ACI Zero Coupon Bond Prospectus

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

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

Advanced Chemical Industries Limited ACI 20% Convertible Zero Coupon Bonds ISSUE SIZE

1,335,850 Convertible Zero Coupon Bonds of Tk1,000 each totaling Tk. 1,335,850,000 Private Placement 801,510 Convertible Zero Coupon Bonds of Tk 1,000 each

Total Tk 801,510,000

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

Conversion Strike Price 1.10 times of Net Asset Value (NAV) per share based on the audited statements of preceding financial year. OPENING DATE FOR SUBSCRIPTION: 31 January 2010 CLOSING DATE FOR SUBSCRIPTION: 04 February 2010 For Non-Resident Bangladeshi (NRB) Quota, Subscription Closes on: 13 February 2010 MANAGER TO THE ISSUE Alliance Financial Services Limited (AFSL) Rahman Chamber (3rd floor),12-13 Motijheel C/A, Dhaka- 1000 Tel: 9515468, 9515469, Fax: 88-02-9515467, www.allfin.org FACILITY ARRANGER & TRUSTEE Industrial & Infrastructure Development Finance Co. Ltd (IIDFC) Chamber Building (6th & 7th floor), 122-124 Motijheel C/A, Dhaka-1000 Tel: 9559311-12,9553387, Fax: 88-02-9568987, www.iidfc.com Issue Date of the Prospectus: 30 December 2009 The issue shall be placed in “N” category Credit Rating by Credit Rating Information and Services Limited (CRISL) Issue Rating (Zero Coupon Bond)

A – (Indicative)

Entity Rating – 2008

A+

Date of Rating Declaration

29 April 2009

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

ACI 20% Convertible Zero Coupon Bonds

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Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

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

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

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

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

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

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

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

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

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

NAME & CONTACT ADDRESS OF THE AUDITOR Rahman Rahman Huq Chartered Accountants 9 Mohakhali C/A ( 11th Floor) Dhaka-1212 Tel : 880 (2) 9886450-2 Fax : 880 (2) 9886449

ACI 20% Convertible Zero Coupon Bonds

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Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

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

Advanced Chemical Industries Limited (ACI)

Allotment

Letter of allotment for shares/Bonds

BB BO CDBL Certificate CIB Commission Companies Act CSE DSE FC Account FID Issue MP NAV NBR

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

NRB

Non-Resident Bangladeshi

Offer Price

Price of the ACI 20% Convertible Zero Coupon Bonds being offered

Registered Office RJSC SC SEC Securities/Bonds Securities Market Sponsors

Head Office of the Company Registrar of Joint Stock Companies & Firms Share Certificate Securities and Exchange Commission ACI 20% Convertible Zero Coupon Bonds The Share/Bond Market of Bangladesh The Sponsor Shareholders of Advanced Chemical Industries Limited (ACI)

Stockholder Subscription

Shareholder of ACI Application money

The Company/Issuer

Advanced Chemical industries Limited (ACI)

Redemption income

Difference between issue price and the face value

Capital gain

Difference between strike price and market price

ACI 20% Convertible Zero Coupon Bonds

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Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

AVAILABILITY OF PROSPECTUS Prospectus of Advanced Chemical industries Limited (ACI) may be obtained from the Issuer Company, Issue Manager, Underwriters and the Stock Exchanges as follows: Company & Address

Contact Person

Telephone Number

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

Ms. Sheema Abed Rahman Company Secretary

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

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

Industrial & Infrastructure Development Finance Co. Ltd (IIDFC) Chamber Building (6th & 7th floor), 122-124 Motijheel C/A, Dhaka-1000 AB Bank Limited BCIC Bhaban 30-31 Dilkusha C/A, Dhaka-1000 Bangladesh Mutual Securities Limited Sharif Mansion (7th floor) 56-57 Motijheel C/A, Dhaka-1000 Bay Leasing & Investment Limited Printers Building (7th floor) 5, Rajuk Avenue Motijheel C/A, Dhaka-1000 BANCO Trans world (BD) Limited Ispahani Building (3rd floor) 14-15 Motijheel C/A, Dhaka-1000 Lanka Bangla Finance Limited Safura Tower, Level 11 20, Kemal Ataturk Avenue Banani, Dhaka-1213 Mercantile Securities Limited Paramount Heights 65/2/1 Box Culvert Road Purana Paltan, Dhaka-1000 Standard Bank Limited Metropolitan Chamber Building (3rd floor),122-124 Motijheel C/A, Dhaka-1000

Mr. Muhammad Nazrul Islam ACMA Manager

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

FACILITY ARRANGER & TRUSTEE Mr. A.S.M Arif Tel: (02)- 9559311-12,9553387 Head of operations Fax: 88-02-9568987 Structured Finance

UNDERWRITERS Mr. Kaiser A Chowdhury President & Managing Director

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

Mr. Md. Nurul Alam CEO

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

Mr. Mahbubur Rashid Managing Director

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

Mr. A. Munim Choudhury Managing Director

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

Mr. Mafizuddin Sarker Managing Director

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

Mr. Musatofa Kamal CEO

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

Mr. S. A. Farooqui Managing Director

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

ACI 20% Convertible Zero Coupon Bonds

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Issuer Advanced Chemical Industries Limited (ACI)

Trust Bank Limited Peoples Insurance Bhaban 36, Dilkusha C/A,Dhaka-1000 Union Capital Limited Noor Tower (5th floor) 73, Sonargaon Road,Dhaka-1205

Issue Manager Alliance Financial Services Limited

Mr. Iqbal U Ahmed Managing Director

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

Mr. Ramendra Nath Paul EVP &Head of Merchant Banking

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

STOCK EXCHANGES Dhaka Stock Exchange Limited. 9/F, Motijheel C/A, Dhaka-1000 Chittagong Stock Exchange Limited.CSE Building, 1080 Sheikh Mujib Road, Agrabad, Chittagong4100

DSE Library

(02) - 9564601-7

CSE Library

(031) - 714632-3 (031) - 720871-3

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

ACI 20% Convertible Zero Coupon Bonds

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Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

TABLE OF CONTENTS Item

Page No

Disclosure in respect of issuance of securities in demat form

10

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

10

General information

14

Declarations and due diligence certificates Declaration about the responsibility of the Directors including the CEO of the Company in respect of the prospectus Consent of the Directors to Serve

15

Declaration about filing of prospectus with the Registrar of Joint Stock Companies & Firms

16

Due Diligence Certificate of Manger to the Issue

17

Due Diligence Certificate of the Underwriter(s)

18

Due Diligence Certificate of Trustee To The Issue

19

Risk factors & management perceptions about the risks Statement regarding holding of Annual General Meeting of Advanced Chemical Industries Limited (ACI) Utilization of proceeds of Advanced Chemicals Industries Limited previous right issues

20

Size of Issue

22

List of Institutional Investors

23

List of Individual Investors

24

Purpose of the Issue

25

Use of proceeds

25

Description of Business

30

Background

30

Important dates and milestone dates of ACI Limited

30

Nature of Business

30

Principal products

30

History of 17 years-ACI Limited

33

Market for the ACI Products

34

Relative contribution to revenue

35

Associate subsidiary/related holding company

36

Distribution of products/services

36

Competitive condition of Business

36

Sources and availability of raw materials and principal suppliers

39

Sources of and requirement for power, gas and water or any other utilities

42

Name of the customers who enjoy 10% or more of the Company’s product/services

42

Contract with principal customers and suppliers

43

Material patents, trademarks, license or royalty agreements

43

Number of employees (as per audited accounts)

45

Capacity and current utilization of facility

45

Description of property

45

ACI 20% Convertible Zero Coupon Bonds

15 16

22 22

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Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Item Plan of operation and discussion of financial condition

46

Internal and external sources of cash (as per audited accounts)

46

Material commitment for capital expenditure

47

Causes for any material changes from period to period

47

Graphical presentation Of ACI’s performance from 2004 to 2008

48

Seasonal aspect

49

Known trends, events or uncertainties

49

Change in the assets of the Company used to pay off any liabilities

49

Loan taken from holding/parent company or subsidiary company

49

Loan given to holding/parent company or subsidiary company

49

Future contractual liabilities

50

Future capital expenditure

50

VAT, income tax, customs duty or other tax liability

50

Operating lease agreement

50

Financial lease and other financial commitment Personnel related scheme

50 51

Revaluation of assets

51

Breakdown of all Expenses connected with the Repeat Issue

53

Auditors’ certificate for paid-up share capital

54

Transaction between Holding/Subsidiary Company and the Issuer

54

Directors and officers of the company

55

Description of the Directors

55

Directors Involvement in other organization

56

Family relationship among Directors

58

Family relationship among top Officers

58

Short Description of the Directors

59

CIB Report

60

Description of senior executives and department heads

60

Involvement of Directors and Officers in certain legal proceedings

61

Certain relationships and related transactions

61

Transaction with related parties

61

Directors facilities

62

Executive compensation

62

Remuneration paid to top five salaried officers

62

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

62

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Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Item Remuneration paid to Director who was not an officer

62

Future compensation to Director or officers Pay increase intention

63 63

Options granted to Directors, officers and employees

63

Transaction with the Directors and subscribers to the Memorandum

63

Tangible assets per share

63

Ownership of the Company’s securities

63

Composition of Shareholders

63

Shareholding structure 5% or more as on 31 December 2008

63

Share held by Directors

64

Securities owned by the officers

64

Net Asset Value

65

Market for the securities being offered Declaration about listing of shares with Stock Exchange

66 66

Trading and settlement

66

Description of Securities outstanding or being offered

66

Dividend, voting, pre-emption rights

66

Conversion and liquidation rights

66

Dividend policy

67

Other rights of shareholders

67

Debt securities

67

General concept on Zero Coupon Bond

67

Zero Coupon Bond

67

Convertible Bond Zero-Coupon Convertible Bond

68 68

Conversion Strike Price

68

ACI 20% Convertible Zero-Coupon Bonds

68

ACI 20% Convertible Zero Coupon bonds at a glance

68

Details of ACI 20% Convertible Zero Coupon Bond

69

Convertibility Option

70

Redemption procedure

70

Early redemption

71

Transferability

71

Lock-in Provision

71

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Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Item Facility arranger & Trustee

71

Conversion Strike Price & Method

71

Convertible Value of the Bond / Conversion Strike Price

71

Conversion date

71

Security Features

71

Rationale for investing In ACI 20% Convertible Zero Coupon Bond

72

Scenario analysis of investing in ACI ZCB

73

Trustee

74

Refund of subscription money

79

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

79

Availability of securities The Offer

80 80

Application for subscription

80

Allotment Underwriting of Bonds

81 82

Principal terms and conditions of underwriting agreement

82

Underwriter’s right to represent in the Board of Directors of the Company Commission of Underwriters

83 83

Right of Underwriters on Company’s Board

83

Material contracts

83

Manager to the issue

83

Commission to the banker to the issue

83

Corporate directory

83

Auditors report to the shareholders

84

Audited Financial Statements

85

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

148

Credit rating report

153

Ratio Analysis

169

Additional Disclosure

170

Application forms

171

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Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

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

Conditions under Section 2CC of the Securities and Exchange Ordinance, 1969 Part A 1. The Company shall go for Repeat Public Offer (RPO) for 534,340 20% Convertible Zero Coupon Bonds of Taka 1,000 each worth Tk.534,340,000.00 (Taka fifty three crore forty three lac forty thousand) only following the Securities and Exchange Commission (Public Issue) Rules, 2006, the Depository Act, 1999 and regulations issued there under; 2. The Company shall disseminate the above information to the Stock Exchanges within half an hour of receipt of this letter; 3.The Company shall disseminate the receipt of the Commission’s approval along with the purpose and amount of the issue, price of the bonds etc. as a price sensitive information, as prescribed by the Commission; 4. The abridged version of the prospectus, as approved by the Commission, shall be published by the issuer in four national daily newspapers (in two Bangla and two English), within 03 (three) working days of issuance of this letter. The issuer shall post the full prospectus vetted by the Securities and Exchange Commission in the issuer’s website and shall also put on the websites of the Commission, stock exchanges, Trustee, and the issue manager within 03 (three) working days from the date of issuance of this letter which shall remain posted till the closure of the subscription. The issuer shall submit to SEC, the stock exchanges, the Trustee and the issue manager a diskette containing the text of the vetted prospectus in “MS -Word” format. 5. Sufficient copies of prospectus shall be made available by the issuer so that any person requesting a copy may receive one. A notice shall be placed on the front of the application form distributed in connection with the offering, informing that interested persons are entitled to a prospectus, if they so desire, and that copies of prospectus may be obtained from the issuer and the issue manager. The subscription application shall indicate in bold type that no sale of securities shall be made, nor shall any money be taken from any person, in connection with such sale until twenty five days after the prospectus has been published. 6. The company shall submit 40 (forty) copies of the printed prospectus to the Securities and Exchange Commission for official record within 5 (Five) working days from the date of publication of the abridged version of the prospectus in the newspaper. 7. The issuer company and the issue manager shall ensure transmission of the prospectus, abridged version of the prospectus and relevant application forms for NRBs through e-mail, simultaneously with publication of the abridged version of the prospectus, to the Bangladesh Embassies and Missions abroad and shall also ensure sending of the printed copies of abridged version of the prospectus and application forms to the said Embassies and Missions within five working days of the publication date by Express Mail Service (EMS) of the postal department. A compliance report shall be submitted in this respect to the SEC jointly by the issuer and the issue manager within two working days from the date of said dispatch of the prospectus & the forms. 8. The paper clipping of publication of price sensitive information and abridged version of prospectus, as mentioned at condition 3 & 4 above, shall be submitted to the Commission within 24 hours of the publication thereof. 9. The company shall maintain separate bank account(s) for collecting proceeds of the Repeat Public Offer and shall also open FC account(s) to deposit the application money of the Non-Resident Bangladeshis (NRBs) for RPO purpose, and shall incorporate full particulars of said FC account(s) in the prospectus. The company shall open the

ACI 20% Convertible Zero Coupon Bonds

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Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

abovementioned accounts for RPO purpose; and close these accounts after refund of over-subscription. Non- Resident Bangladeshi (NRB) means Bangladeshi citizens staying abroad including all those who have dual citizenship (provided they have a valid Bangladeshi passport) or those, whose foreign passport bear a stamp from the concerned Bangladesh Embassy to the effect that no visa is required to travel to Bangladesh. 10. The issuer company shall apply to all the stock exchanges in Bangladesh for listing within 07(seven) working days from the date of issuance of this letter and shall simultaneously submit the vetted prospectus with all exhibits, as submitted to SEC, to the stock exchanges. 11. The following declaration shall be made by the company in the prospectus, namely: “Declaration about Listing of Bonds with the Stock Exchange(s): None of the stock exchange(s), if for any reason, grants listing within 75 days from the closure of subscription, any allotment in terms of this prospectus shall be void and the company shall refund the subscription money within fifteen days from the date of refusal for listing by the stock exchanges, or from the date of expiry of the said 75 (seventy five) days, as the case may be. In case of non -refund of the subscription money within the aforesaid fifteen days, the company directors, in addition to the issuer company, shall be collectively and severally liable for refund of the subscription money, with interest at the rate of 2% (two percent) per month above the bank rate, to the subscribers concerned. The issue manager, in addition to the issuer company, shall ensure due compliance of the above mentioned conditions and shall submit compliance report thereon to the Commission within seven days of expiry of the aforesaid fifteen days time period allowed for refund of the subscription money.” 12. The subscription list shall be opened and the sale of securities commenced after 25 (twenty five) days of the publication of the abridged version of the prospectus and shall remain open for 5 (Five) consecutive banking days. 13. A non-resident Bangladeshi shall apply either directly by enclosing a foreign demand draft drawn on a bank payable at Dhaka, or through a nominee by paying out of foreign currency deposit account maintained in Bangladesh or in Taka, supported by foreign currency encashment certificate issued by the concerned bank, for the value of securities applied for through crossed bank cheque marking “Account Payee only”. Application shall be sent by the NRB applicants to the issuer company so as to reach the same to the company by the closing date of subscription for NRB applicants. Application received by the company after the closing date of subscription will not be considered for allotment purpose. 14. The company shall apply the spot buying rate (TT clean) in US Dollar, UK Pound Sterling and Euro of Sonali Bank, which shall be mentioned in the Prospectus, as prevailed on the date of opening of the subscription for the purpose of application of the NRBs and other Non-Bangladeshi persons, where applicable. 15. The company and the issue manager shall ensure prompt collection/clearance of the foreign remittances of NRBs and other non-Bangladeshis, if applicable, for allotment of bonds. 16. Upon completion of the period of subscription for securities the issuer and the issue manager shall jointly provide the Commission and the stock exchanges with the preliminary status of the subscription within 05 (five) working days, in respect of the following matters, namely: (a) Total number of securities for which subscription has been received; (b) Amount received from the subscription; and (c) Amount of commission paid to the banker to the issue. 17. The issuer and the issue manager shall jointly provide the Commission and the stock exchanges with the list of valid and invalid applicants (i.e. final status of subscription) to the Commission within 3 (three) weeks after the closure of the subscription along with bank statement (original), branch-wise subscription statement, NRB application forms (photocopy attested by CEOs of the issuer company and the issue manager) . The list of valid and invalid applicants shall be finalized after examination with the CDBL in respect of BO accounts and particulars thereof.

ACI 20% Convertible Zero Coupon Bonds

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Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

18. 10% of total public offering shall be reserved for Non-Resident Bangladeshi (NRB) and 10% for mutual funds and collective investment schemes registered with the Commission and the remaining 80% shall be opened for subscription by the general public. In case of under subscription under any of the 10% categories mentioned above, the unsubscribed portion shall be added to the general public category and, if after such addition, there is over subscription in the general public category, the issuer and the issue manager shall jointly conduct an open lottery of all the applicants added together. 19. All the applicants shall first be treated as applied for one minimum market lot of 5 bonds worth Tk.5000/- (face value). If, on this basis, there is over subscription, then lottery shall be held amongst the applicants allocating one identification number for each application, irrespective of the application money. In case of over-subscription under any of the categories mentioned hereinabove, the issuer and the issue manager shall jointly conduct an open lottery of all the applications received under each category separately in presence of representatives from the issuer, the stock exchanges and the applicants, if there be any. 20. An applicant cannot submit more than two applications, one in his/her own name and another jointly with another person. In case an applicant makes more than two applications, all applications will be treated as invalid and will not be considered for allotment purpose. In addition, whole or part of application money may be forfeited by the Commission. 21. Lottery (if applicable) shall be held within 4 (four) weeks from closure of the subscription date. 22. The company shall issue share allotment letters to all successful applicants within 5 (five) weeks from the date of the subscription closing date. Within the same time, Refund to the unsuccessful applicants shall be made in the currency in which the value of securities was paid for by the applicants without any deduction. For the purpose of refund of application money, the applicant must mention the bank account in the application form the same bank account as available in the database of Beneficiary Owners Account in central depository. After completion of refund, the issuer shall disclose the information in the newspapers where the abridged version of prospectus has been published. A compliance report in this regard shall be submitted to the Commission within 7 (seven) weeks from the date of closure of subscription. 23. The company shall furnish the List of Allotees to the Commission and the stock exchange(s) simultaneously in which the shares will be listed, within 24 (twenty four) hours of allotment. 24. In the event of under-subscription of the public offering, the entire unsubscribed portion of securities shall be taken up by the underwriter(s). The issuer must notify the underwriter to take up the underwritten bonds within 10 (ten) days of the subscription closing date on full payment of the share money within 15(fifteen) days of the issuer’s notice. The underwriter shall not share any underwriting fee with the issue manager, other underwriters, issuer or the sponsor group. 25. Lock-in provision shall be applicable upon conversion of bonds as per applicable rules. 26. The company and the issue manager shall apply to the stock exchanges for listing within 7(seven) working days of issuance of this letter and shall simultaneously submit to the Commission attested copies of the application field with the stock exchanges. Part-B 1. The issuer and the issue manager shall ensure that the abridged version of the prospectus and the full prospectus is published correctly and in strict conformity without any error/omission, as vetted by the Securities and Exchange Commission. 2. The issue manager shall carefully examine and compare the published abridged version of prospectus on the date of publication with the copy vetted by SEC. If any discrepancy/inconsistency is found, both the issuer and the issue

ACI 20% Convertible Zero Coupon Bonds

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Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

manager shall jointly publish a corrigendum immediately in the same newspapers concerned, simultaneously endorsing copies thereof to SEC and the stock exchange(s) concerned, correcting the discrepancy/inconsistency as required under ‘Due Diligence Certificates’ provided with SEC. 3. Both the issuer company and the issue manager shall, immediately after publication of the prospectus and its abridged version, jointly inform the Commission in writing that the published prospectus and its abridged version are verbatim copies of the same as vetted by the Commission. 4. The fund collected through RPO and private placement of bonds shall not be utilized prior to listing with stock exchange and that utilization of the said fund shall be effected through banking channel, i.e. through account payee cheque, pay order or bank drafts etc. 5. The company shall furnish report to the Trustee and the Commission on utilization of RPO proceeds within 15 days of the closing of each quarter until such fund is fully utilized, as mentioned in the schedule contained in the prospectus, and in the event of any irregularity or inconsistency, the Commission may employ or engage any person, at issuer’s cost, to examine whether the issuer has utilized the proceeds for the purpose disclosed in the prospectus. 6. All transactions, excluding petty cash expenses, shall be effected through the company’s bank account(s). 7. Proceeds of the RPO shall not be used for any purpose other than those specified in the prospectus. Any deviation in this respect must have prior approval of the bondholders in the Bondholder’s Meeting under intimation to SEC and stock exchange(s). 8. The issuer and the Trustee shall jointly submit to the Commission an annual status report of the bonds containing among others, details about redemption/ conversion, decisions of the bondholder’s meeting (if any) within 03(three) months from the date of Annual General Meeting of the company. 9. The Trustee shall ensure compliance by the issuer in respect of bondholder’s rights as per the Trust Deed and shall submit to the Commission an annual compliance report within 03 (three months) from the date of Annual General Meeting of the company. Part C 1. The Issuer shall execute the Trust Deed with the Trustee and register the same under the Trust Act, 1882 and shall submit a copy of the trust deed attested by the Chief Executive Officers of the Issuer, Trustee and the Issue Manager to the Commission. 2. The Issuer shall execute charge agreements with the Trustee. Part D 1. All the above conditions imposed under section 2CC of the Securities and Exchange Ordinance, 1969 shall be incorporated in the prospectus immediately after the page of table of contents, with a reference in the table of contents, prior to its publication. 2. The Commission may impose further condition/ restrictions etc. from time to time as and when considered necessary which shall also be binding upon the issuer company.

ACI 20% Convertible Zero Coupon Bonds

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Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

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

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

ACI 20% Convertible Zero Coupon Bonds

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Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

DECLARATIONS AND DUE DILIGENCE CERTIFICATES

DECLARATION ABOUT THE RESPONSIBILITY OF THE DIRECTORS, INCLUDING THE CEO OF THE “ADVANCED CHEMICAL INDUSTRIES LIMITED” IN RESPECT OF THE PROSPECTUS

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

Sd/M Anis Ud Dowla Chairman & Director

Sd/Syed Manzur Elahi Director

Sd/Md. Humayun Kabir Director

Sd/Najma Dowla Director

Sd/Dr. Arif Dowla Managing Director and Director

Sd/Waliur Rahman Bhuiyan, OBE Director

Sd/Shusmita Anis Salam Director

Sd/Waliur Rahman Director

Sd/Wajed Salam Director

Sd/Sheema Abed Rahman Director and Company Secretary

ACI 20% Convertible Zero Coupon Bonds

- 15 -

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

CONSENT OF THE DIRECTORS TO SERVE

We hereby confirm that we have been serving as Directors of Advanced Chemical Industries Limited (ACI) and continue to act as Director of the Company

Sd/M Anis Ud Dowla Chairman & Director

Sd/Syed Manzur Elahi Director

Sd/Md. Humayun Kabir Director

Sd/Najma Dowla Director

Sd/Dr. Arif Dowla Managing Director and Director

Sd/Waliur Rahman Bhuiyan, OBE Director

Sd/Shusmita Anis Salam Director

Sd/Waliur Rahman Director

Sd/Wajed Salam Director

Sd/Sheema Abed Rahman Director and Company Secretary

DECLARATION ABOUT FILING OF PROSPECTUS WITH THE REGISTRAR OF JOINT STOCK COMPANIES AND FIRMS This Prospectus (duly signed & dated) has been filed for registration with the Registrar of Joint Stock Companies and Firms, Bangladesh, as required under Section 138 (1) of the Companies Act, 1994 on or before the date of publication of this prospectus in the newspaper.

ACI 20% Convertible Zero Coupon Bonds

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Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

DUE DILIGENCE CERTIFICATE OF MANAGER TO THE ISSUE

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

We, the under-noted Manager to the Issue to the above-mentioned forthcoming issue, state as follows: 1

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

2

On the basis of such examination and the discussion with the issuer company, its directors and officers, and other agencies, independent verification of the statements concerning objects of the Issue and the contents of the documents and other materials furnished by the issuer company.

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

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

ACI 20% Convertible Zero Coupon Bonds

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Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

DUE DILIGENCE CERTIFICATE OF THE UNDERWRITER (S)

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

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

2.

On the basis of such examination and the discussion with the issuer company, its directors and officers, and other agencies, independent verification of the statements concerning objects of the issue and the contents of the documents and other materials furnished by the issuer company.

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

Sd/Managing Director Mercantile Securities Limited

Sd/Managing Director Bangladesh Mutual Securities Limited

Sd/Managing Director Standard Bank Limited

Sd/Managing Director Bay Leasing & Investment Limited

Sd/Managing Director Trust Bank Limited

Sd/Managing Director BANCO Trans world (BD) Limited

Sd/Managing Director Union Capital Limited

Sd/Managing Director Lanka Bangla Finance Limited

ACI 20% Convertible Zero Coupon Bonds

- 18 -

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

DUE DILIGENCE CERTIFICATE OF TRUSTEE TO THE ISSUE

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

We, while agree to act as trustee to the above mentioned Issue, have examined the Information Memorandum/ draft prospectus, other documents and materials as relevant to our decision; and

2.

On the basis of such examination and the discussion with the issuer company, its directors and officers, and other agencies, independent verification of the statements concerning objects of the Issue and the contents of the documents and other materials furnished by the issuer company.

WE CONFIRM THAT: a.

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

b.

all the legal requirements connected with the said issue have been duly complied with;

c.

the disclosures made in the memorandum/draft prospectus are true, fair and adequate to enable the investors to make a well-informed decision for investment in the proposed issue; and

d.

the Securities and Exchange Commission (Public Issue) Rules, 2006 have been complied with.

For Trustee to the Issue

Sd/Managing Director Industrial & Infrastructure Development Finance Company Limited

ACI 20% Convertible Zero Coupon Bonds

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Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

RISK FACTORS AND MANAGEMENT PERCEPTIONS Investment in proposed Convertible Zero Coupon Bond carries fixed return as well as possible capital gain from conversion into shares. Share/Bond market involves risk and investors should carefully consider all the risks and uncertainties associated to the company along with the information provided in the prospectus before taking decision to invest in the Zero Coupon Bonds of Advanced Chemical Industries Limited. The following are the major risk factors considered by the management as of now to the company and its business: Interest rate risk Major source of fund for operation of the company and its subsidiaries are the banks and financial institutions which carries interest based on domestic money market. In case of any volatility in the money market the financial expenses may increase significantly which will ultimately reduce the profitability of the company. Management Perception The management is aware of the impact of high financial expenses and continuously exploring attractive and competitive sources of fund. As a part of this initiative the management approved the issue of ZCB to the public for the first time in the history of Bangladesh capital market. Project funding cost of the initiatives considered here are expected to considerably come down due to issue of zero coupon bonds. Currently discount rate of the bond is fixed and comparatively lower than the current borrowing rate. So the raising of finance through issuance of ZCB is favorable for the company under the current situation. Exchange rate risk The project may face some degree of foreign exchange rate fluctuation risk as the Company imports raw materials against payment of foreign currency. Management Perception: The risk of foreign exchange cannot be eliminated fully as we require importing raw materials. However the management is always alert in minimizing the negative impact of currency fluctuation cost by looking for new sources of raw materials or constantly negotiating with suppliers in reducing price. Moreover, the company is fully aware of the risks related to currency fluctuation and as a prudent Company it always takes steps to hedge all major currency dealings to safeguard the interest of the Company. The risk can be mitigated to some extent through exporting a portion of its production which will neutralize negative impact of currency fluctuation. Industry risk Competition may increase in the pharmaceutical sector due to entrant of new companies which may ultimately reduce the market share as well as profitability of the company. Management Perception: Bangladesh is a developing country where access to healthcare and per capita drug consumption is one of the lowest in the world. With the growth of per capita income demand of the medicines are growing fast. The company is also introducing new drugs to take advantage of the growing demand and change in disease pattern. Moreover, in addition to pharmaceutical business, ACI has other successful business interest in consumer brand and agricultural sector which will continue to generate revenue. Environmentalists are likely to create pressure on Government for banning use of chemicals for its negative effects on living beings thereby causing closure of business by the Company.

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

ACI 20% Convertible Zero Coupon Bonds

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Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Market & Technology related risk ACI’s healthcare and agro based products are based on latest technological developments and marketed for the domestic consumers. With the shrinkage of domestic demand as well as introduction of latest technology in products by its competitors, the company may witness reduction of sales as well as profitability. Management Perception Company owns modern technology with R&D infrastructure and shall be able to adapt to any new inventions with moderate investments as it has been doing in the past. Moreover the management is always updated through participation in international fair, symposium, market study etc. about its competitors, growing competition and technological developments. To retain existing market as well as to enter into new segments of the market, the management always takes necessary steps. Potential or existing Government regulations Government has given very high priority to the development of healthcare and agricultural sector and policies are favorable. Any adverse change by the Government in fiscal policies relating to ACI’s business may adversely affect Company’s profitability. Management Perception Company strictly follows all the laid down regulations for marketing its products and therefore do not foresee any problem in doing the business. Potential changes in global or national policies The Company’s product lines mainly consist of healthcare and agro based products which are primarily based on imported raw materials. International price movements affect the whole industry by and large. The plant and machinery will be imported and costs may fluctuate owing to changes of exchange rate. Management Perception Any change in the global and national policy will affect the industry as a whole. Financial and operational strength of the company reached to very high level by now and is capable to handle reasonable threats. Company has adequate system and procedures in place to take care of any such event. Non-operating history There is no history of non operation in case of ACI Limited. Operational Risk Current global recession shall have serious influence on the Bangladesh economy by way of reduction of exports and remittances from NRBs. This may reduce the demand of the consumer products of ACI drastically which will reduce sales as well as profitability of the company. Management Perception The company has already taken different steps to minimize the impact of global recession towards the profitability of the company. As the current export volume of the Company is not significant, the impact of global meltdown on ACI will be very minimum.

ACI 20% Convertible Zero Coupon Bonds

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Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Statement regarding holding of Annual General Meeting of Advanced Chemical Industries Limited (ACI) (From 1994 to 2007) Sl. No. 1 2 3 4 5 6 7 8 9 10 11 12 13 14

Accounting Year 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

AGM 22nd AGM 23RD AGM 24th AGM 25th AGM 26th AGM 27th AGM 28th AGM 29th AGM 30th AGM 31st AGM 32nd AGM 33rd AGM 34th AGM 35th AGM

Dividend Declared Bonus 1:1, Cash 35% Rights 2:5, Cash 35% Bonus 1:4, Cash 30% Bonus 1:5, Cash 30% Rights 1:1, Cash 25% Cash 30% Cash 35% Cash 37.5% Cash 37.5% Cash 40% Cash 42.5% Cash 45% Cash 60% Cash 85%

AGM held on 14-08-1995 05-09-1996 20-11-1997 23-03-1998 20-05-1999 22-06-2000 26-06-2001 27-06-2002 08-07-2003 22-06-2004 22-06-2005 22-06-2006 26-06-2007 23-06-2008

Utilization of proceeds of Advanced Chemical Industries Limited previous Right Issues The company was listed with DSE and CSE without issuing any Initial Public Offering (IPO) and has raised capital through two right issues in the following manner: Year 1995 1998

Particulars Right Issue (Tk. 10 each at a premium of Tk. 120) Right Issue(Tk. 10 each at a premium of Tk. 10)

No. of Shares

Amount (Tk.)

1,680,000

218,400,000

7,350,000

147,000,000

All the proceeds of the Right Issues were utilized by the company for its’ capacity enhancement leading to business growth which has also been reflected in the cash flow statement as a part of audit financial statements of the respective years of the company. SIZE OF ISSUE Total size of the ZCB is BDT 1,335,850,000 in face value of which BDT 801,510,000 being 60% of the total issue has already been allocated for placement, and subscription will be done along with the public subscription. The Company now offers bonds of BDT 534,340,000 (40% of the ZCBs) through Public Offering with the consent of the SEC. Particulars a. b. Total

Private Placement Public Offering

Issue Price Amount (Tk.) 600,010,386 400,006,924 1,000,017,310

Face Value Amount (Tk.) 801,510,000 534,340,000 1,335,850,000

Percentage 60% 40% 100%

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

ACI 20% Convertible Zero Coupon Bonds

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Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Investor who subscribed the amount offered through private placement are as under:

a. Institutional Investors Sl. No.

Name of the Institution

Address

1

National Credit and Commerce Bank Ltd

2

United Commercial Bank Limited

3

Bank Asia Limited

4

Delta Brac Housing Finance Corp. Ltd.

5

Mobil Jamuna Lubricants Ltd

No. of Lot Subscribed

No. of Unit Subscribed

Face Value

7/8, Motijheel C/A Dhaka-1000

20,000

100,000

100,000,000

74,860,000

59-60, Motijheel C/A Dhaka-1000

26,716

133,580

133,580,000

99,997,988

13,001

65,005

65,005,000

48,662,743

8,014

40,070

40,070,000

29,996,402

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

13,358

66,790

66,790,000

49,998,994

6

Lanka Bangla Finance Limited

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

10,000

50,000

50,000,000

37,430,000

7

BANCO Trans World (BD) Limited

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

5,770

28,850

28,850,000

21,597,110

8

Delta Life Insurance Company Limited

5,343

26,715

26,715,000

19,998,849

9

Alliance Financial Services Limited

2,672

13,360

13,360,000

10,001,296

10

Trust Bank Limited

2,671

13,355

13,355,000

9,997,553

11

Bangladesh Steel Rerolling Mills Limited

Ali Mansion 1173/1207 Sadarghat Road, Chittagong

5,343

26,715

26,715,000

19,998,849

12

Ahsania Malaysia Hajj Investment & Finance Co. Ltd

72 Dilkusha C/A Fazlur Rahman Centre Dhaka-1000

1,335

6,675

6,675,000

4,996,905

13

Square Pharmaceuticals Limited

Square Centre 48 Mohakhali Commercial Area Dhaka-1212

8,014

40,070

40,070,000

29,996,402

14

Pragati Insurance Limited

Pragati RPR Centre 20-21 Kawran Bazar Dhaka - 1215

6,679

33,395

33,395,000

24,999,497

128,916

644,580

644,580,000

482,532,588

Tea Board Building 111-113 Motijheel C/A Dhaka-1000 Landmark (9th floor) 12-14 Gulshan North C/A Gulshan 2, Dhaka-1212

Uttara Bank Bhaban 90, Motijheel C/A Dhaka-1000 Rahman Chamber ( 3rd Floor) 12-13 Motijheel C/A, Dhaka-1000 Peoples Insurance Bhaban 36 Dilkusha C/A Dhaka-1000

Sub- Total (Tk)

ACI 20% Convertible Zero Coupon Bonds

- 23 -

Issue Price

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

b. Individual Investors Sl. No.

No. of Lot Subscribed

No. of Unit Subscribed

Face Value

Issue Price

2,671

13,355

13,355,000

9,997,553

1,335

6,675

6,675,000

4,996,905

2,671

13,355

13,355,000

9,997,553

2,671

13,355

13,355,000

9,997,553

2,671

13,355

13,355,000

9,997,553

3,339

16,695

16,695,000

12,497,877

3,339

16,695

16,695,000

12,497,877

2,671

13,355

13,355,000

9,997,553

667

3,335

3,335,000

2,496,581

4,007

20,035

20,035,000

14,998,201

2,672

13,360

13,360,000

10,001,296

2,672

13,360

13,360,000

10,001,296

Sub- Total (Tk)

31,386

156,930

156,930,000

117,477,798

Grand Total

160,302

801,510

801,510,000

600,010,386

Name

1

Mr. Madhab C Das

2

Mr. Nurul Haque

3

Mr.Samson H Chowdhury

4

Mr. Anjan Chowdhury

5

Mr. Tapan Chowdhury

6

Capt. M Altafur Rahman

7

Maj M Atiqur Rahman

8

Mr. M Anis Ud Dowla

9

Mr. Margub Kabir

10

Barrister Rafiqul Huq

11

Mr. Samuel S. Chowdhury

12

Ms Ratna Patra

Address Appt # 3/C, Sufiany Plaza 10 Avoy Das Lane Tikatully, Dhaka-1203 Appt # A3, House # 2 Road 34, Gulshan Dhaka-1212 Square Centre 48 Mohakhali Commercial Area Dhaka-1212 Square Centre 48 Mohakhali Commercial Area Dhaka-1212 Square Centre 48 Mohakhali Commercial Area Dhaka-1212 Marine Surveyor & Consultant Commercial Plot # 10 Between “G” & “H” Block Port Connecting Road, Halishahar H/E, Chittagong- 4216 A2-8, Kalindi Aptts. Complex, 36, Indira Road Dhaka-1215 ACI Centre 245 Tejgaon Industrial Area, Dhaka-1208 House-2A, Apt-A4, NAM Village, Road-1, Block-I, Banani, Dhaka-1213 Huq and Company 47/1, Purana Paltan Dhaka -1000 Square Centre 48 Mohakhali Commercial Area Dhaka-1212 Square Centre 48 Mohakhali Commercial Area Dhaka-1212

Note: As per condition of the agreement, the aforesaid individual as well as institutional investors will place their fund immediate before opening of public subscription.

ACI 20% Convertible Zero Coupon Bonds

- 24 -

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

PURPOSE OF THE ISSUE As a part of ACI’s vision to look for alternative funding arrangement and be pioneer in undertaking new product in the capital market, ACI Management envisage that raising of money through Zero Coupon Bonds would be an attractive option for the company. Zero Coupon Bonds have primarily four advantages compared to other debt instruments from the perspective of both issuer and the investors: The tax free benefits to all investors except bank, insurance and financial institutions. Short to long term tenure thereby addressing the requirement of the issuer. Convertibility options into ordinary shares of the company – allowing investors to enjoy significant capital gain. Reduced financing cost for ACI- a positive impact on ACI’s future profitability Overall this bond will create a win-win situation for both ACI and its holders.

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

Anti cancer Cancer is the term we give to a large group of diseases that vary in type and location but have one thing in common: abnormal cells growing out of control. Chemotherapy is the use of anti-cancer of drugs. Anti-cancer drugs destroy cancer cells by stopping growth or multiplication at some point in their life cycles. Drugs may be administered intravenously (into a vein), orally (by mouth), by injection into a muscle, depending on the drug and the type of cancer. Reason for Anti cancer drugs The current statistics shows an increasing number of cancer patients throughout the country. The scarcity and excessive cost of anticancer and other specialized medicines are the emerging problems in treating the ailing humanities of Bangladesh. As Bangladesh is exempted from the WTO regulations until 2016, there will be an ample opportunity for our country to manufacture high-tech patented anticancer and other specialized products at competitive prices to face the post WTO challenges. Hormone & Steroid A chemical substance produced in the body that controls and regulates the activity of certain cells or organs. Many hormones and their analogues are used as medication. The most commonly prescribed hormones are estrogens and progestagens (as methods of hormonal contraception and as HRT), thyroxine (as levothyroxine, for hypothyroidism) and steroids (for autoimmune diseases and several respiratory disorders). Most hormone and steroid drugs are made from plants or are completely synthetic.

ACI 20% Convertible Zero Coupon Bonds

- 25 -

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

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

Particulars

Amino Acid

Amount in BDT Hormone & Anti - Cancer Steroid 5,000,000 5,000,000 20,000,000 25,000,000

Total

Land & Land Development Building & Civil Construction

5,000,000 10,000,000

Machinery & Equipment Installation & Erection

88,000,000 700,000

188,000,000 1,100,000

161,500,000 2,000,000

437,500,000 3,800,000

186,000 400,000 1,000,000 12,503,349 117,789,349 1,290,169 119,079,518

345,000 550,000 10,000,000 26,568,522 251,563,522 1,470,022 253,033,544

375,000 950,000 5,000,000 23,633,516 223,458,516 1,622,588 225,081,104

906,000 1,900,000 16,000,000 62,705,387 592,811,387 4,382,779 597,194,166

119,079,518

253,033,544

225,081,104

597,194,166

Office Equipment Pre-operating & start-up cost Contingencies IDCP Total Fixed Cost Net Working Capital Total Project cost Financing Plan: Bond Proceeds

ACI 20% Convertible Zero Coupon Bonds

15,000,000 55,000,000

- 26 -

Issuer Advanced Chemical Industries Limited (ACI)

ID A 1 2 B 1 2 3 4 5 C 1 2 3 D 1 2 3 4 5 6 7 8 E 1 2 3 4 5 F 1 2

Task Name

2010

2011

9 -Ju n 9 -Ju l 9 -A u g 9 -S ep 9 -O ct 9 -N o v 9 -D ec 1 0 -Ja n 1 0 -F e b 1 0 -M ar 1 0 -A p r 1 0 -M ay 1 0 -Ju n 1 0 -Ju l 1 0 -A u g 1 0 -S e p 1 0 -O ct 1 0 -N o v 1 0 -D ec 1 1 -Ja n 1 1 -F e b 1 1 -M ar 1 1 -A p r 1 1 -M ay 1 1 -Ju n 1 1 -Ju l

Implementation Schedule of Anti cancer Project 2009

Issue Manager Alliance Financial Services Limited

LAND PROCUREMENT Location Finalization Land Development LAYOUT & DESIGN 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 & validation Commercial Production 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

ACI 20% Convertible Zero Coupon Bonds

- 27 -

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Implementation Schedule of Hormone & Steroid Project

ID

Task Name

A 1 2 B 1 2 3 4 5 C 1 2 3 D 1 2 3 4 5 6 7 8 E 1 2 3 4 5 F 1 2

LAND PROCUREMENT Location Finalization Land Development LAYOUT & DESIGN 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 & validation Commercial Production 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

2010

2011

9 -Ju n 9 -J u l 9 -A u g 9 -S e p 9 -O c t 9 -N o v 9 -D e c 1 0 -J a n 1 0 -F e b 1 0 -M a r 1 0 -A p r 1 0 -M a y 1 0 -J u n 1 0 -Ju l 1 0 -A u g 1 0 -S e p 1 0 -O c t 1 0 -N o v 1 0 -D e c 1 1 -J a n 1 1 -F e b 1 1 -M a r 1 1 -A p r

2009

Page 28

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Implementation Schedule of Amino Project 1 1 -M ar

1 1 -Jan

1 0 -D ec

1 0 -O ct

1 0 -N o v

1 0 -Sep

1 0 -A u g

1 0 -Ju l

1 0 -Ju n

1 0 -M ay

1 0 -A p r

1 0 -Feb

1 0 -M ar

1 0 -Jan

9 -D ec

9 -O ct

1 1 -Feb

2011

2010 9 -N o v

9 -Sep

LAND PROCUREMENT Location Finalization Land Development LAYOUT & DESIGN 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 & validation Commercial Production 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

9 -Ju l

A 1 2 B 1 2 3 4 5 C 1 2 3 D 1 2 3 4 5 6 7 8 E 1 2 3 4 5 F 1 2

9 -A u g

Task Name

9 -Ju n

2009 ID

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

Sd/Managing Director

Sd/Chief Financial Officer

Page 29

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

DESCRIPTION OF BUSINESS Background ACI Limited was established as the subsidiary of Imperial Chemical Industries (ICI) in the then East Pakistan in 1968. After independence, the company was incorporated in Bangladesh in 1973 as ICI Bangladesh Manufacturers Limited as a Public Limited Company. In 1992, the company was divested to local management and the name of the company changed to Advanced Chemical Industries (ACI) Limited. ACI inherited the rich ICI culture of product quality, customer service and social responsibility. Initially in 1992, ACI started primarily with pharmaceutical business with a turnover of BDT 80 million only but later the new management brought about fundamental changes in the policies and in the year 2008 turnover grew to over BDT 7,365 million. The Company has diversified business interest in pharmaceuticals, agricultural including fishery & livestock and consumer brands. At present, ACI has three strategic business units along with 11 subsidiaries, 3 joint ventures and 1 associate. ACI is a fast growing conglomerate that has substantial contribution in the economy of Bangladesh. In response to growing demands of the consumers of Bangladesh, ACI has diversified its business to include wide range of products in its portfolio. ACI has started its expansion policy by exploring and strengthening the pharmaceuticals wing further so that it can continue giving unswerving service to the consumers of Bangladesh. ACI is the first company in Bangladesh to achieve ISO S001 in 1995 for quality management and also the first company to achieve ISO 14000 in 2000 for environmental management system. ACI is also the first company from Bangladesh to become the honorable member of United Nation Global Compact. It is the only Bangladeshi company which was declared as a notable COP (Communication on Progress) recognized by UNGC (United Nation Global Compact). ACI has been accepted as a founding member of community of Global Growth Companies by the World Economic Forum which is the most prestigious business networking organization in the world. Important dates and milestone dates of ACI Limited Date

Events

1968

:

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

24 January, 1973

:

Incorporation of ICI Bangladesh Manufacturers Limited

24 January, 1973

:

Commencement of Business

5 May, 1992

:

5 May, 1992

:

9 March, 1994

:

Listed with Dhaka Stock Exchange

October 22, 1995

:

Listed with Chittagong Stock Exchange

Imperial Chemical Industries Pakistan Manufactures Limited divested 70% of its shareholding to local management. The name of the company changed to Advanced Chemical Industries Limited from ICI Bangladesh Manufactures Limited.

Nature of Business ACI Limited is committed to providing customers with a broad range of quality products from its business operations. It has diversified its business in various sectors such as the health care division, consumers’ brands division, and agribusiness division. Other than its three major strategic business units, it has 11 subsidiaries, 3 joint ventures and 1 associate. Principal Products Page 30

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Pharmaceuticals ACI formulates and markets a comprehensive range of more than 400 products covering all major therapeutic areas, which come in tablet, capsule, powder, liquid, cream, ointment, gel ,ophthalmic and injection forms. ACI also markets world-renowned branded pharmaceutical products imported from world-class multinational companies like ASTRAZENECA, UK and UCB, BELGIUM. ACI is actively engaged in introducing newer molecules and Novel Drug Delivery Systems (NDDS) to meet the needs of present and future. ACI introduced the concept of quality management system by being the first company in Bangladesh to achieve ISO 9001 certification in 1995 and follows the policy of continuous improvement in all its operations. Aligned with the concept that a pharmaceutical must ensure effective management of environment, ACI complies with standard environment management policy, thus adorned with EMS 14001 in 2000. ACI maintains a congenial and supportive relationship with the healthcare community of Bangladesh, with the belief that business excellence can only be achieved through pursuit of quality by understanding, accepting, meeting and exceeding customer expectations. The management of ACI, a competent team of professionals, thus operates with a progressive attitude to provide effective solutions to satisfy the customers’ needs, through its products and services of uncompromising quality. Consumer Brands This business segment has three major categories of product range- home care, air care and hygiene care. Products under home care category include ACI Aerosol, ACI Mosquito Coil. ACI Aerosol is market leader in the mosquito repellent category having market share of 85%. ACI Coils enjoys very predominant position and striving to become absolute leader in the market place. ACI has also very attractive product range in this Air Care category with Angelic Fresh Air Freshener. This is the first ever locally manufactured Air Freshener of this country whose fragrances has been applauded by the users and has become market leader in two years time. ACI has another very strong range of products in its Hygiene Product category. Savlon Liquid Antiseptic is the highest selling antiseptics in the country. It has more than 75% market share of its category. Products like Savlon Antiseptic cream, Savlon Family Protection Soap and Savlon Femme Sanitary Napkin, Vanish Toilet Cleaner are also under this category. ACI Consumer brands also deals with products of internationally acclaimed company like Colgate Palmolive and Nivea. Recently ACI Electronics a sub unit of ACI Consumer Brands has launched Panasonic Audio visual items in the country. Agribusiness ACI Agribusiness is the largest integrator in agricultural sector of Bangladesh. ACI Agribusiness deals with livestock and fisheries, crop protections, seeds, fertilizer and agri-machineries. Under Agribusiness, the following business units are currently operating: Crop Care & Public Health Crop care & Public health is dealing with all type of crop protection items. It is providing a complete range of cost effective products which can provide appropriate solutions for the farmers through insecticides, herbicides, and fungicides. This business has been transferred to ACI Formulations Limited form 1st January of this year. ACI Formulation Limited has been listed to Dhaka Stock Exchange and Chittagong Stock Exchange recently. Seeds Seeds division is dealing with hybrid rice, vegetable and maize seeds. It has partnership with renowned HYV seed companies of the world. ACI started the seed business in 2006. It has its own research and development stations in Rural Development Academy, Bogra, Bangabandhu Sheikh Mujibur Rahman Agricultural University (BSMRAU), Gazipur and Bangladesh Agricultural University, Mymensingh. Cropex CROPEX is dealing with commodity buying, storing, preserving and selling. ACI Cropex is a remarkable addition to the agricultural advancement in the country. The project assists the farmers in various ways - exchanging their crops at the time of their necessity, providing them with technological assistance and advisory services and so on. Page 31

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Animal Health This division is dealing with high quality nutritional, veterinary, poultry medicine and vaccines including proposal for pisiculture, cattle rearing and cattle fattening. Integrated fisheries and livestock project will be implemented soon. Fertilizer This unit is dealing mainly with micro continent and foliar fertilizer with a focus in basic fertilizer. It launched micronutrient fertilizers like Zinc Sulphate, Magnesium Sulphate, Ammonium Sulphate, Boron, Sulphur 90% and Sulphate of Potash. They are being imported from China, U.S.A, Canada, Taiwan, Argentina, and Turkey etc. ACI Agribusiness strives for providing “one stop solution” to farmers by providing all sorts of activities regarding agriculture. ACI Agribusiness is having a strong partnership with national and international R&D companies, Universities, and research institutions. “Partnership with the farmer” is the main theme of ACI Agribusiness International alliances ACI represents Colgate Palmolive Company as exclusive marketing partner and distributor for the territory of Bangladesh. Colgate is the world wide leader of the oral care products category. ACI was appointed as sole distributor and marketing partner of Beiersdorf AG, Germany; the manufacturer of Nivea brand products. ACI represent Godrej Consumer Products Limited. ACI consumer Brand is also selling low calorie sweetener products of Merisant for weight conscious customers and also for them who want to avoid direct sugar. In additions to these, ACI represents significant number of world’s reputed companies in Pharma and Agriculture sectors.

Page 32

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited History of 17 years

Year

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

Paid up Sales Capital M Tk. M Tk.

21 21 42 59 74 88 162 162 162 162 162 162 162 162 162 162 162

308 366 438 561 605 797 969 1,199 1,411 1,637 2,053 2,240 2,558 3,089 3,516 4,917 7,365

- Sales** 22% - PBT* 45% - PAT* 42% - Dividend** 16% * Simple average

PBT

PAT

Shares

M Tk. M Tk. Number

19 35 49 46 13 40 68 75 95 137 164 93 141 169 233 314 404

8 17 31 38 12 33 53 58 64 92 109 85 90 112 154 211 296

2 2 4 6 7 9 16 16 16 16 16 16 16 16 16 16 16

EPS

DPS

Employees

Taka

Taka

Number

3.9 8.05 7.29 6.48 1.66 3.73 3.26 3.6 3.97 5.67 6.75 5.28 5.57 6.94 9.51 13.05 18.31

1 2 3.5 3.5 3 3 2.5 3 3.5 3.75 3.75 4 4.25 4.5 6 8.5 12

312 391 562 746 756 869 1,047 1,161 1,157 1,284 1,662 1,883 1,931 2,000 2,476 3,050 3,339

Div. Sales PBT PAT Dividend Dividend Employee payout rate growth growth growth growth growth ratio

19% 20% 28% 8% 32% 22% 24% 18% 16% 25% 9% 14% 21% 14% 40% 50%

85% 41% -6% -71% 196% 72% 10% 27% 44% 20% -43% 51% 20% 38% 35% 29%

106% 81% 24% -68% 169% 60% 11% 10% 43% 19% -22% 5% 25% 37% 37% 40%

100% 75% 0% -14% 0% -17% 20% 17% 7% 0% 7% 6% 6% 33% 42% 41%

10% 20% 35% 35% 30% 30% 25% 30% 35% 38% 38% 40% 43% 45% 60% 85% 120%

0.26 0.25 0.48 0.54 1.8 0.81 0.77 0.83 0.88 0.66 0.56 0.76 0.76 0.65 0.63 0.65 0.66

25% 44% 33% 1% 15% 20% 11% 0% 11% 29% 13% 3% 4% 24% 23% 9%

Over the 16 years This statement is prepared based on regular profit. Capital gain from share sale is Over the 16 years ignored in both 2007 and 2008 which were Tk. 97 M and Tk. 780M respectively. Over the 16 years Over the 16 years ** CAGR (Cumulative Average Growth Rate)

Page 33

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Market for the ACI products Pharmaceutical Industry The growth potential of pharmaceutical industry is enormous. As urban population is increasing and people are getting educated, they are now more concerned about healthcare. Therefore, the demands of medical products are rising. Our country’s unhygienic conditions and poor health conditions provide vast scope for the pharmaceutical firms to grow with introduction of new products and increasing the market coverage. Before independence, the pharmaceutical market was largely dominated by multinational companies and the local companies were involved in manufacturing and marketing of very few ranges of products. However, the change in policies and promotion of favorable government initiative has enabled the local companies to be independent and be competitive in the local market. Following the Drug (Control) Ordinance of 1982, some of the local pharmaceutical companies improved range and quality of their products considerably. Currently, the national companies account for more than 65% of the pharmaceutical business in the country. The Bangladesh Pharmaceuticals & Healthcare Report Q3/08 calculated that the country's pharmaceutical market had a valuation of US$700mn in 2007 and that a compound annual growth rate (CAGR) of 18.79% through to 2012 can be expected. This rapid market expansion is primarily due to greater uptake of medicine throughout this densely populated country, but also through appreciation of the taka against the US dollar, population growth and increased government healthcare expenditure, among other factors. Almost all types of possible dosage forms including tablets, capsules, oral and external liquids (solutions, suspensions, emulsions), ointments, creams, injections (small volume ampoules/dry fill vials/suspensions and large volume IV fluids), and aerosol inhalers are now produced in the country. A good number of pharmaceutical companies export their products in the international markets. The annual per capita drug consumption in our country is one of the lowest in the world. However, the industry has been a key contributor to our economy since independence. With the development of healthcare infrastructure and increase of health awareness and the purchasing capacity of people, this industry is expected to grow at a much higher rate in future. High expected growth is likely to encourage the pharmaceutical companies to introduce newer drugs and newer research products, while at the same time maintaining a healthy competitiveness in respect of the most essential drugs. Consumer Product Industry The consumer products industry is comprised of a variety of products, such as toiletries and cosmetics, ready-made edible products, consumer durables, consumer electronics, and other household items. The demand for consumer products in Bangladesh is mounting as the average standard of living is taking an upward turn. People now demand products that had minimal demand in the past such as household cleaning item, pre-packed food products, cosmetics and toiletries etc. This change in demand has encouraged the local firms to become specialized in producing toiletries, readymade food items and other consumer brands. Bangladesh’s export potential is also growing fast. Along with the traditional products, which make the main export basket, non-traditional items are being added to it. The country is now exporting many food items such as spices, frozen vegetables and other snack items. Bangladesh is a tropical country infested with mosquitoes, flies, and other germ carrying insects and bacteria which are hazardous to health. The demand for healthy living has stimulated the production of insect and germ killers such as mosquito coils, aerosols, antiseptic solutions etc. Bangladesh is one of the most densely populated countries in the world. Over 80% of the country's population lives in rural areas, but recent trends show that more and more people are migrating to urban areas; as a result the demands for nontraditional food items and other household products are increasing as purchasing power of the people are augmenting. Hence the demand for consumer products will be strengthening further in the future and leaves a lucrative scope for the local industries to fill the gap between demand and supply.

Page 34

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Agri-business Industry Bangladesh is primarily an agrarian economy. Agriculture is the single largest producing sector of economy since it comprises about 30% of the country’s GDP and employing around 60% of the labor force. The performance of this sector has an impact on major macroeconomic objectives like employment generation, poverty alleviation, human resources development and food security. Hence utmost priority should be given to its proper development of this sector so that our nation can achieve total self sufficiency in agricultural production. As our country is prone to natural calamities, measures should be taken so that progress of this sector is not halted. In addition to government support, the local firms must develop modern agricultural equipment, effective fertilizers distribution; pesticides and other crop protective items at low cost so that it is accessible to the poor farmers. Currently major emphasis is given on increasing production of major crops like rice to make the country self sufficient in producing staple food. There are renewal interests in growing other crops like wheat, maize etc. To help the farmer community government had recently come up with idea of giving subsidy to the farmer in fertilizer. We feel that this sector has tremendous prosperity to grow further by providing all kinds of support to farmer through supplying high yield variety seeds, fertilizer and agricultural equipment including tractors, power tiller and harvesters and crop care products. Availability of all these facilities and products will enable farmer to increase their production yield thereby making them economically solvent as well as helping the country to save foreign currency spent on importing food grains. Relative contribution to revenue As per audited accounts for the year ended 31.12.2008, relative position to total revenue of the products are as follows:

Sl. No. 01. 02. 03. 04. 05. 06. 07.

Name of the Products Pharmaceuticals Consumer Brands Crop Care & Public health Animal Health Fertilizer Seeds Cropex Total

Revenue Taka (million) 2451 1817 1406 433 580 346 332

Value contribution (%) 33.28 24.67 19.10 5.87 7.88 4.70 4.50 100.0

Page 35

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Associates, Subsidiary/ Related Holding Company SI No.

Company name

Relationship

Core business area

1

ACI Formulations Limited

Subsidiary

Manufacturing & marketing of number agrochemical and consumer products

2

Apex Leather Crafts Limited

Subsidiary

Letting out property to ACI Ltd.

3

ACI Salt Limited

Subsidiary

4

ACI Pure Flour Limited

Subsidiary

5

ACI Foods Limited

Subsidiary

6

Premiaflex Plastics Limited

Subsidiary

7

Creative Communications Limited

Subsidiary

8

ACI Motors Limited

Subsidiary

9

ACI Logistics Limited ACI Godrej Agrovet Private Limited Tetley ACI (Bangladesh) Limited

Subsidiary Joint Venture

12

Asian Consumer Care (Pvt) Limited

Joint Venture

13

Stochastic Logic Limited

Manufacturing & marketing of edible packed Salt Processing ,Packing and Marketing of wheat flour Products Manufacturing & Marketing different types of spices and other food products Manufacturing & Marketing of Plastic Products, flexible printing and other ancillary business associated with plastic and flexible printing. Managing Media solutions and similar services for different clients including television commercials and other advertisement and promotion related activities Business of buying, selling, Importing, and assembling of vehicles of both agricultural and nonagricultural use including supplying spare part and providing service facilities for vehicles Operating retail chain stores across the country. Manufacturing and marketing of quality Poultry, Aqua, Cattle Feed and Day Old Chicks Processor, blender and marketer of tea products. Manufacturing and marketing of coconut oil, hair oil shampoo and other products under the brand name “Dabur” Providing high level IT solution to both local and foreign customers.

10 11

Joint Venture

Associates

of

Distribution of Products & Services While ACI brand names distinguish its products from those of its competitors, ACI distribution makes its products available to consumers. Distribution department of ACI is probably the only distribution in Bangladesh which deals with wide range of products of six different strategic business units- Pharmaceuticals, Consumer Brands, Crop Care, Animal Health, Fertilizer & seeds through strategically locate depots in nineteen different locations across the country. These depots are highly streamlined, computerized and automated. ACI distribution is the most widely distributed network in the country. Competitive Conditions in the Business ACI’s mission is to enrich the quality of people through responsible application of knowledge, skills and technology. It is committed to the pursuit of excellence through world-class products, innovative processes and empowered employees, to provide the highest level of satisfaction to its customers. It has been successful in accomplishing a strong market position in most of its product categories by catering to the needs of the customers. ACI has been competing in the market with the industry giants and even with world renowned multinationals, and yet has been thriving strongly in the market.

Page 36

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

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

Company

Share (%) 20.06

Incepta Pharmaceuticals Limited

7.53

Beximco Pharmaceuticals Limited

7.09

The Acme Laboratories Limited

5.25

Eskayef Pharmaceuticals Limited

4.64

ACI Limited

4.52

Opsonin Chemical Industries Limited

4.30

Renata Limited

4.22

Aristopharma Limited

4.18

Drug International Limited Source: IMS fourth quarter, 2008

3.39

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

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

Mosquito Coil

Liquid Antiseptic Antiseptic Cream

ACI Aerosol Reckitt-Benkeizer Square Toiletries ACI Mosquito Coil Reckitt-Benkeizer Globe Bangladesh Ltd Maladesh International Ltd Savlon Liquid Antiseptic (ACI Limited) Reckitt-Benkeizer Savlon Antiseptic Cream (ACI Limited) Millat Chemicals Ltd

Market Share (%) 84.29 7.83 6.40 28.99 54.63 5.97 4.15 78.95 12.10 72.40 3.40

Source: A C Neilsen

Page 37

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

The main competitors of ACI Agribusiness and their relative market share for the year 2008 are as follows: Major Competitors Animal Health ACI Limited Renata ACME Novartis SK+F Square Others Fertilizer ACI Limited Padma Agrochemical Limited Global agrovet Limited Syngenta Bangladesh Limted Alpha Agro chemical Limited Others Seeds: Supreme Seed company Brac Seed Lal Teer Seed ACI Limited A. R Mallik Seed Aftab Seed Others CROPEX Chowdhury Enterprise M.S. Trading Madina enterprise Trade excel Agro ACI Limited Others Source: In house Source

Market Share (%) 8.33% 10.83% 8.83% 6.66% 5.33% 4.66% 55.3% 19.60% 8.00% 6.00% 6.20% 5.60% 54.60% 13.00% 6.00% 9.00% 6.00% 5.00% 2.00% 59.00% 20.00% 10.00% 10.00% 5.00% 5.00% 50.00%

Page 38

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Sources and availability of raw materials and the names of the principal suppliers Division-wise major sources of raw material suppliers are summarized below: Pharmaceuticals & Consumer Brands SL No

Name of Principle Suppliers

Address

2

Zhejiang Jingxin Pharmaceutical Import & Export Co. China. R.T. Vanderbilt Company Inc

3

Divis Pharmaceuticals Pvt. Ltd.

No. 800 Dadado East Road, Chenggguan,Xionchang Country, Zhejiang, China. 30 Winfield Street Norwalk, CT 06855 USA Divi Towers, 7-1-77/E/1/303 Dharam Karan Road, Ammerpet, Hyederabad- 500016, India

4

Univer Exports Univer Ltd.

International House Zenith Paycocke Road Basildon Essex SS14 3DW, United Kingdom

Synperonic PE/F87

5

Nectar Life Sciences Ltd.

110, Industrial Area, Phase-1, Chandigarh-160 002 India

Cefixime Trihydrate

6

Kopran Ltd.

7

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

8

Aarti Drugs Ltd.

1

9 10 11

QILU Antibiotics Pharmaceutical Co. Ltd. Orchid Chemical & Pharmaceuticals Ltd. P.I Drugs & Pharmaceuticals Ltd.

Parijat Housee, 1076, Dr.e.Moses Road, Worli, Mumbai-400 018, India Room-523, Youzu Alliance Building no. 88, ReminZhonglu,Wuxi Jiangsu,China Mahendra Industrial Estate, Ground Floor, Plot no 109-D, Road No- 29, SION (E), Bombay-400 022, India 849 Dongjia Town, Licheng District, Jinan City 250105, China. Orchid Tower,313, VALUVAR Kottam High Road, Nungambakkam, Chennai-600034, India 116, Vardhaman Ind. Complex, L.B.S. marg, Thane(West) 400601, India International house, 48 Kandivli Industrial Estate, Kandivli (W) Mumbai 400 067, India

Raw Materials Levofloxacin Hemihydrate Veegum- K Keterolac Tromethamine

Atenonol Tenoxicam Ciprofloxacin HCL Ceftriaxone Sodium Sterile Cephradine compacted Albenadazole

12

IPCA Laboratories Ltd.

13

Anuh Pharma Ltd.

A-3 Shivsagar Estate, North Wing. Dr, Annie Besant road worli, Mumbai - 400 018. India

Erythromycin

14

United Pharma Industries Ltd.

8F22 Buynow Technology Mansion. #23, Jiaogong Road. Hangzhou, Zhejiang, China 310013

Flunarizine HCL

15

Colorcon

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

HPMC

16

TAT Petrolium Pte Ltd.

9, Jahan Pesawat , Singapore

Isopropyl Alcohol

17

Amoli Organics Pve. Lrd.

Metronidazole Benzoate

18

Camlin Fine Chemicals Limited

407, Dalamal House, Jamalpur Bajaj road, Nariman Point, Mumbai -400 021 India ICC Chambers, 3rd floor, Opp, Santogen silk mills. Saki Vihar Road, Powal, Mumbai - 400 072, India

Trimethoprim

Miconazole Nitrate

Page 39

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

19

Zhejiang Hisun Pharmaceutical co. Ltd.

20

Divi's Laboratories Limited

21

Nosch Labs Private Limited

22

M/S. Metrochem API Private Ltd.

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

Rabeprazole Sodium

23

BASF

7 Temasek Boulevard. # 35-01, Suntec Tower One. Singapore

PEG 400

24

Vipor Chemical India

78, Paragnagar, Hydrabad-500016, India

Strong Cetrimide Solution (CB)

Animal Health SL NO NAME OF SUPPLIER

46. Waisha road, jiaojiang district, Taizhou city, zhejiang provice, China - 318000 Divi tower, 7-1-77/E/1/303, Dharam Karan Road, Ameerpet, Hyderabad - 500 016, India Flat No. 404 to 406, Vijay sai towers, Opp. BJP Office,Kukatpally, Hyderabad - 500 072 India.

ADDRESS

Meropenem Naproxen BP Olanzapine

RAW MATERIALS

1

United Pharma and Chemical Co.Limited

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

Doxyciline HCL

2

United Pharma and Chemical Co. Limited

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

Mannitol

3

AARTI Drugs Ltd.

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

Nicotinamide BP

4

Mingtai Chemical Co. Ltd.

1142, Shin Hsing Rd, Bah-Der City, Taoyung Hsien, Taiwan

Microcrystalline

5

Hebei Shengxue Pharmaceutical Co. Ltd.

Shengxue Road, Luancheng, Shijiaszhuagn 051430,China

Oxytetracycline HCl

6

Evervictory Pharma Co. Ltd.

Unit D 11/F Seabrigt Plaza, 9 - 23 Shell ST. North Poine,China

Tylosin

7

BASF

7, Temasek Boulevard 35 01 Sun, 35 01 Suntec Tower one, Singapore

Vitamin E Oily

Page 40

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Fertilizer & Seeds SL No

Name of Principle Suppliers

Address

Raw Materials

1

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

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

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

2

Mudanjiang Fengda Chemicals Import & Export Corporation.

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

Ammonium Sulphate

3

MTC Foreign Trade

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

Disodium Octoborate Tetrahydrate

4

Winal Hitech Seed Co Ltd.

222 Tian Zhi Road, Hi- Tech Development Zone, Heifei, China

Magnesium Sulphate

5

Chain Yin Trade Co. Intl

8t-5 No, 349 Chung-hua 4th Road, Chien Chin district, kaohsiung Taiwan R.O.C

Sulphate of Potash

6

keg River Chemical Corp

10350 ZI Street, Edmonton, Albarta Canada.

Sulphur 90%

Winal Hitech Seed Co Ltd.

222,Tian Zhi Road,Hi-Tech Development Zone, Hefei,China

Hybrid Rice Seed ACI 1& ACI2China(finished goods)

7

Page 41

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Sources of, requirement for power gas and water Pharmaceutical factory at Narayangonj POWER Sl No 1 2 3 4 5

Type of Source / Supplier

Capacity

Utilization

DESA Own Generation through Gas Generator Own Generation through Gas Generator Own Generation through Gas Generator

500 KVA 1600 KW 1145 KW 380 KW

2,75,636 Kwh

Own Generation through Diesel Generator

55 KW

GAS Sl No

Type of Source / Supplier

Capacity

1

Titas Gas Transmission & Distribution Co Ltd

20 PSI

2

Titas Gas Transmission & Distribution Co Ltd

8 PSI

3

Titas Gas Transmission & Distribution Co Ltd

2 PSI

Utilization 2,285,783 m3 803,665 m3 35,473 m3

WATER Capacity

Type of Source 1)

Deep Tube well

Not Measured

Utilization 179,778,198 Ltr

Tetley Tea & Freedom Sanitary Napkin factory at Konabari , Gazipur POWER

1)

Type of Source Generator

Capacity 415 KVA

Utilization 19,476 Kwh

Capacity

Utilization 15,000 Ltr

WATER

1)

Type of Source Deep Tube well

-

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

Page 42

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Contract with principal suppliers or customers

Parties to the agreement

ACI Limited and ACI Formulations Limited

ACI Limited and Silver Soap Limited

Type of agreement

Marketing & Distribution

Manufacturing

Initiating date

Termination

January 1, 2005

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

June 1, 1998

Valid until terminated by either party giving a written notice of not less than eight (8) months of time Valid until terminated by either party giving a written notice of 6 months

ACI Limited and Transcom Distribution Company Limited (TDCL).

Sale & Purchase

January 1, 2006

ACI Limited and RCI Limited

Manufacturing

July 1,2008

Valid for minimum 5 years

Description

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

Silver Soap limited will manufacture the products (Liquid soaps and liquid cleaning products) in its factory on behalf of ACI Limited as per recipe supplied by ACI and transfer them back to ACI Limited. TDCL will purchase the products exclusively from ACI limited at a cost approved by SERVIER and sell those products at a price approved by SERVIER from time to time. RCI limited will manufacture the products (Liquid soaps and liquid cleaning products) in its factory on behalf of ACI Limited as per recipe supplied by ACI and transfer them back to ACI Limited.

Material patents, trademarks, license or royalty agreement As per requirement of relevant authorities of Bangladesh, the company has obtained registration for its entire healthcare, animal health, seeds & fertilizer products. The company owns a number of trademarks and Patent Rights for Consumer Brands, Animal Health and other business for marketing those products in the Bangladesh Market. Copy right registrations taken by the Company .are summarized as under:

Page 43

Issuer Advanced Chemical Industries Limited (ACI)

Sl.

Product

Issue Manager Alliance Financial Services Limited

License No.

Copyright Registration no./ Application No. 8147-COPR

Standard No.

1

ACI AEROSOL

2

ACI HI POWER MOSQUITO COIL

4614/G-8/2008

BDS-1089/2001

3

ACI SUPER MOSQUITO COIL

4614/G-8/2008

BDS-1089/2001

4

ACI HI BOOSTER MOSQUITO COIL

4614/G-8/2008

BDS-1089/2001

5

4614/G-8/2008

BDS-1089/2001

11

ACI BLACK FIGHTER MOSQUITO COIL ANGELIC AIR FRESHENER CITRUS BURST ANGELIC AIR FRESHENER ORCHID BREEZE SAVLON CREAM SAVLON FAMILY PROTECTION SOAP ACTIVE SAVLON FAMILY PROTECTION SOAP MILD SAVLON Hospital Concentrate

12

SAVLON LIQUID SOAP

13

SAVLON LIQUID ANTICEPTIC 1000ml

04175

14

SAVLON LIQUID ANTICEPTIC 500 ml

9453-COPR

15

SAVLON LIQUID ANTICEPTIC 112ml

04195

16

SAVLON LIQUID ANTICEPTIC 56ml

04206

6 7 8 9 10

10104-COPR 88277 88278 9455-COPR

2859/G-12/2008

BDS-13/1994

2859/G-12/2008

BDS-13/1994 04174 04199

Joint venture The Company has entered into three Joint venture agreements; features of these agreements are as follows: Company name ACI & Godrej Agrovet Limited have agreed and form a new company ACI GODREJ AGROVET PRIVATE LIMITED ACI & THE TETELEY GROUP LIMITED, U.K. have agreed and form a new company Tetley ACI (BD.) Ltd. ACI & REDROCK LIMITED have agreed and form a new company Asian Consumer Care Pvt. Ltd.

Object To raise and market chicken and to produce, market and distribute poultry products, eggs, day old chicks, dressed and live chicken, animal feed or any other related products. To manufacture and market loose tea, packet tea, tea bags, roast and ground coffee, instant coffee and spices or any other related products To manufacture and marketing hair oils, shampoos and other products under the trademark “ Dabur’ or other trademarks sub-licensed to it by Redrock in relation to the products.

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

Term Continue in full force and effect until termination.

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

Continue in full force and effect until termination.

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

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

Page 44

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Employees’ position as on 31 December 2008 Particulars

Number

Full time employees

2,214

Contractual employees

1,125

Total number of employees

3,339

Capacity and current utilization of the production facility The Company has currently four production units, the capacity and related utilization thereof is detailed below: (As on 31 December 2008) Unit

Rated Capacity (Pack per month)

Production (Pack per month)

Utilization (%)

Pharmaceutical

1

2,200,000

2,547,580

116

Pharmaceutical

2

430,000

509,203

118

Consumer products Animal health products

3

600,000

660,080

110

4

140,000

158,651

113

Product Category

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

DESCRIPTION OF PROPERTY Plants and Property A) ACI owns different categories of fixed assets the list of which is detailed below along with written down value: (Amount in Taka) Sl. No.

Name of the Assets

1. 2.

Land Building

3.

Plant & Machinery

4. 5. 6. 7.

Furniture and Fixture Electrical and other office appliances Office machinery Vehicles (including leased Vehicle) Total

Written down Value as on 31 December 2008 330,366,144 160,569,027 506,894,119 28,523,664 23,266,871 20,678,464 52,554,938 1,122,853,227

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

Page 45

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

C) All the assets of the Company are in its own name except the leased assets. The status of these assets is as follows: Name of Lessee

Assets

Starting Month

Lease Amount

Period (Yrs)

Monthly rental

Date of Expiry

1

IDLC Finance Limited

Vehicle

February-05

1,437,000

4

37,420

January-09

2

IDLC Finance Limited

Vehicle

April-05

1,250,000

4

32,560

March-09

3

IDLC Finance Limited

Vehicle

April-05

2,600,000

4

67,730

March-09

4

GSP Finance Company (BD) Ltd

Vehicle

May-05

1,158,500

4

30,747

April-09

5

GSP Finance Company (BD) Ltd

Vehicle

May-05

6,864,750

4

180,899

April-09

6

GSP Finance Company (BD) Ltd

Vehicle

July-05

1,445,000

4

38,078

June-09

7

GSP Finance Company (BD) Ltd

Vehicle

August-05

1,426,000

4

37,578

July-09

8

GSP Finance Company (BD) Ltd

Vehicle

October-05

2,701,000

4

71,176

September-09

9

GSP Finance Company (BD) Ltd

Vehicle

December-05

4,754,000

4

125,277

November-09

10

GSP Finance Company (BD) Ltd

Vehicle

March-06

1,556,000

4

41,296

February-10

11

United Leasing Company Ltd

Vehicle

March-06

2,875,000

4

41,296

February-10

12

United Leasing Company Ltd

Vehicle

July-06

3,278,000

4

91,186

June-11

Sl No.

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

Commercial Bank of Ceylon Ltd. Citibank, N.A Mercantile Bank Limited

HSBC BRAC Bank Ltd.

The City Bank Ltd. Eastern Bank Ltd.

E) No reconditioned or second-hand plant & machinery are being used by the company. PLAN OF OPERATION AND DISCUSSION OF FINANCIAL CONDITION Internal & External Sources of Cash

Paid-up Capital Share Premium Capital Reserve Revaluation Surplus Retained Earnings Sub Total:

31-12-2008 Taka 161,700,000 250,022,474 1,671,386 303,147,632 1,488,114,482 2,204,655,974

31-12-2007 Taka 161,700,000 250,022,474 1,671,386 294,901,646 546,739,197 1,255,034,703

31-12-2006 Taka 161,700,000 250,022,474 1,671,386 229,214,979 344,542,827 987,151,666

External Sources of Cash Bank overdraft Short term Bank Loan Long term Bank Loan –Current portion Trade Creditors Other Creditors Inter-Company liabilities

732,188,602 1,816,568,620 104,776,269 325,560,055 469,811,403 709,609,851

271,195,982 1,142,396,717 62,504,602 132,277,207 478,332,706 758,658,669

126,757,321 698,498,975 0 79,630,620 306,087,482 362,544,680

5,718,892 236,550,474 309,663,981

10,220,408 277,961,183 342,231,018

14,076,453 153,442,970 186,998,651

Internal Sources of Cash

Obligation under Finance Lease Provision for taxation Long term Liabilities

Page 46

Issuer Advanced Chemical Industries Limited (ACI) Sub Total: Grand Total:

4,710,448,147

Issue Manager Alliance Financial Services Limited 3,475,778,492 1,928,037,152

6,915,104,121

4,730,813,195

2,915,188,818

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

Causes for any Material Change from Period to Period Particulars Sales Less: Cost of sales Gross profit Less: Administrative, selling and distribution Expense Operating Profit Other income Profit from sale of shares Less: Financial cost Less: Provision for contribution to WPPF Profit/(Loss) before Taxes Less: Income tax expenses Profit/(Loss) After Tax

2008 Taka 7,365,103,541 5,087,311,724 2,277,791,817 1,629,967,083

2007 Taka 4,917,304,331 3,250,711,677 1,666,592,654 1,240,364,781

2006 Taka 3,515,862,372 2,339,975,616 1,175,886.756 884,474,379

647,824,734 58,209,036 779,634,140

426,227,873 23,346,716 118,818,000

291,412,377 35,345,860 -

1,485,667,910

568,392,589

326,758,237

280,811,155 21,261,132 1,183,595,623 107,928,740 1,075,666,883

119,087,159 22,728,564 426,576,866 118,807,480 307,769,386

81,555,964 12,260,114 232,942,159 79,116,544 153,825,615

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

Page 47

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Graphical Presentation of ACI’s Performance from 2004 to 2008

Annual Tur nover ( in Million t aka)

Pr of it af t er Tax ( in Million t aka)

8000

7365

1200 1075.67

7000 1000

6000 4917

800

5000 4000

3516

600

3089 3000

2558 400

307.77

2000 200

1000 0

89.52

112.27

2004

2005

153.82

0

2004

2005

2006

2007

2008

Ret ur n on Equit y ( %)

2006

2007

2008

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

60.00%

160

136.34

48.80%

50.00%

140 120

40.00%

100

78.7

80

30.00% 24.60%

20.00%

60

53.3

56

40

15.80%

20

12.40% 10.40%

5.54

6.94

66.52

60.2

9.51

19.03

0

10.00%

2004

2005

2006

2007

2008

0.00% 2004

2005

2006

2007

2008

Earning per Share

Net Asset Value

Page 48

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

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




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

Known Trends, Events or Uncertainties There are no known trends, events or uncertainties except economic meltdown due to world recession with limited impact, political unrest and natural disaster which may impact on the demand of the products. Changes in the Assets of the Company used to pay off any Liabilities None of the operating assets of the company has been disposed off to pay the liabilities. Loan taken from holding/parent company or subsidiary company There is no loan taken from holding/parent company or subsidiary company. Loan given to holding/parent company or subsidiary company The company has given temporary loan to its few subsidiaries which are as follows:

2,039,016,708

Outstanding balance 31.12.2008 (698,672,186)

773,379,596

161,993,597

Debtors

9,416,400

52,119,777

Debtors

5,000

976,125

Debtors

984,104,646

53,175,971

Debtors

487,817,693

300,914,860

Debtors

27,340

54,638

Debtors

47,582,792

(10,937,665)

Creditors

677,730,831

175,217,496

Debtors

229,614,527

77,866,482

Debtors

205,230,678

26,780,697

Debtors

Purchase of products

2,222,544

437,294

Debtors

2003

Promotional expenses

4,244,254

7,555,218

Debtors

Joint Venture

2004

Working capital finance

448,418

869,726

Debtors

Associates

2007

Management service and working capital finance

220,000

2,932,141

Debtors

ACI Formulations Ltd.

Subsidiary

Transaction started from 1996

ACI Salt Limited

Subsidiary

2004

Apex Leather Craft Limited

Subsidiary

2001

Flyban Insecticides Ltd.

Subsidiary

1994

ACI Pure Flour Ltd.

Subsidiary

2007

ACI Foods Ltd.

Subsidiary

2006

ACI Agrochemicals Ltd.

Subsidiary

2006

Creative Communications Ltd.

Subsidiary

2007

ACI Motors Limited

Subsidiary

2007

Premiaflex Plastics Limited

Subsidiary

2007

ACI Logistics Limited

Subsidiary

2008

Joint Venture

2002

Joint Venture

Name of related Company

Tetley ACI Bangladesh Limited Asian Consumer Care (Pvt.) Limited ACI Godrej Agrovet Bangladesh (Pvt.) Ltd. Stochastic Logic Limited

Relationship

Nature of transactions Purchase of products Management service and working capital finance Lease of corporate Office Management service and working capital finance Management service and working capital finance Management service and working capital finance Management service and working capital finance Management service and working capital finance Management service and working capital finance Management service and working capital finance Management service and working capital finance

Transaction value-2008

Nature of balance Creditors

Page 49

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Future Contractual Liabilities There is no contractual liability of the company except day to day operational liabilities including bank loans. Future Capital Expenditure The company does not have any capital expenditure plan during financial year 2009 except the details of utilization plan given under the “Use of Proceeds” VAT, Income Tax, Customs Duty or other Tax Liability a) VAT The company has no pending current liability for VAT. VAT current account showed positive balance (advance payment) as of 31 December 2008. However, we have two writ petitions awaiting settlement at the High Court Division of the Honorable Supreme Court. b) Income tax The income tax assessment for the accounting year 2006 corresponding to assessment year -2007-08 is completed and there is no pending liability against that year. The assessment for the accounting year 2007 corresponding to income year 2008-09 is under process. c)

Customs duty or other tax liability

There is no information of any outstanding current liabilities on customs duty or other tax liabilities. Operating Lease agreement The Company has not entered into any operating lease agreement with others. Financial Lease and other financial commitment The company has entered into lease agreements during the past five (5) years with different NBFIs, which are described as follows:

Name of Lessee

Assets

Starting Month

Lease Amount

Period (Yrs)

Monthly rental

Date of Expiry

1

IDLC Finance Limited

Vehicle

May-04

4,753,200

4

128,820

April-08

2

IDLC Finance Limited

Vehicle

May-04

903,000

4

24,480

April-08

3

GSP Finance Company (BD) Ltd

Vehicle

May-04

8,908,086

4

232,502

April-08

4

GSP Finance Company (BD) Ltd

Vehicle

August-04

839,000

4

21,898

July-08

5

IDLC Finance Limited

Vehicle

February-05

1,437,000

4

37,420

January-09

6

IDLC Finance Limited

Vehicle

April-05

1,250,000

4

32,560

March-09

7

IDLC Finance Limited

Vehicle

April-05

2,600,000

4

67,730

March-09

8

GSP Finance Company (BD) Ltd

Vehicle

May-05

1,158,500

4

30,747

April-09

9

GSP Finance Company (BD) Ltd

Vehicle

May-05

6,864,750

4

180,899

April-09

10

GSP Finance Company (BD) Ltd

Vehicle

July-05

1,445,000

4

38,078

June-09

11

GSP Finance Company (BD) Ltd

Vehicle

August-05

1,426,000

4

37,578

July-09

12

GSP Finance Company (BD) Ltd

Vehicle

October-05

2,701,000

4

71,176

September-09

13

GSP Finance Company (BD) Ltd

Vehicle

December-05

4,754,000

4

125,277

November-09

Sl No.

Page 50

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

14

GSP Finance Company (BD) Ltd

Vehicle

March-06

1,556,000

4

41,296

February-10

15

United Leasing Company Ltd

Vehicle

March-06

2,875,000

4

41,296

February-10

16

United Leasing Company Ltd

Vehicle

July-06

3,278,000

4

91,186

June-11

Personnel related Schemes The Company has adequate programs for human resource development. Company also has a well-designed Compensation Plan for attracting highly capable professional staff with high degree of integrity. The compensation package includes salary and allowances, bonus, gratuity, provident fund etc. The existing compensation plans are as follows: (a) Salary/Allowances This includes basic pay, house allowance, conveyance/transport allowance, medical allowances. The amount varies for each grade of services. (b) Traveling This includes fare and daily allowances for each grade of services. (c) Bonus This is paid on the basis of 2 month’s basic pay for each Eid Festival. (d) Provident Fund The Company has already set up Provident Fund as contributory by the employee at the rate of 10% of the basic pay and equal amount by the Company. Company’s contribution would be payable on completion of minimum 5 years service. (e) Gratuity Gratuity Plan is a non-funded liability payable to an outgoing employee on completion of minimum 8 years service at the rate of ½ month’s Basic pay (last pay) for every completed year of service for 8-12 years. For more than 12 years’ service it is one month’s pay and for 16 years/over it is 2 months’ pay. f) WPPF The Company has created a fund for workers as Workers’ Profit Participation Fund and 5% of profit before charging of this rate has been transferred to this fund. g) Leave Salary As a non-funded scheme, leave is allowed at the rate of one day for 14 days’ service. Leave is encashable at the discretion of management up to maximum accumulation of 96 days. Revaluation of Assets The Company has made revaluation of its assets in FY 2004 & 2007 and reflected in the Financial Statements of that year. Particulars of the valuer and summary of reports are as follows: Name Qualification Work done Purpose of Revaluation

: Asian Surveyors Ltd : Professional valuer : 30 June 2004 & 28 November 2007 : To reflect the fair value of the assets of the company in the financial statements Page 51

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Summary of valuation report Revaluation for the year 2004

Name of the assets

Value before revaluation

Value after revaluation

Revaluation surplus / (loss)

Taka

Taka

Taka

Land :

78,224,202

205,650,000

127,425,798

Unit – 1 & 2

68,811,696

88,507,674

19,695,978

Unit – 3

15,224,584

14,717,502

(507,082)

Unit – 4

1,210,386

1,200,000

(10,386)

85,246,666

104,425,176

19,178,510

83,317,409

151,468,814

68,151,405

Unit – 3

1,559,102

2,773,000

1,213,899

Unit – 4

2,127,978

6,198,232

4,070,254

87,004,489

160,440,046

73,435,558

Building

Total Building

Plant & Machinery Unit – 1 & 2

Total Plant & Machinery

Office Machinery Unit – 1

13,554,981

14,904,850

1,349,869

Total Office Machinery

13,554,981

14,904,850

1,349,869

17,896,244

16,323,378

(1,572,866)

17,896,244

16,323,378

(1,572,866)

15,794,174

15,085,515

(708,659)

23,895

29,171

5,276

15,818,069

15,114,686

(703,383)

Electric & other appliances Unit – 1 Total Electric & other appliances

Furniture & Fixtures Unit – 1 & 2 Unit – 4 Total Furniture & Fixtures

Vehicles Unit – 1

10,526,213

40,003,672

29,477,459

Total Vehicles

10,526,213

40,003,672

29,477,459

308,270,864

556,861,808

248,590,945

Total

Page 52

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Revaluation for the year 2007 Name of the Assets

Value before revaluation

Value after revaluation

Revaluation surplus / (loss)

Taka

Taka

Taka

Land :

33,000,000

148,500,000

115,500,000

Building: Unit – 1 & 2 Total Building

17,191,351 17,191,351

17,457,283 17,457,283

265,932 265,932

Total

50,191,351

165,957,283

115,765,932

Breakdown of all Expenses connected with the Public Issue The following is an estimate of expenditures on various accounts in relation to Public Offer: Particulars Manager to the Issue Trustee Fee Credit Rating Fee

Rate Actual Lump sum Actual

Amount in Tk. 2,000,000 1,000,000 700,000

Regulatory Expenses: Listing related expenses Service Charge for DSE Annual Fee for DSE & CSE Listing Fees for Stock Exchange (DSE & CSE) SEC Fees Application Fee Consent Fee

Fixed Fixed @ 0.25% on 10.00 crore and @ 0.15% for the rest amount of paid up capital

20,000 200,000 4,000,000

Fixed @ 0.15% on entire offer

15,000 2,002,171

Public Offering Commission: Underwriting Commission Bankers to the Issue Commission (at actual)

@ 0.40% on Tk.534,340,000 @ 0.10% on collected amount (Lump sum) (assumed 2 times subscription)

2,137,360 2,000,000

Printing & Post Public Offering Expenses (Estimated): Abridged version of Prospectus Printing of Prospectus and Forms Post issue Expenses Arrangement of Lottery Miscellaneous Total

Estimated Estimated Estimated

300,000 400,000 3,000,000 700,000 500,000 18,974,531

N. B. The costs of the above mentioned Public Offer expenses may vary with above estimates and will be adjusted accordingly. Page 53

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Auditors’ certificate for paid-up share capital We certify that total paid-up share capital of Advanced Chemical Industries Limited as of 31 December 2008 was Tk 161,700,000 divided into 16,170,000 ordinary shares @ Tk 10 each. Out of total paid-up shares, 9,030,700 ordinary shares were issued for cash, 1,049,300 ordinary shares were issued as consideration otherwise than cash and 6,090,000 ordinary shares were issued as bonus.

Dhaka, 19 April 2009

Rahman Rahman Huq Chartered Accountants

Transaction between Holding/Subsidiary Company and the Issuer a) Transactions during the year 2008 During the year 2008, the company carried out a number of transactions with Subsidiaries, Joint Ventures and Associates in the normal course of business. The names of the parties and nature of these transactions have been set out below: Name of related party

Relationship

Transaction started from

ACI Formulations Ltd.

Subsidiary

1996

ACI Salt Limited

Subsidiary

2004

Apex Leather Craft Limited

Subsidiary

2001

Flyban Insecticides Ltd.

Subsidiary

1994

ACI Pure Flour Ltd.

Subsidiary

2007

ACI Foods Ltd.

Subsidiary

2006

ACI Agrochemicals Ltd.

Subsidiary

2006

Creative Communication Ltd.

Subsidiary

2007

ACI Motors Limited

Subsidiary

2007

Premiaflex Plastics Limited

Subsidiary

2007

ACI Logistics Limited

Subsidiary

2008

Tetley ACI Bangladesh Limited Asian Consumer Care (Pvt) Limited ACI Godrej Agrovet Bangladesh (Pvt) Ltd. Stochastic Logic Limited

Joint Venture Joint Venture Joint Venture Associates

Nature of transactions Purchase of products Management service and working capital finance Lease of corporate office Management service and working capital finance Management service and working capital finance Management service and working capital finance Management service and working capital finance Management service and working capital finance Management service and working capital finance Management service and working capital finance Management service and working capital finance

2,039,016,708

Outstanding balance 31.12.2008 (698,672,186)

773,379,596

161,993,597

Debtors

9,416,400

52,119,777

Debtors

5,000

976,125

Debtors

984,104,646

53,175,971

Debtors

487,817,693

300,914,860

Debtors

27,340

54,638

Debtors

47,582,792

(10,937,665)

Creditors

677,730,831

175,217,496

Debtors

229,614,527

77,866,482

Debtors

205,230,678

26,780,697

Debtors

Transactions value-2008

Nature of balance Creditors

2002

Purchase of products

2,222,544

437,294

Debtors

2003

Promotional expenses

4,244,254

7,555,218

Debtors

2004

Working capital finance

448,418

869,726

Debtors

2007

Management service and working capital finance

220,000

2,932,141

Debtors

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

Page 54

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Material information which is likely to have an impact There is no other known material information which is likely to have an impact on the offering or change the terms and conditions under which the offer has been made to the public. DIRECTORS AND OFFICERS OF THE COMPANY DESCRIPTION OF THE DIRECTORS

Position

Education

Date of Becoming Director for the first time

72

Chairman

Masters in Public Health

01-07-1987

Mr. Syed Manzur Elahi

67

Director

M.A ( Economics, DU)

24-05-1997

3

Mr. Md. Humayun Kabir

56

Director

M.A ( Economics, DU)

19-05-2009

4

Ms. Najma Dowla

62

Director

Bachelor of Arts

06-01-1996

Sl. No.

Name of the Directors

Age (Years)

1.

Mr. M Anis Ud Dowla

2

5

Dr. Arif Dowla

39

Managing Director

Doctor of Philosophy in Mathematics

18-09-2000

6

Mr. Waliur Rahman Bhuiyan, OBE

57

Director

M.A ( Economics, DU & MBA)

04-11-2007

7

Ms. Shusmita Anis Salam

42

Director

Graduate in Graphics Design, USA

22-05-2000

8

Mr. Waliur Rahman

67

Director

B.Sc (Hon’s & M.Sc

18-03-2001

9

Mr. Wajed Salam

47

Director

Bachelor in Economics, USA

18-03-2001

52

Director & Company Secretary

Post Graduate

18-03-2001

10

Ms. Sheema Abed Rahman

Expiry of current term

One third of total directors take retirement at every Annual General Meeting and re-elect is eligible as seniority

Page 55

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Directors Involvement in other organization Sl. No.

1

Name

Mr. M Anis Ud Dowla

Name of other company where the Director is involved ACI Formulations Limited 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.

2

Mrs. Najma Dowla

3

Dr. Arif Dowla

Credit Rating Agency of Bangladesh Ltd. ACI Formulations Limited 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 Formulations Limited ACI Salt Limited ACI Foods Limited ACI Pure Flour Limited ACI Motors Limited ACI Logistics Limited ACI Agrochemicals Ltd. 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

Position Chairman and Managing 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 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 Nominee of ACI Limited Nominee of ACI Limited Nominee of ACI Limited 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

Page 56

Issuer Advanced Chemical Industries Limited (ACI)

Sl. No.

Name

4

Ms. Shusmita Anis Salam

5

Mr. Wajed Salam

6

Mr.Syed Manzur Elahi

7

Ms. Sheema Abed Rahman

8

Mr. Md. Humayun Kabir

9

Mr. Waliur Rahman Bhuiyan, OBE

10

Mr. Waliur Rahman

Issue Manager Alliance Financial Services Limited

Name of other company where the Director is involved ACI Formulations Limited Consolidated Chemicals Limited Stochastic Logic Limited ACI Formulations Limited Homeland Capital Corp. Apex Tannery Limited Grey Advertising (BD) Limited Apex Enterprise Limited Apex Adelchi Footwear Limited Apex Pharma Limited Pioneer Insurance Company Limited Mutual Trust Bank Limited ACI Formulations Limited Flyban Insecticides Limited Apex Leather Craft Limited Glaxo SmithKline Bangladesh Limited BOC Bangladesh Limited Renata Limited Credit Rating Information & Services Limited (CRISL) Central Depository Bangladesh Limited Bangladesh Shilpa Rin Sangstha Heidelberg Cement Bangladesh Limited Credit Rating Agency of Bangladesh Limited (CRAB) Apex Tannery Limited Dhaka Stock Exchange Limited Standard Bank Limited British American Tobacco Bangladesh Limited National Tea Company Limited Aramit Group ICB Capital Management Limited BOC Bangladesh Limited

Position Director Director Nominee of ACI Limited Director Director Director Director Director Director Director Director Director Director Director Director Director Director Director Director Director Director Director Director Director Director Director Director Director Chairman Chairman Director

Rajbari Enterprise Limited

Director

N/A

N/A

Page 57

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

FAMILY RELATIONSHIP AMONG DIRECTORS

Sl. No.

Name

Director Mrs. Najma Dowla

1

Mr. M Anis Ud Dowla

2

Mrs. Najma Dowla

3

Dr. Arif Dowla

4

5

6

Ms. Shusmita Anis Salam

Mr. Wajed Salam

Mr. Waliur Rahman

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

Relation Wife Son Daughter Son-in-law Husband Son Daughter Son-in-law Father Mother Sister Brother–in-law

Mr. M Anis Ud Dowla

Father

Mrs. Najma Dowla

Mother

Dr. Arif Dowla Mr. Wajed Salam

Brother Husband

Mr. M Anis Ud Dowla

Father-in-law

Mr. M Anis Ud Dowla

Uncle

Mrs. Najma Dowla

Aunt

Dr. Arif Dowla

Cousin

Ms. Shusmita Anis Salam

Cousin

Position in the Company Shareholder, Director, Managing Director and Chairman Shareholder and Director

Shareholder and Director

Shareholder and Director

Shareholder and Director

Shareholder and Director

FAMILY RELATIONSHIP AMONG TOP OFFICERS Sl No. 1

Name Mr. M Anis Ud Dowla

Position Chairman

2

Dr. Arif Dowla

Managing Director

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

Page 58

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Short Description of the Directors: Mr. M Anis Ud Dowla Mr. Dowla, the Chairman of ACI Limited, is one of the most eminent business personalities in Bangladesh. He has maintained a high profile and has provided leadership to business community in different capacities. Mr. Dowla served in the British Oxygen Group of UK in Pakistan, Bangladesh and Kenya for 27 years, including 12 years as Managing Director of Bangladesh Oxygen Limited. In 1987, he became the Group Managing Director of ICI Bangladesh Manufacturers Limited. With experience gathered while working with British Multi-nationals for over 32 years, Mr. Dowla has continued to maintain the multinational culture and management style in ACI, with special emphasis on quality, productivity and customer services. Mr. Dowla was the President of Metropolitan Chamber of Commerce & Industry for three terms in 1975, 1976 & 1977 and the President of Bangladesh Employees Federation for four terms in 1976, 1977, 1994 and 1995. Mr. M Anis Dowla was exposed to lots of international training programme. Ms. Najma Dowla Mrs. Najma Dowla joined ACI Limited as Director on 6 January 1996. She is also Director of Consolidated Chemicals Limited, ACI Salt Limited, Stochastic Logic Limited, Premiaflex Plastics Limited, ACI Pure Flour Limited, ACI Foods Limited, ACI Motors Limited, Creative Communication Limited and Apex Leather Craft Limited. She is the wife of Mr. M Anis Ud Dowla. Dr. Arif Dowla Dr. Arif Dowla took over the charge of Managing Director of ACI Limited in June 2005. Previously, he was the Deputy Managing Director of the same company. He is also the Vice Chairman of Mutual Trust Bank and Board member of Pioneer Insurance Company Limited. He obtained PhD degree in Mathematics from the University of California, San Diego. He is also a member of the American Mathematical Society. His doctoral dissertation was on non-stationary stochastic processes, which is a field of study related to probability theory and statistics. Dr. Dowla was exposed to lots of international training program. He is the son of Mr. M Anis Ud Dowla. Ms. Shusmita Anis Salam Ms. Salam is a Graphic Designer in profession and settled in U.S.A. She was inducted as Director in ACI Limited in the year 2000. She is the daughter of Mr. M Anis Ud Dowla. Mr. Wajed Salam Mr. Salam is engaged in real estate business in USA. He was inducted as Director in ACI Limited in the year 2001. He is the son-in-law of Mr. M Anis Ud Dowla.

Mr. Syed Manzur Elahi Mr. Elahi joined ACI Limited as director on May 24, 1997. He was the founder Chairman of Mutual Trust Bank Limited. He has made significant contribution in various industrial & business enterprises including banking. He completed his M.A. in Economics from University of Dhaka. Mr. Elahi is the Chairman of Bangladesh Association of Banks, Vice Chairman, Bangladesh Association of Publicly Listed Companies and Director of ACI Limited. He was appointed as Advisor to the Caretaker Government of Bangladesh twice for his leadership qualities and professionalism. He is the founder Chairman of Apex Tannery Group, Pioneer Insurance Co. Limited, Grey Advertising (Bangladesh) Ltd., President of East West University and Director of International Chamber of Commerce, International Publications Ltd. He was the director of Bangladesh Bank, Sonali Bank Limited, Bangladesh Krishi Bank Limited, Export Promotion Bureau and Metropolitan Chamber of Commence & Industry. Besides being an eminent industrialist Page 59

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

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

CIB REPORT Neither Advanced Chemical Industries Limited (ACI) nor any of its directors or shareholders who hold 5% or more shares in the paid up capital of the issuer is loan defaulter in terms of the CIB Report of Bangladesh Bank. Description of senior executives and department heads Sl. No. 1.

2.

Name

Position

Date of joining

Dr. Arif Dowla

Chief Executive Officer

18-09-2000

Dr. F H Ansarey

Executive Director, Agribusinesses

01-03-1995

Education

Department

Experience

Doctor of Philosophy in Mathematics

Board of Directors

Director from 2000 and became Managing Director in 2005

Doctor of Philosophy in Ecology

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

Working as Head of the Agri SBU from its inception

Page 60

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

3.

Mr. M Mohibuz Zaman

Chief Operating Officer, Pharma

4.

Mr. Syed Alamgir

Executive Director, Consumer Brands

01-01-1998

5.

Mr. Muallem A Choudhury

Chief Financial Officer

01-06-2005

FCA

Finance & Planning, Commercial, Income Tax

6.

Ms. Sheema Abed Rahman

Company Secretary

04-10-1987

Post Graduate

Human Resource, Admin, Training, MIS

16-10-2003

B.Sc & MBA

MBA

Pharmaceuticals Business& Export

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

Working as Head of ACI’s Pharmaceuticals Business which encompasses manufacturing and marketing of Pharmaceutical products and its exports Working as Head of ACI’s Consumer Brand Business which includes manufacturing and marketing of all Consumer products under ACI’s name. Responsible for managing entire financial matters including Commercial & Planning activities of ACI Ltd. Sits in the board as well as responsible for HR, company secretary and distribution function of ACI Ltd.

INVOLVEMENT OF DIRECTORS AND OFFICERS IN CERTAIN LEGAL PROCEEDINGS No director or officer of the Company was involved in any of the following types of legal proceedings in the last ten years: (a) Any bankruptcy petition filed by or against company of which any officer or director of the issuer company filing the prospectus was a director, officer or partner at the time of the bankruptcy. (b) Any conviction of director, officer in a criminal proceeding or any criminal proceeding pending against him. (c) Any order, judgment or decree of any court of competent jurisdiction against any director, officer, permanently or temporarily enjoining, barring, suspending or otherwise limiting the involvement of any director or officer in any type of business, securities or banking activities. (d) Any order of the Securities and Exchange Commission, or other regulatory authority or foreign financial regulatory authority, suspending or otherwise limiting the involvement of any director or officer in any type of business, securities or banking activities.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS Transaction with related parties Neither any proposed transaction nor had any transaction during the last two years, between the issuer and any of the following persons: (a) Any director or executive officer of the issuer; (b) Any director or officer; Page 61

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

(c) Any person owning 5% or more of the outstanding shares of the issuer; (d) Any member of the immediate family (including spouse, parents, brothers, sisters, children, and in-laws) of any of the above persons. (e) Any transaction or arrangement entered into by the issuer or its subsidiary for a person who is currently a director or in any way connected with a director of either the issuer company or any of its subsidiaries/holding company or associate concerns, or who was a director or connected in any way with a director at any time during the last three years prior to the issuance of prospectus. (f) Any loan either taken or given from or to any director or any person connected with the director, any loan taken from any such person who did not have any stake in the issuer, its holding company or its associate concerns prior to such loan. Directors' facilities The Directors and Chairman of Advanced Chemical Industries Limited (ACI) does not enjoy any facilities other than annual salary as under. Serial No

Name of the sponsor/ promoters

Nature of Transaction

Amount (Tk.)

01

Mr. M Anis Ud Dowla

Remuneration

8,513,430

02

Dr. Arif Dowla

Remuneration

5,210,040

03

Mrs. Sheema Abed Rahman

Remuneration

2,292,557

EXECUTIVE COMPENSATION Remuneration paid to top five salaried officers Sl. No.

Name

Designation

2008 Annual Remuneration (in Tk)

1.

Mr. M Anis Ud Dowla

Chairman

8,513,430

2.

Dr. Arif Dowla

Managing Director

5,210,040

3.

Mr. M Muhibuz Zaman

Chief Operating Officer, Phrama

3,535,560

4.

Mr. Syed Alamgir

5.

Mr. Muallem A Choudhury

Executive Director, Consumer Brands Executive Director, Finance and Planning

3,071,880 2,953,890

Aggregate amount of remuneration paid to all directors & officers Group Directors’ Remuneration Officers salaries, benefits & bonuses including management emoluments

2008 Taka 13,723,470 430,351,850

Remuneration paid to directors who was not an officer of the company The company did not pay any remuneration to any Director who was not an officer during the last accounting year. Page 62

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Future compensation to Directors or Officers There is no contract with any director or officer for future compensation. Pay increase intention Company always reviews the individual and general price index of the country and carries out compensation survey as a regular basis. Based on the comprehensive survey and following the approval grading structure and alleging this with the Company’s affordability increment of salary is given in July every year. OPTIONS GRANTED TO OFFICERS, DIRECTORS AND EMPLOYEES The company has not granted any option to directors, officers or employees. TRANSACTION WITH THE DIRECTORS AND SUBSCRIBERS TO THE MEMORANDUM (a) The Director and subscribers to the memorandum have not received any benefits except remuneration, directly or indirectly during the last five years. The issuer also has not received any assets, services or other consideration from its Directors and subscribers to the memorandum except fund against allotment of shares. (b) No assets were acquired from the subscribers to the memorandum. Tangible Net Assets per Share (As per audited accounts as at 31.12.2008) Particulars Paid-up Capital Share Premium Capital Reserve Revaluation Surplus Retained Earnings Net Asset Less: Intangible Asset Tangible Net Asset Total Ordinary Share Tangible Net Assets per share

Taka 161,700,000 250,022,474 1,671,386 303,147,632 1,488,114,482 2,204,655,974 2,204,655,974 16,170,000 136.34

OWNERSHIP OF THE COMPANY’S SECURITIES AS ON 31 DECEMBER 2008 Composition of Shareholders Sl No.

Status of Shareholder

No. of Shares

Holding (%)

1

Directors/Sponsors

5,952,949

36.81

2

Institutions

6,059,149

37.48

3

General Shareholders

4,157,902

25.71

16,170,000

100.00

Total

List of Shareholders who owns 5% or more share of the company as on 31-12-2008 Sl. No. 01

Name and Address Mr. M Anis Ud Dowla

No. of Shares 4,042462

Percentage of ownership 25.00% Page 63

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

02

ACI Foundation

1,334,190

8.25%

03

ICB Unit Fund

1,368,120

8.64%

Shares held by directors as on 31 December 2008 Sl. No.

Name of the Directors

1

Mr. M Anis Ud Dowla

2 3 4

Mrs. Najma Dowla Dr. Arif Dowla Ms. Shusmita Anis Salam

6 7

No. of shares held

% of share holding

Present Position

4,042462

25%

Chairman

45,220 185,153 1124

0.28% 1.15% 0.01%

Director Managing Director Director

Ms. Sheema Abed Rahman

8250

0.05%

Director & Company Secretary

Mr. Syed Manzur Elahi Total

5850

0.04% 26.53%

Director

Securities owned by the officers The list of employees who own shares of the company as on 31 December 2008 are as follows: Sl. No.

No. of Shares

Percentage of ownership

Chairman

4,042462

25%

Managing Director

185,153

1.15%

8,250

0.05%

329,150

2.03%

688

0.004%

Name and Address

Designation

Mr. M Anis Ud Dowla

02

Dr. Arif Dowla

03

Ms. Sheema Abed Rahman

04

Mr. Towfiqur Rahman

05

Other employees as a group

01

Director & Company Secretary Director, Business Development

Page 64

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Net Asset Value Net Asset Value (NAV) per share is calculated based on book Value of Company’s net Assets. This is determined on the basis of the figures appearing in the audited balance sheet as at 31 December 2008. Sl. No. 1.

Particulars Fixed assets

Amount in Taka 1,122,853,227

2. 3. 4.

Capital work in progress Investments Current Assets Total Assets (A)

135,098,300 670,267,741 4,986,884,853 6,915,104,121

1. 2.

Long term Liabilities Current Liabilities Total Liabilities (B) Net Asset (A-B) Number of Ordinary Shares Net Assets Value per Share

309,663,981 4,400,784,166 4,710,448,147 2,204,655,974 16,170,000 136.34

The Net Assets Value (NAV) is also equivalent to the shareholders’ equity which is detailed below: Sl. No. 1. 2. 3. 4. 5.

Particulars Paid-up Capital Share Premium Capital Reserve Revaluation Surplus Retained Earnings Total Shareholders’ Equity Number of Ordinary Shares Net Assets Value per Share

Amount in Taka 161,700,000 250,022,474 1,671,386 303,147,632 1,488,114,482 2,204,655,974 16,170,000 136.34

Page 65

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

MARKET FOR THE SECURITIES BEING OFFERED The issuer shall apply to the following two Stock Exchanges within 7 (seven) working days from the date of consent accorded by the SEC to issue the prospectus:

Dhaka Stock Exchange Limited 9/F, Motijheel C/A, Dhaka-1000 and Chittagong Stock Exchange Limited CSE Building, 1080 Sk Mujib Road, Agrabad, Chittagong-4100 Declaration about listing of shares with the stock exchange(s) None of the stock exchanges(s), if for any reason, grants listing within 75 days from the closure of subscription, any allotment in terms of this prospectus shall be void and the company shall refund the subscription money within fifteen days from the date of refusal for listing by the stock exchanges, or from the date of expiry of the said 75 (seventy five) days, as the case may be. In case of non-refund of the subscription money within the aforesaid fifteen days, the company directors, in addition to the issuer company, shall be collectively and severally liable for refund of the subscription money, with interest at the rate of 2% (two percent) per month above the bank rate, to the subscribers concerned. The issue manager, in addition to the issuer company, shall ensure due compliance of the above mentioned conditions and submit compliance report thereon to the Commission within seven days of expiry of the aforesaid fifteen days time allowed for refund of the subscription money. Trading and settlement Trading and settlement regulation of the stock exchanges shall apply in respect of trading and settlement of the shares of the Company. DESCRIPTION OF SECURITIES OUTSTANDING OR BEING OFFERED Dividend, voting, pre-emption rights The Share Capital of the company is divided into Ordinary Shares, carrying equal rights to vote and receive dividend in terms of the relevant provisions of the Companies Act 1994 and the Articles Association of the company. All shareholders shall have the usual voting right in person or by proxy in connection with, among others, election of Directors & Auditors and other usual agenda of General Meeting – Ordinary or Extra Ordinary. On a show of hand, every shareholder present in person and every duly authorized representative of a shareholder present at a General Meeting shall have one vote and on a poll every shareholder present or by proxy shall have one vote for every share held by him or her. In case of any additional issue of shares for raising further capital the existing shareholders shall be entitled to Right Issue of shares in terms of the guidelines issued by the SEC from time to time. Conversion and liquidation rights In terms of provisions of the Companies Act 1994, Articles of Association of the Company and other relevant rules in force, the shares of the Company are freely transferable. The Company shall not charge any fee for registering transfer of shares. No transfer shall be made to a firm, an infant or person of unsound mind. Page 66

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Dividend policy (a) The profit of the Company, subject to any special right relating thereto created or authorized to be created by the Memorandum and subject to the provisions of the Articles of Association, shall be divisible among the members in proportion to the amount of capital paid-up on the shares held by them respectively. (b) No large dividend shall be declared than is recommended by the Directors, but the Company in its General Meeting may declare a smaller dividend. The declaration of Directors as to the amount of Net profit of the Company shall be conclusive. (c) No dividend shall be payable except out of the profits of the Company or any other undistributed profits. Dividend shall not carry interest as against the Company. (d) The Directors may from time to time pay the members such interim dividend as in their judgment the financial position of the Company may justify. (e) A transfer of shares shall not pass the right to any dividend declared thereon before the registration of transfer. (f) No limitation in payment of dividend is stipulated in any debt instrument or otherwise. Other rights of stockholders In terms of the provisions of the Companies Act 1994, Articles of Association of the Company and other relevant rules in force, the shares of the Company are transferable. The Company shall not charge any fee, other than Government duties for registering transfer of shares. No transfer shall be made to a minor or person of unsound mind. The Directors shall present the financial statements as required under the law & International Accounting Standard. Financial statements will be prepared in accordance with the International Accounting Standards as adopted in Bangladesh consistently applied throughout the subsequent periods and present with the objective of providing maximum disclosure as par law and International Accounting Standard to the shareholders regarding the financial and operational position of the company. The shareholders shall have the right to receive all periodical statement and reports, audited as well as un audited, published by the company from time to time. The shareholder holding minimum of 10% shares of paid-up capital of the company shall have the right to requisition extra ordinary General Meeting of the company as provided for the section 84 of the Companies Act 1994. DEBT SECURITIES The company has not issued or is planning to issue within next six month any debt security except the proposed ZCB. Description of ZCB is as follows: GENERAL CONCEPT ON ZERO COUPON BOND When a company, private or public Corporations or Banks (or government) wishes to borrow money from the public on a long-term basis, it usually does so by issuing or selling debt securities that is generally called bonds. A bond is normally a fixed interest-bearing debt instruments, meaning that the borrower will pay the interest on predetermined time schedules but the principal will be repaid at the end of the debt period i.e. on maturity. The amount that will be repaid at the end of the debt period is called the bond’s face value or par value. The number of years until the face value is paid is called the bond’s time to maturity. Once the bond has been issued, the number of years to maturity declines as time goes by. Zero Coupon Bond Zero Coupon Bond is a debt security that doesn't pay interest (a coupon) but is traded at a deep discount, rendering profit at maturity when the bond is redeemed for its full face value. This is a type of bond that makes no coupon payments but instead is issued at a considerable discount to par value i.e bond is issued at discounted price and redeemed at face value; the difference of which is income from investment in bond. For example, incase of ACI 20% Convertible Zero Coupon Bonds with a BDT 1,000 face value and 5 years to maturity is issued at BDT 607; the investor will be paying BDT 607 today for a bond that will be worth BDT 1,000 after 5 years. Page 67

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

In contrast, an investor who holds a regular coupon bearing bond receives income from coupon payments, which are usually made semi-annually. The investor also receives the principal or face value of the investment when the bond matures. Convertible Bond As the name implies, convertible bonds, or converts, give the holder the option to exchange the bond for a predetermined number of shares of the issuing company. When first issued, they act just like regular corporate bonds, though with a slightly lower interest rate. Because convertibles can be changed into stock and thus benefit from a rise in the price of the underlying stock, companies offer lower yields on convertibles. Zero-Coupon Convertible Bond A zero-coupon convertible bond is a bond that has an additional convertibility option beside all other features of a regular zero-coupon bond. Usually it is issued by a company that can be converted into that company’s common stock. Conversion Strike Price The conversion strike price (also called the conversion ratio) determines how many shares can be converted from each bond. This can be expressed as a ratio or as the conversion strike price, and is specified in the indenture along with other features and provisions. ACI 20% Convertible Zero-Coupon Bonds ACI 20% Convertible Zero Coupon bonds at a glance A. Issuer: ACI Limited B. Issue size: Tk. 1 Billion, the face value of which is Tk. 1.34 Billion C. Major features Zero Coupons: No interest will be payable on periodical basis. Bonds will be issued at discounted value (Tk. 3,743 per lot) but will be payable at face value (Tk. 5,000 per lot). The difference between the issue price and repayment value (Tk. 1,257) will be redemption income to the bondholders. Effective rate of return (discount rate): 10.5% pa excluding tax exemption benefits and capital gain from conversion. Selling units: o o

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

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


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




At maturity of each respective bond, redemption will be made at cash to the extent of 80% and rest 20% will be converted into ordinary shares of ACI Limited. However the bondholders will have option to redeem 100 % in cash. Page 68

Issuer Advanced Chemical Industries Limited (ACI)




Issue Manager Alliance Financial Services Limited

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

Tradability: Will be listed in the DSE and CSE and freely transferable. Tax exemption: As per Clause 40 of the amended sixth schedule of Income Tax Ordinance No. XXXVI of 1984 published on Bangladesh Gazette Dated June 30, 2008, the redemption income to the bondholders is fully tax exempted except banks, insurance and financial institutions. D. Bond schedule for each lot:

Series

Terms

1

1 year

2

2 year

3

3 year

4

4 year

5

5 year

Maturity date After 1 year After 2 year After 3 year After 4 year After 5 year Total

Redemption 80% 20% Cash Share

Issue Price

Face value

Redemption income

∗Effective rate of return

905

1,000

95

10.50

800

200

819

1,000

181

10.50

800

200

741

1,000

259

10.51

800

200

671

1,000

329

10.49

800

200

607

1,000

393

10.50

800

200

Tk. 3,743

Tk. 5,000

Tk. 1257

10.5%

4,000

1,000

* This rate of return is excluding tax exemption benefits and capital gain from conversion. E. The return of bondholders will be comprised of the following three components: Redemption income; the difference between issue price and the face value. Tax exemption benefits; grossing up tax benefits. Capital gain from conversion; the difference between strike price and market price. Details of ACI 20% Convertible Zero Coupon Bond Bond Redemption Schedule: ACI ZCB MATURITY SCHEDULE Assumptions Total Issue Size Total Face Value Total number of unit Total number of lot First Maturity Final Maturity

BDT 1,000,017,310 BDT 1,335,850,000 1,335,850 267,170 Year 1 Year 5

Discount Rate Year 1 Year 2 Year 3 Year 4 Year 5

10.50% 10.50% 10.51% 10.49% 10.50%

Page 69

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Holding Period Yield (H)= {(F/G)^(1/ A)}-1

ZCB Maturity (A)

Issue Price/Unit (B)

Face Value/Unit (C)

Unit to be Issued (D)

Total Issue Price (E) =(B) х (D)

Total Face Value (F)=(C) х (D)

Gain without Conversion (G) = (F) – (E)

1 year

905

1,000

267,170

241,788,850

267,170,000

25,381,150

10.50%

2 year

819

1,000

267,170

218,812,230

267,170,000

48,357,770

10.50%

3 year

741

1,000

267,170

197,972,970

267,170,000

69,197,030

10.51%

4 year

671

1,000

267,170

179,271,070

267,170,000

87,898,930

10.49%

5 year

607

1,000

267,170

162,172,190

267,170,000

104,997,810

10.50%

Total

3,743

5,000

1,335,850

1,000,017,310

1,335,850,000

335,832,690

Convertibility Option: The investors have the option of redeeming the entire face value of the bond in cash upon maturity or can redeem 80% in cash and convert 20% of the bond value in the common stock of the company. Redemption procedure 1.

The bondholders whose name will appear in the register at record date will be eligible to get the redemption. Record date means the date at which a bond shall mature.

2.

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

3.

The issuer after getting the intimation shall prepare the list of eligible bondholders who want to exercise the convertibility option within next 5 days from the last date of intimation and shall determine the equivalent number of convertible shares within that period based on the agreed formula (striking factor).

4.

If any bondholder gets fraction or odd lot number of shares, the fraction or odd lot shares shall be credited to Suspense Account as per Rule and shall be sold by the Issuer within following 3 working days from the date of finalization of convertibility calculations.

5.

The issuer shall then credit the convertible shares into the bondholders’ accounts who shall get either full lot and the sale proceeds of fraction or odd lot shares which will be distributed within next 7 days through issuing share warrant. By Lot it is meant that the ACI lot of 50 shares

6.

On the other hand, 80% of the redemption value shall be paid by the issuer through warrant within 15 days from the record date. The bondholders who do not want to exercise the convertibility option shall get also 100% redemption value within 15 days from record date.

Page 70

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Early redemption Subject to reasonable interpretation to the bondholders, the issuer may use the option of redeeming one or more series of the bonds before the maturity at regular redemption date. The early redemption can only be exercised at any agreed redemption date. If the issuer wishes to exercise this option, the immediate past matured bond shall be redeemed as per the declared formula and next series of bonds can only be redeemed early with a premium @ 0.3% on Principal and plus accumulated interest (accrued for the rest of the bond series) at early redemption date. The early redemption value shall be paid in cash fully. However the issuer shall communicate the early redemption information to the bond holders at least 3 months before the exercise date. Transferability The ACI Convertible Zero coupon bond will be freely transferable from day one and the security will be traded in both the exchanges through electronic device of CDBL. Lock-In Provision As per notification SEC/CMRRCD/2009-193/Admin/03-33 dated 09 July 2009 issued by the SEC none of the placement holders will be under lock-in except sl no. 08 of individual investors being one of the sponsors of the company. Facility Arranger & Trustee Industrial and Infrastructure Development Finance Company (IIDFC) Limited Conversion Strike Price & Method The Conversion Strike Price will be 1.1 times net asset value per share at the end of last financial year, determined through annual audited financial accounts. Investors will receive exactly the amount of shares derived by dividing Convertible Value (at the end of each maturity) by Conversion Strike Price. The formula will be as follows: Conversion Strike Price = NAV per share as per last annual audited financial statements X 1.1 Convertible Value = 20% face value of the ZCB at each maturity Convertible Value of the Bond / Conversion Strike Price Odd lot and fractional amount of shares will be paid through warrant on disposal at prevailing market price. Conversion date Conversion date will be same as the Principal Payment Date at the end of each maturity. Security Features ZCBs are without any charge creation over any fixed and floating assets of the company. The bonds will be the subordinated to the bank liabilities against parri passu sharing agreement on the hypothecated book debts and stocks of the company and a separate agreement on the plant and machinery. However, the trustee shall act for the benefit of the bondholders. To avoid any event of default, the issuer shall o

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

o

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

Page 71

Issuer Advanced Chemical Industries Limited (ACI)

•

Issue Manager Alliance Financial Services Limited

RATIONALE FOR INVESTING IN ACI 20% CONVERTIBLE ZERO COUPON BOND

Zero-coupon bond is an attractive product from the viewpoint of both the investors and issuers. Some of the salient advantages of zero-coupon bond are as follows: 1.

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

2.

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

3.

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

4.

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

5.

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

Particulars

Tax Rate

Yield = Discount Rate of ZCB / (1- Tax Rate)

Limited Company

37.50%

16.80%

Individuals

25.00%

14%

Banks/FIs/Insurances

45.00%

10.5% since Tax exemption not allowed

Even if GOB changes the regulations there would be no retrospective effect on those ZCB’s issued under Clause 40 of the amended sixth schedule of Income Tax Ordinance No. XXXVI of 1984 published on Bangladesh Gazette Dated June 30, 2008. This product is a win-win situation for both the investor and the issuer. Because net return is guaranteed for the investors and on the other hand the issuer also gets fund in a competitive rate. 6.

Strong Sponsors and Management Team ACI is one of the emerging corporate houses in the country. They have a sound management structure with a proven track record. Annual turnover of ACI Limited in the year 2008 was BDT 7,365 million. Page 72

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

SCENARIO ANALYSIS OF INVESTING IN ACI ZCB SCENARIO: 1- Return without conversion If the market price of the ACI stock is equal or less than the strike price, Investors won’t exercise the convertibility option. In that case the return from investment will be as follows: Issue Price/Unit

Face Value/Unit

Redemption Income

Return

1 year

905

1,000

95

10.50%

2 year

819

1,000

181

10.50%

3 year

741

1,000

259

10.51%

4 year

671

1,000

329

10.49%

5 year

607

1,000

393

10.50%

3,743

5,000

1,257

10.50%

ZCB Maturity

Total

In the above example we have assumed that an investor will invest in single lot of ACI Convertible ZCB and he/she wont exercise the convertibility option in that case the investors holding period yield will equal to the ZCB’s yield to maturity. SCENARIO: 2- return with conversion The bond has a convertibility option which is very much in the discretion of the potential investors. The investor will exercise the convertibility option if the conversion strike price is lower than the prevailing market price of Ordinary Share of ACI Limited during the conversion date. Market Price assumption Mechanism To forecast the market value of the ACI script, linear regression model (being conservative among…..) is used. The dependent variable is market value and the independent variable is Net Asset Value (NAV). The regression model is: Market Value

= α + β X Net Asset Value + ε = - 57.14 + 2.70 X Net Asset Value + 26.95

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

Page 73

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Convertible amount of the Bond / Conversion Strike Price Fractional amount of shares and odd lot of shares will be paid in cash at existing market price.

Expected Net Asset Value (Previous Year) Strike Price = 1.1 times NAV Expected Market Price

Year 1

Year 2

Year 3

Year 4

Year 5

164.8

178

197.2

225.5

266.8

181.2

195.8

217

248

293.4

415

453

510

588

702

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

Expected Capital gain from Conversion Expected No. of MV of Convertible Convertible Redemption Market Expected Price NAV Strike Price share shares Capital gain Series Issue Price Face Value 80%- Cash 20%- Share Income Redemption

Total Income= Present Redemption Value of income + Total Expected Capital gain Income return (%)

1

905

1,000

800

200

95

415

164.8

181.2

1.1

457.9

257.94

352.94

319.4

35.29%

2 3

819 741

1,000 1,000

800 800

200 200

181 259

453 510

178 197.2

195.8 217

1 0.9

462.7 470.1

262.67 270.12

443.67 529.12

363.35 392.17

44.37% 52.92%

4 5

671 607

1,000 1,000

800 800

200 200

329 393

588 702

225.5 266.8

248 293.4

0.8 0.7

474.1 478.5

274.12 278.45

603.12 671.45

404.53 407.57

60.29% 67.15%

Total

3,743

5,000

4,000

1,000

1,257

2,668 1,032.30

1,135.50

4.5

2,343.30

1,343.30

2,600.30

1,887.03

50.41%

Considering the above analysis it revealed that the bondholder is enjoying the convertibility option because the market value of ACI stock was significantly higher than the conversion strike price on the maturity/conversion date of the bond. Trustee Industrial and Infrastructure Development Finance Company Limited (IIDFC) a non-banking financial institution duly incorporated in Bangladesh under the Companies Act of 1994, having its registered office at Metropolitan Chamber Building (6th & 7th Floor), 122-124, Motijheel C/A, Dhaka, Bangladesh, hereby declares and confirms that it is going to act in the capacity of a trustee with the execution of this Trust Deed subject to the power, provisions, agreements and declarations herein contained. The Trustee shall act for the benefit of the Bond Holders by ensuring full repayment on each bond maturity.

Objects of the Trust i)

The Trust has been created with the following objects: a.

To monitor the financial position of the Issuer for the exclusive benefit of the Beneficiaries subject to the Trustee’s obligation to safeguard the interest of the said Beneficiaries.

b.

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

c.

To monitor Issue Proceeds Account and such other accounts as it deems necessary in the name of the Issuer with a scheduled Bank and in respect of the amount received from the purchase of bonds. Page 74

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

d.

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

e.

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

f.

To monitor and check if there is any litigation or potential threat of litigation that could adversely affect the interests of the Beneficiaries. To monitor if there are any insolvency proceedings or a potential for such proceedings against the Issuer that would hamper the interests of the Beneficiaries.

g.

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

h.

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

i.

To call any meetings of the Bondholders and to facilitate the proceedings of such meeting as it deems appropriate in accordance to the terms set forth in Schedule A attached herewith.

j.

To implement, give effect and facilitate the terms and conditions of deeds and Transaction Documents between the Issuer and the Trustee or between the Trustee and the Bondholders.

k.

To do all such other acts, deeds and things as may be necessary and incidental to the above objects unless such acts require the prior consent of the Bondholders in accordance to the terms herein.

ii) The Trust shall not carry out any other commercial activity other than that permitted above for the Benefit of the Bondholders. TRUSTEE’S POWERS AND LIABILITIES The Trustee shall be absolutely vested with the general superintendence, direction and management of the affairs of the Trust and shall and have all powers, authorities and discretion to perform the objects of the Trust and all powers appurtenant to or incidental to the purpose of the Trust, subject to the provisions of this Trust Deed.

Without in any way limiting the generality of the powers, authorities and discretion conferred by and referred to above, the Trustee shall have the following powers: (a)

shall have the right to receive any information regarding the business operation of the Issuer and to seek any information or financial statements from time to time;

(b)

to collect all money due to the Trust and acknowledge and give effectual and valid receipts and discharges for the same;

(c)

to exercise all rights and remedies and take all consequential action under various agreements pertaining to bonds;

(d)

to institute, conduct, defend, compound, settle, withdraw or abandon any legal proceedings in the name of the Trust or the Trustee and to submit any proceedings or differences for settlement by arbitration (if required);

(e)

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

(f)

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

(g)

to appoint brokers, advocates, auditors, solicitors, credit rating agencies, registrar, agents, valuers and other persons for the purpose of fulfilling any of the objectives of the Trust;

Page 75

Issuer Advanced Chemical Industries Limited (ACI)

(h)

Issue Manager Alliance Financial Services Limited

to incur and pay all reasonable costs, charges and expenses incidental to the management, administration and execution of the Trust;

(i)

to sign, seal, execute, deliver and register all deeds, documents and assurances in respect of or relating to the Trust and the due performance and execution of the purpose and objects hereof;

(j)

to call for meetings in accordance to Schedule A attached hereto;

(k)

generally do all acts, deeds, matters and things which are incidental or conducive to the proper exercise of the power of the Trustee under the Trust Deed.

(l)

On or before the execution date of this Deed of Trust, the Trustee is entitled to receive as security, for the benefit of the Bondholder(s), post dated cheques the details of which are described in Schedule-C.

Duties of Trustee (a)

The Trustee shall ensure that all transactions are properly entered into in accordance with this Trust Deed.

(b)

The Trustee shall fulfill all its obligations under the agreements, deeds and writings executed or to be executed by the Trustee in relation to the bonds

(c)

The trustee shall monitor that the Issuer has maintained the Debt Service Reserve Account, which means the account opened with a schedule bank by the issuer for building up and reserve of BDT 26,710,000 fifteen days prior to each maturity and duly made payments to the Bondholders within 15 (fifteen) business days of each maturity.

(d)

The trustee shall reserve the right to notify in writing to the Issuer to make good any Events of Default within 15 days (cure period) of its occurrence. Furthermore, if the Issuer fails to remedy any such occurrence within the stipulated time then the Trustee shall be entitled to take legal action.

(e)

Shall ensure that the Debt Service Reserve Account is established in the name of the Issuer prior to issue of the bonds.

RIGHTS OF BONDHOLDERS In addition to payment on the Bonds, bondholders may initiate meetings and actions to protect their interests as described below: Calling of Meeting The Trustee may, at its discretion or in accordance to the terms of the Subscription Agreement or shall, on a requisition of one or more of the Bondholders holding not less than 51% of the Face Value of all the current bonds convene a meeting of the Bondholders. Provided that the Trustee shall hold such meeting at a date not more than five (5) Business Days after it receives the requisition for convening such meeting. The meeting shall be held at such location as may be determined by the Trustee. Notice of Meetings (a) (b)

A meeting of the Bondholders may be held by giving not less than five (5) Business Days’ notice in writing. A meeting may be called on giving shorter notice than that specified in the foregoing clause, if consent is accorded thereto by all the Bondholders holding at least 51% of the outstanding Bonds. Page 76

Issuer Advanced Chemical Industries Limited (ACI)

(c)

Issue Manager Alliance Financial Services Limited

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

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

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

b.

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

c.

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

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

Resolution a.

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

b.

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

c.

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

d.

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

e.

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

Time of Taking Poll a.

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

b.

A poll demanded on any other question (not being a question relating to the election of a Chairman as provided in Clause 4 hereof) shall be taken at such time not being later than forty eight (48) hours from the time when the demand was made, as the Chairman may direct. Page 77

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Votes a.

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

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

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

i)

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

ii) Power to assent to any modifications of provisions of the Trust Deed which shall be proposed or agreed to by the Trustee and to authorize the Trustee to concur in and execute a supplemental trust deed or deeds embodying any such modification. iii) Power to remove the existing Trustee and to appoint new Trustee. Mode of exercise of powers set out in foregoing Clause 10. i)

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

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

Quorum for passing Special Resolution The Quorum for any meeting convened for the purpose of passing a special resolution shall be Bondholders holding a clear majority in value of the Bonds (51%) issued then outstanding present in person or by proxy. Resolution binding on all Bondholders A resolution special or otherwise passed at a meeting of the Bondholders duly convened and held in accordance with these presents shall be binding upon all the Bondholders whether present or not present at such meeting and each of the Bondholder and the Trustee shall be bound to give effect thereto accordingly. EVENTS of DEFAULT Not limited to the following, events of default will take place if any one of the following occurs: 1.

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

2.

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

3.

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

Page 78

Issuer Advanced Chemical Industries Limited (ACI)

4.

Issue Manager Alliance Financial Services Limited

if the Issuer utilizes any portion of the money raised through the issuance of the bonds for purpose other than those for which the same are issued;

5.

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

6.

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

7.

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

In case of default in payment by ACI the bondholders may initiate actions to protect their interest as described under “Rights of bondholders “ in this prospectus. Transferability The Bond will have to be listed with the Stock Exchanges after obtaining necessary permission from the SEC and will be freely transferable like the existing shares being traded in the stock market through electronic device of CDBL. Moreover, Advanced Chemical Industries Limited (ACI) will meet all the conditions to get the ZCB listed with the Stock Exchanges. It may be mentioned here that Shares of Advanced Chemical Industries Limited (ACI) are already listed with Dhaka Stock Exchange and Chittagong Stock Exchange. Applications for the listing of the Bonds (ZCB) in both DSE and CSE shall be made upon consent of the Commission. REFUND OF SUBSCRIPTION MONEY In the case of non-allotment of securities, if the applicants’ bank accounts as mentioned in their RPO Application Forms are maintained with any of the Bankers to the Issuer and other banks as mentioned below, refund amount of those applicants will be directly credited to the respective bank account as mentioned in their RPO Application Forms. Trust Bank Limited Mutual Trust Bank Limited Bank Asia Limited ICB One Bank Limited

Standard Bank Limited

Eastern Bank limited The City Bank Limited

Otherwise, refund will be made only through “Account Payee” cheque (s) with bank account number and name of bank & branch as mentioned in the application payable at Dhaka or Chittagong, as the case may be. For this purpose the number of the bank account along with name of bank and branch shall be clearly indicated in the securities application form. SUBSCRIPTION BY AND REFUND TO NON-RESIDENT BANGLADESHI (NRB) 1.

A Non-Resident Bangladeshi shall apply either directly by enclosing a foreign demand draft drawn on a bank payable at Dhaka, or through a nominee by paying out of foreign currency deposit account maintained in Bangladesh or in Taka, supported by foreign currency encashment certificate issued by the concerned bank, for the value of securities applied for through crossed bank cheque marking “Account Payee only”.

2.

The value of securities applied for by such person may be paid in Taka or US dollar or UK pound sterling or EURO at the rate of exchange mentioned in the securities application form.

3.

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

Page 79

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

AVAILABILITY OF SECURITIES The Offer 1. Bonds Particulars

No. of Bonds

Amount (Tk.)

A. 10% of RPO of Bonds shall be reserved for Non Resident Bangladeshis

53,434

53,434,000

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

53,434

53,434,000

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

427,472

427,472,000

Total

534,340

534,340,000

2.

All securities as stated in sub -rule (1) shall be offered for subscription and subsequent allotment by the issuer, subject to any restriction which may be imposed, from time to time, by the SEC.

3.

In case of over-subscription under any of the categories mentioned in sub-rule (1), the issue manager shall conduct an open lottery of all applications received under each category separately in accordance with the letter of consent issued by the SEC.

4.

In case of under subscription under any of the 10% categories mentioned in sub-rule (1), the un-subscribed portion shall be added to the general public category and, if after such addition, there is over-subscription in the general public category, the issuer and the issue manager shall jointly conduct an open lottery of all the applicants added together.

5.

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

6.

The lottery as stated in sub-rule (3) and (4) shall be conducted in presence of representatives from the issuer, the stock exchanges, and the applicants, if there be any.

Application for subscription 1.

Application for bonds shall be made for a minimum lot for 5 Zero Coupon Bonds to the value of Tk. 3,743/- and should be made on the ACI’s Printed Application forms. Application Forms and Prospectus may be obtained from the Dhaka Office of the Company, members of the Dhaka Stock Exchange Ltd. and/ or Chittagong Stock Exchange Limited or from the bankers to the Issue. In case adequate forms are not available, applicants may use photocopied / cyclostyled / hand written/typed copies of the forms. Applications must not be for less than 5 Zero Coupon Bonds. Any application not meeting this criterion will not be considered for allotment purpose.

2.

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

3.

Application must be in full name of individuals or limited companies or trusts or societies and not in the name of firms, minors or persons of unsound mind. Applications from insurance, financial and market intermediary companies must be accompanied by Memorandum and Articles of Association.

4.

An applicant cannot submit more than two applications, one in his own name and another jointly with another person which is applicable for both Non-Resident Bangladeshi (NRB) as well as other than Non-Resident Bangladeshi Applicants. In case, an applicant makes more than two applications, those in excess of two applications shall not be considered for allotment purpose.

5.

Bangladeshi Nationals (including non-resident Bangladeshi Nationals residing abroad) and Foreign Nationals shall be entitled to apply for bonds. Page 80

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

6.

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

7.

All completed application forms, together with remittances for the full amount payable on application, shall be lodged by investors other than non-resident Bangladeshis with any of the branches of the Bankers’ to the Issue.

8.

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

9.

The RPO subscription money collected from investors (other than Non-resident Bangladeshis) by the Bankers’ to the Issue will be deposited to Eastern bank limited, Principal Branch, Account No: 01011230000042 with Advanced Chemical industries Limited (ACI), for this purpose.

10. The subscription money collected from Non-resident Bangladeshis in US Dollar or UK Pound Sterling or EURO shall be deposited to the following FC accounts: Sl No. 1 2 3

Name of the FC Accounts Advanced Chemical Industries Limited -do-do-

Account No. 01013050004413 01013060000248 01013070000127

Bank & Branch Eastern Bank Limited, Principal Branch -do-do-

Currency US Dollar GBP EURO

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

APPLICATIONS NOT IN CONFORMITY WITH THE ABOVE REQUIREMENTS AND THE INSTRUCTIONS PRINTED ON THE APPLICATION FORM ARE LIABLE TO BE REJECTED. Allotment The company shall issue bond allotment letters to all successful applicants within 6 (six) weeks from the date of the subscription closing date. At the same time, the unsuccessful applicants shall be refunded with the application money within 6 (six) weeks from the closing of the subscription date by Account Payee Cheque/credit to the applicants bank account without interest payable at Dhaka/Chittagong/Khulna/Rajshahi/Barisal/Sylhet, as the case may be. A compliance report shall be submitted with the Commission within 7(seven) weeks from the date of closure of subscription.

Page 81

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

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

Sl. No.

1

2

3

4

5 6 7

8

9

Name of address of underwriters Bangladesh Mutual Securities Limited Sharif Mansion (7th floor), 56-57 Motijheel C/A,Dhaka-1000 Mercantile Securities Limited Paramount Heights 65/2/1 Box Culvert Road, Purana Paltan, Dhaka-1000 Bay Leasing & Investment Limited Printers Building (7th floor) 5, Rajuk Avenue, Motijheel C/A, Dhaka-1000 Union Capital Limited Noor Tower (5th floor), 73, Sonargaon Road, Dhaka1205 BANCO Trans world (BD) Limited Ispahani Building (3rd floor) 14-15 Motijheel C/A, Dhaka-1000 AB Bank Limited BCIC Bhaban, 30-31 Dilkusha C/A, Dhaka-1000 Trust Bank Limited Peoples Insurance Bhaban, 36, Dilkusha C/A, Dhaka1000 Lanka Bangla Finance Limited Safura Tower, Level 11, 20, Kemal Ataturk Avenue Banani, Dhaka-1213 Standard Bank Limited Metropolitan Chamber Building (3rd floor),122-124 Motijheel C/A, Dhaka-1000 Total

Issue Price Amount(TK.)

Face Value Amount(TK.)

18,410

68,908,630

92,050,000

4,000

14,972,000

20,000,000

26,716

99,997,988

133,580,000

8,014

29,996,402

40,070,000

6,400

23,955,200

32,000,000

13,358

49,998,994

66,790,000

8,306

31,089,358

41,530,000

8,306

31,089,358

41,530,000

13,358

49,998,994

66,790,000

106,868

400,006,924

534,340,000

Number of Lots underwritten

Principal terms and conditions of underwriting agreement 1.

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

2.

If payment is made by Cheque/Bank Draft by an underwriter it will be deemed that the underwriter has not fulfilled his obligation towards his underwriting commitment under the Agreement, until such time as the Cheque/Bank Draft has been en-cashed and the Company’s account credited.

3.

In any case within 7 (seven) days after the expiry of the aforesaid 15(fifteen) days, the Company shall send proof of subscription and payment by the underwriter to the Commission.

4.

In the case of failure by the underwriter to pay for the bonds under the terms mentioned above, the said Underwriter will not be eligible to underwrite any issue, until such time as he fulfils his underwriting commitment under the Agreement and also other penalties as may be determined by the Commission may be imposed on him.

5.

In case of failure by any underwriter to pay for the bonds within the stipulated time, the Company/Issuer will be under no obligation to pay any underwriting commission under the Agreement. Page 82

Issuer Advanced Chemical Industries Limited (ACI)

6.

Issue Manager Alliance Financial Services Limited

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

Underwriter’s right to represent in the Board of Directors of the Company The Underwriters shall not have any right to have any representatives in the Company’s Board of Directors. Commission for Underwriters The Company shall pay to the underwriters an underwriting commission at the rate of 0.4% of whole Public Offering amount (i.e Tk. 534,340,000) of the issue value of ZCB. Right of Underwriters on Company’s Board Underwriters have not acquired any right to have their representatives in the Board of Directors of the Company. Officer or director of the underwriters acting as director of the company No officer or director of the underwriters acting as director of the company. THE ISSUE SHALL BE PLACED IN “N’’ CATEGORY MATERIAL CONTRACTS 1 2 3 4

Underwriting Agreement between the Bank and the Underwriters. Issue Management Agreement between the Company and Alliance Financial Services Limited (AFSL) Agreement between the Company and the Central Depository Bangladesh Ltd. (CDBL). Trust Deed between the Company and Industrial & Infrastructure Development Finance Co. Ltd (IIDFC)

Copies of the aforementioned contracts and documents and a copy of Memorandum and Articles of Association of the Company and the Consent Order from the Securities and Exchange Commission may be inspected on any working day during office hours at the Office of the Company and the manager to the issue. MANAGER TO THE ISSUE Alliance Financial Services Limited Rahman Chamber (3rd Floor) 12-13 Motijheel C/A, Dhaka-1000 is the Manager to the Issue. The Issue Manager will get Tk. 2,000,000/-as issue management fee. COMMISSION TO THE BANKER TO THE ISSUE Commission at the rate of 0.1% of the amount collected will be paid to the Bankers to the Issue for the services to be rendered by them. CORPORATE DIRECTORY Miscellaneous Information: Registered Office

ACI Centre 245 Tajgaon Industrial Area Dhaka-1208, Bangladesh

Auditors

Rahman Rahman Huq Chartered Accountants

Manager to the Issue

Alliance Financial Services Limited

Company Secretary

Ms. Sheema Abed Rahman Page 83

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

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

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

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

Opinion In our opinion, the financial statements of the Company along with the notes thereon and the consolidated financial statements, drawn up on the consideration of the separate audit reports of the subsidiaries as at 31 December 2008, prepared in accordance with Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS), give a true and fair view of the state of the Company’s affairs and of its subsidiaries, and of the results of their operations and cash flows for the year then ended and comply with the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations. We also report that: a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof; b) in our opinion, proper books of account as required by law have been kept by the Companies so far as it appeared from our examination of these books; c) the balance sheets and profit and loss accounts dealt with by the report are in agreement with the books of accounts; and d)

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

Dhaka, 28 April 2009

Rahman Rahman Huq Chartered Accountants

Page 84

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Advanced Chemical Industries Limited Balance Sheet as at 31 December 2008 2008 Taka

2007 Taka (Restated)

1,675,193,452 (552,340,225) 1,122,853,227 135,098,300 1,257,951,527 670,267,741 1,928,219,268

1,327,151,308 (467,726,369) 859,424,939 213,870,224 1,073,295,163 536,629,241 1,609,924,404

2,085,053,250 1,304,815,553 81,605,053 245,796,966 177,028,869 862,058,775 211,924,637 18,601,750 4,986,884,853 6,915,104,121

1,091,397,629 898,891,044 136,565,703 179,761,041 205,661,524 551,416,377 57,195,473 3,120,888,791 4,730,813,195

161,700,000 250,022,474 1,671,386 303,147,632 1,488,114,482 2,204,655,974

161,700,000 250,022,474 1,671,386 294,901,646 546,739,197 1,255,034,703

17

309,663,981 309,663,981

342,231,018 342,231,018

18 19 20

732,188,602 1,816,568,620 104,776,269 325,560,055 469,811,403 709,609,851 5,718,892 236,550,474 4,400,784,166 4,710,448,147 6,915,104,121

271,195,982 1,142,396,717 62,504,602 132,277,207 478,332,706 758,658,669 10,220,408 277,961,183 3,133,547,474 3,475,778,492 4,730,813,195

Notes

Assets Property, plant and equipment: At cost/revaluation Accumulated depreciation

4

Capital work-in-progress

5

Investments Total non-current assets

6

Inventory Trade debtors Other debtors Advances, deposits and prepayments Advance income tax Inter-company receivables Cash and bank balance Assets classified as held for sale Total current assets Total assets Equity Share capital Share premium Capital reserve Revaluation surplus Retained earnings Total equity Liability Long term liabilities Total non-current liabilities

7 8 9 10

Bank overdraft Short term bank loan Long term bank loan- current portion Trade creditors Other creditors Inter-company liabilities Obligation under finance lease- current portion Provision for taxation Total current liabilities Total liabilities Total equity and liabilities

11 12 13

14 15 16 16.2

21 22 17.2 23

The annexed notes 1 to 38 form an integral part of these financial statements. ______Sd/-____ _______Sd/-______ Managing Director Director

Dhaka, 28 April 2009

_______Sd/-____ Company Secretary As per our report of same date ____________Sd/-________ Auditors Page 85

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

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

Notes

2008

2007

Taka

Revenue

24

7,365,103,541

Taka (Restated) 4,917,304,331

Cost of sales

25

(5,087,311,724)

(3,250,711,677)

2,277,791,817

1,666,592,654

(1,629,967,083)

(1,240,364,781)

Gross profit Administrative, selling and distribution expenses

26

Operating profit Other income

647,824,734

426,227,873

27

58,209,036

23,346,716

Profit from sale of shares

28

779,634,140

118,818,000

1,485,667,910

568,392,589

(280,811,155)

(119,087,159)

1,204,856,755

449,305,430

(21,261,132)

(22,728,564)

1,183,595,623

426,576,866

Financing cost

29

Provision for contribution to WPPF Profit before tax Income tax expenses Current tax expenses

23

(98,683,532)

(124,518,213)

Deferred tax income/(expenses)

30

(9,245,208)

5,710,733

(107,928,740)

(118,807,480)

1,075,666,883

307,769,386

66.52

19.03

Net profit after tax Earnings per share Basic earnings per share

31.1

The annexed notes 1 to 38 form an integral part of these financial statements. _______ Sd/-________ Managing Director

____ Sd/-___ Director

___________Sd/-__________ Company Secretary As per our report of same date.

Sd/Auditors Dhaka, 28 April 2009

Page 86

Advanced Chemical Industries Limited Statement of Changes in Equity for the year ended 31 December 2008

Particulars

Balance as at 1 January 2007-reported

Share

Share

Capital

Revaluation

Retained

capital Taka

premium Taka

reserve Taka

surplus Taka

earnings Taka

161,700,000

250,022,474

1,671,386

216,135,224

Adjustments for paid annual leave

Total Taka

344,542,827

974,071,911

(11,795,488)

(11,795,488)

161,700,000

250,022,474

1,671,386

216,135,224

332,747,339

962,276,423

Net profit after tax *

-

-

-

-

307,769,386

307,769,386

Revaluation surplus (net of deferred tax)

-

-

-

81,036,152

-

81,036,152

Realization of revaluation reserve

-

-

-

(2,269,730)

3,242,472

972,742

Dividend

-

-

-

-

(97,020,000)

(97,020,000)

161,700,000

250,022,474

1,671,386

294,901,646

546,739,197

1,255,034,703

Net profit after tax

-

-

-

-

1,075,666,883

1,075,666,883

Deferred tax due to change in tax rate

-

-

-

10,532,202

-

10,532,202

Realization of revaluation reserve

-

-

-

(2,286,216)

3,153,402

867,186

Dividend

-

-

-

-

(137,445,000)

(137,445,000)

161,700,000

250,022,474

1,671,386

303,147,632

1,488,114,482

2,204,655,974

Balance as at 1 January 2007-restated

Balance as at 31 December 2007

Balance as at 31 December 2008

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

Advanced Chemical Industries Limited Cash Flow Statement for the year ended 31 December 2008 2008 Taka

2007 Taka

7,639,454,724 61,681,506 50,838,352 7,751,974,582

4,908,736,690 21,223,737 (69,587,526) 4,860,372,901

(5,752,551,464) (1,593,931,585) (28,452,240) (89,296,633) (730,631,148) 1,924,708 (8,192,938,362) (440,963,780)

(3,460,939,880) (1,085,495,897) 40,737,264 (35,593,801) (539,079,179) (10,793,892) (5,091,165,385) (230,792,484)

Net cash used in operating activities

(280,811,155) (111,461,586) (392,272,741) (833,236,521)

(119,319,310) (133,260,448) (252,579,758) (483,372,242)

Cash flow from investing activities Purchase of property, plant and equipment Payments for capital work in progress Investment in shares Sale proceeds from property, plant and equipment Sales of shares of subsidiaries Net cash from (used in) investing activities

(63,264,697) (225,710,412) (178,576,000) 1,631,300 805,969,890 340,050,081

(33,053,436) (266,499,330) (108,531,000) 2,595,400 119,538,000 (285,950,366)

Cash flow from financing activities Inter-company debts (paid)/received Dividend paid Payment for finance lease Short term loan (paid)/received Long term loan (paid)/ received Net cash from financing activities

(349,990,479) (134,219,424) (10,220,406) 716,443,570 (35,090,276) 186,922,985

137,916,229 (95,201,895) (14,387,713) 506,402,344 104,298,644 639,027,609

D)

Net increase in cash and cash equivalent (A+B+C)

(306,263,455)

(130,294,999)

E)

Cash and cash equivalent at 1 January

(214,000,509)

(83,705,510)

F)

Cash and cash equivalent at 31 December (D+E)

(520,263,964)

(214,000,509)

Note A)

Cash flow from operating activities Cash receipts from customers Cash receipts from other income Receipts from/(payments to) other debtors Cash paid for: Purchase of inventory Operating expenses Other creditors Advances, deposits and prepayments Value added tax (VAT) Workers' profit participation fund Cash generated from operations Financing cost Income tax paid

B)

C)

12

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Advanced Chemical Industries Limited Consolidated Balance Sheet as at 31 December 2008 Assets Property, plant and equipment At cost / revaluation Accumulated depreciation

2008 Taka

2007 Taka

3,822,413,578 (846,901,870) 2,975,511,708 264,954,252 108,283,142 134,462,220 3,483,211,322

2,610,354,214 (660,423,664) 1,949,930,550 567,484,589 104,677,902 62,045,192 2,684,138,233

3,144,253,361 1,874,694,143 83,780,504 357,873,991 218,770,050 12,959,132 233,787,128 5,926,118,309 9,409,329,631

1,583,048,365 907,118,206 144,476,543 248,197,121 234,733,841 27,552,426 82,609,212 3,227,735,714 5,911,873,947

161,700,000 250,022,474 1,671,386 597,276,040 1,493,311,739 2,503,981,639 308,046,695 2,812,028,334

161,700,000 250,022,474 1,671,386 600,284,264 693,691,029 1,707,369,153 92,764,072 1,800,133,225

17 (a)

625,749,542 625,749,542

629,798,677 629,798,677

18 (a) 19 (a) 20 (a)

1,209,590,748 2,870,816,761 232,920,021 473,108,340 840,292,792 5,718,892 339,104,201 5,971,551,755 6,597,301,297 9,409,329,631

314,191,451 1,915,031,415 154,804,698 152,025,307 607,422,628 10,220,408 328,246,138 3,481,942,045 4,111,740,722 5,911,873,947

Notes 4 (a)

Capital work-in-progress Intangible assets Investment Total non -current assets

5 (a) 5(b) 6 (a)

Inventories Trade debtors Other debtors Advance, deposits and prepayments Advance income tax Inter-company receivables Cash and bank balance Total current assets Total assets Equity Share capital Share premium Capital reserve Revaluation surplus Retained profit Total equity attributable to equity holders of the company Minority interest Total equity Liabilities Long term liabilities Total non-current liabilities

7 (a) 8 (a) 9 (a) 10 (a)

Bank overdraft Short term bank loan Long term bank loan- Current portion Trade creditors Other creditors Current portion of lease obligation Provision for tax Total current liabilities Total liabilities Total equity and liabilities

______ Sd/-______ Managing Director

Dhaka, 28 April 2009

11 (a) 12 (a)

16.2 (a)

21 (a) 23 (a)

The annexed notes 1 to 38 form an integral part of these financial statements. ____ Sd/-____ _______ Sd/-_______ Director Company Secretary As per our report of same date. ___________ Sd/-__________ Auditors Page 89

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Advanced Chemical Industries Limited Consolidated Profit and Loss Account for the year ended 31 December 2008 2007 Taka 5,756,817,829

Revenue

24(a)

2008 Taka 10,341,425,084

Cost of sales

25(a)

(7,289,427,526)

(3,749,131,735)

Gross Profit Administration, selling and distribution expenses

26(a)

3,051,997,558 (2,104,511,818)

2,007,686,094 (1,397,956,550)

947,485,740

609,729,544

Other income

27(a)

68,088,797

83,171,466

1,015,574,537

692,901,010

639,297,191

86,181,149

(898,972)

(3,831,367)

1,653,972,756 (523,780,506)

775,250,792 (220,521,137)

1,130,192,250

554,729,655

(35,542,999)

(28,671,365)

1,094,649,251

526,058,290

Current tax expenses

(194,579,195)

(177,604,949)

Deferred tax income

32,839,852

15,711,125

932,909,908

364,164,466

917,905,438

341,808,528

Minority interest

15,004,470

22,355,938

Profit after tax

932,909,908

364,164,466

56.77

21.14

Notes

Result from operating activities Profit from sale of shares

28(a)

Share of profit of equity accounted investees Financing cost

29(a)

Provision for contribution to WPPF Profit before income tax Income tax expense

Profit after tax Attributable to: Equity holders of the company

Earnings per share Basic earnings per share

31.2

The annexed notes 1 to 38 form an integral part of these financial statements. ___________ Sd/-_____________

Managing Director

______ Sd/_______ Director

________ Sd/-______

Company Secretary

As per our report of same date. Dhaka, 28 April 2009

___________ Sd/-__________ Auditors

Page 90

Advanced Chemical Industries Limited Consolidated Statement of Changes in Equity for the year ended 31 December 2008

Particulars

Balance at 1 January 2007- reported

Share capital Taka 161,700,000

Share premium Taka

Capital Special Revaluation Tax holiday reserve reserve reserve reserve Taka Taka Taka Taka

Retained earnings Taka

Total Taka

Minority interest Taka

Total Taka

250,022,474 1,788,902 129,634 273,096,825 34,470,939 411,422,336 1,132,631,110 79,745,885 1,212,376,995

Adjustment for deferred tax assets

-

-

-

-

-

-

10,464,913

10,464,913

2,951,642

13,416,555

Adjustment for preliminary expenses of ACI Salt Ltd.

-

-

-

-

-

-

850,179

850,179

(850,179)

-

Adjustment for paid annual leave

-

-

-

-

-

-

-

(11,795,488)

Balance at 1 January 2007- restated

161,700,000

(11,795,488) (11,795,488)

250,022,474 1,788,902 129,634 273,096,825 34,470,939 410,941,940 1,132,150,714 81,847,348 1,213,998,062

-

-

Deferred tax adjustment for ACI Salt Limited

-

-

-

-

-

-

-

-

2,067,686

2,067,686

Capital paid by minority

-

-

-

-

-

-

-

-

10,651,000

10,651,000

-

600,284,264

-

693,691,029 1,707,369,153 92,764,072 1,800,133,225 917,905,438 917,905,438 15,004,469 932,909,907

Balance at 31 December 2007

161,700,000

982,003 (35,452,942) (2,269,730) (117,516) (129,634) 329,457,169 -

341,808,528 341,808,528 22,355,938 364,164,466 (982,003) 35,452,942 (97,020,000) (97,020,000) (1,920,000) (98,940,000) 3,242,472 972,742 972,742 247,150 329,457,169 329,457,169 (22,237,900) (22,237,900)

Net profit after tax Transferred to tax holiday reserve Transferred from tax holiday reserve no longer required Dividends Realization of revaluation surplus Post acquisition reserve transferred to retained earnings Revaluation reserve created during the year Sale of share of ACI Trading

250,022,474 1,671,386

Net profit after tax

-

-

-

-

-

-

Dividend paid

-

-

-

-

-

-

Realization of revaluation surplus

-

-

(2,286,216)

-

3,153,402

Post acquisition reserve transferred to retained earnings

-

-

-

-

(16,006,870)

-

Deferred tax adjustment for change in tax rate

-

-

-

-

19,646,058

Revaluation reserve created during the year

-

-

-

-

Adjustment for sale of share of ACI Formulation Ltd.

-

-

-

Capital paid by minority

-

-

-

Balance at 31 December 2008

161,700,000

250,022,474 1,671,386

(137,445,000) (137,445,000)

-

(137,445,000)

867,186

-

867,186

16,006,870

-

-

-

-

-

19,646,058

1,365,454

21,011,512

(4,361,196)

-

-

(4,361,196)

-

-

-

-

-

166,672,699 166,672,699

-

-

-

-

-

32,240,000

-

597,276,040

-

(4,361,196)

32,240,000

1,493,311,739 2,503,981,639 308,046,695 2,812,028,334

Advanced Chemical Industries Limited Consolidated Cash Flow Statement for the year ended 31 December 2008 Notes ACash flow from operating activities Cash received from customers Cash received as other income Receipts from (payments to) other debtors Cash paid for: Inventories Operating expenses Other creditors Advances, deposits and prepayments Value added tax (VAT) Paid to workers from WPPF Cash generated from operations Financing cost Income tax paid Net cash used in operating activities B Cash flow from investing activities Purchase of fixed assets Payments for capital work in progress Investment in shares Sale proceeds of fixed assets Proceeds from sale of shares of subsidiary Proceeds from sale of investment in shares- Mutual Trust Bank Net cash used in investing activities CCash flow from financing activities Paid to minority interest Inter-company debts received/(paid) Dividend paid Short term loan received/(paid) Long term loan received/(paid) Issue of shares Repayment of lease obligation Net cash from financing activities DNet decrease in cash and cash equivalent (A+B+C) E Cash and cash equivalent 1 January F Cash and cash equivalent at 31 December (D+E)

12 (a)

2008 Taka

2007 Taka

10,058,175,379 71,561,267 50,207,086 10,179,943,732

5,720,898,542 38,198,506 (69,587,526) 5,689,509,522

(8,242,282,517) (2,022,002,520) 117,027,730 (124,625,657) (738,374,482) 1,924,708 (11,008,332,738) (828,389,006)

(3,902,876,736) (1,247,587,544) 40,104,658 (33,923,599) (539,079,179) (10,793,892) (5,694,156,292) (4,646,770)

(518,576,586) (167,261,741) (685,838,327) (1,514,227,333)

(216,045,054) (191,344,829) (407,389,883) (412,036,653)

(407,950,013) (521,283,902) (73,316,000) 1,631,300 805,969,890 (194,948,725)

(173,030,461) (676,386,404) (37,200,000) 2,882,090 121,992,778 52,763,741 (708,978,256)

(2,738,155) (134,219,424) 973,119,339 106,773,324 32,240,000 (10,220,406) 964,954,678

(1,920,000) 15,994,477 (95,201,895) 844,932,351 248,618,953 10,651,000 (15,001,038) 1,008,073,848

(744,221,380) (231,582,239)

(112,941,061) (118,641,178)

(975,803,619)

(231,582,239)

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Advanced Chemical Industries Limited Notes to the financial statements as at and for the year ended 31 December 2008 1. Reporting entity Advanced Chemical Industries Limited (ACI Limited) is a public limited company which was incorporated on 24 January 1973 as ICI Bangladesh Manufacturers Limited. The address of the Company's registered office is 245Tejgoan Industrial Area, Dhaka-1208. The principal activities of the company are to manufacture pharmaceuticals, consumer brands, public health and animal health products and to market them along with agrochemicals, seeds and other consumer brand items.

The company is listed with Dhaka Stock Exchange Limited (DSE) and Chittagong Stock Exchange Limited (CSE). 1.1 Description of subsidiaries 1.1.1 ACI Formulations Limited The company was incorporated on 29 October 1995 as a private limited company under the Companies Act 1994. The principal activities of the company are manufacturing and marketing of a number of agrochemical and consumer products. Most of its sales for the current year are to Advanced Chemical Industries Limited (ACI Limited), which is responsible for marketing these products. The company became publicly listed company through direct listing process effective from 18 November with Dhaka and Chittagong Stock Exchange. 1.1.2 ACI Salt Limited The company was incorporated on 13 June 2004 as a private limited company under the Companies Act 1994. The principal activity of the Company is manufacturing and marketing of edible branded salt. 1.1.3 ACI Foods Limited The company was incorporated on 14 September 2006 as a private limited company under the Companies Act 1994. The main objectives of the company are manufacturing, processing and marketing of different food items including spices and different snacks items. The company went into commercial production at the beginning of the current year. 1.1.4 ACI Pure Flour Limited The company was incorporated on 29 August 2006 as a private limited company under the Companies Act 1994. The main objectives of the company are to carry on the business of milling processing, packaging and marketing of wheat flour products. The company has commenced its commercial operation in this year.

1.1.5 Apex Leather Craft Limited The company was incorporated on 22 May 1990 as a private limited company under the Companies Act 1994. There was no business activity of the company other than letting out its property to ACI Limited. 1.1.6 Flyban Insecticides Limited The company was incorporated on 5 October 1991 as a private limited company under the Companies Act 1994. The Company's main function was to manufacture and sale of mosquito coil. There was no business operation of the company during the year under review. Page 93

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

1.1.7 ACI Agrochemicals Limited The company was incorporated on 4 July 2006 as a private limited company under the Companies Act 1994. The main objectives of the company are to carry on the business of manufacturing, formulating and packaging of pesticide, fertilizer, plant nutrient and animal food and other nutrient products. The company is yet to start its commercial operation. 1.1.8 ACI Motors Limited The company was incorporated on 11 December 2007 as a private limited company under the Companies Act 1994. The main objectives of the company are to carry on the business of buying, selling, importing and assembling of vehicles for both agricultural and non-agricultural use including other agricultural equipment and supplying of spare parts and providing service facilities for these vehicles and equipment. The company has commenced its commercial operation in this year. 1.1.9 Creative Communications Limited The company was incorporated on 2 September 2007 as a private limited company under the Companies Act 1994. The principal activities of the company are managing media solutions and similar services for different clients including television commercials and other advertisement and promotion related activities. The company has commenced its commercial operation in this year. 1.1.10 Premiaflex Plastics Limited The company was incorporated on 11 June 2007 as a private limited company under the Companies Act 1994. The main objectives of the company are to carry out the business of manufacturing and marketing of plastic products, flexible printing and other ancillary business associated with plastic and flexible printing . The company has commenced its commercial production from 1 December 2008. 1.1.11 ACI Logistics Limited The company was incorporated on 29th April 2008 as a private limited company under the Companies Act 1994. The main objective of the company is to set-up nationwide retail outlets across the country linking ACI's strong presence in the agriculture sector. 2. Basis of preparation 2.1 Statement of compliance The financial statements have been prepared in accordance with Bangladesh Accounting Standards (BASs)/Bangladesh Financial Reporting Standards (BFRSs), Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations. 2.2 Other regulatory compliances The Companies are also required to comply with the following major legal provisions in addition to the Companies Act 1994, the Securities and Exchange Rules 1987 , and other applicable laws and regulations: The Income Tax Ordinance 1984 The Income Tax Rules 1984 The Value Added Tax Act 1991 The Value Added Tax Rules 1991 2.3 Date of authorization The Board of Directors has authorized the financial statements on 16 April 2009 for public issue.

Page 94

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

2.4 Basis of measurement The financial statements have been prepared on historical cost basis except for certain assets which are stated at revalued amount. 2.5 Functional and presentational currency These financial statements are prepared in Bangladesh Taka (Taka/Tk) currency, which is the company's functional currency. 2.6 Use of estimates and judgment The preparation of these financial statements is in conformity with BASs/BFRSs which requires management to make judgments, 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 underlying assumptions are reviewed on an on going basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected thereby. In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant affect on the amounts recognized in the financial statements are included in the following notes: Note 7 – Inventory Valuation Note 8 – bad debt provision Note 17 – measurement of liability for staff gratuity Note 21 – other creditors Note 23 – provision for taxation Note 17.1 – deferred tax liabilities Note 17.2 – lease classification Note 37.2 – contingent liability 2.7 Reporting period The financial period of the companies other than the following two associates namely Stochastic Logic Limited and Asian Consumer Care Limited covers one year from 1 January to 31 December and is followed consistently.

Stochastic Logic Limited Asian Consumer Care Limited

From 1 August to 31 July From 1 April to 31 March

The figures involved in the aforesaid two associated companies up to 31 December 2008 from the end of their accounting years are considered to be immaterial to these financial statements. 3. Significant accounting policies The accounting policies set out below have been applied consistently (otherwise as stated) to all periods presented in these financial statements. Page 95

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

3.1 Basis of consolidation 3.1.1 Subsidiaries

Subsidiaries are entities controlled by ACI Limited. Control exists when ACI Limited has the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable are taken into account. The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that it ceases. The accounting policies of subsidiaries have been changed when necessary to align them with the policies adopted by ACI Limited. 3.1.2 Transactions eliminated on consolidation

Intra-group balances and transactions, and any unrealized income and expenses arising from intra-group transactions, are eliminated in preparing the consolidated financial statements. Unrealized gains arising from transactions with associates are eliminated against the investment to the extent of ACI Limited's interest in the investee. Unrealized losses, if any, are eliminated in the same way as unrealized gains, but only to the extent there is no evidence of impairment 3.2 Property, plant and equipment 3.2.1 Recognition and measurement Items of property, plant and equipment are measured at cost or revaluation less accumulated depreciation less impairment loss, if any. The items of property, plant and equipment were revalued in the year 2004 and 2007 by a firm of professional valuers on the basis of open market value. Capital work in progress represents the cost incurred for acquisition and/or construction of items of property, plant and equipment that were not ready for use at the end of 2008 and these are stated at cost.

Cost includes expenditure that is directly attributable to the acquisition of asset. The cost of self constructed asset includes the cost of material and direct labor, any other costs directly attributable to bringing the assets to a working condition for their intended use, and the costs of dismantling and removing the items and restoring the site on which they are located. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

Gains and losses on disposal of an item of property, plant and equipment are determined by comparing the proceeds from disposal with the carrying amount of the property, plant and equipment disposed off and are recognized net with "other income" in profit or loss account. When revalued assets are sold, the amounts included in the revaluation surplus reserve are transferred to retained earnings. Page 96

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

3.2.2 Subsequent costs The cost of replacing part of an item of property, plant and equipment is recognized in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the company and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognized in the profit and loss account as incurred. 3.2.3 Depreciation

All items of property, plant and equipment have been depreciated on straight line basis. Depreciation on additions are charged at 50% of normal rates only in the year of acquisition and no depreciation is charged in the year of disposal. Depreciation is charged at the rates varying from 2.5% to 20% depending on the estimated useful lives of assets. No depreciation is charged for land and capital work in progress. The revalued items of property, plant and equipment are depreciated by writing off their revalued amount at the date of revaluation over their remaining estimated useful lives. The estimated useful lives for the current and comparative periods are as follows: Building Plant and machinery Furniture and fixture Electrical and other office appliances Office machinery Vehicles

40 years 10 years 10 years 10 years 10 years 5 years

Depreciation methods, useful lives and residual values are reviewed at each reporting date. No revisions in respect of items of property, plant and equipment were made in 2008. 3.2.4 Impairment

The carrying amount of the entity's non financial assets, other than inventories and deferred tax assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, the asset's recoverable amount is re-estimated. However, no such conditions that might be suggestive of a heightened risk of impairment of assets existed at the reporting date. 3.3 Intangible asset 3.3.1 Goodwill Goodwill represents the excess of the cost of the acquisition over the Group's interest in the net value of the identifiable assets and liabilities of the acquiree on the date of acquisition. Page 97

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Subsequent measurement Goodwill is measured at cost less accumulated impairment losses. 3.3.2 Software’s Software’s that are acquired by the Group, which have finite useful lives, are measured at cost less accumulated amortization and accumulated impairment losses. Subsequent expenditure Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific assets to which it relates. All other expenditure is recognized in profit and loss as incurred.

3.3.3 Amortization Amortization is recognized in the profit or loss on a straight line basis over the estimated useful lives of intangible assets other than goodwill. Amortization on additions are charged at 50% of normal rates only in the year of acquisition. Amortization is charged at the rates of 10% depending on the estimated useful lives of assets.

The estimated useful life for the current intangible asset is as follows: Software

Useful life 10 years

Normal rate 10 percent

3.4 Non-current assets held for sale Non-current assets that are expected to be recovered primarily through sale rather than through retaining as investment are classified as held for sale. Immediately before classification as held for sale, the assets are measured in accordance with the Group's accounting policy. Such assets are measured at the lower of their carrying amount and fair value less cost to sell.

3.5 Leased assets

3.5.1 Finance lease Leases in terms of which the Company assumes substantially all the risks and rewards of ownership are classified as finance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair value and the present value of the minimum lease payments. Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicable to that asset.

Page 98

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Depreciation Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Company will obtain ownership by the end of the lease term. Depreciation is charged at the rate of 20% p.a.

Lease payments Minimum lease payments made under finance leases are apportioned between the finance expense and the reduction of the outstanding liability. The finance expense is allocated to each period during the lease term so as to produce a constant periodic rate of interest on the remaining balance of the liability.

3.5.2 Operating lease Payments made under operating leases are recognized in profit and loss account on a straight line basis over the term of the lease. 3.6 Inventories Inventories are measured at the lower of cost and net realizable value. The cost of inventories is based on the weighted average principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs and other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and work in progress, cost includes an appropriate share of production overheads based on normal operation capacity. Net realizable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses. Stock- in-transit represents the cost incurred up to the date of the balance sheet for the items that were not received till to the date of balance sheet. Inventory losses and abnormal losses are recognized as expenses.

3.7 Trade and other receivables Trade and other receivables are initially recognized at cost which is the fair value of the consideration given in return. After initial recognition these are carried at cost less impairment losses due to uncollectibility of any amount so recognized. 3.8 Advances, deposits and prepayments Advances are initially measured at cost. After initial recognition advances are carried at cost less deductions, adjustments or charges to other account heads such as property, plant and equipment, inventory or expenses. Deposits are measured at payment value. Prepayments are initially measured at cost. After initial recognition prepayments are carried at cost less charges to profit and loss account. Page 99

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

3.9 Cash and cash equivalent Cash and cash equivalent include cash in hand, cash at banks which are held and available for use by the Company without any restriction. 3.10 Provision A provision is recognized in the balance sheet when the Company has a legal or constructive obligation as a result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. 3.11 Contingencies Contingencies arising from claims, litigations, assessments, fines, penalties, etc. are recorded when it is probable that a liability has been incurred and the amount can be reasonably estimated. 3.12 Income tax expenses Income tax expense comprises current and deferred tax. Income tax expense is recognized in the profit or loss account except to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity. 3.12.1 Current tax Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted at the reporting date, and any adjustment to tax payable in respect of previous years. The applicable tax rate for the company is 27.5%. As the company qualifies as a "publicly traded company" it is entitled to a 10% rebate if dividend declared is more than 20% of the paid up capital. Provision for taxation has been made on the basis of the Finance Ordinance 2008.

3.12.2 Deferred tax

Deferred tax is recognized using the balance sheet method. Deferred tax arises due to temporary difference deductible or taxable for the events or transactions recognized in the income statement. A temporary difference is the difference between the tax base of an asset or liability and its carrying amount/reported amount in the balance sheet. Deferred tax asset or liability is the amount of income tax recoverable or payable in future period's recognized in the current period. The deferred tax asset /income or liability/expense does not create a legal liability/recoverability to and from the income tax authority. Deferred tax also arises due to revaluation of property, plant and equipment. The resulting impact of deferred tax assets/liabilities on revaluation reserve is included in the statement of changes in equity. 3.13 Investment in shares In the separate financial statements of the company, all investments are carried at costs. Page 100

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

In the Consolidated Financial Statements of Advanced Chemical Industries Limited, following valuation principles have been used: Investments in subsidiaries - Investment in subsidiaries has been accounted for as per BFRS-3 ' Business Combination'. The investment is eliminated in full against the equity of acquiree measured at fair value at the date of acquisition. Long term investments - These are valued at cost or revalued amounts when there is a decline in value which is not temporary. This is as per BAS 25: Accounting for Investment, applicable for periods upto those ending before 31 December 2008.

Associates and joint ventures - Associates are those entities in which the ACI Limited has significant influence, but not control, over the financial and operating policies. Joint ventures are those entities over whose activities ACI Limited has joint control, established by contractual agreement and requiring unanimous consent for strategic financial and operating decisions. Associates and joint ventures are accounted for using the equity method (equity accounted invitees). The consolidated financial statements include the ACI Limited's share of the income and expenses of equity accounted invested, after adjustments to align the accounting policies with those of the ACI Limited, from the date that significant influence or joint control commences until the date that significant influence or joint control ceases. This is in consistent with BAS 28:Investments in Associates and BAS 31: Interests in Joint Ventures. 3.14 Foreign currency transactions Foreign currency transactions are translated at rates ruling on the dates advices were received. Monetary assets and liabilities denominated in foreign currencies at reporting date are reconverted at rates ruling at the balance sheet date. All exchange differences are charged/credited to profit and loss account by being absorbed in the respective head of income or expenditure. 3.15 Revenue recognition 3.15.1 Revenue arising from sale of goods a) Goods sold

Revenue from the sale of goods is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue is recognized when the significant risks and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, there is no continuing management involvement with the goods, and the amount of revenue can be measured reliably. b) Cash on delivery sales Revenue is recognized when delivery is made and cash is received by the seller.

Page 101

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

3.15.2 Revenue arising from services

Revenue from services rendered is recognized in profit or loss account in proportion to the stage of completion of the transaction at the reporting date. The stage of completion is assessed by reference to surveys of work performed. 3.15.3 Revenue arising from commission When the Group acts in the capacity of an agent rather than as the principal in a transaction, the revenue is recognized in the net amount of commission made by the Group. 3.15.4 Interest income

Finance income comprises of interest income of fund invested. Interest income is recognized on accrual basis. 3.15.5 Dividend income Dividend income is recognized when right to receive payment of such dividend is established. 3.16 Borrowing costs Finance expenses comprise interest expense on bank loan, finance lease and other borrowings. All borrowing costs are recognized in the profit and loss account using effective interest method. 3.17 Cash flow statement Cash flow from operating activities have been presented under direct method. 3.18 Workers' profit participation fund The company had created a fund for workers as 'Workers' Profit Participation Fund' and 5% of the profit before charging such expense has been transferred to this fund. 3.19 Employment benefit

The company operates an unfunded gratuity scheme, provision in respect of which is made annually covering all its permanent eligible employees. This scheme is qualified as a defined benefits scheme. There are two recognized provident funds for all employees of the company. These are also qualify as defined contribution scheme. The company also has a group insurance policy for all management staff. Actuarial valuation of gratuity scheme was last made in 2006 to assess the adequacy of the liabilities provided for the schemes as per BAS 19: Employee Benefits. 3.19.1 Defined contribution plan (provident fund) Defined contribution plan is a post employment benefit plan under which the company provides benefits to one or Page 102

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

more employees. The recognized Employees' Provident Fund is being considered as defined contribution plan as it meets the recognition criteria specified for this purpose. All permanent employees contribute 10% of their basic salary to the Provident Fund and the Company also makes equal contribution.

The company recognizes contribution to defined contribution plan as an expense when an employee has rendered services in exchange for those contribution. The legal and constructive obligation is limited to the amount it agrees to contribute to the fund. 3.19.2 Defined benefit plan (gratuity)

Defined benefit plan is a retirement benefit plan under which amounts to be paid as retirement benefits are determined by reference to employees' earnings and/or year of services. The recognized Employees' Gratuity Fund is being considered as defined benefit plan as it meets the recognition criteria. The company's obligation is to provide the agreed benefits to current employees as per condition of the fund.

Present value of defined benefit obligation and the fair value of the plan assets were determined by professional actuary. Projected Unit Credit method is used to measure the present value of defined benefit obligations and related current and past service cost and mutually compatible actuarial assumptions about demographic and financial variables were used. The difference between fair value of the plan assets and present value of obligation is recognized as a liability or an asset in the balance sheet.

The rate used to discount post employment benefit obligations is determined by reference to the rate stated in the actuarial report. The expected return on plan assets is based on market expectation and is one of the component of expenses recognized in the profit and loss account. Total expenses recognized in the profit and loss account comprise of current service cost, interest cost, expected return on plan assets. 3.19.3Leave encashment The company makes provision for annual leave encashment based on latest basic salary as allowed by the Company policy. 3.19.3 Short-term benefit Short-term employee benefit obligations are measured on an undiscounted basis and are expensed as the related service is provided. 3.20 Earnings per share The Company and the Group (which is made up ACI Limited and its subsidiaries and associates) present its basic earnings per share (EPS) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company/Group by the weighted average number of ordinary shares outstanding during the year. Diluted EPS is determined by adjusting the profit or loss account attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential Page 103

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

ordinary shares, if any. This has been shown on the face of profit and loss account and computation of EPS is stated in note 31. 3.21 Segment reporting

A segment is a distinguishable component of the Company that is engaged either in providing related products or services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risks and rewards that are different from those of other segments. The Company's primary format for segment is based on business segments. Segment information is presented only on the basis of the consolidated financial statements. 3.22 New standards and interpretations yet to be applicable A number of new standards, amendments to standards and interpretations are not yet effective for the year ended 31 December 2008 and have not been applied in preparing these financial statements. Bangladesh Financial Reporting Standards (BFRS )-3 'Business Combinations' Revised BFRS 3, which becomes mandatory for the Group's 2010 consolidated financial statements, will be applied prospectively and therefore there will be no impact on prior periods in the Group's 2010 consolidated financial statements. Bangladesh Financial Reporting Standards (BFRS)-7 'Financial Instruments Disclosures' BFRS 7 is effective from 2010.The Company will disclose information about financial assets and financial liabilities in the 2010 financial statements. Bangladesh Financial Reporting Standards (BFRS)-8 'Operating Segments' BFRS-8 'Operating Segments' introduces the "management approach" to segment reporting. BFRS-8 which becomes mandatory for the company's 2010 financial statements, will require a change in the presentation and disclosure of segment information based on the internal reports regularly reviewed by the ACI Group's chief operating decision maker in order to assess each segment's performance and to allocate resources to them. Bangladesh Accounting Standards (BAS)-32'Financial Instruments: Presentation' and Bangladesh Accounting Standards (BAS)-39 'Financial Instruments: Recognition and Measurements'

BAS 32 and 39 are effective from January 2010, which require to adopt policy and disclosure for financial assets and financial liabilities.

Page 104

4. Property, plant and equipment a) Own assets i) Cost Cost Particulars

Land Building Plant and machinery Furniture and fixture Electrical and other appliances Office machinery Vehicles Total (i)

As at 1 January 2008

Additions during the year

Taka

Taka

Depreciation

Transferred from CWIP

Disposal during the year

Adjustment during the year

As at 31 December 2008

Taka

Taka

Taka

Taka

Rate

As at 1 January 2008

Charged during the year

Disposal during the year

Adjustment during the year

Taka

Taka

Taka

Taka

As at 31 December 2008 Taka

Written down value as at 31 December 2008 Taka

46,318,282

-

-

-

-

46,318,282

-

-

-

-

-

46,318,282

143,065,832

-

12,811,049

-

-

155,876,881

2.5%

21,534,881

3,736,784

-

-

25,271,665

130,605,216

435,101,146

2,210,134

291,671,287

(1,019,925)

(150,000)

727,812,642

10.0%

213,804,885

46,373,286

(486,859)

(37,500)

259,653,812

468,158,830

43,380,122

16,377,300

-

-

(3,500)

59,753,922

10.0%

25,955,279

4,888,292

-

(175)

30,843,396

28,910,526

48,032,874

10,884,593

-

-

-

58,917,467

10.0%

30,533,747

4,251,775

-

-

34,785,522

24,131,945

41,342,842

6,289,507

-

-

(442,600)

47,189,749

10.0%

23,395,903

3,880,356

-

(22,130)

27,254,129

19,935,620

104,124,365

27,503,163

-

(2,061,759)

(12,873,703)

116,692,066

20.0%

77,108,298

8,748,189

(1,988,750)

(4,332,432)

79,535,305

37,156,761

861,365,463

63,264,697

304,482,336

(3,081,684)

(13,469,803)

1,212,561,009

392,332,993

71,878,682

(2,475,609)

(4,392,237)

457,343,829

755,217,180

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

ii) Revaluation Revaluation Particulars

Land Building Plant and machinery Furniture and fixture Electrical and other appliances Office machinery Vehicles Total (ii) Total assets (i+ii)

Depreciation As at 31 December 2008 Taka

Written down value as at 31 December 2008 Taka

Transferred from CWIP

Disposal during the year

Adjustment during the year

As at 31 December 2008

Taka

Taka

Taka

Taka

Taka

284,047,862

-

-

-

-

284,047,862

-

-

-

-

-

39,764,561

-

-

-

-

39,764,561

2.5%

8,806,636

994,114

-

-

9,800,750

284,047,862 29,963,811

70,435,559

-

-

(7,271)

-

70,428,288

10.0%

24,652,715

7,042,829

(2,545)

-

31,692,999

38,735,289

(703,383)

-

-

-

-

(703,383)

10.0%

(246,183)

(70,338)

-

-

(316,521)

(386,862)

(1,572,866)

-

-

-

-

(1,572,866)

10.0%

(550,505)

(157,287)

-

-

(707,792)

(865,074)

1,350,619

-

-

-

-

1,350,619

10.0%

472,714

135,061

-

-

607,775

742,844

20.0%

As at 1 January 2008

Additions during the year

Taka

Rate

As at 1 January 2008

Charged during the year

Disposal during the year

Adjustment during the year

Taka

Taka

Taka

Taka

25,714,964

-

-

(1,068,897)

(2,077,234)

22,568,833

18,000,474

4,513,767

(748,225)

(1,454,063)

20,311,953

419,037,316

-

-

(1,076,168)

(2,077,234)

415,883,914

51,135,851

12,458,146

(750,770)

(1,454,063)

61,389,164

2,256,880 354,494,750

1,280,402,779

63,264,697

304,482,336

(4,157,852)

(15,547,037)

1,628,444,923

443,468,844

84,336,828

(3,226,379)

(5,846,300)

518,732,993

1,109,711,930

46,748,529

-

-

-

-

46,748,529

24,257,525

9,349,707

-

-

33,607,232

13,141,297

1,327,151,308

63,264,697

304,482,336

(4,157,852)

(15,547,037)

1,675,193,452

467,726,369

93,686,535

(3,226,379)

(5,846,300)

552,340,225

1,122,853,227

b) Leased assets Vehicles Total 2008 (a+b)

20.0%

Page 106

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Property, plant and equipment-comparative-2007 a) Own assets i) Cost

Cost

Written down value as at 31 December 2007

Depreciation As at 1 January 2007

Charged during the year

Disposal during the year

Taka

Taka

Taka

Taka

Adjustment during the year Taka

-

46,318,282

-

-

-

-

-

143,065,832

2.5%

18,073,683

3,461,198

76,080,379

-

-

435,101,146

10.0%

184,768,238

2,554,527

2,386,003

-

-

43,380,122

10.0%

44,948,846

1,152,850

1,931,178

-

-

48,032,874

34,749,698

6,593,144

-

-

-

Vehicles

73,704,425

21,687,921

-

(5,552,591)

Total (i)

729,946,608

33,053,436

89,633,400

(5,552,591)

Particular s

Land Building Plant and machinery Furniture and fixture Electrical and other appliances Office machinery

As at 1 January 2007

Additions during the year

Taka

Taka

Transferre d from CWIP Taka

Disposal during the year

Adjustment during the year

As at 31 December 2007

Taka

Taka

46,318,282

-

-

-

133,829,992

-

9,235,840

357,955,773

1,064,994

38,439,592

Rate

As at 31 December 2007 Taka

Taka

-

-

46,318,282

-

-

21,534,881

121,530,951

29,036,647

-

-

213,804,885

221,296,261

22,054,259

3,901,020

-

-

25,955,279

17,424,843

10.0%

26,942,707

3,591,040

-

-

30,533,747

17,499,127

41,342,842

10.0%

19,793,071

3,602,832

-

-

23,395,903

17,946,939

14,284,610

104,124,365

20.0%

63,851,902

6,441,034

(5,541,778)

12,357,140

77,108,298

27,016,067

14,284,610

861,365,463

335,483,860

50,033,771

(5,541,778)

12,357,140

392,332,993

469,032,470

Page 107

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

ii) Revaluation Revaluation

Particulars

Land Building Plant and machinery Furniture and fixture Electrical and other appliances Office machinery Vehicles Total (ii) Total assets (i+ii)

Written down value as at 31 December 2007

Depreciation

Taka

As at 31 December 2007 Taka

Taka

-

-

-

284,047,862

986,828

-

-

8,806,636

30,957,925

17,609,159

7,043,556

-

-

24,652,715

45,782,844

10.0%

(175,845)

(70,338)

-

-

(246,183)

(457,200)

(1,572,866)

10.0%

(393,218)

(157,287)

-

-

(550,505)

(1,022,361)

-

1,350,619

10.0%

337,653

135,061

-

-

472,714

877,905

(3,242,472)

-

25,714,964

20.0%

14,478,714

5,142,996

(1,621,236)

-

18,000,474

7,714,490

-

(3,242,472)

-

419,037,316

39,676,271

13,080,816

(1,621,236)

-

51,135,851

367,901,465

89,633,400

(8,795,063)

14,284,610

1,280,402,779

-

-

(14,284,610)

46,748,529

24,735,836

11,878,829

-

(12,357,140)

24,257,525

22,491,004

89,633,400

(8,795,063)

-

1,327,151,308

399,895,967

74,993,416

(7,163,014)

-

467,726,369

859,424,939

As at 1 January 2007

Additions during the year

Taka

Taka

Transferre d from CWIP Taka

Disposal during the year

Adjustment during the year

As at 31 December 2007

As at 1 January 2007

Charged during the year

Disposal during the year

Adjustment during the year

Taka

Taka

Taka

Taka

Taka

Taka

168,547,862

115,500,000

-

-

-

284,047,862

-

-

39,473,129

291,432

-

-

-

39,764,561

2.5%

7,819,808

70,435,559

-

-

-

-

70,435,559

10.0%

(703,383)

-

-

-

-

(703,383)

(1,572,866)

-

-

-

-

1,350,619

-

-

-

28,957,436

-

-

306,488,356

115,791,432

1,036,434,964

148,844,868

57,755,139

3,278,000

1,094,190,103

152,122,868

Rate

b) Leased assets Vehicles Total 2007 (a+b)

Page 108

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

4 (a) Consolidated property plant and equipment a) Freehold assets i) Cost Cost

Depreciation

At 1 January 2008

Additions during the year

Transferred from CWIP

Disposal during the year

Adjustment during the year

As at 31 December 2008

Taka

Taka

Taka

Taka

Taka

Taka

Land

205,109,868

22,496,472

33,667,678

-

-

261,274,018

Building

513,140,440

46,189,887

131,825,621

-

144,478

691,300,426

Plant &Machinery

830,393,874

188,648,825

647,291,040

(1,019,925)

1,509,318

54,297,248

57,994,041

26,484

-

76,379,911

26,606,341

10,907,786

53,743,924

23,457,047

Vehicles

113,514,551

Total (i)

1,846,579,816

Particulars

Furniture & Fixtures Electric & other appliances Office Machinery& Equip.

Rate

At 1 January 2008

Charged during the year

Disposal during the year

Taka

Taka

Taka

Adjustment during the year Taka

As at 31 December 2008

Written down value as at 31 December 2008

Taka

Taka

-

-

-

-

-

261,274,018

2.5%

58,664,220

15,829,922

-

-

74,494,142

616,806,284

1,666,823,132

10.0%

336,667,645

114,396,404

(486,859)

(37,500)

450,539,690

1,216,283,442

485,217

112,802,990

10.0%

29,969,943

10,309,336

-

(175)

40,279,104

72,523,886

-

(2,292,513)

111,601,525

10.0%

36,861,900

8,907,284

-

-

45,769,184

65,832,341

95,630

-

(442,600)

76,854,001

10.0%

27,739,618

7,081,121

-

(22,130)

34,798,609

42,055,392

42,557,401

-

(2,061,759)

(11,097,078)

142,913,115

20.0%

81,712,572

11,466,241

(1,988,750)

(2,733,469)

88,456,594

54,456,521

407,950,013

823,814,240

(3,081,684)

(11,693,178)

3,063,569,207

568,794,805

167,990,308

(2,475,609)

(2,793,274)

734,337,323

2,329,231,884

Page 109

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

ii) Revaluation Revaluation Particulars

Land Building Plant &Machinery Furniture & Fixtures Electric & other appliances Office Machinery& Equip. Vehicles Total (ii) Total assets ( i + ii )

Depreciation

At 1 January 2008

Additions during the year

Transferred from CWIP

Disposal during the year

Adjustment during the year

As at 31 December 2008

Taka

Taka

Taka

Taka

Taka

Taka

524,624,489

-

-

-

524,624,489

56,637,466

-

-

-

56,637,466

102,436,037

-

-

(7,271)

2,241,373

-

-

1,059,947

-

1,350,619

Rate

At 1 January 2008

Charged during the year

Disposal during the year

Taka

Taka

Taka

Adjustment during the year Taka

At 31 December 2008

Written down value as at 31 December 2008

Taka

Taka

-

-

-

-

524,624,489

2.5%

7,402,570

2,438,319

-

9,840,889

46,796,577

102,428,766

10.0%

35,728,959

10,249,876

(2,545)

45,976,290

56,452,476

-

2,241,373

10.0%

248,116

423,502

-

671,618

1,569,755

-

-

1,059,947

10.0%

264,187

59,550

-

323,737

736,210

-

-

-

1,350,619

10.0%

596,366

288,986

-

885,352

465,267

26,899,313

-

-

(1,068,897)

(2,077,234)

23,753,182

20.0%

18,711,080

4,750,637

(748,225)

(1,454,063)

21,259,429

2,493,753

715,249,244

-

-

(1,076,168)

(2,077,234)

712,095,842

62,951,278

18,210,870

(750,770)

(1,454,063)

78,957,315

633,138,527

2,561,829,060

407,950,013

823,814,240

(4,157,852)

(13,770,412)

3,775,665,049

631,746,083

181,671,301

(3,226,379)

(4,247,337)

813,294,638

2,962,370,411

-

b) Leased assets Vehicle

48,525,154

-

-

-

(1,776,625)

46,748,529

Total 2008 ( a +b )

2,610,354,214

407,950,013

823,814,240

(4,157,852)

(15,547,037)

3,822,413,578

20%

25,856,488

9,349,707

-

(1,598,963)

33,607,232

13,141,297

657,602,571

191,021,008

(3,226,379)

(5,846,300)

846,901,870

2,975,511,708

Page 110

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Consolidated property plant and equipment-comparative-2007 a) Freehold assets i) Cost Cost

Depreciation

At 1 January 2007

Additions during the year

Transferred from CWIP

Disposal during the year

At 1 January 2007

Charged during the year

Disposal during the year

Taka

Taka

Taka

Taka

Taka

Taka

Taka

Taka

Taka

Land

161,171,953

35,799,260

8,228,203

(89,548)

-

205,109,868

-

-

Building Plant &Machinery Furniture & Fixtures Electric & other appliances Office Machinery& Equip.

426,086,148

46,998,045

40,340,724

(284,477)

-

513,140,440

2.5%

48,762,187

697,798,818

42,286,787

90,308,269

-

-

830,393,874

10.0%

50,386,917

2,975,333

2,582,326

(1,647,328)

-

54,297,248

59,380,247

11,834,607

5,371,117

(206,060)

-

46,077,449

8,617,298

1,141,640

(2,092,463)

Vehicles

85,343,356

24,519,131

283,020

(10,915,566)

Total (i)

1,526,244,888

173,030,461

148,255,299

(15,235,442)

Particulars

As at 31 December 2007

Written down value as at 31 December 2007

Taka

Taka

Taka

-

-

-

205,109,868

10,089,691

(187,658)

-

58,664,220

454,476,220

274,353,628

62,314,017

-

-

336,667,645

493,726,229

10.0%

25,659,511

5,399,610

(1,089,178)

-

29,969,943

24,327,305

76,379,911

10.0%

31,029,431

5,935,860

(103,391)

-

36,861,900

39,518,011

-

53,743,924

10.0%

23,761,366

4,951,654

(973,402)

-

27,739,618

26,004,306

14,284,610

113,514,551

20.0%

69,594,765

7,603,778

(7,843,111)

12,357,140

81,712,572

31,801,979

473,160,888

96,294,610

(10,196,740)

12,357,140

571,615,898

1,274,963,918

Adjustment during the year

As at 31 December 2007

1,846,579,816

Rate

Adjustment during the year

Page 111

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

ii) Revaluation Revaluation Particulars

Land Building Plant &Machinery Furniture & Fixtures Electric & other appliances Office Machinery& Equip. Vehicles Total (ii) Total assets ( i + ii )

At 1 January 2007

Additions during the year

Transferred from CWIP

Depreciation

Disposal during the year

Adjustment during the year

Disposal during the year

Charged during the year

Adjustment during the year

As at 31 December 2007

Taka

Taka

Taka

Taka

Taka

-

-

Rate

At 1 January 2007

Taka

Taka

Taka

Taka

188,738,635

335,885,854

-

-

524,624,489

29,133,832

27,503,634

-

-

56,637,466

2.5%

6,166,860

102,436,037

-

-

-

102,436,037

10.0%

(828,336)

3,069,709

-

-

2,241,373

(1,232,747)

2,292,694

-

-

1,350,619

-

-

30,141,785

-

349,739,825

Taka

Taka

-

-

524,624,489

1,235,710

-

7,402,570

49,234,896

25,528,839

10,200,120

-

35,728,959

66,707,078

10.0%

330,949

(82,833)

-

248,116

1,993,257

1,059,947

10.0%

387,462

(123,275)

-

264,187

795,760

-

1,350,619

10.0%

417,821

178,545

-

596,366

754,253

-

(3,242,472)

26,899,313

20.0%

14,952,455

5,379,861

(1,621,236)

18,711,080

8,188,233

368,751,891

-

(3,242,472)

715,249,244

47,784,386

16,788,128

(1,621,236)

-

62,951,278

652,297,966

1,875,984,713

541,782,352

148,255,299

(18,477,914)

-

2,561,829,060

520,945,274

113,082,738

(11,817,976)

12,357,140

634,567,176

1,927,261,884

62,131,764

3,278,000

-

(2,600,000)

(14,284,610)

48,525,154

26,239,474

12,585,154

(611,000)

(12,357,140)

25,856,488

22,668,666

1,938,116,477

545,060,352

148,255,299

(21,077,914)

(14,284,610)

2,610,354,214

547,184,748

125,667,892

(12,428,976)

-

660,423,664

1,949,930,550

-

Taka

Written down value as at 31 December 2007

At 31 December 2007

b) Leased assets Vehicle Total 2007 ( a +b )

20%

Page 112

5. Capital work-in-progress-2008

Balance as at 1 January 2008 Taka

Additions

Transferred

during

to fixed

the year

assets

Balance as at 31 December 2008

Taka

Taka

Taka

28,207,698

16,022,988

12,811,049

31,419,637

185,662,526

207,284,164

291,671,287

101,275,403

-

755,430

-

755,430

-

1,647,830

-

1,647,830

213,870,224

225,710,412

304,482,336

135,098,300

7,503,608

29,939,930

9,235,840

28,207,698

29,477,404

232,265,501

76,080,379

185,662,526

23,282

2,362,721

2,386,003

-

-

1,931,178

1,931,178

-

37,004,294

266,499,330

89,633,400

213,870,224

308,658

34,605,195

33,667,678

1,246,175

78,010,642

101,722,221

131,825,621

47,907,242

486,102,013

374,544,573

647,291,040

213,355,546

21,882

800,032

26,484

795,430

2,648,109

323,840

2,971,949

-

393,285

9,192,411

7,935,837

1,649,859

Office machinery

-

95,630

95,630

-

Vehicles

-

-

-

-

567,484,589

521,283,902

823,814,239

264,954,252

-

8,536,861

8,228,203

308,658

8,214,858

110,136,508

40,340,724

78,010,642

31,115,344

545,294,938

90,308,269

486,102,013

23,282

2,580,926

2,582,326

21,882

-

2,648,109

-

2,648,109

-

5,764,402

5,371,117

393,285

Building Plant and machinery Furniture and fixture Electrical and other office appliances

Capital work-in-progress-comparative -2007

Building Plant and machinery Furniture and fixture Electrical and other office appliances

5 (a) Consolidated Capital work-in-progress-2008 Land Building Plant and machinery Furniture & fixture Pantoon and gangway Electrical and other office appliances

Consolidated capital work-in-progress-comparative-2007 Land Building Plant and machinery Furniture & fixture Pantoon and gangway Electrical and other office appliances

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Office machinery

-

1,141,640

1,141,640

-

Vehicles

-

283,020

283,020

-

39,353,484

676,386,404

148,255,299

567,484,589

5 (b) Consolidated intangible assets

Additions

Goodwill on acquisition

Balance as at

during

and

Balance as at

1 Jan 2008

the year

disposal

31 Dec 2008

Taka

Taka

Taka

Taka

104,677,902

-

-

104,677,902

-

3,794,990.00

-

3,794,990

104,677,902

3,794,990

-

108,472,892

-

189,750.00

-

189,750

104,677,902

3,605,240

-

108,283,142

Software Cost Less: Accumulated amortization and impairment losses Carrying amounts

Retirement

6. Investments

Number of shares

Face value per share

2008 Called and paid up capital per share

2007

Shareholding

Value

Value

Taka

Taka

%

Taka

Taka

51.00

2,550,000

2,550,000

Investment in subsidiaries Flyban Insecticides Limited ACI Formulations Limited ACI Salt Limited

100

25,500 12,755,000 78,000

100

10

10

66.00

63,775,000

108,712,500

1,000

1,000

78.00

78,000,000

78,000,000

ACI Foods Limited

380,000

100

100

95.00

38,000,000

38,000,000

ACI Pure Flour Limited

380,000

100

100

95.00

38,000,000

38,000,000

Apex Leather Craft Limited

365,700

100

100

100.00

79,984,291

79,984,291

ACI Agrochemicals Limited Creative Communications Limited

180

100

100

90.00

18,000

18,000

6,000

100

100

60.00

600,000

600,000

ACI Motors Limited

7,500

100

100

75.00

750,000

750,000

32,000

1,000

1,000

80.00

32,000,000

32,000,000

105,260

1,000

1,000

76.00

105,260,000

-

438,937,291

378,614,791

Premiaflex Plastics Limited ACI Logistics Limited

Page 114

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Investment in Associates and Joint Ventures Asian Consumer Care (Pvt.) Limited ACI Godrej Agrovet ( Pvt. ) Limited Computer Technology Limited Stochastic Logic Limited Tetley ACI ( Bangladesh ) Limited

1,079,445

10

10

24.00

10,794,450

10,794,450

1,350,000

100

100

50.00

135,000,000

80,000,000

200

100

100

40.00

20,000

20,000

2,000

100

100

20.00

200,000

200,000

550,000

100

100

50.00

55,000,000

45,000,000

201,014,450

136,014,450

Investment in others Mutual Trust Bank Limited Central Depository Bangladesh Limited

498,960 2

100

100

3.33

28,316,000

20,000,000

1,000,000

1,000,000

0.58

2,000,000

2,000,000

30,316,000

22,000,000

670,267,741

536,629,241

Total investment in shares

6 (a) Consolidated Investment

Number of shares

Face value per share

2008 Called and paid up capital per share

2007

Shareholding

Value

Value

Taka

Taka

%

Taka

Taka

Investment valued at cost: Mutual Trust Bank Limited Central Depository Bangladesh Limited

498,960

100

100

1

28,316,000

20,000,000

2

1,000,000

1,000,000

1

2,000,000

2,000,000

Computer Technology Limited

200

100

100

40

20,000

20,000

30,336,000

22,020,000

Investment valued under equity method: Tetley ACI (Bangladesh) Limited Asian Consumer Care (Pvt) Limited ACI Godrej Agrovet (PVt.) Limited Stochastic Logic Limited

Total carrying amount of investment

550,000

100

100

50

(1,059,354)

(1,859,093)

1,079,445

10

10

24

(5,631,037)

907,018

1,350,000

100

100

50

111,630,417

41,604,435

2,000

100

100

20

(813,806)

(627,168)

104,126,220

40,025,192

134,462,220

62,045,192

7. Inventory

Finished goods

2008

2007

Taka

Taka

1,223,602,498

611,584,055

Page 115

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Work-in-process

84,741,942

35,434,261

Raw materials

690,497,438

312,808,509

Packing materials

113,365,639

74,034,071

Stores and spares

10,578,583

7,528,820

Stock in transit

67,593,045

108,529,354

2,190,379,145

1,149,919,070

105,325,895

58,521,441

2,085,053,250

1,091,397,629

Less:

Provision for slow moving and damaged goods and write down to NRV

In view of innumerable items of inventory and diversified quantities, it is not practical to disclose quantities against each item of inventory.

7 (a) Consolidated inventories

Finished goods

1,452,324,575

644,727,561

88,794,787

36,229,138

1,254,127,400

602,323,616

262,084,178

141,316,259

Stores & spares

42,349,436

13,998,250

Stock in transit

158,031,685

197,259,809

-

5,715,173

3,257,712,061

1,641,569,806

113,458,700

58,521,441

3,144,253,361

1,583,048,365

Work-in-process Raw materials Packing materials

Others

Less:

Provision for slow moving and damaged goods and write down to NRV

8. Trade debtors 2008

2007

Dues over

Dues below

6 months

6 months

Total

Total

Taka

Taka

Taka

Taka

Pharmaceuticals

14,008,187

200,182,951

214,191,138

116,498,581

Agro-business

54,540,654

537,668,512

592,209,166

495,007,467

Animal health

6,127,737

84,189,469

90,317,206

Consumer brands

9,416,852

136,294,910

145,711,762

359,350

89,148,721

89,508,071

59,612,740

19,783,496

150,009,213

169,792,709

112,531,316

-

59,480,835

59,480,835

104,236,276

1,256,974,611

1,361,210,887

940,529,710

56,395,334

41,638,666

1,304,815,553

898,891,044

Seeds Fertilizer Cropex

Less:

Provision for doubtful debts

61,567,581 95,312,025

Page 116

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

8 (a) Consolidated trade debtors 2008

2007

Taka

Taka

Pharmaceuticals

214,191,138

116,498,581

Agro-chemicals

593,113,816

495,007,467

Consumer brands

145,711,762

95,312,025

Animal health

90,317,206

61,567,581

Seeds

89,508,071

-

169,792,709

59,612,740

59,480,835

112,531,316

7,042,852

-

Foods

52,701,814

-

Flour

41,462,365

-

Fertilizer Cropex Salt

Premiaflex

11,798,171

-

Motors

456,438,388

-

Others

-

8,227,162

1,931,559,127

948,756,872

56,864,984

41,638,666

1,874,694,143

907,118,206

51,087,501

23,829,423

1,823,606,642

883,288,783

1,874,694,143

907,118,206

2008

2007

Less: Provision for doubtful debts

Debts due over six months Debts due below six months

9. Other debtors

Dues over

Dues below

6 months

6 months

Total

Total

Taka

Taka

Taka

Taka

-

606,178

606,178

1,400,908

2,262,050

-

2,262,050

2,262,050

Searle Pakistan Limited

-

-

-

1,478,769

Health Care Pharmaceuticals Limited

-

-

-

3,377,568

EAC Industrial Ingredients Pte. Ltd.

-

973,554

973,554

-

Labx Biotechnology ( Pvt.) Limited

938,856

-

938,856

2,638,856

Les Laboratories Servier

-

37,213,012

37,213,012

70,903,945

Godrej Sara Lee A & P Fund

-

-

-

2,314,285

Winall Hi-tech Seed Company Limited

-

-

-

31,779,800

6,052,147

647,948

6,700,095

7,761,251

Receivable from Novartis (Bangladesh) Limited Receivable from Oram Limited

Bank guarantee margin

Page 117

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Other receivables

-

32,911,308

32,911,308

12,648,271

9,253,053

72,352,000

81,605,053

136,565,703

9 (a) Consolidated other debtors

Debts due over six months Debts due below six months

2008

2007

Taka

Taka

9,303,053

16,243,306

74,477,451

128,233,237

83,780,504

144,476,543

10. Advances, deposits and prepayments 2008

2007

Taka

Taka

92,603,253

56,210,410

Advances to C & F agents and others

67,086,789

46,171,864

Advance for rent and others

40,922,149

3,671,742

VAT current account

34,673,374

57,934,082

235,285,565

163,988,098

Advances: Loans and advances to staff

Deposits: Deposits for utilities

3,188,723

2,348,623

Tender deposit

5,820,952

13,260,055

9,009,675

15,608,678

Prepayments

1,501,726

164,265

245,796,966

179,761,041

10 (a) Consolidated advances, deposits and prepayments Advances: Advance to staff Advance to C&F agent and others

92,603,253

56,210,410

110,182,492

102,484,084

Advance for rent and others

80,308,873

4,130,742

VAT current account.

42,197,388

57,934,082

325,292,006

220,759,318

Deposits: Deposits for utilities

13,537,745

9,978,525

Tender deposit

12,435,590

17,073,525

5,008,216

-

30,981,551

27,052,050

1,600,435

385,753

357,873,991

248,197,121

L/C margin Prepayments

I1. Inter company receivables

Page 118

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Flyban Insecticides Limited

976,125

971,125

Apex Leather Craft Limited

52,119,777

53,981,658

30,000

30,000

437,294

182,268

Computer Technology Limited Tetley ACI (Bangladesh) Limited Asian Consumer Care (Pvt.) Limited ACI Salt Limited

7,555,218

17,292,310

161,993,597

296,541,803

869,726

6,913,095

300,914,860

46,203,735

53,175,971

126,138,290

54,638

27,340

4,066,894

3,134,753

77,866,482

-

175,217,496

-

ACI Godrej Agrovet (Pvt. ) Limited ACI Foods Limited ACI Pure Flour Limited ACI Agrochemicals Limited Stochastic Logic Limited Premiaflex Plastics Limited ACI Motors Limited ACI Logistics Limited

26,780,697

-

862,058,775

551,416,377

11 (a) Consolidated inter-company receivables

Tetley ACI Bangladesh Ltd Asian Consumer Care (PVT.) Ltd Computer Technology Ltd. ACI Godrej Agrovet (Pvt.) Limited Stochastic Logic Limited

2008

2007

Taka

Taka

437,294

182,268

7,555,218

17,292,310

30,000

30,000

869,726

6,913,095

4,066,894

3,134,753

12,959,132

27,552,426

11.1 Name of auditors of the group companies

Name of the company ACI Formulations Limited ACI Logistics Limited ACI Godrej Agrovet (Pvt. ) Limited Tetley ACI (Bangladesh) Limited ACI Salt Limited

Relationship

Auditors

Subsidiary

Rahman Rahman Huq

"

Rahman Rahman Huq

Joint venture

Rahman Rahman Huq

"

Rahman Rahman Huq

Subsidiary

Hoda Vasi Chowdhury & Co.

ACI Foods Limited

"

M. J. Abedin & Co.

ACI Pure Flour Limited

"

M. J. Abedin & Co.

Apex Leather Craft Limited

"

M. J. Abedin & Co.

Creative Communication Limited

"

Ashraful Haque Nabi & Co.

ACI Motors Limited

"

Ashraful Haque Nabi & Co.

Premiaflex Plastics Limited

"

Ashraful Haque Nabi & Co.

Flyban Insecticides Limited

"

Shiraz Khan Bashak & Co.

"

Shiraz Khan Bashak & Co.

ACI Agrochemical Limited Asian Consumer Care (Pvt.) Limited

Associate

Ahmed Mashuque & Co.

Stochastic Logic Limited

Associate

Shiraz Khan Bashak & Co.

Page 119

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

12. Cash and bank balance

Cash in hand Collection in hand

2008 Taka

2007 Taka

10,775,189

8,982,229

67,769,455

24,041,251

Cash at bank

133,379,993

24,171,993

Cash and bank balance

211,924,637

57,195,473

Bank overdrafts used for cash management purposes (Note-18)

(732,188,602)

(271,195,982)

Cash and cash equivalent in the cash flow statement

(520,263,965)

(214,000,509)

12,165,386

9,794,426

153,852,287

48,773,535

67,769,455

24,041,251

233,787,128

82,609,212

(1,209,590,748)

(314,191,451)

(975,803,620)

(231,582,239)

12 (a) Consolidated cash and bank balance

Cash in hand Cash at bank (in current accounts) Collection in hand Cash and bank balance Bank overdrafts used for cash management purposes ( Note-18-a) Cash and cash equivalent in the cash flow statement

13. Non-current assets held for sale Non-current assets held for sale represents investment in shares of ACI Formulations Ltd amounting to Taka 18,601,750 (3,720,350 shares at carrying value of Tk 5 per share with a face value of Tk 10 each) The decision to sell this asset was taken in 132nd board meeting dated 2 July 2008 and accounted for as per BFRS-5-'Non-current Assets Held for Sale and Discontinued Operations'. This investment is measured at cost as per BAS25: Investments.

14. Share capital

Authorised:

50,000,000

Ordinary shares of Tk. 10 each

500,000,000

500,000,000

1,680,700

Ordinary shares of Tk. 10 each

16,807,000

16,807,000

1,049,300

Ordinary shares of Tk. 10 each Issued for consideration other than cash

10,493,000

10,493,000

6,090,000

Bonus shares of Tk. 10 each

60,900,000

60,900,000

7,350,000

Right shares of Tk. 10 each

73,500,000

73,500,000

161,700,000

161,700,000

Issued and paid up:

16,170,000

Page 120

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

The aforesaid share capital is subscribed as under : Number of shares

Percentage

Directors/Sponsors

5,951,399

36.81

Institutions

3,425,541

21.18

General shareholders

6,793,060

42.01

16,170,000

100.00

A distribution schedule of the above shares is given below as required by the listing rules: Percentage Number of shareholders

of total Shareholdings

9,228

Less than 500 shares

1,021

501-5,000 shares

No of shares

shareholdings

986,364

6.10

1,240,715

7.67

54

5,001-10,000 shares

369,283

2.28

30

10,001-20,000 shares

468,010

2.89

15

20,001-30,000 shares

335,899

2.08

4

30,001-40,000 shares

142,220

0.88

10

40,001-50,000 shares

366,870

2.27

8

50,001-100,000 shares

604,020

3.74

100,001-1,000,000 shares

5,044,475

31.20

Over 1,000,000 shares

6,612,144

40.89

16,170,000

100.00

15 3 10,388 15. Share premium- Tk. 250,022,474

This represents the amount received against issue of shares at premium in the years 1995 and 1998.

16. Capital and revaluation surplus

16.1 Capital reserve This represents the total grant received from Imperial Chemical Industries plc, London towards the cost of fixed assets.

16.2 Revaluation surplus Opening balance as at 1 January 294,901,646

216,135,224

-

81,036,152

Realized during the year due to disposal of fixed assets

(2,286,216)

(2,269,730)

Adjustment due to change in tax rate

10,532,202

-

303,147,632

294,901,646

Addition during the year

Page 121

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

16.2 (a) Consolidated revaluation surplus 2008 Taka

2007 Taka

600,284,264

273,096,825

Addition during the year

(4,361,196)

329,457,169

Realized during the year due to disposal of fixed assets

(2,286,216)

(2,269,730)

Adjustment due to change in tax rate

19,646,058

-

(16,006,869)

-

597,276,041

600,284,264

Opening balance as at 1 January

Post acquisition reserve transferred to retained earnings

17. Long term liabilities 2008

2007

Taka

Taka

Staff gratuity provision

96,922,813

83,087,269

Other long term employee benefits

27,457,642

17,061,333

128,217,456

130,371,634

Employees group insurance fund

400,000

400,000

Loan from other sources - unsecured

215,245

215,245

Notes

Deferred tax liabilities

17.1

Obligation under finance lease

17.2

2,363,791

8,082,683

Long term bank loan

17.3

54,087,034

103,012,854

309,663,981

342,231,018

Staff gratuity provision

96,922,813

83,087,269

Other long term employee benefits

27,457,642

17,061,333

129,625,281

184,343,829

17 (a) Consolidated long term liabilities

Deferred tax liabilities Employees group insurance fund Loan from other sources - unsecured Obligation under finance lease Long term bank loan

17.3 (a)

400,000

400,000

55,631,573

55,631,573

2,363,791

8,082,683

313,348,442

281,191,990

625,749,542

629,798,677

301,696,063

190,915,049

17.1 Deferred tax liabilities (a)

Deferred tax on temporary differences (i) Taxable temporary differences fixed assets lease obligation Total taxable temporary differences

5,058,609

5,616,376

306,754,672

196,531,425

(ii) Deductible temporary difference Stock

105,325,895

58,521,441

Debtors

56,395,333

41,638,666

Gratuity

96,922,813

83,087,269

258,644,041

183,247,376

Total deductible temporary difference

Page 122

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Net taxable temporary differences

48,110,631

Tax rate Deferred tax liability

13,284,049

27.5%

30%

13,230,424

3,985,215

(b)

Deferred tax liability on revaluation surplus

114,987,032

126,386,419

(a+b)

Closing balance

128,217,456

130,371,634

Deferred tax on revaluation surplus has been restated due to change of tax rate from 30% to 27.5% during the year under review. 17.2 Obligation under finance lease Payment due within one year

5,718,892

10,220,408

Payment due within 5 years but later than one year

2,363,791

8,082,683

-

-

8,082,683

18,303,091

12,328,254

Payment due after 5 years

17.3 Long term bank loan Loan from The Hongkong and Shanghai Banking Corporation Limited

19.3.5

10,774,685

Loan from Standard Chartered Bank

19.1.5

43,312,349

90,684,600

54,087,034

103,012,854

Standard Chartered Bank

43,312,349

48,121,577

The Hongkong and Shanghai Banking Corporation Limited

84,049,143

90,684,600

Citibank N.A

95,789,976

142,385,813

Eastern Bank Limited

34,296,600

-

17.3 (a) Consolidated long term bank loans

The City Bank Limited

55,900,374

-

313,348,442

281,191,990

18. Bank overdraft 2008

2007

Taka

Taka

98,533,776

51,449,751

Notes

Standard Chartered Bank

19.1

Commercial Bank of Ceylon Limited

19.2

The Hongkong and Shanghai Banking Corporation Limited

19.3

Citibank, N.A.

19.4

126,217,600

115,014,970

Mercantile Bank Limited

19.10

70,693,145

-

(1,345)

(3,345)

The City Bank Limited

19.5

196,512,607

-

Eastern Bank Limited

19.6

13,097,718

-

Bank Alfalah Limited

19.7

59,927,779

-

Dhaka Bank Limited

13,522,009 18,139,778

44,816,008 59,918,598

BRAC Bank Limited

19.8

57,389,094

-

AB Bank Limited

19.9

78,156,441

-

732,188,602

271,195,982

Page 123

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

18 (a) Consolidated Bank Overdraft Standard Chartered Bank Commercial Bank of Ceylon Limited The Hongkong and Shanghai Banking Corporation Limited

162,126,004

69,893,177

31,091,261

44,816,008

44,218,473

67,047,759

Citibank N.A

167,990,308

132,437,852

The City Bank Limited

196,512,607

-

70,693,145

-

Mercantile Bank Limited Dhaka Bank Ltd.

136,284,129

(3,345)

Eastern Bank Ltd.

32,581,430

-

Bank Alfalah Ltd.

59,927,779

-

BRAC Bank Ltd.

57,389,094

-

AB Bank Ltd. Bangladesh Krishi Bank National Bank Limited

78,156,441

-

171,178,594

-

1,441,483

-

1,209,590,748

314,191,451

319,575,174

333,159,433

19. Short term bank loan

Standard Chartered Bank Commercial Bank of Ceylon Limited The Hongkong and Shanghai Banking Corporation Limited

19.1 19.2

236,640,000

210,414,000

19.3

351,469,364

513,606,966

Citibank, N.A.

19.4

283,736,166

85,216,318

AB Bank Limited

19.9

77,620,000

-

The City Bank Limited

19.5

182,947,266

-

Eastern Bank Limited

19.6

183,686,243

-

BRAC Bank Limited

19.8

180,894,407

-

1,816,568,620

1,142,396,717

Standard Chartered Bank

640,008,223

624,442,082

Commercial Bank of Ceylon Limited

347,764,000

210,414,000

The Hongkong and Shanghai Banking Corporation Limited

651,721,239

914,701,787

Citibank N.A

403,819,499

165,473,546

AB Bank Ltd.

108,620,000

-

The City Bank Ltd.

182,947,266

-

Eastern Bank Ltd.

355,042,127

-

BRAC Bank Ltd.

180,894,407

-

2,870,816,761

1,915,031,415

19 (a) Consolidated short term bank loans

19.1 Standard Chartered Bank

The company is enjoying following facilities from Standard Chartered Bank (SCB) under the following terms and conditions.

Page 124

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

19.1.1 Overdraft

Limit Purpose Tenor

: : :

Tk 75,000,000 Working capital financing On demand

19.1.2 Letter of Credit / Loan Against Trust Receipt (LATR)

Amount:

:

Tk 600,000,000

Purpose:

:

To open Letter of Credit and subsequent retirement through the Standard Chartered Bank (SCB).

Tenor: Repayment

:

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.

:

19.1.3 Short term bank loan

Amount

:

Tk 70,000,000 (inner limit of Letter of Credit for Tk. 600,000,000 under Note: 19.1.2)

Purpose

:

To finance import of machinery and equipment through the Standard Chartered Bank (SCB).

Tenor

:

1 Year

Repayment

:

12 equal monthly installment

19.1.4 Revolving Loan

Amount

:

Tk 200,000,000 (inner limit of Letter of Credit for Tk. 600,000,000 under Note: 19.1.2)

Purpose

:

Working capital finance

Tenor

:

120 days

19.1.5 Letter of Credit / Term Loan

Amount

:

Purpose

:

Tk 260,000,000 To import Pharmaceuticals capital machinery. A portion of the term loan to the tune of tk.80.00 Million has been disbursed and is now under run-down basis.

Tenor

:

4 Years

Payment

:

16 equal quarterly installments

Amount

:

Purpose

:

Tk 20,000,000 (inner limit of Letter of Credit for Tk. 600,000,000 under Note: 19.1.2) To issue guarantee for tender and utility facilities

Tenor

:

4 Years

19.1.6 Guarantee

Securities for the facilities mentioned under notes 19.1.1, 19.1.2, 19.1.3, 19.1.4, 19.1.5, and 19.1.6 are as follows:

Page 125

Issuer Advanced Chemical Industries Limited (ACI) i)

Issue Manager Alliance Financial Services Limited

ii)

Demand promissory note and letter of continuation for Tk 1,110,454,000.00 each. Registered hypothecation over Stock and Book debts on pari-passu basis with other lenders where Standard Chartered Bank's share should be at least Tk. 920,000,000 [Held for Tk. 1,000,000,000 dtd. 06.06.06].

iii)

Registered hypothecation over Plant & Machinery on pari-passu basis with other lenders where Standard Chartered Bank's should be at least Tk.565,000,000 [ Held for Tk. 1,000,000,000 dtd. 06.06.06].

iv)

Registered hypothecation over specific Plant & Machinery imported through Standard Chartered Bank for Tk.260,000,000.

v)

Equity Mortgage over Land & Building thereon of the factory property of Advanced Chemical Industries Limited at Godnail, Narayanganj (Held for Tk. 318,042,000 dated 11.08.1998).

vi)

Board resolution of the company covering entire facility.

19.2 Commercial Bank of Ceylon Limited

The Company is enjoying following facilities from Commercial Bank of Ceylon Ltd. under the following terms and conditions.

19.2.1 Overdraft

Limit Purpose Tenor Expiry

: : : :

Tk 50,000,000 Working capital financing On demand 31-10-09

19.2.2 Short term bank loan

Amount

:

Tk 150,000,000

Purpose

:

Working capital finance

Tenor

:

180 days

19.2.3 Letter of Credit / Loan Against Trust Receipt (LATR)

Amount

:

Tk 90,000,000

Purpose

:

For import of raw materials

Tenor

:

180 days

Securities for the facilities mentioned under notes 19.2.1, 19.2.2 and 19.2.3 are as follows: i)

Demand promissory notes and letter of continuation for Tk 290,000,000.

ii) Registered first hypothecation charge over stocks and book debts on pari-passu basis with other lenders where Commercial Bank of Ceylon Ltd's should have at least Tk. 290,000,000.

Page 126

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

19.3 The Hongkong and Shanghai Banking Corporation Limited

The Company is enjoying following facilities from The Hongkong and Shanghai Banking Corporation (HSBC) under the following terms and conditions: 19.3.1 Overdraft

Limit Purpose Tenor Expiry

: : : :

Tk 30,000,000 To support collection/payment and daily overhead expenses. On demand 30-06-2009

19.3.2 Letter of Credit / Loan Against Trust Receipt (LATR) / Short term bank loan

Amount

:

Purpose

:

Tk 500,000,000

Tenor Expiry

:

180 days

:

30-06-2009

To open Letter of Credit and their subsequent retirement through the Corporation Limited (HSBC)

Hongkong and Shanghai Banking

19.3.3 Short Term bank Loan

Amount

:

Tk 300,000,000 (inner limit of Letter of Credit for Tk. 500,000,000 under Note: 19.3.2)

Purpose

:

Working Capital financing

Tenor Expiry

:

270 days

:

30-06-2009

19.3.4 Letter of Credit (One off)

Amount

:

Tk 2,000,000

Purpose

:

To import capital machinery and issue shipping guarantee

Tenor Expiry

:

180 days

:

30-06-2009

Amount

:

Tk 17,780,793.02

Purpose

:

To import capital machinery and issue shipping guarantee

19.3.5 Term Loan

Tenor Expiry Payment

:

4 Years

:

08/04/2012

:

16 equal quarterly installments

19.3.6 Guarantee

Page 127

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Amount

:

Tk 10,000,000

Purpose

:

To issue guarantee favoring various Government Bodies and Utility companies

Tenor

:

1 year/5 years for utility companies

Securities for the facilities mentioned under notes 19.3.1, 19.3.2, 19.3.3, 19.3.4, 19.3.5 and 19.3.6 are as follows: i)

Demand promissory notes of Tk 675,000,000 with letters of revival and continuity.

ii) First pari-passu charge with other lenders over the stock of raw materials, work-in-progress, finished goods and book debts/receivables where HSBC's share will Tk 1,000,000,000. iii) First pari-passu charge with other lenders over the borrower's plant and machinery on pari-passu basis where HSBC's share should be at least Tk. 455,000,000. iv) v)

Power of Attorney for hypothecated Goods. Trade Financing General Agreement for trade facilities.

19.4 Citibank, N.A.

The Company is enjoying following facilities from Citibank, N.A. under the following terms and conditions: 19.4.1 Overdraft

Limit Purpose Tenor

: : :

Tk 70,000,000 Working capital financing On demand

19.4.2 Letter of Credit/Loan Against Trust Receipts/ Short term loan

Amount

:

Tk 400,000,000

Purpose

:

For import of raw materials, spares and finished goods.

Tenor

:

180 days

19.4.3 Short term bank loan

Amount

:

Tk 250,000,000 ( inner limit of Letter of Credit for Tk. 400,000,000 under Note: 19.4.2)

Purpose

:

Local purchase loan/duty/VAT payment

Tenor

:

90 days

Securities for the facilities mentioned under notes 19.4.1, 19.4.2 and 19.4.3 are as follows:

i)

First registered hypothecation charge on a Pari-Passu basis with other lenders of ACI Ltd. on stocks and book debts where Citibank, N.A's share should be at least Tk. 470,000,000

19.5 The City Bank Limited

The Company is enjoying following facilities from The City Bank Limited under the following terms and conditions:

Page 128

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

19.5.1 Overdraft

Limit Purpose Tenor Expiry Repayment

: : :

Tk 200,000,000 Working capital financing On demand

:

31-03-09

:

Through internal cash generation/own sources

19.5.2 Letter of Credit (Specific))

Amount

:

Tk 70,000,000

Purpose Tenor

:

To import machinery

:

210 Days

:

31-03-09

:

Tk 100,000,000 (including the Letter of Credit facility under Note: 19.5.2) For retirement of imported machineries against LC under Letter of Credit mentioned under Notes: 19.5.2 and to finance the cost of civil construction.

Expiry

19.5.3 Term Loan

Amount: Purpose:

Tenor Expiry

:

: :

210 Days 31-03-09

19.5.4 Letter of Credit / LATR (Regular)

Amount

:

Tk 250,000,000

Purpose Tenor

:

To import raw material

:

120 Days

:

31-03-09

Expiry

19.5.5 Short term bank loan

Amount

:

Tk 100,000,000 (inner limit of LATR under Note: 19.5.4)

Purpose Tenor

:

Working capital financing

:

90 Days

:

22-03-2009

Expiry

Securities for the facilities mentioned under notes 19.5.1, 19.5.2, 19.5.3, 19.5.4 and 19.5.5 are as follows: i)1st ranking Paripassu Charge on all floating assets including stock, book debts of ACI Limited with other lenders.

19.6 Eastern Bank Limited

Page 129

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

The Company is enjoying following facilities from Eastern Bank Limited under the following terms and conditions. 19.6.1 Overdraft

Limit Purpose Tenor Expiry Repayment

: : :

Tk 20,000,000 Working capital financing On demand

:

13-02-09

:

From own cash flow / sales proceeds of the business.

19.6.2 Letter of Credit/Import Loan ( Revolving)

Amount Purpose

: :

Tk 400,000,000 To import raw materials, finished goods, spare parts and others to be used in the product and sale by the company

Tenor

:

120 days

Expiry Repayment

:

13-02-09

: Letter of Credit will be adjusted upon receipt of shipping documents, Letter of Credit liability will be switched over to import loan liability. Import Loan will be repaid from own cash flow/sales proceeds of its products.

19.6.3 Letter of Credit/Term Loan ( One Time)

Amount

:

Tk 25,000,000

Purpose

:

To import capital machinery and equipment of the Company.

Tenor

:

4 Years

Expiry Repayment

:

13-02-09

:

To be repaid in 14 equal quarterly installment.

19.6.4 Demand Loan

Amount

:

Tk 125,000,000

Purpose

:

For local procurement / Duty / Tax / VAT

Tenor

:

120 days

Expiry Repayment

:

13-02-09 From own cash flow / sales proceeds of the products.

:

Securities for the facilities mentioned under notes 19.6.1, 19.6.2 , 19.6.3 and 19.6.4 are as follows: i) Registered (1st charge pari passu) hypothecation over entire stock and book debts with other lenders where Eastern Bank Limited's share should be at least Tk. 470,000,000 on pari-passu basis. 19.7 Bank Alfalah Limited

Page 130

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

The company is enjoying following facilities from Bank Alfalah Limited under the following terms and conditions: 19.7.1 Overdraft

Limit

:

Purpose

:

Tenor

:

Expiry Repayment

Tk 70,000,000 Working capital financing On demand

:

30-06-09

:

From own cash flow / sales proceeds of the products.

19.7.2 Letter of Credit/Loan Against Trust Receipts

Amount:

:

Tk 100,000,000

Purpose:

:

To import raw material

Tenor

:

150 days

Expiry Repayment

:

31-06-09

:

From company's own source.

Securities for the facilities mentioned under notes 19.7.1 and 19.7.2 are as follows: i) First registered hypothecation charge on a Pari-Passu basis with other lenders of Advanced Chemicals Industries Limited on Stocks and Book Debts where Bank Alfalah Limited's share should be at least Tk. 180,000,000. ii)

Trust Receipt

19.8 BRAC Bank Limited

The company is enjoying following facilities from BRAC Bank Limited under the following terms and conditions: 19.8.1 Overdraft

Limit: Purpose: Tenor Repayment

: : : :

Expiry

:

Tk 60,000,000 Working capital financing On demand From operational cash flow of the company. One year from the date of sanction

19.8.2 Letter of Credit /LATR(revolving)

Amount Purpose

: :

Tenor

:

Expiry Repayment

: :

Tk 500,000,000 To import raw materials, finished products and other items for various business division of Advanced Chemicals Industries Limited. 120 days One year from the date of sanction From operational cash flow of the company.

Page 131

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

19.8.3 Short term loan Amount

:

Tk 100,000,000 (inner limit of Letter of Credit for Tk. 500,000,000 under Note:19.8.2)

Purpose

:

To finance local purchases and other various trading items of Advanced Chemicals Industries Limited.

Tenor

:

Expiry Repayment

:

120 days One year from the date of sanction

:

From operational cash flow of the company.

19.8.4 Revolving Loan Amount

:

Tk 50,000,000

Purpose

:

To finance duty payment and local purchase

Tenor

:

120 days One year from the date of sanction

Expiry Repayment

: :

From operational cash flow of the company.

19.8.5 Guarantees Amount

:

Tk 10,000,000

Purpose

:

To meet various contractual obligations

Tenor

:

120 days

Securities for the facilities mentioned under notes 19.8.1, 19.8.2, 19.8.3, 19.8.4 and 19.8.5 are as follows: i)

Registered (1st charge pari passu) hypothecation with other lenders over entire stock of Advanced Chemicals Industries Limited where BRAC Bank Limited should have a share of Tk. 610,000,000 on pari-passu basis.

ii) Registered (1st charge pari passu) hypothecation with other lenders over entire book debts of Advanced Chemicals Industries Ltd. where BRAC Bank Limited should have a share of Tk. 610,000,000 on pari-passu basis. iii) Other usual charge documents (DP notes, Letter of Continuity, Letter of Agreement, General Loan, Agreement, Letter of Counter Guarantee) 19.9 AB Bank Limited

The Company is enjoying following facilities from AB Bank Limited under the following terms and conditions: 19.9.1 Overdraft Tk 80,000,000

Amount

:

Purpose

:

Tenor

:

Expiry Repayment

:

28-02-09

:

From sales proceed of the company's products

Working capital financing On demand

19.9.2 Letter of Credit/Loan Against Trust Receipts

Amount

:

Tk 500,000,000

Purpose

:

To import raw materials, finished goods, additives etc.

Tenor

:

120 days

Page 132

Issuer Advanced Chemical Industries Limited (ACI) Expiry Repayment

:

28-02-09

:

From sale proceeds

Issue Manager Alliance Financial Services Limited

19.9.3 Revolving Time Loan

Amount

:

Tk 120,000,000

Purpose

:

To procure raw material/finished goods and pay duty/VAT

Tenor

:

120 days

Expiry Repayment

:

28-02-09

:

From operational cash flow

19.9.4 Revolving Bank Guarantee

Amount

:

Tk 10,000,000

Purpose

:

To issue guarantee for tender and utility facilities

Expiry Repayment

:

28-02-09

:

By return of duly released original guarantee

Securities for the facilities mentioned under notes 19.9.1, 19.9.2, 19.9.3 and 19.9.4 are as follows: i) Registered (1st charge pari passu) hypothecation over all floating assets of the company under Pari-passu security share agreement with other lenders where AB Bank should have a minimum share of Tk. 710,000,000. ii)

Corporate guarantee of ACI Formulations Limited, ACI Pure Flour Limited, ACI Foods Limited.

19.10 Mercantile Bank Limited

The Company is enjoying following facilities from Mercantile Bank Limited under the following terms and conditions: 19.10.1 Overdraft

Limit Purpose Tenor Repayment

: : : :

Tk 75,000,000 Working capital financing On demand From sales proceed of company's products

19.10.2 Letter of Credit/Loan Against Trust Receipts Amount

:

Purpose

:

Tenor Repayment

:

Tk 200,000,000 To import pharmaceutical raw materials, chemicals, medicines, consumer goods raw material for production of veterinary items. 120 days From sale proceeds of company's products

Securities for the facilities mentioned under notes 19.10.1 and 19.10.2 are as follows: i)

Registered (1st charge pari passu) hypothecation over all floating assets of the company under Pari-passu security share agreement with other lenders where Mercantile Bank Limited's should have a minimum share of Tk. 275,000,000.

Page 133

Issuer Advanced Chemical Industries Limited (ACI)

ii)

Issue Manager Alliance Financial Services Limited

Corporate guarantee of ACI Formulations Limited, ACI Pure Flour Limited, ACI Foods Limited

20. Long term Bank loan - Current portion 2008 Taka

2007 Taka

19.1.5

99,171,382

58,021,601

19.3.5

5,604,887

4,483,001

104,776,269

62,504,602

Notes Standard Chartered Bank The Hongkong and Shanghai Banking Corporation Limited

20 (a) Consolidated long term loans- Current portion Standard Chartered Bank The Hongkong and Shanghai Banking Corporation Limited Citibank N.A

99,171,382

58,021,601

23,127,235

46,943,021

53,333,304

49,840,076

The City Bank Limited

5,183,939

-

Eastern Bank Limited

52,104,161

-

232,920,021

154,804,698

241,205,456

247,735,933

37,971,126

43,549,675

78,212,732

55,026,894

14,133,311

10,907,735

10,083,431

9,567,757

72,950,623

55,671,220

21. Other creditors Creditors for expenses Security money received from customers Workers profit participation fund Unpaid dividend Tax deduction at source Employees welfare fund Right share deposit to be refunded Family day fund Non-management staff provident fund Godrej Sara Lee (Bangladesh) Pvt. Limited Pidilight advertisement and promotional fund Perfetti advertisement and promotional fund Godrej consumer product advertisement and promotional fund Nivea advertisement and promotional fund Godrej Sara Lee replacement fund Management staff provident fund ACI Trading Limited Laser advertisement and promotional fund

563,722

562,644

4,212,869

2,068,364

2,378,529

2,234,976

-

735,405

-

68,114

-

12,925

3,628,267

4,678,866

-

1,112,887

-

66,366

1,769,687

1,086,681

-

43,246,264

2,701,650

-

469,811,403

478,332,706

2008 Taka

2007 Taka

553,600,009

340,391,873

21 (a) Consolidated other creditors

Creditors for expenses Security money received from customers Workers' profit participation fund Unpaid dividend

45,623,960

43,748,369

128,646,734

91,179,028

14,133,311

10,907,735

Page 134

Issuer Advanced Chemical Industries Limited (ACI) Provident fund

Issue Manager Alliance Financial Services Limited 1,769,687

1,086,681

Tax deducted from suppliers and employees

10,083,431

9,650,911

Employees savings fund

72,950,623

55,671,220

Right share deposit to be refunded

563,722

562,644

Family day fund

4,212,869

2,068,364

Non-management staff provident fund

2,378,529

2,234,976

-

735,405

Pidilight advertisement and promotional fund

-

68,114

Perfeti advertisement and promotional fund

-

12,925

3,628,267

4,678,866

-

1,112,887

Godrej Sara Lee (Bangladesh) Pvt. Limited

Godrej consumer product advertisement and promotional fund Nevia advertisement and promotional fund Godrej Sara Lee replacement fund Laser advertisement and promotional fund ACI Trading Limited

-

66,366

2,701,650

-

840,292,792

43,246,264 607,422,628

698,672,186

726,212,549

22. Inter-company liabilities

ACI Formulations Limited Premiaflex Plastics Limited ACI Motors Limited Creative Communication Limited

-

31,250,543 522,230

10,937,665

673,347

709,609,851

758,658,669

277,961,183

153,442,970

98,683,532

124,518,213

23. Provision for taxation

Opening balance Provision made during the year

376,644,715

277,961,183

Adjustment of advance payment of tax

140,094,241

-

Closing balance

236,550,474

277,961,183

Opening balance

328,246,138

214,162,306

Provision for the year

194,579,195

172,168,213

522,825,333

386,330,519

(183,721,132)

(58,084,381)

339,104,201

328,246,138

2008

2007

Taka

Taka

23 (a) Consolidated provision for tax

Advance payment of tax during the year Closing balance

24. Revenue

Page 135

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Pharmaceuticals*

2,450,979,832

1,783,144,340

Agrochemicals and public health

1,406,251,276

1,016,584,961

432,506,569

363,101,078

1,816,932,587

1,434,539,829

346,403,255

143,017,038

-

5,495,478

Fertilizer

580,258,469

171,421,607

Cropex

331,771,553

-

7,365,103,541

4,917,304,331

Quantity

Quantity

Tablets (Pc)

9,143,122

7,623,909

Capsules (Pc)

3,009,865

1,910,148

Injection (Pc)

2,853,647

1,949,992

16,193,958

14,294,046

2,553,883

3,114,500

2008

2007

Taka

Taka

Gross sales

12,427,075,182

7,075,958,101

Inter-company sales

(2,085,650,098)

(1,319,140,272)

Net sales

10,341,425,084

5,756,817,829

Animal health Consumer brands Seeds Newspaper

* Pharmaceuticals turnover includes sales of the following in units :

Bottled products (Pc) Creams (Pc)

The rest relates to agrochemical, animal health, seeds, fertilizer, cropex and consumer goods.

24 (a) Consolidated revenue

Page 136

25. Cost of sales

2008 Particulars

Raw and packing materials : Opening stock Purchase Closing stock Manufacturing expenses Quality control and development expenses Cost of samples, product bonus and stock write off Opening workin-process Closing work-inprocess Cost of goods manufactured/s old

2007

Pharmaceutical s

Agro-chemicals

Animal health

Consumer brands

Seeds

Fertilizer

Cropex

Total

Total

Taka

Taka

Taka

Taka

Taka

Taka

Taka

Taka

Taka

264,841,675 1,213,567,955

36,404,399

10,500,767

558,138

74,537,601

386,842,580

252,860,033

11,500

-

111,885,821

58,286,083

10,820,525

736,352,904

2,130,924,788

1,209,386,194

(370,496,254)

-

(67,502,095)

(27,452,867)

(3,148,200)

(335,263,661)

(803,863,077)

(386,842,580)

1,107,913,376

11,500

80,788,125

41,333,983

8,230,463

475,626,844

1,713,904,291

1,075,403,647

196,660,516

-

8,090,171

5,969,626

10,826,554

7,220,351

228,767,218

169,557,113

36,945,465

-

55,366

-

-

37,000,831

33,285,654

(46,600,368)

(2,172,386)

(3,958,015)

1,126,492

39,589

54,254,005

2,689,317

(2,275,963)

29,415,804

-

903,538

-

5,114,919

-

35,434,261

35,998,760

(58,282,519)

-

(4,733,030)

-

(21,726,393)

(84,741,942)

(35,434,261)

1,266,052,274

(2,160,886)

81,146,155

48,430,101

2,485,132

1,933,053,976

1,276,534,950

537,101,200

Finished goods: Opening stock Purchase Closing stock Inter business adjustment Cost of sales

173,045,784

121,888,944

103,729,271

144,169,679

41,960,752

26,789,625

611,584,055

446,057,066

44,456,371

1,197,224,847

150,502,568

1,397,259,115

312,799,112

324,000,409

340,033,769

3,766,276,191

2,139,703,716

(151,577,835)

(247,080,950)

(105,046,068)

(259,965,699)

(92,409,714)

(367,085,357)

(436,875)

(1,223,602,498)

(611,584,055)

(125,866,069)

-

26,079,023

99,787,046

-

-

-

-

(59,941,749)

1,072,032,841

175,264,794

1,381,250,141

262,350,150

(16,295,323)

339,596,894

3,154,257,748

1,974,176,727

1,206,110,525

1,069,871,955

256,410,949

1,429,680,242

264,835,282

520,805,877

339,596,894

5,087,311,724

3,250,711,677

As per Part II of Schedule XI of the Companies Act 1994, the quantities of raw materials, purchases and stocks should be expensed in quantitative denomination, however, this could not be provided as the company deals with large number of products both locally made and imported.

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Raw and packing materials have been procured from local sources and also imported from the following countries: China

India

Malaysia

France

Pakistan

Germany

USA

Italy

Korea

UK

Japan

Singapore

Raw and packing materials consumed are 75% (approximately) imported.

25 (a) Consolidated cost of sale 2008

2007

Taka

Taka

Opening stock

1,454,820,172

1,166,762,791

Purchase

8,357,928,759

3,611,518,147

Closing stock

9,812,748,931

4,778,280,938

(3,135,786,405)

(1,456,332,288)

6,676,962,526

3,321,948,650

612,465,000

427,183,085

7,289,427,526

3,749,131,735

Manufacturing expenses

26. Allocation of expenses

2008

2007 Quality control

Administrative

Distribution

Manufacturing

and development

Selling

expenses

expenses

expenses

expenses

expenses

Total

Total

Taka

Taka

Taka

Taka

Taka

Taka

Taka

(A)

(A)

(B)

(C)

(A)

84,429,052

51,784,748

104,326,131

26,417,571

451,622,527

718,580,029

590,119,982

Traveling and conveyance

5,011,502

30,057,590

1,147,040

219,475

153,963,190

190,398,797

150,497,110

Rent and rates

4,788,054

12,107,572

5,443,913

-

11,692,543

34,032,082

24,024,206

Particulars

Salary and wages

Page 138

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Repair and maintenance

5,299,461

3,169,618

17,010,257

503,353

4,472,437

30,455,125

22,863,335

Fuel and power

1,455,862

1,970,134

14,814,955

-

1,927,137

20,168,088

15,944,177

Postage

3,918,892

1,869,660

602,729

87,565

11,264,923

17,743,769

13,194,784

Printing and stationery

2,596,861

5,439,008

914,916

136,830

14,172,454

23,260,069

18,796,790

Promotional expenses

2,563,124

2,783,280

11,863,567

-

517,866,293

535,076,264

359,828,989

Entertainment

1,214,914

744,132

1,393,447

-

3,665,660

7,018,153

3,122,871

Vehicle maintenance

4,351,518

34,433,550

2,045,988

309,799

18,348,386

59,489,241

49,299,946

Bad debts

-

-

-

-

14,923,181

14,923,181

12,996,654

Truck and handling Legal and professional charges

-

19,628,978

2,391,160

-

50,254,942

72,275,080

48,559,045

1,194,456

110,735

198,228

-

996,827

2,500,246

5,717,286

Audit fees

300,000

-

-

-

-

300,000

255,000

Insurance

448,009

3,057,689

4,694,606

-

3,249,654

11,449,958

9,189,416

24,000

-

-

-

-

24,000

22,500

7,766,852

3,220,075

943

-

1,185,521

12,173,391

7,539,763

-

244,552

-

-

-

244,552

276,025

-

-

622,386

964,532

1,944,033

3,530,951

3,858,391

1,319,752

10,764

59,225

707,284

6,954,719

9,051,744

5,427,169

10,475,898

8,329,959

60,227,058

1,289,811

13,363,809

93,686,535

74,993,416

-

-

1,010,669

6,364,611

-

7,375,280

4,670,125

-

-

-

-

-

-

27,000

542,602

430

-

-

18,178,376

18,721,408

11,093,515

3,444,108

-

-

-

-

3,444,108

2,897,429

-

-

-

-

3,863,944

3,863,944

2,882,855

441,031

-

-

-

-

441,031

387,128

-

-

-

-

5,508,105

5,508,105

4,722,641

141,585,948

178,962,474

228,767,218

37,000,831

1,309,418,661

1,895,735,131

1,443,207,548

Directors' fees Bank charges Sundry expenses Product development expenses Training expenses Depreciation Lab chemical and apparatus Quality Control research and development Meeting expenses Share department expenses Export expenses ISO/TQM related expenses Market research

Page 139

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

(A) Administrative, selling and distribution expenses (B) Manufacturing expenses (C) Quality control and development expenses

1,629,967,083

1,240,364,781

228,767,218

169,557,113

37,000,831

33,285,654

1,895,735,131

1,443,207,548

Administrative expenses

321,801,962

171,140,276

Distribution expenses

277,057,578

252,361,112

1,505,652,278

974,455,162

2,104,511,818

1,397,956,550

(0) 26 (a) Consolidated administrative, selling and distribution expenses

Selling expenses

Page 140

27.

Other income

Taka

Taka

13,458,272

6,822,967

Dividends

28,275,726

9,216,000

-

3,378,273

3,116,000

4,404,000

Gain from sale of fixed assets

699,827

963,351

Gain from foreign currency transactions

962,374

29,199

Rental income

Proceeds from scrap sale

4,087,096

3,184,858

-

(5,417,088)

7,609,741

765,156

58,209,036

23,346,716

Service charges

13,458,272

6,822,967

Dividend received

28,275,726

8,712,000

Loss on sale of newspaper business Miscellaneous income

Consolidated other income

Agency commission from ACI Media

-

3,378,273

Agency commission from Tetley ACI (Bangladesh) Ltd

2,801,803

-

Rental income

3,116,000

4,404,000

Sales proceeds of scrap

9,270,250

4,941,967

Loss on sale of news paper business Gain from foreign currency transactions Income from sale of shares Profit from sale of fixed assets Miscellaneous income

28

2007

Service charges

Agency commission from ACI Media

27 (a)

2008

-

(5,417,088)

962,374

29,199

-

44,007,483

699,827

1,061,041

9,504,545

15,231,624

68,088,797

83,171,466

Profit from sale of shares

The company off-loaded 24% shares of ACI Formulations Limited numbering 5,267,150 shares out of its total holding of 21,742,500 shares (21.07% of total shares of ACI Formulations Limited) through direct listing with both DSE and CSE in November 2008. In addition, the company also divested its total investment in ACI Trading Limited (60%) on 30 September 2007. The capital gain arose from the divestments are as follows:

Sale proceeds Less: cost of investment : cost to sales

28 (a)

Profit from sale of shares to group

812,323,176

119,538,000

26,335,750

720,000

6,353,286

-

32,689,036

720,000

779,634,140

118,818,000

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Net sales proceeds

805,969,890

119,538,000

Less: Carrying amount of investment

166,672,699

33,356,851

Profit from sale of shares of subsidiary

639,297,191

86,181,149

791,095,275

55,594,752

21.07%

60%

166,672,699

33,356,851

2008

2007

Taka

Taka

319,095,946

139,249,313

Staff welfare fund

6,933,017

5,879,498

Finance lease

1,950,098

3,088,981

Security deposit

3,023,211

3,742,363

Workers' profit participation fund

5,300,163

3,829,558

Other funds/borrowings

2,110,258

1,250,473

338,412,693

157,040,186

(55,779,740)

(37,298,275)

(677,902)

(193,159)

(1,143,896)

(461,593)

(57,601,538)

(37,953,027)

280,811,155

119,087,159

508,716,737

204,733,330

Staff welfare fund

6,933,017

5,879,498

Lease

1,950,098

3,088,981

Carrying amount of investment to the Group has been determined as follows:

Net assets at the date of divestment % of divestment of subsidiary

29. Financing cost

Interest expenses on Bank loan

Interest income from Investment/inter-company Bank Suppliers/others

29 ( a) Consolidated financing cost

Finance cost on: Bank loan

Security deposit

3,023,211

3,742,363

Workers' profit participation fund

5,300,163

3,829,558

2,110,258

1,250,473

528,033,484

222,524,203

(943,334)

(1,348,314)

Bank

(1,143,896)

(193,159)

Suppliers

(2,165,748)

(461,593)

(4,252,978)

(2,003,066)

Other funds/borrowings

Income from: Investment/inter-company

Page 142

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited 523,780,506

220,521,137

48,110,631

13,284,049

27.50%

30.00%

13,230,424

3,985,215

3,985,215

9,695,948

(9,245,209)

5,710,733

30. Deferred tax (expenses)/income

Net taxable temporary differences Tax rate Deferred tax liability as at 31 December Less: Opening balance as at 1 January

31. Earnings per share

31.1 Basic earnings per share

The calculation of basic earnings per share at 31 December 2008 was based on the profit attributable to ordinary shareholders as follows:

Profit for the period Weighted average number of shares outstanding during the year Basic earnings per share

1,075,666,883

307,769,386

16,170,000

16,170,000

66.52

19.03

31.2 Consolidated basic earnings per share The calculation of consolidated basic earnings per share at 31 December 2008 was based on the consolidated profit attributable to ordinary shareholders as follows:

Consolidated profit for the period (Taka) Weighted average number of shares outstanding during the year Basic earnings per share (Taka)

2008

2007

917,905,438

341,808,528

16,170,000

16,170,000

56.77

21.14

31.3 Diluted EPS No diluted EPS was required to be calculated for the year since there was no scope for dilution of share during the year under review. 32. Operating leases-lessee Cancelable operating lease rentals are payable as follows: 2008

2007

Taka

Taka

Less than one year

29,191,626

20,013,380

Between one and five years

90,630,816

62,795,224

6,147,495

-

125,969,937

82,808,604

More than five years

The Company obtained leases of 55 Depots and 9 warehouses and 1 office premises under operating leases. The leases typically run for 3 -7 years, with an option to renew the leases after that date. Lease payments are increased at the time of renewal of the rent agreements to reflect market rental.

Page 143

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

During the year ended 31 December 2008 Tk 34,032,081 was recognized as expense in the income statement in respect of operating leases (2007: 24,024,000). 33. Sale/adjustment of fixed assets Original

Accumulated

cost

depreciation

Taka

Taka

Book value Taka

Motor car

587,273

497,272

Motor car

469,999

Motor car

617,360

Covered Van

Particulars

Motor car Plant & Machinery

Sale value

Mode of disposal/

Taka

adjustment

90,001

410,500

Sold through tender

424,998

45,001

180,000

Sold through tender

544,651

72,709

390,500

Sold through tender

667,625

584,975

82,650

280,000

Sold through tender

788,399

685,078

103,321

370,300

Sold through tender

1,027,196

489,404

537,792

-

Adjustment

4,157,852

3,226,378

931,474

1,631,300

34. Subsequent events The board of director of ACI Limited has recommended cash dividend Tk. 161,700,000 and stock dividend Tk. 32,340,000 for the year 2008 subject to approval of the shareholders in the Annual General meeting scheduled to be held on 18 June 2009. The company is going to issue “ACI 20 % Convertible Zero Coupon Bond” of Tk. 1 billion ( face value of Tk. 1.34 billion) with a maturity of 5 years to be listed with both of the bourses of the country as approved by its shareholders in the Extraordinary General Meeting held on 12 April 2009 subject to approval from the Securities and exchange Commission (SEC) of Bangladesh. There are no other events identified after the balance sheet date which might be material.

Page 144

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

35. Consolidated segment reporting - business segment 2008

2007

Reportable business segment Pharmaceutical s

Crop Care and Public Health

Animal health

Consumer brands

ACI Salt Ltd.

ACI Pure Flour Ltd.

Non-reportable segments

Unallocated

Total

Total

Taka

Taka

Taka

Taka

Taka

Taka

Taka

Taka

Taka

Taka

2,450,979,832

1,476,329,804

432,506,569

1,831,534,884

679,322,895

1,132,311,665

2,338,439,435

-

10,341,425,084

5,756,817,829

2,450,979,832

1,476,329,804

432,506,569

1,831,534,884

679,322,895

1,132,311,665

2,338,439,435

-

10,341,425,084

5,756,817,829

Cost of sales

(1,206,110,525)

(804,313,131)

(256,410,949)

(1,381,997,274)

(562,167,610)

(1,026,605,698)

(2,050,893,810)

-

(7,288,498,997)

(3,749,131,735)

Gross profit

1,244,869,307

672,016,673

176,095,620

449,537,610

117,155,285

105,705,967

287,545,625

-

3,052,926,087

2,007,686,094

Selling expenses

(680,209,815)

(242,204,843)

(75,541,004)

(200,276,135)

(22,215,730)

(67,878,713)

(217,325,038)

(1,000)

(1,505,652,278)

(1,035,934,186)

Distribution expenses

(59,057,617)

(38,658,500)

(8,948,124)

(56,262,067)

(37,236,200)

(17,315,780)

(59,382,941)

(196,350)

(277,057,579)

(190,882,088)

Administrati ve expenses

(46,723,175)

(54,958,239)

(7,079,269)

(53,498,228)

(6,674,996)

(6,865,244)

(143,376,021)

(2,626,791)

(321,801,963)

(165,387,099)

Other income/(exp ense)

8,999,662

4,830,421

8,066,032

1,754,712

2,969,185

1,386,749

6,014,425

34,067,611

68,088,797

169,352,615

Segment result

467,878,362

341,025,512

92,593,255

141,255,892

53,997,544

15,032,979

(126,523,950)

31,243,470

1,016,503,064

784,835,336

Segment assets

2,064,393,049

2,161,643,481

351,717,871

1,317,578,451

411,681,122

502,782,580

3,048,988,505

1,774,972,226

11,633,757,285

5,912,361,279

Segment equity and liabilities

1,314,297,014

498,786,699

326,325,465

495,268,206

411,681,123

502,782,580

2,732,898,989

5,351,717,209

11,633,757,285

5,912,361,279

Particulars

Segment revenue: To external customers Total revenue

Page 145

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

36. Related party transactions During the year, the company carried out a number of transactions with related parties in the normal course of business. The names of the related parties and nature of these transactions have been set out in accordance with the provisions of BAS 24: Related Party Disclosure. Outstanding balance as at 31 (a) Name of related party Relationship Nature of transactions Transactions value during the year December 2008 2007 2008 2007 Taka Taka Taka Taka ACI Formulations Limited Subsidiary Purchase of products 2,039,016,708 1,308,144,018 (698,672,186) (726,212,549) Providing working capital ACI Salt Limited Subsidiary 773,379,596 622,744,488 161,993,597 296,541,803 finance Apex Leather Craft Limited Subsidiary Lease of corporate office 9,416,400 18,742,810 52,119,777 53,981,658 Providing working capital 5,000 19,000 976,125 971,125 Flyban Insecticides Limited Subsidiary finance

(b)

ACI Pure Flour Limited

Subsidiary

ACI Foods Limited

Subsidiary

ACI Agrochemicals Limited

Subsidiary

Creative Communications Limited

Subsidiary

ACI Motors Limited

Subsidiary

Premiaflex Plastic Limited

Subsidiary

ACI Logistics Limited

Subsidiary

Tetley ACI Bangladesh Limited Asian Consumer Care (Pvt) Limited

Joint Venture Associate

ACI Godrej Agrovet Bangladesh (Pvt) Limited

Joint Venture

Director's emoluments Salary Benefits Provident fund contribution

Providing working capital finance Providing working capital finance Providing working capital finance Providing working capital finance Providing working capital finance Providing working capital finance Providing working capital finance Purchase of products Promotional expenses Providing working capital finance

984,104,646

195,675,286

53,175,971

126,138,290

487,817,693

90,227,888

300,914,860

46,203,735

27,340

22,405

54,638

27,340

47,582,792

600,000

(10,937,665)

(673,347)

677,730,831

750,000

175,217,496

(522,230)

229,614,527

32,002,400

77,866,482

(31,250,543)

205,230,678

-

26,780,697

-

2,222,544 4,244,254

2,103,154 26,911,423

437,294 7,555,218

182,268 17,292,310

448,418

23,650,258

869,726

6,913,095

2008 Taka 8,606,492 4,480,240 636,738 13,723,470

2007 Taka 7,519,882 3,736,610 554,784 11,811,276

Page 146

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

37. Off balance sheet items 37.1 Commitments

On the balance sheet date, the company was enjoying unfunded credit facilities from the following banks: 2008

2007

Taka

Taka

Letter of Credit Standard Chartered Bank Commercial Bank of Ceylon Limited The Hongkong and Shanghai Banking Corporation Limited Citibank, N.A. BRAC Bank Limited Eastern Bank Limited

64,838,451

238,043,902

-

1,776,864

292,107,556

128,912,418

-

139,206,764

7,022,500

-

9,680,822

-

373,649,329

507,939,948

-

9,768,881

37.2 Contingent liabilities Bank guarantees Standard Chartered Bank The Hongkong and Shanghai Banking Corporation Limited Mercantile Bank Limited

-

4,019,700

-

424,382

-

14,212,963

13,698,277

14,971,873

33,684,252

31,039,565

47,382,529

46,011,438

-

8,373,864

-

8,373,864

Shipping guarantees Standard Chartered Bank The Hongkong and Shanghai Banking Corporation Limited

Bills receivable

Standard Chartered Bank

38. General 38.1 Production capacity Production capacity of Pharmaceuticals, Consumer Brand and Animal Health business was 3,875,514 units pack per 8 hr/month and current utilization was 114%. It was 3,114,000 units pack per 8 hr/month in 2007 with utilization of 118%.

Page 147

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Advanced Chemical Industries Limited Auditors' Report under section 135(1) and paragraph 24(1) of part -II of the Third Schedule of the Companies Act 1994 We as the auditors having examined the Financial Statements of Advanced Chemical Industries Limited for the years ended 31 December 2004, 2005, 2006, 2007 and 2008 and in pursuance of section 135(1) and paragraph 24(1) of part -II of the Third Schedule of the Companies Act 1994, report that: A. The statement of assets and liabilities of the company are as under: Particulars

2008

2007

2006

2005

2004

Taka

Taka

Taka

Taka

Taka

Property and assets

Fixed assets

1,122,853,227

859,424,939

694,319,636

743,466,107

680,835,067

135,098,300

213,870,224

37,004,294

13,290,851

60,138,205

670,267,741

536,629,241

428,818,241

380,781,241

295,381,241

Current assets

4,986,884,853

3,120,888,791

1,755,046,647

1,536,955,946

1,342,335,580

Total property and assets

6,915,104,121

4,730,813,195

2,915,188,818

2,674,494,145

2,378,690,093

161,700,000

161,700,000

161,700,000

161,700,000

161,700,000

1,792,933,500

843,312,229

562,349,437

494,212,795

449,764,482

250,022,474

250,022,474

250,022,474

250,022,474

250,022,474

2,204,655,974

1,255,034,703

974,071,911

905,935,269

861,486,956

309,663,981

342,231,018

200,078,406

244,355,147

356,247,707

Current liabilities

4,400,784,166

3,133,547,474

1,741,038,501

1,524,203,729

1,160,955,430

Total liabilities & shareholders' equity

6,915,104,121

4,730,813,195

2,915,188,818

2,674,494,145

2,378,690,093

Capital work-in progress Investments

Liability and capital Share capital Reserve and surplus Share premium Shareholders' equity Long term liabilities

B. The statement of operating result of the company is as follow: Revenue

7,365,103,541

4,917,304,331

3,515,862,372

3,088,714,707

2,557,772,237

(5,087,311,724)

(3,250,711,677)

(2,339,975,616)

(2,131,538,267)

(1,817,394,259)

2,277,791,817

1,666,592,654

1,175,886,756

957,176,440

740,377,978

(1,629,967,083)

(1,240,364,781)

(884,474,379)

(726,132,328)

(540,425,340)

647,824,734

426,227,873

291,412,377

231,044,112

199,952,638

58,209,036

23,346,716

35,345,860

30,326,861

42,043,347

779,634,140

118,818,000

-

-

-

1,485,667,910

568,392,589

326,758,237

261,370,973

241,995,985

(280,811,155)

(119,087,159)

(81,555,964)

(83,396,936)

(93,164,270)

1,204,856,755

449,305,430

245,202,273

177,974,037

148,831,715

(21,261,132)

(22,728,564)

(12,260,114)

(8,898,702)

(7,441,586)

Profit before tax

1,183,595,623

426,576,866

232,942,159

169,075,335

141,390,129

Tax expenses

(107,928,740)

(118,807,480)

(79,116,544)

(56,804,522)

(51,873,927)

Net profit after tax

1,075,666,883

307,769,386

153,825,615

112,270,813

89,516,202

Cost of sales Gross profit Administrative, selling and distribution expenses Total income Other income (Nonoperating) Profit from sale of shares

Financial costs Profit before contribution to WPPF Provision for contribution to WPPF

Page 148

Issuer Advanced Chemical Industries Limited (ACI) C.

Issue Manager Alliance Financial Services Limited

The statement of cash flow of the company was as under: 2008 Taka

i)

2007

2006

2005

2004

Taka

Taka

Taka

Taka

Cash flow from operating activities Cash receipts from customers

7,639,454,724

4,908,736,690

3,806,112,232

3,358,707,758

2,742,404,999

Cash receipts from other income

61,681,506

21,223,737

35,289,395

29,535,859

47,893,107

Receipts from/(payments to) other debtors

50,838,352

(69,587,526)

(24,445,421)

7,187,755

(22,227,853)

7,751,974,582

4,860,372,901

3,816,956,206

3,395,431,372

2,768,070,253

(5,752,551,464)

(3,460,939,880)

(2,367,519,806)

(2,063,386,261)

(1,673,511,744)

Cash paid for: Purchase of inventory Operating expenses

vi)

(502,261,329)

40,737,264

(11,951,130)

48,130,048

25,682,753

(89,296,633)

(35,593,801)

11,008,583

(17,530,498)

28,651,559

Value added tax (VAT)

(730,631,148)

(539,079,179)

(410,940,340)

(337,126,878)

(275,126,997)

1,924,708

(10,793,892)

(2,207,532)

(2,007,532)

(3,855,060)

(8,192,938,362)

(5,091,165,385)

(3,552,521,412)

(3,018,691,494)

(2,400,420,818)

Cash generated from operations

(440,963,780)

(230,792,484)

264,434,794

376,739,878

367,649,435

Financing cost

(280,811,155)

(119,319,310)

(81,555,964)

(83,396,936)

(93,164,270)

Income tax paid

(111,461,586)

(133,260,448)

(59,835,560)

(25,643,000)

(14,277,841)

(392,272,741)

(252,579,758)

(141,391,524)

(109,039,936)

(107,442,111)

Net cash used in operating activities Cash flow from investing activities Purchase of property, plant and equipment Payments for capital work- inprogress

(833,236,521)

(483,372,242)

123,043,270

267,699,942

260,207,324

(63,264,697)

(33,053,436)

(10,948,620)

(21,321,196)

(6,984,937)

(225,710,412)

(266,499,330)

(32,175,356)

(41,813,850)

(70,497,536)

Investment in shares

(178,576,000)

(108,531,000)

(48,019,000)

(85,200,000)

(105,962,000)

1,631,300

2,595,400

1,511,241

2,937,206

1031402

Sales of shares of subsidiaries

805,969,890

119,538,000

-

-

-

Net cash from (used in) investing activities Cash flow from financing activities Inter-company debts (paid)/received Dividend distribution tax paid

340,050,081

(285,950,366)

(89,631,735)

(145,397,840)

(182,413,071)

(349,990,479)

137,916,229

42,393,545

29,711,344

(49,562,210)

-

-

-

-

(6,468,000)

(134,219,424)

(95,201,895)

(71,172,362)

(67,483,629)

(63,993,201)

(10,220,406)

(14,387,713)

(19,168,801)

(14,762,775)

(9,704,641)

Short term loan (paid)/received

716,443,570

506,402,344

161,713,248

(32,674,695)

(38,753,980)

Long term loan (paid)/ received

(35,090,276)

104,298,644

(28,766,555)

(118,793,680)

77,840,598

Net cash from financing activities Net increase in cash and cash equivalent (i+ii+iii) Cash and cash equivalent at 1 January Cash and cash equivalent at 31 December (iv+v)

186,922,985

639,027,609

84,999,075

(204,003,435)

(90,641,434)

(306,263,455)

(130,294,999)

118,410,610

(81,701,333)

(12,847,181)

(214,000,509)

(83,705,510)

(202,116,120)

(120,414,787)

(107,567,606)

(520,263,964)

(214,000,509)

(83,705,510)

(202,116,120)

(120,414,787)

Payment for finance lease

v)

(646,770,373)

(28,452,240)

Dividend paid

iv)

(770,911,187)

Other creditors

Sale proceeds from property, plant and equipment

iii)

(1,085,495,897)

Advances, deposits and prepayments Workers' profit participation fund

ii)

(1,593,931,585)

Page 149

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

D. The statement of consolidated assets and liabilities of the company and its group are as under: Particulars

2008

2007

2006

2005

2004

Taka

Taka

Taka

Taka

Taka

Property and assets Fixed assets

2,975,511,708

1,949,930,550

1,393,394,278

1,423,875,821

1,017,583,458

Intangible assets

108,283,142

104,677,902

104,677,902

104,677,902

104,677,902

Capital work-in-progress

264,954,252

567,484,589

39,353,484

33,557,417

82,112,777

Investments

134,462,220

62,045,192

38,069,558

65,187,998

112,789,450

Current assets

5,926,118,309

3,227,735,714

2,140,810,780

1,754,789,209

1,479,889,119

Total property and assets

9,409,329,631

5,911,873,947

3,716,306,002

3,382,088,347

2,797,052,706

161,700,000

161,700,000

161,700,000

161,700,000

161,700,000

2,092,259,165

1,295,646,679

721,388,636

641,662,355

622,243,443

250,022,474

250,022,474

250,022,474

250,022,474

250,022,474

2,503,981,639

1,707,369,153

1,133,111,110

1,053,384,829

1,033,965,917

Liability and capital Share capital Reserve and surplus Share premium Shareholders' equity Minority interest

308,046,695

92,764,072

79,265,885

75,453,643

55,628,265

Long term liabilities

625,749,542

629,798,677

370,117,209

500,746,656

480,954,356

Current liabilities

5,971,551,755

3,481,942,045

2,133,811,798

1,752,503,219

1,226,504,168

Total liabilities & shareholders' equity

9,409,329,631

5,911,873,947

3,716,306,002

3,382,088,347

2,797,052,706

E. The statement of consolidated operating result of the company and its group are as under: Revenue

10,341,425,084

5,756,817,829

4,237,856,136

3,327,490,971

2,695,049,890

Cost of sales

(7,289,427,526)

(3,749,131,735)

(2,770,641,893)

(2,189,003,597)

(1,773,119,725)

Gross profit

3,051,997,558

2,007,686,094

1,467,214,243

1,138,487,374

921,930,165

(2,104,511,818)

(1,397,956,550)

(1,014,602,710)

(797,999,902)

(628,023,411)

947,485,740

609,729,544

452,611,533

340,487,472

293,906,754

68,088,797

83,171,466

56,050,015

46,569,092

37,915,757

639,297,191

86,181,149

-

-

-

1,654,871,728

779,082,159

508,661,548

387,056,564

331,822,511

(898,972)

(3,831,367)

(36,965,835)

(27,393,797)

-

1,653,972,756

775,250,792

471,695,713

359,662,767

331,822,511

(523,780,506)

(220,521,137)

(163,661,101)

(137,276,023)

(117,363,237)

1,130,192,250

554,729,655

308,034,612

222,386,744

214,459,274

(35,542,999)

(28,671,365)

(17,679,294)

(14,686,683)

(12,115,555)

Profit before tax

1,094,649,251

526,058,290

290,355,318

207,700,061

202,343,719

Tax expenses

(161,739,343)

(161,893,824)

(122,478,216)

(94,065,617)

(79,018,048)

932,909,908

364,164,466

167,877,102

113,634,444

123,325,671

Administrative, selling and distribution expenses Total income Other income (Nonoperating) Profit from sale of shares

Share of profit of equity accounted investees

Financial costs Profit before contribution to WPPF Provision for contribution to WPPF

Net profit after tax

Page 150

Issuer Advanced Chemical Industries Limited (ACI)

F.

i.

Issue Manager Alliance Financial Services Limited

Attributable to: Equity holders of the Company Minority interest

917,905,438 15,004,470

22,355,938

2,291,243

(734,623)

4,028,480

Net profit after tax

932,909,908

364,164,466

167,877,102

113,634,444

123,325,671

341,808,528

165,585,859

114,369,067

119,297,191

The statement of consolidated cash flow of the company was as under:

Cash flow from operating activities Cash received from customers Cash received as other income Receipts from (payments to) other debtors

2008

2007

2006

2005

2004

Taka

Taka

Taka

Taka

Taka

10,058,175,379

5,720,898,542

4,475,228,183

3,545,792,895

2,832,187,153

71,561,267

38,198,506

57,059,881

44,026,944

47,337,989

50,207,086

(69,587,526)

(25,856,727)

7,187,755

(22,227,853)

10,179,943,732

5,689,509,522

4,506,431,337

3,597,007,594

2,857,297,289

Inventories

(8,242,282,517)

(3,902,876,736)

(2,837,287,508)

(2,213,639,916)

(1,555,955,174)

Operating expenses

(2,022,002,520)

(1,247,587,544)

(903,926,092)

(713,198,092)

(587,836,450)

117,027,730

40,104,658

(12,391,675)

47,904,659

25,803,326

(124,625,657)

(33,923,599)

(14,871,907)

(29,775,247)

17,172,172

(738,374,482)

(539,079,179)

(435,495,125)

(336,414,244)

(275,126,997)

1,924,708

(10,793,892)

(7,626,712)

(7,795,513)

(3,855,060)

Cash paid for:

Other creditors Advances, deposits and prepayments Value added tax (VAT) Paid to workers from WPPF

(11,008,332,738)

(5,694,156,292)

(4,211,599,019)

(3,252,918,353)

(2,379,798,183)

Cash generated from operations

(828,389,006)

(4,646,770)

294,832,318

344,089,241

477,499,106

Financing cost

(518,576,586)

(216,045,054)

(158,586,084)

(131,834,859)

(117,363,237)

Income tax paid

(167,261,741)

(191,344,829)

(59,835,560)

(36,476,069)

(14,277,841)

(685,838,327)

(407,389,883)

(218,421,644)

(168,310,928)

(131,641,078)

(1,514,227,333)

(412,036,653)

76,410,674

175,778,313

345,858,028

(407,950,013)

(173,030,461)

(38,164,709)

(370,523,396)

(17,909,137)

(521,283,902)

(676,386,404)

(77,115,119)

(46,964,869)

(91,813,512)

(73,316,000)

(37,200,000)

(10,000,000)

(85,200,000)

(73,719,500)

1,631,300

2,882,090

1,511,241

2,937,206

1,031,402

805,969,890

121,992,778

-

-

-

-

52,763,741

-

-

-

(194,948,725)

(708,978,256)

(123,768,587)

(499,751,059)

(182,410,747)

-

(1,920,000)

(480,000)

-

(3,257,500)

Net cash used in operating activities ii

iii

Cash flow from investing activities Purchase of fixed assets Payments for capital work-in-progress Investment in shares Sale proceeds of fixed assets Proceeds from sale of shares of subsidiary Proceeds from sale of investment in sharesMutual Trust Bank Net cash used in investing activities Cash flow from financing activities Paid to minority interest

Page 151

Issuer Advanced Chemical Industries Limited (ACI) Inter-company debts received/(paid) Dividend distribution tax paid Dividend paid Short term loan received/(paid) Long term loan received/(paid) sale of shares Repayment of lease obligation Net cash from financing activities iv v vi

G.

Net decrease in cash and cash equivalent (i+ii+iii) Cash and cash equivalent 1 January Cash and cash equivalent at 31 December (iv+v)

Cash dividend-% Stock dividend (Bonus share)-%

I.

J.

15,994,477

(13,766,700)

(9,290,315)

(1,661,271)

-

(16,048,000)

(134,219,424)

(95,201,895)

(71,172,362)

(68,443,629)

(63,993,201)

973,119,339

844,932,351

284,694,648

127,313,582

(149,618,621)

106,773,324

248,618,953

(27,299,509)

93,673,079

68,821,598

32,240,000

10,651,000

2,001,000

90,000,000

12,257,500

(10,220,406)

(15,001,038)

(19,404,533)

(15,206,580)

(10,089,532)

964,954,678

1,008,073,848

154,572,544

218,046,136

(163,589,027)

(744,221,380)

(112,941,061)

107,214,631

(105,926,610)

(141,746)

(231,582,239)

(118,641,178)

(225,855,809)

(119,929,199)

(119,787,453)

(975,803,619)

(231,582,239)

(118,641,178)

(225,855,809)

(119,929,199)

2008

2007

2006

2005

2004

100%

85.00%

60%

45%

42.50%

20%

0%

0%

0%

0%

Dividend declared:

Particulars

H.

(2,738,155)

Issue Manager Alliance Financial Services Limited

Advanced Chemical Industries Limited (ACI) is a public limited company which was incorporated on 24 January 1973 as ICI Bangladesh Manufacturers Limited. The company did not prepare any account for any period subsequent to 31 December 2008. Figures related to previous years have been rearranged where considered necessary.

Page 152

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Page 153

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Page 154

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Page 155

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Page 156

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Page 157

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Page 158

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Page 159

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Page 160

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Page 161

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Page 162

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Page 163

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Page 164

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Page 165

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Page 166

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Page 167

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Page 168

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Advanced Chemical Industries Limited Auditors’ certificate regarding calculations of EPS and other ratios as per Securities and Exchange Commission (Public Issue Rules 2006) We have examined the following earnings per share (EPS) and other ratios of ACI Limited for the years ended 31 December 2004, 2005, 2006, 2007 and 2008, which have been produced by the management of the company to us. The calculation of the EPS and other ratios is the responsibility of the company’s management. Our responsibility is to review them and certify as to whether they have been properly calculated using acceptable principles on the basis of audited financial statements for the years ended 31 December 2004, 2005, 2006, 2007 and 2008. Based on our review, we certify that the company has properly calculated the following EPS and other ratios using acceptable principles on the basis of financial statements for the years ended 31 December 2004, 2005, 2006, 2007 and 2008.

A.

B.

C.

Particulars Liquidity ratio: Current ratio Quick ratio Time interest earned ratio Debt to equity 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 (excluding capital gain) Return on asset ratio (including capital gain) Return on equity ratio (excluding capital gain) Return on equity ratio (including capital gain) Earnings per share(EPS) in Taka

2008

2007

2006

2005

2004

1.13 0.66 5.29 2.14

1.00 0.65 4.77 2.77

1.01 0.58 4.01 1.99

1.01 0.55 3.13 1.95

1.16 0.55 2.60 1.76

6.68 3.20 1.26

7.51 3.56 1.29

9.54 3.25 1.26

10.55 3.02 1.22

12.04 2.42 1.16

31% 10% 15% 13%

34% 09% 06% 12%

33% 09% 04% 12%

31% 08% 04% 10%

29% 09% 03% 11%

26%

15%

12%

10%

11%

23%

20%

16%

13%

12%

62%

28%

16%

13%

12%

66.52

19.03

9.51

6.94

5.54

Page 169

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

ADDITIONAL DISCLOSURE

DSE’s Observations/Queries Observations/Queries-1 Zero Coupon Bond with a convertible feature shall render the bond interest income taxable in hands of bond holders. As a result investors will be deprived from the tax benefit allowed to Zero Coupon Bonds under paragraph 40 of Sixth Schedule, Part-A of the Income Tax Ordinance, 1984.

Management Perception ACI 20% Convertible Zero Coupon Bond is by nature is a Zero Coupon Bond and it has all the attributes ( features) of Zero Coupon Bond and the convertibility option is an added feature of the Bond. The added option of convertibility does not any way clash with the basic features of the Zero Coupon Bond rather it strengthens the bond’s acceptability to the investors. Since the Bond market has not yet developed in Bangladesh and instruments with fixed return are not attractive in our capital market, we have added the conversion feature as an option. It is working as a sweetener of this bond. We believe that Convertibility option does not impair the status of Zero Coupon Bond and pursuant to Paragraph 40 of Sixth Schedule, Part A of Income tax Ordinance, 1984 all the subscribers will be entitled to tax exemption on interest income.

Observations/Queries-2 The proposed Bond is unsecured. No asset of the company is mortgaged against the proposed bond issue. We have worse experience of deprival of the investors in the past on debentures issued without security. The trustees could do nothing in favour of investors; and against such delinquent issuers.

Management Perception Aiming towards protecting investors right ACI Limited (the issuer) shall be responsible to pay the installments as per the terms of the bonds. In addition, the Trustee would be responsible to ensure that payments are being made according to the terms of bond as per the clause 4.5 of the Trust Deed. Furthermore, if for any reason the issuer fails to pay the installment timely, the occurrence would be treated as Event of Default as described in Article 8 of the trust deed which implies that the Trustee can take legal actions against the issuer in the Event of Default to protect the interest of the Bondholder(s). On the other hand there is no mortgage or collateral security against the bonds. As a publicly traded security, mortgage/Collateral security against ACI 20% convertible Zero Coupon Bond bears less importance. However, to protect the interest of the Bondholder(s), the issuer would ensure that the combined total of the issuer’s bank loan and bond’s outstanding balance is not more than the value of the chargeable assets of the issuer as described in Article 8 of the Trust Deed. In addition to this, the issuer would issue receive post dated cheques as security to the Trustee for the benefit of the Bondholder(s) as referred to the Schedule C of the Trust Deed.

Observations/Queries-3 Conversion feature includes unrealized profit (revaluation surplus) as one of the components of net asset value determinants. This features is unreasonable and illogical and against the interest of the general investors at large.

Management Perception Fixed assets are revalued at regular interval to reflect the fair value of the assets in the Financial Statements as prescribed by International Accounting Statdard-16 (IAS 16: Property, Plant and Equipment). Any surplus arising from revaluation is considered as part of the equity or net asset as per the said IAS, since the benefits from revaluation surplus flow to the company when the asset is used or disposed off. As such in line with accepted accounting practices (IAS), revaluation surplus will be treated in calculating net assets value.

Page 170

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

APPLICATION FORM Interested persons are entitled to a prospectus and copy of prospectus may be obtained from the issuer and the issue manager. Advanced Chemical Industries Limited APPLICATION FOR ACI 20% CONVERTIBLE ZERO COUPON BONDS (ZCB) (INVESTORS OTHER THAN NON-RESIDENT BANGLADESHIS) Please read the instructions at the back of this form. Incorrectly filled applications or failing to comply with any of the instructions there in, application may be rejected. Banker’s Sl. No. The Managing Director Advanced Chemical Industries Limited (ACI) ACI Centre 245 Tejgaon Industrial Area Dhaka- 1208 I/we apply for and request you to allot me/us the ……….lots of ZCB and I/we agree to accept the same or any smaller number that may be allotted to me/us upon the terms of the Company’s approved Prospectus and subject to the Memorandum and Articles of Association of the Company. Further, I/we authorize you to place my/our name(s) on the Register of Bondholders of the Company and deposit the said Bonds to my BO (Beneficiary Owner) Account and/or a Crossed (Account Payee only) Cheque in respect of any application money refundable by post/courier at my/our risk to the first applicant’s address stated below:1. No. of lots of Zero Coupon Bonds:……………………………………………………….…………… lots of Tk 3,743 per lot( Face value of Tk 5,000). 2. Amount of Tk (in figure), ……….….….….,(in words)…….……………….…..………… ………………………….…………….……….………only deposited vide Cash/Cheque/Draft/Pay Order No..….……………..…………..Dated……..……………...…………………..........……..…. drawn on …………………………..….………………………….Bank………..…………………………...….………..….………...………………..….…Brach. 3. Beneficiary (B/O) Account Number (If you do not mention your valid BO (Beneficiary Owners) account, your application will be treated as invalid) 4. I/we agree to fully abide by the instruction given herein. 5. Particulars of Applicant(s). a) Sole/First Applicant Name: Mr./Mrs./Ms. Father /Husband’s name: Mother’s name: Postal address: Occupation:

Nationality:

Telephone (If any):

For refund warrant (Application will not be treated as valid if anyone uses a non-scheduled bank. To avoid this complication, investors are requested not to use the name of any non-scheduled bank) Please write the correct and full name of bank and branch: For refund warrant: Applicant’s Bank A/C No. Name of the Bank:

Branch:

b) Second Applicant Name: Mr./Mrs./Ms. Father /Husband’s name: Mother’s name: Postal address: Occupation: 6. 7.

Nationality:

I/we hereby declare that I/we have read the Prospectus of ‘Advanced Chemical Industries Limited’, and have willingly subscribed for ……………….………….lots of ZCB Tk. 3,743 per lot ( Face value Tk.5,000.00) on this form. Specimen Signature(s): Name (IN BLOCK LETTERS)

SIGNATURE

First Applicant: Second Applicant: ………………………………………………………………………………………..………...……………………………………………………….…….. BANK’S ACKNOWLEDGMENT Certified that this bank has received Tk………..…………...(in word)……………….………………………………. ……………………………. only from Mr./Ms…...…………………………………….……………..being the Application Money for ……………….lots of ZCB of Advanced Chemical Industries Limited (ACI). Banker’s Sl. No.

Seal and Date

Authorized Signature (Name & Designation)

Page 171

Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Instructions: 1. As per provision of the Depository Act, 1999 and regulations made there under bonds will only be issued in dematerialized condition. Please mention your BO (Beneficiary Owner) account number in the Application Form. If you do not mention your valid BO (Beneficiary Owner) Account, your application will be treated as invalid. 2. All information must be typed or written in full (in block letters) in English or in Bengali and must not be abbreviated. 3. Application must be made on the Company’s printed form/photocopy or on typed copy/hand written form thereof. 4. Application must not be for less than 1(one) lot of 5(five) Bonds and must be for a multiple of one lot of ZCB. Any application not meeting these criterions will not be considered for allotment purpose. 5. Remittance for the full amount of the bonds must accompany each application and must be forwarded to any of the Bankers’ to the Issue. Remittance should be in the form of cash/cheque/bank draft/pay order payable to one of the Bankers’ to the Issue favoring “ADVANCED CHEMICAL INDUSTRIES LIMITED” and crossed “A/C Payee only” and must be drawn on a bank in the same town as the bank to which the application form has been sent. 6. In the case of a joint application form, the Allotment letter will be dispatched to the person whose name appears first on this application form and where any amount is refundable in whole or in part the same will be refunded by Account Payee cheque by post/courier service to the person named first on this application form in the manner prescribed in the Prospectus. 7. Joint application form for more than two persons will not be accepted. In case of joint application, each party must sign the application form. 8. Applications must be in the full name of individuals or companies or societies or trusts and not in the name of firms, minors or persons of unsound mind. Application from financial and market intermediary companies must be accompanied by Memorandum of Association and Articles of Associations and Certificate of Incorporation. 9. An applicant cannot submit more than two applications, one in his/her own name and another jointly with another person. In case an applicant makes more than two applications, all applications will be treated as invalid and will not be considered for allotment purpose. In addition, whole or part of application money may be forfeited by the Commission. 10. No receipt will be issued for the payment made with application, but the bankers will issue a provisional acknowledgement to the issue for application lodged with them. 11. In the case of non-allotment of securities, if the applicants’ bank accounts as mentioned in their IPO Application Forms are maintained with the Bankers to the Issue, refund amount of those applicants will be directly credited into the respective bank accounts as mentioned in their IPO Application Forms. Otherwise, refund will be made only through “Account Payee” cheque(s) showing bank account number and name of bank and branch as mentioned in the application payable at Dhaka or Chittagong, as the case may be. 12. Allotment shall be made solely in accordance with the instructions of the Securities and Exchange Commission. 13. Making of any false statement in the application or supplying of incorrect information therein or suppressing any relevant information shall make the application liable to rejection and subject to forfeiture of application money and / or forfeiture of securities (unit) before or after issuance of the same by the issuer. The said forfeited Application money or securities (unit) will be deposited in account specified by the Securities and Exchange Commission (SEC). This may be in addition to any other penalties as may be provided for by the law. 14. Applications which do not meet the above requirements, or applications, which are incomplete, shall not be considered for allotment purpose. 15. The Bankers’ to the Issue shall be obliged to receive the A/C Payee Cheque(s) on the closing day of the subscription. 16. No sale of securities shall be made nor shall any money be taken from any person, in connection with such sale until twenty five days after the prospectus have been published. Bankers to the Issue Kushita Br., Kushita Mirpur Br. Dhaka Agrabad Br. Chittagong Trust Bank Limited Principal Branch, Dhaka Dhaka Chamber Br. Motijheel, Dhaka Khatungonj Br. Chittagong Bank Asia Limited SKB Br. Dhaka Principal Branch, Dhaka Imamganj Br. Dhaka CDA Avenue Br. Chittagong Gulshan Corporate Br. Dhaka MCB Dilkusha Br., Dhaka Islami Banking Br. Dhaka Bahaddar Hat br., Ctg Dilkusha Corporate Br. Dhaka Corporate Br., Dhaka Uttara Br. Dhaka Sylhet Br. Sylhet Dhanmondi Br. Dhaka Mohakhali Br., Dhaka Shaymoli Br. Dhaka Khulna Br. Khulna Millenium Corporate Br. Dhaka Morpur Br., Dhaka Islampur Br. Dhaka Rajshahi Br. Rajshahi Uttara Corporate Br. Dhaka Shantinagar Br., Dhaka Tongi Br. Gazipur Jessore Br. Jessore Mirpur Br. Dhaka Bashundhara Br., Dhaka Tanbazar Br. Narayangonj Narayangonj Br. Narayangonj Kawranbazar Br. Dhaka Dholaikhal Br.,Dhaka Comilla Br. Comilla One Bank Limited Naval Base Br. Chittagong Scotia Br., Dhaka Jubilee Road Br. Chittagong Principal Branch, Dhaka Agrabad Br. Chittagong Gulshan Br., Dhaka Agrabad Br. Chittagong Kawran Bazar Br. Dhaka Shahjalal Uposhohor Br. Sylhet MCB Banani Br., Dhaka Khatungonj Br. Chittagong Mirpur Br. Dhaka Sylhet Corporate Br. Sylhet Uttara Br., Dhaka O.R. Nizam Road Br. Chittagong Dhanmondi Br. Dhaka Feni Br. Feni Mitford Br., Dhaka Bandar Bazar Br. Sylhet Ganakbari (EPZ) Br., Dhaka Khulna Br. Khulna North South Road Br., Dhaka Zinda Bazar Br. Sylhet Progoti Sharani Br., Dhaka Sylhet Main Br., Sylhet Bogra Br. Bogra Elephant Road Br., Dhaka Mutual Trust Bank Limited Principal Branch, Dhaka Sylhet Uposhahar Br. Sylhet Rajshahi Br. Rajshahi Nowabgonj Br., Dhaka Dilkusha Br., Dhaka Agrabad Br. Chittagong Barishal Br. Barishal Joypara Br., Dhaka Babu Bazar Br. , Dhaka Khatungunj Br., Chittagong Khulna Br. Khulna Motijheel Br. Motijheel, Dhaka Fulbaria Br., Dhaka MCB Sk. Mujib Rd. Br., Chittagong Gulshan Br. Dhaka Eastern Bank Limited Dholaikhal Br.,Dhaka CDA Avenue Br. Chittagong Mirpur Br. Dhaka Uttara Br. Dhaka Panthapath Br., Dhaka Station Road Br., Chittagong Motijheel Br. Motijheel, Dhaka Banani Br. Dhaka Uttara Model Town Br., Dhaka Rajshahi Br. Rajshahi Principal Br., Dilkusha, Dhaka Kakrail Br., Dhaka Dhanmondi Br. Dhaka Khulna Br. Khulna Shyamoli Br., Dhaka Imamganj Br. Dhaka Progati Sarani Br., Dhaka Bogra Br., Bogra Bashundhara Br., Dhaka Jatrabari Br., Dhaka Pallabi Br., Dhaka Jessore Br., Jessore Khatungonj Br. Chittagong Bangshal Br., Dhaka Gulshan Br., Dhaka Anderkilla Br., Chittagong Narayangonj Br., Narayangonj Narayangonj Br. Narayangonj Bashundhara City Br., Dhaka Khulna Br., Khulna Agrabad Br. Chittagong Banani Br., Dhaka Agrabad Br. Chittagong Cox’s Bazar Br., Chittagong ICB Agrabad Br. Chittagong Head Office (NSC Tower), Dhaka Rajshahi Br., Rajshahi CDA Avenue Br., Chittagong CDA Avenue Br., Chittagong Chittagong Br. Agrabad,Chittagong Bogra Br., Bogra Khatungonj Br. Chittagong Jubilee Road Br., Chittagong Rajshahi Br. Rajshahi Jubilee Road Br. Chittagong Standard Bank Limited Khatungunj Br., Chittagong Khulna Br. Khulna Principal Branch, Dhaka Nanupur Bazar Br., Chittagong Sylhet Br., Sylhet Barisal Br. Barisal Foreign Exchange Br. Dhaka Feni Br. Feni Jiypurhat Br., Joypurhat Sylhet Br. Sylhet Topkhana Road Br.,Dhaka Raipur Br., Lazmipur Madaripur Br., Madaripur Bogra Br. Bogra Imamgonj Br. Dhaka Chandragonj Br., Lakshmipur Moulvi Bazar Br., Moulvi Bazar Local Office Br. Dhaka Gulshan Br. Dhaka Dagon Bhuiyan Br., Feni Sreenagar Br., Munshigonj Dhanmondi Br. Dhaka Chowmuhuni Br., Noakhali The City Bank Limited Pabna Br., Pabna Principal Office, Br. Dhaka Uttara Br. Dhaka Sylhet Br., Sylhet Chandra Br., Gazipur B.B. Avenue Br. Dhaka Gulshan-1 Br. Dhaka Islampur Br., Sylhet Sonargaon Br., Sonargaon Dhanmondi Br. Dhaka Panthapath Br. Dhaka Sherpur Br., Moulivi Bazar Narayangonj Br., Narayangonj New Market Br. Dhaka Banani Br. Dhaka Bogra Br. Bogra Savar Br. Savar Gulshan Br. Dhaka Mirpur Br., Dhaka Jessore Br. Jessore Tongi Br., Gazipur Kawran Bazar Br. Dhaka Munshikhola Br. Dhaka Siraigonj Br., Sirajgonj Rangpur Br., Rangpur Foreign Ex. Br. Dhaka Jubilee Road Br. Chittagong

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Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Interested persons are entitled to a prospectus and copy of prospectus may be obtained from the issuer and the issue manager. ADVANCED CHEMICAL INDUSTRIES LIMITED APPLICATION FOR ACI 20% CONVERTIBLE ZERO COUPON BOND (ZCB) BY NON-RESIDENT BANGLADESHI(S) (To be sent directly to the company’s corporate office) Please read the instructions at the back of this form. Incorrectly filled applications or failing to comply with any of the instructions there in, application may be rejected. The Managing Director Advanced Chemical Industries Limited (ACI) ACI Centre 245 Tejgaon Industrial Area Dhaka- 1208 I/we apply for and request you to allot me/us the following lots of Zero Coupon Bonds (ZCB) and I/we agree to accept the same or any smaller number that may be allotted to me/us upon the terms of the Company’s approved Prospectus and subject to the Memorandum and Articles of Association of the Company. Further, I/we authorize you to place my/our name(s) on the Register of Bondholders of the Company as the holder(s) of…………..lots of Bonds allotted to me/us pursuant to this application and credit the said securities to my BO (Beneficiary Owner) Account and/or a Crossed (Account Payee only) Cheque in respect of any application money refundable by post/courier at my/our risk to the first applicant’s address stated below:1. No of lots of ZCB: ……………................................................….........................…..........………lots of Tk. 3,743 per lot (Face value of Tk 5,000) 2. Amount of Tk(in figure). ……………………….................………(in words)…… .................…………...…….................……………………….only Convertible into US Dollar 1.00 =Tk ...……… .............UK Pound Sterling 1.00 =Tk. ……………and Euro 1.00 =Tk…….…….................…..........… 3. Payment by cheque/draft no.…………..…………….........…….dated…...…………….................………….for US Dollar/UK Pound Sterling/Euro or Tk……….………..….drawn on……….................….................……………….………Bank….................………….……………………….…Branch. 4. Beneficiary Owner (B/O) Account Number (If you do not mention your valid BO (Beneficiary Owners) account, your application will be treated as invalid) 5. I/we agree to fully abide by the instruction given herein. 6. Particulars of Applicant(s). a) Sole/First Applicant Name: Mr./Mrs./Ms. Father’s /Husband’s name: Mother’s name: Mailing address: Occupation:

Nationality:

Passport No.

Valid up to:

Date of Birth

Telephone (If any):

For refund warrant (Application will not be treated as valid if anyone uses a non-scheduled bank. To avoid this complication, investors are requested not to use the name of any non-scheduled bank) Please write the correct and full name of bank and branch: For refund warrant: Applicant’s Bank A/C No. Name of the Bank: b) Second Applicant Name: Mr./Mrs./Ms. Father’s /Husband’s name: Mother’s name: Mailing address: Occupation: Passport No. Date of Birth: Nominee: Name: Mailing Address:

Branch

Nationality: Valid up to:

Telephone (If any): 7.

8.

I/we hereby declare that I/we have read the Prospectus of “Advanced Chemical Industries Limited (ACI)” and have willingly subscribed for …...…………………………………….................….................….................….................……..lots of ZCB Tk. 3,743 per lot ( Face value Tk.5,000.00) on this form. Specimen Signature(s): Name in Block Letters Signature Sole/First Applicant: Second Applicant:

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Issuer Advanced Chemical Industries Limited (ACI)

Issue Manager Alliance Financial Services Limited

Nominee: Instructions: 1. As per provision of the Depository Act, 1999 and regulations made there under bonds will only be issued in dematerialized condition. Please mention your BO (Beneficiary Owner) account number in the Application Form. If you do not mention your valid BO (Beneficiary Owner) account, your application will be treated as invalid. 2.

All information must be written or typed in block letters in English and must not be abbreviated.

3.

An application must not be for less than 1(one) lot of 5 bonds and must be for a multiple of single lot. Any application not meeting this criterion will not be considered for allotment purpose.

4.

An application must be accompanied by a foreign demand draft drawn on a bank payable at Dhaka or cheque drawn out of foreign currency deposit account maintained in Bangladesh for the full value of shares favoring “Advanced Chemical Industries Limited” and crossed “Account Payee only”.

5.

An application shall be sent by the applicant directly to the Company by 04.02.2010 so as to reach the Company by 13.02.2010 Applications sent after 04.02.2010 or received by the Company after 13.02.2010 will not be considered for allotment purpose.

6.

Refund against over-subscription shall be made in the currency in which the value of securities was paid for by the applicant at the same rate as stated on the application form through Account Payee cheque payable at Dhaka with bank account number, Bank’s name and Branch as indicated in the securities application form.

7.

In case of over-subscription, allotment shall be made by lottery solely in accordance with the instructions by SEC.

8.

Money receipt on clearance of draft or cheque, as the case may be, shall be sent by post to the applicant by the Company.

9.

Joint application by two persons will be acceptable. In such a case, allotment or refund shall be made by post to the first applicant.

10. Application must be made by an individual, a corporation or company, a trust or a society and not by a firm, minor or persons of unsound mind. 11. Making of any false statement in the application or supplying of incorrect information therein or suppressing any relevant information in the application shall make the Application liable to rejection and subject to forfeiture of application money and / or forfeiture of share (unit) before or after issuance of the same by the issuer. The said forfeited application money or share (unit) will be deposited in account specified by the Securities and Exchange Commission (SEC). This may be in addition to any other penalties as may be provided for by the law. 12. The intending NRB applicants shall deposit share money by US$/UK Pound Sterling/EURO draft drawn on any Bank and payable in Dhaka, Bangladesh, or through a nominee by paying out of foreign currency deposit account maintained in Bangladesh or in Taka, supported by foreign currency encashment certificate issued by the concerned bank, for the value of securities applied for through crossed bank cheque marking “Account Payee only”. So that the issuer’s collecting bank can clear the proceeds and deposit the same into Issuer Company’s account in time. 13. The spot buying rate (TT Clean) in US Dollar, UK Pound Sterling and EURO of Sonali Bank at the day of subscription opening will be applicable for the Non Resident Bangladeshi (NRB) applicants. 14. The applicant shall furnish photocopies of relevant pages of valid passports in support of his being a NRB, dual citizenship or of the foreign passport bearing an endorsement from the concerned Bangladeshi Embassy to the effect that no visa is required for him to travel to Bangladesh. 15. In case of joint NRB application joint applicant shall also submit supporting papers /documents in support of their being a NRB as mentioned in para-14 (above). 16. An applicant cannot submit more than two applications, one in his/her own name and another jointly with another person. In case an applicant makes more than two applications, all applications will be treated as invalid and will not be considered for allotment purpose. In addition, whole or part of application money may be forfeited by the Commission. 17. No sale of securities shall be made nor shall any money be taken from any person, in connection with such sale until twenty five days after the prospectus have been published. 18. In the case of non-allotment of securities, if the applicants’ bank accounts as mentioned in their IPO Application Forms are maintained with the Bankers to the Issue, refund amount of those applicants will be directly credited into the respective bank accounts as mentioned in their IPO Application Forms. Otherwise, refund will be made only through “Account Payee” cheque(s) with bank account number and name of bank branch as mentioned in the application payable at Dhaka or Chittagong, as the case may be. THE NRB APPLICATION ALONG WITH THE FOREIGN CURRENCY DRAFT, AS ABOVE, IS TO BE SUBMITTED TO THE COMPANY’S DHAKA OFFICE DIRECTLY WITHIN THE STIPULATED TIME MENTIONED IN PARA 5.

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