Advanced Chemical Industries Limited

Issuer Issue Manager Advanced Chemical Industries Limited (ACI) Alliance Financial Services Limited

ACI 20% Convertible Zero Coupon Bonds - 1 -

‘If you have any query about this document, you may consult issuer, issue manager and underwriter’

Repeat Public Offer of

Advanced Chemical Industries Limited

ACI 20% Convertible Zero Coupon Bonds

ISSUE SIZE

1,335,850 Convertible Zero Coupon Bonds of Tk1,000 each totaling Tk. 1,335,850,000

Private Placement 801,510 Convertible Zero Coupon Bonds of Tk 1,000 each Total Tk 801,510,000

Public Offering 534,340 Convertible Zero Coupon Bonds of Tk 1000 each Total Tk 534,340,000 Offer value (per lot) Tk. 3,743 (Face value Tk. 5,000)

Conversion Strike Price 1.10 times of Net Asset Value (NAV) per share based on the audited statements of preceding financial year.

OPENING DATE FOR SUBSCRIPTION: 31 January 2010

CLOSING DATE FOR SUBSCRIPTION: 04 February 2010

For Non-Resident Bangladeshi (NRB) Quota, Subscription Closes on: 13 February 2010

MANAGER TO THE ISSUE

Alliance Financial Services Limited (AFSL) Rahman Chamber (3rd floor),12-13 Motijheel C/A, Dhaka- 1000

Tel: 9515468, 9515469, Fax: 88-02-9515467, www.allfin.org

FACILITY ARRANGER & TRUSTEE

Industrial & Infrastructure Development Finance Co. Ltd (IIDFC) Chamber Building (6th & 7th floor), 122-124 Motijheel C/A, Dhaka-1000

Tel: 9559311-12,9553387, Fax: 88-02-9568987, www.iidfc.com Issue Date of the Prospectus: 30 December 2009

The issue shall be placed in “N” category

Credit Rating by Credit Rating Information and Services Limited (CRISL)

Issue Rating (Zero Coupon Bond) A – (Indicative)

Entity Rating – 2008 A+

Date of Rating Declaration 29 April 2009

“CONSENT OF THE SECURITIES AND EXCHANGE COMMISSION HAS BEEN OBTAINED TO THE ISSUE/OFFER OF THESE SECURITIES UNDER THE SECURITIES AND EXCHANGE ORDINANCE, 1969, AND THE SECURITIES AND EXCHANGE COMMISSION (PUBLIC ISSUE) RULES, 2006. IT MUST BE DISTINCTLY UNDERSTOOD THAT IN GIVING THIS CONSENT THE COMMISSION DOES NOT TAKE ANY RESPONSIBILITY FOR THE FINANCIAL SOUNDNESS OF THE ISSUER COMPANY, ANY OF ITS PROJECTS OR THE ISSUE PRICE OF ITS SECURTIES OR FOR THE CORRECTNESS OF ANY OF THE STATEMENTS MADE OR OPINION EXPRESSED WITH REGARD TO THEM. SUCH RESPONSIBILITY LIES WITH THE ISSUER, ITS DIRECTORS, CHIEF EXECUTIVE OFFICER/CHIEF FINANCIAL OFFICER, ISSUE MANAGER, UNDERWRITERS AND/OR AUDITOR.’’



UNDERWRITERS

AB Bank Limited BCIC Bhaban 30-31 Dilkusha C/A Dhaka-1000 Tel: (02)-9560312 Fax : (8802) 9564122-23

Mercantile Securities Limited Paramount Heights 65/2/1 Box Culvert Road Purana Paltan, Dhaka-1000 Tel: (02)-7119654, 7125396 Fax : (8802) 9562780

Bangladesh Mutual Securities Limited Sharif Mansion (7th floor) 56-57 Motijheel C/A Dhaka-1000 Tel: (02)-7169428,9570624 Fax : (8802) 7123820

Standard Bank Limited Metropolitan Chamber Building (3rd floor) 122-124 Motijheel C/A, Dhaka- 1000 Tel: (02)-7175698, 7169134 Fax : (8802) 7176367

Bay Leasing & Investment Limited Printers Building (7th floor) 5, Rajuk Avenue Motijheel C/A, Dhaka-1000 Tel: (02)-9565026, 9568599 Fax : (8802) 9565027

Trust Bank Limited Peoples Insurance Bhaban 36, Dilkusha C/A Dhaka-1000 Tel: (02)-9572012-3 Fax : (8802) 9572315

BANCO Trans world (BD) Limited Ispahani Building (3rd floor) 14-15 Motijheel C/A, Dhaka-1000, Tel: (02)-9569541,9564922 Fax : (8802) 9569612

Union Capital Limited Noor Tower (5th floor) 73, Sonargaon Road Dhaka-1205 Tel: (02)-9662888 Fax : (8802) 8616878

Lanka Bangla Finance Limited Safura Tower, Level 11 20, Kemal Ataturk Avenue Banani, Dhaka-1213 Tel: (02)-9883701-10 Fax : (8802) 8810998

NAME & CONTACT ADDRESS OF THE AUDITOR

Rahman Rahman Huq Chartered Accountants 9 Mohakhali C/A ( 11th Floor) Dhaka-1212 Tel : 880 (2) 9886450-2 Fax : 880 (2) 9886449



Definition and elaboration of the abbreviated words and technical terms used in the Prospectus

ACI Advanced Chemical Industries Limited (ACI)

Allotment Letter of allotment for shares/Bonds

BB Bangladesh Bank BO Beneficiary Owner CDBL Central Depository of Bangladesh Limited Certificate Share Certificate/Bond Certificate CIB Credit Information Bureau Commission Securities and Exchange Commission Companies Act Companies Act, 1994 (Act. No. XVIII of 1994) CSE Chittagong Stock Exchange Limited DSE Dhaka Stock Exchange Limited FC Account Foreign Currency Account FID Financial Institutions Department of Bangladesh Bank Issue Public Issue of ACI 20% Convertible Zero Coupon Bonds MP Market Price NAV Net Asset Value NBR National Board of Revenue

NRB Non-Resident Bangladeshi Offer Price Price of the ACI 20% Convertible Zero Coupon Bonds being offered Registered Office Head Office of the Company RJSC Registrar of Joint Stock Companies & Firms SC Share Certificate SEC Securities and Exchange Commission Securities/Bonds ACI 20% Convertible Zero Coupon Bonds Securities Market The Share/Bond Market of Bangladesh Sponsors The Sponsor Shareholders of Advanced Chemical Industries Limited (ACI)

Stockholder Shareholder of ACI Subscription Application money

The Company/Issuer Advanced Chemical industries Limited (ACI)

Redemption income Difference between issue price and the face value

Capital gain Difference between strike price and market price



AVAILABILITY OF PROSPECTUS Prospectus of Advanced Chemical industries Limited (ACI) may be obtained from the Issuer Company, Issue

Manager, Underwriters and the Stock Exchanges as follows:

Company & Address Contact Person Telephone Number

THE ISSUER Advanced Chemical industries Limited (ACI) ACI Centre, 245 Tejgaon Industrial Area, Dhaka- 1208

Ms. Sheema Abed Rahman Company Secretary

Tel: (02) 9885694-8 Fax : (8802) 9884784,9565257


Alliance Financial Services Ltd Rahman Chamber (3rd floor) 12-13 Motijheel C/A, Dhaka- 1000

Mr. Muhammad Nazrul Islam ACMA Manager

Tel: (02) – 9515468,9515469 Fax: (8802) 9515467

FACILITY ARRANGER & TRUSTEE

Industrial & Infrastructure Development Finance Co. Ltd (IIDFC) Chamber Building (6th & 7th floor), 122-124 Motijheel C/A, Dhaka-1000

Mr. A.S.M Arif Head of operations Structured Finance

Tel: (02)- 9559311-12,9553387 Fax: 88-02-9568987

UNDERWRITERS AB Bank Limited BCIC Bhaban 30-31 Dilkusha C/A, Dhaka-1000

Mr. Kaiser A Chowdhury President & Managing Director

Tel: (02)-9560312 Fax : (8802) 9564122-23

Bangladesh Mutual Securities Limited Sharif Mansion (7th floor) 56-57 Motijheel C/A, Dhaka-1000

Mr. Md. Nurul Alam CEO

Tel: (02)-7169428,9570624 Fax : (8802) 7123820

Bay Leasing & Investment Limited Printers Building (7th floor) 5, Rajuk Avenue Motijheel C/A, Dhaka-1000

Mr. Mahbubur Rashid Managing Director

Tel: (02)-9565026, 9568599 Fax : (8802) 9565027

BANCO Trans world (BD) Limited Ispahani Building (3rd floor) 14-15 Motijheel C/A, Dhaka-1000

Mr. A. Munim Choudhury Managing Director

Tel: (02)-9569541,9564922 Fax : (8802) 9569612

Lanka Bangla Finance Limited Safura Tower, Level 11 20, Kemal Ataturk Avenue Banani, Dhaka-1213

Mr. Mafizuddin Sarker Managing Director

Tel: (02)-9883701-10 Fax : (8802) 8810998

Mercantile Securities Limited Paramount Heights 65/2/1 Box Culvert Road Purana Paltan, Dhaka-1000

Mr. Musatofa Kamal CEO

Tel: (02)-7119654, 7125396 Fax : (8802) 9562780

Standard Bank Limited Metropolitan Chamber Building (3rd floor),122-124 Motijheel C/A, Dhaka-1000

Mr. S. A. Farooqui Managing Director

Tel: (02)-7175698, 7169134 Fax : (8802) 7176367



Trust Bank Limited Peoples Insurance Bhaban 36, Dilkusha C/A,Dhaka-1000

Mr. Iqbal U Ahmed Managing Director

Tel: (02)-9572012-3 Fax : (8802) 9572315

Union Capital Limited Noor Tower (5th floor) 73, Sonargaon Road,Dhaka-1205

Mr. Ramendra Nath Paul EVP &Head of Merchant Banking

Tel: (02)-9662888 Fax : (8802) 8616878

STOCK EXCHANGES Dhaka Stock Exchange Limited. 9/F, Motijheel C/A, Dhaka-1000 DSE Library (02) - 9564601-7

Chittagong Stock Exchange Limited.CSE Building, 1080 Sheikh Mujib Road, Agrabad, Chittagong-4100

CSE Library (031) - 714632-3 (031) - 720871-3

Prospectus is also available on the websites www.secbd.org, www.aci-bd.com , www.iidfc.com, www.allfin.org. www.dsebd.org, www.csebd.com and Public Reference room of the Securities and Exchange Commission (SEC) for reading and study.



TABLE OF CONTENTS

Item Page No Disclosure in respect of issuance of securities in demat form 10 Conditions under Section 2CC of the Securities and Exchange Ordinance, 1969 10 General information 14 Declarations and due diligence certificates 15 Declaration about the responsibility of the Directors including the CEO of the Company in respect of the prospectus 15

Consent of the Directors to Serve 16 Declaration about filing of prospectus with the Registrar of Joint Stock Companies & Firms 16 Due Diligence Certificate of Manger to the Issue 17 Due Diligence Certificate of the Underwriter(s) 18 Due Diligence Certificate of Trustee To The Issue 19 Risk factors & management perceptions about the risks 20 Statement regarding holding of Annual General Meeting of Advanced Chemical Industries Limited (ACI) 22

Utilization of proceeds of Advanced Chemicals Industries Limited previous right issues 22 Size of Issue 22 List of Institutional Investors 23 List of Individual Investors 24 Purpose of the Issue 25 Use of proceeds 25 Description of Business 30 Background 30 Important dates and milestone dates of ACI Limited 30 Nature of Business 30 Principal products 30 History of 17 years-ACI Limited 33 Market for the ACI Products 34 Relative contribution to revenue 35 Associate subsidiary/related holding company 36 Distribution of products/services 36 Competitive condition of Business 36 Sources and availability of raw materials and principal suppliers 39 Sources of and requirement for power, gas and water or any other utilities 42 Name of the customers who enjoy 10% or more of the Company’s product/services 42 Contract with principal customers and suppliers 43 Material patents, trademarks, license or royalty agreements 43 Number of employees (as per audited accounts) 45 Capacity and current utilization of facility 45 Description of property 45



Item Plan of operation and discussion of financial condition 46 Internal and external sources of cash (as per audited accounts) 46 Material commitment for capital expenditure 47 Causes for any material changes from period to period 47 Graphical presentation Of ACI’s performance from 2004 to 2008 48 Seasonal aspect 49 Known trends, events or uncertainties 49 Change in the assets of the Company used to pay off any liabilities 49 Loan taken from holding/parent company or subsidiary company 49 Loan given to holding/parent company or subsidiary company 49 Future contractual liabilities 50 Future capital expenditure 50 VAT, income tax, customs duty or other tax liability 50

Operating lease agreement 50

Financial lease and other financial commitment 50 Personnel related scheme 51 Revaluation of assets 51 Breakdown of all Expenses connected with the Repeat Issue 53

Auditors’ certificate for paid-up share capital 54

Transaction between Holding/Subsidiary Company and the Issuer 54

Directors and officers of the company 55

Description of the Directors 55

Directors Involvement in other organization 56

Family relationship among Directors 58

Family relationship among top Officers 58

Short Description of the Directors 59

CIB Report 60 Description of senior executives and department heads 60

Involvement of Directors and Officers in certain legal proceedings 61 Certain relationships and related transactions 61

Transaction with related parties 61

Directors facilities 62

Executive compensation 62

Remuneration paid to top five salaried officers 62

Aggregate amount of remuneration paid to directors and officers (as audited accounts) 62



Item Remuneration paid to Director who was not an officer 62

Future compensation to Director or officers 63

Pay increase intention 63 Options granted to Directors, officers and employees 63 Transaction with the Directors and subscribers to the Memorandum 63 Tangible assets per share 63 Ownership of the Company’s securities 63 Composition of Shareholders 63 Shareholding structure 5% or more as on 31 December 2008 63 Share held by Directors 64

Securities owned by the officers 64

Net Asset Value 65

Market for the securities being offered 66

Declaration about listing of shares with Stock Exchange 66 Trading and settlement 66 Description of Securities outstanding or being offered 66 Dividend, voting, pre-emption rights 66

Conversion and liquidation rights 66 Dividend policy 67 Other rights of shareholders 67 Debt securities 67 General concept on Zero Coupon Bond 67 Zero Coupon Bond 67 Convertible Bond 68

Zero-Coupon Convertible Bond 68

Conversion Strike Price 68

ACI 20% Convertible Zero-Coupon Bonds 68 ACI 20% Convertible Zero Coupon bonds at a glance 68 Details of ACI 20% Convertible Zero Coupon Bond 69

Convertibility Option 70

Redemption procedure 70

Early redemption 71

Transferability 71

Lock-in Provision 71



Item Facility arranger & Trustee 71

Conversion Strike Price & Method 71 Convertible Value of the Bond / Conversion Strike Price 71 Conversion date 71 Security Features 71 Rationale for investing In ACI 20% Convertible Zero Coupon Bond 72

Scenario analysis of investing in ACI ZCB 73

Trustee 74

Refund of subscription money 79

Subscription by and refund to non-resident Bangladeshi (NRB) 79

Availability of securities 80

The Offer 80 Application for subscription 80 Allotment 81

Underwriting of Bonds 82 Principal terms and conditions of underwriting agreement 82 Underwriter’s right to represent in the Board of Directors of the Company 83

Commission of Underwriters 83 Right of Underwriters on Company’s Board 83 Material contracts 83 Manager to the issue 83 Commission to the banker to the issue 83 Corporate directory 83 Auditors report to the shareholders 84

Audited Financial Statements 85

Auditors report under section 135(1), Para 24(1) of part II of schedule III to Companies Act, 1994 148

Credit rating report 153

Ratio Analysis 169

Additional Disclosure 170

Application forms 171



Disclosure in respect of issuance of security in Demat Form

As per provision of the Depository Act, 1999 and regulations made there under, shares will only be issued in dematerialized condition. All transfer/transmission/splitting will take place in the Central Depository Bangladesh Ltd. (CDBL) system and any further issuance of shares (right/bonus) will be issued in dematerialized form only.

Conditions under Section 2CC of the Securities and Exchange Ordinance, 1969

Part A

1. The Company shall go for Repeat Public Offer (RPO) for 534,340 20% Convertible Zero Coupon Bonds of Taka 1,000 each worth Tk.534,340,000.00 (Taka fifty three crore forty three lac forty thousand) only following the Securities and Exchange Commission (Public Issue) Rules, 2006, the Depository Act, 1999 and regulations issued there under; 2. The Company shall disseminate the above information to the Stock Exchanges within half an hour of receipt of this letter; 3.The Company shall disseminate the receipt of the Commission’s approval along with the purpose and amount of the issue, price of the bonds etc. as a price sensitive information, as prescribed by the Commission; 4. The abridged version of the prospectus, as approved by the Commission, shall be published by the issuer in four national daily newspapers (in two Bangla and two English), within 03 (three) working days of issuance of this letter. The issuer shall post the full prospectus vetted by the Securities and Exchange Commission in the issuer’s website and shall also put on the websites of the Commission, stock exchanges, Trustee, and the issue manager within 03 (three) working days from the date of issuance of this letter which shall remain posted till the closure of the subscription. The issuer shall submit to SEC, the stock exchanges, the Trustee and the issue manager a diskette containing the text of the vetted prospectus in “MS -Word” format. 5. Sufficient copies of prospectus shall be made available by the issuer so that any person requesting a copy may receive one. A notice shall be placed on the front of the application form distributed in connection with the offering, informing that interested persons are entitled to a prospectus, if they so desire, and that copies of prospectus may be obtained from the issuer and the issue manager. The subscription application shall indicate in bold type that no sale of securities shall be made, nor shall any money be taken from any person, in connection with such sale until twenty five days after the prospectus has been published. 6. The company shall submit 40 (forty) copies of the printed prospectus to the Securities and Exchange Commission for official record within 5 (Five) working days from the date of publication of the abridged version of the prospectus in the newspaper. 7. The issuer company and the issue manager shall ensure transmission of the prospectus, abridged version of the prospectus and relevant application forms for NRBs through e-mail, simultaneously with publication of the abridged version of the prospectus, to the Bangladesh Embassies and Missions abroad and shall also ensure sending of the printed copies of abridged version of the prospectus and application forms to the said Embassies and Missions within five working days of the publication date by Express Mail Service (EMS) of the postal department. A compliance report shall be submitted in this respect to the SEC jointly by the issuer and the issue manager within two working days from the date of said dispatch of the prospectus & the forms. 8. The paper clipping of publication of price sensitive information and abridged version of prospectus, as mentioned at condition 3 & 4 above, shall be submitted to the Commission within 24 hours of the publication thereof. 9. The company shall maintain separate bank account(s) for collecting proceeds of the Repeat Public Offer and shall also open FC account(s) to deposit the application money of the Non-Resident Bangladeshis (NRBs) for RPO purpose, and shall incorporate full particulars of said FC account(s) in the prospectus. The company shall open the



abovementioned accounts for RPO purpose; and close these accounts after refund of over-subscription. Non- Resident Bangladeshi (NRB) means Bangladeshi citizens staying abroad including all those who have dual citizenship (provided they have a valid Bangladeshi passport) or those, whose foreign passport bear a stamp from the concerned Bangladesh Embassy to the effect that no visa is required to travel to Bangladesh. 10. The issuer company shall apply to all the stock exchanges in Bangladesh for listing within 07(seven) working days from the date of issuance of this letter and shall simultaneously submit the vetted prospectus with all exhibits, as submitted to SEC, to the stock exchanges. 11. The following declaration shall be made by the company in the prospectus, namely: -

“Declaration about Listing of Bonds with the Stock Exchange(s):

None of the stock exchange(s), if for any reason, grants listing within 75 days from the closure of subscription, any allotment in terms of this prospectus shall be void and the company shall refund the subscription money within fifteen days from the date of refusal for listing by the stock exchanges, or from the date of expiry of the said 75 (seventy five) days, as the case may be. In case of non -refund of the subscription money within the aforesaid fifteen days, the company directors, in addition to the issuer company, shall be collectively and severally liable for refund of the subscription money, with interest at the rate of 2% (two percent) per month above the bank rate, to the subscribers concerned. The issue manager, in addition to the issuer company, shall ensure due compliance of the above mentioned conditions and shall submit compliance report thereon to the Commission within seven days of expiry of the aforesaid fifteen days time period allowed for refund of the subscription money.” 12. The subscription list shall be opened and the sale of securities commenced after 25 (twenty five) days of the publication of the abridged version of the prospectus and shall remain open for 5 (Five) consecutive banking days. 13. A non-resident Bangladeshi shall apply either directly by enclosing a foreign demand draft drawn on a bank payable at Dhaka, or through a nominee by paying out of foreign currency deposit account maintained in Bangladesh or in Taka, supported by foreign currency encashment certificate issued by the concerned bank, for the value of securities applied for through crossed bank cheque marking “Account Payee only”. Application shall be sent by the NRB applicants to the issuer company so as to reach the same to the company by the closing date of subscription for NRB applicants. Application received by the company after the closing date of subscription will not be considered for allotment purpose. 14. The company shall apply the spot buying rate (TT clean) in US Dollar, UK Pound Sterling and Euro of Sonali Bank, which shall be mentioned in the Prospectus, as prevailed on the date of opening of the subscription for the purpose of application of the NRBs and other Non-Bangladeshi persons, where applicable. 15. The company and the issue manager shall ensure prompt collection/clearance of the foreign remittances of NRBs and other non-Bangladeshis, if applicable, for allotment of bonds. 16. Upon completion of the period of subscription for securities the issuer and the issue manager shall jointly provide the Commission and the stock exchanges with the preliminary status of the subscription within 05 (five) working days, in respect of the following matters, namely: - (a) Total number of securities for which subscription has been received; (b) Amount received from the subscription; and (c) Amount of commission paid to the banker to the issue. 17. The issuer and the issue manager shall jointly provide the Commission and the stock exchanges with the list of valid and invalid applicants (i.e. final status of subscription) to the Commission within 3 (three) weeks after the closure of the subscription along with bank statement (original), branch-wise subscription statement, NRB application forms (photocopy attested by CEOs of the issuer company and the issue manager) . The list of valid and invalid applicants shall be finalized after examination with the CDBL in respect of BO accounts and particulars thereof.



18. 10% of total public offering shall be reserved for Non-Resident Bangladeshi (NRB) and 10% for mutual funds and collective investment schemes registered with the Commission and the remaining 80% shall be opened for subscription by the general public. In case of under subscription under any of the 10% categories mentioned above, the unsubscribed portion shall be added to the general public category and, if after such addition, there is over subscription in the general public category, the issuer and the issue manager shall jointly conduct an open lottery of all the applicants added together. 19. All the applicants shall first be treated as applied for one minimum market lot of 5 bonds worth Tk.5000/- (face value). If, on this basis, there is over subscription, then lottery shall be held amongst the applicants allocating one identification number for each application, irrespective of the application money. In case of over-subscription under any of the categories mentioned hereinabove, the issuer and the issue manager shall jointly conduct an open lottery of all the applications received under each category separately in presence of representatives from the issuer, the stock exchanges and the applicants, if there be any. 20. An applicant cannot submit more than two applications, one in his/her own name and another jointly with another person. In case an applicant makes more than two applications, all applications will be treated as invalid and will not be considered for allotment purpose. In addition, whole or part of application money may be forfeited by the Commission. 21. Lottery (if applicable) shall be held within 4 (four) weeks from closure of the subscription date. 22. The company shall issue share allotment letters to all successful applicants within 5 (five) weeks from the date of the subscription closing date. Within the same time, Refund to the unsuccessful applicants shall be made in the currency in which the value of securities was paid for by the applicants without any deduction. For the purpose of refund of application money, the applicant must mention the bank account in the application form the same bank account as available in the database of Beneficiary Owners Account in central depository. After completion of refund, the issuer shall disclose the information in the newspapers where the abridged version of prospectus has been published. A compliance report in this regard shall be submitted to the Commission within 7 (seven) weeks from the date of closure of subscription. 23. The company shall furnish the List of Allotees to the Commission and the stock exchange(s) simultaneously in which the shares will be listed, within 24 (twenty four) hours of allotment. 24. In the event of under-subscription of the public offering, the entire unsubscribed portion of securities shall be taken up by the underwriter(s). The issuer must notify the underwriter to take up the underwritten bonds within 10 (ten) days of the subscription closing date on full payment of the share money within 15(fifteen) days of the issuer’s notice. The underwriter shall not share any underwriting fee with the issue manager, other underwriters, issuer or the sponsor group. 25. Lock-in provision shall be applicable upon conversion of bonds as per applicable rules. 26. The company and the issue manager shall apply to the stock exchanges for listing within 7(seven) working days of issuance of this letter and shall simultaneously submit to the Commission attested copies of the application field with the stock exchanges.

Part-B

1. The issuer and the issue manager shall ensure that the abridged version of the prospectus and the full prospectus is published correctly and in strict conformity without any error/omission, as vetted by the Securities and Exchange Commission. 2. The issue manager shall carefully examine and compare the published abridged version of prospectus on the date of publication with the copy vetted by SEC. If any discrepancy/inconsistency is found, both the issuer and the issue



manager shall jointly publish a corrigendum immediately in the same newspapers concerned, simultaneously endorsing copies thereof to SEC and the stock exchange(s) concerned, correcting the discrepancy/inconsistency as required under ‘Due Diligence Certificates’ provided with SEC. 3. Both the issuer company and the issue manager shall, immediately after publication of the prospectus and its abridged version, jointly inform the Commission in writing that the published prospectus and its abridged version are verbatim copies of the same as vetted by the Commission. 4. The fund collected through RPO and private placement of bonds shall not be utilized prior to listing with stock exchange and that utilization of the said fund shall be effected through banking channel, i.e. through account payee cheque, pay order or bank drafts etc. 5. The company shall furnish report to the Trustee and the Commission on utilization of RPO proceeds within 15 days of the closing of each quarter until such fund is fully utilized, as mentioned in the schedule contained in the prospectus, and in the event of any irregularity or inconsistency, the Commission may employ or engage any person, at issuer’s cost, to examine whether the issuer has utilized the proceeds for the purpose disclosed in the prospectus. 6. All transactions, excluding petty cash expenses, shall be effected through the company’s bank account(s). 7. Proceeds of the RPO shall not be used for any purpose other than those specified in the prospectus. Any deviation in this respect must have prior approval of the bondholders in the Bondholder’s Meeting under intimation to SEC and stock exchange(s). 8. The issuer and the Trustee shall jointly submit to the Commission an annual status report of the bonds containing among others, details about redemption/ conversion, decisions of the bondholder’s meeting (if any) within 03(three) months from the date of Annual General Meeting of the company. 9. The Trustee shall ensure compliance by the issuer in respect of bondholder’s rights as per the Trust Deed and shall submit to the Commission an annual compliance report within 03 (three months) from the date of Annual General Meeting of the company.

Part C

1. The Issuer shall execute the Trust Deed with the Trustee and register the same under the Trust Act, 1882 and shall submit a copy of the trust deed attested by the Chief Executive Officers of the Issuer, Trustee and the Issue Manager to the Commission. 2. The Issuer shall execute charge agreements with the Trustee.

Part D

1. All the above conditions imposed under section 2CC of the Securities and Exchange Ordinance, 1969 shall be incorporated in the prospectus immediately after the page of table of contents, with a reference in the table of contents, prior to its publication. 2. The Commission may impose further condition/ restrictions etc. from time to time as and when considered necessary which shall also be binding upon the issuer company.



Part E

1.As per provision of the Depository Act, 1999 and regulation made there under, bonds will only be issued in dematerialized condition. All transfer/transmission/splitting will take place in the Central Depository Bangladesh Ltd. (CDBL) system. An applicant (including NRB) shall not be able to apply for allotment of bonds without beneficial owner’s account (BO account). 2. The issue manager shall also ensure due compliance of all above.

GENERAL INFORMATION

Alliance Financial Services Limited (Issue Manager) has prepared this prospectus based on the information provided by Advanced Chemical industries Limited (the Issuer) and also upon several discussions with Chairman, Managing Director and concerned executives of the Company. The directors including Executive Director of the Advanced Chemical Industries Limited (ACI) and Alliance Financial Services Limited (AFSL) collectively and individually, having made all reasonable inquires, confirm that to the best of their knowledge and belief, the information contained herein is true and correct in all material aspects and that there are no other material facts, the omission of which would make any statement herein misleading. No person is authorized to give any information or to make any representation not contained in this Prospectus and if given or made, any such information or representation must not be relied upon as having been authorized by the Company or Issue Manager. The Issue as contemplated in this document, is made in Bangladesh and is subject to the exclusive jurisdiction of the courts of Bangladesh, forwarding this Prospectus to any person resident outside Bangladesh in no way implies that the Issue is made in accordance with the laws of that country or is subject to the jurisdiction of the laws of that country. A copy of this Prospectus may be obtained from the Head Office of Advanced Chemical industries Limited (ACI), Alliance Financial Services Limited (AFSL), the Underwriters and the Stock Exchanges where the securities will be traded.



DECLARATIONS AND DUE DILIGENCE CERTIFICATES

DECLARATION ABOUT THE RESPONSIBILITY OF THE DIRECTORS, INCLUDING THE CEO

OF THE “ADVANCED CHEMICAL INDUSTRIES LIMITED” IN RESPECT OF THE PROSPECTUS

This Prospectus has been prepared, seen and approved by us and we, individually and collectively, accept full responsibility for the authenticity and accuracy of the statements made, information given in the prospectus, documents, financial statements, exhibits, annexes, papers submitted to the Commission in support thereof, and confirm, after making all reasonable inquiries that all conditions concerning this public issue and prospectus have been met and that there are no other information or documents the omission of which make any information or statements therein misleading for which the Commission may take any civil, criminal or administrative action against any or all of us as it may deem fit.

We also confirm that full and fair disclosure has been made in this prospectus to enable the investors to make a well-informed decision for investment.

Sd/-

M Anis Ud Dowla Chairman & Director

Sd/- Syed Manzur Elahi

Director

Sd/- Md. Humayun Kabir

Director

Sd/- Najma Dowla

Director

Sd/- Dr. Arif Dowla

Managing Director and Director

Sd/- Waliur Rahman Bhuiyan, OBE

Director

Sd/- Shusmita Anis Salam

Director

Sd/- Waliur Rahman

Director

Sd/- Wajed Salam

Director

Sd/- Sheema Abed Rahman

Director and Company Secretary



CONSENT OF THE DIRECTORS TO SERVE

We hereby confirm that we have been serving as Directors of Advanced Chemical Industries Limited (ACI) and

continue to act as Director of the Company

Sd/-

M Anis Ud Dowla Chairman & Director

Sd/- Syed Manzur Elahi

Director

Sd/- Md. Humayun Kabir

Director

Sd/- Najma Dowla

Director

Sd/- Dr. Arif Dowla

Managing Director and Director

Sd/- Waliur Rahman Bhuiyan, OBE

Director

Sd/- Shusmita Anis Salam

Director

Sd/- Waliur Rahman

Director

Sd/- Wajed Salam

Director

Sd/- Sheema Abed Rahman

Director and Company Secretary

DECLARATION ABOUT FILING OF PROSPECTUS WITH THE REGISTRAR OF JOINT STOCK COMPANIES AND FIRMS

This Prospectus (duly signed & dated) has been filed for registration with the Registrar of Joint Stock Companies and Firms, Bangladesh, as required under Section 138 (1) of the Companies Act, 1994 on or before the date of publication of this prospectus in the newspaper.



DUE DILIGENCE CERTIFICATE OF MANAGER TO THE ISSUE

Sub: Public Offer of ACI 20% Convertible Zero Coupon Bonds of Tk. 1,000 each aggregating Tk. 1,335.85 million of Advanced Chemical Industries Limited (ACI).

We, the under-noted Manager to the Issue to the above-mentioned forthcoming issue, state as follows:

1 We, while finalizing the draft prospectus pertaining to the said issue, have examined various documents and other materials as relevant for adequate disclosures to the investors; and

2 On the basis of such examination and the discussion with the issuer company, its directors and officers, and

other agencies, independent verification of the statements concerning objects of the Issue and the contents of the documents and other materials furnished by the issuer company.

WE CONFIRM THAT:

a. the draft prospectus forwarded to the Commission is in conformity with the documents, materials and papers relevant to the issue; b. all the legal requirements connected with the said issue have been duly complied with; and c. the disclosures made in the draft prospectus are true, fair and adequate to enable the investors to make a well-informed decision for investment in the proposed issue. For Manager to the Issue

Sd/- (Tapan K Podder) Managing Director Alliance Financial Services Limited (AFSL)



DUE DILIGENCE CERTIFICATE OF THE UNDERWRITER (S)

Sub: Public Offer of ACI 20% Convertible Zero Coupon Bond of Tk. 1000 each for Tk. 1,335.85 million of Advanced Chemical Industries Limited (ACI). We, the under-noted Underwriter(s) to the above-mentioned forthcoming issue, state individually and collectively as follows:

1. We, while underwriting the above mentioned Issue on a firm commitment basis, have examined the draft prospectus, other documents and materials as relevant to our underwriting decision; and

2. On the basis of such examination and the discussion with the issuer company, its directors and officers, and

other agencies, independent verification of the statements concerning objects of the issue and the contents of the documents and other materials furnished by the issuer company.

WE CONFIRM THAT:

a. all information as are relevant to our underwriting decision have been received by us and the draft prospectus forwarded to the Commission has been approved by us; b. we shall subscribe and take up the un-subscribed securities against the above mentioned public issue within 15(fifteen) days of calling up thereof by the issuer; and c. this underwriting commitment is unequivocal and irrevocable. For Underwriter(s)

Sd/- Managing Director AB Bank Limited

Sd/- Managing Director

Mercantile Securities Limited


Bangladesh Mutual Securities Limited


Standard Bank Limited


Bay Leasing & Investment Limited


Trust Bank Limited


BANCO Trans world (BD) Limited


Union Capital Limited


Lanka Bangla Finance Limited



DUE DILIGENCE CERTIFICATE OF TRUSTEE TO THE ISSUE

Sub: Public Offer of ACI 20% Convertible Zero Coupon Bonds of Tk. 1000 each of Tk. 1,335.85 million of Advanced Chemical Industries Limited (ACI). We, the under-noted Trustee to the Issue to the above-mentioned forthcoming issue, state as follows: 1. We, while agree to act as trustee to the above mentioned Issue, have examined the Information Memorandum/ draft

prospectus, other documents and materials as relevant to our decision; and 2. On the basis of such examination and the discussion with the issuer company, its directors and officers, and other

agencies, independent verification of the statements concerning objects of the Issue and the contents of the documents and other materials furnished by the issuer company.

WE CONFIRM THAT:

a. the information memorandum/draft prospectus forwarded to the Commission is in conformity with the documents, materials and papers relevant to the issue;

b. all the legal requirements connected with the said issue have been duly complied with; c. the disclosures made in the memorandum/draft prospectus are true, fair and adequate to enable the investors to

make a well-informed decision for investment in the proposed issue; and d. the Securities and Exchange Commission (Public Issue) Rules, 2006 have been complied with. For Trustee to the Issue

Sd/- Managing Director Industrial & Infrastructure Development Finance Company Limited



RISK FACTORS AND MANAGEMENT PERCEPTIONS Investment in proposed Convertible Zero Coupon Bond carries fixed return as well as possible capital gain from conversion into shares. Share/Bond market involves risk and investors should carefully consider all the risks and uncertainties associated to the company along with the information provided in the prospectus before taking decision to invest in the Zero Coupon Bonds of Advanced Chemical Industries Limited. The following are the major risk factors considered by the management as of now to the company and its business: Interest rate risk Major source of fund for operation of the company and its subsidiaries are the banks and financial institutions which carries interest based on domestic money market. In case of any volatility in the money market the financial expenses may increase significantly which will ultimately reduce the profitability of the company.

Management Perception

The management is aware of the impact of high financial expenses and continuously exploring attractive and competitive sources of fund. As a part of this initiative the management approved the issue of ZCB to the public for the first time in the history of Bangladesh capital market. Project funding cost of the initiatives considered here are expected to considerably come down due to issue of zero coupon bonds. Currently discount rate of the bond is fixed and comparatively lower than the current borrowing rate. So the raising of finance through issuance of ZCB is favorable for the company under the current situation. Exchange rate risk The project may face some degree of foreign exchange rate fluctuation risk as the Company imports raw materials

against payment of foreign currency.

Management Perception: The risk of foreign exchange cannot be eliminated fully as we require importing raw materials. However the management is always alert in minimizing the negative impact of currency fluctuation cost by looking for new sources of raw materials or constantly negotiating with suppliers in reducing price. Moreover, the company is fully aware of the risks related to currency fluctuation and as a prudent Company it always takes steps to hedge all major currency dealings to safeguard the interest of the Company. The risk can be mitigated to some extent through exporting a portion of its production which will neutralize negative impact of currency fluctuation. Industry risk

Competition may increase in the pharmaceutical sector due to entrant of new companies which may ultimately reduce the market share as well as profitability of the company.

Management Perception: Bangladesh is a developing country where access to healthcare and per capita drug consumption is one of the lowest in the world. With the growth of per capita income demand of the medicines are growing fast. The company is also introducing new drugs to take advantage of the growing demand and change in disease pattern. Moreover, in addition to pharmaceutical business, ACI has other successful business interest in consumer brand and agricultural sector which will continue to generate revenue.

Environmentalists are likely to create pressure on Government for banning use of chemicals for its negative

effects on living beings thereby causing closure of business by the Company.

Management Perception The company is always careful in compliance of Government Regulations regarding use of chemicals. The main goal of ACI is to make the country self sufficient in health, agriculture and other sectors.



Market & Technology related risk ACI’s healthcare and agro based products are based on latest technological developments and marketed for the domestic consumers. With the shrinkage of domestic demand as well as introduction of latest technology in products by its competitors, the company may witness reduction of sales as well as profitability.

Management Perception Company owns modern technology with R&D infrastructure and shall be able to adapt to any new inventions with moderate investments as it has been doing in the past. Moreover the management is always updated through participation in international fair, symposium, market study etc. about its competitors, growing competition and technological developments. To retain existing market as well as to enter into new segments of the market, the management always takes necessary steps. Potential or existing Government regulations Government has given very high priority to the development of healthcare and agricultural sector and policies are favorable. Any adverse change by the Government in fiscal policies relating to ACI’s business may adversely affect Company’s profitability. Management Perception Company strictly follows all the laid down regulations for marketing its products and therefore do not foresee any problem in doing the business. Potential changes in global or national policies The Company’s product lines mainly consist of healthcare and agro based products which are primarily based on imported raw materials. International price movements affect the whole industry by and large. The plant and machinery will be imported and costs may fluctuate owing to changes of exchange rate.

Management Perception Any change in the global and national policy will affect the industry as a whole. Financial and operational strength of the company reached to very high level by now and is capable to handle reasonable threats. Company has adequate system and procedures in place to take care of any such event. Non-operating history There is no history of non operation in case of ACI Limited. Operational Risk Current global recession shall have serious influence on the Bangladesh economy by way of reduction of exports and remittances from NRBs. This may reduce the demand of the consumer products of ACI drastically which will reduce sales as well as profitability of the company. Management Perception The company has already taken different steps to minimize the impact of global recession towards the profitability of the company. As the current export volume of the Company is not significant, the impact of global meltdown on ACI will be very minimum.



Statement regarding holding of Annual General Meeting of Advanced Chemical Industries Limited (ACI)

(From 1994 to 2007)

Utilization of proceeds of Advanced Chemical Industries Limited previous Right Issues

The company was listed with DSE and CSE without issuing any Initial Public Offering (IPO) and has raised capital through two right issues in the following manner:

Year Particulars No. of Shares Amount (Tk.)

1995 Right Issue (Tk. 10 each at a premium of Tk. 120) 1,680,000 218,400,000

1998 Right Issue(Tk. 10 each at a premium of Tk. 10) 7,350,000 147,000,000

All the proceeds of the Right Issues were utilized by the company for its’ capacity enhancement leading to business growth which has also been reflected in the cash flow statement as a part of audit financial statements of the respective years of the company.

SIZE OF ISSUE

Total size of the ZCB is BDT 1,335,850,000 in face value of which BDT 801,510,000 being 60% of the total issue has already been allocated for placement, and subscription will be done along with the public subscription. The Company now offers bonds of BDT 534,340,000 (40% of the ZCBs) through Public Offering with the consent of the SEC.

Particulars Issue Price Amount (Tk.)

Face Value Amount (Tk.)

Percentage

a. Private Placement 600,010,386 801,510,000 60% b. Public Offering 400,006,924 534,340,000 40% Total 1,000,017,310 1,335,850,000 100%

** Lot Size Tk. 3,743 for face value Tk. 5,000

Sl. No. Accounting Year AGM Dividend Declared AGM held on 1 1994 22nd AGM Bonus 1:1, Cash 35% 14-08-1995 2 1995 23RD AGM Rights 2:5, Cash 35% 05-09-1996 3 1996 24th AGM Bonus 1:4, Cash 30% 20-11-1997 4 1997 25th AGM Bonus 1:5, Cash 30% 23-03-1998 5 1998 26th AGM Rights 1:1, Cash 25% 20-05-1999 6 1999 27th AGM Cash 30% 22-06-2000 7 2000 28th AGM Cash 35% 26-06-2001 8 2001 29th AGM Cash 37.5% 27-06-2002 9 2002 30th AGM Cash 37.5% 08-07-2003

10 2003 31st AGM Cash 40% 22-06-2004 11 2004 32nd AGM Cash 42.5% 22-06-2005 12 2005 33rd AGM Cash 45% 22-06-2006 13 2006 34th AGM Cash 60% 26-06-2007 14 2007 35th AGM Cash 85% 23-06-2008



Investor who subscribed the amount offered through private placement are as under: a. Institutional Investors

Sl. No.

Name of the Institution Address No. of Lot

Subscribed No. of Unit Subscribed Face Value Issue Price

1 National Credit and Commerce Bank Ltd

7/8, Motijheel C/A Dhaka-1000 20,000 100,000 100,000,000 74,860,000

2 United Commercial Bank Limited

59-60, Motijheel C/A Dhaka-1000 26,716 133,580 133,580,000 99,997,988

3 Bank Asia Limited Tea Board Building 111-113 Motijheel C/A Dhaka-1000

13,001 65,005 65,005,000 48,662,743

4 Delta Brac Housing Finance Corp. Ltd.

Landmark (9th floor) 12-14 Gulshan North C/A Gulshan 2, Dhaka-1212

8,014 40,070 40,070,000 29,996,402

5 Mobil Jamuna Lubricants Ltd

Mobil House CWS © 9, Gulshan - 1 Dhaka-1212

13,358 66,790 66,790,000 49,998,994

6 Lanka Bangla Finance Limited

20, Kemal ATaturk Avenue , Safura Tower (11th floor) Banani, Dhaka-1213

10,000 50,000 50,000,000 37,430,000

7 BANCO Trans World (BD) Limited

Ispahani Building (3rd floor), 14-15 Motijheel C/A, Dhaka-1000

5,770 28,850 28,850,000 21,597,110

8 Delta Life Insurance Company Limited

Uttara Bank Bhaban 90, Motijheel C/A Dhaka-1000

5,343 26,715 26,715,000 19,998,849

9 Alliance Financial Services Limited

Rahman Chamber ( 3rd Floor) 12-13 Motijheel C/A, Dhaka-1000

2,672 13,360 13,360,000 10,001,296

10 Trust Bank Limited

Peoples Insurance Bhaban 36 Dilkusha C/A Dhaka-1000

2,671 13,355 13,355,000 9,997,553

11 Bangladesh Steel Re-rolling Mills Limited

Ali Mansion 1173/1207 Sadarghat Road, Chittagong

5,343 26,715 26,715,000 19,998,849

12 Ahsania Malaysia Hajj Investment & Finance Co. Ltd

72 Dilkusha C/A Fazlur Rahman Centre Dhaka-1000

1,335 6,675 6,675,000 4,996,905

13 Square Pharmaceuticals Limited

Square Centre 48 Mohakhali Commercial Area Dhaka-1212

8,014 40,070 40,070,000 29,996,402

14 Pragati Insurance Limited

Pragati RPR Centre 20-21 Kawran Bazar Dhaka - 1215

6,679 33,395 33,395,000 24,999,497

Sub- Total (Tk) 128,916 644,580 644,580,000 482,532,588



b. Individual Investors Sl. No. Name Address No. of Lot

Subscribed No. of Unit Subscribed Face Value Issue Price

1 Mr. Madhab C Das Appt # 3/C, Sufiany Plaza 10 Avoy Das Lane Tikatully, Dhaka-1203

2,671 13,355 13,355,000 9,997,553

2 Mr. Nurul Haque Appt # A3, House # 2 Road 34, Gulshan Dhaka-1212

1,335 6,675 6,675,000 4,996,905

3 Mr.Samson H Chowdhury

Square Centre 48 Mohakhali Commercial Area,Dhaka-1212

2,671 13,355 13,355,000 9,997,553

4 Mr. Anjan Chowdhury


2,671 13,355 13,355,000 9,997,553

5 Mr. Tapan Chowdhury


2,671 13,355 13,355,000 9,997,553

6 Capt. M Altafur Rahman

Marine Surveyor & Consultant Commercial Plot # 10 Between “G” & “H” Block Port Connecting Road, Halishahar H/E, Chittagong- 4216

3,339 16,695 16,695,000 12,497,877

7 Maj M Atiqur Rahman

A2-8, Kalindi Aptts. Complex, 36, Indira Road Dhaka-1215

3,339 16,695 16,695,000 12,497,877

8 Mr. M Anis Ud Dowla

ACI Centre 245 Tejgaon Industrial Area, Dhaka-1208

2,671 13,355 13,355,000 9,997,553

9 Mr. Margub Kabir House-2A, Apt-A4, NAM Village, Road-1, Block-I, Banani, Dhaka-1213

667 3,335 3,335,000 2,496,581

10 Barrister Rafiqul Huq

Huq and Company 47/1, Purana Paltan Dhaka -1000

4,007 20,035 20,035,000 14,998,201

11 Mr. Samuel S. Chowdhury


2,672 13,360 13,360,000 10,001,296

12 Ms Ratna Patra Square Centre 48 Mohakhali Commercial Area,Dhaka-1212

2,672 13,360 13,360,000 10,001,296

Sub- Total (Tk) 31,386 156,930 156,930,000 117,477,798

Grand Total 160,302 801,510 801,510,000 600,010,386 Note: As per condition of the agreement, the aforesaid individual as well as institutional investors placed their fund for subscription and lying with escrow account maintained with Eastern Bank Limited (Account No: 01011230000042 ). Allotment of bonds will be made at a time along with the public subscriptions.



PURPOSE OF THE ISSUE As a part of ACI’s vision to look for alternative funding arrangement and be pioneer in undertaking new product in the capital market, ACI Management envisage that raising of money through Zero Coupon Bonds would be an attractive option for the company.

Zero Coupon Bonds have primarily four advantages compared to other debt instruments from the perspective of both issuer and the investors:

The tax free benefits to all investors except bank, insurance and financial institutions.

Short to long term tenure thereby addressing the requirement of the issuer.

Convertibility options into ordinary shares of the company – allowing investors to enjoy significant capital gain.

Reduced financing cost for ACI- a positive impact on ACI’s future profitability

Overall this bond will create a win-win situation for both ACI and its holders.

USE OF PROCEEDS

ACI Pharmaceuticals is expected to be introducing three new lines of medicine products namely Anti Cancer, Hormone & Steroid and Amino Acid. For this new initiative, Company needs funding facilities to allow it to import capital machinery and carry out construction of physical facilities. Out of the total proceeds of BDT 1.00 billion that will be raised through issuance of zero-coupon bond, BDT 597,194,166 (i.e. approx. 60%) is earmarked for the expansion scheme of the pharmaceuticals division. The rest BDT 402,805,834 (approx. i.e. 40%) of the total fund will be utilized in repayment of its existing short term debt. The repayment would facilitate in bringing down current borrowings with banks and save the company from bearing the high interest rates attached with borrowing capital.

Anti cancer

Cancer is the term we give to a large group of diseases that vary in type and location but have one thing in common: abnormal cells growing out of control.

Chemotherapy is the use of anti-cancer of drugs. Anti-cancer drugs destroy cancer cells by stopping growth or multiplication at some point in their life cycles. Drugs may be administered intravenously (into a vein), orally (by mouth), by injection into a muscle, depending on the drug and the type of cancer.

Reason for Anti cancer drugs

The current statistics shows an increasing number of cancer patients throughout the country. The scarcity and excessive cost of anticancer and other specialized medicines are the emerging problems in treating the ailing humanities of Bangladesh. As Bangladesh is exempted from the WTO regulations until 2016, there will be an ample opportunity for our country to manufacture high-tech patented anticancer and other specialized products at competitive prices to face the post WTO challenges.

Hormone & Steroid

A chemical substance produced in the body that controls and regulates the activity of certain cells or organs. Many hormones and their analogues are used as medication. The most commonly prescribed hormones are estrogens and progestagens (as methods of hormonal contraception and as HRT), thyroxine (as levothyroxine, for hypothyroidism) and steroids (for autoimmune diseases and several respiratory disorders). Most hormone and steroid drugs are made from plants or are completely synthetic.



Amino Acid Amino acids are used by every cell of body and are used to build the proteins that human need to survive. They build the cells, repair tissues, produce enzymes, and play a key role in mental health. There are about 20 natural amino acids. These can be divided into two basic groups: essential and non-essential. The essential amino acids are those which body cannot produce and can be obtained through diet. The nonessential amino acids are just as important for healthy functioning as essential amino acids. Non-essential amino acids are produced by our system, namely the liver is responsible for manufacturing them.

Project Cost (Estimated)

Amount in BDT Particulars

Amino Acid Anti - Cancer Hormone & Steroid Total

Land & Land Development 5,000,000 5,000,000 5,000,000 15,000,000 Building & Civil Construction 10,000,000 20,000,000 25,000,000 55,000,000 Machinery & Equipment 88,000,000 188,000,000 161,500,000 437,500,000 Installation & Erection 700,000 1,100,000 2,000,000 3,800,000

Office Equipment 186,000 345,000 375,000 906,000 Pre-operating & start-up cost 400,000 550,000 950,000 1,900,000 Contingencies 1,000,000 10,000,000 5,000,000 16,000,000 IDCP 12,503,349 26,568,522 23,633,516 62,705,387 Total Fixed Cost 117,789,349 251,563,522 223,458,516 592,811,387 Net Working Capital 1,290,169 1,470,022 1,622,588 4,382,779 Total Project cost 119,079,518 253,033,544 225,081,104 597,194,166 Financing Plan: Bond Proceeds 119,079,518 253,033,544 225,081,104 597,194,166



ID Task Name

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A LAND PROCUREMENT1 Location Finalization2 Land DevelopmentB LAYOUT & DESIGN1 Layout of the Factory2 Structural Drawing3 Machinery Drawing4 Prequalification of Contractor5 BOQ & work order to the contractorC CIVIL CONSTRUCTION1 Civil Construction2 Electrification3 Drainage & PlumbingD MACHINERY PROCUREMENT1 Selection of the Machinery2 L/C Opening/Advance3 Shipment of the Machinery4 Arrival of Machinery5 Erection of Machinery6 Commissioning of the plant7 Trial Production & validation8 Commercial ProductionE DEVELOPMENT OF RM/PM1 Qualitative & Quantitative Survey2 Pack Design3 Finalizing the RM/PM4 Order Placement for RM/PM5 Supply receive of the RM/PMF REGULATORY PERMITS1 Environmental Clearance2 Necessary Licenses

Implementation Schedule of Anti cancer Project2009 2010 2011


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ID Task Name

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A LAND PROCUREMENT1 Location Finalization2 Land Development B LAYOUT & DESIGN 1 Layout of the Factory2 Structural Drawing3 Machinery Drawing4 Prequalification of Contractor5 BOQ & work order to the contractorC CIVIL CONSTRUCTION1 Civil Construction2 Electrification3 Drainage & PlumbingD MACHINERY PROCUREMENT1 Selection of the Machinery2 L/C Opening/Advance3 Shipment of the Machinery4 Arrival of Machinery5 Erection of Machinery6 Commissioning of the plant7 Trial Production & validation8 Commercial ProductionE DEVELOPMENT OF RM/PM1 Qualitative & Quantitative Survey2 Pack Design3 Finalizing the RM/PM4 Order Placement for RM/PM5 Supply receive of the RM/PMF REGULATORY PERMITS1 Environmental Clearance2 Necessary Licenses

Implementation Schedule of Hormone & Steroid Project2009 2010 2011


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ID Task Name

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A LAND PROCUREMENT1 Location Finalization2 Land Development B LAYOUT & DESIGN 1 Layout of the Factory2 Structural Drawing3 Machinery Drawing4 Prequalification of Contractor5 BOQ & work order to the contractorC CIVIL CONSTRUCTION1 Civil Construction2 Electrification3 Drainage & PlumbingD MACHINERY PROCUREMENT1 Selection of the Machinery2 L/C Opening/Advance3 Shipment of the Machinery4 Arrival of Machinery5 Erection of Machinery6 Commissioning of the plant7 Trial Production & validation8 Commercial ProductionE DEVELOPMENT OF RM/PM1 Qualitative & Quantitative Survey2 Pack Design3 Finalizing the RM/PM4 Order Placement for RM/PM5 Supply receive of the RM/PMF REGULATORY PERMITS1 Environmental Clearance2 Necessary Licenses

Implementation Schedule of Amino Project2009 2010 2011

This schedule (Grid Chart) was prepared based on the assumption that the proceeds would be received in June 2009. However, the implementation schedule will be changed based on the collection of sales proceeds from the issuance of ZCBs.

Sd/- Sd/- Managing Director Chief Financial Officer


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DESCRIPTION OF BUSINESS

Background ACI Limited was established as the subsidiary of Imperial Chemical Industries (ICI) in the then East Pakistan in 1968. After independence, the company was incorporated in Bangladesh in 1973 as ICI Bangladesh Manufacturers Limited as a Public Limited Company. In 1992, the company was divested to local management and the name of the company changed to Advanced Chemical Industries (ACI) Limited. ACI inherited the rich ICI culture of product quality, customer service and social responsibility.

Initially in 1992, ACI started primarily with pharmaceutical business with a turnover of BDT 80 million only but later the new management brought about fundamental changes in the policies and in the year 2008 turnover grew to over BDT 7,365 million. The Company has diversified business interest in pharmaceuticals, agricultural including fishery & livestock and consumer brands. At present, ACI has three strategic business units along with 11 subsidiaries, 3 joint ventures and 1 associate. ACI is a fast growing conglomerate that has substantial contribution in the economy of Bangladesh. In response to growing demands of the consumers of Bangladesh, ACI has diversified its business to include wide range of products in its portfolio. ACI has started its expansion policy by exploring and strengthening the pharmaceuticals wing further so that it can continue giving unswerving service to the consumers of Bangladesh. ACI is the first company in Bangladesh to achieve ISO S001 in 1995 for quality management and also the first company to achieve ISO 14000 in 2000 for environmental management system. ACI is also the first company from Bangladesh to become the honorable member of United Nation Global Compact. It is the only Bangladeshi company which was declared as a notable COP (Communication on Progress) recognized by UNGC (United Nation Global Compact). ACI has been accepted as a founding member of community of Global Growth Companies by the World Economic Forum which is the most prestigious business networking organization in the world. Important dates and milestone dates of ACI Limited

Date Events

1968 : Imperial Chemical Industries Pakistan Manufactures Limited (ICI Pakistan) was established in the then East Pakistan.

24 January, 1973 : Incorporation of ICI Bangladesh Manufacturers Limited

24 January, 1973 : Commencement of Business

5 May, 1992 : Imperial Chemical Industries Pakistan Manufactures Limited divested 70% of its shareholding to local management.

5 May, 1992 : The name of the company changed to Advanced Chemical Industries Limited from ICI Bangladesh Manufactures Limited.

9 March, 1994 : Listed with Dhaka Stock Exchange

October 22, 1995 : Listed with Chittagong Stock Exchange

Nature of Business

ACI Limited is committed to providing customers with a broad range of quality products from its business operations. It has diversified its business in various sectors such as the health care division, consumers’ brands division, and agribusiness division. Other than its three major strategic business units, it has 11 subsidiaries, 3 joint ventures and 1 associate.

Principal Products


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Pharmaceuticals

ACI formulates and markets a comprehensive range of more than 400 products covering all major therapeutic areas, which come in tablet, capsule, powder, liquid, cream, ointment, gel ,ophthalmic and injection forms. ACI also markets world-renowned branded pharmaceutical products imported from world-class multinational companies like ASTRAZENECA, UK and UCB, BELGIUM. ACI is actively engaged in introducing newer molecules and Novel Drug Delivery Systems (NDDS) to meet the needs of present and future. ACI introduced the concept of quality management system by being the first company in Bangladesh to achieve ISO 9001 certification in 1995 and follows the policy of continuous improvement in all its operations. Aligned with the concept that a pharmaceutical must ensure effective management of environment, ACI complies with standard environment management policy, thus adorned with EMS 14001 in 2000. ACI maintains a congenial and supportive relationship with the healthcare community of Bangladesh, with the belief that business excellence can only be achieved through pursuit of quality by understanding, accepting, meeting and exceeding customer expectations. The management of ACI, a competent team of professionals, thus operates with a progressive attitude to provide effective solutions to satisfy the customers’ needs, through its products and services of uncompromising quality.

Consumer Brands

This business segment has three major categories of product range- home care, air care and hygiene care. Products under home care category include ACI Aerosol, ACI Mosquito Coil. ACI Aerosol is market leader in the mosquito repellent category having market share of 85%. ACI Coils enjoys very predominant position and striving to become absolute leader in the market place. ACI has also very attractive product range in this Air Care category with Angelic Fresh Air Freshener. This is the first ever locally manufactured Air Freshener of this country whose fragrances has been applauded by the users and has become market leader in two years time. ACI has another very strong range of products in its Hygiene Product category. Savlon Liquid Antiseptic is the highest selling antiseptics in the country. It has more than 75% market share of its category. Products like Savlon Antiseptic cream, Savlon Family Protection Soap and Savlon Femme Sanitary Napkin, Vanish Toilet Cleaner are also under this category. ACI Consumer brands also deals with products of internationally acclaimed company like Colgate Palmolive and Nivea. Recently ACI Electronics a sub unit of ACI Consumer Brands has launched Panasonic Audio visual items in the country.

Agribusiness

ACI Agribusiness is the largest integrator in agricultural sector of Bangladesh. ACI Agribusiness deals with livestock and fisheries, crop protections, seeds, fertilizer and agri-machineries. Under Agribusiness, the following business units are currently operating:

Crop Care & Public Health Crop care & Public health is dealing with all type of crop protection items. It is providing a complete range of cost effective products which can provide appropriate solutions for the farmers through insecticides, herbicides, and fungicides. This business has been transferred to ACI Formulations Limited form 1st January of this year. ACI Formulation Limited has been listed to Dhaka Stock Exchange and Chittagong Stock Exchange recently.

Seeds

Seeds division is dealing with hybrid rice, vegetable and maize seeds. It has partnership with renowned HYV seed companies of the world. ACI started the seed business in 2006. It has its own research and development stations in Rural Development Academy, Bogra, Bangabandhu Sheikh Mujibur Rahman Agricultural University (BSMRAU), Gazipur and Bangladesh Agricultural University, Mymensingh.

Cropex

CROPEX is dealing with commodity buying, storing, preserving and selling. ACI Cropex is a remarkable addition to the agricultural advancement in the country. The project assists the farmers in various ways - exchanging their crops at the time of their necessity, providing them with technological assistance and advisory services and so on.


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Animal Health This division is dealing with high quality nutritional, veterinary, poultry medicine and vaccines including proposal for pisiculture, cattle rearing and cattle fattening. Integrated fisheries and livestock project will be implemented soon.

Fertilizer

This unit is dealing mainly with micro continent and foliar fertilizer with a focus in basic fertilizer. It launched micronutrient fertilizers like Zinc Sulphate, Magnesium Sulphate, Ammonium Sulphate, Boron, Sulphur 90% and Sulphate of Potash. They are being imported from China, U.S.A, Canada, Taiwan, Argentina, and Turkey etc. ACI Agribusiness strives for providing “one stop solution” to farmers by providing all sorts of activities regarding agriculture. ACI Agribusiness is having a strong partnership with national and international R&D companies, Universities, and research institutions. “Partnership with the farmer” is the main theme of ACI Agribusiness

International alliances ACI represents Colgate Palmolive Company as exclusive marketing partner and distributor for the territory of Bangladesh. Colgate is the world wide leader of the oral care products category. ACI was appointed as sole distributor and marketing partner of Beiersdorf AG, Germany; the manufacturer of Nivea brand products. ACI represent Godrej Consumer Products Limited. ACI consumer Brand is also selling low calorie sweetener products of Merisant for weight conscious customers and also for them who want to avoid direct sugar. In additions to these, ACI represents significant number of world’s reputed companies in Pharma and Agriculture sectors.


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YearPaid up Capital

Sales PBT PAT Shares EPS DPS Employees

M Tk. M Tk. M Tk. M Tk. Number Taka Taka Number1992 21 308 19 8 2 3.9 1 312 10% 0.261993 21 366 35 17 2 8.05 2 391 19% 85% 106% 100% 20% 0.25 25%1994 42 438 49 31 4 7.29 3.5 562 20% 41% 81% 75% 35% 0.48 44%1995 59 561 46 38 6 6.48 3.5 746 28% -6% 24% 0% 35% 0.54 33%1996 74 605 13 12 7 1.66 3 756 8% -71% -68% -14% 30% 1.8 1%1997 88 797 40 33 9 3.73 3 869 32% 196% 169% 0% 30% 0.81 15%1998 162 969 68 53 16 3.26 2.5 1,047 22% 72% 60% -17% 25% 0.77 20%1999 162 1,199 75 58 16 3.6 3 1,161 24% 10% 11% 20% 30% 0.83 11%2000 162 1,411 95 64 16 3.97 3.5 1,157 18% 27% 10% 17% 35% 0.88 0%2001 162 1,637 137 92 16 5.67 3.75 1,284 16% 44% 43% 7% 38% 0.66 11%2002 162 2,053 164 109 16 6.75 3.75 1,662 25% 20% 19% 0% 38% 0.56 29%2003 162 2,240 93 85 16 5.28 4 1,883 9% -43% -22% 7% 40% 0.76 13%2004 162 2,558 141 90 16 5.57 4.25 1,931 14% 51% 5% 6% 43% 0.76 3%2005 162 3,089 169 112 16 6.94 4.5 2,000 21% 20% 25% 6% 45% 0.65 4%2006 162 3,516 233 154 16 9.51 6 2,476 14% 38% 37% 33% 60% 0.63 24%2007 162 4,917 314 211 16 13.05 8.5 3,050 40% 35% 37% 42% 85% 0.65 23%2008 162 7,365 404 296 16 18.31 12 3,339 50% 29% 40% 41% 120% 0.66 9%

- Sales** 22% Over the 16 years- PBT* 45% Over the 16 years- PAT* 42% Over the 16 years- Dividend** 16% Over the 16 years* Simple average ** CAGR (Cumulative Average Growth Rate)

This statement is prepared based on regular profit. Capital gain from share sale is ignored in both 2007 and 2008 which were Tk. 97 M and Tk. 780M respectively.

History of 17 years

Sales growth

PBT growth

PAT growth

Dividend growth

Dividend rate

Div. payout

ratio

Employee growth


Page 34

Market for the ACI products

Pharmaceutical Industry

The growth potential of pharmaceutical industry is enormous. As urban population is increasing and people are getting educated, they are now more concerned about healthcare. Therefore, the demands of medical products are rising. Our country’s unhygienic conditions and poor health conditions provide vast scope for the pharmaceutical firms to grow with introduction of new products and increasing the market coverage. Before independence, the pharmaceutical market was largely dominated by multinational companies and the local companies were involved in manufacturing and marketing of very few ranges of products. However, the change in policies and promotion of favorable government initiative has enabled the local companies to be independent and be competitive in the local market. Following the Drug (Control) Ordinance of 1982, some of the local pharmaceutical companies improved range and quality of their products considerably. Currently, the national companies account for more than 65% of the pharmaceutical business in the country. The Bangladesh Pharmaceuticals & Healthcare Report Q3/08 calculated that the country's pharmaceutical market had a valuation of US$700mn in 2007 and that a compound annual growth rate (CAGR) of 18.79% through to 2012 can be expected. This rapid market expansion is primarily due to greater uptake of medicine throughout this densely populated country, but also through appreciation of the taka against the US dollar, population growth and increased government healthcare expenditure, among other factors. Almost all types of possible dosage forms including tablets, capsules, oral and external liquids (solutions, suspensions, emulsions), ointments, creams, injections (small volume ampoules/dry fill vials/suspensions and large volume IV fluids), and aerosol inhalers are now produced in the country. A good number of pharmaceutical companies export their products in the international markets. The annual per capita drug consumption in our country is one of the lowest in the world. However, the industry has been a key contributor to our economy since independence. With the development of healthcare infrastructure and increase of health awareness and the purchasing capacity of people, this industry is expected to grow at a much higher rate in future. High expected growth is likely to encourage the pharmaceutical companies to introduce newer drugs and newer research products, while at the same time maintaining a healthy competitiveness in respect of the most essential drugs.

Consumer Product Industry

The consumer products industry is comprised of a variety of products, such as toiletries and cosmetics, ready-made edible products, consumer durables, consumer electronics, and other household items. The demand for consumer products in Bangladesh is mounting as the average standard of living is taking an upward turn. People now demand products that had minimal demand in the past such as household cleaning item, pre-packed food products, cosmetics and toiletries etc. This change in demand has encouraged the local firms to become specialized in producing toiletries, readymade food items and other consumer brands. Bangladesh’s export potential is also growing fast. Along with the traditional products, which make the main export basket, non-traditional items are being added to it. The country is now exporting many food items such as spices, frozen vegetables and other snack items. Bangladesh is a tropical country infested with mosquitoes, flies, and other germ carrying insects and bacteria which are hazardous to health. The demand for healthy living has stimulated the production of insect and germ killers such as mosquito coils, aerosols, antiseptic solutions etc. Bangladesh is one of the most densely populated countries in the world. Over 80% of the country's population lives in rural areas, but recent trends show that more and more people are migrating to urban areas; as a result the demands for nontraditional food items and other household products are increasing as purchasing power of the people are augmenting. Hence the demand for consumer products will be strengthening further in the future and leaves a lucrative scope for the local industries to fill the gap between demand and supply.


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Agri-business Industry

Bangladesh is primarily an agrarian economy. Agriculture is the single largest producing sector of economy since it comprises about 30% of the country’s GDP and employing around 60% of the labor force. The performance of this sector has an impact on major macroeconomic objectives like employment generation, poverty alleviation, human resources development and food security. Hence utmost priority should be given to its proper development of this sector so that our nation can achieve total self sufficiency in agricultural production. As our country is prone to natural calamities, measures should be taken so that progress of this sector is not halted. In addition to government support, the local firms must develop modern agricultural equipment, effective fertilizers distribution; pesticides and other crop protective items at low cost so that it is accessible to the poor farmers. Currently major emphasis is given on increasing production of major crops like rice to make the country self sufficient in producing staple food. There are renewal interests in growing other crops like wheat, maize etc. To help the farmer community government had recently come up with idea of giving subsidy to the farmer in fertilizer. We feel that this sector has tremendous prosperity to grow further by providing all kinds of support to farmer through supplying high yield variety seeds, fertilizer and agricultural equipment including tractors, power tiller and harvesters and crop care products. Availability of all these facilities and products will enable farmer to increase their production yield thereby making them economically solvent as well as helping the country to save foreign currency spent on importing food grains.

Relative contribution to revenue

As per audited accounts for the year ended 31.12.2008, relative position to total revenue of the products are as follows:

Sl. No. Name of the Products Revenue Taka (million) Value contribution (%)

01. Pharmaceuticals 2451 33.28 02. Consumer Brands 1817 24.67 03. Crop Care & Public health 1406 19.10 04. Animal Health 433 5.87 05. Fertilizer 580 7.88 06. Seeds 346 4.70 07. Cropex 332 4.50

Total 100.0


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Associates, Subsidiary/ Related Holding Company

SI No. Company name Relationship Core business area

1 ACI Formulations Limited Subsidiary Manufacturing & marketing of number of agrochemical and consumer products

2 Apex Leather Crafts Limited Subsidiary Letting out property to ACI Ltd.

3 ACI Salt Limited Subsidiary Manufacturing & marketing of edible packed Salt

4 ACI Pure Flour Limited Subsidiary Processing ,Packing and Marketing of wheat flour Products

5 ACI Foods Limited Subsidiary Manufacturing & Marketing different types of spices and other food products

6 Premiaflex Plastics Limited Subsidiary Manufacturing & Marketing of Plastic Products, flexible printing and other ancillary business associated with plastic and flexible printing.

7 Creative Communications Limited Subsidiary

Managing Media solutions and similar services for different clients including television commercials and other advertisement and promotion related activities

8 ACI Motors Limited Subsidiary

Business of buying, selling, Importing, and assembling of vehicles of both agricultural and non-agricultural use including supplying spare part and providing service facilities for vehicles

9 ACI Logistics Limited Subsidiary Operating retail chain stores across the country.

10 ACI Godrej Agrovet Private Limited Joint Venture Manufacturing and marketing of quality Poultry,

Aqua, Cattle Feed and Day Old Chicks 11 Tetley ACI (Bangladesh) Limited Joint Venture Processor, blender and marketer of tea products.

12 Asian Consumer Care (Pvt) Limited Joint Venture

Manufacturing and marketing of coconut oil, hair oil shampoo and other products under the brand name “Dabur”

13 Stochastic Logic Limited Associates Providing high level IT solution to both local and foreign customers.

Distribution of Products & Services

While ACI brand names distinguish its products from those of its competitors, ACI distribution makes its products available to consumers. Distribution department of ACI is probably the only distribution in Bangladesh which deals with wide range of products of six different strategic business units- Pharmaceuticals, Consumer Brands, Crop Care, Animal Health, Fertilizer & seeds through strategically locate depots in nineteen different locations across the country. These depots are highly streamlined, computerized and automated. ACI distribution is the most widely distributed network in the country.

Competitive Conditions in the Business

ACI’s mission is to enrich the quality of people through responsible application of knowledge, skills and technology. It is committed to the pursuit of excellence through world-class products, innovative processes and empowered employees, to provide the highest level of satisfaction to its customers. It has been successful in accomplishing a strong market position in most of its product categories by catering to the needs of the customers. ACI has been competing in the market with the industry giants and even with world renowned multinationals, and yet has been thriving strongly in the market.


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The major competitors of ACI in the pharmaceutical market in the year 2008 are as follows:

Company Share (%) Square Pharmaceuticals Limited 20.06 Incepta Pharmaceuticals Limited 7.53 Beximco Pharmaceuticals Limited 7.09 The Acme Laboratories Limited 5.25 Eskayef Pharmaceuticals Limited 4.64 ACI Limited 4.52 Opsonin Chemical Industries Limited 4.30 Renata Limited 4.22 Aristopharma Limited 4.18 Drug International Limited 3.39 Source: IMS fourth quarter, 2008

Here to mention that Pharma business of ACI Limited has become the 2nd fastest growth company in 2008 in

Bangladesh.

The table below depicts the major market share (Consumer Brands) of the major players of the market in the year 2008:

Brand Name Market Share (%) ACI Aerosol 84.29 Reckitt-Benkeizer 7.83 Aerosol Square Toiletries 6.40 ACI Mosquito Coil 28.99 Reckitt-Benkeizer 54.63 Globe Bangladesh Ltd 5.97

Mosquito Coil

Maladesh International Ltd 4.15 Savlon Liquid Antiseptic (ACI Limited) 78.95 Liquid Antiseptic Reckitt-Benkeizer 12.10 Savlon Antiseptic Cream (ACI Limited) 72.40 Antiseptic Cream Millat Chemicals Ltd 3.40

Source: A C Neilsen


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The main competitors of ACI Agribusiness and their relative market share for the year 2008 are as follows:

Major Competitors Market Share (%) Animal Health ACI Limited 8.33% Renata 10.83% ACME 8.83% Novartis 6.66% SK+F 5.33% Square 4.66% Others 55.3% Fertilizer ACI Limited 19.60% Padma Agrochemical Limited 8.00% Global agrovet Limited 6.00% Syngenta Bangladesh Limted 6.20% Alpha Agro chemical Limited 5.60% Others 54.60% Seeds: Supreme Seed company 13.00% Brac Seed 6.00% Lal Teer Seed 9.00% ACI Limited 6.00% A. R Mallik Seed 5.00% Aftab Seed 2.00% Others 59.00% CROPEX Chowdhury Enterprise 20.00% M.S. Trading 10.00% Madina enterprise 10.00% Trade excel Agro 5.00% ACI Limited 5.00% Others 50.00% Source: In house Source


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Sources and availability of raw materials and the names of the principal suppliers

Division-wise major sources of raw material suppliers are summarized below: Pharmaceuticals & Consumer Brands

SL No Name of Principle Suppliers Address Raw Materials

1 Zhejiang Jingxin Pharmaceutical Import & Export Co. China.

No. 800 Dadado East Road, Chenggguan,Xionchang Country, Zhejiang, China.

Levofloxacin Hemihydrate

2 R.T. Vanderbilt Company Inc 30 Winfield Street Norwalk, CT 06855 USA Veegum- K

3 Divis Pharmaceuticals Pvt. Ltd. Divi Towers, 7-1-77/E/1/303 Dharam Karan Road, Ammerpet, Hyederabad- 500016, India

Keterolac Tromethamine

4 Univer Exports Univer Ltd. International House Zenith Paycocke Road Basildon Essex SS14 3DW, United Kingdom Synperonic PE/F87

5 Nectar Life Sciences Ltd. 110, Industrial Area, Phase-1, Chandigarh-160 002 India Cefixime Trihydrate

6 Kopran Ltd. Parijat Housee, 1076, Dr.e.Moses Road, Worli, Mumbai-400 018, India Atenonol

7 Wuxi- Pharma- Trading Imp & Exp Co. Ltd.

Room-523, Youzu Alliance Building no. 88, ReminZhonglu,Wuxi Jiangsu,China Tenoxicam

8 Aarti Drugs Ltd. Mahendra Industrial Estate, Ground Floor, Plot no 109-D, Road No- 29, SION (E), Bombay-400 022, India

Ciprofloxacin HCL

9 QILU Antibiotics Pharmaceutical Co. Ltd.

849 Dongjia Town, Licheng District, Jinan City 250105, China.

Ceftriaxone Sodium Sterile

10 Orchid Chemical & Pharmaceuticals Ltd.

Orchid Tower,313, VALUVAR Kottam High Road, Nungambakkam, Chennai-600034, India

Cephradine compacted

11 P.I Drugs & Pharmaceuticals Ltd.

116, Vardhaman Ind. Complex, L.B.S. marg, Thane(West) 400601, India Albenadazole

12 IPCA Laboratories Ltd. International house, 48 Kandivli Industrial Estate, Kandivli (W) Mumbai 400 067, India Trimethoprim

13 Anuh Pharma Ltd. A-3 Shivsagar Estate, North Wing. Dr, Annie Besant road worli, Mumbai - 400 018. India Erythromycin

14 United Pharma Industries Ltd. 8F22 Buynow Technology Mansion. #23, Jiaogong Road. Hangzhou, Zhejiang, China 310013

Flunarizine HCL

15 Colorcon Plot No. M - 14 to M - 18, VermaIndustrial estate, Verma, Goa 403 722, India. HPMC

16 TAT Petrolium Pte Ltd. 9, Jahan Pesawat , Singapore Isopropyl Alcohol

17 Amoli Organics Pve. Lrd. 407, Dalamal House, Jamalpur Bajaj road, Nariman Point, Mumbai -400 021 India

Metronidazole Benzoate

18 Camlin Fine Chemicals Limited ICC Chambers, 3rd floor, Opp, Santogen silk mills. Saki Vihar Road, Powal, Mumbai - 400 072, India

Miconazole Nitrate


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19 Zhejiang Hisun Pharmaceutical co. Ltd.

46. Waisha road, jiaojiang district, Taizhou city, zhejiang provice, China - 318000 Meropenem

20 Divi's Laboratories Limited Divi tower, 7-1-77/E/1/303, Dharam Karan Road, Ameerpet, Hyderabad - 500 016, India Naproxen BP

21 Nosch Labs Private Limited Flat No. 404 to 406, Vijay sai towers, Opp. BJP Office,Kukatpally, Hyderabad - 500 072 India. Olanzapine

22 M/S. Metrochem API Private Ltd.

Flat No. 302, Bhanu Enclave sunder Nagar, Erragadda, Hyderabad - 500 038, A. P. India Rabeprazole Sodium

23 BASF 7 Temasek Boulevard. # 35-01, Suntec Tower One. Singapore PEG 400

24 Vipor Chemical India 78, Paragnagar, Hydrabad-500016, India Strong Cetrimide Solution (CB)

Animal Health SL NO NAME OF SUPPLIER ADDRESS

RAW MATERIALS

1 United Pharma and Chemical Co.Limited

Flat RM 1005, Wing Yue Bldg, 60-64 Des Voeux Road west, Hongkong, China Doxyciline HCL

2 United Pharma and Chemical Co. Limited

Flat/RM 1005, Wing Yue Bldg, 60-64 Des Voeux Road west, Hongkong, China Mannitol

3 AARTI Drugs Ltd. Mahendra Industrial Estate, Ground floor, Plot Noo109-D, Road No 29, Sion (E), Mumbai 400 022, India

Nicotinamide BP

4 Mingtai Chemical Co. Ltd. 1142, Shin Hsing Rd, Bah-Der City, Taoyung Hsien, Taiwan Microcrystalline

5 Hebei Shengxue Pharmaceutical Co. Ltd.

Shengxue Road, Luancheng, Shijiaszhuagn 051430,China Oxytetracycline HCl

6 Evervictory Pharma Co. Ltd. Unit D 11/F Seabrigt Plaza, 9 - 23 Shell ST. North Poine,China Tylosin

7 BASF 7, Temasek Boulevard 35 01 Sun, 35 01 Suntec Tower one, Singapore Vitamin E Oily


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Fertilizer & Seeds

S L No

Name of Principle Suppliers Address Raw Materials

1 Hunan Senan Industries and Trade IMP.& EXP.Co. Ltd.

RM D 29th Flooor Biyuntian Building No.423 WUYI Road Changsha, Hunan, China.

Zinc Sulphate (Hepta Granular) Zinc Sulphte (Mono Granular) Magnesium Sulphate

2 Mudanjiang Fengda Chemicals Import & Export Corporation.

Corporation. No.167,Aimin Street,Mudanjiaang Heilongjiang, China

Ammonium Sulphate

3 MTC Foreign Trade Guvendik, Mentes Mevkii -Pastoral Evler Sitesi No.3- Cesmialty-Urla-35450 lzmir-Turkey

Disodium Octoborate Tetrahydrate

4 Winal Hitech Seed Co Ltd. 222 Tian Zhi Road, Hi- Tech Development Zone, Heifei, China

Magnesium Sulphate

5 Chain Yin Trade Co. Intl 8t-5 No, 349 Chung-hua 4th Road, Chien Chin district, kaohsiung Taiwan R.O.C Sulphate of Potash

6 keg River Chemical Corp 10350 ZI Street, Edmonton, Albarta Canada. Sulphur 90%

7 Winal Hitech Seed Co Ltd. 222,Tian Zhi Road,Hi-Tech Development Zone, Hefei,China

Hybrid Rice Seed ACI 1& ACI-2China(finished goods)


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Sources of, requirement for power gas and water

Pharmaceutical factory at Narayangonj

POWER

Sl No Type of Source / Supplier Capacity Utilization

1 DESA 500 KVA 2,75,636 Kwh 2 Own Generation through Gas Generator 1600 KW 3 Own Generation through Gas Generator 1145 KW 4 Own Generation through Gas Generator 380 KW

5 Own Generation through Diesel Generator 55 KW

GAS

Sl No Type of Source / Supplier Capacity Utilization

1 Titas Gas Transmission & Distribution Co Ltd 20 PSI 2,285,783 m3

2 Titas Gas Transmission & Distribution Co Ltd 8 PSI 803,665 m3

3 Titas Gas Transmission & Distribution Co Ltd 2 PSI 35,473 m3

WATER

Type of Source Capacity Utilization

1) Deep Tube well Not Measured 179,778,198 Ltr Tetley Tea & Freedom Sanitary Napkin factory at Konabari , Gazipur POWER

Type of Source Capacity Utilization 1) Generator 415 KVA 19,476 Kwh

WATER

Type of Source Capacity Utilization 1) Deep Tube well - 15,000 Ltr

Names of the customers who enjoy 10% or more of the Company’s product / services The Company has no individual customer of any of its products who enjoys 10% or more.


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Contract with principal suppliers or customers

Material patents, trademarks, license or royalty agreement As per requirement of relevant authorities of Bangladesh, the company has obtained registration for its entire healthcare, animal health, seeds & fertilizer products.

The company owns a number of trademarks and Patent Rights for Consumer Brands, Animal Health and other business for marketing those products in the Bangladesh Market. Copy right registrations taken by the Company .are summarized as under:

Parties to the agreement

Type of agreement Initiating date Termination Description

ACI Limited and ACI Formulations Limited

Marketing & Distribution January 1, 2005

Valid until terminated by either party giving a written notice of 6 months or such period as may be negotiated mutually.

ACI limited will market the products manufactured by ACI Formulations Limited.

ACI Limited and Silver Soap Limited

Manufacturing June 1, 1998

Valid until terminated by either party giving a written notice of not less than eight (8) months of time

Silver Soap limited will manufacture the products (Liquid soaps and liquid cleaning products) in its factory on behalf of ACI Limited as per recipe supplied by ACI and transfer them back to ACI Limited.

ACI Limited and Transcom Distribution Company Limited (TDCL).

Sale & Purchase January 1, 2006

Valid until terminated by either party giving a written notice of 6 months

TDCL will purchase the products exclusively from ACI limited at a cost approved by SERVIER and sell those products at a price approved by SERVIER from time to time.

ACI Limited and RCI Limited Manufacturing July 1,2008 Valid for

minimum 5 years

RCI limited will manufacture the products (Liquid soaps and liquid cleaning products) in its factory on behalf of ACI Limited as per recipe supplied by ACI and transfer them back to ACI Limited.


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Sl. Product License No. Standard No. Copyright

Registration no./ Application No.

1 ACI AEROSOL 8147-COPR 2 ACI HI POWER MOSQUITO COIL 4614/G-8/2008 BDS-1089/2001 3 ACI SUPER MOSQUITO COIL 4614/G-8/2008 BDS-1089/2001 4 ACI HI BOOSTER MOSQUITO COIL 4614/G-8/2008 BDS-1089/2001 5 ACI BLACK FIGHTER MOSQUITO COIL 4614/G-8/2008 BDS-1089/2001 10104-COPR

6 ANGELIC AIR FRESHENER CITRUS BURST 88277

7 ANGELIC AIR FRESHENER ORCHID BREEZE 88278

8 SAVLON CREAM 9455-COPR

9 SAVLON FAMILY PROTECTION SOAP ACTIVE 2859/G-12/2008 BDS-13/1994

10 SAVLON FAMILY PROTECTION SOAP MILD 2859/G-12/2008 BDS-13/1994

11 SAVLON Hospital Concentrate 04174 12 SAVLON LIQUID SOAP 04199 13 SAVLON LIQUID ANTICEPTIC 1000ml 04175 14 SAVLON LIQUID ANTICEPTIC 500 ml 9453-COPR 15 SAVLON LIQUID ANTICEPTIC 112ml 04195 16 SAVLON LIQUID ANTICEPTIC 56ml 04206

Joint venture The Company has entered into three Joint venture agreements; features of these agreements are as follows: Company name Object Share holding position Term ACI & Godrej Agrovet Limited have agreed and form a new company ACI GODREJ AGROVET PRIVATE LIMITED

To raise and market chicken and to produce, market and distribute poultry products, eggs, day old chicks, dressed and live chicken, animal feed or any other related products.

Each company hold 50% of their paid-up capital of Tk. 80,000,000 where authorized capital is Tk. 500,000,000

Continue in full force and effect until termination.

ACI & THE TETELEY GROUP LIMITED, U.K. have agreed and form a new company Tetley ACI (BD.) Ltd.

To manufacture and market loose tea, packet tea, tea bags, roast and ground coffee, instant coffee and spices or any other related products

Each company hold 50% of their paid-up capital of Tk.30,000,000 where authorized capital is Tk. 500,000,000

Continue in full force and effect until termination.

ACI & REDROCK LIMITED have agreed and form a new company Asian Consumer Care Pvt. Ltd.

To manufacture and marketing hair oils, shampoos and other products under the trademark “ Dabur’ or other trademarks sub-licensed to it by Redrock in relation to the products.

Financing of Project: Redrock Ltd. : TK 129 (Lac) ACI : TK 41 (Lac)

Continue to remain in force for a period of 5 years from the date of execution.


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Employees’ position as on 31 December 2008

Particulars Number

Full time employees 2,214

Contractual employees 1,125

Total number of employees 3,339 Capacity and current utilization of the production facility The Company has currently four production units, the capacity and related utilization thereof is detailed below:

(As on 31 December 2008)

Product Category Unit Rated Capacity (Pack per month)

Production (Pack per month) Utilization (%)

Pharmaceutical 1 2,200,000 2,547,580 116

Pharmaceutical 2 430,000 509,203 118

Consumer products 3 600,000 660,080 110 Animal health products 4 140,000 158,651 113

Note: Rated capacity is calculated based on one shift of eight hours. Due to excess demand of the products the company runs at more than one shift.

DESCRIPTION OF PROPERTY

Plants and Property A) ACI owns different categories of fixed assets the list of which is detailed below along with written down value:

(Amount in Taka)

Sl. No. Name of the Assets Written down Value as on 31 December 2008

1. Land 330,366,144 2. Building 160,569,027 3. Plant & Machinery 506,894,119 4. Furniture and Fixture 28,523,664 5. Electrical and other office appliances 23,266,871 6. Office machinery 20,678,464 7. Vehicles (including leased Vehicle) 52,554,938 Total 1,122,853,227

B) All the above-mentioned assets are located in Company’s factory sites at Narayanganj, Gazipur and Sirajgonj and office at ACI Centre, 245 Tejgaon Industrial Area, Dhaka- 1208 premises.


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C) All the assets of the Company are in its own name except the leased assets. The status of these assets is as follows: Sl No. Name of Lessee Assets Starting

Month Lease

Amount Period (Yrs)

Monthly rental Date of Expiry

1 IDLC Finance Limited Vehicle February-05 1,437,000 4 37,420 January-09

2 IDLC Finance Limited Vehicle April-05 1,250,000 4 32,560 March-09


4 GSP Finance Company (BD) Ltd Vehicle May-05 1,158,500 4 30,747 April-09


6 GSP Finance Company (BD) Ltd Vehicle July-05 1,445,000 4 38,078 June-09

7 GSP Finance Company (BD) Ltd Vehicle August-05 1,426,000 4 37,578 July-09

8 GSP Finance Company (BD) Ltd Vehicle October-05 2,701,000 4 71,176 September-09

9 GSP Finance Company (BD) Ltd Vehicle December-05 4,754,000 4 125,277 November-09

10 GSP Finance Company (BD) Ltd Vehicle March-06 1,556,000 4 41,296 February-10

11 United Leasing Company Ltd Vehicle March-06 2,875,000 4 41,296 February-10

12 United Leasing Company Ltd Vehicle July-06 3,278,000 4 91,186 June-11

D) All the owned assets of the Company as described above are mortgaged to different banks to obtain loan facilities as mentioned in the note – 17 & 19 of the audited accounts. The followings are the current mortgagees of the company:

Standard Chartered Bank Ltd. Commercial Bank of Ceylon Ltd. HSBC The City Bank Ltd. AB Bank Ltd. Citibank, N.A BRAC Bank Ltd. Eastern Bank Ltd. Bank Alfalah Limited Mercantile Bank Limited

E) No reconditioned or second-hand plant & machinery are being used by the company.

PLAN OF OPERATION AND DISCUSSION OF FINANCIAL CONDITION

Internal & External Sources of Cash

Internal Sources of Cash 31-12-2008 Taka

31-12-2007 Taka

31-12-2006 Taka

Paid-up Capital 161,700,000 161,700,000 161,700,000 Share Premium 250,022,474 250,022,474 250,022,474 Capital Reserve 1,671,386 1,671,386 1,671,386 Revaluation Surplus 303,147,632 294,901,646 229,214,979 Retained Earnings 1,488,114,482 546,739,197 344,542,827 Sub Total: 2,204,655,974 1,255,034,703 987,151,666

External Sources of Cash Bank overdraft 732,188,602 271,195,982 126,757,321 Short term Bank Loan 1,816,568,620 1,142,396,717 698,498,975 Long term Bank Loan –Current portion 104,776,269 62,504,602 0 Trade Creditors 325,560,055 132,277,207 79,630,620 Other Creditors 469,811,403 478,332,706 306,087,482 Inter-Company liabilities 709,609,851 758,658,669 362,544,680 Obligation under Finance Lease 5,718,892 10,220,408 14,076,453 Provision for taxation 236,550,474 277,961,183 153,442,970 Long term Liabilities 309,663,981 342,231,018 186,998,651


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Sub Total: 4,710,448,147 3,475,778,492 1,928,037,152

Grand Total: 6,915,104,121 4,730,813,195 2,915,188,818 Material Commitment for Capital Expenditure

There are capital expenditure commitment for Tk. 52 million in respect of import of plant and machinery, building renovation, construction of central warehouse and laboratory which will be financed by bank borrowing.

Causes for any Material Change from Period to Period

Particulars 2008Taka

2007 Taka

2006Taka

Sales 7,365,103,541 4,917,304,331 3,515,862,372 Less: Cost of sales 5,087,311,724 3,250,711,677 2,339,975,616 Gross profit 2,277,791,817 1,666,592,654 1,175,886.756 Less: Administrative, selling and distribution Expense 1,629,967,083 1,240,364,781 884,474,379 Operating Profit 647,824,734 426,227,873 291,412,377 Other income 58,209,036 23,346,716 35,345,860 Profit from sale of shares 779,634,140 118,818,000 - 1,485,667,910 568,392,589 326,758,237 Less: Financial cost 280,811,155 119,087,159 81,555,964 Less: Provision for contribution to WPPF 21,261,132 22,728,564 12,260,114 Profit/(Loss) before Taxes 1,183,595,623 426,576,866 232,942,159 Less: Income tax expenses 107,928,740 118,807,480 79,116,544 Profit/(Loss) After Tax 1,075,666,883 307,769,386 153,825,615

The last three years’ result shows a positive growth on a year to year basis clearly demonstrating success is perusing aggressive growth plan by the Company. In the year 2008, Profit after tax grew by 250% mainly due to capital gain arose from sale of shares of ACI Formulations Limited to the extent of Tk. 780 million. The regular (recurring) profit also grew by 40%.


Page 48

Graphical Presentation of ACI’s Performance from 2004 to 2008

Annual Turnover ( in Million t aka)

25583089

3516

4917

7365

0

1000

2000

3000

4000

5000

6000

7000

8000

2004 2005 2006 2007 2008

Prof it af t er Tax ( in Million t aka)

89.52 112.27153.82

307.77

1075.67

0

200

400

600

800

1000

1200

2004 2005 2006 2007 2008

Ret urn on Equit y (%)

10.40%12.40%

15.80%

24.60%

48.80%

0.00%

10.00%

20.00%

30.00%

40.00%

50.00%

60.00%

2004 2005 2006 2007 2008

Earning per Share vs. Net Asset Value (in taka)

5.54 6.94 9.5119.03

66.5253.3 56 60.2

78.7

136.34

020406080

100120140160

2004 2005 2006 2007 2008

Earning per Share Net Asset Value


Page 49

Seasonal Aspect There is seasonal impact on few products which are as follows:

Pharmaceutical- due to changes in weather and climate, change in disease pattern on time to time. Consumer brands- demand varies with climate change and weather change Agribusinesses- due to changes in season, natural disaster and crop pattern

Known Trends, Events or Uncertainties

There are no known trends, events or uncertainties except economic meltdown due to world recession with limited impact, political unrest and natural disaster which may impact on the demand of the products.

Changes in the Assets of the Company used to pay off any Liabilities

None of the operating assets of the company has been disposed off to pay the liabilities.

Loan taken from holding/parent company or subsidiary company There is no loan taken from holding/parent company or subsidiary company.

Loan given to holding/parent company or subsidiary company

The company has given temporary loan to its few subsidiaries which are as follows:

Name of related Company Relationship Transaction

started from

Nature of transactions Transaction value-2008

Outstanding balance

31.12.2008

Nature of balance

ACI Formulations Ltd. Subsidiary 1996 Purchase of products 2,039,016,708 (698,672,186) Creditors

ACI Salt Limited Subsidiary 2004 Management service and working capital finance 773,379,596 161,993,597 Debtors

Apex Leather Craft Limited Subsidiary 2001 Lease of corporate Office 9,416,400 52,119,777 Debtors

Flyban Insecticides Ltd. Subsidiary 1994 Management service and working capital finance 5,000 976,125 Debtors

ACI Pure Flour Ltd. Subsidiary 2007 Management service and working capital finance 984,104,646 53,175,971 Debtors

ACI Foods Ltd. Subsidiary 2006 Management service and working capital finance 487,817,693 300,914,860 Debtors

ACI Agrochemicals Ltd. Subsidiary 2006 Management service and working capital finance 27,340 54,638 Debtors

Creative Communications Ltd. Subsidiary 2007 Management service and

working capital finance 47,582,792 (10,937,665) Creditors

ACI Motors Limited Subsidiary 2007 Management service and working capital finance 677,730,831 175,217,496 Debtors

Premiaflex Plastics Limited Subsidiary 2007 Management service and working capital finance 229,614,527 77,866,482 Debtors

ACI Logistics Limited Subsidiary 2008 Management service and working capital finance 205,230,678 26,780,697 Debtors

Tetley ACI Bangladesh Limited Joint Venture 2002 Purchase of products 2,222,544 437,294 Debtors

Asian Consumer Care (Pvt.) Limited Joint Venture 2003 Promotional expenses 4,244,254 7,555,218 Debtors

ACI Godrej Agrovet Bangladesh (Pvt.) Ltd. Joint Venture 2004 Working capital finance 448,418 869,726 Debtors

Stochastic Logic Limited Associates 2007 Management service and working capital finance 220,000 2,932,141 Debtors


Page 50

Future Contractual Liabilities There is no contractual liability of the company except day to day operational liabilities including bank loans.

Future Capital Expenditure

The company does not have any capital expenditure plan during financial year 2009 except the details of utilization plan given under the “Use of Proceeds” VAT, Income Tax, Customs Duty or other Tax Liability

a) VAT The company has no pending current liability for VAT. VAT current account showed positive balance (advance payment) as of 31 December 2008. However, we have two writ petitions awaiting settlement at the High Court Division of the Honorable Supreme Court. b) Income tax The income tax assessment for the accounting year 2006 corresponding to assessment year -2007-08 is completed and there is no pending liability against that year. The assessment for the accounting year 2007 corresponding to income year 2008-09 is under process. c) Customs duty or other tax liability There is no information of any outstanding current liabilities on customs duty or other tax liabilities. Operating Lease agreement The Company has not entered into any operating lease agreement with others.

Financial Lease and other financial commitment

The company has entered into lease agreements during the past five (5) years with different NBFIs, which are described as follows: Sl No. Name of Lessee Assets Starting

Month Lease

Amount Period (Yrs)

Monthly rental Date of Expiry

1 IDLC Finance Limited Vehicle May-04 4,753,200 4 128,820 April-08

2 IDLC Finance Limited Vehicle May-04 903,000 4 24,480 April-08


4 GSP Finance Company (BD) Ltd Vehicle August-04 839,000 4 21,898 July-08

5 IDLC Finance Limited Vehicle February-05 1,437,000 4 37,420 January-09





10 GSP Finance Company (BD) Ltd Vehicle July-05 1,445,000 4 38,078 June-09

11 GSP Finance Company (BD) Ltd Vehicle August-05 1,426,000 4 37,578 July-09

12 GSP Finance Company (BD) Ltd Vehicle October-05 2,701,000 4 71,176 September-09

13 GSP Finance Company (BD) Ltd Vehicle December-05 4,754,000 4 125,277 November-09


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14 GSP Finance Company (BD) Ltd Vehicle March-06 1,556,000 4 41,296 February-10

15 United Leasing Company Ltd Vehicle March-06 2,875,000 4 41,296 February-10

16 United Leasing Company Ltd Vehicle July-06 3,278,000 4 91,186 June-11

Personnel related Schemes The Company has adequate programs for human resource development. Company also has a well-designed Compensation Plan for attracting highly capable professional staff with high degree of integrity. The compensation package includes salary and allowances, bonus, gratuity, provident fund etc. The existing compensation plans are as follows: (a) Salary/Allowances This includes basic pay, house allowance, conveyance/transport allowance, medical allowances. The amount varies for each grade of services. (b) Traveling This includes fare and daily allowances for each grade of services. (c) Bonus This is paid on the basis of 2 month’s basic pay for each Eid Festival. (d) Provident Fund The Company has already set up Provident Fund as contributory by the employee at the rate of 10% of the basic pay and equal amount by the Company. Company’s contribution would be payable on completion of minimum 5 years service. (e) Gratuity Gratuity Plan is a non-funded liability payable to an outgoing employee on completion of minimum 8 years service at the rate of ½ month’s Basic pay (last pay) for every completed year of service for 8-12 years. For more than 12 years’ service it is one month’s pay and for 16 years/over it is 2 months’ pay. f) WPPF The Company has created a fund for workers as Workers’ Profit Participation Fund and 5% of profit before charging of this rate has been transferred to this fund. g) Leave Salary As a non-funded scheme, leave is allowed at the rate of one day for 14 days’ service. Leave is encashable at the discretion of management up to maximum accumulation of 96 days.

Revaluation of Assets

The Company has made revaluation of its assets in FY 2004 & 2007 and reflected in the Financial Statements of that year. Particulars of the valuer and summary of reports are as follows:

Name : Asian Surveyors Ltd Qualification : Professional valuer Work done : 30 June 2004 & 28 November 2007 Purpose of Revaluation : To reflect the fair value of the assets of the company in the financial

statements


Page 52

Summary of valuation report Revaluation for the year 2004

Value before revaluation Value after revaluation Revaluation surplus / (loss)

Name of the assets

Taka Taka Taka

Land : 78,224,202 205,650,000 127,425,798 Building

Unit – 1 & 2 68,811,696 88,507,674 19,695,978 Unit – 3 15,224,584 14,717,502 (507,082) Unit – 4 1,210,386 1,200,000 (10,386) Total Building 85,246,666 104,425,176 19,178,510

Plant & Machinery Unit – 1 & 2 83,317,409 151,468,814 68,151,405 Unit – 3 1,559,102 2,773,000 1,213,899 Unit – 4 2,127,978 6,198,232 4,070,254 Total Plant & Machinery 87,004,489 160,440,046 73,435,558

Office Machinery Unit – 1 13,554,981 14,904,850 1,349,869 Total Office Machinery 13,554,981 14,904,850 1,349,869

Electric & other appliances Unit – 1 17,896,244 16,323,378 (1,572,866) Total Electric & other appliances 17,896,244 16,323,378 (1,572,866)

Furniture & Fixtures Unit – 1 & 2 15,794,174 15,085,515 (708,659) Unit – 4 23,895 29,171 5,276 Total Furniture & Fixtures 15,818,069 15,114,686 (703,383)

Vehicles Unit – 1 10,526,213 40,003,672 29,477,459 Total Vehicles 10,526,213 40,003,672 29,477,459 Total 308,270,864 556,861,808 248,590,945


Page 53

Revaluation for the year 2007 Name of the Assets

Value before revaluation Value after revaluation Revaluation surplus / (loss)

Taka Taka Taka Land : 33,000,000 148,500,000 115,500,000 Building: Unit – 1 & 2 17,191,351 17,457,283 265,932 Total Building 17,191,351 17,457,283 265,932 Total 50,191,351 165,957,283 115,765,932

Breakdown of all Expenses connected with the Public Issue The following is an estimate of expenditures on various accounts in relation to Public Offer:

Particulars Rate Amount in Tk. Manager to the Issue Actual 2,000,000 Trustee Fee Lump sum 1,000,000 Credit Rating Fee Actual 700,000

Regulatory Expenses:

Listing related expenses Service Charge for DSE Fixed 20,000 Annual Fee for DSE & CSE Fixed 200,000 Listing Fees for Stock Exchange (DSE & CSE) @ 0.25% on 10.00 crore and @ 0.15% for

the rest amount of paid up capital 4,000,000

SEC Fees Application Fee Fixed 15,000 Consent Fee @ 0.15% on entire offer 2,002,171

Public Offering Commission:

Underwriting Commission @ 0.40% on Tk.534,340,000 2,137,360 Bankers to the Issue Commission (at actual) @ 0.10% on collected amount (Lump sum)

(assumed 2 times subscription) 2,000,000

Printing & Post Public Offering Expenses (Estimated):

Abridged version of Prospectus Estimated 300,000 Printing of Prospectus and Forms Estimated 400,000 Post issue Expenses Estimated 3,000,000 Arrangement of Lottery 700,000 Miscellaneous 500,000 Total 18,974,531 N. B. The costs of the above mentioned Public Offer expenses may vary with above estimates and will be adjusted accordingly.


Page 54

Auditors’ certificate for paid-up share capital

We certify that total paid-up share capital of Advanced Chemical Industries Limited as of 31 December 2008 was Tk 161,700,000 divided into 16,170,000 ordinary shares @ Tk 10 each. Out of total paid-up shares, 9,030,700 ordinary shares were issued for cash, 1,049,300 ordinary shares were issued as consideration otherwise than cash and 6,090,000 ordinary shares were issued as bonus. Dhaka, 19 April 2009 Rahman Rahman Huq Chartered Accountants Transaction between Holding/Subsidiary Company and the Issuer

a) Transactions during the year 2008

During the year 2008, the company carried out a number of transactions with Subsidiaries, Joint Ventures and Associates in the normal course of business. The names of the parties and nature of these transactions have been set out below:

Name of related party Relationship Transaction started from Nature of transactions Transactions

value-2008

Outstanding balance

31.12.2008

Nature of balance

ACI Formulations Ltd. Subsidiary 1996 Purchase of products 2,039,016,708 (698,672,186) Creditors

ACI Salt Limited Subsidiary 2004 Management service and working capital finance 773,379,596 161,993,597 Debtors

Apex Leather Craft Limited Subsidiary 2001 Lease of corporate office 9,416,400 52,119,777 Debtors

Flyban Insecticides Ltd. Subsidiary 1994 Management service and working capital finance 5,000 976,125 Debtors

ACI Pure Flour Ltd. Subsidiary 2007 Management service and working capital finance 984,104,646 53,175,971 Debtors

ACI Foods Ltd. Subsidiary 2006 Management service and working capital finance 487,817,693 300,914,860 Debtors

ACI Agrochemicals Ltd. Subsidiary 2006 Management service and working capital finance 27,340 54,638 Debtors

Creative Communication Ltd. Subsidiary 2007 Management service and

working capital finance 47,582,792 (10,937,665) Creditors

ACI Motors Limited Subsidiary 2007 Management service and working capital finance 677,730,831 175,217,496 Debtors

Premiaflex Plastics Limited Subsidiary 2007 Management service and working capital finance 229,614,527 77,866,482 Debtors

ACI Logistics Limited Subsidiary 2008 Management service and working capital finance 205,230,678 26,780,697 Debtors

Tetley ACI Bangladesh Limited

Joint Venture 2002 Purchase of products 2,222,544 437,294 Debtors

Asian Consumer Care (Pvt) Limited

Joint Venture 2003 Promotional expenses 4,244,254 7,555,218 Debtors

ACI Godrej Agrovet Bangladesh (Pvt) Ltd.

Joint Venture 2004 Working capital finance 448,418 869,726 Debtors

Stochastic Logic Limited Associates 2007 Management service and working capital finance 220,000 2,932,141 Debtors

b) Transactions during the last five years

During the last five years similar nature of transactions prevailed between ACI Limited and above-mentioned concerns from the year as indicated above.


Page 55

Material information which is likely to have an impact

There is no other known material information which is likely to have an impact on the offering or change the terms and conditions under which the offer has been made to the public.

DIRECTORS AND OFFICERS OF THE COMPANY

DESCRIPTION OF THE DIRECTORS

Sl. No. Name of the Directors Age

(Years) Position Education

Date of Becoming Director for the first time

Expiry of current term

1. Mr. M Anis Ud Dowla 72 Chairman Masters in Public Health 01-07-1987

2 Mr. Syed Manzur Elahi 67 Director M.A ( Economics, DU) 24-05-1997

3 Mr. Md. Humayun Kabir

56 Director M.A ( Economics, DU) 19-05-2009

4 Ms. Najma Dowla 62 Director Bachelor of Arts 06-01-1996

5 Dr. Arif Dowla 39 Managing Director

Doctor of Philosophy in Mathematics 18-09-2000

6 Mr. Waliur Rahman Bhuiyan, OBE 57 Director M.A ( Economics, DU & MBA)

04-11-2007

7 Ms. Shusmita Anis Salam 42 Director Graduate in Graphics Design, USA 22-05-2000

8 Mr. Waliur Rahman 67 Director B.Sc (Hon’s & M.Sc 18-03-2001

9 Mr. Wajed Salam 47 Director Bachelor in Economics, USA 18-03-2001

10 Ms. Sheema Abed Rahman 52

Director & Company Secretary

Post Graduate 18-03-2001

One third of total directors

take retirement at every Annual

General Meeting and

re-elect is eligible as seniority


Page 56

Directors Involvement in other organization

Sl. No. Name Name of other company where the Director is involved Position

ACI Formulations Limited Chairman and Managing Director ACI Salt Limited Director ACI Foods Limited Director ACI Pure Flour Limited Director ACI Motors Limited Director ACI Logistics Limited Chairman and Director ACI Agrochemicals Ltd. Director Stochastic Logic Limited Nominee of ACI Limited Apex Leather Craft Limited Director Consolidated Chemicals Limited Chairman & Managing Director Flyban Insecticides Limited Director Premiaflex Plastic Limited Director Creative Communications Ltd. Director Intesa Communication Limited Director Tetley ACI Bangladesh Limited Director ACI Godrej Agrovet Pvt. Ltd. Chairman

Pioneer Insurance Co. Ltd. Nominee of Consolidated Chemicals Ltd.


Credit Rating Agency of Bangladesh Ltd. Director ACI Formulations Limited Director ACI Salt Limited Director ACI Foods Limited Nominee of ACI Limited ACI Pure Flour Limited Nominee of ACI Limited ACI Motors Limited Nominee of ACI Limited ACI Logistics Limited Nominee of ACI Limited ACI Agrochemicals Ltd. Nominee of ACI Limited Stochastic Logic Limited Nominee of ACI Limited Apex Leather Craft Limited Nominee of ACI Limited Consolidated Chemicals Limited Director

2 Mrs. Najma Dowla

Premiaflex Plastic Limited Director ACI Formulations Limited Director ACI Salt Limited Managing Director ACI Foods Limited Managing Director ACI Pure Flour Limited Managing Director ACI Motors Limited Nominee of ACI Limited ACI Logistics Limited Nominee of ACI Limited ACI Agrochemicals Ltd. Nominee of ACI Limited Stochastic Logic Limited Managing Director Consolidated Chemicals Limited Director Premiaflex Plastic Limited Nominee of ACI Limited Creative Communications Ltd. Nominee of ACI Limited Intesa Communication Limited Director Tetley ACI Bangladesh Limited Nominee of ACI Limited ACI Godrej Agrovet Pvt. Ltd. Nominee of ACI Limited Pioneer Insurance Co. Ltd. Nominee of ACI Foundation

3 Dr. Arif Dowla

Mutual Trust Bank Limited Nominee of ACI Limited


Page 57

Sl. No. Name Name of other company where the

Director is involved Position

ACI Formulations Limited Director Consolidated Chemicals Limited Director 4 Ms. Shusmita Anis Salam Stochastic Logic Limited Nominee of ACI Limited ACI Formulations Limited Director 5 Mr. Wajed Salam Homeland Capital Corp. Director Apex Tannery Limited Director Grey Advertising (BD) Limited Director Apex Enterprise Limited Director Apex Adelchi Footwear Limited Director Apex Pharma Limited Director Pioneer Insurance Company Limited Director

6 Mr.Syed Manzur Elahi

Mutual Trust Bank Limited Director ACI Formulations Limited Director Flyban Insecticides Limited Director 7 Ms. Sheema Abed Rahman Apex Leather Craft Limited Director Glaxo SmithKline Bangladesh Limited Director BOC Bangladesh Limited Director Renata Limited Director Credit Rating Information & Services Limited (CRISL) Director

Central Depository Bangladesh Limited Director Bangladesh Shilpa Rin Sangstha Director Heidelberg Cement Bangladesh Limited Director Credit Rating Agency of Bangladesh Limited (CRAB) Director

Apex Tannery Limited Director Dhaka Stock Exchange Limited Director Standard Bank Limited Director British American Tobacco Bangladesh Limited Director

National Tea Company Limited Director Aramit Group Chairman

8 Mr. Md. Humayun Kabir

ICB Capital Management Limited Chairman BOC Bangladesh Limited Director

9 Mr. Waliur Rahman Bhuiyan, OBE Rajbari Enterprise Limited Director

10 Mr. Waliur Rahman N/A N/A


Page 58

FAMILY RELATIONSHIP AMONG DIRECTORS

Sl. No. Name Director Relation Position in the Company

Mrs. Najma Dowla Wife Dr. Arif Dowla Son Ms. Shusmita Anis Salam Daughter


Mr. Wajed Salam Son-in-law

Shareholder, Director, Managing

Director and Chairman

Mr. M Anis Ud Dowla Husband Dr. Arif Dowla Son Ms. Shusmita Anis Salam Daughter

2 Mrs. Najma Dowla

Mr. Wajed Salam Son-in-law

Shareholder and Director

Mr. M Anis Ud Dowla Father Mrs. Najma Dowla Mother Ms. Shusmita Anis Salam Sister

3 Dr. Arif Dowla

Mr. Wajed Salam Brother–in-law


Mr. M Anis Ud Dowla Father

Mrs. Najma Dowla Mother

Dr. Arif Dowla Brother

4 Ms. Shusmita Anis Salam

Mr. Wajed Salam Husband


5 Mr. Wajed Salam Mr. M Anis Ud Dowla Father-in-law Shareholder and Director

Mr. M Anis Ud Dowla Uncle

Mrs. Najma Dowla Aunt

Dr. Arif Dowla Cousin 6 Mr. Waliur Rahman

Ms. Shusmita Anis Salam Cousin


FAMILY RELATIONSHIP AMONG TOP OFFICERS

Sl No. Name Position Relation 1 Mr. M Anis Ud Dowla Chairman Father of Dr. Arif Dowla , Managing Director,

ACI Limited 2 Dr. Arif Dowla Managing Director Son of Mr. M Anis Ud Dowla, Chairman, ACI

Limited


Page 59

Short Description of the Directors: Mr. M Anis Ud Dowla Mr. Dowla, the Chairman of ACI Limited, is one of the most eminent business personalities in Bangladesh. He has maintained a high profile and has provided leadership to business community in different capacities. Mr. Dowla served in the British Oxygen Group of UK in Pakistan, Bangladesh and Kenya for 27 years, including 12 years as Managing Director of Bangladesh Oxygen Limited. In 1987, he became the Group Managing Director of ICI Bangladesh Manufacturers Limited.

With experience gathered while working with British Multi-nationals for over 32 years, Mr. Dowla has continued to maintain the multinational culture and management style in ACI, with special emphasis on quality, productivity and customer services.

Mr. Dowla was the President of Metropolitan Chamber of Commerce & Industry for three terms in 1975, 1976 & 1977 and the President of Bangladesh Employees Federation for four terms in 1976, 1977, 1994 and 1995.

Mr. M Anis Dowla was exposed to lots of international training programme.

Ms. Najma Dowla Mrs. Najma Dowla joined ACI Limited as Director on 6 January 1996. She is also Director of Consolidated Chemicals Limited, ACI Salt Limited, Stochastic Logic Limited, Premiaflex Plastics Limited, ACI Pure Flour Limited, ACI Foods Limited, ACI Motors Limited, Creative Communication Limited and Apex Leather Craft Limited. She is the wife of Mr. M Anis Ud Dowla. Dr. Arif Dowla Dr. Arif Dowla took over the charge of Managing Director of ACI Limited in June 2005. Previously, he was the Deputy Managing Director of the same company. He is also the Vice Chairman of Mutual Trust Bank and Board member of Pioneer Insurance Company Limited. He obtained PhD degree in Mathematics from the University of California, San Diego. He is also a member of the American Mathematical Society. His doctoral dissertation was on non-stationary stochastic processes, which is a field of study related to probability theory and statistics. Dr. Dowla was exposed to lots of international training program. He is the son of Mr. M Anis Ud Dowla.

Ms. Shusmita Anis Salam Ms. Salam is a Graphic Designer in profession and settled in U.S.A. She was inducted as Director in ACI Limited in the year 2000. She is the daughter of Mr. M Anis Ud Dowla. Mr. Wajed Salam Mr. Salam is engaged in real estate business in USA. He was inducted as Director in ACI Limited in the year 2001. He is the son-in-law of Mr. M Anis Ud Dowla. Mr. Syed Manzur Elahi Mr. Elahi joined ACI Limited as director on May 24, 1997. He was the founder Chairman of Mutual Trust Bank Limited. He has made significant contribution in various industrial & business enterprises including banking. He completed his M.A. in Economics from University of Dhaka. Mr. Elahi is the Chairman of Bangladesh Association of Banks, Vice Chairman, Bangladesh Association of Publicly Listed Companies and Director of ACI Limited. He was appointed as Advisor to the Caretaker Government of Bangladesh twice for his leadership qualities and professionalism. He is the founder Chairman of Apex Tannery Group, Pioneer Insurance Co. Limited, Grey Advertising (Bangladesh) Ltd., President of East West University and Director of International Chamber of Commerce, International Publications Ltd. He was the director of Bangladesh Bank, Sonali Bank Limited, Bangladesh Krishi Bank Limited, Export Promotion Bureau and Metropolitan Chamber of Commence & Industry. Besides being an eminent industrialist


Page 60

and businessman, Mr. Elahi is the Honorary Counselor of the Republic of Belgium in Bangladesh. A widely traveled man in connection with business and industrial establishments Mr. Elahi was awarded “Business Executive of the year 2000” by the American Chamber of Commerce in Bangladesh and later “Business Person of the Year” award sponsored by DHL and The Daily Star. Ms. Sheema Abed Rahman Mrs. Rahman joined the Company in the year 1987. Prior to joining ACI, she worked for British American Tobacco Bangladesh (BAT) for 14 years. During the 35 years of service, her major contribution is in Human Resource Management. She has done her Bachelor of Arts from Dhaka University with Post Graduation in Human Resource Management. She is also a fellow member of the Institute of Chartered Secretaries and Managers of Bangladesh. She was inducted in the Board as a Director in the year 2001. Mr. Waliur Rahman Bhuiyan, OBE Mr. Bhuiyan joined ACI Limited as Director as November 4, 2007. He is currently the Managing Director of BOC Bangladesh Limited. Mr. Bhuiyan has been appointed Honorary Officer of the most excellent order of the British Empire, OBE in 2007. He is an active member of the business community and sits on the Boards of the Chittagong Stock Exchange, the International Chamber of Commerce and Bangladesh Employees Federation. He was also the former President of the Foreign Investors’ Chamber of Commerce and Industry (FICCI) of Bangladesh (1999-2003). He is regarded as a magnificent “ambassador” for Bangladesh, Britain and the business community. Mr. Md. Humayun Kabir Mr. Humayun Kabir is holding the position of Managing Director of ICB (Investment Corporation of Bangladesh). He has served in the Glaxo SmithKline Bangladesh Limited, Bangladesh Shilpa Rin Shangstha, Dhaka Stock Exchange Limited and other many organizations as Director and Aramit Group and ICB Capital Management Limited as Chairman. He also performed training in different subject and topics both locally and internationally. Mr. Waliur Rahman Mr. Waliur Rahman has a long career in different organizations. His last position served in Bangladesh before leaving for Canada was Managing Director of Social Marketing Company (SMC).

CIB REPORT

Neither Advanced Chemical Industries Limited (ACI) nor any of its directors or shareholders who hold 5% or more shares in the paid up capital of the issuer is loan defaulter in terms of the CIB Report of Bangladesh Bank.

Description of senior executives and department heads

Sl. No. Name Position Date of

joining Education Department Experience

1. Dr. Arif Dowla

Chief Executive Officer

18-09-2000 Doctor of Philosophy in Mathematics

Board of Directors Director from 2000 and became Managing Director in 2005

2. Dr. F H Ansarey

Executive Director, Agribusinesses

01-03-1995 Doctor of Philosophy in Ecology

Agribusiness, Crop Care & Public Health, Cropex, Livestock & Fisheries, Fertilizer, Motors Seeds, Plastics

Working as Head of the Agri SBU from its inception


Page 61

3. Mr. M Mohibuz Zaman

Chief Operating Officer, Pharma

16-10-2003 B.Sc & MBA Pharmaceuticals Business& Export

Working as Head of ACI’s Pharmaceuticals Business which encompasses manufacturing and marketing of Pharmaceutical products and its exports

4. Mr. Syed Alamgir

Executive Director, Consumer Brands

01-01-1998 MBA

Consumer Brands, Salt, Pure Flour, Foods, Lights business

Working as Head of ACI’s Consumer Brand Business which includes manufacturing and marketing of all Consumer products under ACI’s name.

5. Mr. Muallem A Choudhury

Chief Financial Officer

01-06-2005 FCA Finance & Planning, Commercial, Income Tax

Responsible for managing entire financial matters including Commercial & Planning activities of ACI Ltd.

6. Ms. Sheema Abed Rahman

Company Secretary 04-10-1987 Post Graduate

Human Resource, Admin, Training, MIS

Sits in the board as well as responsible for HR, company secretary and distribution function of ACI Ltd.

INVOLVEMENT OF DIRECTORS AND OFFICERS IN CERTAIN LEGAL PROCEEDINGS

No director or officer of the Company was involved in any of the following types of legal proceedings in the last ten years:

(a) Any bankruptcy petition filed by or against company of which any officer or director of the issuer company filing the prospectus was a director, officer or partner at the time of the bankruptcy.

(b) Any conviction of director, officer in a criminal proceeding or any criminal proceeding pending against him.

(c) Any order, judgment or decree of any court of competent jurisdiction against any director, officer, permanently or temporarily enjoining, barring, suspending or otherwise limiting the involvement of any director or officer in any type of business, securities or banking activities.

(d) Any order of the Securities and Exchange Commission, or other regulatory authority or foreign financial

regulatory authority, suspending or otherwise limiting the involvement of any director or officer in any type of business, securities or banking activities.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transaction with related parties

Neither any proposed transaction nor had any transaction during the last two years, between the issuer and any of the following persons:

(a) Any director or executive officer of the issuer;

(b) Any director or officer;


Page 62

(c) Any person owning 5% or more of the outstanding shares of the issuer; (d) Any member of the immediate family (including spouse, parents, brothers, sisters, children, and in-laws) of any of

the above persons. (e) Any transaction or arrangement entered into by the issuer or its subsidiary for a person who is currently a director or

in any way connected with a director of either the issuer company or any of its subsidiaries/holding company or associate concerns, or who was a director or connected in any way with a director at any time during the last three years prior to the issuance of prospectus.

(f) Any loan either taken or given from or to any director or any person connected with the director, any loan taken from

any such person who did not have any stake in the issuer, its holding company or its associate concerns prior to such loan.

Directors' facilities The Directors and Chairman of Advanced Chemical Industries Limited (ACI) does not enjoy any facilities other than annual salary as under.

Serial No Name of the sponsor/ promoters Nature of Transaction Amount (Tk.)

01 Mr. M Anis Ud Dowla Remuneration 8,513,430 02 Dr. Arif Dowla Remuneration 5,210,040 03 Mrs. Sheema Abed Rahman Remuneration 2,292,557

EXECUTIVE COMPENSATION

Remuneration paid to top five salaried officers

Sl. No. Name Designation 2008 Annual Remuneration

(in Tk) 1. Mr. M Anis Ud Dowla Chairman 8,513,430

2. Dr. Arif Dowla Managing Director 5,210,040

3. Mr. M Muhibuz Zaman Chief Operating Officer, Phrama 3,535,560

4. Mr. Syed Alamgir Executive Director, Consumer Brands 3,071,880

5. Mr. Muallem A Choudhury Executive Director, Finance and Planning 2,953,890

Aggregate amount of remuneration paid to all directors & officers

Group 2008Taka

Directors’ Remuneration 13,723,470 Officers salaries, benefits & bonuses including management emoluments 430,351,850

Remuneration paid to directors who was not an officer of the company The company did not pay any remuneration to any Director who was not an officer during the last accounting year.


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Future compensation to Directors or Officers There is no contract with any director or officer for future compensation. Pay increase intention Company always reviews the individual and general price index of the country and carries out compensation survey as a regular basis. Based on the comprehensive survey and following the approval grading structure and alleging this with the Company’s affordability increment of salary is given in July every year.

OPTIONS GRANTED TO OFFICERS, DIRECTORS AND EMPLOYEES

The company has not granted any option to directors, officers or employees. TRANSACTION WITH THE DIRECTORS AND SUBSCRIBERS TO THE MEMORANDUM

(a) The Director and subscribers to the memorandum have not received any benefits except remuneration, directly or indirectly during the last five years. The issuer also has not received any assets, services or other consideration from its Directors and subscribers to the memorandum except fund against allotment of shares.

(b) No assets were acquired from the subscribers to the memorandum.

Tangible Net Assets per Share

(As per audited accounts as at 31.12.2008)

Particulars Taka Paid-up Capital 161,700,000 Share Premium 250,022,474 Capital Reserve 1,671,386 Revaluation Surplus 303,147,632 Retained Earnings 1,488,114,482 Net Asset 2,204,655,974 Less: Intangible Asset - Tangible Net Asset 2,204,655,974 Total Ordinary Share 16,170,000 Tangible Net Assets per share 136.34

OWNERSHIP OF THE COMPANY’S SECURITIES AS ON 31 DECEMBER 2008

Composition of Shareholders Sl No. Status of Shareholder No. of Shares Holding (%) 1 Directors/Sponsors 5,952,949 36.81 2 Institutions 6,059,149 37.48 3 General Shareholders 4,157,902 25.71

Total 16,170,000 100.00 List of Shareholders who owns 5% or more share of the company as on 31-12-2008

Sl. No. Name and Address No. of Shares Percentage of ownership 01 Mr. M Anis Ud Dowla 4,042462 25.00%


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02 ACI Foundation 1,334,190 8.25% 03 ICB Unit Fund 1,368,120 8.64%

Shares held by directors as on 31 December 2008

Sl. No. Name of the Directors No. of shares held % of share holding Present Position

1 Mr. M Anis Ud Dowla 4,042462 25% Chairman

2 Mrs. Najma Dowla 45,220 0.28% Director 3 Dr. Arif Dowla 185,153 1.15% Managing Director 4 Ms. Shusmita Anis Salam 1124 0.01% Director

6 Ms. Sheema Abed Rahman 8250 0.05% Director & Company Secretary

7 Mr. Syed Manzur Elahi 5850 0.04% Director Total 26.53%

Securities owned by the officers The list of employees who own shares of the company as on 31 December 2008 are as follows:

Sl. No. Name and Address Designation No. of Shares Percentage of

ownership

01 Mr. M Anis Ud Dowla Chairman 4,042462 25%

02 Dr. Arif Dowla Managing Director 185,153 1.15%

03 Ms. Sheema Abed Rahman Director & Company Secretary 8,250 0.05%

04 Mr. Towfiqur Rahman Director, Business Development 329,150 2.03%

05 Other employees as a group 688 0.004%


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Net Asset Value

Net Asset Value (NAV) per share is calculated based on book Value of Company’s net Assets. This is determined on the basis of the figures appearing in the audited balance sheet as at 31 December 2008.

Sl. No. Particulars Amount in Taka 1. Fixed assets 1,122,853,227

2. Capital work in progress 135,098,300 3. Investments 670,267,741 4. Current Assets 4,986,884,853 Total Assets (A) 6,915,104,121

1. Long term Liabilities 309,663,981 2. Current Liabilities 4,400,784,166 Total Liabilities (B) 4,710,448,147 Net Asset (A-B) 2,204,655,974 Number of Ordinary Shares 16,170,000 Net Assets Value per Share 136.34

The Net Assets Value (NAV) is also equivalent to the shareholders’ equity which is detailed below:

Sl. No. Particulars Amount in Taka 1. Paid-up Capital 161,700,000 2. Share Premium 250,022,474 3. Capital Reserve 1,671,386 4. Revaluation Surplus 303,147,632 5. Retained Earnings 1,488,114,482

Total Shareholders’ Equity 2,204,655,974 Number of Ordinary Shares 16,170,000 Net Assets Value per Share 136.34


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MARKET FOR THE SECURITIES BEING OFFERED

The issuer shall apply to the following two Stock Exchanges within 7 (seven) working days from the date of consent accorded by the SEC to issue the prospectus: Dhaka Stock Exchange Limited 9/F, Motijheel C/A, Dhaka-1000 and Chittagong Stock Exchange Limited CSE Building, 1080 Sk Mujib Road, Agrabad, Chittagong-4100

Declaration about listing of shares with the stock exchange(s) None of the stock exchanges(s), if for any reason, grants listing within 75 days from the closure of subscription, any allotment in terms of this prospectus shall be void and the company shall refund the subscription money within fifteen days from the date of refusal for listing by the stock exchanges, or from the date of expiry of the said 75 (seventy five) days, as the case may be. In case of non-refund of the subscription money within the aforesaid fifteen days, the company directors, in addition to the issuer company, shall be collectively and severally liable for refund of the subscription money, with interest at the rate of 2% (two percent) per month above the bank rate, to the subscribers concerned. The issue manager, in addition to the issuer company, shall ensure due compliance of the above mentioned conditions and submit compliance report thereon to the Commission within seven days of expiry of the aforesaid fifteen days time allowed for refund of the subscription money. Trading and settlement Trading and settlement regulation of the stock exchanges shall apply in respect of trading and settlement of the shares of the Company.

DESCRIPTION OF SECURITIES OUTSTANDING OR BEING OFFERED Dividend, voting, pre-emption rights The Share Capital of the company is divided into Ordinary Shares, carrying equal rights to vote and receive dividend in terms of the relevant provisions of the Companies Act 1994 and the Articles Association of the company. All shareholders shall have the usual voting right in person or by proxy in connection with, among others, election of Directors & Auditors and other usual agenda of General Meeting – Ordinary or Extra Ordinary. On a show of hand, every shareholder present in person and every duly authorized representative of a shareholder present at a General Meeting shall have one vote and on a poll every shareholder present or by proxy shall have one vote for every share held by him or her. In case of any additional issue of shares for raising further capital the existing shareholders shall be entitled to Right Issue of shares in terms of the guidelines issued by the SEC from time to time. Conversion and liquidation rights In terms of provisions of the Companies Act 1994, Articles of Association of the Company and other relevant rules in force, the shares of the Company are freely transferable. The Company shall not charge any fee for registering transfer of shares. No transfer shall be made to a firm, an infant or person of unsound mind.


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Dividend policy

(a) The profit of the Company, subject to any special right relating thereto created or authorized to be created by the Memorandum and subject to the provisions of the Articles of Association, shall be divisible among the members in proportion to the amount of capital paid-up on the shares held by them respectively.

(b) No large dividend shall be declared than is recommended by the Directors, but the Company in its General

Meeting may declare a smaller dividend. The declaration of Directors as to the amount of Net profit of the Company shall be conclusive.

(c) No dividend shall be payable except out of the profits of the Company or any other undistributed profits.

Dividend shall not carry interest as against the Company.

(d) The Directors may from time to time pay the members such interim dividend as in their judgment the financial position of the Company may justify.

(e) A transfer of shares shall not pass the right to any dividend declared thereon before the registration of transfer.

(f) No limitation in payment of dividend is stipulated in any debt instrument or otherwise.

Other rights of stockholders In terms of the provisions of the Companies Act 1994, Articles of Association of the Company and other relevant rules in force, the shares of the Company are transferable. The Company shall not charge any fee, other than Government duties for registering transfer of shares. No transfer shall be made to a minor or person of unsound mind. The Directors shall present the financial statements as required under the law & International Accounting Standard. Financial statements will be prepared in accordance with the International Accounting Standards as adopted in Bangladesh consistently applied throughout the subsequent periods and present with the objective of providing maximum disclosure as par law and International Accounting Standard to the shareholders regarding the financial and operational position of the company. The shareholders shall have the right to receive all periodical statement and reports, audited as well as un audited, published by the company from time to time. The shareholder holding minimum of 10% shares of paid-up capital of the company shall have the right to requisition extra ordinary General Meeting of the company as provided for the section 84 of the Companies Act 1994.

DEBT SECURITIES

The company has not issued or is planning to issue within next six month any debt security except the proposed ZCB. Description of ZCB is as follows:

GENERAL CONCEPT ON ZERO COUPON BOND

When a company, private or public Corporations or Banks (or government) wishes to borrow money from the public on a long-term basis, it usually does so by issuing or selling debt securities that is generally called bonds. A bond is normally a fixed interest-bearing debt instruments, meaning that the borrower will pay the interest on predetermined time schedules but the principal will be repaid at the end of the debt period i.e. on maturity. The amount that will be repaid at the end of the debt period is called the bond’s face value or par value. The number of years until the face value is paid is called the bond’s time to maturity. Once the bond has been issued, the number of years to maturity declines as time goes by.

Zero Coupon Bond

Zero Coupon Bond is a debt security that doesn't pay interest (a coupon) but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value. This is a type of bond that makes no coupon payments but instead is issued at a considerable discount to par value i.e bond is issued at discounted price and redeemed at face value; the difference of which is income from investment in bond. For example, incase of ACI 20% Convertible Zero Coupon Bonds with a BDT 1,000 face value and 5 years to maturity is issued at BDT 607; the investor will be paying BDT 607 today for a bond that will be worth BDT 1,000 after 5 years.


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In contrast, an investor who holds a regular coupon bearing bond receives income from coupon payments, which are usually made semi-annually. The investor also receives the principal or face value of the investment when the bond matures.

Convertible Bond

As the name implies, convertible bonds, or converts, give the holder the option to exchange the bond for a predetermined number of shares of the issuing company. When first issued, they act just like regular corporate bonds, though with a slightly lower interest rate. Because convertibles can be changed into stock and thus benefit from a rise in the price of the underlying stock, companies offer lower yields on convertibles.

Zero-Coupon Convertible Bond

A zero-coupon convertible bond is a bond that has an additional convertibility option beside all other features of a regular zero-coupon bond. Usually it is issued by a company that can be converted into that company’s common stock.

Conversion Strike Price The conversion strike price (also called the conversion ratio) determines how many shares can be converted from each bond. This can be expressed as a ratio or as the conversion strike price, and is specified in the indenture along with other features and provisions.

ACI 20% Convertible Zero-Coupon Bonds

ACI 20% Convertible Zero Coupon bonds at a glance

A. Issuer: ACI Limited B. Issue size: Tk. 1 Billion, the face value of which is Tk. 1.34 Billion C. Major features

Zero Coupons: No interest will be payable on periodical basis. Bonds will be issued at discounted value (Tk. 3,743 per lot) but will be payable at face value (Tk. 5,000 per lot). The difference between the issue price and repayment value (Tk. 1,257) will be redemption income to the bondholders.

Effective rate of return (discount rate): 10.5% pa excluding tax exemption benefits and capital gain from

conversion.

Selling units:

o Total number of bonds to be issued : 1,335,850 ( the face value of each bond is Tk. 1,000) o Total number of lots: 267,170 ( the face value of each lot is Tk. 5,000 and issue value is Tk. 3,743)

Formation of Lot: The face value of each bond will be Tk. 1,000 and five bonds will be bundled together to make a lot; that is each lot will be consisted of five bonds (five series) with five different maturity dates ranging from 1 year to 5 years.

Maturity and redemption

Five bonds in a lot will have five different maturity dates i.e. at the end of each year one bond from a lot will

mature.

At maturity of each respective bond, redemption will be made at cash to the extent of 80% and rest 20% will be converted into ordinary shares of ACI Limited. However the bondholders will have option to redeem 100 % in cash.


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The strike price to convert bonds into ordinary share will be the net asset value per share as per the last annual audited accounts + 10% premium on net asset value.

Tradability: Will be listed in the DSE and CSE and freely transferable.

Tax exemption: As per Clause 40 of the amended sixth schedule of Income Tax Ordinance No. XXXVI of 1984 published on Bangladesh Gazette Dated June 30, 2008, the redemption income to the bondholders is fully tax exempted except banks, insurance and financial institutions.

D. Bond schedule for each lot:

Redemption Series Terms Maturity

date Issue Price Face value Redemption income

∗Effective rate of return

80% Cash

20% Share

1 1 year After 1 year 905 1,000 95 10.50 800 200

2 2 year After 2 year 819 1,000 181 10.50 800 200

3 3 year After 3 year 741 1,000 259 10.51 800 200

4 4 year After 4 year 671 1,000 329 10.49 800 200

5 5 year After 5 year 607 1,000 393 10.50 800 200

Total Tk. 3,743 Tk. 5,000 Tk. 1257 10.5% 4,000 1,000 * This rate of return is excluding tax exemption benefits and capital gain from conversion.

E. The return of bondholders will be comprised of the following three components:

Redemption income; the difference between issue price and the face value. Tax exemption benefits; grossing up tax benefits. Capital gain from conversion; the difference between strike price and market price.

Details of ACI 20% Convertible Zero Coupon Bond

Bond Redemption Schedule:

ACI ZCB MATURITY SCHEDULE Assumptions Total Issue Size BDT 1,000,017,310 Discount Rate Total Face Value BDT 1,335,850,000 Year 1 10.50% Total number of unit 1,335,850 Year 2 10.50% Total number of lot 267,170 Year 3 10.51% First Maturity Year 1 Year 4 10.49% Final Maturity Year 5 Year 5 10.50%


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ZCB Maturity

(A)

Issue Price/Unit

(B)

Face Value/Unit

(C)

Unit to be Issued

(D)

Total Issue Price

(E) =(B) х (D)

Total Face Value

(F)=(C) х (D)

Gain without

Conversion (G) = (F) –

(E)

Holding Period Yield (H)=

{(F/G)^(1/A)}-1

1 year 905 1,000 267,170 241,788,850 267,170,000 25,381,150 10.50%

2 year 819 1,000 267,170 218,812,230 267,170,000 48,357,770 10.50%

3 year 741 1,000 267,170 197,972,970 267,170,000 69,197,030 10.51%

4 year 671 1,000 267,170 179,271,070 267,170,000 87,898,930 10.49%

5 year 607 1,000 267,170 162,172,190 267,170,000 104,997,810 10.50%

Total 3,743 5,000 1,335,850 1,000,017,310 1,335,850,000 335,832,690

Convertibility Option:

The investors have the option of redeeming the entire face value of the bond in cash upon maturity or can redeem 80% in

cash and convert 20% of the bond value in the common stock of the company.

Redemption procedure 1. The bondholders whose name will appear in the register at record date will be eligible to get the redemption. Record

date means the date at which a bond shall mature.

2. Bondholders who do not want to exercise the option of convertibility should communicate issuer his or her intention within 5 working days from record date i.e. the intimation not to exercise the convertibility shall reach to the Issuer by 5 working days of record date. The intimation shall reach to the issuer address i.e. Bond Department, ACI Centre, 245, Tejgaon I/A, Dhaka-1208.

3. The issuer after getting the intimation shall prepare the list of eligible bondholders who want to exercise the

convertibility option within next 5 days from the last date of intimation and shall determine the equivalent number of convertible shares within that period based on the agreed formula (striking factor).

4. If any bondholder gets fraction or odd lot number of shares, the fraction or odd lot shares shall be credited to

Suspense Account as per Rule and shall be sold by the Issuer within following 3 working days from the date of finalization of convertibility calculations.

5. The issuer shall then credit the convertible shares into the bondholders’ accounts who shall get either full lot and the

sale proceeds of fraction or odd lot shares which will be distributed within next 7 days through issuing share warrant. By Lot it is meant that the ACI lot of 50 shares

6. On the other hand, 80% of the redemption value shall be paid by the issuer through warrant within 15 days from the

record date. The bondholders who do not want to exercise the convertibility option shall get also 100% redemption value within 15 days from record date.


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Early redemption

Subject to reasonable interpretation to the bondholders, the issuer may use the option of redeeming one or more series of the bonds before the maturity at regular redemption date. The early redemption can only be exercised at any agreed redemption date. If the issuer wishes to exercise this option, the immediate past matured bond shall be redeemed as per the declared formula and next series of bonds can only be redeemed early with a premium @ 0.3% on Principal and plus accumulated interest (accrued for the rest of the bond series) at early redemption date. The early redemption value shall be paid in cash fully. However the issuer shall communicate the early redemption information to the bond holders at least 3 months before the exercise date.

Transferability

The ACI Convertible Zero coupon bond will be freely transferable from day one and the security will be traded in both the exchanges through electronic device of CDBL. Lock-In Provision As per notification SEC/CMRRCD/2009-193/Admin/03-33 dated 09 July 2009 issued by the SEC none of the placement holders will be under lock-in except sl no. 08 of individual investors being one of the sponsors of the company. Facility Arranger & Trustee

Industrial and Infrastructure Development Finance Company (IIDFC) Limited Conversion Strike Price & Method The Conversion Strike Price will be 1.1 times net asset value per share at the end of last financial year, determined through annual audited financial accounts. Investors will receive exactly the amount of shares derived by dividing Convertible Value (at the end of each maturity) by Conversion Strike Price. The formula will be as follows: Conversion Strike Price = NAV per share as per last annual audited financial statements X 1.1 Convertible Value = 20% face value of the ZCB at each maturity Convertible Value of the Bond / Conversion Strike Price Odd lot and fractional amount of shares will be paid through warrant on disposal at prevailing market price. Conversion date Conversion date will be same as the Principal Payment Date at the end of each maturity. Security Features ZCBs are without any charge creation over any fixed and floating assets of the company. The bonds will be the subordinated to the bank liabilities against parri passu sharing agreement on the hypothecated book debts and stocks of the company and a separate agreement on the plant and machinery. However, the trustee shall act for the benefit of the bondholders. To avoid any event of default, the issuer shall

o Transfer of the redemption fund to bond redemption account before 15 days of each maturity date.

o Provide post dated cheques equivalent to the total face value of the ZCBs to the trustee as security, for the benefit of the Bondholder(s).


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• RATIONALE FOR INVESTING IN ACI 20% CONVERTIBLE ZERO COUPON BOND

Zero-coupon bond is an attractive product from the viewpoint of both the investors and issuers. Some of the salient

advantages of zero-coupon bond are as follows:

1. First Ranking Claim on Shareholders

Bonds are debt, whereas stocks are equity. This is the important distinction between the two securities. By purchasing equity (stock) an investor becomes an owner in a company. Ownership comes with voting rights and the right to share in any future profits. By purchasing debt (bonds) an investor becomes a creditor to the company. The primary advantage of being a creditor is that the investor has a higher claim on assets than shareholders do: that is, in the case of bankruptcy, a bondholder will have the first charge on assets of the company (except specific charges).

2. Convertibility Option

The investor has the option to convert 20% of the bond at face value in a predetermined conversion strike price. The investor will execute the convertibility option assuming that the market value of ACI stock is higher than the conversion strike price on the conversion date.

3. Short Term Volatility of the Stock Market

Bonds are appropriate particularly when investors cannot tolerate the short-term volatility of the stock market. Bonds are perceived as more secured and stable investment as investors are assured of guaranteed return. Therefore, for a fixed income earner it is more lucrative to invest in zero-coupon bond.

4. Extra Income Potential:

It leaves the investor with the option of earning more by converting 20% of the investment into common stocks depending on the market condition. Due to high profit growth, the shares of ACI enjoys high market price.

5. Win-win situation-Tax free benefits

Government of Bangladesh is promoting the bond market as an alternate source of investment for infrastructure projects and as such tax exemption allowed to any income derived from Zero Coupon Bond received by a person other than bank, insurance or any financial institution under certain prescribed conditions. Consider the case of a corporation and other investors that invests in ACI 20% Convertible ZCB and the scenario will be as below:

Particulars Tax Rate Yield = Discount Rate of ZCB /

(1- Tax Rate)

Limited Company 37.50% 16.80%

Individuals 25.00% 14%

Banks/FIs/Insurances 45.00% 10.5% since Tax exemption not

allowed

Even if GOB changes the regulations there would be no retrospective effect on those ZCB’s issued under Clause 40 of the amended sixth schedule of Income Tax Ordinance No. XXXVI of 1984 published on Bangladesh Gazette Dated June 30, 2008. This product is a win-win situation for both the investor and the issuer. Because net return is guaranteed for the investors and on the other hand the issuer also gets fund in a competitive rate.

6. Strong Sponsors and Management Team

ACI is one of the emerging corporate houses in the country. They have a sound management structure with a proven track record. Annual turnover of ACI Limited in the year 2008 was BDT 7,365 million.


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SCENARIO ANALYSIS OF INVESTING IN ACI ZCB

SCENARIO: 1- Return without conversion

If the market price of the ACI stock is equal or less than the strike price, Investors won’t exercise the convertibility

option. In that case the return from investment will be as follows:

ZCB Maturity

Issue Price/Unit

Face Value/Unit

Redemption Income

Return

1 year 905 1,000 95 10.50%

2 year 819 1,000 181 10.50%

3 year 741 1,000 259 10.51%

4 year 671 1,000 329 10.49%

5 year 607 1,000 393 10.50%

Total 3,743 5,000 1,257 10.50% In the above example we have assumed that an investor will invest in single lot of ACI Convertible ZCB and he/she wont

exercise the convertibility option in that case the investors holding period yield will equal to the ZCB’s yield to maturity.

SCENARIO: 2- return with conversion

The bond has a convertibility option which is very much in the discretion of the potential investors. The investor will

exercise the convertibility option if the conversion strike price is lower than the prevailing market price of Ordinary

Share of ACI Limited during the conversion date.

Market Price assumption Mechanism

To forecast the market value of the ACI script, linear regression model (being conservative among…..) is used. The

dependent variable is market value and the independent variable is Net Asset Value (NAV). The regression model is:

Market Value = α + β X Net Asset Value + ε

= - 57.14 + 2.70 X Net Asset Value + 26.95

For selecting independent variable, three variables — Earning per Share (EPS), Net Asset Value (NAV), and Price Earning Ratio (P/E) — are considered. The correlation between Market Value with EPS, NAV, and P/E ratio is 0.99, 0.86, and 0.05 respectively. It shows that EPS & NAV has the strong relationship with Market Value and very weak relationship with P/E ratio. The covariance between Market Value with EPS, NAV, and P/E Ratio is 2886.35, 503.64, and 6.39 respectively. P/E ratio shows lower covariance with Market Value of ACI share scripts although both EPS and NAV shows a high covariance value. However, except NAV (t = 2.46, tcrit 2-tail = 2.57) no statistically significant relationship found with Market Value out of the three independent variable. Thus, NAV is selected as independent variable based on the result of all statistical indicators. Conversion Mechanism The Conversion Strike Price will be 1.1 times net asset value per share at the end of financial year. Investors will receive

exactly the amount of shares derived by dividing Convertible amount (at the end of each year) by Conversion Strike

Price. The formula will be as follows:


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Convertible amount of the Bond / Conversion Strike Price

Fractional amount of shares and odd lot of shares will be paid in cash at existing market price.

Year 1 Year 2 Year 3 Year 4 Year 5 Expected Net Asset Value (Previous Year) 164.8 178 197.2 225.5 266.8

Strike Price = 1.1 times NAV 181.2 195.8 217 248 293.4 Expected Market Price 415 453 510 588 702

Note: Expected net assets value is shown as per Five year’s financial projection prepared by the management of ACI

Face Value 80%- Cash 20%- Share

Expected Market

PriceExpected

NAV Strike Price

No. of Convertible

share

MV of Convertible

shares Capital gain

1 905 1,000 800 200 95 415 164.8 181.2 1.1 457.9 257.94 352.94 319.4 35.29%2 819 1,000 800 200 181 453 178 195.8 1 462.7 262.67 443.67 363.35 44.37%3 741 1,000 800 200 259 510 197.2 217 0.9 470.1 270.12 529.12 392.17 52.92%4 671 1,000 800 200 329 588 225.5 248 0.8 474.1 274.12 603.12 404.53 60.29%5 607 1,000 800 200 393 702 266.8 293.4 0.7 478.5 278.45 671.45 407.57 67.15%

Total 3,743 5,000 4,000 1,000 1,257 2,668 1,032.30 1,135.50 4.5 2,343.30 1,343.30 2,600.30 1,887.03 50.41%

Present Value of

Total Income

Expected return (%)Series Issue Price

Redemption

Redemption Income

Expected Capital gain from ConversionTotal

Income= Redemption

income + Capital gain

Considering the above analysis it revealed that the bondholder is enjoying the convertibility option because the market value of ACI stock was significantly higher than the conversion strike price on the maturity/conversion date of the bond.

Trustee

Industrial and Infrastructure Development Finance Company Limited (IIDFC) a non-banking financial institution

duly incorporated in Bangladesh under the Companies Act of 1994, having its registered office at Metropolitan

Chamber Building (6th & 7th Floor), 122-124, Motijheel C/A, Dhaka, Bangladesh, hereby declares and confirms that

it is going to act in the capacity of a trustee with the execution of this Trust Deed subject to the power, provisions,

agreements and declarations herein contained. The Trustee shall act for the benefit of the Bond Holders by ensuring

full repayment on each bond maturity.

Objects of the Trust

i) The Trust has been created with the following objects:

a. To monitor the financial position of the Issuer for the exclusive benefit of the Beneficiaries subject to the

Trustee’s obligation to safeguard the interest of the said Beneficiaries.

b. To monitor any material adverse change in the business environment that could jeopardize the interests of the

Beneficiaries.

c. To monitor Issue Proceeds Account and such other accounts as it deems necessary in the name of the Issuer with

a scheduled Bank and in respect of the amount received from the purchase of bonds.


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d. To monitor any changes in the relevant legislation that could hamper the interests of the Bondholders.

e. To take reasonable steps to ensure that the Issuer is complying with all the relevant regulatory bodies. e.g. SEC,

Bangladesh Bank, NBR.

f. To monitor and check if there is any litigation or potential threat of litigation that could adversely affect the

interests of the Beneficiaries. To monitor if there are any insolvency proceedings or a potential for such

proceedings against the Issuer that would hamper the interests of the Beneficiaries.

g. To ensure that there are no changes in the Memorandum and Articles of the Issuer Company without prior

notification to the Trustee.

h. To ensure that there are no changes in the * Sponsors share structure of the Issuer company without prior

notification to the Trustee.

i. To call any meetings of the Bondholders and to facilitate the proceedings of such meeting as it deems

appropriate in accordance to the terms set forth in Schedule A attached herewith.

j. To implement, give effect and facilitate the terms and conditions of deeds and Transaction Documents between

the Issuer and the Trustee or between the Trustee and the Bondholders.

k. To do all such other acts, deeds and things as may be necessary and incidental to the above objects unless such

acts require the prior consent of the Bondholders in accordance to the terms herein.

ii) The Trust shall not carry out any other commercial activity other than that permitted above for the Benefit of the

Bondholders.

TRUSTEE’S POWERS AND LIABILITIES

The Trustee shall be absolutely vested with the general superintendence, direction and management of the affairs of the

Trust and shall and have all powers, authorities and discretion to perform the objects of the Trust and all powers

appurtenant to or incidental to the purpose of the Trust, subject to the provisions of this Trust Deed.

Without in any way limiting the generality of the powers, authorities and discretion conferred by and referred to above,

the Trustee shall have the following powers:

(a) shall have the right to receive any information regarding the business operation of the Issuer and to seek

any information or financial statements from time to time;

(b) to collect all money due to the Trust and acknowledge and give effectual and valid receipts and

discharges for the same;

(c) to exercise all rights and remedies and take all consequential action under various agreements

pertaining to bonds;

(d) to institute, conduct, defend, compound, settle, withdraw or abandon any legal proceedings in the name

of the Trust or the Trustee and to submit any proceedings or differences for settlement by arbitration (if

required);

(e) to compromise, settle or abandon any debt or claim due to the Trust;

(f) to enter into all arrangements and contracts in relation to the objects of the Trust;

(g) to appoint brokers, advocates, auditors, solicitors, credit rating agencies, registrar, agents, valuers and

other persons for the purpose of fulfilling any of the objectives of the Trust;


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(h) to incur and pay all reasonable costs, charges and expenses incidental to the management,

administration and execution of the Trust;

(i) to sign, seal, execute, deliver and register all deeds, documents and assurances in respect of or relating

to the Trust and the due performance and execution of the purpose and objects hereof;

(j) to call for meetings in accordance to Schedule A attached hereto;

(k) generally do all acts, deeds, matters and things which are incidental or conducive to the proper exercise

of the power of the Trustee under the Trust Deed.

(l) On or before the execution date of this Deed of Trust, the Trustee is entitled to receive as security, for

the benefit of the Bondholder(s), post dated cheques the details of which are described in Schedule-C.

Duties of Trustee

(a) The Trustee shall ensure that all transactions are properly entered into in accordance with this Trust

Deed.

(b) The Trustee shall fulfill all its obligations under the agreements, deeds and writings executed or to be

executed by the Trustee in relation to the bonds

(c) The trustee shall monitor that the Issuer has maintained the Debt Service Reserve Account, which

means the account opened with a schedule bank by the issuer for building up and reserve of BDT

26,710,000 fifteen days prior to each maturity and duly made payments to the Bondholders within 15

(fifteen) business days of each maturity.

(d) The trustee shall reserve the right to notify in writing to the Issuer to make good any Events of Default

within 15 days (cure period) of its occurrence. Furthermore, if the Issuer fails to remedy any such

occurrence within the stipulated time then the Trustee shall be entitled to take legal action.

(e) Shall ensure that the Debt Service Reserve Account is established in the name of the Issuer prior to

issue of the bonds.

RIGHTS OF BONDHOLDERS

In addition to payment on the Bonds, bondholders may initiate meetings and actions to protect their interests as described

below:

Calling of Meeting

The Trustee may, at its discretion or in accordance to the terms of the Subscription Agreement or shall, on a requisition of one or more of the Bondholders holding not less than 51% of the Face Value of all the current bonds convene a meeting of the Bondholders. Provided that the Trustee shall hold such meeting at a date not more than five (5) Business Days after it receives the requisition for convening such meeting. The meeting shall be held at such location as may be determined by the Trustee.

Notice of Meetings

(a) A meeting of the Bondholders may be held by giving not less than five (5) Business Days’ notice in writing.

(b) A meeting may be called on giving shorter notice than that specified in the foregoing clause, if consent is accorded thereto by all the Bondholders holding at least 51% of the outstanding Bonds.


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(c) Every notice of a meeting shall specify the place, day and time of the meeting and shall contain a statement of the business to be transacted thereat.

Notice of every meeting shall be given:

To every registered Bondholder:

If within half an hour from the time appointed for holding a meeting for the Bondholders, a quorum is not present, the meeting, if convened on the requisition of the Bondholders, shall be dissolved but in any other case the meeting shall stand adjourned to the same day in the next week, at the same time and place or to such other day and at such other time and place as the Trustee may determine and if the adjourned meeting also a quorum is not present within half an hour from the time appointed for holding a meeting, the Bondholders present shall form a quorum.

Chairman of Meeting

a. The nominee of the Trustee shall be the Chairman of the meeting and in his absence; the Bondholders present at the meeting shall elect one of themselves to be the Chairman thereof on a show of hands.

b. If a poll is demanded on the election of the Chairman, it shall be taken forthwith by a show of hands exercising all the powers of the Chairman under the said provisions.

c. If some other person is elected Chairman as a result of the poll, he shall be Chairman for the rest of the meeting.

Other persons entitled to attend and speak

The Trustee and their legal representatives and any director or officer of the Trustee hereof and any Director and the secretary and the legal representative of the Issuer and any other person authorized in that behalf by the Trustee may attend and speak at any meeting.

Resolution

a. Any decision requiring the approval of the Bondholders shall be deemed to have been taken if Bondholders holding at least 51% of the Bonds then outstanding is present and voting at such general meeting in favor of such decision.

b. Provided that a resolution contained in one document or in several documents signed by Bondholders holding at least 51% of the Bonds then outstanding, shall be as valid and effectual as if it had been passed at a meeting of the Bondholders called and held in accordance with these provisions.

c. At any meeting a resolution put to the vote shall be decided in the first instanced on a show of hands unless (before or on the declaration of the result of the show of hands) a poll is demanded by the Chairman or by at least 51% of the Bondholders; or by a Bondholder or Bondholders of at least one tenth of the aggregate Face value of the Bonds for the time being outstanding, whichever is less, present in person or by proxy. Unless a poll is so demanded, a declaration by the Chairman that a resolution has been carried or carried by a particular majority or lost or not carried by a particular majority shall be conclusive evidence of the fact.

d. Demand for a poll may be withdrawn any time by the person or persons who made the demand.

e. The demand for a poll shall not prevent the continuance of a meeting for the transaction of any business other than the question on which a poll has been demanded.

Time of Taking Poll

a. A poll demanded on a question of adjournment shall be taken forthwith.

b. A poll demanded on any other question (not being a question relating to the election of a Chairman as provided in Clause 4 hereof) shall be taken at such time not being later than forty eight (48) hours from the time when the demand was made, as the Chairman may direct.


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Votes

a. At every such meeting each Bondholder present in person or by proxy shall on a show of hands, be entitled to one vote only. In the case of an equality of votes, whether on a show of hands or on a poll, the Chairman of the meeting at which the show of hands takes place or at which the poll is demanded shall have a casting vote in addition to any vote or votes which he may be entitled as a Bondholder or a Proxy.

Adjournment of Meetings

The Chairman may with the consent of any meeting at which quorum is present adjourn the same from time to time and from place to place but no business shall be transacted at any adjourned meeting other than the business left unfinished at the meeting from which the adjournment took place.

Power of Meeting of Bondholders

a. Without prejudice to any of the powers conferred upon the Trustee under any of the provisions of the Trust Deed, a meeting of the Bondholders shall, inter alia, have the following powers exercisable in the manner hereinafter specified in Clause 11 hereof:

i) Power to sanction any compromise or arrangement proposed to be made between the Issuer and the Bondholders.

ii) Power to assent to any modifications of provisions of the Trust Deed which shall be proposed or agreed to by the Trustee and to authorize the Trustee to concur in and execute a supplemental trust deed or deeds embodying any such modification.

iii) Power to remove the existing Trustee and to appoint new Trustee. Mode of exercise of powers set out in foregoing Clause 10.

i) The powers set out in Clause 11 hereof shall be exercisable by a special resolution passed at a meeting of the Bondholders duly convened and held in accordance with the provisions herein contained and carried by a majority consisting of not less than 75% of the Bondholders voting thereat upon a show of hands or if a poll is duly demanded, by votes consisting of not less than three fourths in value of the votes given on such poll in accordance with the provisions of Clause 9 hereof, such resolution is hereinafter called “Special Resolution”.

ii) A meeting of the Bondholders may be held by giving not less than twenty-one (21) Business Days’ notice in writing.

Quorum for passing Special Resolution

The Quorum for any meeting convened for the purpose of passing a special resolution shall be Bondholders holding a clear majority in value of the Bonds (51%) issued then outstanding present in person or by proxy.

Resolution binding on all Bondholders

A resolution special or otherwise passed at a meeting of the Bondholders duly convened and held in accordance with these presents shall be binding upon all the Bondholders whether present or not present at such meeting and each of the Bondholder and the Trustee shall be bound to give effect thereto accordingly.

EVENTS of DEFAULT

Not limited to the following, events of default will take place if any one of the following occurs:

1. if the Issuer fails to pay any sum due from it hereunder on the due date or on demand, if so payable;

2. if the Issuer ceases to carry on its business without prior notification to the Trustee;

3. if the Issuer changes Memorandum and/or Articles of Association without prior notification to the Trustee;


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4. if the Issuer utilizes any portion of the money raised through the issuance of the bonds for purpose other

than those for which the same are issued;

5. if a court order is made or special resolution is passed for winding up the Issuer company;

6. if the Issuer restricts the trustee to observe/perform its duties as stipulated in this agreement;

7. If the combined total of the issuer’s bank loan and bond’s outstanding balance is more than the value of the

chargeable assets of the issuer.

In case of default in payment by ACI the bondholders may initiate actions to protect their interest as described under

“Rights of bondholders “ in this prospectus.

Transferability

The Bond will have to be listed with the Stock Exchanges after obtaining necessary permission from the SEC and will be freely transferable like the existing shares being traded in the stock market through electronic device of CDBL. Moreover, Advanced Chemical Industries Limited (ACI) will meet all the conditions to get the ZCB listed with the Stock Exchanges. It may be mentioned here that Shares of Advanced Chemical Industries Limited (ACI) are already listed with Dhaka Stock Exchange and Chittagong Stock Exchange. Applications for the listing of the Bonds (ZCB) in both DSE and CSE shall be made upon consent of the Commission.

REFUND OF SUBSCRIPTION MONEY

In the case of non-allotment of securities, if the applicants’ bank accounts as mentioned in their RPO Application Forms are maintained with any of the Bankers to the Issuer and other banks as mentioned below, refund amount of those applicants will be directly credited to the respective bank account as mentioned in their RPO Application Forms.

Trust Bank Limited Standard Bank Limited Mutual Trust Bank Limited Eastern Bank limited Bank Asia Limited The City Bank Limited ICB One Bank Limited

Otherwise, refund will be made only through “Account Payee” cheque (s) with bank account number and name of bank & branch as mentioned in the application payable at Dhaka or Chittagong, as the case may be. For this purpose the number of the bank account along with name of bank and branch shall be clearly indicated in the securities application form.

SUBSCRIPTION BY AND REFUND TO NON-RESIDENT BANGLADESHI (NRB) 1. A Non-Resident Bangladeshi shall apply either directly by enclosing a foreign demand draft drawn on a bank payable

at Dhaka, or through a nominee by paying out of foreign currency deposit account maintained in Bangladesh or in Taka, supported by foreign currency encashment certificate issued by the concerned bank, for the value of securities applied for through crossed bank cheque marking “Account Payee only”.

2. The value of securities applied for by such person may be paid in Taka or US dollar or UK pound sterling or EURO

at the rate of exchange mentioned in the securities application form. 3. Refund against oversubscription shall be made in the currency in which the value of securities was paid for by the

applicant through Account Payee bank cheque payable at Dhaka with bank account number, Bank’s name and Branch as indicated in the securities application form. If the applicants’ bank accounts as mentioned in their RPO Application Forms are maintained with the Bankers to the Issue and other banks as mentioned above under “Refund of Subscription Money”, refund amount of those applicants will be directly credited into the respective bank accounts as mentioned in their RPO Application Forms.


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AVAILABILITY OF SECURITIES

The Offer 1. Bonds Particulars No. of Bonds Amount (Tk.)

A. 10% of RPO of Bonds shall be reserved for Non Resident Bangladeshis 53,434 53,434,000

B. 10% of RPO of Bonds shall be reserved for Mutual funds and Collective Investment schemes registered with the Commission 53,434 53,434,000

C. Remaining 80% of RPO of Bonds shall be opened for subscription by The General Public. 427,472 427,472,000

Total 534,340 534,340,000

2. All securities as stated in sub -rule (1) shall be offered for subscription and subsequent allotment by the issuer,

subject to any restriction which may be imposed, from time to time, by the SEC. 3. In case of over-subscription under any of the categories mentioned in sub-rule (1), the issue manager shall conduct an

open lottery of all applications received under each category separately in accordance with the letter of consent issued by the SEC.

4. In case of under subscription under any of the 10% categories mentioned in sub-rule (1), the un-subscribed portion

shall be added to the general public category and, if after such addition, there is over-subscription in the general public category, the issuer and the issue manager shall jointly conduct an open lottery of all the applicants added together.

5. In case of under subscription of the public offering, the un-subscribed portion of securities shall be taken up by the

underwriters. 6. The lottery as stated in sub-rule (3) and (4) shall be conducted in presence of representatives from the issuer, the

stock exchanges, and the applicants, if there be any. Application for subscription 1. Application for bonds shall be made for a minimum lot for 5 Zero Coupon Bonds to the value of Tk. 3,743/- and

should be made on the ACI’s Printed Application forms. Application Forms and Prospectus may be obtained from the Dhaka Office of the Company, members of the Dhaka Stock Exchange Ltd. and/ or Chittagong Stock Exchange Limited or from the bankers to the Issue. In case adequate forms are not available, applicants may use photocopied / cyclostyled / hand written/typed copies of the forms. Applications must not be for less than 5 Zero Coupon Bonds. Any application not meeting this criterion will not be considered for allotment purpose.

2. Joint application form for more than two persons will not be accepted. In the case of joint application each party must

sign the application form. 3. Application must be in full name of individuals or limited companies or trusts or societies and not in the name of

firms, minors or persons of unsound mind. Applications from insurance, financial and market intermediary companies must be accompanied by Memorandum and Articles of Association.

4. An applicant cannot submit more than two applications, one in his own name and another jointly with another

person which is applicable for both Non-Resident Bangladeshi (NRB) as well as other than Non-Resident Bangladeshi Applicants. In case, an applicant makes more than two applications, those in excess of two applications shall not be considered for allotment purpose.

5. Bangladeshi Nationals (including non-resident Bangladeshi Nationals residing abroad) and Foreign Nationals shall be

entitled to apply for bonds.


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6. Payment for subscription by investors other than Non -Resident Bangladeshi may be made to the said branches/office of the banks mentioned below in Cash/Cheque/Pay Order/Bank Draft. The Cheque/Pay Order/Bank Draft shall be made payable to the bank to which it is sent and be marked “Advanced Chemical industries Limited (ACI) .” and shall bear the crossing “A/C Payee Only” and must be drawn on a bank in the same town of the bank to which application form is deposited.

7. All completed application forms, together with remittances for the full amount payable on application, shall be

lodged by investors other than non-resident Bangladeshis with any of the branches of the Bankers’ to the Issue. 8. A Non-Resident Bangladeshi (NRB) shall apply against the IPO either directly by enclosing a foreign demand draft

drawn on a bank payable at Dhaka, or through a nominee (including a Bank or a Company) by paying out of foreign currency deposit account maintained in Bangladesh, for the value of securities applied for. The value of securities applied for may be paid in Taka, US Dollar or Euro or UK Pound Sterling at the Spot Buying (TT Clean) rate of exchange prevailing on the date of opening of subscription. Refund against over-subscription of bonds shall be made in the currency in which the value of bonds applied for was paid by the applicant. Bond Application Form against the quota for NRB shall be sent by the applicant directly along with a draft or cheque to Advanced Chemical Industries Limited at its corporate office. Copies of application Form and Prospectus shall be available with Bangladesh Embassy/High Commission in USA, UK, Saudi Arabia, U.A.E., Qatar, Kuwait, Oman, Bahrain, Malaysia and South Korea and web site of the SEC, Issuer Company, Issue manager, DSE and CSE.

9. The RPO subscription money collected from investors (other than Non-resident Bangladeshis) by the Bankers’ to the

Issue will be deposited to Eastern bank limited, Principal Branch, Account No: 01011230000042 with Advanced Chemical industries Limited (ACI), for this purpose.

10. The subscription money collected from Non-resident Bangladeshis in US Dollar or UK Pound Sterling or EURO

shall be deposited to the following FC accounts:

Sl No. Name of the FC Accounts Account No. Bank & Branch Currency 1 Advanced Chemical Industries Limited 01013050004413 Eastern Bank Limited,

Principal Branch US Dollar

2 -do- 01013060000248 -do- GBP 3 -do- 01013070000127 -do- EURO

In the case of over-subscription of securities to the NRB applicants, refund shall be made by Advanced Chemical Industries Limited out of the “FC Account for RPO”. Advanced Chemical Industries Limited has already opened the aforesaid FC Accounts and shall close these FC Accounts after refund of over-subscription, if any. An applicant cannot submit more than two applications, one in his/her own name and another jointly with another person. In case an applicant makes more than two applications, all applications will be treated as invalid and will not be considered for allotment purpose. In addition, whole or part of application money may be forfeited by the Commission.

APPLICATIONS NOT IN CONFORMITY WITH THE ABOVE REQUIREMENTS AND THE INSTRUCTIONS PRINTED ON THE APPLICATION FORM ARE LIABLE TO BE REJECTED.

Allotment The company shall issue bond allotment letters to all successful applicants within 6 (six) weeks from the date of the subscription closing date. At the same time, the unsuccessful applicants shall be refunded with the application money within 6 (six) weeks from the closing of the subscription date by Account Payee Cheque/credit to the applicants bank account without interest payable at Dhaka/Chittagong/Khulna/Rajshahi/Barisal/Sylhet, as the case may be. A compliance report shall be submitted with the Commission within 7(seven) weeks from the date of closure of subscription.


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Underwriting of Bonds

Total size of the ZCB is BDT 1,335,850,000 in face value of which BDT 801,510,000 being 60% of the total issue has already been subscribed through private placement as per consent of the SEC.

Sl. No. Name of address of underwriters Number of Lots underwritten

Issue Price Amount(TK.)

Face Value Amount(TK.)

1 Bangladesh Mutual Securities Limited Sharif Mansion (7th floor), 56-57 Motijheel C/A,Dhaka-1000

18,410 68,908,630 92,050,000

2 Mercantile Securities Limited Paramount Heights 65/2/1 Box Culvert Road, Purana Paltan, Dhaka-1000

4,000 14,972,000 20,000,000

3 Bay Leasing & Investment Limited Printers Building (7th floor) 5, Rajuk Avenue, Motijheel C/A, Dhaka-1000

26,716 99,997,988 133,580,000

4 Union Capital Limited Noor Tower (5th floor), 73, Sonargaon Road, Dhaka-1205

8,014 29,996,402 40,070,000

5 BANCO Trans world (BD) Limited Ispahani Building (3rd floor) 14-15 Motijheel C/A, Dhaka-1000

6,400 23,955,200 32,000,000

6 AB Bank Limited BCIC Bhaban, 30-31 Dilkusha C/A, Dhaka-1000 13,358 49,998,994 66,790,000

7 Trust Bank Limited Peoples Insurance Bhaban, 36, Dilkusha C/A, Dhaka- 1000

8,306 31,089,358 41,530,000

8 Lanka Bangla Finance Limited Safura Tower, Level 11, 20, Kemal Ataturk Avenue Banani, Dhaka-1213

8,306 31,089,358 41,530,000

9 Standard Bank Limited Metropolitan Chamber Building (3rd floor),122-124 Motijheel C/A, Dhaka-1000

13,358 49,998,994 66,790,000

Total 106,868 400,006,924 534,340,000 Principal terms and conditions of underwriting agreement 1. If and to the extent that the bonds offered to the public by a Prospectus authorized hereunder shall not have been

subscribed and paid for in cash in full by the closing date, the Company shall within 10 (ten) days of the closure of subscription call upon the underwriter in writing with a copy of said writing to the Securities and Exchange Commission, to subscribe for the bonds not subscribed by the closing date and to pay for in cash in full for such unsubscribed bonds within 15(fifteen) days of the date of said notice and the said amount shall have to be credited into bonds subscription account within the said period.

2. If payment is made by Cheque/Bank Draft by an underwriter it will be deemed that the underwriter has not fulfilled

his obligation towards his underwriting commitment under the Agreement, until such time as the Cheque/Bank Draft has been en-cashed and the Company’s account credited.

3. In any case within 7 (seven) days after the expiry of the aforesaid 15(fifteen) days, the Company shall send proof of

subscription and payment by the underwriter to the Commission. 4. In the case of failure by the underwriter to pay for the bonds under the terms mentioned above, the said Underwriter

will not be eligible to underwrite any issue, until such time as he fulfils his underwriting commitment under the Agreement and also other penalties as may be determined by the Commission may be imposed on him.

5. In case of failure by any underwriter to pay for the bonds within the stipulated time, the Company/Issuer will be

under no obligation to pay any underwriting commission under the Agreement.


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6. In case of failure by the Company to call upon the underwriter for the aforementioned purpose within the stipulated time, the Company and its Directors shall individually and collectively be held responsible for the consequence and/or penalties as determined by the Securities and Exchange Commission under the law as may be imposed on them.

Underwriter’s right to represent in the Board of Directors of the Company The Underwriters shall not have any right to have any representatives in the Company’s Board of Directors. Commission for Underwriters The Company shall pay to the underwriters an underwriting commission at the rate of 0.4% of whole Public Offering amount (i.e Tk. 534,340,000) of the issue value of ZCB.

Right of Underwriters on Company’s Board

Underwriters have not acquired any right to have their representatives in the Board of Directors of the Company.

Officer or director of the underwriters acting as director of the company

No officer or director of the underwriters acting as director of the company.

THE ISSUE SHALL BE PLACED IN “N’’ CATEGORY

MATERIAL CONTRACTS

1 Underwriting Agreement between the Bank and the Underwriters. 2 Issue Management Agreement between the Company and Alliance Financial Services Limited (AFSL) 3 Agreement between the Company and the Central Depository Bangladesh Ltd. (CDBL). 4 Trust Deed between the Company and Industrial & Infrastructure Development Finance Co. Ltd (IIDFC) Copies of the aforementioned contracts and documents and a copy of Memorandum and Articles of Association of the Company and the Consent Order from the Securities and Exchange Commission may be inspected on any working day during office hours at the Office of the Company and the manager to the issue.


Alliance Financial Services Limited Rahman Chamber (3rd Floor) 12-13 Motijheel C/A, Dhaka-1000 is the Manager to the Issue. The Issue Manager will get Tk. 2,000,000/-as issue management fee. COMMISSION TO THE BANKER TO THE ISSUE

Commission at the rate of 0.1% of the amount collected will be paid to the Bankers to the Issue for the services to be rendered by them.

CORPORATE DIRECTORY

Miscellaneous Information:

Registered Office ACI Centre 245 Tajgaon Industrial Area Dhaka-1208, Bangladesh Auditors Rahman Rahman Huq Chartered Accountants Manager to the Issue

Alliance Financial Services Limited

Company Secretary Ms. Sheema Abed Rahman


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AUDITOR’S REPORT

Auditors’ Report to

the shareholders of


We have audited the accompanying balance sheet of Advanced Chemical Industries Limited (the "Company") as at 31 December 2008 and the related profit and loss account, cash flow statement and statement of changes in equity for the year then ended and a summary of significant accounting policies and other explanatory notes. We have also audited the attached consolidated balance sheet, profit and loss account, cash flow statement, statement of changes in equity and a summary of significant accounting policies and other explanatory notes of Advanced Chemical Industries Limited and its subsidiaries as at 31 December 2008. The financial statements of 9 subsidiaries disclosed in note 11.1 to the financial statements, are not audited by us. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

Scope We conducted our audit in accordance with Bangladesh Standards on Auditing. These standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

The financial statements of the Company's 9 subsidiaries disclosed in note 11.1 to the financial statements, reflect total assets of Tk 2,572,008,162 as at 31 December 2008 and total revenue Tk 2,880,268,796 for the year then ended. These financial statements have been audited by other auditors whose reports have been furnished to us and our opinion, in so far as it relates to the amounts included in respect of the Company's 9 subsidiaries, is based solely on the reports of the other auditors.

Opinion In our opinion, the financial statements of the Company along with the notes thereon and the consolidated financial statements, drawn up on the consideration of the separate audit reports of the subsidiaries as at 31 December 2008, prepared in accordance with Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS), give a true and fair view of the state of the Company’s affairs and of its subsidiaries, and of the results of their operations and cash flows for the year then ended and comply with the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations.

We also report that: a)

we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof;

b)

in our opinion, proper books of account as required by law have been kept by the Companies so far as it appeared from our examination of these books;

c) the balance sheets and profit and loss accounts dealt with by the report are in agreement with the books of accounts; and

d) the expenditure incurred were for the purposes of the Companies’ businesses.

Rahman Rahman Huq Dhaka, 28 April 2009 Chartered Accountants


Page 85


Balance Sheet as at 31 December 2008

2008 2007 Assets Notes Taka Taka (Restated) Property, plant and equipment: 4 At cost/revaluation 1,675,193,452 1,327,151,308 Accumulated depreciation (552,340,225) (467,726,369) 1,122,853,227 859,424,939 Capital work-in-progress 5 135,098,300 213,870,224 1,257,951,527 1,073,295,163 Investments 6 670,267,741 536,629,241 Total non-current assets 1,928,219,268 1,609,924,404 Inventory 7 2,085,053,250 1,091,397,629 Trade debtors 8 1,304,815,553 898,891,044 Other debtors 9 81,605,053 136,565,703 Advances, deposits and prepayments 10 245,796,966 179,761,041 Advance income tax 177,028,869 205,661,524 Inter-company receivables 11 862,058,775 551,416,377 Cash and bank balance 12 211,924,637 57,195,473 Assets classified as held for sale 13 18,601,750 - Total current assets 4,986,884,853 3,120,888,791 Total assets 6,915,104,121 4,730,813,195 Equity Share capital 14 161,700,000 161,700,000 Share premium 15 250,022,474 250,022,474 Capital reserve 16 1,671,386 1,671,386 Revaluation surplus 16.2 303,147,632 294,901,646 Retained earnings 1,488,114,482 546,739,197 Total equity 2,204,655,974 1,255,034,703 Liability Long term liabilities 17 309,663,981 342,231,018 Total non-current liabilities 309,663,981 342,231,018 Bank overdraft 18 732,188,602 271,195,982 Short term bank loan 19 1,816,568,620 1,142,396,717 Long term bank loan- current portion 20 104,776,269 62,504,602 Trade creditors 325,560,055 132,277,207 Other creditors 21 469,811,403 478,332,706 Inter-company liabilities 22 709,609,851 758,658,669 Obligation under finance lease- current portion 17.2 5,718,892 10,220,408 Provision for taxation 23 236,550,474 277,961,183 Total current liabilities 4,400,784,166 3,133,547,474 Total liabilities 4,710,448,147 3,475,778,492 Total equity and liabilities 6,915,104,121 4,730,813,195 The annexed notes 1 to 38 form an integral part of these financial statements. _______Sd/-______ ______Sd/-____ _______Sd/-____ Managing Director Director Company Secretary As per our report of same date ____________Sd/-________

Dhaka, 28 April 2009 Auditors


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Advanced Chemical Industries Limited Profit and Loss Account

for the year ended 31 December 2008 2008 2007 Notes Taka Taka (Restated)

Revenue 24 7,365,103,541 4,917,304,331 Cost of sales 25 (5,087,311,724) (3,250,711,677) Gross profit 2,277,791,817 1,666,592,654 Administrative, selling and distribution expenses 26 (1,629,967,083) (1,240,364,781) Operating profit 647,824,734 426,227,873 Other income 27 58,209,036 23,346,716 Profit from sale of shares 28 779,634,140 118,818,000 1,485,667,910 568,392,589 Financing cost 29 (280,811,155) (119,087,159) 1,204,856,755 449,305,430 Provision for contribution to WPPF (21,261,132) (22,728,564) Profit before tax 1,183,595,623 426,576,866 Income tax expenses Current tax expenses 23 (98,683,532) (124,518,213) Deferred tax income/(expenses) 30 (9,245,208) 5,710,733 (107,928,740) (118,807,480) Net profit after tax 1,075,666,883 307,769,386

Earnings per share Basic earnings per share 31.1 66.52 19.03

The annexed notes 1 to 38 form an integral part of these financial statements.

_______ Sd/-________ ____ Sd/-___ ___________Sd/-__________ Managing Director Director Company Secretary

As per our report of same date. Sd/- Auditors

Dhaka, 28 April 2009

Advanced Chemical Industries Limited Statement of Changes in Equity

for the year ended 31 December 2008 Share Share Capital Revaluation Retained

Particulars capital premium reserve surplus earnings Total Taka Taka Taka Taka Taka Taka

Balance as at 1 January 2007-reported

161,700,000

250,022,474

1,671,386

216,135,224

344,542,827

974,071,911

Adjustments for paid annual leave

(11,795,488)

(11,795,488)

Balance as at 1 January 2007-restated

161,700,000

250,022,474

1,671,386

216,135,224

332,747,339

962,276,423

Net profit after tax *

-

-

-

-

307,769,386

307,769,386

Revaluation surplus (net of deferred tax)

-

-

-

81,036,152

-

81,036,152

Realization of revaluation reserve

-

-

-

(2,269,730)

3,242,472

972,742

Dividend

-

-

-

-

(97,020,000)

(97,020,000)

Balance as at 31 December 2007

161,700,000

250,022,474

1,671,386

294,901,646

546,739,197

1,255,034,703

Net profit after tax

-

-

-

-

1,075,666,883

1,075,666,883

Deferred tax due to change in tax rate

-

-

-

10,532,202

-

10,532,202

Realization of revaluation reserve

-

-

-

(2,286,216)

3,153,402

867,186

Dividend

-

-

-

-

(137,445,000)

(137,445,000)

Balance as at 31 December 2008

161,700,000

250,022,474

1,671,386

303,147,632

1,488,114,482

2,204,655,974 * In 2008, the company rectified an earlier error with respect to paid annual leave for which the corresponding balances in the financial statements had been restated as per Bangladesh Accounting Standards 8: Accounting Policies, changes in Accounting Estimates. The effect of restatement has been reported as adjustments for paid annual leave in the statement of changes in equity. ** Reported profit after tax in 2007 was Tk 313,035,231which has been restated during this year by an amount of Tk 5,265,845 for provision of paid annual leave.


Cash Flow Statement for the year ended 31 December 2008

2008 2007 Note Taka Taka

A) Cash flow from operating activities Cash receipts from customers 7,639,454,724 4,908,736,690 Cash receipts from other income 61,681,506 21,223,737 Receipts from/(payments to) other debtors 50,838,352 (69,587,526) 7,751,974,582 4,860,372,901 Cash paid for: Purchase of inventory (5,752,551,464) (3,460,939,880) Operating expenses (1,593,931,585) (1,085,495,897) Other creditors (28,452,240) 40,737,264 Advances, deposits and prepayments (89,296,633) (35,593,801) Value added tax (VAT) (730,631,148) (539,079,179) Workers' profit participation fund 1,924,708 (10,793,892) (8,192,938,362) (5,091,165,385) Cash generated from operations (440,963,780) (230,792,484) Financing cost (280,811,155) (119,319,310) Income tax paid (111,461,586) (133,260,448) (392,272,741) (252,579,758) Net cash used in operating activities (833,236,521) (483,372,242) B) Cash flow from investing activities Purchase of property, plant and equipment (63,264,697) (33,053,436) Payments for capital work in progress (225,710,412) (266,499,330) Investment in shares (178,576,000) (108,531,000) Sale proceeds from property, plant and equipment 1,631,300 2,595,400 Sales of shares of subsidiaries 805,969,890 119,538,000 Net cash from (used in) investing activities 340,050,081 (285,950,366) C) Cash flow from financing activities Inter-company debts (paid)/received (349,990,479) 137,916,229 Dividend paid (134,219,424) (95,201,895) Payment for finance lease (10,220,406) (14,387,713) Short term loan (paid)/received 716,443,570 506,402,344 Long term loan (paid)/ received (35,090,276) 104,298,644 Net cash from financing activities 186,922,985 639,027,609 D) Net increase in cash and cash equivalent (A+B+C) (306,263,455) (130,294,999) E) Cash and cash equivalent at 1 January (214,000,509) (83,705,510) F) Cash and cash equivalent at 31 December (D+E) 12 (520,263,964) (214,000,509)


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Consolidated Balance Sheet as at 31 December 2008

2008 2007Assets Notes Taka Taka Property, plant and equipment 4 (a) At cost / revaluation 3,822,413,578 2,610,354,214 Accumulated depreciation (846,901,870) (660,423,664) 2,975,511,708 1,949,930,550 Capital work-in-progress 5 (a) 264,954,252 567,484,589 Intangible assets 5(b) 108,283,142 104,677,902 Investment 6 (a) 134,462,220 62,045,192Total non -current assets 3,483,211,322 2,684,138,233 Inventories 7 (a) 3,144,253,361 1,583,048,365 Trade debtors 8 (a) 1,874,694,143 907,118,206 Other debtors 9 (a) 83,780,504 144,476,543 Advance, deposits and prepayments 10 (a) 357,873,991 248,197,121 Advance income tax 218,770,050 234,733,841 Inter-company receivables 11 (a) 12,959,132 27,552,426 Cash and bank balance 12 (a) 233,787,128 82,609,212Total current assets 5,926,118,309 3,227,735,714Total assets 9,409,329,631 5,911,873,947Equity Share capital 161,700,000 161,700,000 Share premium 250,022,474 250,022,474 Capital reserve 1,671,386 1,671,386 Revaluation surplus 16.2 (a) 597,276,040 600,284,264 Retained profit 1,493,311,739 693,691,029Total equity attributable to equity holders of the company 2,503,981,639 1,707,369,153 Minority interest 308,046,695 92,764,072Total equity 2,812,028,334 1,800,133,225Liabilities Long term liabilities 17 (a) 625,749,542 629,798,677Total non-current liabilities 625,749,542 629,798,677 Bank overdraft 18 (a) 1,209,590,748 314,191,451 Short term bank loan 19 (a) 2,870,816,761 1,915,031,415 Long term bank loan- Current portion 20 (a) 232,920,021 154,804,698 Trade creditors 473,108,340 152,025,307 Other creditors 21 (a) 840,292,792 607,422,628 Current portion of lease obligation 5,718,892 10,220,408 Provision for tax 23 (a) 339,104,201 328,246,138Total current liabilities 5,971,551,755 3,481,942,045Total liabilities 6,597,301,297 4,111,740,722Total equity and liabilities 9,409,329,631 5,911,873,947

The annexed notes 1 to 38 form an integral part of these financial statements. ______ Sd/-______ ____ Sd/-____ _______ Sd/-_______ Managing Director Director Company Secretary As per our report of same date. ___________ Sd/-__________ Dhaka, 28 April 2009 Auditors


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Advanced Chemical Industries Limited Consolidated Profit and Loss Account for the year ended 31 December 2008

2008 2007 Notes Taka Taka

Revenue 24(a) 10,341,425,084 5,756,817,829Cost of sales 25(a) (7,289,427,526) (3,749,131,735)Gross Profit 3,051,997,558 2,007,686,094Administration, selling and distribution expenses 26(a) (2,104,511,818) (1,397,956,550) 947,485,740 609,729,544Other income 27(a) 68,088,797 83,171,466Result from operating activities 1,015,574,537 692,901,010Profit from sale of shares 28(a) 639,297,191 86,181,149

Share of profit of equity accounted investees (898,972) (3,831,367) 1,653,972,756 775,250,792Financing cost 29(a) (523,780,506) (220,521,137) 1,130,192,250 554,729,655Provision for contribution to WPPF (35,542,999) (28,671,365)

Profit before income tax 1,094,649,251 526,058,290Income tax expense Current tax expenses (194,579,195) (177,604,949)Deferred tax income 32,839,852 15,711,125

Profit after tax 932,909,908 364,164,466

Attributable to:

Equity holders of the company 917,905,438 341,808,528

Minority interest 15,004,470 22,355,938

Profit after tax 932,909,908 364,164,466

Earnings per share Basic earnings per share 31.2 56.77 21.14

The annexed notes 1 to 38 form an integral part of these financial statements.

___________ Sd/-_____________ Managing Director

______ Sd/_______ Director

________ Sd/-______Company Secretary

As per our report of same date.

___________ Sd/-__________ Dhaka, 28 April 2009 Auditors


Consolidated Statement of Changes in Equity for the year ended 31 December 2008

Share Share Capital Special Revaluation Tax holiday Retained Minority

Particulars capital premium reserve reserve reserve reserve earnings Total interest Total Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka Balance at 1 January 2007- reported 161,700,000 250,022,4741,788,902 129,634 273,096,825 34,470,939 411,422,336 1,132,631,110 79,745,885 1,212,376,995

Adjustment for deferred tax assets - - - - - - 10,464,913 10,464,913 2,951,642 13,416,555 Adjustment for preliminary expenses of ACI Salt Ltd. - - - - - - 850,179 850,179 (850,179) - Adjustment for paid annual leave - - - - - - (11,795,488) (11,795,488) - (11,795,488)

Balance at 1 January 2007- restated 161,700,000 250,022,4741,788,902 129,634 273,096,825 34,470,939 410,941,940 1,132,150,714 81,847,348 1,213,998,062 Net profit after tax - - - - - - 341,808,528 341,808,528 22,355,938 364,164,466 Transferred to tax holiday reserve - - - - - 982,003 (982,003) - - - Transferred from tax holiday reserve no longer required - - - - - (35,452,942) 35,452,942 - - Dividends - - - - - - (97,020,000) (97,020,000) (1,920,000) (98,940,000) Realization of revaluation surplus - - - - (2,269,730) - 3,242,472 972,742 - 972,742 Post acquisition reserve transferred to retained earnings - - (117,516) (129,634) - - 247,150 - - - Revaluation reserve created during the year - - - - 329,457,169 - - 329,457,169 - 329,457,169 Sale of share of ACI Trading - - - - - - - - (22,237,900) (22,237,900)

Deferred tax adjustment for ACI Salt Limited - - - - - - - - 2,067,686 2,067,686

Capital paid by minority - - - - - - - - 10,651,000 10,651,000

Balance at 31 December 2007 161,700,000 250,022,4741,671,386 - 600,284,264 - 693,691,029 1,707,369,153 92,764,072 1,800,133,225

Net profit after tax - - - - - - 917,905,438 917,905,438 15,004,469 932,909,907

Dividend paid - - - - - - (137,445,000) (137,445,000) - (137,445,000)

Realization of revaluation surplus - - (2,286,216) - 3,153,402 867,186 - 867,186

Post acquisition reserve transferred to retained earnings - - - - (16,006,870) - 16,006,870 - - -

Deferred tax adjustment for change in tax rate - - - - 19,646,058 - - 19,646,058 1,365,454 21,011,512

Revaluation reserve created during the year - - - - (4,361,196) - - (4,361,196) (4,361,196)

Adjustment for sale of share of ACI Formulation Ltd. - - - - - - - - 166,672,699 166,672,699

Capital paid by minority - - - - - - - - 32,240,000 32,240,000 Balance at 31 December 2008 161,700,000 250,022,4741,671,386 - 597,276,040 - 1,493,311,7392,503,981,639 308,046,695 2,812,028,334


Consolidated Cash Flow Statement for the year ended 31 December 2008

2008 2007 Notes Taka Taka A Cash flow from operating activities Cash received from customers 10,058,175,379 5,720,898,542 Cash received as other income 71,561,267 38,198,506 Receipts from (payments to) other debtors 50,207,086 (69,587,526) 10,179,943,732 5,689,509,522 Cash paid for: Inventories (8,242,282,517) (3,902,876,736) Operating expenses (2,022,002,520) (1,247,587,544) Other creditors 117,027,730 40,104,658 Advances, deposits and prepayments (124,625,657) (33,923,599) Value added tax (VAT) (738,374,482) (539,079,179) Paid to workers from WPPF 1,924,708 (10,793,892) (11,008,332,738) (5,694,156,292) Cash generated from operations (828,389,006) (4,646,770) Financing cost (518,576,586) (216,045,054) Income tax paid (167,261,741) (191,344,829) (685,838,327) (407,389,883) Net cash used in operating activities (1,514,227,333) (412,036,653)B Cash flow from investing activities Purchase of fixed assets (407,950,013) (173,030,461) Payments for capital work in progress (521,283,902) (676,386,404) Investment in shares (73,316,000) (37,200,000) Sale proceeds of fixed assets 1,631,300 2,882,090 Proceeds from sale of shares of subsidiary 805,969,890 121,992,778 Proceeds from sale of investment in shares- Mutual Trust Bank - 52,763,741 Net cash used in investing activities (194,948,725) (708,978,256) C Cash flow from financing activities Paid to minority interest - (1,920,000) Inter-company debts received/(paid) (2,738,155) 15,994,477 Dividend paid (134,219,424) (95,201,895) Short term loan received/(paid) 973,119,339 844,932,351 Long term loan received/(paid) 106,773,324 248,618,953 Issue of shares 32,240,000 10,651,000 Repayment of lease obligation (10,220,406) (15,001,038) Net cash from financing activities 964,954,678 1,008,073,848 D Net decrease in cash and cash equivalent (A+B+C) (744,221,380) (112,941,061)E Cash and cash equivalent 1 January (231,582,239) (118,641,178)F Cash and cash equivalent at 31 December (D+E) 12 (a) (975,803,619) (231,582,239)


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Notes to the financial statements as at and for the year ended 31 December 2008

1. Reporting entity

Advanced Chemical Industries Limited (ACI Limited) is a public limited company which was incorporated on 24January 1973 as ICI Bangladesh Manufacturers Limited. The address of the Company's registered office is 245-Tejgoan Industrial Area, Dhaka-1208. The principal activities of the company are to manufacture pharmaceuticals,consumer brands, public health and animal health products and to market them along with agrochemicals, seeds andother consumer brand items.

The company is listed with Dhaka Stock Exchange Limited (DSE) and Chittagong Stock Exchange Limited (CSE). 1.1 Description of subsidiaries 1.1.1 ACI Formulations Limited

The company was incorporated on 29 October 1995 as a private limited company under the Companies Act 1994.The principal activities of the company are manufacturing and marketing of a number of agrochemical andconsumer products. Most of its sales for the current year are to Advanced Chemical Industries Limited (ACILimited), which is responsible for marketing these products. The company became publicly listed company through direct listing process effective from 18 November with Dhaka and Chittagong Stock Exchange. 1.1.2 ACI Salt Limited The company was incorporated on 13 June 2004 as a private limited company under the Companies Act 1994. The principal activity of the Company is manufacturing and marketing of edible branded salt.

1.1.3 ACI Foods Limited The company was incorporated on 14 September 2006 as a private limited company under the Companies Act1994. The main objectives of the company are manufacturing, processing and marketing of different food itemsincluding spices and different snacks items. The company went into commercial production at the beginning of the current year.

1.1.4 ACI Pure Flour Limited The company was incorporated on 29 August 2006 as a private limited company under the Companies Act 1994.The main objectives of the company are to carry on the business of milling processing, packaging and marketing of wheat flour products. The company has commenced its commercial operation in this year.

1.1.5 Apex Leather Craft Limited The company was incorporated on 22 May 1990 as a private limited company under the Companies Act 1994.There was no business activity of the company other than letting out its property to ACI Limited. 1.1.6 Flyban Insecticides Limited

The company was incorporated on 5 October 1991 as a private limited company under the Companies Act 1994.The Company's main function was to manufacture and sale of mosquito coil. There was no business operation of the company during the year under review.


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1.1.7 ACI Agrochemicals Limited The company was incorporated on 4 July 2006 as a private limited company under the Companies Act 1994. Themain objectives of the company are to carry on the business of manufacturing, formulating and packaging ofpesticide, fertilizer, plant nutrient and animal food and other nutrient products. The company is yet to start itscommercial operation. 1.1.8 ACI Motors Limited The company was incorporated on 11 December 2007 as a private limited company under the Companies Act 1994.The main objectives of the company are to carry on the business of buying, selling, importing and assembling ofvehicles for both agricultural and non-agricultural use including other agricultural equipment and supplying of spareparts and providing service facilities for these vehicles and equipment. The company has commenced itscommercial operation in this year.

1.1.9 Creative Communications Limited

The company was incorporated on 2 September 2007 as a private limited company under the Companies Act 1994.The principal activities of the company are managing media solutions and similar services for different clientsincluding television commercials and other advertisement and promotion related activities. The company hascommenced its commercial operation in this year. 1.1.10 Premiaflex Plastics Limited

The company was incorporated on 11 June 2007 as a private limited company under the Companies Act 1994. Themain objectives of the company are to carry out the business of manufacturing and marketing of plastic products,flexible printing and other ancillary business associated with plastic and flexible printing . The company hascommenced its commercial production from 1 December 2008. 1.1.11 ACI Logistics Limited The company was incorporated on 29th April 2008 as a private limited company under the Companies Act 1994.The main objective of the company is to set-up nationwide retail outlets across the country linking ACI's strongpresence in the agriculture sector. 2. Basis of preparation 2.1 Statement of compliance

The financial statements have been prepared in accordance with Bangladesh Accounting Standards(BASs)/Bangladesh Financial Reporting Standards (BFRSs), Companies Act 1994, the Securities and ExchangeRules 1987 and other applicable laws and regulations. 2.2 Other regulatory compliances The Companies are also required to comply with the following major legal provisions in addition to the Companies Act 1994, the Securities and Exchange Rules 1987 , and other applicable laws and regulations:

The Income Tax Ordinance 1984 The Income Tax Rules 1984 The Value Added Tax Act 1991 The Value Added Tax Rules 1991 2.3 Date of authorization The Board of Directors has authorized the financial statements on 16 April 2009 for public issue.


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2.4 Basis of measurement The financial statements have been prepared on historical cost basis except for certain assets which are stated at revalued amount. 2.5 Functional and presentational currency These financial statements are prepared in Bangladesh Taka (Taka/Tk) currency, which is the company's functionalcurrency. 2.6 Use of estimates and judgment

The preparation of these financial statements is in conformity with BASs/BFRSs which requires management tomake judgments, estimates and assumptions that affect the application of accounting policies and the reportedamounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an on going basis. Revisions to accounting estimates arerecognized in the period in which the estimates are revised and in any future periods affected thereby.

In particular, information about significant areas of estimation uncertainty and critical judgments in applyingaccounting policies that have the most significant affect on the amounts recognized in the financial statements are included in the following notes: Note 7 – Inventory Valuation Note 8 – bad debt provision Note 17 – measurement of liability for staff gratuity Note 21 – other creditors Note 23 – provision for taxation Note 17.1 – deferred tax liabilities Note 17.2 – lease classification Note 37.2 – contingent liability 2.7 Reporting period The financial period of the companies other than the following two associates namely Stochastic Logic Limited and Asian Consumer Care Limited covers one year from 1 January to 31 December and is followed consistently.

Stochastic Logic Limited From 1 August to 31 July Asian Consumer Care Limited From 1 April to 31 March The figures involved in the aforesaid two associated companies up to 31 December 2008 from the end of their accounting years are considered to be immaterial to these financial statements. 3. Significant accounting policies The accounting policies set out below have been applied consistently (otherwise as stated) to all periods presentedin these financial statements.


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3.1 Basis of consolidation 3.1.1 Subsidiaries

Subsidiaries are entities controlled by ACI Limited. Control exists when ACI Limited has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that it ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by ACI Limited. 3.1.2 Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealized gains arising from transactions with associates are eliminated against the investment to the extent of ACI Limited's interest in the investee. Unrealized losses, if any, are eliminated in the same way as unrealized gains, but only to the extent there is no evidence of impairment 3.2 Property, plant and equipment 3.2.1 Recognition and measurement Items of property, plant and equipment are measured at cost or revaluation less accumulated depreciation less impairment loss, if any. The items of property, plant and equipment were revalued in the year 2004 and 2007 by a firm of professional valuers on the basis of open market value. Capital work in progress represents the cost incurred for acquisition and/or construction of items of property, plant and equipment that were not ready for use at the end of 2008 and these are stated at cost.

Cost includes expenditure that is directly attributable to the acquisition of asset. The cost of self constructed asset includes the cost of material and direct labor, any other costs directly attributable to bringing the assets to a working condition for their intended use, and the costs of dismantling and removing the items and restoring the site on which they are located.

When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of the property, plant and equipment disposed off and are recognized net with "other income" in profit or loss account. When revalued assets are sold, the amounts included in the revaluation surplus reserve are transferred to retained earnings.


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3.2.2 Subsequent costs

The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the company and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognized in the profit and loss account as incurred. 3.2.3 Depreciation

All items of property, plant and equipment have been depreciated on straight line basis. Depreciation on additions are charged at 50% of normal rates only in the year of acquisition and no depreciation is charged in the year of disposal. Depreciation is charged at the rates varying from 2.5% to 20% depending on the estimated useful lives of assets. No depreciation is charged for land and capital work in progress. The revalued items of property, plant and equipment are depreciated by writing off their revalued amount at the date of revaluation over their remaining estimated useful lives. The estimated useful lives for the current and comparative periods are as follows: Building 40 years Plant and machinery 10 years Furniture and fixture 10 years Electrical and other office appliances 10 years Office machinery 10 years Vehicles 5 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date. No revisions in respect of items of property, plant and equipment were made in 2008. 3.2.4 Impairment

The carrying amount of the entity's non financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is re-estimated. However, no such conditions that might be suggestive of a heightened risk of impairment of assets existed at the reporting date. 3.3 Intangible asset 3.3.1 Goodwill Goodwill represents the excess of the cost of the acquisition over the Group's interest in the net value of the identifiable assets and liabilities of the acquiree on the date of acquisition.


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Subsequent measurement Goodwill is measured at cost less accumulated impairment losses. 3.3.2 Software’s Software’s that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortization and accumulated impairment losses.

Subsequent expenditure Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific assets to which it relates. All other expenditure is recognized in profit and loss as incurred.

3.3.3 Amortization Amortization is recognized in the profit or loss on a straight line basis over the estimated useful lives of intangible assets other than goodwill. Amortization on additions are charged at 50% of normal rates only in the year of acquisition. Amortization is charged at the rates of 10% depending on the estimated useful lives of assets.

The estimated useful life for the current intangible asset is as follows:

Software Useful life Normal rate 10 years 10 percent 3.4 Non-current assets held for sale

Non-current assets that are expected to be recovered primarily through sale rather than through retaining as investment are classified as held for sale. Immediately before classification as held for sale, the assets are measured in accordance with the Group's accounting policy. Such assets are measured at the lower of their carrying amount and fair value less cost to sell.

3.5 Leased assets

3.5.1 Finance lease

Leases in terms of which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.


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Depreciation

Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term. Depreciation is charged at the rate of 20% p.a.

Lease payments Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

3.5.2 Operating lease

Payments made under operating leases are recognized in profit and loss account on a straight line basis over the term of the lease. 3.6 Inventories Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the weighted average principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operation capacity.

Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

Stock- in-transit represents the cost incurred up to the date of the balance sheet for the items that were not received till to the date of balance sheet. Inventory losses and abnormal losses are recognized as expenses.

3.7 Trade and other receivables

Trade and other receivables are initially recognized at cost which is the fair value of the consideration given in return. After initial recognition these are carried at cost less impairment losses due to uncollectibility of any amount so recognized. 3.8 Advances, deposits and prepayments

Advances are initially measured at cost. After initial recognition advances are carried at cost less deductions, adjustments or charges to other account heads such as property, plant and equipment, inventory or expenses. Deposits are measured at payment value. Prepayments are initially measured at cost. After initial recognition prepayments are carried at cost less charges to profit and loss account.


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3.9 Cash and cash equivalent Cash and cash equivalent include cash in hand, cash at banks which are held and available for use by the Company without any restriction. 3.10 Provision

A provision is recognized in the balance sheet when the Company has a legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. 3.11 Contingencies Contingencies arising from claims, litigations, assessments, fines, penalties, etc. are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. 3.12 Income tax expenses

Income tax expense comprises current and deferred tax. Income tax expense is recognized in the profit or loss account except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity. 3.12.1 Current tax Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years. The applicable tax rate for the company is 27.5%. As the company qualifies as a "publicly traded company" it is entitled to a 10% rebate if dividend declared is more than 20% of the paid up capital. Provision for taxation has been made on the basis of the Finance Ordinance 2008.

3.12.2 Deferred tax

Deferred tax is recognized using the balance sheet method. Deferred tax arises due to temporary difference deductible or taxable for the events or transactions recognized in the income statement. A temporary difference is the difference between the tax base of an asset or liability and its carrying amount/reported amount in the balance sheet. Deferred tax asset or liability is the amount of income tax recoverable or payable in future period's recognized in the current period. The deferred tax asset /income or liability/expense does not create a legal liability/recoverability to and from the income tax authority. Deferred tax also arises due to revaluation of property, plant and equipment. The resulting impact of deferred tax assets/liabilities on revaluation reserve is included in the statement of changes in equity. 3.13 Investment in shares In the separate financial statements of the company, all investments are carried at costs.


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In the Consolidated Financial Statements of Advanced Chemical Industries Limited, following valuation principles have been used:

Investments in subsidiaries - Investment in subsidiaries has been accounted for as per BFRS-3 ' Business Combination'. The investment is eliminated in full against the equity of acquiree measured at fair value at the date of acquisition.

Long term investments - These are valued at cost or revalued amounts when there is a decline in value which is not temporary. This is as per BAS 25: Accounting for Investment, applicable for periods upto those ending before 31 December 2008.

Associates and joint ventures - Associates are those entities in which the ACI Limited has significant influence, but not control, over the financial and operating policies. Joint ventures are those entities over whose activities ACI Limited has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. Associates and joint ventures are accounted for using the equity method (equity accounted invitees). The consolidated financial statements include the ACI Limited's share of the income and expenses of equity accounted invested, after adjustments to align the accounting policies with those of the ACI Limited, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. This is in consistent with BAS 28:Investments in Associates and BAS 31: Interests in Joint Ventures. 3.14 Foreign currency transactions

Foreign currency transactions are translated at rates ruling on the dates advices were received. Monetary assets and liabilities denominated in foreign currencies at reporting date are reconverted at rates ruling at the balance sheet date. All exchange differences are charged/credited to profit and loss account by being absorbed in the respective head of income or expenditure. 3.15 Revenue recognition 3.15.1 Revenue arising from sale of goods a) Goods sold

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is recognized when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. b) Cash on delivery sales Revenue is recognized when delivery is made and cash is received by the seller.


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3.15.2 Revenue arising from services

Revenue from services rendered is recognized in profit or loss account in proportion to the stage of completion of the transaction at the reporting date. The stage of completion is assessed by reference to surveys of work performed. 3.15.3 Revenue arising from commission When the Group acts in the capacity of an agent rather than as the principal in a transaction, the revenue is recognized in the net amount of commission made by the Group. 3.15.4 Interest income

Finance income comprises of interest income of fund invested. Interest income is recognized on accrual basis. 3.15.5 Dividend income Dividend income is recognized when right to receive payment of such dividend is established. 3.16 Borrowing costs

Finance expenses comprise interest expense on bank loan, finance lease and other borrowings. All borrowing costs are recognized in the profit and loss account using effective interest method. 3.17 Cash flow statement Cash flow from operating activities have been presented under direct method. 3.18 Workers' profit participation fund The company had created a fund for workers as 'Workers' Profit Participation Fund' and 5% of the profit before charging such expense has been transferred to this fund. 3.19 Employment benefit

The company operates an unfunded gratuity scheme, provision in respect of which is made annually covering all its permanent eligible employees. This scheme is qualified as a defined benefits scheme. There are two recognized provident funds for all employees of the company. These are also qualify as defined contribution scheme. The company also has a group insurance policy for all management staff. Actuarial valuation of gratuity scheme was last made in 2006 to assess the adequacy of the liabilities provided for the schemes as per BAS 19: Employee Benefits. 3.19.1 Defined contribution plan (provident fund) Defined contribution plan is a post employment benefit plan under which the company provides benefits to one or


Page 103

more employees. The recognized Employees' Provident Fund is being considered as defined contribution plan as it meets the recognition criteria specified for this purpose. All permanent employees contribute 10% of their basic salary to the Provident Fund and the Company also makes equal contribution.

The company recognizes contribution to defined contribution plan as an expense when an employee has rendered services in exchange for those contribution. The legal and constructive obligation is limited to the amount it agrees to contribute to the fund. 3.19.2 Defined benefit plan (gratuity)

Defined benefit plan is a retirement benefit plan under which amounts to be paid as retirement benefits are determined by reference to employees' earnings and/or year of services. The recognized Employees' Gratuity Fund is being considered as defined benefit plan as it meets the recognition criteria. The company's obligation is to provide the agreed benefits to current employees as per condition of the fund.

Present value of defined benefit obligation and the fair value of the plan assets were determined by professional actuary. Projected Unit Credit method is used to measure the present value of defined benefit obligations and related current and past service cost and mutually compatible actuarial assumptions about demographic and financial variables were used. The difference between fair value of the plan assets and present value of obligation is recognizedas a liability or an asset in the balance sheet.

The rate used to discount post employment benefit obligations is determined by reference to the rate stated in the actuarial report. The expected return on plan assets is based on market expectation and is one of the component of expenses recognized in the profit and loss account. Total expenses recognized in the profit and loss account comprise of current service cost, interest cost, expected return on plan assets. 3.19.3Leave encashment The company makes provision for annual leave encashment based on latest basic salary as allowed by the Company policy.

3.19.3 Short-term benefit

Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. 3.20 Earnings per share The Company and the Group (which is made up ACI Limited and its subsidiaries and associates) present its basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company/Group by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss account attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential


Page 104

ordinary shares, if any. This has been shown on the face of profit and loss account and computation of EPS is stated in note 31.

3.21 Segment reporting

A segment is a distinguishable component of the Company that is engaged either in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. The Company's primary format for segment is based on business segments. Segment information is presented only on the basis of the consolidated financial statements. 3.22 New standards and interpretations yet to be applicable

A number of new standards, amendments to standards and interpretations are not yet effective for the year ended 31 December 2008 and have not been applied in preparing these financial statements. Bangladesh Financial Reporting Standards (BFRS )-3 'Business Combinations'

Revised BFRS 3, which becomes mandatory for the Group's 2010 consolidated financial statements, will be applied prospectively and therefore there will be no impact on prior periods in the Group's 2010 consolidated financial statements. Bangladesh Financial Reporting Standards (BFRS)-7 'Financial Instruments Disclosures'

BFRS 7 is effective from 2010.The Company will disclose information about financial assets and financial liabilities in the 2010 financial statements. Bangladesh Financial Reporting Standards (BFRS)-8 'Operating Segments'

BFRS-8 'Operating Segments' introduces the "management approach" to segment reporting. BFRS-8 which becomes mandatory for the company's 2010 financial statements, will require a change in the presentation and disclosure of segment information based on the internal reports regularly reviewed by the ACI Group's chief operating decision maker in order to assess each segment's performance and to allocate resources to them. Bangladesh Accounting Standards (BAS)-32'Financial Instruments: Presentation' and Bangladesh Accounting Standards (BAS)-39 'Financial Instruments: Recognition and Measurements'

BAS 32 and 39 are effective from January 2010, which require to adopt policy and disclosure for financial assets and financial liabilities.

4. Property, plant and equipment

a) Own assets

i) Cost

Cost Depreciation

Particulars As at

1 January 2008

Additions during the

year

Transferred from CWIP

Disposal during the

year

Adjustment during the

year

As at 31 December

2008 Rate

As at 1 January

2008

Charged during the

year

Disposal during the

year


year

As at 31

December 2008

Written down value as at

31 December 2008

Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka Land 46,318,282 - - - - 46,318,282 - - - - - 46,318,282 Building 143,065,832 - 12,811,049 - - 155,876,881 2.5% 21,534,881 3,736,784 - - 25,271,665 130,605,216 Plant and machinery 435,101,146 2,210,134 291,671,287 (1,019,925) (150,000) 727,812,642 10.0% 213,804,885 46,373,286 (486,859) (37,500) 259,653,812 468,158,830

Furniture and fixture 43,380,122 16,377,300 - - (3,500) 59,753,922 10.0% 25,955,279 4,888,292 - (175) 30,843,396 28,910,526

Electrical and other appliances 48,032,874 10,884,593 - - - 58,917,467 10.0% 30,533,747 4,251,775 - - 34,785,522 24,131,945

Office machinery 41,342,842 6,289,507 - - (442,600) 47,189,749 10.0% 23,395,903 3,880,356 - (22,130) 27,254,129 19,935,620 Vehicles 104,124,365 27,503,163 - (2,061,759) (12,873,703) 116,692,066 20.0% 77,108,298 8,748,189 (1,988,750) (4,332,432) 79,535,305 37,156,761

Total (i) 861,365,463 63,264,697 304,482,336 (3,081,684) (13,469,803) 1,212,561,009 392,332,993 71,878,682 (2,475,609) (4,392,237) 457,343,829 755,217,180


Page 106

ii) Revaluation Revaluation Depreciation

Particulars As at

1 January 2008


year


Disposal during the

year


year

As at 31 December

2008 Rate

As at 1 January

2008

Charged during the

year

Disposal during the

year


year

As at 31

December 2008


31 December 2008

Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka Land 284,047,862 - - - - 284,047,862 - - - - - 284,047,862 Building 39,764,561 - - - - 39,764,561 2.5% 8,806,636 994,114 - - 9,800,750 29,963,811 Plant and machinery 70,435,559 - - (7,271) - 70,428,288 10.0% 24,652,715 7,042,829 (2,545) - 31,692,999 38,735,289 Furniture and fixture (703,383) - - - - (703,383) 10.0% (246,183) (70,338) - - (316,521) (386,862) Electrical and other appliances

(1,572,866) - - - - (1,572,866) 10.0% (550,505) (157,287) - - (707,792) (865,074)

Office machinery 1,350,619 - - - - 1,350,619 10.0% 472,714 135,061 - - 607,775 742,844 Vehicles 25,714,964 - - (1,068,897) (2,077,234) 22,568,833 20.0% 18,000,474 4,513,767 (748,225) (1,454,063) 20,311,953 2,256,880 Total (ii) 419,037,316 - - (1,076,168) (2,077,234) 415,883,914 51,135,851 12,458,146 (750,770) (1,454,063) 61,389,164 354,494,750 Total assets (i+ii) 1,280,402,779 63,264,697 304,482,336 (4,157,852) (15,547,037) 1,628,444,923 443,468,844 84,336,828 (3,226,379) (5,846,300) 518,732,993 1,109,711,930 b) Leased assets Vehicles 46,748,529 - - - - 46,748,529 20.0% 24,257,525 9,349,707 - - 33,607,232 13,141,297 Total 2008 (a+b) 1,327,151,308 63,264,697 304,482,336 (4,157,852) (15,547,037) 1,675,193,452 467,726,369 93,686,535 (3,226,379) (5,846,300) 552,340,225 1,122,853,227


Page 107

Property, plant and equipment-comparative-2007 a) Own assets i) Cost

Cost Depreciation

Written down value

as at 31

December 2007

Particulars

As at 1 January

2007


year

Transferre

d from CWIP

Disposal during the

year


year

As at 31 December

2007 Rate

As at 1 January

2007

Charged during the

year

Disposal during the

year

Adjustment

during the year

As at 31 December

2007

Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka

Land

46,318,282

-

-

- -

46,318,282

-

-

-

-

-

46,318,282

Building

133,829,992

-

9,235,840

- -

143,065,832 2.5%

18,073,683

3,461,198

-

-

21,534,881

121,530,951 Plant and machinery

357,955,773

1,064,994

76,080,379

- -

435,101,146 10.0%

184,768,238

29,036,647

-

-

213,804,885

221,296,261

Furniture and fixture

38,439,592

2,554,527

2,386,003

- -

43,380,122 10.0%

22,054,259

3,901,020

-

-

25,955,279

17,424,843

Electrical and other appliances

44,948,846

1,152,850

1,931,178

- -

48,032,874 10.0%

26,942,707

3,591,040

-

-

30,533,747

17,499,127

Office machinery

34,749,698

6,593,144

-

- -

41,342,842 10.0%

19,793,071

3,602,832

-

-

23,395,903

17,946,939

Vehicles

73,704,425

21,687,921

-

(5,552,591)

14,284,610

104,124,365 20.0%

63,851,902

6,441,034

(5,541,778)

12,357,140

77,108,298

27,016,067

Total (i)

729,946,608

33,053,436

89,633,400

(5,552,591)

14,284,610

861,365,463

335,483,860

50,033,771

(5,541,778)

12,357,140

392,332,993

469,032,470


Page 108

ii) Revaluation

Revaluation Depreciation


31 December 2007

Particulars As at 1 January 2007


year

Transferre

d from CWIP

Disposal during the

year


year

As at 31 December

2007 Rate

As at 1 January

2007

Charged during the

year

Disposal during the

year


year

As at 31

December 2007


Land

168,547,862

115,500,000

-

- -

284,047,862

-

-

- -

-

284,047,862

Building

39,473,129

291,432

-

- -

39,764,561 2.5%

7,819,808

986,828

- -

8,806,636

30,957,925 Plant and machinery

70,435,559

-

-

- -

70,435,559 10.0%

17,609,159

7,043,556

- -

24,652,715

45,782,844


(703,383)

-

-

- -

(703,383) 10.0%

(175,845)

(70,338)

- -

(246,183)

(457,200)

Electrical and other appliances

(1,572,866)

-

-

- -

(1,572,866) 10.0%

(393,218)

(157,287)

- -

(550,505)

(1,022,361)

Office machinery

1,350,619

-

-

- -

1,350,619 10.0%

337,653

135,061

- -

472,714

877,905

Vehicles

28,957,436

-

-

(3,242,472) -

25,714,964 20.0%

14,478,714

5,142,996

(1,621,236) -

18,000,474

7,714,490

Total (ii)

306,488,356

115,791,432

-

(3,242,472) -

419,037,316

39,676,271

13,080,816

(1,621,236) -

51,135,851

367,901,465 Total assets (i+ii)

1,036,434,964

148,844,868

89,633,400

(8,795,063)

14,284,610

1,280,402,779

b) Leased assets

Vehicles

57,755,139

3,278,000

-

-

(14,284,610)

46,748,529

24,735,836

11,878,829

-

(12,357,140)

24,257,525

22,491,004 Total 2007 (a+b)

1,094,190,103

152,122,868

89,633,400

(8,795,063) -

1,327,151,308

399,895,967

74,993,416

(7,163,014) -

467,726,369

859,424,939


Page 109

4 (a) Consolidated property plant and equipment a) Freehold assets i) Cost

Cost Depreciation

Particulars At 1 January 2008


year


Disposal during the

year


year

As at 31 December

2008 Rate At 1 January

2008

Charged during the

year

Disposal during the

year


year

As at 31 December

2008

Written down value as

at 31 December

2008


Land

205,109,868

22,496,472

33,667,678

-

-

261,274,018

-

-

-

-

-

261,274,018

Building

513,140,440

46,189,887

131,825,621

-

144,478

691,300,426 2.5%

58,664,220

15,829,922

-

-

74,494,142

616,806,284

Plant &Machinery

830,393,874

188,648,825

647,291,040

(1,019,925)

1,509,318

1,666,823,132 10.0%

336,667,645

114,396,404

(486,859)

(37,500)

450,539,690

1,216,283,442

Furniture & Fixtures

54,297,248

57,994,041

26,484

-

485,217

112,802,990 10.0%

29,969,943

10,309,336

-

(175)

40,279,104

72,523,886 Electric & other appliances

76,379,911

26,606,341

10,907,786

-

(2,292,513)

111,601,525 10.0%

36,861,900

8,907,284

-

-

45,769,184

65,832,341

Office Machinery& Equip.

53,743,924

23,457,047

95,630

-

(442,600)

76,854,001 10.0%

27,739,618

7,081,121

-

(22,130)

34,798,609

42,055,392

Vehicles

113,514,551

42,557,401

-

(2,061,759)

(11,097,078)

142,913,115 20.0%

81,712,572

11,466,241

(1,988,750)

(2,733,469)

88,456,594

54,456,521

Total (i)

1,846,579,816

407,950,013

823,814,240

(3,081,684)

(11,693,178)

3,063,569,207

568,794,805

167,990,308

(2,475,609)

(2,793,274)

734,337,323

2,329,231,884


Page 110

ii) Revaluation




year


Disposal during the

year


year

As at 31 December


2008

Charged during the

year

Disposal during the

year


year

At 31 December

2008

Written down value as at 31

December 2008


Land

524,624,489

-

-

-

524,624,489

-

-

-

-

524,624,489

Building

56,637,466

-

-

-

56,637,466 2.5%

7,402,570

2,438,319

-

9,840,889

46,796,577

Plant &Machinery

102,436,037

-

-

(7,271)

102,428,766 10.0%

35,728,959

10,249,876

(2,545)

45,976,290

56,452,476 Furniture & Fixtures

2,241,373

-

-

-

2,241,373 10.0%

248,116

423,502

-

671,618

1,569,755

Electric & other appliances

1,059,947

-

-

-

1,059,947 10.0%

264,187

59,550

-

323,737

736,210


1,350,619

-

-

-

1,350,619 10.0%

596,366

288,986

-

885,352

465,267

Vehicles

26,899,313

-

-

(1,068,897)

(2,077,234)

23,753,182 20.0%

18,711,080

4,750,637

(748,225)

(1,454,063)

21,259,429

2,493,753

Total (ii)

715,249,244

-

-

(1,076,168)

(2,077,234)

712,095,842

62,951,278

18,210,870

(750,770)

(1,454,063)

78,957,315

633,138,527 Total assets ( i + ii )

2,561,829,060

407,950,013

823,814,240

(4,157,852)

(13,770,412)

3,775,665,049

-

631,746,083

181,671,301

(3,226,379)

(4,247,337)

813,294,638

2,962,370,411

b) Leased assets

Vehicle 48,525,154

-

-

-

(1,776,625)

46,748,529 20%

25,856,488

9,349,707

-

(1,598,963)

33,607,232

13,141,297

Total 2008 ( a +b ) 2,610,354,214

407,950,013

823,814,240

(4,157,852)

(15,547,037)

3,822,413,578

657,602,571

191,021,008

(3,226,379)

(5,846,300)

846,901,870

2,975,511,708


Page 111

Consolidated property plant and equipment-comparative-2007 a) Freehold assets

i) Cost

Cost Depreciation



year


Disposal during the

year

Adjustment

during the year

As at 31 December


2007

Charged during the

year

Disposal during the

year

Adjustment

during the year

As at 31 December

2007

Written down value as at 31

December 2007


Land

161,171,953

35,799,260

8,228,203

(89,548)

-

205,109,868

-

-

-

-

-

205,109,868

Building

426,086,148

46,998,045

40,340,724

(284,477)

-

513,140,440 2.5%

48,762,187

10,089,691

(187,658)

-

58,664,220

454,476,220 Plant &Machinery

697,798,818

42,286,787

90,308,269

-

-

830,393,874 10.0%

274,353,628

62,314,017

-

-

336,667,645

493,726,229


50,386,917

2,975,333

2,582,326

(1,647,328)

-

54,297,248 10.0%

25,659,511

5,399,610

(1,089,178)

-

29,969,943

24,327,305


59,380,247

11,834,607

5,371,117

(206,060)

-

76,379,911 10.0%

31,029,431

5,935,860

(103,391)

-

36,861,900

39,518,011


46,077,449

8,617,298

1,141,640

(2,092,463)

-

53,743,924 10.0%

23,761,366

4,951,654

(973,402)

-

27,739,618

26,004,306

Vehicles

85,343,356

24,519,131

283,020

(10,915,566)

14,284,610

113,514,551 20.0%

69,594,765

7,603,778

(7,843,111)

12,357,140

81,712,572

31,801,979

Total (i)

1,526,244,888

173,030,461

148,255,299

(15,235,442)

1,846,579,816

473,160,888

96,294,610

(10,196,740)

12,357,140

571,615,898

1,274,963,918


Page 112

ii) Revaluation




year


Disposal during the

year


year

As at 31 December 2007 Rate At 1 January

2007

Charged during the

year

Disposal during the

year


year

At 31 December

2007

Written down value as

at 31 December

2007


Land

188,738,635

335,885,854

-

-

524,624,489

-

-

-

-

524,624,489

Building

29,133,832

27,503,634

-

-

56,637,466 2.5%

6,166,860

1,235,710

-

7,402,570

49,234,896 Plant &Machinery

102,436,037

-

-

-

102,436,037 10.0%

25,528,839

10,200,120

-

35,728,959

66,707,078


(828,336)

3,069,709

-

-

2,241,373 10.0%

330,949

(82,833)

-

248,116

1,993,257


(1,232,747)

2,292,694

-

-

1,059,947 10.0%

387,462

(123,275)

-

264,187

795,760


1,350,619

-

-

-

1,350,619 10.0%

417,821

178,545

-

596,366

754,253

Vehicles

30,141,785

-

-

(3,242,472)

26,899,313 20.0%

14,952,455

5,379,861

(1,621,236)

18,711,080

8,188,233

Total (ii)

349,739,825

368,751,891

-

(3,242,472)

715,249,244

47,784,386

16,788,128

(1,621,236)

-

62,951,278

652,297,966 Total assets ( i + ii )

1,875,984,713

541,782,352

148,255,299

(18,477,914)

-

2,561,829,060

-

520,945,274

113,082,738

(11,817,976)

12,357,140

634,567,176

1,927,261,884

b) Leased assets

Vehicle

62,131,764

3,278,000

-

(2,600,000)

(14,284,610)

48,525,154 20%

26,239,474

12,585,154

(611,000)

(12,357,140)

25,856,488

22,668,666 Total 2007 ( a +b )

1,938,116,477

545,060,352

148,255,299

(21,077,914)

(14,284,610)

2,610,354,214

547,184,748

125,667,892

(12,428,976)

-

660,423,664

1,949,930,550

5. Capital work-in-progress-2008

Additions Transferred

Balance as at during to fixed Balance as at

1 January

2008 the year assets 31 December

2008

Taka Taka Taka Taka

Building

28,207,698

16,022,988

12,811,049

31,419,637

Plant and machinery

185,662,526

207,284,164

291,671,287

101,275,403


-

755,430 -

755,430 Electrical and other office appliances

-

1,647,830 -

1,647,830

213,870,224

225,710,412

304,482,336

135,098,300

Capital work-in-progress-comparative -2007

Building

7,503,608

29,939,930

9,235,840

28,207,698

Plant and machinery

29,477,404

232,265,501

76,080,379

185,662,526


23,282

2,362,721

2,386,003 - Electrical and other office appliances

-

1,931,178

1,931,178 -

37,004,294

266,499,330

89,633,400

213,870,224

5 (a) Consolidated Capital work-in-progress-2008

Land

308,658

34,605,195

33,667,678

1,246,175

Building

78,010,642

101,722,221

131,825,621

47,907,242

Plant and machinery

486,102,013

374,544,573

647,291,040

213,355,546

Furniture & fixture

21,882

800,032

26,484

795,430

Pantoon and gangway

2,648,109

323,840

2,971,949 - Electrical and other office appliances

393,285

9,192,411

7,935,837

1,649,859

Office machinery

-

95,630

95,630 -

Vehicles

-

- - -

567,484,589

521,283,902 823,814,239 264,954,252

Consolidated capital work-in-progress-comparative-2007

Land

-

8,536,861

8,228,203

308,658

Building

8,214,858

110,136,508

40,340,724

78,010,642

Plant and machinery

31,115,344

545,294,938

90,308,269

486,102,013

Furniture & fixture

23,282

2,580,926

2,582,326

21,882

Pantoon and gangway

-

2,648,109 -

2,648,109 Electrical and other office appliances

-

5,764,402

5,371,117

393,285


Page 114

Office machinery

-

1,141,640

1,141,640 -

Vehicles

-

283,020

283,020 -

39,353,484

676,386,404 148,255,299 567,484,589

5 (b) Consolidated intangible assets Additions Retirement

Balance as at during and Balance as at

1 Jan 2008 the year disposal 31 Dec 2008

Taka Taka Taka Taka

Goodwill on acquisition

104,677,902

- -

104,677,902

Software

-

3,794,990.00 -

3,794,990

Cost

104,677,902

3,794,990 -

108,472,892

Less: Accumulated amortization and impairment losses

-

189,750.00 -

189,750

Carrying amounts

104,677,902

3,605,240 -

108,283,142

6. Investments

2008 2007

Number Face value

Called and paid up

of shares per

share capital per

share Shareholding Value Value

Taka Taka % Taka Taka

Investment in subsidiaries

Flyban Insecticides Limited 25,500

100

100

51.00

2,550,000

2,550,000

ACI Formulations Limited 12,755,000 10

10

66.00

63,775,000

108,712,500

ACI Salt Limited 78,000 1,000

1,000

78.00

78,000,000

78,000,000

ACI Foods Limited 380,000 100

100

95.00

38,000,000

38,000,000

ACI Pure Flour Limited 380,000 100

100

95.00

38,000,000

38,000,000

Apex Leather Craft Limited 365,700 100

100

100.00

79,984,291

79,984,291

ACI Agrochemicals Limited 180 100

100

90.00

18,000

18,000

Creative Communications Limited 6,000

100

100

60.00

600,000

600,000

ACI Motors Limited 7,500 100

100

75.00

750,000

750,000

Premiaflex Plastics Limited 32,000 1,000

1,000

80.00

32,000,000

32,000,000

ACI Logistics Limited 105,260 1,000

1,000

76.00

105,260,000 -

438,937,291

378,614,791


Page 115

Investment in Associates and Joint Ventures

Asian Consumer Care (Pvt.) Limited 1,079,445

10

10

24.00

10,794,450

10,794,450

ACI Godrej Agrovet ( Pvt. ) Limited 1,350,000

100

100

50.00

135,000,000

80,000,000

Computer Technology Limited 200 100

100

40.00

20,000

20,000

Stochastic Logic Limited 2,000 100

100

20.00

200,000

200,000

Tetley ACI ( Bangladesh ) Limited 550,000

100

100

50.00

55,000,000

45,000,000

201,014,450

136,014,450

Investment in others

Mutual Trust Bank Limited 498,960 100

100

3.33

28,316,000

20,000,000

Central Depository Bangladesh Limited 2

1,000,000

1,000,000

0.58

2,000,000

2,000,000

30,316,000

22,000,000

Total investment in shares

670,267,741

536,629,241

6 (a) Consolidated Investment

2008 2007

Number Face value

Called and paid up

of shares per

share capital per

share Shareholding Value Value

Taka Taka % Taka Taka

Investment valued at cost:

Mutual Trust Bank Limited 498,960

100

100

1

28,316,000

20,000,000 Central Depository Bangladesh Limited 2

1,000,000

1,000,000

1

2,000,000

2,000,000

Computer Technology Limited 200

100

100

40

20,000

20,000

30,336,000

22,020,000 Investment valued under equity method:

Tetley ACI (Bangladesh) Limited 550,000

100

100

50

(1,059,354)

(1,859,093) Asian Consumer Care (Pvt) Limited 1,079,445

10

10

24

(5,631,037)

907,018

ACI Godrej Agrovet (PVt.) Limited 1,350,000

100

100

50

111,630,417

41,604,435

Stochastic Logic Limited 2,000

100

100

20

(813,806)

(627,168)

104,126,220 40,025,192

Total carrying amount of investment 134,462,220 62,045,192

7. Inventory

2008 2007

Taka Taka

Finished goods 1,223,602,498 611,584,055


Page 116

Work-in-process 84,741,942 35,434,261

Raw materials 690,497,438 312,808,509

Packing materials 113,365,639 74,034,071

Stores and spares 10,578,583 7,528,820

Stock in transit 67,593,045 108,529,354

2,190,379,145 1,149,919,070

Less: Provision for slow moving and damaged goods and write down to NRV 105,325,895 58,521,441

2,085,053,250 1,091,397,629

In view of innumerable items of inventory and diversified quantities, it is not practical to disclose quantities against each item of inventory.

7 (a) Consolidated inventories

Finished goods 1,452,324,575 644,727,561

Work-in-process 88,794,787 36,229,138

Raw materials 1,254,127,400 602,323,616

Packing materials 262,084,178 141,316,259

Stores & spares 42,349,436 13,998,250

Stock in transit 158,031,685 197,259,809

Others - 5,715,173

3,257,712,061 1,641,569,806

Less: Provision for slow moving and damaged goods and write down to NRV 113,458,700 58,521,441

3,144,253,361 1,583,048,365

8. Trade debtors

2008 2007

Dues over Dues below

6 months 6 months Total Total

Taka Taka Taka Taka

Pharmaceuticals

14,008,187 200,182,951 214,191,138 116,498,581

Agro-business

54,540,654 537,668,512 592,209,166 495,007,467

Animal health

6,127,737 84,189,469 90,317,206 61,567,581

Consumer brands

9,416,852 136,294,910 145,711,762 95,312,025

Seeds

359,350 89,148,721 89,508,071 59,612,740

Fertilizer

19,783,496 150,009,213 169,792,709 112,531,316

Cropex

- 59,480,835 59,480,835

104,236,276 1,256,974,611 1,361,210,887 940,529,710

Less: Provision for doubtful debts 56,395,334 41,638,666

1,304,815,553 898,891,044


Page 117

8 (a) Consolidated trade debtors

2008 2007

Taka Taka

Pharmaceuticals 214,191,138 116,498,581

Agro-chemicals 593,113,816 495,007,467

Consumer brands 145,711,762 95,312,025

Animal health 90,317,206 61,567,581

Seeds 89,508,071 -

Fertilizer 169,792,709 59,612,740

Cropex 59,480,835 112,531,316

Salt 7,042,852 -

Foods 52,701,814 -

Flour 41,462,365 -

Premiaflex 11,798,171 -

Motors 456,438,388 -

Others - 8,227,162

1,931,559,127 948,756,872

Less: Provision for doubtful debts 56,864,984 41,638,666

1,874,694,143 907,118,206

Debts due over six months 51,087,501 23,829,423

Debts due below six months 1,823,606,642 883,288,783

1,874,694,143 907,118,206

9. Other debtors

2008 2007

Dues over Dues below

6 months 6 months Total Total

Taka Taka Taka Taka

Receivable from Novartis (Bangladesh) Limited

- 606,178 606,178 1,400,908

Receivable from Oram Limited

2,262,050 - 2,262,050 2,262,050

Searle Pakistan Limited

- - - 1,478,769

Health Care Pharmaceuticals Limited

- - - 3,377,568

EAC Industrial Ingredients Pte. Ltd. - 973,554 973,554 -

Labx Biotechnology ( Pvt.) Limited

938,856 - 938,856 2,638,856

Les Laboratories Servier

- 37,213,012 37,213,012 70,903,945

Godrej Sara Lee A & P Fund

- - - 2,314,285

Winall Hi-tech Seed Company Limited

- - - 31,779,800

Bank guarantee margin

6,052,147 647,948 6,700,095 7,761,251


Page 118

Other receivables

- 32,911,308 32,911,308 12,648,271

9,253,053 72,352,000 81,605,053 136,565,703

9 (a) Consolidated other debtors

2008 2007

Taka Taka

Debts due over six months 9,303,053 16,243,306

Debts due below six months 74,477,451 128,233,237

83,780,504 144,476,543

10. Advances, deposits and prepayments 2008 2007 Taka Taka Advances:

Loans and advances to staff 92,603,253 56,210,410 Advances to C & F agents and others 67,086,789 46,171,864 Advance for rent and others 40,922,149 3,671,742 VAT current account 34,673,374 57,934,082

235,285,565 163,988,098

Deposits:

Deposits for utilities 3,188,723 2,348,623 Tender deposit 5,820,952 13,260,055

9,009,675 15,608,678

Prepayments 1,501,726 164,265

245,796,966 179,761,041

10 (a) Consolidated advances, deposits and prepayments Advances: Advance to staff 92,603,253 56,210,410 Advance to C&F agent and others 110,182,492 102,484,084 Advance for rent and others 80,308,873 4,130,742 VAT current account. 42,197,388 57,934,082

325,292,006 220,759,318

Deposits: Deposits for utilities 13,537,745 9,978,525 Tender deposit 12,435,590 17,073,525 L/C margin 5,008,216 -

30,981,551 27,052,050

Prepayments 1,600,435 385,753

357,873,991 248,197,121

I1. Inter company receivables


Page 119

Flyban Insecticides Limited 976,125 971,125

Apex Leather Craft Limited 52,119,777 53,981,658

Computer Technology Limited 30,000 30,000

Tetley ACI (Bangladesh) Limited 437,294 182,268

Asian Consumer Care (Pvt.) Limited 7,555,218 17,292,310

ACI Salt Limited 161,993,597 296,541,803

ACI Godrej Agrovet (Pvt. ) Limited 869,726 6,913,095

ACI Foods Limited 300,914,860 46,203,735

ACI Pure Flour Limited 53,175,971 126,138,290

ACI Agrochemicals Limited 54,638 27,340

Stochastic Logic Limited 4,066,894 3,134,753

Premiaflex Plastics Limited 77,866,482 -

ACI Motors Limited 175,217,496 -

ACI Logistics Limited 26,780,697 -

862,058,775 551,416,377

11 (a) Consolidated inter-company receivables 2008 2007 Taka Taka Tetley ACI Bangladesh Ltd 437,294 182,268 Asian Consumer Care (PVT.) Ltd 7,555,218 17,292,310 Computer Technology Ltd. 30,000 30,000 ACI Godrej Agrovet (Pvt.) Limited 869,726 6,913,095 Stochastic Logic Limited 4,066,894 3,134,753

12,959,132 27,552,426

11.1 Name of auditors of the group companies

Name of the company Relationship Auditors ACI Formulations Limited Subsidiary Rahman Rahman Huq ACI Logistics Limited " Rahman Rahman Huq ACI Godrej Agrovet (Pvt. ) Limited Joint venture Rahman Rahman Huq Tetley ACI (Bangladesh) Limited " Rahman Rahman Huq ACI Salt Limited Subsidiary Hoda Vasi Chowdhury & Co. ACI Foods Limited " M. J. Abedin & Co. ACI Pure Flour Limited " M. J. Abedin & Co. Apex Leather Craft Limited " M. J. Abedin & Co. Creative Communication Limited " Ashraful Haque Nabi & Co. ACI Motors Limited " Ashraful Haque Nabi & Co. Premiaflex Plastics Limited " Ashraful Haque Nabi & Co. Flyban Insecticides Limited " Shiraz Khan Bashak & Co. ACI Agrochemical Limited " Shiraz Khan Bashak & Co. Asian Consumer Care (Pvt.) Limited Associate Ahmed Mashuque & Co. Stochastic Logic Limited Associate Shiraz Khan Bashak & Co.


Page 120

12. Cash and bank balance

2008 2007

Taka

Taka

Cash in hand 10,775,189 8,982,229

Collection in hand 67,769,455 24,041,251

Cash at bank 133,379,993 24,171,993

Cash and bank balance 211,924,637 57,195,473

Bank overdrafts used for cash management purposes (Note-18) (732,188,602) (271,195,982)

Cash and cash equivalent in the cash flow statement (520,263,965) (214,000,509)

12 (a) Consolidated cash and bank balance

Cash in hand 12,165,386 9,794,426

Cash at bank (in current accounts) 153,852,287 48,773,535

Collection in hand 67,769,455 24,041,251

Cash and bank balance 233,787,128 82,609,212

Bank overdrafts used for cash management purposes ( Note-18-a) (1,209,590,748) (314,191,451)

Cash and cash equivalent in the cash flow statement (975,803,620) (231,582,239)

13. Non-current assets held for sale

Non-current assets held for sale represents investment in shares of ACI Formulations Ltd amounting to Taka 18,601,750 (3,720,350 shares at carrying value of Tk 5 per share with a face value of Tk 10 each) The decision to sell this asset was taken in 132nd board meeting dated 2 July 2008 and accounted for as per BFRS-5-'Non-current Assets Held for Sale and Discontinued Operations'. This investment is measured at cost as per BAS-25: Investments.

14. Share capital

Authorised:

50,000,000 Ordinary shares of Tk. 10 each 500,000,000 500,000,000

Issued and paid up:

1,680,700 Ordinary shares of Tk. 10 each 16,807,000 16,807,000

1,049,300 Ordinary shares of Tk. 10 each

Issued for consideration other than cash 10,493,000 10,493,000

6,090,000 Bonus shares of Tk. 10 each 60,900,000 60,900,000

7,350,000 Right shares of Tk. 10 each 73,500,000 73,500,000

16,170,000 161,700,000 161,700,000


Page 121

The aforesaid share capital is subscribed as under :

Number of

shares Percentage

Directors/Sponsors 5,951,399 36.81

Institutions 3,425,541 21.18

General shareholders 6,793,060 42.01

16,170,000 100.00

A distribution schedule of the above shares is given below as required by the listing rules:

Percentage

Number of of total

shareholders Shareholdings No of shares shareholdings

9,228 Less than 500 shares 986,364 6.10

1,021 501-5,000 shares 1,240,715 7.67

54 5,001-10,000 shares 369,283 2.28

30 10,001-20,000 shares 468,010 2.89

15 20,001-30,000 shares 335,899 2.08

4 30,001-40,000 shares 142,220 0.88

10 40,001-50,000 shares 366,870 2.27

8 50,001-100,000 shares 604,020 3.74

15 100,001-1,000,000 shares 5,044,475 31.20

3 Over 1,000,000 shares 6,612,144 40.89

10,388 16,170,000 100.00

15. Share premium- Tk. 250,022,474

This represents the amount received against issue of shares at premium in the years 1995 and 1998.

16. Capital and revaluation surplus

16.1 Capital reserve

This represents the total grant received from Imperial Chemical Industries plc, London towards the cost of fixed assets.

16.2 Revaluation surplus Opening balance as at 1 January 294,901,646 216,135,224

Addition during the year - 81,036,152

Realized during the year due to disposal of fixed assets (2,286,216) (2,269,730)

Adjustment due to change in tax rate 10,532,202 -

303,147,632 294,901,646


Page 122

16.2 (a) Consolidated revaluation surplus

2008 2007

Taka

Taka

Opening balance as at 1 January 600,284,264 273,096,825

Addition during the year (4,361,196) 329,457,169

Realized during the year due to disposal of fixed assets (2,286,216) (2,269,730)

Adjustment due to change in tax rate 19,646,058 -

Post acquisition reserve transferred to retained earnings (16,006,869) -

597,276,041 600,284,264

17. Long term liabilities 2008 2007 Notes Taka Taka Staff gratuity provision 96,922,813 83,087,269 Other long term employee benefits 27,457,642 17,061,333 Deferred tax liabilities 17.1 128,217,456 130,371,634 Employees group insurance fund 400,000 400,000 Loan from other sources - unsecured 215,245 215,245 Obligation under finance lease 17.2 2,363,791 8,082,683 Long term bank loan 17.3 54,087,034 103,012,854

309,663,981 342,231,018

17 (a) Consolidated long term liabilities Staff gratuity provision 96,922,813 83,087,269 Other long term employee benefits 27,457,642 17,061,333 Deferred tax liabilities 129,625,281 184,343,829 Employees group insurance fund 400,000 400,000 Loan from other sources - unsecured 55,631,573 55,631,573 Obligation under finance lease 2,363,791 8,082,683 Long term bank loan 17.3 (a) 313,348,442 281,191,990

625,749,542 629,798,677

17.1 Deferred tax liabilities (a) Deferred tax on temporary differences (i) Taxable temporary differences fixed assets 301,696,063 190,915,049 lease obligation 5,058,609 5,616,376

Total taxable temporary differences 306,754,672 196,531,425

(ii) Deductible temporary difference Stock 105,325,895 58,521,441 Debtors 56,395,333 41,638,666 Gratuity 96,922,813 83,087,269

Total deductible temporary difference 258,644,041 183,247,376


Page 123

Net taxable temporary differences 48,110,631 13,284,049

Tax rate 27.5% 30% Deferred tax liability 13,230,424 3,985,215 (b) Deferred tax liability on revaluation surplus 114,987,032 126,386,419

(a+b) Closing balance 128,217,456 130,371,634

Deferred tax on revaluation surplus has been restated due to change of tax rate from 30% to 27.5% during the year under review.

17.2 Obligation under finance lease Payment due within one year 5,718,892 10,220,408 Payment due within 5 years but later than one year 2,363,791 8,082,683 Payment due after 5 years - -

8,082,683 18,303,091

17.3 Long term bank loan Loan from The Hongkong and Shanghai Banking Corporation Limited 19.3.5 10,774,685 12,328,254 Loan from Standard Chartered Bank 19.1.5 43,312,349 90,684,600

54,087,034 103,012,854

17.3 (a) Consolidated long term bank loans Standard Chartered Bank 43,312,349 48,121,577 The Hongkong and Shanghai Banking Corporation Limited 84,049,143 90,684,600 Citibank N.A 95,789,976 142,385,813 Eastern Bank Limited 34,296,600 - The City Bank Limited 55,900,374 -

313,348,442 281,191,990

18. Bank overdraft

2008 2007

Notes Taka Taka

Standard Chartered Bank 19.1 98,533,776 51,449,751

Commercial Bank of Ceylon Limited 19.2 13,522,009 44,816,008 The Hongkong and Shanghai Banking Corporation Limited 19.3 18,139,778 59,918,598

Citibank, N.A. 19.4 126,217,600 115,014,970

Mercantile Bank Limited 19.10 70,693,145 -

Dhaka Bank Limited (1,345) (3,345)

The City Bank Limited 19.5 196,512,607 -

Eastern Bank Limited 19.6 13,097,718 -

Bank Alfalah Limited 19.7 59,927,779 -

BRAC Bank Limited 19.8 57,389,094 -

AB Bank Limited 19.9 78,156,441 -

732,188,602 271,195,982


Page 124

18 (a) Consolidated Bank Overdraft

Standard Chartered Bank 162,126,004 69,893,177

Commercial Bank of Ceylon Limited 31,091,261 44,816,008

The Hongkong and Shanghai Banking Corporation Limited 44,218,473 67,047,759

Citibank N.A 167,990,308 132,437,852

The City Bank Limited 196,512,607 -

Mercantile Bank Limited 70,693,145 -

Dhaka Bank Ltd. 136,284,129 (3,345)

Eastern Bank Ltd. 32,581,430 -

Bank Alfalah Ltd. 59,927,779 -

BRAC Bank Ltd. 57,389,094 -

AB Bank Ltd. 78,156,441 -

Bangladesh Krishi Bank 171,178,594 -

National Bank Limited 1,441,483 -

1,209,590,748 314,191,451

19. Short term bank loan

Standard Chartered Bank 19.1 319,575,174 333,159,433

Commercial Bank of Ceylon Limited 19.2 236,640,000 210,414,000 The Hongkong and Shanghai Banking Corporation Limited

19.3 351,469,364 513,606,966

Citibank, N.A. 19.4 283,736,166 85,216,318

AB Bank Limited 19.9 77,620,000 -

The City Bank Limited 19.5 182,947,266 -

Eastern Bank Limited 19.6 183,686,243 -

BRAC Bank Limited 19.8 180,894,407 -

1,816,568,620 1,142,396,717

19 (a) Consolidated short term bank loans


Commercial Bank of Ceylon Limited 347,764,000 210,414,000


Citibank N.A 403,819,499 165,473,546

AB Bank Ltd. 108,620,000 -

The City Bank Ltd. 182,947,266 -

Eastern Bank Ltd. 355,042,127 -

BRAC Bank Ltd. 180,894,407 -

2,870,816,761 1,915,031,415

19.1 Standard Chartered Bank

The company is enjoying following facilities from Standard Chartered Bank (SCB) under the following terms and conditions.


Page 125

19.1.1 Overdraft

Limit :

Tk 75,000,000

Purpose :

Working capital financing

Tenor :

On demand

19.1.2 Letter of Credit / Loan Against Trust Receipt (LATR)

Amount: : Tk 600,000,000

Purpose: : To open Letter of Credit and subsequent retirement through the Standard Chartered Bank (SCB).

Tenor: : 120 days

Repayment :

On maturity each trust receipt outstanding will be adjusted by debiting Company's bank account and quarterly interest will be charged into the same account.

19.1.3 Short term bank loan

Amount : Tk 70,000,000 (inner limit of Letter of Credit for Tk. 600,000,000 under Note: 19.1.2)

Purpose : To finance import of machinery and equipment through the Standard Chartered Bank (SCB).

Tenor : 1 Year

Repayment : 12 equal monthly installment

19.1.4 Revolving Loan


Purpose : Working capital finance

Tenor : 120 days

19.1.5 Letter of Credit / Term Loan

Amount : Tk 260,000,000

Purpose :

To import Pharmaceuticals capital machinery. A portion of the term loan to the tune of tk.80.00 Million has been disbursed and is now under run-down basis.

Tenor : 4 Years

Payment : 16 equal quarterly installments

19.1.6 Guarantee


Purpose : To issue guarantee for tender and utility facilities

Tenor : 4 Years

Securities for the facilities mentioned under notes 19.1.1, 19.1.2, 19.1.3, 19.1.4, 19.1.5, and 19.1.6 are as follows:


Page 126

i) Demand promissory note and letter of continuation for Tk 1,110,454,000.00 each.

ii)

Registered hypothecation over Stock and Book debts on pari-passu basis with other lenders where Standard Chartered Bank's share should be at least Tk. 920,000,000 [Held for Tk. 1,000,000,000 dtd. 06.06.06].

iii)

Registered hypothecation over Plant & Machinery on pari-passu basis with other lenders where Standard Chartered Bank's should be at least Tk.565,000,000 [ Held for Tk. 1,000,000,000 dtd. 06.06.06].

iv)

Registered hypothecation over specific Plant & Machinery imported through Standard Chartered Bank for Tk.260,000,000.

v)

Equity Mortgage over Land & Building thereon of the factory property of Advanced Chemical Industries Limited at Godnail, Narayanganj (Held for Tk. 318,042,000 dated 11.08.1998).

vi) Board resolution of the company covering entire facility.

19.2 Commercial Bank of Ceylon Limited

The Company is enjoying following facilities from Commercial Bank of Ceylon Ltd. under the following terms and conditions.

19.2.1 Overdraft

Limit :

Tk 50,000,000

Purpose :


Tenor :

On demand

Expiry : 31-10-09


Amount : Tk 150,000,000

Purpose : Working capital finance

Tenor : 180 days

19.2.3 Letter of Credit / Loan Against Trust Receipt (LATR)

Amount : Tk 90,000,000

Purpose : For import of raw materials

Tenor : 180 days

Securities for the facilities mentioned under notes 19.2.1, 19.2.2 and 19.2.3 are as follows:

i) Demand promissory notes and letter of continuation for Tk 290,000,000.

ii)

Registered first hypothecation charge over stocks and book debts on pari-passu basis with other lenders where Commercial Bank of Ceylon Ltd's should have at least Tk. 290,000,000.


Page 127

19.3 The Hongkong and Shanghai Banking Corporation Limited

The Company is enjoying following facilities from The Hongkong and Shanghai Banking Corporation (HSBC) under the following terms and conditions:

19.3.1 Overdraft

Limit :

Tk 30,000,000

Purpose :

To support collection/payment and daily overhead expenses.

Tenor :

On demand

Expiry : 30-06-2009

19.3.2 Letter of Credit / Loan Against Trust Receipt (LATR) / Short term bank loan

Amount : Tk 500,000,000

Purpose :

To open Letter of Credit and their subsequent retirement through the Hongkong and Shanghai Banking Corporation Limited (HSBC)

Tenor : 180 days

Expiry : 30-06-2009

19.3.3 Short Term bank Loan


Purpose : Working Capital financing

Tenor : 270 days

Expiry : 30-06-2009

19.3.4 Letter of Credit (One off)

Amount : Tk 2,000,000

Purpose : To import capital machinery and issue shipping guarantee

Tenor : 180 days

Expiry : 30-06-2009

19.3.5 Term Loan

Amount : Tk 17,780,793.02

Purpose : To import capital machinery and issue shipping guarantee

Tenor : 4 Years

Expiry : 08/04/2012

Payment : 16 equal quarterly installments

19.3.6 Guarantee


Page 128

Amount : Tk 10,000,000

Purpose : To issue guarantee favoring various Government Bodies and Utility companies

Tenor : 1 year/5 years for utility companies

Securities for the facilities mentioned under notes 19.3.1, 19.3.2, 19.3.3, 19.3.4, 19.3.5 and 19.3.6 are as follows:

i) Demand promissory notes of Tk 675,000,000 with letters of revival and continuity.

ii)

First pari-passu charge with other lenders over the stock of raw materials, work-in-progress, finished goods and book debts/receivables where HSBC's share will Tk 1,000,000,000.

iii)

First pari-passu charge with other lenders over the borrower's plant and machinery on pari-passu basis where HSBC's share should be at least Tk. 455,000,000.

iv) Power of Attorney for hypothecated Goods.

v) Trade Financing General Agreement for trade facilities.

19.4 Citibank, N.A.

The Company is enjoying following facilities from Citibank, N.A. under the following terms and conditions:

19.4.1 Overdraft

Limit :

Tk 70,000,000

Purpose :


Tenor :

On demand

19.4.2 Letter of Credit/Loan Against Trust Receipts/ Short term loan

Amount : Tk 400,000,000

Purpose : For import of raw materials, spares and finished goods.

Tenor : 180 days


Amount : Tk 250,000,000 ( inner limit of Letter of Credit for Tk. 400,000,000 under Note: 19.4.2)

Purpose : Local purchase loan/duty/VAT payment

Tenor : 90 days

Securities for the facilities mentioned under notes 19.4.1, 19.4.2 and 19.4.3 are as follows:

i)

First registered hypothecation charge on a Pari-Passu basis with other lenders of ACI Ltd. on stocks and book debts where Citibank, N.A's share should be at least Tk. 470,000,000

19.5 The City Bank Limited

The Company is enjoying following facilities from The City Bank Limited under the following terms and conditions:


Page 129

19.5.1 Overdraft

Limit :

Tk 200,000,000

Purpose :


Tenor : On demand

Expiry : 31-03-09

Repayment : Through internal cash generation/own sources

19.5.2 Letter of Credit (Specific))

Amount : Tk 70,000,000

Purpose : To import machinery Tenor

: 210 Days

Expiry : 31-03-09

19.5.3 Term Loan

Amount: : Tk 100,000,000 (including the Letter of Credit facility under Note: 19.5.2)

Purpose: :

For retirement of imported machineries against LC under Letter of Credit mentioned under Notes: 19.5.2 and to finance the cost of civil construction.

Tenor :

210 Days

Expiry : 31-03-09

19.5.4 Letter of Credit / LATR (Regular)

Amount : Tk 250,000,000

Purpose : To import raw material Tenor

: 120 Days

Expiry : 31-03-09


Amount : Tk 100,000,000 (inner limit of LATR under Note: 19.5.4)

Purpose : Working capital financing Tenor

: 90 Days

Expiry : 22-03-2009

Securities for the facilities mentioned under notes 19.5.1, 19.5.2, 19.5.3, 19.5.4 and 19.5.5 are as follows:

i)1st ranking Paripassu Charge on all floating assets including stock, book debts of ACI Limited with other lenders.

19.6 Eastern Bank Limited


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The Company is enjoying following facilities from Eastern Bank Limited under the following terms and conditions.

19.6.1 Overdraft

Limit :

Tk 20,000,000

Purpose :


Tenor : On demand

Expiry : 13-02-09

Repayment : From own cash flow / sales proceeds of the business.

19.6.2 Letter of Credit/Import Loan ( Revolving)

Amount : Tk 400,000,000

Purpose :

To import raw materials, finished goods, spare parts and others to be used in the product and sale by the company

Tenor : 120 days

Expiry : 13-02-09

Repayment :

Letter of Credit will be adjusted upon receipt of shipping documents, Letter of Credit liability will be switched over to import loan liability. Import Loan will be repaid from own cash flow/sales proceeds of its products.

19.6.3 Letter of Credit/Term Loan ( One Time)

Amount : Tk 25,000,000

Purpose : To import capital machinery and equipment of the Company.

Tenor : 4 Years

Expiry : 13-02-09

Repayment : To be repaid in 14 equal quarterly installment.

19.6.4 Demand Loan

Amount : Tk 125,000,000

Purpose : For local procurement / Duty / Tax / VAT

Tenor : 120 days

Expiry : 13-02-09

Repayment :

From own cash flow / sales proceeds of the products.

Securities for the facilities mentioned under notes 19.6.1, 19.6.2 , 19.6.3 and 19.6.4 are as follows:

i)

Registered (1st charge pari passu) hypothecation over entire stock and book debts with other lenders where Eastern Bank Limited's share should be at least Tk. 470,000,000 on pari-passu basis.

19.7 Bank Alfalah Limited


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The company is enjoying following facilities from Bank Alfalah Limited under the following terms and conditions:

19.7.1 Overdraft

Limit :

Tk 70,000,000

Purpose :


Tenor : On demand

Expiry : 30-06-09

Repayment : From own cash flow / sales proceeds of the products.

19.7.2 Letter of Credit/Loan Against Trust Receipts

Amount: : Tk 100,000,000

Purpose: : To import raw material

Tenor : 150 days

Expiry : 31-06-09

Repayment : From company's own source.

Securities for the facilities mentioned under notes 19.7.1 and 19.7.2 are as follows:

i)

First registered hypothecation charge on a Pari-Passu basis with other lenders of Advanced Chemicals Industries Limited on Stocks and Book Debts where Bank Alfalah Limited's share should be at least Tk. 180,000,000.

ii) Trust Receipt

19.8 BRAC Bank Limited

The company is enjoying following facilities from BRAC Bank Limited under the following terms and conditions: 19.8.1 Overdraft

Limit:

: Tk 60,000,000

Purpose: :


Tenor : On demand

Repayment :

From operational cash flow of the company.

Expiry : One year from the date of sanction

19.8.2 Letter of Credit /LATR(revolving)

Amount : Tk 500,000,000

Purpose :

To import raw materials, finished products and other items for various business division of Advanced Chemicals Industries Limited.

Tenor : 120 days


Repayment : From operational cash flow of the company.


Page 132

19.8.3 Short term loan

Amount : Tk 100,000,000 (inner limit of Letter of Credit for Tk. 500,000,000 under Note:19.8.2)

Purpose : To finance local purchases and other various trading items of Advanced Chemicals Industries Limited.

Tenor : 120 days


Repayment :


19.8.4 Revolving Loan

Amount : Tk 50,000,000

Purpose : To finance duty payment and local purchase

Tenor : 120 days


Repayment :


19.8.5 Guarantees

Amount : Tk 10,000,000

Purpose : To meet various contractual obligations

Tenor : 120 days

Securities for the facilities mentioned under notes 19.8.1, 19.8.2, 19.8.3, 19.8.4 and 19.8.5 are as follows: i)

Registered (1st charge pari passu) hypothecation with other lenders over entire stock of Advanced Chemicals Industries Limited where BRAC Bank Limited should have a share of Tk. 610,000,000 on pari-passu basis.

ii)

Registered (1st charge pari passu) hypothecation with other lenders over entire book debts of Advanced Chemicals Industries Ltd. where BRAC Bank Limited should have a share of Tk. 610,000,000 on pari-passu basis.

iii)

Other usual charge documents (DP notes, Letter of Continuity, Letter of Agreement, General Loan, Agreement, Letter of Counter Guarantee)

19.9 AB Bank Limited

The Company is enjoying following facilities from AB Bank Limited under the following terms and conditions:

19.9.1 Overdraft

Amount : Tk 80,000,000

Purpose : Working capital financing

Tenor : On demand

Expiry : 28-02-09

Repayment : From sales proceed of the company's products


Amount : Tk 500,000,000

Purpose : To import raw materials, finished goods, additives etc.

Tenor : 120 days


Page 133

Expiry : 28-02-09

Repayment : From sale proceeds

19.9.3 Revolving Time Loan

Amount : Tk 120,000,000

Purpose : To procure raw material/finished goods and pay duty/VAT

Tenor : 120 days

Expiry : 28-02-09

Repayment : From operational cash flow

19.9.4 Revolving Bank Guarantee

Amount : Tk 10,000,000

Purpose : To issue guarantee for tender and utility facilities

Expiry : 28-02-09

Repayment : By return of duly released original guarantee

Securities for the facilities mentioned under notes 19.9.1, 19.9.2, 19.9.3 and 19.9.4 are as follows:

i)

Registered (1st charge pari passu) hypothecation over all floating assets of the company under Pari-passu security share agreement with other lenders where AB Bank should have a minimum share of Tk. 710,000,000.

ii) Corporate guarantee of ACI Formulations Limited, ACI Pure Flour Limited, ACI Foods Limited.

19.10 Mercantile Bank Limited

The Company is enjoying following facilities from Mercantile Bank Limited under the following terms and conditions:

19.10.1 Overdraft

Limit : Tk 75,000,000

Purpose : Working capital financing

Tenor : On demand

Repayment : From sales proceed of company's products


Amount : Tk 200,000,000

Purpose :

To import pharmaceutical raw materials, chemicals, medicines, consumer goods raw material for production of veterinary items.

Tenor : 120 days

Repayment From sale proceeds of company's products

Securities for the facilities mentioned under notes 19.10.1 and 19.10.2 are as follows:

i) Registered (1st charge pari passu) hypothecation over all floating assets of the company under Pari-passu security share agreement with other lenders where Mercantile Bank Limited's should have a minimum share of Tk. 275,000,000.


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ii) Corporate guarantee of ACI Formulations Limited, ACI Pure Flour Limited, ACI Foods Limited

20. Long term Bank loan - Current portion

2008 2007

Notes Taka Taka

Standard Chartered Bank 19.1.5 99,171,382 58,021,601 The Hongkong and Shanghai Banking Corporation Limited

19.3.5 5,604,887 4,483,001

104,776,269 62,504,602

20 (a) Consolidated long term loans- Current portion

Standard Chartered Bank 99,171,382 58,021,601 The Hongkong and Shanghai Banking Corporation Limited

23,127,235 46,943,021

Citibank N.A 53,333,304 49,840,076

The City Bank Limited 5,183,939 -

Eastern Bank Limited 52,104,161 -

232,920,021 154,804,698

21. Other creditors

Creditors for expenses 241,205,456 247,735,933

Security money received from customers 37,971,126 43,549,675

Workers profit participation fund 78,212,732 55,026,894

Unpaid dividend 14,133,311 10,907,735

Tax deduction at source 10,083,431 9,567,757

Employees welfare fund 72,950,623 55,671,220

Right share deposit to be refunded 563,722 562,644

Family day fund 4,212,869 2,068,364

Non-management staff provident fund 2,378,529 2,234,976

Godrej Sara Lee (Bangladesh) Pvt. Limited - 735,405

Pidilight advertisement and promotional fund - 68,114

Perfetti advertisement and promotional fund - 12,925

Godrej consumer product advertisement and promotional fund 3,628,267 4,678,866

Nivea advertisement and promotional fund - 1,112,887

Godrej Sara Lee replacement fund - 66,366

Management staff provident fund 1,769,687 1,086,681

ACI Trading Limited - 43,246,264

Laser advertisement and promotional fund 2,701,650 -

469,811,403

478,332,706

21 (a) Consolidated other creditors

2008 2007

Taka

Taka

Creditors for expenses

553,600,009 340,391,873

Security money received from customers

45,623,960 43,748,369

Workers' profit participation fund

128,646,734 91,179,028

Unpaid dividend

14,133,311 10,907,735


Page 135

Provident fund

1,769,687 1,086,681

Tax deducted from suppliers and employees

10,083,431 9,650,911

Employees savings fund

72,950,623 55,671,220

Right share deposit to be refunded

563,722 562,644

Family day fund

4,212,869 2,068,364

Non-management staff provident fund

2,378,529 2,234,976

Godrej Sara Lee (Bangladesh) Pvt. Limited

- 735,405

Pidilight advertisement and promotional fund

- 68,114

Perfeti advertisement and promotional fund

- 12,925

Godrej consumer product advertisement and promotional fund

3,628,267 4,678,866

Nevia advertisement and promotional fund

- 1,112,887

Godrej Sara Lee replacement fund

- 66,366

Laser advertisement and promotional fund

2,701,650 -

ACI Trading Limited

- 43,246,264

840,292,792

607,422,628

22. Inter-company liabilities

ACI Formulations Limited

698,672,186

726,212,549

Premiaflex Plastics Limited

- 31,250,543

ACI Motors Limited

-

522,230

Creative Communication Limited 10,937,665

673,347

709,609,851

758,658,669

23. Provision for taxation

Opening balance 277,961,183 153,442,970

Provision made during the year 98,683,532 124,518,213

376,644,715 277,961,183

Adjustment of advance payment of tax 140,094,241 -

Closing balance 236,550,474 277,961,183

23 (a) Consolidated provision for tax

Opening balance 328,246,138 214,162,306

Provision for the year 194,579,195 172,168,213

522,825,333 386,330,519

Advance payment of tax during the year (183,721,132) (58,084,381)

Closing balance 339,104,201 328,246,138

24. Revenue

2008 2007

Taka Taka


Page 136

Pharmaceuticals* 2,450,979,832 1,783,144,340

Agrochemicals and public health 1,406,251,276 1,016,584,961

Animal health 432,506,569 363,101,078

Consumer brands 1,816,932,587 1,434,539,829

Seeds 346,403,255 143,017,038

Newspaper - 5,495,478

Fertilizer 580,258,469 171,421,607

Cropex 331,771,553 -

7,365,103,541 4,917,304,331

* Pharmaceuticals turnover includes sales of the following in units :

Quantity Quantity

Tablets (Pc) 9,143,122 7,623,909

Capsules (Pc) 3,009,865 1,910,148

Injection (Pc) 2,853,647 1,949,992

Bottled products (Pc) 16,193,958 14,294,046

Creams (Pc) 2,553,883 3,114,500

The rest relates to agrochemical, animal health, seeds, fertilizer, cropex and consumer goods.

24 (a) Consolidated revenue

2008 2007

Taka Taka

Gross sales 12,427,075,182 7,075,958,101

Inter-company sales (2,085,650,098) (1,319,140,272)

Net sales 10,341,425,084 5,756,817,829

25. Cost of sales

2008 2007

Particulars

Pharmaceutical

s Agro-chemicals Animal health Consumer brands Seeds Fertilizer Cropex Total

Total

Taka Taka Taka Taka Taka Taka Taka Taka Taka Raw and packing materials :

Opening stock 264,841,675 - 36,404,399 10,500,767 558,138 74,537,601 386,842,580 252,860,033 Purchase 1,213,567,955 11,500 111,885,821 58,286,083 10,820,525 736,352,904 2,130,924,788 1,209,386,194 Closing stock (370,496,254) - (67,502,095) (27,452,867) (3,148,200) (335,263,661) (803,863,077) (386,842,580)

1,107,913,376 11,500 80,788,125 41,333,983 8,230,463 475,626,844 1,713,904,291 1,075,403,647 Manufacturing expenses 196,660,516 - 8,090,171 5,969,626 10,826,554 7,220,351 228,767,218 169,557,113

Quality control and development expenses

36,945,465 - 55,366 - - 37,000,831 33,285,654

Cost of samples, product bonus and stock write off

(46,600,368) (2,172,386) (3,958,015) 1,126,492 39,589 54,254,005 2,689,317 (2,275,963)

Opening work-in-process 29,415,804 - 903,538 - 5,114,919 - 35,434,261 35,998,760

Closing work-in-process (58,282,519) - (4,733,030) - (21,726,393) (84,741,942) (35,434,261)

Cost of goods manufactured/sold

1,266,052,274 (2,160,886) 81,146,155 48,430,101 2,485,132 537,101,200 1,933,053,976 1,276,534,950

Finished goods:

Opening stock 173,045,784 121,888,944 103,729,271 144,169,679 41,960,752 26,789,625 611,584,055 446,057,066 Purchase 44,456,371 1,197,224,847 150,502,568 1,397,259,115 312,799,112 324,000,409 340,033,769 3,766,276,191 2,139,703,716 Closing stock (151,577,835) (247,080,950) (105,046,068) (259,965,699) (92,409,714) (367,085,357) (436,875) (1,223,602,498) (611,584,055) Inter business

adjustment (125,866,069) - 26,079,023 99,787,046 - - - -

(59,941,749) 1,072,032,841 175,264,794 1,381,250,141 262,350,150 (16,295,323) 339,596,894 3,154,257,748 1,974,176,727

Cost of sales 1,206,110,525 1,069,871,955 256,410,949 1,429,680,242 264,835,282 520,805,877 339,596,894 5,087,311,724 3,250,711,677

As per Part II of Schedule XI of the Companies Act 1994, the quantities of raw materials, purchases and stocks should be expensed in quantitative denomination, however, this could not be provided as the company deals with large number of products both locally made and imported.


Page 138

Raw and packing materials have been procured from local sources and also imported from the following countries:

China India Malaysia

France Pakistan Germany

USA Italy Korea

UK Japan Singapore

Raw and packing materials consumed are 75% (approximately) imported.

25 (a) Consolidated cost of sale

2008 2007

Taka Taka

Opening stock 1,454,820,172 1,166,762,791

Purchase 8,357,928,759 3,611,518,147

9,812,748,931 4,778,280,938

Closing stock (3,135,786,405) (1,456,332,288)

6,676,962,526 3,321,948,650

Manufacturing expenses 612,465,000 427,183,085

7,289,427,526 3,749,131,735

26. Allocation of expenses

2008 2007

Quality control Administrative Distribution Manufacturing and development Selling Particulars expenses expenses expenses expenses expenses Total Total

Taka Taka Taka Taka Taka Taka Taka (A) (A) (B) (C) (A)

Salary and wages 84,429,052 51,784,748 104,326,131

26,417,571 451,622,527

718,580,029 590,119,982

Traveling and conveyance 5,011,502 30,057,590 1,147,040

219,475 153,963,190

190,398,797 150,497,110

Rent and rates 4,788,054 12,107,572 5,443,913 - 11,692,543

34,032,082 24,024,206


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Repair and maintenance 5,299,461 3,169,618 17,010,257

503,353 4,472,437

30,455,125 22,863,335

Fuel and power 1,455,862 1,970,134 14,814,955 - 1,927,137

20,168,088 15,944,177

Postage 3,918,892 1,869,660 602,729

87,565 11,264,923

17,743,769 13,194,784

Printing and stationery 2,596,861 5,439,008 914,916

136,830 14,172,454

23,260,069 18,796,790

Promotional expenses 2,563,124 2,783,280 11,863,567 - 517,866,293

535,076,264 359,828,989

Entertainment 1,214,914 744,132 1,393,447 - 3,665,660

7,018,153 3,122,871

Vehicle maintenance 4,351,518 34,433,550 2,045,988

309,799 18,348,386

59,489,241 49,299,946

Bad debts - - - - 14,923,181

14,923,181 12,996,654

Truck and handling - 19,628,978 2,391,160 - 50,254,942

72,275,080 48,559,045 Legal and professional charges 1,194,456 110,735 198,228 - 996,827

2,500,246 5,717,286

Audit fees 300,000 - - - -

300,000 255,000

Insurance 448,009 3,057,689 4,694,606 - 3,249,654

11,449,958 9,189,416

Directors' fees 24,000 - - - -

24,000 22,500

Bank charges 7,766,852 3,220,075 943 - 1,185,521

12,173,391 7,539,763

Sundry expenses - 244,552 - - -

244,552 276,025 Product development expenses - - 622,386

964,532 1,944,033

3,530,951 3,858,391

Training expenses 1,319,752 10,764 59,225

707,284 6,954,719

9,051,744 5,427,169

Depreciation 10,475,898 8,329,959 60,227,058

1,289,811 13,363,809

93,686,535 74,993,416 Lab chemical and apparatus - - 1,010,669

6,364,611 -

7,375,280 4,670,125

Quality Control research and development - - - - -

- 27,000

Meeting expenses 542,602 430 - - 18,178,376

18,721,408 11,093,515

Share department expenses 3,444,108 - - - -

3,444,108 2,897,429

Export expenses - - - - 3,863,944

3,863,944 2,882,855

ISO/TQM related expenses 441,031 - - - -

441,031 387,128

Market research - - - - 5,508,105

5,508,105 4,722,641

141,585,948 178,962,474 228,767,218

37,000,831 1,309,418,661

1,895,735,131 1,443,207,548


Page 140

(A) Administrative, selling and distribution expenses

1,629,967,083 1,240,364,781

(B) Manufacturing expenses

228,767,218 169,557,113

(C) Quality control and development expenses

37,000,831 33,285,654

1,895,735,131 1,443,207,548

(0)

26 (a) Consolidated administrative, selling and distribution expenses

Administrative expenses

321,801,962 171,140,276

Distribution expenses

277,057,578 252,361,112

Selling expenses

1,505,652,278 974,455,162

2,104,511,818 1,397,956,550

27. Other income

2008 2007

Taka Taka

Service charges 13,458,272 6,822,967

Dividends 28,275,726 9,216,000

Agency commission from ACI Media - 3,378,273

Rental income 3,116,000 4,404,000

Gain from sale of fixed assets 699,827 963,351

Gain from foreign currency transactions 962,374 29,199

Proceeds from scrap sale 4,087,096 3,184,858

Loss on sale of newspaper business - (5,417,088)

Miscellaneous income 7,609,741 765,156

58,209,036 23,346,716

27 (a) Consolidated other income

Service charges 13,458,272 6,822,967

Dividend received 28,275,726 8,712,000

Agency commission from ACI Media - 3,378,273

Agency commission from Tetley ACI (Bangladesh) Ltd 2,801,803 -

Rental income 3,116,000 4,404,000

Sales proceeds of scrap 9,270,250 4,941,967

Loss on sale of news paper business - (5,417,088)

Gain from foreign currency transactions 962,374 29,199

Income from sale of shares - 44,007,483

Profit from sale of fixed assets 699,827 1,061,041

Miscellaneous income 9,504,545 15,231,624

68,088,797 83,171,466

28 Profit from sale of shares

The company off-loaded 24% shares of ACI Formulations Limited numbering 5,267,150 shares out of its total holding of 21,742,500 shares (21.07% of total shares of ACI Formulations Limited) through direct listing with both DSE and CSE in November 2008. In addition, the company also divested its total investment in ACI Trading Limited (60%) on 30 September 2007. The capital gain arose from the divestments are as follows:

Sale proceeds 812,323,176 119,538,000

Less: cost of investment 26,335,750 720,000

: cost to sales 6,353,286 -

32,689,036 720,000

779,634,140 118,818,000

28 (a) Profit from sale of shares to group


Page 142

Net sales proceeds 805,969,890 119,538,000

Less: Carrying amount of investment 166,672,699 33,356,851

Profit from sale of shares of subsidiary 639,297,191 86,181,149

Carrying amount of investment to the Group has been determined as follows:

Net assets at the date of divestment 791,095,275 55,594,752

% of divestment of subsidiary 21.07% 60%

166,672,699 33,356,851

29. Financing cost

2008 2007

Taka Taka

Interest expenses on

Bank loan 319,095,946 139,249,313

Staff welfare fund 6,933,017 5,879,498

Finance lease 1,950,098 3,088,981

Security deposit 3,023,211 3,742,363

Workers' profit participation fund 5,300,163 3,829,558

Other funds/borrowings 2,110,258 1,250,473

338,412,693 157,040,186

Interest income from

Investment/inter-company (55,779,740) (37,298,275)

Bank (677,902) (193,159)

Suppliers/others (1,143,896) (461,593)

(57,601,538) (37,953,027)

280,811,155 119,087,159

29 ( a) Consolidated financing cost

Finance cost on:

Bank loan 508,716,737 204,733,330

Staff welfare fund 6,933,017 5,879,498

Lease 1,950,098 3,088,981

Security deposit 3,023,211 3,742,363

Workers' profit participation fund 5,300,163 3,829,558

Other funds/borrowings 2,110,258 1,250,473

528,033,484 222,524,203

Income from:

Investment/inter-company (943,334) (1,348,314)

Bank (1,143,896) (193,159)

Suppliers (2,165,748) (461,593)

(4,252,978) (2,003,066)


Page 143

523,780,506 220,521,137

30. Deferred tax (expenses)/income

Net taxable temporary differences 48,110,631 13,284,049

Tax rate 27.50% 30.00%

Deferred tax liability as at 31 December 13,230,424 3,985,215

Less: Opening balance as at 1 January 3,985,215 9,695,948

(9,245,209) 5,710,733

31. Earnings per share

31.1 Basic earnings per share

The calculation of basic earnings per share at 31 December 2008 was based on the profit attributable to ordinary shareholders as follows:

Profit for the period 1,075,666,883 307,769,386

Weighted average number of shares outstanding during the year 16,170,000 16,170,000

Basic earnings per share 66.52 19.03

31.2 Consolidated basic earnings per share

The calculation of consolidated basic earnings per share at 31 December 2008 was based on the consolidated profit attributable to ordinary shareholders as follows:

2008 2007

Consolidated profit for the period (Taka) 917,905,438 341,808,528

Weighted average number of shares outstanding during the year 16,170,000 16,170,000

Basic earnings per share (Taka) 56.77 21.14

31.3 Diluted EPS

No diluted EPS was required to be calculated for the year since there was no scope for dilution of share during the year under review.

32. Operating leases-lessee

Cancelable operating lease rentals are payable as follows:

2008 2007

Taka Taka

Less than one year 29,191,626 20,013,380

Between one and five years 90,630,816 62,795,224

More than five years 6,147,495 -

125,969,937 82,808,604

The Company obtained leases of 55 Depots and 9 warehouses and 1 office premises under operating leases. The leases typically run for 3 -7 years, with an option to renew the leases after that date. Lease payments are increased at the time of renewal of the rent agreements to reflect market rental.


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During the year ended 31 December 2008 Tk 34,032,081 was recognized as expense in the income statement in respect of operating leases (2007: 24,024,000).

33. Sale/adjustment of fixed assets

Original Accumulated

Particulars cost depreciation Book value Sale value Mode of disposal/

Taka Taka Taka Taka adjustment

Motor car 587,273 497,272 90,001 410,500 Sold through tender



Covered Van 667,625 584,975 82,650 280,000 Sold through tender


Plant & Machinery 1,027,196 489,404 537,792 - Adjustment

4,157,852 3,226,378 931,474 1,631,300

34. Subsequent events The board of director of ACI Limited has recommended cash dividend Tk. 161,700,000 and stock dividend Tk. 32,340,000 for the year 2008 subject to approval of the shareholders in the Annual General meeting scheduled to be held on 18 June 2009. The company is going to issue “ACI 20 % Convertible Zero Coupon Bond” of Tk. 1 billion ( face value of Tk. 1.34 billion) with a maturity of 5 years to be listed with both of the bourses of the country as approved by its shareholders in the Extraordinary General Meeting held on 12 April 2009 subject to approval from the Securities and exchange Commission (SEC) of Bangladesh. There are no other events identified after the balance sheet date which might be material.


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35. Consolidated segment reporting - business segment

2008 2007

Reportable business segment

Particulars Pharmaceuticals

Crop Care and Public Health Animal health Consumer

brands ACI Salt Ltd. ACI Pure Flour Ltd.

Non-reportable segments Unallocated Total Total

Taka Taka Taka Taka Taka Taka Taka Taka Taka Taka Segment revenue: To external customers 2,450,979,832 1,476,329,804 432,506,569 1,831,534,884 679,322,895 1,132,311,665 2,338,439,435 - 10,341,425,084 5,756,817,829

Total revenue 2,450,979,832 1,476,329,804 432,506,569 1,831,534,884 679,322,895 1,132,311,665 2,338,439,435 - 10,341,425,084 5,756,817,829

Cost of sales (1,206,110,525) (804,313,131) (256,410,949) (1,381,997,274) (562,167,610) (1,026,605,698) (2,050,893,810) - (7,288,498,997) (3,749,131,735) Gross profit 1,244,869,307 672,016,673 176,095,620 449,537,610 117,155,285 105,705,967 287,545,625 - 3,052,926,087 2,007,686,094 Selling expenses (680,209,815) (242,204,843) (75,541,004) (200,276,135) (22,215,730) (67,878,713) (217,325,038) (1,000) (1,505,652,278) (1,035,934,186)

Distribution expenses (59,057,617) (38,658,500) (8,948,124) (56,262,067) (37,236,200) (17,315,780) (59,382,941) (196,350) (277,057,579) (190,882,088)

Administrative expenses (46,723,175) (54,958,239) (7,079,269) (53,498,228) (6,674,996) (6,865,244) (143,376,021) (2,626,791) (321,801,963) (165,387,099)

Other income/(expense)

8,999,662 4,830,421 8,066,032 1,754,712 2,969,185 1,386,749 6,014,425 34,067,611 68,088,797 169,352,615

Segment result 467,878,362 341,025,512 92,593,255 141,255,892 53,997,544 15,032,979 (126,523,950) 31,243,470 1,016,503,064 784,835,336

Segment assets 2,064,393,049 2,161,643,481 351,717,871 1,317,578,451 411,681,122 502,782,580 3,048,988,505 1,774,972,226 11,633,757,285 5,912,361,279

Segment equity and liabilities

1,314,297,014 498,786,699 326,325,465 495,268,206 411,681,123 502,782,580 2,732,898,989 5,351,717,209 11,633,757,285 5,912,361,279


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36. Related party transactions During the year, the company carried out a number of transactions with related parties in the normal course of business. The names of the related parties and nature of these transactions have been set out in accordance with the provisions of BAS 24: Related Party Disclosure.

(a) Name of related party Relationship Nature of transactions Transactions value during the year Outstanding balance as at 31 December

2008 2007 2008 2007 Taka Taka Taka Taka ACI Formulations Limited Subsidiary Purchase of products 2,039,016,708 1,308,144,018 (698,672,186) (726,212,549)

ACI Salt Limited Subsidiary Providing working capital finance 773,379,596 622,744,488 161,993,597 296,541,803

Apex Leather Craft Limited Subsidiary Lease of corporate office 9,416,400 18,742,810 52,119,777 53,981,658

Flyban Insecticides Limited Subsidiary Providing working capital finance 5,000 19,000 976,125 971,125

ACI Pure Flour Limited Subsidiary Providing working capital finance 984,104,646 195,675,286 53,175,971 126,138,290

ACI Foods Limited Subsidiary Providing working capital finance 487,817,693 90,227,888 300,914,860 46,203,735

ACI Agrochemicals Limited Subsidiary Providing working capital finance 27,340 22,405 54,638 27,340

Creative Communications Limited Subsidiary Providing working capital finance 47,582,792 600,000 (10,937,665) (673,347)

ACI Motors Limited Subsidiary Providing working capital finance 677,730,831 750,000 175,217,496 (522,230)

Premiaflex Plastic Limited Subsidiary Providing working capital finance 229,614,527 32,002,400 77,866,482 (31,250,543)

ACI Logistics Limited Subsidiary Providing working capital finance 205,230,678 - 26,780,697 -

Tetley ACI Bangladesh Limited Joint Venture Purchase of products 2,222,544 2,103,154 437,294 182,268 Asian Consumer Care (Pvt) Limited Associate Promotional expenses 4,244,254 26,911,423 7,555,218 17,292,310

ACI Godrej Agrovet Bangladesh (Pvt) Limited Joint Venture Providing working capital finance 448,418 23,650,258 869,726 6,913,095

(b) Director's emoluments 2008 2007 Taka Taka Salary 8,606,492 7,519,882 Benefits 4,480,240 3,736,610 Provident fund contribution 636,738 554,784 13,723,470 11,811,276


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37. Off balance sheet items

37.1 Commitments

On the balance sheet date, the company was enjoying unfunded credit facilities from the following banks:

2008 2007

Letter of Credit Taka Taka


Commercial Bank of Ceylon Limited - 1,776,864


Citibank, N.A. - 139,206,764

BRAC Bank Limited 7,022,500 -

Eastern Bank Limited 9,680,822 -

373,649,329 507,939,948

37.2 Contingent liabilities

Bank guarantees

Standard Chartered Bank - 9,768,881

The Hongkong and Shanghai Banking Corporation Limited - 4,019,700

Mercantile Bank Limited - 424,382

- 14,212,963

Shipping guarantees



47,382,529 46,011,438

Bills receivable

Standard Chartered Bank - 8,373,864

- 8,373,864

38. General

38.1 Production capacity

Production capacity of Pharmaceuticals, Consumer Brand and Animal Health business was 3,875,514 units pack per 8 hr/month and current utilization was 114%. It was 3,114,000 units pack per 8 hr/month in 2007 with utilization of 118%.


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Auditors' Report under section 135(1) and paragraph 24(1) of part -II of the Third Schedule of the Companies Act 1994

We as the auditors having examined the Financial Statements of Advanced Chemical Industries Limited for the years ended 31 December 2004, 2005, 2006, 2007 and 2008 and in pursuance of section 135(1) and paragraph 24(1) of part -II of the Third Schedule of the Companies Act 1994, report that:

A. The statement of assets and liabilities of the company are as under:

Particulars 2008 2007 2006 2005 2004

Taka Taka Taka Taka Taka

Property and assets

Fixed assets 1,122,853,227 859,424,939 694,319,636 743,466,107 680,835,067

Capital work-in -progress 135,098,300 213,870,224 37,004,294 13,290,851 60,138,205

Investments 670,267,741 536,629,241 428,818,241 380,781,241 295,381,241

Current assets 4,986,884,853 3,120,888,791 1,755,046,647 1,536,955,946 1,342,335,580

Total property and assets 6,915,104,121 4,730,813,195 2,915,188,818 2,674,494,145 2,378,690,093

Liability and capital

Share capital 161,700,000 161,700,000 161,700,000 161,700,000 161,700,000

Reserve and surplus 1,792,933,500 843,312,229 562,349,437 494,212,795 449,764,482

Share premium 250,022,474 250,022,474 250,022,474 250,022,474 250,022,474

Shareholders' equity 2,204,655,974 1,255,034,703 974,071,911 905,935,269 861,486,956

Long term liabilities 309,663,981 342,231,018 200,078,406 244,355,147 356,247,707

Current liabilities 4,400,784,166 3,133,547,474 1,741,038,501 1,524,203,729 1,160,955,430

Total liabilities & shareholders' equity 6,915,104,121 4,730,813,195 2,915,188,818 2,674,494,145 2,378,690,093

B. The statement of operating result of the company is as follow:

Revenue 7,365,103,541 4,917,304,331 3,515,862,372 3,088,714,707 2,557,772,237 Cost of sales (5,087,311,724) (3,250,711,677) (2,339,975,616) (2,131,538,267) (1,817,394,259)

Gross profit 2,277,791,817 1,666,592,654 1,175,886,756 957,176,440 740,377,978

Administrative, selling and distribution expenses

(1,629,967,083) (1,240,364,781) (884,474,379) (726,132,328) (540,425,340)

Total income 647,824,734 426,227,873 291,412,377 231,044,112 199,952,638

Other income (Non-operating) 58,209,036 23,346,716 35,345,860 30,326,861 42,043,347

Profit from sale of shares 779,634,140 118,818,000 - - -

1,485,667,910 568,392,589 326,758,237 261,370,973 241,995,985

Financial costs (280,811,155) (119,087,159) (81,555,964) (83,396,936) (93,164,270)

Profit before contribution to WPPF 1,204,856,755 449,305,430 245,202,273 177,974,037 148,831,715

Provision for contribution to WPPF (21,261,132) (22,728,564) (12,260,114) (8,898,702) (7,441,586)

Profit before tax 1,183,595,623 426,576,866 232,942,159 169,075,335 141,390,129

Tax expenses (107,928,740) (118,807,480) (79,116,544) (56,804,522) (51,873,927)

Net profit after tax 1,075,666,883 307,769,386 153,825,615 112,270,813 89,516,202


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C. The statement of cash flow of the company was as under:

2008 2007 2006 2005 2004

Taka Taka Taka Taka Taka

i) Cash flow from operating activities

Cash receipts from customers 7,639,454,724 4,908,736,690 3,806,112,232 3,358,707,758 2,742,404,999

Cash receipts from other income 61,681,506 21,223,737 35,289,395 29,535,859 47,893,107

Receipts from/(payments to) other debtors 50,838,352 (69,587,526) (24,445,421) 7,187,755 (22,227,853)

7,751,974,582 4,860,372,901 3,816,956,206 3,395,431,372 2,768,070,253

Cash paid for:

Purchase of inventory (5,752,551,464) (3,460,939,880) (2,367,519,806) (2,063,386,261) (1,673,511,744)

Operating expenses (1,593,931,585) (1,085,495,897) (770,911,187) (646,770,373) (502,261,329)

Other creditors (28,452,240) 40,737,264 (11,951,130) 48,130,048 25,682,753

Advances, deposits and prepayments (89,296,633) (35,593,801) 11,008,583 (17,530,498) 28,651,559

Value added tax (VAT) (730,631,148) (539,079,179) (410,940,340) (337,126,878) (275,126,997)

Workers' profit participation fund 1,924,708 (10,793,892) (2,207,532) (2,007,532) (3,855,060)

(8,192,938,362) (5,091,165,385) (3,552,521,412) (3,018,691,494) (2,400,420,818)

Cash generated from operations (440,963,780) (230,792,484) 264,434,794 376,739,878 367,649,435

Financing cost (280,811,155) (119,319,310) (81,555,964) (83,396,936) (93,164,270)

Income tax paid (111,461,586) (133,260,448) (59,835,560) (25,643,000) (14,277,841)

(392,272,741) (252,579,758) (141,391,524) (109,039,936) (107,442,111)

Net cash used in operating activities (833,236,521) (483,372,242) 123,043,270 267,699,942 260,207,324

ii) Cash flow from investing activities

Purchase of property, plant and equipment (63,264,697) (33,053,436) (10,948,620) (21,321,196) (6,984,937)

Payments for capital work- in- progress (225,710,412) (266,499,330) (32,175,356) (41,813,850) (70,497,536)

Investment in shares (178,576,000) (108,531,000) (48,019,000) (85,200,000) (105,962,000)

Sale proceeds from property, plant and equipment 1,631,300 2,595,400 1,511,241 2,937,206 1031402

Sales of shares of subsidiaries 805,969,890 119,538,000 - - -

Net cash from (used in) investing activities 340,050,081 (285,950,366) (89,631,735) (145,397,840) (182,413,071)

iii) Cash flow from financing activities

Inter-company debts (paid)/received (349,990,479) 137,916,229 42,393,545 29,711,344 (49,562,210)

Dividend distribution tax paid - - - - (6,468,000)

Dividend paid (134,219,424) (95,201,895) (71,172,362) (67,483,629) (63,993,201)

Payment for finance lease (10,220,406) (14,387,713) (19,168,801) (14,762,775) (9,704,641)

Short term loan (paid)/received 716,443,570 506,402,344 161,713,248 (32,674,695) (38,753,980)

Long term loan (paid)/ received (35,090,276) 104,298,644 (28,766,555) (118,793,680) 77,840,598

Net cash from financing activities 186,922,985 639,027,609 84,999,075 (204,003,435) (90,641,434)

iv) Net increase in cash and cash equivalent (i+ii+iii) (306,263,455) (130,294,999) 118,410,610 (81,701,333) (12,847,181)

v) Cash and cash equivalent at 1 January (214,000,509) (83,705,510) (202,116,120) (120,414,787) (107,567,606)

vi) Cash and cash equivalent at 31 December (iv+v) (520,263,964) (214,000,509) (83,705,510) (202,116,120) (120,414,787)


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D. The statement of consolidated assets and liabilities of the company and its group are as under:

Particulars 2008 2007 2006 2005 2004 Taka Taka Taka Taka Taka Property and assets

Fixed assets 2,975,511,708 1,949,930,550 1,393,394,278 1,423,875,821 1,017,583,458

Intangible assets 108,283,142 104,677,902 104,677,902 104,677,902 104,677,902

Capital work-in-progress 264,954,252 567,484,589 39,353,484 33,557,417 82,112,777

Investments 134,462,220 62,045,192 38,069,558 65,187,998 112,789,450

Current assets 5,926,118,309 3,227,735,714 2,140,810,780 1,754,789,209 1,479,889,119

Total property and assets 9,409,329,631 5,911,873,947 3,716,306,002 3,382,088,347 2,797,052,706

Liability and capital

Share capital 161,700,000 161,700,000 161,700,000 161,700,000 161,700,000

Reserve and surplus 2,092,259,165 1,295,646,679 721,388,636 641,662,355 622,243,443

Share premium 250,022,474 250,022,474 250,022,474 250,022,474 250,022,474

Shareholders' equity 2,503,981,639 1,707,369,153 1,133,111,110 1,053,384,829 1,033,965,917

Minority interest 308,046,695 92,764,072 79,265,885 75,453,643 55,628,265

Long term liabilities 625,749,542 629,798,677 370,117,209 500,746,656 480,954,356

Current liabilities 5,971,551,755 3,481,942,045 2,133,811,798 1,752,503,219 1,226,504,168

Total liabilities & shareholders' equity 9,409,329,631 5,911,873,947 3,716,306,002 3,382,088,347 2,797,052,706

E. The statement of consolidated operating result of the company and its group are as under:

Revenue 10,341,425,084 5,756,817,829 4,237,856,136 3,327,490,971 2,695,049,890

Cost of sales (7,289,427,526) (3,749,131,735) (2,770,641,893) (2,189,003,597) (1,773,119,725)

Gross profit 3,051,997,558 2,007,686,094 1,467,214,243 1,138,487,374 921,930,165

Administrative, selling and distribution expenses (2,104,511,818) (1,397,956,550) (1,014,602,710) (797,999,902) (628,023,411)

Total income 947,485,740 609,729,544 452,611,533 340,487,472 293,906,754

Other income (Non-operating) 68,088,797 83,171,466 56,050,015 46,569,092 37,915,757

Profit from sale of shares 639,297,191 86,181,149 - - -

1,654,871,728 779,082,159 508,661,548 387,056,564 331,822,511

Share of profit of equity accounted investees (898,972) (3,831,367) (36,965,835) (27,393,797) -

1,653,972,756 775,250,792 471,695,713 359,662,767 331,822,511

Financial costs (523,780,506) (220,521,137) (163,661,101) (137,276,023) (117,363,237)

Profit before contribution to WPPF 1,130,192,250 554,729,655 308,034,612 222,386,744 214,459,274

Provision for contribution to WPPF (35,542,999) (28,671,365) (17,679,294) (14,686,683) (12,115,555)

Profit before tax 1,094,649,251 526,058,290 290,355,318 207,700,061 202,343,719

Tax expenses (161,739,343) (161,893,824) (122,478,216) (94,065,617) (79,018,048)

Net profit after tax 932,909,908 364,164,466 167,877,102 113,634,444 123,325,671


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Attributable to:

Equity holders of the Company 917,905,438 341,808,528 165,585,859 114,369,067 119,297,191

Minority interest 15,004,470 22,355,938 2,291,243 (734,623) 4,028,480

Net profit after tax 932,909,908 364,164,466 167,877,102 113,634,444 123,325,671

F. The statement of consolidated cash flow of the company was as under:

2008 2007 2006 2005 2004 Taka Taka Taka Taka Taka

i. Cash flow from operating activities

Cash received from customers 10,058,175,379 5,720,898,542 4,475,228,183 3,545,792,895 2,832,187,153

Cash received as other income 71,561,267 38,198,506 57,059,881 44,026,944 47,337,989

Receipts from (payments to) other debtors

50,207,086 (69,587,526) (25,856,727) 7,187,755 (22,227,853)

10,179,943,732 5,689,509,522 4,506,431,337 3,597,007,594 2,857,297,289

Cash paid for: Inventories (8,242,282,517) (3,902,876,736) (2,837,287,508) (2,213,639,916) (1,555,955,174) Operating expenses (2,022,002,520) (1,247,587,544) (903,926,092) (713,198,092) (587,836,450) Other creditors 117,027,730 40,104,658 (12,391,675) 47,904,659 25,803,326

Advances, deposits and prepayments (124,625,657) (33,923,599) (14,871,907) (29,775,247) 17,172,172

Value added tax (VAT) (738,374,482) (539,079,179) (435,495,125) (336,414,244) (275,126,997)

Paid to workers from WPPF 1,924,708 (10,793,892) (7,626,712) (7,795,513) (3,855,060)

(11,008,332,738) (5,694,156,292) (4,211,599,019) (3,252,918,353) (2,379,798,183)

Cash generated from operations (828,389,006) (4,646,770) 294,832,318 344,089,241 477,499,106

Financing cost (518,576,586) (216,045,054) (158,586,084) (131,834,859) (117,363,237) Income tax paid (167,261,741) (191,344,829) (59,835,560) (36,476,069) (14,277,841)

(685,838,327) (407,389,883) (218,421,644) (168,310,928) (131,641,078)

Net cash used in operating activities (1,514,227,333) (412,036,653) 76,410,674 175,778,313 345,858,028

ii Cash flow from investing activities

Purchase of fixed assets (407,950,013) (173,030,461) (38,164,709) (370,523,396) (17,909,137)

Payments for capital work-in-progress (521,283,902) (676,386,404) (77,115,119) (46,964,869) (91,813,512)

Investment in shares (73,316,000) (37,200,000) (10,000,000) (85,200,000) (73,719,500)

Sale proceeds of fixed assets 1,631,300 2,882,090 1,511,241 2,937,206 1,031,402

Proceeds from sale of shares of subsidiary 805,969,890 121,992,778 - - -

Proceeds from sale of investment in shares- Mutual Trust Bank

- 52,763,741 - - -

Net cash used in investing activities (194,948,725) (708,978,256) (123,768,587) (499,751,059) (182,410,747)

iii Cash flow from financing activities

Paid to minority interest - (1,920,000) (480,000) - (3,257,500)


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Inter-company debts received/(paid) (2,738,155) 15,994,477 (13,766,700) (9,290,315) (1,661,271)

Dividend distribution tax paid - (16,048,000)

Dividend paid (134,219,424) (95,201,895) (71,172,362) (68,443,629) (63,993,201)

Short term loan received/(paid) 973,119,339 844,932,351 284,694,648 127,313,582 (149,618,621)

Long term loan received/(paid) 106,773,324 248,618,953 (27,299,509) 93,673,079 68,821,598

sale of shares 32,240,000 10,651,000 2,001,000 90,000,000 12,257,500

Repayment of lease obligation (10,220,406) (15,001,038) (19,404,533) (15,206,580) (10,089,532)

Net cash from financing activities 964,954,678 1,008,073,848 154,572,544 218,046,136 (163,589,027)

iv Net decrease in cash and cash equivalent (i+ii+iii) (744,221,380) (112,941,061) 107,214,631 (105,926,610) (141,746)

v Cash and cash equivalent 1 January (231,582,239) (118,641,178) (225,855,809) (119,929,199) (119,787,453)

vi Cash and cash equivalent at 31 December (iv+v) (975,803,619) (231,582,239) (118,641,178) (225,855,809) (119,929,199)

G. Dividend declared:

Particulars 2008 2007 2006 2005 2004 Cash dividend-% 100% 85.00% 60% 45% 42.50%

Stock dividend (Bonus share)-% 20% 0% 0% 0% 0%

H.

Advanced Chemical Industries Limited (ACI) is a public limited company which was incorporated on 24 January 1973 as ICI Bangladesh Manufacturers Limited.

I. The company did not prepare any account for any period subsequent to 31 December 2008.

J. Figures related to previous years have been rearranged where considered necessary.


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Auditors’ certificate regarding calculations of EPS and other ratios as per Securities and Exchange

Commission (Public Issue Rules 2006) We have examined the following earnings per share (EPS) and other ratios of ACI Limited for the years ended 31 December 2004, 2005, 2006, 2007 and 2008, which have been produced by the management of the company to us. The calculation of the EPS and other ratios is the responsibility of the company’s management. Our responsibility is to review them and certify as to whether they have been properly calculated using acceptable principles on the basis of audited financial statements for the years ended 31 December 2004, 2005, 2006, 2007 and 2008. Based on our review, we certify that the company has properly calculated the following EPS and other ratios using acceptable principles on the basis of financial statements for the years ended 31 December 2004, 2005, 2006, 2007 and 2008.

Particulars 2008 2007 2006 2005 2004 Liquidity ratio: Current ratio 1.13 1.00 1.01 1.01 1.16 Quick ratio 0.66 0.65 0.58 0.55 0.55 Time interest earned ratio 5.29 4.77 4.01 3.13 2.60

A.

Debt to equity ratio 2.14 2.77 1.99 1.95 1.76 Operating ratio: Accounts receivable turnover ratio 6.68 7.51 9.54 10.55 12.04 Inventory turnover ratio 3.20 3.56 3.25 3.02 2.42 B.

Asset turnover ratio 1.26 1.29 1.26 1.22 1.16 Profitability ratio: Gross profit ratio 31% 34% 33% 31% 29% Operating profit ratio 10% 09% 09% 08% 09% Net profit ratio 15% 06% 04% 04% 03% Return on asset ratio (excluding capital gain)

13% 12% 12% 10% 11%

Return on asset ratio (including capital gain)

26% 15% 12% 10% 11%

Return on equity ratio (excluding capital gain)

23% 20% 16% 13% 12%

Return on equity ratio (including capital gain)

62% 28% 16% 13% 12%

C.

Earnings per share(EPS) in Taka 66.52 19.03 9.51 6.94 5.54


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ADDITIONAL DISCLOSURE

DSE’s Observations/Queries

Observations/Queries-1 Zero Coupon Bond with a convertible feature shall render the bond interest income taxable in hands of bond holders. As a result investors will be deprived from the tax benefit allowed to Zero Coupon Bonds under paragraph 40 of Sixth Schedule, Part-A of the Income Tax Ordinance, 1984. Management Perception

ACI 20% Convertible Zero Coupon Bond is by nature is a Zero Coupon Bond and it has all the attributes ( features) of Zero Coupon Bond and the convertibility option is an added feature of the Bond. The added option of convertibility does not any way clash with the basic features of the Zero Coupon Bond rather it strengthens the bond’s acceptability to the investors. Since the Bond market has not yet developed in Bangladesh and instruments with fixed return are not attractive in our capital market, we have added the conversion feature as an option. It is working as a sweetener of this bond. We believe that Convertibility option does not impair the status of Zero Coupon Bond and pursuant to Paragraph 40 of Sixth Schedule, Part A of Income tax Ordinance, 1984 all the subscribers will be entitled to tax exemption on interest income. Observations/Queries-2 The proposed Bond is unsecured. No asset of the company is mortgaged against the proposed bond issue. We have worse experience of deprival of the investors in the past on debentures issued without security. The trustees could do nothing in favour of investors; and against such delinquent issuers. Management Perception Aiming towards protecting investors right ACI Limited (the issuer) shall be responsible to pay the installments as per the terms of the bonds. In addition, the Trustee would be responsible to ensure that payments are being made according to the terms of bond as per the clause 4.5 of the Trust Deed. Furthermore, if for any reason the issuer fails to pay the installment timely, the occurrence would be treated as Event of Default as described in Article 8 of the trust deed which implies that the Trustee can take legal actions against the issuer in the Event of Default to protect the interest of the Bondholder(s). On the other hand there is no mortgage or collateral security against the bonds. As a publicly traded security, mortgage/Collateral security against ACI 20% convertible Zero Coupon Bond bears less importance. However, to protect the interest of the Bondholder(s), the issuer would ensure that the combined total of the issuer’s bank loan and bond’s outstanding balance is not more than the value of the chargeable assets of the issuer as described in Article 8 of the Trust Deed. In addition to this, the issuer would issue receive post dated cheques as security to the Trustee for the benefit of the Bondholder(s) as referred to the Schedule C of the Trust Deed.

Observations/Queries-3 Conversion feature includes unrealized profit (revaluation surplus) as one of the components of net asset value determinants. This features is unreasonable and illogical and against the interest of the general investors at large. Management Perception

Fixed assets are revalued at regular interval to reflect the fair value of the assets in the Financial Statements as prescribed by International Accounting Statdard-16 (IAS 16: Property, Plant and Equipment). Any surplus arising from revaluation is considered as part of the equity or net asset as per the said IAS, since the benefits from revaluation surplus flow to the company when the asset is used or disposed off. As such in line with accepted accounting practices (IAS), revaluation surplus will be treated in calculating net assets value.


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APPLICATION FORM Interested persons are entitled to a prospectus and copy of prospectus may be obtained from the issuer and the issue manager.


APPLICATION FOR ACI 20% CONVERTIBLE ZERO COUPON BONDS (ZCB) (INVESTORS OTHER THAN NON-RESIDENT BANGLADESHIS)

Please read the instructions at the back of this form. Incorrectly filled applications or failing to comply with any of the instructions there in, application may be rejected.

Banker’s Sl. No.

The Managing Director Advanced Chemical Industries Limited (ACI) ACI Centre 245 Tejgaon Industrial Area Dhaka- 1208 I/we apply for and request you to allot me/us the ……….lots of ZCB and I/we agree to accept the same or any smaller number that may be allotted to me/us upon the terms of the Company’s approved Prospectus and subject to the Memorandum and Articles of Association of the Company. Further, I/we authorize you to place my/our name(s) on the Register of Bondholders of the Company and deposit the said Bonds to my BO (Beneficiary Owner) Account and/or a Crossed (Account Payee only) Cheque in respect of any application money refundable by post/courier at my/our risk to the first applicant’s address stated below:- 1. No. of lots of Zero Coupon Bonds:……………………………………………………….…………… lots of Tk 3,743 per lot( Face value of Tk 5,000). 2. Amount of Tk (in figure), ……….….….….,(in words)…….……………….…..………… ………………………….…………….……….………only deposited vide Cash/Cheque/Draft/Pay Order No..….……………..…………..Dated……..……………...…………………..........……..…. drawn on

…………………………..….………………………….Bank………..…………………………...….………..….………...………………..….…Brach. 3. Beneficiary (B/O) Account Number (If you do not mention your valid BO (Beneficiary Owners) account, your application will be treated as invalid) 4. I/we agree to fully abide by the instruction given herein. 5. Particulars of Applicant(s). a) Sole/First Applicant

Name: Mr./Mrs./Ms.

Father /Husband’s name: Mother’s name:

Postal address: Occupation: Nationality: Telephone (If any):

For refund warrant (Application will not be treated as valid if anyone uses a non-scheduled bank. To avoid this complication, investors are requested not to use the name of any non-scheduled bank) Please write the correct and full name of bank and branch: For refund warrant: Applicant’s Bank A/C No. Name of the Bank: Branch:

b) Second Applicant Name: Mr./Mrs./Ms.

Father /Husband’s name: Mother’s name:

Postal address:

Occupation: Nationality:

6. I/we hereby declare that I/we have read the Prospectus of ‘Advanced Chemical Industries Limited’, and have willingly subscribed for ……………….………….lots of ZCB Tk. 3,743 per lot ( Face value Tk.5,000.00) on this form.

7. Specimen Signature(s):

Name (IN BLOCK LETTERS) SIGNATURE

First Applicant:

Second Applicant:

………………………………………………………………………………………..………...……………………………………………………….……..

BANK’S ACKNOWLEDGMENT Certified that this bank has received Tk………..…………...(in word)……………….………………………………. ……………………………. only from Mr./Ms…...…………………………………….……………..being the Application Money for ……………….lots of ZCB of Advanced Chemical Industries Limited (ACI).

Banker’s Sl. No. Seal and Date Authorized Signature

(Name & Designation)


Page 172

Instructions: 1. As per provision of the Depository Act, 1999 and regulations made there under bonds will only be issued in dematerialized condition. Please mention your BO (Beneficiary Owner)

account number in the Application Form. If you do not mention your valid BO (Beneficiary Owner) Account, your application will be treated as invalid. 2. All information must be typed or written in full (in block letters) in English or in Bengali and must not be abbreviated. 3. Application must be made on the Company’s printed form/photocopy or on typed copy/hand written form thereof. 4. Application must not be for less than 1(one) lot of 5(five) Bonds and must be for a multiple of one lot of ZCB. Any application not meeting these criterions will not be considered

for allotment purpose. 5. Remittance for the full amount of the bonds must accompany each application and must be forwarded to any of the Bankers’ to the Issue. Remittance should be in the form of

cash/cheque/bank draft/pay order payable to one of the Bankers’ to the Issue favoring “ADVANCED CHEMICAL INDUSTRIES LIMITED” and crossed “A/C Payee only” and must be drawn on a bank in the same town as the bank to which the application form has been sent.

6. In the case of a joint application form, the Allotment letter will be dispatched to the person whose name appears first on this application form and where any amount is refundable in whole or in part the same will be refunded by Account Payee cheque by post/courier service to the person named first on this application form in the manner prescribed in the Prospectus.

7. Joint application form for more than two persons will not be accepted. In case of joint application, each party must sign the application form. 8. Applications must be in the full name of individuals or companies or societies or trusts and not in the name of firms, minors or persons of unsound mind. Application from financial

and market intermediary companies must be accompanied by Memorandum of Association and Articles of Associations and Certificate of Incorporation. 9. An applicant cannot submit more than two applications, one in his/her own name and another jointly with another person. In case an applicant makes more than two

applications, all applications will be treated as invalid and will not be considered for allotment purpose. In addition, whole or part of application money may be forfeited by the Commission.

10. No receipt will be issued for the payment made with application, but the bankers will issue a provisional acknowledgement to the issue for application lodged with them. 11. In the case of non-allotment of securities, if the applicants’ bank accounts as mentioned in their IPO Application Forms are maintained with the Bankers to the Issue, refund amount

of those applicants will be directly credited into the respective bank accounts as mentioned in their IPO Application Forms. Otherwise, refund will be made only through “Account Payee” cheque(s) showing bank account number and name of bank and branch as mentioned in the application payable at Dhaka or Chittagong, as the case may be.

12. Allotment shall be made solely in accordance with the instructions of the Securities and Exchange Commission. 13. Making of any false statement in the application or supplying of incorrect information therein or suppressing any relevant information shall make the application liable to rejection

and subject to forfeiture of application money and / or forfeiture of securities (unit) before or after issuance of the same by the issuer. The said forfeited Application money or securities (unit) will be deposited in account specified by the Securities and Exchange Commission (SEC). This may be in addition to any other penalties as may be provided for by the law.

14. Applications which do not meet the above requirements, or applications, which are incomplete, shall not be considered for allotment purpose. 15. The Bankers’ to the Issue shall be obliged to receive the A/C Payee Cheque(s) on the closing day of the subscription. 16. No sale of securities shall be made nor shall any money be taken from any person, in connection with such sale until twenty five days after the prospectus have been

published. Bankers to the Issue

Trust Bank Limited Kushita Br., Kushita Mirpur Br. Dhaka Agrabad Br. Chittagong Principal Branch, Dhaka Bank Asia Limited Dhaka Chamber Br. Motijheel, Dhaka Khatungonj Br. Chittagong SKB Br. Dhaka Principal Branch, Dhaka Imamganj Br. Dhaka CDA Avenue Br. Chittagong Gulshan Corporate Br. Dhaka MCB Dilkusha Br., Dhaka Islami Banking Br. Dhaka Bahaddar Hat br., Ctg Dilkusha Corporate Br. Dhaka Corporate Br., Dhaka Uttara Br. Dhaka Sylhet Br. Sylhet Dhanmondi Br. Dhaka Mohakhali Br., Dhaka Shaymoli Br. Dhaka Khulna Br. Khulna Millenium Corporate Br. Dhaka Morpur Br., Dhaka Islampur Br. Dhaka Rajshahi Br. Rajshahi Uttara Corporate Br. Dhaka Shantinagar Br., Dhaka Tongi Br. Gazipur Jessore Br. Jessore Mirpur Br. Dhaka Bashundhara Br., Dhaka Tanbazar Br. Narayangonj Narayangonj Br. Narayangonj Kawranbazar Br. Dhaka Dholaikhal Br.,Dhaka Comilla Br. Comilla One Bank Limited Naval Base Br. Chittagong Scotia Br., Dhaka Jubilee Road Br. Chittagong Principal Branch, Dhaka Agrabad Br. Chittagong Gulshan Br., Dhaka Agrabad Br. Chittagong Kawran Bazar Br. Dhaka Shahjalal Uposhohor Br. Sylhet MCB Banani Br., Dhaka Khatungonj Br. Chittagong Mirpur Br. Dhaka Sylhet Corporate Br. Sylhet Uttara Br., Dhaka O.R. Nizam Road Br. Chittagong Dhanmondi Br. Dhaka Feni Br. Feni Mitford Br., Dhaka Bandar Bazar Br. Sylhet Ganakbari (EPZ) Br., Dhaka Khulna Br. Khulna North South Road Br., Dhaka Zinda Bazar Br. Sylhet Progoti Sharani Br., Dhaka Mutual Trust Bank Limited Sylhet Main Br., Sylhet Bogra Br. Bogra Elephant Road Br., Dhaka Principal Branch, Dhaka Sylhet Uposhahar Br. Sylhet Rajshahi Br. Rajshahi Nowabgonj Br., Dhaka Dilkusha Br., Dhaka Agrabad Br. Chittagong Barishal Br. Barishal Joypara Br., Dhaka Babu Bazar Br. , Dhaka Khatungunj Br., Chittagong Khulna Br. Khulna Motijheel Br. Motijheel, Dhaka Fulbaria Br., Dhaka MCB Sk. Mujib Rd. Br., Chittagong Eastern Bank Limited Gulshan Br. Dhaka Dholaikhal Br.,Dhaka CDA Avenue Br. Chittagong Mirpur Br. Dhaka Uttara Br. Dhaka Panthapath Br., Dhaka Station Road Br., Chittagong Motijheel Br. Motijheel, Dhaka Banani Br. Dhaka Uttara Model Town Br., Dhaka Rajshahi Br. Rajshahi Principal Br., Dilkusha, Dhaka Kakrail Br., Dhaka Dhanmondi Br. Dhaka Khulna Br. Khulna Shyamoli Br., Dhaka Imamganj Br. Dhaka Progati Sarani Br., Dhaka Bogra Br., Bogra Bashundhara Br., Dhaka Jatrabari Br., Dhaka Pallabi Br., Dhaka Jessore Br., Jessore Khatungonj Br. Chittagong Bangshal Br., Dhaka Gulshan Br., Dhaka Anderkilla Br., Chittagong Narayangonj Br., Narayangonj Narayangonj Br. Narayangonj Bashundhara City Br., Dhaka Khulna Br., Khulna Agrabad Br. Chittagong Banani Br., Dhaka ICB Agrabad Br. Chittagong Cox’s Bazar Br., Chittagong Agrabad Br. Chittagong Head Office (NSC Tower), Dhaka Rajshahi Br., Rajshahi CDA Avenue Br., Chittagong CDA Avenue Br., Chittagong Chittagong Br. Agrabad,Chittagong Bogra Br., Bogra Khatungonj Br. Chittagong Jubilee Road Br., Chittagong Rajshahi Br. Rajshahi Standard Bank Limited Jubilee Road Br. Chittagong Khatungunj Br., Chittagong Khulna Br. Khulna Principal Branch, Dhaka Nanupur Bazar Br., Chittagong Sylhet Br., Sylhet Barisal Br. Barisal Foreign Exchange Br. Dhaka Feni Br. Feni Jiypurhat Br., Joypurhat Sylhet Br. Sylhet Topkhana Road Br.,Dhaka Raipur Br., Lazmipur Madaripur Br., Madaripur Bogra Br. Bogra Imamgonj Br. Dhaka Chandragonj Br., Lakshmipur Moulvi Bazar Br., Moulvi Bazar Local Office Br. Dhaka Gulshan Br. Dhaka Dagon Bhuiyan Br., Feni Sreenagar Br., Munshigonj The City Bank Limited Dhanmondi Br. Dhaka Chowmuhuni Br., Noakhali Pabna Br., Pabna Principal Office, Br. Dhaka Uttara Br. Dhaka Sylhet Br., Sylhet Chandra Br., Gazipur B.B. Avenue Br. Dhaka Gulshan-1 Br. Dhaka Islampur Br., Sylhet Sonargaon Br., Sonargaon Dhanmondi Br. Dhaka Panthapath Br. Dhaka Sherpur Br., Moulivi Bazar Narayangonj Br., Narayangonj New Market Br. Dhaka Banani Br. Dhaka Bogra Br. Bogra Savar Br. Savar Gulshan Br. Dhaka Mirpur Br., Dhaka Jessore Br. Jessore Tongi Br., Gazipur Kawran Bazar Br. Dhaka Munshikhola Br. Dhaka Siraigonj Br., Sirajgonj Rangpur Br., Rangpur Foreign Ex. Br. Dhaka Jubilee Road Br. Chittagong


Page 173

Interested persons are entitled to a prospectus and copy of prospectus may be obtained from the issuer and the issue manager. ADVANCED CHEMICAL INDUSTRIES LIMITED

APPLICATION FOR ACI 20% CONVERTIBLE ZERO COUPON BOND (ZCB)

BY NON-RESIDENT BANGLADESHI(S) (To be sent directly to the company’s corporate office)

Please read the instructions at the back of this form. Incorrectly filled applications or failing to comply with any of the instructions there in, application may be rejected.

The Managing Director Advanced Chemical Industries Limited (ACI) ACI Centre 245 Tejgaon Industrial Area Dhaka- 1208 I/we apply for and request you to allot me/us the following lots of Zero Coupon Bonds (ZCB) and I/we agree to accept the same or any smaller number that may be allotted to me/us upon the terms of the Company’s approved Prospectus and subject to the Memorandum and Articles of Association of the Company. Further, I/we authorize you to place my/our name(s) on the Register of Bondholders of the Company as the holder(s) of…………..lots of Bonds allotted to me/us pursuant to this application and credit the said securities to my BO (Beneficiary Owner) Account and/or a Crossed (Account Payee only) Cheque in respect of any application money refundable by post/courier at my/our risk to the first applicant’s address stated below:- 1. No of lots of ZCB: ……………................................................….........................…..........………lots of Tk. 3,743 per lot (Face value of Tk 5,000) 2. Amount of Tk(in figure). ……………………….................………(in words)…… .................…………...…….................……………………….only Convertible into US Dollar 1.00 =Tk ...……… .............UK Pound Sterling 1.00 =Tk. ……………and Euro 1.00 =Tk…….…….................…..........… 3. Payment by cheque/draft no.…………..…………….........…….dated…...…………….................………….for US Dollar/UK Pound Sterling/Euro or

Tk……….………..….drawn on……….................….................……………….………Bank….................………….……………………….…Branch. 4. Beneficiary Owner (B/O) Account Number (If you do not mention your valid BO (Beneficiary Owners) account, your application will be treated as invalid) 5. I/we agree to fully abide by the instruction given herein. 6. Particulars of Applicant(s). a) Sole/First Applicant

Name: Mr./Mrs./Ms.

Father’s /Husband’s name:

Mother’s name:

Mailing address:

Occupation: Nationality:

Passport No. Valid up to: Date of Birth Telephone (If any):

For refund warrant (Application will not be treated as valid if anyone uses a non-scheduled bank. To avoid this complication, investors are requested not to use the name of any non-scheduled bank) Please write the correct and full name of bank and branch: For refund warrant: Applicant’s Bank A/C No. Name of the Bank: Branch

b) Second Applicant

Name: Mr./Mrs./Ms. Father’s /Husband’s name: Mother’s name: Mailing address: Occupation: Nationality: Passport No. Valid up to: Date of Birth:

Nominee: Name: Mailing Address: Telephone (If any):

7. I/we hereby declare that I/we have read the Prospectus of “Advanced Chemical Industries Limited (ACI)” and have willingly subscribed for

…...…………………………………….................….................….................….................……..lots of ZCB Tk. 3,743 per lot ( Face value Tk.5,000.00) on this form.

8. Specimen Signature(s): Name in Block Letters Signature Sole/First Applicant: Second Applicant:


Page 174

Nominee:

Instructions: 1. As per provision of the Depository Act, 1999 and regulations made there under bonds will only be issued in dematerialized condition. Please

mention your BO (Beneficiary Owner) account number in the Application Form. If you do not mention your valid BO (Beneficiary Owner) account, your application will be treated as invalid.

2. All information must be written or typed in block letters in English and must not be abbreviated.

3. An application must not be for less than 1(one) lot of 5 bonds and must be for a multiple of single lot. Any application not meeting this criterion will not be considered for allotment purpose.

4. An application must be accompanied by a foreign demand draft drawn on a bank payable at Dhaka or cheque drawn out of foreign currency deposit account maintained in Bangladesh for the full value of shares favoring “Advanced Chemical Industries Limited” and crossed “Account Payee only”.

5. An application shall be sent by the applicant directly to the Company by 04.02.2010 so as to reach the Company by 13.02.2010 Applications sent after 04.02.2010 or received by the Company after 13.02.2010 will not be considered for allotment purpose.

6. Refund against over-subscription shall be made in the currency in which the value of securities was paid for by the applicant at the same rate as stated on the application form through Account Payee cheque payable at Dhaka with bank account number, Bank’s name and Branch as indicated in the securities application form.

7. In case of over-subscription, allotment shall be made by lottery solely in accordance with the instructions by SEC.

8. Money receipt on clearance of draft or cheque, as the case may be, shall be sent by post to the applicant by the Company.

9. Joint application by two persons will be acceptable. In such a case, allotment or refund shall be made by post to the first applicant.

10. Application must be made by an individual, a corporation or company, a trust or a society and not by a firm, minor or persons of unsound mind.

11. Making of any false statement in the application or supplying of incorrect information therein or suppressing any relevant information in the application shall make the Application liable to rejection and subject to forfeiture of application money and / or forfeiture of share (unit) before or after issuance of the same by the issuer. The said forfeited application money or share (unit) will be deposited in account specified by the Securities and Exchange Commission (SEC). This may be in addition to any other penalties as may be provided for by the law.

12. The intending NRB applicants shall deposit share money by US$/UK Pound Sterling/EURO draft drawn on any Bank and payable in Dhaka, Bangladesh, or through a nominee by paying out of foreign currency deposit account maintained in Bangladesh or in Taka, supported by foreign currency encashment certificate issued by the concerned bank, for the value of securities applied for through crossed bank cheque marking “Account Payee only”. So that the issuer’s collecting bank can clear the proceeds and deposit the same into Issuer Company’s account in time.

13. The spot buying rate (TT Clean) in US Dollar, UK Pound Sterling and EURO of Sonali Bank at the day of subscription opening will be applicable for the Non Resident Bangladeshi (NRB) applicants.

14. The applicant shall furnish photocopies of relevant pages of valid passports in support of his being a NRB, dual citizenship or of the foreign passport bearing an endorsement from the concerned Bangladeshi Embassy to the effect that no visa is required for him to travel to Bangladesh.

15. In case of joint NRB application joint applicant shall also submit supporting papers /documents in support of their being a NRB as mentioned in para-14 (above).

16. An applicant cannot submit more than two applications, one in his/her own name and another jointly with another person. In case an applicant makes more than two applications, all applications will be treated as invalid and will not be considered for allotment purpose. In addition, whole or part of application money may be forfeited by the Commission.

17. No sale of securities shall be made nor shall any money be taken from any person, in connection with such sale until twenty five days after the prospectus have been published.

18. In the case of non-allotment of securities, if the applicants’ bank accounts as mentioned in their IPO Application Forms are maintained with the Bankers to the Issue, refund amount of those applicants will be directly credited into the respective bank accounts as mentioned in their IPO Application Forms. Otherwise, refund will be made only through “Account Payee” cheque(s) with bank account number and name of bank branch as mentioned in the application payable at Dhaka or Chittagong, as the case may be.

THE NRB APPLICATION ALONG WITH THE FOREIGN CURRENCY DRAFT, AS ABOVE, IS TO BE SUBMITTED TO THE COMPANY’S DHAKA OFFICE DIRECTLY WITHIN THE STIPULATED TIME MENTIONED IN PARA 5.