090104

If you have any queries about this document, you may consult issuer and issue manager.
Information Document for Direct Listing OF ACI FORMULATIONS LIMITED

ACI Centre, 245 Tejgaon Industrial Area, Dhaka-1208 Tel.9885694-8 Fax (8802)9884784, 9886029, 8810191 Email: [email protected] Website: www.aci-bd.com
Offloading of 89,87,500 ordinary shares of Tk. 10.00 each (Face Value Tk. 8,98,75,000.00)
Listing Date with DSE: 30 October 2008 Listing Date with CSE: 02 November 2008
Manager to the Issue

ICB Capital Management Limited (A Subsidiary of ICB) BSB Building (14th Floor), 8, DIT Avenue, Dhaka. Date of Information Document: 06 November 2008 The Issue shall be placed in N Category
Credit Rating by Credit Rating Information and Services Ltd. (CRISL)
Long Term Rating

A+
Short Term
ST - 3
CONSENT OF THE DHAKA AND CHITTAGONG STOCK EXCHANGE LIMITED HAS BEEN OBTAINED TO THE ISSUE/OFFER OF THESE SECURITIES UNDER THE DHAKA & CHITTAGONG STOCK EXCHANGE (DIRECT LISTING) REGULATIONS, 2006. IT MUST BE DISTINCTLY UNDERSTOOD THAT IN GIVING THIS CONSENT THE EXCHANGES DO NOT TAKE ANY RESPONSIBILITY FOR THE FINANCIAL SOUNDNESS OF THE COMPANY, ANY OF ITS PROJECTS OR THE ISSUE PRICE OF ITS SHARES OR FOR THE CORRECTNESS OF ANY OF THE STATEMENTS MADE OR OPINION EXPRESSED WITH REGARD TO THEM. SUCH RESPONSIBILITY LIES WITH THE ISSUER, ITS DIRECTORS, CHIEF EXECUTIVE OFFICER/CHIEF FINANCIAL OFFICER, ISSUE MANAGER AND/OR AUDITOR.
AVAILABILITY OF INFORMATION DOCUMENT

Information Document of the Company may be available at the following addresses:
Company
ACI Formulations Limited ACI Centre, 245 Tejgaon Industrial Area Dhaka - 1208
Contact Person
Ms. Sheema Abed Rahman Company Secretary Phone Fax Email
Contact Number
: 9885694-8 : (8802) 9884784, 9565257 : [email protected] or [email protected] Website : www.aci-bd.com
Manager to the Issue

ICB Capital Management Ltd. BSB Building (14th Floor), 8, DIT Avenue, Dhaka.
Contact Person
Md. Iftikhar-uz-zaman Chief Executive Officer
Contact Number
Phone : 02-7160422, 7160326-27, 9563455 EX-196 Fax : 880-2-9555707 E-mail : [email protected] Website : www.icbcml.com.bd
Stock Exchanges
Dhaka Stock Exchange Ltd. 9/F Motijheel C/A, Dhaka-1000. Chittagong Stock Exchange Ltd. CSE Building, 1080 Sheikh Mujib Road, Chittagong.
Available at
DSE Library Phone Fax E-mail Website : : : :
Contact Number
02-9564601-7, 7175705-9 88-02-9564727 [email protected] www.dsebd.org
CSE Library
Phone : 031-714632-3, 031-720871-3 Website : www. csebd.com
Information Document would also be available on the website of SEC (www.secbd.org), DSE (www. dsebd.org), CSE (www.csebd.com), Issue Manager (www.icbcml.com.bd) and Public Reference Room of the Securities and Exchange Commission (SEC) for reading and study.
FINANCIAL STRUCTURE OF THE COMPANY

The Financial Structure of the Company as on 30.06.2008 is as follows:
Particulars Authorised Capital Paid-up Capital
No. of shares 5,00,00,000 2,50,00,000
Face Value (Taka) 10.00 10.00
Amount in Taka 50,00,00,000.00 25,00,00,000.00
INFORMATION DOCUMENT
Page 2 of 89
ACI FORMULATIONS LIMITED
Definition and Elaboration of the abbreviated words and technical terms used in the Information Document
ACIFL ACI AGM BCPA CAGR CDBL CIB COMMISSION CC & PH CSE DSE EPS EGM FAO FMC GOB GDP GLC HPLC ISSUE ICML ICB KW KWH LATR M COIL NAV PHP PPW RJSC R&D RCC REB RL SEC SECURITIES SECURITIES MARKET STL THE COMPANY/ISSUER VAT WPPF WDG
: : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : : :
ACI Formulations Limited. Advanced Chemical Industries Annual General Meeting Bangladesh Crop Protection Association Compound Average Growth Rate Central Depository Bangladesh Limited Credit Information Bureau Securities and Exchange Commission Crop Care & Public Health Chittagong Stock Exchange Limited Dhaka Stock Exchange Limited Earning Per Share Extra-Ordinary General Meeting Food & Agricultural Organization Fast Moving Consumers Government of Bangladesh Gross Domestic Product Gas Liquid Chromatograph High Performance Liquid Chromatograph Direct Listing of Shares of ACIFL ICB Capital Management Limited Investment Corporation of Bangladesh Kilo Watt Kilo Watt Hour Loan Against Trust Receipt Mosquito Coil Net Asset Value Public Health Product Plant Protection Wing Registrar of Joint Stock Companies & Firms Research & Development Reinforcement Concrete Rural Electrification Board Revolving Loan Securities and Exchange Commission Shares of ACIFL The Share Market of Bangladesh Short Term Loan ACI Formulations Limited. Value Added Tax Workers Profit Participation Fund Water Dispersible Granular
Page 3 of 89
TABLE OF CONTENTS
Particulars Disclosure in respect of issuance of security in demat form-------------Disposal of Shares ---------------------------------------------------------------------- ----------------
no. Page no. 7 7-8
Shareholders Resolution in respect of disposal of shares in accordance with the regulation 5 of Dhaka/Chittagong Stock Exchange (Direct Listing) Regulations, 2006 Undertaking to DSE
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Undertaking to CSE
10
Purpose of Offloading / Use of Sale Proceeds
11
Statement Regarding Holding Annual General Meeting ----------------------------------------
11
Risk Factors and Management Perceptions
----------------------------------------------------
12-13
Description of Business
------------------------------------------------------------------------------
13-19
Corporate status and background Nature of business Principal products or services of the Company Market for the products or services of the Company Relative contribution of products contributing more than 10% of the total revenue Name of associates, subsidiary/related holding company and their core areas of business Distribution of products or services Competitive conditions in the business Sources and availability of raw materials and the names of the principal suppliers Sources of requirement for power, gas and water Name of customers who purchase 10% or more of the Companys products Contract with principal suppliers/customers Material patents, trademarks, licenses or royalty agreements Employees position Production capacity and current utilization -----------------------------------------------------------------------------19-20
Description of Property
Page 4 of 89
Information in respect of plant and property Fixed assets Condition of property Ownership of property Lien status Lease property Written down value of the property, plant and equipment ---------------------------------
Plan Of Operation And Discussion On Financial Conditions
21-30
Internal and external sources of cash Material commitments for capital expenditure Causes of any material changes in income, cost of goods sold, other operating expenses and net income Seasonal aspects of business Known trends, events or uncertainties Change in the assets to pay off any liabilities Loans taken from the holding/subsidiary company or loans given to those companies Future contractual liabilities Estimated future capital expenditure Vat, income tax, customs duty or other tax liabilities Sources from which VAT and Tax etc are paid Finance lease during last 5 years Financial and lease commitment during last 5 years Personnel related schemes Break down of all expenses including fee of issue manager and underwriters Revaluation of assets Transaction with holding or subsidiary companies which have been taken place during last 5 years Special report from the auditors for issue of shares otherwise than for cash Material information having an impact on the affairs of the company Statement of changes in shareholders equity --------------------------------------------------------------------------------
Directors And Officers
31-37
Name, age and position of all Directors of the company and any person nominated to be a director Date of becoming first Director and date of expiry of current term Involvement of Directors with other companies Involvement of Directors with listed companies in terms of dividend and category Family relationship between directors and officers Short bio-data of Directors Holding of 5% or more shares in the paid-up capital by the Directors or shareholders of the Issuer is loan defaulter in terms of the CIB report of the Bangladesh Bank Description of senior executives and officers ---------------------
Involvement Of Officers And Directors In Certain Legal Proceedings
38 38
Certain Relationships And Related Transactions
----------------------------------------------
Page 5 of 89
Executive Compensation
----------------------------------------------------------------------------
39 39 40 40 41
Options Granted To Officers, Directors And Employees
-------------------------------------
Transaction With Promoters
--------------------------------------------------------------------------
Net Tangible Assets Per Share
------------------------------------------------------------------------
Ownership Of The Companys Securities officers
- ----------------------------------------------------------
Number of shares owned by the top ten salaried officers, directors and all other
Description Of Securities Outstanding Or Being Offered
-------------------------------------
41-42
Dividend, voting and preemption rights Conversion and liquidation rights of any preferred stock outstanding or being offered Dividend Others material rights of common stockholders ------------------------------------------------------------------------------------------
Debt Securities
42 43-44
Future Prospects
-----------------------------------------------------------------------------------------
Credit Rating Report
-------------------------------------------------------------------------------------
45-55 56-81
Financial Statements
-------------------------------------------------------------------------------------
Auditors Report and Audited Financial Statements for the half year ended 30 June 08 Comparative Income Statements, Balance sheet and Cash Flow Statement for
immediate preceding five accounting years
Selected Ratios
Additional Disclosures -------------------------------------------------------------------------------------
82-89
Page 6 of 89
DISCLOSURE IN RESPECT OF ISSUANCE OF SECURITY IN DEMAT FORM

As per provisions of the Depository Act, 1999 and regulations made thereunder, share of the company will be issued in dematerialized form, only and, for this purpose, ACI Formulations Limited (ACIFL) has signed an agreement with the Central Depository Bangladesh Limited (CDBL). Therefore, all transfers/transmissions, splitting or conversions will take place in the CDBL system and any further issuance of shares (including` rights/bonus) will also be issued in dematerialized form only.
DISPOSAL OF SHARES
Details of offloading of shares by the Existing Shareholders as per Regulation 5 of Dhaka & Chittagong Stock Exchange (Direct Listing) Regulations, 2006
ACI Limited, one of the Existing Shareholders of ACI Formulations Ltd, shall offload 89,87,500 ordinary shares of Tk. 10 each (Face value Tk. 8,98,75,000.00) with a minimum market lot of 50 (fifty) shares following the Regulation 5 of Dhaka & Chittagong Stock Exchange (Direct Listing) Regulations, 2006, the Depository Act, 1999 and regulations issued thereunder: 1. As resolved in the Board of ACI Formulations Limited (ACIFL) and also as per resolution taken in the EGM of ACIFL, 35.95% of the Paid-up share capital (i.e. 89,87,500 shares) to be sold to the general public/institutions at market price. The Information Document, as vetted by DSE & CSE, have been published in two widely circulated national dailies (one in English and another in Bengali) minimum 7 (Seven) days before commencement of trade upon listing by DSE & CSE along with an electronic copy for posting in the web page of DSE & CSE. The company has simultaneously submitted the vetted Information Document with all exhibits to SEC, to the Stock Exchanges where it tends to list its securities. The existing shareholders of the company shall sell their shares through brokers of the exchange upon listing. No existing shareholder of the company shall sell more than 50% of his existing shareholdings until the company holds the Annual General Meeting after completion of one full accounting year of the company upon listing with the Exchanges. The conditions stated in 4 and 5 is subject to the provision that the existing shareholders shall offer for sell at least 10% of the shareholdings in the company within 30(thirty) working days from the date of listing. Declaration about listing of Shares with the stock exchange (s): Applications have already been made to the Dhaka and Chittagong Stock Exchanges for permission of the shares of the company for dealing in both the said Stock Exchanges and for the quotation of the Stock Exchanges. After fulfillment of all requirements by the Company, the Exchanges shall list the Companys shares within three weeks from the date of Publication of the Information Document, as mentioned in regulation 4, under intimation to the Commission, provided there is no contrary opinion of the Commission in this respect. In case of failure to fulfill the requirements by the company, the Exchanges shall reject the application for listing showing reasons thereof, under intimation to the Securities and Exchange Commission within 60 (sixty) days from the date of application.
2.
3.
4.
5.
6.
7.
Page 7 of 89
Shareholders Resolution in respect of disposal of shares in accordance with the regulation 5 of Dhaka/Chittagong Stock Exchange (Direct Listing) Regulations, 2006
We the existing shareholders of ACI Formulations Limited (ACIFL) declare that-
i)
We shall sell our shares through the Exchanges (DSE/CSE) upon listing;
ii) We shall not sell more than 50% of our existing shareholdings until the Company holds the Annual General Meeting after completion of one full accounting year of the Company upon listing with the exchanges (DSE/CSE); iii) We shall offer for sell at least 10% of the shareholdings in the Company within 30 (thirty) working days from the date of listing.
Sd/( M Anis Ud Dowla)
Sd/( Najma Dowla)
Sd/(Dr. Arif Dowla)
Sd/( Shusmita Anis Salam)
Sd/( Wajed Salam)
Sd/(Dr. F H Ansarey)
Sd/( Sheema Abed Rahman)
Sd/( M Anis Ud Dowla) Representative of ACI Ltd.
Page 8 of 89
Date: September 17, 2008
To The Secretary Dhaka Stock Exchange Limited Dhaka.
Dear Sir, UNDERTAKING
We undertake, unconditionally, to abide by the Listing Regulations of the Dhaka Stock Exchange Limited as well as other relevant securities laws which presently are, or hereinafter may be in force.
We further undertake:
(1) That our shares and securities shall be quoted on the Ready Quotation List and/or the Cleared List at the discretion of the Exchange. (2) That the Exchange shall not be bound by our request to remove the shares or securities from the ready Quotation List and/or the Cleared List. (3) That the Exchange shall have the right, at any time to suspend or remove the said shares or securities for any reason which the Exchange considers sufficient in public interest. (4) That such provisions in the Articles of Association of our Company or in any declaration or basis relating to any security as are or otherwise not deemed by the Exchange to be in conformity with the Listing Regulations of the Exchange shall, upon being called upon by the Exchange, be amended to supersede the Articles of Association of our Company or the declaration or basis relating to any security; and (5) That our company and /or the security may be delisted by the Exchange in the event of non-compliance and breach of the Regulations and/or of this undertaking after giving an opportunity of being heard to us.
Yours faithfully,
Sd/M Anis Ud Dowla Managing Director
Page 9 of 89
Date: September 17, 2008
To The Secretary Chittagong Stock Exchange Limited Chittagong.
Dear Sir, UNDERTAKING
We undertake, unconditionally, to abide by the Listing Regulations of the Chittagong Stock Exchange Limited as well as other relevant securities laws which presently are, or hereinafter may be in force. We further undertake: (1) That our shares and securities shall be quoted on the Ready Quotation List and/or the Cleared List at the discretion of the Exchange. (2) That the Exchange shall not be bound by our request to remove the shares or securities from the ready Quotation List and/or the Cleared List. (3) That the Exchange shall have the right, at any time to suspend or remove the said shares or securities for any reason which the Exchange considers sufficient in public interest. (4) That such provisions in the Articles of Association of our Company or in any declaration or basis relating to any security as are or otherwise not deemed by the Exchange to be in conformity with the Listing Regulations of the Exchange shall, upon being called upon by the Exchange, be amended to supersede the Articles of Association of our Company or the declaration or basis relating to any security; and (5) That our company and /or the security may be delisted by the Exchange in the event of non-compliance and breach of the Regulations and/or of this undertaking after giving an opportunity of being heard to us.
Yours faithfully,
Sd/M Anis Ud Dowla Managing Director
Page 10 of 89
PURPOSE OF OFFLOADING/USE OF SALE PROCEEDS:

Out of all shareholders of ACI Formulations Limited, only ACI Limited will offload 89,87,500 shares of its shareholding in ACI Formulations Limited through Direct Listing of ACI Formulations Limited with DSE and CSE and the sale proceeds of the shares will be utilized by ACI Limited in the following manner : As a prudent and progressive company, ACI Limited endeavors to maximise the shareholders wealth. Last few years records will surely vouch that. Here, there will be no exception also. The company gives shareholders trust and confidence most important thing to cherish and this actually allows ACI Limited to drive its energy and efforts to realize companys mission. In order to give consistent return to the shareholders in the longer term, money to be realized from the capital market will be utilized most judiciously: one, to keep the pace of growth continues ACI Limited will invest in new projects or sectors which have proven track records of giving lower pay back period with high returns. secondly, shareholders companys most important assets, will be rewarded with good returns commensurate with their contribution. thirdly, steps will be taken to strengthen the Balance Sheet of the ACI Limited to keep the company remain in the strong footing.
STATEMENT REGARDING HOLDING ANNUAL GENERAL MEETING OF THE COMPANY
No. of AGM 1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th 11th 12th
Date of AGM 24-04-1997 02-11-1998 21-04-1999 22-05-2000 22-05-2001 09-05-2002 10-05-2003 26-05-2004 02-05-2005 28-05-2006 28-05-2007 23-06-2008
Financial year 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Page 11 of 89
RISK FACTORS AND MANAGEMENT PERCEPTIONS

The Company is operating in an industry involving both external and internal risk factors having direct as well as indirect effects on the investments by the investors. The assessable risk factors, both external and internal, and Management perception thereabout are enumerated hereunder: a) Interest rate risk: Interest/financial charges are paid against any kind of borrowed fund. Instability in money market and increased requirement for fund may put pressure on interest rate structure. Rising of interest rate increases the cost of fund and consequently there may be impact on profitability. Management Perception: While taking loan, Company always carefully considers the balance to be maintained between term loan which carries fixed interest rate and short term loan which carries variable interest rate so that any interest on inflation rate increase can be kept to the minimum. Additionally Company maintains very good reputation in the Banking Community and so far being able to attract very competitive rates from the Banks. Management of the Company is also emphasizing on equity based financing to reduce the dependency on bank borrowings which is reflected in the Financial Statements. b) Exchange rate risk: The Company imports raw materials against payment of foreign currency. Unfavorable volatility or currency fluctuation may affect the profitability of the Company. Management Perception: Company is fully aware of the risks related to currency fluctuation and as a prudent company we always take steps to hedge all major currency dealings to safeguard the interest of the Company. c) Industry risk: Environmentalists are likely to create pressure on Government for banning agro-chemicals for its negative effects on living beings thereby causing closure of business by the Company. Management Perception: With the world wide shortage of food products there is renewed importance and urgency in increasing food production. With the help of pesticides, insecticides and other crop care products farmers will be able to increase their crop yield and there by helping the country to become self sufficient in food. Bangladesh is one of the countries where per hector yield is lowest. No doubt product coming out from this Company will be used to increase yield. Company also strictly follows all the laid down regulations for marketing agrochemical products and therefore do not foresee any problems in doing the business. d) Market & Technology related risk: The production facilities are based on currently available technology. Any invention of new and more cost effective technology may cause operational obsolescence thereby causing in substantial new investments. Proposed new investments in diversified product lines may need diversified technology and management skills which may not be available. Any serious defects in the plant and machinery may affect production and profitability calling for additional investment for replacement. Management Perception: Company owns modern technology with R&D infrastructure and shall be able to adapt to any new inventions with moderate investments as it has been doing in the past. The Company has access to international/multinational companies for supplying appropriate technology and technical management support for operation of new projects. The selected/installed plant and machinery have been manufactured by reputed manufacturer with proper warranty to take care any defects or confirmation of supplying of adequate spare parts. As such the Company does not envisage any major problem in this area. e) Potential or existing Government regulations: Environmentalists may like to create pressure on Government to reduce the use of crop protection products for its effects on living beings due to misuse or lack of awareness. Any adverse change by the Government in fiscal policies relating to agro-incentives may adversely affect Companys profitability. Management Perception: Recently there is campaign to increase food production. FAO and other international bodies are also asking Bangladesh to improve its food security. This Company is poised in the right position to actively participate in increasing countrys food production as there will be an increasing demand for agrochemical products for enhancing the crop production. INFORMATION DOCUMENT
Page 12 of 89
f)
Potential changes in global or national policies: The Companys product lines consist of crop protection products which are primarily based on imported raw materials. Any shortage in the international market might dent the production level and profitability. Law and order situation and political unrest may also jeopardize Companys operations and adversely affect profitability. Management Perception: As a going concern, Company always takes step to safeguard its interest. The companys supply chain is robust in accommodating large number of suppliers with proper contingency plan in place.
g) Non-operating history: There is no history of non operation in case of ACIFL. h) Operational Risk: Shortage of power supply, labour unrest, unavailability or price increase of raw materials, natural calamities like flood, cyclone, earthquake etc. may disrupt the production of the Company and can adversely impact the profitability of the Company. Management Perception: The Company always provide competitive compensation package to its employees and maintain a healthy workers management relationship. The project of the Company is situated at a high land where there was no less record of flood. The factory building has strong RCC foundation, RCC floor, pre-fabricated steel structure to withstand wind, storm, rain etc. along with good drainage facility. The Companys product has a good reputation in the market. Company always takes pragmatic steps to convince the customers to share a portion of the increased burden of cost increase which is possible because of strong reputation of companys products in the market and we do not compromise on quality.
DESCRIPTION OF BUSINESS
Corporate Status and Background ACI Formulations Limited (ACIFL) is a public limited company which was incorporated on 29 October 1995 as a private limited company with the Registrar of Joint Stock Companies and Firms, Dhaka, Bangladesh under the Companies Act 1994 with a mission to play dominant role in enhancing the quality of life and well being of the people of Bangladesh. The Company went into commercial operation on 01 July 1998. The status of the Company was converted from Private Limited to Public Limited Company on 04 May 2005. The Authorized Capital of the Company as of 30 June 2008 is Tk. 500,000,000.00 divided into 50,000,000 ordinary shares of Tk. 10.00 each. The paid up capital as of the same date was Tk. 250,000,000.00 divided into 25,000,000 ordinary shares of Tk. 10.00 each. ACI Formulations Limited is the subsidiary of ACI Limited by virtue of its holding 86.95% of the paid up share capital of ACI Formulations Limited. The registered office of the Company is situated at ACI Center, 245 Tejgaon Industrial Area, Dhaka-1208 and the factory is located at Rajabaria, Sreepur, Gazipur.
Nature of Business The current principal activities of the Company are to manufacture and market of a number of Agrochemicals and Consumer products. Most of the sales are made currently to ACI Limited which markets the products under the Marketing and Distribution agreement. As envisaged in the Memorandum of Association, the Companys main object clause include, not being limited to, among others business of agro-chemicals and public health products to carry on the business of manufacturing, formulation and packaging of granular/liquid/powder forms of pesticides like insecticide, fungicide, herbicide, repellent, adjuvant etc. production of fertilizer, plant nutrient, growth regulator, hormone, stimulants, animal feed, cattle feed, poultry feed, fish feed, production/processing/development of all types of seeds like cereals, pulses, oil, fruits, vegetables, ornamentals, engage in farming, horticulture, tissue culture, plantation, aquaculture and varieties of allied industrial and service related operations. In the proposed new structure all the agro-chemical products (Crop-Care) will be manufactured and directly marketed by the Company (ACIFL) without using ACI Limited as a selling & marketing agent. This will allow the Company to have higher margin and more control in the market.
Page 13 of 89
Principal products or services of the Company The Company currently has three units; each of them produces different types of products which are as follows: a) Unit 1: Insecticides, Herbicides, Fungicides and other related products. b) Unit 2: Mosquito Coil c) Unit 3: Aerosol and Air freshener Aside from these, the Company also provides services to ACI Ltd. by manufacturing Vanish Toilet Cleaner for ACI Ltd. under the contract manufacturing agreement (Marketing and Distribution agreement) with ACI Limited. The Companys products have distinct superiority due to high standard of quality control measures through use of quality control laboratory equipped with HPLC and GLC to check the quality as well as product development activities. Market for the products or services of the Company The Company has two major lines of business. One is Agro-chemicals which are crop protection products and has direct relationship with increasing and protecting crops of millions of farmers. Secondly, Public Health products like mosquito repellant (Coil, Aerosol) and other health and hygienic products like Air freshener & house cleaning. Since contribution of the agricultural sector to the GDP is still dominant and the sector is the largest employer of workforce, public sector (Govt. agencies) and the private sectors (farmers) have been keen in applying Agro-chemicals along with fertilizers and other components to grow-more food. As a result the demand for these products have shown increasing trend over the years. This is reflected in the increased rate of turnover growth of the Company over the years. The Company enjoys a dominant market share of 18% in crop pesticides (source: BCPA 2007), 87.9% in consumer pesticides (Aerosol), 27% in mosquito coil (source: Nielsen-BD, August 2008). Relative contribution of Products contributing more than 10% of the total revenue The relative contribution to sales and income of each product that accounts for more than 10% of the Companys total revenue are mentioned below: Sl. No. 1 Name of the products Insecticides, Herbicides, Fungicides Mosquito Coil Aerosol % of contribution to sales 56.38% % of contribution to income 92.63%
2 3
26.67% 16.95%
3.83% 3.54%
Name of associates, subsidiary/related holding company and their core areas of business The Company is a subsidiary of ACI Limited, a publicly listed company. ACI Limited holds 86.95% of the paid up share capital of the Company. The principal activities of ACI Ltd. are to manufacture pharmaceutical, consumer brands, public health and animal health products and to market them along with agrochemicals, seeds and other consumer brands items. Currently, ACI Limited is responsible for distribution and marketing of ACIFLs products under the Marketing & Distribution agreement. The following companies are also the subsidiaries of ACI Limited: 1. 2. 3. 4. 5. 6. 7. ACI Salt Limited having shares of 78% ACI Foods Limited having shares of 95% ACI Pure Flour Limited having shares of 95% Apex Leather Craft Limited having ownership of 100% Flyban Insecticides Ltd having shares of 51% ACI Agro-chemicals Limited having shares of 90% Premiaflex Plastics Limited having shares of 80%
Page 14 of 89
8. ACI Motors Limited having shares of 75% 9. Creative Communication Limited having shares of 60% 10. ACI Logistics Limited having shares of 76% The following are the Joint Ventures/Associates of ACI Limited: 1.
2.
Tetley ACI (Bangladesh) Limited (processor, blender and distributor of tea) with Tetley UK Ltd.
Asian Consumer Care (Pvt.) Limited ( manufacturer of shampoo, hair oil, toothpaste etc.) with Dabur Intl. Dubai
3. 4. 5.
ACI Godrej Agrovet Private Limited ( poultry feed) with Godrej India Computer Technology Limited Stochastic Logic Limited
Distribution of products or services Almost the entire products (97% of Unit -1 and 2 and 100% of Unit-3) are currently distributed/marketed by ACI Limited through ACIs channel of depots and agents throughout the country under Marketing & Distribution agreement. ACI Limited has 19 depots as on 30 June 2008. ACI Limited also maintains a fleet of 84 transport vehicles consisting of 68 vans and 16 micro vans. Competitive conditions in the business The competitiveness of the market may be gauged by the presence of giants like Syngenta Bangladesh Limited & Padma Oil Company (agents of FMC and BASF). Other competitors include Shetu Pesticides Limited, Bayer Crop Science, Auto Crop Care Ltd., Mc Donald (Bangladesh) Ltd. ( agent of Nishan Chemical Co.), Shetu Corporation Limited ( agent of Sumitomo Corporation ) and Setu Marketing Company ( SEMCO). Sources and availability of raw materials and the name of principal suppliers The raw materials used by the Company in the formulation processes are mainly basic chemicals, auxiliary, solvents and emulsifiers. About 20% of the raw materials are locally procured while about 80% is directly imported. For Crop Care & Public Health products, the company imports 22 chemical items while locally procures 12 items. For Aerosol, 12 items are imported and 5 items are locally sourced. For Mosquito Coil, 11 items are imported and 12 items are locally purchased. The names of principal suppliers of raw materials are mentioned below: a) Pesticides for Crop Care business: Address
"Akand Jyoti" 8th Road, P.B. No. 6822, Santacruz (East), Mumbai-400 055, India Shaxi, Taicang, Jiangsu Province, P R China Siro-Fabricato D-ala 3, Via calder, 21-20153, Milan-Italy 101, Solitaire Corporate Park, 151, M, Vasanji Road, Chakain Andheri (East), Mumbai 400 093, India Rue de Renory, 26 B-4102 Ougree, Belgium 17-10, Tzyy Lin Matau, Tainan Hsien, Taiwan, R.O.C. P O Box 9, DK-7620 Lemvig, Denmark Mumbai, India 8/23-24, Race Course Road, Coimbatore-641 018, India 23/F Kinwic Centre, 32, Hollywood Road, Central Hong Kong, China
Sl. No. Name of Supplier Aimco Pesticides Ltd. 1 2 3 4 5 6 7 8 9 10

Taicang Otsuka Chemical Co. Ltd. Isagro Centro Uffici San
Isagro (Asia) Agrochemicals Pvt. Ltd.
Raw Materials
Butachlor, Carbendazim, Sulpher, Endosulfan, Carbofuran, Chloropyriphos, Acetamiprid Carbofuran,
Mancozeb , Benalaxyl,
Orthosulfamuron Phenthoate, Mancozeb, Dimetoate
Chimac Agriphar Hui Kwang Corporation Cheminova A/S Cheminova India Ltd. T. Stane & Co Ltd. East Sun Chemical Co Ltd.
Cypermethrin, Diazinon Carbofuran, Mancozeb +, Metalaxyl, Butachlor, Cartap Malathion Chloropyriphos Azadirachtin Diazinon, Malathion, Carbofuran, Mancozeb
Page 15 of 89
Sl. No. Name of Supplier Tagros Chemicals India Ltd. 11 12 13 14 15 16

Sundat (S) Pte Ltd.
Address
"Jhavar Centre" Rajah Annamalai Building IV Fl72, Marshalls Road Egmore, Chennai 600 008, India 26, Gul Crescent, Singapore
Raw Materials
Cypermethrin, Propiconazole, Deltamethrin Paraquat, 2,4 D amine, Lambda cyhalothrin, Primiphos methyl, Glyphosate Imidacloprid, Acephate, Cartap Abamectin, Propiconazole, Fenitrothion, Fipronil, Pretilachlor, Iprodione Sulpher
Tide Int. Chemical Co. Ltd. Sinochem Ningbo
Flat H&I, 19/F, Building 1, Huazhe Plaza, Hangzhow (310006), China 21JianXia Street, Ningbo, China
Jaishil Sulphur and Chemical Industries Ltd. Fulon Chemical Industrial Co. Ltd.
212/213 Navjivan (Mandvi), 125, Kazi sayed street, masjid, Mumbai,India Taiwan
Glyphasate
b) Pesticides for Public Health business: Sl. No. 1 2 3 4 5 6 Name of Supplier

Sumitomo Corporation (Singapore) Pte. Ltd. Sinochem Ningbo Ltd.
Address
20 Cecil Street# 23-02/08 and # 2401/08 Equity Plaza, Singapore 21JianXia Street, Ningbo, China
Raw Materials
D-allethrin, Imiprothrin , Deltamethrin, Metofluthrin, d-allethrin, S-bilothrin, Tetramethrin, Permethrin, d-trans alethrin, ETOC ,Sumithrin, Pirimiphos-methyl, Temephos, Lambda cyhalothrin Phenthoate Chlorpyrifos
Sundat (s) pte Ltd, Singapore Sinochem Ningbo Ltd. Cheminova India Limited
26, Gul Crescent, Singapore
India
Formulation Division 242-P, GIDC PANOLI, Dist. Bharuch, Gujarat, India "Jhavar Centre" Rajah Annamalai Building IV Fl72, Marshalls Road Egmore, Chennai 600 008, India
Tagros Chemicals India Limited
Deltamethrin, Cypermethrin
Sources of requirement for, Power, Gas and Water a) Power: The Company has power supply from REB with 500 KVA connected load which may be expanded to 1250 KVA line passed through the factory site. The factory is further equipped with 3 diesel generators of total 615 KVA capacity and 2 gas generator of 380 KW and 1030 KW (expected to be commissioned by the end of the year 2008) capacity. Application have already been made for increasing gas supply which is in active consideration of the Titas Gas Authority and it is expected that by the end of this year permission will be received from Titas Gas Authority. Currently Companys operation is being run with diesel generators. We presume that if there are inadvertent delay in getting permission to laying gas line, operation will be continued with existing diesel generators along with enjoying power supply from REB. b) Gas: Titas Gas Transmission and Distribution Co. Ltd. supplies required gas for the plant from 50 psl main line. For reducing production cost, the Company is working to get connection from 150 psl main line of Titas Gas Transmission and Distribution Co. Ltd. c) Water: The Company requires huge amount of water. During the year 2007, the factory consumed about 196,344 m3 of water, which was lifted by Companys owned/installed deep-tube-well/pump and supplied to different points with a network of distribution pipelines. The quality of water is good and useable for all purposes. INFORMATION DOCUMENT
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Name of customers who purchase 10% or more of the Companys products At present, Advanced Chemical Industries Ltd. (ACI Ltd.) is the buyer who purchases almost the entire products (97% of Unit - 1 and 2 and 100% of Unit - 3) of the company individually. In future, ACIFL will directly market its Crop-Care products thereby maintain better margins and more control over the market. Contract with principal suppliers/customers The Company has entered into an agreement with ACI Limited, the major features of which are as follows: ACI Limited markets and distributes the products of Crop Care and Public Health business manufactured by ACIFL. b) ACIFL acts as a contract manufacturer of Coil and Aerosol products. c) ACI Ltd. provides management services to ACIFL. The agreement shall be valid for a period of five (5) years (renewable with mutual understanding) since 1 January 2005. Material Patents, Trade Marks, Licenses or Royalty Agreements The Company has 72 Registered Products out of which 52 are for Corp Care and 20 are for Public Health. It has Registration with PPW for the following pesticides for Crop-Care and Public Health products: List of the pesticides for crop care business Sl. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 BRAND NAME Acamite 1.8 EC Acithrin 2.5 EC Aimchlor 5G Aimcozim 50 WP Amcoround Aimcoflo 80 WDG Brifur 5G Carbofuran 3G Care 4G Care 50 SP Caught 10 EC Cidial 50 L Cidial 5G Classic 20 EC Conza 5 EC Conazole 25 EC Cythrine 10 EC Diazonyl T 60 Endosol 35 EC Feniton 50 EC Fielder Fighter 2.5 EC Furacarb 3G Furan 3G Galben-M Greesul 80 WDG REG. NO. AP-1286 AP-880 AP-403 AP-375 AP-411 AP-869 AP 324 AP 05 AP-593 AP-654 AP-639 AP 124 AP - 139 AP 345 AP- 1047 AP-1264 AP-310 AP-283 AP-1276 AP-1046 AP-494 AP-502 AP 214 AP-1008 AP-374 AP-1048 Sl. No. 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 BRAND NAME Gola 48 EC Goolee 3GR Goolee 50 SC Kelion 50 WG Limithion 57 EC Nimbecidine Nemispore Nuben 72 WP Nuchlor 5G Nutap 4G Platinum 20 SP Proud 25 EC Paraxone Pyriban 15 G Razthion 57 EC Razfuran 5G Razdan 10G Razland 80 WP Rogor L 40 Sulphotox 80 WP Rovanon 50 WP Super Guard 50EC Superheat 500 EC Sun-up Tiddo 20 SL Tidphate REG. NO. AP-1271 AP-778 AP-779 AP-1176 AP 264 AP-373 AP 166 AP-612 AP-846 AP-807 AP-826 AP-609 AP-495 AP-516 AP 288 AP 305 AP 282 AP-351 AP 141 AP- 357 AP-1385 AP-580 AP-697 AP-669 AP-468 AP-473 a)
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List of the pesticides for Public Health business Sl. No. 1 2 3 4 5 6 7 8 9 10 BRAND NAME ACI Mosquito Coil ACI King Mosquito Coil ACI Mosquito Coil Super ACI Mosquito Coil Super Plus ACI Queen Mosquito Coil ACI Cockroach Spray ACI Aerosol Insect Spray New ACI Aerosol Insect Spray ACI Liquid Insecticide ACI Mosquito Insecticide REG. NO. PHP-73 PHP-187 PHP-241 PHP-183 PHP-206 PHP-237 PHP-08 PHP-122 PHP 17 PHP-186 Sl. No. 11 12 13 14 15 16 17 18 19 20 BRAND NAME Cidial 50 L Classic 20 EC Cleaner 50 EC Delete 2.5 EC Keeper 10 EC Missile 50 EC Relax Mosquito Coil Relax Mosquito Mat Relax Mosquito Vaporizer Shooter 2. 5 EC REG. NO. PHP 22 PHP-123 PHP-175 PHP-162 PHP-168 PHP-184 PHP-136 PHP-145 PHP-133 PHP-140
The Company does not have any Licenses or Royalty Agreements with anyone. Employees Position as on 30.06. 2008 (a) Total employee (b) Full time (c) Contractual 790 201 589
Production capacity and current utilization The utilization of production capacity of the company is increasing gradually due to expansion of sales network, launching of new products and customer demand this has commensurate with cost control as well as efficient and effective measures taken by the management. The production capacity and current utilization of the factory is as under: (A) CC & PH i) Granular Year 2005 2006 2007 Up to June 2008 Business CC & PH CC & PH CC & PH CC & PH Department Granular Granular Granular Granular Unit MT MT MT MT Capacity/Year 9,000 9,000 13,500 13,500 Production/Year 4,782 5,715 7,962 4,756 % of Utilization 53.13 63.50 58.98 70.46
ii) Powder (Manual Line) Year 2005 2006 2007 Up to June 2008 Business CC & PH CC & PH CC & PH CC & PH Department Powder Powder Powder Powder Unit MT MT MT MT Capacity/Year 1,500 1,500 1,500 1,500 Production/Year 454 496 671 812 % of Utilization 30.27 33.07 44.73 108.27
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iii) Liquid Year 2005 2006 2007 Up to June 2008 (B) Mosquito Coil Year 2005 2006 2007 Up to June 2008 Business CB CB CB CB Department M Coil M Coil M Coil M Coil Unit Carton Carton Carton Carton Capacity/Year 600,000 750,000 675,000 1,056,,000 Production/Year 466,177 426,289 499,435 354,104 % of Utilization 77.70 56.84 73.99 67.07 Business CC & PH CC & PH CC & PH CC & PH Department Liquid Liquid Liquid Liquid Unit MT MT MT MT Capacity/Year 1,500 1,500 1,500 1,500 Production/Year 378 457 597 375 % of Utilization 25.20 30.47 39.80 50.00
(C) Aerosol, Air Freshener & Cockroach Killer Year 2005 2006 2007 Up to June 2008 Business CB CB CB CB Department Aerosol Aerosol Aerosol Aerosol Unit pcs pcs pcs pcs Capacity/Year 7,560,000 7,560,000 7,560,000 7,560,000 Production/Year 1,767,691 1,909,605 2,723,588 1,932,632 % of Utilization 23.18 25.26 36.03 51.13
The capacity utilization reflects average production throughout the year which is significantly lower than the peak season capacity utilization.
DESCRIPTION OF PROPERTY
Information in respect of Plants and Property The Company has set up its factory at Rajabari, Sreepur, Gazipur. The factory is situated on a tract of land measuring about 21 acres only 1000 ft off the 30 ft wide Dhaka-Kapasia high-way connected by road, rail & river which offer easiest and economic transport for both way movement of materials and finished goods. The project site level is about 10 ft higher above the highest flood level so far recorded. The factory is surrounded by forest creating a natural aesthetic beauty. In addition, in order to make the factory more environmental friendly, about 1000 timber plants have been sowed/planted inside and around the factory. The existing factory buildings, made of pre-fabricated steel, and civil constructions including, office-blocks, guest house, cafeteria, labour office, sanitary blocks, medical centre, pump-house, generator block, effluent system and incineration treatment facilities, internal roads (106,185 sft) & drainages, foot-path, boundary wall/fencing, gardens etc. occupy about 42% of the total land mass leaving scope for substantial expansion in various areas of goods and service. The existing total covered area for production & warehouses is about 2,10,000 sft. The Company has constructed its own link road from factory site to the Dhaka-Kapasia high way. The buildings and civil construction facilities are of top quality materials with aesthetic architectural designs conforming to the natural beauty of the site.
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Fixed Assets The Company possesses the following fixed assets : Sl. No. 1 2 3 4 5 6 7 8 Name of Assets Land Building Plant Machinery & Equipment Electric & Other appliances Furniture & Fixture Vehicle Deep Tube-well
Condition of property The conditions of the above property are physically good. Ownership of property The Company is the legal and absolute owner of all the fixed assets and properties. Lien status The tangible assets of the company are mortgaged to one of the lending banks namely Standard Chartered Bank against borrowing facilities enjoyed from them. Leased property The company doesnt have any lease property. The written down value of the property, plant and equipment of the Company as of 30 June 2008 is as follows: (Amount in Taka) Sl. Written down value as Name of Assets No. of 30 June 2008 Land 77,758,688 1 Unit-1 73,689,139 2 Building Unit-2 13,895,612 Unit-3 12,883,220 Sub-total 100,467,971 Unit-1 18,804,425 Plant 3 Unit-2 49,015,144 Unit-3 16,452,803 Sub-total 84,272,372 Unit-1 3,978,352 Machinery & Equipment 4 Unit-2 1,076,450 Unit-3 255,788 Sub-total 5,310,590 Unit-1 2,888,961 Electric & Other Appliance 5 Unit-2 2,247,553 Unit-3 1,901,668 Sub-total 7,038,182 Unit-1 1,788,304 Furniture & Fixture 6 Unit-2 3,098,192 Unit-3 486,849 Sub-total 5,373,345 Vehicles 663,530 7 Unit-1 Deep Tube-well 20,400 8 Unit- 1 Total 280,905,078
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PLAN OF OPERATION AND DISCUSSION OF FINANCIAL CONDITIONS

Internal and external sources of cash Internal Sources: Particulars 01.01.08 01.01.07 01.01.06 to to to 30.06.08 31.12.07 31.12.06 250,000,000 250,000,000 250,000,000 65,495,689 65,495,689 65,495,689 39,635,436 01.01.05 to 31.12.05 250,000,000 65,495,689 30,209,027 115,769,982 461,474,698 (Amount in Taka) 01.01.04 01.01.03 to to 31.12.04 31.12.03 250,000,000 66,000,000 65,495,689 13,323,809 55,031,802 383,851,300 14,500,000 85,763,329 97,770,765 264,034,094
Paid-up Capital Share Money Deposit Revaluation Reserve Tax Holiday Reserve Retained Earnings Total
373,578,114 278,771,668 173,611,158 689,073,803 594,267,357 528,742,283
External Sources: Particulars 01.01.08 to 30.06.08 74,856,290 74,856,290 01.01.07 to 31.12.07 76,787,324 76,787,324 01.01.06 to 31.12.06 77,049,191 77,049,191 01.01.05 to 31.12.05 73,152,354 73,152,354 01.01.04 to 31.12.04 (Amount in Taka) 01.01.03 to 31.12.03 3,750,000 3,750,000
Long Term Loan Deff. Tax Liability Total
67,804,115 67,804,115
Material Commitments for Capital Expenditures The material commitments in terms of development activities with estimated cost, sources of fund, year of completion of the project with other relevant information are shown as follows: (Amount in Taka) Year of Completion December 2008 December 2008 December 2008 December 2008 December 2008
Sl. No. 1 2 3 4 5
Name of Projects M Coil Expansion Project Gas Generator Gas Line Connection Jet Printer CC & PH Total
Cost 30,770,480 26,486,000 47,58,103 2,500,000 6,799,742 71,314,325
Sources of Fund Short Term Loan Short Term Loan Short Term Loan Short Term Loan Short Term Loan
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Causes of any material changes in income, cost of goods sold, other operating expenses and net income (Amount in Taka)
Particulars Sale Cost of goods sold Operating profit Other income (NonOperating) Total income Administrative, selling and distribution expenses Financial costs Profit before contribution to WPPF Provision for contribution to WPPF Net profit before tax Tax expenses Profit after tax 01.01.08 01.01.07 to to 30.06.08 31.12.07 1,069,475,034 1,383,118,708 854,681,630 1,170,928,968 214,793,404 212,189,740 2,108,484 216,901,888 23,375,569 35,446,938 158,079,381 7,903,968 150,175,413 55,368,966 94,806,447 1,187,728 213,377,468 52,727,239 41,794,221 118,856,008 5,942,801 112,913,207 47,388,133 65,525,074 01.01.06 to 31.12.06 923,862,592 743,306,060 180,556,532 850,980 181,407,512 52,615,437 20,408,472 108,383,603 5,419,180 102,964,423 35,696,837 67,267,586 01.01.05 to 31.12.05 807,101,129 631,958,750 175,142,379 (30,646) 175,111,734 41,661,924 17,690,192 115,759,618 5,787,981 109,971,637 32,348,239 77,623,398 01.01.04 to 31.12.04 716,849,826 527,878,463 188,971,363 1,804,216 190,775,579 81,708,092 15,588,105 93,479,382 4,673,969 88,805,413 24,058,189 64,747,224 01.01.03 to 31.12.03 649,772,561 530,832,577 118,939,984 1,222,309 120,162,293 8,917,997 15,741,103 95,503,193 4,923,115 90,580,078 13,141,687 77,438,391
The income of the Company has been increasing gradually without any significant fluctuation due to expansion of sales network, cost control and customers demand as well as efficient and effective measures taken by the management to its business. Seasonal aspect of business There are seasonal impact on few products, which are as follows : Crop Care & Public Health - due to change in season and crop pattern. Mosquito repellant- demand varies with weather and climate change. Known trends, events or uncertainties There is known tends in increasing demand for Companys products because of crop pattern and seasonal variation. However uncertainties may arise from government policy, increased competition, natural calamities and political unrest. Changes in the assets to pay off liabilities None of the operating assets has been disposed off to pay off any liabilities of the Company. Loans taken from the holding/subsidiary company or loans given to those companies The company did neither take any loan from nor give any loan to its holding company during the last five years. Future contractual liabilities The Company is envisaging for future capital expenditure by setting up two projects namely i) Sulpher 80 WDG ii) NPKS Fertilizer The above projects will be financed through bank loan.
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Estimated amount of future Capital Expenditure The Company has plan for future capital expenditure other than stated earlier under captioned Material commitment for capital expenditure. The detail of the future capital expenditure is given below: i) Name of the Project: Sulpher 80 WDG a. Products: Sulpher 80 WDG b. Production Capacity & Utilization UNIT Capacity/yearly Production/yearly (initial) MT MT Qty 4,500 2,000
Utilization % 45 The capacity utilization reflects average production throughout the year which is significantly lower than the peak season capacity utilization. c. Market Being an agricultural country, Bangladesh is very much dependent on fertilizer to produce various types of crops. The demand of food, protein and agricultural inputs including crop protection chemicals are increasing very significantly. Our soil is in extreme need of micronutrient and fertilizer. Sulpher 80 WDG is an important micronutrient for most of the crops and the usages of Sulpher 80 WDG is growing rapidly over the years. The total market demand of Sulpher 80 WDG in 2008 is estimated at 8,500 MT and the growth is around 20% over the last few years. Since the total market demand is fulfilled through import, there is a wide scope for local manufacturer to enter into this business to meet local demand. The establishment of such manufacturing plant will be able to decrease our foreign dependency on Sulpher. Moreover, the local manufacturers will enjoy a significant value addition to this product compared to importing from outside. ACIFL is capable to serve this market through establishing modern manufacturing facilities to produce Sulpher. ACIFL will market this product along with other agricultural products that it is already marketing. d. Project Cost and Mode of finance i. Project Cost Particulars Land and Land development Building & Civil Works Plant & Machinery Preliminary & others Total Fixed Cost Working Capital Total Project Cost ii. Mode of Finance Own fund Project Loan 135,470,148 135,470,148 1:0
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Taka 4,000,000 32,000,000 80,000,000 17,573,140 133,573,140 1,897,008 135,470,148
Debt/ Equity Ratio INFORMATION DOCUMENT
e. Projected Income Statement Net Sales Cost of Goods Sold Gross Margin Admin, Selling & Distribution Expenses Profit before Interest and Tax Interest Expenses Profit before WPPF & Tax Provision for WPPF Profit before Tax Taxation Profit after tax Gross Profit to Sales-% Net Profit Before Tax to Sales-% Net Profit to Sales-% Year-1 213.00 (87.16) 125.84 (76.68) 49.16 (23.15) 26.01 (1.30) 24.71 (6.92) 17.79 59% 23% 8%
Figures in Million Taka. Year-2 290.00 (112.31) 177.69 (104.40) 73.29 (22.75) 50.54 (2.53) 48.01 (13.44) 34.57 61% 25% 12% Year-3 375.00 (137.46) 237.54 (135.00) 102.54 (22.11) 80.43 (4.02) 76.41 (21.39) 55.02 63% 27% 15%
f. Implementation schedule of the project is as follows :

ID Task Name May 08 Jun 08 Jul 08 Aug 08 Sep 08 Oct 08 Nov 08 Dec 08 Jan 09 Feb 09 Mar 09 Apr 09
A 1 2
LAND PROCUREMENT Location Finalization Land Development LAYOUT & DESIGN DEVELOPMENT Layout of the Factory Structural Drawing Machinery Drawing
Prequalification of Contractor BOQ & work order to the contractor CIVIL CONSTRUCTION Civil Construction Electrification Drainage & Plumbing MACHINERY PROCUREMENT Selection of the Machinery L/C Opening/Advance Shipment of the Machinery Arrival of Machinery Erection of Machinery Commissioning of the plant Trial Production Commercial Production
B 1 2 3 4 5
C 1 2 3 D 1 2 3 4 5 6 7 8
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ID
Task Name
May 08
Jun 08
Jul 08
Aug 08
Sep 08
Oct 08
Nov 08
Dec 08
Jan 09
Feb 09
Mar 09
Apr 09
E 1 2 3 4 5 F 1 2
DEVELOPMENT OF RM/PM Qualitative & Quantitative Survey Pack Design Finalizing the RM/PM Order Placement for RM/PM Supply receive of the RM/PM REGULATORY PERMITS
Environmental Clearance Necessary Licenses
ii) Name of the Project: NPKS Fertilizer a. Products: Compound Fertilizer NPKS b. Production Capacity & Utilization Capacity/yearly Production/yearly (initial) Utilization UNIT MT MT % Qty 100,000 40,000 40%
The capacity utilization reflects average production throughout the year which is significantly lower than the peak season capacity utilization. c. Market The use of compound (NPKS) fertilizer is scientific, economic and beneficial for the crop. NPKS is a compound of fertilizers like TSP, Urea, DAP, MOP and Gypsum, which are mixed in certain ratio. It helps crop to have nutrient like nitrogen, phosphorus, Potassium and Sulpher altogether in a balanced way. Due to lower cost and easier application process, the use of the NPKS is increasing day by day. The total market of NPKS in 2007 was 400,000 MT with 30% average growth. The current local production of NPKS is 300,000 MT and the remaining balance of the quantity is imported to meet the demand. Due to crop diversification and comparing intensity, it is expected that the demand of the NPKS will continue to grow. Being market leader in the crop protection sector and having advantage of its strong distribution network, ACIFL will be able to capture substantial market share and help farmer with superior product quality. ACIFL will produce 100,000 MT NPKS yearly, which will cover 25 % of the total market. d. Project Cost and Mode of finance i Project Cost Particulars Land and land development Building & Civil Works Plant & Machinery Furniture Erection and Installation Lab and Bridge Vehicles Contingency and others Total fixed cost Working capital Total Project Cost Taka 15,000,000 55,000,000 91,390,000 1,000,000 10,000,000 6,000,000 14,860,000 2,000,000 195,250,000 81,620,417 276,870,417
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ii
Particulars Mode of Finance Equity Project Loan Debt/ Equity Ratio
Taka 276,870,417 1:0
e. Projected Income Statement Figure in Million Taka Year-1 Net Sales Cost of Goods Sold Gross Margin Admin, Selling & Distribution Expenses Profit before Interest and Tax Interest Expenses Profit before WPPF & Tax Provision for WPPF Profit before Tax Taxation Profit after tax Gross Profit to Sales-% Net Profit Before Tax to Sales-% Net Profit to Sales-% 1,200.00 (1,020.00) 180.00 (42.00) 84.00 (54.21) 41.78 (2.08) 39.69 (11.11) 28.57 15.00% 3.31% 2.38% Year-2 1,680.00 (1428.00) 252.00 (61.60) 117.60 (60.66) 73.73 (3.68) 70.04 (19.61) 50.43 15.00% 4.17% 3.00% Year-3 2,025.00 (1721.25) 303.75 (67.20) 131.62 (62.84) 109.27 (5.46) 103.81 (29.06) 74.74 15.00% 5.13% 3.69%
f. Implementation schedule of the project is as follows:

ID Task Name Jan 09 Feb 09 Mar 09 Apr 09 May 09 Jun 09 Jul 09 Aug 09 Sep 09 Oct 09 Nov 09 Dec 09
A 1 2
LAND PROCUREMENT Location Finalization Land Development LAYOUT & DESIGN DEVELOPMENT Layout of the Factory Structural Drawing Machinery Drawing
Prequalification of Contractor BOQ & work order to the contractor
B 1 2 3 4 5
C 1 2 3
CIVIL CONSTRUCTION Civil Construction Electrification Drainage & Plumbing
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ID
Task Name MACHINERY PROCUREMENT Selection of the Machinery L/C Opening/Advance Shipment of the Machinery Arrival of Machinery Erection of Machinery Commissioning of the plant Trial Production Commercial Production
Jan 09
Feb 09
Mar 09
Apr 09
May 09
Jun 09
Jul 09
Aug 09
Sep 09
Oct 09
Nov 09
Dec 09
D 1 2 3 4 5 6 7 8
E 1 2 3 4 5
DEVELOPMENT OF RM/PM Qualitative & Quantitative Survey Pack Design Finalizing the RM/PM Order Placement for RM/PM Supply receive of the RM/PM REGULATORY PERMITS
F 1 2
Environmental Clearance Necessary Licenses
In addition to above two projects, Company will invest Tk. 56 million in 2010 to increase the existing production capacity of CC & PH business. VAT, Income Tax, Custom Duty and other Tax Liabilities VAT There is no pending liability for VAT. Income Tax The income tax for assessment year 2008-2009 has been assessed and no pending claim exists. Custom Duty or other Tax liabilities yet to be paid There is no outstanding on account of custom duty or other tax liabilities to be paid. Sources from which VAT & Taxes etc are paid VAT & Taxes is being paid from ordinary business resources. Finance lease during last five years The Company took following vehicles as operating lease : Sl. No. 1 Name of Lessor IDLC Assets Vehicle Lease Amount 1,776,400 Period 4 Years (Amount in Taka) Monthly Date of Rental Expiry 48,840 May 2007
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Financial and Lease Commitment during last five years Financial Commitment Sl. No. 1 2 3 4 Name of Bank Limit of Loan As per audited account (Amount in Taka) Rate of interest Outstanding Balance as of 30 June 2008 11.50% to 12.50% 301,836,672 11.50% to 12.50% 230,370,314 11.50% to 12.50% 11.50% to 12.50% 80,255,568 134,694,879
Standard Chartered Bank The Hong Kong and Shanghai Banking Corporation Ltd. (HSBC) Citibank N.A. Commercial Bank of Ceylon
520,000,000 350,000,000 300,000,000 180,000,000
There is no case of loan default made by the Company from its inception. Lease Commitment There is no lease commitment during last five years. Personnel related Schemes The Company has adequate programmes for human resource development. Company also has a welldesigned Compensation Plan for attracting highly capable professional staff with high degree of integrity. The compensation package include Salary and Allowances, Bonus, Leave Salary, Gratuity, Provident Fund and performance based reward scheme etc. The existing Compensation Plans are as follows: (a) Salary/Allowances : This includes basic pay, house allowance, conveyance/transport allowance, medical allowances. The amount varies for each grade of services. (b) Traveling : This includes fare and daily allowances for each grade of services. (c) Bonus : This is paid on the basis of 2 months basic pay for each Eid Festival. There is an incentive Bonus Scheme based on performance. (d) Provident Fund : The Company has already set up Provident Fund as contributory by the employee at the rate of 10% of the basic pay and equal amount by the Company. Companys contribution would be payable on completion of minimum 5 years service. (e) Gratuity : Gratuity Plan is a non-funded liability payable to an outgoing employee on completion of minimum 8 years service at the rate of months Basic pay (last pay) for every completed year of service for 8-12 years. For more than 12 years service it is one months pay and for 16 years/over it is 2 months pay. f) WPPF: The Company has created a fund for workers as Workers Profit Participation Fund and 5% of profit before charging this rate has been transferred to this fund. g) Leave Salary : As a non-funded scheme, leave is allowed at the rate of one day for 14 days service. Leave is encashable at the discretion of management up to maximum accumulation of 96 days.
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Break down of all expenses including fee of Issue Manager and Underwriters I. Fee of Issue Manager : II. Underwriting Commission : Revaluation of Assets The assets of the Company were revalued in the year 2004 by a firm of professional valuers named Asian Surveyors Ltd. on the basis of open market value. The valuation has been made for reflection of actual value of its assets. The revalued amount was incorporated in the accounts during the accounting year 2004. The assets have been revalued as follows: Balance as at 1 Jan 2004(Cost) Taka 13,737,663 53,160,374 13,217,220 9,006,672 30,243,910 47,451,884 8,516,043 4,925,052 56,150 2,616,250 785,576 2,380,936 1,331,461 138,390 2,686,000 140,000 1,776,625 192,170,206 180,655,730 Addition during the year (Cost) Taka Revaluation Surplus/Loss Taka 61,312,837 6,634,644 2,472,218 848,461 8,193,868 6,744,849 16,626,917 323,824 77,018 704,065 (363,947) 160,215 (266,855) (18,310) 1,184,348 34,000 104,668,152 Balance as at 31 Dec 2004 Tk. 7.50 Lac. N/A
Name of the Assets
Taka 75,050,500 59,795,018 15,689,438 12,553,392 41,018,550 54,849,652 25,312,173 5,804,720 133,168 3,389,075 421,629 20,500 2,657,001 1,080,076 120,080 3,870,348 174,000 1,776,625 303,715,945 190,393,581
Land : Unit 1 Building: Unit 1 Unit 2 Unit 3 Plant: Unit 1 Unit 2 Unit 3 Equipment & Machinery: Unit 1 Unit 2 Electric & other appliances: Unit 1 Unit 2 Unit 3 Furniture & Fixtures: Unit 1 Unit 2 Unit 3 Vehicles: Unit 1 Deep Tube-well: Unit 1 Leased Asset -Vehicle Unit 1 At 31 December 2004 At 31 December 2003
2,698,259 2,580,772 652,919 169,213 555,844 68,760 20,500 115,850 15,470 6,877,587 9,737,851
Transaction with holding or subsidiary companies which have been taken place during last five years of the publication of Information Documents The Company carried out a number of numerous transactions under the Marketing and Distribution Agreement with its holding parent company (ACI Ltd.) during last five years. The year ending balance with ACI Ltd. was as follows : Particulars Due from ACI Ltd. 30.06.2008 807,887,512 31.12.2007 726,212,549 31.12.2006 363,836,431 31.12.2005 256,613,691 31.12.2004 114,553,884 31.12.2003 155,930,174
The above balances is due on account of enjoying normal supplier credit facility by ACI Ltd. granted by ACIFL for selling the goods of Crop Care and Public Health products. INFORMATION DOCUMENT
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A Special Report from the Auditors regarding any allotment of shares to the Directors and Subscribers for any consideration otherwise than cash
Auditors certificate for issue of shares otherwise than for cash
We certify that no other share was issued otherwise than for cash upto 30 June 2008 except 1,250,000 bonus shares @ Tk. 100 each which was approved by the shareholders in the 9th Annual General Meeting held on 2 May 2005.
Dhaka, 25 September 2008
Sd/Rahman Rahman Huq Chartered Accountants
Material information having an impact on the affairs of the company We furnish the following information, which has an impact on the affairs of the Company: 01.01.08 to 30.06.08 1,069,475,034 23,375,569 150,175,413 94,806,447 01.01.07 to 31.12.07 1,383,118,708 52,727,239 112,913,207 65,525,074 01.01.06 to 31.12.06 923,862,592 52,615,437 102,964,423 67,267,586 01.01.05 to 31.12.05 807,101,129 41,661,924 109,971,637 77,623,398 (Amount in Taka) 01.01.04 01.01.03 to to 31.12.04 31.12.03 716,849,826 649,772,561 81,708,092 88,805,413 64,747,224 8,917,997 90,580,078 77,438,391
Particulars Sale Operating expenses Net profit before tax Net profit after tax & WPPF
Statements of changes in shareholders equity for the half year ended 30 June 2008 (Amount in Taka) Particulars Balance at 31 December 2006 Net profit after tax Transferred to tax holiday reserve Transferred from tax holiday reserve Balance at 30 June 2007 Balance at 31 December 2007 Net profit after tax Balance at 30 June 2008 Share capital 250,000,000 250,000,000 250,000,000 250,000,000 Share money deposit Revaluation reserve 65,495,689 65,495,689 65,495,689 65,495,689 Tax holiday reserve 39,635,436 1,129,128 (40,764,564) Retained earnings 173,611,158 51,404,533 (1,129,128) 40,764,564 264,651,127 278,771,668 94,806,447 373,578,115 Total 528,742,283 51,404,533 580,146,816 594,267,357 94,806,447 689,073,804
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DIRECTORS AND OFFICERS

Name, age and position of directors of the Company and any person nominated to be a director:
Sl. No. 1 2 3 4 5 6 7
Name of the Directors Mr. M Anis Ud Dowla Mrs. Najma Dowla Dr. Arif Dowla Ms. Shusmita Anis Salam Mr. Wajed Salam Dr. F H Ansarey Ms. Sheema Abed Rahman
Age 72 62 39 42 47 55 52
Present Position Chairman & Managing Director Director Director Director Director Director Director & Company Secretary
Representative of Not applicable - do - do - do - do - do - do -
Date of becoming first Directors and date of expiry of current term
Sl. No. 1 2 3 4 5 6 7
Name Mr. M Anis Ud Dowla Mrs. Najma Dowla Dr. Arif Dowla Ms. Shusmita Anis Salam Mr. Wajed Salam Dr. F H Ansarey Ms. Sheema Abed Rahman
Present Position Chairman & Managing Director Director Director Director Director Director Director & Company Secretary
Date of First Directorship 29-10-95 18-03-01 09-02-03 09-02-03 28-04-05 30-11-95 28-04-05
Expiry of current term
One third of total directors take retirement at every Annual General Meeting and re-elect is eligible as seniority.
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Involvement of Directors with other companies Sl. No. Name Name of other company where the Director is involved Advanced Chemicals Industries Ltd. ACI Salt Limited ACI Foods Limited ACI Pure Flour Limited ACI Motors Limited ACI Logistics Limited ACI Agrochemicals Ltd. Stochastic Logic Limited Apex Leather Craft Limited Consolidated Chemicals Limited Flyban Insecticides Limited Premiaflex Plastic Limited Creative Communications Ltd. Intesa Communication Limited Tetley ACI Bangladesh Limited ACI Godrej Agrovet Pvt. Ltd. Pioneer Insurance Co. Ltd. Credit Rating Agency of Bangladesh Ltd. ACI Foundation Advanced Chemicals Industries Ltd. ACI Salt Limited ACI Foods Limited ACI Pure Flour Limited ACI Motors Limited ACI Logistics Limited ACI Agrochemicals Ltd. Stochastic Logic Limited Apex Leather Craft Limited Consolidated Chemicals Limited Premiaflex Plastic Limited ACI Foundation Advanced Chemicals Industries Ltd. ACI Salt Limited ACI Foods Limited ACI Pure Flour Limited ACI Motors Limited ACI Logistics Limited ACI Agrochemicals Ltd. Apex Leather Craft Limited Stochastic Logic Limited Consolidated Chemicals Limited Premiaflex Plastic Limited Creative Communications Ltd. Intesa Communication Limited Tetley ACI Bangladesh Limited ACI Godrej Agrovet Pvt. Ltd. Pioneer Insurance Co. Ltd. Mutual Trust Bank Limited ACI Foundation Position Chairman and Director Director Director Director Director Chairman and Director Director Nominee of ACI Limited. Director Chairman & Managing Director Director Director Director Director Director Chairman Nominee of Consolidated Chemicals Ltd. Director Director Director Director Nominee of ACI Limited. Nominee of ACI Limited. Nominee of ACI Limited. Nominee of ACI Limited. Nominee of ACI Limited. Nominee of ACI Limited. Nominee of ACI Limited. Director Director Director Managing Director Managing Director Managing Director Managing Director Nominee of ACI Limited. Nominee of ACI Limited. Nominee of ACI Limited. Managing Director Managing Director Director Nominee of ACI Limited. Nominee of ACI Limited. Director Nominee of ACI Limited. Nominee of ACI Limited. Nominee of ACI Foundation Nominee of ACI Limited. Director
Mr. M Anis Ud Dowla
Mrs. Najma Dowla
Dr. Arif Dowla
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Sl. No. 4 5
Name Ms. Shusmita Anis Salam Mr. Wajed Salam
Dr. F H Ansarey
Ms. Sheema Abed Rahman
Name of other company where the Director is involved Advanced Chemicals Industries Ltd. Consolidated Chemicals Limited Stochastic Logic Limited Advanced Chemicals Industries Ltd. Homeland Capital Corp. ACI Agrochemicals Ltd. ACI Salt Limited ACI Motors Limited Flyban Insecticides Limited Premiaflex Plastic Limited ACI Godrej Agrovet Pvt. Ltd. Advanced Chemicals Industries Ltd. Flyban Insecticides Limited Apex Leather Craft Limited
Position Director Director Nominee of ACI Limited. Nominee of ACI Foundation Director Nominee of ACI Limited. Director Nominee of ACI Limited. Managing Director Nominee of ACI Limited. Nominee of ACI Limited. Director Director Director
Involvement of Directors with Listed Companies in terms of dividend & category Sl. No. 1 2 3 Name Mr. M Anis Ud Dowla Mrs. Najma Dowla Dr. Arif Dowla Name of the Company where the Director is involved Advanced Chemicals Industries Ltd. Pioneer Insurance Company Limited Advanced Chemicals Industries Ltd. Advanced Chemicals Industries Ltd. Pioneer Insurance Company Limited Mutual Trust Bank Limited Ms. Shusmita Anis Salam Mr. Wajed Salam Ms. Sheema Abed Rahman Advanced Chemicals Industries Ltd. Advanced Chemicals Industries Ltd. Advanced Chemicals Industries Ltd. Position Chairman Director Director Managing Director Director Director Director Director Director
Listing category in terms of dividend
A A A A A A A A A
4 5 6
Family relationship between Directors and Officers Sl. No. 1 Name Mr. M Anis Ud Dowla Director Mrs. Najma Dowla Dr. Arif Dowla Ms. Shusmita Anis Salam Mr. Wajed Salam Mr. M Anis Ud Dowla Dr. Arif Dowla Ms. Shusmita Anis Salam Mr. Wajed Salam Mr. M Anis Ud Dowla Mrs. Najma Dowla Ms. Shusmita Anis Salam Mr. Wajed Salam Mr. M Anis Ud Dowla Mrs. Najma Dowla Dr. Arif Dowla Mr. Wajed Salam Mr. M Anis Ud Dowla Mrs. Najma Dowla Dr. Arif Dowla Ms. Shusmita Anis Salam
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Relation Wife Son Daughter Son-in-law Husband Son Daughter Son-in-law Father Mother Sister Brotherin-law Father Mother Brother Husband Father-in-law Mother-in-law Brother-in-law Wife
Position in the Company Shareholder, Director, Managing Director and Chairman Shareholder and Director
Mrs. Najma Dowla
Dr. Arif Dowla
Shareholder and Director
Ms. Shusmita Anis Salam
Mr. Wajed Salam
Short Bio-Data of Directors MR. M ANIS UD DOWLA Name Fathers name Permanent Address Present Address Office Address Date of Birth Age Religion Education Other Positions Personal Profile : : : : : : : : : : : M Anis Ud Dowla Late Khan Bahadur Md. Ismail House # 18/B, Road # 126, Gulshan, Dhaka-1212 House # 18/B, Road # 126, Gulshan, Dhaka-1212 ACI Centre, 245 Tejgaon Industrial Area, Dhaka-1208 1 March 1937 72 years Islam Masters in Public Administration Member, Executive Committee, Metropolitan Chamber of Commerce & Industry As below
Mr. M Anis Ud Dowla, the Chairman of ACI Limited, is one of the most successful personalities in Bangladesh business circle. He has maintained a high profile, and has provided leadership to business community in different capacities. Mr. Dowla served in the British Oxygen Group of UK in Pakistan, Bangladesh and Kenya for 27 years, including 12 years as Managing Director of Bangladesh Oxygen Ltd. In 1987, he became the Group Managing Director of the three ICI companies in Bangladesh. With experience gathered while working with British Multi-nationals for over 32 years, Mr. Dowla has continued to maintain the multinational culture and management style in ACI, with special emphasis on quality, productivity and customer services. Mr. Dowla was the President of Metropolitan Chamber of Commerce & Industry for three terms in 1975, 1976 & 1977 and the President of Bangladesh Employees Federation for four terms in 1976, 1977, 1994 and 1995. Mr. M Anis Ud Dowla was exposed to lots of international training programme. MRS. NAJMA DOWLA Name Husband Present Address Office Address Date of Birth Age Religion Education Personal Profile : : : : : : : : : Najma Dowla Mr. M Anis Ud Dowla House # 18/B, Road # 126, Gulshan, Dhaka-1212 ACI Centre, 245 Tejgaon Industrial Area, Dhaka-1208 4 October 1946 62 years Islam Graduate As below
Mrs. Najma Dowla joined ACI Limited as Director on 6 January 1996. She is also Director of Subsidiary Companies of ACI Limited, Consolidated Chemicals Limited, ACI Salt Limited, Stochastic Logic Limited, Premiaflex Plastics Limited, ACI Pure Flour Limited, ACI Foods Limited, ACI Motors Limited, Creative Communication Limited and Apex Leather Craft Limited.
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DR. ARIF DOWLA Name Fathers Name Present Address Office Address Date of Birth Age Religion Education Personal Profile : : : : : : : : : Dr. Arif Dowla Mr. M Anis Ud Dowla Unique Corner, 3rd Floor, House # 38, Road # 63, Gulshan, Dhaka-1212 ACI Centre, 245 Tejgaon Industrial Area, Dhaka-1208 9 April 1970 39 years Islam Doctor of Philosophy in Mathematics, University of California, San Diego As below
Dr. Arif Dowla took over the charge of Managing Director of ACI limited in June 2005. Before that he was Deputy Managing Director of the same company. He is also Vice Chairman of Mutual Trust Bank and board member of Pioneer Insurance Limited. He obtained PhD degree in Mathematics from the University of California, San Diego. He is also a member of the American Mathematical Society. His doctoral dissertation was on non-stationary stochastic processes, which is a field of study related to probability theory and statistics. His thesis advisor was the renowned Time Series and Random Fields analyst Professor Dimitris N. Politis. Dr. Arif Dowla was exposed to lots of international training programme. MS. SHUSMITA ANIS SALAM Name Husbands Name Fathers name Present Address Office Address Date of Birth Age Religion Education Personal Profile : : : : : : : : : : Shusmita Anis Salam Mr. Wajed Salam Mr. M Anis Ud Dowla Unique Corner, 3rd Floor, House # 38, Road # 63, Gulshan, Dhaka-1212 ACI Centre, 245 Tejgaon Industrial Area, Dhaka-1208 26 August 1966 42 years Islam Fine Arts Graduate in Graphics Design from San Jose, California, U.S.A. As below
A Graphic Designer and settled in U.S.A. She was inducted as Director in ACI Limited in the year 2000.
MR. WAJED SALAM Name Fathers Name Present Address Office Address Age Religion Education Personal Profile : : : : : : : : Wajed Salam Late Abdus Salam Unique Corner, 3rd Floor, House # 38, Road # 63, Gulshan, Dhaka-1212 ACI Centre, 245 Tejgaon Industrial Area, Dhaka-1208 47 years Islam
Bachelors in Economics from University of California, Los Angeles, U.S.A.
As below
He is engaged in real estate business in USA. He was inducted as Director in ACI Limited in the year 2001
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DR. F H ANSAREY Name Fathers Name Present Address Office Address Date of Birth Age Religion Education Personal Profile : : : : : : : : : Dr. F H Ansarey Late Md. Nazrul Islam 335 South Paikpara, Mirpur, Dhaka 1216 ACI Centre, 245 Tejgaon Industrial Area, Dhaka-1208 22 April 1954 55 years Islam Doctor of Philosophy in Ecology. As below
Dr. F H Ansarey, a Ph.D. holder in Ecology, brings with him high profile management strength for a highly techno-dependent company like this. His wide experience of working in MNCs like CibaGeigy and local corporate like Shetu Corporation in the filed of Chemicals world gives confidence in realizing the business potential of this enterprise.
MS. SHEEMA ABED RAHMAN Name Husbands Name Fathers Name Present Address Office Address Date of Birth Age Education Personal Profile : : : : : : : : : Sheema Abed Rahman, ACS Mr. Abedur Rahman Late Syed Ashraf Alam Flat # F, House # 03, Road # 03, Sector # 04, Uttara, Dhaka-1230. ACI Centre, 245 Tejgaon Industrial Area, Dhaka-1208 9 July 1957 52 years Post Graduate and Diploma in Personnel Management, Bangladesh Institute of Management. As below
Ms. Sheema Abed Rahman joined the Company in the year 1987. Prior to joining ACI she worked for BAT for 14 years. During these 35 years of service her major contribution is in Human Resource Management. She has done her Bachelor of Arts from Dhaka University with Post Graduation in Human Resource Management. She is also a fellow member of the Institute of Chartered Secretaries and Managers of Bangladesh. She was inducted in the Board as a Director in the year 2001.
Holding of 5% or more shares in the paid-up capital by the directors or shareholders of the issuer is loan defaulter in terms of the CIB report of Bangladesh Bank Neither the Company nor any of its Directors or shareholders who hold 5% or more shares in the paid up capital of the issuer is loan defaulter in terms of the CIB report of Bangladesh Bank.
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Description of Senior Executives and Officers
Sl. No. 1
Name Mr. M Anis Ud Dowla
Position Managing Director,
Date of joining 29-10-95
Educational qualification MPA (Karachi) . Doctorate in Ecology FCA
Job experience (last five Years) Chairman & Managing Director Executive Director Finance, Planning &
Material Management
Dr. F H Ansarey 2 Mr. Muallem A Choudhury
Director , In-charge
30-11-95
Chief Financial Officer (CFO)
01-06-05
4 5 6
Ms. Seema Abed Rahman Mr. Md Abdul Hamid
Director & Company Secretary General Manager (Operation ) Production Engineer (Head of Engineering Dept.) Quality Control Chemist (Head of QC Dept.)
28-04-05
Post Graduate
Company Secretary Factory Manager ElectroMechanical Engineer DAE UAO
01-01-02 14-03-03
Mr. Zubair Mahmud
B. Sc Engineer (Mech.) B.Sc Engineer (Mech.) PHD from BAU
23-12- 07
Dr. Abdus Salam Bhuyan
01-01-02 8 Mr. Sheik Muzaffar Hassan Production In-charge
M. Sc. (Organic Chemistry)
1997 SMAH Ltd.
Mr. Ahmed Zubair Mr. M. Mizanur Rahman Sarker, Maj. (Retd.) Mr. Golam Mostafa
Asst. Manager, Warehouse (Head of Warehouse) Sr. Admin Officer
23-07-94
B. Sc
Working in the Company Since 1995 Bangladesh Army. Worked with Eurasia Enterprise.
23-09-04
B.A.
10
Sr. Accounts Officer 11
01-10-04
M.Com, Accounting
CMA Partly Qualified
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INVOLVEMENT OF OFFICERS AND DIRECTORS IN CERTAIN LEGAL PROCEEDINGS

No Directors or Officer of the company was involved in any of the following types of legal proceedings in the past ten years: Any bankruptcy petition filed by or against any company of which any officer or director of the issuer company filling the prospectus was a director, officer or partner at the time of the bankruptcy; Any conviction of director, officer in criminal proceedings or any criminal proceedings pending against him; Any order, judgment or decree of any Court of competent jurisdiction against any director, officer permanently or temporarily enjoying, barring, suspending or otherwise limiting the involvement of any director or officer in any type of business, securities or banking activities. Any order of the Securities and Exchange Commission or other regulatory authority or foreign financial regulatory authority suspending or otherwise limiting the involvement of any director or officer in any type of business of securities or banking activities.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The company does not have any transaction during the last two years, or any proposed transaction, between the issuer and any of the following persons: Any director or executive officer of the issuer. Any director or officer. Any person owning 5% or more of the outstanding shares of the issuer. Any member of the immediate family (including spouse, parents, brothers, sisters, children, and inlaws) of any of the above persons. Any transaction or arrangement entered into by the issuer or its subsidiary for a person who is currently a director or in any way connected with a director of either the issuer company or any of its subsidiaries/holding company or associate concerns, or who was a director or connected in any way with a director at any time during the last three years prior to the issuance of the prospectus, except disclosure under caption related party transaction in Note 23 of Audited Financial Statement, transaction with the directors and subscribers to the memorandum and Executive Compensation part of Information Document. Loan given/taken No such loan was taken or given from or to directors or any person connected with the directors of ACIFL. Interests and Facilities enjoyed by the Director All Directors are getting dividend, bonus and right shares in due course and none of the directors are taking monthly salary except Dr. F H Ansarey.
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EXECUTIVE COMPENSATION
Name and designation with the amount of remuneration paid to the top ten salaried officers in the last accounting year : (Amount in Taka) Remuneration Sl. 01.01.2008 01.01.2007 Name Designation No. to to 30.06.2008 31.12.2007 1 Dr. F H Ansarey Executive Director 820,260 1,713,720 2 Mr. Md. Abdul Hamid General Manager 568,902 1,200,932 (Operation) 3 Mr. Sheikh Muzaffar Production Manager 245,685 520,184 Hasan 4 Mr. Zubair Mahmud Asst. Manager, Engineering 184,115 391,002 5 Mr. Ahmed Zubayer Asst. Manager, Warehouse 163,127 345,720 6 Mr. Md.Muzibur Rahman Senior Production Officer 104,486 226,278 7 Mr. Ohiduzzaman Khan Maintenance Engineer 104,392 224,168 8 Md. Anowar Hossain Logistic Officer 54,994 114,792 9 Md. Mizanur Rahman Senior Administrative officer 99,919 205,683 Sarker 10 Md. Golam Mustafa Accounts Officer, ACIFL 76,051 156,543 Aggregate amount of remuneration paid to all Directors & Officers as a group during last accounting year: (Amount in Taka) Remuneration & Salary Sl. 01.01.2008 01.01.2007 Particulars No. to to 30.06.2008 31.12.2007 1 Directors 820,260 1,713,720 2 Officers & Staff 10,066,869 18,881,317 Remuneration paid to any Director who was not an officer during the last fiscal year The Company did not pay any remuneration to any director who was not an officer of the company during the last accounting year. Any contract with any Officer or Director providing for payment of future compensation The Company has no contract with any director/officer for providing the payment of future compensation. Companys plan to increase substantially remuneration to Officers & Directors during the current year The Company does not have any plan to substantially increase remuneration to Officers/Directors except normal & additional annual increments/awards of salaries/allowances as per Service Regulations/Articles of Association and in line with the performance achieved by individuals.
OPTIONS GRANTED TO OFFICERS, DIRECTORS AND EMPLOYEES

The Company has no option plans for Officers, Directors or Employees or other employees of the Company.
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TRANSACTION WITH PROMOTERS TO THE MEMORANDUM

The Company has not conducted any transaction with anyone of its promoters nor exchanged anything for any value received except payment of fees for attending meetings of the Board of Directors/Committee. The company has not also received anything from promoters except fund against allotment of Shares taken up as per subscription requirement of Memorandum and Articles of Association. Promoters have not transferred any assets to the Company except deposit of Cash funds for proposed allotment of Shares as per Memorandum and Articles of Association.
TANGIBLE ASSETS PER SHARE

Statement of net asset value per share: Net assets are valued on historical cost/revaluation basis reduced by depreciation provision and considered on the basis of audited balance sheet as at 30 June 2008 as under: ASSETS
Fixed assets
Amount (Taka) 280,905,080 66,614,372 450,231,305 4,739,162 2,841,943 82,429,336 807,937,372 20,246,710 1,715,945,280
Property, plant and equipment Capital work-in-progress

Current Assets
Inventories Trade debtors Other receivables Advance, deposit and prepayments Due from inter-company Cash and bank balance Total assets LIABILITIES
Current liabilities
Bank overdraft Short term loan Withholding tax and VAT Trade creditors and accruals Provision for tax
Deferred tax liabilities
62,198,281 684,959,151 105,651 97,829,299 106,922,803 74,856,290 1,026,871,476 689,073,804 25,000,000 27.56
Deferred tax liability Total liabilities Net Asset Value (NAV) Number of Shares Net Asset Value Per Share
The net assets value (NAV) is also equivalent to the shareholder's equity consisting of paid-up capital, revaluation reserve and retained earnings as follows: Particulars Share capital Revaluation reserve Retained earnings Total Shareholder's Equity Number of Shares Net Asset Value Per Share Amount (Taka) 250,000,000 65,495,689 373,578,115 689,073,804 25,000,000 27.56 Sd/Rahman Rahman Huq Chartered Accountants
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Dhaka, 25 September 2008
OWNERSHIP OF COMPANYS SECURITIES

The Companys shareholding position as on 30 June 2008 is as follows: Sl. No. 1 Names/Addresses of Shareholders ACI Limited ACI Centre, 245 Tejgaon I/A Dhaka 1208 Mr. M Anis Ud Dowla House No. 18B, Road No. 126 Gulshan, Dhaka 1212 Mrs. Najma Dowla House No. 18B, Road No. 126 Gulshan, Dhaka 1212 Dr. Arif Dowla Unique Corner ( 3rd floor) House No 38, Road No.63 Gulshan Model Town, Dhaka-1212 Ms. Shusmita Anis Salam Unique Corner ( 3rd floor) House No 38, Road No.63 Gulshan Model Town, Dhaka-1212 Mr. Wajed Salam Unique Corner ( 3rd floor) House No 38, Road No.63 Gulshan Model Town, Dhaka-1212 Dr. F H Ansarey 335 South Paik Para Mirpur, Dhaka 1216 Ms. Sheema Abed Rahman Flat # F, House # 33, Road # 06, Sector # 04, Uttara, Dhaka-1230 Mr. M Mosaddek Hossain 5/8 (1st Floor), Block # C, Lalmatia, Dhaka-1206 Total Number of Shares 21,737,500 Amount Paid up 217,375,000
Percentage (%)
86.95
2,502,500
25,025,000
10.01
2,500
25,000
0.01
1,000
10,000
0.0004
1,000
10,000
0.0004
1,000
10,000
0.0004
752,500
7,525,000
3.01
1,000
10,000
0.0004
1,000
10,000
0.0004
25,000,000
250,000,000
100.00
Number of Shares owned by the top ten salaried officers, directors and all other officers The number of shares owned by the top ten salaried officers and directors are as follows: Sl. No. 1 Name Dr. F H Ansarey Designation Director, In-charge No. of Shares 752,500
DESCRIPTION OF SECURITIES OUTSTANDING OR BEING OFFERED

Dividend, Voting and Preemption Right Voting: On a show of hand every member present in person shall have one vote and upon a poll every member present in person shall have one vote for every share held by him.
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Any objection as to the admission or rejection of a vote, either on a show of hands, or on a poll made in due time , shall be referred to the Chairman of the meeting who shall forth with decide the same, and such decision made in good faith shall be final and conclusive.
Conversion and liquidation rights of any preferred stock outstanding or being offered: If the company at any time issues convertible preference shares or Debenture or Bond with the consent of SEC, such holders of securities shall be entitled to convert such securities into ordinary shares if it is so determined by the company. Subject to the provisions of the Companies Act, 1994, Articles of Association of the Company and other relevant Rules in force, the shares, if any, of the company are freely transferable, the company shall not charge any fee for registering transfer of shares. Dividend: The Company in General Meeting may declare a dividend to be paid to the members according to their rights and interests in the profits and may fix the time for payment. No larger dividend shall be declared than is recommended by the Directors but the Company in General Meeting may declare a smaller dividend. No dividend shall be payable except out of profits of the Company of the year or any other undistributed profits, and dividend shall not carry interest as against the Company. The declaration of the Directors as to the amount of net profits of the Company shall be conclusive. The Directors may from time to time pay to the members such interim dividend as in their judgment the position of the Company justifies. A transfer of shares shall not pass the right to any dividend declared thereon before the registration of transfer. Any one of several who are registered as the joint holders of any shares may give effectual receipt for all dividends and payments on account of dividend in respect of such shares. All dividends unclaimed for one year after having been declared may be invested or otherwise made use of by the Directors for the benefit of the Company until claimed. Unclaimed dividend shall not be forfeited by the Company.
Others materials rights of common stockholders: The shareholders shall have the right to receive all periodical reports and statements, audited as well as unaudited, publish by the company from time to time. The Directors shall present the financial statements as required under the Law and International Accounting Standards. Financial Statements will be prepared in accordance with International Accounting Standards, consistently applied throughout the subsequent periods and present with the objective of providing maximum disclosure as per law and International Accounting Standards to the Shareholders regarding the Financial and operational position of the company. In case of any declaration of stock dividend by issue of bonus shares, all share holders shall be entitled to it in proportion to their shareholdings on the date of book closure/record date for the purpose. The shareholders holding not less than 10% of the issued/fully paid up capital of the company shall have the right to requisition Extra-ordinary General Meeting of the Company as provided under section 84 of the Companies Act, 1994.
DEBT SECURITIES
Terms and Conditions of debt securities that the company may have issued or to be issued The company did not issue any debt securities and has no plan to issue any debt securities within next six months.
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FUTURE PROSPECTS
Food Security is the number one challenge for the world. This situation is more critical for Bangladesh. The country occupies 1/50th of the world population on only 1/3000th of the world land area. Having the highest population density this issue has the priority to address in Bangladesh. Our land and farmers has an ability to transform us from the major food importer to food exporter. ACI has realized this from the very beginning of its operation. ACIFL is the pioneer for agriculture input business to provide complete solution for farmers requirement. ACIFL is the only organized and professional business house exploring the huge opportunity of Agriculture business. Throughout the world there is a growing interest in investing in agriculture sector and Bangladesh is not an exception. ACIFL wants to play a dominant role in this growing sector by investing in agri-related sector. To improve the food production farmers need to have proper crop inputs which include seeds, fertilizers, and crop care products followed by excellent agricultural practices. ACIFLs diversified role in agri-sector will directly help the Farmer Community in increasing their crop productions by providing precise form of crop care and related products. We have around 350 field forces with strong agricultural background including agronomists, botanists etc. Our field forces are situated throughout the country to assist the farmers in: Improving agricultural practices including mechanisation. Suggesting the use of right doses of agrichemicals. Helping farmers to get proper information on soil conditions. Educating farmers with appropriate agricultural knowledge. Facilitating farmers to get the right price of their crops.
All these have made ACIFL the right choice for the farmers and thereby a dominant player in agri-sector. The philosophy of our business is to give the farmers a total solution of their need and building a long term relationship with them. ACIFL considers that increasing food production is its social commitment and therefore it will utilize its resources to achieve the greater success in making our country food sufficient. We have strong team of dedicated professionals with vast experience and strong track records to make this possible. Our top level management has the ideal strategic vision and competence to guide the team to reach its target. The future of ACIFL business will be mainly concentrated in the following areas: (1) Crop Care products manufacturing and marketingThe entire Crop Care production and marketing business will be handled by ACI Formulations Limited. This is a growing business and projected turnover of 2009 is Tk. 1.4 billion (expected to be Tk. 1 billion in 2008). With the inclusion of Crop Care business in its entirety, the profitability of ACIFL will grow significantly in the upcoming years. (2) Sulpher projectWe have already started a new project by establishing a Sulpher Manufacturing Plant in Bangladesh. This particular project will take care of the sulpher requirements of farmers which currently being imported from abroad. The local manufacturing of sulpher will not only give farmers price advantage but also increase the availability of sulpher in the market. (3) NPKS fertilizerTo play more active role in Countrys agriculture sector holistically, ACI Formulations Limited will also involve in fertilizer business by establishing its own NPKS fertilizer plant. It is to be noted here that ACI is already in fertilizer business and during a short span of time it has established a strong foothold in this sector.
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(4) Agriculture machineryTo improve countrys agriculture production, mechanization is a must. ACI Motors Ltd. which started its operation in end 2007, has already become no-2 in marketing agriculture equipment like tractors, power tillers, harvesters etc. As this business is directly linked with ACIFLs philosophy to enhance countrys food production and therefore, to have quick access to this growing business area, it has been agreed that 10% share holding of ACI Motors Ltd. will be divested by ACI Limited in favour of ACIFL. This will allow ACIFL to have more direct contacts with farmer community and be potential gainers of the recent upsurge of farmers demand for increased use of agriculture machinery. (5) Contract manufacturingACI Formulations Limited will continue to be the contract manufacturer of public health products which are marketed by ACI Ltd. ACIFL will get the share of growing demand in public health products like Aerosol, Mosquito Coils and Air-freshener. We strongly feel that our current leading position in crop care business will be further strengthened by incorporating above new projects which have been carefully selected to enhance the future business prospects. Agriculture of Bangladesh needs up-gradation and modernization and ACIFL wants to be a change agent for this revolution. Following is the projected income statement of ACIFL for the next five years:
Expected to be Particulars 2008 Taka Sales Cost of goods sold Gross profit Other income Administrative, selling and distribution expenses Financing cost Provision for contribution to WPPF Profit before tax Tax expenses Profit after tax Eearning per share (EPS) 44,015,569 293,612,335 56,346,938 237,265,397 11,863,270 225,402,127 83,262,890 142,139,236 5.69 424,966,669 440,274,498 135,121,142 305,153,356 15,257,668 289,895,688 81,170,793 208,724,896 8.35 605,059,453 632,622,201 195,030,623 437,591,578 27,782,563 409,809,015 114,746,524 295,062,491 11.80 736,961,910 760,188,772 207,163,689 553,025,083 33,870,480 519,154,603 145,363,289 373,791,314 14.95 856,885,444 899,849,895 214,740,018 685,109,876 37,569,694 647,540,182 181,311,251 466,228,931 18.65 981,526,319 995,921,251 222,168,465 773,752,786 43,526,207 730,226,579 204,463,442 525,763,137 21.03 1,841,645,034 (1,506,815,614) 334,829,420 2,798,484 337,627,904 2009 Taka 2,508,515,563 (1,645,909,414) 862,606,150 2,635,017 865,241,167 2010 Taka 4,153,581,273 (2,918,798,138) 1,234,783,135 2,898,519 1,237,681,654 Projected 2011 Taka 5,068,090,685 (3,574,128,374) 1,493,962,311 3,188,371 1,497,150,682 2012 Taka 5,893,386,546 (4,140,158,415) 1,753,228,131 3,507,208 1,756,735,338 2013 Taka 6,681,650,781 (4,708,061,139) 1,973,589,642 3,857,929 1,977,447,570
With the inclusion of two (2) new projects i.e. Sulpher and NPKS along with the investment in ACI Motors Ltd and restructuring of existing Crop Care business, ACIFL is expected to increase its return from 2008s estimated EPS of Tk. 5.69 to Tk. 21.03 ( CAGR + 30%) in 2013.
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CREDIT RATING REPORT ON

Report : RR/215/08
Address: CRISL Nakshi Homes (4th Floor), 6/1A, Segunbagicha, Dhaka-1000 Tel: 7173700-1 Fax: 88-02-9565783 Email: [email protected]
This is a credit rating report as per the provisions of the Credit Rating Companies Rules 1996. CRISLs Long-term Rating is valid for one year only and Short-term rating is valid for 6 months only. After the above periods, these rating will not carry any validity unless the company goes for rating surveillance. .
Entity Rating Outlook Date of Rating Declaration

1.0 RATIONALE
Long term A+
Short term ST - 3
Positive September 22, 2008
Analysts: Sk.Md.Lutful Kabir [email protected] Md.Sajedul Islam [email protected] Entity Rating: Long Term: A+ Short term: ST-3 Outlook: Positive Rating : Based on Financials of first half-2008
CRISL has assigned A+ (pronounced as Single A Plus) rating in the long term and ST-3 rating in the short term to ACI Formulations Limited (hereinafter referred as ACIFL). The above has been done on the basis of its good fundamentals such as sound equity based capital structure, good franchise value in the market, sound production arrangement, experienced management team, diversified product line, good market share, good profitability, strong support of parent ACI Limited, sound debt servicing history etc. However, the above factors are moderated to some extent; by its full dependence on parent support to promotion & distribution, continuous substantial receivable with the parent, huge working capital loan etc. Entities rated in this category are adjudged to offer adequate safety for timely repayment of financial obligations. This level of rating indicates a corporate entity with an adequate credit profile. Risk factors are more variable and greater in periods of economic stress than those rated in the higher categories. The short term rating indicates good certainty of timely payment. Liquidity factors and company fundamentals are sound. Although ongoing funding needs may enlarge total financing requirements, access to capital markets is good. Risk factors are small. CRISL also considers its positive outlook due to its business expansion plan, adoption of business policy to develop its own distribution channel & promotional team and others.
ACI Formulations Limited

PRINCIPAL ACTIVITY Manufacturing and marketing of agrochemical and consumer products
2.0
CORPORATE PROFILE
INCORPORATED ON
October 29,1995
BOARD CHAIRMAN & MANAGING DIRECTOR Mr. M Anis Ud Dowla
2.1 The Genesis ACI Formulations Limited (hereinafter referred ACIFL), a subsidiary of Advanced Chemical Industries Limited (ACI Limited), was incorporated on 29th October 1995 under Companies Act-1994 as a public limited company and went into commercial operation on 1st July 1998. The principle business of the Company is manufacturing and marketing of a number of agrochemical and consumer products through its three manufacturing units -Crop Care and Public Health, Mosquito Coil and Aerosol. As on June 30, 2008 the authorized and paid up capital of the company stood at Tk.500.00 million and Tk.250.00 million respectively. With the continuous technical and operational support from ACI Limited and under the auspicious leadership of renowned entrepreneur Mr. Anis Ud Dowla, the company has been able to improve its growth progressively. The company has the plan to go for direct listing with stock exchanges under direct listing rules. The Corporate Head Office of the company is at ACI Centre, 245 Tejgaon Industrial Area, Dhaka-1208 and Factory is at Rajabari, Gazipur. 2.2 Ownership Pattern ACI Limited, the parent of the ACIFL owns 86.95% shares of the company, while the balance shares are held by the Chairman & Managing Director of the company Mr. M Anis Ud Dowla & his family members (10.03%), Dr. F H Ansarey (3.01%),Ms. Sheema Abed Rahman and Mr.M. Mosaddek Hossain (0.004% each). All the individual shareholders are the Directors of the Company. 2.3 Products ACIFL is highly innovative in product line development. The products of ACIFL are categorized under three major business segments namely Crop Care & Public Health (CC & PH), Mosquito Pesticides, and household chemicals. The CC & PH products includes insecticides, herbicides and fungicides in granular, powder and liquid forms; Mosquito Repellants in the forms of aerosols, vaporizers and coils; and household chemicals like toilet cleaners, Air freshener and hand wash. Overall the company has about 55 products under its three business segments.
EQUITY TK.689.07 million
TOTAL ASSETS TK.1,715.95 million
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3.0 Diversified business of parent
PARENT PROFILE: ACI HOLDING
Advanced Chemical Industries Limited (ACI) has a long heritage in its business, which was incorporated in 1992 to take over the business of the then Imperial Chemical Industries Pakistan Manufactures Limited (ICI Pakistan) through a Management buyout. Presently it is one of the largest conglomerate business houses in the country having ten subsidiaries and three joint ventures. ACIs business was diversified within three business divisions namely ACI Healthcare, ACI Consumer Brands and ACI Agrochemicals. Besides, it has also presence in other related and un-related sectors. As on 31st December 2007, the authorized capital and paid up capital of the company stood at Tk.500.00 million and Tk. 161.70 million respectively. ACI is registered with both the bourses of the country having market capitalization of Tk.8484.40 million as on September 02,2008. The consolidated turnover of the ACI Holding (including its subsidiaries) was Tk. 5,756.82 million and Tk. 4,237.86 million in YE2007 and YE 2006 respectively. The after- tax profit was Tk. 362.59 million and Tk. 167.88 million in YE2007 and YE2006 respectively. Again, the consolidated asset- base of the Holding stood at Tk. 5,912.36 million and Tk. 3,716.30 million in YE 2007 and YE 2006 respectively. The consolidated equity base of the Holding Company ACI reached to Tk. 1,794.87 million at YE2007 including the Minority Interest, of which only ACIs equity base was Tk. 1,272.10 million. The parent has also commendable leverage of 2.29 times and 2.06 times in YE2007 and YE2006 respectively. 4.0 PRODUCTION FACILITIES AND ENVIRONMENT COMPLIANCE
Good infrastructure and environment compliance
The production facility of ACIFL is located at Rajabari, Gazipur on a total land area of 19 acres. The core production plant includes three production units such as Unit 1: Crop Care and Public Health, Unit 2: Mosquito Coil and Unit 3: Aerosol. Besides, within the premises of ACIFL, there is also a Vanish production unit under the ownership of ACI Limited and managed by ACIFL. Other than the plant shed, the ACIFL has 7 warehouses, engineering workshop, substation, store, two quality control laboratories, a medical center and other related infrastructures. The company has own gas generated power supply capacity of 2025 KW and water supply system. For Aerosol unit, it has LPG storage facility of 17 Ton. ACIFL Plant has its own effluent treatment plant as per the WHO and FAO approved guideline. Initially the company started with the Agrochemical Unit in 1998 on 12.5 acres of land area to produce crop care granular product and coconut hair oil. Subsequently, within the next five years, it expanded to produce CFC based Aerosol, Mosquito Coil, LPG based Aerosol, Air Freshener, Vanish (public hygiene product), Lissapol (textile chemical) and others. Production for the Crop Care and Public Health (insecticide, fungicide and herbicide) items is done in three separate floors, namely Granular Production, Powder Production and Liquid Production. For the production of Consumer Brand (CB) there are three separate floors for Aerosol, Mosquito Coil, and Vanish. ACIFL has been using semi-automated plant and equipment needing human intervention, however, it has planned to use fully automated equipments & machineries to avoid possible health hazard. 5.0 CORPORATE GOVERNANCE
Corporate governance is a blend of law, regulations, enforcement and appropriate voluntary practice by the companies that permit a corporate to attract capital, perform efficiently and generate long term economic value for its shareholders while respecting the interest of its stakeholders and society as a whole. The specific areas covered are transparency in disclosure of relevant, reliable financial and operational information, information on ownership and control, information on internal processing of management. Some of the areas are reviewed as follows: 5.1 Board The seven members Board of ACIFL is being lead by Mr. M Anis Ud Dowla as Chairman, who has long exposures in the business arena since the Pakistani regime. Mr. Dowla served in the British Oxygen Group of UK in Pakistan, Bangladesh and Kenya for 27 years, including 12 years as Managing Director of Bangladesh Oxygen Ltd. In 1987, he became the Group Managing Director of the three ICI companies in Bangladesh. Later, he started his own business under the name and brand ACI in 1992 and now the ACI brand commands a high franchise value and it is considered to be one of the local giant private sector conglomerate house of the country. Board reviews the overall activities of the business and gives necessary strategic guidelines for onward policy implementation. The Directors are kept informed of the results and the major activities through distribution of monthly statements and quarterly reporting by the Managing Director. The board agenda includes financial results, consideration of major investments, new business initiatives, borrowings liquidity, etc. in addition to statutory approvals. However, the board meets periodically to transact matters that require boards approval. The board conducted 5 meetings each of the year 2006 and FY 2007.
Experienced Board
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Experienced management team
5.2 Corporate Management The Management Team of ACIFL is headed by the Managing Director Mr. M Anis Ud Dowla, who is also the Chairman of the Board. The global best corporate governance practice as well as SEC corporate governance guidelines suggest that the Chairman and the Managing Director should be different persons. Mr. Dowla is actively aided by key persons Dr. F.H Ansarey, Executive Director, Engr. Md. Abdul Hamid, General Manager (Operations), Mr. Sheikh Muzaffar Hasan, Production Manager, Dr. Md. Abdus Salam Bhuiyan, Manager, Quality Control for day to day operations. Dr. F H Ansarey, with his experience of working with different multinational organizations like Ciba-Geigy and Shetu Corporation in the field of chemicals, has been engaged as the Executive Director (ED). Engr. Md. Abdul Hamid is basically a Mechanical Engineer having professional experience in different local and multinational companies, has been working as head of the production and operation. Over and above, the Finance, Administration, Marketing, Sales and Distribution are overseen by the Central Corporate Team of the parent company which consisted of highly qualified and professionally sound. The Parent has highly dedicated, well qualified, innovative and multi dimensional professionals to take the challenge in any endeavor. 5.3 Delegation of Power The Board has delegated adequate operational and financial authority to the Managing Director to manage operations of the Company. The Managing Director is responsible for implementing the Boards decision and he uses the Management Committee as a consultative body to advise and assist him on issues under consideration. Senior managers with responsibilities for business, operations and functional services are members of the Management Committee which meets once a month to discuss the business result to review the prevailing business position and discuss policy matters. The Management Committee also advises the Managing Director on new products, major items of capital expenditure and overall supervision of the affairs of the Company. However, for operational efficiency and smooth functioning, the Managing Director has re-delegated the financial power to respective Executive Directors and factory managers. The operational power is also delegated on the basis of business need being determined through budgetary control system. Based on the above, the operational activities at all level are being carried out. The operational staff does not feel the dearth of delegation. 5.4 Human Resources Policy ACIFL has structured service rule to ensure the congenial working environment and better career path. The compensation structure is framed with the objective to attract and retain high quality people. Management has efforts to ensure a good and congenial working environment for its employees. The company has conducted numerous training programs on variety of topics, ranging from focused, skill based programs to highly interactive leadership development session. The well structured performance evaluation system and succession development plan also ensured a better career path of the employees. 5.5 Management Information System The Management Information System (MIS) of ACIFL has been developed on Dot Point Solution (DPS), the most modern software platform. MIS in ACIFL is in focus of establishing technology driven process to reduce human activities, effective user tutorial for ensuring proper understanding of the developed tools, personalized dashboards for process monitoring and highlighting exceptions, continuous quality improvement, high security to ensure accuracy and reliability of data, excellent closely coupled communication with the customer etc. The company uses in-house developed various software for material planning, Inventory RM/PM, Inventory finished product, invoicing system, SMS based sales Invoicing system, BSC, Accounting Mirror, Cpanel Text and Graphics etc. The connectivity of the Formulation Plant with the ACI Center is supported P2P radio link. The development tools and infrastructure of the company includes SQL server in back end, Visual basic and php in font end, MS Exchange and Mdaemon mail server, Microsoft Windows (2X authentication,2X File,2X FTP) server, SMS gateway etc. The company has sufficient safeguard to face any theft of information as well as disaster situation. In order to investigate the IT activities of the company internal audit team is actively involved with necessary steps. 5.6 Internal Control System ACIFL has been following sound internal control system to ensure compliance of its Standard Operating Procedure in order to keep the company on track. The Managing Director has to satisfy the Board that adequate internal check and control are in place through appropriate MIS and employment of Internal Audit team to check and validate the expenses and the system in operation. The central internal audit team of the ACI Holding is responsible for audit and inspection, compliance of laws & regulation, monitoring and risk assessment activities on behalf of the subsidiary companies. It undertakes comprehensive internal audit of the Head Office as well as Factory in order to find out the deficiencies in operations, weaknesses in the control system and report to the Board and Managing Director for their review and taking appropriate actions.
Required delegation of power
Structured service policy
Automated Information System
Sound internal control and compliance system
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6.0
BUSINESS RELATION WITH THE PARENT
Highly integrated with the parent ACI Holding
ACIFL was an expansion in the new business arena of ACI Holding like other subsidiary companies. The parent has direct support to all the subsidiaries under its corporate management team in the areas of sales & marketing, distribution, administration, procurements and others. All the products of its different subsidiaries are pulling in three products Groups under three Strategic Business Units (SBUs) namely Health Care Division, Consumer Brands Division and Agribusiness Division. The products under different Strategic Business Units (SBUs) are marketed and distributed in their respective channel to reach at identical consumer group. The management adopted the strategy to promote and distribute the products in the identical consumer group as well as to introduce new products in the respective business segments as according to the group demand. This is also supposed to be cost effective for the company to market the products under the same brand recognition. Therefore, management perceived no major operational problem, as usually faced by any new company, in case of brand development and operation. The corporate overhead incurred by ACI Holding are also be allocated among all the business units as according to their business volume.
7.0 TRANSFER PRICING WITH THE PARENT Documented transfer pricing agreement About 97% sales of Unit 1 and 100% of Unit 2 and Unit 3 are made to ACI Ltd., where ACI also act as the sales agent of the company. ACI has strong distribution network all over the country as well as well developed field force to monitor the supply chain. The above inter company business dependency put both the companies in win-win situation as both the parties protect their business interest through a Marketing and Distribution Agreement signed on the 1st Day of January 2005. According to the Agreement, the transfer pricing of different products are accounted in three separate modes according to the respective production unit, which are delineated below: Crop Care and Public Health Unit: According to the agreement, ACI will be treated just as a sales agent of ACIFL for the Crop Care & Public Health products. Under this arrangement, ACIFL shall reimburse all the Selling, Marketing and Distribution cost at actual incurred by ACI to sale the products of ACIFL produced in the above unit. ACIFL also pays 5% of the invoice value of ACI as service charge to sale its products. Mosquito Coil Unit: As per agreement, Mosquito coil production is supposed to be done on Contract Manufacturing basis, where ACIFL is entitled to receive only the one forth of the initial investment cost of Mosquito plant by ACIFL, without any reference to the actual production quantity. In return of the goods produced by ACIFL, ACI will bear all the production cost except the general overhead incurred by ACIFL. Aerosol Unit: The transfer pricing of the products of the Aerosol Unit is being determined by ACI and ACIFL on year to year basis considering the profitability of the business vis--vis market dynamics. Vanish Unit: Though the transfer pricing for vanish unit is separately mentioned in the agreement; it is covered under the other products clause, where of the service charges are to be mutually determined between ACI Limited and ACIFL. Vanish unit is actually under the ownership of ACI, and ACIFL just provide the manufacturing service with its personnel and other overhead to produce the products. In return, the ACI is required to pay service charge @ Tk. 1.50 per unit of production.
8.0 INDUSTRY PROSPECTS Excellent Business Prospects As its part of resilience of Bangladesh economy in FY 2006-07, the agrochemical and consumer brand sector once again showed continuous trend of growth to cope with demand of domestic market. In the rural area, the demand for Crop care and pesticides products has increased significantly to increase production volume which has ultimate reflection to the national GDP, keeping pace with the growth of per capita GDP of 11.01% and GNI of 10.69% percent in FY 2006-07. Moreover, socio-economic development and improvement in quality of life of people both in urban and rural areas has created demand for healthcare products that warranted the increased demand for highly innovative hygienic and comfortable products of consumer brand like aerosol, vanish, mosquito coil etc. However, gap of local and foreign participants in this sector is considerably noticed. As a mainstay of the Bangladesh economy, improved and modernized agricultural projects and small agro businesses are highly encouraged by the government and donor agencies. To meet huge demand and to have a quick progress of agro chemical and pesticide industry Government has provided tax exemption and other facilities which will create further opportunity to expansion.
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9.0
BUSINESS PERFORMANCE
Production as per domestic demand
Business performance of ACIFL has been increasing with a substantial growth over the years. The turnover of the company was Tk. 1383.12 million and Tk. 923.86 million in FY2007 and FY2006 respectively, indicating 49.71% growth; however, the half yearly turnover was Tk.1,069.47 million as on 30th June 2008 from Tk.667.63 of corresponding period with a growth rate of 60.19%. Product Category Unit Quantity in
Capacity CC & PH (Granular) CC & PH (Powder) CC & PH (Liquid) M. Coil Aerosol, Air Fresh & C. Killer 1 1 1 2 3 MT MT MT Carton Piece 13,500 1,500 1,500 675,000 7,560,000
Production -2007
production 7,962 671 597 499,435 2,723,588 Utilization (%) 58.98 44.73 39.80 73.99 36.00 Capacity 9,000 1,500 1,500 750,000 7,560,000
Production -2006
Production 5,715 496 457 426,289 1,909,605 Utilization (%) 63.50 33.07 30.47 56.84 25.26
The CC & PH unit contributed highest in the gross turnover by 56.38% followed by 26.67% of Mosquito Coil unit and 16.95% of the Aerosol unit. The turnover of ACI Crop care & Public health unit increased by 43.28% (Tk. 789.48 million in FY2007 from Tk 551.00 million in FY2006) over the last year against the industry growth of 28%. The turnover of Mosquito Coil business increased to Tk. 361.37 million, a 73.24% growth in YE 2007 from Tk. 208.60 million in YE2006, with a record market share of 29%. Aerosol Insect Spray maintained its 14% growth over previous year and maintained its leadership with 79% market share. The company recognized October to April time as its pick operation period at which it utilizes 100% of its achievable production capacity but the rest time its production capacity is utilized only about 40% on average. The average capacity utilization of the different units varied due to its market requirements and 47.84% was recorded for CC & PH unit, 73.99% for Mosquito coil unit and 36% for Aerosol unit in FY 2007. However, the company feels comfort for its production volume as per its domestic market share. 10.0 FINANCIAL PERFORMANCE The after tax profit of the company was Tk.65.53 million in FY2007 and Tk.67.27 million during FY2006 indicating a negative growth of 2.59% over the year; however, the half yearly accounts reported Tk. 94.81 million as on 30th June 2008 with a growth rate of 84.43% over its previous half year performance (Tk. 51.40 million). Though there was an acceptable growth in the before tax profit of the company in the last year (about 9.66%), due to expiry of tax holiday period of the Unit -3: Aerosol Unit, reduced the after tax profitability of the company. The earning per share (EPS) (Face value @ Tk.10) of the company was Tk 3.79 as on half year end of FY 2008 (i.e. Tk.7.58 on annualized) against Tk 2.62 and Tk 2.69 in YE2007 and YE206 respectively. The company declared dividend @10% in FY2004 and thereafter no declaration was given. Net asset value (NAV) per share of the company increased to Tk.27.56 as on 30th June 2008 against Tk. 23.77 in YE2007 and Tk. 21.15 in YE2006. 10.1 Profitability Good profitability The company has a good market existence in turnover and overall profitability is good. The profitability indicators curved with a noticeable growth in the half yearly performance during FY 2008 albeit performance movement faced a declining fashion in the last few years. The gross profit margin was 19.54% and 15.34% in YE2006 and YE2007 respectively, but it twisted to 20.08% at half year end of FY 2008. Accordingly, operating profit margin stood at 17.90% at half year end of FY 2008 with the corresponding rate of 11.53% and 13.85% in YE2007 and YE 2006 respectively. Net profit margin also stood at 8.86% at half year end of FY 2008 against 4.74% and 8.86% in YE2007 and YE2006 respectively. It has been revealed that due to variation in unit wise transfer pricing, profitability of the each unit varies widely. The net profit margin of Mosquito Coil unit (i.e. Unit 2) and Aerosol Unit (i.e. Unit 3) was 1.27% and 1.85% respectively whereas CC & PH unit (i.e. unit 1) represented 14.56% net profit margin in the half year end of FY2008. While analyzing the unit wise performance, it also revealed that CC & PH unit contributed substantially in the PAT (Profit After Tax) by 92.62% followed by 3.83% of Mosquito Coil unit and 3.54% of the Aerosol unit; whereas contribution in the gross turnover by CC & PH unit was 56.38 % followed by 26.67% of Mosquito Coil unit and 16.95% of the Aerosol unit. It reveals that the Mosquito coil unit and Aerosol unit are less profitable compared to CC & PH unit, as production under these units are conducted on
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contract manufacturing basis. CRISL views that the change in the business model may pose the profitability of the Unit 2 and Unit 3, which dependents on the future transfer pricing policy. Again, profitability against assets and capital utilization, the company is performing well. The after tax return on average assets of the company was 7.12%, 5.10% in YE2006, YE2007 respectively, but it stood at 5.86% on half yearly performance which is equal to 11.72% on annualized. The after tax return on equity was 13.59%, 11.67% in YE2006, YE2007 respectively and it stood at 14.77% on half yearly performance which is equal to 29.54% on annualized. Again, against the capital employed amount the return was 11.79%, 10.26% in YE2006, YE2007 respectively and it stood at 13.21% on half yearly performance which is equal to 29.54% on annualized. It is mentionable here that due to seasonal business in nature, peak season (November to April) carries the major part of the yearly trade volume; performance of which are mostly reported in the first half of financial year. However, the company is estimating to maintain the business growth in the second half of FY2008 also. 10.2 Cost Efficiency The cost efficiency ratio (i.e. cost of goods sold as compared to its sales) stood at 79.92% in 1H 2008 with a slight improvement against 84.66% in YE 2007, however, in line with the average efficiency of 79.39% in the last five years. Unit wise cost efficiency revealed that CC&PH unit has been operating with better efficiency (i.e. 71.41%) compared to other two units, where Mosquito unit and Aerosol Unit has been operating at as high as 91.19% and 90.45% of cost to income ratio respectively. Administrative overheads as percentage of total costs noticeably decreased to 1.88% in IH 2008 against 3.04% and 3.27% in YE 2007 and YE 2006 respectively. Selling and distribution overheads as percentage of total costs also substantially decreased to 0.31% in IH 2008 against 0.77% and 2.43% in YE 2007 and YE 2006 respectively. Finance cost to revenue ratio stood at 3.02% in FY 2007 against 2.21%, 2.19% in FY 2006, in FY 2005 respectively and it further increased to 3.31% in 1H 2008. CRISL views that financial cost increased due to increased working capital loan, which is also the outcome of increased receivable to the parent. 10.3 Operational Efficiency Substantial receivable with parent The substantial receivable amount against the turnover apparently downsized the operational efficiency of the company. Though the average receivable outstanding stood at 130 days equivalent turnover in the half year end of FY2008 against 145 days, 123 days, 86 days in FY2007, FY2006 and FY2005 respectively; however, it seems high due to fall in receivable turnover below 3.00 times in FY2007 and FY2008 over 5.11 times in FY2004. Against the above receivable, the company can stagger the payment liability only upto 20-30 days on an average, which in result may put a pressure on the liquidity of the company. The company is also required to maintain substantial inventory of raw materials due to its business cyclicality and overall it maintains inventory equivalent to the 3 months production requirements. The raw materials in the closing inventory of the company held 93.02% as on 30th June 2008 and 92.43% in YE2007 leaving only 7.00% for the finished goods. Though there are huge finished goods in the ware houses, however, the finished goods sold to the ACI are not considered in the inventory of ACIFL. Considering all of the above, the cash conversion cycle (i.e. the time required to back the cash injected into operation after sales of products) represented by 229 days in FY 2007 and 233 days in FY 2006 to move, and it reached to 197 days in the half year end of FY2008 albeit yet seems high for the company. 11.0 CAPITAL STRUCTURE AND LEVERAGE
Improving efficiency
Sound equity based company
ACIFL is a sound equity based company without having any contribution of long term loan in the capital structure. The capital structure also reveled that 90.20% of the net capital employed of Tk. 763.93 million was financed by the equity of Tk.689.07 million as on 30th June 2008. The equity build-up significantly contributed by the retained earnings (i.e. by 54.21%), which was also subsequent result of sound internal capital generation over the last five years and non declaration of dividend after FY2004. Internal capital generation of the company was 13.76%, 11.03%, 12.72% and 16.82% in 1H 2008, FY2007, FY 2006 and FY 2005 respectively. However, considering all the outside liabilities of the company; the leverage ratio reached to 1.49 times in HYE 2008 and 1.56 times in FY 2007 in comparison to 0.99 times, 0.82 times and 0.60 times in FY 2006, FY 2005 and FY 2004 respectively. CRISL views that increasing short term loan and overdraft facility pushed the leverage of the company significantly over the last five years. As on 30th June 2008, about 58% of the net revolving fund of the company was financed by bank loan, whereas 63% of the above revolving fund was in receivable form to its parent ACI Limited. 12.0 LIQUIDITY AND FUND FLOW ANALYSIS
Substantial working capital loan
The fund flow of the company revealed that the liquidity of the company is highly dependent on collection of trade receivables from its parent- ACI Limited. The liquidity ratio of the company revealed comfortable indicator of 1.44 times and 1.40 times in HYE 2008 and YE2007 respectively though there was an increase of bank borrowing over the years. As mentioned earlier that due to increased business volume, the company is
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also required to maintain significant inventory of raw materials which was also the ultimate cause of additional working capital financing as reflected in the fund flow movement of the company. The fund flow of 1st half of 2008, revealed that fund from operation was Tk.104.45 million; against the above net additional fund flow to the working capital was Tk. 126.16 million and capital expenditure of Tk. 18.38 million resulting a net gap in free cash flow of Tk.51.67 million. The above gap was supported by the additional bank borrowing of Tk. 63.89 million in the form of overdraft and short term loan. CRISL views that the liquidity of the company may be affected if the ACI Holding face operating cash flow crisis; although so far it enjoyed parent support in serving the bank loan duly. In this connection it may be mentioned here that since the parent company is dependent on the subsidiary for its product range, the parent will support the subsidiary at the time of liquidity need.
13.0 Good debt servicing capacity
CREDIBILITY AND CREDITWORTHINESS
ACIFL has a good debt servicing history from its inception and so far any exposures are yet to be classified. Due to its sound credibility, it is enjoying credit limit against the funded and non-funded facility to the amount of Tk.1,060.00 million from three commercial banks including Standard Chartered, HSBC and Commercial bank of Ceylon. However, the outstanding bank loan liability was Tk. 747.16 million (i.e. 70.48% of the limit) as on 30th June 2008 consisting of Tk. 684.96 million as short term loan and Tk. 61.19 million as Bank Overdraft. The facility wise outstanding short term loan was Tk. 258.74 million as LATR (Loan against trust receipt), Tk. 150.00 million as short term loan, Tk.250.37 million as import cash limit and Tk. 45.85 million as Revolving loan. The above exposures are secured by a registered first hypothecation charge over stock and book debts on pari- passu basis among the lenders covering to the amount of Tk. 1,140.00 million. Corporate guarantee of the ACI limited is also additional cushion to the exposures. While analyzing the creditworthiness of the company, it revealed that in absence of long term loan, the company has been utilizing each of the revolving credit limit duly. The cash generation of the company supported to service the interest obligation against the revolving loan. The interest coverage ration of the company was 5.46 times, 3.84 times, 6.31 times in 1H2008, FY 2007, FY 2006 respectively, reflects its sufficient cash generation capacity.
14.0
RISK ANALYSIS
Supplies risk within control
14.1 Supplies Risk ACIFL is fully dependent on imported raw materials as no backward linkage has been developed in the country. The Company has a strong supply chain management to mitigate the supplies risk which is a great concern for any agrochemical and pharmaceutical company in Bangladesh. It imports raw materials from various countries like India, China, Japan etc. and tests the quality of raw materials in its modern quality control laboratory to ensure quality of raw material. It has its own quality assurance policy in line with the international standard to select suppliers as well as supplies. Its own established formulation plant is also a comfort for manufacturing the product concern with it. CRISL does not foresee any major risk of supplies other than usual industry risk in general. 14.2 Market Risk Crops care and Public health related products are usually exposed to high market risk. Each product is required to be marketed through a stringent compliance procedure both in local and export market and also is required to have flexibility to cope with the new regulations and also the continuous quality improvement capacity to face the global demand. Especially local market is highly competitive due to presence of both quality local producers and many global giants. Any deviation from the standard may result serious market image crisis and might also create regulatory barrier. ACI like other same line companies may face product liability risk which might take place even after taking the most stringent quality control procedure. ACIFL possess relatively low market risk since it has been enjoying strong share in domestic market prevailed by ACI Limited. 14.3 Distribution Risk Product distribution risk of ACIFL is minimal as the company has been selling its products to its parent company. The company has been enjoying uninterrupted supply of products through the well established distribution network of ACI Limited to uphold the market share. ACI Limited is conscious to have market presence of all the products in the nearby outlets of the consumers. As on 31st December 2007, it has 19 depots in different strategically located important areas, fleet of 84 vehicles and sufficient sales personnel. ACI has a large number of distributors/wholesalers and retailers over the country in selling of products. CRISL views that initially the company reaped the opportunity by using the distribution channel of ACI, however, in the longer term it may not reduce the cost without having any own distribution network or using the ACI network on rental basis under its own marketing and distribution team.
Low market risk
Distribution channel shared with parent
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Transfer pricing based on business model
14.4 Transfer Pricing Risk As a subsidiary of ACI, the transfer pricing agreement was signed in 2005 as according to the business strategy adopted between them. The Mosquito coil unit and Aerosol unit is yet to achieve the expected profitability due to following contract manufacturing policy, as mentioned earlier. CRISL views that, due to additional investment in the above two units in the last four years, the transfer price which was based on the invested capital of four years back, may not commensurate the expected cost on present invested capital in the two units. 14.5 Receivable Collection Risk It has been revealed that about 60% of the annual turnover is always due with ACI Holding. Though ACIFL is facing the issue due to parent subsidiary relationship, however, the parent has a good support to the company in necessity of fund and ACIFL is also not facing any receivable collection risk due to their above relationship. 15.0 OBSERVATION SUMMARY Rating Concerns: Full dependence of parent support to promotion & distribution Continuous substantial trade receivable with the parent Huge working capital loan Marketing and distribution agreement specially on contract manufacturing basis Semi automatic plants having scope of health hazard Business Challenges: Compliance with regulation regarding product quality Removal of health hazard through installing automatic plant Reducing of trade receivables with parent Development of own promotional team and distribution channel Review of transfer pricing
Low collection risk
Rating Comforts: Strong equity base Good franchise value Sound production facilities Experienced management team Diversified product line Good Market share Good profitability Strong support of parent towards business Sound debt servicing history
Business Prospects: Immense opportunity of market growth Introduce new products Diversification in the business Capacity utilization to the estimated level
END OF THE REPORT [Information used herein is obtained from sources believed to be accurate and reliable. However, CRISL does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information. Rating is an opinion on credit quality only and is not a recommendation to buy or sell any securities. All rights of this report are reserved by CRISL. Contents may be used by news media and researchers with due acknowledgement] 16.0 CORPORATE INFORMATION Date of Incorporation : October 29, 1995 July 01, 1998 : Mr. M Anis Ud Dowla : Mrs. Nazma Dowla : Dr. F H Ansarey : Ms. Shusmita Anis Salam : Mr. Wajed Salam : Dr. Arif Dowla : Ms. Sheema Abed Rahman : Rahman Rahman Huq Chartered Accountants Chairman Director Director Director Director Managing Director Director & Company Secretary
Commencement of Business : Board of Directors
Auditor
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Key Management
: Mr. M Anis Ud Dowla : Dr. F. H. Ansarey : Mr. Md. Abdul Hamid : Mr. Sheikh Muzaffar Hasan : Dr. Md. Abdus Salam Bhuiyan : Engr. Zubair Mahmud
Managing Director Executive Director G.M. Operation Production Manager Manager, Quality Control Assistant Manager
Capital History: Year Authorized Capital(M.Tk) 500.00 500.00 Issued, Subscribed and Paidup Capital (M. Tk.) 66.00 250.00 Rate of Increase 278.79% Source of Paid-up Capital
1998 2004
Issue of Right and Bonus share -
2005 2006 2007 IH2008
500.00 500.00 500.00 500.00
250.00 250.00 250.00 250.00
Financials (Up to 30th June, 2008) A. Balance Sheet Particulars Non-Current Assets: Property, Plant & Equipment. Capital work in progress Total Non-Current Assets Current Assets: Inventories Trade Debtors Adv. Deposits & Prepayments Other Current Assets Cash & Bank Balances Total Current Assets Current Liabilities: Short Term Loan Long Term Loan-CP Trade Creditors Other ST Liabilities Total Current Liabilities Net Current Assets Net Assets Non-Current Liabilities: Long Term Loan Deferred Liabilities Total Non-Current Liability. Shareholders' Equity: Share Capital Capital Reserve Other Reserve Retained Earnings Total Shareholder's Equity Total Equity and LT Liability. Total Assets 1H 2008 --280.91 66.61 347.52 --450.23 812.68 82.43 2.84 20.25 1,368.43 --684.96 97.83 169.23 952.02 416.41 763.93 --74.86 74.86 --250.00 65.50 373.58 689.07 763.93 1,715.95 2007 --273.62 55.52 329.14 --397.81 734.46 50.29 8.02 1,190.59 --663.19 115.70 69.78 848.67 341.92 671.05 --76.79 76.79 250.00 65.50 278.77 594.27 671.05 1,519.73 2006 --284.14 2.35 286.49 --342.32 364.03 53.96 2.80 763.11 --269.90 0.24 84.01 89.66 443.81 319.30 605.79 --77.05 77.05 --250.00 65.50 39.64 173.61 528.74 605.79 1,049.60 2005 --266.02 20.27 286.28 --248.03 257.76 37.83 5.93 3.06 552.61 --170.19 0.51 58.93 74.40 304.03 248.58 534.86 --0.24 73.15 73.39 --250.00 65.496 30.21 115.77 461.47 534.86 838.90
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B. Income Statement Particulars Sales Revenue Cost of Good Sold Gross Profit Other Admin. Expenses Total Adm. Exp Total Selling And Dist. Exp. Profit from Operation Other Income Financial Cost Other Non-Operating Exp.(WPPF) Profit Before Tax Income Tax Profit After Tax 1H2008 1,069.48 854.68 214.79 20.08 20.08 3.29 191.42 2.11 35.45 7.90 150.18 55.37 94.81 2007 1,383.12 1,170.93 212.19 42.07 42.07 10.66 159.46 1.19 41.79 5.94 112.91 47.39 65.53 2006 923.86 743.31 180.56 30.17 30.17 22.44 127.94 0.85 20.41 5.42 102.96 35.70 67.27 2005 807.10 631.96 175.14 22.54 22.54 19.13 133.48 (0.03) 17.69 5.79 109.97 32.35 77.62
CRISL RATING SCALES AND DEFINITIONS LONG-TERM RATINGS OF MANUFACTURING COMPANIES RATING AAA (Triple A) (Highest Safety) AA+, AA, AA(Double A) (High Safety) A+, A, ASingle A (Adequate Safety) BBB+, BBB, BBBTriple B (Moderate Safety) BB+, BB, BBDouble B (Inadequate Safety) B+, B, BSingle B (Risky) CCC Triple C (Vulnerable) DEFINITION Investment Grade Entities rated in this category are adjudged to be of best quality, offer highest safety and have highest credit quality. Risk factors are negligible and risk free, nearest to risk free Government bonds and securities. Changing economic circumstances are unlikely to have any serious impact on this category of companies. Entities rated in this category are adjudged to be of high quality, offer higher safety and have high credit quality. This level of rating indicates a corporate entity with a sound credit profile and without significant problems. Risks are modest and may vary slightly from time to time because of economic conditions. Entities rated in this category are adjudged to offer adequate safety for timely repayment of financial obligations. This level of rating indicates a corporate entity with an adequate credit profile. Risk factors are more variable and greater in periods of economic stress than those rated in the higher categories. Entities rated in this category are adjudged to offer moderate degree of safety for timely repayment of financial obligations. This level of rating indicates that a company is under-performing in some areas. Risk factors are more variable in periods of economic stress than those rated in the higher categories. These entities are however considered to have the capability to overcome the above-mentioned limitations. Speculative Grade Entities rated in this category are adjudged to lack key protection factors, which results in an inadequate safety. This level of rating indicates a company as below investment grade but deemed likely to meet obligations when due. Overall quality may move up or down frequently within this category. Entities rated in this category are adjudged to be with high risk. Timely repayment of financial obligations is impaired by serious problems which the entity is faced with. Whilst an entity rated in this category might be currently meeting obligations in time through creating external liabilities. Entities rated in this category are adjudged to be vulnerable and might fail to meet its repayments frequently or it may currently meeting obligations in time through creating external liabilities. Continuance of this would depend upon favorable economic conditions or on some degree of external support. Entities rated in this category are adjudged to be very highly vulnerable. Entities might not have required financial flexibility to continue meeting obligations; however, continuance of timely repayment is subject to external support.
Entities rated in this category are adjudged to be with extremely speculative in timely repayment of financial obligations. This level of rating indicates entities with very serious problems and unless external support is provided, they would be unable to meet financial obligations. D Default Grade Entities rated in this category are adjudged to be either already in default or (Default) expected to be in default. Note: For long-term ratings, CRISL assigns + (Positive) sign to indicate that the issue is ranked at the upper-end of its generic rating category and - (Minus) sign to indicate that the issue is ranked at the bottom end of its generic rating category. Long-term ratings without any sign denote mid-levels of each group.
CC Double C (High Vulnerable) C (Extremely Speculative)
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SHORT-TERM RATINGS OF MANUFACTURING COMPANIES Highest Grade Highest certainty of timely payment. Short-term liquidity including internal fund generation is very strong and access to alternative sources of funds is outstanding. Safety is almost like risk free Government short-term obligations. High Grade High certainty of timely payment. Liquidity factors are strong and supported by good fundamental protection factors. Risk factors are very small. Good Grade Good certainty of timely payment. Liquidity factors and company fundamentals are sound. Although ongoing funding needs may enlarge total financing requirements, access to capital markets is good. Risk factors are small. Moderate Grade Moderate liquidity and other protection factors qualify an entity to be in investment grade. Risk factors are larger and subject to more variation. Non-investment /Speculative Grade Speculative investment characteristics. Liquidity is not sufficient to ensure discharging debt obligations. Operating factors and market access may be subject to a high degree of variation. Default Entity is in default or is likely to default in discharging its short-term obligations. Market access for liquidity and external support is uncertain.
ST-1
ST-2
ST-3
ST-4
ST-5
ST-6
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Auditors Report to the Shareholders of ACI Formulations Limited We have audited the accompanying balance sheet of ACI Formulations Limited as at 30 June 2008 and the related profit and loss account, statement of changes in shareholders' equity and cash flow statement for the half year then ended. These financial statements are the responsibility of the companys management. Our responsibility is to express an independent opinion on these financial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing (BSA). Those standards require that we plan and perform the audit to obtain reasonable assurance whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements prepared in accordance with Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS), give a true and fair view of the state of the companys affairs as at 30 June 2008 and of the results of its operations and its cash flows for the half year then ended and comply with the Companies Act 1994 and other applicable laws and regulations.
We also report that: a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof;
b)
in our opinion, proper books of account as required by law have been kept by the company so far as it appeared from our examination of those books; and the companys balance sheet and profit and loss account dealt with by the report are in agreement with the books of account.
c)
Dhaka, 5 August 2008
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Balance Sheet as at 30 June 2008 As at 30 June 2008 Taka As at 31 December 2007 Taka
Assets Property, plant and equipment: At cost/revaluation Less: Accumulated depreciation
Notes 4
405,841,074 124,935,994 280,905,080 5 66,614,372
386,982,537 113,364,906 273,617,631 55,520,930
Capital work in progress Current assets : Raw materials-in-transit Inventories Trade debtors Other receivables Advance income tax Advances, deposits and prepayments Inter-company receivables Cash and bank balances
7 8 9 10
61,773,460 388,457,845 4,739,162 2,841,943 48,151,053 34,278,283 807,937,372 20,246,710 1,368,425,828 1,715,945,280
88,730,455 309,076,868 8,252,162 28,084,925 22,208,847 726,212,549 8,022,605 1,190,588,411 1,519,726,972
Equity and liabilities Shareholders' equity: Share capital Revaluation reserve Retained earnings
11 12
250,000,000 65,495,689 373,578,115 689,073,804
250,000,000 65,495,689 278,771,668 594,267,357
Current liabilities : Bank overdraft Short term loan Withholding tax and VAT Trade creditors and accruals Provision for tax Deferred tax liability
13 14 15 16 17
62,198,282 684,959,151 105,651 97,829,299 106,922,803 952,015,186 74,856,290 1,715,945,280
20,075,993 663,190,412 83,154 115,699,929 49,622,803 848,672,291 76,787,324 1,519,726,972
The annexed notes 1 to 24 form an integral part of these financial statements.
Sd/Managing Director
Sd/Director
Sd/Company Secretary As per our report of same date.
Sd/Auditors
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Profit and Loss Account for the half year ended 30 June 2008
Half year ended 30 June 2007 (unaudited)
Half year ended 30 June 2008 Particulars Notes Unit 1 Taka Sales Cost of sales Gross profit Other income Administrative, selling and distribution expenses: Financing cost Provision for contribution to WPPF Profit before tax Provision for tax: Current tax Deferred tax (income)/expense 17 Profit after tax 18 19 20 603,021,358 (430,655,401) 172,365,957 1,424,401 173,790,358 14,215,585 159,574,773 12,863,404 146,711,369 7,335,568 139,375,801 53,500,000 (1,939,737) 51,560,263 87,815,538 Unit 2 Taka 285,196,862 (260,080,215) 25,116,647 225,341 25,341,988 5,863,930 19,478,058 14,404,538 5,073,520 253,676 4,819,844 1,200,000 (13,476) 1,186,524 3,633,320 Unit 3 Taka 181,256,814 (163,946,016) 17,310,798 458,742 17,769,540 3,296,052 14,473,488 8,178,996 6,294,492 314,724 5,979,768 2,600,000 22,179 2,622,179 3,357,589 Total Taka 1,069,475,034 (854,681,632) 214,793,402 2,108,484 216,901,886 23,375,567 193,526,319 35,446,938 158,079,381 7,903,968 150,175,413 57,300,000 (1,931,034) 55,368,966 94,806,447
Total Taka 667,630,727 (544,517,630) 123,113,097 464,527 123,577,624 21,057,953 102,519,671 18,416,807 84,102,864 4,205,143 79,897,721 26,500,000 1,993,188 28,493,188 51,404,533
21
The annexed notes 1 to 24 form an integral part of these financial statements.
Sd/Managing Director
Sd/Director
Sd/Company Secretary As per our report of same date.
Sd/Audirots
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Statement of changes in shareholders' equity for the half year ended 30 June 2008
Particulars
Share capital Taka 250,000,000 250,000,000
Revaluation reserve Taka 65,495,689 65,495,689
Tax holiday reserve Taka 39,635,436 1,129,128 (40,764,564) -
Retained earnings Taka 173,611,158 51,404,533 (1,129,128) 40,764,564 264,651,127
Total Taka 528,742,283 51,404,533 580,146,816
Balance as at 31 December 2006 Net profit after tax for the period (unaudited) Transferred to tax holiday reserve Transferred from tax holiday reserve Balance as at 30 June 2007
Balance as at 31 December 2007 Net profit after tax Balance as at 30 June 2008
250,000,000 250,000,000
65,495,689 65,495,689
278,771,668 94,806,447 373,578,115
594,267,357 94,806,447 689,073,804
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Cash Flow Statement for the half year ended 30 June 2008 Half year ended 30 June 2008 Taka A. Cash flows from operating activities : Profit before tax Adjustment for items not involving movement of cash : Depreciation Changes in working capital : Raw material in transit Inventories Trade debtors Other receivables Advances, deposits and prepayments Due from inter-company Short term loan Withholding tax and VAT Trade creditors and accruals 150,175,413 11,571,089 161,746,502 26,956,995 (79,380,977) 3,513,000 (2,841,943) (12,069,436) (81,724,823) 21,768,739 22,497 (17,870,630) (141,626,578) 20,119,924 (20,066,128) 53,796 79,897,721 10,888,587 90,786,308 52,267,185 46,875,659 (31,804,947) 1,550,184 (76,654,655) (44,441,089) (320,851) (16,930,264) (69,458,778) 21,327,530 (18,463,158) 2,864,372 Half year ended 30 June 2007 (unaudited) Taka
Advance income tax paid Net cash provided by operating activities B. Cash flows from investing activities : Capital work in progress Acquisition of property, plant and equipment Net cash used in investing activities C. Cash flows from financing activities : Payment of Finance lease liabilities Net cash flows from financing activities D. E. F. Net cash inflow/(outflow) from total activities (A+B+C) Opening cash and cash equivalents Closing cash and cash equivalents (D+E)
(28,468,598) (1,483,382) (29,951,980)
(1,191,871) (2,233,610) (3,425,481)
(29,898,184) (12,053,388) (41,951,572)
(235,731) (235,731) (796,840) (26,326,745) (27,123,585)
Closing cash and cash equivalents represent: Cash and bank balances Bank overdraft 20,246,710 (62,198,282) (41,951,572) 1,975,581 (29,099,166) (27,123,585)
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Notes to the financial statements as at and for the half year ended 30 June 2008
1.
Background of the company

The company was incorporated on 29 October 1995 as a private limited company. The company went into commercial operations on 1 July 1998. The principal activity of the company, during the period under review, was manufacturing and marketing of a number of agrochemical and consumer products. Most of the sales are made to Advance Chemical Industries Limited (ACI Limited), which is responsible for marketing these products.
2.
2.1
Basis of preparation
Statement of compliance The accounts have been prepared in accordance with Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS) and the Companies Act 1994. The elements included in the financial statements have been measured at historical cost except for property, plant and equipment, which are stated at revalued amount.
2.2
Basis of measurement The financial statement have been prepared on the historical cost basis except for property, plant and equipment, which are stated at revalued amount.
2.3
Functional and presentational currency and level of precision The financial statements are prepared in Bangladesh Taka (Taka/Tk), which is the company's functional currency. All financial information presented in Taka and has been rounded off to the nearest integer.
2.4
Use of estimates and judgement The preparation of financial statements in conformity with BAS/BFRS require management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underling assumptions are reviewed on an on going basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements is included in the following notes : Note 6 Note 15 Note 16 Note 17 Inventory valuations Provision for expenses Provision for taxation Deferred tax liabilities
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2.5
Reporting period The reporting period of the company covers six months from 1 January to 30 June.
3.
Significant accounting policies

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.
3.1 3.1.1
Property, plant and equipment Recognition and measurement These are stated at cost or revaluation less accumulated depreciation subject to a write down to recoverable amount. Capital work in progress represents the cost incurred for acquisition and/or construction of property, plant and equipment that were not ready for use at the end of 30 June 2008 and these are stated at cost. The property, plant and equipment of the company were revalued in the year 2004 by a firm of professional valuers on the basis of open market value.
3.1.2
Depreciation Depreciation is provided on straight line method and charged at 50% of normal rates for additions in the period of addition and no depreciation is charged on disposal or adjustment in the period of disposal or adjustment. Rates of depreciation are stated below: Category Land Building Plant Equipment and machinery Electric and other appliances Furniture and fixtures Vehicles Deep tube well Rate (%) Nil 2.5 10 10-20 10-20 10 20 10
The revalued property, plant and equipment are depreciated by writing off their net book value at the date of revaluation over their remaining estimated useful life. 3.1.3 Subsequent costs The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the company and its cost can be measured reliably. The cost of the day to day servicing of property, plant and equipment are recognized in the profit and loss account as incurred. 3.2 Cash and bank balances These are cash and bank balances which are held and available for use by the company without any restriction.
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3.3
Provision A provision is recognized in the balance sheet when the company has a legal or constructive obligation as a result of past event, it is probable that an outflow of economic benefit will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
3.4
Contingencies Contingencies arising from claim, litigation, assessment, fines, penalties, etc. are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated.
3.5
Income tax Income tax comprises of both current tax and deferred tax.
3.5.1
Current tax The applicable tax rate for ACI Formulations Limited is currently 37.5%. Provision for taxation has been made on the basis of Finance Ordinance 2008
3.5.2
Deferred tax Deferred tax has been provided using the liability method for all temporary timing differences arising between tax bases of asset and liabilities and their carrying value for financial reporting purpose. Adjustment arising from such accounting has been recorded in the current year's profit and loss account. The tax rate prevailing at the balance sheet date is used to determine deferred tax The deferred tax asset/income or liability/expenses does not create a legal liability/recoverability to and from the income tax authority.
3.6
Foreign currency Transaction in foreign currencies during the period are translated to taka at the foreign exchange rates prevailing on the transaction date. All monetary assets and liabilities denominated in foreign currencies at balance sheet date get retranslated to Taka at the rates of exchange prevailing on the date, if any. Exchange differences arising on conversion are recognized in the profit and loss account.
3.7 3.7.1
Revenue recognition Goods sold Revenue from sale of goods is recognized on the basis of invoice value upon delivery of goods to the buyers.
3.7.2
Services Revenue from services rendered is recognized in the profit and loss account when the bills are raised to the customer.
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3.8
Inventories Inventories, except material-in-transit, are valued at lower of weighted average cost and expected net realisable value. As per Bangladesh Accounting Standard 2: Inventories, net realisable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
3.9
Finance expense Finance expenses comprise of bank interest and bank charges.
3.10
Cash flow statement Cash flow from operating activities have been presented under indirect method.
3.11
Workers' profit participation fund The company has created a fund for workers as Workers' Profit Participation Fund and 5% of profit before charging this rate has been transferred to this fund.
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4. Property, plant and equipment 4.1 At cost Cost Name of assets Balance as at 1 January 2008 Taka Addition during the period Taka Balance as at 30 June 2008 Taka Balance as at 1 January 2008 Taka Depreciation Charged during the period Taka Balance as at 30 June 2008 Taka Written down value as at 30 June 2008 Taka
Own assets Land: Unit 1 Building: Unit 1 Unit 2 Unit 3 Plant: Unit 1 Unit 2 Unit 3 Equipment and machinery: Unit 1 Unit 2 Unit -3 Electric and other appliances: Unit 1 Unit 2 Unit 3 Furniture and fixtures: Unit 1 Unit 2 Unit 3 Vehicles: Unit 1 Deep tube well: Unit 1
15,149,107
1,296,744
16,445,851
16,445,851
81,170,863 13,858,595 13,733,172
81,170,863 13,858,595 13,733,172
12,438,268 2,014,748 1,441,901
1,014,636 173,232 171,665
13,452,904 2,187,980 1,613,566
67,717,959 11,670,615 12,119,606
46,308,613 62,358,496 12,464,191
17,375,156
46,308,613 79,733,652 12,464,191
30,105,078 31,213,115 5,364,328
2,315,431 3,552,304 623,210
32,420,509 34,765,419 5,987,538
13,888,104 44,968,233 6,476,653
9,930,003 1,202,670 282,765
9,930,003 1,202,670 282,765
5,588,869 119,486 14,138
496,500 60,133 12,838
6,085,369 179,619 26,976
3,844,634 1,023,051 255,789
5,475,920 3,428,628 2,353,528
5,475,920 3,428,628 2,353,528
2,708,326 776,985 320,503
301,070 171,431 131,357
3,009,396 948,416 451,860
2,466,524 2,480,212 1,901,668
3,199,823 5,015,319 674,190
186,639
3,386,462 5,015,319 674,190
1,529,630 1,506,248 142,646
164,657 250,766 33,710
1,694,287 1,757,014 176,356
1,692,175 3,258,305 497,834
5,568,500
5,568,500
5,090,460
177,661
5,268,121
300,379
140,000 282,314,383
18,858,539
140,000 301,172,922
133,000 100,507,729
7,000 9,657,601
140,000 110,165,330
191,007,592
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4.2 Revaluation Revaluation Name of assets Balance as at 1 January 2008 Taka Addition during the period Taka Balance as at 30 June 2008 Taka Depreciation on revaluation Balance Balance as at Charged as at 1 January during 30 June 2008 the period 2008 Taka Taka Taka Written down value as at 30 June 2008 Taka
Own assets Land: Unit 1 Building: Unit 1 Unit 2 Unit 3 Plant: Unit 1 Unit 2 Unit 3 Equipment and machinery: Unit 1 Unit 2 Electric and other appliances: Unit 1 Unit 2 Furniture and fixtures: Unit 1 Unit 2 Unit 3 Vehicles: Unit 1 Deep tube well: Unit 1 Effect of revaluation Total (30 June 2008) Total (31 December 2007)
61,312,837
61,312,837
61,312,837
6,634,644 2,472,218 848,461
6,634,644 2,472,218 848,461
580,531 216,318 74,242
82,933 30,903 10,606
8,193,868 6,744,849 16,626,917
8,193,868 6,744,849 16,626,917
2,867,854 2,360,697 5,819,421
409,693 337,242 831,346
663,464 247,221 84,848 3,277,547 2,697,939 6,650,767
5,971,180 2,224,997 763,613
4,916,321 4,046,910 9,976,150
323,824 77,018
323,824 77,018
113,338 26,956 246,425 (127,382)
76,767 (3,338)
190,105 23,618 281,628 (131,288)
133,719 53,400
704,065 (363,947)
704,065 (363,947)
35,203 (3,906)
422,438 (232,659)
160,215 (266,855) (18,310)
160,215 (266,855) (18,310)
56,076 (93,400) (6,409)
8,011 (13,343) (916)
64,087 (106,743) (7,325)
96,129 (160,113) (10,985)
1,184,348
1,184,348
710,610
110,587
821,197
363,151
34,000 104,668,152 386,982,535 375,483,450
18,858,539 11,499,087
34,000 104,668,152 405,841,074 386,982,537
11,900 12,857,176 113,364,905 91,341,509
1,700 1,913,488 11,571,089 22,023,397
13,600 14,770,664 124,935,994 113,364,906
20,400 89,897,488 280,905,080 273,617,631
Page 66 of 89
5.
Capital work in progress

As at Building and furniture Taka Opening balance Addition during the period Transferred to property, plant and equipment Closing balance 2,276,192 2,276,192 As at 30 June 2008 Plant and machinery Taka 53,244,738 28,468,598 (17,375,156) 64,338,180 31 December 2007 Total Taka 55,520,930 28,468,598 (17,375,156) 66,614,372 Total Taka 2,349,190 61,777,097 (8,605,357) 55,520,930
6.
Inventories
As at 30 June 2008 Taka Raw materials Packing materials Finished goods Other inventories (engineering stores and diesel) 247,161,349 101,270,202 31,402,200 8,624,094 388,457,845 As at 31 December 2007 Taka 213,184,257 60,050,902 30,126,536 5,715,173 309,076,868
In view of innumerable items of inventories and diversified quantities it is not feasible to disclose quantities against each item of inventory.
7.
Advance income tax

Opening balance Add: Paid during the period Less: Adjustment during the period 28,084,925 20,066,128 48,151,053 48,151,053 42,775,046 43,394,260 86,169,306 58,084,381 28,084,925
8.
Advances, deposits and prepayments

Advance to suppliers Interest receivable against advance Security money and tender deposits Prepayments-insurance 28,573,639 4,614,370 1,090,274 34,278,283 18,343,491 51,886 3,813,470 22,208,847
9.
Inter-company receivables
ACI Limited ACI Motors Limited 807,887,512 49,860 807,937,372 726,212,549 726,212,549
These represent the amount receivable for sales made and for overheads .
Page 67 of 89
10.
Cash and bank balances

As at 30 June 2008 Taka Cash in hand Cash at bank: Agrani Bank Ltd. Citibank, N.A. The Hongkong and Shanghai Banking Corporation Ltd. (HSBC) Standard Chartered Bank (SCB) Commercial Bank of Ceylon Ltd. (CBC) AB Bank Ltd. Sonali Bank Ltd. Uttara Bank Ltd. Janata Bank Ltd. 150,000 As at 31 December 2007 Taka 150,000
2,826,253 16,802,112 366,375 101,145 825 20,096,710 20,246,710
384,902 7,117,582 80,000 6,718 82,714 148,504 51,360 825 7,872,605 8,022,605
11.
Share capital
Authorised : 50,000,000 Ordinary shares of Tk 10 each Issued, called and paid up : 6,600,000 Ordinary shares of Tk 10 issued for cash 5,900,000 Right shares of Tk 10 each issued for cash 12,500,000 Bonus shares of Tk 10 each 25,000,000 Out of the total shares issued, ACI Limited is the holder of 21,737,500 shares. The aforesaid share capital was subscribed as under : As at 30 June 2008 No of shares Value (Tk) 21,737,500 2,502,500 2,500 1,000 1,000 1,000 1,000 1,000 752,500 25,000,000 217,375,000 25,025,000 25,000 10,000 10,000 10,000 10,000 10,000 7,525,000 250,000,000 As at 31 December 2007 No of shares Value (Tk) 21,737,500 2,502,500 2,500 1,000 1,000 1,000 1,000 1,000 752,500 25,000,000 217,375,000 25,025,000 25,000 10,000 10,000 10,000 10,000 10,000 7,525,000 250,000,000 66,000,000 59,000,000 125,000,000 250,000,000 66,000,000 59,000,000 125,000,000 250,000,000 500,000,000 500,000,000
Name of the subscriber ACI Limited Mr M Anis Ud Dowla Ms Najma Dowla Dr Arif Dowla Ms Sheema Abed Rahman Mr M. Mosaddek Hossain Ms Shusmita Anis Salam Mr Wajed Salam Dr F H Ansarey
Page 68 of 89
12.
Revaluation reserve
As at 30 June 2008 Taka Revaluation surplus Deferred tax 104,793,102 (39,297,413) 65,495,689 As at 31 December 2007 Taka 104,793,102 (39,297,413) 65,495,689
13.
Bank overdraft
Notes Standard Chartered Bank The Hongkong and Shanghai Banking Corporation Ltd. Standard Chartered Bank (current account) Commercial Bank of Ceylon Ltd. Citibank, N.A. (current account) 13.1 34,057,670 7,219,606 19,645,879 1,275,127 62,198,282 9,702,685 6,117,223 4,256,085 20,075,993
13.2
13.1
Standard Chartered Bank The company is enjoying a bank overdraft facility from Standard Chartered Bank (SCB) under the following terms and conditions: Limit: Purpose: Tenor: Security: Tk 10,000,000 Working capital On demand i) ii) iii) Demand Promissory Note and Letter of Continuation for Tk 540,000,000 each. Registered first charge over stock and book debts of the company with HSBC and CBC where SCB's share is at least Tk 530,000,000. First charge by way of registered mortgage over the tangible fixed assets of the company both existing and future to be shared pari-passu with IPDC. Standard Chartered Bank's share should be at least Tk 15,000,000. Corporate guarantee from ACI Limited supported by Board Resolution. Agreement and indemnity relating to the issuing of documentary credits. Board Resolution of the company covering entire facility.
iv) v) vi)
13.2
Commercial Bank of Ceylon Ltd. The company is enjoying a bank overdraft facility from Commercial Bank of Ceylon Ltd. under the following terms and conditions: Limit: Purpose: Tenor: Security: Tk 20,000,000 Working capital On demand Registered first hypothecation charge over stocks and book debts on pari-passu basis with SCB and HSBC, CBC's share being Tk. 180,000,000.
Interest rates on the facilities mentioned under notes 13.1 and 13.2 range from 11.50% to 12.50%.
Page 69 of 89
14.
Short term loan

Notes As at 30 June 2008 Taka As at 31 December 2007 Taka
Standard Chartered Bank : Loan Against Trust Receipt (LATR) Revolving loan Short term loan The Hongkong and Shanghai Banking Corporation Ltd. : Import cash limit Short term loan Citibank, N.A.: Loan Against Trust Receipt (LATR) Commercial Bank of Ceylon Ltd.: Loan Against Trust Receipt (LATR) Short term loan
14.1 14.2 14.3 14.4 14.5 14.6 14.7 14.8
164,712,755 45,846,641 50,000,000 230,370,314 78,980,441 15,049,000 100,000,000 684,959,151
151,298,278 39,984,371 100,000,000 286,515,534 30,000,000 55,392,229 663,190,412
14.1
Standard Chartered Bank - Loan Against Trust Receipt (LATR) Amount: Purpose: Tenor: Payment: Tk 400,000,000 To retire the documents under Letter of Credits issued by the Standard Chartered Bank (SCB). 120 days On maturity each Trust Receipt outstanding will be adjusted by debiting company's bank account and quarterly interest will be charged into the same account. Same as note 13.1
Security: 14.2
Standard Chartered Bank - Revolving loan Amount: Purpose: Tk 60,000,000 To finance payment of Government duty and tax against import of raw materials and also for procurement of local raw materials against suppliers' invoice. 120 days On maturity each Revolving Loan outstanding will be adjusted by debiting company's bank account and quarterly interest will be charged into the same account. Same as note 13.1
Tenor: Payment:
Security:
Page 70 of 89
14.3
Standard Chartered Bank - Short term loan Amount: Purpose: Tenor: Payment: Security: Tk 100,000,000 Working Capital Finance 120 Days The above short term loan outstanding to be cleaned up for 5 days per annum. Same as note 13.1
14.4
The Hongkong and Shanghai Banking Corporation Limited - Import cash limit Amount: Purpose: Tk 350,000,000 To retire sight documents by creating import loan and usance documents against borrowers acceptance and issue shipping guarantee. 180 days for import loan and deferred payment bill and 30 days for shipping guarantee. Commission on deferred payment bill will be charged @ 0.20% for the first quarter and 0.15% for subsequent quarters and is subject to change at any time at the bank's discretion. i) ii) iii) iv) v) Demand Promissory Note of Tk 380,320,000 with Letter of Revival and Continuity. Letter of Set Off to set off between different accounts maintained with the bank. Corporate guarantee to be executed by ACI Limited for Tk 430,000,000 with supporting Board Resolution for credit facilities granted to ACI Formulations Ltd. First pari-passu charge with other lenders over the borrower's stock of raw materials, work-in-progress and finished goods for Tk. 430,000,000 with the Registrar of Joint Stock Companies (RJSC). First pari-passu charge with other lenders over the borrower's Book Debts/Receivables for Tk. 430,000,000 with the Registrar of Joint Stock Companies (RJSC) on pari-passu basis with SCB where HSBC's share is Tk. 430,000,000
Tenor: Commission:
Security:
14.5
The Hongkong and Shanghai Banking Corporation Limited - Short term loan Amount: Purpose: Tenor: Security: Tk 200,000,000 To finance working capital requirement i.e. local purchased and duty payments 180 days for import loan and deferred payment bill and 30 days for shipping guarantee. Same as note 14.4
14.6
Citibank, N.A. - Loan Against Trust Receipt (LATR) Amount: Purpose: Tk 400,000,000 To finance against import of raw materials, spares and finished goods required for normal course of business.
Tenor: Security:
180 days for import loan and deferred payment bill and 30 days for shipping guarantee. i) ii) iii) Registered first charge over stock and book debts of the company for Tk 470,000,000. Cross corporate guarantees from ACI Limited and ACI Formulations Limited. Personal guarangtee from the sponsors of ACI Limited and ACI Formulations Limited.
The arrangement permits the use of funds by both ACI Limited and ACI Formulations Ltd. under this agreement. However the joint utilisation limit is capped to Tk 400,000,000.
Page 71 of 89
14.7
Commercial Bank of Ceylon Ltd. - Loan Against Trust Receipt (LATR) The company is enjoying a bank overdraft facility from Commercial Bank of Ceylon Ltd. under the following terms and conditions: Limit: Purpose: Tenor: Security: Tk 60,000,000 To retire import documents for raw materials and chemicals. 180 days Same as note 13.2
14.8
Commercial Bank of Ceylon Ltd. - Short term loan The company is enjoying a bank overdraft facility from Commercial Bank of Ceylon Ltd. under the following terms and conditions: Limit: Purpose: Tenor: Security: Tk 100,000,000 Working capital 180 days Same as note 13.2
Interest rates on the facilities mentioned under notes 14.1 to 14.8 range from 11.50% to 12.50%.
15.
Trade creditors and accruals

As at 30 June 2008 Taka Provision for expenses Provision for inventory Security money payable Interest payable Provision for workers' profit participation fund 53,274,502 498,694 44,056,103 97,829,299 As at 31 December 2007 Taka 75,174,184 1,433,080 198,694 2,741,837 36,152,134 115,699,929
16.
Provision for tax

Opening balance Provision made during the period Adjustment for the years finalised Closing balance 49,622,803 57,300,000 106,922,803 60,057,184 47,650,000 (58,084,381) 49,622,803
Page 72 of 89
17.
Deferred tax liability

Carrying amount on balance sheet Taka 174,561,741 (200,237) (1,433,080) Deductible/ (taxable) temporary difference Taka (96,456,989) 200,237 1,433,080 (94,823,672) 37.5% 35,558,877 39,297,413 74,856,290
30 June 2008
Tax base Taka 78,104,752 -
Property, plant and equipment Provision for bad debt Provision for inventory written off Taxable temporary difference Applicable tax rate
Deferred tax liability arising from above taxable temporary differences Deferred tax liability on revaluation surplus Deferred tax liability
18.
Sales
Half year ended 30 June 2008 Taka Agrochemical products Consumer products 603,021,358 466,453,676 1,069,475,034 Half year ended 30 June 2007 (unaudited) Taka 417,946,020 249,684,707 667,630,727
97% sales of Unit 1 and Unit 2 and 100% sales of Unit 3 were made to ACI Limited. In view of innumerable items of sales and diversified quantities it is not feasible to disclose quantities against each item of sales.
Page 73 of 89
19.
Cost of sales
Half year ended 30 June 2008 Raw Packing materials materials Total Taka Taka Taka Unit 1 Opening inventory Add : Purchase Less : Closing inventory Consumption Overhead and operating expenses (Note 19.1) Cost of goods manufactured Add: Opening inventory of finished goods Less: Closing inventory of finished goods 132,261,130 312,456,283 444,717,413 77,919,760 366,797,653 29,721,925 50,850,964 80,572,889 35,469,085 45,103,804 161,983,055 363,307,247 525,290,302 113,388,845 411,901,457 20,008,758 431,910,215 30,126,536 (31,381,350) 430,655,401 115,944,950 228,362,136 344,307,086 79,302,173 265,004,913 15,746,836 280,751,749 73,963,363 (29,618,794) 325,096,318 Half year ended 30 June 2007 (unaudited) Total Taka
Unit 2 Opening inventory Add : Purchase Less : Closing inventory Consumption Overhead and operating expenses (Note 19.1) Add: Opening inventory of finished goods Less: Closing inventory of finished goods 45,457,916 198,356,929 243,814,845 113,644,578 130,170,267 8,929,465 88,864,536 97,794,001 24,382,411 73,411,590 54,387,381 287,221,465 341,608,846 138,026,989 203,581,857 56,519,208 260,101,065 (20,850) 260,080,215 50,687,381 91,726,775 142,414,156 56,737,274 85,676,882 30,436,831 116,113,713 116,113,713
Unit 3 Opening inventory Add: Purchase Less : Closing inventory Consumption Overhead and operating expenses (Note 19.1) 35,465,211 105,746,648 141,211,859 55,597,011 85,614,848 21,399,512 91,797,861 113,197,373 41,418,707 71,778,666 56,864,723 197,544,509 254,409,232 97,015,718 157,393,514 6,552,502 163,946,016 854,681,632 16,043,816 126,371,330 142,415,146 44,755,866 97,659,280 5,648,319 103,307,599 544,517,630
Page 74 of 89
19.1
Overhead and operating expenses
There is no significant expenditure included here which is not directly connected to production. Half year ended 30 June 2007 (unaudited) Total Taka 15,962,641 1,361,325 15,630,852 217,939 669,529 209,542 802,310 330,969 98,963 4,000 394,559 5,766,797 192,701 64,062 10,888,587 52,318 52,647,094 415,104
Half year ended 30 June 2008 Unit 1 Taka Salary and wages Staff welfare and uniforms Fuel and electricity Postage, telephone, fax etc. Traveling and conveyance Donation & trade subscription Insurance premium Office stationery Entertainment Training Rent, rates and taxes Repairs and maintenance Car running expenses Lab chemicals and testing fee Depreciation Product development expenses Miscellaneous 7,882,523 1,579,169 2,380,030 73,059 171,217 86,257 566,418 158,240 84,532 50,616 14,755 1,641,042 231,683 109,962 5,201,850 132,500 44,901 20,408,754 Unit 2 Taka 14,740,997 3,172,975 27,792,393 129,520 42,658 137,886 326,778 209,384 137,883 81,129 15,627 4,487,085 671,796 35,264 4,525,048 126,540 51,245 56,684,208 165,000 Unit 3 Taka 2,355,397 551,032 969,421 22,417 9,148 45,547 201,818 53,071 25,160 44,851 153,525 510,494 75,042 11,350 1,844,194 9,580 6,882,047 329,545 Total Taka 24,978,917 5,303,176 31,141,844 224,996 223,023 269,690 1,095,014 420,695 247,575 176,596 183,907 6,638,621 978,521 156,576 11,571,092 259,040 105,726 83,975,009 494,545
From ACI Limited From EAC Industrial Ingredients (Bangladesh) Limited (formerly ACI Trading Limited)
Charged to cost of sales
399,996 399,996 20,008,758
165,000 56,519,208
329,545 6,552,502
399,996 894,541 83,080,468
400,004 815,108 51,831,986
20.
Other income
Scrap sales 1,424,401 1,424,401 225,341 225,341 458,742 458,742 2,108,484 2,108,484 464,527 464,527
Page 75 of 89
21.
Administrative, selling and distribution expenses

Half year ended 30 June 2008 Unit 1 Taka Legal and professional charges Entertainment Delivery expenses Bank charges Audit fees Business promotion expenses Other Expenses 40,000 463,780 12,894 33,380 760,322 1,208,300 2,518,676 986,000 395,000 115,000 10,200,909 11,696,909 14,215,585 Unit 2 Taka 40,000 460,600 17,497 34,328 17,170 878,352 1,447,947 4,415,983 4,415,983 5,863,930 Unit 3 Taka 40,000 95,600 11,060 32,292 3,992 182,944 3,113,108 3,113,108 3,296,052 Total Taka 120,000 1,019,980 41,451 100,000 777,492 2,090,644 4,149,567 986,000 395,000 115,000 17,730,000 19,226,000 23,375,567 Half year ended 30 June 2007 (unaudited) Total Taka 72,839 9,133 2,473,785 111,898 75,000 1,509,893 2,271,405 6,523,953 327,000 219,000 34,000 13,954,000 14,534,000 21,057,953
Marketing expenses Field force expenses Distribution expenses Administrative expenses
These expenses have been charged by ACI Ltd. to support the activities of ACI Formulations Ltd. as per agreement executed between them.
22.
22.1
Off balance sheet items

Commitments On the balance sheet date the company had the following unfunded credit facilities from its bankers: Taka Letter of credit: Citibank, N.A. Standard Chartered Bank The Hongkong and Shanghai Banking Corporation Ltd. 48,138,803 159,930,474 75,454,199 283,523,476
22.2
Contingent liabilities Bank guarantee: The Hongkong and Shanghai Banking Corporation Ltd. Acceptance: Standard Chartered Bank Import bills: The Hongkong and Shanghai Banking Corporation Ltd. 24,687,325 1,002,154 24,679
Page 76 of 89
23.
Related party transaction

During the period, the company carried out a number of transactions with related parties in the normal course of business. The name of related parties, nature of transactions and total transaction value have been set out in accordance with the provisions Outstanding value receivable/ Transaction value Name of related party Relationship Nature of transactions (payable) Taka Taka ACI Limited Holding company - Sale of products - Overhead ACI Motors Limited Sister concern Overhead 1,042,525,610 27,830,256 49,860 807,887,512 49,860
24.
24.1
General
Previous year's/period's figures have been rearranged where necessary to conform to current period's presentation.
24.2
The number of employees drawing Tk 3,000 or more per month as at 30 June 2008 was 154 (31 December 2007: 163).
Page 77 of 89
Auditors Report under section 135(1) and paragraph 24(1) of part -II of Third Schedule of the Companies Act 1994: We as the auditors having examined the Financial Statements of ACI Formulations Ltd. for the years ended 31 December 2003, 2004, 2005,2006 and 2007 and for the period from 1 January 2008 to 30 June 2008 and in pursuance of section 135(1) and paragraph 24(1) of part -II of the Third Schedule of the Companies Act 1994 report that: A. The statement of assets & liabilities of the company is as under
31 December 2007 Taka 273,617,631 55,520,930 1,190,588,411 1,519,726,972 31 December 2006 Taka 284,141,938 2,349,190 763,113,611 1,049,604,739 31 December 2005 Taka 266,016,801 20,266,566 552,613,101 838,896,468 31 December 2004 Taka 250,776,298 21,974,575 342,405,832 615,156,705 31 December 2003 Taka 152,251,064 658,599 366,028,209 518,937,872
Particulars
30 June 2008 Taka
Property & assets: Fixed assets Capital work-in -process Current assets Total property and assets: Liability and capital Share capital Reserve and surplus Shareholders' equity Long term liabilities Current liabilities Total liabilities & shareholders' equity 250,000,000 439,073,804 689,073,804 74,856,290 952,015,186 1,715,945,280 250,000,000 344,267,357 594,267,357 76,787,324 848,672,291 1,519,726,972 250,000,000 278,742,283 528,742,283 77,049,191 443,813,265 1,049,604,739 250,000,000 211,474,698 461,474,698 73,388,085 304,033,685 838,896,468 250,000,000 133,851,300 383,851,300 68,551,577 162,753,828 615,156,705 66,000,000 198,034,094 264,034,094 3,750,000 251,153,778 518,937,872 280,905,080 66,614,372 1,368,425,828 1,715,945,280
B. The statement of operating result of the company is as follows

01.01.08 to 30.06.08 01.01.07 to 31.12.07 01.01.06 to 31.12.06 01.01.05 to 31.12.05 01.01.04 to 31.12.04 01.01.03 to 31.12.03
Particulars
Sales Cost of sales Gross profit Other income (Nonoperating) Total income Administrative, selling and distribution expenses Financial costs Profit before contribution to WPPF Provision for contribution to WPPF Profit before tax Tax expenses Profit after tax Tax holiday reserve Profit for the year
1,069,475,034 (854,681,632) 214,793,402 2,108,484 216,901,886 (23,375,567) (35,446,938) 158,079,381 (7,903,968) 150,175,413 (55,368,966) 94,806,447 94,806,447
1,383,118,708 (1,170,928,968) 212,189,740 1,187,728 213,377,468 (52,727,239) (41,794,221) 118,856,008 (5,942,801) 112,913,207 (47,388,133) 65,525,074 (1,129,128) 64,395,946
923,862,592 (743,306,060) 180,556,532 850,980 181,407,512 (52,615,437) (20,408,472) 108,383,603 (5,419,180) 102,964,423 (35,696,837) 67,267,586 (9,426,409) 57,841,177
807,101,129 (631,958,750) 175,142,379 (30,646) 175,111,733 (41,661,924) (17,690,192) 115,759,617 (5,787,981) 109,971,636 (32,348,239) 77,623,397 (16,885,218) 60,738,179
716,849,826 (527,878,463) 188,971,363 1,804,216 190,775,579 (81,708,092) (15,588,105) 93,479,382 (4,673,969) 88,805,413 (24,058,189) 64,747,224 (13,323,809) 51,423,415
649,772,561 (530,832,577) 118,939,984 1,222,309 120,162,293 (8,917,997) (15,741,103) 95,503,193 (4,923,115) 90,580,078 (13,141,687) 77,438,391 (23,397,877) 54,040,514
Page 78 of 89
C. The statement of cash flows of the company is as under: Half year ended 30 June 2008 Taka Cash flows from operating activities Profit before tax 150,175,413
Particulars
2007 Taka 112,913,207
2006 Taka 102,964,423
2005 Taka 109,971,637 17,961,397 127,933,034
2004 Taka 88,805,413 14,619,467 124,950 103,549,830
2003 Taka 90,580,078 11,750,450 102,330,528
Adjustment for items not involving movement of cash Depreciation 11,571,089 22,023,397 20,440,465 Loss on revaluation Provision for 1,433,080 1,985,805 inventory 161,746,502 136,369,684 125,390,693 Changes in working capital Inventories Trade debtors Other receivables Advances, deposits and prepayments Due from intercompany Short term loan Withholding tax and VAT Trade creditors and accruals Income tax paid Net cash provided by operating activities
(52,423,982) 3,513,000 (2,841,943) (12,069,436) (81,724,823) 21,768,739 22,497 (17,870,630) (20,066,128) (161,692,706) 53,796 (55,483,282) (8,062,324) 3,669,213 (362,376,118) 393,290,618 (396,875) 30,253,381 (58,084,381) (57,189,768) 79,179,916 (94,294,584) 960,163 5,929,677 (16,128,060) (107,222,740) 99,705,864 (164,545) 23,096,934 (21,907,421) (110,024,712) 15,365,981
(58,753,030) 6,100,000 (874,475) (27,530,518) (142,059,807) 106,107,261 (229,389) 1,308,634 (115,931,324) 12,001,710
3,327,626 (4,448,000) (5,055,202) (9,777,017) 41,376,290 (110,864,643) 116,573 11,535,817 (73,788,556) 29,761,274
(41,456,923) 25,305,370 (8,092,915) (110,668,016) 88,282,656 642,343 4,372,359 (41,615,126) 60,715,402
Cash flows from investing activities

Capital work in progress Acquisition of property, plant and equipment (28,468,598) (1,483,382) (53,171,740) (11,499,088) (18,547,018) (2,101,209) (26,342,874) (5,151,017) (21,315,976) (6,877,587) (658,599) (9,737,851)
Net cash used in investing ___________________________________________________________________________________ activities ____(29,951,980) (64,670,828) (20,648,227) (31,493,891) (28,193,563) ( 10,396,450)
Cash flows from financing activities Share capital Share money deposit Long term loan (Secured) Interim dividend paid
Dividend distribution tax Obligation under finance lease - current portion Obligation under finance lease - long term portion
(235,731) (235,731)
(511,732) (511,732)
67,926 (511,731) (443,805)
44,500,000 (3,750,000) (25,000,000) (9,100,000) (384,891) 6,265,109
14,500,000 (3,750,000) (66,000,000) (55,250,000)
Net cash flows from financing activities INFORMATION DOCUMENT
Page 79 of 89
Net cash inflow/(outflow) from total activities Opening cash and cash equivalents Closing cash and cash equivalents
(29,898,184) (12,053,388) (41,951,572)
14,273,357 (26,326,745) (12,053,388)
(5,793,978) (20,532,767) (26,326,745)
(19,935,986) (596,779) (20,532,765)
7,832,820 (8,429,599) (596,779)
(4,931,048) (3,498,551) (8,429,599)
Closing cash and cash equivalents represent Cash in hand and at bank Bank overdraft 20,246,710 (62,198,282) (41,951,572) 8,022,605 (20,075,993) (12,053,388) 2,800,314 (29,127,059) (26,326,745) 3,055,352 (23,588,117) (20,532,765) 2,988,834 (3,585,613) (596,779) 1,187,514 (9,617,113) (8,429,599)
D. Dividend declared: 01.01.08 to 30.06.08 0% 0% 01.01.07 to 31.12.07 0% 0% 01.01.06 to 31.12.06 0% 0% 01.01.05 to 31.12.05 0% 0% 01.01.04 to 31.12.04 10% 100% 01.01.03 to 31.12.03 100% 0%
Particulars Cash dividend (interim) Stock dividend (bonus share)
E.
The company was incorporated as a private limited company under the Companies Act 1994, on 29 October 1995. Subsequently it was converted to Public Limited Company on 04 May 2005, by special resolution. The company has no subsidiaries, but it is a subsidiary of ACI Ltd.
F.
G. The company did not prepare any account for any period subsequent to 30 June 2008 H. Figures related to previous years have been rearranged where considered necessary.
Dhaka , 25 September 2008
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Auditors certificates regarding calculations of EPS and other ratios as per Direct Listing Rules-2006
We have examined the following earning per share (EPS) and other ratios of ACI Formulations Ltd. for the years ended 31 December 2003, 2004, 2005, 2006, 2007 and for the period ended 30 June 2008, which have been produced by the management of the company to us. The preparation of the EPS and other ratios is the responsibility of the companys management. Our responsibility is to review them and certify as to whether they have been properly prepared using acceptable principles on the basis of audited financial statements for the years ended 31 December 2003, 2004, 2005, 2006 and 2007 and for the half year ended 30 June 2008. Based on our review, we certify that the company has properly prepared the following EPS and other ratios using acceptable principles on the basis of financial statements for the years ended 31 December 2003, 2004, 2005, 2006 and 2007 and for the half year ended 30 June 2008.
Particulars Liquidity Ratio: Current ratio Quick ratio Operating Ratio: Accounts receivable turnover ratio Inventory turnover ratio Asset turnover ratio Profitability Ratio: Gross profit ratio Operating profit ratio Net profit ratio Return on asset ratio Return on equity ratio Earning per share(EPS) in Taka Solvency Ratio Times interest earned ratio Debt to equity ratio* Bad debt ratio
30 June 2008 (For 6 months) 1.44 0.96 1.38 2.02 0.66 20% 18% 9% 12% 14% 3.79
2007
2006
2005
2004
2003
A.
1.40 0.93 2.52 3.16 1.08 15% 12% 5% 13% 11% 2.62
1.72 0.95 2.97 2.52 0.98 20% 14% 7% 14% 13% 2.69
1.82 1.00 4.25 2.89 1.11 22% 17% 10% 18% 17% 3.10
2.10 0.94 5.11 2.76 1.26 26% 15% 9% 19% 17% 2.94
1.46 0.69 5.60 3.09 1.44 18% 17% 12% 25% 29% 5.87
B.
C.
5.46 Not applicable
3.84 Not applicable
6.31 Not applicable
7.54 0.0005 Not applicable
D.
* Calculated considering long term debt portion only
sd/Dhaka, 25 September 2008 Rahman Rahman Huq Chartered Accountant
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Additional Disclosure
A. SECs Observations/queries Observation/ Query - 1: Paid up capital of ACI Formulations Ltd. was raised from Tk. 6.60 crore to Tk. 25.00 crore in 2004 without consent of the commission. Companys response: The paid up capital of ACI Formulations Limited was raised from Tk. 66 million to Tk. 250 million on different dates as shown below: Sl. 1 2 3 Date 01-05-2004 29-09-2004 29-09-2004 Description From Tk. 66 million to Tk. 100 million From Tk. 100 million to Tk. 125 million From Tk. 125 million to Tk. 250 million Remarks Right share Right share Bonus share
Proper approvals were taken from RJSC for raising share capital. Documents (Gazette notification no SEC/CMRRCD/2001-18/343/02-05, dated 2 October 2004) available to us confirms that the provision required for taking prior approval from SEC for raising share capital was introduced on 2 October 2004 i.e after the date ACIFL last increased its Paid up Capital. Accordingly, as it appears, there is no question of anomaly here as the share capital was increased prior to the effective date of the said regulation. Observation/ Query - 2: RJSC certified special resolutions regarding conversion of the company from private to public limited company and changing of denomination of shares are not submitted. Companys response: The RJSC certified special resolution regarding conversion of the company from Private to Public Limited Company and changing denomination of shares have been submitted to SEC. Observation/ Query - 3: Audited F/S as of 31.12.2005 is not submitted. Companys response: The audited financial statements as at 31 December 2005 have been submitted to SEC. Observation/ Query - 4: Statement of holding AGM is not submitted. Companys response: Statement of holding AGMs has been submitted to SEC and shown in page 11 of Information Document. Observation/ Query - 5: Status of loan including information concerning loan default (if any) of the company to be incorporated. Company response: Status of loan has been incorporated in pages 28 and 36 of Information Document. Observation/ Query - 6: Statement as per B (1) (f) to be furnished in the cover page. Companys response: Statement as per B(1) (f) has been furnished in Information Document as advised. INFORMATION DOCUMENT
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Observation/ Query - 7: Existing shareholders shall offload the shares, not the company. Companys response: Necessary revision has been made in Information Document as advised. Observation/ Query - 8: Declaration about listing should not be in future tense. Companys response: Declaration has been revised in Information Document as advised. Observation/ Query - 9: Inclusion of full credit rating report is preferable. Companys response: Full credit rating report has been incorporated in the Information Document (Page- 45-55). B. DSEs Observations/ queries Observation/ Query - 1: Detailed location of the production sites of ACI Formulations Ltd. Please intimate about effluent treatment arrangements in all the production sites of ACI Formulations Limited. Companys response: Detailed location of the production sites of ACI Formulations Ltd has been incorporated in the page-19 of Information document under caption Information in respect of Plants and Property. Effluent treatment arrangements The plant has its own effluent treatment plant with incinerator facility. Effluent treatment plant consists of collection pit, neutralization pit, chemical dosing pit, bulk agitation pond, discharge pump etc. Incinerator facility consists of main chamber and secondary chamber, burner, fuel tank, scrubber, exhaust blower, chimney, scrubber water circulation tank, scrubber water circulation pump. A flow chart of Incinerator facility has been submitted to DSE. Observation/ Query - 2: Detailed list of the raw materials used for the production units of ACI Formulations Limited. Whether any raw materials used for the production of ACI Formulations Limited need clearance from the Directorate of Environment of the Government, if so, please inform your position regarding environmental clearance. Companys response: A list of the Registration Number of each raw material along with the brand names of the finished goods has been submitted to DSE. For manufacturing and marketing of Crop care and public health products we need to obtain the permission (registration) from Plant Protection Wing (PPW) under the Directorate of Agriculture (Khamar Bari). To get product registration a manufacturer has to go long process of the fulfilling all the stringent procedures as detailed in the Bangladesh Pesticides Rules 1985. Observation/ Query - 3: It is observed that profit before tax and after tax of ACI Formulations Limited are showing negative growth for the year 2006 and 2007 which does not comply with regulation 2 (iv) of Direct Listing Regulations 2006.
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Companys response: After the establishment of ACI Formulations Limited in 1998 the company never experienced any loss; rather it has increased its turnover from Tk. 74 million of 1998 to Tk. 1.3 billion in 2007 showing an impressive growth over the years. The main motto of the company was to gain market share, strengthening its position in the growing agriculture sector and then convert this revenue growth into profit. You will appreciate that to arrive at a dominant market leader it takes time, effort and customers trust backed by quality products and services. Over a period of 10 years ACIFL has reached to a formidable position competing against the multinational and local companies dealing with imported products. During this last five years the company has been able to maintain sustainable profit before tax and PAT without major deep even if we consider year to year comparison. It is worth mentioning here that ACIFL operates in a sector where millions of poor farmers are being benefited by products which not only improve their livelihood through increased agricultural production but also contributes towards reducing national food deficit. The efforts which have been made in past years in consolidating Companys position in the market through consistent pricing policy, higher production, introduction of new products and non-compromising attitude towards quality has created a platform wherefrom we expect that ACIFL will be able to realize benefits in years to come. Moreover, our interpretation of the clause 2 (iv) as referred by you is that out of last five years, at least in three years, Company should make profit and again with steady growth. Against this condition, when two years loss is allowed within 5 years, ACIFL has made profit in all 5 years thereby exceeding the requirement with wide margin. With regard to growth, if you consider CAGR (Compound Average Growth Rate) an accepted norm for judging growth of the Company, ACIFLs CAGR of operating profit (EBIT which is the best way to judge a companys real performance) for last five year was positive 9.7%. However, there was a slight drop in PAT (Profit after Tax) which we can not deny in year to year basis due to the expiry of the tax holiday period of all units which attracted additional tax expenses. Considering all these factors we firmly believe that in both counts i.e. profit and growth ACIFL has maintained the provision of regulation 2(iv). Recent result further shows that through high turnover supported by good product mix and control over costs, Company has been able to reduce the impact of higher tax with significant growth in PAT as evidenced from the performance of 2008 and beyond. The performance of 2008 indeed gives us confidence that Company is in strong footing to grow aggressively in years to come.
Observation/ Query - 4: It is observed that there is no dividend policy of the company. Because you did not declare any dividend after the year 2004 although the company made profit in these years. What is the companys future plan regarding dividend policy? Companys response: As you know ACI Formulations Limited is in the growth mode which requires huge additional working capital involvement on a year to year basis. As a prudent company we had the plan to generate fund internally through retention of profit. This strategy was taken to maximize the wealth of the shareholders. Moreover, ACIFL is a non listed company and ACI Limited is the major shareholders of ACIFL. This relationship allowed ACIFL to generate fund internally by retaining profit. After availing the opportunity to becoming Publicly Limited Company ACIFL will follow the policy of declaring good dividend maintaining a consistent pay out ratio as currently its parent company ACI Limited is applying. The most recent performance as well as projections of future years give an impression that Company will be able to maintain good dividend declaration for its valued shareholders.
Observation/ Query - 5: What are the reasons for the declining trend in ROE and ROA from the year 2004 to 2007 of the company?
Page 84 of 89
Companys response: As you know the ROA is the functions of total assets (Fixed assets + Working capital + Capital work-inprogress) and operating profit on sales. On the other hand the ROE is the functions of total Equity (Paid up capital + retained earnings + tax holiday reserve + revaluation surplus) and net profit on sales. In the year 2003 the ROA and ROE was exceptionally high due to lower assets and equity base and higher profit contributed by adopting strategy of dealing with lower range of products with higher margin. During the period Company also enjoyed tax holiday for the profit earned from all units of ACI Formulations Limited. Subsequently Company has taken growth strategy to become market leader in the agriculture sector. To cater the growth, ACI Formulations Limited has increased its investment over the last five years to allow it to : Enhance production capacity by investing in fixed assets and infrastructure including laboratory facilities. Enhance operational capacity by investing in working capital and human capital. Develop the market Capture more market share Build trust with customers Build brand image Increase distribution network Provide complete solution to the farmers not only selling products. The above steps along with the revaluation of fixed assets (done in 2004) and increase of paid-up capital in 2005 have contributed toward increasing assets and capital base. On the other hand tax holiday of all units was started expiring gradually from middle of 2003 which attracted additional tax expenses and there by impacting net profits of 2004 2007. This has resulted into lower ROA and ROE in those years compared to initial years of performance. On the other hand if we ignore 2003, which was an exceptional year (as explained earlier), we will see that the return over the last few years was quite acceptable and in line with overall Sectors performance. The investments made in last five years have just started giving fruits as we can see from the performance for last six months to June 2008. Considering the full year performance of 2008, we can firmly say that the return will reach at a very satisfactory level. With ACIFL becoming Publicly Listed Company, ACIFL will directly sell the Crop care and Public Health Products from 1 January of 2009. This along with the establishment of two new projects like Sulpher and NPKS Fertilizer, ACI Formulations Limited will be able to maintain very attractive ROA and ROE in the years to come. As explained above, under the proposed arrangement, ACIFL will deal entire business of Crop Care and Public Health which has a annual turnover of approximately Tk. 1.4 billion in 2009. This along with new openings in Sulpher and NPKS business, ACIFL will have have significantly high turnover of Tk. 2.5 billion followed by impressive Profit after tax of Tk. 209 million. The new proposed business model therefore will ensure higher ROE and ROA for the Company. Observation/ Query - 6: It appears that there is significant amount of inter party transactions between ACI Formulations Limited and ACI Limited. Is there any pricing mechanism and profit sharing agreement on inter party transactions? If so, please furnish all documents in this regard. Companys response: There is a Sales and Marketing agreement between ACI Formulations Limited and ACI Limited under which ACI Limited sells and markets the products manufactured by ACI Formulations Limited. Under the agreement the transfer price of the products are determined which is detailed below:
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Unit-1. Crop Care and Public Health Products Transfer Price between ACI and ACIFL is determined as per clause 2.2 and 2.3 of article 2 of Sales and Marketing Agreement which are: ACIFL shall reimburse all selling and Marketing Overhead and Distribution Cost incurred by ACI for selling and marketing of products manufactured by ACIFL. ACIFL shall pay 5% of ACI Sales of products manufactured by ACIFL as service charge. Unit- 2. Mosquito Coil Transfer Price between ACI and AFL is determined as per clause 2.2 and 2.3 of article 2 which are: ACI shall pay all expenses for raw materials, packing materials, labor cost, utilities cost, depreciation and plant running cost other than general overhead incurred by ACIFL ACI shall pay the total amount of investment by ACIFL in this plant in 4 years from the date of signing this agreement as period cost without any reference to the actual production. ACI shall pay the financing cost incurred by ACIFL on the stock of raw materials, packing materials and finished goods. Unit- 3. Aerosol Transfer Price between ACI and AFL is determined as per clause 2.7 which is: Considering the portability of the business vis a vis market dynamics transfer price of Aerosol Unit will be determined mutually by ACI Limited and ACIFL on year to year basis. It is worth mentioning here that under the new arrangement the proportion of business through contract manufacturing arrangement (determined through transfer pricing agreement) will be reduced to only 25% from the current level. The agreement between ACI Limited and ACI Formulations Limited has been submitted to DSE. Observation/ Query - 7: It is observed that you have not disclosed related party transactions disclosures as required by IAS 24, please disclose. Companys response: In the Financial statements we have given related party disclosures as required by IAS- 24. For your reference if you see the half yearly audited accounts of 2008 (note 23 of page 77), you will get the disclosures. Observation/ Query - 8: You have reported that you will purchase 2 Gas Generators by the end of the year 2008. In this regard, did you confirm about the availability of gas supply for necessary power generation. If gas is not available then what would be your alternative solution? Companys response: The Gas generators have already been procured from caterpillar USA. Our application for increasing gas supply is in active consideration of the authority. We are confident that by the end of this year permission will be received from Titas Gas authority. Currently Companys operation is being run with diesel generators. We presume that if there are inadvertent delay in getting permission to laying gas line, operation will be continued with diesel generators along with enjoying power supply from REB.
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Observation/ Query - 9: It appears that administrative and selling expenses have increased significantly during the year 2006 and 2007. Please explain the reasons in this regard. Companys response: The increase in administration and selling expenses for both 2006 and 2007 was mainly due to normal pay increase, inflation adjustment, engagement of higher number of people, increased marketing and promotional expenses which actually led to stabilizing Companys grip in the market (as explained in point 3 and 5 of the letter). This strategy of investing money against people and marketing and sales front has already started working as evidenced from the recent performance till June 2008. Observation/ Query - 10: Submit revaluation report on the fixed assets held in the year 2004. Companys response: Revaluation report on the fixed assets held in the year 2004 has been submitted to DSE. C. CSEs Observations/ queries Observation/ Query - 1: Though the company earned profit every year, it could not maintain its steady profit growth in last three completed accounting/financial years as per regulation 2(iv) of the Direct Listing Regulations. Companys response: Our interpretation of the clause 2 (iv) as referred by you is that out of last five years, at least in three years, Company should make profit and again with steady growth. Against this condition, when two years loss is allowed within 5 years, ACIFL has made profit in all 5 years thereby exceeding the requirement with wide margin. With regard to growth, if you consider CAGR (Compound Average Growth Rate) an accepted norm for judging growth of the Company, ACIFLs CAGR of operating profit (EBIT which is the best way to judge a companys real performance) for last five year was positive 9.7%. However, there was a slight drop in PAT (Profit after Tax) which we can not deny in year to year basis due to the expiry of the tax holiday period of all units which attracted additional tax expenses. Considering all these factors we firmly believe that in both counts i.e. profit and growth ACIFL has maintained the provision of regulation 2(iv). Recent result further shows that through high turnover supported by good product mix and control over costs, Company has been able to reduce the impact of higher tax with significant growth in PAT as evidenced from the performance of 2008 and beyond. The performance of 2008 indeed gives us confidence that Company is in strong footing to grow aggressively in years to come. Observation/ Query - 2: The period of time has not been mentioned against the information on involvement of Officers and Directors in certain Legal Proceedings in page # 38 of the Information Documents (ID). Companys response: We have incorporated the period of time in the page 38 of the Information Document as advised. Observation/ Query - 3: Details of Trade Debtors and Other Receivables in the Balance Sheet (page # 57) should be provided in the notes to the Financial Statements for the half-year ended 30 June 2008 in order to have a clear view to the investors. Companys response: As per accounting principle i.e. materiality concept, the trade debtors and other receivable are not material (total of both balance was only 0.44% of total assets) and as such no detail is given in the notes to the accounts. INFORMATION DOCUMENT
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Observation/ Query - 4: Adequate provision against the Gratuity Scheme of the permanent employees of the company should be made in the accounts. Companys response: ACI Group maintains Gratuity Fund at Group level where ACI Formulations Limited is also a participator. In the accounts, ACI Formulations Limited makes provision for gratuity expenses on month to month basis which charged to Salary head. In every two years valuation of gratuity scheme is done by professional firm as required by IAS- 19: Employee Benefits. Observation/ Query - 5: Comparative Income Statement and Balance Sheet for immediate preceding five accounting years have not been provided in the ID. Companys response: We have incorporated comparative Income Statement and Balance Sheet of ACI Formulations Limited for the immediate last five years in the page 78 of Information Document under the head Auditors Report under the section 135(1) and paragraph 24(1) of part-II of Third Schedule of the Companies Act 1994 Observation/ Query - 6: The purpose of the Offloading should be mentioned in ID. Companys response: As suggested by you we have incorporated the purpose of offloading of shares by ACI Limited in the page 11 of Information Document. Observation/ Query - 7: Though the company submitted information in respect of the amount of loan taken from different banks, it did not provide information concerning loan default, if any (Ref. 3 (h) of the regulation). Companys response: There is no case of loan default which has been mentioned in the page 28 and 36 of Information Document. Observation/ Query - 8: The company should submit copy of CIB report of Bangladesh Bank confirming that each director or shareholder who holds 5% or more shares is not a loan defaulter. Companys response: The CIB report has been forwarded to DSE by Bangladesh Bank that will also be used by CSE. Observation/ Query - 9: The submitted undertaking is not containing any signature in the first page and common seal in the both pages. Companys response: Undertaking with signature and common seal has been provided to CSE. Observation/ Query - 10: The declaration of Mr. M Mosaddek Hossain in respect of disposal of shares in accordance with the regulation 5 has not been submitted. Companys response: Our understanding about the provision of regulation 5 is that any shareholder who wishes to offload its shares needs to give a declaration confirming that he/she will not offload more than 50% of his or her own shareholding. In this particular case out of the nine shareholders only one shareholder i.e. ACI Limited has INFORMATION DOCUMENT
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opted for offloading 41.35% of its shareholding in ACI Formulations Limited equivalent to 89,87,500 shares which is 36.95% of the total shares of ACI Formulations Limited. As other shareholders have not shown any intent to dispose off any shareholding (Subject to the condition stated in Regulation-5) this is not necessary to submit undertaking by them. However as a part of disclosure, the shareholders who were available before the submission of this application, we voluntarily opted for submitting undertaking from them; which can be considered as part of supplying additional information. Please also note that subject to the approval of DSE and CSE, we will dematerialize only 8,987,500 shares of ACI Formulations Limited held by ACI Limited and no other shares held by the shareholders other than ACI Limited will be offloaded and dematerialized now. Observation/ Query - 11: Shares of the company are required to be dematerialized with CDBL. Companys response: As per Listing Rules we will dematerialize the shares of ACI Formulations Limited with CDBL before starting trading of shares in the Stock Exchanges.
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Information Document for Direct Listing OF ACI FORMULATIONS LIMITED

Manager to the Issue

Credit Rating by Credit Rating Information and Services Ltd. (CRISL)

Long Term Rating

AVAILABILITY OF INFORMATION DOCUMENT

Manager to the Issue

Phone : 031-714632-3, 031-720871-3 Website : www. csebd.com

FINANCIAL STRUCTURE OF THE COMPANY

Particulars Authorised Capital Paid-up Capital

No. of shares 5,00,00,000 2,50,00,000

Face Value (Taka) 10.00 10.00

Amount in Taka 50,00,00,000.00 25,00,00,000.00

ACI FORMULATIONS LIMITED

ACI FORMULATIONS LIMITED

no. Page no. 7 7-8

Purpose of Offloading / Use of Sale Proceeds

Statement Regarding Holding Annual General Meeting ----------------------------------------

Risk Factors and Management Perceptions

ACI FORMULATIONS LIMITED

Plan Of Operation And Discussion On Financial Conditions

Directors And Officers

Involvement Of Officers And Directors In Certain Legal Proceedings

Certain Relationships And Related Transactions

ACI FORMULATIONS LIMITED

Options Granted To Officers, Directors And Employees

Transaction With Promoters

Net Tangible Assets Per Share

Ownership Of The Companys Securities officers

Description Of Securities Outstanding Or Being Offered

Credit Rating Report

ACI FORMULATIONS LIMITED

DISCLOSURE IN RESPECT OF ISSUANCE OF SECURITY IN DEMAT FORM

ACI FORMULATIONS LIMITED

We the existing shareholders of ACI Formulations Limited (ACIFL) declare that-

Sd/( M Anis Ud Dowla)

Sd/( Najma Dowla)

Sd/(Dr. Arif Dowla)

Sd/( Shusmita Anis Salam)

Sd/( Wajed Salam)

Sd/( Sheema Abed Rahman)

Sd/( M Anis Ud Dowla) Representative of ACI Ltd.

ACI FORMULATIONS LIMITED

Date: September 17, 2008

To The Secretary Dhaka Stock Exchange Limited Dhaka.

Dear Sir, UNDERTAKING

Sd/M Anis Ud Dowla Managing Director

ACI FORMULATIONS LIMITED

Date: September 17, 2008

To The Secretary Chittagong Stock Exchange Limited Chittagong.

Dear Sir, UNDERTAKING

Sd/M Anis Ud Dowla Managing Director

ACI FORMULATIONS LIMITED

PURPOSE OF OFFLOADING/USE OF SALE PROCEEDS:

STATEMENT REGARDING HOLDING ANNUAL GENERAL MEETING OF THE COMPANY

ACI FORMULATIONS LIMITED

RISK FACTORS AND MANAGEMENT PERCEPTIONS

ACI FORMULATIONS LIMITED

ACI FORMULATIONS LIMITED

ACI FORMULATIONS LIMITED