cuywRevRv‡i wewb‡qvM SzuwKc~Y©| †R‡b I ey‡S wewb‡qvM … Bags Ltd... · 2018-10-29 · 56-57 Motijheel C/A Dhaka -1000. Fax: +88-02-47117218 Md. Riyad Matin E mail: [email protected]

“cuywRevRv‡i wewb‡qvM SzuwKc~Y©| †R‡b I ey‡S wewb‡qvM Ki~b”

“Investment in capital market involves certain degree of risks. The investors are required to read the prospectus and risk factors carefully, assess their own financial conditions and risk taking ability before making their investment decisions.”

PUBLIC ISSUE OF 30,000,000 ORDINARY SHARES

ISSUE DATE OF THE PROSPECTUS: _________________

OFFER PRICE TK. 10.00 EACH AT PAR, TOTAL SIZE OF FUND TO BE RAISED TK. 300,000,000.00

Opening and closing date of subscription:

Opening date of subscription: ______________ Closing date of subscription: _______________

PROSPECTUS

Name of Issuer:

Name of Issue Managers:

BMSL Investment Limited

&

IIDFC Capital Limited

Page: ii

(a) Preliminary Information and Declarations: (i) Name(s), address(s), telephone number(s), web address(s), e-mail(s), fax number(s) and contact persons of the issuer, issue manager(s),

underwriter(s), auditors, credit rating company and valuer, where applicable;

Issuer

Name & Address Telephone & Fax Number, E-mail, Web Address Contact Person

Al-Faruque Bags Limited (AFBL) Tel: +88-02-9119266 Firoz Tower, 8th Floor (South Site), 152/3B, Bir Uttam Kazi Nurruzzaman Sarok, Green Road (Panthapath), Dhaka-1205

Fax: +88-02-9119266 (Ext.-101) Prantush Chandra Shaha ACS

Email: [email protected] Company Secretary

Web: www.al-faruquebags.com

Issue Managers


BMSL Investment Limited Tel: +88-02-9577651, +88-02-9570624, +88-02-9565183 Shareef Mansion (4th Floor) 56-57 Motijheel C/A Dhaka-1000.

Fax: +88-02-47117218 Md. Riyad Matin

E-mail: [email protected] Managing Director

Web: www.bmslinvestment.com

IIDFC Capital Limited Tel: +88-02-9514637-8 Eunoos Trade Center (Level 7), 52-53 Dilkusha C/A, Dhaka 1000.

Fax: +88-02-9514641 Mohammad Saleh Ahmed

E-mail: [email protected] Chief Executive Officer

Web: www.iidfc.com

Underwriters






Sandhani Life Finance Limited Tel: +88-02-9551896, +88-02-9575903 16, Motijheel Commercial Area, (3rd Floor), Dhaka-1000

Fax: +88-02-9554847 Muhammad Nazrul Islam FCMA

E-mail: [email protected] Managing Director & CEO

Web: www.slflbd.com

Asian Tiger Capital Partners Investments Limited Tel: +88-02-9898439 Sheba House (7th Floor), Plot # 34, Road # 46, Gulshan-2, Dhaka -1212.

Fax: +88-02-9898439 Mohammad Samsul Haque, ACS


Web: www.at-capital.com

Page: iii

Auditor


ARTISAN Tel: +88-02-8189883-7 Chartered Accountants Fax: +88-02-8180187 A F M Alamgir 33 Shah Ali Tower, (7th Floor), Kawran Bazar Dhaka-1215.

E-mail: [email protected] Chief Executive Partner

web: www.artisan-ca.com

The Company has no involvement with Credit Rating Company and Valuer.

(ii) A person interested to get a prospectus may obtain from the issuer and the issue managers. (iii) “If you have any query about this document, you may consult the issuer, issue manager and underwriter”

mailto:[email protected]

http://www.mahfelhuq.com/

Page: iv

(iv) “CONSENT OF THE BANGLADESH SECURITIES AND EXCHANGE COMMISSION HAS BEEN OBTAINED TO THE ISSUE OR OFFER OF THESE SECURITIES UNDER THE SECURITIES AND EXCHANGE ORDINANCE, 1969, AND THE BANGLADESH SECURITIES AND EXCHANGE COMMISSION (PUBLIC ISSUE) RULES, 2015. 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 SECURITIES 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, MANAGING DIRECTOR, CHIEF FINANCIAL OFFICER, COMPANY SECRETARY, ISSUE MANAGER, ISSUE MANAGER’S CHIEF EXECUTIVE OFFICER, UNDERWRITERS, AUDITOR(S), VALUER AND/OR CREDIT RATING COMPANY (IF ANY)."

(v) ‘Risks in relation to the First Issue’ “This being the first issue of the issuer, there has been no formal market for the securities of the issuer. The face value of the securities is Tk. 10.00 (Ten) and the issue price is Tk. 10.00, i.e. the face value. The issue price has been determined and justified by the issuer and the issue managers as stated under the paragraph on “justification of issue price” should not be taken to be indicative of the market price of the securities after listing. No assurance can be given regarding an active or sustained trading of the securities or the price after listing."

(vi) ‘General Risk' "Investment in securities involves a degree of risk and investors should not invest any funds in this offer unless they can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before taking an investment decision in this offer. For taking an investment decision, investors must rely on their own examination of the issuer and the offer including the risks involved. The securities have not been recommended by the Bangladesh Securities and Exchange Commission (BSEC) nor does BSEC guarantee the accuracy or adequacy of this document. Specific attention of investors is invited to the statement of ‘risk factors’ given on page number(s) 124-130”

(vii) ‘AFBL’s Absolute Responsibility’

"The issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this prospectus contains all material information with regard to the issuer and the issue, that the information contained in the prospectus are true, fair and correct in all material aspects and are not misleading in any respect, that the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of which make this document as a whole or any of such information or the expression of any such opinions or intentions misleading in any material respect."

Page: v

(b) Availability of Prospectus

(i) Names, addresses, telephone numbers, fax numbers, website addresses and e-mail addresses and names of contact persons of the institutions where the prospectus and abridged version of prospectus are available in hard and soft forms; The Prospectus and abridged version prospectus in hard and soft forms of the Company shall be obtained from the following addresses:

Issuer


Al-Faruque Bags Limited (AFBL) Tel: +88-02-9119266 Firoz Tower, 8th Floor (South Site), 152/3B, Bir Uttam Kazi Nurruzzaman Sarok, Green Road (Panthapath), Dhaka-1205

Fax: +88-02-9119266 (Ext.-101) Prantush Chandra Shaha ACS

Email: [email protected] Company Secretary


Issue Managers









Web: www.iidfc.com

Stock Exchanges


Dhaka Stock Exchange Limited Tel: +88-02-9564601, 9576210-18 DSE Library, 9/F Motijheel C/A, Dhaka-1000 Fax: +88-02-9564727, +88-02-9569755 Afzalur Rahaman

E-mail: [email protected] Manager

Web: www.dsebd.org

Chittagong Stock Exchange Limited Tel: 031-714632-3 CSE Library, CSE Building, 1080, Sheikh Mujib Road Agrabad, Chittagong- 4100.

Fax: 031-714101 Mohammed Jabed Sarwar

E-mail: [email protected] Assistant Manager

Web: www.cse.com.bd

Prospectus would also be available on the web sites of BSEC (www.sec.gov.bd) and at the Public Reference Room of the Bangladesh Securities and Exchange Commission (BSEC) for reading and studying.


http://www.dsebd.org/

http://www.cse.com.bd/

http://www.sec.gov.bd/

Page: vi

(ii) Names and dates of the newspapers where abridged version of prospectus was published. Names and dates of the newspapers where abridged version of prospectus was published:

Sl. No. Name of the Newspaper Date of Publication

1

2

3

4

Page: vii

(iii) Definitions and Acronyms or Elaborations Acronyms or Elaborations: A

“Articles” or “Articles of Association” or “AoA” The Articles of Association of Al-Faruque Bags Limited, as amended

AFBL Al-Faruque Bags Limited

AGM Annual General Meeting

Allotment Letter of Allotment of shares

B

“Board” or “Board of Directors” or “our Board” The Board of Directors of Al-Faruque Bags Limited, as duly constituted from time to time including any committees thereof

B.A. Bachelor of Arts

B.Sc Bachelor of Science

BAS Bangladesh Accounting Standards

BDT Bangladeshi Taka

BFRS Bangladesh Financial Reporting Standards

BIDA Bangladesh Investment Development Authority

BMSLIL BMSL Investment Limited

BO A/C Beneficiary Owner's Account

BSEC Bangladesh Securities and Exchange Commission

C

CDBL Central Depository Bangladesh Limited

Certificate Share Certificate

CFO Chief Financial Officer

CIB Credit Information Bureau

Commission Bangladesh Securities and Exchange Commission

CSE Chittagong Stock Exchange Limited

D

DSE Dhaka Stock Exchange Limited

E

E-Mail Electronic Mail

EPS Earnings Per Share

Exchanges Stock Exchanges

F

FC A/C Foreign Currency Account

FDR Fixed Deposit Receipt

FY Fiscal Year

G

GBP Great Britain Pound

I

IIDFCCL IIDFC Capital Limited

IPO Initial Public Offering

Issue Public Issue of shares

Issue Managers BMSL Investment Limited & IIDFC Capital Limited

Issuer Al-Faruque Bags Limited

L

L/C Letter of Credit

Page: viii

M

“Memorandum” or “Memorandum of Association” or “MoA”

The Memorandum of Association of Al-Faruque Bags Limited, as amended

MS-Word Microsoft word

N

NAV Net Asset Value

NRB Non Resident Bangladeshi

O

“Our Company” Al-Faruque Bags Limited, a public limited company incorporated under the Companies Act

Offering Price Price of the Securities of AFBL

P

PE Price to Earnings

R

RJSC Registrar of Joint Stock Companies and Firms

S

Securities Share of Al-Faruque Bags Limited

Securities Market The Share Market of Bangladesh

Sponsors The sponsor shareholders of Al-Faruque Bags Limited

Stock Holder Share Holder

Subscription Application Money

T

The Company/Issuer Al-Faruque Bags Limited, a public limited company incorporated under the Companies Act

TT Telephonic Transfer

U

UK Pound United Kingdom Pound

USD United States Dollar

V

VAT Value Added Tax

W

WDV Written Down Value

Page: ix

Table of Contents CHAPTER (I): EXECUTIVE SUMMARY ................................................................................................ 1

(a) About the industry: ........................................................................................................................................... 1

(b) About the Issuer: ............................................................................................................................................... 1

(c) Financial Information: ...................................................................................................................................... 2

(d) Features of the issue and its objects: ............................................................................................................ 2

(e) Legal and other Information: ......................................................................................................................... 3

(f) Promoters’ background: .................................................................................................................................. 4

(g) Capital structure and history of capital raising: ........................................................................................ 5

(h) Summary of Valuation Report of Securities: ............................................................................................... 6

(i) Others: ................................................................................................................................................................ 7

CHAPTER (II): CONDITIONS IMPOSED BY THE COMMISSION .......................................................................... 8

DISCLOSURE IN RESPECT OF ISSUANCE OF SECURITY IN DEMAT FORM: .................................................... 8

CONDITIONS UNDER 2CC OF THE SECURITIES AND EXCHANGE ORDINANCE, 1969: ............................ 8

CHAPTER (III): DECLARATION AND DUE DILIGENCE CERTIFICATES ............................................................... 15

DECLARATION ABOUT THE RESPONSIBILITY OF THE DIRECTORS, INCLUDING THE CEO OF THE

ISSUER IN RESPECT OF THE PROSPECTUS ......................................................................................................... 15

DUE DILIGENCE CERTIFICATE BY ISSUE MANAGER ......................................................................................... 16

DUE DILIGENCE CERTIFICATE BY ISSUE MANAGER ......................................................................................... 18

DUE DILIGENCE CERTIFICATE BY THE UNDERWRITER ...................................................................................... 20



CHAPTER (IV): ABOUT THE ISSUER ....................................................................................................................... 24

Particulars of the Company: .................................................................................................................................. 24

Name of the Sponsors and Directors: .................................................................................................................. 24

Particulars of Auditor and Registrar to the Issue: .............................................................................................. 25

Name of the Stock Exchanges where the Securities to be listed: ................................................................... 25

CHAPTER (V): CORPORATE DIRECTORY OF THE ISSUER ................................................................................. 26

CHAPTER (VI): DESCRIPTION OF THE ISSUER ..................................................................................................... 27

(a) Summary: ........................................................................................................................................................ 27

(b) General Information: .................................................................................................................................... 27

(c) Capital Structure: .......................................................................................................................................... 34

(d) Description of Business: ................................................................................................................................ 40

(e) Description of Property: .............................................................................................................................. 50

(f) Plan of Operation and Discussion of Financial Condition: .................................................................... 62

(a) Internal and external sources of cash;.................................................................................... 63

(b) Any material commitments for capital expenditure and expected sources of funds for

such expenditure; ........................................................................................................................ 64

(c) Causes for any material changes from period to period in revenues, cost of goods

sold, other operating expenses and net income; ................................................................. 64

(d) Any seasonal aspects of the issuer’s business; ...................................................................... 64

(e) Any known trends, events or uncertainties that may have material effect on the issuer’s

future business; ............................................................................................................................ 64

(f) Any assets of the company used to pay off any liabilities; ............................................... 64

(g) Any loan taken from or given to any related party or connected person of the issuer

with details of the same; ........................................................................................................... 65

(h) Any future contractual liabilities the issuer may enter into within next one year, and the

impact, if any, on the financial fundamentals of the issuer; ............................................... 65

(i) The estimated amount, where applicable, of future capital expenditure; ..................... 65

Page: x

(j) Any VAT, income tax, customs duty or other tax liability which is yet to be paid,

including any contingent liabilities stating why the same was not paid prior to the

issuance of the prospectus. Updated income tax status for the last 5 years or from

commercial operation, which is shorter; ................................................................................. 65

(k) Any financial commitment, including lease commitment, the company had entered into

during the past five years or from commercial operation, which is shorter, giving

details as to how the liquidation was or is to be effected; ............................................... 66

(l) Details of all personnel related schemes for which the company has to make provision

for in future years; ..................................................................................................................... 66

(m) Break down of all expenses related to the public issue; .................................................... 67

(n) If the issuer has revalued any of its assets, the name, qualification and experiences of

the valuer and the reason for the revaluation, showing the value of the assets prior to

the revaluation separately for each asset revalued in a manner which shall facilitate

comparison between the historical value and the amount after revaluation and giving

a summary of the valuation report along with basis of pricing and certificates required

under the revaluation guideline of the Commission; ............................................................ 69

(o) Where the issuer is a holding or subsidiary company, full disclosure about the

transactions, including its nature and amount, between the issuer and its subsidiary or

holding company, including transactions which had taken place within the last five

years of the issuance of the prospectus or since the date of incorporation of the issuer,

whichever is later, clearly indicating whether the issuer is a debtor or a creditor; ...... 69

(p) Financial Information of Group Companies and Companies under common ownership

by more than 50%: following information for the last three years based on the

audited financial statements, in respect of all the group companies of the issuer,

wherever applicable, along with significant notes of auditors: ........................................ 70

(q) Where the issuer is a banking company, insurance company, non‐banking financial

institution or any other company which is regulated and licensed by another primary

regulator, a declaration by the board of directors shall be included in the prospectus

stating that all requirements of the relevant laws and regulatory requirements of its

primary regulator have been adhered to by the issuer; ................................................... 71

(r) A report from the auditors regarding any allotment of shares to any person for any

consideration otherwise than cash along with relationship of that person with the issuer

and rationale of issue price of the shares; ............................................................................ 71

(s) Any 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 ............... 71

(t) Business strategies and future plans - projected financial statements shall be required

only for companies not started commercial operation yet and authenticated by

Chairman, two Directors, Managing Director, CFO, and Company Secretary; ............ 71

(u) Discussion on the results of operations: ................................................................................... 72

(v) Comparison of recent financial year with the previous financial years on the major

heads of the profit and loss statement, including an analysis of reasons for the changes

in significant items of income and expenditure, inter-alia, containing the following: ... 74

(w) Defaults or rescheduling of borrowings with financial institutions or banks, conversion of

loans into equity along with reasons thereof, lock out, strikes and reasons for the same

etc. during the history of operation of the company; ......................................................... 76

(x) Details regarding the changes in the activities of the issuer during the last five years

which may had a material effect on the profits or loss, including discontinuance of lines

of business, loss of agencies or markets and similar factors; ............................................ 76

(y) Injunction or restraining order, if any, with possible implications; .................................... 76

(z) Technology, market, managerial competence and capacity built-up; ............................ 76

Page: xi

(aa) Changes in accounting policies in the last three years; ....................................................... 77

(bb) Significant developments subsequent to the last financial year: A statement by the

directors whether in their opinion there have arisen any circumstances since the date of

the last financial statements as disclosed in the prospectus and which materially and

adversely affect or is likely to affect the trading or profitability of the issuer, or the

value of its assets, or its ability to pay its liabilities within the next twelve months;..... 77

(cc) If any quarter of the financial year of the issuer ends after the period ended in the

audited financial statements as disclosed in the prospectus, unaudited financial

statements for each of the said quarters duly authenticated by the CEO and CFO of

the issuer; ...................................................................................................................................... 77

(dd) Factors that may affect the results of operations. ............................................................... 77

CHAPTER (VII): MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION ............... 78

(a) Overview of business and strategies: ....................................................................................................... 78

(b) SWOT ANALYSIS: ......................................................................................................................................... 79

(c) Analysis of the financial statements of last five years with reason(s) of fluctuating revenue or

sales, other income, total income, cost of material, finance cost, depreciation and

amortization expense, other expense; changes of inventories, net profit before and after

tax, EPS etc. ................................................................................................................................................... 80

(d) Known trends, demands, commitments, events or uncertainties that are likely to have an

effect on the company’s business: .............................................................................................................. 81

(e) Trends or expected fluctuations in liquidity: ............................................................................................ 81

(f) Off-balance sheet arrangements those have or likely to have a current or future effect on

financial condition: ........................................................................................................................................ 81

CHAPTER (VIII): DIRECTORS AND OFFICERS ....................................................................................................... 82

(a) Name, Father’s Name, age, Residential address, Educational qualification, experience and

position of each director and nominated director with nomination period, organization name: . 82

(b) Date of first Directorship and Expiry of Current Tenure of the directors: ......................................... 84

(c) Name of Interest and Involvement in other business or organization of directors: .......................... 84

(d) Statement of if any Directors of the issuer are associated with the securities market in any

manner and any director of the issuer company is also director of any issuer of other listed

securities during last three years with dividend payment history and market performance: ....... 84

(e) Family relationship (father, mother, spouse, brother, sister, son, daughter, spouse’s father,

spouse’s mother, spouse’s brother, spouse’s sister) among the directors and top five officers: .... 86

(f) Brief description of other businesses of the directors: ........................................................................... 86

(g) Short bio-data of each director: ................................................................................................................ 87

(h) Loan status of the issuer, its directors and shareholders who hold 10% or more shares in the

paid-up capital of the issuer in terms of the CIB Report of Bangladesh Bank: ................................ 88

(i) Name, position, educational qualification, age, date of joining in the company, overall

experience (in year), previous employment, salary paid for the financial year of the Chief

Executive Officer, Managing Director, Chief Financial Officer, Company Secretary, Advisers,

Consultants and all Departmental Heads. If the Chairman, any director or any shareholder

received any monthly salary than this information should also be included:.................................... 89

(j) Changes in the key management persons during the last three years: ............................................. 90

(k) A profile of the sponsors including their names, father’s names, age, personal addresses,

educational qualifications, and experiences in the business, positions or posts held in the past,

directorship held, other ventures of each sponsor and present position:........................................... 91

(l) If the present directors are not the sponsors and control of the issuer was acquired within five

years immediately preceding the date of filing prospectus details regarding the acquisition

of control, date of acquisition, terms of acquisition, consideration paid for such acquisition

etc. ................................................................................................................................................................... 92

Page: xii

(m) If the sponsors or directors do not have experience in the proposed line of business, the fact

explaining how the proposed activities would be carried out or managed: ................................... 92

(n) Interest of the key management persons: ................................................................................................ 92

(o) All interests and facilities enjoyed by a director, whether pecuniary or non-pecuniary: .............. 92

(p) Number of shares held and percentage of shareholding (pre-issue): ............................................... 92

(q) Change in board of directors during last three years: ......................................................................... 93

(r) Director’s engagement with similar business: ........................................................................................... 93

CHAPTER (IX): CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ................................................... 94

CHAPTER (X): EXECUTIVE COMPENSATION ....................................................................................................... 96

(a) The total amount of remuneration or salary or perquisites paid to the top five salaried

officers of the issuer in the last accounting year and the name and designation of each such

officer: ............................................................................................................................................................. 96

(b) Aggregate amount of remuneration paid to all directors and officers as a group during the

last accounting year: .................................................................................................................................... 96

(c) If any shareholder director received any monthly salary or perquisite or benefit it must be

mentioned along with date of approval in AGM or EGM, terms thereof and payments made

during the last accounting year: ................................................................................................................ 96

(d) The board meeting attendance fees received by the director including the managing

director along with date of approval in AGM or EGM: ...................................................................... 96

(e) Any contract with any director or officer providing for the payment of future compensation: .... 96

(f) If the issuer intends to substantially increase the remuneration paid to its directors and

officers in the current year, appropriate information regarding thereto: ........................................ 96

(g) Any other benefit or facility provided to the above persons during the last accounting year: ... 96

CHAPTER (XI): OPTIONS GRANTED TO DIRECTORS, OFFICERS AND EMPLOYEES ................................... 96

CHAPTER (XII): TRANSACTION WITH THE DIRECTORS AND SUBSCRIBERS TO THE MEMORANDUM ... 97

Benefits from the Company during last five years: ........................................................................................... 97

Directors and Subscribers’ Assets to the Company: .......................................................................................... 97

CHAPTER (XIII): OWNERSHIP OF THE COMPANY’S SECURITIES .................................................................... 98

a) The names, addresses, BO ID Number of all shareholders of the company before IPO,

indicating the amount of securities owned and the percentage of the securities represented

by such ownership: ........................................................................................................................................ 98

b) There shall also be a table showing the name and address, age, experience, BO ID Number,

TIN number, numbers of shares held including percentage, position held in other companies

of all the directors before the public issue: ........................................................................................... 101

c) The average cost of acquisition of equity shares by the directors certified by the auditors: ..... 103

d) A detail description of capital built up in respect of shareholding (name-wise) of the issuer’s

sponsors or directors. In this connection, a statement to be included: - ............................................ 104

e) Detail of shares issued by the company at a price lower than the issue price: ............................. 105

f) History of significant (5% or more) changes in ownership of securities from inception: ............... 105

CHAPTER (XIV): CORPORATE GOVERNANCE .................................................................................................. 106

a) Management disclosure regarding compliance with the requirements of Corporate

Governance Guidelines of the Bangladesh Securities and Exchange Commission (BSEC); ......... 106

b) A compliance report of Corporate Governance requirements certified by competent

authority; ...................................................................................................................................................... 106

c) Details relating to the issuer's audit committee and remuneration committee, including the

names of committee members and a summary of the terms of reference under which the

committees operate. ................................................................................................................................... 115

CHAPTER (XV): VALUATION REPORT OF SECURITIES PREPARED BY THE ISSUE MANAGERS ............... 116

CHAPTER (XVI): DEBT SECURITIES........................................................................................................................ 119

CHAPTER (XVII): PARTIES INVOLVED AND THEIR RESPONSIBILITIES ........................................................... 120

Page: xiii

CHAPTER (XVIII): MATERIAL CONTRACTS ......................................................................................................... 121

CHAPTER (XIX): LITIGATIONS, FINE OR PENALTY ........................................................................................... 123

CHAPTER (XX): RISK FACTORS AND MANAGEMENT’S PERCEPTIONS ABOUT THE RISKS ..................... 124

(i) Internal risk factors may include, among others: .................................................................................. 124

(ii) External risk factors may include among others: .................................................................................. 128

CHAPTER (XXI): DESCRIPTION OF THE ISSUE ................................................................................................... 131

(a) Issue Size: Tk. 300,000,000.00 ............................................................................................................... 131

(b) Number of securities to be issued;........................................................................................................... 131

(c) Authorized capital and paid-up capital; ............................................................................................... 131

(d) Face value, premium and offer price per unit of securities; .............................................................. 131

(e) Number of securities to be entitled for each category of applicants;............................................. 131

(f) Holding structure of different classes of securities before and after the issue; ............................. 131

(g) Objective of the issue including financing requirements and feasibility in respect of enhanced

paid-up capital. .......................................................................................................................................... 132

CHAPTER (XXII): USE OF PROCEEDS .................................................................................................................. 136

(a) Use of net proceeds of the offer indicating the amount to be used for each purpose with

head-wise break-up; .................................................................................................................................. 136

(b) Utilization of the total amount of paid-up capital and share premium, if any, including the

sponsors’ contribution and capital raised of the issuer at the time of submission of prospectus,

in details with indication of use of such funds in the financial statements; ...................................... 142

(c) If one of the objects is an investment in a joint venture, a subsidiary, an associate or any

acquisition, details of the form of investment, nature of benefit expected to accrue to the

issuer as a result of the investment, brief description of business and financials of such

venture; ......................................................................................................................................................... 142

(d) If IPO proceeds are not sufficient to complete the project, then source of additional fund

must be mentioned. In this connection, copies of contract to meet the additional funds are

required to be submitted to the Commission. The means and source of financing, including

details of bridge loan or other financial arrangement, which may be repaid from the

proceeds of the issue along with utilization of such funds; ................................................................. 142

(e) A schedule mentioning the stages of implementation and utilization of funds received through

public offer in a tabular form, progress made so far, giving details of land acquisition, civil

works, installation of plant and machinery, the approximate date of completion of the

project and the projected date of full commercial operation etc. The schedule shall be signed

by the Chief Executive Officer or Managing Director, Chief Financial Officer and Chairman

on behalf of Board of Directors of the issuer; ...................................................................................... 143

(f) If there are contracts covering any of the activities of the issuer for which the proceeds of

sale of securities are to be used, such as contracts for the purchase of land or contracts for

the construction of buildings, the issuer shall disclose the terms of such contracts, and copies of

the contracts shall be enclosed as annexure to the prospectus; ........................................................ 143

(g) If one of the objects of the issue is utilization of the issue proceeds for working capital, basis

of estimation of working capital requirement along with the relevant assumptions, reasons for

raising additional working capital substantiating the same with relevant facts and figures

and also the reasons for financing short with long term investments and an item-wise break-

up of last three years working capital and next two years projection; .......................................... 143

(h) Where the issuer proposes to undertake one or more activities like diversification,

modernization, expansion, etc., the total project cost activity-wise or project-wise, as the case

may be; ......................................................................................................................................................... 143

(i) Where the issuer is implementing the project in a phased manner, the cost of each phase,

including the phases, if any, which have already been implemented; ............................................ 143

Page: xiv

(j) The details of all existing or anticipated material transactions in relation to utilization of the

issue proceeds or project cost with sponsors, directors, key management personnel,

associates and group companies; ............................................................................................................ 144

(k) Summary of the project appraisal or feasibility report by the relevant professionals not

connected with the issuer, issue manager and registrar to the issue with cost of the project

and means of finance, weaknesses and threats, if any, as given in the appraisal or feasibility

report. ........................................................................................................................................................... 144

CHAPTER (XXIII): LOCK-IN .................................................................................................................................... 151

CHAPTER (XXIV): MARKETS FOR THE SECURITIES BEING OFFERED ............................................................ 153

CHAPTER (XXV): DESCRIPTION OF SECURITIES OUTSTANDING OR BEING OFFERED ........................... 154

(a) Dividend, voting and preemption rights; ................................................................................................ 154

(b) Conversion and liquidation rights; ........................................................................................................... 154

(c) Dividend policy; .......................................................................................................................................... 154

(d) Other rights of the securities holders; ..................................................................................................... 154

CHAPTER (XXVI): FINANCIAL STATEMENTS ...................................................................................................... 155

(a) The latest financial statements prepared and audited by the Commission’s panel auditors in

adherence to the provisions of the Securities and Exchange Rules, 1987, the †Kv¤úvwb AvBb,

1994, International financial Reporting and Auditing Standards as adopted in Bangladesh

from time to time and any other law as applicable; .......................................................................... 155

(b) Information as is required under section 186 of the †Kv¤úvwb AvBb, 1994 relating to holding

company; ...................................................................................................................................................... 180

(c) Selected ratios as specified in Annexure-D; ......................................................................................... 180

(d) Auditors report under Section 135(1), Paragraph 24(1) of Part II of Schedule III of the

†Kv¤úvwb AvBb, 1994. The report shall include comparative income statements and balance

sheet and aforementioned ratios for immediate preceding five accounting years of the

issuer. If the issuer has been in commercial operation for less than five years, the above

mentioned inclusion and submission will have to be made for the period since commercial

operation; ..................................................................................................................................................... 188

(e) Financial spread sheet analysis for the latest audited financial statements; ................................. 192

(f) Earnings Per Share (EPS) on fully diluted basis (with the total existing number of shares) in

addition to the weighted average number of shares basis. Future projected Net Income

should not be considered while calculating the weighted average EPS; ........................................ 196

(g) All extra-ordinary income or non-recurring income coming from other than core operations

should be shown separately while showing the Net Profit as well as the Earnings Per Share; .. 196

(h) Quarterly or half-yearly EPS should not be annualized while calculating the EPS; ..................... 196

(i) Net asset value (with and without considering revaluation surplus or reserve) per unit of the

securities being offered at the date of the latest audited statement of financial position. ........ 196

(j) The Commission may require the issuer to re-audit the audited financial statements, if any

deficiency or anomaly is found in the financial statements. In such a case, cost of audit should

be borne by the concerned issuer. .......................................................................................................... 196

(k) Following statements for the last five years or any shorter period of commercial operation

certified by the auditors:- ......................................................................................................................... 197

(i) Statement of long term and short term borrowings including borrowing from related

party or connected persons with rate of interest and interest paid or accrued; .......... 197

(ii) Statement of principal terms of secured loans and assets on which charge have been

created against those loans with names of lenders, purpose, sanctioned amount, rate of

interest, primary security, collateral or other security, re-payment schedule and status;

....................................................................................................................................................... 199

(iii) Statement of unsecured loans with terms and conditions; .................................................. 204

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(iv) Statement of inventories showing amount of raw material, packing material, stock-in-

process and finished goods, consumable items, store and spares parts, inventory of

trading goods etc.; ..................................................................................................................... 204

(v) Statement of trade receivables showing receivable from related party and connected

persons; ........................................................................................................................................ 205

(vi) Statement of any loan given by the issuer including loans to related party or connected

persons with rate of interest and interest realized or accrued; ........................................ 205

(vii) Statement of other income showing interest income, dividend income, discount received,

other non operating income; .................................................................................................... 206

(viii) Statement of turnover showing separately in cash and through banking channel; ....... 207

(ix) Statement of related party transaction; ................................................................................ 208

(x) Reconciliation of business income shown in tax return with net income shown in audited

financial statements;................................................................................................................... 209

(xi) Confirmation that all receipts and payments of the issuer above Tk.5,00,000/- (five

lac) were made through banking channel; ............................................................................ 210

(xii) Confirmation that Bank Statements of the issuer are in conformity with its books of

accounts; ....................................................................................................................................... 210

(xiii) Statement of payment status of TAX, VAT and other taxes or duties; ............................ 211

CHAPTER (XXVII): CREDIT RATING REPORT ...................................................................................................... 212

CHAPTER (XXVIII): PUBLIC ISSUE APPLICATION PROCEDURE ....................................................................... 212

CHAPTER (XXIX): OTHERS ..................................................................................................................................... 217

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CHAPTER (I): EXECUTIVE SUMMARY

(a) About the industry: Bangladesh has around 5000 small, medium and large size plastic goods manufacturing units with around 1.2million workforces directly or indirectly employed in this sector. This sector is contributed around Taka 3000.00 crore as revenue in government every year. In the financial year 2016-2017, the export stood on US$ 116.95 million from the plastic sector of Bangladesh whereas in the financial year 2010-2011 export was US$ 68.76 million. Currently, this sector is growing at average 20 percent more per year. Among the plastic industries, PP Woven is the one of important packaging manufacturing sector. In Bangladesh 70 number of industries are now engaged in manufacturing PP Woven fabric for manufacturing PP Woven bag, FIBC bag, recyclable & reusable shopping bag, tarpaulin other bag which use for bagging of cement, poultry & aqua feed, food grain, seed, textile, bulk carrier (i.e. spinning cone carrier, detergent, tea, confectionery, others), riverbank embankment bag, fashionable shopping bag, etc. all over the world. The woven-bag industry is flourishing fast as Bangladesh is one of the prime sources of cheap labor in the world. The overall investment in Bangladesh’s WPP bags manufacturing sector has approx. Tk. 3,500 crore. Source: Annual report (2016-17) of Bangladesh Plastic Goods Manufacturers & Exporters Association (BPGMEA).

(b) About the Issuer:

Incorporation As Private Limited

Company December 3, 2007 &

Reg. No. Raj-C-446/2007

Converted into Public Limited Company January 15, 2018

Commencement of Commercial Operation March 1, 2010

Registered Office & Factory Santahar Road, Shikor, Narhatto, Kahaloo, Bogra-5870, Bangladesh

Corporate Office Firoz Tower, 8th Floor (South Site), 152/3B, Bir Uttam Kazi Nurruzzaman Sarok, Green Road (Panthapath), Dhaka-1205

Nature of Business

The Company's main business is to manufacture of different types of PP Woven Bag, High Density Poly Ethylene (HDPE) Bag, Low Density Poly Ethylene (LDPE) Bag, Liner, Garments poly and selling them to export oriented Companies as deemed export and direct exporting to the international market.

Page: 2

(c) Financial Information: Major financial information of Al-Faruque Bags Limited (AFBL) is as follows:

Sl. No. Particulars 31 Mar 2018 30 Jun 2017 30 Jun 2016 30 Jun 2015 30 Jun 2014 30 Jun 2013

(9 Months)

1 Export Sales 413,375,395 507,906,169 436,625,142 310,159,892 253,600,597 309,525,830

2 Gross Profit/(Loss) 114,259,268 141,097,792 114,332,830 84,506,944 63,743,659 99,872,241

3 Profit before Income Tax 43,651,218 58,318,107 43,443,188 32,324,121 18,150,189 62,724,423

4 Net Profit after Tax 36,012,255 37,750,512 24,673,652 23,030,936 12,932,010 36,850,599

5 Total Property & Assets 1,307,522,381 994,619,423 705,634,797 507,478,561 407,505,079 350,504,989

6 Share Capital 480,000,000 98,000,000 10,000,000 10,000,000 10,000,000 10,000,000

7 Retained Earnings - - - - - 9,883,632

8 NAV Per Share (Considering Face Value Tk.10) 15.62 33.87 282.27 250.35 222.41 205.84

9 Earnings per Share (EPS) (Considering Face Value Tk.10)

1.06 1.53 1.00 0.94 0.53 1.50

The Company started its commercial operation on March 01, 2010.

(d) Features of the issue and its objects:

Offer Price Tk. 10.00

Number of Shares 30,000,000

Offer Size Tk. 300,000,000.00

Purpose of Raising Fund Proceeds from Initial Public Offering (IPO) will be used for acquisition of machinery & equipment, construction and other civil works, for paying off loan and for IPO Expenses

Date of Implementation Within 21 months after receiving IPO fund

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(e) Legal and other Information:

SL Name of

Certificate/license/Registration License Issuer/Issuing Authority

Certificate/License No.

Validity/Current Status

1 Certificate of Incorporation Registrar of Joint Stock Companies & Firms, Rajshahi Raj-C-446/2007 N/A

2 Trade License Narhatto Union Parishad 1386 30-Jun-18

3 TIN Certificate National Board of Revenue 297233859160 N/A

4 VAT Reg. No. Customs, Excise & VAT Commissionerate, Rajshahi 000645416 N/A

5 Import Registration Certificate (IRC) Controller of Import & Export, Government of Bangladesh, Bogra

B 0187746 30-Jun-18

6 Export Registration Certificate (ERC) R 72994

7 BPGMEA Bangladesh Plastic Goods Manufacturers & Exporters Association

G-1130 31-Dec-18

8 BCCI Bogra Chamber of Commerce & Industry G 3081 31-Dec-18

9 Fire License Bangladesh Fire Services and Civil Defense, Bogra 1041/2010-2011 30-Jun-18

10 Bonded Warehouse License Customs Bond Commissionerate, Rajshahi 01/KAS-SBW/2012 17-Apr-20

11 Environment Clearance Certificate Department of Environment, Rajshahi Division 12948/2008/2055 12-Apr-18

(Applied for renewal)

12 Factory License Department of Factory, Rajshahi Division 19402/Dhaka 31-Dec-18

13 EPB Export Promotion Bureau, Dhaka NT-693 30-Jun-18

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(f) Promoters’ background: At the time of incorporation of the Company, the following persons were the subscribers to the memorandum:

Sl. No. Name of Promoter Current Status

1 Chowdhury Al-Faruque Chairman

2 Md. Redwanul Kabir Chowdhury Managing Director & Director

3 Mst. Nimme Kabir Chowdhury Director

Their background is stated below: Chowdhury Al-Faruque, Chairman Mr. Chwodhury Al-Faruque, S/O-Late Mr. Chowdhury Afsar Hossain of Pourashava Lane, Jaleshwaritola, Bogra is the Chairman of Al-Faruque Bags Limited (AFBL). He was born on 25th October 1941 in a Muslim family at Naogaon though subsequently settled at Bogra. Mr. Chowhdury completed his graduation degree from Bogra and he started his career with trading business in domestically & internationally through export & import from Bogra. Mr. Chowdhury is wide experience businessman and learned more knowledge in the line of export and import. Mr. Chowdhury Al-Faruque is also the Chairman of Al-Faruque Flour Mills Ltd. and Al-Faruque Feed Mills Ltd. He visited India, Nepal, Malaysia, Singapore and Taiwan for business purpose. Md. Redwanul Kabir Chowdhury, Managing Director & Director Rtn. Md. Redwanul Kabir Chowdhury is the Managing Director of Al-Faruque Bags Limited (AFBL) was born on 23rd August 1968 in a Muslim family at Bogra. He is a son of Mr. Chowdhury Al-Faruque, Chairman of Al-Faruque Group is an excellent business entrepreneur. He comes from a business family and accordingly as of now successfully being continued through diversification into manufacturing industry after his graduation. Mr. Kabir Chowdhury is a dynamic professional businessman with more than 25 years of business experiences. He established his first venture ‘D N Traders’ as a trading firm involved was import-export business. Subsequently thinking for wide business area and gathered knowledge he establishes another venture Al-Faruque Bags Limited at end 2007 which went into commercial operation from March of 2010 and since then by the dint of his dynamic leadership and excellent entrepreneurship, he achieved a massive expression in his business ventures both vertically and horizontally. Mr. Md. Redwanul Kabir Chowdhury is Director of Al-Faruque Flour Mills Ltd. and proprietor of Al-Faruque Dairy Firm, DN Traders, Nawroz Corporation. He proves himself a business leader through his dynamic & hard working personalities. Mr. Kabir Chowdhury is a well renowned business person in the plastic packaging industry of Bangladesh. He visited several times in India, Nepal, Thailand, Malaysia, Singapore, Hong Kong, China, Taiwan, Turky, USA for business purpose.

Mst. Nimme Kabir Chowdhury, Director Mst. Nimme Kabir Chowdhury, W/O- Mr. Md. Redwanul Kabir Chowdhury is a director of Al-Faruque Bags Ltd. She was born on 7th June 1978 at Bogra and she comes from a much-respected family. She completed her graduation from Bogra. Her overall personal attachment to Al-faruque Bags Ltd. helps to grow remarkable. To enhance the business, she visited many countries like Singapore, India, Nepal, Thailand and Malaysia. Mst. Nimme Kabir Chowdhury is also Managing Director of Al-Faruque Feed Mills Ltd. and Director of Al-Faruque Flour Mills Ltd.

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(g) Capital structure and history of capital raising: The Company intends to issue 30,000,000 ordinary shares of Tk. 10.00 each at par through Initial public offering (IPO) totaling to Tk. 300,000,000.00.

Particulars No. of Shares Face Value (Tk.) Issue Price (Tk.) Amount in Taka

Authorized Capital 100,000,000 10.00 10.00 1,000,000,000

Before IPO:

Paid up capital 48,000,000 10.00 10.00 480,000,000

After IPO:

To be issued through IPO 30,000,000 10.00 10.00 300,000,000

Paid up capital (Post IPO) 78,000,000 10.00 10.00 780,000,000

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The Company has raised its paid-up capital in following phases:

Particulars of Allotment Date of

Allotment

Form of Consideration (No. of Shares)

Face Value of

Share (Tk.)

Paid-up Capital

In cash Other than in

cash Bonus

Considering Face Value of Tk. 1,000

each Share

Considering Face Value Tk. 10 each Share after split

1st (subscriber to the Memorandum & Articles of Association at the

time of incorporation)

3-Dec-07 10,000 - - - 1,000.00 10,000,000

2nd 6-Feb-17 - - - 8,000,000 10.00 80,000,000

3rd 9-Feb-17 - 800,000 - - 10.00 8,000,000

4th 12-Dec-17 - 38,200,000 - - 10.00 382,000,000

Total 10.00 480,000,000

Notes: The Company has changed the face value of its ordinary share from Tk. 1,000.00 to Tk. 10.00 by passing a special resolution in its extraordinary general meeting held on November 30, 2016 and necessary amendments in capital clause of the Memorandum and Articles of Association were made accordingly.

(h) Summary of Valuation Report of Securities:

Particulars Amount (in Tk.)

Method 1: Net Asset Value (NAV) per share/Equity based valuation 15.62

Method 2: Historical Earnings based valuation 11.19

Method 3: Average market price of similar stock based valuation 31.84

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(i) Others:

a) DECLARATION OF MATERIAL CHANGES

We, the Issuer, declare that we did not make any material changes including raising of paid-up capital after the date of audited financial statements as included in the prospectus.

Sd/- Md. Redwanul Kabir Chowdhury Managing Director b) ISSUE MANAGERS DECLARATION IN CONNECTION WITH ISSUER We, the Issue Managers, declared that we do not have any connection with the Issuer, nor any connected persons of us are connected with the Issuer. Moreover, we do not have any connection with the connected persons of the Issuer nor hold any securities thereof.

Sd/- Md. Riyad Matin Managing Director BMSL Investment Ltd.

Sd/- Mohammad Saleh Ahmed

Chief Executive Officer IIDFC Capital Ltd.

Page: 8

CHAPTER (II): CONDITIONS IMPOSED BY THE COMMISSION DISCLOSURE IN RESPECT OF ISSUANCE OF SECURITY IN DEMAT FORM: As per provisions of the Depository Act, 1999 and regulations made there under, share of the Company will be issued in dematerialized form only and for this purpose Al-Faruque Bags Limited will sign an agreement with the Central Depository Bangladesh Limited (CDBL). Therefore, all transfers, transmissions, splitting or conversions will take place on the Central Depository Bangladesh Limited system and any further issuance of shares (including rights and bonus) will also be issued in dematerialized form only. CONDITIONS UNDER 2CC OF THE SECURITIES AND EXCHANGE ORDINANCE, 1969:

PART–A

1. The Company shall go for Initial Public Offer (IPO) for 3,00,00,000 ordinary shares of Tk. 10.00

each at par totaling to Tk. 30,00,00,000.00 (Taka Thirty Crore only) following the Securities and Exchange Ordinance, 1969, the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015, the Depository Act, 1999 and rules made there under.

2. The abridged version of the prospectus, as approved by the Commission, shall be published by the issuer in 4 (Four) national daily newspapers (two in Bangla and two in English), within 02 (two) working days of issuance of this consent letter. The issuer shall post the full prospectus, vetted by Commission, in the issuer’s website and shall also put on the websites of the Commission, stock exchanges, and the issue manager, within 3 (three) working days from the date of issuance of this letter and shall remain posted till the closure of the subscription list. The issuer shall submit to the Commission, the stock exchanges and the issue manager a diskette containing the text of the vetted prospectus in “MS -Word” format.

3. The company shall submit 40 (Forty) copies of the printed prospectus to the Commission for official record within 5 (Five) working days from the date of publication of the abridged version of the prospectus in the newspaper.

4. The issuer company and the issue manager shall ensure transmission of the prospectus and its abridged version for NRBs through email to the Bangladesh Embassies and Missions abroad within 5 (Five) working days from the date of publication of the abridged version of the prospectus in the newspaper. A compliance report shall be submitted in this respect to the Commission jointly by the issuer and the Issue Manager within 02 (Two) working days from the date of said transmission of the prospectus.

5. The following declaration shall be made by the company in the prospectus, namely: -

“Declaration about Listing of Shares with the stock exchange (s):

None of the stock exchange(s), if for any reason, grants listing within 75 (Seventy Five) 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 15 (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 15 (Fifteen) days, the Directors of the company, 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) 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 07 (Seven) days of expiry of the aforesaid 15 (Fifteen) days time period allowed for refund of the subscription money.”

Page: 9

6. All applicants shall apply for a minimum lot of 500 shares worth Taka 5,000/- (Taka five thousand only) or its multiples.

7. The IPO shall stand cancelled in case of under-subscription in any category above 35%. In such an event, the issuer and issue manger shall inform the Commission within 2 (two) working days and release the subscription money within 10 (ten) working days after receiving verification report from CDBL and the information from exchanges regarding subscription.

8. 20% of the securities reserved for other general public shall be reserved for ¶wZMÖ¯’ ¶z ª̀

wewb‡qvMKvix. In case of under-subscription under any of sub-categories of eligible investors

category or general public category, the unsubscribed portion shall be added to other sub-category of the same category. In case of over subscription in the general public category, the issuer and the issue manager shall jointly conduct an open lottery. In case of over subscription in the eligible investors category, securities shall be allotted on pro-rata basis. No eligible investor shall apply for more than 2% (two percent) of the total securities reserved for the eligible investors.

9. An applicant cannot submit more than two applications, one in his/her own name and the other jointly with another person. In case, an applicant submits more than two applications, all applications will be treated as invalid and will not be considered for allotment purpose. In addition, 15% (fifteen) of the application money will be forfeited by the Commission and the balance amount will be refunded to the applicant.

10. The applicants who have applied for more than two applications using same bank account, their application will not be considered for lottery and the Commission will forfeit 15% of their subscription money.

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 25% of the 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 of the Bangladesh Securities and Exchange Commission (BSEC). This is in addition to any other penalties as may be provided for by the law.

12. 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.

13. Shares not allotted at the time of according this consent, but allotted after listing, in favor of sponsors, directors or shareholders having 10% or more shares, other than alternative investment funds, through stock dividends, shall be subject to a lock-in period of 02(two) years from the date of issuance of the prospectus.

14. If any share of Sponsors/Directors/Promoters is in paper format, it shall be handed over to securities custodian registered with the Commission and shall remain held till completion of lock-in period and the name of the securities custodian shall be furnished to the Commission jointly by the issuer and issue manager, along with a confirmation thereof from the custodian, within one week of listing of the shares with the stock exchange(s). Or they (shares of Sponsors/ Directors/ Promoters) can be demated and shall remain in lock-in under CDBL system and issuer shall submit a dematerialization confirmation report generated by CDBL and attested by Managing Director of the company along with the lock-in confirmation to the Commission within one week of listing of the shares with the stock exchange(s). In respect of shares other than Sponsors/Directors/Promoters the issuer will ensure their lock-in of those shares and submit a statement to this effect to the Commission.

15. The company shall not declare any dividend/bonus shares before listing of its capital with any Exchange from the date of this consent for raising of capital.

Page: 10

16. The company shall not engage itself into any merger/amalgamation or acquisition activities without taking “No Objection” from the Commission, on the scheme of the said merger/amalgamation or acquisition, as recommended by the Board of Directors, before approval by the shareholders in General Meeting.

PART–B

Application Process

Step-1 (Applicant)

1. An applicant for public issue of securities shall submit application/buy instruction to the Stockbroker/Merchant Banker where the applicant maintains customer account, within the cut-off date (i.e. the subscription closing date), which shall be the 25th (twenty fifth) working day from the date of publication of abridged version of prospectus.

2. The application/buy instruction may be submitted in prescribed paper or electronic form, which shall contain the Customer ID, Name, BO Account Number, Number of Securities applied for, Total Amount and Category of the Applicant. At the same time: (a) Other than non-resident Bangladeshi (NRB) and Foreign applicants shall make the

application money and service charge available in respective customer account maintained with the Stockbroker/Merchant Banker. No margin facility, advance or deferred payment is permissible for this purpose. In case the application is made through a margin account, the application money shall be deposited separately and the Stockbroker/Merchant Banker shall keep the amount segregated from the margin account, which shall be refundable to the applicant, if become unsuccessful.

(b) Non-resident Bangladeshi (NRB) and Foreign applicants shall submit bank drafts (FDD),

issued in favor of the Issuer for an amount equivalent to the application money, with their application to the concerned Stockbroker/Merchant Banker. A Non-resident Bangladeshi (NRB) and Foreign applicant may also submit a single draft against 02(two) applications made by him/her, i.e. one in his/her own name and the other jointly with another person. The draft (FDD) shall be issued by the Bank where the applicant maintains Foreign Currency account debiting the same account and provide the customer with a certificate mentioning the FC account number which has been debited to issue the FDD. The applicant shall also submit the certificate with their application. No banker shall issue more than two drafts from any Foreign Currency account for any public issue. At the same time, the applicant shall make the service charge available in respective customer account maintained with the Stockbroker/Merchant Banker.

(c) Eligible investors shall submit application through the electronic subscription system of

the exchange(s) and deposit the full amount intended to subscribe by the method as determined by the exchange(s).

Step-2 (Intermediary)

3. The Stockbroker/Merchant Banker shall maintain a separate bank account only for this purpose namely “Public Issue Application Account”. The Stockbroker/Merchant Banker shall: a) post the amount separately in the customer account (other than NRB and Foreign

applicants), and upon availability of fund, block the amount equivalent to the application money;

b) accumulate all the application/buy instructions received up to the cut-off date, deposit the amount in the “Public Issue Application Account” maintained with its bank within the first banking hour of next working day of the cut-off date;

Page: 11

c) instruct the banker to block the account for an amount equivalent to the aggregate

application money and to issue a certificate in this regard.

4. Banker of the Stockbroker/Merchant Banker shall block the account as requested for, issue a certificate confirming the same and handover it to the respective Stockbroker/Merchant Banker.

5. For Non-resident Bangladeshi (NRB) and Foreign applicants, the Stockbroker/Merchant Banker shall prepare a list containing the draft information against the respective applicant’s particulars.

6. The Stockbroker/Merchant Banker shall prepare category wise lists of the applicants containing Customer ID, Name, BO Account Number and Number of Securities applied for, and within 03 (three) working days from the cut-off date, send to the respective Exchange, the lists of applicants in electronic (text format with tilde ‘~’ separator) format, the certificate(s) issued by its banker, the drafts and certificates received from Non-resident Bangladeshi (NRB) and Foreign applicants and a copy of the list containing the draft information.

7. On the next working day, the Exchanges shall provide the Issuer with the information received from the Stockbroker/Merchant Bankers, the drafts and certificates submitted by Non-resident Bangladeshi (NRB) and Foreign applicants and the list containing the draft information. Exchanges shall verify and preserve the bankers’ certificates in their custody.

8. The application/buy instructions shall be preserved by the Stockbroker/Merchant Bankers up to 6 months from listing of the securities with exchange. Step-3 (Issuer)

9. The Issuer shall prepare consolidated list of the applications and send the applicants’ BOIDs in electronic (text) format in a CDROM to CDBL for verification. The Issuer shall post the consolidated list of applicants on its website and websites of the Exchanges. CDBL shall verify the BOIDs as to whether the BO accounts of the applicants are active or not.

10. On the next working day, CDBL shall provide the Issuer with an updated database of the applicants containing BO Account Number, Name, Addresses, Parents’ Name, Joint Account and Bank Account information along with the verification report.

11. After receiving verification report and information from CDBL, the Issuer shall scrutinize the applications, prepare category wise consolidated lists of valid and invalid applications and submit report of final status of subscription to the Commission and the Exchanges within 10 (ten) working days from the date of receiving information from the Exchanges.

12. The Issuer and the issue manager shall conduct category wise lottery with the valid applications within 03 (three) working days from the date of reporting to the Commission and the Exchanges, if do not receive any observation from the Commission or the Exchanges.

13. The Issuer and issue manager shall arrange posting the lottery result on their websites within 06 (six) hours and on the websites of the Commission and Exchanges within 12 (twelve) hours of lottery.

14. Within 02 (two) working days of conducting lottery, the Issuer shall:

a) send category wise lists of the successful and unsuccessful applicants in electronic (text format with tilde ‘~’ separator) format to the respective Exchange.

b) send category wise lists of unsuccessful applicants who are subject to penal provisions as per conditions of the Consent Letter issued by the Commission in electronic (text format with

Page: 12

tilde ‘~’ separator) format to the Commission and Exchanges mentioning the penalty amount against each applicant.

c) issue allotment letters in the names of successful applicants in electronic format with digital signatures and send those to respective Exchange in electronic form.

d) send consolidated allotment data (BOID and number of securities) in electronic text format in a CDROM to CDBL to credit the allotted shares to the respective BO accounts.

Step-4 (Intermediary)

15. On the next working day, Exchanges shall distribute the information and allotment letters to the Stockbroker/Merchant Bankers concerned in electronic format and instruct them to: a) remit the amount of successful (other than NRB and Foreign) applicants to the Issuer’s

respective Escrow Account opened for subscription purpose, and unblock the amount of unsuccessful applicants;

b) send the penalty amount of other than NRB and Foreign applicants who are subject to penal provisions to the Issuer’s respective Escrow Accounts along with a list and unblock the balance application money;

16. On the next working day of receiving the documents from the Exchanges, the

Stockbrokers/Merchant Banker shall request its banker to: a) release the amount blocked for unsuccessful (other than NRB and foreign) applicants;

b) remit the aggregate amount of successful applicants and the penalty amount of

unsuccessful applicants (other than NRB and foreign) who are subject to penal provisions to the respective ‘Escrow’ accounts of the Issuer opened for subscription purpose.

17. On the next working day of receiving request from the Stockbrokers/Merchant Bankers, their

bankers shall unblock the amount blocked in the account(s) and remit the amount as requested for to the Issuer’s ‘Escrow’ account.

18. Simultaneously, the stockbrokers/Merchant Bankers shall release the application money blocked in the customer accounts; inform the successful applicants about allotment of securities and the unsuccessful applicants about releasing their blocked amounts and send documents to the Exchange evidencing details of the remittances made to the respective ‘Escrow’ accounts of the Issuer. The unblocked amounts of unsuccessful applicants shall be placed as per their instructions. The Stockbroker/Merchant Banker shall be entitled to recover the withdrawal charges, if any, from the applicant who wants to withdraw the application money, up to an amount of Tk. 5.00 (five) per withdrawal.

19. All drafts submitted by NRB or Foreign applicants shall be deposited in the Issuer’s respective ‘Escrow’ accounts and refund shall be made by the Issuer by refund warrants through concerned stockbroker or merchant banker or transfer to the applicant’s bank account (FC account which has been debited to apply by NRB or foreign applicants) through banking channel within 10 (ten) working days from the date of lottery. Miscellaneous:

20. The Issuer, Issue Manager(s), Stockbrokers and Merchant Bankers shall ensure compliance of the above.

21. The bank drafts (FDD) shall be issued considering TT Clean exchange rate of Sonali Bank Ltd. on the date of publication of abridged version of prospectus.

Page: 13

22. Amount deposited and blocked in the “Public Issue Application Account” shall not be withdrawn or transferred during the blocking period. Amount deposited by the applicants shall not be used by the Stockbrokers/Merchant Bankers for any purpose other than public issue application.

23. The Issuer shall pay the costs related to data transmission, if claimed by the Exchange concerned up to an amount of Tk.2,00,000.00 (taka two lac) for a public issue.

24. The Stockbroker/Merchant Bankers shall be entitled to a service charge of Tk.5.00 (taka five) only per application irrespective of the amount or category. The service charge shall be paid by the applicant at the time of submitting application.

25. The Stockbroker/Merchant Banker shall provide the Issuer with a statement of the remittance and drafts sent.

26. The Issuer shall accumulate the penalty amount recovered and send it to the Commission through a bank draft/payment order issued in favor of the Bangladesh Securities and Exchange Commission.

27. The concerned Exchange are authorized to settle any complaints and take necessary actions against any Stockbroker/Merchant Banker in case of violation of any provision of the public issue application process with intimation to the Commission.

PART–C

1. The issue manager shall carefully examine and compare the published prospectus and its

abridged version on the date of publication with the copies vetted by the Commission. If any discrepancy 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 the Commission and the stock exchanges concerned. In this regard, the issue manager shall submit a compliance report to the Commission within 5 working days from the date of such publications.

2. The fund collected through Public Offering shall not be utilized prior to listing with Exchange(s) 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.

3. The company shall furnish status report on utilization of Public Offering proceeds audited by foreign affiliated auditors and authenticated by the board of directors to the Commission and the Exchanges within 15 (Fifteen) days of the closing of each month until such fund is fully utilized, as mentioned in the schedule contained in the prospectus. The issuer shall simultaneously post the status report in its website and Exchanges shall also post the same in company information contained in websites of the Exchanges. In the event of any irregularity or inconsistency, the Commission may employ or engage any person to examine whether the issuer has utilized the proceeds for the purpose disclosed in the prospectus.

4. While auditing the utilization of IPO proceeds, the auditors will perform their jobs under the following terms of reference (TOR) and confirm the same in their report/certificate:

(a) Whether IPO proceeds have been utilized for the purposes/heads as specified in the

prospectus;

(b) Whether IPO proceeds have been utilized in line with the condition (if any) of the Commission’s consent letter;

(c) Whether utilization of IPO proceeds have been completed within the time schedule/implementation schedule as specified in the published prospectus;

Page: 14

(d) Whether utilization of IPO proceeds is accurate and for the purpose of the company as mentioned/specified in the published prospectus; and

(e) The auditors should also confirm that: (i) assets have been procured/imported/constructed maintaining proper/required procedure as well as at reasonable price; and (ii) auditors’ report has been made on verification of all necessary documents/papers/vouchers in support of IPO proceeds making reconciliation with Bank Statement.

5. All transactions, excluding petty cash expenses, shall be effected by crossed cheques or bank

transfers.

6. Proceeds of the public offering shall not be transferred to any other bank account before listing with the Exchange(s). The proceeds shall not be used for any purpose other than those specified in the prospectus without any valid ground. Any deviation in respect of time or purpose of utilization must have prior approval of the shareholders in the general meeting and if approved by the shareholders, the meeting resolution shall be submitted to the Commission and the Exchanges along with reasonable explanations.

7. If any quarter or half-year of the financial year ends after publication of the abridged version of prospectus and before listing of its securities with any exchange, the company shall disseminate/transmit/submit the said quarterly/half yearly financial statements in accordance with the Commission’s Notification SEC/CMRRCD/2008-183/admin/03-34 dated September 27, 2009 and Rules 13 of the Securities and Exchange Rules, 1987.

8. In the event of arising issues concerning Price Sensitive Information as defined under the wmwKDwiwUR

I G·‡PÄ Kwgkb (myweav‡fvMx e¨emv wbwl×KiY) wewagvjv 1995 after publication of the abridged version of

prospectus and before listing of its securities with any exchange, the company shall disseminate/transmit/submit the information as price sensitive in accordance with the Commission’s Notification No. SEC/SRMI/200-953/1950 dated October 24, 2000.

PART–D

1. As per provision of the Depository Act, 1999 & Regulations made thereunder, shares will only be

issued in dematerialized condition. All transfer/transmission/splitting will take place in the depository system of Central Depository Bangladesh Ltd. (CDBL) and any further issuance of shares (including rights/bonus) will be made in dematerialized form only.

2. The issuer and the issue manager shall ensure due compliance of all the above conditions, the ‘Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015’ and the listing regulations of the Exchanges.

3. The Commission may impose further conditions/restrictions etc. from time to time as and when considered necessary which shall also be binding upon the issuer company.

Page: 15

CHAPTER (III): DECLARATION AND DUE DILIGENCE CERTIFICATES

Annexure-A DECLARATION ABOUT THE RESPONSIBILITY OF THE DIRECTORS, INCLUDING THE CEO OF THE ISSUER IN RESPECT OF THE PROSPECTUS

[Rule 4 (1)(d)] This prospectus has been prepared, seen and approved by us, and we, individually and collectively, accept full responsibility for the authenticity, accuracy and adequacy 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 actions against any or all of us as it may deem fit. We also confirm that full and fair disclosures have been made in this prospectus to enable the investors to make a well informed decision for investment.

Sd/- Sd/- Chowdhury Al-Faruque Md. Redwanul Kabir Chowdhury Chairman Managing Director & Director Sd/- Sd/-

Mst. Nimme Kabir Chowdhury Al-Faruque Flour Mills Ltd.

Represented by Md. Tanzil Kabir Chowdhury Director Director Sd/- Subrata Pal FCMA Independent Director

Date: June 03, 2018

Page: 16

Annexure-B

DUE DILIGENCE CERTIFICATE BY ISSUE MANAGER (BMSL INVESTMENT LIMITED)

[Rule 4 (1) (d)]

To The Bangladesh Securities and Exchange Commission Sub: Public Issue of 30,000,000 Ordinary Shares of Tk. 300,000,000.00 by Al-Faruque Bags Limited. Dear Sir, We, the issue manager to the above-mentioned forthcoming issue, state and confirm as follows: (1) We have examined all the documents submitted with the application for the above mentioned

public issue, visited the premises of the issuer and interviewed the Chairperson, Directors and key management personnel of the issuer in connection with the finalization of the prospectus pertaining to the said issue;

(2) On the basis of such examination and the discussions with the directors, officers and auditors of the

issuer, 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.

WE CONFIRM THAT: (a) The prospectus filed with the Commission is in conformity with the documents, materials and papers

relevant to the issue; (b) All the legal requirements relating to the issue as also in the rules, notification, guidelines,

instructions, etc. framed/issued by the Commission, other competent authorities in this behalf and the Government have been duly complied with;

(c) The disclosures made in prospectus are true, fair and adequate to enable the investors to make a

well informed decision for investment in the proposed issue and such disclosures are in accordance with the requirements of the Companies Act, 1994, the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015 and other applicable laws;

(d) Besides ourselves, all the intermediaries named in the prospectus are registered with the

Commission and that till date such registrations are valid; (e) We have satisfied ourselves about the capability of the underwriters to fulfill their underwriting

commitments; (f) The proposed activities of the issuer for which the funds are being raised in the present issue fall

within the ‘main objects’ listed in the object clause of the Memorandum of Association or other charter of the issuer and that the activities which have been carried out till now are valid in terms of the object clause of its Memorandum of Association;

(g) Necessary arrangements have been made to ensure that the moneys to be received pursuant to the issue shall be kept in a separate bank account and shall be used for the purposes disclosed in the use of proceeds section of the prospectus;

Page: 17

(h) All the applicable disclosures mandated in the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015 have been made in addition to other disclosures which, in our view, are fair and adequate to enable the investor to make a well informed decision;

(i) We enclose a note explaining how the process of due diligence has been exercised by us in view

of the nature of current business background or the issuer, situation at which the proposed business stands, the risk factors, sponsors experiences etc. We also confirm that the due diligence related process, documents and approval memos shall be kept in record by us for the next 5 (five) years after the IPO for any further inspection by the Commission;

(j) We enclose a checklist confirming rule-wise compliance with the applicable provisions of the

Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015 containing details such as the rule number, its text, the status of compliance, page numbers of the prospectus where the rules has been complied with and our comments, if any;

(k) We also declare that we have managed the public issue of following issuers in the last 05 (five)

years:

Serial No

Issue Month/Year Issue Price

Dividend Payment History

1 Global Heavy Chemicals Limited (2013)

20.00 Cash Dividend

10% 2013, 10% 2014, 15% 2016, 10% 2017

Stock Dividend -

2 Khan Brothers PP Woven Bag Industries Limited (2014)

10.00

Cash Dividend -

Stock Dividend 10% 2014, 15% 2015, 11% 2016, 10% 2017

3 SK Trims & Industries Limited (2018)

10.00 - -

Sd/- Md. Riyad Matin Place: Dhaka Managing Director Date: April 4, 2018 BMSL Investment Limited

Page: 18

Annexure-B

DUE DILIGENCE CERTIFICATE BY ISSUE MANAGER (IIDFC CAPITAL LIMITED)

[Rule 4 (1) (d)]

To The Bangladesh Securities and Exchange Commission Sub: Public Issue of 30,000,000 Ordinary Shares of Tk. 300,000,000.00 by Al-Faruque Bags Limited. Dear Sir, We, the issue manager to the above-mentioned forthcoming issue, state and confirm as follows: (1) We have examined all the documents submitted with the application for the above mentioned

public issue, visited the premises of the issuer and interviewed the Chairperson, Directors and key management personnel of the issuer in connection with the finalization of the prospectus pertaining to the said issue;

(2) On the basis of such examination and the discussions with the directors, officers and auditors of the

issuer, 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.

WE CONFIRM THAT: (a) The prospectus filed with the Commission is in conformity with the documents, materials and papers

relevant to the issue; (b) All the legal requirements relating to the issue as also in the rules, notification, guidelines,

instructions, etc. framed/issued by the Commission, other competent authorities in this behalf and the Government have been duly complied with;

(c) The disclosures made in prospectus are true, fair and adequate to enable the investors to make a

well informed decision for investment in the proposed issue and such disclosures are in accordance with the requirements of the Companies Act, 1994, the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015 and other applicable laws;

(d) Besides ourselves, all the intermediaries named in the prospectus are registered with the

Commission and that till date such registrations are valid; (e) We have satisfied ourselves about the capability of the underwriters to fulfill their underwriting

commitments; (f) The proposed activities of the issuer for which the funds are being raised in the present issue fall

within the ‘main objects’ listed in the object clause of the Memorandum of Association or other charter of the issuer and that the activities which have been carried out till now are valid in terms of the object clause of its Memorandum of Association;

(g) Necessary arrangements have been made to ensure that the moneys to be received pursuant to the issue shall be kept in a separate bank account and shall be used for the purposes disclosed in the use of proceeds section of the prospectus;

Page: 19

(h) All the applicable disclosures mandated in the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015 have been made in addition to other disclosures which, in our view, are fair and adequate to enable the investor to make a well informed decision;

(i) We enclose a note explaining how the process of due diligence has been exercised by us in view

of the nature of current business background or the issuer, situation at which the proposed business stands, the risk factors, sponsors experiences etc. We also confirm that the due diligence related process, documents and approval memos shall be kept in record by us for the next 5 (five) years after the IPO for any further inspection by the Commission;

(j) We enclose a checklist confirming rule-wise compliance with the applicable provisions of the

Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015 containing details such as the rule number, its text, the status of compliance, page numbers of the prospectus where the rules has been complied with and our comments, if any;

(k) We also declare that we have managed the public issue of following issuers in the last 05 (five)

years:

Serial No Issue Month/Year Issue Price Dividend Payment History

NIL

Sd/- Mohammad Saleh Ahmed Place: Dhaka Chief Executive Officer Date: May 22, 2018 IIDFC Capital Limited

Page: 20

Annexure-C

DUE DILIGENCE CERTIFICATE BY THE UNDERWRITER (BMSL INVESTMENT LIMITED)

[Rule 4 (1)(d)]

To The Bangladesh Securities and Exchange Commission

Sub: Public Issue of 30,000,000 Ordinary Shares of Tk. 300,000,000.00 by Al-Faruque Bags Limited.

Dear Sir, 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 discussions 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) We are registered with the Bangladesh Securities and Exchange Commission as a merchant

banker and eligible to carry out the underwriting activities. Our present paid-up capital stands at Tk. 42,00,00,000 (Forty Two Crore Only) and we have the capacity to underwrite a total amount of Tk. 210,00,00,000 (Two Hundred Ten Crore Only) as per relevant legal requirements. We have committed to underwrite for up to Tk. 35,000,000.00 (Three crore fifty lac) for the upcoming issue.

(b) At present, the following underwriting obligations are pending for us: (Name of issue and amount

underwritten)

Sl. Name of the company Amount Underwritten (In Tk.)

1 Bashundhara Paper Mills Ltd. 50,000,000

2 Delta Hospital Ltd 8,000,000

3 M.L. Dyeing Ltd. 10,000,000

4 Esquire Knit Composit Ltd. 20,000,000

5 Silva Pharmaceuticals Ltd. 20,000,000

6 SK Trims & Industries Ltd. 25,000,000

7 S. S. Steel Mills Ltd. 50,000,000

8 Ashuganj Power Station Co. Ltd. (Bond) 5,000,000

9 Lub-rref (Bangladesh) Ltd. 30,000,000

10 GENEX INFOSYS LTD. 10,000,000

11 Md. Elias Brothers Poy Manufacturing Ltd. 3,500,000

12 AB Bank Ltd. 50,000,000

13 Ratanpur Steel Re-Rolling Mills Ltd. 37,500,000

14 Western Marine Shipyard Ltd. 350,000,000

Total 669,000,000

Page: 21

(c) 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;

(d) 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 (e) This underwriting commitment is unequivocal and irrevocable.

For the Underwriter: Sd/- Md. Riyad Matin Managing Director BMSL Investment Limited Date: April 04, 2018

Page: 22

Annexure-C

DUE DILIGENCE CERTIFICATE BY THE UNDERWRITER (SANDHANI LIFE FINANCE LIMITED)

[Rule 4 (1)(d)]

To

The Bangladesh Securities and Exchange Commission

Sub: Public Issue of 30,000,000 Ordinary Shares of Tk. 300,000,000.00 by Al-Faruque Bags Limited. Dear Sir,

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



WE CONFIRM THAT:

a) We are registered with the Bangladesh Securities and Exchange Commission as a merchant banker

and eligible to carry out the underwriting activities. Our present paid-up capital stands at Tk. 250,000,000 (Taka Twenty Five Crore Only) only and we have the capacity to underwrite a total amount of Tk. 1,250,000,000 (Taka One Hundred Twenty Five Crore Only) as per relevant legal requirements. We have committed to underwrite for up to Tk. 35,000,000 (Taka Three Crore Fifty Lacs) only for the upcoming issue.

b) At present, the following underwriting obligations are pending for us:

Sl. No. Name of the Company Underwritten amount in BDT

01 Shamsul Alamin Real Estate Limited 100,000,000

02 New Line Clothings Limited 30,000,000

03 Ratanpur Steel Re-Rolling Mills Limited 75,000,000

04 IPDC Finance Limited 191,100,000

Total 396,100,000

c) 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;

d) 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 e) This underwriting commitment is unequivocal and irrevocable.

For the Underwriter: Sd/- Muhammad Nazrul Islam FCMA Managing Director & CEO Sandhani Life Finance Limited

Date: April 05, 2018

Page: 23

Annexure-C

DUE DILIGENCE CERTIFICATE BY THE UNDERWRITER (ASIAN TIGER CAPITAL PARTNERS INVESTMENTS LIMITED)

[Rule 4 (1)(d)] To

The Bangladesh Securities and Exchange Commission

Sub: Public Issue of 30,000,000 Ordinary Shares of Tk. 300,000,000.00 by Al-Faruque Bags Limited.

Dear Sir,

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



WE CONFIRM THAT:

(a) We are registered with the Bangladesh Securities and Exchange Commission as a merchant banker and eligible to carry out the underwriting activities. Our present paid-up capital stands at Tk. 250,000,000.00 (Two Hundred Fifty million only) and we have the capacity to underwrite a total amount of Tk. 1,250,000,000.00 (One Thousand Two Hundred Fifty Million) as per relevant legal requirements. We have committed to underwrite for up to Tk. 35,000,000.00 (Three crore fifty lac) for the upcoming issue.

(b) At present, there is no underwriting obligations are pending for us;

(c) 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;

(d) 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 (e) This underwriting commitment is unequivocal and irrevocable. For the Underwriter: Sd/- Muhammad Fuad Hussain Managing Director & CEO Asian Tiger Capital Partners Investments Limited


Page: 24

CHAPTER (IV): ABOUT THE ISSUER (a) Name of the issuer, dates of incorporation and commencement of its commercial operations,

its logo, addresses of its registered office, other offices and plants, telephone number, fax number, contact person, website address and e-mail address; Particulars of the Company:

Particulars Description

Name of the Issuer : Al-Faruque Bags Limited (AFBL)

Dates of Incorporation : December 3, 2007 & Reg. No. Raj-C-446/2007

Commencement of its Commercial Operations

: March 1, 2010

Logo :

Corporate Office

:

Firoz Tower, 8th Floor (South Site), 152/3B, Bir Uttam Kazi Nurruzzaman Sarok, Green Road (Panthapath), Dhaka-1205.

Tel: +88-02-9119266

Fax: +88-02-9119266 (Ext.-101)

Registered office & Factory

:

Santahar Road, Shikor, Narhatto, Kahaloo, Bogra-5870, Bangladesh

PABX: +8801926998897-8

Fax: +88-051-51466

Contact Person : Prantush Chandra Shaha ACS

Company Secretary

Website Address : Web: www.al-faruquebags.com

E-mail Address : Email: [email protected]

(b) The names of the sponsors and directors of the issuer:

Name of the Sponsors and Directors: Sponsors:

Sl. No. Name of Promoter Current Status




Directors:

Director Designation

Chowdhury Al-Faruque Chairman

Md. Redwanul Kabir Chowdhury Managing Director & Director

Mst. Nimme Kabir Chowdhury Director

Al-Faruque Flour Mills Ltd. Represented by Md. Tanzil Kabir Chowdhury

Director

Subrata Pal FCMA Independent Director

Page: 25

(c) The name, logo and address of the auditors and registrar to the issue along with their telephone numbers, fax numbers, contact persons, website and e-mail addresses:

Particulars of Auditor and Registrar to the Issue:

Auditor:


Name : ARTISAN

Chartered Accountants

Logo :

Address : 33 Shah Ali Tower, (7th Floor), Kawran Bazar Dhaka-1215.

Telephone Number : Tel: +88-02-8189883-7

Fax Number : Fax: +88-02-8180187

Contact Person : A F M Alamgir

Chief Executive Partner

Website Address : web: www.artisan-ca.com

E-mail Address : E-mail: [email protected]

Registrar to the Issue is not applicable for AFBL. (d) The name(s) of the stock exchanges where the specified securities are proposed to be listed.

Name of the Stock Exchanges where the Securities to be listed:

Stock Exchanges

Dhaka Stock Exchange Limited 9/F Motijheel C/A, Dhaka 1000.

Tel: +88-02-9564601, 9576210-18

Fax: +88-02-9564727, +88-02-9569755

Chittagong Stock Exchange Ltd. CSE Building, 1080, Sheikh Mujib Road Chittagong 4100.

Tel: +880-2-9513911-15 Fax: +880-2-9513906

http://www.mahfelhuq.com/


Page: 26

CHAPTER (V): CORPORATE DIRECTORY OF THE ISSUER

Name of the Company

: Al-Faruque Bags Limited (AFBL)

Logo :

Nature of Business :

The Company's main business is to manufacture of different types of PP Woven Bag, High Density Poly Ethylene (HDPE) Bag, Low Density Poly Ethylene (LDPE) Bag, Liner, Garments poly and selling them to export oriented Companies as deemed export and direct exporting to the international market.

Date of Incorporation

: December 3, 2007 & Reg. No. Raj-C-446/2007

Commencement of its Commercial Operations

: March 1, 2010

Authorized Capital : Tk. 1,000,000,000 divided into 100,000,000 Ordinary Share of Tk. 10.00 each

Paid up Capital : Tk. 480,000,000 divided into 48,000,000 Ordinary Share of Tk. 10.00 each

Corporate Office :

Firoz Tower, 8th Floor (South Site), 152/3B, Bir Uttam Kazi Nurruzzaman Sarok, Green Road (Panthapath), Dhaka-1205

Tel: +88-02-9119266

Fax: +88-02-9119266 (Ext.-101)

Email: [email protected]


Registered office & Factory


: Cell: +8801926998897-8

Fax: +88-051-51466

Board of Directors : 5 Directors.

Auditors :

ARTISAN


33 Shah Ali Tower, (7th Floor), Kawran Bazar Dhaka-1215.

Tel: +88-02-8189883-7

Fax: +88-02-8180187

E-mail: [email protected]

web: www.artisan-ca.com

Legal Advisors :

Advocate Masud Reza, LLB

Motiar Rahman Bhaban, 1st Floor, Room No. 206 Judge Court, Bogra

Tel: +88-051-65261


Banker for IPO : Brac Bank Limited

Banker of the Company

:

Al-Arafa Islami Bank Ltd., Dutch Bangla Bank Ltd., Islami Bank Bangladesh Ltd., Jamuna Bank Ltd., Mercantile Bank Ltd., Mutual Trust Bank Ltd., National Bank Ltd., Rajshahi Krishi Unnayan Bank, Social Islami Bank Ltd., Sonali Bank Ltd., Farmers Bank Ltd., Bank Asia Ltd., United Commercial Bank Ltd.

Compliance Officer : Prantush Chandra Shaha ACS

Company Secretary

Page: 27

CHAPTER (VI): DESCRIPTION OF THE ISSUER

(a) Summary: (i) The summary of the industry and business environment of the issuer. The summary shall

not be one-sided or biased to highlight the issuer or the issue; Summary of the industry: Bangladesh has around 5000 small, medium and large size plastic goods manufacturing units with around 1.2million workforces directly or indirectly employed in this sector. This sector is contributed around Taka 3000.00 crore as revenue in government every year. In the financial year 2016-2017, the export stood on US$ 116.95 million from the plastic sector of Bangladesh whereas in the financial year 2010-2011 export was US$ 68.76 million. Currently, this sector is growing at average 20 percent more per year. Among the plastic industries, PP Woven is the one of important packaging manufacturing sector. In Bangladesh 70 number of industries are now engaged in manufacturing PP Woven fabric for manufacturing PP Woven bag, FIBC bag, recyclable & reusable shopping bag, tarpaulin other bag which use for bagging of cement, poultry & aqua feed, food grain, seed, textile, bulk carrier (i.e. spinning cone carrier, detergent, tea, confectionery, others), riverbank embankment bag, fashionable shopping bag, etc. all over the world. The woven-bag industry is flourishing fast as Bangladesh is one of the prime sources of cheap labor in the world. The overall investment in Bangladesh’s WPP bags manufacturing sector has approx. Tk. 3,500 crore. Source: Annual report (2016-17) of Bangladesh Plastic Goods Manufacturers & Exporters Association (BPGMEA). Business environment: The Issuer’s business environment is conducive to the business as we have good supply of raw materials. We have skilled labors as well. The wage of labor is reasonable also. Overall, it is a business-friendly situation.

(ii) Summary of consolidated financial, operating and other information.

This information is not applicable for Al-Faruque Bags Limited since it has neither any subsidiary company nor operates under any holding company.

(b) General Information:

(i) Name and address, telephone and fax numbers of the registered office, corporate head office, other offices, factory, business premises and outlets of the issuer;


Name and Corporate Office Address

:

Al-Faruque Bags Limited (AFBL)


Tel: +88-02-9119266

Fax: +88-02-9119266 (Ext.-101)

Email: [email protected]


Registered office & Factory :


PABX: +8801926998897-8

Outlets of the issuer : The issuer company has no outlets.

Page: 28

(ii) The board of directors of the issuer;

Director Designation





Director


Page: 29

(iii) Names, addresses, telephone numbers, fax numbers and e-mail addresses of the chairman, managing director, whole time directors, etc. of the issuer;

Sl. Name & Address Telephone and Fax No. & E-mail Address

1

Name: Chowdhury Al-Faruque Tel: +88-02-9119266

Position: Chairman Fax: +88-02-9119266 (Ext.-101)

Address: Jaleswaritola, Pourasava Lane, Bogra-5800. E-mail: [email protected]

2

Name: Md. Redwanul Kabir Chowdhury Tel: +88-02-9119266

Position: Managing Director & Director Fax: +88-02-9119266 (Ext.-101)


3

Name: Mst. Nimme Kabir Chowdhury Tel: +88-02-9119266

Position: Director Fax: +88-02-9119266 (Ext.-101)


4

Name: Al-Faruque Flour Mills Ltd. Represented by Md. Tanzil Kabir Chowdhury

Tel: +88-02-9119266

Position: Director Fax: +88-02-9119266 (Ext.-101)

Address: House- 87 (Building- 01), Flat-2D, Road-9/C, Sector-05, Uttara, Dhaka-1230 E-mail: [email protected]

5

Name: Subrata Pal FCMA Tel: +88-02-9119266

Position: Independent Director Fax: +88-02-9119266 (Ext.-101)

Address: 31, Gopibagh (3rd Floor), 3rd Lane, Dhaka-1203. E-mail: [email protected]

Page: 30

(iv) Names, addresses, telephone numbers, fax numbers and e-mail addresses of the CFO, company secretary, legal advisor, auditors and compliance officer;

Sl. Name & Address Telephone and Fax No. & E-mail Address

1

Golam Mohammad Ayub Tel: +88-02-9119266

Chief Financial Officer Fax: +88-02-9119266 (Ext.-101)



2

Prantush Chandra Shaha ACS Tel: +88-02-9119266

Company Secretary & Compliance Officer Fax: +88-02-9119266 (Ext.-101)



3

Advocate Masud Reza, LLB Tel: +88-051-65261

Legal Advisor Fax: No Fax Number

Motiar Rahman Bhaban, 1st Floor, Room No. 206, Judge Court, Bogra E-mail: [email protected]

4

ARTISAN Tel: +88-02-8189883-7

Chartered Accountants Fax: +88-02-8180187

33 Shah Ali Tower, (7th Floor), Kawran Bazar Dhaka-1215. E-mail: [email protected]

v) Names, addresses, telephone numbers, fax numbers, contact person, website addresses and e-mail addresses of the issue manager(s);









Web: www.iidfc.com


Page: 31

(vi) The following details of credit rating, where applicable: a) The names of all the credit rating agencies from which credit rating has been obtained; b) The details of all the credit ratings obtained for the issue and the issuer; c) The rationale or description of the ratings(s) so obtained, as furnished by the credit rating agency(s); d) Observations and risk factors as stated in the credit rating report.

As per Section 3 of Credit Ratings Companies Rules, 1996, no credit rating report is required by the Company.

(vii) Following details of underwriting:

a) The names, addresses, telephone numbers, fax numbers, contact persons and e-mail addresses of the underwriters and the amount underwritten by them;

Name & Address Telephone & Fax Number, E-mail, Web

Address Contact Person

Amount Underwritten

BMSL Investment Limited Tel: +88-02-9577651, +88-02-9570624, +88-02-9565183

35,000,000 Shareef Mansion (4th Floor) 56-57 Motijheel C/A Dhaka-1000.




Sandhani Life Finance Limited Tel: +88-02-9551896, +88-02-9575903

35,000,000 16, Motijheel Commercial Area, (3rd Floor), Dhaka-1000.

Fax: +88-02-9554847 Muhammad Nazrul Islam FCMA


Web: www.slflbd.com

Asian Tiger Capital Partners Investments Limited Tel: +88-02-9898439

35,000,000 Sheba House (7th Floor), Plot # 34, Road # 46, Gulshan-2, Dhaka -1212.

Fax: +88-02-9898439 Muhammad Fuad Hussain


Web: www.at-capital.com

Total 105,000,000

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b) Declaration by the underwriters that they have sufficient resources as per the regulatory requirements to discharge their respective obligations;

Declaration by the BMSL Investment Limited

We are one of the underwriters of the Initial Public Offering (IPO) of Al-Faruque Bags Limited. We will underwrite BDT 35,000,000 for the upcoming issue on a firm commitment basis. In this connection, we hereby declare that: We have sufficient resources as per the regulatory requirements to discharge our respective obligations. For the Underwriter: Sd/- Md. Riyad Matin Managing Director BMSL Investment Limited


Declaration by the Sandhani Life Finance Limited We are one of the underwriters of the Initial Public Offering (IPO) of Al-Faruque Bags Limited. We will underwrite totaling to BDT 35,000,000 (Taka Three Crore Fifty Lacs) only on a firm commitment basis. In this connection, we hereby declare that:

We have sufficient resources as per the regulatory requirements to discharge our respective obligations. For the Underwriter: Sd/- Muhammad Nazrul Islam FCMA Managing Director & CEO Place: Dhaka Date: April 05, 2018

Declaration by the Asian Tiger Capital Partners Investments Limited We are one of the underwriters of the Initial Public Offering (IPO) of Al-Faruque Bags Limited. We will underwrite BDT 35,000,000 for the upcoming issue on a firm commitment basis. In this connection, we hereby declare that: We have sufficient resources as per the regulatory requirements to discharge our respective obligations. For the Underwriter: Sd/- Muhammad Fuad Hussain Managing Director & CEO Asian Tiger Capital Partners Investments Limited

Page: 33

c) Major terms and conditions of the underwriting agreements.

(i) The IPO shall stand cancelled if at least 65% in any category of the IPO is not subscribed.

(ii) In case of under subscription in any category by up to 35% of the IPO the un-subscribed securities shall be taken up by the underwriters.

(iii) Notwithstanding anything contained in the agreement in case of inconsistency between the provision of the agreement and the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015, the Public Issue Rules shall prevail.

(iv) Prior to publication of the prospectus, the Company shall have obtained consent from the Bangladesh Securities and Exchange Commission permitting the issue as described in Article 2.01 and providing for payment of underwriting commission 0.40% on the amount underwritten.

(v) The Issuer shall within 10 (Ten) days of the closure of subscription call upon the

underwriter in writing with a copy of said writing to the Bangladesh Securities and Exchange Commission, to subscribe for the shares not subscribed by the closing date and to pay for in cash in full for such unsubscribed shares within 15 (Fifteen) days of the date of said notice and the said amount shall have to be credited into shares subscription account within the said period.

(vi) 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 Underwriters to the Commission.

In the case of failure by the underwriter to pay for the shares within the stipulated time, the Company/Issuer will be under no obligation to pay any underwriting commission under this Agreement.

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(c) Capital Structure:

(i) Authorized, issued, subscribed and paid up capital (number and class of securities, allotment dates, nominal price, issue price and form of consideration);

Particulars No. of Securities Class of Securities

Allotment Nominal & Form of Consideration

Amount in Taka Dates Amount Issue Price (Tk.)

Authorized Capital 100,000,000 Ordinary Share - - 10.00 - 1,000,000,000

Before IPO:

Issued, Subscribed and paid up capital

48,000,000 Ordinary Share

3-Dec-07 10,000,000 1,000.00 Cash

480,000,000 6-Feb-17 80,000,000 10.00 Bonus

9-Feb-17 8,000,000 10.00 Cash

12-Dec-17 382,000,000 10.00 Cash

After IPO:

To be issued as IPO 30,000,000 Ordinary Share - - 10.00 Cash 300,000,000

Paid up capital (Post IPO) 78,000,000 Ordinary Share - - 10.00 Cash 780,000,000

Notes: The Company has changed the face value of its ordinary share from Tk. 1,000.00 to Tk. 10.00 by passing a special resolution in its extraordinary general meeting held on November 30, 2016 and necessary amendments in capital clause of the Memorandum and Articles of Association were made accordingly.

(ii) Size of the present issue, with break-up (number of securities, description, nominal value and issue amount);

Particulars Percentage No. of Ordinary

Shares Nominal

Value Issue price Issue Amount (Taka)

Initial Public Offering through Fixed Price Method

Eligible investors (EI)

EI excluding mutual funds and CIS

40% 12,000,000

10.00 10.00

120,000,000

Mutual Funds and CIS 10% 3,000,000 30,000,000

General public (GP)

GP excluding NRB* 40% 12,000,000 120,000,000

Others* 10% 3,000,000 30,000,000

Total 100% 30,000,000 300,000,000

Other*: 12,000,000 Ordinary shares will be reserved for General Public and Small Affected Investors.

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(iii) Paid up capital before and after the present issue, after conversion of convertible instruments (if any) and share premium account (before and after the issue);

The Company has no convertible instruments and share premium account.

Particulars Amount in BDT

Paid up capital before the present issue 480,000,000

Paid up capital after the present issue 780,000,000

Paid up capital after conversion of convertible instruments (if any) N/A

Share premium account before the present issue N/A

Share premium account after the present issue N/A

(iv) Category wise shareholding structure with percentage before and after the present issue and after conversion of convertible instruments (if

any); The paid-up capital of the Company is Tk. 480,000,000.00. The Company intends to issue 30,000,000 ordinary shares of Tk. 10.00 each at an issue price of Tk. 10.00 through Initial public offering (IPO) totaling to Tk. 300,000,000.00 under Fixed Price Method subject to regulatory approvals.

Category wise shareholding structure with percentage before and after the present issue is as follows:

Sl. No. Category of Shareholders No. of Ordinary Shares Hold Percentage of Holding

Pre-IPO Post-IPO Pre-IPO Post-IPO

1 Director & Sponsor 24,100,000 24,100,000 50.21% 30.90%

2 Institutional 8,551,000 20,551,000 17.81% 26.35%

3 Mutual Funds and CIS - 3,000,000 0.00% 3.85%

4 Individual 15,349,000 27,349,000 31.98% 35.06%

5 Non Resident Bangladeshis (NRBs) - 3,000,000 0.00% 3.85%

Total 48,000,000 78,000,000 100.00% 100.00%

There is no convertible instrument, so no conversion is required.

Page: 36

(v) Where shares have been issued for consideration in other than cash at any point of time, details in a separate table, indicating the date of issue, persons to whom those are issued, relationship with the issuer, issue price, consideration and valuation thereof, reasons for the issue and whether any benefits have been accrued to the issuer out of the issue; The Company issued the following ordinary shares for consideration in other than cash (bonus):

Date of issue

Persons to whom those are issued

No. of shares alloted

Relationship with the issuer

Issue price

Consideration & Valuation

Reasons for the issue

Benefit from the issue

6-Feb-2017

Chowdhury Al-Faruque 2,400,000 Chairman

Tk. 10.00 Other than

Cash (Bonus)

Distribution of accumulated

profit

Enhencement of capital base and

re-investments Md. Redwanul Kabir Chowdhury 4,800,000

Managing Director & Director

Mst. Nimme Kabir Chowdhury 800,000 Director

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(vi) Where shares have been allotted in terms of any merger, amalgamation or acquisition scheme, details of such scheme and shares allotted;

The Company has not allotted any shares in terms of any merger, amalgamation or acquisition scheme.

(vii) Where the issuer has issued equity shares under one or more employee stock option

schemes, date-wise details of equity shares issued under the schemes, including the price at which such equity shares were issued; The issuer has not issued equity shares under one or more employee stock option schemes.

(viii) If the issuer has made any issue of specified securities at a price lower than the issue price during the preceding two years, specific details of the names of the persons to whom such specified securities have been issued, relation with the issuer, reasons for such issue and the price thereof; The issuer has not made any issue of specified securities at a price lower than the issue price during the preceding two years.

(ix) The decision or intention, negotiation and consideration of the issuer to alter the capital structure by way of issue of specified securities in any manner within a period of one year from the date of listing of the present issue;

The Company has no decision or intention, negotiation and consideration to alter the capital structure by way of issue of specified securities in any manner within a period of one year from the date of listing of the present issue.

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(x) The total shareholding of the sponsors and directors in a tabular form, clearly stating the names, nature of issue, date of allotment, number of shares, face value, issue price, consideration, date when the shares were made fully paid up, percentage of the total pre and post issue capital, the lock in period and the number and percentage of pledged shares, if any, held by each of them;

Name & Position Nature of

Issue

Date of Allotment and Acquisition & date of shares fully paid-up

No. of shares

Face Value

& Issue Price

Consideration Pre IPO

% Post

IPO % Lock in Period*

Number & % of

pledge of shares

Name: Chowdhury Al-Faruque Ordinary

3-Dec-07 300,000 10.00

Cash 5.63% 3.46% 3 Yrs No Pledge

Position: Chairman 6-Feb-17 2,400,000 Bonus

Total 2,700,000

Name: Md. Redwanul Kabir Chowdhury

Ordinary

3-Dec-07 600,000

10.00

Cash

25.83% 15.90% 3 Yrs No Pledge

6-Feb-17 4,800,000 Bonus

Position: Managing Director & Director

12-Dec-17 7,000,000 Cash

Total 12,400,000

Name: Mst. Nimme Kabir Chowdhury

Ordinary

3-Dec-07 100,000

10.00

Cash

8.13% 5.00% 3 Yrs No Pledge

6-Feb-17 800,000 Bonus

Position: Director 12-Dec-17 3,000,000 Cash

Total 3,900,000

Name:


Ordinary 9-Feb-17 100,000

10.00 Cash

10.63% 6.54% 3 Yrs No Pledge

Position: Director 12-Dec-17 5,000,000 Cash

Total 5,100,000

Name: Subrata Pal FCMA

Ordinary N/A N/A N/A N/A N/A N/A N/A N/A Position: Independent Director

The Company split its share from Tk. 1,000.00 to Tk. 10.00 on 30.11.2016. [*From the issue date of Prospectus]

Page: 39

(xi) The details of the aggregate shareholding of the sponsors and directors, the aggregate number of specified securities purchased or sold or otherwise transferred by the sponsor and/or by the directors of the issuer and their related parties within six months immediate preceding the date of filing the prospectus;

Aggregate shareholding of the Sponsors and Directors:

Sl. Name of Sponsor & Director Number of Ordinary

Shares Held

Face Value

& Issue Price

Date of acquisition

Percentage

Pre-IPO Post-IPO

1 Chowdhury Al-Faruque 2,700,000 10.00 3-Dec-07 5.63% 3.46%

2 Md. Redwanul Kabir Chowdhury 12,400,000 10.00 3-Dec-07 25.83% 15.90%

3 Mst. Nimme Kabir Chowdhury 3,900,000 10.00 3-Dec-07 8.13% 5.00%

4 Al-Faruque Flour Mills Ltd. Represented by Md. Tanzil Kabir Chowdhury

5,100,000 10.00 9-Feb-17 10.63% 6.54%

5 Subrata Pal FCMA - 10.00 - 0.00% 0.00%

Total 24,100,000

50.21% 30.90%

Transferred by the sponsor and/or by the directors of the issuer: No shares have been transferred by the sponsor and/or by the directors of the Al-Faruque Bags Limited and their related parties within six months immediate preceding the date of filing the prospectus.

(xii) The name and address of any person who owns, beneficially or of record, 5% or more of

the securities of the issuer, indicating the amount of securities owned, whether they are owned beneficially or of record, and the percentage of the securities represented by such ownership including number of equity shares which they would be entitled to upon exercise of warrant, option or right to convert any convertible instrument;

Sl. Name of the Shareholders

Relationship Address Number of Shares Held

Pre IPO %

1 Chowdhury Al-Faruque Chairman Jaleswaritola, Pourasava Lane, Bogra-5800.

2,700,000 5.63%

2 Md. Redwanul Kabir Chowdhury


Jaleswaritola, Pourasava Lane, Bogra-5800.

12,400,000 25.83%

3 Mst. Nimme Kabir Chowdhury

Director Jaleswaritola, Pourasava Lane, Bogra-5800.

3,900,000 8.13%

4 Al-Faruque Flour Mills Ltd.

Director Santahar Road, Narhatto, Kahaloo, Bogra- 5870.

5,100,000 10.63%

5 Al-Faruque Feed Mills Ltd.

Shareholder Santahar Road, Narhatto, Kahaloo, Bogra- 5870.

2,487,500 5.18%

6 BLI Capital Limited Shareholder Eunoos Trade Centre, Level-18, 52-53 Dilkusha, C/A, Dhaka.

4,750,000 9.90%

There is no event or intent of exercising warrant, option or right to convert any convertible instrument.

Page: 40

(xiii) The number of securities of the issuer owned by each of the top ten salaried officers, and all other officers or employees as group, indicating the percentage of outstanding shares represented by the securities owned.

No employee or executive holds any shares of the Company individually or as a group except the following:

Sl. Name of the Shareholders Position Address Number of Shares Held

Pre IPO %


Jaleswaritola, Pourasava Lane,

Bogra-5800.

2,700,000 5.63%


12,400,000 25.83%

3 Mst. Nimme Kabir Chowdhury Director 3,900,000 8.13%

(d) Description of Business:

(i) The date on which the issuer company was incorporated and the date on which it

commenced operations and the nature of the business which the company and its subsidiaries are engaged in or propose to engage in; Al-Faruque Bags Limited, (AFBL) is located at Santahar Road, Shikor, Narhatto, Kahaloo, Bogra-5870, Bangladesh which is very near to Bogra City. AFBL is an ISO 9001:2015 QMS certified company. It is endeavoring to translate its dream of becoming one of the leaders by manufacturing superior quality packaging products using the best technologies and materials. AFBL’s products have already won the hearts of the thousands of consumers in Bangladesh for their outstanding designs, uncompromising quality and affordable prices. It has now become a trusted brand name in Bangladesh. AFBL was incorporated as a Private Limited Company on 3rd December 2007. The Company started its commercial operation on 1st March, 2010 and subsequently converted into a Public Limited Company on 15th January, 2018 under Companies Act 1994 with the Registrar of Joint Stock Companies and Firms, Dhaka, Bangladesh. The Certificate of Incorporation number is Raj-C-446/2007. Al Faruque Bags Limited is 100% export oriented plastic packaging industry. The Company's main business is to manufacture of different types of PP Woven Bag, High Density Poly Ethylene (HDPE) Bag, Low Density Poly Ethylene (LDPE) Bag, Liner, Garments poly and selling them to export oriented Companies as deemed export and direct exporting to the international market. There is no subsidiary company of AFBL.

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(ii) Location of the project; AFBL’s registered office and Factory is situated at Santahar Road, Shikor, Narhatto, Kahaloo, Bogra-5870, Bangladesh and corporate office is situated at Firoz Tower, 8th Floor (South Site), 152/3B, Bir Uttam Kazi Nurruzzaman Sarok, Green Road (Panthapath), Dhaka-1205.

(iii) Plant, machinery, technology, process, etc.

Plant: AFBL is vertically integrated generic plastic packaging formulation products manufacturer, marketer, promoter and supplier. There is integrated Building Management System, structural design, dust-free environment, fire management system. Machinery: The company set up the sophisticated and high speed machineries to ensure smooth and quality based production. There is included sophisticated Tape Line machine, high speed Circular Weaving Machine, Automatic Bag Conversion machine, Film Blowing Machine, Lamination machine and more other relevant machineries. Technology: The Company has been using Extrusion, Printing & Packaging Technology. Plastics extrusion is a high-volume manufacturing process in which raw plastic is melted & formed and Rotogravure Printing technology. Its manufacturing process heavily integrated technology driven, dynamic in nature and using highly sophisticated state-of-the–art cutting edge technology. Process: AFBL maintains total quality system which includes strict monitoring, process to process regulation, true measurement, equipment calibration.

(iv) Details of the major events in the history of the issuer, including details of capacity or

facility creation, launching of plant, products, marketing, change in ownership and/or key management personnel etc.;

History of the issuer

On December 03, 2007 incorporated as a Private Limited Company.

Converted into a Public Limited Company on January 15, 2018.

Launching of plant On March 01, 2010.

Capacity PP Woven Bag (in Ton): 2,178/Year

Wide Plain Poly Bag (WPP) (in Ton): 627/Year

Capital raise (Last) Tk. 382,000,000.00 (Cash consideration) on 12.12.2017.

Products Different types of PP Woven Bags, Poly Ethylene including HDPE, LDPE, BOPP, Shopping bag and liner.

Market for the product Overseas Market

Change in ownership/key management personnel

The followings Directors have been appointed: 1. On December 12, 2017, Md. Tanzil Kabir Chowdhury

(Representative of Al-Faruque Flour Mills Ltd.), appointed as Director;

2. On April 02, 2018, Subrata Pal FCMA appointed as Independent Director for the period of 3 (Three) years.

The followings key management personnel have been appointed: 1. On October 11, 2015, Engr. Kh. Ferdous Ouhid Pavel

appointed as Factory Manager; 2. On December 01, 2015, Prantush Chandra Shaha ACS

appointed as Company Secretary;

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3. On January 16, 2016, Golam Mohammad Ayub appointed as Chief Financial Officer;

4. On July 08, 2017, Md. Sunjurul Alam appointed as Sr. Manager, Marketing & Sales (Head of Marketing);

5. On November 15, 2017, Asst. Manager (Head of Commercial) appointed as Sr. Manager, Marketing & Sales (Head of Marketing).

(v) Principal products or services of the issuer and markets for such products or services.

Past trends and future prospects regarding exports (if applicable) and local market, demand and supply forecasts for the sector in which the product is included with source of data;

Principal products or services of the issuer: Al-Faruque Bags Limited is engaged in manufacturing different types of PP Woven Bags, Poly Ethylene including HDPE, LDPE, BOPP, Shopping bag and liner. Market for such Products: Al Faruque Bags Limited is 100% export oriented plastic packaging industry. AFBL produces its goods on receiving the order from its customers and supply to the customer’s destination as per their requirements. Past trends and future prospects regarding exports (if applicable) and local market, demand and supply forecasts for the sector in which the product is included with source of data: Last 5 years sales of Al-Faruque Bags Limited (AFBL):

(Amount in BDT)

Particulars 1 Jul 2017

to 31 Mar 2018

1 Jul 2016 to

30 Jun 2017

1 Jul 2015 to

30 Jun 2016

1 Jul 2014 to

30 Jun 2015

1 Jul 2013 to

30 Jun 2014

1 Jul 2012 to

30 Jun 2013

Export Sales 413,375,395 507,906,169 436,625,142 310,159,892 253,600,597 309,525,830

Bangladesh has around 5000 small, medium and large size plastic goods manufacturing units with around 1.2million workforces directly or indirectly employed in this sector. This sector is contributed around Taka 3000.00 crore as revenue in government every year. In the financial year 2016-2017, the export stood on US$ 116.95 million from the plastic sector of Bangladesh whereas in the financial year 2010-2011 export was US$ 68.76 million. Currently, this sector is growing at average 20 percent more per year. Among the plastic industries, PP Woven is the one of important packaging manufacturing sector. In Bangladesh 70 number of industries are now engaged in manufacturing PP Woven fabric for manufacturing PP Woven bag, FIBC bag, recyclable & reusable shopping bag, tarpaulin other bag which use for bagging of cement, poultry & aqua feed, food grain, seed, bulk carrier (i.e. spinning cone carrier, detergent, tea, confectionery, others), riverbank embankment bag, fashionable shopping bag, etc. all over the world. The woven-bag industry is flourishing fast as Bangladesh is one of the prime sources of cheap labor in the world. The overall investment in Bangladesh’s WPP bags manufacturing sector has approx. Tk. 3,500 crore. Source: Annual report (2016-17) of Bangladesh Plastic Goods Manufacturers & Exporters Association (BPGMEA).

Page: 43

(vi) If the issuer has more than one product or service, the relative contribution to sales and income of each product or service that accounts for more than 10% of the company’s total revenues;

There is no individual product that account for more than 10% of the Company’s total revenue.

(vii) Description of associates, subsidiary and holding company of the issuer and core areas of business thereof; Al-Faruque Bags Limited has no associates, subsidiary and holding company.

(viii) How the products or services are distributed with details of the distribution channel. Export possibilities and export obligations; Al Faruque Bags Limited is 100% export oriented plastic packaging industry. AFBL produces its goods on receiving the order from its customers and supply to the customer’s destination as per their requirements. Moreover, the Company maintains stocks for quick delivery to customer. The distribution channel theoretically like- raw material import from abroad and after that kept it properly in warehouse by inspecting its quality. After that raw material supply to the production floor as per requirements with proper checking of weight & quantity and after production, the finished products check the quality before packing for delivery. At the ending stage of distribution is delivering the goods to the respective customers in two ways, one is shipment for foreign customers and another is sent to local customers those are direct exporter. The distribution process may demonstrate as follows:

Export possibilities and export obligations: AFBL does not have any export obligation rather there is good potential of expansion for export.

Finished Goods Warehouse

Delivery

Page: 44

(ix) Competitive conditions in business with names, percentage and volume of market shares of major competitors; AFBL has a number of competitors and some of these are as follows:

Sl. No. Name of the Company

1 Sino Bangla Industries Ltd.

2 United Fiber Industries Ltd.

3 Miracle Industries Ltd.

4 Yeakin Polymer Ltd.

5 Shovon Woven Bag Manufacturing Co. Ltd.

6 Desh Bondhu Polymer Ltd.

7 Khan Brothers PP woven Bag Ind. Ltd.

8 Madina Poly Fibre Ltd.

9 Paragoan Plast Fibre Ltd.

10 Ideal Fibre Industries Ltd.

11 Akiz Poly Fibre Ind. Ltd.

There is no market data in respect of percentage and volume of market shares of major competitors.

Apart from this, as per annual report of the listed companies and audited financial statements of Al-Faruque Bags Limited, the sales amounts are presented below:

Amount in BDT (Million)

Sl. Name of the Company 2017/2018 Period/Year Year End

1 Al-Faruque Bags Limited 413.38 From 1 Jul 17 to 31 Mar 18 30 Jun

2 Deshbandhu Polymer Limited

787.89 From 1 Jul 17 to 31 Mar 18 30 Jun

3 Yeakin Polymer Limited 110.16 From 1 Jul 17 to 31 Dec 17 30 Jun

4 Khan Brothers PP Woven Bag Industries Ltd.

651.69 From 1 Jul 17 to 31 Mar 18 30 Jun

5 Miracle Industries Ltd. 238.38 From 1 Oct 16 to 31 Mar 18 30 Jun

6 Sino Bangla Industries Ltd. 653.57 From 1 Jul 17 to 31 Mar 18 30 Jun

There is no data available regarding market shares of the respective listed company in their annual report.

Page: 45

(x) Sources and availability of raw materials, names and addresses of the principal suppliers and contingency plan in case of any disruption;

Main raw materials of the AFBL‘s product are TPMC in form of PP, HDPE, LDPE, LLDPE, Caco3 and Filler, Ink, Thinner and chemicals, which the company procures from overseas market. The company has some trusted suppliers of its materials and chemicals. List of leading suppliers is as follows:

SL Name of Suppliers Name of Raw Materials Address Country of

origin

1 United Raw Material Solutions Limited

LLDPE Film Grade 11F, No. 167, Fuxing N. Rd, Taipei Taiwan

2 Polmac Co. Ltd. LLDPE Film Grade (3224) Semyung Blgd., 945-2, Daechi-Dong, Gangnam-Gu, Seoul, KOrea Korea

3 CJ Polymers Ltd. PP H1045, PP Lamination Grade PP General Film Grade

B-6-16 Vox Southgate, Jalan Dua Off Jalan Chan Sow Lin, 55200, Kualalampur, Malaysia

Malaysia

4 EMERAUDE Polymers DMCC PP Yarn Grade 2nd Floor, Office No.201, 207, 208 Indigoicon, Tower-Cluster F, Jumeirah Lake Towers, P.o. Box 487350-Dubai-UAE

UAE

5 Raj Plaschem Industries Polypropylene, Grade: Polycob 1 Ganpati Vihar, Navratan Complex, Udaipur(Raj.), India India

6 GS Global Corp. Polypropylene, Grade-J-560S GS Tower 679, Yeoksam-Dong, Gangnam-Gu, Seoul, 135-985, Republic of Korea

South Korea

7 Global Alliance Group DMCC

HDPE Marlet TR-144 1503, Indigo Icon Building JTR, Dubai UAE

8 Formosa Plastic Corporation Pp Yarn Grade Yungsox 1040F LLDPE LDPE

Road, Taipei, Taiwan Taiwan

9 Mohon Perfumery Thinner Vandary Bhaban, 56/57, Mitford Road, Dhaka-1100 Bangladesh

10 Chisty PVC Ind. Calcium Carbonate House # 06, Road # 02, Sector # 11, Uttara Dhaka Bangladesh

11 Nissan Paints and Autolacquer Co.

BOPP Ink 4783, South Matuail, Shampur, Dhaka Bangladesh

12 Danish Industries (Pvt.) Limited

Ink and Thinner 133/134, Begun Bari, Tejgaon 1/A, Dhaka-1208 Bangladesh

13 Russel Enterprise Sewing Yarn 17, S M Maleh Road, Tanbazar, Narayangonj. Bangladesh

Contingency Plan in case of any disruption:

We have been collecting our raw materials from different suppliers from local and international suppliers. Suppliers’ countries are India, South Korea, Vietnam, Thailand, Hong Kong, Taiwan, and Saudi Arabia. So, we have already contingency plan in there in case of any disruption.

Page: 46

(xi) Sources of, and requirement for, power, gas and water; or any other utilities and contingency plan in case of any disruption;

Power: Electricity connection has been taken from Power Development Board (PDB), Bogra having a capacity of 2,000 KVA. A diesel generator having capacity of 110 KVA will act as alternative power supply. Gas: No need for production. Water: At different stages throughout the production process in AFBL there requires water which is collected from deep tubewell.

Contingency Plan in case of any disruption: To tackle the disruption of utilities, Company has installed generator as mentioned in above.

(xii) Names, address(s), telephone number, web address, e-mail and fax number of the

customers who account for 10% or more of the company’s products or services with amount and percentage thereof; There is no customer who purchase 10% or more of the company’s products.

(xiii) Names, address(s), telephone number, web address, e-mail and fax number of the

suppliers from whom the issuer purchases 10% or more of its raw material or finished goods with amount and percentage thereof; No particular suppliers from whom Al-Faruque Bags Limited purchases 10% or more of its raw material or finished goods.

(xiv) Description of any contract which the issuer has with its principal suppliers or customers

showing the total amount and quantity of transaction for which the contract is made and the duration of the contract. If there is not any of such contract, a declaration is to be disclosed duly signed by CEO or MD, CFO and Chairman on behalf of Board of Directors; The Company has no such contract with principal suppliers or Customers.

Declaration regarding Contract with Principal suppliers or customers We, on behalf of the Board of Directors certify that Al-Faruque Bags Limited did not enter into any contract with its principal suppliers or customers.

Sd/- Md. Redwanul Kabir Chowdhury Managing Director

Sd/- Golam Mohammad Ayub

Chief Financial Officer

Sd/- Chowdhury Al-Faruque

Chairman

on behalf of Board of Directors Dated: June 03, 2018 Dhaka

Page: 47

(xv) Description of licenses, registrations, NOC and permissions obtained by the issuer with issue, renewal and expiry dates; The Company neither obtained any Patent Right/Trademarks nor signed any royalty agreement with any party. However, AFBL has several regulatory licenses and certificates in order to continue its operations. The table shows list of licenses:

SL Name of

Certificate/license/Registration License Issuer/Issuing Authority

Certificate/License No.

Validity/Current Status

1 Certificate of Incorporation Registrar of Joint Stock Companies & Firms, Rajshahi Raj-C-446/2007 N/A

2 Trade License Narhatto Union Parishad 1386 30-Jun-18

3 TIN Certificate National Board of Revenue 297233859160 N/A

4 VAT Reg. No. Customs, Excise & VAT Commissionerate, Rajshahi 000645416 N/A

5 Import Registration Certificate (IRC) Controller of Import & Export, Government of Bangladesh, Bogra

B 0187746 30-Jun-18

6 Export Registration Certificate (ERC) R 72994

7 BPGMEA Bangladesh Plastic Goods Manufacturers & Exporters Association

G-1130 31-Dec-18

8 BCCI Bogra Chamber of Commerce & Industry G 3081 31-Dec-18

9 Fire License Bangladesh Fire Services and Civil Defense, Bogra 1041/2010-2011 30-Jun-18

10 Bonded Warehouse License Customs Bond Commissionerate, Rajshahi 01/KAS-SBW/2012 17-Apr-20

11 Environment Clearance Certificate Department of Environment, Rajshahi Division 12948/2008/2055 12-Apr-18

(Applied for renewal)

12 Factory License Department of Factory, Rajshahi Division 19402/Dhaka 31-Dec-18

13 EPB Export Promotion Bureau, Dhaka NT-693 30-Jun-18

(xvi) Description of any material patents, trademarks, licenses or royalty agreements;

The Company neither obtained any Patent Right/Trademarks nor signed any royalty agreement with any party. However, it has several regulatory licenses and certificate in order to continue its operation.

(xvii) Number of total employees and number of full-time employees; Number of employees is as follows:

Salary (Monthly) Total Employees

Below Tk. 3,000/- -

Above Tk. 3,000/- 215

The above-mentioned number of employee includes office staff & workers, which are full time employee. Mentionable here that, the Company has no part time employees.

Page: 48

(xviii) A brief description of business strategy; A business strategy sets out to achieve the desired goals. Business strategy is defined as long-term business planning which is concerned with the scope of a business' activities. The company strategies are as follows.

1. Increase Fixed Assets: The Company is in planning to invest in fixed assets in order to expand its existing business. 2. Economic Scale: With a view to spreading the fixed cost over more units the Company is trying to increase economic of scale 3. Lower price: In order to be market leader, the Company is trying to be competitive price to deal with its rivals. 4. Product Differentiating: By differentiating in the product line, the Company will be able to make higher price for its product. Hence, product

differentiation is on the mind.

(xix) A table containing the existing installed capacities for each product or service, capacity utilization for these products or services in the previous years, projected capacities for existing as well as proposed products or services and the assumptions for future capacity utilization for the next three years in respect of existing as well as proposed products or services. If the projected capacity utilization is higher than the actual average capacity utilization, rationale to achieve the projected levels. With regard to above, a table is presented in the following page:

Total actual capacity and its utilization:

Sl. Name of Product

30.06.2017 30.06.2016 30.06.2015

Installed Capacity

(Ton)

Actual Production

(Ton)

Utilization (%)

Installed Capacity

(Ton)

Actual Production

(Ton)

Utilization (%)

Installed Capacity

(Ton)

Actual Production

(Ton)

Utilization (%)

1 PP Woven Bag 2,916 2,178 74.69% 2,196 1,716 78.14% 2,028 1,461 72.04%

2 Wide Plain Poly Bag (WPP)

840 627 74.64% 840 657 78.21% 360 274 76.15%

Capacity is calculated considering 320 days per year, 2 shifts per day and 12 hours per shift.

Page: 49

Projected capacity and its utilization:

Sl. Name of Product

30.06.2021 30.06.2020 30.06.2019

Installed Capacity

(Ton)

Actual Production

(Ton)

Utilization (%)

Installed Capacity

(Ton)

Actual Production

(Ton)

Utilization (%)

Installed Capacity

(Ton)

Actual Production

(Ton)

Utilization (%)

1 PP Woven Bag 3,873 3,486 90.00% 3,521 3,028 86.00% 3,062 2,511 82.00%

2 Wide Plain Poly Bag (WPP) 1,116 1,004 90.00% 1,014 872 86.00% 882 723 82.00%

Assumptions for future capacity utilization

Assumption indicator Assumption's Basis Assumptions Years

30-Jun-21 30-Jun-20 30-Jun-19

Capacity Increase Capacity will be increased as new machineries will be introduced.

10% 15% 5%

Rationale to achieve the projected levels: The Company has projected that the capacity utilization will increase. As the total market is increased day by day and market share of the company is increasing. Hence, the management of the Company thinks that the projected capacity is attainable.

Page: 50

(e) Description of Property: The written down value of Property, Plant & Equipment’s owned by the company as per audited accounts as on 31 March, 2018 are stated below:

Particulars Written down value as on

31-Mar-2018

Factory:

Land & Land Development 41,767,143

Boundary Wall & Surface Drain 27,670,113

Dormitory Building & Canteen 58,791,902

Water Reserver 1,156,552

Factory Shed, Workshop & Godown 138,972,924

Fire Fightting Equipments 367,212

Plant & Machinery 78,017,336

Sub station, Electric installation, Stablizer 22,353,542

Motor Vehicles 24,682,381

Total (Factory) 393,779,105

Office:

Office Building 55,027,321

Electric Equipments 2,042,358

Office Equipments 2,588,733

Furniture & Fixture 5,209,194

Total (Office) 64,867,607

Grand Total 458,646,712

(i) Location and area of the land, building, principal plants and other property of the

company and the condition thereof; The entire above mentioned assets are located at the Company’s registered office and factory: Santahar Road, Shikor, Narhatto, Kahaloo, Bogra-5870, Bangladesh and at rented corporate office: Firoz Tower, 8th Floor (South Site), 152/3B, Bir Uttam Kazi Nurruzzaman Sarok, Green Road (Panthapath), Dhaka-1205. The Company has 714.25 decimals land located at Shikor, Vagdubra & Larua, Kahaloo, Bogra on which the Company’s factory

premises is situated. All of the above‐mentioned Property, Plant & Equipment’s are in working condition.

(ii) Whether the property is owned by the company or taken on lease; All the above-mentioned assets of the Company are in its own name except rented corporate office at Firoz Tower, 8th Floor (South Site), 152/3B, Bir Uttam Kazi Nurruzzaman Sarok, Green Road (Panthapath), Dhaka-1205.

Page: 51

(iii) Dates of purchase, last payment date of current rent (LvRbv) and mutation date of lands, deed value and other costs including details of land

development cost, if any and current use thereof; Land:

Deed No. Date of

purchase Mutation

date

Last payment date of current

rent

(LvRbv)/Premium

R. S Dag No. Deed Value

In Tk.

Land development & Other Cost in

Tk.

Area of Land

(Decimal)

Current use

1763/09 12.03.2009 26.11.2009 Apr 16, 2017 2928, 2912, 2927, 2925, 2923,

2930, 2931, 2914, 2913, 2924 1,927,000

28,065,143

243.5

Factory Building, Administrative Building, Dormitory, Godown, Mosque, Water Preserver, pond and developed free land in the factory boundary wall.

8099/14 17.11.2014

Mutation

uder

process

- 2920 550,000 22

7999/15 30.11.2015 29.08.2016 Apr 16, 2017 2890,2893 550,000 21.75

8000/15 30.11.2015

Mutation

uder

process

- 2892 200,000 08

1724/15 12.03.2015 29.08.2016 Apr 16, 2017 2897 450,000 18

8188/15 08.12.2015 29.08.2018 Apr 16, 2017 2849,2898 400,000 16

301/16 11.01.2016 Mutation

uder

process

- 2898 450,000 18

4387/16 12.07.2016 - 2896 525,000 21

4388/16 12.07.2016 - 1672 1,025,000 41

4389/16 12.07.2016 29.08.2016 Apr 16, 2017 2895 250,000 10

4842/16 26.07.2016

Mutation

uder

process

- 712, 1850, 2434, 2688, 2745,

2442, 2556 2,875,000 115

5326/16 09.08.2016 - 2890 550,000 22

5327/16 09.08.2016 - 2878 725,000 29

5959/16 01.09.2016 - 2900 325,000 13

5960/16 01.09.2016 - 2894 625,000 25

5979/16 01.09.2016 - 2891 350,000 14

5981/16 01.09.2016 - 2929, 2931, 2933, 2923, 2932,

448 1,925,000 77

13,702,000 714.25

Page: 52

(iv) The names of the persons from whom the lands has been acquired or proposed to be acquired along with the cost of acquisition and relation, if any, of such persons to the issuer or any sponsor or director thereof;

Deed No.

Name of the persons from whom the land has been acquired

Cost of acquisition

Relation

1763/09 Md. Redwanul Kabir Chowdhury Mst. Nemme kabir Chowdhury

19,27,000.00 Sponsor Director

8099/14 Md. Shofikul Islam Md. Alom Md. Jafurul Islam

5,50,000.00 No relation

7999/15 Md. Babul Sarkar 5,50,000.00 No relation

8000/15

Chan Mohammad Aktar Banu Md. Hazrat Ali Md. Ferdous Hossain Md. Sakhowat Talukdar Md. Shohidul Islam


1724/15 Mst. Angura Begum Md. Dulu Miya


8188/15 Md. Shamim 4,00,000.00 No relation

301/16 Md. Makbul hossain Md. Abdul Gafur Md. Belal Hossain


4387/16 Md. Kashem Ali 5,25,000.00 No relation

4388/16 Mst. Dipa khatun (Protima Khatun) 10,25,000.00 No relation

4389/16 Md. Abdul khalek 2,50,000.00 No relation

4842/16 Md. Mominul Islam Sarkar (Sumon) 28,75,000.00 No relation

5326/16 Md. Belal Uddin Md. Motiur Rahman (Palash) Md. Aminul Islam(Ripon)


5327/16 Md. Mokbul hossain Md. Abdul Gafur Md. Balal hossain


5959/16 Md. Hossain Ali 3,25,000.00 No relation

5960/16 Alhaj Md. Abdul Bari (Bulu) Md. Anisar Rahman


5979/16 Mrs. Rokeya Begum 3,50,000.00 No relation

5981/16 Md. Kashem Ali 19,25,000.00 No relation

1,37,02,000.00

(v) Details of whether the issuer has received all the approvals pertaining to use of the land,

if required; The Company has received all the approvals pertaining to use of the land from Narhatto Union Parishad.

Page: 53

(vi) If the property is owned by the issuer, whether there is a mortgage or other type of

charge on the property, with name of the mortgagee; 321.25 decimals lands along with factory buildings and plant & machinery are mortgaged to The Farmers Bank Limited and Rajshahi Krishi Unnayan Bank against Long Term Loan and Short Term Borrowings.

Name of Mortgagee Date Description of

Land Area in

Decimals Other assets

The Farmers Bank Limited (Motijheel Branch)

21.01.2016 Santahar Road, Shikor, Narhatto, Kahaloo, Bogra-

5870

77.75 -

Rajshahi Krishi Unnayan Bank (Bogra Corporate Branch)

16.03.2009 243.50

factory buildings and

plant & machinery

Total 321.25

(vii) If the property is taken on lease, the expiration dates of the lease with name of the

lessor, principal terms and conditions of the lease agreements and details of payment; No Property is taken by the Company under lease agreement.

Page: 54

(viii) Dates of purchase of plant and machineries along with sellers name, address, years of sale, condition when purchased, country of origin, useful economic life at purchase and remaining economic life, purchase price and written down value;

Sl No.

L/C No. & Date B/E

No/Challan No & Date

Sellers Name Address Years of

Sale

Machineries Name

(Description)

Condition when

Purchased Quantity

Country of Origin

Useful Economic

Life at Purchase

Remaining Economic

Life

Machineries Acquisition

value in BDT W.D.V

1 March 17, 2009 DC/2009/12

March 17, 2009

I.K.Machineries

198-202, Nababpur Road, Shop No. 24, Dhaka-1100.

N/A Grinding Machine

Brand New 3 Set Bangladesh 20 Yrs 11 Year 32,180 5,736

2 304409010059 May 10, 2009

C-131612 October 11,

2009

Bluesea International Co., Ltd.

No.39-2, Lane 66, Kwang-Ming Street, Tainan 701, Taiwan

N/A Flat Yarn Making Machine

Brand New 1 Set Taiwan 24 Years 15 Years 8 Months

19,049,371 3,395,701

3 094010010032

February 28, 2010

C-91135 April 15,

2010

Gabbar Engineering Co.

Plot No. 1903, Phase III, 'F' Road, G.I.D.C. Ind. Est, Vatwa, Ahmedabad, Gujarat

N/A

Double Needle Chain Stitch Sewing

Machine

Brand New 4 Sets India 20 Yrs 12 Years 477,294 85,081

4 304409010066 June 01, 2009


2009

Weifang Haicheng Import & Export Corporation

Taihua Building E,360, Dongfeng East Street, Weifang, Shandong, China

N/A Out Side

Lamination Machine

Brand New 1 Set China 24 Years 15 Years 8 Months

3,621,097 645,489

5 304409010066 June 01, 2009


2009



N/A

Automatic Bag

Conversion Line ( Cutting and sewing)

Machine


2,851,945 508,382

6 304409010066 June 01, 2009


2009



N/A Gravure Printing Machine


6,398,935 1,140,661

7 304409010066 June 01, 2009


2009



N/A

Blow Molding For inner Film

& injection Molding Machine


748,870 133,492

8 304409010066 June 01, 2009


2009



N/A

Crusher Mixture Dryer & Granulator

Machine


2,798,120 498,787

9 304409010066 June 01, 2009


2009

Weifang Haicheng Import &

Taihua Building E,360, Dongfeng East Street,

N/A Computer

Control Heat Cutting, Heat


2,164,311 385,806

Page: 55

Export Corporation

Weifang, Shandong, China

sealing & heat Punching

Machine

10 304409010059 May 10, 2009


2009



N/A Circular

Weaving Machine

Brand New 12 Sets Taiwan 24 Years 15 Years 8 Months

15,955,604 2,844,213

11 304409010059 May 10, 2009


2009



N/A Circular

Weaving Machine

Brand New 6 Sets Taiwan 24 Years 15 Years 8 Months

6,955,127 1,239,806

12 304409010059 May 10, 2009


2009



N/A Automatic

Woven Bags Conversion

Brand New 1 Set Taiwan 24 Years 15 Years 8 Months

5,234,287 933,053

13 304409010059 May 10, 2009


2009



N/A Testing

Equipment Brand New 1 Set Taiwan 24 Years

15 Years 8 Months

1,170,109 208,581

14 087313010006

Nov 07,2013

C-1010525 Feb 26, 2014

MAN-N-Machine

263, G.T ROAD, Shibpur, Howrah-711102, West Bengal

N/A Hydraulic

Bailing Press Machine

Brand New 1 Set India 24 Years 20 Years 884,000 346,245

15 87314010163

Jul 03,2014

C-1713496 Nov 18, 2014

MAN-N-Machine

263, G.T ROAD, Shibpur, Howrah-711102, West

Bengal N/A

Drum Printing Machine

Brand New 1 Set India 20 Years 16 Years 8 Months

1,173,632 617,174

16 120115010002

Oct 19, 2015

C-1117985 March 10,

2016



N/A Circular

Weaving Machine

Brand New 2 Sets China 24 Years 22 Years 6,843,296 4,498,326

17 120115010002

Oct 19, 2015

C-1117985 March 10,

2016



N/A

Water Chilling Plant

(20TR) Machine

Brand New 1 Set China 20 Years 18 Years 1,337,756 879,352

18 120115010002

Oct 19, 2015

C-1117985 March 10,

2016



N/A

Cooling Tower Plant

(30TR) Machine

Brand New 1 Set China 20 Years 18 Years 269,625 177,234

19 120116990004 April 20, 2016

DC No. EPGL-

27/2016 April 24,

2016

Energypac Power Generation Limited

79, Shahid Tajuddin Ahmed Sharfani, Tejgaon I/A, Dhaka-1208

N/A 110 KVA Standby Foreign Canopied

Diesel Generator Brand New 1 Set Bangladesh 20 Years 18 Years 3,315,282 2,179,245

20 120115010002

Oct 19, 2015

C-1117985 March 10,

2016



N/A Normal Type Film Blowing

Machine Brand New 1 Set China 20Years 18 Years 900,961 592,232

Page: 56

21 120115010002

Oct 19, 2015

C-1117985 March 10,

2016



N/A Flexo Printing

Machine Brand New 1 Set China 24 Years 22 Years 5,883,485 3,867,411

22 120115010002

Oct 19, 2015

C-1117985 March 10,

2016



N/A

Automatic Bag

Conversion Line ( Cutting and sewing)

Machine

Brand New 1 Set China 24 Years 22 Years 5,721,102 3,760,671

23 120115010002

Oct 19, 2015

C-1117985 March 10,

2016



N/A Lath Machine Brand New 2 Set China 20 Years 18 Years 5,304,451 3,486,792

24 120115010002

Oct 19, 2015

C-1117985 March 10,

2016



N/A Shaper Machine


25 120115010002

Oct 19, 2015

C-1117985 March 10,

2016



N/A Milling

Machine Brand New 1 Set China 20 Years 18 Years 106,089 69,736

26 120115010002

Oct 19, 2015

C-1117985 March 10,

2016



N/A Welding Machine


27 330316010142 April 17, 2016

C-1017694 August 22,

2016

Lohia Corp Limited

D-3/A, Panki Industrial Estate Kanpur-208 022 (India)

N/A Circular Loom

Machine Brand New 6 Sets India 20 Yrs

18 Years 4 Months

7,039,061 5,783,762

28 330316010186 May 11, 2016

C-1160997 October 01,

2016

Lohia Corp Limited

D-3/A, Panki Industrial Estate Kanpur-208 022 (India)

N/A Tape Plant Machine

Brand New 1 Set India 20 Yrs 18 Years 6 Months

43,642,177 35,859,322

29 120116010012

Jul 14,2016

C-1447677 December 22, 2016



N/A

Computer Control Heat Cutting, Heat

sealing & heat Punching

Machine


4,011,795 3,296,359

30 330316010502 November 23,

2016

C-73497 December 07, 2016

MAN-N-Machine

263, G.T ROAD, Shibpur, Howrah-711102, West Bengal

N/A Air Coolded

Water Chiller Machine

Brand New 1 Set India 20 Years 18 Years 9 Months

253,406 208,215

Total 58 SETS

154,706,965 78,017,336

Page: 57

(ix) Details of the machineries required to be bought by the issuer, cost of the machineries, name of the suppliers, date of placement of order and the date or expected date of supply, etc. No machineries are required to be bought by the issuer except machineries to be bought from IPO proceeds, the details of which are below:

A. Flexible Packaging unit:

Sl. Description Supplier and Country of Origin

Date of Placement of

Order

Date or Expected Date of Supply

1 Multi-Layer Blown Film Plant

POLYMMA, China

Aft

er

rece

ivin

g IPO

Fun

d

Withi

n 1

8 M

ont

hs A

fter

rece

ivin

g IPO

Fun

d

Model: JT3*70*QM2300

2 GFQ-800 Automatic Sealing & Cutting Machine XINE, China

3 Automatic Bag Cutting & Sewing Machine XINE, China

4 9 Color Rotogravure Printing M/C

KUNRUN, China Model: HTYJMD08-1000

B. PP Woven Bag Unit: WEAVING SECTION:

1

Circular Loom

LOHIA, India Model: Nova-6

Model: LSL610HF

2 Circular Loom

LOHIA, India Model: LSL620HF

3 Circular Loom

LOHIA, India Model: LSL620HFR

4 Circular Loom

LOHIA, India Model: Nova-10

PRINTING SECTION:

1 8 color Flexible Printing Machine

Olgar, China Model: YT-81000

LINER SECTION:

1 Liner Folding Machine

Polymma, China Model: ZDP1500

Page: 58

(x) In case the machineries are yet to be delivered, the date of quotations relied upon for the cost estimates given shall also be mentioned; There are no machineries which are yet to be delivered.

(xi) If plant is purchased in brand new condition then it should be mentioned; All plants and machineries of the Company were purchased in brand new condition.

AUDITOR'S CERTIFICATE REGARDING PURCHASED IN BRAND NEW CONDITION OF

MACHINERIES

We do hereby declare that all the plants and machineries of Al-Faruque Bags Limited were purchased in brand new condition. There are no re-conditioned or second hand machineries installed in the Company.

Place: Dhaka; Dated: May 24, 2018

Sd/- ARTISAN

Chartered Accountants (xii) Details of the second hand or reconditioned machineries bought or proposed to be

bought, if any, including the age of the machineries, balance estimated useful life, etc. as per PSI certificates of the said machineries as submitted to the Commission; The Company neither purchased any second hand or reconditioned machineries nor has any plan to purchase in future.

(xiii) A physical verification report by the issue manager(s) regarding the properties as submitted to the Commission;

PHYSICAL VERIFICATION REPORT

Of Al-Faruque Bags Limited

This is to certify that we have visited the factory of Al-Faruque Bags Limited on 10 April, 2018 and we have found the factory as details bellow: Visited and Accompanied by:

Particulars Name & Designation Company

Visited by

: Md. Riyad Matin Managing Director


: Mohammad Saleh Ahmed Chief Executive Officer

IIDFC Capital Limited

Accompanied by

: Prantush Chandra Shaha ACS Company Secretary

Al-Faruque Bags Limited

: Engr. Kh. Ferdous Ouhid Pavel Factory Manager

Company Overview AFBL was incorporated as a Private Limited Company on 3rd December 2007 and subsequently converted into a Public Limited Company on 15th January, 2018 under Companies Act 1994 with the Registrar of Joint Stock Companies and Firms, Dhaka, Bangladesh. The Certificate of Incorporation number is Raj-C-446/2007. The Company started its commercial operation on 1st March, 2010.

The authorized and paid-up capital of the company is as follows: Authorized Capital : Tk. 1,000,000,000.00 Paid up Capital : Tk. 480,000,000.00 Proposed IPO Size : Tk. 300,000,000.00 (3.00 Crore Shares @ Tk. 10.00 each) IPO Size (in share) : 30,000,000 Shares

Page: 59

Registered Office & Factory and Corporate Office AFBL’s registered office and Factory is situated at Santahar Road, Shikor, Narhatto, Kahaloo, Bogra-5870, Bangladesh and corporate office is situated at Firoz Tower, 8th Floor (South Site), 152/3B, Bir Uttam Kazi Nurruzzaman Sarok, Green Road (Panthapath), Dhaka-1205. Nature of Business The company's main business is to manufacture of different types of PP Woven Bag, High Density Ploy Ethylene (HDPE) Bag, Low Density Poly Ethylene (LDPE) Bag, Liner, Garments poly and selling them to export oriented companies as deemed export and direct exporting to the international market. Products Al-Faruque Bags Limited is engaged in manufacturing different types of PP Woven Bags, Poly Ethylene including HDPE, LDPE, BOPP, Shopping bag and liner. DESCRIPTION OF PROPERTY We have identified that the factory of Al-Faruque Bags Limited is located at Santahar Road, Shikor, Narhatto, Kahaloo, Bogra-5870, Bangladesh. We have found properties at the factory like:

(a) Land: We have found 714.25 decimals of land surrounded by boundary wall (three

sides) and wire fence (one side).

(b) Factory Building: Details of the buildings status are discussed below:

Description Type (RCC/ Bricks/ Tin/ Prefabricated

steel) Area (Sft) per floor

Total Building

area

Steel Structure Factory shed (Oven Bags Unit)

Pillar–RCC+ Prefab Steel, Wall–Brick+ Prefab steel, Roof– Prefab Steel (Single Storey foundation and construction completed)

37,400 37,400

Generator with sub-station room

Pillar–RCC, Wall–Brick, Roof–RCC Slab (Single Storey foundation and construction completed)

2,560 2,560

Maintenance workshop shed Pillar–RCC, Wall–Brick, Roof–Tin with steel truss (Single Storey foundation and construction completed)

1,780 1,780

Canteen shed Pillar–RCC, Wall–Brick, Roof–Tin with steel truss (Single Storey foundation and construction completed)

2,870 2,870

Security shed Pillar–RCC, Wall–Brick, Roof–Tin with steel truss (Single Storey foundation and construction completed)

2,690 2,690

Toilet Building (for oven bags unit)

Pillar–RCC, Wall–Brick, Roof–RCC Slab (Single Storey foundation and construction completed)

620 620

Bonded Warehouse (single storey bldg.-20 ft. height)

Pillar–RCC, Wall–Brick, Roof–RCC Slab (Single storey foundation and construction completed)

4,727 4,727

Dormitory Building (2039 sft. *4 storey)

Pillar–RCC, Wall–Brick, Roof–RCC Slab (4 Storey foundation and construction completed)

2,039 8,156

Mosque (single storey bldg.) Pillar–RCC, Wall–Brick, Roof–RCC Slab (Single storey foundation and construction completed)

1,400 1,400

Page: 60

Head Office Bldg. (2936 sft. *4 storey)

Pillar–RCC, Wall–Brick, Roof–RCC Slab (4 Storey foundation and construction completed)

2,936 11,744

Boundary Wall (2730ft.length*10 ft. height)

Pillar–RCC, Wall–Brick (construction completed)

27,300 27,300

RCC Road Construction (1593 Rft.* 20ft. width)

Pavement–RCC, Guide wall–Brick (construction completed)

31,860 31,860

RCC U-Drain Construction (3186 Rft. * 3ft width*3ft depth)

Floor–RCC, Side Wall–Brick + RCC, (construction completed)

9,558 9,558

(c) Machinery:

Sl No. Machineries Name Quantity

1 Grinding Machine 3 Set

2 Flat Yarn Making Machine 1 Set

3 Double Needle Chain Stitch Sewing Machine 4 Sets

4 Out Side Lamination Machine 1 Set

5 Automatic Bag Conversion Line (Cutting and sewing) Machine 1 Set

6 Gravure Printing Machine 1 Set

7 Blow Molding for Inner Film & injection Molding Machine 1 Set

8 Crusher Mixture Dryer & Granulator Machine 1 Set

9 Computer Control Heat Cutting, Heat sealing & heat Punching Machine 1 Set

10 Circular Weaving Machine 12 Sets


12 Automatic Woven Bags Conversion 1 Set

13 Testing Equipment 1 Set

14 Hydraulic Bailing Press Machine 1 Set

15 Drum Printing Machine 1 Set


17 Water Chilling Plant (20TR) Machine 1 Set

18 Cooling Tower Plant (30TR) Machine 1 Set

19 110 KVA Standby Foreign Canopied Diesel Generator 1 Set

20 Normal Type Film Blowing Machine 1 Set

21 Flexo Printing Machine 1 Set

22 Automatic Bag Conversion Line (Cutting and sewing) Machine 1 Set

23 Lath Machine 2 Set

24 Shaper Machine 1 Set

25 Milling Machine 1 Set

26 Welding Machine 1 Set

27 Circular Loom Machine 6 Sets

28 Tape Plant Machine 1 Set

29 Computer Control Heat Cutting, Heat sealing & heat Punching Machine 1 Set

30 Air Coolded Water Chiller Machine 1 Set

Besides these assets, we have also found other assets like Boundary Wall & Surface Drain, Dormitory Building & Canteen, Water Reserver, Factory Shed, Workshop & Godown, Fire Fightting Equipments, Sub station, Electric installation, Stablizer, Motor Vehicles and others. It is also mentionable here that during our visit, we also checked Inventory register and roster (Workers’ duty register) and found satisfactory. We also noticed that all machineries of AFBL are in good condition and running well.

Page: 61

Signboard: The signboard of the Company is well displayed at the corporate office and factory premises and there is no other office or factory within the said factory premises. Sd/- Md. Riyad Matin Managing Director BMSL Investment Ltd.



(xiv) If the issuer is entitled to any intellectual property right or intangible asset, full

description of the property, whether the same are legally held by the issuer and whether all formalities in this regard have been complied with; The Company has no intellectual property right or intangible asset.

(xv) Full description of other properties of the issuer;

Particulars Written down value as on

31-Mar-2018

Factory:

Boundary Wall & Surface Drain 27,670,113

Dormitory Building & Canteen 58,791,902

Water Reserver 1,156,552

Factory Shed, Workshop & Godown 138,972,924

Fire Fightting Equipments 367,212

Sub station, Electric installation, Stablizer 22,353,542

Motor Vehicles 24,682,381

Office:

Office Building 55,027,321

Electric Equipments 2,042,358

Office Equipments 2,588,733

Furniture & Fixture 5,209,194

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(f) Plan of Operation and Discussion of Financial Condition:

The issuer’s revenue and results from operation, financial position and changes in financial position and cash flows for the last five years:

Particulars 31-Mar-18 30-Jun-17 30-Jun-16 30-Jun-15 30-Jun-14 30-Jun-13

RESULTS FROM OPERATION (9 Months)

Export Sales 413,375,395 507,906,169 436,625,142 310,159,892 253,600,597 309,525,830

Cost of Goods Sold (299,116,127) (366,808,377) (322,292,312) (225,652,948) (189,856,938) (209,653,589)

Gross Profit/(Loss) 114,259,268 141,097,792 114,332,830 84,506,944 63,743,659 99,872,241

Operating Expenses (18,910,466) (24,231,362) (28,940,945) (19,610,358) (28,243,594) (17,149,552)

Financial Expenses (51,868,683) (58,548,323) (41,948,697) (32,572,465) (17,349,876) (19,998,266)

Other Income 171,099 - - - - -

Profit before Income Tax 43,651,218 58,318,107 43,443,188 32,324,121 18,150,189 62,724,423

Provision for Tax -Holiday Reserve - (3,887,874) (7,240,531) (6,464,824) (3,630,038) (20,908,141)

General Reserve - - - - - (3,136,221)

Provision for Income Tax (7,638,963) (16,679,721) (11,529,005) (2,828,361) (1,588,142) (1,829,462)

Net Profit after Tax 36,012,255 37,750,512 24,673,652 23,030,936 12,932,010 36,850,599


(9 months)

CHANGES IN FINANCIAL POSITION

Fixed Assets 458,646,712 454,950,285 304,555,009 257,164,051 127,185,648 116,716,183

Other & Non-Current Assets 447,928,102 218,511,452 99,568,181 47,661,562 116,433,896 79,077,487

Current Assets 400,947,567 321,157,685 301,511,607 202,652,948 163,885,535 154,711,319

TOTAL PROPERTY & ASSETS 1,307,522,381 994,619,423 705,634,797 507,478,561 407,505,079 350,504,989

Shareholders' Equity 749,916,847 331,904,592 282,266,207 250,352,024 222,405,251 205,843,203

Long Term Liabilities 143,333,969 297,608,269 142,866,797 91,538,648 69,089,558 80,027,649

Current Liabilities 414,271,565 365,106,562 280,501,793 165,587,888 116,010,270 64,634,138

TOTAL EQUITY & LIABILITIES 1,307,522,381 994,619,423 705,634,797 507,478,561 407,505,079 350,504,989


CHANGES IN CASH FLOWS (9 months)

Net cash generated from operating activities 122,459,040 135,174,273 57,307,101 49,660,504 48,839,789 77,970,962

Net cash used in investing activities (280,277,663) (310,340,607) (169,415,015) (85,052,181) (66,813,911) (59,274,469)

Net cash provided/(used) by financing activities 216,293,599 173,614,955 118,110,085 37,787,643 18,335,365 (20,692,222)

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(a) Internal and external sources of cash;

Particulars 31-Mar-18 30-Jun-17 30-Jun-15 30-Jun-14 30-Jun-13

(9 Months)

Internal Sources of Cash

Share Capital 480,000,000 98,000,000 10,000,000 10,000,000 10,000,000

Tax Holiday Reserve 96,110,705 96,110,705 84,982,300 78,517,476 74,887,438

General Reseve - - - - 9,883,632

Retained Earnings 173,806,142 137,793,887 155,369,724 133,887,775 111,072,133

Sub-Total 749,916,847 194,110,705 94,982,300 88,517,476 84,887,438

External Sources of Cash

Long Term Loan 133,890,090 137,910,228 68,150,958 68,940,899 80,025,656

Share Money Deposits - 150,000,000 20,290,000 - -

Current Portion of Long Term Loan 22,500,000 18,300,000 14,400,000 13,600,000 14,400,000

Short Term Loan 281,227,761 273,389,007 100,180,307 66,465,478 41,767,329

Sub-Total 437,617,852 579,599,236 203,021,265 149,006,377 136,192,985

Grand Total 1,187,534,698 773,709,941 298,003,565 237,523,853 221,080,423

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(b) Any material commitments for capital expenditure and expected sources of funds for such expenditure; The Company has not yet made any material commitment for capital expenditure except for those that are mentioned under the head ‘Use of Proceeds’ from IPO fund.

(c) Causes for any material changes from period to period in revenues, cost of goods sold, other operating expenses and net income; The company’s revenue and other income as well as operating expenses and net income have continued to change due to increasing production by adding new machine and increase sales volume.

Particular 31-Mar-18 30-Jun-17 30-Jun-16 30-Jun-15 30-Jun-14 30-Jun-13

(9 Months)

Export Sales 413,375,395 507,906,169 436,625,142 310,159,892 253,600,597 309,525,830

Cost of Goods Sold 299,116,127 366,808,377 322,292,312 225,652,948 189,856,938 209,653,589

Operating Expenses 18,910,466 24,231,362 28,940,945 19,610,358 28,243,594 17,149,552


Causes for changes: Revenues: The company has installed new machineries in order to increase production capacity. As a result, production increased as well as turnover increased. Through installation of new different types of machineries, the Company has been able to produce various types of products as well as to create the market of new products. So, increase of turnover of the company is relevant. Cost of goods sold: The costs of materials to revenue are consistent over the years. Other operating expenses: The Company did not incur any other expenses other than regular expenses during the last five years. Net income: The growth of net profit before and after tax is consistent with the growth of the revenue. No unusual changes have been occurred during the last five years on the above matters.

(d) Any seasonal aspects of the issuer’s business; AFBL supplies its products to its regular buyers, who provide sufficient purchase orders to work throughout the year. As a result, no seasonal aspects adversely affect the business of AFBL.

(e) Any known trends, events or uncertainties that may have material effect on the issuer’s future business; At present, there are no known trends, events and/or uncertainties that shall have a material impact on the company’s future business except for those which are naturally beyond control of human being. The business operation of the Company may be affected by the following events: I. Political unrest

II. Natural disaster.

(f) Any assets of the company used to pay off any liabilities; None of the assets of the company has been used to pay off any liabilities of the company.

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(g) Any loan taken from or given to any related party or connected person of the issuer with

details of the same; The Company did not take or give any loan from or to any related party or connected person of the issuer.

(h) Any future contractual liabilities the issuer may enter into within next one year, and the impact, if any, on the financial fundamentals of the issuer; The Company has no plan to enter into any contract creating future liabilities for the company except for those which are created in the normal course of business activities.

(i) The estimated amount, where applicable, of future capital expenditure; The Company has no plan for capital expenditure except for those mentioned in the ‘Use of Proceeds’ from IPO fund.

(j) Any VAT, income tax, customs duty or other tax liability which is yet to be paid, including any contingent liabilities stating why the same was not paid prior to the issuance of the prospectus. Updated income tax status for the last 5 years or from commercial operation, which is shorter; VAT: There is no VAT liability of the Company as on 31 March, 2018. Customs Duty or other tax liabilities: There is no customs duty Liability of the Company as on 31 March, 2018. Income Tax: The Company is a regular tax payer. The TIN number of the Company is 297233859160 (445-200-5804), Circle-1 (Companies), Taxes Zone-Bogra. Following are the details of income tax related information of the Company:

Accounting year

Assessment Year

Assessment Status

30-Jun-13 2013-2014

As per certificate given by Deputy Commissioner of Taxes (DCT), Circle-1 (Companies), Taxes Zone-Bogra dated 8.5.2016 the assessment of the company has been completed upto the assessment year 2013-2014 and tax paid in full.

30-Jun-14 2014-2015

As per certificate given by Deputy Commissioner of Taxes (DCT), Circle-1 (Companies), Taxes Zone-Bogra dated 8.5.2016 the assessment of the company has been completed upto the assessment year 2014-2015 and tax paid in full.

30-Jun-15 2015-2016

As per certificate given by Deputy Commissioner of Taxes (DCT), Circle-1 (Companies), Taxes Zone-Bogra dated 21.03.2017 the assessment of the company has been completed upto the assessment year 2015-2016.

30-Jun-16 2016-2017

As per certificate given by Deputy Commissioner of Taxes (DCT), Circle-1 (Companies), Taxes Zone-Bogra dated 21.09.2017 the assessment of the company for the assessment year 2016-2017 is under process.

30-Jun-17 2017-2018

As per certificate given by Deputy Commissioner of Taxes (DCT), Circle-1 (Companies), Taxes Zone-Bogra dated 22.10.2017 the assessment of the company for the assessment year 2017-2018 is under process.

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(k) Any financial commitment, including lease commitment, the company had entered into during the past five years or from commercial operation, which is shorter, giving details as to how the liquidation was or is to be effected; The Company has following operating lease commitment for its rented corporate office at Firoz Tower, 8th Floor (South Site), 152/3B, Bir Uttam Kazi Nurruzzaman Sarok, Green Road (Panthapath), Dhaka-1205:

Address Area (Sft) Rent/Sft. Period Rent p/m (Tk.)


1,991 @ Tk. 40.00 Aug 1, 2017 to Jul 31, 2019 79,640/-

Loans:

Sl. Name of Bank Sanction Amount

Purpose of Loan

Sanction Date Expiry Date Installment-

Qtr. Outstanding at 31 Mar, 2018

Mortgage /Lien

1 The Farmers Bank Limited

24.50 Cr. Expansion (Project) 24 Sep, 2016

17 Aug, 2023 39.00 Lac 6.54 Cr. 77.75 decimals of land

30.00 Cr. CC & LTR - - 22.59 Cr.

2 Rajshahi Krishi unnayan Bank

17.00 Cr. Machineries

4 Mar, 2009

30 Dec, 2022 62.18 Lac 9.10 Cr. 243.50 decimals of land

along with factory buildings and plant &

machinery 5.00 Cr. CC - - 5.52 Cr.

NB: Apart from the above, the Company did not enter into any financial commitment since its commencement of commercial operation.

(l) Details of all personnel related schemes for which the company has to make provision for in future years; The Company considers its human resources as the most valuable assets and the profitability of company largely depends on the efficient & effective productivity of human resources. The Company provides facilities and incentives to motivate employees for its continued profitability and prosperity. The following benefits and related scheme are applicable for company’s permanent payroll employees:

Yearly Increment: Upon management approval and salary brackets or scales, annual increments on basic salaries may be given to employees.

Allowances: According to pay scales, allowances are given for expenses such as house rent, conveyance, medical expense and mobile phone facility.

Festival Bonus: Two festival bonuses are paid to each employee.

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(m) Break down of all expenses related to the public issue; The following amount to be paid to the Issue Managers, Underwriters and other costs are as follows:

Sl. No.

Particulars Basis Amount in BDT (approx.)

A. MANAGERS TO THE ISSUE FEES 2,875,000

1 Managers to the Issue fee Maximum 2% (two percent) of the public offer amount 2,500,000

2 VAT against Issue Management Fees 15% of issue management fees 375,000

B. FEES RELATED TO LISTING WITH THE STOCK EXCHANGES 3,820,000

3 Draft prospectus scrutiny fee for DSE & CSE Fixed 100,000

4 DSE and CSE Annual Fee @ 0.05% on Tk. 100 Crore of paid-up capital and 0.02% on the rest amount of paid-up capital; (minimum Tk. 50 thousand and Maximum Tk. 6 lacs for each exchanges

780,000

5 Fees related to Listing with the stock exchanges @ 0.25% on Tk. 10 Crore and 0.15% on the rest amount of paid up capital range; (minimum 50 thousand and maximum Tk. 1 crore for each exchanges)

2,540,000

6 Data Transmission Fee for DSE & CSE Fixed 400,000

C. BSEC FEES 1,250,000

7 Application fee Fixed 50,000

8 Consent fee fee @ 0.40% on entire offer 1,200,000

D. IPO RELATED FEES 620,000

9 Underwriting commission (0.40%) Commission @ 0.40% on Underwritten Amount 420,000

10 Auditors Certification fees At Actual 200,000

E. CDBL FEES AND EXPENSES 725,500

11 Security Deposit At Actual 500,000

12 Documentation fee At Actual 2,500

13 Annual fee At Actual 100,000

14 Connection Fee (TK. 500 per month* 12) At Actual 6,000

15 Initial Public Offering fee @.015% of issue size+.015% of Pre-IPO paid up capital 117,000

F. PRINTING AND POST PUBLIC OFFER EXPENSES 8,509,500

16 Publication of prospectus Estimated (to be paid at actual) 650,000

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17 Abridge Version of Prospectus and Notice in 4 daily newspaper

Estimated (to be paid at actual) 600,000

18 Notice for prospectus, Lottery, Refund etc. in 4 daily newspaper

Estimated (to be paid at actual) 250,000

19 Lottery related expenses including BUET fee Estimated (to be paid at actual) 800,000

20 Data Processing and Share Software Charge Estimated (to be paid at actual) 5,890,000

22 Stationary & Other Expenses Estimated (to be paid at actual) 319,500


N.B.: Actual costs will vary if above mentioned estimates differ and will be adjusted accordingly.

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(n) If the issuer has revalued any of its assets, the name, qualification and experiences of the valuer and the reason for the revaluation, showing the value of the assets prior to the revaluation separately for each asset revalued in a manner which shall facilitate comparison between the historical value and the amount after revaluation and giving a summary of the valuation report along with basis of pricing and certificates required under the revaluation guideline of the Commission; Al-Faruque Bags Limited has not made any revaluation of its asset.

(o) Where the issuer is a holding or subsidiary company, full disclosure about the transactions, including its nature and amount, between the issuer and its subsidiary or holding company, including transactions which had taken place within the last five years of the issuance of the prospectus or since the date of incorporation of the issuer, whichever is later, clearly indicating whether the issuer is a debtor or a creditor; The Company has neither any subsidiary nor it operates under any holding company. Hence, no transaction has taken place.

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(p) Financial Information of Group Companies and Companies under common ownership by more than 50%: following information for the last three years based on the audited financial statements, in respect of all the group companies of the issuer, wherever applicable, along with significant notes of auditors:

AFBL has the following group companies and companies under common ownership by more than 50%:

Particulars Name of Companies

Al-Faruque Flour Mills Ltd. Al-Faruque Feed Mills Ltd.

(1) Date of Incorporation 21.11.2012 08.09.2011

(2) Nature of Business Manufacturer of flour Feed Manufacturer & supplier

(3) Equity Capital Tk. 3.00 Crore Tk. 2.65 Crore

(4) Reserves (In crore) - -

(5) Sales (In crore) - -

(6) Profit after Tax (In Crore) - -

(7) Earnings Per Share & Diluted Earnings Per Share - -

(8) Net Asset Value Tk. 1,000 Tk. 1,000

(9) The highest and lowest market price of shares during the preceding six months with disclosures for changes in capital structure during the period, if any securities of the group are listed with any exchange

Non-listed

(10) Information regarding significant adverse factors relating to the group N/A

(11) Any of the group companies has become sick or is under winding up N/A

(12) The related business transactions within the group and their significance on the financial performance of the issuer

No transaction

13) Sales or purchase between group companies or subsidiaries or associate companies when such sales or purchases exceed in value in the aggregate ten percent of the total sales or purchases of the issuer and also material items of income or expenditure arising out of such transactions

No transaction

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(q) Where the issuer is a banking company, insurance company, non‐banking financial institution or any other company which is regulated and licensed by another primary regulator, a declaration by the board of directors shall be included in the prospectus stating that all requirements of the relevant laws and regulatory requirements of its primary regulator have been adhered to by the issuer; Not applicable.

(r) A report from the auditors regarding any allotment of shares to any person for any consideration otherwise than cash along with relationship of that person with the issuer and rationale of issue price of the shares;

A REPORT FROM THE AUDITORS REGARDING ANY ALLOTMENT OF SHARES TO ANY PERSON FOR ANY CONSIDERATION OTHERWISE THAN CASH ALONG WITH RELATIONSHIP OF THAT PERSON WITH THE ISSUER AND RATIONALE OF ISSUE PRICE OF THE SHARES We certify that the Company has allotted the following ordinary shares otherwise than for cash (bonus) and the books of accounts of the Company have been verified and found in order.

Date of allotment

Persons to whom those are issued

No. of shares allotted

Relationship with the issuer

Rationale of the price

Consideration & Valuation

Reasons for the issue

Benefit from the issue

6-Feb-2017

Chowdhury Al-Faruque

2,400,000 Chairman

Face Value Other than Cash

(Bonus)

Distribution of accumulated

profit

Enhancement of capital

base and re-investments

Md. Redwanul Kabir Chowdhury

4,800,000 Managing Director & Director

Mst. Nimme Kabir Chowdhury

800,000 Director

Sd/- Place: Dhaka Date: May 24, 2018

ARTISAN Chartered Accountants

(s) Any 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 There is no 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

(t) Business strategies and future plans - projected financial statements shall be required only for companies not started commercial operation yet and authenticated by Chairman, two Directors, Managing Director, CFO, and Company Secretary;

Business Strategies: A business strategy sets out to achieve the desired goals. Business strategy is defined as long-term business planning which is concerned with the scope of a business' activities. The company strategies are as follows.

1. Increase Fixed Assets: The Company is in planning to invest in fixed assets in order to expand

its existing business. 2. Economic Scale: With a view to spreading the fixed cost over more units the Company is

trying to increase economic of scale

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3. Lower price: In order to be market leader, the Company is trying to be competitive price to deal with its rivals.

4. Product Differentiating: By differentiating in the product line, the Company will be able to make higher price for its product. Hence, product differentiation is on the mind.

Future plans In persuasion of aforesaid Strategies AFBL and its experienced team have been working insistently keeping in consideration future as well. AFBL has a planned for acquisition of machineries & equipments, construction of building and other civil works and for bank loan pay off by using IPO proceeds.

(u) Discussion on the results of operations:

1) A summary of the past financial results after adjustments as given in the auditor’s report containing significant items of income and expenditure;


(9 Months)

Fixed Assets 458,646,712 454,950,285 304,555,009 257,164,051 127,185,648 116,716,183

Other & Non-Current Assets 447,928,102 218,511,452 99,568,181 47,661,562 116,433,896 79,077,487

Current Assets 400,947,567 321,157,685 301,511,607 202,652,948 163,885,535 154,711,319

Shareholders' Equity 749,916,847 331,904,592 282,266,207 250,352,024 222,405,251 205,843,203

Long Term Liabilities 143,333,969 297,608,269 142,866,797 91,538,648 69,089,558 80,027,649

Current Liabilities 414,271,565 365,106,562 280,501,793 165,587,888 116,010,270 64,634,138

Export Sales 413,375,395 507,906,169 436,625,142 310,159,892 253,600,597 309,525,830




2) A summary of major items of income and expenditure;

Major items of income:


(9 Months)

Export Sales 413,375,395 507,906,169 436,625,142 310,159,892 253,600,597 309,525,830

Other Income 171,099 - - - - -

Major items of Expenditure:


(9 Months)


Operating Expenses 18,910,466 24,231,362 28,940,945 19,610,358 28,243,594 17,149,552

Financial Expenses 51,868,683 58,548,323 41,948,697 32,572,465 17,349,876 19,998,266

3) The income and sales on account of major products or services;

There is no individual major product of the Company.

4) In case, other income constitutes more than 10% of the total income, the breakup of the same along with the nature of the income, i.e., recurring or non-recurring; The Company’s other income is not more than 10% of the total income.

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5) If a material part of the income is dependent upon a single customer or a few major customers, disclosure of this fact along with relevant data. Similarly, if any foreign customer constitutes a significant portion of the issuer’s business, disclosure of the fact along with its impact on the business considering exchange rate fluctuations; The Company’s income is not dependent upon a single customer or a few major customers nor foreign customer.

6) In case the issuer has followed any unorthodox procedure for recording sales and revenues, its impact shall be analyzed and disclosed. The issuer has not followed any unorthodox procedure for recording sales and revenues.

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(v) Comparison of recent financial year with the previous financial years on the major heads of the profit and loss statement, including an analysis of reasons for the changes in significant items of income and expenditure, inter-alia, containing the following:


RESULTS FROM OPERATION (9 Months)

Export Sales 413,375,395 507,906,169 436,625,142 310,159,892 253,600,597 309,525,830

Cost of Goods Sold (299,116,127) (366,808,377) (322,292,312) (225,652,948) (189,856,938) (209,653,589)

Gross Profit/(Loss) 114,259,268 141,097,792 114,332,830 84,506,944 63,743,659 99,872,241

Operating Expenses (18,910,466) (24,231,362) (28,940,945) (19,610,358) (28,243,594) (17,149,552)

Financial Expenses (51,868,683) (58,548,323) (41,948,697) (32,572,465) (17,349,876) (19,998,266)

Other Income 171,099 - - - - -


Provision for Tax -Holiday Reserve - (3,887,874) (7,240,531) (6,464,824) (3,630,038) (20,908,141)

General Reserve - - - - - (3,136,221)

Provision for Income Tax (7,638,963) (16,679,721) (11,529,005) (2,828,361) (1,588,142) (1,829,462)


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Analysis of reasons for the changes in significant items of income and expenditure: In the last few years, production capacity has been increased by installation of new machinery. As a result, significant revenue has been increased in the year 2017.

1) Unusual or infrequent events or transactions including unusual trends on account

of business activity, unusual items of income, change of accounting policies and discretionary reduction of expenses etc. The is no unusual or infrequent events or transactions including unusual trends on account of business activity, unusual items of income, change of accounting policies and discretionary reduction of expenses etc.

2) Significant economic changes that materially affect or are likely to affect income

from continuing operations; There are no significant economic changes that materially affect or are likely to affect income from continuing operations.

3) Known trends or uncertainties that have had or are expected to have a material

adverse impact on sales, revenue or income from continuing operations; At present, there are no known trends, events and/or uncertainties that shall have a material impact on the company’s future business except for those which are naturally beyond control of human being. The business operation of the Company may be affected by the following events: i. Political unrest; ii. Natural disaster.

4) Future changes in relationship between costs and revenues, in case of events such

as future increase in labor or material costs or prices that will cause a material change are known; We are aware of the fact that future is always uncertain that affect business. It is expected that labor and material price will go up in future because of inflation and other factors. However, revenue is always adjusted and follows the trend in line with production cost. Hence, any change in cost will be reflected in sales price.

5) The extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased sales prices; There is no material increase in sales volume or revenue due to increased sales volume, introduction of new products or services or increased sales prices.

6) Total turnover of each major industry segment in which the issuer operated; There are 36 company is enlisted in the capital market.

7) Status of any publicly announced new products or business segment;

The Company did not announce new products or business segment. 8) The extent to which the business is seasonal.

AFBL supplies its products to its regular buyers, who provide sufficient purchase orders to work throughout the year. As a result, no seasonal aspects adversely affect the business of AFBL.

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(w) Defaults or rescheduling of borrowings with financial institutions or banks, conversion of loans into equity along with reasons thereof, lock out, strikes and reasons for the same etc. during the history of operation of the company;

Rescheduling of borrowings with banks: The Company has four times reschedule its borrowing with Rajshahi Krishi Unnayan Bank due to change in interest rate and installment size change.

conversion of loans into equity along with reasons thereof, lock out, strikes and reasons for the same etc. during the history of operation of the company There is no history of conversion of loan into equity, lock out and strikes.

(x) Details regarding the changes in the activities of the issuer during the last five years which may had a material effect on the profits or loss, including discontinuance of lines of business, loss of agencies or markets and similar factors; There were no changes in the activities of the Company during the last five years and had not any material effect on the profits or loss, including discontinuance of lines of business, loss of agencies or markets and similar factors.

(y) Injunction or restraining order, if any, with possible implications; There was no injunction or restraining order.

(z) Technology, market, managerial competence and capacity built-up;

Technology: The Company has been using Extrusion, Printing & Packaging Technology. Plastics extrusion is a high-volume manufacturing process in which raw plastic is melted & formed and Rotogravure Printing technology. Its manufacturing process heavily integrated technology driven, dynamic in nature and using highly sophisticated state-of-the–art cutting edge technology. Market The Company is producing different types of PP Woven Bag, High Density Ploy Ethylene (HDPE) Bag, Low Density Poly Ethylene (LDPE) Bag, Liner, Garments poly since 2010. These products are now market demanded product for packaging solutions. Market demand says, market has been growing up and the Company has good opportunity to maximize market share. Currently, the sectors are growing at 20 percent. Hence, the managements are capable enough to deal with enhancing the capacity of the overall phenomenon of the business capacity. Managerial competence The management team of the company is highly professional with having expertise in different field. The management team is led by Mr. Md. Redwanul Kabir Chowdhury, Managing Director, who has over 25 years of experience in the field of Export, Import & manufacturing of Plastic packaging sector. There are number of Engineers, Professional Accountants and Professional Compliance persons have been working for the betterment of the company. Capacity built-up The company is at the growing up stage of the business. Hence, capacity is increasing to grasp the more market share as there is huge opportunity in the market. In the financial year 2017, the company invested huge amount in plant and machineries. In the financial year 2018, there is also investment for fixed assets.

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(aa) Changes in accounting policies in the last three years; The management of the Company has introduced The Effects of Changes in Foreign Exchange Rates and Interim Financial Reporting in the year 2018.

(bb) Significant developments subsequent to the last financial year: A statement by the directors whether in their opinion there have arisen any circumstances since the date of the last financial statements as disclosed in the prospectus and which materially and adversely affect or is likely to affect the trading or profitability of the issuer, or the value of its assets, or its ability to pay its liabilities within the next twelve months;

A statement by the directors: In our opinion, there have no such circumstances arisen since the date of the last financial statements as disclosed in the prospectus which materially and adversely affect or is likely to affect the trading or profitability of the Al-Faruque Bags Limited or the value of its assets, or its ability to pay its liabilities within the next twelve months.

Sd/- Sd/- Chowdhury Al-Faruque Md. Redwanul Kabir Chowdhury Chairman Managing Director & Director Sd/- Sd/-

Mst. Nimme Kabir Chowdhury Al-Faruque Flour Mills Ltd.

Represented by Md. Tanzil Kabir Chowdhury Director Director Sd/- Subrata Pal FCMA Independent Director

(cc) If any quarter of the financial year of the issuer ends after the period ended in the audited financial statements as disclosed in the prospectus, unaudited financial statements for each of the said quarters duly authenticated by the CEO and CFO of the issuer; Audited 3rd quarter financial statements for the period ended July 01, 2017 to March 31, 2018 are incorporated in the prospectus.

(dd) Factors that may affect the results of operations. There are no such factors that may affect the results of operations.

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CHAPTER (VII): MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

(a) Overview of business and strategies:

Overview of business:

Al-Faruque Bags Limited, (AFBL) is located at Santahar Road, Shikor, Narhatto, Kahaloo, Bogra-5870, Bangladesh which is very near to Bogra City. AFBL is an ISO 9001:2015 QMS certified company. It is endeavoring to translate its dream of becoming one of the leaders by manufacturing superior quality packaging products using the best technologies and materials. AFBL’s products have already won the hearts of the thousands of consumers in Bangladesh for their outstanding designs, uncompromising quality and affordable prices. It has now become a trusted brand name in Bangladesh. AFBL was incorporated as a Private Limited Company on 3rd December 2007 and subsequently converted into a Public Limited Company on 15th January, 2018 under Companies Act 1994 with the Registrar of Joint Stock Companies and Firms, Dhaka, Bangladesh. The Certificate of Incorporation number is Raj-C-446/2007. The Company started its commercial operation on 1st March, 2010. The Company's main business is to manufacture of different types of PP Woven Bag, High Density Poly Ethylene (HDPE) Bag, Low Density Poly Ethylene (LDPE) Bag, Liner, Garments poly and selling them to export oriented Companies as deemed export and direct exporting to the international market. There is no subsidiary company of AFBL. Strategies: A business strategy sets out to achieve the desired goals. Business strategy is defined as long-term business planning which is concerned with the scope of a business' activities. The company strategies are as follows.

1. Increase Fixed Assets: The Company is in planning to invest in fixed assets in order to expand

its existing business. 2. Economic Scale: With a view to spreading the fixed cost over more units the Company is

trying to increase economic of scale 3. Lower price: In order to be market leader, the Company is trying to be competitive price to

deal with its rivals. 4. Product Differentiating: By differentiating in the product line, the Company will be able to

make higher price for its product. Hence, product differentiation is on the mind.

Page: 79

(b) SWOT ANALYSIS:

Strengths: 1. Brand loyalty: Our products got popularity among our customers and we have a strong brand

loyalty of our customers. 2. Modern Machineries: We have been using modern machineries that increase our productivity. 3. Market Share: We have good market share of PP Woven Bang that is helpful our business. 4. Strong distribution channels: We have very strong distribution channels through which we can

smoothly supply our products. 5. Good Corporate Governance: Our company has good corporate governance that enhance

our operation smoothly.

Weaknesses: 1. Untrained workers: We have huge manpower in the industry. It is good for our business.

However, they are mostly unskilled that reduced the high productivity of manpower. Opportunity: 1. Available Labor: Our industry is labor-intensive and cheap labor has huge advantage for cost

minimizing that helps us competitive edge over our competitor. 2. Emerging Overseas Market: Overseas Market is emerging which will be beneficial to us.

Threat: 1. Intense Competition: There is rivalry among the competitors to get the market share as

maximum as possible. 2. Power Supply: We have power supply shortage in our country. For business expansion we

need continuous power supply, particularly electricity supply which is important for the industry.

Page: 80

(c) Analysis of the financial statements of last five years with reason(s) of fluctuating revenue or sales, other income, total income, cost of material, finance cost, depreciation and amortization expense, other expense; changes of inventories, net profit before and after tax, EPS etc.


(9 Months)

Export Sales 413,375,395 507,906,169 436,625,142 310,159,892 253,600,597 309,525,830

Other Income 171,099 - - - - -

Total Income 413,546,494 507,906,169 436,625,142 310,159,892 253,600,597 309,525,830

Cost of Materials 299,116,127 366,808,377 322,292,312 225,652,948 189,856,938 209,653,589

Financial Expenses 51,868,683 58,548,323 41,948,697 32,572,465 17,349,876 19,998,266

Depreciation Expense 52,175,704 49,358,235 37,267,956 21,800,621 18,379,819 20,408,232

Amortization Expense - - - - - -

Others Expense 18,910,466 24,231,362 28,940,945 19,610,358 28,243,594 17,149,552

Changes of Inventories 44,398,237 6,119,675 22,362,414 20,229,496 (3,870,200) (408,100)

Net Profit Before Tax 43,651,218 58,318,107 43,443,188 32,324,121 18,150,189 62,724,423

Net Profit After Tax 36,012,255 37,750,512 24,673,652 23,030,936 12,932,010 36,850,599

EPS 1.06 1.53 1.00 0.94 0.53 1.50

Page: 81

Reason of Fluctuation:

Revenue: The company has installed new machineries in order to increase production capacity. As a result, production increased as well as turnover increased. Through installation of new different types of machineries, the Company has been able to produce various types of products as well as to create the market of new products. So, increase of turnover of the company is relevant.

Other Income: Other income has been generated from foreign currency fluctuation.

Total Income: Since Revenue is increased, so naturally total income has been increased.

Cost of Materials: The costs of materials to revenue are consistent over the years.

Finance Cost and Bank Charge: The Company has taken long term loan from bank for importing new machineries. The Company availed various short-term loan facilities from bank. So, the finance cost and bank charge increased and the trend is relevant to the production and also consistent with the revenue. Depreciation and Amortization: The management has increased capacity installing new machineries, build up factory building and other assets. So, depreciation has been charged or increased accordingly. The Company did not amortize any of its capital expenditure during the last five years. Other Expenses: The Company did not incur any other expenses other than regular expenses during the last five years Changes of inventory: There has been increasing of installed capacity and sales volume over the year. The demand for products is also increasing. So, the management has to maintain sufficient amount of inventory in order to meet the sales order. Thus, inventory is increasing year to year. Net profit before and after Tax and Earnings per Share The growth of net profit before and after tax is consistent with the growth of the revenue. No unusual changes have been occurred during the last five years on the above matters. Earnings per Share are properly calculated through using weighted average number of ordinary shares for each year. (d) Known trends, demands, commitments, events or uncertainties that are likely to have an effect

on the company’s business: At present, there are no known trends, events and/or uncertainties that shall have a material impact on the company’s future business except for those which are naturally beyond control of human being.

The business operation of the Company may be affected by the following events: i. Political unrest; ii. Natural disaster.

(e) Trends or expected fluctuations in liquidity:

There are no trends or expected fluctuations in liquidity.

(f) Off-balance sheet arrangements those have or likely to have a current or future effect on financial condition: There are no off-balance sheet arrangements those have or likely to have a current or future effect on financial condition.

Page: 82

CHAPTER (VIII): DIRECTORS AND OFFICERS

(a) Name, Father’s Name, age, Residential address, Educational qualification, experience and position of each director and nominated director with nomination period, organization name:

SL Name of Director, Father’s Name, Age & Experience Residential Address Educational

Qualification

Name of the Institutions and

Duration for Nominated

Director

1

Name: Chowdhury Al-Faruque


B.A. -

Position: Chairman

Father's Name: Late Chowdhury Afsar Hossain

Age: 76 Years

Experience: 45 Years

2



B.A. -

Position: Managing Director & Director

Father's Name: Chowdhury Al-Faruque

Age: 49 Years


3



B.A -

Position: Director

Father's Name: Razi Billah

Age: 39 Years


Page: 83

4


House- 87 (Building- 01), Flat-2D, Road-9/C, Sector-05, Uttara, Dhaka-1230

B. Sc in Textile Engineering

3 Years (From 12-Dec-17 to

11-Dec-20)

Position: Director


Age: 38 Years


5


31, Gopibagh (3rd Floor), 3rd Lane, Dhaka-1203.

FCMA 3 Years

(From 02-Apr-18 to 01-Apr-21)

Position: Independent Director

Father's Name: Late Durga Kinkar Pal

Age: 76 Years


Page: 84

(b) Date of first Directorship and Expiry of Current Tenure of the directors:

Sl. Name of the Director Position Date of first Directorship

Date of Expiration of Current term

1 Chowdhury Al-Faruque Chairman 3-Dec-07 12th AGM in 2020

2 Md. Redwanul Kabir Chowdhury Managing Director

& Director 3-Dec-07 12th AGM in 2019

3 Mst. Nimme Kabir Chowdhury Director 3-Dec-07 11th AGM in 2020


Director 12-Dec-17 11th AGM in 2019

5 Subrata Pal FCMA Independent

Director 2-Apr-18 13th AGM in 2021

(c) Name of Interest and Involvement in other business or organization of directors:

Sl. Name & Designation in AFBL Designation in AFBL

Directorship/Ownership with Other Companies

Companies Position

1 Chowdhury Al-Faruque Chairman Al-Faruque Flour Mills Ltd. Chairman

Al-Faruque Feed Mills Ltd. Chairman



Al-Faruque Flour Mills Ltd. Director


Al-Faruque Flour Mills Ltd. Director

Al-Faruque Feed Mills Ltd. Managing Director & Director


Director Not involved in other

organization -

5 Subrata Pal FCMA Independent Director Wata Chemicals Limited Independent

Director

(d) Statement of if any Directors of the issuer are associated with the securities market in any

manner and any director of the issuer company is also director of any issuer of other listed securities during last three years with dividend payment history and market performance: None of the Directors are involved in securities market in any manner and not have any directorship in any issuer of other listed securities during last three years except following: 1. Subrata Pal FCMA, Independent Director

Associated in Listed Company

Wata Chemicals Limited

Last three years with dividend payment history and market performance of Wata Chemicals Limited under as follows:

Last three years Dividend payment history:

Sl. No.

Name of the Issue Dividend Payment History

2017 2016 2014

1 Wata Chemicals Limited 10% C 5% B

10% C 10% B

25% B

Page: 85

Last three years Market performance of Wata Chemicals Limited:

Sl. No. Particulars 30.06.2017 30.06.2016 31.12.2014

1 Net Sales 399,959,943 470,476,056 352,356,781

2 Gross Profit 110,559,860 143,258,030 92,947,603

3 Net Profit after Tax 35,845,672 47,974,260 36,566,476

4 NAV per share 77.65 83.60 97.32

5 Earnings per Share 4.13 5.52 4.65

Source: Annual Report

Page: 86

(e) Family relationship (father, mother, spouse, brother, sister, son, daughter, spouse’s father, spouse’s mother, spouse’s brother, spouse’s sister) among the directors and top five officers:

i. Family relationship among directors

Sl. Name Designation Relationship

1 Chowdhury Al-Faruque Chairman Father of Md. Redwanul Kabir Chowdhury & Md. Tanzil Kabir Chowdhury and Father-in-law of Mst. Nimme Kabir Chowdhury


Son of Chowdhury Al-Faruque, elder brother of Md. Tanzil Kabir Chowdhury and husband of Mst. Nimme Kabir Chowdhury


Wife of Md. Redwanul Kabir Chowdhury, daughter-in-law of Chowdhury Al-Faruque and sister-in-law of Md. Tanzil Kabir Chowdhury


Director

Son of Chowdhury Al-Faruque, younger brother of Md. Redwanul Kabir Chowdhury and brother-in-law of Mst. Nimme Kabir Chowdhury

5 Subrata Pal FCMA Independent

Director No family relationship

ii. Family relationship among directors and top five officers of the company:

There is no family relationship exist between directors and top five management officers except mentioned above.

(f) Brief description of other businesses of the directors: Chowdhury Al-Faruque Chairman

Sl. No.

Name of Companies


Nature of Business

Legal Status Equity capital (Total) in Taka


21.11.2012 Manufacturer of

flour Private Limited

Company 30,000,000


08.09.2011 Feed Manufacturer

& supplier Private Limited

Company 26,500,000


Sl. No.

Name of Companies


Nature of Business





Company 30,000,000


Sl. No.

Name of Companies


Nature of Business





Company 30,000,000


08.09.2011 Feed Manufacturer

& supplier Private Limited

Company 26,500,000

Page: 87

Al-Faruque Flour Mills Ltd. Represented by Md. Tanzil Kabir Chowdhury Director Not involved in other business.


Sl. No.

Name of Companies


Nature of Business


1 Wata Chemicals Limited

19-Aug-81 Produce Chemicals Public Limited

Company 91,220,000

(g) Short bio-data of each director:

Chowdhury Al-Faruque, Chairman Mr. Chwodhury Al-Faruque, S/O-Late Mr. Chowdhury Afsar Hossain of Pourashava Lane, Jaleshwaritola, Bogra is the Chairman of Al-Faruque Bags Limited (AFBL). He was born on 25th October 1941 in a Muslim family at Naogaon though subsequently settled at Bogra. Mr. Chowhdury completed his graduation degree from Bogra and he started his career with business in domestically & internationally through export & import from Bogra. Mr. Chowdhury is wide experience businessman and learned more knowledge in the line of export and import. Mr. Chowdhury Al-Faruque is also the Chairman of Al-Faruque Flour Mills Ltd. and Al-Faruque Feed Mills Ltd. He visited India, Nepal, Malaysia, Singapore and Taiwan for business purpose. Md. Redwanul Kabir Chowdhury, Managing Director & Director Rtn. Md. Redwanul Kabir Chowdhury is the Managing Director of Al-Faruque Bags Limited (AFBL) was born on 23rd August 1968 in a Muslim family at Bogra. He is a son of Mr. Chowdhury Al-Faruque, Chairman of Al-Faruque Group is an excellent business entrepreneur. He comes from a business family and accordingly as of now successfully being continued through diversification into manufacturing industry after his graduation. Mr. Kabir Chowdhury is a dynamic professional businessman with more than 25 years of business experiences. He established his first venture ‘D N Traders’ as a trading firm involved was import-export business. Subsequently thinking for wide business area and gathered knowledge he establishes another venture Al-Faruque Bags Limited at end 2007 which went into commercial operation from March of 2010 and since then by the dint of his dynamic leadership and excellent entrepreneurship, he achieved a massive expression in his business ventures both vertically and horizontally. Mr. Md. Redwanul Kabir Chowdhury is Director of Al-Faruque Flour Mills Ltd. and proprietor of Al-Faruque Dairy Firm, DN Traders, Nawroz Corporation. He proves himself a business leader through his dynamic & hard working personalities. Mr. Kabir Chowdhury is a well renowned business person in the plastic packaging industry of Bangladesh. He visited several times in India, Nepal, Thailand, Malaysia, Singapore, Hong Kong, China, Taiwan, Turky, USA for business purpose.

Mst. Nimme Kabir Chowdhury, Director Mst. Nimme Kabir Chowdhury, W/O- Mr. Md. Redwanul Kabir Chowdhury is a director of Al-Faruque Bags Ltd. She was born on 7th June 1978 at Bogra and she comes from a much-respected family. She completed her graduation from Bogra. Her overall personal attachment to Al-faruque Bags Ltd. helps to grow remarkable. To enhance the business, she visited many countries like Singapore, India, Nepal, Thailand and Malaysia. Mst. Nimme Kabir Chowdhury is also Managing Director of Al-Faruque Feed Mills Ltd. and Director of Al-Faruque Flour Mills Ltd. Md. Tanzil Kabir Chowdhury, Director (Representative of Al-Faruque Flour Mills Ltd.)

Page: 88

Md. Tanzil Kabir Chowdhury was born in September 01, 1981 at Bogra. He did his B. Sc in Textile Engineering & Technology. He looks after directly to the important departments of the company i.e. production department and marketing department. His outstanding contribution helps to grow fast the business of the Company. He has total 12 years’ experiences. He is the nominee Director of Al-Faruque Flour Mills Ltd. He visited several times in India, Nepal, Thailand, Malaysia, Singapore, China and Taiwan for business purpose. Subrata Pal FCMA, Independent Director Subrata Pal FCMA, Independent Director of Al-Faruque Bags Limited (AFBL) was born on 7th November 1941 in a prominent Hindu family at Chittagong. He did his M.Com in Accounting from the University of Dhaka in 1969. After having recognized post graduate degree he qualified CMA from the Institute of Cost and Management Accountants of Bangladesh (ICMAB). He served many govt. and private organizations in his service life, like – Mohamedi Iron & Steel Works Ltd., Husein Industries Ltd., Amit Footwear Ltd., Noman Group of Industries and Bangladesh Steel & Engineering Corporation. By his dynamic and hard working personality, he enriched with tremendous knowledge in accounting related to planning, coordination and overall supervision of consulting, taxation, auditing and assurance assignments, drafting audit reports and finalizing financial statements. He is also an Independent Director of Wata Chemicals Limited, a listed company of Bangladesh.

(h) Loan status of the issuer, its directors and shareholders who hold 10% or more shares in the

paid-up capital of the issuer in terms of the CIB Report of Bangladesh Bank: Neither the Company nor any of its Directors or shareholders who hold 10% or more shares in the paid-up capital of the issuer is loan defaulter in terms of the CIB report of Bangladesh Bank.

Page: 89

(i) Name, position, educational qualification, age, date of joining in the company, overall experience (in year), previous employment, salary paid for the financial year of the Chief Executive Officer, Managing Director, Chief Financial Officer, Company Secretary, Advisers, Consultants and all Departmental Heads. If the Chairman, any director or any shareholder received any monthly salary than this information should also be included:

Name & Designation Educational

Qualification Age

(Years) Date of Joining

Overall experience

(Years) Previous Employment

Salary paid for the financial year ended 30.06.17


B. A 76 03-12-2007 45 Self employment 600,000

Md. Redwanul Kabir Chowdhury Managing Director




Md. Tanzil Kabir Chowdhury DMD

B. Sc in Textile Engineering &

Technology 38 01-10-2015 12 Self employment 480,000

Prantush Chandra Shaha ACS Company Secretary

M.Com, ACS 38 01-12-2015 13 Rupali Life Insurance Co. Ltd., BDG, Simtex Industries Ltd.

600,000

Golam Mohammad Ayub Chief Financial Officer

M.Com, CA (cc)

37 16-01-2016 14 Shore to Shore (BD) Ltd. Muntaha holdings Ltd., JMS Garments Ltd.

780,000

Engr. Kh. Ferdous Ouhid Pavel Factory Manager

B. Sc in Mechanical Engineering (BUET)

36 11-10-2015 15

Akij Engineering Institute, KPN Technology Ltd., Pharaoh Communication & Networks Bd Ltd.

360,000

Engr. Md. Mahbur Rahman Civil Engineer

M. Sc in Civil Engineering

35 01-08-2016 15 Gooryong Fashion Ltd., Advance Property Development Ltd., Alive Builders Ltd.

495,000

Md. Sunjurul Alam Sr. Manager, Marketing & Sales (Head of Marketing)

Diploma in Electrical Engineering

39 08-07-2017 23 Aleya Group, T. K Group of Industries, Five Star Woven Bags Ltd.

-

Mirza Ahasan Habib Asst. Manager (Head of Commercial)

M. A in Philosophy

36 15-11-2017 12 Welltouch Apparels Ltd., Siddique Group of Industris,

-

The Company has no permanent advisor and consultant.

Page: 90

(j) Changes in the key management persons during the last three years:

The following changes have been made in the senior key management personnel during the last three years:

Name of the employee Position/Designation Date of Joining Remarks

Md. Tanzil Kabir Chowdhury DMD 01-10-2015 Appointed

Engr. Kh. Ferdous Ouhid Pavel Factory Manager 11-10-2015 Appointed Prantush Chandra Shaha ACS Company Secretary 01-12-2015 Appointed Golam Mohammad Ayub Chief Financial Officer 16-01-2016 Appointed Engr. Md. Mahbur Rahman Civil Engineer 01-08-2016 Appointed Md. Sunjurul Alam Sr. Manager, Marketing & Sales (Head of Marketing) 08-07-2017 Appointed Mirza Ahasan Habib Asst. Manager (Head of Commercial) 15-11-2017 Appointed Subrata Pal FCMA Independent Director 02-04-2018 Appointed

Page: 91

(k) A profile of the sponsors including their names, father’s names, age, personal addresses, educational qualifications, and experiences in the business, positions or posts held in the past, directorship held, other ventures of each sponsor and present position:

Name, Father’s Name, Age & Personal Address Educational

Qualification

Experience Position/Post Holding in other Venture

(Years) Past Present


B.A. 45 Years Sponsor & Chairman

Sponsor & Chairman

Father's Name: Late Chowdhury Afsar Hossain Al-Faruque Flour Mills Ltd.

Al-Faruque Feed Mills Ltd.

Age: 76 Years

Personal Address: Jaleswaritola, Pourasava Lane, Bogra-5800.


B.A. 25 Years Sponsor & MD Sponsor

& MD


Al-Faruque Flour Mills Ltd.

Age: 49 Years



B.A 12 Years Sponsor & Director

Sponsor & Director

Father's Name: Razi Billah Al-Faruque Flour Mills Ltd.


Age: 39 Years


Page: 92

(l) If the present directors are not the sponsors and control of the issuer was acquired within five years immediately preceding the date of filing prospectus details regarding the acquisition of control, date of acquisition, terms of acquisition, consideration paid for such acquisition etc. No other Director except the followings:

Name Acquisition of Control

Date of Acquisition

Terms of Acquisition

Consideration paid for such Acquisition


12-Dec-17 12-Dec-17 N/A Cash

Subrata Pal FCMA 2-Apr-18 - - Appoint as an

Independent Director

(m) If the sponsors or directors do not have experience in the proposed line of business, the fact

explaining how the proposed activities would be carried out or managed: All the directors have adequate knowledge to carry out this line of business.

(n) Interest of the key management persons: Interest of the key management persons is given below:

Name Designation Date of Joining

Salary paid for the

financial year ended 30.06.17

Chowdhury Al-Faruque Director-Sales & Marketing 03-12-2007 600,000

Md. Redwanul Kabir Chowdhury Managing Director 03-12-2007 600,000

Mst. Nimme Kabir Chowdhury Director-Admin 03-12-2007 600,000

Md. Tanzil Kabir Chowdhury DMD 01-10-2015 480,000

Prantush Chandra Shaha ACS Company Secretary 01-12-2015 600,000

Golam Mohammad Ayub Chief Financial Officer 16-01-2016 780,000

Engr. Kh. Ferdous Ouhid Pavel Factory Manager 11-10-2015 360,000

Engr. Md. Mahbur Rahman Civil Engineer 01-08-2016 495,000

Md. Sunjurul Alam Sr. Manager, Marketing & Sales (Head of Marketing)

08-07-2017 -

Mirza Ahasan Habib Asst. Manager (Head of

Commercial) 15-11-2017 -

(o) All interests and facilities enjoyed by a director, whether pecuniary or non-pecuniary:

All directors except independent director receive monthly remuneration. Besides this all Directors received board meeting fee.

(p) Number of shares held and percentage of shareholding (pre-issue):

Sl. Name of Director Position Number of Shares

Held

%

Pre-IPO

1 Chowdhury Al-Faruque Chairman 2,700,000 5.63%

2 Md. Redwanul Kabir Chowdhury Managing Director &

Director 12,400,000 25.83%

3 Mst. Nimme Kabir Chowdhury Director 3,900,000 8.13%


Director 5,100,000 10.63%

5 Subrata Pal FCMA Independent Director - 0.00%

Total 24,100,000 50.21%

Page: 93

(q) Change in board of directors during last three years:

Sl. Name of the Directors Date of Joining

Date of retirement Present Status


12-Dec-17 11th AGM in 2019 Director

2 Subrata Pal FCMA 2-Apr-18 13th AGM in 2021 Independent

Director

(r) Director’s engagement with similar business:

None of the Directors are involve with similar business.

Page: 94

CHAPTER (IX): CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

(a) TO WHOM IT MAY CONCERN This is to certify that the Financial Statements of Al-Faruque Bags Limited furnished for our audit does not have any transaction during the last five years, or any proposed transaction, between the issuer and any of the following persons:

(i) Any director or sponsor or executive officer of the issuer; (ii) Any person holding 5% or more of the outstanding shares of the issuer; (iii) Any related party or connected person of any of the above persons;

Except the transactions described in the following table:

Name

Amount in (BDT)

Nature of Transaction

31-Mar-18 30-Jun-17 30-Jun-16 30-Jun-15 30-Jun-14 30-Jun-13

Total

Amount Accrued Payment

Total


Total


Total


Total


Total



Remuneration 450,000 - 450,000 600,000 - 600,000 600,000 - 600,000 600,000 - 600,000 600,000 - 600,000 174,000 - 174,000

Board Meeting Fee

12,000 - 12,000 15,000 - 15,000 15,000 - 15,000 15,000 - 15,000 - - - - - -

Md. Redwanul

Kabir Chowdhury

Remuneration 450,000 - 450,000 600,000 - 600,000 600,000 - 600,000 600,000 - 600,000 600,000 - 600,000 174,000 - 174,000

Board Meeting Fee

12,000 - 12,000 15,000 - 15,000 15,000 - 15,000 15,000 - 15,000 - - - - - -


Remuneration 450,000 - 450,000 600,000 - 600,000 600,000 - 600,000 600,000 - 600,000 600,000 - 600,000 174,000 - 174,000

Board Meeting

Fee 9,000 - 9,000 15,000 - 15,000 15,000 - 15,000 15,000 - 15,000 - - - - - -

Tanzil Kabir Chowdhury

Remuneration - - - - - - - - - - - - - - - - - -

Board Meeting Fee

3,000 - 3,000 - - - - - - - - - - - - - - -

Sd/-

Place: Dhaka;

ARTISAN Date: May 24, 2018


Page: 95

(b) Any transaction or arrangement entered into by the issuer or its subsidiary or associate or entity owned or significantly influenced by 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 or 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 the prospectus; There is no transaction or arrangement entered into by the issuer or its subsidiary or associate or entity owned or significantly influenced by 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 or 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 the prospectus except the transaction mentioned in CHAPTER (IX) (a).

(c) Any loans either taken or given from or to any director or any person connected with the

director, clearly specifying details of such loan in the prospectus, and if any loan has been 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, rate of interest applicable, date of loan taken, date of maturity of loan. and present outstanding of such loan.

No loan was taken or given from or to Directors or any person connected with the Directors of Al-Faruque Bags Limited.

Page: 96

CHAPTER (X): EXECUTIVE COMPENSATION

(a) The total amount of remuneration or salary or perquisites paid to the top five salaried officers of the issuer in the last accounting year and the name and designation of each such officer:

SL Name Designation

Remuneration/salaries (Tk.)

For the year ended 30.06.2017

1 Golam Mohammad Ayub Chief Financial Officer 780,000.00

2 Md. Redwanul Kabir Chowdhury Managing Director 600,000.00

3 Chowdhury Al-Faruque Director-Sales & Marketing 600,000.00

4 Mst. Nimme Kabir Chowdhury Director-Admin 600,000.00

5 Prantush Chandra Shaha ACS Company Secretary 600,000.00

(b) Aggregate amount of remuneration paid to all directors and officers as a group during the last

accounting year:

Sl. Name Amount (in Taka)

For the year ended 30.06.2017

1 Managing Director & Director’s Remuneration 1,800,000

2 Board Meeting Fee 45,000

3 Salary and Allowances 6,722,607

(c) If any shareholder director received any monthly salary or perquisite or benefit it must be

mentioned along with date of approval in AGM or EGM, terms thereof and payments made during the last accounting year: All directors except independent director are receiving remuneration for their services rendered to the Company. The above-mentioned remuneration was approved in the Statutory General Meeting dated January 31, 2010.

(d) The board meeting attendance fees received by the director including the managing director along with date of approval in AGM or EGM: The board meeting attendance fees received by all the directors including the managing director which was approved in the AGM dated February 05, 2014.

(e) Any contract with any director or officer providing for the payment of future compensation:

There is no contract between the Company and any of directors or officers regarding any future compensation to be made to them.

(f) If the issuer intends to substantially increase the remuneration paid to its directors and officers

in the current year, appropriate information regarding thereto: The Company has no plan for substantially increasing remuneration to its directors and/or officers except for those that are paid as annual increment to their salaries.

(g) Any other benefit or facility provided to the above persons during the last accounting year:

No other benefit or facility provided to the above persons during the last accounting year.

CHAPTER (XI): OPTIONS GRANTED TO DIRECTORS, OFFICERS AND EMPLOYEES Al-Faruque Bags Limited did not grant any options to its directors, officers and/or any other employees for the purpose of issuing shares.

Page: 97

CHAPTER (XII): TRANSACTION WITH THE DIRECTORS AND SUBSCRIBERS TO THE MEMORANDUM

(a) The names of the directors and subscribers to the memorandum, the nature and amount of

anything of value received or to be received by the issuer from the above persons, or by the said persons, directly or indirectly, from the issuer during the last five years along with the description of assets, services or other consideration received or to be received; Benefits from the Company during last five years: The Directors and subscribers to the memorandum of association have not received any benefits except remuneration (received by all directors except independent director) and board meeting fees directly or indirectly and share money deposited during the last five years.

(b) If any assets were acquired or to be acquired within next two financial years from the aforesaid persons, the amount paid for such assets and the method used to determine the price shall be mentioned in the prospectus, and if the assets were acquired by the said persons within five years prior to transfer those to the issuer, the acquisition cost thereof paid by them. Directors and Subscribers’ Assets to the Company: Directors and subscribers to the memorandum have not transferred any asset to the Company. Besides, the issuer Company has not received any assets or other considerations from its Directors and subscribers to the memorandum except fund against allotment of shares.

Page: 98

CHAPTER (XIII): OWNERSHIP OF THE COMPANY’S SECURITIES

a) The names, addresses, BO ID Number of all shareholders of the company before IPO, indicating the amount of securities owned and the percentage of the securities represented by such ownership:

Sl. Name of the Shareholders Position Address BO IDs Number of Shares Held

Pre IPO %

1 Chowdhury Al-Faruque Chairman Jaleswaritola, Pourasava Lane, Bogra-5800. 1201950064693981 2,700,000 5.63%



Jaleswaritola, Pourasava Lane, Bogra-5800. 1201950064693949 12,400,000 25.83%

3 Mst. Nimme Kabir Chowdhury

Director Jaleswaritola, Pourasava Lane, Bogra-5800. 1201950064693957 3,900,000 8.13%

4 Al-Faruque Flour Mills Ltd. Director Santahar Road, Narhatto, Kahaloo, Bogra- 5870. 1201950064695640 5,100,000 10.63%

5 Md. Farid Ahmed Shareholder Flat-B7, Firuza Rose, 12 Eskaton Road, Dhaka-1000 1604940047346138 1,040,000 2.17%

6 Mohammad Mokarom Hossain

Shareholder 454/C, Khilgaon Chowdhury Para, Dhaka. 1604940047359958 300,000 0.63%

7 Mohammed Ziaul Hossain Shareholder Flat- FG-3, House- 80, Road-9A (new), Satmasjid Road, Dhanmondi, Dhaka.

1604940058412680 400,000 0.83%

8 Mohammad Didarul Alam Shareholder 11/11 Tajmohal Road (4th Floor), Block-C, Mohammadpur, Dhaka.

1604940047359941 100,000 0.21%

9 Md. Anwar Latif Khan Shareholder 40 Madrasa Lane, Seuzgari, Bogra. 1202830031496575 100,000 0.21%

10 Md. Zillur Rahman Mridha Shareholder ABA Fashions Ltd., Sena Kalyan Commercial Complex, Block-F, Plot-9, Tongi.

1604940056385728 100,000 0.21%

11 Asraf Uddin Ahmed Shareholder Vill: Moheswarpasa (Kalibari), P.O: KUET-9203, P.S: Daulatpur, Dist:- Khulna.

1203110060936141 200,000 0.42%

12 Mostafa Kamal Ahmed Shareholder Amicus Amity, Flat-C5, Plot-371, Road- 10, Block-C, Bashundhara R/A, Dhaka.

1203110052459838 200,000 0.42%

13 Shireen Akter Karim Shareholder 4/3 Humayun Road, Block-B, (2nd Floor), Mohammadpur, Dhaka.

1203110061206516 200,000 0.42%

14 Lutfur Rahman Shareholder Rangs Anando, Apt.-D8, House-48, Road-10/A, Dhanmondi, Dhaka.

1604940036835032 200,000 0.42%

15 Md. Abdur Rashed Shareholder 105, I H Sirajee Sarak, P.O+ PS: Sirajgonj, Dist: Sirajgonj.

1604940047376959 80,000 0.17%

16 Rafiqul Anowar Shareholder Global Brand Private Limited, 19/2, West Panthapath (5th Floor) Dhanmond, Dhaka.

1201890000119342 300,000 0.63%

Page: 99

17 Md. Golam Sarwar Bhuiyan Shareholder Green Corner, 22 Green Road, Dhaka. 1202550061178900 100,000 0.21%

18 Mohammad Shofiqul Islam Shareholder 23/5, 4th Floor, Joint Quarter Bizli Mohalla, Mohammadpur, Dhaka.

1203630052555496 80,000 0.17%

19 Abaci Investment Limited Shareholder Rupayan Prime (7th Floor), Plot- 02, Road- 07, Dhanmondi, Dhaka- 1205.

1602770045524684 1,000 0.00%

20 M Shefaque Ahmed Shareholder Apartment- B4, House- 20, Road- 66, Gulshan-2, Dhaka.

1602770045524684 500 0.00%

21 Ali Noor Shareholder House # 800, Middle Monipur, Mirpur, Dhaka-1216.

1201580000665844 1000 0.00%

22 Farmers Hopes Limited Shareholder Plot No. 167, Fakirkhali Road, Barith, Badda, Dhaka 1605860064386069 500,000 1.04%

23 Md. Habibur Rahman Sikder Shareholder PBL Tower, 13th Floor, 17 New Gulshan North C/A, Dhaka.

1203040045061772 550,000 1.15%

24 Horipur Feed Ltd. Shareholder 40, Hazi Nagar, Ideal Road, Sarulia, Demra, Dhaka. 1203040062596431 500,000 1.04%

25 Ruma Akter Shareholder 25 Kha/1, Golapbagh Road, PS- Motijheel, Dhaka. 1202020053784037 200,000 0.42%

26 Shakil Mahmud Shareholder Nachon Mohuri, Jhenaigati, Sherpur. 1605550062101886 250,000 0.52%

27 Md. Abdul Halim Shareholder Vill. + P.O - Bagbari, P.S – Gabtoli, Dist. - Bogra. 1201950064840432 10,000 0.02%

28 Al-Faruque Feed Mills Ltd. Shareholder Santahar Road, Narhatto, Kahaloo, Bogra- 5870. 1201950064695849 2,487,500 5.18%

29 Nawroz Kabir Chowdhury Shareholder Suborna Tower, Flat # A2, 36 Kalabagan, Lake Circus, Dhaka.

1201950064694068 2,000,000 4.17%

30 Nawshin Binte Kabir Chowdhury

Shareholder Suborna Tower, Flat # A2, 36 Kalabagan, Lake Circus, Dhaka.

1201950064694051 2,000,000 4.17%

31 A K M Shamsuzzoha Shareholder Thanthania Shah Para, Bogra Sadar, Bogra- 5800. 1201950064694041 2,000,000 4.17%

32 BLI Capital Limited Shareholder Eunoos Trade Centre, Level-18, 52-53 Dilkusha C/A, Dhaka. 1605650050408172 4,750,000 9.90%

33 Tamanna Ahmed Shareholder House-10/3, Lane-4, Block-D, Section-14, Mirpur, Dhaka-1206.

1202120044226209 125,000 0.26%

34 Marzina Akter Shareholder 33/2 Zigatola, Flat-7A, Hazaribag, Dhaka. 1201830064495635 125,000 0.26%

35 Md. Borhan Uddin Shareholder 980/5/A, East Shewrapara, Kafrul, Dhaka. 1205000045087327 50,000 0.10%

36 Syed Golam Wadud Shareholder 797 Ibrahimpur, Dhaka Cantonment, Dhaka. 1203180004740195 100,000 0.21%

37 Asim Kumar Mondal Shareholder 26, Hemendra Das Road, Dhaka-1100. 1201830058165521 100,000 0.21%

38 Mohammad Saidul Hossain Shareholder Flat-B4, Road-02, House-15, Block-K, Halishahar H/E, Chittagong.

1204410048555552 150,000 0.31%

39 Fareast Islami Life Insurance Co. Ltd.

Shareholder Fareast Tower (Level-18), 35 Topkhana Road, Dhaka.

1205790011903928 2,000,000 4.17%

40 Khaled Ishtiaq Nadim Shareholder Square Center, 48 Mohakhali C/A, Dhaka. 1201560018522942 80,000 0.17%

41 Rowson Ara Sumi Shareholder 26/10, Kalichoron Saha Road, PO- Faridabad, PS- Gandaria, Dhaka- 1204.

1201830053881757 150,000 0.31%

Page: 100

42 Bangladesh Finance and Investment Co. Ltd.

Shareholder Baitul Hossain Building (2nd Floor), 27 Dilkusha C/A, Dhaka-1000.

1205150002440950 300,000 0.63%

43 City General Insurance Company Ltd.

Shareholder Baitul Hossain Building, 3rd Floor, 27 Dilkusha C/A, Dhaka-1000.

1205150028332076 500,000 1.04%

44 BD Finance Capital Holdings Ltd.

Shareholder 64, Motijheel C/A, 2nd Floor, Dhaka-1000. 1205150045165228 500,000 1.04%

45 BD Finance Securities Ltd. Shareholder 64, Motijheel C/A, (2d Floor), Dhaka-1000. 1205150043284418 500,000 1.04%

46 Milton Kumar Roy Shareholder 195/2/2, Tejkunipara, 4th Floor, Tejgaon, Dhaka. 1201910000037197 50,000 0.10%

47 Rowshan Ara Begum Shareholder Jaleswaritola, Pourasava Lane, Bogra- 5800. 1201950064693965 520,000 1.08%

Total

48,000,000 100.00%

Page: 101

b) There shall also be a table showing the name and address, age, experience, BO ID Number, TIN number, numbers of shares held including percentage, position held in other companies of all the directors before the public issue:

SL Name of Director, Address, Age & Experience No. of Share % Position held in Other Organization

Pre-IPO Other Organization Position

1


2,700,000 5.63%

Chairman

Address: Jaleswaritola, Pourasava Lane, Bogra-5800.

Age: 76 Years Al-Faruque Flour Mills Ltd. Chairman

. Experience: 45 Years Al-Faruque Feed Mills Ltd Chairman

BO ID No.: 1201950064693981

TIN No.: 317705718320

2


12,400,000 25.83% Al-Faruque Flour Mills Ltd. Director



Age: 49 Years


BO ID No.: 1201950064693949

TIN No.: 770587635209

3


3,900,000 8.13%

Director


Age: 39 Years Al-Faruque Flour Mills Ltd. Director

Al-Faruque Feed Mills Ltd. Managing Director &

Director


BO ID No.: 1201950064693957

TIN No.: 471448212872

Page: 102

4


5,100,000 10.63% Not involved in other organization -

Director

Address: Santahar Road, Narhatto, Kahaloo, Bogra- 5870.

Age: 38 Years


BO ID No.: 1201950064695640

TIN No.: 067-200-0193

5


- 0.00% Wata Chemicals Limited Independent Director

Independent Director

Address: 31, Gopibagh (3rd Floor), 3rd Lane, Dhaka-1203.

Age: 76 Years


BO ID No.: 2698875743511

TIN No.: 355749265197

Page: 103

c) The average cost of acquisition of equity shares by the directors certified by the auditors:

To Whom It May Concern

Al-Faruque Bags Limited has been allotted shares in cash and other than cash (Bonus). The average cost of acquisition of equity by the directors is Tk. 10.00 each. Necessary particulars of shareholdings, allotment date and consideration are given below:

Date Allotment/ Transfer


Md. Redwanul Kabir

Chowdhury

Mst. Nimme Kabir

Chowdhury


Represented by Md. Tanzil Kabir Chowdhury

Subrata Pal FCMA

Consideration Face value of Share

(Tk.)

Chairman Managing Director & Director

Director Director Independent

Director

3-Dec-07 Allotment 300,000 600,000 100,000 - - Cash 10.00

6-Feb-17 Allotment 2,400,000 4,800,000 800,000 - - Bonus 10.00

9-Feb-17 Allotment - - - 100,000 - Cash 10.00

12-Dec-17 Allotment - 7,000,000 3,000,000 5,000,000 - Cash 10.00

Total

2,700,000 12,400,000 3,900,000 5,100,000 -

The Company split its share from Tk. 1,000.00 to Tk. 10.00 on November 30, 2016.

Sd/- Place: Dhaka ARTISAN Dated: May 24, 2018 Chartered Accountants

Page: 104

d) A detail description of capital built up in respect of shareholding (name-wise) of the issuer’s sponsors or directors. In this connection, a statement to be included: -


Date of Allotment/

Transfer of fully paid- up shares

Consideration Nature of

issue

No. of Equity shares

Face value

Issue Price/Acquisition

Price/Transfer Prices

Cumulative no. of Equity shares

% Pre- issue paid up capital

% Post issue paid up capital

Sources of fund

3-Dec-07 Cash Ordinary Share

300,000 10.00 10.00 300,000 5.63% 3.46%

Own Source 6-Feb-17 Bonus 2,400,000 10.00 10.00 2,700,000


Date of Allotment/



issue


Face value






Sources of fund

3-Dec-07 Cash Ordinary

Share

600,000 10.00 10.00 600,000

25.83% 15.90% Own

Source 6-Feb-17 Bonus 4,800,000 10.00 10.00 5,400,000

12-Dec-17 Cash 7,000,000 10.00 10.00 12,400,000


Date of Allotment/



issue


Face value






Sources of fund

3-Dec-07 Cash Ordinary

Share

100,000 10.00 10.00 100,000

8.13% 5.00% Own

Source 6-Feb-17 Bonus 800,000 10.00 10.00 900,000

12-Dec-17 Cash 3,000,000 10.00 10.00 3,900,000

Page: 105

Al-Faruque Flour Mills Ltd. Represented by Md. Tanzil Kabir Chowdhury Director

Date of Allotment/



issue


Face value






Sources of fund

9-Feb-17 Cash Ordinary Share

100,000 10.00 10.00 100,000 10.63% 6.54%

Own Source 12-Dec-17 Cash 5,000,000 10.00 10.00 5,100,000


Date of Allotment/



issue


Face value






Sources of fund

N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

e) Detail of shares issued by the company at a price lower than the issue price:

All the shares are issued by the Company at face value of Tk. 10.00 before this issue. f) History of significant (5% or more) changes in ownership of securities from inception:

Date of Allotment/Transfer






BLI Capital Limited

No. of Share

3-Dec-07 300,000 600,000 100,000 - - -

6-Feb-17 2,400,000 4,800,000 800,000 - - -

9-Feb-17 - - - 100,000 20,000 -

12-Dec-17 - 7,000,000 3,000,000 5,000,000 2,467,500 4,750,000

Total 2,700,000 12,400,000 3,900,000 5,100,000 2,487,500 4,750,000

Page: 106

CHAPTER (XIV): CORPORATE GOVERNANCE

a) Management disclosure regarding compliance with the requirements of Corporate Governance Guidelines of the Bangladesh Securities and Exchange Commission (BSEC);

The Company declares that it has complied with the requirements of the applicable regulations of Corporate Governance Guidelines of Bangladesh Securities and Exchange Commission (BSEC) and accordingly constitute several committees under the board for good governance. A certificate of compliance from competent authority has been incorporated accordingly. Sd/- Md. Redwanul Kabir Chowdhury Managing Director

b) A compliance report of Corporate Governance requirements certified by competent authority;

CERTIFICATE ON CORPORATE GOVERNANCE COMPLIANCE OF


We have examined the compliance to the BSEC guidelines on Corporate Governance by Al-Faruque Bags Limited. These guidelines relate to the Notification no. SEC/ CMRRCD/2006-158/134/Admin/44 dated 7 August 2012, as amended vide notification dated 21 July 2013 and 18 August 2013 of Bangladesh Securities and Exchange Commission (BSEC) on Corporate Governance. Such compliance to the codes of Corporate Governance is the responsibility of the company. Our examination for the purpose of issuing this certificate was limited to the procedures including implementation thereof as adopted by the Company for ensuring the compliance on the attached statement on the basis of evidence gathered and representation received. In our opinion and to the best of our information and according to the explanations provided to us, we certify that the Company has complied with the conditions of Corporate Governance as stipulated in the above mentioned guidelines is issued by BSEC except the approval of appointment of Independent Director in the AGM under clause 1.2 (iii).

Sd/- Place: Dhaka. Date: May 24, 2018


Page: 107

Compliance Report on BSEC's Notification


Status of Compliance with the conditions imposed by the Commission`s Notification No. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012, as amended vide notification dated 21 July 2013 and 18 August 2013 issued under section 2CC of the Securities and Exchange Ordinance, 1969: (Report Under Condition No. 7.00)

Condition No.

Title

Compliance Status (Put √ in the

appropriate column) Remarks (if any)

Complied Non-

complied

1.0 Board of Directors

1.1 Board's Size

The number of the Board members of the company shall not be less than 5 (five) and more than 20 (twenty)

√

1.2 Independent Directors

1.2(i) At least on fifth (1/5) of the total number of directors in the company's board shall be independent directors.

√

Including independent director total number of directors in the board is 5 (Five).

1.2 (ii) a)

Independent Director does not hold any share in the company or holds less than one percent (1%) shares of the total paid-up shares of the company.

√

1.2 (ii) b)

Independent Director is not a sponsor of the company and is not connected with the company’s any sponsor or director or shareholder who holds one percent (1%) or more shares of the total paid-up shares of the company on the basis of family relationship. His/her family members also should not hold above mentioned shares in the company.

√

1.2 (ii) c)

Independent Director does not have any other relationship, whether pecuniary or otherwise, with the company or its subsidiary/associated companies.

√

1.2 (ii) d) Independent Director who is not a member, director or officer of any stock exchange;

√

1.2 (ii) e)

Independent Director who is not a shareholder, director or officer of any member of stock exchange or an intermediary of the capital market;

√

1.2 (ii) f)

Independent Director who is not a partner or an executive or was not a partner or an executive during the preceding 3 (three) years of the concerned company's statutory audit firm;

√

1.2 (ii) g) Independent Director shall not be an independent director in more than 3 (three) listed companies;

√

Page: 108

1.2 (ii) h)

Independent Director has not been convicted by a court of competent jurisdiction as a defaulter in payment of any loan to a bank or a Non-Bank Financial Institution (NBFI);

√

1.2 (ii) i) Independent Director has not been convicted for a criminal offence involving moral turpitude;

√

1.2 (iii)

Independent director shall be appointed by the board of directors and approved by the shareholders in the Annual General Meeting (AGM);

√

Independent Director has been appointed by the Board of Directors on 2nd April 2018 and to be placed before the shareholders for approval in the next AGM.

1.2 (iv) The post of independent director cannot remain vacant for more than 90 (ninety) days;

√

Independent director has been appointed on 2nd April 2018.

1.2 (v) The Board shall lay down a code of conduct of all Board members and annual compliance of the code to be recorded;

√

1.2 (vi)

The tenure of office of an independent director shall be for a period of 3 (three) years, which may be extended for 1 (one) term only;

√


1.3 Qualification of Independent Director(ID)

1.3 (i)

Independent Director shall be a knowledgeable individual with integrity who is able to ensure compliance with financial, regulatory and corporate laws and can make meaningful contribution to business;

√

1.3 (ii)

The independent director should be a Business Leader/Corporate Leader/ Bureaucrat /University Teacher with Economics or Business Studies or Law background /Professionals like Chartered Accountants, Cost & Management Accountants and Chartered Secretaries. The independent director must have at least 12 (twelve) years of Corporate engagement/professional experiences.

√

1.3 (iii) In special cases the above qualifications may be relaxed subject to prior approval of the Commission;

- - N/A

1.4 Chairman of the Board and Chief Executive Officer

The positions of the Chairman of the Board and the Chief Executive Officer of the companies shall be filled by different individuals. The Chairman of the company shall be elected from among the directors of the company. The Board of Directors

√

Page: 109

shall clearly define respective roles and responsibilities of the Chairman and the Chief Executive Officer.

1.5 The Directors’ Report to Shareholders

The directors of the companies shall include the following additional statements in the Directors' Report prepared under section 184 of the Companies Act, 1994 (Act No. XVIIIof 1994)

1.5 (i) Industry outlook and possible future developments in the industry

√

1.5 (ii) Segment-wise or product-wise performance - - N/A

1.5 (iii) Risks and concerns √

1.5 (iv) A discussion on Cost of Goods sold, Gross Profit Margin and Net Profit Margin

√

1.5 (v) Discussion on continuity of any Extra-Ordinary gain or loss

- - N/A

1.5 (vi) Basis for related party transactions-a statement of all related party transactions should be disclosed in the annual report

√

1.5 (vii) Utilization of proceeds from public issues, rights issues and/or through any others instruments.

- - N/A

1.5 (viii)

An explanation if the financial results deteriorate after the company goes for Initial Public Offering (IPO), Repeat Public Offering (RPO), Rights Offer, Direct Listing, etc.

- - N/A

1.5 (ix)

If significant variance occurs between Quarterly Financial performance and Annual Financial Statements, the management shall explain about the variance on their Annual Report.

- - N/A

1.5 (x) Remuneration to directors including independent directors

√

Independent does not take any remuneration. He gets only Board meeting fee.

1.5 (xi)

The financial statements prepared by the management of the issuer company present fairly its state of affairs, the result of its operations, cash flows and changes in equity.

√

1.5 (xii) Proper books of account of the issuer company have been maintained.

√

1.5 (xiii)

Appropriate accounting policies have been consistently applied in preparation of the financial statements and that the accounting estimates are based on reasonable and prudent judgment.

√

1.5 (xiv)

International Accounting Standards (IAS)/Bangladesh Accounting Standards (BAS) / International Financial Reporting Standards (IFRS)/Bangladesh Financial Reporting Standards (BFRS), as applicable in Bangladesh, have been followed in preparation of the financial statements and

√

Page: 110

any departure there-from has been adequately disclosed.

1.5 (xv) The system of internal control is sound in design and has been effectively implemented and monitored.

√

1.5 (xvi)

There are no significant doubts upon the issuer company's ability to continue as a going concern. If the issuer company is not considered to be a going concern, the fact along with reasons thereof should be disclosed.

√

1.5 (xvii)

Significant deviations from the last year’s operating results of the issuer company shall be highlighted and the reasons thereof should be explained.

- - N/A

1.5 (xviii) Key operating and financial data of at least preceding 5 (five) years shall be summarized.

√

1.5 (xix) If the issuer company has not declared dividend (cash or stock) for the year, the reasons thereof shall be given.

√

Due to business growth and re-investment.

1.5 (xx) The number of Board meetings held during the year and attendance by each director shall be disclosed.

√

1.5 (xxi) The pattern of shareholding shall be reported to disclose the aggregate number of shares held by:

1.5 (xxi) a) Parent/Subsidiary/Associated Companies and other related parties (name wise details)

√

1.5 (xxi) b)

Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer, Head of Internal Audit and their spouses and minor children (name wise details)

√

1.5 (xxi) c) Executives √

1.5 (xxi) d) Shareholders holding ten percent (10%) or more voting interest in the company (name wise details)

√

1.5 (xxii)

In case of the appointment/re-appointment of a director the company shall disclose the following information to the shareholders:

1.5 (xxii) a) A brief resume of the director √

1.5 (xxii) b) Nature of his/her expertise in specific functional areas.

√

1.5 (xxii) c) Names of companies in which the person also holds the directorship and the membership of committees of the board.

√

2.0 Chief Financial Officer (CFO), Head of Internal Audit and Company Secretary (CS)

2.1 Appointment

The company shall appoint a Chief Financial Officer (CFO), a Head of Internal Audit (Internal Control and Compliance) and a Company Secretary (CS). The Board

√

Page: 111

of Directors should clearly define respective roles, responsibilities and duties of the CFO, the Head of internal Audit and the CS.

2.2 Requirement to attend the Board Meetings

The CFO and the Company Secretary of the companies shall attend the meetings of the Board of Directors provided that the CFO and /or the Company Secretary shall not attend such part of a meeting of the Board of Directors which involves consideration of an agenda item relating of their personal matters.

√

3.0 Audit Committee

3 (i) The company shall have an Audit Committee as a sub-committee of the Board of Directors

√

3 (ii)

The Audit Committee shall assist the Board of Directors in ensuring that the financial statements reflect true and fair view of the state of affairs of the company and in ensuring a good monitoring system within the business.

√

3 (iii)

The Audit Committee shall be responsible to the Board of Directors. The duties of the Audit Committee shall be clearly set forth in writing.

√

3.1 Constitution of Audit Committee

3.1 (i) The Audit Committee shall be composed of at least 3 (three) members

√

3.1 (ii)

The Board of Directors shall appoint members of the Audit Committee who shall be directors of the company and shall include at least 1 (one) independent director.

√

3.1 (iii)

All members of the audit committee should be “financially literate” and at least 1 (one) member shall have accounting or related financial management experience.

√

3.1 (iv)

When the term of service of the Committee members expires or there is any circumstance causing any Committee member to be unable to hold office until expiration of the term of service, thus making the number of the Committee members to be lower than the prescribed number of 3 (three) persons, the Board of Directors shall appoint the new Committee member(s) to fill up the vacancy(ies) immediately or not later than 1 (one) month from the date of vacancy(ies) in the Committee to ensure continuity of the performance of work of the Audit Committee.

√ -


3.1 (v) The company secretary shall act as the secretary of the Committee.

√

3.1 (vi) The quorum of the Audit Committee √

Page: 112

meeting shall not constitute without at least 1 (one) independent director.

3.2 Chairman of the Audit Committee

3.2 (i)

The Board of Directors shall select 1 (one) member of the Audit Committee to be Chairman of the Audit Committee, who shall be an independent director.

√

3.2 (ii) Chairman of the audit committee shall remain present in the Annual General Meeting (AGM).

√

3.3 Role of Audit Committee shall include the following:

3.3 (i) Oversee the financial reporting process. √

3.3 (ii) Monitor choice of accounting policies and principles.

√

3.3 (iii) Monitor Internal Control Risk management process.

√

3.3 (iv) Oversee hiring and performance of external auditors.

√

3.3 (v) Review along with the management, the annual financial statements before submission to the board for approval.

√

3.3 (vi)

Review along with the management, the quarterly and half yearly financial statements before submission to the board for approval.

√

3.3 (vii) Review the adequacy of internal audit function.

√

3.3 (viii) Review statement of significant related party transactions submitted by the management.

√

3.3 (ix) Review Management Letters/ Letter of Internal Control weakness issued by statutory auditors.

√

3.3 (x)

When money is raised through Initial Public Offering (IPO)/Repeat Public Offering (RPO)/Rights Issue the company shall disclose to the Audit Committee about the uses/applications of funds by major category (capital expenditure, sales and marketing expenses, working capital, etc.), on a quarterly basis, as a part of their quarterly declaration of financial results. Further, on an annual basis, the company shall prepare a statement of funds utilized for the purposes other than those stated in the offer document/prospectus.

- - N/A

3.4 Reporting of the Audit Committee

3.4.1 Reporting to the Board of Directors

3.4.1 (i) The Audit Committee shall report on its activities to the Board of Directors.

√

3.4.1(ii) The Audit committee shall immediately report to the Board of Directors on the following findings, if any;

3.4.1 (ii) a) Report on conflicts of interests; -

- No such event

occurred

3.4.1 (ii) b) Suspected or presumed fraud or - - No such event

Page: 113

irregularity or material defect in the internal control system;

occurred

3.4.1 (ii) c) Suspected infringement of laws, including securities related laws, rules and regulations; and

- - No such event

occurred

3.4.1 (ii) d) Any other matter which shall be disclosed to the Board of Directors immediately

- - No such event

occurred

3.4.2 Reporting to the Authorities

If the Audit Committee has reported to the Board of Directors about anything which has material impact on the financial condition and results of operation and has discussed with the Board of Directors and the management that any rectification is necessary and if the Audit Committee finds that such rectification has been unreasonably ignored, the Audit Committee shall report such finding to the Commission, upon reporting of such matters to the Board of Directors for three times or completion of a period of 6 (six) months from the date of first reporting to the Board of Directors, whichever is earlier.

- - N/A

3.5 Reporting to the Shareholders and General Investors

Report on activities carried out by Audit Committee, including any report made to the Board of Directors under condition 3.4.1(ii) above during the year shall be signed by the Chairman of the Audit Committee and disclosed in the annual report of the issuer company.

√

4.0 External/Statutory Auditors.

4 (i) Non-engagement in Appraisal or valuation services or fairness opinions

√

4 (ii) Non-engagement in designing and implementation of Financial Information System.

√

4 (iii) Non-engagement Book-keeping or accounting

√

4 (iv) Non-engagement Broker-dealer services √

4 (v) Non-engagement in Actuarial services √

4 (vi) Non-engagement in Internal audit services √

4 (vii) Non-engagement in any other service determined by the Audit Committee

√

4 (viii)

No partner or employees of the external audit firms shall possess any share of the company they audit at least during the tenure of their audit assignment of that company.

√

4 (ix) Audit/certification services on compliance of corporate governance as required under clause (i) of condition No. 7.

√

5.0 Subsidiary Company

5 (i) Provisions relating to the composition of the Board of Directors of the holding company shall be made applicable to the

N/A

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composition of the Board of Directors of the subsidiary company.

5 (ii)

At least 1 (one) independent director on the Board of Directors of the holding company shall be a director on the Board of Directors of the subsidiary company.

N/A

5 (iii)

The minutes of the Board meeting of the subsidiary company shall be placed for review at the following Board meeting of the holding company.

N/A

5 (iv)

The minutes of the respective Board meeting of the holding company shall state that they have reviewed the affairs of the subsidiary company also.

N/A

5 (v)

The Audit Committee of the holding company shall also review the financial statements, in particular the investments made by the subsidiary company.

N/A

6.0 Duties of Chief Executive Officer (CEO)& Chief Financial Officer (CFO)

6 (i)

The CEO and CFO shall certify to the Board that they have reviewed financial statements for the year and that to the best of their knowledge and belief;

√

6 (i) a)

These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading.

√

6 (i) b)

These statements together present a true and fair view of the company’s affairs and are in compliance with existing accounting standards and applicable laws.

√

6 (ii)

There are, to the best of knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or violation of the company’s code of conduct.

√

7.0 Reporting and Compliance of Corporate Governance

7 (i)

The company shall obtain a certificate from a practicing Professional Accountant/ Secretary (Chartered Accountant/Cost and Management Accountant / Chartered Secretary) regarding compliance of conditions of Corporate Governance Guidelines of the Commission and shall send the same to the shareholders along with the Annual Report on a yearly basis.

√

7 (ii)

The directors of the company shall state, in accordance with the Annexure attached, in the directors' report whether the company has complied with these conditions.

√

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c) Details relating to the issuer's audit committee and remuneration committee, including the names of committee members and a summary of the terms of reference under which the committees operate. The name of audit committee members and remuneration committee members are as follows:

Audit Committee Members Name Remuneration Committee Members Name

• Subrata Pal FCMA (Independent Director) Chairman of the Committee

• Chowdhury Al-Faruque -Chairman

• Md. Redwanul Kabir Chowdhury, Managing Director

• Prantush Chandra Shaha ACS, Company Secretary

• Chowdhury Al-Faruque -Chairman of the Committee

• Md. Tanzil Kabir Chowdhury

• Subrata Pal FCMA (Independent Director)

• Md. Redwanul Kabir Chowdhury, Managing Director

• Golam Mohammad Ayub, Chief Financial Officer

The terms of reference of the audit committee has been agreed upon as follows:

▪ To review all internal and external audit report.

▪ To recommend the statutory annual audited financial statements to the Board of Directors for approval.

▪ To review the finding of the internal and external auditors.

▪ To review and approve the Annual “Audit Plant” of the Internal Audit Department.

▪ To monitor the implementation of the recommendations of the Internal and External auditors.

▪ To review the performance of the external auditors and make recommendations to the Board regarding their appointment and fees.

▪ To review the quarterly, half yearly and annual financial statements before submission to the Board, focusing particularly on.

▪ To review the company’s statement on internal control systems prior to endorsement by the Board.

▪ The company secretary shall be the secretary of the audit committee. The terms of reference of the remuneration committee has been agreed upon as follows:

▪ To assist the Board in developing and administering a fair and transparent procedure for setting policy on the remuneration of directors and senior management of the Company

▪ Determining the remuneration packages

▪ Review the Annual Confidential Report (ACR) of senior management of the company

▪ Review and oversee the Company's overall human resources strategy.

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CHAPTER (XV): VALUATION REPORT OF SECURITIES PREPARED BY THE ISSUE MANAGERS The valuation report of securities offered is prepared and justified by the issue managers (BMSL Investment Limited & IIDFC Capital Limited) on the basis of the financial and all other information pertinent to the Issue. Qualitative and Quantitative factors for Valuation: Qualitative Justification: 1. Brand loyalty: The products of the Company got popularity among their customers and the

Company has a strong brand loyalty of their customers. 2. Modern Machineries: The Company has been using modern machineries that increase their

productivity. 3. Market Share: The Company has good market share of PP Woven Bang that is helpful their

business. 4. Strong distribution channels: The Company has very strong distribution channels through which

they can smoothly supply their products. 5. Good Corporate Governance: The Company has good corporate governance that enhance their

operation smoothly. Quantitative Justification: The issue price at Tk. 10.00 each is justified as details below:

Particulars Amount (in Tk.)

Method 1: Net Asset Value (NAV) per share/Equity based valuation 15.62

Method 2: Historical Earnings based valuation 11.19

Method 3: Average market price of similar stock based valuation 31.84

Method 1: Share price on Net Asset Value (NAV)/Equity based valuation

Sl. No. Particulars Amount (in Tk.)

a) Share Capital 480,000,000

b) Tax Holiday Reserve 96,110,705

c) Retained Earnings 173,806,142

Total Shareholders' Equity (A) 749,916,847

Number of Share Outstanding as on 31 March, 2018 (B) 48,000,000

Net Asset Value per share (without revaluation reserve) as per Audit Report as on 31 March, 2018 (A/B)

15.62

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Method 2: Historical Earnings based value per share Earnings based Value per share based on Overall Market P/E

Year No. of Share Net Profit after Tax Weight (%) Weighted Average Net Profit after Tax

30-Jun-13 1,000,000 36,850,599 0.0725 2,670,333

30-Jun-14 1,000,000 12,932,010 0.0725 937,102

30-Jun-15 1,000,000 23,030,936 0.0725 1,668,908

30-Jun-16 1,000,000 24,673,652 0.0725 1,787,946

30-Jun-17 9,800,000 37,750,512 0.7101 26,808,334

Total 13,800,000 135,237,708 1.0000 33,872,624

Weighted Average Net Profit after Tax 33,872,624

No. of shares outstanding before IPO 48,000,000

Diluted EPS based on weighted Average of Net Profit after Tax 0.7057

Market PE (Considering Lesser P/E of 16.99, 21.17 & 15.86 is 15.86) 15.86

Earnings based Value per share 11.19

Calculation of Average Price Earnings of Market & Engineering Sector:

Particulars Feb-18 Mar-18 Apr-18 Average

Engineering Sector P/E 17.17 16.50 17.30 16.99

Miscellaneous Sector P/E 21.42 20.47 21.61 21.17

Overall Market P/E 16.47 15.67 15.43 15.86

Considering Lesser P/E of 16.99, 21.17 & 15.86 is 15.86

Source: DSE Monthly Review.

Page: 118

Method 3: Average market price of similar stock based valuation

Month end close price

Sl. Date Deshbandhu Polymer

Limited Yeakin Polymer

Limited Khan Brothers PP Woven Bag

Industries Ltd. Miracle Industries

Ltd. Sino Bangla Industries

Ltd.

1 31-May-17 18.50 27.30 22.60 43.40 36.10

2 29-Jun-17 20.70 26.70 23.10 45.10 42.80

3 31-Jul-17 21.20 26.80 23.40 50.90 66.40

4 31-Aug-17 20.90 26.80 22.80 52.00 64.50

5 28-Sep-17 19.10 25.30 20.00 58.10 59.30

6 31-Oct-17 19.70 20.90 19.10 51.80 55.50

7 30-Nov-17 18.20 22.20 18.60 45.30 47.10

8 28-Dec-17 22.40 21.00 17.80 45.70 52.60

9 31-Jan-18 20.70 19.50 17.10 42.00 52.00

10 28-Feb-18 18.80 19.60 16.40 41.00 53.90

11 29-Mar-18 18.10 18.40 15.70 36.90 43.30

12 30-Apr-18 17.50 17.80 16.60 40.90 42.40

Average Price 19.65 22.69 19.43 46.09 51.33

Average Price of these 5 (Five) Stocks 31.84

Source: DSE Monthly Review.

Average market price of similar stock based valuation (Assumption) 1. The average month end close price of the peer Company from May 2017 to April 2018 is considered.

Page: 119

Rationale for choosing these 5 Companies: There are thirty-six engineering companies and twelve Miscellaneous companies listed in the capital market. Among the thirty-six and twelve companies AFBL has taken five companies because AFBL’s nature, capital structure and revenue matches to these 5 (Five) companies.

Amount in BDT million

No. Name of Company Turnover Paid-up Capital

1 Deshbandhu Polymer Limited 787.89 613.65

2 Yeakin Polymer Limited 110.16 681.45

3 Khan Brothers PP Woven Bag Industries Ltd. 651.69 980.80

4 Miracle Industries Ltd. 200.08 313.55

5 Sino Bangla Industries 653.57 199.97

Explanation of similarities: 1. AFBL having a Revenue of BDT 413.38 million in the Jul-2017-Mar-2018, it is justifiable to

consider the companies having more or close to the revenue of AFBL. In our Analysis, companies having revenue between BDT 110.00-790.00 million as of Jul-2017-Mar-2018, are considered as comparable annual revenue.

2. Considering the Capital Base of AFBL of BDT 480.00 million, companies with paid-up Capital between BDT 150.00-980.00 million as of March 2018, are considered as comparable companies.

3. Extreme values have been excluded to avoid distortion.

4. Companies having available data have been considered only. The management of the Company in consultation with the Issue Managers has set the issue price at Tk. 10.00 each at par value. Sd/- Md. Riyad Matin Managing Director BMSL Investment Ltd.



CHAPTER (XVI): DEBT SECURITIES The Company has not issued or is planning to issue any debt security within six months.

Page: 120

CHAPTER (XVII): PARTIES INVOLVED AND THEIR RESPONSIBILITIES

Parties involve with AFBL Responsibilities

(a) Issue Manager(s) (1) BMSL Investment Limited & (2) IIDFC Capital Limited.

The Issue Managers will act as the managers to the issue for the public issue as described in the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015.

(b) Underwriters (1) BMSL Investment Limited; (2) Sandhani Life Finance Limited & (3) Asian Tiger Capital Partners Investments Limited.

The Underwriters will act as the underwriters to the public issue as described in the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015.

(c) Statutory Auditors ARTISAN Chartered Accountants

To express an opinion on these financial statements based on their audit. Auditor will conduct the audit in accordance with Bangladesh Standards on Auditing (BSA).

(d) Cost Auditor No N/A

(e) Valuer No N/A

(f) Credit Rating Company No N/A

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CHAPTER (XVIII): MATERIAL CONTRACTS (a) Major agreements entered into by the Issuer:

The following are material agreements have been entered into by the Company:

1. Underwriting Agreements between the Company and the Underwriters; i. BMSL Investment Limited; ii. Sandhani Life Finance Limited & iii. Asian Tiger Capital Partners Investments Limited.

2. Issue Management Agreement between the Company and;

i. BMSL Investment Limited & ii. IIDFC Capital Limited.

(b) Material parts of the agreements:

Underwriting agreements with: i. BMSL Investment Limited;

ii. Sandhani Life Finance Limited & iii. Asian Tiger Capital Partners Investments Limited.

Material parts of the agreements

Signing Date: With BMSL Investment Limited, Sandhani Life Finance Limited and Asian Tiger Capital Partners Investments Limited: April 04, 2018

Tenure: This Agreement shall be valid until completion of subscription of shares and unless this Agreement is extended or earlier terminated in accordance with the terms of this Agreement.

Principal Terms and Condition:

(i) The IPO shall stand cancelled if at least 65% in any category of the IPO is not subscribed.

(ii) In case of under subscription in any category by up to 35% of the IPO the un-subscribed securities shall be taken up by the underwriters.

(iii) Notwithstanding anything contained in the agreement in case of inconsistency between the provision of the agreement and the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015, the Public Issue Rules shall prevail.

(iv) Prior to publication of the prospectus, the Company shall have obtained consent from the Bangladesh Securities and Exchange Commission permitting the issue as described in Article 2.01 and providing for payment of underwriting commission 0.40% on the amount underwritten.

(v) The Issuer shall within 10 (Ten) days of the closure of subscription call upon the underwriter in writing with a copy of said writing to the Bangladesh Securities and Exchange Commission, to subscribe for the shares not subscribed by the closing date and to pay for in cash in full for such unsubscribed shares within 15 (Fifteen) days of the date of said notice and the said amount shall have to be credited into shares subscription account within the said period.

(vi) 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 Underwriters to the Commission.

In the case of failure by the underwriter to pay for the shares within the stipulated time, the Company/Issuer will be under no obligation to pay any underwriting commission under this Agreement.

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Issue Management Agreements with:

i. BMSL Investment Limited & ii. IIDFC Capital Limited

Material parts of the agreements

Signing Date: With BMSL Investment Limited & IIDFC Capital Limited: November 02, 2017

Tenure: This Agreement shall be valid until completion of subscription of shares and unless this Agreement is extended or earlier terminated in accordance with the terms of this Agreement

Principal Terms and Condition:

(i) According to Article 2.2; the scope of the services to be rendered by the ISSUE MANAGER to the ISSUER under this agreement shall cover Regulatory Compliance, Underwriting Co-operation and after consent tasks.

(ii) According to Article 2.3; The ISSUE MANAGER takes the responsibility to take such

steps as are necessary to ensure completion of allotment and dispatch of letters of allotment and refund warrants to the applicants according to the basis of allotment approved by the Bangladesh Securities and Exchange Commission. The ISSUER undertakes to bear all expenses relevant to share application processing, allotment,

and dispatch of letters of allotment and refund warrant. The ISSUER shall also bear all expenses related to printing and issuance of share certificate and connected govt. stamps and hologram expenses.

(iii) According to Article 3.1; without prejudice ISSUER hereby declares that it agrees to

comply with all statutory formalities under Companies Act, Guidelines issued by Bangladesh Securities and Exchange Commission and other relevant status to enable it to make the issue.

(iv) According to Article 6.1; The ISSUE MANAGER hereby undertake to keep in strict

compliance all information (whether written or oral) proprietary documents and data secured in connection with or as a result of this Agreement (Confidential Information) and shall limit the availability of such information to employees, who have a need to see and use it for the express and limited purpose stated in this Agreement.

(v) According to Article 8.1; The Issuer and ISSUE MANAGER shall ensure compliance of

the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015, The Listing Regulations of Stock Exchanges, The Companies Act, 1994, the Securities and Exchange (Amendment) Act, 2012 and other relevant rules, regulations, practices, directives, guidelines etc.

(c) Fees payable to different parties

Sl. Name of the Parties Role Fees Payable

1


Underwriters 0.40% on 35% of the Total IPO amount (i.e. Tk. 420,000.00)

Sandhani Life Finance Limited

Asian Tiger Capital Partners Investments Limited

2 BMSL Investment Limited Issue

Manager 0.8333% of the public offer amount IIDFC Capital Limited

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CHAPTER (XIX): LITIGATIONS, FINE OR PENALTY

(a) The following litigations including outstanding litigations against the issuer or any of its directors and fine or penalty imposed by any authority: The issuer or any of its directors was not involved in any of the following type of legal proceedings mentioned below;

(i) Litigation involving Civil Laws (ii) Litigation involving Criminal Laws (iii) Litigation involving Securities, Finance and Economic Laws (iv) Litigation involving Labor Laws (v) Litigation involving Taxation (Income tax, VAT, Customs Duty and any other taxes or duties) (vi) Litigation involving any other Laws

(b) Cases including outstanding litigations filed by the Company or any of its directors:

There is no case including outstanding cases filed by the issuer or any of its directors to any of the following types of legal proceedings mentioned below;

(i) Litigation involving Civil Laws: No cases filed by the company or any of its directors. (ii) Litigation involving Criminal Laws: No cases filed by the company or any of its directors. (iii) Litigation involving Securities, Finance and Economic Laws: No cases filed by the

company or any of its directors. (iv) Litigation involving Labor Laws: No cases filed by the company or any of its directors. (v) Litigation involving Taxation (Income tax, VAT, Customs Duty and any other taxes or

duties): No cases filed by the company or any of its directors. (vi) Litigation involving any other Laws: No cases filed by the company or any of its directors.

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CHAPTER (XX): RISK FACTORS AND MANAGEMENT’S PERCEPTIONS ABOUT THE RISKS

(i) Internal risk factors may include, among others:

a) Credit Risk: This is the risk of default on a debt that may arise because of default by the borrower to pay the loan. In operating any business there is always credit risk lies in the business. As there is always lending and borrowing between parties in the form of money and goods.

Management Perception: Credit Risk mainly lies with Financial Institutions. Since Al-Faruque Bags Limited is involved in manufacturing and marketing of packaging products, there is no such credit risk. Regarding credit sales, company try to ensure credit policy so that operating cycle can be efficient comparing to other competitors.

b) Liquidity Risk: The risk that a company may be unable to meet short term financial demands.

This usually occurs due to the inability to convert its current assets to cash without a loss of capital or income. Liquidity is a common phenomenon of the business. Management Perception: Finance is an arts and science of managing fund so that it can manage working capital in efficient way. Al-Faruque Bags Limited is also doing its level best to manage working capital management in efficient way to maintain liquidity risk. Management is dealing with accounts payable, inventory and accounts receivable efficiently.

c) Risk associated with the issuer’s interest in subsidiaries, joint ventures and associates: If

the subsidiaries make loss, it affects parent company’s balance sheet. In case of associate, there is chance of decline value of investment in associate company. As for joint venture, A joint venture (JV) is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses and costs associated with it. Management Perception: Al-Faruque Bags Limited has no subsidiary, associate and joint venture.

d) Significant revenue generated from limited number of customers, losing anyone or more

of which would have a material adverse effect on the issuer: There is risk involved in having limited number of customer and losing of that particular customer has negative impact on company’s sales and cash flow as well. Management Perception: The Management is always keen to find out new buyers which boost up the sales. The company generates revenues from selling packaging products across the country. Hence, the company is not dependent on any particular or limited number of customers to operate our business.

e) Dependency on a single or few suppliers of raw materials, failure of which may affect

production adversely: There is also risk involved in having limited number of suppliers as well. Single or few suppliers may exploit the company by price hike, untimely delivery and low quality of product. Management Perception: In business, having many suppliers of raw materials helps to get competitive advantage of cheaper price of raw materials. Because, having many suppliers help to bargain with suppliers over price. In addition, having many suppliers helps to maintain doing business efficiently. As we hold the views, we are not dependent on a single or few suppliers. We have many suppliers from different countries that we have also mentioned in the prospectus.

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f) More than 20% revenue of the issuer comes from sister concern or associate or subsidiary: Having 20% revenue generation from sister concern or associate or subsidiary makes issuer dependent on others companies. Hence, there is dependency risk. Management Perception: We do not have any sister concerns and associate or subsidiary.

g) Negative earnings, negative cash flows from operating activities, declining turnover or

profitability, during last five years, if any: Negative earning and negative operating cash flow is risk the going concern risk for the entity.

Management Perception: We have been operating our business efficiently. We do not have any negative earning and negative cash flow from operation during last five years.

h) Loss making associate/subsidiary/group companies of the issuer: When associate/ subsidiary/group companies of the issuer are loss making, it affects the issuer and there is negative impact on cash flow of issuer and Balance Sheet as well.

Management Perception: We do not have any associate.

i) Financial weakness and poor performance of the issuer or any of its subsidiary or

associates: Financial weakness and poor performance of the issuer have negative impact on the company. As a result, it will be tough to pay loan interest, debt service and dividend. Future growth will be hampered.

Management Perception: Sales is one of the key indicators of success of a business if there is good margin of profit. Al-Faruque Bags Limited has been generating sales growth efficiently.

j) Decline in value of any investment: If investment value decline, it will reduce the profit and

assets as well.

Management Perception: We do not have investment.

k) Risk associated with useful economic life of plant and machinery, if purchased in second hand or reconditioned: There is obsolescence risk relating to plant and machinery. If the machinery is purchased in second hand or reconditioned, there high risk of repair and maintenance which has impact on profitability of the company. Management Perception: We have been using new branded machineries.

l) Adverse effect on future cash flow if interest free loan given to related party or such loans

taken from directors may recall: It is loan given and taken from related party and directors as well. If company gives such loan without interest to related party, there is interest burden for the company if the money was taken as loan. On the other hand, if such loan are taken from directors, it will have an impact on the cash flow to pay off the loan to the Directors. Management Perception: There is no as such loan given to related party or loan taken from directors.

m) Potential conflict of interest, if the sponsors or directors of the issuer are involved with one

or more ventures which are in the same line of activity or business as that of the issuer and if any supplier of raw materials or major customer is related to the same sponsors or directors: In these cases, there is high chance of compromise among the related companies because of conflict of Interest. Management Perception: There is no potential conflict of Interest as we do not have any venture which is in the same line of activity.

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n) Related party transactions entered into by the company those may adversely affect competitive edge: Related party transaction of the issuer creates conflict of interest which reduces the competitive advantage of the issuer. Management Perception: There is no as such transaction which may adversely affect competitive edge.

o) Any restrictive covenants in any shareholders' agreement, sponsors' agreement or any

agreement for debt or preference shares or any restrictive covenants of banks in respect of the loan/ credit limit and other banking facilities: All information must be known to the potential investor so that investor’s interest may not be hampered in future. So, any restrictive covenants, if it goes against potential investors, will make investors in jeopardy.

Management Perception: There are no restrictive covenants in any shareholders’ agreement, sponsors’ agreement or any agreement relating to debt or preference shares or any restrictive covenants of Banks in respect of loan or credit limit and other banking facilities.

p) Business operations may be adversely affected by strikes, work stoppages or increase in

wage demands by employees: In such case, company’s business operation will be hampered. Management Perception: We were used to with the political unrest for long time and our business industries are used to dealing with this phenomenon. We provide competitive wages among the competitors of us. In addition, there is government regulation of paying minimum wage. We comply with the rules.

q) Seasonality of the business of the issuer: It is the risk involving that company is not doing

business round the year. Management Perception: We manufacture and sell packaging products. We sell our products round the years.

r) Expiry of any revenue generating contract that may adversely affect the business: This is the risk of losing customers affecting future sales.

Management Perception: We do not have any revenue generating contract that may adversely affect the business.

s) Excessive dependence on debt financing which may adversely affect the cash flow: Excessive dependence on debt causes huge interest burden of the company and high risk of insolvency that may result in bankruptcy.

Management Perception: Company is not dependence on any excessive debt finance and debt equity ratio is less than 1.

t) Excessive dependence on any key management personnel absence of whom may have adverse effect on the issuer’s business performance: Excessive dependence on key management affects the business if the management is changed in future, which will create vacuum. Besides, if the key management personnel is of bad intention, excessive dependence will also affect the business.

Management Perception: Corporate Governance is well practiced in our company. We have also well-placed organogram in our company. Hence, any change in the key management can be replaced with other persons.

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u) Enforcement of contingent liabilities which may adversely affect financial condition: It is the future burden of liabilities that the investors will take on their shoulders. Contingent liabilities reduced the assets or create obligation to pay the liabilities.

Management Perception: We do not have any contingent liabilities which may adversely affect financial condition.

v) Insurance coverage not adequately protect against certain risks of damages: Insurance

ensures and protects to deal with uncertainty of future material loss/damage. So, insurance coverage is important for the business.

Management Perception: We have fire insurance is in place.

w) Absence of assurance that directors will continue its engagement with Company after expiry of lock in period: Directors run the company with the accumulated finance from public and other financing source. If directors discontinue running the business, there will be negative impact on business and share price as well. Management Perception: Our directors are involved in the business for long time and they will continue the business after expiry of lock in period.

x) Ability to pay any dividends in future will depend upon future earnings, financial

condition, cash flows, working capital requirements and capital expenditure: Dividend payment is highly dependent on company’s ability to generate profit. If company can not earn good amount of profit from operation, it is unlikely to pay dividend. Management Perception: We have been earning profit and a profitable entity. We are in belief that we will be able to pay dividend from our earning profit.

y) History of non-operation, if any and short operational history of the issuer and lack of adequate background and experience of the sponsors: If there is any non-operation of the company, it creates negative impression. Apart from this, short operation history indicates company is gathering knowledge and expertise to be competitive in the market. Management Perception: Such case did not happen in the history of our company.

z) Risks related to engagement in new type of business, if any: If it is new business, there is risk of viability of the new business.

Management Perception: There is no as such risk as we are not engaged in any new type of business.

aa) Risk in investing the securities being offered with comparison to other available investment options: If the issue price goes down after floating, there is investment risk for the potential investors.

Management Perception: We are profitable entity and our business growth will continue in longer period. It is not risky in investing securities in comparison with other available investment option.

bb) Any penalty or action taken by any regulatory authorities for non-compliance with provisions of any law: It creates a negative impression on the issuer. Management Perception: There are no as such issues arisen in the history of our company.

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cc) Litigations against the issuer for Tax and VAT related matters and other government claims, along with the disclosures of amount, period for which such demands or claims are outstanding, financial implications and the status of the case: It creates a negative impression on the issuer. Management Perception: No, we did not have any litigation relating to Tax, VAT or other government claims against of our company.

dd) Registered office or factory building or place of operation is not owned by the issuer:

Factory building should be owned by the company. Otherwise, there is risk of hike in factory rent in the years to come and threat of shifting the factory as well. Management Perception: Our registered office and Factory is situated at Santahar Road, Shikor, Narhatto, Kahaloo, Bogra. The factory is owned by us and corporate office, which is rented, is situated at Firoz Tower, 8th Floor (South Site), 152/3B, Bir Uttam Kazi Nurruzzaman Sarok, Green Road (Panthapath), Dhaka-1205.

ee) Lack of renewal of existing regulatory permissions/ licenses: In this case company is not following the law to renew its all licenses.

Management Perception: There is no such issue relating to lack of existing regulatory permissions/ licenses.

ff) Failure in holding AGM or declaring dividend or payment of interest by any listed securities of the issuer or any of its subsidiaries or associates: Failure in holding AGM or declaring dividend indicates the lack of compliance to the regulatory rules. Failure of payment of interest indicate the poor cash generation to the company to pay interest and debt service. The overall impression will be negative for the company. Management Perception: There is no incident of failure in holding AGM or declaring dividend or payment of interest by the issuers.

gg) Issuances of securities at lower than the IPO offer price within one year: The management

ultimate goal is to maximize the wealth of the company. If share price goes up, it maximizes wealth of the company. On the other hand, if share price goes down, it minimizes the wealth of the company. Management Perception: Al-Faruque Bags Limited has been profitable entity. It has potentiality to grow in future. We believe that our IPO offer price will not be lower within one year.

hh) Refusal of application for public issue of any securities of the issuer or any of its subsidiaries or associates at any time by the Commission: If any refusal happened in the above cases, it will create negative impression to the issuer. Management Perception: Such cases did not happen for our company and associates.

(ii) External risk factors may include among others:

a) Interest Rate Risks: When interest rate fluctuates, it causes interest risk. Companies who have debt financing are exposed to this risk highly. Management Perception: At current situation, interest is going up though there is pressure from our prime minister and Bangladesh Bank to reduce interest rate down to single digit to promote business. We are not dependent on debt and current debt in terms of interest is manageable.

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b) Exchange Rate Risks: Foreign exchange risk, also known as FX risk or currency risk is a financial risk that exists when a financial transaction is denominated in a currency other than that of the base currency of the company. This risk arises when investment's value changed due to the changes in currency exchange rates. Management Perception: In the context of Bangladesh, Garments and Textiles Industries is the driving force of economy. Bangladesh is the second largest apparel exporter in the world after China. In order to protect exchange risk Bangladesh Bank, for over the years, has done tremendous job to keep the exchange rate stable. Moreover, macro-economic variable which is beyond our control and exchange risk is adjusted with price.

c) Industry Risks: Industry risk is related with the factors affecting the company such as Raw Material, labor, demand of the product, government policy to the sector, competitor’s rivalry. Management Perception: Al-Faruque Bags Limited is aware of the above fact. Industry risk is inherent in any kind of business. At the moment industry is favoring for operating business.

d) Economic and Political risks: This risk can be described as the likelihood that an investment will be affected by macroeconomic conditions such as government regulation, exchange rates, or political stability. In other words, while financing a project, the risk that the output of the project will not produce adequate revenues for covering operating costs and repaying the debt obligations. In a nutshell, economic risk refers to the risk that a venture will be economically unsustainable due to various reasons. Management Perception: Bangladesh economy is enjoying 7% economic growth and expected economic growth by the government is 7.5%. As a result, huge development work is underway by the govt. Hence, huge expensive infrastructure has been under construction that will create employment and per capita income is going up as well. At current pace, it is likely that by 2020 our per capita income will cross the per capita income of India. As economy is expanding, so is our business viability and profitability. Political risks: Bangladesh experienced with political unrest for over the years. Political instability hampers the smooth operation of business.

Management Perception: Nowadays calm and serene atmosphere is prevailing in our country. There is no political chaos as was at the beginning of 2014. Government is industry friendly and trying to its level best to boost up economic activities in the country.

e) Market and Technology-related Risks; Market risks: Al-Faruque Bags Limited is operating in a free market economy regime. The company might have to face stiff competition from its competitors. Management perception: Market risk is dealt with efficiently by the experienced management. Technology-related risks: Technology always plays a vital role for each and every type of business. Innovation of new and cost-effective technology can increase productivity and reduce costs of production. On the other hand, obsolete technology may have a negative impact on the business. Management perception: Because of nature of the business Al-Faruque Bags Limited applies the latest technology to deal with its operation. If it does not use latest technology, it will not be able to cope with the competitors.

http://www.investopedia.com/terms/c/currency-exchange.asp

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f) Potential or existing government regulations: Potential or existing Govt. regulations may hamper the smooth operation of the industry. Management perception: We are enjoying good atmosphere in operating our business. Government regulations are favorable for the company.

g) Potential or existing changes in global or national policies: Policies from govt has a positive or negative impact on any company along with existing changes in globally. Management perception: Nowadays global and national policies do not change without prior notice. For potential changes in policies, local and global leaders consider different issues including industries opinion. We are optimistic that if any policies change unpredictably, we can improvise with new policies without hampering our smooth operation.

h) Statutory clearances and approvals those are yet to be received by the issuer: Statutory clearance and approval is imperative for any business to start off. There are many statutory clearances and approvals need by the regulatory authority in order to be monitored, controlled and guided. Management Perception: Al-Faruque Bags Limited has been running its business over the years. We have collected all the statutory clearance to operate our business. Hence, there are no as such risks for our Company.

i) Competitive condition of the business: Al-Faruque Bags Limited has been operating in a free market economy. The company has to face stiff competition from its competitors. Management Perception: Al-Faruque Bags Limited has been in the market over the years. We are doing our level best to be competitive with our competitors. Hence, there is always check and balance existed among the rivalry companies.

j) Complementary and supplementary products/services which may have an impact on business of the issuer: Complementary goods or services that are used in conjunction with another goods or services. Usually, the complementary goods have no value when consumed alone, but when combined with another good or service, it adds to the overall value of the offering. A product can be considered a complement when it shares a beneficial relationship with another product offering. Supplementary goods are two goods that are used together. For example, if we have a car, we also need petrol to run the car. Supplementary goods have a negative cross elasticity of demand. For instance, when price of petrol goes up, demand for petrol and cars goes down. Management Perception: The Company has not faced any challenges relating to supplementary and complementary products and Management are concerned with the issue. In future, if necessary, management may diversify the product to be competitive over the competitors.

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CHAPTER (XXI): DESCRIPTION OF THE ISSUE

(a) Issue Size: Tk. 300,000,000.00 (b) Number of securities to be issued;

The Company will offer 30,000,000 Ordinary Shares, of these 30,000,000 ordinary shares 40% (i.e. 12,000,000 Ordinary Shares) are reserved for Eligible Investor (EI) excluding mutual funds and CIS and 10% (i.e. 3,000,000 Ordinary Shares) are reserved for Mutual Funds and CIS and 40% (i.e. 12,000,000 Ordinary Shares) to General Public excluding NRB and ¶wZMÖ¯’ ¶z ª̀

wewb‡qvMKvix and remaining 10% (i.e. 3,000,000 Ordinary Shares) are reserved for NRB.

(c) Authorized capital and paid-up capital;

Particular Amount in Tk.

Authorized Capital 100,000,000 Ordinary Share of Tk.10.00 each 1,000,000,000.00

Issued, Subscribed and Paid up Capital Before IPO 48,000,000 Ordinary Shares of Taka 10.00 each 480,000,000.00

Initial Public Offering through Fixed Price Method 30,000,000 Ordinary Shares of Taka 10.00 each 300,000,000.00

Post IPO Paid up Capital 780,000,000.00

(d) Face value, premium and offer price per unit of securities;

Face value per Share Tk. 10.00 each

Premium -

Offer Price per Share Tk. 10.00 each

(e) Number of securities to be entitled for each category of applicants;

Category Particular Number of

Shares Issue Price per Share

Amount in Tk.

Eligible Investors (EIs)

40% of IPO i.e. 12,000,000 Ordinary Shares shall be reserved for Eligible Investor (EI) excluding mutual funds and CIS

12,000,000

10.00

120,000,000

10% of IPO i.e. 3,000,000 Ordinary Shares shall be reserved for Mutual Funds and CIS

3,000,000 30,000,000

General Public (GP)

40% of IPO i.e. 12,000,000 Ordinary Shares shall be reserved for General Public (GP) excluding NRB and ¶wZMÖ¯’ ¶z`ª wewb‡qvMKvix

12,000,000 120,000,000

10% of IPO i.e. 3,000,000 Ordinary Shares shall be reserved for Non-Resident Bangladeshis (NRB)

3,000,000 30,000,000

Total 30,000,000 300,000,000

(f) Holding structure of different classes of securities before and after the issue;

Sl. No. Category of Shareholders No. of Ordinary Shares Hold Percentage of Holding

Pre-IPO Post-IPO Pre-IPO Post-IPO

1 Director & Sponsor 24,100,000 24,100,000 50.21% 30.90%

2 Institutional 8,551,000 20,551,000 17.81% 26.35%

3 Mutual Funds and CIS - 3,000,000 0.00% 3.85%

4 Individual 15,349,000 27,349,000 31.98% 35.06%

5 Non Resident Bangladeshis (NRBs) - 3,000,000 0.00% 3.85%

Total 48,000,000 78,000,000 100.00% 100.00%

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(g) Objective of the issue including financing requirements and feasibility in respect of enhanced paid-up capital.

Proceeds from Initial Public Offering (IPO) will be used for acquisition of machinery & equipment, construction of building & other civil works, bank loan pay off and for IPO Expenses.

Use of Proceeds under:

The feasibility report in respect enhances paid up capital as prepared by A F M Alamgir, Chief Executive Partner, ARTISAN, Chartered Accountants is enclosed below:

Sl. Particulars Amount in Tk.

1 Acquisition of machinery and equipment 145,165,650

2 Construction of building & other civil works (2nd Floor of 4 Storied for 43,000 Sft each floor)

87,034,350

3 Bank loan (Long Term Loan) pay off 50,000,000

4 IPO Expenses 17,800,000

Total 300,000,000

Page: 133

Feasibility in respect of enhanced paid-up capital:

Statement of Financial Position (Projected) Amount in Taka

Particulars Audited Projected

31-Mar-18 30-Jun-18 30-Jun-19 30-Jun-20 30-Jun-21

PROPERTY & ASSETS:

Fixed Assets 458,646,712 438,922,946 631,741,856 732,856,243 680,741,858

Property, Plant & Equipment 458,646,712 438,922,946 631,741,856 732,856,243 680,741,858

Other & Non-Current Assets 447,928,102 456,759,601 242,253,277 249,246,777 301,968,663

Investment 30,562,700 30,562,700 30,562,700 30,562,700 30,562,700 Capital Work-In-Progress 417,365,402 426,196,901 211,690,577 218,684,077 271,405,963

Current Assets 400,947,567 438,482,143 502,197,886 872,854,613 987,427,735

Inventories 145,172,210 151,243,129 219,701,899 330,499,219 437,139,120 Trade Receivable 137,671,420 183,538,675 213,070,048 314,917,531 321,215,882 Advances, Deposits & Pre-Payments 51,887,080 56,005,225 51,339,806 70,807,338 76,515,044 Cash and Bank Balances 66,216,857 47,695,113 18,086,133 156,630,525 152,557,688

TOTAL PROPERTY & ASSETS 1,307,522,381 1,334,164,690 1,376,193,019 1,854,957,634 1,970,138,256

EQUITY & LIABILITIES:

Shareholders' Equity 749,916,847 763,809,617 836,394,681 1,255,760,113 1,393,164,980

Share Capital 480,000,000 480,000,000 480,000,000 780,000,000 780,000,000 Tax Holiday Reserve 96,110,705 96,110,705 96,110,705 96,110,705 96,110,705 Retained Earnings 173,806,142 187,698,912 260,283,976 379,649,408 517,054,275

Long Term Liabilities 143,333,969 142,512,361 126,286,915 54,198,678 38,286,642

Long Term Loan 133,890,090 133,890,090 112,961,090 42,032,090 29,148,711 Deferred Tax Liability 9,443,879 8,622,271 13,325,824 12,166,588 9,137,931

Current Liabilities 414,271,565 427,842,711 413,511,424 544,998,843 538,686,634

Current Portion of Long Term Loan 22,500,000 20,929,000 20,929,000 12,883,379 12,883,379 Trade Payable 2,405,241 2,663,865 3,006,141 3,126,387 2,306,928 Short Term Loan 281,227,761 277,026,137 261,056,320 391,584,480 395,500,325 Provision for Expenses 79,054,872 94,371,460 106,465,001 110,925,421 95,820,858 Provision for Income Tax 29,083,691 32,852,250 22,054,962 26,479,176 32,175,145

TOTAL EQUITY & LIABILITIES 1,307,522,381 1,334,164,690 1,376,193,019 1,854,957,634 1,970,138,256

Net Assets Value (NAV) per share 15.62 15.91 17.42 16.10 21.71

Page: 134

Statement of Comprehensive Income (Projected)

Amount in Taka

Particulars

Audited Projected

1 July 2017 To

31 March 2018

1 July 2017 To

30 June 2018

1 July 2018 To

30 June 2019

1 July 2019 To

30 June 2020

1 July 2020 To

30 June 2021

Export Sales 413,375,395 550,616,026 639,210,145 944,752,594 963,647,646 Less: Cost of Goods Sold 299,116,127 396,692,543 460,537,971 679,495,883 692,562,185

Gross Profit 114,259,268 153,923,483 178,672,174 265,256,712 271,085,462

Less: Operating Expenses: 18,910,466 24,479,617 31,332,705 53,529,906 40,697,277

Administrative Expenses 16,092,438 20,994,376 25,833,600 46,494,372 32,958,189 Selling & Distribution Expenses 2,818,028 3,485,242 5,499,105 7,035,534 7,739,087

Operating Profit 95,348,802 129,443,866 147,339,469 211,726,806 230,388,185

Add: Other Income 171,099 205,319 209,425 314,137 345,551

Less: Financial Expenses: 51,868,683 69,158,245 59,566,999 67,355,571 64,182,381

Financial Expenses 51,868,683 69,158,245 59,566,999 67,355,571 64,182,381

Profit before Income Tax 43,651,218 60,490,940 87,981,895 144,685,372 166,551,355

Less: Provision for Income Tax 7,638,963 10,585,914 15,396,832 25,319,940 29,146,487

Current Tax 7,893,124 11,661,684 10,693,278 26,479,176 32,175,145 Deferred Tax (254,161) (1,075,769) 4,703,554 (1,159,236) (3,028,657)

Total Comprehensive Income for the Period/Year

36,012,255 49,905,025 72,585,064 119,365,432 137,404,868

Earnings Per Share (EPS) 1.06 1.33 1.51 1.53 1.76

• Dividend is not considered

Page: 135

The assumptions for these projections are as follows: (Each year calculation is made comparing with respective previous year)

The projected financial statement has been prepared on underlying assumption

Assumption indicator

Assumption's Basis Assumptions Years

30-Jun-19 30-Jun-20 30-Jun-21

Capacity Increase

Capacity will be increased as new machineries will be introduced. 5% 15% 10%

Capacity Utilization

Capacity utilization will be increased for new machinery installation and efficient use of machinery.

80%-85% 86%-90% 90%-95%

Sales Revenue Increase

Sales will be increased for qualitative products by the increase of sales volume and unit price.

16.09% 47.80% 2.00%

Operating Expenses Increase/ (Decrease)

Operating expenses will be increased due to increase of production and sales. IPO expense will lead to the higher increase of Operating expenses in the year 2020. Expenses will be reduced in the year 2021 because of no IPO Expense in the year.

19.76% 68.19% -26.70%

Property, Plant and Equipment

Addition

Property, Plant and Equipment will be increased in every year for the purpose of production increase

238,051,057 234,464,400 75,215,099

Paid up Capital Increase

Paid up Capital will be increased by Tk. 300,000,000 through IPO in FY 2019-2020.

- 300,000,000 -

Dividend Dividend is not considered here as the decision is not predetermined.

- - -

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CHAPTER (XXII): USE OF PROCEEDS (a) Use of net proceeds of the offer indicating the amount to be used for each purpose with

head-wise break-up; Proceeds from Initial Public Offering (IPO) will be used for acquisition of machinery & equipment, construction of building & other civil works, bank loan pay off and for IPO Expenses.

Use of Proceeds under:

Details of acquisition of machinery and equipment:

A. Flexible Packaging unit:

Sl. Description Supplier and

Country of Origin Qty

Unit Price in US$

Total Price in US$

1

Multi-Layer Blown Film Plant POLYMMA, China 1 240,000 240,000

Model: JT3*70*QM2300

2 GFQ-800 Automatic Sealing & Cutting Machine

XINE, China 2 15,000 30,000

3 Automatic Bag Cutting & Sewing Machine

XINE, China 1 45,000 45,000

4

9 Color Rotogravure Printing M/C KUNRUN, China 1 750,000 750,000

Model: HTYJMD08-1000

Sub-total US$ 1,065,000

B. PP Woven Bag Unit:

WEAVING SECTION:

1

Circular Loom

LOHIA, India 8 15,000 120,000 Model: Nova-6

Model: LSL610HF

2 Circular Loom

LOHIA, India 4 30,000 120,000 Model: LSL620HF

3 Circular Loom

LOHIA, India 2 32,000 64,000 Model: LSL620HFR

4 Circular Loom

LOHIA, India 2 80,000 160,000 Model: Nova-10

PRINTING SECTION:

1 8 color Flexible Printing Machine

Olgar, China 1 62,000 62,000 Model: YT-81000

LINER SECTION:

1 Liner Folding Machine

Polymma, China 1 35,000 35,000 Model: ZDP1500

Sub-total US $ 561,000

Grand Total US $ (A+B) 1,626,000

Converting in Bangladesh currency @ Tk. 82.00, accumulated Total in BDT 133,332,000

ADD.: Erection, Installation, Commissioning & Trial Run Charges 11,833,650

Grand Total in BDT 145,165,650




87,034,350

3 Bank loan (Long Term Loan) pay off 50,000,000

4 IPO Expenses (Detailed breakdown of IPO expenses in page number 67-68) 17,800,000

Total 300,000,000

Page: 137

Details of construction of building & other civil works:

4 story FIBC factory building (2nd floor), 36,000 Sft

Description Amount in BDT.

i) Civil Work 68,893,781

ii) Electrical Work (15 % of Civil Work) 10,334,067

iii) Sanitary & Plumbing Work (8% of Civil Work) 5,511,502

iv) Fire Detection & Protection Work Purpose (L/S) 2,295,000

TOTAL 87,034,350

Details of Civil Work:

Sl. Description Unit Quantity Rate in BDT.

Amount in BDT.

1

Preparation & submission of implementation schedule to the Engineer for approval prior ground breaking showing the events (works) and successive sub-events of works including all the management progress of the whole works under contract)

L.S. 1 34998.0 34,998

2

Providing all necessary logistic support to frame monthly progress meeting between contractor/Contractor's representatives and Employer / Employer's representatives at the Engineer's office at site.

Month 6 2162.40 12,974

3

Providing Expertise Engineer having relevant experience(s) more than 10 years, for the project documentation, progress study & adjustment, preparation of project Material schedule and Testing schedule for approval etc. & jobs assigned by the HOPE or his official, at site (max man month not greater than 1/4th of Project duration & payment for the item subject to submission of CV & approved by approving authority)

Per Month

6 180000.00 1,080,000

4

Pick - up (double Cab) for transport of Test samples, work samples & emergency services etc. in/c fuel etc. (total usage not more than 1/6th of project duration.)

Per Month

1 78000.00 78,000

5

Mobilization and cleaning site before commencing actual physical work and during contract period and demobilization after completion of the Works under contract accepted by Engineer.

Sq. 3345.41 25.00 83,635

6

Brick works with 10 holes machine made bricks of approved size (9.5" x 4.5" x 2.75") having uniform colour carefully laid in cement sand (F.M. 1.2) mortar (1:4) in superstructure with uniform width and depth joints, true to vertical and horizontal lines including raking out joints, filling the interstices with mortar, cleaning and soaking bricks at least for 24 hours before use and washing and screening of sand, necessary scaffolding, curing at least for 7 days and

cum. 220.95 13140.00 2,903,283

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pointing with cement sand (F.M. 1.2) mortar (1:2) including cost of water, electricity and other charges etc. complete and accepted by the Engineer.(Cement: CEM-II/A-M)In ground floor

7

Providing 125 mm thick (Partition walls) brick work in superstructure brick work (1:4) in cement sand (F.M. 1.2) mortar with 10-hole machine made ceramic bricks of approved size having uniform colour, carefully laid in cement mortar and depth joints true to vertical and horizontal lines including. racking out joints, filling the interstices with same mortar, making bond with connected walls, cleaning, soaking brick at least 24 hours and washing of sand, curing 7 days in all floors, including cost of water, electricity and other charges accepted by the Engineer. (Cement: CEM-II/A-M) In ground floor

sqm 476.70 1800.00 858,060

8

38 mm thick artificial patent stone (1:1.5:3) flooring for roof with cement, best quality coarse sand (50% quantity of Sylhet sand or coarse sand of equivalent F.M. 2.2 and 50% best local sand of FM 1.2) and 12 mm down well graded stone chips, laying the concrete in alternate panels, compacting and finishing the top with neat cement and curing at least 7 days in all floors including cost of water, electricity and other charges etc. all complete and accepted by the Engineer.

sqm 3345.41 647.00 2,164,480

9

Minimum 12 mm thick cement sand (F.M. 1.2) plaster with neat cement finishing for roof (1:4) with cement up to 150 mm below ground level with neat cement finishing including washing of sand, finishing the edges and corners and curing at least for 7 days, cost of water, electricity and other charges etc. all complete.

sqm 3345.41 295.00 986,896

10

Minimum 12 mm thick cement sand (F.M. 1.2) plaster (1:4) with fresh cement to wall both inner-and outer surface, curing at least for 7 days, cost of water, electricity and other charges etc. all complete.

sqm 2063.00 257.00 530,191

11

Minimum 6 mm thick cement sand (F.M. 1.2) plaster (1:4) with fresh cement to ceiling R.C.C. columns, beams, surface of stair case, sunshades, cornices, railings, drop wall, louvers, etc. all complete.

sqm 6646.80 230.00 1,528,764

12

38 mm thick colored cladding work in facing on superstructure with (200 x 92 x 38) mm size concrete clad pasted with 20 mm thick cement mortar (1:4) to be placed at 6 mm apart, filling the interstices with same mortar, raking out joints and cutting the clad to required sizes wherever

sqm 1302.40 1476.00 1,922,342

Page: 139

necessary with high class recessed pointing, cleaning and washing of sand, necessary scaffolding, curing for min 3 (three) days on mortar joints by jute /brush in wet, followed by impervious /wet covering for another 4 (four) days etc. all complete for up to 4th floor accepted by the Engineer.

13.1

Supplying, fitting and fixing mirror polished homogeneous floor tiles (local made) with cement sand (F.M. 1.2) mortar (1:4) base and raking out the joints with white cement including cutting and laying the tiles in proper way and finishing with care etc. all complete and accepted by the Engineer.

13.1.0 GP (mirror polished) 600 x 600 mm floor tiles- 13mm Heavy Industrial Tiles

sqm 2898.41 2445.00 7,086,612

13.2

Supplying, fitting and fixing GP homogeneous stair tiles (local made) with cement sand (F.M. 1.2) mortar (1:4) base and raking out the joints with white cement including cutting and laying the tiles in proper way and finishing with care etc. all complete.

sqm 447.00 1843.00 823,821

13.3

Supplying, fitting and fixing glazed wall tiles (local made) with on 20 mm thick cement sand (F.M. 1.2) mortar (1:3) base and raking out the joints with white cement including cutting, laying and hire charge of machine and finishing with care etc.

13.3.0 Wall tiles more than 250x330 & less than 250x400 in sizes or equivalent

sqm 317.80 1607.00 510,705

14

Reinforced cement concrete works using steel shutter with minimum cement content relates to mix ratio 1:1.25:2.5 having minimum fact = 40 MPaand satisfying a specified compressive strength face = 32 MPa at 28 days best quality sand [50% quantity of best local sand (F.M. 1.2) and 50% quantity of Sylhet sand or coarse sand & curing at least for 28 days etc. all complete.

14.1 Pedestals, column capitals, lift walls, etc.

14.1.1 Concrete cum 205.50 13285.00 2,730,068

14.1.2 Formwork/shuttering, prop and necessary supports etc.

sqm 1027.50 448.00 460,320

14.2 Floor/ Roof Slab

14.2.1 Concrete cum 905.50 13487.00 12,212,479

14.2.2 Formwork/shuttering, prop and necessary supports etc.

sqm 5854.50 701.00 4,104,005

15

Supplying, fabrication and fixing to details as per design deformed bar reinforcement in concrete in accordance with BDS 1313: 1991 standard including straightening and cleaning rust, if any, bending and binding in position including supply of G.I. wires etc. complete in all respects and accepted by the Engineer.

Page: 140

15.0

500-grade (72.5 G) deformed bar with minimum fy = 500 MPa & tensile strength at least 560 MPa. Price considering straightening, fabrication, binding, and wastage.

Ton 205.00 105000.00 21,525,000

16

Supplying, fitting and fixing of Aluminum sliding doors & Windows as per supplied design & drawing including all accessories etc. all complete.

16.1 S.S colour sqm 386.8 4419.00 1,709,269

16.2

Supplying, fitting, fixing of Aluminum sliding fly proof Netting shutter as per the U.S. Architectural Aluminum Manufacturer’s Association (AAMA) standard specification having 1.2mm thick 38mm x 18mm aluminum outer frame, 1.2mm thick 38mm x 12mmmosquito net shutter frame (mesh section).All aluminum members (total weight 12.79 kg) will be anodized to aluminum SS/ bronze/silver colour with a coat not less than 15 micron in thickness and density of 4 mg per square cm etc. including all accessories like wheel, sealant, rubber, bolts and nuts keeping provision for fitting fiber mesh including labour charge for fitting of accessories, making grooves and mending good damages, carriage, and electricity complete in all respect as per drawing and accepted by the Engineer.

sqm 386.8 2483.00 960,424

17.1 Supplying and making door frames (Chowkat) for etc. complete and accepted by the Engineer

17.1.0 Shilkarai cum 1.06 190912.00 202,939

17.2

Supplying, fitting and fixing 38 mm thick well matured, seasoned (min 10" wide plank) solid wood single leaf door shutter nickel plated handle, hinged cleats, buffer blocks and finished by sand papering etc. all complete and accepted by the Engineer. (All sizes of wood are finished)

17.2.0 ChittagongTeak sqm 26.02 13589.00 353,586

17.3

Supplying, fitting and fixing of made in hydraulic door closer (big size) including all necessary tools and accessories etc. all complete approved and accepted by the Engineer.

each 10.00 3025.00 30,250

17.4 Supplying, fitting and fixing MORTICE door lock approved and accepted by the Engineer.

each 10.00 1944.00 19,440

17.5

Supplying, fitting and fixing of best quality magnetic door shock absorber including all necessary tools and accessories etc. all complete approved and accepted by the Engineer

each 20.00 326.50 6,530

17.6 Supplying, fitting and fixing best quality heavy type 19 mm dia and to 300 mm long brass hasp bolt including cutting grooves in

each 10.00 484.00 4,840

Page: 141

door shutter and frames, screws etc. all complete approved and accepted by the Engineer.

18

Supplying, fitting and fixing window grills made of 16 mm dia M.S. rod @ 100 mm c/c fitted with 3 (three) Nos. horizontal M.S. flat bar (38 x 6 mm) including fabrication, welding, riveting, cost of electricity, workshop charges, carriage, fixing with pre-placed clamps in walls/RCC member for all floors etc. complete and accepted by the Engineer. (Total weight per sqm should be approx. 22.8 kg and add or deduct @ Tk. 35.00 for each kg excess or less respectively)

sqm 386.80 2593.00 1,002,972

19

Supplying, fitting and fixing stainless steel (SS) stair railing of standard height with 2 mm thick 2.5” dia pipe for hand-rail as per drawing and accepted by the Engineer.

sqm 53.60 8410.00 450,776

20.1

Painting to door and window frames and shutters in two coats with approved best quality and colour of synthetic enamel paint applied by brass/roller/spray over a coat of priming elapsing time for drying including charges etc. all complete in all floors approved and accepted by the Engineer.

sqm 1043.10 219.60 229,065

20.2

On exterior surface applying as per manufacturer instructions 3 coat of weather coat of approved quality and colour delivered from authorized local agent of the manufacturer in a sealed container complete in all respect in all floors and accepted by the Engineer.

sqm 1060.00 227.00 240,620

20.3

Plastic emulsion paint of approved best quality and colour delivered from authorized local agent of the manufacturer in a sealed container, applying to wall and ceiling in two coats over lime putty of specified brand applied on primer or sealer elapsing specified time for drying/recoating including cleaning drying, making free from dirt, grease, wax, removing all chalked and scaled materials, fungus, mending good the surface defects, sand papering the surface and necessary scaffolding, spreading by brush/roller/spray etc. all complete in all floors accepted by the Engineer.

sqm 7722.40 265.00 2,046,436

Total Amount 68,893,781

Page: 142

(b) Utilization of the total amount of paid-up capital and share premium, if any, including the sponsors’ contribution and capital raised of the issuer at the time of submission of prospectus, in details with indication of use of such funds in the financial statements; Tk. 10,000,000.00 (One Crore), Tk. 80,000,000.00 (Eight Crore) through other than cash (bonus), Tk. 8,000,000.00 (Eighty Lac) and Tk. 382,000,000.00 (Thirty-Eight Crore Twenty Lac) totaling Tk. 480,000,000.00 (Forty-Eight Crore) has been raised prior to the public issue on dated December 03, 2007, February 06, 2017, February 09, 2017 and December 12, 2017 respectively. This fund has already been deployed by the issuer in the following manner:

Accounting Year

Items Amount in

BDT Reflected in Cash Flows

2008 Acquisition of

Property, Plant & Equipment

10,000,000 In the statement of Cash Flows, the figure is included in total amount of fixed assets acquisition under the head of Investing Activities.

2014-15 Acquisition of Fixed Assets


2015-16

Acquisition of Property,

Plant & Equipment 20,000,000

In the statement of Cash Flows, the figure is included in total amount of fixed assets acquisition under the head of Investing Activities.

Capital Work -In-Progress

28,130,000 In the statement of Cash Flows, the figure is included in total amount of Capital Work in Progress under the head of Investing Activities.

2016-17

Acquisition of Fixed Assets




1.07.17 - 31.03.18



Cash & cash equivalent

64,804,752

The figure is shown in financial statements under the head of cash & cash equivalent which has kept in the bank account as cash deposit & FDR form in favor of the Company.

Total 400,000,000

(c) If one of the objects is an investment in a joint venture, a subsidiary, an associate or any

acquisition, details of the form of investment, nature of benefit expected to accrue to the issuer as a result of the investment, brief description of business and financials of such venture; The Company has no objects to investment in such type of ventures by using Use of IPO proceeds.

(d) If IPO proceeds are not sufficient to complete the project, then source of additional fund must be mentioned. In this connection, copies of contract to meet the additional funds are required to be submitted to the Commission. The means and source of financing, including details of bridge loan or other financial arrangement, which may be repaid from the proceeds of the issue along with utilization of such funds; IPO proceeds are not sufficient to complete the project.

Page: 143

(e) A schedule mentioning the stages of implementation and utilization of funds received through public offer in a tabular form, progress made so far, giving details of land acquisition, civil works, installation of plant and machinery, the approximate date of completion of the project and the projected date of full commercial operation etc. The schedule shall be signed by the Chief Executive Officer or Managing Director, Chief Financial Officer and Chairman on behalf of Board of Directors of the issuer;

Sl. No.

Projects Progress made so Far Approximate date of Completion of

the projects

Projected date of full commercial operation

1 Land Acquisition No land is required to be acquired

- -

2

Acquisition and Installation of Machineries and Equipment’s

Acquisition and Installation of Machineries and Equipments will be started after receiving of IPO fund

Within 18 months after receiving IPO

fund

Within 3 months of

the completion

of the project

3 Civil Construction Construction & other civil works will be started after receiving of IPO fund

Sd/- Md. Redwanul Kabir Chowdhury Managing Director


Chief Financial Officer

Sd/- Chowdhury Al-Faruque

Chairman,

On behalf of Board

(f) If there are contracts covering any of the activities of the issuer for which the proceeds of sale of securities are to be used, such as contracts for the purchase of land or contracts for the construction of buildings, the issuer shall disclose the terms of such contracts, and copies of the contracts shall be enclosed as annexure to the prospectus; There is no contract yet to be engaged by the Company.

(g) If one of the objects of the issue is utilization of the issue proceeds for working capital, basis

of estimation of working capital requirement along with the relevant assumptions, reasons for raising additional working capital substantiating the same with relevant facts and figures and also the reasons for financing short with long term investments and an item-wise break-up of last three years working capital and next two years projection; No objects of the issue are utilization of the issue proceeds for working capital.

(h) Where the issuer proposes to undertake one or more activities like diversification,

modernization, expansion, etc., the total project cost activity-wise or project-wise, as the case may be; The Company has planned to expand its existing projects by Acquisition of Machineries and Equipments and Civil Construction, which have been mentioned in Use of IPO proceeds and projects Implementation schedule.

(i) Where the issuer is implementing the project in a phased manner, the cost of each phase,

including the phases, if any, which have already been implemented; The Company has planned to implement to the existing projects by using IPO proceeds after receiving the funds, which have been mentioned in Use of IPO proceeds and projects Implementation schedule.

Page: 144

(j) The details of all existing or anticipated material transactions in relation to utilization of the issue proceeds or project cost with sponsors, directors, key management personnel, associates and group companies; There is no existing or anticipated material transaction in relation to utilization of the issue proceeds or project cost with sponsors, directors, key management personnel, associates and group companies.

(k) Summary of the project appraisal or feasibility report by the relevant professionals not

connected with the issuer, issue manager and registrar to the issue with cost of the project and means of finance, weaknesses and threats, if any, as given in the appraisal or feasibility report.

Feasibility Report of Al-Faruque Bags Limited

Executive Summary The Company's main business is to manufacture of different types of PP Woven Bag, High Density Poly Ethylene (HDPE) Bag, Low Density Poly Ethylene (LDPE) Bag, Liner, Garments poly and selling them to export oriented Companies as deemed export and direct exporting to the international market. Currently, AFBL has decided to go for Initial Public Offerings and this feasibility study is prepared for the utilization plan of the IPO proceedings. Some projections regarding profitability and other financial issues are analyzed. AFBL has made projections of Statement of Financial Position, Statement of Comprehensive Income and Statement of Cash Flows for the upcoming three reporting years. This Feasibility Report discusses and shows the various aspects of Expansion Program of Al Faruque Bags Limited (AFBL). Introduction Al-Faruque Bags Limited, (AFBL) is located at Santahar Road, Shikor, Narhatto, Kahaloo, Bogra-5870, Bangladesh which is very near to Bogra City. AFBL is an ISO 9001:2015 QMS certified company. It is endeavoring to translate its dream of becoming one of the leaders by manufacturing superior quality packaging products using the best technologies and materials. AFBL’s products have already won the hearts of the thousands of consumers in Bangladesh for their outstanding designs, uncompromising quality and affordable prices. It has now become a trusted brand name in Bangladesh. AFBL was incorporated as a Private Limited Company on 3rd December 2007 and subsequently converted into a Public Limited Company on 15th January, 2018 under Companies Act 1994 with the Registrar of Joint Stock Companies and Firms, Dhaka, Bangladesh. The Certificate of Incorporation number is Raj-C-446/2007. The Company started its commercial operation on 1st March, 2010. There is no subsidiary company of AFBL. Location of the Factory AFBL’s registered office and Factory is situated at Santahar Road, Shikor, Narhatto, Kahaloo, Bogra-5870, Bangladesh and corporate office is situated at Firoz Tower, 8th Floor (South Site), 152/3B, Bir Uttam Kazi Nurruzzaman Sarok, Green Road (Panthapath), Dhaka-1205. Plant, machinery, technology, process Plant: AFBL is vertically integrated generic plastic packaging formulation products manufacturer, marketer, promoter and supplier. There is integrated Building Management System, structural design, dust-free environment, fire management system.

Page: 145

Machinery: The company set up the sophisticated and high speed machineries to ensure smooth and quality based production. There is included sophisticated Tape Line machine, high speed Circular Weaving Machine, Automatic Bag Conversion machine, Film Blowing Machine, Lamination machine and more other relevant machineries. Technology: The Company has been using Extrusion, Printing & Packaging Technology. Plastics extrusion is a high-volume manufacturing process in which raw plastic is melted & formed and Rotogravure Printing technology. Its manufacturing process heavily integrated technology driven, dynamic in nature and using highly sophisticated state-of-the–art cutting edge technology. Process: AFBL maintains total quality system which includes strict monitoring, process to process regulation, true measurement, equipment calibration.

Principal products of the Company Al-Faruque Bags Limited is engaged in manufacturing different types of PP Woven Bags, Poly Ethylene including HDPE, LDPE, BOPP, Shopping bag and liner. Market for Products: Al Faruque Bags Limited is 100% export oriented plastic packaging industry. AFBL produces its goods on receiving the order from its customers and supply to the customer’s destination as per their requirements. Utilities Considerations Power: Electricity connection has been taken from Power Development Board (PDB), Bogra having a capacity of 2,000 KVA. A diesel generator having capacity of 110 KVA will act as alternative power supply.

Gas: No need for production.

Water: At different stages throughout the production process in AFBL there requires water which is collected from deep tubewell.

Methodology We have considered the historical data of last couple of year’s revenue and expenses of the company. We have also talked with the staffs. The interviews provided us with the relevant information concerning all aspects sales and expenses. The responses to these open-ended questions have allowed us to have a greater depth of knowledge into their opinions and so we were able to address them to the best of our ability. A lot of time was spent working on the interviews; also that each had a different idea that is important to the effects of the implementation of sales growth and enough background information was included. Once we have compiled and analyzed all data and research us as a group, look at all the different options of implementing the living wall and then decide on the best option of the sales, current and future market and saleable capacity in near future.

Page: 146

Financial Projections The financial projections for Al-Faruque Bags Ltd. (AFBL) are highlighted in the table below. These figures account for projected productions, sales and additional requirements. There are many ways to present these projections. The assumptions for these projections are as follows: (Each year calculation is made comparing with respective previous year)

The projected financial statement has been prepared on underlying assumption

Assumption indicator

Assumption's Basis Assumptions Years

30-Jun-19 30-Jun-20 30-Jun-21

Capacity Increase

Capacity will be increased as new machineries will be introduced. 5% 15% 10%

Capacity Utilization

Capacity utilization will be increased for new machinery installation and efficient use of machinery.

80%-85% 86%-90% 90%-95%

Sales Revenue Increase

Sales will be increased for qualitative products by the increase of sales volume and unit price.

16.09% 47.80% 2.00%

Operating Expenses Increase/ (Decrease)

Operating expenses will be increased due to increase of production and sales. IPO expense will lead to the higher increase of Operating expenses in the year 2020. Expenses will be reduced in the year 2021 because of no IPO Expense in the year.

19.76% 68.19% -26.70%

Property, Plant and Equipment

Addition

Property, Plant and Equipment will be increased in every year for the purpose of production increase

238,051,057 234,464,400 75,215,099

Paid up Capital Increase

Paid up Capital will be increased by Tk. 300,000,000 through IPO in FY 2019-2020.

- 300,000,000 -

Dividend Dividend is not considered here as the decision is not predetermined.

- - -

Page: 147

Statement of Financial Position (Projected)

Particulars Audited Projected

31-Mar-18 30-Jun-18 30-Jun-19 30-Jun-20 30-Jun-21

PROPERTY & ASSETS:

Fixed Assets 458,646,712 438,922,946 631,741,856 732,856,243 680,741,858

Property, Plant & Equipment 458,646,712 438,922,946 631,741,856 732,856,243 680,741,858

Other & Non-Current Assets 447,928,102 456,759,601 242,253,277 249,246,777 301,968,663

Investment 30,562,700 30,562,700 30,562,700 30,562,700 30,562,700 Capital Work-In-Progress 417,365,402 426,196,901 211,690,577 218,684,077 271,405,963

Current Assets 400,947,567 438,482,143 502,197,886 872,854,613 987,427,735

Inventories 145,172,210 151,243,129 219,701,899 330,499,219 437,139,120 Trade Receivable 137,671,420 183,538,675 213,070,048 314,917,531 321,215,882 Advances, Deposits & Pre-Payments 51,887,080 56,005,225 51,339,806 70,807,338 76,515,044 Cash and Bank Balances 66,216,857 47,695,113 18,086,133 156,630,525 152,557,688

TOTAL PROPERTY & ASSETS 1,307,522,381 1,334,164,690 1,376,193,019 1,854,957,634 1,970,138,256


Shareholders' Equity 749,916,847 763,809,617 836,394,681 1,255,760,113 1,393,164,980

Share Capital 480,000,000 480,000,000 480,000,000 780,000,000 780,000,000 Tax Holiday Reserve 96,110,705 96,110,705 96,110,705 96,110,705 96,110,705 Retained Earnings 173,806,142 187,698,912 260,283,976 379,649,408 517,054,275

Long Term Liabilities 143,333,969 142,512,361 126,286,915 54,198,678 38,286,642

Long Term Loan 133,890,090 133,890,090 112,961,090 42,032,090 29,148,711 Deferred Tax Liability 9,443,879 8,622,271 13,325,824 12,166,588 9,137,931

Current Liabilities 414,271,565 427,842,711 413,511,424 544,998,843 538,686,634

Current Portion of Long Term Loan 22,500,000 20,929,000 20,929,000 12,883,379 12,883,379 Trade Payable 2,405,241 2,663,865 3,006,141 3,126,387 2,306,928 Short Term Loan 281,227,761 277,026,137 261,056,320 391,584,480 395,500,325 Provision for Expenses 79,054,872 94,371,460 106,465,001 110,925,421 95,820,858 Provision for Income Tax 29,083,691 32,852,250 22,054,962 26,479,176 32,175,145

TOTAL EQUITY & LIABILITIES 1,307,522,381 1,334,164,690 1,376,193,019 1,854,957,634 1,970,138,256

Net Assets Value (NAV) per share 15.62 15.91 17.42 16.10 21.71

Page: 148

Statement of Comprehensive Income (Projected)

Particulars

Audited Projected

1 July 2017 To

31 March 2018

1 July 2017 To

30 June 2018

1 July 2018 To

30 June 2019

1 July 2019 To

30 June 2020

1 July 2020 To

30 June 2021

Export Sales 413,375,395 550,616,026 639,210,145 944,752,594 963,647,646 Less: Cost of Goods Sold 299,116,127 396,692,543 460,537,971 679,495,883 692,562,185

Gross Profit 114,259,268 153,923,483 178,672,174 265,256,712 271,085,462

Less: Operating Expenses: 18,910,466 24,479,617 31,332,705 53,529,906 40,697,277

Administrative Expenses 16,092,438 20,994,376 25,833,600 46,494,372 32,958,189 Selling & Distribution Expenses 2,818,028 3,485,242 5,499,105 7,035,534 7,739,087

Operating Profit 95,348,802 129,443,866 147,339,469 211,726,806 230,388,185

Add: Other Income 171,099 205,319 209,425 314,137 345,551

Less: Financial Expenses: 51,868,683 69,158,245 59,566,999 67,355,571 64,182,381

Financial Expenses 51,868,683 69,158,245 59,566,999 67,355,571 64,182,381

Profit before Income Tax 43,651,218 60,490,940 87,981,895 144,685,372 166,551,355

Less: Provision for Income Tax 7,638,963 10,585,914 15,396,832 25,319,940 29,146,487

Current Tax 7,893,124 11,661,684 10,693,278 26,479,176 32,175,145 Deferred Tax (254,161) (1,075,769) 4,703,554 (1,159,236) (3,028,657)


36,012,255 49,905,025 72,585,064 119,365,432 137,404,868

Earnings Per Share (EPS) 1.06 1.33 1.51 1.53 1.76

• Dividend is not considered

Page: 149

Statement of Cash Flows (Projected)

Particulars

Amount in Taka 31-Mar-18 30-Jun-18 30-Jun-19 30-Jun-20 30-Jun-21

Audited Projected

CASH FLOWS FROM OPERATING ACTIVITES:

Cash received from Customers & others 441,560,962 532,968,558 609,888,197 843,219,249 957,694,847

Cash payment to suppliers, employees and others (315,712,193) (404,380,085) (481,249,381) (735,009,426) (725,055,285)

Cash paid for Income Tax (3,389,729) (4,030,780) (25,759,783) (14,867,873) (28,913,823)

Net cash generated from operating activities 122,459,040 124,557,692 102,879,033 93,341,950 203,725,739

CASH FLOWS FROM INVESTING ACTIVITES:

Paid for acquisition of Fixed Assets (26,064,301) (239,233) (13,561,057) (206,248,800) (31,592,506)

Land purchases (541,300) (885,868) (60,874) (2,459,297) -

Investment (970,000) (970,000) - - -

Capital Work-in-Progress (252,702,062) (289,376,645) (31,253,521) (33,756,128) (87,124,486)

Net cash used in investing activities (280,277,663) (291,471,746) (44,875,452) (242,464,225) (118,716,993)

CASH FLOWS FROM FINANCING ACTIVITES:

Cash paid for Financial Expenses (23,725,017) (27,378,704) (50,713,744) (63,886,873) (80,114,049)

Short term bank loan received/(paid) 7,838,754 3,637,130 (15,969,817) 130,528,160 3,915,845

Long term bank loan received/(paid) 179,862 (1,391,138) (20,929,000) (78,974,621) (12,883,379)

Proceeds from Share Capital 232,000,000 232,000,000 - 300,000,000 -

Net cash provided by financing activities 216,293,599 206,867,288 (87,612,561) 287,666,666 (89,081,583)

Net Increase/ (Decrease) in cash & cash equivalents 58,474,977 39,953,233 (29,608,980) 138,544,391 (4,072,836.67)

Cash & Cash equivalents at the beginning of the period 7,741,880 7,741,880 47,695,113 18,086,133 156,630,525

Cash & Cash equivalents at the end of the period 66,216,857 47,695,113 18,086,133 156,630,525 152,557,688

Page: 150

Cost of the Project The cost of the expansion project is as follows:

Means of Finance The project will be financed through using IPO proceeds. Weaknesses:

1. Untrained workers: We have huge manpower in the industry. It is good for their business.

However, they are mostly unskilled that reduced the high productivity of manpower.

Threat:

1. Intense Competition: There is rivalry among the competitors to get the market share as maximum as possible.

2. Power Supply: We have power supply shortage in our country. For business expansion we need continuous power supply, particularly electricity supply which is important for the industry.

Conclusion The feasibility of the project has been conducted and analyzed from the viewpoint of marketing, financial, management & economic aspects and found to be worthwhile. The projected financial results and the profitability estimated based on historical data shows that the project is viable and lucrative. This projection will help the interested parties to have an idea over the Al-Faruque Bags Limited (AFBL).

Sd/-

AFM Alamgir Chief Executive Partner


Date: June 03, 2018




87,034,350

Total 232,200,000

Page: 151

CHAPTER (XXIII): LOCK-IN (a) Ordinary shares of the issuer shall be subject to lock-in, from the date of issuance of prospectus or commercial operation, whichever comes later, in the

following manner: (1) All shares held, at the time of according consent to the public offer, by sponsors, directors and shareholders holding ten percent (10%) or more

shares, other than alternative investment funds, for 03(three) years. (2) In case any existing sponsor or director of the issuer transfers any share to any person, other than existing shareholders, all shares held by those

transferee shareholders, at the time of according consent to the public offer, for 03 (three) years. (3) Twenty five percent (25%) of the shares allotted to eligible investors, for 06 (six) months and other twenty five percent (25%) of the shares allotted

to them, for 09 (nine) months. (4) All shares held by alternative investment funds, at the time of according consent to the public offer, for 01 (one) year. (5) All shares held, at the time of according consent to the public offer, by any person other than the persons mentioned in sub-rules (1), (2) and (3)

above, for 01 (one) year. (b) The following table indicates the Lock-In status of the shareholders of Al-Faruque Bags Limited:

Sl. Name of Shareholder Position No. of Share (%) BO ID Date of

1st acquisition Lock-in period*

1 Chowdhury Al-Faruque Chairman 2,700,000 5.63% 1201950064693981 3-Dec-07 3 Yrs.

2 Md. Redwanul Kabir Chowdhury Managing Director

& Director 12,400,000 25.83% 1201950064693949 3-Dec-07 3 Yrs.

3 Mst. Nimme Kabir Chowdhury Director 3,900,000 8.13% 1201950064693957 3-Dec-07 3 Yrs.

4 Al-Faruque Flour Mills Ltd. Director 5,100,000 10.63% 1201950064695640 9-Feb-17 3 Yrs.

5 Md. Farid Ahmed Shareholder 1,040,000 2.17% 1604940047346138 9-Feb-17 1 Yr.

6 Mohammad Mokarom Hossain Shareholder 300,000 0.63% 1604940047359958 9-Feb-17 1 Yr.

7 Mohammed Ziaul Hossain Shareholder 400,000 0.83% 1604940058412680 9-Feb-17 1 Yr.

8 Mohammad Didarul Alam Shareholder 100,000 0.21% 1604940047359941 9-Feb-17 1 Yr.

9 Md. Anwar Latif Khan Shareholder 100,000 0.21% 1202830031496575 9-Feb-17 1 Yr.

10 Md. Zillur Rahman Mridha Shareholder 100,000 0.21% 1604940056385728 9-Feb-17 1 Yr.

11 Asraf Uddin Ahmed Shareholder 200,000 0.42% 1203110060936141 9-Feb-17 1 Yr.

12 Mostafa Kamal Ahmed Shareholder 200,000 0.42% 1203110052459838 9-Feb-17 1 Yr.

13 Shireen Akter Karim Shareholder 200,000 0.42% 1203110061206516 9-Feb-17 1 Yr.

14 Lutfur Rahman Shareholder 200,000 0.42% 1604940036835032 9-Feb-17 1 Yr.

Page: 152

15 Md. Abdur Rashed Shareholder 80,000 0.17% 1604940047376959 9-Feb-17 1 Yr.

16 Rafiqul Anowar Shareholder 300,000 0.63% 1201890000119342 9-Feb-17 1 Yr.

17 Md. Golam Sarwar Bhuiyan Shareholder 100,000 0.21% 1202550061178900 9-Feb-17 1 Yr.

18 Mohammad Shofiqul Islam Shareholder 80,000 0.17% 1203630052555496 9-Feb-17 1 Yr.

19 Abaci Investment Limited Shareholder 1,000 0.00% 1602770045524684 9-Feb-17 1 Yr.

20 M Shefaque Ahmed Shareholder 500 0.00% 1602770045524684 9-Feb-17 1 Yr.

21 Ali Noor Shareholder 1,000 0.00% 1201580000665844 9-Feb-17 1 Yr.

22 Farmers Hopes Limited Shareholder 500,000 1.04% 1605860064386069 9-Feb-17 1 Yr.

23 Md. Habibur Rahman Sikder Shareholder 550,000 1.15% 1203040045061772 9-Feb-17 1 Yr.

24 Horipur Feed Ltd. Shareholder 500,000 1.04% 1203040062596431 9-Feb-17 1 Yr.

25 Ruma Akter Shareholder 200,000 0.42% 1202020053784037 9-Feb-17 1 Yr.

26 Shakil Mahmud Shareholder 250,000 0.52% 1605550062101886 9-Feb-17 1 Yr.

27 Md. Abdul Halim Shareholder 10,000 0.02% 1201950064840432 9-Feb-17 1 Yr.

28 Al-Faruque Feed Mills Ltd. Shareholder 2,487,500 5.18% 1201950064695849 9-Feb-17 1 Yr.

29 Nawroz Kabir Chowdhury Shareholder 2,000,000 4.17% 1201950064694068 9-Feb-17 1 Yr.

30 Nawshin Binte Kabir Chowdhury Shareholder 2,000,000 4.17% 1201950064694051 9-Feb-17 1 Yr.

31 A K M Shamsuzzoha Shareholder 2,000,000 4.17% 1201950064694041 9-Feb-17 1 Yr.

32 BLI Capital Limited Shareholder 4,750,000 9.90% 1605650050408172 12-Dec-17 1 Yr.

33 Tamanna Ahmed Shareholder 125,000 0.26% 1202120044226209 12-Dec-17 1 Yr.

34 Marzina Akter Shareholder 125,000 0.26% 1201830064495635 12-Dec-17 1 Yr.

35 Md. Borhan Uddin Shareholder 50,000 0.10% 1205000045087327 12-Dec-17 1 Yr.

36 Syed Golam Wadud Shareholder 100,000 0.21% 1203180004740195 12-Dec-17 1 Yr.

37 Asim Kumar Mondal Shareholder 100,000 0.21% 1201830058165521 12-Dec-17 1 Yr.

38 Mohammad Saidul Hossain Shareholder 150,000 0.31% 1204410048555552 12-Dec-17 1 Yr.

39 Fareast Islami Life Insurance Co. Ltd. Shareholder 2,000,000 4.17% 1205790011903928 12-Dec-17 1 Yr.

40 Khaled Ishtiaq Nadim Shareholder 80,000 0.17% 1201560018522942 12-Dec-17 1 Yr.

41 Rowson Ara Sumi Shareholder 150,000 0.31% 1201830053881757 12-Dec-17 1 Yr.

42 Bangladesh Finance and Investment Co. Ltd. Shareholder 300,000 0.63% 1205150002440950 12-Dec-17 1 Yr.

43 City General Insurance Company Ltd. Shareholder 500,000 1.04% 1205150028332076 12-Dec-17 1 Yr.

44 BD Finance Capital Holdings Ltd. Shareholder 500,000 1.04% 1205150045165228 12-Dec-17 1 Yr.

45 BD Finance Securities Ltd. Shareholder 500,000 1.04% 1205150043284418 12-Dec-17 1 Yr.

46 Milton Kumar Roy Shareholder 50,000 0.10% 1201910000037197 12-Dec-17 1 Yr.

47 Rowshan Ara Begum Shareholder 520,000 1.08% 1201950064693965 12-Dec-17 1 Yr.

Total 48,000,000 100.00%

[From the issue date of Prospectus]

Page: 153

CHAPTER (XXIV): MARKETS FOR THE SECURITIES BEING OFFERED Stock Exchanges: The issuer shall apply to the following bourses for listing shares within 7 (seven) working days from the date of consent accorded by the Commission to issue the prospectus:

Dhaka Stock Exchange Limited (DSE)

9/F, Motijheel C/A, Dhaka‐1000; and

Chittagong Stock Exchange Limited (CSE) CSE Building, 1080 Sheikh Mujib Road, Chittagong.

Declaration about Listing of Shares with Stock Exchanges: None of the Stock Exchanges, if for any reason, grant 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 exchange, 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 managers, 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. Trading and Settlement; Trading and Settlement Regulation of the stock exchanges will apply in respect of trading and settlement of the shares of the Company. THE ISSUE SHALL BE PLACED IN “N” CATEGORY

Page: 154

CHAPTER (XXV): DESCRIPTION OF SECURITIES OUTSTANDING OR BEING OFFERED (a) Dividend, voting and preemption 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 of Association of the company. All Shareholders shall have the usual voting rights 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 presents 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 BSEC from time to time.

(b) 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.

(c) Dividend policy;

i. 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.

ii. 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.

iii. 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.

iv. 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.

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

vi. No limitation in payment of dividend is stipulated in any debt instrument or otherwise. (d) Other rights of the securities holders;

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 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.

Page: 155

CHAPTER (XXVI): FINANCIAL STATEMENTS (a) The latest financial statements prepared and audited by the Commission’s panel auditors in

adherence to the provisions of the Securities and Exchange Rules, 1987, the †Kv¤úvwb AvBb,

1994, International financial Reporting and Auditing Standards as adopted in Bangladesh

from time to time and any other law as applicable;

Date: 14th May, 2018 AUDITORS’ REPORT

We have audited the accompanying financial statements of AL–FARUQUE BAGS LIMITED which comprise the Statement of Financial Position as at 31st March, 2018 and Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the period then ended and all related consolidated financial statements and a summary of significant accounting policies and other explanatory notes. The Managements’ Responsibility for the Financial Statements The Management is responsible for the preparation of financial statements that give a true and fair view in accordance with International Financial Reporting Standards (IFRS), Bangladesh Financial Reporting Standards (BFRS), the Companies Act, 1994, the Securities and Exchange Rules, 1987 and other applicable laws and regulations. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors' Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (ISA) and Bangladesh Standards on Auditing (BAS). Those standards require that we comply with ethical requirements and plan and perform to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedure to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of the material misstatement of the financial statements, whether due to error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion: In our opinion, the financial statements including consolidated financial statements, prepared in accordance with International Financial Reporting Standards (IFRS) and Bangladesh Financial Reporting Standards (BFRS) give a true and fair view of the state of the Company as at 31st March, 2018 and of the results of its operations and its cash flows for the period ended in accordance with the Companies Act, 1994 and other applicable laws and regulations

Page: 156

We also Report that:

(a) We have obtained all the information and explanation which to the best of our knowledge and belief were necessary for the purpose 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 Company

as far as it appeared from our examination of those books;

(c) The Company’s Statement of Financial Position, Statement of Comprehensive Income and Statement of Cash Flows dealt with by the report are in agreement with the books of account;

And

(d) The expenditure incurred was for the purpose of Company’s business.

Sd/- ARTISAN

CHARTERED ACCOUNTANTS

Page: 157

AL-FARUQUE BAGS LIMITED ARTISAN

Santahar Road, Shikor, Narhatto,

CHARTERED ACCOUNTANTS Kahaloo, Bogra-5870

Bangladesh.

Statement of Financial Position As at March 31, 2018

Particulars Notes

Amount in BDT

31-Mar-18

30-Jun-17

PROPERTY & ASSETS: Fixed Assets 458,646,712 454,950,285 Property, Plant & Equipment 4.00 458,646,712 454,950,285

Other & Non-Current Assets 447,928,102 218,511,452

Investment 5.00 30,562,700 29,592,700 Capital Work-In-Progress 6.00 417,365,402 188,918,752

Current Assets 400,947,567 321,157,685

Inventories 7.00 145,172,210 100,773,974 Trade Receivable 8.00 137,671,420 165,685,888 Advances, Deposits & Pre-Payments 9.00 51,887,080 46,955,944 Cash and Bank Balances 10.00 66,216,857 7,741,880

TOTAL PROPERTY & ASSETS 1,307,522,381 994,619,423

EQUITY & LIABILITIES: Shareholders' Equity 749,916,847 331,904,592

Share Capital 11.00 480,000,000 98,000,000 Tax Holiday Reserve 12.00 96,110,705 96,110,705 Retained Earnings 13.00 173,806,142 137,793,887

Long Term Liabilities 143,333,969 297,608,268

Long Term Loan 14.00 133,890,090 137,910,228 Share Money Deposits 15.00 - 150,000,000 Deferred Tax Liability 16.00 9,443,879 9,698,040

Current Liabilities 414,271,565 365,106,562

Current Portion of Long Term Loan 14.00 22,500,000 18,300,000 Trade Payable 17.00 2,405,241 1,941,504 Short Term Loan 18.00 281,227,761 273,389,007 Provision for Expenses 19.00 79,054,872 49,985,484 Provision for Income Tax 20.00 29,083,691 21,490,566

TOTAL EQUITY & LIABILITIES 1,307,522,381 994,619,423

Net Asset Value (NAV) per share 30.00 15.62 33.87

Sd/- Sd/- Sd/- Company Secretary Managing Director

Chairman

Signed in terms of our annexed report of even date.

Sd/-

ARTISAN

Dated: Dhaka, the 14th May, 2018


Page: 158




Bangladesh.

Statements of Profit or Loss and other Comprehensive Income For the period from 1st July, 2017 to 31st March, 2018.

Particulars Notes

Amount in BDT Amount in BDT

1 July 2017 To

31 March 2018

1 July 2016 To

31 March 2017

1 January 2018 To

31 March 2018

1 January 2017 To

31 March 2017

Export Sales 21.00

413,375,395 373,116,549 143,353,311 120,094,465 Less: Cost of Goods Sold 22.00

299,116,127 270,486,010 103,922,587 87,235,081

Gross Profit

114,259,268 102,630,539 39,430,724 32,859,384

Less: Operating Expenses:

18,910,466 19,667,069 5,543,894 6,362,713

Administrative Expenses 23.00

16,092,438 16,181,634 5,000,224 5,120,094 Selling & Distribution Expenses 24.00

2,818,028 3,485,435 543,670 1,242,619

Operating Profit

95,348,802 82,963,470 33,886,830 26,496,671

Add: Other Income 25.00

171,099 - 27,033 -

Less: Financial Expenses:

51,868,683 41,150,535 20,376,409 13,516,099

Financial Expenses 26.00

51,868,683 41,150,535 20,376,409 13,516,099

Profit before Income Tax

43,651,218 41,812,935 13,537,454 12,980,572 Less: Provision for Tax Holiday Reseve - 2,787,529 - 865,371

Less: Provision for Income Tax

7,638,963 13,680,546 2,369,054 3,039,887

Current Tax 27.00

7,893,124 14,530,000 2,249,581 3,201,474 Deffered Tax 28.00

(254,161) (849,454) 119,474 (161,586)

Total Comprehensive Income for the Period

36,012,255 25,344,860 11,168,400 9,075,313

Earnings per share 29.00

1.06 1.03 0.23 0.37


Chairman


Sd/-

ARTISAN



Page: 159




Bangladesh.

Statement of Cash Flows For the Period ended 31st March, 2018

Particulars

Amount in BDT

31-03-2018

31-03-2017

A. CASH FLOWS FROM OPERATING ACTIVITES:

Cash received from Customers & others

441,560,962

348,475,087

Cash paid to Suppliers

(293,543,129)

(242,274,415)

Cash paid to Employees

(15,633,779)

(16,325,704)

Cash paid for Others

(6,535,285)

(2,980,902)

Cash paid for Income Tax

(3,389,729)

(5,068,489)

Net cash generated from operating activities

122,459,040

81,825,577

B. CASH FLOWS FROM INVESTING ACTIVITES:

Paid for acquisition of Fixed Assets

(26,064,301)

(32,575,493)

Land purchases

(541,300)

-

Investment

(970,000)

(1,810,000)

Capital Work-in-Progress

(252,702,062)

(258,143,304)

Net cash used in investing activities

(280,277,663)

(292,528,797)

C. CASH FLOWS FROM FINANCING ACTIVITES:

Cash paid for Financial Expenses

(23,725,017)

(26,699,339)

Short term bank loan received/(paid)

7,838,754

13,795,794

Long term bank loan received/(paid)

179,862

57,013,284

Proceeds from Share Capital

232,000,000

88,000,000

Received as Share Money Deposit

-

81,580,000

Net cash provided by financing activities

216,293,599

213,689,739

D.

Net Increase/ (Decrease) in cash & cash equivalents (A+B+C)

58,474,977

2,986,520

E.

Cash & Cash equivalents at the beginning of the period

7,741,880

9,293,260

F.

Cash & Cash equivalents at the end of the period (D+E)

66,216,857

12,279,780

Operating Cash Flows Per Share

3.59

3.33


Chairman


Sd/-

ARTISAN



Page: 160




Bangladesh.

Statement of Changes in Equity For the period ended 31st March, 2018

Particulars

Share Capital

Tax Holiday Reserve

Retained Earnings

Total

Amount in BDT

Opening Balance as at 01st July, 2017 98,000,000 96,110,705 137,793,887 331,904,592 Net profit (after tax) for the period - - 36,012,255 36,012,255 Share Issue during the period 382,000,000 - - 382,000,000

Shareholder's Equity at the end of the period 31st March, 2018

480,000,000 96,110,705 173,806,142 749,916,847

Statement of Changes in Equity

For the period ended 31st March, 2017

Particulars Share

Capital

Tax Holiday Reserve

Retained Earnings

Total

Amount in BDT

Opening Balance as at 01st July, 2016 10,000,000 92,222,831 180,043,376 282,266,207 Tax holiday reserve - 2,787,529

2,787,529

Net profit (after tax) for the period - - 25,344,860 25,344,860

Shareholder's Equity at the end of the period 31st March, 2017

10,000,000 95,010,360 205,388,236 310,398,596


Chairman


Sd/-

ARTISAN



Page: 161




Bangladesh.

Notes to the Financial Statement For the period ended 31st March, 2018

1.00 Corporate History of the Reporting Entity

Al-Faruque Bags Limited (The company) was incorporated in Bangladesh as a Private Limited Company vide Registration No. RAJ-C-446/2007 dated 3rd December 2007. Subsequently the company was converted into Public Company Limited by shares on 15 January 2018.

The registered office of the company and the factory is located at Santahar Road, Shikor, Narhatto, Kahaloo, Bogra-5870, Bangladesh.

2.00 Nature of Business The company's main business is to manufacture of different types of PP Woven Bag, High

Density Ploy Ethylene (HDPE) Bag, Low Density Poly Ethylene (LDPE) Bag, Liner, Garments poly and selling them to export oriented companies as deemed export and direct exporting to the international market.

3.00 Basis of preparation and significant accounting policies 3.01 Basis of Measurement of Elements of Financial Statements The financial statements of the company are prepared on going concern under historical cost

convention on accrual basis and in accordance with the Bangladesh Accounting Standards (BASs), Bangladesh Financial Reporting Standards (BFRSs), the Companies Act 1994, The securities & Exchange Rules, 1987 and other applicable laws & regulation in Bangladesh.The following Bangladesh Accounting Standards were applied for the preparation of the financial statements for the period under review:

BAS 1 Presentation of Financial Statements BAS 2 Inventories BAS 7 Statement of Cash Flows BAS 8 Accounting policies, Changes in Accounting Estimates and Errors BAS 10 Events after the reporting period BAS 12 Income Taxes BAS 16 Property, Plant and Equipment BAS 18 Revenue BAS 19 Employee Benefits BAS 21 The Effects of Changes in Foreign Exchange Rates BAS 23 Borrowing Costs BAS 24 Related Party Disclosures BAS 33 Earnings per share BAS 34 Interim Financial Reporting BAS 36 Impairment of Assets BAS 37 Provisions, Contingent Liabilities and Contingent Assets BAS 39 Financial Instrument: Recognition and Measurement BFRS 8 Operating Segment

3.02 Going Concern Basis The company has adequate resources to continue its operation for the foreseeable future. As

such, the directors intended to adopt the going concern basis in preparing the financial statements. The current credit facilities and resources of the company provides sufficient fund to meet the present requirements of its existing business.

Page: 162

3.03 Accrual Basis The financial statements have been prepared, except cash flow information, using the accrual

basis of accounting.

3.04 Function and presentational Currency

The financial statements are prepared in Bangladesi Taka which is the company's functional currency

3.05 Structure, Content and Presentation of Financial Statements Being the general purpose financial statements, the presentation of these financial statements

is in accordance with the guidelines provided by BAS 1 Presentation of Financial Statements. A complete set of financial statements comprises:

i) Statement of Financial Position as at March 31, 2018 ii) Statement of Profit or Loss and other Comprehensive Income for the period from 1st July,

2017 to 31st March, 2018 iii) Statement of Changes in Equity for the period ended 31st March, 2018 iv) Statement of Cash Flows for the period ended 31st March, 2018 vi) Notes comprising a summary of significant accounting policies and other explanatory

information to the Financial Statements for the period ended 31st March, 2018.

3.06 Reporting Period The period of the Financial Statements covers from 1st July, 2017 to 31st March, 2018.

3.07 Comparative Comparative information has been disclosed for all numerical information in the financial

statements and also the narrative and descriptive information where it is relevent for understanding of the current period/ year's financial satements.

3.08 Revenue Recognition: Revenue from the sales of goods is recognized when Significant risk and rewards associated

with ownership has been transferred to buyer, which satisfied all the condition for the revenue recognition as provided in BAS 18 Revenue.

3.09 Borrowing Costs Financial Expenses (Borrowing Costs) incurred during the period /year was recognized in

accordance with BAS 23 Borrowing Costs.

3.10 Property, Plant and Equipment

Initial Recognition and Measurement

Property, plant and equipment are capitalized at cost of acquisition and subsequently stated at cost or valuation less accumulated depreciation in compliance with the requirements of BAS 16 Property, Plant and Equipment. The cost of acquisition of an asset comprises its purchase price and any directly attributable cost of bringing the assets to its working condition for its intended use inclusive of inward freight, duties, non-refundable taxes and un-allocated expenditures etc.

Depreciation on Fixed Assets

Depreciation on Property, Plant & Equipment other than Land and Land Development has been computed during the year using the reducing balance method. Depreciation has been charged on addition when the related Property, Plant and Equipment are available for use as per management intention.

Page: 163

The periodical depreciation rates applicable to the principal categories are:

Item of property, plant and equipment 31st March-2018 30th June-2017

Land & Land Development 0% 0%

Boundary Wall & Surface Drain 5% 5%

Dormitory Building & Canteen 10% 10%

Factory Shed, Workshop & Godwon 20% 20%

Water Reserver 10% 10%

Fire Fighting Equipments 10% 10%

Plant & Machinery 20% 20%

Sub-station, Electric Insallation, Stabilizer 20% 20%

Motor Vehicles 20% 20%

Office Buildings 10% 10%

Electric Equipments 20% 20%

Office Equipments 30% 30%

Furniture & Fixture 10% 10%

Disposal of Property, Plant and Equipment

On retirement or otherwise disposal of fixed assets, the cost and accumulate depreciation are eliminated and any gain or loss on such disposal is disclosed in the Statement of Profit or Loss and Other Comprehensive Income when applicable.

Impairment of Assets

All fixed assets have been reviewed and it was confirmed that no such fixed assets have been impaired during the period / year and for this reason no provision has been made for impairment of assets.

3.11 Employees Benefits Plan

The company mainitained defined benefits plan for its eligible permanent employees. The eligibility is determined according to the terms and conditions set forth in the respective deeds. The company has accounted for and disclosed employees benefits in compliance with the provision of BAS 19 Employee Benefits.The cost of employees benefits is charged off as revenue expenditure in the period to which the contributions relate. The company's employees benefits include the following:

Short Term Employees Benefits

Short term employees benefits include salaries, bonuses, etc.

3.12 Financial Instruments: Recognition and Measurement

A financial instrument in any contract that gives rise to a financial asset of one entity and financial liability or equity instrument of another entity as per BAS 39 Financial Instruments' Recognition and Measurement.

3.13 Financial Assets

Financial assets of the company include cash and cash equivalents, equity instrument of another equity, Trade receivable and other receivables. The company initially recognize a financial asset in its statement of financial position when and only when the company becomes a part to the contractual provision of the instrument. The company derecognizes a financial asset when and only when, the contractual rights to the cash flows from the financial assets expire of transfer to receive the cash flows on the financial asset.

Financial Liabilities

The company initially recognizes financial liability in its statements of financial position when, and only when, the company becomes a party to the contractual provision of the instrument. The company derecognize a financial liability from its statement of financial position when, and only when, it is extinguished, that when the obligation specified in the contract is discharged or cancelled or expires.

Page: 164

3.14 Operating Segment:

As requireed by BFRS 8 Operating Segments, if an entity operates business activities that may earn revenues or incur expenses, whose operating results are reveiwed by the chief operating decision maker and for which discrete financial information is available.

The company consider the operation on aggregate basis and manage the operations as a single operating segment. Here it is felt that such segment reporting is no required to be disclosed.

3.15 Inventories

Inventories are valued at the lower of cost or net realizable value as prescribed by BAS 2 Inventories. Cost is determined on weighted average cost basis. The cost of inventories comprises of expenditure incurred in the normal course of business in bringing the inventories to their present location and condition. Net realizable value is based on estimated selling price less any further costs expected to be incurred to make the sale.

3.16 Cash and Cash Equivalents

Cash and cash equivalents comprise cash in-hand, Cash at Bank, demand deposits and short term deposits that are readily convertible to a known amount of cash, and that are not subject to significant risk of change in value.

3.17 Events after the Reporting Period

Event after the reporting period are those events, favorable or unfavorable, that occurs between the end of the reporting period and the date that the financial statements are authorized for issue. Two type events can be indentified:

Adjusting event: those that provide evidence of conditions that existed at the end of the reporting period.

Non-adjusting event: those that are indicative of a conditions that arose after the reporting period.

Management of the company has taken close look whether any events after the reporting period exist that need to take into account during the preperation of Financial Reports. No event after the reporting period exists and management of the company has prepared the financial reports in accordance.

3.18 Cash Flows Statement

The Statement of Cash Flows is prepared in accordance with Bangladesh Accounting Standards BAS 7 Statement of Cash Flows and Cash Flow from the Operating Activities have been presented under direct method considering the provision of paragraph 19 of BAS 7 Statement of Cash Flows which provides that entities are encouraged to report cash flow from operating activities using the Direct Method.

3.19 Related Party Disclosures

The company carried out a number of transactions with related parties. The information as required by BAS 24 Related Party Disclosures has been disclosed in a separate note to the accounts.

3.20 Earnings Per Share

The company calculates Earnings Per Share (EPS) in accordance with the requirement of BAS 33 Earnings Per Share, which has been shown on the face of the Statement of Profit or Loss and other Comprehensive Income.

3.21 Basic Earnings

This represents earnings for the period / year ended 31st March, 2018 attributable to the ordinary shareholders.

Basic earnings per share

This has been calculated dividing the basic earnings by the weighted average number of shares outstanding for the period / year.

Page: 165

3.22 Provisions

In accordance with the guidelines as prescribed by BAS 37 Provisions, Contingent Liabilities and Contingent Assets a provision shall be recognized when:

a. an entity has a present obligation (legal or constructive) as a result of a past event;

b. it is probable that an outflow of resources embodying economic benefits will be required to

settle the obligation; and

c. a reliable estimate can be made of the amount of the obligation.

3.23 Income Tax

Current Tax

Current tax is the expected tax payable on the taxable income for the financial period /year and any adjustement to tax payable in respect of previous years. Provision for taxation is calculated on the basis of applicable current tax rate incompliance with Finance Act. 2017.

The company is enjoying Tax holiday from the year 2010 as per section 46B(6) of ITO 1984. Tax holiday was expired at 28 Februrary, 2017 and after tax holiday expired Tax was calcultaed on the basis of export oriented company.

3.24 Deferred Tax:

The company recognized defferred tax as per BAS 12 Income Taxes. The Tax rate prevaling at the Financial Position date is used to determine deferred tax.

3.25 General

i) The figure has been rounded off to the nearest BDT.

Page: 166

Al-Faruque Bags Ltd. SCHEDULE OF FIXED ASSETS AS AT MARCH 31, 2018 (9 MONTH)

Schedule - "A1"

Name of Assets

C o s t

Rate (%)

D e p r e c i a t i o n Written Down Value as on

March 31, 2018 Opening Balance

Addition during this

Period

Value as on 31st March,

2018

Opening Balance

Charged during the

Period

Value as on 31st March,

2018

Factory:

Land & Land Development 41,750,143 17,000 41,767,143 0% - - - 41,767,143

Boundary Wall & Surface Drain 31,573,552 - 31,573,552 5% 2,825,383 1,078,056 3,903,439 27,670,113

Dormitory Building & Canteen 72,179,329 7,437,205 79,616,534 10% 16,392,730 4,431,902 20,824,632 58,791,902

Water Reserver 2,351,431 - 2,351,431 10% 1,101,104 93,775 1,194,879 1,156,552

Factory Shed, Workshop & Godown 194,514,559 22,370,624 216,885,183 20% 56,896,743 21,015,516 77,912,259 138,972,924

Fire Fighting Equipments 830,000 - 830,000 10% 433,014 29,774 462,788 367,212

Plant & Machinery 154,706,965 - 154,706,965 20% 62,921,864 13,767,765 76,689,629 78,017,336

Sub station, Electric installation, Stabilizer 59,980,733 45,900 60,026,633 20% 33,728,348 3,944,743 37,673,091 22,353,542

Motor Vehicles 4,331,685 25,095,500 29,427,185 20% 2,849,433 1,895,371 4,744,804 24,682,381

Total (Factory) = 562,218,397 54,966,229 617,184,626 - 177,148,619 46,256,902 223,405,521 393,779,105

Office:

Office Building 79,692,781 - 79,692,781 10% 20,203,786 4,461,675 24,665,460 55,027,321

Electric Equipments 3,975,666 - 3,975,666 20% 1,572,891 360,416 1,933,308 2,042,358

Office Equipments 5,582,874 313,280 5,896,154 30% 2,606,382 701,039 3,307,421 2,588,733

Furniture & Fixture 6,412,617 592,621 7,005,238 10% 1,400,371 395,672 1,796,044 5,209,194

Total (Office) = 95,663,938 905,901 96,569,839 - 25,783,430 5,918,802 31,702,232 64,867,607

Grand Total = 657,882,335 55,872,130 713,754,465 - 202,932,050 52,175,704 255,107,753 458,646,712

30.06.2017 458,128,824 199,753,511 657,882,335

153,573,815 49,358,235 202,932,050 454,950,285

(a) Depreciation have been charged as follows:

Allocation of Depreciation:

Amount

Manufacturing Account

46,256,902

Administrative expenses

5,918,802

Total

Tk. 52,175,704

Page: 167

4.00 Property, Plant & Equipment: BDT 458,646,712 Amount in BDT

31.03.2018 30.06.2017

Opening Balance

657,882,335 458,128,824

Add: Addition for the period / year

55,872,130 199,753,511

713,754,465 657,882,335

Less: Accumulated Depreciation for the period / year 255,107,753 202,932,050

Closing Balance

458,646,712 454,950,285

5.00 Investment: BDT 30,562,700

Opening balance

29,592,700 27,782,700

Add: Current period / year's Investment

970,000 1,810,000

Closing Balance

30,562,700 29,592,700

6.00 Capital Work-in-Progress: BDT 417,365,402

Factory Shed & Building, Workshop, Godown & Others:

Opening Balance

145,584,357 71,785,481

Add. Current period /year construction cost 214,760,872 154,545,597

Less: Transferred to fixed assets 22,370,624 80,746,721

Closing Balance

337,974,605 145,584,357

Dormitory Building, Canteen & Others:

Opening Balance

17,509,327 -

Add. Current period /year construction cost

522,345 36,298,524

Less: Transferred to fixed assets 7,437,205 18,789,197

Closing Balance

10,594,467 17,509,327

Ware House Building:

Opening Balance

-

Add. Current period / year construction cost

38,372,917

Closing Balance

38,372,917 -

Plant & Machinery:

Opening Balance

25,825,068 80,771,507

Add. Current period / year cost

4,598,345 54,946,439

Closing Balance

30,423,413 25,825,068

Total

417,365,402 188,918,752

7.00 Inventories: BDT 145,172,210

Raw Materials

127,196,000 82,819,125

Work-In-Process

8,093,550 3,519,705

Finished Goods

7,758,840 7,308,046

Stores & Spares

2,123,820 7,127,098

Total

145,172,210 100,773,974

8.00 Trade Receivables: BDT 137,671,420

The amount of receivables is against bills as on 31 March, 2018. This is considered as good & realizable and supported &

secured by L/Cs.

Particulars

Trade receivables

137,671,420 165,685,888

Total

137,671,420 165,685,888

The classification of Trade Receivables as required by the Schedule-XI, Part-I, Para -4 of the Companies Act, 1994 are given below:

Ageing of accounts receivables

More than six months

- -

Less than six months

137,671,420 165,685,888

Total

137,671,420 165,685,888

Page: 168

(1) Receivables considered good and in respect of which the

company is fully secured; 137,671,420 165,685,888

(2) Receivables considered good for which the company holds no security other than the debtor's personal security;

- -

(3) Receivable considered doubtful or bad; - -

(4) Receivable due by Directors or other officers of the company or any of them either severally or jointly with any other person or receivables due by firms or private companies respectively in which any director is a partner or a director or a member;

- -

(5) Receivables due by companies under the same management;

- -

(6) The maximum amount due by directors or other officer of the company at any time during the period / year.

- -

Total 137,671,420 165,685,888

9.00 Advances, Deposits & Pre-Payments: BDT 51,887,080

This Comprises:

Advances:

Construction materials

10,090,082 15,642,500

Lund Purchase

5,742,800 5,201,500

Office Rent

275,426 -

Salary & Allowance

1,283,600 1,789,135

Advance Income Tax (Note # 9.01)

12,448,573 9,358,844

L/C Margin against Raw materials

19,991,411 13,345,334

49,831,892 45,337,313

Deposits:

Security Deposit - PDB

600,000 600,000

600,000 600,000

Prepayments:

Insurance Premium (Note # 9.02)

1,455,188 1,018,631

1,455,188 1,018,631

Total

51,887,080 46,955,944

9.01 Advance Tax: BDT 12,448,573

Opening Balance as on 01.07.2017

9,358,844 2,727,232

AIT for the period / year

3,089,729 3,412,164

Add: Payment for the year 2014

- 1,844,383

Add: Payment for the year 2015

- 1,375,065

Closing Balance

12,448,573 9,358,844

9.02 Insurance Premium: BDT 1,455,188

Opening balance as on 01.07.2017

1,018,631 895,781

Addition during the period / year

1,746,225 1,746,225

2,764,856 2,642,006

Charge during the period / year

1,309,669 1,623,375

Closing balance as on 31.03.2018

1,455,188 1,018,631

Page: 169

10.00 Cash and Cash Equivalents: BDT 66,216,857

Cash in Hand:

836,682 7,546,452

Cash at Bank:

65,380,175 195,428

FDR

26,515,000 -

Al-Arafa Islami Bank Ltd. CD-13231

13,863 10,521

Dutch Bangla Bank Ltd. CD-1678

77,493 14,416

Islami Bank Bangladesh Ltd. SND-205031209-607

126,996 25,138

Islami Bank Bangladesh Ltd. SND-94

34,246 25,209

Islami Bank Bangladesh Ltd. CD-270509

61,275 7,759

Jamuna Bank Ltd. CD-0024-0210018552

28,006 4,756

Mercantile Bank Ltd. CD-05948

23,418 23,533

Mutual Trust Bank Ltd. SND-101

28,260 28,482

National Bank Ltd. CD- 6942

16,687 17,492

Rajshahi Krishi Unnayan Bank CD-8006

64 64

Social Islami Bank Ltd. 31133-5535

21,364,922 16,969

Social Islami Bank Ltd. 031136-498

15,074,830 -

Sonali Bank Ltd. CD-7296

10,848 10,848

The Farmers Bank Ltd. CD 92441

841 6,916

The Farmers Bank Ltd. CD- 17952

575 -

United Commercial Bank Ltd. CD- 26791

2,750 3,325

One Bank Ltd. CD-0121020006325

2,000,101 -

Total

66,216,857 7,741,880


11.00 Share Capital:

11.01 Authorized Share Capital: BDT 1,000,000,000

100,000,000 Ordinary Shares @ Tk. 10/= each

1,000,000,000 200,000,000

11.02 Issued, Subscribed & Paid-up Capital: BDT 480,000,000

48,000,000 Ordinary Shares @ Tk. 10/= each

480,000,000 98,000,000

Total

480,000,000 98,000,000

Issued, Subscribed and Paid-up Capital consists of 48,000,000 Ordinary shares of Taka 10/= each fully paid-up. The break-up of Issued, Subscribed and Paid-up Capital is shown in (Annexure -1)

12.00 Tax Holiday Reserve: BDT 96,110,705

Opening balance

96,110,705 92,222,831

Add: Current period /Year reserve

- 3,887,874

Closing balance

96,110,705 96,110,705

13.00 Retained Earnings: BDT 173,806,142

Opening balance

137,793,887 180,043,376

Add: Net Profit for the period / year

36,012,255 37,750,512

Less: Bonus Share

- 80,000,000

Closing balance

173,806,142 137,793,887

14.00 Long Term Loan: BDT 133,890,090

i) Project Loan from RAKUB (A/C # 024):

Balance as per Bank statement

116,026,458 119,182,447

Add/ (Back) due to prior year interest calculation 692,776 (467,936)

Add: Interest (Over)/ Under charged during the year by Bank 12,972,189 1,160,712

Balance as on 31.03.2018

129,691,423 119,875,223

Less: Current portion of long term loan

10,800,000 14,400,000

Less: Interest payable [Note: 14.01 (i)]

38,658,262 28,842,073

80,233,161 76,633,150

Page: 170

ii) The Farmers Bank Limited, General Term Loan, (A/c # 1623115008)

77,429,727 69,989,230

Less: Current portion of long term loan

11,700,000 3,900,000

Less: Interest payable [Note: 14.01 (i)]

12,072,798 4,812,152

53,656,930 61,277,078

Total

133,890,090 137,910,228

14.01 Interest Payable on long term loan: BDT 38,658,262

i) Project Loan from RAKUB (A/C # 024):


28,842,073 30,251,870

Add: Charged for the period / year

12,972,189 15,989,277

Less: Paid for the period / year

3,156,000 17,399,074


38,658,262 28,842,073

ii) The Farmers Bank Limited, General Term Loan, A/c No. # LD1623115008


4,812,152 -

Add: Charged for the period / year

7,440,497 6,792,487

Less: Paid for the period / year

179,851 1,980,335

12,072,798 4,812,152


50,731,060 33,654,224

15.00 Share Money Deposit: BDT 0


70,000,000


30,000,000


50,000,000

Md. Anwar Latif khan

-

Mr. Farid Ahamed

- -

Mohammed Ziaul Hossain

- -

Asraf Uddin Ahamed

- -

Md. Abdur Rashed

- -

Mohammad Shofiqul Islam

- -

Md. Golam Sarwar Bhuiyan

- -

Rafiqul Anowar

- -

Total

- 150,000,000

16.00 Deferred Tax: BDT 9,443,879

Tax Base Depreciation

50,723,353 69,716,320

Account Base Depreciation

52,175,704 49,358,235

Temporary Difference

(1,452,351) 20,358,085

Tax Rate (Exempted for 8 months)

17.50% 35.00%

Deferred Tax Expenses for the period / year

(254,161) 4,750,220

Opening Deferred Tax

9,698,040 4,947,820

Net deferred Tax Liability (Closing balance)

9,443,879 9,698,040

17.00 Trade Payable: BDT 2,405,241

Asoke International Ltd.

83,070 83,071

Chisty PVC Industries Ltd.

454,273 397,127

Danish Inds. (Pvt.) Ltd.

- 441,249

Mohon Perfumary

500,219 212,411

Prime Marble & Granite

383,952 383,952

Russel Enterprise (Sagor Traders)

983,727 423,694

Total

2,405,241 1,941,504

Page: 171

18.00 Short Term Loan: BDT 281,227,761

Rajshahi Krishi Unnayan Bank, BB, CC A/C #5-4787 57,024,856 52,932,265

Liabilities Against Bill Discount

- 9,620,842

The Farmers Bank Limited, CC, A/C # 161-94187

122,721,558 110,563,665

The Farmers Bank Limited, LTR Trade, A/C # 1726-204982 10,575,537 9,559,296

The Farmers Bank Limited, Time Loan, A/C # 1735-131820 20,014,702 18,093,820



Interest payable (Note # 19.01)

(23,074,196) (12,188,873)

Total

281,227,761 273,389,007

19.00 Provision for Expenses: BDT 79,054,872

Salary & Allowances

2,697,433 1,097,495

Audit Fee

150,000 200,000

Attendance Bonus

50,000 56,000

Electricity Bill (PDB)

1,801,659 1,685,764

Withholding Tax

476,893 471,578

Interest Payable (Note # 19.01)

73,805,256 45,843,097

IDCP payable

- 631,550

Others Expenses

73,632 -

Total

79,054,872 49,985,484

19.01 Interest Payable: BDT 73,805,256

Interest Payable on Long Term Loan

50,731,060 33,654,224

Interest Payable on Short Term Loan

23,074,196 12,188,873

73,805,256 45,843,097

20.00 Provision for Income Tax: BDT 29,083,691

Opening balance

21,490,566 9,889,313

Add. Current period /year balance Note # 27.00

7,893,124 11,929,501

Less: Adjustment for the year 30 June, 2014

- (328,248)

Less: Adjustment for the year 30 June, 2015

(300,000) -

Closing balance

29,083,691 21,490,566

Page: 172

Particulars

Amount in BDT Amount in BDT

1 July 2017 To

31 March 2018

1 July 2016 To

31 March 2017

1 January 2018 To

31 March 2018

1 January 2017 To

31 March 2017

21.00 Export Sales: BDT 413,375,395

Sales - Export

413,375,395 373,116,549 143,353,311 120,094,465

Total

413,375,395 373,116,549 143,353,311 120,094,465

22.00 Cost of Goods Sold: BDT 299,116,127

Opening Stock of Work-in-Process (WIP)

3,519,705 2,719,705 2,293,550 1,959,852

Add: Raw Materials Consumed (Note-22.1)

230,808,575 217,689,755 90,966,321 71,615,655

Add: Stores & Spares Consumed (Note-22.2)

6,085,836 4,005,926 598,739 1,303,456

Add: Direct Expenses:

9,896,675 8,781,110 1,910,611 2,687,205

Wages

9,217,469 8,170,975 1,863,322 2,487,250

Overtime

679,206 610,135 47,289 199,955

Add: Manufacturing Overhead (Note-22.3)

57,349,680 38,803,840 18,946,916 12,629,262

Less: Closing Work-in-Process (WIP)

8,093,550 1,959,852 8,093,550 1,959,852

Cost of Goods Manufactured

299,566,921 270,040,484 106,622,587 88,235,578

Add: Opening Stock of Finished Goods

7,308,046 4,542,046 5,058,840 3,096,023

Cost of Goods available for sales

306,874,967 274,582,530 111,681,427 91,331,601

Less: Closing Stock of Finished Goods

7,758,840 4,096,520 7,758,840 4,096,520

Cost of Goods Sold

299,116,127 270,486,010 103,922,587 87,235,081

22.01 Raw Materials Consumed: BDT 230,808,575

Opening Stock of raw materials

82,819,125 85,830,450 117,195,475 44,915,225

Add: Purchases during the period

275,185,450 222,774,530 100,966,846 117,615,655

Less: Closing Stock of raw materials

127,196,000 90,915,225 127,196,000 90,915,225

Raw Materials Consumed during the period

230,808,575 217,689,755 90,966,321 71,615,655

22.02 Store & Spares Consumption: BDT 6,085,836

Opening balance

7,127,098 1,562,098 1,923,094 4,063,549

Add: Purchases during the period

1,082,558 6,007,377 799,465 803,456

Less: Closing balance

2,123,820 3,563,549 2,123,820 3,563,549

Consumption during the period

6,085,836 4,005,926 598,739 1,303,456

Page: 173

22.03 Manufacturing Overhead: BDT 57,349,680

Attendance Bonus

259,400 278,220 27,400 116,420

Electricity Bill- factory

8,662,116 8,976,740 1,971,969 2,685,303

Repairs & Maintenance- Factory

639,030 811,805 23,957 80,525

Insurance - Factory

1,309,669 1,186,819 436,555 375,131

Factory tiffin expenses

222,564 156,990 19,114 50,730

Factory depreciation

46,256,902 27,393,267 16,467,921 9,321,154

Total

57,349,680 38,803,840 18,946,916 12,629,262

23.00 Administrative Expenses: BDT 16,092,438

Salary & Allowances

4,444,412 4,343,357 851,555 995,607

Office Rent

824,274 376,500 572,274 124,500

Audit Fee

150,000 150,000 150,000 150,000

Advertisement

91,450 89,262 10,000 40,000

Bridge Toll expenses

113,190 115,187 17,850 9,737

Utilities expenses

72,390 63,408 29,025 27,308

Electricity charges

51,095 45,634 20,535 5,312

Directors Remuneration

1,350,000 1,350,000 450,000 450,000

Board meeting fees

36,000 36,000 18,000 9,000

Entertainment

131,295 113,306 59,075 52,915

Festival Bonus

342,765 358,000 - -

Food & Lodging

137,260 221,273 1,660 118,543

Fuel & Lubricant-Vehicles

245,926 30,885 191,529 10,004

Fuel & Lubricant-Generator

264,604 698,964 14,075 32,476

Gifts, Donation & Subscription

62,679 54,225 905 10,000

Insurance Premium

221,650 1,042 101,000 300

Loading & Unloading expenses

284,445 169,100 79,220 68,392

Medical expenses

39,546 37,919 1,123 9,650

Telephone, Mobile, Internet & Fax

171,786 235,627 50,000 130,350

Postage, Courier & Online

58,540 42,654 8,777 1,994

Printing & Stationary

229,413 275,644 150,525 20,525

Registration & Renewal Fees

326,433 923,827 103,697 530,000

Fees, Forms & others

116,400 264,255 82,947 235,285

Repair & Maintenance- Office

199,770 275,262 13,642 10,075

Repair & Maintenance- Vehicles

43,430 30,704 7,857 9,960

Travelling & Conveyance

92,453 173,183 9,099 53,000

Miscellaneous expenses

72,430 130,530 11,636 103,250

Depreciation of Fixed Assets

5,918,802 5,575,886 1,994,218 1,911,911

Total

16,092,438 16,181,634 5,000,224 5,120,094

Page: 174

24.00 Selling & Distribution Expenses: BDT 2,818,028

Salary and allowances

1,663,400 1,865,750 455,637 935,484

Advertisement

122,543 112,875 22,093 4,993

Marketing expense

76,340 205,335 36,205 100,030

Carriage outwards

848,092 980,825 26,831 139,962

Business development expense

107,653 320,650 2,904 62,150

Total

2,818,028 3,485,435 543,670 1,242,619

25.00 Other Income

Foreign Currency Fluctuation Gain / (Loss)

171,099

27,033

Total

171,099

27,033

26.00 Financial Expenses: BDT 51,868,683

Bank Charge & Commission

181,507 107,987 3,280 10,000

Interest on Long Term Loan

20,412,686 16,455,453 6,875,775 6,269,174

Interest on Short Term Loan

31,274,490 24,587,095 13,497,354 7,236,925

Total

51,868,683 41,150,535 20,376,409 13,516,099

27.00 Current Tax during the period: Tk. 7,893,124

Accounting profit before Tax

43,651,218 41,812,935 13,537,454 12,980,572

Add: Depreciation Charge for the period

52,175,704 32,969,153 18,462,140 11,233,065

Less: Taxable Depreciation

50,723,353 29,608,673 19,144,847 10,493,036

Total Taxable Income

45,103,568 45,173,414 12,854,747 13,720,601

Less: Exempted

- 10,149,970

2,286,767

Balance of Profit (on which it calculated)

- 35,023,444

11,433,834

Rate of Income Tax

17.50% 35.00% 17.50% 35.00%

Total Tax Expense for the current period

7,893,124 11,457,837 2,249,581 3,201,474

Tax expense for the year 30 June, 2014

- (1,117,456)

Tax expense for the year 30 June, 2015

- 4,189,619

7,893,124 14,530,000 2,249,581 3,201,474

28.00 Deferred Tax: BDT 9,443,879

Tax Base Depreciation

50,723,353 29,608,673 19,144,847 10,493,036

Account Base Depreciation

52,175,704 32,969,153 18,462,140 11,233,065

Temporary Difference

(1,452,351) (3,360,479) 682,707 (740,029)

Page: 175

Tax Rate

17.50% 35.00% 17.50% 35.00%

Deferred Tax Expense for the period

(254,161) (849,454) 119,474 (161,586)

Opening Deferred Tax

9,698,040 4,947,820 9,324,405 4,259,952

Net deferred Tax liability

9,443,879 4,098,366 9,443,879 4,098,366

29.00 Earnings Per Share:

Total Comprehensive Income of the period 36,012,255 25,344,860 11,168,400 9,075,313

Weighted Average number of Ordinary Shares outstanding (Note-29.01)

34,113,869 24,580,000 48,000,000 24,580,000

Earnings Per Share

1.06 1.03 0.23 0.37

29.01 Weighted Average No. of Shares Amount In BDT

Particulars No. of Shares Days Weight

1 July 2017 To

31 March 2018

1 July 2016 To

31 March 2017

1 January 2018 To

31 March 2018

1 January 2017 To

31 March 2017

Opening balance 9,800,000 274 1.00 9,800,000 1,000,000 9,800,000 1,000,000

Share Money Deposits 580,000

1.00

580,000 - 580,000

Share Money Deposit 15,000,000 274 1.00 15,000,000 15,000,000 15,000,000 15,000,000

Bonus Shares 8,000,000

1.00

8,000,000 - 8,000,000.00

Cash received during the period

23,200,000 110 0.4015 9,313,869 - 23,200,000 -

Total 48,000,000

34,113,869 24,580,000 48,000,000 24,580,000

30.00 Net Asset Value per share:

Net Assets Value per share is calculated as follows:

Gross Assets

1,307,522,381 994,619,423

Less: Non-Current Liabilities+Current Liabilities 557,605,534 662,714,830

Net Assets Value

749,916,847 331,904,593

Number of Ordinary Shares outstanding 48,000,000 9,800,000

Net Assets Value per share

15.62 33.87

Page: 176

31.00 Related parties transactions: As per BAS 24:

(a) Short-term Employees benefits:

i) Remuneration

Name

Designation 31.03.2018


Chairman 450,000


Managing Director 450,000


Director 450,000

ii) Board meeting fee of Directors:

Name

Designation 31.03.2018


Chairman 9,000


Managing Director 9,000


Director 9,000

Tanzil Kabir Chowdhury

Nominee Director 9,000

(b) Post-employee benefits - Not paid

(c) Other long-term benefits - Not paid (d) Termination benefits - Not paid (e) Share-based payment - Not paid

Common Management

Name Designation Company Name


Al-Faruque Feed Mills Ltd. & Al-Faruque Flour Mills Ltd.


Director Al-Faruque Flour Mills Ltd.

Mst. Nimme Kabir Chowdhury Director Al-Faruque Flour Mills Ltd.


Managing Director


32.00 The disclosure relating to Schedule XI, Part II, Para 3, 4, 7 & 8 of the Companies Act. 1994

32.01 The disclosure of Schedule XI, part-II, Para 3:

(a) Turnover:

Particulars

31.03.2018

Turnover in BDT.

413,375,395

Turnover in Quantity (M.Ton)

2,204

(b) No Commission paid to selling agents during the period / year.

(c) No brokerage and discount paid on sales during the period / year.

(d) (i): Raw Materials Consumed:

Particulars

31.03.2018

Raw Materials (Value in BDT.)

230,808,575

Raw Materials Quantities (kg)

2,269,204

(ii): Finished goods

Particulars 31.03.2018

Opening Quantity (M.Ton) 55

Production Quantity during the period / year (M.Ton) 2,205

Closing Quantity (M.Ton) 57

iii) Work-In-Process:


PP Woven Bag

6,283,491

Wide Plain Poly Bag (W PP)

1,810,059

Total in BDT

8,093,550

Page: 177

Disclosure as per requirement of Schedule XI, part II, Note-5 of para 3:


Salary/Wages Per Month, Below Tk. 3000 -

Salary/Wages Per Month, Above Tk. 3000 215

Total No. of Employees 215

32.02 Disclosure of Schedule XI, part-II, Para 4:

The following payments provided or made during the financial year to the directors, including managing director, the managing agents or manager, if any, by the company, the subsidiaries of the company and any other person: -

No. Particulars 31.03.2018

(a) Managerial remuneration paid or payable during the financial period / year to the directors, including managing directors, a managing agent or manager

1,350,000

(b) Expenses reimbursed to the Managing Agent Nil

(c) Commission or remuneration payable separately to a managing agent or his associate

Nil

(d) Commission received or receivable by the managing agent or his associate as selling or buying agent of other concerns in respect of contracts entered into by such concerns with the company

Nil

(e) The money value of the contracts for the sale or purchase of goods and materials or supply of services, entered into by the company with the managing agent or his associate during the financial period / year

Nil

(f) Any other perquisite or benefits in cash or in kind stating, approximate money value where practicable

Nil

(g) Other allowances and commission including guarantee commission Nil

(h) Pensions, etc.

Nil

(i) Pensions

Nil

(ii) Gratuities

Nil

(iii) Payments from a provident funds, in excess of own subscription and interest thereon

Nil

(i) Share-based payment

Nil

32.03 Disclosure of Schedule XI, part-II, Para 7:

The production capacity and utilization is as follows:

Particulars 31 March 2018

Quantity in M.Ton

Installed Capacity:

2,817

PP Woven Bag

2,187


630

Particulars

31 March 2018

Quantity in M.Ton

Actual Production:

PP Woven Bag

1,711


494

Total

2,205

Capacity Utilization %

78%

32.04 Disclosure of Schedule XI, Part-II, Para 8:

(a)

Value of imports calculated on C.I.F basis by the company during the period in respect of Raw materials, Component and Spare Parts and Capital Goods were as follows:

Particulars 31 March 2018

Amount in BDT

i) Raw Materials 275,185,450

ii) Components and Spare Parts 1,082,558

iii) Capital Goods 4,598,345

Total 280,866,353

Page: 178

(b) No expenditure in foreign currency made during the financial period on account of Royalty, Know-How, Professional Consultation Fees, Interest and Other Matters:

(c) Value of all imported raw materials, spare parts and components consumed during the financial period and the value of all indigenous raw materials, spare parts and components similarly consumed and the percentage of each to the total consumption:

Particulars

Raw Materials Total Spare Parts

Imported Value (In

BDT)

Indigenous Value (In

BDT)

Imported Value (In

BDT)

Indigenous Value (In

BDT)

Opening Balance 81,977,598 841,527 82,819,125 7,127,098 -

Purchases during the year

267,640,450 7,545,000 275,185,450 1,082,558 -

Closing Balance 125,550,125 1,645,875 127,196,000 2,123,820 -

Consumption during the year

224,067,923 6,740,652 230,808,575 6,085,836 -

Percentage of total consumption during the year

97% 3% 100% 100% -

(d) No amount is remitted during the period in foreign currencies on account of dividends to non-resident shareholders. It is mentioned that the company does not have any non-resident shareholder.

(e) Earning in foreign exchange classified under the following heads, namely:

Particulars

31 March 2018

i) Export of goods calculated on F.O.B. basis:

PP Woven Bag

$4,044,259


$1,097,226

ii) No Royalty, Know-How, Professional and consultation fee paid during the period

Nil

iii) No Interest & dividend paid during the period Nil

iv) No other income received during the period

Nil

Page: 179

Sl No

Name of shareholders Position Total Share

holdings % of

holdings Amount in

Tk.

1 Chowdhury Al-Faruque Chairman 2,700,000 5.63 27,000,000


Managing Director

12,400,000 25.83 124,000,000

3 Mst. Nimme Kabir Chowdhury Director 3,900,000 8.13 39,000,000

4 Al-Faruque Flour Mills Ltd. Shareholder 5,100,000 10.63 51,000,000

5 Md. Farid Ahmed Shareholder 1,040,000 2.17 10,400,000

6 Mohammad Mokarom Hossain Shareholder 300,000 0.63 3,000,000

7 Mohammed Ziaul Hossain Shareholder 400,000 0.83 4,000,000

8 Mohammad Didarul Alam Shareholder 100,000 0.21 1,000,000

9 Md. Anwar Latif Khan Shareholder 100,000 0.21 1,000,000

10 Md. Zillur Rahman Mridha Shareholder 100,000 0.21 1,000,000

11 Asraf Uddin Ahmed Shareholder 200,000 0.42 2,000,000

12 Mostafa Kamal Ahmed Shareholder 200,000 0.42 2,000,000

13 Shireen Akter Karim Shareholder 200,000 0.42 2,000,000

14 Lutfur Rahman Shareholder 200,000 0.42 2,000,000

15 Md. Abdur Rashed Shareholder 80,000 0.17 800,000

16 Rafiqul Anowar Shareholder 300,000 0.62 3,000,000

17 Md. Golam Sarowar Bhuiyan Shareholder 100,000 0.21 1,000,000

18 Mohammd Shofiqul Islam Shareholder 80,000 0.17 800,000

19 Abaci Investment Limited Shareholder 1,000 0.002 10,000

20 M Shefaque Ahmed Shareholder 500 0.001 5,000

21 Ali Noor Shareholder 1000 0.002 10,000

22 Farmers Hopes Limited Shareholder 500,000 1.04 5,000,000

23 Md. Habibur Rahman Sikder Shareholder 550,000 1.14 5,500,000

24 Horipur Feed Ltd. Shareholder 500,000 1.04 5,000,000

25 Ruma Akter Shareholder 200,000 0.42 2,000,000

26 Shakil Mahmud Shareholder 250,000 0.52 2,500,000

27 Md. Abdul Halim Shareholder 10,000 0.02 100,000

28 Al-Faruque Feed Mills Ltd. Shareholder 2,487,500 5.18 24,875,000

29 Nawroz Kabir Chowdhury Shareholder 2,000,000 4.17 20,000,000

30 Nawshin Binte Kabir Chowdhury

Shareholder 2,000,000 4.17 20,000,000

31 A K M Shamsuzzoha Shareholder 2,000,000 4.16 20,000,000

32 BLI Capital Limited Shareholder 4,750,000 9.9 47,500,000

33 Tamanna Ahmed Shareholder 125,000 0.26 1,250,000

34 Marzina Akter Shareholder 125,000 0.26 1,250,000

35 Md. Borhan Uddin Shareholder 50,000 0.1 500,000

36 Syed Golam Wadud Shareholder 100,000 0.21 1,000,000

37 Asim Kumar Mondal Shareholder 100,000 0.21 1,000,000

38 Mohammad Saidul Hossain Shareholder 150,000 0.31 1,500,000

39 Fareast Islami Life Insurance Co. Ltd.

Shareholder 2,000,000 4.17 20,000,000

40 Khaled Ishtiaq Nadim Shareholder 80,000 0.17 800,000

41 Rowson Ara Sumi Shareholder 150,000 0.31 1,500,000

42 Bangladesh Finance and Investment Co. Ltd.

Shareholder 300,000 0.62 3,000,000

43 City General Insurance Company Ltd.

Shareholder 500,000 1.04 5,000,000

44 BD Finance Capital Holdings Ltd.

Shareholder 500,000 1.04 5,000,000

45 BD Finance Securities Ltd. Shareholder 500,000 1.04 5,000,000

46 Milton Kumar Roy Shareholder 50,000 0.1 500,000

47 Rowshan Ara Begum Shareholder 520,000 1.08 5,200,000

Total 48,000,000 100% 480,000,000

Page: 180

(b) Information as is required under section 186 of the †Kv¤úvwb AvBb, 1994 relating to holding

company; This information is not applicable for AFBL.

(c) Selected ratios as specified in Annexure-D;

Auditor's certificate regarding calculation of EPS and Ratios

This is to certify that AL-FARUQUE BAGS LTD. has maintained the following ratios as computed on the basis of the audited financial statements for the period ended 31st March 2018 and for the year ended 30th June 2017, ,2016, 2015, 2014 and 2013.

Particulars


Ratio

I. Liquidity Ratios:

(i) Current Ratio 0.97 0.88 1.07 1.22 1.41 2.39

(ii) Quick Ratio 0.49 0.48 0.55 0.78 0.95 1.51

II. Operating Efficiency Ratios:

(i) Accounts Receivable Turnover Ratio 2.73 3.27 3.23 2.64 2.46 3.73

(ii) Inventory Turnover Ratio 2.43 3.75 3.86 3.63 3.52 3.73

(iii) Asset Turnover Ratio 0.36 0.60 0.72 0.68 0.67 0.97

III. Profitability Ratios:

(i) Gross Margin Ratio 27.64% 27.78% 26.19% 27.25% 25.14% 32.27%

(ii) Operating Profit Ratio 23.07% 23.01% 19.56% 20.92% 14.00% 26.73%

(iii) Net Profit Ratio 8.71% 7.43% 5.65% 7.43% 5.10% 11.91%

(iv) Return on Assets Ratio 3.13% 4.44% 4.07% 5.03% 3.41% 11.56%

(v) Return on Equity Ratio 6.66% 12.29% 9.27% 9.74% 6.04% 21.01%

(vi) Earnings Per Share (EPS) 1.06 1.53 1.00 0.94 0.53 1.50

(vii) Earnings before interest, taxes, depreciation and amortization (EBITDA) margin

35.69% 32.73% 28.09% 27.95% 21.25% 33.32%

IV.Solvency Ratios:

(i) Debt to Total Assets Ratio 0.33 0.43 0.42 0.36 0.37 0.39

(ii) Debt to Equity Ratio 0.58 1.29 1.05 0.73 0.67 0.66

(iii) Times Interest Earned Ratio 1.84 2.00 2.04 1.99 2.05 4.14

(iv) Debt Service Coverage Ratio 9.38 4.42 0.92 6.03 2.10 4.98

V. Cash Flow Ratios:

(i) Net Operating Cash Flow per Share (NOCFPS)

3.59 5.48 2.33 2.02 1.99 3.17

(ii) NOCFPS to EPS Ratio 3.40 3.58 2.32 2.16 3.78 2.12

Sd/- Place: Dhaka

ARTISAN

Date: May 24, 2018 Chartered Accountants

Page: 181

Ratio Calculation

Particulars Formula 31-Mar-18 30-Jun-17 30-Jun-16 30-Jun-15 30-Jun-14 30-Jun-13

Calculation Ratio Calculation Ratio Calculation Ratio Calculation Ratio Calculation Ratio Calculation Ratio


(i) Current Ratio Current Assets/Current Liabilities 400,947,567

0.97 321,157,685

0.88 301,511,607

1.07 202,652,948

1.22 163,885,535

1.41 154,711,319

2.39 414,271,565 365,106,562 280,501,793 165,587,888 116,010,270 64,634,138

(ii) Quick Ratio (Current Assets-Inventories-Advance, Deposit & Prepayments)/Current

Liabilities

203,888,277 0.49

173,427,767 0.48

154,524,920 0.55

128,596,936 0.78

110,431,063 0.95

97,336,714 1.51

414,271,565 365,106,562 280,501,793 165,587,888 116,010,270 64,634,138


(i) Accounts Receivable Turnover Ratio Net Sales/Average Accounts Receivables 413,375,395

2.73 507,906,169

3.27 436,625,142

3.23 310,159,892

2.64 253,600,597

2.46 309,525,830

3.73 151,678,654 155,458,774 135,268,754 117,420,893 103,169,386 83,040,810

(ii) Inventory Turnover Ratio Cost of Goods Sold /Average Inventory 299,116,127

2.43 366,808,377

3.75 322,292,312

3.86 225,652,948

3.63 189,856,938

3.52 209,653,589

3.73 122,973,092 97,714,137 83,473,092 62,177,137 53,997,489 56,136,640

(iii) Asset Turnover Ratio Net Sales/Average Total Assets 413,375,395

0.36 507,906,169

0.60 436,625,142

0.72 310,159,892

0.68 253,600,597

0.67 309,525,830

0.97 1,151,070,902 850,127,110 606,556,679 457,491,820 379,005,034 318,880,577


(i) Gross Margin Ratio Gross Profit/Net Sales 114,259,268

27.64% 141,097,792

27.78% 114,332,830

26.19% 84,506,944

27.25% 63,743,659

25.14% 99,872,241

32.27% 413,375,395 507,906,169 436,625,142 310,159,892 253,600,597 309,525,830

(ii) Operating Profit Ratio Operating Profit/Net Sales 95,348,802

23.07% 116,866,429

23.01% 85,391,885

19.56% 64,896,586

20.92% 35,500,065

14.00% 82,722,689

26.73% 413,375,395 507,906,169 436,625,142 310,159,892 253,600,597 309,525,830

(iii) Net Profit Ratio Net Profit after Tax/Net Sales 36,012,255

8.71% 37,750,512

7.43% 24,673,652

5.65% 23,030,936

7.43% 12,932,010

5.10% 36,850,599

11.91% 413,375,395 507,906,169 436,625,142 310,159,892 253,600,597 309,525,830

(iv) Return on Assets Ratio Net Profit after Tax/Average Total Assets 36,012,255

3.13% 37,750,512

4.44% 24,673,652

4.07% 23,030,936

5.03% 12,932,010

3.41% 36,850,599

11.56% 1,151,070,902 850,127,110 606,556,679 457,491,820 379,005,034 318,880,577

(v) Return on Equity Ratio Net Profit after Tax/Average Total

Shareholders Equity

36,012,255 6.66%

37,750,512 12.29%

24,673,652 9.27%

23,030,936 9.74%

12,932,010 6.04%

36,850,599 21.01%

540,910,720 307,085,400 266,309,116 236,378,638 214,124,227 175,395,723

(vi) Earnings Per Share (EPS) Net Profit after Tax/Weighted Average Number of Ordinary Shares Outstanding

36,012,255 1.06

37,750,512 1.53

24,673,652 1.00

23,030,936 0.94

12,932,010 0.53

36,850,599 1.50

34,113,869 24,665,589 24,580,000 24,580,000 24,580,000 24,580,000

(vii) Earnings before interest, taxes, depreciation and amortization (EBITDA)

margin

EBITDA/Net Sales 147,524,506

35.69% 166,224,664

32.73% 122,659,841

28.09% 86,697,207

27.95% 53,879,884

21.25% 103,130,921

33.32% 413,375,395 507,906,169 436,625,142 310,159,892 253,600,597 309,525,830

IV. Solvency Ratios:

(i) Debt to Total Assets Ratio Total Debt/Total Assets 437,617,851

0.33 429,599,235

0.43 295,717,117

0.42 182,731,265

0.36 149,006,377

0.37 136,192,985

0.39 1,307,522,381 994,619,423 705,634,797 507,478,561 407,505,079 350,504,989

(ii) Debt to Equity Ratio Total Debt/Total Equity 437,617,851

0.58 429,599,235

1.29 295,717,117

1.05 182,731,265

0.73 149,006,377

0.67 136,192,985

0.66 749,916,847 331,904,592 282,266,207 250,352,024 222,405,251 205,843,203

(iii) Times Interest Earned Ratio EBIT/Financial Expenses 95,348,802

1.84 116,866,429

2.00 85,391,885

2.04 64,896,586

1.99 35,500,065

2.05 82,722,689

4.14 51,868,683 58,548,323 41,948,697 32,572,465 17,349,876 19,998,266

(iv) Debt Service Coverage Ratio Net Operating Profit / Total Debt Service 147,524,506

9.38 166,224,664

4.42 122,659,841

0.92 86,697,207

6.03 53,879,884

2.10 103,130,921

4.98 15,731,402 37,605,114 133,030,337 14,371,192 25,698,993 20,692,222


(i) Net Operating Cash Flow per Share

(NOCFPS)

Net Operating Cash Flow/ Number of

Ordinary Shares Outstanding

122,459,040 3.59

135,174,273 5.48

57,307,100 2.33

49,660,504 2.02

48,839,789 1.99

77,970,962 3.17

34,113,869 24,665,589 24,580,000 24,580,000 24,580,000 24,580,000

(ii) NOCFPS to EPS Ratio Net Operating Cash Flow per Share/EPS 3.59

3.40 5.48

3.58 2.33

2.32 2.02

2.16 1.99

3.78 3.17

2.12 1.06 1.53 1.00 0.94 0.53 1.50

Page: 182

Comparison ratios with the industry average ratios of the same periods:

AL-FARUQUE BAGS LTD. Industry

Average ***

Particulars

30.06.2017

2017 Remark/ Explanation

Ratio

Ratio


(i) Current Ratio 0.88

2.38

AFBL's Current Ratio is satisfactory with the industry average current ratio.

(ii) Quick Ratio 0.48

0.87

AFBL'sRatio is satisfactory with the industry average ratio.


(i) Accounts Receivable Turnover Ratio

3.27

4.51

AFBL's Ratio is satisfactory as operating profit is sufficient to pay for financial expense.

(ii) Inventory Turnover Ratio 3.75

3.76

AFBL's Ratio is lower as debt burden is lowerer than equity.

(iii) Asset Turnover Ratio 0.60

0.64

AFBL's Ratio is satisfactory as collection period is shorter period.


(i) Gross Margin Ratio 27.78%

17.08%

AFBL's Ratio is satisfactory as inventory is sold in shorter time.

(ii) Operating Profit Ratio 23.01%

12.43%

AFBL'sRatio is satisfactory with the average industry ratio.

(iii) Net Profit Ratio 7.43%

6.01%

AFBL's Ratio is satisfactory with the industry average ratio.

(iv) Return on Assets Ratio 4.44%

3.83%


(v) Return on Equity Ratio 12.29%

5.95%


(vi) Earnings Per Share (EPS) 1.53

1.19



32.73%

16.53%



(i) Debt to Total Assets Ratio 0.43

0.25


(ii) Debt to Equity Ratio 1.29

0.57


(iii) Times Interest Earned Ratio 2.00

4.78

AFBL's Ratio is satisfactory as debt burden is lower than assets.

(iv) Debt Service Coverage Ratio 4.42

Not Available

AFBL's Ratio is satisfactory as net operating profit is sufficient to pay interest and principal of long term debt.

Page: 183



5.48

0.66

AFBL's Ratio is satisfactory as Net Operating Cash Flow is positive.

(ii) NOCFPS to EPS Ratio 3.58

(2.44)


*** The Industry average ratio is calculated through using the ratio of 5 listed similar companies namely Yeakin Polymer Limited, Khan Brothers PP Woven Bag Industries Ltd., Deshbandhu Polymer Ltd., Sinobangla Industries Ltd. and Miracle Industries Ltd. for the year ended June 30, 2017.

AL-FARUQUE BAGS LTD.

Industry Average ***

Particulars

30.06.2016


Ratio

Ratio



2.19



0.76




3.23

4.74



2.28



0.58

AFBL's Ratio is satisfactory with the average industry ratio.



17.22%



11.83%



5.99%



4.36%



6.23%



1.14



28.09%

15.09%




0.22



0.43



6.36


Page: 184


Not Available




2.33

1.54



3.02


*** The Industry average ratio is calculated through using the ratio of 5 listed similar companies namely Yeakin Polymer Limited, Khan Brothers PP Woven Bag Industries Ltd., Deshbandhu Polymer Ltd., Sinobangla Industries Ltd. and Miracle Industries Ltd. for the year ended June 30, 2016.



Particulars

30.06.2015


Ratio

Ratio



1.95



0.69




2.64

5.54



3.33



0.91




16.66%



11.44%



6.89%



5.50%



7.60%



1.38



27.95%

14.41%




0.21


Page: 185


0.42



4.15



Not Available




2.02

2.69



1.20


*** The Industry average ratio is calculated through using the ratio of 5 listed similar companies namely Yeakin Polymer Limited, Khan Brothers PP Woven Bag Industries Ltd., Deshbandhu Polymer Ltd. and Miracle Industries Ltd. for the year ended June 30, 2015 and Sinobangla Industries Ltd. for the year ended 31 October, 2015.



Particulars

30.06.2014


Ratio

Ratio



2.14



0.66




2.46

6.07



3.26



0.80




17.74%



12.82%



6.11%



5.07%



7.79%



1.18


Page: 186


21.25%

16.35%




0.16



0.66



4.90



Not Available




1.99

1.38



1.05





Particulars

30.06.2013


Ratio

Ratio



2.13



0.88




3.73

5.96



3.12



0.77




17.03%



11.67%



4.87%


Page: 187


4.27%



6.25%



1.07



33.32%

14.94%




0.30



0.70

AFBL's Ratio is higher as debt burden is higher than equity.


4.12



Not Available




3.17

0.01

AFBL's Ratio is negative as Net Operating Cash Flow is positive.


(2.4)



Page: 188

(d) Auditors report under Section 135(1), Paragraph 24(1) of Part II of Schedule III of the †Kv¤úvwb AvBb, 1994. The report shall include comparative

income statements and balance sheet and aforementioned ratios for immediate preceding five accounting years of the issuer. If the issuer has been in commercial operation for less than five years, the above mentioned inclusion and submission will have to be made for the period since commercial operation;

We have examined the Financial Statements of AL-FARUQUE BAGS LTD. for the period ended March 31, 2018, for the year ended June 30, 2017, 2016, July 01 2015, June 30 2014 and July 01 2013 which were audited. In pursuance of Section-135 (1) and Para-24 (1) of Part-II of Schedule-III of the Companies Act 1994, our report is as under:

A) Statements of Assets and Liabilities of the company is as under:

Particulars

Amount in Taka

31-Mar-2018

30-Jun-2017

30-Jun-2016

01-Jul-2015

30-Jun-2014

01-Jul-2013

Restated

Restated

Restated

Restated

PROPERTY & ASSETS:

Fixed Assets 458,646,712

454,950,285

304,555,009

257,164,051

127,185,648

116,716,183

Property, Plant & Equipment 458,646,712

454,950,285

304,555,009

257,164,051

127,185,648

116,716,183

Other & Non-Current Assets 447,928,102

218,511,452

99,568,181

47,661,562

116,433,896

79,077,487

Investment 30,562,700

29,592,700

27,782,700

26,166,500

25,259,000

20,032,000 Capital Work-In-Progress 417,365,402

188,918,752

71,785,481

17,845,754

85,480,096

52,742,469

Preliminary Expense -

-

-

3,649,308

4,257,526

4,865,744 Deferred Expense -

-

-

-

1,437,274

1,437,274

Current Assets 400,947,567

321,157,685

301,511,607

202,652,948

163,885,535

154,711,319

Inventories 145,172,210

100,773,974

94,654,299

72,291,885

52,062,389

55,932,589 Trade Receivable 137,671,420

165,685,888

145,231,660

125,305,847

109,535,939

96,802,833

Advances, Deposits & Pre-payments 51,887,080

46,955,944

52,332,388

1,764,127

1,392,083

1,442,016 Cash and Bank Balances 66,216,857

7,741,880

9,293,260

3,291,089

895,124

533,881

TOTAL PROPERTY & ASSETS 1,307,522,381

994,619,423

705,634,797

507,478,561

407,505,079

350,504,989


Shareholders' Equity 749,916,847

331,904,592

282,266,207

250,352,024

222,405,251

205,843,203

Share Capital 480,000,000

98,000,000

10,000,000

10,000,000

10,000,000

10,000,000 Tax Holiday Reserve 96,110,705

96,110,705

92,222,831

84,982,300

78,517,476

74,887,438

General Reserve -

-

-

-

-

9,883,632 Retained Earnings 173,806,142

137,793,887

180,043,376

155,369,724

133,887,775

111,072,133

Page: 189

Long Term Liabilities 143,333,969

297,608,269

142,866,797

91,538,648

69,089,558

80,027,649

Long Term Loan 133,890,090

137,910,228

69,498,976

68,150,958

68,940,899

80,025,656 Share Money Deposits -

150,000,000

68,420,000

20,290,000

-

Deferred Tax Liability 9,443,879

9,698,040

4,947,820

3,097,690

148,659

1,993

Current Liabilities 414,271,565

365,106,562

280,501,793

165,587,888

116,010,270

64,634,138

Current Portion of Long Term Loan 22,500,000

18,300,000

14,400,000

14,400,000

13,600,000

14,400,000 Trade Payable 2,405,241

1,941,504

3,644,920

3,076,819

5,205,175

2,554,943

Short Term Loan 281,227,761

273,389,007

211,818,141

100,180,307

66,465,478

41,767,329 Provision for Expenses 79,054,872

49,985,484

40,749,420

43,233,500

27,470,672

4,084,396

Provision for Income Tax 29,083,691

21,490,566

9,889,313

4,697,262

3,268,945

1,827,470

TOTAL EQUITY & LIABILITIES 1,307,522,381

994,619,423

705,634,797

507,478,561

407,505,079

350,504,989

Net Asset Value (NAV) per Share 15.62

33.87

282.27

250.35

222.41

205.84

Page: 190

B) The statements of operating results of the company is as follow:

Particulars

Amount in Taka

1 July 2017 To

31 March 2018

1 July 2016 To

30 June 2017

1 July 2015 To

30 June 2016

1 July 2014 To

30 June 2015

1 July 2013 To

30 June 2014

1 July 2012 To

30 June 2013

Restated

Export Sales 413,375,395

507,906,169

436,625,142

310,159,892

253,600,597

309,525,830

Less: Cost of Goods Sold 299,116,127

366,808,377

322,292,312

225,652,948

189,856,938

209,653,589

Gross Profit 114,259,268

141,097,792

114,332,830

84,506,944

63,743,659

99,872,241

Less: Operating Expenses: 18,910,466

24,231,362

28,940,945

19,610,358

28,243,594

17,149,552

Administrative expenses 16,092,438

20,542,309

25,314,360

16,865,766

19,642,568

13,326,621 Selling & Distribution Expenses 2,818,028

3,689,053

3,626,586

2,744,592

8,601,026

3,822,931

Operating Profit 95,348,802

116,866,429

85,391,885

64,896,586

35,500,065

82,722,689

Add: Other Income 171,099

-

-

-

-

-

Less: Financial Expenses: 51,868,683

58,548,323

41,948,697

32,572,465

17,349,876

19,998,266

Financial Expenses 51,868,683

58,548,323

41,948,697

32,572,465

17,349,876

19,998,266

Profit before Income Tax 43,651,218

58,318,107

43,443,188

32,324,121

18,150,189

62,724,423 Less: Provision for Tax Holiday Reserve -

3,887,874

7,240,531

6,464,824

3,630,038

20,908,141

Less: General Reserve -

-

-

-

-

3,136,221 Less: Provision for Income Tax 7,638,963

16,679,721

11,529,005

2,828,361

1,588,142

1,829,462

Current Tax 7,893,124

11,929,501

9,678,875

1,428,317

1,441,476

1,829,462 Deferred Tax (254,161)

4,750,220

1,850,130

1,400,044

146,666

-


36,012,255

37,750,512

24,673,652

23,030,936

12,932,010

36,850,599

Earnings per Share 1.06

1.53

1.00

0.94

0.53

1.50

Page: 191

C) Dividend declared:


Cash Dividend

Nil Nil Nil Nil Nil Nil

Stock Dividend

(Bonus Share) Nil Nil 800% Nil Nil Nil

D) Al-Faruque Bags Limited was incorporated in Bangladesh as a Private Limited Company with the

issuance of Certificate of incorporation bearing Reg. No. Raj-C-446/2007 dated on December 03, 2007 by the Registrar of Joint Stock Companies & Firms. The Company, however has sub-divided the face value of its ordinary share from Tk. 1,000.00 to Tk. 10.00 by passing a special resolution in its extraordinary general meeting held on November 30, 2016 and necessary amendments in the capital clause of the Memorandum and Articles of Association were made accordingly. AFBL converted into public Limited Company on January 15, 2018.

E) The Company started its commercial operation in March 1, 2010.

F) The Company has no subsidiary as on the balance sheet date.

G) No proceeds or part of the proceeds of the issue of shares would be applied directly by the company in the purchase of any business.

H) The Company did not prepare any statement of accounts for the period subsequent to March 31, 2018.

I) Figures related to previous years have been re-arranged whenever considered necessary.

Sd/- Place: Dhaka

ARTISAN

Date: May 24, 2018


Page: 192

(e) Financial spread sheet analysis for the latest audited financial statements;

AL-FARUQUE BAGS LTD. Statement of Financial Position

As at March 31, 2018

Particulars Amount Percentage on Total

Asset Grand Total

PROPERTY & ASSETS:

Fixed Assets 458,646,712 35.08%

Property, Plant & Equipment 458,646,712 35.08%

Land & Land Development 41,767,143 3.19%

Boundary Wall & Surface Drain 27,670,113 2.12%

Dormitory Building & Canteen 58,791,902 4.50%

Water Reserver 1,156,552 0.09%

Factory Shed, Workshop & Godown 138,972,924 10.63%

Fire Fightting Equipments 367,212 0.03%

Plant & Machinery 78,017,336 5.97%

Sub station, Electric installation, Stablizer 22,353,542 1.71%

Motor Vehicles 24,682,381 1.89%

Office Building 55,027,321 4.21%

Electric Equipments 2,042,358 0.16%

Office Equipments 2,588,733 0.20%

Furniture & Fixture 5,209,194 0.40%

Other & Non-Current Assets 447,928,102 34.26%

Investment 30,562,700 2.34%

Capital Work in Progress 417,365,402 31.92%

Current Assets 400,947,567 30.66%

Inventories 145,172,210 11.10%

Raw Materials 127,196,000 9.73%

Work-In-Process 8,093,550 0.62%

Finished Goods 7,758,840 0.59%

Stores & Spares 2,123,820 0.16%

Trade Receivables 137,671,420 10.53%

Trade Receivables 137,671,420 10.53%

Advances, Deposits & Pre-payments 51,887,080 3.97%

Construction materials 10,090,082 0.77%

Lund Purchase 5,742,800 0.44%

Office Rent 275,426 0.02%

Salary & Allowance 1,283,600 0.10%

Advance Income Tax 12,448,573 0.95%

L/C Margin agianst Raw materials 19,991,411 1.53%

Security Deposit - PDB 600,000 0.05%

Insurance Premium 1,455,188 0.11%

Cash and Bank Balances 66,216,857 5.06%

TOTAL PROPERTY & ASSETS 1,307,522,381 100.00%


Shareholders' Equity 749,916,847 57.35%

Share Capital 480,000,000 36.71%

Tax Holiday Reserve 96,110,705 7.35%

Retained Earnings 173,806,142 13.29%

Page: 193

Long Term Liabilities 143,333,969 10.96%

Long Term Loan 133,890,090 10.24%

Deferred Tax Liability 9,443,879 0.72%

Current Liabilities 414,271,565 31.68%

Current Portion of Long Term Loan 22,500,000 1.72%

Trade Payable 2,405,241 0.18%

Short Term Loan 281,227,761 21.51%

Provision for Expenses 79,054,872 6.05%

Salary & Allowances 2,697,433 0.21%

Audit Fee 150,000 0.011%

Attendance Bonus 50,000 0.00%

Electircity Bill (PDB) 1,801,659 0.14%

Withholding Tax 476,893 0.138%

Interest Payable 73,805,256 5.64%

Others Expenses 73,632 0.01%

Provision for Income Tax 29,083,691 2.22%

TOTAL EQUITY & LIABILITIES 1,307,522,381 100%

Page: 194

AL-FARUQUE BAGS LTD. Statement of Profit or Loss and other Comprehensive Income

For the period from 1st July, 2017 to 31st March, 2018

Particulars

Period ended March 31, 2018

Percentage on Total Turnover

Grand Percentage

Export Sales 413,375,395 100%

Export Sales 413,375,395

Less: Cost of Goods Sold 299,116,127 72.36%

Opening Stock of Work-in-Process (WIP) 3,519,705

Add: Raw Materials Consumed 230,808,575 55.84%

Add: Stores & Spares Consumed 6,085,836 1.47%

Add: Direct Expenses: 9,896,675 2.39%

Wages 9,217,469 2.23%

Overtime 679,206 0.16%

Add: Manufacturing Overhead 57,349,680 13.87%

Less: Closing Work-in-Process (WIP) 8,093,550

Cost of Goods Manufactured 299,566,921 72.47%

Add: Opening Stock of Finished Goods 7,308,046

Cost of Goods available for sales 306,874,967 74.24%

Less: Closing Stock of Finished Goods 7,758,840

Gross Profit 114,259,268 27.64%

Less: Operating Expenses: 18,910,466 4.57%

Administrative Expenses 16,092,438 3.89%

Selling & Distribution Expenses 2,818,028 0.68%

Operating Profit 95,348,802 23.07%

Add: Other Income 171,099 0.04%

Less: Financial Expenses: 51,868,683

Financial Expenses 51,868,683 12.55%

Profit before Income Tax 43,651,218 10.56%

Less: Provision for Income Tax 7,638,963 1.85%

Current Tax 7,893,124 1.91%

Deferred Tax (254,161) -0.06%

Total Comprehensive Income for the Period

36,012,255 8.71%

Page: 195

AL-FARUQUE BAGS LTD. Summary of Financial Position

As at March 31, 2018

Particulars Amount Percentage on Total

Asset Grand Total

PROPERTY & ASSETS:

Fixed Assets 458,646,712 35.08%

Property, Plant and Equipment 458,646,712 35.08%

Other & Non-Current Assets 447,928,102 34.26%

Investment 30,562,700 2.34%

Capital Work in Progress 417,365,402 31.92%

Current Assets 400,947,567 30.66%

Inventories 145,172,210 11.10%

Trade Receivable 137,671,420 10.53%

Advances, Deposits & Pre-payments 51,887,080 3.97%

Cash and Bank Balances 66,216,857 5.06%

TOTAL PROPERTY & ASSETS 1,307,522,381 100.00%

Equity & Liabilities:

Shareholders' Equity 749,916,847 57.35%

Long Term Liabilities 143,333,969 10.96%

Current Liabilities 414,271,565 31.68%

TOTAL EQUITY & LIABILITIES 1,307,522,381 100%

Page: 196

(f) Earnings Per Share (EPS) on fully diluted basis (with the total existing number of shares) in addition to the weighted average number of shares basis. Future projected Net Income should not be considered while calculating the weighted average EPS;

As per audited financial statement for the year ended June 30, 2017

Particulars Amount in Taka

Net Profit after Tax 37,750,512

Total existing number of Share 48,000,000

Weighted average number of Share 9,665,589

Earnings per Share (EPS)-Fully Diluted Basis 0.79

Earnings per Share (EPS)-Weighted average no. of Share basis 3.91

(g) All extra-ordinary income or non-recurring income coming from other than core operations should be shown separately while showing the Net Profit as well as the Earnings Per Share;

As per audited financial statement for the year ended June 30, 2017


Operating Profit before Tax-Holiday Reserve 58,318,107

Less: Provision for Tax -Holiday (40%) 3,887,874

Less: Other Income -

Net Profit before Tax except Other Income 54,430,233

Less: Provision for Income Tax 16,679,721

Net Profit after Tax 37,750,512

No. of shares 9,665,589

Earnings per Share (EPS) 3.91

(h) Quarterly or half-yearly EPS should not be annualized while calculating the EPS;

This information is not applicable for AFBL.

(i) Net asset value (with and without considering revaluation surplus or reserve) per unit of the securities being offered at the date of the latest audited statement of financial position. The Company has not revalued any of its assets.

As per audited financial statement for the period ended March 31, 2018


Share Capital 480,000,000

Tax Holiday Reserve 96,110,705

Retained Earnings 173,806,142

Total Shareholders' Equity (without revaluation reserve) 749,916,847

Total Number of Ordinary Share 48,000,000

Net Assets Value (NAV) (without revaluation reserve) at BDT 10.00 per share 15.62

(j) The Commission may require the issuer to re-audit the audited financial statements, if any

deficiency or anomaly is found in the financial statements. In such a case, cost of audit should be borne by the concerned issuer. This information is not applicable for AFBL.

Page: 197

(k) Following statements for the last five years or any shorter period of commercial operation certified by the auditors:-

(i) Statement of long term and short term borrowings including borrowing from related party or connected persons with rate of interest and interest paid or accrued;

Certification on Statement of long term and short term borrowings including borrowing from related party or connected persons with rate of interest and interest paid or accrued of Al-Faruque Bags Limited.

After due verification, we certify that the long term and short term borrowing including borrowing from related party or connected persons of Al - Faruque Bags Limited from 1st July, 2012 to 31 March, 2018 made up as follows:

For the period ended 31 March, 2018

Name of Party

Nature of Relationship

Nature of Borrowing

Balance as 31 March, 2018 (BDT)

Interest Rate

Interest Paid, (BDT)

Interest Accrued, (BDT)

Rajshahi Krishi Unnayan Bank Lender Long Term 91,033,161 13.00% - 12,972,189

The Farmers Bank Limited Lender Long Term 65,356,930 13.50% - 7,440,497

Sub-Total 156,390,090

- 20,412,686

Rajshahi Krishi Unnayan Bank Lender Short Term 55,229,884 13.00% 1,250,000 4,067,569

The Farmers Bank Limited Lender Short Term 225,997,877 13.50% 6,566,692 19,006,627

Social Islami Bank Bangladesh Ltd. Lender Short Term - 12.00% 383,603 -

Sub-Total 281,227,761

8,200,294 23,074,196


8,200,294 43,486,882

For the year ended 30 June, 2017

Name of Party


Nature of Borrowing

Balance as 30 June, 2017 (BDT)

Interest Rate




The Farmers Bank Limited Lender Long Term 65,177,078 13.50% 1,980,335 4,812,152

Sub-Total 156,210,228 1,980,335 20,801,429



Social Islami Bank Bangladesh Ltd. Lender Short Term 9,620,842 12.00%

928,027

-

Sub-Total 273,389,007 23,261,192 12,188,873

Grand Total 429,599,235 25,241,527 32,990,302

Page: 198


Name of Party


Nature of Borrowing

Balance as 30 June, 2016(BDT)

Interest Rate




Sub-Total 83,898,976

- 16,913,194



National Bank Ltd. Lender Short Term - 17.00% 800,674 -

Social Islami Bank Bangladesh Ltd. Lender Short Term 10,749,210 12.00% 7,858,410 -

Sub-Total 211,818,141

17,335,530 7,206,562


17,335,530 24,119,756


Name of Party


Nature of Borrowing


Interest Rate




Sub-Total 82,550,958 - 16,351,887

Rajshahi Krishi Unnayan Bank Lender Short Term 50,236,621 15.00% 6,570,765 -

National Bank Ltd. Lender Short Term 49,943,686 17.00% 9,556,480 -

Sub-Total 100,180,307 16,127,245 -

Grand Total 182,731,265 16,127,245 16,351,887


Name of Party


Nature of Borrowing


Interest Rate




Sub-Total 105,297,925

- 14,921,817


National Bank Ltd. Lender Short Term 10,329,797 17.00% 841,694 -

Sub-Total 66,465,478

2,313,235 -


2,313,235 14,921,817

Page: 199


Name of Party


Nature of Borrowing


Interest Rate



Rajshahi Krishi Unnayan Bank Lender Long Term 94,425,656 14.50% 1,424,827 11,896,692

Sub-Total 94,425,656 1,424,827 11,896,692


Sub-Total 41,767,329 6,637,883 -

Grand Total 136,192,985 8,062,710 11,896,692

Sd/- Place: Dhaka

ARTISAN


(ii) Statement of principal terms of secured loans and assets on which charge have been created against those loans with names of lenders, purpose, sanctioned amount, rate of interest, primary security, collateral or other security, re-payment schedule and status;

Certification on statement of principal terms of secured loans and assets on which charge have been created against those loans with names of lenders, purpose, sanctioned amount, rate of interest, primary security, collateral or other security, re-payment schedule and status of Al-Faruque Bags Limited.

After due verification, we certify that the principal terms of secured loans as per loan agreement and assets on which charge have been created against those loans of Al-Faruque Bags Limited from 1st July, 2012 to 31 March, 2018 were as follows:


Names of lenders The Farmers Bank Limited The Farmers Bank

Limited

Purpose To purchase Capital Machinery Sanctioned Amount (Taka in lac) 2,450.00 2,450.00

Rate of Interest 13.50% 13.50%

Primary security 113.75 Decimal Land of the Company

Collateral or other security 597.65 Decimal Land (third party), floating assets of the company and personal Guarantee of all Director, L/C Documents & Shipping Documents, Cheque covering the entire loan amount.

Re-payment schedule 78 Equal Monthly Installment 78 Equal Monthly

Installment

Status (Outstanding balance Tk.)

65,356,930 65,177,078

Page: 200


Names of lenders Rajshahi Krishi Unnayan Bank Rajshahi Krishi Unnayan Bank

Rajshahi Krishi Unnayan Bank

Rajshahi Krishi

Unnayan Bank

Rajshahi Krishi

Unnayan Bank

Rajshahi Krishi

Unnayan Bank

Purpose To purchase Capital Machinery

Sanctioned Amount (Taka in lac)

1,700.00 1,700.00 1,700.00 1,700.00 1,700.00 1,700.00

Rate of Interest 13.00% 13.00% 14.00% 14.50% 14.50% 14.50%

Primary Security 243.50 Decimal land (Project land)

Collateral or other security 7.50 Decimal Land (Third party) : Factory Building and Plant & Machineries

Re-payment schedule 29 Equal Quarterly Installment 29 Equal Quarterly

Installment

29 Equal Quarterly Installment





91,033,161 91,033,150 83,898,976 82,550,958 105,297,925 94,425,656



Limited The Farmers Bank Limited

Purpose To finance working capital requirement of the company

Sanctioned Amount (Taka in lac) 1,500.00 1,500.00 1,000.00

Rate of Interest 13.50% 13.50% 13.50%

Primary security 113.75 Decimal Land of the Company 103.75 Decimal Land of the Company

Collateral or other security

597.65 Decimal Land (third party), floating assets of the company and personal Guarantee of all Director, L/C Documents & Shipping Documents, Cheque covering the entire loan amount.

547.65 Decimal Land (third party), floting assets of the company, personal Guarantee of all Director, L/C Documents & Shipping Documents, Cheque covering the entire loan amount.

Re-payment schedule Within 1 Year Within 1 Year Within 1 Year

Status (Outstanding balance Tk.) 118,349,212 106,915,184 97,019,882

Page: 201



Limited The Farmers Bank Limited

Purpose To purchase raw materials

Sanctioned Amount (Taka in lac) 1,500.00 1,350.00 1,350.00

Rate of Interest 13.50% 13.50% 13.50%

Primary security 113.75 Decimal Land of the Company 103.75 Decimal Land of the Company


597.65 Decimal Land (third party), floating assets of the company and personal Guarantee of all Director, L/C Documents & Shipping Documents, Cheque covering the entire loan amount.

547.65 Decimal Land (third party), floting assets of the company, personal Guarantee of all Director, L/C Documents & Shipping Documents, Cheque covering the entire loan amount.

Re-payment schedule Deal to Deal basis Deal to Deal basis Deal to Deal

basis

Status (Outstanding balance Tk.) 107,648,665 108,750,014 52,204,783


Names of lenders Rajshahi Krishi Unnayan Bank Rajshahi Krishi Unnayan Bank

Rajshahi Krishi Unnayan Bank

Rajshahi Krishi

Unnayan Bank

Rajshahi Krishi

Unnayan Bank

Rajshahi Krishi

Unnayan Bank

Purpose To finance working capital requirement of the company


500.00 500.00 500.00 500.00 500.00 500.00

Rate of Interest 13.00% 13.00% 14.00% 15.00% 15.00% 15.50%

Primary security 243.50 Decimal land (Project land)

Collateral or other security 7.50 Decimal Land (Third party) : Factory Building and Plant & Machineries

Re-payment schedule Within 1 Year Within 1 Year Within 1 Year Within 1 Year Within 1

Year Within 1

Year

Status (Outstanding balance Tk.) 55,229,884 48,102,967 51,844,267 50,236,621 56,135,681 41,767,329

Page: 202


Names of lenders National

Bank Limited

National Bank

Limited

National Bank

Limited

Purpose To purchase raw materials


400.00

Rate of Interest 17.00%

Primary security

1) 10% Cash Margin (for L/C), 2) shipping documents 3) Trust receipt duly signed by management 4) Post dated cheques for each LTR


1) 4.94 katha Land (third party 2) 03 (three) storied Residential Building

Re-payment schedule Deal to Deal

basis


39,486,510

Page: 203


Names of lenders National

Bank Limited

National Bank

Limited

National Bank

Limited

Purpose To finance working capital

requirement of the company


100.00

100.00


Primary security Stock of raw materials, Work-in-process and finished products of PP woven bags duly insured

Collateral or other security 1) 4.94 katha Land (third party) 2) 03 (three) storied Residential Building

Re-payment schedule Deal to Deal

basis Deal to Deal

basis

Status (Outstanding balance Tk.) 10,457,176 10,329,797


Names of lenders Social Islami Bank

Limited Social Islami Bank Limited

Purpose To meet working capital requirement of the

company

Sanctioned Amount 90% of total L/C value 90% of total L/C

value


Primary security Personal Guarantee of all Director of the Company

Collateral or other security Discounted document

Re-payment schedule Deal to Deal basis Deal to Deal basis

Status (Outstanding balance Tk.) 9,620,842 10,749,210

Sd/- Place: Dhaka

ARTISAN


Page: 204

(iii) Statement of unsecured loans with terms and conditions;

Certification on statement of unsecured loans with terms and conditions of Al-Faruque Bags Limited. This is to certify that Al - Faruque Bags Limited did not take any unsecured loan from 1st July, 2012 to 31 March, 2018.

Sd/- Place: Dhaka

ARTISAN

Date: May 24, 2018 Chartered Accountants (iv) Statement of inventories showing amount of raw material, packing material, stock-in-process and finished goods, consumable items, store

and spares parts, inventory of trading goods etc.;

Certification on statement of inventories showing amount of raw material, packing material, stock-in process and finished goods, consumable items, store & spare parts, inventory of trading goods etc. of Al-Faruque Bags Limited.

After due verification, we certify that the statement of inventories showing amount of raw material, packing material, stock-in process, finished goods, consumable items, store & spare parts, inventory of trading goods of Al - Faruque Bags Limited from 1st July, 2012 to 31 March, 2018 were as follows:

Particulars

Amount in Taka


Raw Material 127,196,000 82,819,125 85,830,450 54,060,243 30,999,450 43,101,650

Work-In-Process 8,093,550 3,519,705 2,719,705 8,204,058 9,498,712 7,136,757

Finished Goods 7,758,840 7,308,046 4,542,046 9,101,079 7,932,879 5,652,800

Store & Spares parts 2,123,820 7,127,098 1,562,098 926,505 3,631,348 41,382

Total 145,172,210 100,773,974 94,654,299 72,291,885 52,062,389 55,932,589

Sd/- Place: Dhaka

ARTISAN


Page: 205

(v) Statement of trade receivables showing receivable from related party and connected persons;

Certification on statement of trade receivables showing receivable from related party and connected persons of Al-Faruque Bags Limited.

After due verification, we certify that the statement of trade receivables showing receivable from related party and connected persons of Al - Faruque Bags Limited from 1st July, 2012 to 31 March, 2018 were as follows:

Particulars

Amount in Taka


Genaral 137,671,420 165,685,888 145,231,660 125,305,847 109,535,939 96,802,833

From related party - - - - - -

From connected persons - - - - - -

Total 137,671,420 165,685,888 145,231,660 125,305,847 109,535,939 96,802,833

Sd/- Place: Dhaka

ARTISAN

Date: May 24, 2018 Chartered Accountants (vi) Statement of any loan given by the issuer including loans to related party or connected persons with rate of interest and interest realized or

accrued;

Certification on statement of any loan given by the issuer including loans to related party or connected persons with rate of interest and interest realized or accrued by the Al-Faruque Bags Limited.

This is to certify that Al - Faruque Bags Limited did not give any loan to any related party or connected persons from 1st July, 2012 to 31 March, 2018.

Sd/-

Place: Dhaka

ARTISAN Date: May 24, 2018 Chartered Accountants

Page: 206

(vii) Statement of other income showing interest income, dividend income, discount received, other non operating income;

Certification on statement of other income showing interest income, dividend income, discount received, other non operating income of Al-Faruque Bags Limited.

After due verification, we certify that the statement of other income showing interest income, dividend income, discount received and other non-operating

income of Al - Faruque Bags Limited from 1st July, 2012 to 31 March, 2018 were as follows:

Particular Amount in Taka


Interest Income - - - - - -

Dividend Income - - - - - -

Discount Received - - - - - -

Other Non-Operating Income 171,099 - - - - -

Total 171,099 - - - - -

Sd/-

Place: Dhaka


Page: 207

(viii) Statement of turnover showing separately in cash and through banking channel;

Certification on statement of turnover showing separately in cash and through banking channel of Al-Faruque Bags Limited.

After due verification, we certify that the turnover showing seperately in cash, through banking channel of Al - Faruque Bags Limited from 1st July, 2012 to 31 March, 2018 were as follows:

Particular

Amount in Taka


In Cash - - - - - -

Through banking channel 441,389,863 487,451,941 416,699,329 294,389,984 240,867,490 282,001,783

Total Collection 441,389,863 487,451,941 416,699,329 294,389,984 240,867,490 282,001,783

Closing Receivables 137,671,420 165,685,888 145,231,660 125,305,847 109,535,939 96,802,833

Opening Receivables 165,685,888 145,231,660 125,305,847 109,535,939 96,802,833 69,278,786

Total Turnover 413,375,395 507,906,169 436,625,142 310,159,892 253,600,597 309,525,830

Sd/- Place: Dhaka

ARTISAN


Page: 208

(ix) Statement of related party transaction;

Certification on statement of related party transactions of Al-Faruque Bags Limited.

After due verification, we certify that the status of related party transaciton of Al - Faruque Bags Limited from 1st July, 2012 to 31 March, 2018 were as follows:

Name

Amount in (BDT)

Nature of

Transaction


Total Amount

Accured Payment Total

Amount Accured Payment

Total Amount



Total Amount



Chowdhury Al-

Faruque

Remuneration 450,000 - 450,000 600,000 - 600,000 600,000 - 600,000 600,000 - 600,000 600,000 - 600,000 174,000 - 174,000

Board Meeting

Fee 12,000 - 12,000 15,000 - 15,000 15,000 - 15,000 15,000 - 15,000 - - - - - -


Remuneration 450,000 - 450,000 600,000 - 600,000 600,000 - 600,000 600,000 - 600,000 600,000 - 600,000 174,000 - 174,000

Board Meeting

Fee 12,000 - 12,000 15,000 - 15,000 15,000 - 15,000 15,000 - 15,000 - - - - - -

Mst. Nimme Kabir

Chowdhury

Remuneration 450,000 - 450,000 600,000 - 600,000 600,000 - 600,000 600,000 - 600,000 600,000 - 600,000 174,000 - 174,000

Board Meeting Fee

9,000 - 9,000 15,000 - 15,000 15,000 - 15,000 15,000 - 15,000 - - - - - -

Tanzil Kabir

Chowdhury

Remuneration - - - - - - - - - - - - - - - - - -

Board Meeting

Fee 3,000 - 3,000 - - - - - - - - - - - - - - -

Sd/-

Place: Dhaka


Page: 209

(x) Reconciliation of business income shown in tax return with net income shown in audited financial statements; Certification regarding reconciliation of business income shown in tax return with net income shown in audited financial statements of Al-Faruque Bags

Limited from 1st July, 2012 to 31 March, 2018.

After due verification, we certify that the reconciliation of business income shown in tax return with net income before tax shown in audited financial statements of Al-Faruque Bags Limited from 1st July, 2012 to 31st march 2018 were as follows:


Net income before tax as per Audited Financial Statements

43,651,218 58,318,107 43,443,188 32,324,121 18,150,189 62,724,423

Add: Accounting Depreciation 52,175,704 49,358,235 37,267,956 21,800,621 18,379,819 20,408,232

Less: Tax Depreciation 50,723,353 69,716,320 46,329,820 37,801,122 20,056,002 20,476,555

Income shown in Tax Return 45,103,568 37,960,021 34,381,324 16,323,620 16,474,006 62,656,100

Sd/- Place: Dhaka

ARTISAN


Page: 210

(xi) Confirmation that all receipts and payments of the issuer above Tk.5,00,000/- (five lac) were made through banking channel;

Certification on confirmation that all receipts and payments of Al-Faruque Bags Limited above Tk.

500,000/- (Five Lac) were made through Banking Channel. This is to certify that all receipts and payments of Al - Faruque Bags Limited above Tk. 500,000 (Five Lac) were made through banking channel from 1st July, 2012 to 31 March, 2018.

Sd/- Place: Dhaka

ARTISAN


(xii) Confirmation that Bank Statements of the issuer are in conformity with its books of

accounts;

Certification on confirmation that Bank Statements of Al-Faruque Bags Limited are in conformity with its books of accounts

This is to certify that the bank statements of Al - Faruque Bags Limited from 1st July, 2012 to 31 March, 2018 are in conformity with books of accounts.

Sd/-

Place: Dhaka


Page: 211

(xiii) Statement of payment status of TAX, VAT and other taxes or duties;

Certification on statement of payment status of Tax, VAT and other taxes or duties of Al-Faruque Bags Limited.

After due verification, we certify that the status of TAX, VAT and other taxes or duties payments of Al - Faruque Bags Limited from 1st July, 2012 to 31 March, 2018 were as follows:

Particular

Amount in BDT


Tax 3,389,729 6,959,861 6,943,707 191,643 78,706 -

VAT* Exempted Exempted Exempted Exempted Exempted Exempted

Others Taxes/ Duties - - - - - -

Total 3,389,729 6,959,861 6,943,707 191,643 78,706 -

Sd/- Place: Dhaka

ARTISAN


Page: 212

CHAPTER (XXVII): CREDIT RATING REPORT As per Section 3 of Credit Ratings Companies Rules, 1996, the Company requires no credit rating report.

CHAPTER (XXVIII): PUBLIC ISSUE APPLICATION PROCEDURE Step-1 (Applicant) 1. An applicant for public issue of securities shall submit application/buy instruction to the

Stockbroker/ Merchant Banker where the applicant maintains customer account, within the cut-off date (i.e. the subscription closing date), which shall be the 25th (twenty fifth) working day from the date of publication of abridged version of prospectus.

2. The application/buy instruction may be submitted in prescribed paper or electronic form, which

shall contain the Customer ID, Name, BO Account Number, Number of Securities applied for, Total Amount and Category of the Applicant. At the same time:

a) Other than non-resident Bangladeshi (NRB) and Foreign applicants shall make the application

money and service charge available in respective customer account maintained with the Stockbroker/Merchant Banker. No margin facility, advance or deferred payment is permissible for this purpose. In case the application is made through a margin account, the application money shall be deposited separately and the Stockbroker/Merchant Banker shall keep the amount segregated from the margin account, which shall be refundable to the applicant, if become unsuccessful.

b) Non-resident Bangladeshi (NRB) and Foreign applicants shall submit bank drafts (FDD), issued

in favor of the Issuer for an amount equivalent to the application money, with their application to the concerned Stockbroker/Merchant Banker. A Non-resident Bangladeshi (NRB) and Foreign applicant may also submit a single draft against 02(two) applications made by him/her, i.e. one in his/her own name and the other jointly with another person. The draft (FDD) shall be issued by the Bank where the applicant maintains Foreign Currency account debiting the same account and provide the customer with a certificate mentioning the FC account number which has been debited to issue the FDD. The applicant shall also submit the certificate with their application. No banker shall issue more than two drafts from any Foreign Currency account for any public issue. At the same time, the applicant shall make the service charge available in respective customer account maintained with the Stockbroker/Merchant Banker.

c) Eligible investors shall submit application through the electronic subscription system of the

exchange(s) and deposit the full amount intended to subscribe by the method as determined by the exchange(s).

Step-2 (Intermediary) 3. The Stockbroker/Merchant Banker shall maintain a separate bank account only for this purpose

namely “Public Issue Application Account”. The Stockbroker/Merchant Banker shall:

a) post the amount separately in the customer account (other than NRB and Foreign applicants), and upon availability of fund, block the amount equivalent to the application money;

b) accumulate all the application/buy instructions received up to the cut-off date, deposit the

amount in the “Public Issue Application Account” maintained with its bank within the first banking hour of next working day of the cut-off date;

Page: 213

c) instruct the banker to block the account for an amount equivalent to the aggregate application money and to issue a certificate in this regard.

4. Banker of the Stockbroker/Merchant Banker shall block the account as requested for, issue a

certificate confirming the same and handover it to the respective Stockbroker/Merchant Banker. 5. For Non-resident Bangladeshi (NRB) and Foreign applicants, the Stockbroker/Merchant Banker

shall prepare a list containing the draft information against the respective applicant’s particulars. 6. The Stockbroker/Merchant Banker shall prepare category-wise lists of the applicants containing

Customer ID, Name, BO Account Number and Number of Securities applied for, and within 03 (three) working days from the cut-off date, send to the respective Exchange, the lists of applicants in electronic (text format with tilde ‘~’ separator) format, the certificate(s) issued by its banker, the drafts and certificates received from Non-resident Bangladeshi (NRB) and Foreign applicants and a copy of the list containing the draft information.

7. On the next working day, the Exchanges shall provide the Issuer with the information received from

the Stockbroker/Merchant Bankers, the drafts and certificates submitted by Non-resident Bangladeshi (NRB) and Foreign applicants and the list containing the draft information. Exchanges shall verify and preserve the bankers’ certificates in their custody.

8. The application/buy instructions shall be preserved by the Stockbroker/Merchant Bankers up to 6

months from listing of the securities with exchange. Step-3 (Issuer) 9. The Issuer shall prepare consolidated list of the applications and send the applicants’ BOIDs in

electronic (text) format in a CDROM to CDBL for verification. The Issuer shall post the consolidated list of applicants on its website and websites of the Exchanges. CDBL shall verify the BOIDs as to whether the BO accounts of the applicants are active or not.

10. On the next working day, CDBL shall provide the Issuer with an updated database of the

applicants containing BO Account Number, Name, Addresses, Parents Name, Joint Account and Bank Account information along with the verification report.

11. After receiving verification report and information from CDBL, the Issuer shall scrutinize the

applications, prepare category wise consolidated lists of valid and invalid applications and submit report of final status of subscription to the Commission and the Exchanges within 10 (ten) working days from the date of receiving information from the Exchanges.

12. The Issuer and the issue manager shall conduct category wise lottery with the valid applications

within 03 (three) working days from the date of reporting to the Commission and the Exchanges, if do not receive any observation from the Commission or the Exchanges.

13. The Issuer and issue manager shall arrange posting the lottery result on their websites within 06

(six) hours and on the websites of the Commission and Exchanges within 12 (twelve) hours of lottery.

14. Within 02 (two) working days of conducting lottery, the Issuer shall:

a) send category wise lists of the successful and unsuccessful applicants in electronic (text format with tilde ‘~’ separator) format to the respective Exchange.

b) send category wise lists of unsuccessful applicants who are subject to penal provisions as per

conditions of the Consent Letter issued by the Commission in electronic (text format with tilde ‘~’ separator) format to the Commission and Exchanges mentioning the penalty amount against each applicant.

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c) issue allotment letters in the names of successful applicants in electronic format with digital signatures and send those to respective Exchange in electronic form.

d) send consolidated allotment data (BOID and number of securities) in electronic text format in a

CDROM to CDBL to credit the allotted shares to the respective BO accounts. Step-4 (Intermediary) 15. On the next working day, Exchanges shall distribute the information and allotment letters to the

Stockbroker/Merchant Bankers concerned in electronic format and instruct them to:

a) remit the amount of successful (other than NRB and Foreign) applicants to the Issuer’s respective Escrow Account opened for subscription purpose, and unblock the amount of unsuccessful applicants;

b) send the penalty amount of other than NRB and Foreign applicants who are subject to penal

provisions to the Issuer’s respective Escrow Accounts along with a list and unblock the balance application money;

16. On the next working day of receiving the documents from the Exchanges, the

Stockbrokers/Merchant Banker shall request its banker to: a) release the amount blocked for unsuccessful (other than NRB and foreign) applicants; b) remit the aggregate amount of successful applicants and the penalty amount of unsuccessful applicants (other than NRB and foreign) who are subject to penal provisions to the respective ‘Escrow’ accounts of the Issuer opened for subscription purpose.

17. On the next working day of receiving request from the Stockbrokers/Merchant Bankers, their

bankers shall unblock the amount blocked in the account(s) and remit the amount as requested for to the Issuer’s ‘Escrow’ account.

18. Simultaneously, the stockbrokers/Merchant Bankers shall release the application money blocked in

the customer accounts; inform the successful applicants about allotment of securities and the unsuccessful applicants about releasing their blocked amounts and send documents to the Exchange evidencing details of the remittances made to the respective ‘Escrow’ accounts of the Issuer. The unblocked amounts of unsuccessful applicants shall be placed as per their instructions. The Stockbroker/Merchant Banker shall be entitled to recover the withdrawal charges, if any, from the applicant who wants to withdraw the application money, up to an amount of Tk. 5.00 (five) per withdrawal.

19. All drafts submitted by NRB or Foreign applicants shall be deposited in the Issuer’s respective

‘Escrow’ accounts and refund shall be made by the Issuer by refund warrants through concerned stockbroker or merchant banker or transfer to the applicant’s bank account (FC account which has been debited to apply by NRB or foreign applicants) through banking channel within 10 (ten) working days from the date of lottery.

Miscellaneous: 20. The Issuer, Issue Manager, Stockbrokers and Merchant Bankers shall ensure compliance of the

above. 21. The bank drafts (FDD) shall be issued considering TT Clean exchange rate of Sonali Bank Ltd. on

the date of publication of abridged version of prospectus. 22. Amount deposited and blocked in the “Public Issue Application Account” shall not be withdrawn or

transferred during the blocking period. Amount deposited by the applicants shall not be used by the Stockbrokers/Merchant Bankers for any purpose other than public issue application.

Page: 215

23. The Issuer shall pay the costs related to data transmission, if claimed by the Exchange concerned

up to an amount of Tk. 2,00,000.00 (taka two lac) for a public issue. 24. The Stockbroker/Merchant Bankers shall be entitled to a service charge of Tk.5.00 (taka five) only

per application irrespective of the amount or category. The service charge shall be paid by the applicant at the time of submitting application.

25. The Stockbroker/Merchant Banker shall provide the Issuer with a statement of the remittance and

drafts sent. 26. The Issuer shall accumulate the penalty amount recovered and send it to the Commission through a

bank draft/payment order issued in favor of the Bangladesh Securities and Exchange Commission. 27. The concerned Exchange are authorized to settle any complaints and take necessary actions

against any Stockbroker/Merchant Banker in case of violation of any provision of the public issue application process with intimation to the Commission.

All eligible Stock Brokers and Merchant Bankers shall receive the IPO Subscription.

The IPO subscription money collected from successful applicants (other than NRB applicants) by the Stockbrokers/Merchant Bankers will be remitted to the Company’s Account No. 1501203959824001 with BRAC Bank Limited, Head Office, Dhaka-1208, Bangladesh for this purpose. The IPO subscription money collected from successful NRB applicants in US Dollar or UK Pound Sterling or EURO shall be deposited to three FC accounts opened by the Company for IPO purpose are as follows:

SL Name of the A/C Account No. Type of

A/C Currency Bank & Branch

1 Al-Faruque Bags

Limited

1501203959824002

FC A/C

USD BRAC Bank Limited, Head

Office, Dhaka-1208 2 1501203959824003 EURO

3 1501203959824004 GBP

Page: 216

APPLICATION FORM

cuywRevRv‡i wewb‡qvM SzuwKc~Y©| †R‡b I ey‡S wewb‡qvM Ki ~b|

Interested persons are entitled to a prospectus, if they desire, and that copies of prospectus may be obtained from the issuer and the issue manager.

AL-FARUQUE BAGS LIMITED

APPLICATION FOR PUBLIC ISSUE Date:

Name of applicant :

Client Code :

BO ID No. :

Category of applicant :

Name of the Company/Fund :

Number of Shares/Units : ….…………………. Shares of Tk. ……………… each

Total amount in Tk. :

Amount in word :

Mode of payment :

Cheque/Draft information :

Signature of Applicants

Signature of Authorized Officer

Page: 217

CHAPTER (XXIX): OTHERS

DECLARATION REGARDING COST AUDIT

This is to inform you that Ministry of Commerce in its Gazette dated 12th January, 2003 ordered 5 companies from power sector and 6 companies from jute sector would be under Cost Audit Compliance. Later on, 3rd December 2009 Ministry of Commerce issued Gazette by which 42 companies from Garments and Textiles sector, 12 companies from Pharmaceutical sector and all the companies involved in manufacturing of Chemical Fertilizer would be under Cost Audit Compliance. Since Al-Faruque Bags Limited is not bracketed in above mentioned companies, Cost Audit by Cost and Management Accountants is not applicable for “Al-Faruque Bags Limited”.

Sd/- Md. Redwanul Kabir Chowdhury Managing Director Al-Faruque Bags Limited


Chief Financial Officer Al-Faruque Bags Limited

Sd/- Md. Riyad Matin Managing Director BMSL Investment Limited

Sd/-

Mohammad Saleh Ahmed

Chief Executive Officer IIDFC Capital Limited

Dated: June 03, 2018