaries in different regions in the world. But the company is potential for other bank services. Conclusion. International fishing and holding company has been offering diversified products and services to the customers ranging from fishing to aquaculture equipment and consultancy services. The company has been the market leader in the aquaculture and seafood business industry. The company operates at the shore of Indian Ocean which makes it to be strategically positioned in reaching customers from different regions in the world. The company performance in the market is moderate though after analyzing its financial statements they indicated that the company performance has dropped in 2011. The company has been operating through debt which could have been resulted to poor performance of company due to increase in operating costs. The company management seem not have effectively managed their resources to minimize the amount of expenses associated with its operations. Therefore offering loan to the company could be risky to our organization as the company might not be in a position service the loan, but other banking services can do very well in the company. Therefore the need to assist the company should be analyzed effectively to avoid banking financial loss. Hence the company should be considered for financial services in the near future after spotting indicators to improve its performance as the bank will be assured of the company position to service its loan. References. Abu Dhabi Securities exchange. (2011) international fishing and holding company. From http://www.adx.ae. Accessed on 23/04/2011. Appendix. 1. Summary. Balance Sheet 2010 2011 Total Assets 950,081 1582084 Current Assets 461,869 225,126 Total Liabilities 605,754 598,422 Shareholders Equity 344,327 983,662 Current Liabilities 600,134 390,416 * All the accounts are in AED. Income Statement Total Revenues 504,577 72,699 Operational Profit (Loss) 68,522 21482 Net Profit (Loss) 70,674 21012 * All the accounts are in AED. Ratios Profitability Ratios Return on Assets (ROA) 7.44% 1.33% Annualized Return on Assets (ROA) 7.44% 1.33% Return on Equity (ROE) 20.53% 2.14% gross profit margin 135.80% 295.49% Gross profit ratio 14.85% 69.34% Operating Profit Margin 13.58% 29.55% Efficiency Ratios Inventory Turnover 32.39x 5.78x Current asset turnover 1.09x 0.32x Fixed-asset turnover 1.03x 0.054x Valuation figures and ratios Earning Before Interests and Taxes (EBIT) 68,522 21482 EBITDA 68,522 21482 Liquidity Ratios Current Ratio 76.96% 57.66% Quick ratio 74.36% 53.57% Debt to equity 175.92% 60.83.% Debt to total assets 63.76% 37.82% Financial ratio charts. Graph 1 Graph 2. Graph 3. Graph 4. Read More