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“Investment in capital market involves certain degree of risks. The investors are required to read the

prospectus and risk factors carefully, assess their own financial conditions and risk taking ability

before making their investment decisions.”

PUBLIC ISSUE OF 20,000,000 ORDINARY SHARES

OFFER PRICE TK. 10 EACH (AT PAR)

TOTAL SIZE OF FUND TO BE RAISED TK 200,000,000

Issue Date of Prospectus :

Opening Date of Subscription :

Closing Date of Subscription :

Prospectus of ACHIA SEA FOODS LIMITED

–

MANAGER TO THE ISSUE

Amin Court, 4th Floor (Suite # 403-405), 31, Bir Uttam Shahid Ashfaques Samad Road (Previous 62-63, Motijheel (C/A), Dhaka-1000,

Phone: +88029559602, +88029567726, Fax: +8802-9558330 Website: www.aaafinancebd.com, E-mail: [email protected]

ii

PRELIMINARY INFORMATON AND DECLARATION

(i) Name(s), address(s), telephone number(s), web address(s), e-mail(s), fax number(s) and contact persons of

the issuer, issue manager(s), underwriter(s), auditors, Credit Rating Company and valuer:

Name And Address Contact Person Contact Address

Issuer

Achia Sea Foods Limited 50/7, Shipyard Road, Labanchara, Khulna, Bangladesh

Md. Tariqul Islam Zaheer

Managing Director

Tel: +88-04-1 813837 Fax: +88-04-1 913836 Email: [email protected] Web:www.achia-seafoods.com

Manager To The Issue

AAA Finance & Investment Limited Amin Court, 4th Floor (Suite # 403-405), 31, Bir Uttam Shahid Ashfaques Samad Road (Previous 62-63, Motijheel (C/A), Dhaka-1000

Mohammad Obaydur Rahman FCS

Managing Director

Tel: +88-02-9559602 Fax: +88-02-9558330 Email:[email protected] Web: www.aaafinancebd.com

Auditors

Mahfel Huq & Co.

Chartered Accountants

BGIC Tower (4th Floor), 34 Topkhana

Road, Dhaka-1000

Howlader Mahfel Huq

Principal

Tel :+88-02-9553143, 9581786

Fax :+88-02-9571005

E-mail: [email protected]

Web:www.mahfelhuq.com

Underwriters

AAA Finance & Investment Ltd. Amin Court, 4th Floor (Suite # 403-405), 31, Bir Uttam Shahid Ashfaques Samad Road (Previous 62-63, Motijheel (C/A), Dhaka-1000


Managing Director


IIDFC Capital Limited

Chamber Building (6th Floor), 122-124

Motijheel C/A, Dhaka-1000

Mohammad Saleh

Ahmed

Chief Executive Officer

Tel: +88-02-9559311-12

Fax: +88-02-9568987


Web: www.iidfc.com

Sandhani Life Finance Limited

16 Motijheel Commercial Area (2nd Floor),

Dhaka – 1000, Bangladesh

Muhammad Nazrul Islam FCMA

Managing Director & CEO

Tel: +88-02-47118505, 9515249

Fax: +88-02-9614405


Web: www.slflbd.com

EBL Investments Limited

59 Motijheel C/A, Dhaka-1000.

Bangladesh

Tahid A Chowdhury

Managing Director

Tel: +88-02-47111096, 47111867

Fax: +88-02-47111218


Web: www.eblinvestments.com

Southeast Bank Capital Services Limited

Eunoos Center (Level 9), 52-53 Dilkhusa

C/A, Dhaka 1000

Air (Cdre (Retd) Md. Abu Bakar, FCA

Managing Director

Tel: +88-02-9574171 to 5

Fax: +88-02-9574169


Web: www.southeastbank.com.bd

i. Declaration: Any person interested to get prospectus may obtain from the issuer, and

the issue manager(s).

iii

ii. Statement: “If you have any query about this document, you may consult the

issuer, issue manager and underwriter”

(IV) “CONSENT OF THE BANGLADESH SECURITIES AND EXCHANGE COMMISSION HAS BEEN

OBTAINED TO THE ISSUE OR OFFER OF THESE SECURITIES UNDER THE SECURITIES AND

EXCHANGE ORDINANCE, 1969, AND THE BANGLADESH SECURITIES AND EXCHANGE

COMMISSION (PUBLIC ISSUE) RULES, 2015. IT MUST BE DISTINCTLY UNDERSTOOD THAT IN

GIVING THIS CONSENT THE COMMISSION DOES NOT TAKE ANY RESPONSIBILITY FOR THE

FINANCIAL SOUNDNESS OFTHE ISSUER COMPANY, ANY OF ITS PROJECTS OR THE ISSUE

PRICE OF ITS SECURITIES OR FOR THE CORRECTNESS OF ANY OF THE STATEMENTS MADE OR

OPINION EXPRESSED WITH REGARD TO THEM. SUCH RESPONSIBILITY LIES WITH THE ISSUER,

ITS DIRECTORS, CHIEF EXECUTIVE OFFICER, MANAGING DIRECTOR, CHIEF FINANCIAL

OFFICER,COMPANY SECRETARY, ISSUE MANAGER, ISSUE MANAGER’S CHIEF EXECUTIVE

OFFICER, UNDERWRITERS, AUDITOR(S), VALUER AND/OR CREDIT RATING COMPANY (IF

ANY)."

(V) ‘Risk in relation to the first issue’

"This being the first issue of the issuer, there has been no formal market for the securities of the issuer.

The face value of the securities is Tk. 10.00 (ten) and the issue price is Tk. 10 i.e. ‘one-time’ of the face

value. The issue price has been determined and justified by the issuer and the issue manager or bidding

by the eligible investors as stated under the paragraph on “Justification of Issue Price” should not be

taken to be indicative of the market price of the securities after listing. No assurance can be given

regarding an active or sustained trading of the securities or the price after listing."

(VI) ‘General Risk’

"Investment in securities involves a degree of risk and investors should not invest any funds in this offer

unless they can afford to take the risk of losing their investment. Investors are advised to read the risk

factors carefully before taking an investment decision in this offer. For taking an investment decision,

investors must rely on their own examination of the issuer and the offer including the risks involved. The

securities have not been recommended by the Bangladesh Securities and Exchange Commission (BSEC)

nor does BSEC guarantee the accuracy or adequacy of this document. Specific attention of investors is

invited to the statement of ‘risk factors’ given on page number 125 - 130"

(VII) ‘Achia Sea Foods Limited Absolute Responsibility’

"The issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this red-

herring prospectus or prospectus or information memorandum contains all material information with

regard to the issuer and the issue, that the information contained in the red-herring prospectus or

prospectus or information memorandum are true, fair and correct in all material aspects and are not

misleading in any respect, that the opinions and intentions expressed herein are honestly held and that

there are no other facts, the omission of which make this document as a whole or any of such information

or the expression of any such opinions or intentions misleading in any material respect."

iv

AVAILABILITY OF PROSPECTUS

(i)Names, addresses, telephone numbers, fax numbers, website addresses and e-mail addresses and

names of contact persons of the institutions where the prospectus and abridged version of

prospectus are available in hard and soft forms;

Name And Address Contact Person Contact Address

Issuer

Achia Sea Foods Limited 50/7, Shipyard Road, Labanchara, Khulna, Bangladesh

Masuma Yasmin Chief Financial Officer

Tel: +88041 813837 Fax: +88041 913836 Email:[email protected] Web:www.achia-seafoods.com

Issue Manager

AAA Finance & Investment Limited Amin Court, 4th Floor (Suite # 403-405), 31, Bir Uttam Shahid Ashfaques Samad Road (Previous 62-63, Motijheel (C/A), Dhaka-1000


Managing Director


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

Date of publication of the abridged version of the prospectus: [*]

SL No. Name Date

Bengali Newspapers

1 [*] [*]

2 [*] [*]

English Newspapers

1 [*] [*]

2 [*] [*]

v

(iii) Definitions and Acronyms/Elaborations of the abbreviated words and technical terms used in

the prospectus:

Elaboration

A

AAA : AAA Finance & Investment Limited

AGM : Annual General Meeting

Allotment : Allotment of Shares to respective B/O A/C

ASFL Achia Sea Foods Limited

B

BAS : Bangladesh Accounting Standards

BB : Bangladesh Bank

BDT : Bangladeshi Taka

BO Account : Beneficial Owners Account

C

CDBL : Central Depository Bangladesh Limited

CIB : Credit Information Bureau

CEO : Chief Executive Officer

Commission : Bangladesh Securities and Exchange Commission

Company / Issuer : Achia Sea Foods Limited

Companies Act : Companies Act, 1994 (Act. No. XVIII of 1994)

Corporate Office : Head Office of the Company

CSE : Chittagong Stock Exchange Limited

D

DSE : Dhaka Stock Exchange Limited

DGHS : Directorate General of Health Services

E

EPS : Earnings Per Share

F

FC Account : Foreign Currency Account

G

GBP : Great Britain Pound

GDP : Gross Domestic Product

I

IPO : Initial Public Offering

N

NAV : Net Asset Value Per Share

NRB : Non-Resident Bangladeshi

P

P/E : Price Earnings Ratio

R

RJSC : Registrar of Joint Stock Companies and Firms

Rules : Securities and Exchange Commission (Public Issue) Rules, 2015

vi

Table of Contents

Particulars Page No.

PART I

EXECUTIVE SUMMARY 1

(a) About the Issuer 1-2

(b) About the Industry 3

(c) Financial Information 3

(d) Features of the issue and its objects 3

(e) Legal and other information 3

(f) Promoters’ background 4-5

(g) Capital structure and history of capital raising 5-6

(h) Summary of the valuation report of securities 6

PART II

CONDITIONS IMPOSED BY THE COMMISSION

7-12 Disclosure in respect of issuance of security in dematerialized form

Conditions imposed by the Commission in the consent letter

PART III DECLARATION AND DUE DILIGENCE CERTIFICATES AS PER ANNEXURE A, B & C

13-20

PART IV

ABOUT THE ISSUER

(a)

Name of the issuer, dates of incorporation and commencement of its commercial operations, its logo, addresses of its registered office, other offices and plants, telephone number, fax number, contact person, website address and e-mail address;

21

(b) The names of the sponsors and directors of the issuer; 21

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

22

(d) The name(s) of the stock exchanges where the specified securities are proposed to be listed;

22

PART V CORPORATE DIRECTORY OF THE ISSUER 23

PART VI

DESCRIPTION OF THE ISSUER

(a) Summary 24

(b) General Information 25-29

(c) Capital Structure 30-36

(d) Description of Business 37-43

(e) Description of Property 44-52

(f) Plan of Operation and Discussion of Financial Condition 53-70

PART VII

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS:

(a) Overview of business and strategies; 71

(b) SWOT analysis; 72

(c) Analysis of the financial statements of last five years; 73-75

(d) Known trends demands, commitments, events or uncertainties that are likely to have an effect on the company’s business;

75

(e) Trends or expected fluctuations in liquidity; 75

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

75

PART VIII

DIRECTORS AND OFFICERS

(a) Name, Father’s name, age, residential address, educational qualification, experience and position of each of the directors of the company and any person nominated/represented to be a director;

76

(b) The date on which he first became a director and the date on which his current term of office shall expire;

76

vii

(c) Director has any type of interest in other businesses, names and types of business of such organizations;

77

(d) Statement of if any of the directors of the issuer are associated with the securities market in any manner;

78

(e) Family relationship (father, mother, spouse, brother, sister, son, daughter, spouse’s father, spouse’s mother, spouse’s brother, spouse’s sister) among the directors and top five officers;

78

(f) A very brief description of other businesses of the directors; 78

(g) Short bio-data of each director; 78-79

(h) Loan status of the issuer, its directors and shareholders who hold 5% or more shares in the paid-up capital of the issuer in terms of the CIB Report of Bangladesh Bank;

79

(i)

Name with position, educational qualification, age, date of joining in the company, overall experience (in year), previous employment, salary paid for the financial year of the Chief Executive Officer, Managing Director, Chief Financial Officer, Company Secretary, Advisers, Consultants and all Departmental Heads;

80

(j) Changes in the key management persons during the last three years; 80

(k) A profile of the sponsors including their names, father’s names, age, personal addresses, educational qualifications, and experiences in the business;

81

(l) If the present directors are not the sponsors and control of the issuer was acquired within five years immediately preceding the date of filing prospectus;

82

(m) If the sponsors/directors do not have experience in the proposed line of business, the fact explaining how the proposed activities would be carried out/managed;

82

(n) Interest of the key management persons; 82

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

82

(p) Number of shares held and percentage of shareholding (preissue); 82-83

(q) Change in board of directors during last three years; 83

(r) Director’s engagement with similar business; 83

PART IX CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS 84-85

PART X

EXECUTIVE COMPENSATION

(a) The total amount of remuneration/salary/perquisites paid to the top five salaried officers of the issuer in the last accounting year and the name and designation of each such officer;

86

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

86

(c)

If any shareholder director received any monthly salary/perquisite/benefit it must be mentioned along with date of approval in AGM/EGM, terms thereof and payments made during the last accounting year;

86

(d) The board meeting attendance fees received by the director including the managing director along with date of approval in AGM/EGM;

86

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

86

(f) If the issuer intends to substantially increase the remuneration paid to its directors and officers in the current year, appropriate information regarding thereto;

86-87

(g) Any other benefit/facility provided to the above persons during the last accounting year;

87

viii

PART XI OPTIONS GRANTED TO DIRECTORS, OFFICERS AND EMPLOYEES 87

PART XII

TRANSACTIONS WITH THE DIRECTORS AND SUBSCRIBERS TO THE MEMORANDUM

(a) Benefits From the Company during last five years 88

(b) Directors and Subscribers’ Assets to the Company 88

PART XIII

OWNERSHIP OF THE COMPANY'S SECURITIES

(a) The names, addresses, BO ID Number of all shareholders of the company before IPO, indicating the amount of securities owned and the percentage of the securities represented by such ownership, in tabular form;

89-90

(b)

There shall also be a table showing the name and address, age, experience, BO ID Number, TIN number, numbers of shares held including percentage, position held in other companies of all the directors before the public issue;

91

(c) The average cost of acquisition of equity shares by the directors certified by the auditors;

92-94

(d) A detail description of capital built up in respect of shareholding (name-wise) of the issuer’s sponsors/ directors. In this connection, a statement to be included:-

95-97

(e) Detail of shares issued by the company at a price lower than the issue price;

97

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

97

PART XIV CORPORATE GOVERNANCE 98-114

PART XV VALUATION REPORT OF SECURITIES PREPARED BY THE ISSUE MANAGER

115-120

PART XVI DEBT SECURITIES 121

PART XVII PARTIES INVOLVED AND THEIR RESPONSIBILITIES 122

PART XVIII

MATERIAL CONTACTS 123-125

PART XIX OUTSTANDING LITIGATIONS, FINE OR PENALTY 125

PART XX RISK FACTORS AND MANAGEMENT’S PERCEPTIONS ABOUT THE RISKS

126-131

PART XXI DESCRIPTION OF THE ISSUE 132-133

PART XXII USE OF PROCEEDS 134-143

PART XXIII

LOCK-IN 144-145

PART XXIV

MARKETS FOR THE SECURITIES BEING OFFERED 146

PART XXV DESCRIPTION OF SECURITIES OUTSTANDING OR BEING OFFERED 147

PART XXVI

FINANCIAL STATEMENTS 148-208

PART XXVII

CREDIT RATING REPORT 209

PART XXVIII

PUBLIC ISSUE APPLICATION PROCEDURE 210-213

PART XXIX

OTHERS -

1

Part I

EXECUTIVE SUMMARY

a. About the Issuer

Achia Sea Foods Limited is one of the rising food processing companies, which has started its

journey from the year 1993 in Khulna, Bangladesh. The company mainly processes seafood and

fishes, and the ultimate sources of the firm’s revenue comes from exporting of its products. The

company was incorporated in December 27, 1993 as a Private Limited Company registered in

Bangladesh vide-registration no. Khulna 178. Its registered office is situated at 50/7, Shipyard

Road, Labanchara, Khulna, Bangladesh. The factory is operational in Khulna city as the

surrounding areas are the significant place for shrimp’s production. Most of the exported sea foods

are processed in these areas and its surrounding. The factory adopted HACCP (Hazard analysis

and critical control points) systems in its operations, and earned BRC (BRC Certificate No. 411A

13070001). Achia SeaFoods Limited is an export oriented company. Producing hazard free marine

food products for human consumption, and exporting it to the global market are the principal

objectives of the company. As a matter of fact, the company has been successfully running its

production and exporting operations for more than two decades. Since its establishment Achia Sea

Foods Limited has been processing and exporting of the finest quality seafood products “Shrimps

& Fish”. The quality products and services of the company have earned the approval of European

Union approval, and have received KLN-57 from the EU.

Incorporation of top-notch food processing technology and innovative methodology to produce

quality food products has helped Achia Sea Foods Limited to gain immense appreciation from its

clients. As a result to that, the company could establish its products as leading food products

producer in the global seafood industry. OCEAN PEARL and SITARA are the name of its two

products which are recognized globally. This is manifested in the enviable reputation of its brand

in the seafood markets of European Union, United Kingdom, Cyprus, Japan, Korea, Taiwan, Egypt,

UAE & other far Eastern countries of Asia. Achia Sea Foods Limited is an honorable member of

Bangladesh Frozen Foods Exporters Association (BFFEA), which is established in 1984; and

working to promote and protect the interest of Frozen Food processors, Packers and Exporters in

the Country.

The company produces a number of products which include but are not limited to Sea Water Black

Tiger Head Less Shell on Block Frozen, Sea Water Black Tiger Head on Shell on Semi IQF , Sea

Water Black Tiger PUD/P&D Block Frozen, Fresh Water Prawn Head-Less Shell-on Block Frozen,

Fresh Water Prawn Head on Shell on Semi IQF, Fresh Water Prawn PUD /P&D Block Frozen, Sea

Water Harina PUD Shrimps Block Frozen, Sea Water White PUD Shrimps Block Frozen, Sea Water

Red Tiger PUD Shrimps Block Frozen, and Sea Water & Sweet Water Fishes Block Frozen & Semi

IQF.

b. About the Industry

Global Market Scenario

Frozen food is a valued commodity in today’s times. With lifestyles getting more hectic by the day

and the time required to cook traditional meals in short supply, frozen foods have become a

lifesaver for a large part of the global population. The increasing working population of women

and the increasingly long working hours in the corporate sector are the major factors driving the

global frozen food market. Freezing food reduces the chances of microbes invading it, since most

pathogens can’t survive at sub-zero temperatures. As a result, frozen food can be stored for long

periods and consumed at the convenience of the user upon short notice. On the basis of product

type, the global frozen food market is segmented into frozen ready meals, frozen fruits and

vegetables, frozen potatoes, frozen soup, frozen meat, and frozen fish and other seafood.

2

The increasing sophistication of freezing techniques allow vendors to keep frozen production fresh

for a longer time, which significantly drive the demand from the global frozen food market.

Geographically, Europe held the largest share in the global frozen food market in 2012, with

Germany emerging as the dominant national market. However, many researchers have predicted

that the frozen food market will soon be dominated by emerging regions such as Asia Pacific, the

Middle East, and Latin America in the coming years. The rampant urbanization in these regions,

particularly in dynamic economies such as China, Bangladesh, India, Brazil, and Mexico, has led to

a growth in the demand for food that can be prepared with minimal prep. The growing middle

class and the increasing trend of families consisting of two working spouses have also spurred the

Asia Pacific market for frozen food.

In 2012 Transparency Market Research valued the global frozen food market to be US$ 224.7 billion,

which is expected to grow to US$293.7 billion showing an average growth rate (CAGR) of 3.9%.

Many other published reports are also suggesting an average growth 4%-5% in the global frozen

food market.

Source:http://www.marketwired.com/press-release/frozen-food-market-reach-us-29375-billion-

will-register-cagr-39-between-2013-2019-transparency-2023000.htm

Bangladesh Market Scenario

Bangladesh frozen foods industry is one of the most significant component of the country’s

economy. The country earn a significant amount of foreign currency from the exporting of frozen

foods to European and American Market. The Public Sector Corporation and the Private

Organizations have setup about 145 numbers of shore based export oriented fish processing plants

at Dhaka, Chittagong, Khulna, Jessore, Satkhira, Bagerhat, Cox's Bazar, Chandpur, Kishoregonj,

Syihet and Patuakhali. These plants produces Shrimp products under the most hygienic and

sanitary condition under the supervision, control and guidance of foreign trained handling &

processing experts.

The country usually exports different types of shrimps and prawns among them Fresh water

headless, shell on tail on (FWSO), Sea Water headless shell on tail on(SWSO), Peeled and Deveined

(P&D), Peeled and Undeveined (PUD) and BrokenProducts (BP) of Prawns and Shrimps in Block

Frozen, Cooked, Semi Cooked, IQF, Semi IQF etc. The country also exports frozen sea water and

Fresh Water Fish in many variety and the demand for these products are increasing. Among the

sea water fish Bangladesh usually exports Prompfrets, Jewfish, Indian Salmon, Shad, Caffish,

Ribbonfish, Mullet, Tena, Mackerel, Cockup, Red Snapper ets. are processed in whole, headless,

belly clean (IQF) state or sliced/fillets/steak in Block Frozen state. As for the fresh water fish Carps,

Common Carps, Snake-Heads, Barbs Shad, Eel, Mullets etc. The large fishes are processed in whole

headless, belly clean (IQF) state of sliced/fillets/steaks and small fishes and processed in whole

block frozen state.

Source: https://www.bffea.net/product.php

3

c. Financial Information

The following table would provide a summary of the financial information of the firm for the last

five financial years:-

Particulars 30.06.2018 30.06.2017 30.06.2016 30.06.2015 30.06.2014

Authorized Capital 1,000,000,000 1,000,000,000 1,000,000,000 1,000,000,000 1,000,000,000

Total Assets 637,612,672 659,194,843 531,541,909 443,335,748 405,531,223

Retained Earnings 110,154,115 85,053,558 62,613,879 84,967,499 57,946,700

Long Term Bank Loan 23,138,320 - - 20,688,223 33,689,751

Short Term Bank Loan 270,372,943 336,492,617 235,522,631 181,529,226 164,728,925

Revenue 937,326,012 694,742,004 202,379,849 225,433,282 540,819,526

Gross Profit 49,670,151 36,812,217 21,074,844 22,404,994 43,110,607

Profit before Tax 38,759,790 25,595,086 18,307,861 41,741,353 41,940,919

Profit after tax 25,100,557 22,128,993 15,714,779 27,131,879 36,289,334

EPS 1.24 1.09 0.94 2.85 6.67

NAV 15.42 14.18 13.08 30.28 27.44

d. Features of the issue and its objects:

Achia Sea Foods Limited intends to issue 20,000,000 ordinary shares of BDT 10 each at the issue price

of BDT 10 totaling BDT 200,000,000 only through initial public offering (IPO) subject to approval of

concerned regulatory authorities.

The net proceeds from the intended Initial Public Offering (IPO) will be used for expansion of business

activities, purchase of machineries, installation of electricity generation plan, and installation of water

treatment plant repayment of long term loan.

e. Legal and other Information:

Name of the Issuer : Achia Sea Foods Limited.

Legal Position :

Achia Sea Foods Limited incorporated as a Private Limited

Company under the Company Act 1913 vides Registration No.

Khulna-178 dated December 27, 1993. The corporate office of the

Company is situated at 50/7, Shipyard Road, Labanchara, Khulna,

Bangladesh.

Logo :

Registered office : 50/7, Shipyard Road, Labanchara, Khulna, Bangladesh.

Date of Incorporation

& Registration No : December 27, 1993 & Khulna- 178

4

f. Promoters’ background

Md Arifur Rahman Sagir

Md. Arifur Rahman Sagir is a well-known business professional who has been working in different

areas of the food processing industry. In his 27 years professional experience he has managed the

supply chain of the food processing companies, especially his experience in exporting operations

such as clearing, forwarding, and others is highly appreciable. Mr. Arif has also managed factory

operations of in the food processing plant where he has successfully incorporated new technology

and production process to enhance the efficiency of the food processing plant.

Md. Arifur Rahman Sagir has completed his Bachelor of Arts (BA) from Khulna, Bangladesh. He

started his career in the sea foods processing industry and has been working in different departments

in the food processing companies. In 1993 he along with some others shareholders incorporated the

company named Achia Sea Foods Limited, and right now he is the Chairman of the company. He is

also the Chairman of Sundarban Shrimps Private Limited.

Md Tariqul Islam Zaheer

Md Tariqul Islam Zaheer is the Managing Director of Achia Sea Foods Limited. He is also the

Managing Director of Sundarban Shrimps Private Limited. Mr. Tariqul Islam Zaheer completed his

Bachelor of Arts (BA) from Khulna and then he started working in the food processing industry. He

has 21 years’ experience of managing the food processing and exporting business altogether. He is

highly experienced in supply chain controlling and managing the business operations. He is a

Director of the Bangladesh Frozen Foods Exporter Association.

In addition to the business activities, Mr. Tariqul is actively engaged in different social activities. He

holds important positions in many social service organizations that strive to improve the social

conditions of the country. He is the Director Service Project of the Rotary Club of Rupsha Rotary

District 3281, Life-time Member of Khulna Metropolitan Shooting Club, Life Memebr of Khulna

Shishu Foundation, and Memeber of Khulna Club Limited.

Md Ali Azgar Nasir

Md Ali Azgar Nasir is the Director of Achia Sea Foods Limited. He is also a shareholder of Sundarban

Shrimps Private Limited. Mr. Nasir completed his Bachelor of Arts (BA) from Khulna and then he

started working in the food processing industry. He has 15 years’ experience of managing the food

processing and exporting business altogether. Mr. Nasir is highly experienced in supply chain

controlling and managing the business operations. In addition to the business activities, Mr. Ali

Azgar Nasir is actively engaged in different social activities. He holds important positions in many

social service organizations that strive to improve the social conditions of the country.

Md Nadirul Islam

Md Nadirul Islam is the Director of Achia Sea Foods Limited. He is also a shareholder of Sundarban

Shrimps Private Limited. Mr. Nadirul Islam completed his Bachelor of Arts (BA) and then he started

working in the food processing industry. He has 6 years’ experience of managing the food processing

and exporting business altogether.

5

Mr. Nadirul Islam is experienced in managing factory production of sea foods as well as he is

experienced in procurement of finished products. He has been managing the operations of Achia Sea

Foods Limited for the last six years. Apart from that, Mr. Nadirul Islam is involved in different social

activities for the greater good of the society.

Md Ryiad Mahmood

Md Riyad Mahmood is one of the Sponsors of Achia Sea Foods Limited. He is also a shareholder of

Sundarban Shrimps Private Limited. Mr. Riyad Mahmood completed his Master of Business

Administration (MBA) and then he started working in the food processing industry. He has 13 years’

experience of managing the food processing and exporting business altogether.

Mr. Nadirul Islam is experienced in effective administration of the business operations. He also

excels in investment decision making, financial analysis, and business development area. His efforts

have been helping the business of Achia Sea Foods Limited to continue to improve its business

performance since he started working as a Director for the company. His social engagement is also

mentionable.

A. K. M. Mostagawsul Haque

A.K.M. Mostagawsul Haque is one of the the Sponsors of Achia Sea Foods Limited. Mr. Mostagawsul

completed his Master of Commerce (M.Com). He also has achieved Diploma Associate of Institute

of Bankers Bangladesh (DAIBB) degree. He served as a banker for 36 years, while he has been

working in different areas of banking operations; he finally retired as a Senior Principal Officer from

Janata Bank Limited.

Mr. Mostagawsul is experienced in effective administration of the financial transactions. He also

excels in investment decision making, financial analysis area. His efforts have been helping the

business of Achia Sea Foods Limited to continue to improve it’sfinancial. His social engagement is

also mentionable.

g. Capital structure and history of capital raising

CAPITAL STRUCTURE

particulars Types of

securities

Number of

Securities Amount of Taka

Authorized Capital Ordinary 100,000,000 1,000,000,000

Issued, Subscribed and paid up Capital Ordinary 20,323,940 203,239,400

Total Paid up Capital Before IPO [A] Ordinary 20,323,940 203,239,400

Proposed Initial Public Offering (IPO)

thought book building method [B] Ordinary 20,000,000 200,000,000

Total Paid up Capital after IPO [A+B] 40,323,940 403,239,400

6

HISTORY OF CAPITAL RISING

ALLOTMENT HISTORY OF SECURITIES

Allotment

Date

Form of Consideration Issue Price

(BDT)

Amount of

Share

Capital(BDT) Cash Other Than Cash Bonus Issue

As per MoA

27.12.1993 20,000 - - 10 200,000

05.09.1999 6,680 - - 10 66,800

26.01.2005 2,473,320 - - 10 24,733,200

18.07.2005 4,980 - - 10 49,800

05.01.2006 1,062,120 - - 10 10,621,200

08.03.2014 - 5,950,000 - 10 59,500,000

22.11.2015 - - 3,806,840 10 38,068,400

09.01.2016 7,000,000 - - 10 70,000,000

Total 203,239,400

*** All the stocks are shown in the face value of TK 10

*** The company sub-divided its shares from TK 100 to TK 10 on 20th February 2014 by passing a

special resolution.

h. Summary of Valuation Report of securities

Reference Valuation Method Calculated Fair Value

(BDT)

Method – 1 Net Asset Value (NAV) Per Share 15.42

Method- 2(A) Earning Based Value Per Share (Market P/E) 19.04

Method- 2(B) Earning Based Value Per Share (Sector P/E) 31.94

Method- 3 Average Market Price of Similar Stocks 341.14

Method- 4 P/BV Multiple of Similar Stocks 159.60

7

Part II

CONDITIONS IMPOSED BY THE COMMISSION IN THE CONSENT LETTER

DISCLOSURE IN RESPECT OF ISSUANCE OF SECURITY IN DEMAT FORM

As per provision of the Depository Act, 1999 and regulation made there under, shares will 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 (rights/bonus) will be issued in

dematerialized form only.

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

PART–A

1. The Company shall go for Initial Public Offer (IPO) for 20,000,000ordinary shares of Tk. 10.00 each

at par totaling to Tk. 200,000,000 following the Securities and Exchange Ordinance, 1969, the

Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015, the Depository Act,

1999 and rules made thereunder.

2. The abridged version of the prospectus, as approved by the Commission, shall be published by the

issuer in 4 (Four) national daily newspapers (two in Bangla and two in English), within 02 (two)

working days of issuance of this consent letter. The issuer shall post the full prospectus, vetted by

Commission, in the issuer’s website and shall also put on the websites of the Commission, stock

exchanges, and the issue manager, within 3 (three) working days from the date of issuance of this

letter and shall remain posted till the closure of the subscription list. The issuer shall submit to the

Commission, the stock exchanges and the issue manager a diskette containing the text of the vetted

prospectus in “MS -Word” format.

3. The company shall submit 40 (Forty) copies of the printed prospectus to the Commission for official

record within 5 (Five) working days from the date of publication of the abridged version of the

prospectus in the newspaper.

4. The issuer company and the issue manager shall ensure transmission of the prospectus and its

abridged version for NRBs through email to the Bangladesh Embassies and Missions abroad within

5 (Five) working days from the date of publication of the abridged version of the prospectus in the

newspaper. A compliance report shall be submitted in this respect to the Commission jointly by the

issuer and the Issue Manager within 02 (Two) working days from the date of said transmission of

the prospectus.

5. The following declaration shall be made by the company in the prospectus, namely “Declaration

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

None of the stock exchange(s), if for any reason, grants listing within 75 (Seventy Five) days from

the closure of subscription, any allotment in terms of this prospectus shall be void and the company

shall refund the subscription money within 15 (Fifteen) days from the date of refusal for listing by

the stock exchanges, or from the date of expiry of the said 75 (Seventy Five) days, as the case may

be In case of non-refund of the subscription money within the aforesaid 15 (Fifteen) days, the

Directors of the company, in addition to the issuer company, shall be collectively and severally

liable for refund of the subscription money, with interest at the rate of 2% (two percent) above the

bank rate, to the subscribers concerned. The issue manager, in addition to the issuer company, shall

ensure due compliance of the above mentioned conditions and shall submit compliance report

thereon to the Commission within 07 (Seven) days of expiry of the aforesaid 15 (Fifteen) days’ time

period allowed for refund of the subscription money.”

6. The IPO shall stand cancelled and the issuer and issue manger shall inform the Commission within

2 (two) working days and release the subscription money within 10 (ten) working days after

receiving verification report from CDBL and the information from exchanges to the effect that at

least 35% of the IPO in any category is not subscribed.

8

7. 20% of the securities reserved for general public shall be reserved for. In case of over subscription

in the general public category, the issuer and the issue manager shall jointly conduct an open

lottery. In case of over subscription in the eligible investors’ category, securities shall be allotted on

pro-rata basis as per rules.

8. All applicants under general public category shall apply for minimum market lot of 500 shares

worth Taka 5,000/- (Taka five thousand only) and eligible investors shall apply for a market lot or

its multiples.

9. An applicant cannot submit more than two applications, one in his/her own name and the other

jointly with another person. In case, an applicant submits more than two applications, all

applications will be treated as invalid and will not be considered for allotment purpose. In addition,

15% (fifteen) of the application money will be forfeited by the Commission and the balance amount

will be refunded to the applicant.

10. The applicants who have applied for more than two applications using same bank account, their

application will not be considered for lottery and the Commission will forfeit 15% of their

subscription money.

11. Making of any false statement in the application or supplying of incorrect information therein or

suppressing any relevant information in the application shall make the application liable to

rejection and subject to forfeiture of 25% of the application money and/or forfeiture of share (unit)

before or after issuance of the same by the issuer. The said forfeited application money or share

(unit) will be deposited in account of the Bangladesh Securities and Exchange Commission (BSEC).

This is in addition to any other penalties as may be provided for by the law.

12. The company shall furnish the list of allotees to the Commission and the stock exchange(s)

simultaneously in which the shares will be listed, within 24 (Twenty Four) hours of allotment.

13. Shares not allotted at the time of according this consent, but allotted after listing, in favor of

sponsors, directors or shareholders having 5% or more shares through stock dividends, shall be

subject to a lock-in period of 02(two) years from the date of issuance of the prospectus.

14. If any share shares of Sponsors/Directors/Promoters is in paper format, it shall be handed over to

securities custodian registered with the Commission and shall remain held till completion of lock-

in period and the name of the securities custodian shall be furnished to the Commission jointly by

the issuer and issue manager, along with a confirmation thereof from the custodian, within one

week of listing of the shares with the stock exchange(s). Or they (shares of Sponsors/ Directors/

Promoters) can be demated and shall remain in lock-in under CDBL system and issuer shall submit

a dematerialization confirmation report generated by CDBL and attested by Managing Director of

the company along with the lock-in confirmation to the Commission within one week of listing of

the shares with the stock exchange(s). In respect of shares other than

Sponsors/Directors/Promoters the issuer will ensure their lock-in of those shares and submit a

statement to this effect to the Commission.

15. The company shall not declare any dividend/bonus shares before listing of its capital with any

Exchange from the date of this consent for raising of capital.

PART–B

Application Process

Step-1 (Applicant)

1. An applicant for public issue of securities shall submit application/buy instruction to the

Stockbroker/ Merchant Banker where the applicant maintains customer account, within the cut-off

date (i.e. the subscription closing date), which shall be the 25th (twenty fifth) working day from the

date of publication of abridged version of prospectus.

9

2. The application/buy instruction may be submitted in prescribed paper or electronic form, which

shall contain the Customer ID, Name, BO Account Number, Number of Securities applied for, Total

Amount and Category of the Applicant. At the same time:

a. Other than non-resident Bangladeshi (NRB) and Foreign applicants shall make the

application money and service charge available in respective customer account maintained

with the Stockbroker/Merchant Banker. No margin facility, advance or deferred payment

is permissible for this purpose. In case the application is made through a margin account,

the application money shall be deposited separately and the Stockbroker/Merchant Banker

shall keep the amount segregated from the margin account, which shall be refundable to

the applicant, if become unsuccessful.

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

issued in favor of the Issuer for an amount equivalent to the application money, with their

application to the concerned Stockbroker/Merchant Banker. A Non-resident Bangladeshi

(NRB) and Foreign applicant may also submit a single draft against 02(two) applications

made by him/her, i.e. one in his/her own name and the other jointly with another person.

The draft (FDD) shall be issued by the Bank where the applicant maintains NITA/Foreign

Currency account debiting the same account. No banker shall issue more than two drafts

from any NITA/Foreign Currency account for any public issue. At the same time, the

applicant shall make the service charge available in respective customer account

maintained with the Stockbroker/Merchant Banker.

Step-2 (Intermediary)

3. The Stockbroker/Merchant Banker shall maintain a separate bank account only for this purpose

namely “Public Issue Application Account”. The Stockbroker/Merchant Banker shall:

a. post the amount separately in the customer account (other than NRB and Foreign

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

money;

b. Accumulate all the application/buy instructions received up to the cut-off date, deposit the

amount in the “Public Issue Application Account” maintained with its bank within the first

banking hour of next working day of the cut-off date. In case of application submitted by

the Stock-dealer or the Merchant Banker’s own portfolio, the application amount should

also be transferred to the “Public Issue Application Account”;

c. Instruct the banker to block the account for an amount equivalent to the aggregate

application money and to issue a certificate in this regard.

4. Banker of the Stockbroker/Merchant Banker shall block the account as requested for, issue a

certificate confirming the same and handover it to the respective Stockbroker/Merchant Banker.

5. For Non-resident Bangladeshi (NRB) and Foreign applicants, the Stockbroker/Merchant Banker

shall prepare a list containing the draft information against the respective applicant’s particulars.

6. The Stockbroker/Merchant Banker shall prepare category wise lists of the applicants containing

Customer ID, Name, BO Account Number and Number of Securities applied for, and within 03

(three) working days from the cut-off date, send to the respective Exchange, the lists of applicants

in electronic (text format with tilde ‘~’ separator) format, the certificate(s) issued by its banker, the

drafts received from Non-resident Bangladeshi (NRB) and Foreign applicants and a copy of the list

containing the draft information.

7. On the next working day, the Exchanges shall provide the Issuer with the information received

from the Stockbroker/Merchant Bankers, the drafts submitted by Non-resident Bangladeshi (NRB)

and Foreign applicants and the list containing the draft information. Exchanges shall verify and

preserve the bankers’ certificates in their custody.

10

8. The application/buy instructions shall be preserved by the Stockbroker/Merchant Bankers up to 6

months from listing of the securities with exchange.

Step-3 (Issuer)

9. The Issuer shall prepare consolidated list of the applications and send the applicants’ BOIDs in

electronic (text) format in a CDROM to CDBL for verification. The Issuer shall post the consolidated

list of applicants on its website and websites of the Exchanges. CDBL shall verify the BOIDs as to

whether the BO accounts of the applicants are active or not.

10. On the next working day, CDBL shall provide the Issuer with an updated database of the applicants

containing BO Account Number, Name, Addresses, Parents’ Name, Joint Account and Bank

Account information along with the verification report.

11. After receiving verification report and information from CDBL, the Issuer shall scrutinize the

applications, prepare category wise consolidated lists of valid and invalid applications and submit

report of final status of subscription to the Commission and the Exchanges within 10 (ten) working

days from the date of receiving information from the Exchanges.

12. The Issuer and the issue manager shall conduct category wise lottery with the valid applications

within 03 (three) working days from the date of reporting to the Commission and the Exchanges,

if do not receive any observation from the Commission or the Exchanges.

13. The Issuer and issue manager shall arrange posting the lottery result on their websites within 06

(six) hours and on the websites of the Commission and Exchanges within 12 (twelve) hours of

lottery.

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

a. Send category wise lists of the successful and unsuccessful applicants in electronic (text

format with tilde ‘~’ separator) format to the respective Exchange.

b. Send category wise lists of unsuccessful applicants who are subject to penal provisions as

per conditions of the Consent Letter issued by the Commission in electronic (text format

with tilde ‘~’ separator) format to the Commission and Exchanges mentioning the penalty

amount against each applicant.

c. Issue allotment letters in the names of successful applicants in electronic format with digital

signatures and send those to respective Exchange in electronic form.

d. Send consolidated allotment data (BOID and number of securities) in electronic text format

in a CDROM to CDBL to credit the allotted shares to the respective BO accounts.


15. On the next working day, Exchanges shall distribute the information and allotment letters to the

Stockbroker/Merchant Bankers concerned in electronic format and instruct them to:

a. remit the amount of successful (other than NRB and Foreign) applicants to the Issuer’s

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

unsuccessful applicants;

b. send the penalty amount of other than NRB and Foreign applicants who are subject to

penal provisions to the Issuer’s respective Escrow Accounts along with a list and unblock

the balance application money;

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

Stockbrokers/Merchant Banker shall request its banker to:

a. release the amount blocked for unsuccessful (other than NRB and foreign) applicants;

b. Remit the aggregate amount of successful applicants and the penalty amount of

unsuccessful applicants (other than NRB and foreign) who are subject to penal provisions

to the respective ‘Escrow’ accounts of the Issuer opened for subscription purpose.

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

bankers shall unblock the amount blocked in the account(s) and remit the amount as requested for

to the Issuer’s ‘Escrow’ account.

11

18. Simultaneously, the stockbrokers/Merchant Bankers shall release the application money blocked

in the customer accounts; inform the successful applicants about allotment of securities and the

unsuccessful applicants about releasing their blocked amounts and send documents to the

Exchange evidencing details of the remittances made to the respective ‘Escrow’ accounts of the

Issuer. The unblocked amounts of unsuccessful applicants shall be placed as per their instructions.

The Stockbroker/Merchant Banker shall be entitled to recover the withdrawal charges, if any, from

the applicant who wants to withdraw the application money, up to an amount of Tk. 5.00 (five) per

withdrawal.

19. All drafts submitted by NRB or Foreign applicants shall be deposited in the Issuer’s respective

‘Escrow’ accounts and refund shall be made by the Issuer by refund warrants through concerned

stockbroker or merchant banker or transfer to the applicant’s bank account through banking

channel within 10 (ten) working days from the date of lottery.

Miscellaneous:

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

above.

21. The bank drafts (FDD) shall be issued considering TT Clean exchange rate of Sonali Bank Ltd. on

the date of publication of abridged version of prospectus.

22. Amount deposited and blocked in the “Public Issue Application Account” shall not be withdrawn

or transferred during the blocking period. Amount deposited by the applicants shall not be used

by the Stockbrokers/Merchant Bankers for any purpose other than public issue application.

23. The Issuer shall pay the costs related to data transmission, if claimed by the Exchange concerned

up to an amount of Tk.2,00,000.00 (taka two lac) for a public issue.

24. The Stockbroker/Merchant Bankers shall be entitled to a service charge of Tk.5.00 (taka five) only

per application irrespective of the amount or category. The service charge shall be paid by the

applicant at the time of submitting application.

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

drafts sent.

26. The Issuer shall accumulate the penalty amount recovered and send it to the Commission through

a bank draft/payment order issued in favor of the Bangladesh Securities and Exchange

Commission.

27. The concerned Exchange are authorized to settle any complaints and take necessary actions against

any Stockbroker/Merchant Banker in case of violation of any provision of the public issue

application process with intimation to the Commission.

PART–C

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

version on the date of publication with the copies vetted by the Commission. If any discrepancy is

found, both the issuer and the issue manager shall jointly publish a corrigendum immediately in

the same newspapers concerned, simultaneously endorsing copies thereof to the Commission and

the stock exchanges concerned. In this regard, the issue manager shall submit a compliance report

to the Commission within 5 working days from the date of such publications.

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

and that utilization of the said fund shall be effected through banking channel, i.e. through account

payee cheque, pay order or bank drafts etc.

3. The company shall furnish status report on utilization of Public Offering proceeds audited by

foreign affiliated auditors and authenticated by the board of directors to the Commission and the

exchanges within 15 (Fifteen) days of the closing of each month until such fund is fully utilized, as

mentioned in the schedule contained in the prospectus, 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.

12

4. While auditing the utilization of IPO proceeds, the auditors will perform their jobs under the

following terms of reference (TOR) and confirm the same in their report/certificate:

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

prospectus;

b. Prospectus Achia Sea Foods Limited Page 17 of 356

c. Whether IPO proceeds have been utilized in line with the condition (if any) of the

Commission’s consent letter;

d. Whether utilization of IPO proceeds have been completed within the time

schedule/implementation schedule as specified in the published prospectus;

e. Whether utilization of IPO proceeds is accurate and for the purpose of the company as

mentioned/specified in the published prospectus; and

f. The auditors should also confirm that:(i)assets have been

procured/imported/constructed maintaining proper/required procedure as well as at

reasonable price; and (ii) auditors’ report has been made on verification of all necessary

documents/papers/vouchers in support of IPO proceeds making reconciliation with

Bank Statement.

5. All transactions, excluding petty cash expenses, shall be effected through the company’s bank

account(s).

6. Proceeds of the public offering shall not be transferred to any other bank account before listing with

the Exchange(s) and used for any purpose other than those specified in the prospectus. Any

deviation in this respect must have prior approval of the shareholders in the shareholders meeting

under intimation to the Commission and the exchanges.

7. If any quarter or half-year of the financial year ends after publication of the abridged version of

prospectus and before listing of its securities with any exchange, the company shall

disseminate/transmit/submit the said quarterly/half yearly financial statements in accordance

with the Commission’s Notification SEC/CMRRCD/2008-183/admin/03-34 dated September 27,

2009 and Rules 13 of the Securities and Exchange Rules, 1987.

8. In the event of a rising issues concerning Price Sensitive Information as defined under the 1995 after

publication of the abridged version of prospectus and before listing of its securities with any

exchange, the company shall disseminate/transmit/submit the information as price sensitive in

accordance with the Commission’s Notification No. SEC/SRMI/200-953/1950 dated October 24,

2000.

PART–D 1. As per provision of the Depository Act, 1999 & regulations made 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 (Including

rights/bonus) will be made in dematerialized form only.

2. The issuer and the issue manager shall ensure due compliance of all the above conditions, the

‘Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015’ and the listing

regulations of the exchanges.

3. The Commission may impose further conditions/restrictions etc. from time to time as and when

considered necessary, which shall also be binding upon the issuer company

13

Part III

DECLARATION AND DUE DILIGENCE CERTIFICATES

Annexure-A

Declaration about the responsibility of the directors, including the CEO of the issuer in respect

of the Prospectus.

[Rule 4 (1) (d)]

This Prospectus has been prepared, seen, and approved by us, and we, individually and collectively,

accept full responsibility for the authenticity, accuracy and adequacy of the statements made,

information given in the prospectus, documents, financial statements, exhibits, annexes, papers

submitted to the commission in support thereof, and confirm, after making all reasonable inquiries that

all conditions concerning this public issue and prospectus have been met and that there are no other

information or documents, the omission of which make any information or statements therein

misleading for which the Commission may take any civil, criminal or administrative actions against

any or all of us as it may deem fit.

We also confirm that full and fair disclosures have been made in this Prospectus to enable the investors

to make a well-informed decision for investment.

Sd/- Sd/- Sd/-

Md. Arifur Rahman Sagir Md. Tariqul Islam Zaheer Md. Ali Azgar Nasir

Chairman Managing Director Director

Sd/- Sd/-

Md. Nadirul Islam Babu Md. Arfin Ali

Director Independent Director

14

Annexure-B

Due diligence certificate by Issue Manager in the prospectus [Rule 4 (1) (d)]

To The Bangladesh Securities and Exchange Commission Sub: Public Issue of 20,000,000 Ordinary Shares of Tk. 200,000,000 by Achia Sea Foods Limited

Dear Sir,

We, the issue manager(s) to the above-mentioned forth coming issue, state and confirm as follows:

1. We have examined all the documents submitted with the application for the above mentioned

public issue, visited the premises of the issuer and interviewed the Chairperson, Directors and

key management personnel of the issuer in connection with the finalization of the prospectus

pertaining to the said issue;

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

of the issuer, other agencies, independent verification of the statements concerning objects of

the issue and the contents of the documents and other materials furnished by the issuer.

We Confirm That:

a. The prospectus filed with the Commission is in conformity with the documents, materials and

papers relevant to the issue;

b. All the legal requirements relating to the issue as also in the rules, notification, guidelines,

instructions, etc. framed/issued by the Commission, other competent authorities in this behalf

and the Government have been duly complied with;

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

a well informed decision for investment in the proposed issue and such disclosures are in

accordance with the requirements of the Companies Act, 1994, the Bangladesh Securities and

Exchange Commission (Public Issue) Rules, 2015 and other applicable laws;

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

Commission and that till date such registrations are valid;

e. We have satisfied ourselves about the capability of the underwriters to fulfill their

underwriting commitments;

f. The proposed activities of the issuer for which the funds are being raised in the present issue

fall within the ‘main objects’ listed in the object clause of the Memorandum of Association or

other charter of the issuer and that the activities which have been carried out till now are valid

in terms of the object clause of its Memorandum of Association;

g. Necessary arrangements have been made to ensure that the moneys to be received pursuant to

the issue shall be kept in a separate bank account and shall be used for the purposes disclosed

in the use of proceeds section of the prospectus;

h. All the applicable disclosures mandated in the Bangladesh Securities and Exchange

Commission (Public Issue) Rules, 2015 have been made in addition to other disclosures which,

in our view, are fair and adequate to enable the investor to make a well informed decision;

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

of the nature of current business background or the issuer, situation at which the proposed

business stands, the risk factors, sponsors experiences etc. We also confirm that the due

diligence related process, documents and approval memos shall be kept in record by us for the

next 5 (five) years after the IPO for any further inspection by the Commission;

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

Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015 containing details

15

such as the rule number, its text, the status of compliance, page numbers of the prospectus

where the rules has been complied with and our comments, if any;

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

(five) years:

Sl. No.

Name of the Issue Issue Date

Issue Price (Tk.)

Dividend Payment History (Year Wise)

2013 2014 2015 2016 2017

1 Shahjibazar Power Co. Ltd.

18-02-2014 25 N/A 5% B

25% C 3% B

28% C 3%B

30%C 14%B 16%C

2 Bashundhara Paper Mills Limited 01-04-2018 80 N/A N/A N/A N/A N/A

N. B. ‘B’ indicates Bonus share or Stock Dividend and ‘C’ indicates Cash Dividend

Sd/-

Place: Dhaka Mohammad Obaydur Rahman, FCS

7th August, 2018 Managing Director

AAA Finance & Investment Ltd.

16

Annexure-C

Due diligence certificate by the underwriter(s)

[Rule 4 (1) (d)]

AAA Finance & Investment Limited

To

The Bangladesh Securities and Exchange Commission

Sub: Public Issue of 20,000,000 Ordinary Shares of Tk. 20.00 Crore by Achia Sea Foods Limited.

Dear Sir,

We, the under-noted Underwriter(s) to the above-mentioned forthcoming issue, state individually

and collectively as follows:

(1) We, while underwriting the above mentioned issue on a firm commitment basis, have

examined the prospectus, other documents and materials as relevant to our underwriting

decision; and

(2) On the basis of such examination and the discussions with the issuer company, its directors

and officers, and other agencies, independent verification of the statements concerning

objects of the issue and the contents of the documents and other materials furnished by the

issuer company.

We Confirm That:

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

banker and eligible to carry out the underwriting activities. Our present paid-up capital

stands at Tk. 25 Crore (Twenty five crore) and we have the capacity to underwrite a total

amount of Tk. 125 Crore (One hundred twenty five crore) as per relevant legal requirements.

We have committed to underwrite for up to Tk. 1 Crore 40 Lac (One crore Forty Lac) only

for the upcoming issue.

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

(Name of issue and amount underwritten)

Sl. Name of Company Nature of Issue Amount Underwritten

(In Tk.)

1. AB Bank Limited Rights 280,000,000.00

2. Ratunpur Steel Re-rolling Mills Ltd. IPO 100,000,000.00

3. IPDC Finance Ltd. Rights 371,545,304.00

4. Baraka Patenga Power Ltd. IPO 25,000,000.00

5. Express Insurance Ltd. IPO 16,276,500.00

6. Coppertech Industries Ltd. IPO 20,000,000.00

Total 812,821,804.00

(c) All information as are relevant to our underwriting decision have been received by us and

the prospectus forwarded to the Commission has been approved by us;

(d) We shall subscribe and take up the un-subscribed securities against the above-mentioned

public issue within 15 (fifteen) days of calling up thereof by the issuer; and

(e) This underwriting commitment is unequivocal and irrevocable.

For the Underwriter

Sd/-

Mohammad Obaydur Rahman, FCS

Managing Director

AAA Finance & Investment Limited

Dhaka

Date: 19/09/2018

17


To The Bangladesh Securities and Exchange Commission

Sub: Public Issue of 20,000,000 Ordinary Shares of Tk. 20.00 crore by Achia Sea Foods Limited.

Dear Sir,

We, the under-noted Underwriter(s) to the above-mentioned forthcoming issue, state individually and

collectively as follows:

1. We, while underwriting the above mentioned issue on a firm commitment basis, have

examined the prospectus, other documents and materials as relevant to our underwriting

decision; and

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

and officers, and other agencies, independent verification of the statements concerning objects

of the issue and the contents of the documents and other materials furnished by the issuer

company.

We Confirm That:

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

banker and eligible to carry out the underwriting activities. Our present paid-up capital stands

at Tk. 600,000,000 (Taka Sixty Crore Only) and we have the capacity to underwrite a total

amount of Tk. 3,000,000,000 (Taka Three Hundred Crore Only) as per relevant legal

requirements. We have committed to underwrite for up to 1 Crore 40 Lac (One crore Forty Lac)

only for the upcoming issue.

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

Sl.

No. Name of the Company

Amount

Underwritten

(BDT)

1 Infinity Technology International Limited 52,500,000.00

2 Dragon Sweater & Spinning Limited 30,000,000.00

3 AB Bank Limited (Rights Share) 280,000,000.00

4 IPDC Finance Limited (Rights Share Offer) 40,300,000.00

5 Popular Pharmaceuticals Limited 10,000,000.00

6 Runner Automobiles Limited 15,000,000.00

7 Modern Steel Mills Limited 50,000,000.00

8 Mohammad Elias Brothers POY Manufacturing Plant Limited 3,500,000.00

Total Amount 481,300,000.00

(c) All information as are relevant to our underwriting decision have been received by us and the prospectus forwarded to the Commission has been approved by us;

(d) We shall subscribe and take up the un-subscribed securities against the above-mentioned public issue within 15 (fifteen) days of calling up thereof by the issuer; and

(e) This underwriting commitment is unequivocal and irrevocable. For the Underwriter

Sd/- Mohammad Saleh Ahmed

Chief Executive Office (CC) IIDFC Capital Limited Place: Dhaka Date: September 18, 2018

18

Sandhani Life Finance Limited

To

The Bangladesh Securities and Exchange Commission Sub: Public Issue of 20,000,000 Ordinary Shares of Tk. 20.00 crore by Achia Sea Foods Limited.

Dear Sir,

We, the under-noted Underwriter(s) to the above-mentioned forthcoming issue, state individually and collectively as follows:

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

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

We Confirm That:

a) We are registered with the Bangladesh Securities and Exchange Commission as a merchant banker and eligible to carry out the underwriting activities. Our present paid-up capital stands at Tk. 250,000,000 (Taka Twenty Five Crore only) and we have the capacity to underwrite a total amount of Tk. 1,250,000,000(Taka One Hundred and Twenty Five Crore only) as per relevant legal requirements. We have committed to underwrite for up to 1 Crore 40 Lac (One crore Forty Lac) only for the upcoming issue.

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

Sl. No. Name of The Company Amount Underwritten (in BDT)

1 Shamsul Alamin Real Estate Limited 100,000,000

2 New Line Clothings Limited 30,000,000

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

4 IPDC Finance Limited 191,100,000

5 Al-Faruque Bags Limited 35,000,000

6 Sea Pearl Beach Resort & Spa Ltd. 20,000,000

Total 451,100,000

c) All information as are relevant to our underwriting decision have been received by us and the

draft prospectus forwarded to the Commission has been approved by us; d) We shall subscribe and take up the un-subscribed securities against the above-mentioned

public issue within 15 (fifteen) days of calling up thereof by the issuer; and e) This underwriting commitment is unequivocal and irrevocable.

For the Underwriter: Muhammad Nazrul Islam FCMA Managing Director & CEO Sandhani Life Finance Ltd. Place: Dhaka Date: September 11, 2018.

19

Southeast Bank Capital Services Limited

To


Dear Sir, We, the under-noted Underwriter(s) to the above-mentioned forthcoming issue, state individually and collectively as follows:



We Confirm That:

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

banker and eligible to carry out the underwriting activities. Our present paid-up capital stands at Tk. 550,000,000 (Taka Fifty Five Crore only) and we have the capacity to underwrite a total amount of Tk. 2,750,000,000 as per relevant legal requirements. We have committed to underwrite for up to 1 Crore 40 Lac (One crore Forty Lac) only for the upcoming issue.

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

Sl. No.

Name of The Company Amount Underwritten

(in BDT)

1 Express Insurance Limited 57,325,000

2 Dragon Sweater & Spinning Limited 20,000,000

3 Dhaka Regency Hotel Limited 25,000,000

4 Lub-rref (Bangladesh) Limited 200,000,000

5 New Line Clothing Limited 30,000,000

6 AB Bank Limited 180,000,000

7 Esquire Knit Composite Limited 20,000,000

8 Mohammad Elias Brothers POY Manufacturing Plant Limited 3,500,000

Total 535,825,000

h) 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; i) 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 j) This underwriting commitment is unequivocal and irrevocable.

For the Underwriter: Air (Cdre (Retd) Md. Abu Bakar, FCA Managing Director Southeast Bank Capital Services Limited Place: Dhaka Date: September 17, 2018

20


To


Dear Sir, We, the under-noted Underwriter(s) to the above-mentioned forthcoming issue, state individually and collectively as follows:



We Confirm That:

k) We are registered with the Bangladesh Securities and Exchange Commission as a merchant banker and eligible to carry out the underwriting activities. Our present paid-up capital stands at Tk. 300,000,000 (Taka Thirty Crore only) and we have the capacity to underwrite a total amount of Tk. 1,500,000,000(Taka One Hundred and Fifty Crore only) as per relevant legal requirements. We have committed to underwrite for up to 1 Crore 40 Lac (One crore Forty Lac) only for the upcoming issue.

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

Sl. No.

Name of The Company Amount Underwritten

(in BDT)

1 Silco Pharmaceuticals Limited 26,250,000

2 STS Holdings Limited 20,000,000

3 AB Bank Limited 90,000,000

4 Delta Hospital Limited 8,000,000

5 INDEX Agro Industries Limited 70,000,000

6 Esquire Knit Composite Ltd 20,000,000

7 Genex Infosys Limited 30,000,000

8 Shamsul Alamin Real Estate Limited 150,000,000

9 Energypack Power Generation Limited 25,000,000

10 Ratanpur Steel Re-Rolling Mills Limited 450,187,840

11 Western Marine Shipyard Limited 100,000,000

12 IPDC Finance Limited 40,300,000

Total 1,029,737,840

m) 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;

n) 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

o) This underwriting commitment is unequivocal and irrevocable. For the Underwriter: Sd/- Tahid Ahmed Chowdhury

Managing Director EBL Investments Limited Place: Dhaka Date: September 17, 2018

21

Part IV

ABOUT THE ISSUER

(a) Name of the issuer, dates of incorporation and commencement of its commercial operations, its

logo, addresses of its registered office, other offices and plants, telephone number, fax number,

contact person, website address and e-mail address.

Particulars Description

Name of the Issuer : Achia Sea Foods Limited

Date of Incorporation : December 27, 1993

Commencement of Commercial

Operations : February 15 , 1998

Logo :

Address of the Registered Office : 50/7, Shipyard Road, Labanchara, Khulna,

Bangladesh.

Other Offices and Plants : 50/7, Shipyard Road, Labanchara, Khulna,

Bangladesh.

Telephone Number : +88 041 722648

Fax Number : +88 041 813836

Contact Person : Masuma Yasmin

Website Address : www.achia-seafoods.com

E-Mail Address : [email protected]

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

SL. No. Name of the Sponsors Permanent Address

Sponsors

1. Haji A. Malek Miah 101, Motiakhali Shipyard Road, Khulna

2. Md. Nurul Alam Miah 101, Motiakhali Shipyard Road, Khulna

3. Mrs. Achia Khatoon 101, Motiakhali Shipyard Road, Khulna

4. Md. Nuril Islam Miah 101, Motiakhali Shipyard Road, Khulna

5. Md. Nuruzzaman Miah 101, Motiakhali Shipyard Road, Khulna

6. Md. Nurul Huda Miah 101, Motiakhali Shipyard Road, Khulna

Directors (Shareholding)

Sl. Name of the Directors Permanent Address

1. Md. Ali Asgar Naser 52, South Central Road, Khulna

2. Md. Tariqul Islam Zaheer 52, South Central Road, Khulna

3. Md. Arifur Rahman Sagir 52, South Central Road, Khulna

4. Md. Nadirul Islam Babu 52, South Central Road, Khulna

Directors (Independent)

Sl. Name of the Directors Permanent Address

1. Md. Arfin Ali 176/2, Sher-e- Bangla Road, (1st Floor), Power

House More, Khulna

22

(c) The name, logo and address of the auditors and registrar to the issue, along with their telephone

numbers, fax numbers, contact persons, website and e-mail addresses

Auditor

Name : Mahfel Huq & Co

Logo :

Address : 4th Floor, BGIC Tower, 34 Topkhana Road, Dhaka-1000,

Bangladesh

Telephone : +880-2-9553143

Fax : +88-02-9571005

Contact Person : Howlader Mahfel Huq

Principal

Website : www.mahfelhuq.com

E-Mail : [email protected]

(d) The name(s) of the stock exchanges where the specified securities are proposed to be listed.

Stock Exchanges Contact Addresses

DHAKA STOCK EXCHANGE LIMITED

:

Dhaka Stock Exchange Ltd. Stock Exchange Building 9/F Motijheel C/A, Dhaka-1000 Phone: +88-02-9564601, 9576210-18 Fax: +88-02-9564727, +88-02-9569755 Web:www.dsebd.org

CHITTAGONG STOCK EXCHANGE LIMITED

:

CSE Building, 1080, Sk. Mujib Road

Agrabad, Chittagong, Bangladesh

Tel: +88(0) 31-714632-3, +88(0) 31-720871-3

Fax: +88(0) 31-714101

Web: www.cse.com.bd

23

Part V

CORPORATE DIRECTORY OF THE ISSUER

Company Name : Achia Sea Foods Limited

Registered Office : 50/7 Shipyard Road, Labanchara

Manufacturing Plant : 50/7 Shipyard Road, Labanchara

Incorporation & Registration No : Khulna-3-178A

Commercial Production : February 15, 1998

Auditors : Mahfel Huq & Co.

Manager to the Issue : AAA Finance & Investment Limited

Lead Banker for IPO : Merchantile Bank Limited

Company Secretary : Md. Elias

24

Part VI

DESCRIPTION OF THE ISSUER

(a) Summary

i. The summary of the industry and business environment of the issuer

Global Market Scenario

Frozen food is a valued commodity in today’s times. With lifestyles getting more hectic by the day and the time required to cook traditional meals in short supply, frozen foods have become a lifesaver for a large part of the global population. The increasing working population of women and the increasingly long working hours in the corporate sector are the major factors driving the global frozen food market. Freezing food reduces the chances of microbes invading it, since most pathogens can’t survive at sub-zero temperatures. As a result, frozen food can be stored for long periods and consumed at the convenience of the user upon short notice. On the basis of product type, the global frozen food market is segmented into frozen ready meals, frozen fruits and vegetables, frozen potatoes, frozen soup, frozen meat, and frozen fish and other seafood.

The increasing sophistication of freezing techniques allow vendors to keep frozen production fresh for a longer time, which significantly drive the demand from the global frozen food market. Geographically, Europe held the largest share in the global frozen food market in 2012, with Germany emerging as the dominant national market. However, many researchers have predicted that the frozen food market will soon be dominated by emerging regions such as Asia Pacific, the Middle East, and Latin America in the coming years. The rampant urbanization in these regions, particularly in dynamic economies such as China, Bangladesh, India, Brazil, and Mexico, has led to a growth in the demand for food that can be prepared with minimal prep. The growing middle class and the increasing trend of families consisting of two working spouses have also spurred the Asia Pacific market for frozen food.

In 2012 Transparency Market Research valued the global frozen food market to be US$ 224.7 billion, which is expected to grow to US$293.7 billion showing an average growth rate (CAGR) of 3.9%. Many other published reports are also suggesting an average growth 4%-5% in the global frozen food market. Source:http://www.marketwired.com/press-release/frozen-food-market-reach-us-29375-billion-will-register-cagr-39-between-2013-2019-transparency-2023000.htm Bangladesh Market Scenario

Bangladesh frozen foods industry is one of the most significant component of the country’s economy. The country earns a significant amount of foreign currency from the exporting of frozen foods to European and American Market. The Public Sector Corporation and the Private Organizations have setup about 145 numbers of shore based export oriented fish processing plants at Dhaka, Chittagong, Khulna, Jessore, Satkhira, Bagerhat, Cox's Bazar, Chandpur, Kishoregonj, Syihet and Patuakhali. These plants produces Shrimp products under the most hygienic and sanitary condition under the supervision, control and guidance of foreign trained handling & processing experts.

The country usually exports different types of shrimps and prawns among them Fresh water headless, shell on tail on (FWSO), Sea Water headless shell on tail on(SWSO), Peeled and Deveined (P&D), Peeled and Undeveined (PUD) and BrokenProducts (BP) of Prawns and Shrimps in Block Frozen, Cooked, Semi Cooked, IQF, Semi IQF etc. The country also exports frozen sea water and Fresh Water Fish in many variety and the demand for these products are increasing. Among the sea water fish Bangladesh usually exports Prompfrets, Jewfish, Indian Salmon, Shad, Caffish, Ribbonfish, Mullet, Tena, Mackerel, Cockup, Red Snapper ets. are processed in whole, headless, belly clean (IQF) state or sliced/fillets/steak in Block Frozen state. As for the fresh water fish Carps, Common Carps, Snake-Heads, Barbs Shad, Eel, Mullets etc. The large fishes are processed in whole headless, belly clean (IQF) state of sliced/fillets/steaks and small fishes and processed in whole block frozen state. Source: https://www.bffea.net/product.php

25

ii. Summary of consolidated financial, operating and other information

Achia Sea Foods Limited has no subsidiary company. Therefore, such information is not applicable for

the company.

(b) General Information

a. Name and address, telephone and fax numbers of the registered office, corporate head office, other offices, factory, business premises and outlets of the issuer

Particulars Description

Registered Office

Achia Sea Foods Limited

50/7 Shipyard Road, Labanchara, Khulna

Tel: +88 041 813837, 722648

Fax: +88 041 813836

Corporate Head Office



Tel: +88 041 813837, 722648

Fax: +88 041 813836

Other Office/s


Suite 2A, House 120, Road 01, Block F, Banani, Dhaka

Tel: +88 02 9851872; 9852796; 9899543

Fax: +88 02 9895981

Factory



Tel: +88 041 813837, 722648

Fax: +88 041 813836

*** The company does not have any other business premises except the factory premises. The company doesn’t sale its products in the local market; hence, the company does not need any outlets.

b. The board of directors of the issuer

SL No. Name Position

1 Md. Arifur Rahman Sagir Chairman

2 Md. Tariqul Islam Zaheer Managing Director

3 Md. Ali Azgar Nasir Director

4 Md. Nadirul Islam Babu Director

5 Md. Arfin Ali FCA Independent Director

26

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

1. Chairman

Name : Md. Arifur Rahman Sagir

Address : 50/7 Shipyard Road, Labanchara, Khulna

Telephone : +88 041 813837

Fax : +88 041 813836

E-mail : [email protected]

2. Managing Director

Name : Md. Tariqul Islam Zaheer


Telephone : +88 041 813837

Fax : +88 041 813836

E-Mail : [email protected]

3. Whole Time Director Achia Sea Foods Limited does not have any whole time director.

d. Names, addresses, telephone numbers, fax numbers and e-mail addresses of the CFO, company secretary, legal advisor, auditors and compliance officer

1. CFO

Name : Mrs. Masuma Yasmin


Telephone : +88 041 813837

Fax : +88 041 813836


2. Company Secretary

Name : Md.Elias


Telephone : +88 041 813837

Fax : +88 041 813836


3. Legal Advisor

Name : Advocate Mollah Masum Rashid

Address : 4, Sarker Para Road, Toothpara, Khulna-

9100.

Telephone : +88-01558366427

Fax : N/A


4. Auditor

Name : Mahfel Huq & Co.

Address : 4th Floor, BGIC Tower

34 Topkhana Road

Dhaka-1000, Bangladesh

Telephone : +880-2-9553143

Fax : +88-02-9571005


27

5. Compliance Officer

Name : BM Feroj Ahmed


Telephone : +88 041 813837

Fax : +88 041 813836


e. Names, addresses, telephone numbers, fax numbers, contact person, website addresses and

e-mail addresses of the issue manager(s), registrar to the issue etc.

Issue Manager

Name : AAA Finance & Investment Ltd.

Address : Suite # 404, Amin Court (4th floor), 62-63

Motijheel C.A. Dhaka-1000, Bangladesh.

Telephone : +8809559602, +8809567726

Fax : +8802-9558330

Contact Person : Mohammad Obaydur Rahman FCS

Website Address : http://www.aaafinancebd.com

Email Address : [email protected]

f. Details of Credit Rating

The credit rating information is not applicable for Achia Sea Foods Limited. Hence, such

information is not applicable for ASFL.

28

g. Details of Underwriting

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

Underwriter/s

Amount

Underwritten

(BDT)

AAA Finance & Investment

Ltd

Amin Court, 4th Floor (Suite

# 403-405)

31,Bir Uttam Shahid

Ashfaqueus Samad Road,

Dhaka-1000

Contact Person:

Mohammad Obaydur Rahman, FCS

Managing Director

14,000,000 Tel:+8809559602, +8809567726

Fax:+8802-9558330

Email:[email protected]

Web: www.aafinancebd.com


Chamber Building (6th Floor),

122-124

Motijheel C/A, Dhaka-1000

Contact Person:

Mohammad Saleh Ahmed

Chief Executive Officer (CC)

14,000,000 Tel: +88-02-9559311-12

Fax: +88-02-9568987

Email: [email protected]

Web: www.iidfc.com

Sandhani Life Finance

Limited

16, Motijheel Commercial Area

Dhaka-100

Contact Person:

Muhammad Nazrul Islam

Managing Director

14,000,000 Tel: +88-02-9515249

Fax: N/A


Web: www.slflbd.com


59 Motijheel C/A, Dhaka-1000.

Bangladesh

Contact Person:

Tahid Ahmed Chowdhury

Managing Director

14,000,000 Tel: (88) 02 47111096, 47111867

Fax: (88) 02 47111218


Web: www.eblinvestments.com

Southeast Bank Capital

Services Limited

Eunoos Center (Level 9), 52-53

Dilkhusa C/A, Dhaka 1000

Contact Person:

Air Cdre (Retd) Md. Abu Bakar FCA

Managing Director (CC)

14,000,000 Tel: +88-02-9574171 to 5

Fax: +88-02-9574169


Web: www.southeastbank.com.bd

29

b. Declaration by the underwriters that they have sufficient resources as per the regulatory

requirements to discharge their respective obligations.

We the under-noted Underwriters to the forthcoming issue of Achia Sea Foods Limited declare that we

have sufficient resources as per the regulatory requirements to discharge our respective obligations

regarding underwriting.

We also declare that the authority can take action against us for concealment of fact in this regard and

we, the Underwriters shall be legally bound to abide by any decision taken by the Authority in this

regard.

Sd/- Sd/-

Mohammad Obaydur Rahman FCS Muhammad Nazrul Islam FCMA

Managing Director Managing Director & CEO

AAA Finance & Investment Limited Sandhani Life Finance Limited

Sd/- Sd/-

Air Cdre (Retd) Md. Abu Bakar, FCA Tahid Ahmed Chowdhury

Managing Director Managing Director

Southeast Bank Capital Services Limited EBL Investments Limited

Sd/-

Mohammad Saleh Ahmed

Chief Executive Officer


c. Major terms and conditions of the underwriting agreements.

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

subscribed.

(ii) In case of under subscription in any category by up to 35% of the IPO the under-

subscribed securities shall be taken up by the underwriters.

(iii) Notwithstanding anything contained in the agreement in case of inconsistency

between the provision of the agreement and the Bangladesh Securities and Exchange

Commission (Public Issue) Rules, 2015, the Public Issue Rules shall prevail.

(iv) Prior to publication of the prospectus, the Company shall have obtained consent from

the Bangladesh Securities and Exchange Commission permitting the issue as described

in Article 2.01 and providing for payment of underwriting commission 0.50% (zero

point five zero percent) on the amount underwritten.

(v) The issuer, in the event of under subscription, shall send notice to the underwriter(s)

within ten days of closure of subscription calling upon them to subscribe the securities

and pay for this in cash in full within fifteen days of the date of said notice and the said

amount shall be credited into securities subscription account within the said period.

(vi) In any case within 7 (seven) days after the expiry of the aforesaid 15 (fifteen) days, the

Company shall send to the Commission the proof of subscription and deposit of the

money by the underwriter(s).

30

(C) Capital Structure

i. Authorized, issued, subscribed and paid up capital (number and class of securities, allotment

dates, nominal price, issue price and form of consideration);

Particulars Class of

securities

Number of

Securities

Nominal

Price Amount in Taka

Authorized Capital Ordinary 100,000,000 10 1,000,000,000

Issued & Subscribed Capital Ordinary 20,323,940 10 203,239,400

Paid-up-capital before IPO Ordinary 20,323,940 10 203,239,400

Proposed Initial Public Offering Ordinary 20,000,000 10 200,000,000

Total paid-up-capital after IPO Ordinary 40,323,940 10 403,239,400

ALLOTMENT HISTORY OF SECURITIES

Allotment Date Form of Consideration Issue Price

(BDT)

Amount of

Share Capital In Cash Other Than

Cash

Bonus Issue

27.12.1993 20,000 - - 10 200,000

05.09.1999 6,680 - - 10 66,800

26.01.2005 2,473,320 - - 10 24,733,200

18.07.2005 4,980 - - 10 49,800

05.01.2006 1,062,120 - - 10 10,621,200

08.03.2014 - 5,950,000 - 10 59,500,000

22.11.2015 - - 3,806,840 10 38,068,400

09.01.2016 7,000,000 - - 10 70,000,000

Total 203,239,400

*** All the stocks are shown in the face value of TK 10

*** The company sub-divided its shares from TK 100 to TK 10 on 20th February 2014 by passing a

special resolution.

ii. Size of the present issue, with break-up (number of securities, description, nominal

value and issue amount);

A details breakup of the distribution mechanism of the present issue is given as under:-

Particulars Percentage

%

Number of

securities Description

Nominal

Value

Issue

Amount

Eligible

Investors (EI)

EI excluding

Mutual funds

& CIS

40.00 8,000,000 Ordinary

Shares 10.00 80,000,000

Mutual Fund &

CIS 10.00 2,000,000

Ordinary

Shares 10.00 20,000,000

General Public

(GP)

General Public

excluding NRB 40.00 8,000,000

Ordinary

Shares 10.00 80,000,000

NRB 10.00 2,000,000

Ordinary

Shares 10.00 20,000,000

Total 100 20,000,000 200,000,000

31

iii. Paid up capital before and after the present issue, after conversion of convertible instruments

(if any) and share premium account (before and after the issue);

Particulars Before the Present Issue After the Present Issue

Paid-up Capital 203,239,400 403,239,400

Convertible Instrument N/A N/A

Share Premium N/A N/A

iv. Category wise shareholding structure with percentage before and after the present issue

and after conversion of convertible instruments (if any);

SL

No. Category of Shareholders

Before Present Issue After Present Issue

Ordinary

Shares Percentage

Ordinary

shares Percentage

1 Directors & Sponsors 13,036,008 64.14% 13,036,008 32.33%

2 Shareholders other than Directors

& Sponsors 7,287,932 35.86% 7,287,932 18.07%

3 Mutual Fund & CIS - - 2,000,000 4.96%

4 EIs Other than Mutual Fund & CIS - - 8,000,000 19.84%

5 General Public - - 8,000,000 19.84%

6 NRBs - - 2,000,000 4.96%

Total 20,323,940 100% 40,323,940 100.00%

v. Where shares have been issued for consideration in other than cash at any point of time, details

in a separate table, indicating the date of issue, persons to whom those are issued,

relationship with the issuer, issue price, consideration and valuation thereof, reasons for the

issue and whether any benefits have been accrued to the issuer out of the issue;

Persons to whom

shares are issued

Relationship

with the issuer

No. of

Stocks Date

Issue

Price

Consideration &

Valuation

Arifur Rahman Sagir Chairman 402,000 8/03/2014 10

1.96 Acre land assets for

company business

expansion.

Market value of the land

is taken as basis of

valuation.

Tariqul Islam Zaheer Managing

Director 2,912,960 8/03/2014 10

Ali asgar Nasir Director 427,840 8/03/2014 10

Nadirul Islam Babu Director 424,000 8/03/2014 10

Md. Riyad Mahmood Sponsor 608,000 8/03/2014 10

Jonayed Ahsan Subro Sponsor 495,200 8/03/2014 10

Md. Mashfiqul Islam Shareholder 680,000 8/03/2014 10

Reasons of the Issue Expansion of Business.

Benefits from the

Issue

The company has received 1.96 acre land for expanding its business

operations.

32

vi. Where shares have been allotted in terms of any merger, amalgamation or acquisition scheme,

details of such scheme and shares allotted;

No shares have been allotted in terms of any merger amalgamation or acquisition.

vii. Where the issuer has issued equity shares under one or more employee stock option schemes,

date-wise details of equity shares issued under the schemes, including the price at which

such equity shares were issued;

The issuer has not issued any equity shares under stock option to its employees.

viii. If the issuer has made any issue of specified securities at a price lower than the issue price during

the preceding two years, specific details of the names of the persons to whom such specified

securities have been issued, relation with the issuer, reasons for such issue and the price thereof;

Achia Sea Foods Limited has not made any issue of specified securities at a price lower than the

issue price during the preceding two years.

ix. The decision or intention, negotiation and consideration of the issuer to alter the capital

structure by way of issue of specified securities in any manner within a period of one year from

the date of listing of the present issue;

The Company has no such decision or intention, negotiation and consideration of the issuer to alter

the capital structure by way of issue of specified securities in any manner within a period of one

year from the date of listing of the present issue.

x. The total shareholding of the sponsors and directors in a tabular form, clearly stating the names,

nature of issue, date of allotment, number of shares, face value, issue price, consideration, date

when the shares were made fully paid up, percentage of the total pre and post issue capital, the

lock in period and the number and percentage of pledged shares, if any, held by each of them;

33

Name Md. Arifur Rahman Sagir Position Sponsor & Chairman Percentage

Nature of Issue Allotment

date No. of Shares Face value Issue Price Consideration Total Shares

Lock In

period Pre IPO

Post

IPO

Fresh Allotment 5.01.2006 200,000 10 10 Cash 200,000

3 Years 6.25% 3.15%

Transfer 12.08.2010 71,120 10 10 Cash 271,120

Transfer 22.03.2011 127,090 10 10 Cash 398,160


Bonus Issue 22.11.2015 320,064 10 10 Other Than Cash 1,120,224

Conversion 09.01.2016 150,000 10 10 Other Than Cash 1,270,224

Name Md. Tariqul Islam Zaheer Position Managing Director Percentage



Lock In

period Pre IPO

Post

IPO

Fresh Allotment 18.07.2005 4980 10 10 Cash 4980

3 Years 38.07% 19.19%


Transfer 25.05.2008 17,8090 10 10 Cash 1,045,190

Transfer 12.08.2010 21,3300 10 10 Cash` 1,258,490

Transfer 22.03.2011 12,7030 10 10 Cash 1,385,520

Transfer 11.02.2014 6,120 10 10 Cash 1,391,640

Fresh Allotment 08.03.2014 2,912,960 10 10 Cash 4,304,600

Bonus Issue 22.11.2015 1,721,840 10 10 Other Than Cash 6,026,440

Conversion 09.01.2016 1,710,000 10 10 Other Than Cash 7,736,440

34

Name Md. Ali Asgar Nasir Position Director Percentage



Lock In

period Pre IPO

Post

IPO

Transfer 25.05.2008 177,850 10 10 Cash 177,850

3 Years 6.52% 3.29%

Transfer 12.08.2010 71,120 10 10 Cash 248,970

Transfer 22.03.2011 127,040 10 10 Cash 376,010




Name Nadirul Islam Babu Position Director Percentage



Lock In

period Pre IPO

Post

IPO

Transfer 25.05.2008 177,850 10 10 Cash 177,850

3 Years 6.69% 3.37%

Transfer 12.08.2010 71,120 10 10 Cash 248,970

Transfer 22.03.2011 127,040 10 10 Cash 376,010




Name A.K.M Mostagawsul Hoque Position Sponsor Percentage



Lock In

period Pre IPO

Post

IPO

Transfer 25.05.2008 11,700 10 10 Cash 11,700 3 Years 0.0806% 0.0406%

Bonus Issue 22.11.2015 4,680 10 10 Cash 16,380

35

Name Md. Riyad Mahmood Position Sponsor Percentage



Lock In period

Pre IPO Post IPO

Transfer 25.05.2008 17,200 10 10 Cash 17,200

3 Years 6.53% 3.29%

Transfer 22.03.2011 2,540 10 10 Cash 19,740

Fresh Allotment 08.03.2014 608,000 10 10 Other Than Cash 627,740

Transfer 11.02.2014 177,660 10 10 Cash 805,400

Bonus Issue 22.11.2015 322,160 10 10 Cash 1,127,560


36

xi. The details of the aggregate shareholding of the sponsors and directors, the aggregate number

of specified securities purchased or sold or otherwise transferred by the sponsor and/or by the

directors of the issuer and their related parties within six months immediate preceding the date

of filing the red-herring prospectus or prospectus or information memorandum;

Details of the aggregate shareholding of the sponsors and directors are given in the above mention

clause no (x).

No securities purchased or sold otherwise transferred by the sponsors and/or by the directors of

the issuer and their related parties within six months immediate preceding the date of filing the

prospectus.

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

securities of the issuer, indicating the amount of securities owned, whether they are owned

beneficially or of record, and the percentage of the securities represented by such ownership

including number of equity shares which they would be entitled to upon exercise of warrant,

option or right to convert any convertible instrument;

SL.

No.

Name of

Shareholder Address

No of Share

Owned or

beneficially

Total No. of

Shares

Recorded

Shareholding (%)

before IPO

1. Md. Tariqul

Islam Zaheer

52, South Central

Road Khulna 7,736,440 7,736,440 38.07%

2. Arifur Rahman

Sagir

52, South Central

Road Khulna 1,270,224 1,270,224 6.25%

3. Md. Riyad

Mahmood

52, South Central

Road Khulna 1,327,560 1,327,560 6.53%

4. Ali Asgar Nasir 52, South Central

Road Khulna 1,325,390 1,325,390 6.52%`

5. Nadirul Islam

Babu

52, South Central

Road Khulna 1,360,014 1,360,014 6.69%

xiii. The number of securities of the issuer owned by each of the top ten salaried officers, and all

other officers or employees as group, indicating the percentage of outstanding shares

represented by the securities owned.

SL.

No.

Name of

Shareholder Position

No of

Shareholding

Shareholding

(%) before IPO

Shareholding

(%) after IPO

1 Md. Tariqul

Islam Zaheer

Managing

Director 7,736,440 7,736,440 38.07%

37

(D) Description of Business

i. The date on which the issuer company was incorporated and the date on which it commenced

operations and the nature of the business which the company and its subsidiaries are engaged

in or propose to engage in;

Achia Sea Foods Limited is one of the shrimp producers in the frozen food processing industry in

Bangladesh. The company was incorporated in December 27th, 1993as a private limited company

vide registration no Khulna-3-178A/93 under the companies Act 1913 (VII of 1913). Having its

factory and head office in Khulna, Bangladesh and a branch office in Dhaka, Bangladesh, the

company has been successfully operating its business since its commencement of operations.

The company has commenced its operations on February 15, 1998.

The principal operations of the company includes but are not limited to collecting shrimp from the

farmers, and the fishermen, and depots, processing the shrimps and other fishes in the factory, and

exporting the processed sea foods to the customers in Europe and America. It has got its only food

processing plant in Khulna. The company has no subsidiary, nor does the company operate under

a holding company.

ii. Location of the project;

Sea Foods Processing Factory: 50/7, Labanchara, Khulna, Bangladesh.

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

Achia Sea Foods Limited is supported by advanced food processing machineries to ensure

international standard of exporting frozen foods. The company has efficient leadership to manage

its business operations.

The company has an automated fish processing system that processes the raw sea foods into eatable

sea foods.

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

facility creation, launching of plant, products, marketing, change in ownership and/or key

management personnel etc.;

Date of Incorporation : December 27, 1993

Private to Public Conversion : September 27, 2014

Date of Commercial operation : February 15, 1998

Started Exporting : 1998

Increase of Paid-Up-Capital : 1999, 2016

Capacity/Facility Creation : 1998

ISO Quality Certificate : 2017

Changes in Ownership : 2008

Changes in Key Management :

No major changes have taken place except in position of

CFO and Company Secretary. Mrs. Masuma Yasmin,

took over the charge of CFO after leaving Mr. Prodip

Kumar Dey. Mr. Elias has been appointed as Company

Secretary.

38

v. Principal products or services of the issuer and markets for such products or services. Past trends

and future prospects regarding exports (if applicable) and local market, demand and supply

forecasts for the sector in which the product is included with source of data;

The principal products of Achia Sea Foods Limited (ASFL) are as follows:

Sea Water Black Tiger Headless Shell on Block Frozen

Sea Water Black Tiger Head on Shell on Semi IQF

Sea Water Black Tiger PUD/P&D Block Frozen

Fresh Water Prawn Headless Shell-on Block Frozen

Fresh Water Prawn PUD/P&D Block Frozen

Sea Water Harina PUD Shrimps Block Frozen

Sea Water White PUD Shrimps Block Frozen

Sea Water Red Tiger PUD Shrimps Block Frozen

Sea Water & Sweet Water Fishes Block Frozen & Semi IQF

Market of the Products: The market of the above mentioned products are usually European Countries as well as some American states, which include but are not limited to UK, France, Italy, America, Canada etc. Upcoming Product:

There is no upcoming product of Achia Sea Foods Limited. Past Trend Regarding Exports and Local Market:

Particulars June 30,2018 June 30, 2017 June 30, 2016 June 30, 2015 June 30, 2014

Export Sales

937,326,012

694,742,004 202,379,849 225,433,282 540,819,526

Future Prospects: The company has pleasant prospect in the frozen foods processing industry, the export income of the company has been gradually increasing. The production capacity of the current facilities is almost saturated. Hence, company is considering an expansion of operations. Demand Forecast:

There is no available data source to forecast the demand and supply of the industry, but it was found in different articles the industry is growing at a rate of 5% per year.

vi. If the issuer has more than one product or service, the relative contribution to sales and

income of each product or service that accounts for more than 10% of the company’s total

revenues;

The following products account for more than 10% of the company’s total revenue-

Sea Water Black Tiger Headless Shell on Block Frozen

Sea Water Black Tiger Head on Shell on Semi IQF

Sea Water Black Tiger PUD/P&D Block Frozen

Sea Water Harina PUD Shrimps Block Frozen

vii. Description of associates, subsidiary and holding company of the issuer and core areas of

business thereof;

Achia Sea Foods Limited has not any associates, subsidiary and holding company.

39

viii. How the products or services are distributed with details of the distribution channel. Export

possibilities and export obligations, if any;

Achia Sea Foods Limited’s primary product is processed frozen shrimps; among them Black Tiger

Shrimp & Harina Shrimp are the major products. Apart from that the company exports of sweet

water frozen fishes is also notable. The company distributes the shrimp products in the following

manner-

At the very first stage of distribution the company collects shrimps from the suppliers, who collect

shrimps from the farmers. The collected shrimps then taken into the factory. At the factory the raw

shrimp is processed. Once the food is processed into different offered products of the company, the

shrimps are packaged. Then the packaged shrimps are stored in the cold storage, ready to be

exported. The packaged foods are then sending to the buying country through shipping in a frozen

container.

The complete distribution flowchart of Achia Sea Foods Limited is given in the following page:-

40

ix. Competitive conditions in business with names, percentage and volume of market shares of

major competitors;

In Bangladesh few numbers of listed companies are engaged in shrimp processing industry. Major

competitors are:

1.Gemini Sea Food Limited 5.Accqua International

2.Apex Food Limited

6.Marine Fresh Bangladesh

3.A.K. Khan &Co. Ltd 7. Aman Sea Foods limited

4.Amam Sea Foods Industries Ltd 8.Bengal Fisheries Ltd

Apart from this, as per annual report of the listed companies and audited financial statements of

Achia Sea Foods limited, the sales amounts are presented below:

Name of the Company

Sales Amount during 2016-2017 (BDT) Year End

1.Gemini Sea Food Limited

1,355,124,000 30th June

2.Apex Food Limited

1,642,772000 30th June

3.Achia Sea Foods Limited

694,742,004 30th June

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

report.

x. Sources and availability of raw materials, names and addresses of the principal suppliers

and contingency plan in case of any disruption;

SL.

No Name of Supplier

Country of

Origin Address

1 Sundarban Shrimps

Limited Bangladesh

Sutarkhali, Dacope, Khulna, Bangladesh

Mobile: 01789 046886


2 M/S. Hoque Fish Bangladesh

Char Rupsha, Khulna, Bangladesh

Tel: 01556 783403

Email:[email protected]

3 M/S Pioneer & Co. Bangladesh

36, Natunbazar, Launchghat Road,

Khulna, Bangladesh

Tel: +88 041 724169

4 M/S. Prince Fish Bangladesh

Natun Bazar, Launch Ghat Road, Khulna,

Bangladesh

Mobile: 01712146230

5 M/S. Raj Fish Bangladesh


Bangladesh

Mobile: 01727840985

41

6 M/S Sawoar Enterprise Bangladesh


Bangladesh

Mobile:01716840460

7 M/S Bappy Enterprise Bangladesh


Bangladesh

Mobile:01712233052

Contingency plan in case of any disruption:

The company has got plenty of shrimps suppliers to meet the demand of its buyers. In case of any

disruptions in regular supply the company collects shrimps from the designated contingency or

emergency situations suppliers.

xi. Sources of, and requirement for, power, gas and water; or any other utilities and contingency

plan in case of any disruption;

SL

No. Description Source Current Requirement

1 Electricity PDB 4400 Unit

2 Water Deep Tube well 150,000 Liter

3 Diesel Oil Distributors 120 Liter

In case of disruption in the electricity supply the company uses its own generator, which ensures

the uninterrupted supply of power. Water supply disruption is very rare in the factory as the

company uses its own source for water, but sometimes the tube well malfunctions. To solve that

issue the company keeps spares parts of tube well and motor so that the parts can be replaced if it

is not working.

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

who account for 10% or more of the company’s products /services with amount and percentage

thereof;

There is no such customers to whom the company sales 10% or more of its products/services.

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

whom the issuer purchases 10% or more of its raw material or finished goods with amount and

percentage thereof;

There is no such supplier from whom the company purchases 10% or more of its raw materials or

finished goods.

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

showing the total amount and quantity of transaction for which the contract is made and the

duration of the contract. If there is not any of such contract, a declaration is to be disclosed duly

signed by CEO or MD, CFO and Chairman on behalf of Board of Directors;

There is no such contract which the issuer has with its principal suppliers or customers.

42

xv. Description of licenses, registrations, NOC and permissions obtained by the issuer with issue,

renewal and expiry dates;

Certificate Issuer License No. Issue Date Renewal

Date

Expiry

Date

Certificate of

Incorporation RJSC, Khulna

Khulna-3-

178A 27-12-1993 N/A N/A

Export Registration

Certificate (ERC)

Imports & Exports

Control Office B012094 05-07-1994 29.07.2018 30.06.2019

Certificate of

Conformity Intertek HACCP

CONF-FSC-

0422014 15-8-2014 N/A 17-08-2015

Fire Safety & Civil

Defense License

Bangladesh Fire

Service & Civil

Defense

Khulna

3438/04-05 6-6-2010 30-6-2016 30.06.2019

Import Registration

Certificate (IRC)

Imports & Exports

Control Office BA-049607 17-02-2014 29.07.2018 30.06.2019

Fish processing

Plant Certificate

Department of

Fisheries KLN-57 03-05-1997 01.01.2018 31.12.2018

Trade License City Corporation,

Khulna 31/127 31.07.2017 14.08.2018 30.06.2019

Environment

Clearance

Certificate

Directorate of

Environment 895 26.12.2017

Under

Processing

Under

Processing

License

Department of

Inspection for

Factories and

Establishments.

321/ Khulna 16-06-1996 12.07.2018 30.06.2019

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

There are no material patents, trademarks, licenses or royalty agreements of ASFL. Hence, such

information cannot be given in the prospectus.

xvii. Number of total employees and number of full-time employees;

Particulars Number of Employees

Number of employees whose salary below 3000 Tk.

Per month N/A

Number of employees whose salary above 3000 Tk.

Per month 117

xviii. A brief description of business strategy;

Achia Sea Foods Limited is one of the most prominent frozen food exporting company that is

operating in the Khula district of the country. The company sale its product to different European

countries and the sales of the company is depended on the economic condition of Europe and

America.

43

Keeping these facts in mind Achia Sea Foods Limited has been formulating its business strategy.

The market trend is suggesting a good growth in the demand for the frozen fish in the recent years

as the euro zone has completely recovered from the long going economic crisis. The production of

shrimp in the country is not growing along with the growth of demand, which is why ASFL has

taken initiatives to strengthen its supply chain. The company has increased its investment in the

supply line to ensure that the projected sales volume is met, and for that enough volume of shrimp

have to be collected from the farmers. As a matter of fact, the company has got a good number of

shrimp supplier to maintain a steady supply of raw shrimp.

The quality of processed shrimp has been standard since the inception of ASFL operation, but in

recent years we have focused more on improving the product quality to capture more market share.

The effort has paid off as the demand of ASFL is growing more than ever, which has signaled a

saturation in the production. Therefore, an expansion of production facilities is imminent.

xix. A table containing the existing installed capacities for each product or service, capacity

utilization for these products or services in the previous years, projected capacities for existing

as well as proposed products or services and the assumptions for future capacity utilization for

the next three years in respect of existing as well as proposed products or services. If the

projected capacity utilization is higher than the actual average capacity utilization, rationale to

achieve the projected levels.

The following table would provide information regarding the capacity utilization of ASFL-

Particular Product Historical Production Projected Production

2015 2016 2017 2018 2019 2020

Installed

Capacity

Processed

Shrimps

6,000,000

Kg.

6,000,000

Kg.

6,000,000

Kg.

6,000,000

Kg.

6,000,000

Kg.

6,000,000

Kg.

Capacity

Utilized 229,035 kg 675,699 kg

1,177,219

kg

1,200,500

kg

1,300,000

kg

1,600,000

kg

Capacity

Utilization 3.82% 11.26% 19.62% 20.01% 21.67% 26.67%

*** The average of Industry capacity utilization is around 15% in case of frozen fish storages.

The future production will be increasing of the company because the amount of shrimp producing

farmers have been increasing at a significant rate every year. Besides the company has developed a

stronger supply chain to collect more raw shrimps from the farmers. The number of suppliers is being

increased every year, which would improve the raw materials collection volume. As a result to that,

production will be higher than the current production level.

44

(E) Description of Property

i. Location and area of the land, building, principal plants and other property of the company

and the condition thereof;

Location of building and principal plant of ASFL are same, the company plant is at 90 Labanchara

Mouza, 31 no. ward, Khulna Sadar.

Particulars Written Down Value as at June 30, 2018 (BDT)

Land and Land Development 69,607,774

Factory Building 90,499,207

Plant & Machinery 27,926,619

IQF Machinery 16,448,910

Cold Storage Compressor Unit 3,592,713

Fleck Ice Machinery 3,518,004

Factory Equipment 27,803,260

Tools & Equipment 1,114,751

Transformer 137,533

I Phone & I Pad 160,605

Processing Equipment 1,599,818

Laboratory Equipment 345,164

Electric Equipment 1,173,568

Refrigeration Van 276,402

Office Equipment 688,870

Furniture & Fixture 526,646

Jetty 132,451

Crockery's & Cutleries 20,774

Tube well & waterline 663,226

Vacuums Machine 224,138

Metal Detector Machine 325,822

Boundary Wall 2,376,799

Vehicles 1,239,750

Total 250,402,804

Details of Land Property

SL.

No. Location Deed No.

Date of

Purchase

Area

(Acre) Deed Value

1 90 Labanchara Mouza, 31 no. ward,

Khulna Sadar 592 20.2.1995 .84 300,000 Tk.

2 90 Labanchara Mouza, 31 no. ward,

Khulna Sadar 2045 23.09.2010 .05775 545,000 Tk.

3 50 Joriya Maitkomra, Khulna 2126 7.1.2014 1.84 45,500,000 Tk.

4 31 no Ward, Labanchara, Khulna

Sadar 8926 6.1.2014 .12 18,000,000 Tk.

Summary of Land Property

Particulars Land Area (Acre)

Own Land Factory Area & Others 2.85775 acre

Leased Land - -

45

ii. Whether the property is owned by the company or taken on lease;

All the assets that are described are the owned by the company.

iii. Dates of purchase, last payment date of current rent (LvRbv and mutation date of lands, deed

value and other costs including details of land development cost, if any and current

use thereof;

SL

No

Deed

No.

Date of

purchase

Area

(Acre)

Deed

Value

Cost of

Acquisitio

n

Mutation

Date

Last Payment

Date of

Current rent

Current

Use

1 592 20.2.1995 .84 300,000 300,000 28.4.2009 29.6.2017 Yes

2 2045 23.9.2010 .05775 545,000 545,000 30.12.2013 2.5.2017 Yes

3 2126 7.1.2014 1.84 45,500,000 45,500,000 1.5.2014 30.04.2014 Yes

4 8926 6.1.2014 .12 18,000,000 18,000,000 24.3.2014 3.04.2014 Yes

iv. The names of the persons from whom the lands has been acquired or proposed to be acquired

along with the cost of acquisition and relation, if any, of such persons to the issuer or any

sponsor or director thereof;

SL

No. Name of Seller

Relation of

seller with

Issuer

Deed No Date of

Purchase

Area

(Acre)

Cost of

Acquisition

1 Haji Abdul Malek

Cold Storage No Relation 592 20.2.1995 .84 300,000

2 Md. Babor Khan

Babu No Relation 2045 23.9.2010 .05775 545,000

3 Tarikul Islam

Zaheer

Managing

Director 8926 6.1.2014 .12 18,000,000

4 Md. Ali Asgar

Nasir Director

2126 7.1.2014 1.84 45,500,000

5 Tarikul Islam

Zaheer

Managing

Director

Land Proposed to be acquired

There is no land that the company is thinking of acquiring within the next few years.

46

v. Details of whether the issuer has received all the approvals pertaining to use of the land, if

required;

The company does not have any lands that require approval from any authority pertaining to its

use.

vi. If the property is owned by the issuer, whether there is a mortgage or other type of charge on

the property, with name of the mortgagee;

All the property of the Company is in its own name. However a total of 275.81decimal land are given

as mortgaged to Mercantile Bank Limited, Khulna Branch against loan facilities. Details of mortgaged

land areas under:

SL No Deed no Date Mouza District Area of Land

(Decimal)

1 592 June 05,2017 Labonchora Khulna 84.04



4 2126 June 05,2017 Zariamaitkumra Khulna 184.00

vii. If the property is taken on lease, the expiration dates of the lease with name of the lessor,

principal terms and conditions of the lease agreements and details of payment;

There is no such property that has been taken on lease.

viii. Dates of purchase of plant and machineries along with sellers name, address, years of sale,

condition when purchased, country of origin, useful economic life at purchase and

remaining economic life, purchase price and written down value;

47

Na

me

Dat

e o

f

Pu

rch

ase

Sel

lers

Na

me

Address

Co

nd

itio

n

Wh

en

Pu

rch

ased

Co

un

try

of

Ori

gin

Use

ful

Eco

no

mic

life

Rem

ain

ing

eco

no

mic

lif

e

Pu

rch

ase

pri

ce (

BD

T)

Wri

tten

do

wn

Va

lue

IQF Machineries

of Shrimp & Fish

processing Line

7.1.2015

Nantong

Sinrofreeze

equipment Ltd

No. 31, Guogiang rd,

Gangzha District,

Natong, Jiangsu,China

New

China 10 7 20,119,080 14,666,809

NHDD4-20 Cold

Storage

Equipment &

Evaporator Dj-

140

8.1.2015 Yantai Ningxin

No 88, Huangwu Xili

Industry park, Zhifu

district,Tantai, Chaina

New

China 10 7 3,578,800 2,608,945

Water Treatment

Plant 15.5.2017

A Gofur &

Sons

51/33 T.B Cross Road,

Khulna New

Bangladesh 10 9 473,000 425,700

650 KVA Electric

Generator 17.12.2016

Jubilee Power

Ltd

PO BOX 1106, west

Drayton, Middlesex,

UBB9WQ, England

New

England 5 4 2,278,500 1,822,800

500 Kg/ hour

Boiler &

Auxiliary Plants

23.5.2015

Powertech

Trading

International

103/2 GA, Progoti

Sarani, Middle Badda,

Gulshan 1212

New

Bangladesh 5 2 500,000 256,000

Amonia Liquid

pump (2”/2”) 7.12.2014

Mss Lamisa

Amonia

Machineries

14, Borda Datta Lane,

Ferighat, Khulna New

Bangladesh 5 2 80,000 40,960

48

Flake ICE

Machine

Model:F200WF

24.8.2014

Fujian

Snowman Co

Ltd

Binhai Industrial

District of Fuzhou,

Fujian Province

new

China 10 6 4,680,000 3,070,548

Copeland Parallel

Compressor Unit

NHDD4-20

4.2.2015 Yantai Ningxin

No 88, Huangwu Xili

Industry park, Zhifu

district,Tantai, Chaina

New

China 10 7 3,588,000 2,615,652

IQF Machineries

of Shrimp & Fish

processing Line

7.1.2015

Nantong

Sinrofreeze

equipment Ltd

No. 31, Guogiang rd,

Gangzha District,

Natong, Jiangsu,China

New

China 10 7 20,072,400 14,632,780

49

ix. Details of the machineries required to be bought by the issuer, cost of the machineries, name of

the suppliers, date of placement of order and the date or expected date of supply, etc.

There are no machineries that are in the process of buying or installing by the company. Also the

management feels the companies do not need any new machineries or going to need new

machineries within the next two years.

x. In case the machineries are yet to be delivered, the date of quotations relied upon for the cost

estimates given shall also be mentioned;

There is no such machinery that was purchased by the company and is yet to be delivered.

xi. If plant is purchased in brand new condition then it should be mentioned;

The plant was purchased in brand new condition.

xii. Details of the second hand or reconditioned machineries bought or proposed to be bought,

if any, including the age of the machineries, balance estimated useful life, etc. as per PSI

certificates of the said machineries as submitted to the Commission;

The company never bought any second hand or reconditioned machineries. Moreover, the

company do not have any intention to buy any second hand or reconditioned machine.

xiii. A physical verification report by the issue manager(s) regarding the properties as

submitted to the Commission;

PHYSICAL VERIFICATION REPORT BY THE ISSUE MANAGERS

OF

ACHIA SEA FOODS LIMITED

This is to certify that we have visited the Registered and Head office of Achia Sea Foods Limited on

5th September, 2018.

Visiting and accompanying Team:

Particulars Representative

Visited by AAA Finance & Investment Ltd.

Mohammad Obaydur Rahman , FCS

Managing Director

Mohammad Ferdous Mazid

Director & COO

Md. Samsul Haque, ACMA

Manager

H. A. Mamun Manager

Accompanied by



Managing Director & CEO

Mrs. Masuma Yasmin

Chief Financial Officer

We have found the Registered & Head office as details bellow:

Registered & Head Office:


50

Company Overview

Achia Sea Foods Limited (ASFL) is a 100% export oriented Sea Fish Processing Industry in Bangladesh.

Achia Sea Foods Limited was registered as a private limited company with the Registrar of Joint Stock

Companies and Firms (RJSC) vide registration no. Khulna-178 dated December 27, 1993 under the

Companies Act-1994. Subsequently the company was converted into a public limited company effective

from September 27, 2014.

The Company is engaged in the processing & exporting of the finest quality Sea Food products

“Shrimps & Fish" in the foreign market. Achia Sea Foods Limited is one of the most prominent frozen

food exporting company that is operating in the Khulna district of the country. The policy of Achia Sea

Foods Limited is to ensure sustainability of quality and safety of the products.

The capital structure of the company is as follows:

Authorized Capital: Tk. 1,000,000,000.00

Paid up Capital: Tk. 203,239,400.00

Proposed IPO Size: Tk. 200,000,000.00 (2.00 Corer Shares @ Tk. 10.00 each)

IPO Size (in share): 20,000,000 Shares

Description of Property:

We have identified that the factory of Achia Sea Foods Limited is located at 50/7 Shipyard Road,

Labanchara, Khulna. We have found properties as like:

1. Land:

We have found that 2.85775 acre of land. Among them 0.89775 acre of land are in the 90, Labanchara

Mouza, 31 no. ward, Khulna Sadar. This land is demarcated by road. And another 1.84 acre of land is

in the 50, Joriya Maitkomra, Khulna. And other .12 acre of land is in the 31 no Ward, Labanchara,

Khulna Sadar. This land is demarcated by boundary pillar.

2. Office Building & Factory:

Achia Sea Foods Limited is utilizing 13,000 Sft floor place for its Corporate Head Office & Factory

owned by itself at 50/7 Shipyard Road, Labanchara, Khulna. The office is well equipped with modern

class of furniture and amenities.

3. Machinery

Serial No. Particulars Set

1 IQF Machineries of Shrimp & Fish processing Line 1 Set

2 NHDD4-20 Cold Storage Equipment & Evaporator Dj-140 3 Sets

3 Water Treatment Plant 2 Sets

4 650 KVA Electric Generator 1 Set

5 500 Kg/ hour Boiler & Auxiliary Plants 1 Set

6 Amonia Liquid pump (2”/2”) 1 Set

7 Flake ICE Machine Model:F200WF 1 Set

8 Copeland Parallel Compressor Unit NHDD4-20 1 Set

9 IQF Machineries of Shrimp & Fish processing Line 1 Set

51

3) Vehicle:

The company owns a number of vehicles for its employees. A list of vehicle provided as follows:

Vehicle Number & Name Model Purchase Value

KHULNA WU 11-000; Tata Covered Van 2004 1,500,000

Other assets:

Besides, these assets we have also found other assets like furniture and fixture, electrical installation and equipment’s, computers, generators, office equipment, fire equipment, air conditions, air coolers and other assets as mentioned in the fixed assets schedule of the audited financial statements for the year ended June 30, 2018. Around 143 officers and staffs were present during our visit in the registered & head office of the Company. Signboard: The signboard of the Company is well displayed at the factory premises and there is no other office or factory within the said factory premises. Conclusion: AAA team physically visited and verified documents and papers on random basis. Based on Management declaration, auditor’s certificate and RJSC document AAA Issue Due-Diligence. We hope the company will maintain full compliance as per regulatory guidelines.

Sd/- Mohammad Obaydur Rahman FCS Managing Director AAA Finance & Investment Limited

Date: September 10, 2018

xiv. If the issuer is entitled to any intellectual property right or intangible asset, full description of

the property, whether the same are legally held by the issuer and whether all formalities in

this regard have been complied with;

52

The company is not entitled to any intellectual property right or intangible asset.

xv. Full description of other properties of the issuer.

The Company has no other properties except the followings:

Particulars Written Down Value as at June 30, 2018

As Per Audited Accounts

Land and Land Development 69,607,774

Factory Building 90,499,207

Plant & Machinery 27,926,619

IQF Machinery 16,448,910

Cold Storage Compressor Unit 3,592,713

Fleck Ice Machinery 3,518,004

Factory Equipment 27,803,260

Tools & Equipment 1,114,751

Transformer 137,533

I Phone & I Pad 160,605

Processing Equipment 1,599,818

Laboratory Equipment 345,164

Electric Equipment 1,173,568

Refrigeration Van 276,402

Office Equipment 688,870

Furniture & Fixture 526,646

Jetty 132,451

Crockery's & Cutleries 20,774

Tube well & waterline 663,226

Vacuums Machine 224,138

Metal Detector Machine 325,822

Boundary Wall 2,376,799

Vehicles 1,239,750

Balance as at June 30, 2018 250,402,804

53

(F) Plan of Operation and Discussion of Financial Condition:

i. If the issuer has not started its commercial operation, the company’s plan of operations for the

period which would be required to start commercial operation which shall, among others,

include:-

ASFL has started its commercial production from February 15, 1998; therefore such information

is not applicable for this company.

ii. If the issuer had been in operation, the issuer’s revenue and results from operation, financial

position and changes in financial position and cash flows for the last five years or from

commercial operation, which is shorter, shall be furnished in tabular form which shall, among

others, include the following information:

The company’s revenues and results from operation, financial position and changes in financial

position and cash flows for the last five years are as follows:-

54

REVENUE AND RESULTS FROM OPERATIONS

Particulars 30-Jun-18 30-Jun-17 30-Jun-16 30-Jun-15 30-Jun-14

Revenue 937,326,012 694,742,004 202,379,849 225,433,282 540,819,526

Cost of Goods Sold 887,655,861 (657,929,787) (181,305,005) (203,028,288) (497,708,919)

Gross Profit 49,670,151 36,812,217 21,074,844 22,404,994 43,110,607

Operating Expenses (67,838,982) (61,519,085) (17,976,849) (18,540,423) (31,262,144)

General &Administrative Expenses 23,294,142 (27,480,924) (12,215,373) (10,923,906) (18,791,475)

Selling & Distribution Expenses 44,544,840 (34,038,16) (5,761,112) (7,616,517) (12,470,664)

PROFIT FROM OPERATIONS (18,168,831) (24,706,868) 3,097,995 3,864,571 11,848,463

Non-Operating Income 88,356,125 50,301,954 15, 209,866 37,876,782 30 ,092,456

PROFIT BEFORE TAX 38,759,790 25,595,086 18,307,861 41,741,353 41,940,919

Income Tax 8,652,255 (5,677,511) (1,436,117) (3,120,424) (5,651,585)

Deferred Tax (Expense/Income) 5,006,977 2,211,418 (1,156,965) (11,489,050)

PROFIT AFTER TAX 25,100,557 22,128,993 15,714,779 27,131,879 36,289,334

Earning Per Share (EPS) 1.24 1.09 0.94 2.85 6.67

55

STATEMENT OF FINANCIAL POSITION


Non-Current Assets 250,402,804 240,483,160 209,330,938 193,878,116 154,531,832

Property, Plant, Equipment 250,402,804 240,483,160 209,330,938 193,878,116 154,531,832

Current Assets 387,209,868 418,711,684 322,210,971 249,457,632 250,999,401

Cash and Cash Equivalents 991,950 900,430 829,646 561,353 941,403

Accounts Receivable 16,378,784 4,117,752 11,202,590 11,313,385 31,080,003

Inventories 205,176,037 237,995,495 197,410,098 178,766,830 171,997,488

Advances, Deposits, and Prepayments 164,663,097 170,698,006 223,768,637 58,816,064 46,980,507

TOTAL ASSETS 637,612,672 659,194,843 531,541,909 443,335,748 405,531,233

Shareholders’ Equity 313,393,515 288,292,958 266,163,965 205,449,185 178,428,386

Share Capital 203,239,400 203,239,400 203,239,400 95,171,000 95,171,000

Share Money Deposits - - - 25,000,000 25,000,000


Reserve & Surplus - - 310,686 310,686 310,686

Non-Current Liabilities 38,579,894 10,434,597 12,646,015 32,177,273 33,689,751

Long Term Bank Loans 23,138,320 - - 20,688,223 33,689,751

Deferred Tax Liability 15,441,574 10,434,597 12,646,015 11,489,050 -

Current Liabilities 285,639,263 360,467,288 252,731,929 205,709,291 196,413,096

Accounts Payables 6,614,065 14,273,161 13,209,298 20,180,065 24,684,171

Short Term Loans 270,372,943 336,492,617 235,522,631 181,529,226 164,728,925

Loan from Directors - 4,024,000 4,000,000 - -

Provision for income Tax 8,652,255 5,677,511 - - -

Other Payable - - - 4,000,000 4,000,000

Total Equity & LIABILITIES 637,612,672 659,194,843 531,541,909 443,335,748 405,531,233

56

STATEMENT OF CASH FLOWS


Cash received from customer & others 1,018,421,105 747,128,796 217,700,510 283,076,682 561,600,590

Payment to Creditors, Suppliers & Others (907,555,463) (770,394,716) (239,537,766) (208,391,726) (561,600,590)

Interest Paid (31,427,504) (25,410,490) (25,338,530) (25,098,057) (23,112,712)

Income Tax paid (5,677,511) (5,778,016) (1,436,117) (3,120,424) (5,842,535)

Net Cash used in operating activities (A) 73,760,627 (54,454,426) (48,611,903) 46,466,475 8,462,557

Acquisition of property, plant and Equipment (26,663,753) (46,444,775) (29,424,987) (50,645,297) (7,410,316)

Net Cash used in investing activities(B) (26,663,753) (46,444,775) (29,424,987) (50,645,297) (7,410,316)

Long term bank loan (paid)/received 23,138,320 - (20,688,223) (13,001,528) 1,011,697

Short term bank loan (paid)/received (66,119,674) 100,969,986 53,993,405 16,800,301 (2,299,607)

Proceeds from issue of new shares - - 45,000,000 - -

Loan from Directors (4,024,000) - - - -

Net Cash provided by financing Activities (C) (47,005,354) 100,969,986 78,305,182 3,798,773 (1,287,910)

Net Increase in cash & cash equivalents (A+B+C) 91,520 70,785 268,293 (380,050) (235,669)

Cash & cash equivalents at the beginning of the year 900,430 829,646 561,353 941,402 1,177,071

Cash & cash equivalents at the end of the year 991,950 900,430 829,646 561,353 941,402

STATEMENTS OF CHANGES IN EQUITY


Share Capital 203,239,400 203,239,400 203,239,400 95,171,000 95,171,000

Reserve & Surplus - - 310,686 310,686 -


Addition During The Year 25,100,557 22,128,993 11,121,845 27,131,879 36,289,334

Stock Bonus - - (38,068,400) - -

Share Money Deposit - - - 25,000,000 25,000,000

Total Equity 313,393,515 288,292,958 261,571,030 205,449,185 178,117,699

57

a. (a) Internal and External Sources of Cash

INTERNAL AND EXTERNAL SOURCES OF CASH


Internal Sources of Cash

Share Capital 203,239,400 203,239,400 203,239,400 95,171,000 95,171,000

Cash Received From

Customers and Other

Income

1,018,421,105 747,128,796 217,700,510 283,076,682 561,600,590

Sub-Total 1,221,660,505 950,368,196 420,939,910 378,247,682 656,771,590

External Sources of Cash

Long Term Loans 23,138,320 - - 20,688,223 33,689,751

Short Term Loans 270,372,943 336,492,617 235,522,631 181,529,226 164,728,925

Sub-Total 293,511,263 336,492,617 235,522,631 202,217,449 198,418,676

Grand Total 1,515,171,768 1,286,860,813 656,462,541 580,465,131 855,190,266

b. Any material commitments for capital expenditure and expected sources of funds for such

expenditure;

The company has no Material commitment for capital expenditure except normal causes of

business. However, the proceeds of Initial Public Offering (IPO) that will be utilized to finance the

expansion of the project and loan repayment. Detail information under the head use of proceed

&Implementation schedule.

c. Causes for any material changes from period to period in revenues, cost of goods sold, other

operating expenses and net income;

Particulars 30.06.2018 30.06.2017 30.06.2016 30.06.2015 30.06.2014

Sales 937,326,012 694,742,004 202,379,849 225,433,282 540,819,526

Cost of Sales 887,655,861 657,929,787 181,305,005 203,028,288 497,708,919

Operating Expense

67,838,982 61,519,085 17,976,849 18,540,423 31,262,144

Net Income 25,100,557 22,128,993 15,714,779 27,131,879 36,289,334

Revenue:

The sales trend is suggesting that the firm has been performing well in terms of increasing its sales

revenue. The demand for processed sea foods products such as shrimps and fishes has been increasing

in the country, and ASFL has been successfully increasing its production to meet the increasing market

demand. The principal reason for the increasing sales seems to be the company’s strong management

and efficient sales team.

Cost of Goods Sold:

The cost of goods sold history is suggesting that there was no material changes in the COGS accounts

of ASFL. It has been proportionately increasing with the increase of sales with the changes of year. A

slight increase in the cost of goods sold might have been caused by the yearly inflation, apart from that

nothing significant were found in the COGS account.

Finance Cost:

58

There is no significant change found in the cost of finance of ASFL for the last five years period.

However, interest payment has increased over the years as the company has been increasing its reliance

on external financing. The amount of Long term loan has increased over the years, which essentially

had increased the cost of finance.

Depreciation and Amortization:

There are some changes in the depreciation and amortization can be seen in the past five years but no

material changes were found. Depreciation increased in some years as the company had purchased

additional assets. Hence, additional depreciation was added to the yearly depreciation, which has

increased the total depreciation expense.

Other Expenses:

No significant changes were found in other expenses of Achia Sea Foods Limited. Other expenses have

increased according to the increase in the price of different materials and services. In short, only the

impact of inflation is reflecting on “other expenses” of Achia Sea Foods Limited.

Changes in Inventory:

There is no significant changes in inventory over the last five years. Although there were some seasonal

impact on the inventory, the company has increased its finished goods inventory during the time when

seasonal demands increase in the European market.

Net Profit Before & After Tax:

The net profit before tax and after tax of Walton has been fluctuating over the last five years. As the

sales revenue of the company has been increasing so the cost of goods sold, which has been affecting

the income of the company over the years. There was no changes in the imposed tax on the company,

which implies the profit after tax showed the similar trend over the last five years.

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

No seasonal aspects affect the business of ASFL.

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

business;

Though there are no known trends, events and/or uncertainties that shall have material impacts

on the company’s future business, the operation of the company may be affected by the following

events.

a. Political unrest

b. Entrance of new technology

c. Natural disaster

d. Increased competition

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

None of the operating assets of the company has been disposed of to liquidate any liabilities of the

company.

g. Any loan taken from or given to any related party or connected person of the issuer with details

of the same;

There is no such loans taken or given to the related parties or connected person with ASFL,

therefore this information is not applicable to ASFL.

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

if any, on the financial fundamentals of the issuer;

59

The company has no plan to enter into any contract creating future liabilities for the company for

those which are created in the normal course of business activities.

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

The Company has no plan for capital expenditure except for those mentioned in the ‘Use of

Proceeds’ from IPO fund.

j. Any VAT, income tax, customs duty or other tax liability which is yet to be paid, including any

contingent liabilities stating why the same was not paid prior to the issuance of the prospectus.

Updated income tax status for the last 5 years or from commercial operation, which is shorter;

VAT: There is no VAT liability of the Company as on 30 June, 2018.

Customs Duty or other tax liabilities: There is no customs duty Liability of the Company as on 30

June, 2018.

Income Year Assessment

Year Tax Status

2017-2018 2018-2019 Income Tax Return will be submitted in due time, by January 2019.

2016-2017 2017-2018

As per certificate given by Deputy Commissioner of Taxes (DCT),

Circle-1 (Companies), Taxes Zone-Khulna, dated 25.03.2018 the

assessment of the company has been completed up to the

assessment year 2017-2018 under Assessment on Correct Return

(u/s-82) and tax paid in full on the basis of the return income.

2015-2016 2016-2017






2014-2015 2015-2016






2013-2014 2014-2015






k. Any financial commitment, including lease commitment, the company had entered into during

the past five years or from commercial operation, which is shorter, giving details as to how the

liquidation was or is to be effected;

There is no financial commitment, including lease commitment; the company had entered into

during the past five years or from commercial operation.

l. Details of all personnel related schemes for which the company has to make provision for in

future years;

60

There are no personal related schemes for which the company has to make provision for in future

years.

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

Particulars Basis of Calculation Amount in BDT

Bangladesh Securities & Exchange Commission Fees

Application Fee Fixed 50,000

Consent Fee .40% on the IPO Amount 800,000

Fess Related To Listing With Stock Exchanges

Prospectus Submission Fess To DSE

& CSE Tk. 50,000 Each 100,000

Listing Fees to DSE & CSE

.25% Up To Tk. 10 Crore Paid-Up Capital 250,000

.15% on the rest of Paid-Up Capital

(Minimum 50,000 and maximum

10,000,000 for each exchange)

454,859

Annual Fees for DSE & CSE

.05% on Tk. 10 Crore and 50,000

.02% on the rest of Paid-Up Capital

(Minimum 50,000 and maximum 600,000

for each exchange)

60,648

CDBL Fees & Expenses

Security Fee Fixed 500,000

Documentation Fee Fixed 2500

Initial Public Offering Fee Tk.0.00015 of Issue Size+ Tk.0.00015 of Pre

IPO 604,859

Annual Fee Fixed 100,000

Connection Fee (1 Year) Tk. 500 Per Month 6,000

Manager To The Issue Fees & Underwriting Commission

Manager To The Issue Fee Maximum

2% of the public offering amount 4,000,000

VAT Against Issue Management Fee 15% of the issue management fee 600,000

Underwriting Commission .50% on Underwriting Amount 350,000

Expenses Related To Printing & Post IPO

Publication of Prospectus (Estimated; to be paid actual) 1,500,000

Publication of Abridged version of

prospectus and notice in 4 national

dailies

(Estimated; to be paid actual) 900,000

Lottery Conduction Expenses

Including BUET Fee (Estimated; to be paid actual) 10,00,000

Collection of Forms, Data Processing

and Share other related job (Estimated; to be paid actual) 7,671,134

Courier Expense (Estimated; to be paid actual) 200,000

Stationeries & other Expenses (Estimated; to be paid actual) 500,000

Allotment and Refund (Estimated; to be paid actual) 300,000

Total 20,000,000

N.B: Actual costs will vary if above mentioned estimates differ and will be adjusted accordingly.

61

n. If the issuer has revalued any of its assets, the name, qualification and experiences of the valuer and the reason for the revaluation, showing the value of the assets prior to the revaluation separately for each asset revalued in a manner which shall facilitate comparison between the historical value and the amount after revaluation and giving a summary of the valuation report along with basis of pricing and certificates required under the revaluation guideline of the Commission;

Achia Sea Foods Limited has not made any revaluation of its asset.

o. Where the issuer is a holding/subsidiary company, full disclosure about the transactions,

including its nature and amount, between the issuer and its subsidiary or holding company,

including transactions which had taken place within the last five years of the issuance of the

prospectus or since the date of incorporation of the issuer, whichever is later, clearly indicating

whether the issuer is a debtor or a creditor;

Not applicable for the company as ASFL is not a subsidiary company of any other company.

p. Financial Information of Group Companies under common ownership by more than 50%:

following information for the last three years based on the audited financial statements, in

respect of all the group companies of the issuer, wherever applicable, along with significant

notes of auditors:

Not applicable for Achia Sea Foods Limited.

q. Where the issuer is a banking company, insurance company, non-banking financial

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

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

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

primary regulator have been adhered to by the issuer;

Not applicable for Achia Sea Food Limited

r. A report from the auditors regarding any allotment of shares to any person for any consideration

otherwise than cash along with relationship of that person with the issuer and rationale of issue

price of the shares;

Auditor Certificates auditors regarding any allotment of shares to any person for any consideration other than cash of Achia Sea Foods Limited

This is to certify that, based on our examination of share register and its underlying documents, the following shares allotted for consideration in otherwise than cash of Achia sea food Ltd.

Achia has been 5,950,000 ordinary shares of TK 10 each in kinds to Achia Sea Foods Ltd. On 08.03.2014 as the following manner.

Persons to whom shares are issued

Relationship with the issuer

No. of Stocks Date Issue Price Consideration & Valuation

62

Tariqul Islam Zaheer

Managing Director

2,912,960 08-03-14 10

1.96 Acre land assets for company business

expansion. Market value of

the land is taken as basis of valuation.

Ali Azgar Nasir Director 427,840 08-03-14 10

Arifur Rahman Sagir

Chairman 402,000 08-03-14 10

Nadirul Islam Babu

Director 424,000 08-03-14 10

Md. Riyad Mahmood

Director 608,000 08-03-14 10

Jonayed Ahsan Subro

Shareholder 495,200 08-03-14 10

Md. Mashfiqul Islam

Shareholder 680,000 08-03-14 10

Reasons of the Issue

To raise paid-up capital in exchange of 1.96 acre of lands.

Benefits from the Issue

The company has received 1.96 acre land for expanding its business operations.

Sd/-

Mahfel Huq & Co.

Dhaka, September 16, 2018 Chartered Accounts

s. Any material information, which is likely to have an impact on the offering or change the terms

and conditions under which the offer has been made to the public;

There is no material information, which is likely to have an impact on the offering or change the

terms and conditions under which the offer has been made to the public.

t. Business strategies and future plans - projected financial statements shall be required only for

companies not started commercial operation yet and authenticated by Chairman, two Directors,

Managing Director, CFO, and Company Secretary;

ASFL has started its commercial operations on February 15, 1998 therefore this information is not

applicable for ASFL.

u. Discussion on the results of operations shall inter-alia contain the following:

63

1) A summary of the past financial results after adjustments as given in the auditor’s report containing significant items of income and expenditure;



Revenue 937,326,012 694,742,004 202,379,849 225,433,282 540,819,526

Cost of Goods Sold 887,655,861 (657,929,787) (181,305,005) (203,028,288) (497,708,919)

Gross Profit 49,670,151 36,812,217 21,074,844 22,404,994 43,110,607

Operating Expenses 67,838,982 (61,519,085) (17,976,849) (18,540,423) (31,262,144)

General &Administrative Expenses 23,294,142 (27,480,924) (12,215,373) (10,923,906) (18,791,475)

Selling & Distribution Expenses 44,544,840 (34,038,16) (5,761,112) (7,616,517) (12,470,664)

Profit From Operations (18,168,831) (24,706,868) 3,097,995 3,864,571 11,848,463


Profit Before Tax 38,759,790 25,595,086 18,307,861 41,741,353 41,940,919

Income Tax 8,652,255 (5,677,511) (1,436,117) (3,120,424) (5,651,585)

Deferred Tax (Expense/Income) 5,006,977 2,211,418 (1,156,965) (11,489,050)

Profit After Tax 25,100,557 22,128,993 15,714,779 27,131,879 36,289,334

Earnings Per Share (EPS) 1.24 1.09 0.94 2.85 6.67

64

2) A summary of major items of income and expenditure



Total Operating Revenue (A) 937,326,012 694,742,004 202,379,849 225,433,282 540,819,526

Less Cost of Sales (B) (887,655,861) (657,929,787) (181,305,005) (203,028,288) (497,708,919)

Gross Profit : C=(A-B) 49,670,151 36,812,217 21,074,844 22,404,994 43,110,607

General &Administrative Expenses (23,294,142) (27,480,924) (12,215,373) (10,923,906) (18,791,475)

Selling & Distribution Expenses (44,544,840) (34,038,16) (5,761,112) (7,616,517) (12,470,664)




Income Tax (8,652,255) (5,677,511) (1,436,117) (3,120,424) (5,651,585)

Deferred Tax (Expense/Income) (5,006,977) 2,211,418 (1,156,965) (11,489,050)

Profit After Tax 25,100,557 22,128,993 15,714,779 27,131,879 36,289,334


3) The income and sales account of major products or services;

Product Name 2014 2015 2016 2017 2018

Black Tiger & Horina 436,618,848 220,357,418 192,808,009 694,742,004 937,326,012

Cat, H, PUD 23,727,220 - - - -

White Fish 80,473,458 5,075,864 9,571,840 - -

65

4) In case,otherincomeconstitutesmorethan10%ofthe total income, the breakup of the same along with

the nature of the income, i.e., recurring or non-recurring;

The other income of ASFL no do not constitutes more than 10% of total income, hence, it is not

applicable for ASFL.

5) If a material part of the income is dependent upon a single customer or a few major customers,

disclosure of this fact along with relevant data. Similarly if any foreign customer constitutes a

significant portion of the issuer’s business, disclosure of the fact along with its impact on the

business considering exchange rate fluctuations;

Not applicable for ASFL.

6) In case the issuer has followed any unorthodox procedure for recording sales and revenues, its

impact shall be analyzed and disclosed.

The issuer has not followed any unorthodox procedure for recording sales and revenues.

66

(v)Comparison of recent financial year with the previous financial years on the major heads of the profit and loss statement, including an analysis of

reasons for the changes in significant items of income and expenditure, inter-alia, containing the following;



Revenue 937,326,012 694,742,004 202,379,849 225,433,282 540,819,526

Cost of Goods Sold (887,655,861) (657,929,787) (181,305,005) (203,028,288) (497,708,919)

Gross Profit 49,670,151 36,812,217 21,074,844 22,404,994 43,110,607


General &Administrative Expenses (23,294,142) (27,480,924) (12,215,373) (10,923,906) (18,791,475)

Selling & Distribution Expenses (44,544,840) (34,038,16) (5,761,112) (7,616,517) (12,470,664)




Income Tax (8,652,255) (5,677,511) (1,436,117) (3,120,424) (5,651,585)

Deferred Tax (Expense/Income) (5,006,977) 2,211,418 (1,156,965) (11,489,050)

Profit After Tax 25,100,557 22,128,993 15,714,779 27,131,879 36,289,334


1. Unusual or infrequent events or transactions including unusual trends on account of business activity, unusual items of income, change of accounting

policies and discretionary reduction of expenses etc.

There is no unusual or infrequent events or transactions found in the audited statements of ASFL.

2. Significant economic changes that materially affect or are likely to affect income from continuing operations;

Severe economic crisis in the European area would have a significant impact on the income of the company. The European customers are the main buyers

of the company’s product. Hence, an economic crisis in that region would reduce the consumption preference of the customers. The consumption usually

go down during this season. Therefore such cases of economic changes would materially affect the income of ASFL.

3. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations;

67

Severe economic crisis in the European area would have a significant impact on the income of the company. The European customers are the main buyers

of the company’s product. Hence, an economic crisis in that region would reduce the consumption preference of the customers. The consumption usually

go down during this season. Therefore such cases of economic changes would materially affect the income of ASFL.

4. Future changes in relationship between costs and revenues, in case of events such as future increase in labor or material costs or prices that will cause a material change are known; An increase in fish feeds or its raw materials, or electricity, foods processing cost, increase in freight cost etc. would drastically reduce company profit as the cost of goods sold would become very high.

5. The extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased sales prices;



Revenue 937,326,012 694,742,004 202,379,849 225,433,282 540,819,526



Profit After Tax 25,100,557 22,128,993 15,714,779 27,131,879 36,289,334

The table is suggesting that the sales has increased in the recent years, the volume of sales has increased. The company did not introduce any new product or services in these years.

68

6. Total turnover of each major industry segment in which the issuer operated; ASFL is operating in the frozen food industry of Bangladesh, and the major operations of the company

Year Industry Segments if Fish industry (BDT)

2015-2016 4286.16 Crore

2016-2017 4211.60 Crore

Data Source: https://www.bffea.net/export.php

7. Status of any publicly announced new products or business segment; The company did not announce any new products or segment.

8. The extent to which the business is seasonal.

The business has not any seasonal effect.

(w) Defaults or rescheduling of borrowings with financial institutions/banks, conversion of loans into equity along with reasons thereof, lock out, strike sand reasons for the same etc. during the history of operation of the company; Achia Sea Foods Limited has never been defaulted in repayment of loan. It has also not rescheduled its loan. (x) Details regarding the changes in the activities of the issuer during the last five years which may had a material effect on the profits/loss, including discontinuance of lines of business, loss of agencies or markets and similar factors; There has been no such changes in activities of ASFL which might have a material impact on the profit/loss of the. There was no discontinuance of production line, or no loss of markets except the impact of European economic crisis, which had a negative impact on the sales. (y) Injunction or restraining order, if any, with possible implications; There is no Injunction or restraining order pending against ASFL. (z) Technology, market, managerial competence and capacity built-up; Technology ASFL is curious about new technologies that would improve the product quality of the company. As the frozen fish industry is sophisticated, it requires appropriate use of technology. Especially the freezing technology and food processing technology requires heavy attention. The company is adopting all the technology available for processing. ASFL imports latest freezing and food processing machineries to get updated with the market, which has helped the company to get EU clearance for exporting food products in the region. Market Market demand for shrimps in the EU is strong. Demand for shrimp products has increased during the past few years, and despite the financial crisis the EU demand remained strong. In the near future it is expected that competition between different shrimp species (especially between Pacific White and Black Tiger shrimp) will increase. The main result is likely to be that in Western Europe Black Tiger shrimp becomes more of a niche product because it is more expensive than Pacific White shrimp. However, in Southern Europe Black

https://www.bffea.net/export.php

69

Tiger shrimp will remain a mainstream product because Black Tiger is preferred to Pacific White shrimp for reasons of taste and size. It is also expected that the market for value-added products such as marinated and battered shrimp will increase. This offers opportunities for Bangladeshi exporters that are able to invest in processing machines. The market for captured shrimp is expected to remain stable. Managerial Competence

The management of the company is highly competent and experienced in managing sea foods

exporting business. The management’s knowledge of the business industry and market is in depth. The

production management team is highly capable of managing high volume production. Besides, the

supply management team is very effective, the team can handle any sort of crisis situation within a

short period of time. The unparalleled competence of the management personnel of ASFL has become

one of the major strength of the company.

Capacities Build Up

To keep up with the contemporary technology and customer demand, the company continuously

investing and deploying enough resources. To cope up with the growing market competition and

strengthening long term sustainability, the company is thinking of developing its production facilities

with the incorporation of latest technology and modified version the current production facilities.

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

The management of the company has not changed any accounting policy in the last three years’ time.

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

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

statements as disclosed in the prospectus and which materially and adversely affect or is likely to

affect the trading or profitability of the issuer, or the value of its assets, or its ability to pay its

liability;

There were no significant developments subsequent to the last financial year.

70

DECLARATION REGARDING SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST

FINANCIAL YEAR (June 30, 2018)

This is to declare that, there have been no circumstances arisen since the date of the last financial

statements as disclosed in the prospectus and which materially and adversely affect or is likely to affect

the trading or profitability of the issuer, or the value of its assets, or its pay its liabilities within the next

twelve months.

Sd/- Sd/- Sd/-

Md. Arifur Rahman Sagir Md. Tariqul Islam Zaheer Md. Ali Asgar Nasir

Chairman Managing Director Director

Sd/- Sd/-

Md. Nadirul Islam Babu Md. Arfin Ali FCA

Director Independent Director

(cc) If any quarter of the financial year of the issuer ends after the period ended in the audited financial statements as disclosed in the prospectus or information memorandum, unaudited financial statements for each of the said quarters duly authenticated by the CEO and CFO of the issuer or information memorandum, unaudited financial statements for each of the said quarters duly authenticated by the CEO and CFO of the issuer;

The unaudited financial statements will be provided when it becomes due.

dd) Factors that may affect the results of operations.

There are no such factors that may affect the results of operations except the known trends and

uncertainties as follows:

a. Political unrest

b. Natural disaster

c. Entrance of new technology

d. Unusual increase in production cost

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Part VII

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL

CONDITION AND RESULT OF OPERATIONS

a) Overview of business and strategies:

Company Business

Achia Sea Foods Limited is one of the rising food processing companies, which has started its journey

from the year 1993 in Khulna, Bangladesh. The company mainly process seafood and fishes and the

ultimate sources of the firm’s revenue comes from exporting of its products. The company was

incorporated in December 27, 1993 as a Private Limited Company registered in Bangladesh vide-

registration no. Khulna 178. Its registered office is situated at 50/7, Shipyard Road, Labanchara,

Khulna, Bangladesh. The factory is operational in Khulna city as the surrounding areas are the

significant place for shrimp’s production. Most of the exported sea foods are processed in these areas

and its surrounding. The factory adopted HACCP (Hazard analysis and critical control points) systems

in its operations, and earned BRC (BRC Certificate No. 411A 13070001).

Achia SeaFoods Limited is an export oriented company. Producing hazard free marine food products

for human consumption, and exporting it to the global market are the principal objectives of the

company. As a matter of fact, the company has been successfully running its production and exporting

operations for more than two decades. Since its establishment Achia Sea Foods Limited has been

processing and exporting of the finest quality seafood products “Shrimps & Fish”. The quality products

and services of the company have earned the approval of European Union approval, and have received

KLN-57 from the EU.

Incorporation of top-notch food processing technology and innovative methodology to produce quality

food products has helped Achia Sea Foods Limited to gain immense appreciation from its clients. As a

result to that, the company could establish its products as leading food products producer in the global

seafood industry. OCEAN PEARL and SITARA are the name of its two products which are recognized

globally. This is manifested in the enviable reputation of its brand in the seafood markets of European

Union, United Kingdom, Cyprus, Japan, Korea, Taiwan, Egypt, UAE & other far Eastern countries of

Asia. Achia Sea Foods Limited is an honorable member of Bangladesh Frozen Foods Exporters

Association (BFFEA), which is established in 1984; and working to promote and protect the interest of

Frozen Food processors, Packers and Exporters in the Country.

The company produces a number of products which include but are not limited to Sea Water Black

Tiger Head Less Shell on Block Frozen, Sea Water Black Tiger Head on Shell on Semi IQF , Sea Water

Black Tiger PUD/P&D Block Frozen, Fresh Water Prawn Head-Less Shell-on Block Frozen, Fresh Water

Prawn Head on Shell on Semi IQF, Fresh Water Prawn PUD /P&D Block Frozen, Sea Water Harina

PUD Shrimps Block Frozen, Sea Water White PUD Shrimps Block Frozen, Sea Water Red Tiger PUD

Shrimps Block Frozen, and Sea Water & Sweet Water Fishes Block Frozen & Semi IQF.

Strategies

To become one of the most efficient frozen food suppliers in Bangladesh.

To improve the production quality beyond the threshold of European standard.

To utilize the full production capacity.

To expand the manufacturing capacity of the business.

To capture new markets in the European zone.

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b) SWOT Analysis

SWOT analysis is an acronym for strength, weaknesses, opportunities, and threats and is a structure

planning method that evaluates those four elements of a project or business venture where,

Strength: Characteristics of the business that aid the business to gain advantage over the competitors.

Weaknesses: Characteristics of the business that place the business or project at a disadvantage in the

competitive environment.

Opportunity: Macro environmental stimulus that a business entity can explore to enhance its

performance in the market.

Threats: Stimulus of external environment that could create problem for the business performance.

The SWOT analysis of ASFL is as follows:

Strength Weaknesses

Quality food production facility

Strong supply chain

Highly competent management personnel

Trained workforce

Cost of production is highly fluctuating

Full production capacity is not being used

Comparatively higher management cost

Opportunities Threats

The demand for Black Tiger Shrimp is

growing in the European zone.

Use of information technology

Technological advancement

Economic crisis

Changes in exporting and importing

regulations in the European area.

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c) Analysis of the financial statements of last five years with reason(s) of fluctuating revenue or sales , other income, total income, cost of material,

finance cost, depreciation and amortization expense, other expenses, changes of inventories, net profit before & after tax, EPS etc.


Revenue 937,326,012 694,742,004 202,379,849 225,433,282 540,819,526

% Changes in Revenue 34.92% 243.29% (10.23%) (58.32%) 25.76%

Cost of materials 887,655,861 657,929,787 181,305,005 203,028,288 497,708,919

% Changes in cost of materials 34.92% 262.89% (10.69%) (59.21%) 27.06%

Total Income (18,168,831) (24,706,868) 3,097,996 3,864,571 11,848,463

% Change in Total Income 26.46% -897.51% -19.84% -67.38% 29.15%

Other Expenses - - - - -

% Change in Other Expense - - - - -

Depreciation & Amortization 4,353,568 3,976,064 3,632,763 2,937,743 19,429,217

% Change in Depreciation & Amortization 9.49% 9.45% 23.66% (51.85%) -15.37%

Finance cost - 25,410,490 25,338,530 25,098,057 23,112,712

% Change in Finance cost - .284% .958% 8.59% -16.62%

Inventory 205,176,037 237,995,495 197,410,098 178,766,830 171,997,488

% Change in Inventory (13.79%) 20.56% 10.43% 3.94% -2.83%

Other Income 88,356,125 50,301,954 15,209,866 37,876,782 30,092,456

% Change in Other Income 75.65% 230.72% (59.84%) 25.87% -39.22%


% Change in Profit before tax 51.43% 39.80% (56.14%) (.476%) -28.53%

Profit After Tax 25,100,557 22,128,993 15,714,779 27,131,879 36,289,334

% Change in Profit After Tax 13.43% 40.82% (42.08%) (25.23%) -31.23%

EPS (10 Tk. Per Share) 1.24 1.09 .94 2.85 6.67

% Change in EPS 13.76% 15.96% (67.02%) (57.27%) -31.23%

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Reason of Fluctuation

Revenue

The sales trend is suggesting that the firm has been performing well in terms of increasing its sales

revenue consistently. The demand for fish products has been increasing, and Achia Sea Foods Limited

has been successfully increasing its production to meet the increasing market demand. The average

growth in the sales of Achia Sea Foods Limited is quite satisfactory. The principal reason for the

increasing sales seems to be the company’s strong management and efficient sales team.

Total Income

Along with the increase in sales the total income of the company has been increasing proportionately.

Although in some years the increase is noticeable which has happened due to increase of COGS was

significantly lower than the increase in sales.

Cost of Materials:

The cost of goods sold history is suggesting that there was no material changes in the COGS accounts

of Achia Sea Foods Limited. It has been proportionately increasing with the increase of sales with the

changes of year. A slight increase in the cost of goods sold might have been caused by the yearly

inflation, apart from that nothing significant were found in the COGS account.

Finance Cost:

There is no significant change found in the cost of finance of ASFL for the last five years period.

However, interest payment has increased over the years as the company has been increasing its reliance

on external financing. The amount of Long term loan has increased over the year, which essentially had

increased the cost of finance.

Depreciation and Amortization:

There are some changes in the depreciation and amortization can be seen in the past five years but no

material changes were found. Depreciation increased in some years as the company had purchased

additional assets. Hence, additional depreciation was added to the yearly depreciation, which has

increased the total depreciation expense.

Other Expenses:

The company has reported that it has no expenses under the account head called “other expenses”

during the last five years.

Other Income:

The company has been generating significant income from different non-operating sources, therefore a

fluctuation in the other income is visible. The other income seems to be the main driver of the positive

profit for the company. Although the company has been successfully reducing its dependency on the

income from non-operating sources.

Changes in Inventory:

There is no significant changes in inventory over the last five years. Although there were some seasonal

impact on the inventory, the company has increased its finished goods inventory during the time when

seasonal demands increase in the Bangladeshi market.

Net Profit Before & After Tax:

The net profit before tax and after tax of Achia Sea Foods Limited has been increasing consistently after

the year 2016. As the sales revenue of the company has been increasing so the net profit before tax has

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increased. There was no changes in the imposed tax on the company, which implies the profit after tax

showed the similar increasing trend.

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

on the company’s business;

There are no known trends demands, commitments, events or uncertainties that are likely to have

an effect on the company’s business. The business operations of the company may be affected by

the following issues-

• Political unrest

• Natural disaster

• Technological advancement

e) Trend or expected fluctuations in liquidity

Over the last five years a slight fluctuation in the current ratio can be observed from the following

table. Although, the current ratio has decreased a little bit but it has never went below 1, which is

suggesting that the company has been maintaining its liquidity efficiently. The quick ratio provides

more clarity on the liquidity management, during the last five years the quick ratio was below 1.

The quick ratio suggests that the company might be having some issues with the liquidity

management. Analyzing the quick ratio it is found that the changes in current ratio is due to the

changes in inventory reserve, the company has been changing its inventory reserve to make the

operations more efficient and profitable. The following table is representing last five years liquidity

ratios of ASFL:-

Ratio 30 Jun 2018 30 Jun 2017 30 Jun 2016 30 Jun 2015 30 Jun 2014

Current Ratio 1.36 1.16 1.05 1.21 1.30

Quick Ratio .64 .50 .27 .34 .41

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑟𝑎𝑡𝑖𝑜 =𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠 𝑄𝑢𝑖𝑐𝑘 𝑟𝑎𝑡𝑖𝑜 =

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐴𝑠𝑠𝑒𝑡𝑠 − 𝐼𝑛𝑣𝑒𝑛𝑡𝑜𝑟𝑦

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝐿𝑖𝑎𝑏𝑖𝑙𝑖𝑡𝑖𝑒𝑠

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

condition.

There are no off-balance sheet arrangements those have or likely to have a current or future effect on

financial condition.

76

Part VIII

DIRECTORS AND OFFICERS

a) Name, Father’s name, age, residential address, educational qualification, experience and position of each of the directors of the company and

any person nominated or represented to be a director, showing the period for which the nomination has been made and the name of the

organization which has nominated him;

Name Fathers Name

Age Residential Address Education

Qualification Experience Position

Md.Arifur Rahman Sagir Late M.A. Wahed

60

52,South Central Road, Khulna

Bachelor of Arts

25 Years’ experience in fishing business

Chairman

Md.Tariqul Islam Zaheer Late M.A. Wahed

49

52,South Central Road, Khulna

Bachelor of Arts

20 Year experience in fishing business

Managing Director

Md.Ali Azgar Nasir Late M.A. Wahed 54 06,Fire Brigade Road

Khulna Bachelor of Arts


Director

Md.Nadirul Islam Babu Late M.A. Wahed 46 43/1,Miapara Main

Road Khulna Bachelor of Arts


Director

Mr. Afrin Ali FCA Md. Ershed Ali 38 176/2, Shere-E Bangla

Road, Sonadanga, Khulna

Chartered Accountant

10 Years’ experience in the field of

finance

Independent Director

b) The date on which he first became a director and the date on which his current term of office shall expire;

Name Position Date of Becoming Director For The

First Time Date of Expiration of Current Term

Md.Arifur Rahman Sagir Chairman 12.01.2006 Continuing

Md.Tariqual Islam Zaheer Managing Director 18.07.2005 Continuing

Md Ali Azgar Nasir Director 25.05.2008 Continuing

Md Nadirul Islam Director 25.05.2008 Next AGM

Mr. Afrin Ali FCA Independent Director 01.06.2018 Next AGM

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c) If any director has any type of interest in other businesses, names and types of business of such organizations. If any director is also a director

of another company or owner or partner of any other concern, the names of such organizations;

Following directors of Achia Sea Foods Limited have ownership in Sundarban Shrimps Pvt. Limited, details of ownership is given in the following table-

Name of the Company Name of the Directors Interested in other business

Business Type Md. Arifur Rahman Sagir Md. Tariqul Islam Zaheer Md. Ali Asgar Nasir

Sundarban Shrimps Pvt Limited Agro 7 % (2170 share) 48.39 % (15000 share) 7 % (2170 share)


Business Type Md. Riyad Mahmood Md. Nadirul Islam

Sundarban Shrimps Pvt Limited Agro 5.25 % (1627 share) 7 % (2170 share)

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d) Statement of if any of the directors of the issuer are associated with the securities

market in any manner. If any director of the Issuer company is also a director of any issuer

of other listed securities during last three years then dividend payment history and market

performance of that issue r;

There are no director directors of ASFL who are associated with the securities market in any

manner.

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

father, spouse’s mother, spouse’s brother, spouse’s sister) among the directors and top five

officers;

Name Position Relationship

Md.Arifur Rahman Sagir Chairman

Brother of Md.Tariqual Islam Zaheer, Md

Ali Azgar Nasir, Md Ali Azgar Nasir, Md

Nadirul Islam

Md.Tariqual Islam Zaheer Managing Director

Brother of Md.Arifur Rahman Sagir, Md

Ali Azgar Nasir, Md Ali Azgar Nasir, Md

Nadirul Islam

Md Ali Azgar Nasir Director

Brother of Md.Arifur Rahman Sagir,

Md.Tariqual Islam Zaheer, Md Nadirul

Islam

Md Nadirul Islam Director

Brother of Md.Arifur Rahman Sagir,

Md.Tariqual Islam Zaheer, Md Ali Azgar

Nasir

f) A very brief description of other businesses of the directors;

Sundarban Shirmps Limited is an agro based company that is based in Khulna. The company mainly

cultivates shrimps and others fishes. The main products of the company is fresh water fishes like, rui,

katla and others. The company has got around 12 big sized ponds suitable for shrimp cultivation as

well as fresh water fish cultivation.

g) Short bio-data of each director;

Md Arifur Rahman Sagir

Md. Arifur Rahman Sagir is a well-known business professional who has been working in different

areas of the food processing industry. In his 27 years professional experience he has managed the

supply chain of the food processing companies, especially his experience in exporting operations

such as clearing, forwarding, and others is highly appreciable. Mr. Arif has also managed factory

operations of in the food processing plant where he has successfully incorporated new technology

and production process to enhance the efficiency of the food processing plant.

Md. Arifur Rahman Sagir has completed his Bachelor of Arts (BA) from Khulna, Bangladesh. He

started his career in the sea foods processing industry and has been working in different departments

in the food processing companies. In 1993 he along with some others shareholders incorporated the

company named Achia Sea Foods Limited, and right now he is the Chairman of the company. He is

also the Chairman of Sundarban Shrimps Private Limited.

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Md Tariqul Islam Zaheer

Md Tariqul Islam Zaheer is the Managing Director of Achia Sea Foods Limited. He is also the

Managing Director of Sundarban Shrimps Private Limited. Mr. Tariqul Islam Zaheer completed his

Bachelor of Arts (BA) from Khulna and then he started working in the food processing industry. He

has 21 years’ experience of managing the food processing and exporting business altogether. He is

highly experienced in supply chain controlling and managing the business operations. He is a

Director of the Bangladesh Frozen Foods Exporter Association.

In addition to the business activities, Mr. Tariqul Islam Zaheer is actively engaged in different social

activities. He holds important positions in many social service organizations that strive to improve

the social conditions of the country. He is the Director Service Project of the Rotary Club of Rupsha

Rotary District 3281, Life-time Member of Khulna Metropolitan Shooting Club, Life Memebr of

Khulna Shishu Foundation, and Memeber of Khulna Club Limited.

Md Ali Azgar Nasir

Md Ali Azgar Nasir is the Director of Achia Sea Foods Limited. He is also a shareholder of Sundarban

Shrimps Private Limited. Mr. Nasir completed his Bachelor of Arts (BA) from Khulna and then he

started working in the food processing industry. He has 15 years’ experience of managing the food

processing and exporting business altogether.

Mr. Nasir is highly experienced in supply chain controlling and managing the business operations.

In addition to the business activities, Mr. Ali Azgar Nasir is actively engaged in different social

activities. He holds important positions in many social service organizations that strive to improve

the social conditions of the country.

Md Nadirul Islam

Md Nadirul Islam is the Director of Achia Sea Foods Limited. He is also a shareholder of Sundarban

Shrimps Private Limited. Mr. Nadirul Islam completed his Bachelor of Arts (BA) and then he started

working in the food processing industry. He has 6 years’ experience of managing the food processing

and exporting business altogether.

Mr. Nadirul Islam is experienced in managing factory production of sea foods as well as he is

experienced in procurement of finished products. He has been managing the operations of Achia Sea

Foods Limited for the last six years. Apart from that, Mr. Islam is involved in different social activities

for the greater good of the society.

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

the paid-up capital of the issuer in terms of the CIB Report of Bangladesh Bank;

Neither the company nor any of its Directors or shareholders who hold 10% or more shares

in the paid up capital of the issuer is loan defaulter in terms of CIB report of Bangladesh

Bank.

80

i) Name with position, educational qualification, age, date of joining in the company, overall experience (in year), previous employment,

salary paid for the financial year of the Chief Executive Officer, Managing Director, Chief Financial Officer, Company Secretary, Advisers,

Consultants and all Departmental Heads. If the Chairman, any director or any shareholder received any monthly salary than this information

should also be included;

Name Position Educational

Qualification Age (Yr.)

Joining Date in

ASFL Previous Employment

Overall

Experience Salary (FY17-18)

Md. Tariqul Islam Zaheer Managing

Director BA 49 18.07.05 N/A 20 Years 720,000

Masuma Yasmin CFO

M.Com

(Accounting),CAC

C (partly

qualified)

35 01.08.18 Chistern Service

Society 6 Years Joined Recently

Md.Elias Company

Secretary

M.Com

(Marketing) 50 15.02.2015

pride Group, Fashions

Group 13 years 108,000

Amit Kumar Saha Head of Sales BA 45 01.06.16 Jemini Sea Food 15 Years 458,000

Md. Golap Hossain Head of

Production BA 52 15.07.17 Lockpur Group 18 Years 364,000

j) Changes in the key management persons during the last three years. Any change otherwise than by way of retirement in the normal course in

the senior key management personnel particularly in charge of production, planning, finance and marketing during the last three years prior to

the date of filing the information memorandum. If the turnover of key management personnel is high compared to the industry, reasons should

be discussed;

No major changes have taken place except in position of CFO and Company Secretary. Mrs. Masuma Yasmin, took over the charge of CFO after

leaving Mr. Prodip Kumar Dey. Mr. Elias has been appointed as Company Secretary.

81

k) A profile of the sponsors including their names, father’s names, age, personal addresses, educational qualifications, and experiences in the

business, positions or posts held in the past, directorship held, other ventures of each sponsor and present position;

Name Father’s Name Age Personal Addresses Educational

qualification Experience Past Position

Md. Tariqul Islam Zaheer Late M.A Wahed 49 52,South Central Road,

Khulna BA 20 Years N/A

Md. Arifur Rahman Sagir Late M.A Wahed 60 52,South Central Road,


Md. Ali Asgar Nasir Late M.A Wahed 54 52,South Central Road,


Md. Nadirul Islam Late M.A Wahed 46 52,South Central Road,


Riyaad Mahmood A K M Mostagawsul

Haque 39

19, Hazi Mohsin Road, 1st

Lane, Khulna MBA 12 Years N/A

A K M Mostagawsul Haque Late M.A Wahed 71 19, Hazi Mohsin Road, 1st

Lane, Khulna M.Com, DIBB 26 Years N/A

Other ventures of existing sponsors


Business Type Md. Arifur Rahman Sagir Md. Tariqul Islam Zaheer Md. Ali Asgar Nasir

Sundarban Shrimps Pvt Limited Agro 7 % (2170 share) 48.39 % (15000 share) 7 % (2170 share)


Business Type Md. RiyadMahmood A.K.M MostagawsulHoque Md. Nadirul Islam

Sundarban Shrimps Pvt Limited Agro 5.25 % (1627 share) 0 % 7 % (2170 share)

Total Share=31000*100/- =3100000/-

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

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

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

acquisition etc.

There is no such acquisition of control in ASFL within the last five years immediately

preceding the date of filling the prospectus.

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

the fact explaining how the proposed activities would be carried out/managed;

The directors of ASFL are highly experienced in managing the frozen foods processing and

distributing business.

n) Interest of the key management persons

All the key management persons but the Managing Director, Md.Tariqul Islam Zaheer has no

other interest but remuneration. Managing Director as a Director enjoys the ownership

interest in addition to the remuneration.

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

There is no interest and facility except disclosed in Executive Compensation of this

Prospectus.

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

Name Position Total no. of Shares Pre IPO Percentage

(%)


Director 7,736,440 38.07%

Md. Arifur Rahman Sagir Chairman 1,270,224 6.25%

Md. Ali Asgar Nasir Director 1,325,390 6.52%

Md. Nadirul Islam Director 1,360,014 6.69%

Md. Riyaad Mahmood Shareholder 1,327,560 6.53%

A.K.M Mostagawsul Hoque Shareholder 16,380 .08%

Mashfiqul Islam Shareholder 1,135,400 5.59%

Junayed Ahsan Shuvro Shareholder 1,120,084 5.51%

Naznin Nahar Shareholder 238,308 1.17%

Ahmed Rosafi Mamood Shareholder 276,360 1.36%

Nahid Farhana Shareholder 17,780 .09%

FAS Finance & Investment Shareholder 1,000,000 4.92%

Grameen One Shareholder 500,000 2.46%

Reliance One Shareholder 500,000 2.46%

83

Popular life insurance Shareholder 500,000 2.46%

Moazzam Hossain House Shareholder 1,000,000 4.92%

Md. Shamsul Alam Shareholder 100,000 .49%

Md. Saiful Islam Shareholder 50,000 .25%

Md. Shamsuddoha Tapos Shareholder 100,000 .49%

Md. Omar Sadek Mollah Shareholder 60,000 .30%

Mr. Mohammad Helal Miah Shareholder 390,000 1.92%

BD Finance Securities Ltd Shareholder 300,000 1.48%

q) Change in board of directors during last three years;

In the last three years two of the director of ASFL retired and One Independent directors joined

in the board. Details of their joining and retirement is given in the following table-

Name of the Directors Date of joining Date of retirement Present status as on

31.07.2018

Md. Riyaad Mahmood 25.05.2008 22 May, 2018 Shareholder

A.K.M Mostagawsul Hoque 25.05.2008 22 May, 2018 Shareholder

Mr. Arfin Ali FCA 01 June, 2018 Continuing Independent Director

r) Director’s engagement with similar business.

The directors are not engaged in any sort of similar business, except they have ownership in Sundarban

Shrimps Limited which is not

84

Part IX

CERTAIN RELATIONSHIP AND TRANSACTIONS

a) The prospectus shall contain a description of any transaction during the last five years, or any

proposed transactions certified by the auditors, between the issuer and any of the following

persons, giving the name of the persons involved in the transaction, their relationship with the

issuer, the nature of their interest in the transaction and the amount of such interest, namely:-

i. Any director or sponsor or executive officer of the issuer; ii. Any person holding 5% or more of the outstanding shares of the issuer;

iii. Any related party or connected person of any of the above persons;

To whom it may concern

This is to certify that the Achia Sea Foods Limited has the following transactions during the last five years, or any proposed transactions, between the issuer and any of the following persons : i) Any directors or sponsor or executive officer of the issuer ii) Any person holding 5% or more of the outstanding shares of issuer iii) Any related party or connected person of any of the above person Except the transactions described in the following table:

SL.

No

Name of person/party

Relationship with the

issuer

Nature of transections

Amount in Taka

30-Jun-18 30-Jun-

17 30-Jun-16

30-Jun-15

30-Jun-14

01 Md. Arifur Rahman Sagir

Chairman Remuneration 420000 420,000 420,000 420,000 420,000

02 Md. Tariqul Islam Zaheer

Managing Director

Remuneration 720,000 720,000 720,000 720,000 720,000

03 Md. Ali Azgar Nasir

Director Remuneration 240,000 240,000 240,000 240,000 240,000

04 Md. Nadirul Islam Babu


05

A.K.M. Mostagawsul Haque


06 Md. Riyad Mahmood


07

Sundarbon Shrimps (Pvt.) Ltd.

Sister Concern

Short Term 12,494,595 5,772,040 39,893,000

Sd/-

Mahfel Huq & Co Dhaka, September 16, 2018 Chartered Accountants

85

b) Any transaction or arrangement entered into by the issuer or its subsidiary or associate or

entity owned or significantly influenced by a person who is currently a director or in any way

connected with a director of either the issuer company or any of its subsidiaries or holding

company or associate concerns, or who was a director or connected in any way with a director at

any time during the last three years prior to the issuance of the prospectus;

There is no transaction or arrangement entered into by the issuer or its subsidiary or associate or

entity owned or significantly influenced by a person who is currently a director or in any way

connected with a director of either the issuer company or any of its subsidiaries or holding company

or associate concerns, or who was a director or connected in any way with a director at any time

during the last three years prior to the issuance of the prospectus except the transaction mentioned

under “related party transaction” in the note [*] of audited financial statements and “Executive

Compensation” part of this prospectus.

c) Any loans either taken or given from or to any director or any person connected with the director,

clearly specifying details of such loan in the prospectus, and if any loan has been taken from any

such person who did not have any stake in the issuer, its holding company or its associate

concerns prior to such loan, rate of interest applicable, date of loan taken, date of maturity of

loan, and present outstanding of such loan.

No such loan was taken or given from or to Directors or any person connected with the Directors of

Achia Sea Foods Limited.

86

Part X

EXECUTIVE COMPENSATION

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

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

SL No. Name Designation Remuneration

1 Mr. Prodip Kumer General manager 384,000

2 Amit Kumar Saha Commercial Manager 288,000

3 B. M Feroj Ahmed Admin Officer 192,000

4 Mr. Gourango Saha Asst. Commercial Officer 210,000

5 Md. Elias Chief Accountant 180,000

*** The amount representing the salary paid from 1st July 2017 to 30 June 2018

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

last accounting year;

SL No. Particulars Remuneration

1 Directors Remuneration 2,205,000

2 Salary Paid to Executives and Employees 10,119,500

*** The amount representing the salary paid from 1st July 2017 to 30 June 2018

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

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

during the last accounting year;

None of the director except the Managing Director Md. Tariqul Islam Zaheer has received monthly

salary/benefits for his services to the company, which was approved in a board of directors meeting

held on 10 November 2009.

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

along with date of approval in AGM or EGM;

The board of director of ASFL never received any meeting attendance fees.

e) Any contract with any director or officer providing for the payment of future compensation;

There is no available contract between the company and any director or officer to provide any future

compensation to be made to them.

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

in the current year, appropriate information regarding thereto;

The company has no such intention to substantially increase the remuneration paid to its directors

and officers in the current year. But the company would provide annual increment to the employees

87

considering company’s profitability, its business growth, rate of inflation and performance of the

individual.

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

No other benefits or facility were provided to any of the directors or officers during the last

accounting year except the ones that were disclosed above.

Part XI

OPTIONS GRANTED TO DIRECTORS, OFFICERS, AND EMPLOYEES

Achia Sea Foods Limited did not grant any options to its directors, officers and/or any other employees

for the purpose of issuing shares.

88

Part XII

TRANSACTION WITH THE DIRECTORS AND SUBSCRIBERS TO THE

MEMORANDUM

a) The names of the directors and subscribers to the memorandum, the nature and amount of

anything of value received or to be received by the issuer from the above persons, or by the said

persons, directly or indirectly, from the issuer during the last five years along with the

description of assets, services or other consideration received or to be received;

The directors and subscriber to the memorandum have not received any benefit except

remuneration directly or indirectly during the last five years, details of which is given below. The

issuer has received or to be received any assets, services, or other considerations from its directors

and subscriber to the memorandum except fund against allotment of shares and land.

Name Nature of

Relationship

Nature of

Transaction

Value of Transaction (BDT)

2018 2017 2016 2015 2014

Md. Arifur Rahman Sagir Chairman Remuneration 420000 420,000 420,000 420,000 420,000



Md. Ali Azgar Nasir Director Remuneration 240,000 240,000 240,000 240,000 240,000

Md. Nadirul Islam Babu Director Remuneration 240,000 240,000 240,000 240,000 240,000

A.K.M. Mostagawsul Haque Sponsor Remuneration 120,000 120,000 120,000 120,000 120,000

Md. Riyad Mahmood Sponsor Remuneration 480,000 480,000 480,000 480,000 480,000

b) If any assets were acquired or to be acquired within next two financial years from the aforesaid

persons, the amount paid for such assets and the method used to determine the price shall be

mentioned in the prospectus, and if the assets were acquired by the said persons within five

years prior to transfer those to the issuer, the acquisition cost thereof paid by them.

No assets were acquired by the Company from its director or subscribers to the memorandum.

.

89

Part XIII

OWNERSHIP OF THE COMPANY SECURITIES

a) The names, addresses, BO ID Number of all shareholders of the company before IPO, indicating the amount of securities owned and the percentage

of the securities represented by such ownership, in tabular form;

Name Position Address BO ID No. Total no. of

Shares

Pre IPO

Percentage

(%)

Md. Tariqul Islam Zaheer Managing Director 52,South Central Road, Khulna 1604630053987156 7,736,440 38.07%

Md. Arifur Rahman Sagir Chairman House 14, Gagonbabu Road, Khulna 1604630041565468 1,270,224 6.25%

Md. Ali Asgar Nasir Director 52,South Central Road, Khulna 1604630013975606 1,325,390 6.52%

Md. Nadirul Islam Director 52,South Central Road, Khulna 1604630002603560 1,360,014 6.69%

Md. Riyaad Mahmood Director 19, Hazi Mohsin Road, 1st Lane, Khulna 1604630063604733 1,327,560 6.53%

A.K.M Mostagawsul Hoque Shareholder 19, Hazi Mohsin Road, 1st Lane, Khulna 1604630078025639 16,380 .08%

Mashfiqul Islam Shareholder 52,South Central Road, Khulna,

Bangladesh 1604630000582312 1,135,400 5.59%

Junayed Ahsan Shuvro Shareholder 52,South Central Road, Khulna,

Bangladesh 1604630000231475 1,120,084 5.51%

Naznin Nahar Shareholder 54, Sarkerpara, Tootapara, Khulna 1604630000458556 238,308 1.17%

Ahmed Rosafi Mamood Shareholder 19, Hazi Mohsin Road, 1st Lane, Khulna,

Bangladesh 1604630000125893 276,360 1.36%

Nahid Farhana Shareholder 52,South Central Road, Khulna,

Bangladesh 1604630055669147 17,780 .09%

FAS Finance & Investment Shareholder Suvastu Imam Square(4th Floor) 65 gulshan

avenue, Dhaka-1212 1604630019840113 1,000,000 4.92%

Grameen One: Scheme Two Shareholder

AIMS of Bangladesh Limited Unique

Trade Center (UTC),Level 6(SW),8

Panthopath, Karwan Bazar, Dhaka-1215.6,

1604620016329737 500,000 2.46%

90

Reliance One Shareholder

AIMS of Bangladesh Limited, Unique

Trade Centre (UTC), Level-6 (SW), 8

Panthopath, Karwan Bazar, Dhaka-1215.

1604620041309123 500,000 2.46%

Popular life insurance Shareholder 36, Dilkusha C/A, Peoples Insurance

Bhaban (17th Floor) Dhaka -1000 1204680000045409 500,000 2.46%

Captain M. Moazzam Hossain Shareholder H #271, Eastern Road, DOHS Baridhara,

Dhaka-1206 1202880000037311 1,000,000 4.92%

Md. Shamsul Alam Shareholder 1816 KM DAS Lane, Dhaka- 1203880025907560 100,000 .49%

Md. Saiful Islam Shareholder H-149, R-01, Plot A2, Mirpur DOHS,

Dhaka 1203060012359790 50,000 .25%

Md. Shamsuddoha Tapos Shareholder 16/10 Kalichoran Saha Road, Faridabad,

Dhaka 1204240016889929 100,000 .49%

Md. Omar Sadek Mollah Shareholder 617 Dhonia Road Shyampur, Dhaka-1236 1202950056525143 60,000 .29%

Mr. Mohammad Helal Miah Shareholder Amanat Shah Group, City Centre, L-24,

Motijheel, Dhaka-1000 1204570003635981 390,000 1.92%

BD Finance Securities Ltd Shareholder 64, Motijheel C/A 2nd Block, Dhaka-1000 1205150043284418 300,000 1.48%

Total 20,323,940 100.00%

91

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

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

the directors before the public issue;

Please find the name, address, age, experience at page no 81; BO ID and Tin number, number of

shares held including percentage at page no 90; position held in other companies of all the directors

before the public issue at page no 81 of this prospectus.

92

c) The average cost of acquisition of equity shares by the directors certified by the auditors;

Auditor's certificate regarding average cost of acquisition of equity shares by the directors

This is to certify that the equity shares of Achia Sea Foods Limited have been allotted at face of Tk. 10.00 each and the average cost of acquisition of equity by the directors is Tk. 10.00 each. Name wise shareholdings position, allotment date and consideration are given below:

Sl. No

. Name Position

Allotment Transfer/Acquire Total

shares

Face Valu

e

Total Amount in TK.

Consideration

Average cost of

acquisition per share

Date No. of shares Date No. of shares

1

Md. Arifur

Rahman Sagir

Chairman

05.01.2006 20,000 - - 100 2,000,000 Cash 100

- - 12.08.2010 7,112 100 711,200 Cash 100

- - 22.03.2011 12,704 100 1,270,400 Cash 100 Converted

Share 20,000 200,000 Converted

Share 19,816 198,160

08.03.2014 402,000 - - 10 4,020,000 Cash 10

22.11.2015 320,064

- -

10 3,200,640 Other Than

Cash 10

09.01.2016 150,000

- -

10 1,500,000 Other Than

Cash 10

Total 1,072,064 198,160 1,270,224 12,702,240

2

Md. Tariqul Islam

Zaheer

Managing

Director

18.07.2005 498 - 100 49,800 Cash 100

05.01.2006 86,212 - 100 8,621,200 Cash 100

- 25.05.2008 17,809 100 1,780,900 Cash 100

- 12.08.2010 21,330 100 2,133,000 Cash` 100

- 22.03.2011 12,703 100 1,270,300 Cash 100

- 11.02.2014 612 100 61,200 Cash 100 Converted

Share 86,710 867,100 Converted Share

524,540

93

08.03.2014 2,912,960 - 10 29,129,600 Cash 10

22.11.2015 1,721,840

-

10 17,218,400 Other Than

Cash 10

09.01.2016 1,710,000

-

10 17,100,000 Other Than

Cash 10

Total 7,211,900 524,540 7,736,440 77,364,400

3 Md. Ali Azgar Nasir

Director

- 25.05.2008 17,785 100 1,778,500 Cash 100

- 12.08.2010 7,112 100 711,200 Cash 100

- 22.03.2011 12,704 100 1,270,400 Cash 100

Converted Share

37,601 376,010

08.03.2014 427,840 - - 10 4,278,400 Cash 10

22.11.2015

321,540

- -

10 3,215,400 Other Than

Cash 10

09.01.2016

200,000

- -

10 2,000,000 Other Than

Cash 10

Total 949,380 376,010 1,325,390 13,253,900

4 Nadirul

Islam Babu

Director

25.05.2008 17,785 100 1,778,500 Cash 100

12.08.2010 7,112 100 711,200 Cash 100

22.03.2011 12,704 100 1,270,400 Cash 100

Converted Share

37,601 376,010

08.03.2014 424,000 - 10 4,240,000 Cash 10

22.11.2015 320,004

-

10 3,200,040 Other Than

Cash 10

94

09.01.2016

240,000

-

10 2,400,000 Other Than

Cash 10

Total 984,004 376,010 1,360,014

13,600,140

Sd/-

Mahfel Huq & Co.

Dhaka, September 16 , 2018

Chartered Accountants

95

d) A detail description of capital built up in respect of shareholding (name-wise) of the issuer’s sponsors/ directors. In this connection, a statement

to be included:-

Md. Arifur Rahman Sagir

Allotment

date Nature of issue No. of Shares Face value Issue Price Consideration Total Shares

Sources of

Fund Pre IPO Post IPO

5.01.2006 Ordinary Shares 200,000 10 10 Cash 200,000

Own Source 6.25% 3.15%




22.11.2015 Ordinary Shares 320,064 10 10 Other Than Cash 1,120,224



Allotment

date

Nature of Issue No. of Shares Face value Issue Price Consideration Total Shares

Sources of

Fund Pre IPO

Post

IPO

18.07.2005 Ordinary Shares 4980 10 10 Cash 4980

Own Source 38.07% 19.19%


25.05.2008 Ordinary Shares 17,8090 10 10 Cash 1,045,190

12.08.2010 Ordinary Shares 21,3300 10 10 Cash` 1,258,490



08.03.2014 Ordinary Shares 2,912,960 10 10 Cash 4,304,600

22.11.2015 Ordinary Shares 1,721,840 10 10 Other Than Cash 6,026,440

09.01.2016 Ordinary Shares 1,710,000 10 10 Other Than Cash 7,736,440

96

Md. Ali Asgar Nasir

Allotment

date Nature of Issue No. of Shares Face value Issue Price Consideration Total Shares

Sources of

Fund

Pre

IPO

Post

IPO








Md. Nadirul Islam

Allotment

date Nature of Issue No. of Shares Face value Issue Price Consideration Total Shares

Sources of

Fund

Pre

IPO

Post

IPO








A.K.M Mostagawsul Hoque



Lock In

period Pre IPO

Post

IPO

Transfer 25.05.2008 11,700 10 10 Cash 11,700 3 Years 0.0806% 0.0406%

Bonus Issue 22.11.2015 4,680 10 10 Cash 16,380

97

Md. Riyad Mahmood



Lock In period

Pre IPO Post IPO

Transfer 25.05.2008 17,200 10 10 Cash 17,200

3 Years 6.53% 3.29%

Transfer 22.03.2011 2,540 10 10 Cash 19,740

Fresh Allotment 08.03.2014 608,000 10 10 Other Than Cash 627,740

Transfer 11.02.2014 177,660 10 10 Cash 805,400

Bonus Issue 22.11.2015 322,160 10 10 Cash 1,127,560


e) Detail of shares issued by the company at a price lower than the issue price;

All the shares of the company are issued at face value of Tk. 10 before this issue.

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

Since inception there is no significant change in ownership in ASFL.

98

Part XIV

CORPORATE GOVERNANCE

a) A disclosure to the effect that the issuer has complied with the requirements of Corporate

Governance Guidelines of the Commission;

MANAGEMENT DISCLOSURE REGARDING COMPLIANCE WITH THE REQUIREMENTS OF

CORPORATE GOVERNANCE CODE OF BANGLADESH SECURITIES AND EXCHANGE

COMMISSION

The Company declares that it is in compliance with the requirements of the applicable regulations of

Corporate Governance Code of Bangladesh Securities and Exchange Commission in respect of

corporate governance including constitution of the Board and committees thereof.


Managing Director


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

[Certificate as per condition No.1 (5) (XVII)]

Report to the Shareholders of

Achia Sea Foods Limited on compliance on the Corporate Governance Code

We have examined the compliance status to the Corporate Governance Code by Achia Sea Foods

Limited for the year ended on 30 June 2018. This Code relates to the Notification No. BSEC/

CMRRCD/ 2006-158/207/Admin/80 dated 3 June, 2018 of the Bangladesh Securities and Exchange

Commission.

Such compliance with the Corporate Governance Code is the responsibility of the Company. Our

examination was limited to the procedures and implementation thereof as adopted by the Management

in ensuring compliance to the conditions of the Corporate Governance Code.

This is a scrutiny and verification and an independent audit on compliance of the conditions of the

Corporate Governance Code as well as the provisions of relevant Bangladesh Secretarial Standards

(BSS) as adopted by Institute of Chartered Secretaries of Bangladesh (ICSB) in so far as those standards

are not inconsistent with any condition of this Corporate Governance Code.

We state that we have obtained all the information and explanations, which we have required, and after

due scrutiny and verification thereof, we report that, in our opinion:

99

(a) The Company has complied with the conditions of the Corporate Governance Code as stipulated in the above mentioned Corporate Governance Code issued by the Commission;

(b) The Company has complied with the provisions of the relevant Bangladesh Secretarial Standards (BSS) as adopted by the Institute of Chartered Secretaries of Bangladesh (ICSB) as required by this Code;

(c) Proper books and records have been kept by the company as required under the Companies Act, 1994, the securities laws and other relevant laws; and

(d) The Governance of the company is satisfactory.

Dhaka, Dated October 02, 2018

Suraiya Parveen & Associates Chartered Secretaries

Suraiya Parveen, FCS

Chartered Secretary in Practice

STATUS OF COMPLIANCE REPORT ON CORPORATE GOVERNANCE

ACHIA SEA FOODS LIMITED

Status of Compliance with the conditions imposed by the Commission`s Notification No.

BSEC/CMRRCD/2006-158/207/Admin/80 dated 3 June, 2018 issued under section 2CC of the

Securities and Exchange Ordinance, 1969:

Condition No.

Title

Compliance Status (Put √ in the

appropriate column) Remarks (if any)

Complied Not

complied

1.00 Board of Directors

1.1

Size of the Board of Directors: The total number of members of a company’s Board of Directors (hereinafter referred to as “Board”) shall not be less than 5 (five) and more than 20 (twenty)

√

1.2 Independent Director

1.2(a) At least one-fifth (1/5) of the total number of directors in the company’s Board shall be independent directors

√

100

1.2(b)(i) Does not hold any share in the company or holds less than one percent (1%) shares of the total paid-up shares of the company

√

1.2(b)(ii)

Do not a sponsor of the company or is not connected with the company’s any sponsor or director or nominated director or shareholder of the company or any of its associates, sister concerns, subsidiaries and parents or holding entities who holds one percent (1%) or more shares of the total paid-up shares of the company on the basis of family relationship and his or her family members also shall not hold above mentioned shares in the company

√

1.2(b)(iii) Do not been an executive of the company in immediately preceding 2 (two) financial years

√

1.2(b)(iv)

Does not have any other relationship, whether pecuniary or otherwise, with the company or its subsidiary or associated companies

√

1.2(b)(v) Do not a member or TREC (Trading Right Entitlement Certificate) holder, director or officer of any stock exchange

√

1.2(b)(vi)

Do not a shareholder, director excepting

independent director or officer of any member

or TREC holder of stock exchange or an

intermediary of the capital market

√

1.2(b)(vii)

Do not a partner or an executive or was not a

partner or an executive during the preceding

3 (three) years of he concerned company’s

statutory audit firm or audit firm engaged in

internal audit services or audit firm

conducting special audit or professional

certifying compliance of this Code

√

1.2(b)(viii)

Do not independent director in more than 5

(five) listed companies √

1.2(b)(ix)

Do not been convicted by a court of

competent jurisdiction as a defaulter in

payment of any loan or any advance to a bank

or a Non-Bank Financial Institution NBFI)

√

1.2(b)(x) Do not been convicted for a criminal offence involving moral turpitude;

√

1.2(c)

Do the independent director(s) is appointed

by the Board and approved by the

shareholders in the Annual General Meeting

(AGM)

√

The Independent director is appointed by board of directors on 01.06.2018 and

101

will be approved on AGM

1.2(d)

Is the post of independent director(s) remain

vacant for more than 90 (ninety) days √

1.2(e) Does the tenure of an independent director within a period of 3 (three) years, which may be extended for 1 (one) tenure only.

√

1.3 Qualification of Independent Director (ID)

1.3(a)

Does the independent director a knowledgeable individual with integrity who is able to ensure compliance with financial laws, regulatory requirements and corporate laws and can make meaningful contribution to the business

√

1.3(b) Independent director shall have following qualifications:

1.3(b)(i)

Does the independent director a business Leader who is or was a promoter or director of an unlisted company having minimum paid-up capital of Tk. 100.00 million or any listed company or a member of any national or international chamber of commerce or business association

- N/A

1.3(b)(ii)

Does the independent director a corporate leader who is or was a top level executive not lower than Chief Executive Officer or Managing Director or Deputy Managing Director or Chief Financial Officer or Head of Finance or Accounts or Company Secretary or Head of Internal Audit and Compliance or Head of Legal Service or a candidate with equivalent position of an unlisted company having minimum paid-up capital of Tk. 100.00 million or of a listed company

- N/A

1.3(b)(iii)

Does the independent director a former official of government or statutory or autonomous or regulatory body in the position not below 5th Grade of the national pay scale, who has at least educational background of bachelor degree in economics or commerce or business or Law

- N/A

1.3(b)(iv)

Does the independent director a university teacher who has educational background in Economics or Commerce or Business Studies or Law

√

1.3(b)(v)

Does the independent director a professional who is or was an advocate practicing at least in the High Court Division of Bangladesh Supreme Court or a Chartered Accountant or Cost and Management Accountant or Chartered Financial Analyst or Chartered Certified Accountant or Certified Public

- N/A

102

Accountant or Chartered Management Accountant or Chartered Secretary or equivalent qualification

1.3(c) Does the independent director have at least 10 (ten) years of experiences in any field mentioned in clause (b)

√

1.3(d)

In special cases, does the company relaxed above qualifications or experiences which may be relaxed subject to prior approval of the Commission

- N/A

1.4 Duality of Chairperson of the Board of Directors and Managing Director or Chief

Executive Officer

1.4 (a)

Do the positions of the Chairperson of the Board and the Managing Director (MD) and/or Chief Executive Officer (CEO) of the company filled by different individuals

√

1.4 (b)

Do the Managing Director (MD) and/or Chief Executive Officer (CEO) of a listed company hold the same position in another listed company

√

1.4 (c) Does the Chairperson of the Board elected from among the non-executive directors of the company

√

1.4 (d)

Do the Board clearly define respective roles and responsibilities of the Chairperson and the Managing Director and/or Chief Executive Officer

√

1.4 (e)

In the absence of the Chairperson, does the Board will elect from the remaining members and nonexecutive directors as Chairperson for that particular Board’s meeting;

√

1.5 Directors report to shareholders

1.5(i) Industry outlook and possible future developments in the industry

√

1.5(ii) Segment-wise or product-wise performance -

N/A

1.5(iii)

Risks and concerns including internal and external risk factors, threat to sustainability and negative impact on environment, if any

√

1.5(iv) Discussion on cost of goods sold, gross profit margin and net profit margin

- N/A

1.5(v) Discussion on continuity of any Extra-Ordinary gain or loss

√

1.5(vi)

A detailed discussion on related party transactions along with a statement showing amount, nature of related party, nature of transactions and basis of transactions of all related party transactions;

√

103

1.5(vii) Utilization of proceeds from public issues, right issues and/ or through any others instruments

-

N/A

1.5(viii) An explanation if the financial results deteriorate after the company goes for IPO, RPO, Rights Offer, Direct Listing etc.

-

N/A

1.5(ix)

If significant variance occurs between Quarterly Financial performance and Annual Financial Statements the management shall explain about the variance on their Annual Report

-

N/A

1.5(x) Remuneration to directors including independent directors

√

1.5(xi)

The financial statements prepared by the management of the issuer company present fairly its state of affairs, the results of its operation, cash flows and changes in equity

√

1.5(xii) Proper books of account of the issuer company have been maintained

√

1.5(xiii)

Appropriate accounting policies have been consistently applied in preparation of the financial statements and that the accounting estimates are based on reasonable and prudent judgment

√

1.5(xiv)

International Accounting Standards (IAS) or International Financial Reporting Standards (IFRS), as applicable in Bangladesh, have been followed in preparation of the financial statements and any departure there from has been adequately disclosed

√

1.5(xv) The system of internal control is sound in design and has been effectively implemented and monitored

√

1.5(xvi)

Minority shareholders have been protected from abusive actions by, or in the interest of, controlling shareholders acting either directly or indirectly and have effective means of redress

√

1.5(xvii)

There is no significant doubt upon the issuer company’s ability to continue as a going concern, if the issuer company is not considered to be a going concern, the fact along with reasons there of shall be disclosed

√

1.5(xviii)

Significant deviations from the last year’s operating results of the issuer company shall be highlighted and the reasons thereof shall be explained

- N/A

1.5(xix) Key operating and financial data of at least preceding 5 (five) years shall be summarized

√

1.5(xx) If the issuer company has not declared dividend (cash or stock) for the year

√

104

1.5(xxi) Board’s statement to the effect that no bonus share or stock dividend has been or shall be declared as interim dividend

√

1.5(xxii) The total number of Board meetings held during the year and attendance by each director

√

1.5 (xxiii) The Board of the company shall include the following additional statements or disclosures in the Directors’ Report prepared under section 184 of the Companies Act, 1994 (Act No. XVIII of 1994):

1.5(xxiii)(a) Parent or Subsidiary or Associated Companies and other related parties (name-wise details)

√

1.5(xxiii)(b)

Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer, Head of Internal Audit and Compliance and their spouses and minor children (name-wise details)

√

1.5(xxiii)(c) Executives (top five salaried employees) √

1.5(xxiii)(d) Shareholders holding ten percent (10%) or more voting interest in the company (name-wise details)

√

1.5(xxiv) In case of the appointment or reappointment of a director, a disclosure on the following information to the shareholders: a brief resume of the director

1.5(xxiv)(a) A brief resume of the director √

1.5(xxiv)(b) Nature of his or her expertise in specific functional areas

√

1.5(xxiv)(c)

Names of companies in which the person also holds the directorship and the membership of committees of the Board

√

1.5(xxv) A Management’s Discussion and Analysis signed by CEO or MD presenting detailed analysis of the company’s position and operations along with a brief discussion of changes in the financial statements, among others, focusing on

1.5(xxv)(a) Accounting policies and estimation for preparation of financial statements

√

1.5(xxv)(b)

Changes in accounting policies and estimation, if any, clearly describing the effect on financial performance or results and financial position as well as cash flows in absolute figure for such changes

√

1.5(xxv)(c)

Comparative analysis (including effects of inflation) of financial performance or results and financial position as well as cash flows for current financial year with immediate preceding five years explaining reasons thereof

√

1.5(xxv)(d) Compare such financial performance or results and financial position as well as cash flows with the peer industry scenario

√

1.5(xxv)(e) Briefly explain the financial and economic scenario of the country and the globe;

√

105

1.5(xxv)(f) Risks and concerns issues related to the financial statements, explaining such risk and concerns mitigation plan of the company

√

1.5(xxv)(g)

Does future plan or projection or forecast for company’s operation, performance and financial position, with justification thereof, i.e., actual position explained to the shareholders in the next AGM

√

1.5(xxvi)

Does declaration or certification by the CEO and the CFO to the Board as required under condition No. 3(3) disclosed as per Annexure-A

√

1.5(xxvii)

Does the report as well as certificate regarding compliance of conditions of this Code as required under condition No. 9 disclosed as per Annexure-B and Annexure-C

√

1.6 Meetings of the Board of Directors

1.6

Does the company conduct its Board meetings and record the minutes of the meetings as well as keep required books and records in line with the provisions of the relevant Bangladesh Secretarial Standards (BSS) as adopted by the Institute of Chartered Secretaries of Bangladesh (ICSB) in so far as those standards are not inconsistent with any condition of this Code.

√

1.7 Code of Conduct for the Chairperson, other Board members and Chief Executive

Officer

1.7 (a)

Does the Board lay down a code of conduct, based on the recommendation of the Nomination and remuneration Committee (NRC) at condition No. 6, for the chairperson of the Board, other board members and Chief Executive Officer of the company;

√

1.7 (b)

Does the code of conduct as determined by the NRC posted on the website of the company including, among others, prudent conduct and behavior; confidentiality; conflict of interest; compliance with laws, rules and regulations; prohibition of insider trading; relationship with environment, employees, customers and suppliers; and independency

√

2.00 Governance of Board of Directors of Subsidiary Company

2 (a)

Do provisions relating to the composition of the Board of the holding company applicable to the composition of the Board of the subsidiary company

-

N/A

2 (b) Does at least 1 (one) independent director on the Board of the holding company on the Board of the subsidiary company

- N/A

2 (c)

Does the minutes of the Board meeting of the subsidiary company placed for review at the following Board meeting of the holding company

- N/A

106

2 (d)

Does the minutes of the respective Board meeting of the holding company state that they have reviewed the affairs of the subsidiary company

- N/A

2 (e)

Does the Audit Committee of the holding company review the financial statements, in particular the investments made by the subsidiary company

- N/A

3.00 Managing Director (MD) or Chief Executive Officer (CEO), Chief Financial Officer (CFO), Head of Internal Audit and Compliance (HIAC) and Company Secretary (CS)

3.1 Appointment

3 (a)

Does the Board appoint a Managing Director (MD) or Chief Executive Officer (CEO), a Company Secretary (CS), a Chief Financial Officer (CFO) and a Head of Internal Audit and Compliance (HIAC);

√

3 (b)

Does the positions of the Managing Director (MD) or Chief Executive Officer (CEO), Company Secretary (CS), Chief Financial Officer (CFO) and Head of Internal Audit and Compliance (HIAC) filled by different individuals

√

3 (c) Does the MD or CEO, CS, CFO and HIAC of a listed company hold any executive position in any other company at the same time

√

3 (d) Does the Board clearly define respective roles, responsibilities and duties of the CFO, the HIAC and the CS

√

3 (e)

Does the MD or CEO, CS, CFO and HIAC removed from their position without approval of the Board as well as immediate dissemination to the Commission and stock exchange(s)

√

3.2 Requirement to attend Board of Directors’ Meetings

3.2 Do the MD or CEO, CS, CFO and HIAC of the company attend the meetings of the Board:

√

3.3 Duties of Managing Director (MD) or Chief Executive Officer (CEO) and Chief Financial Officer (CFO)

3.3(a)(i)

These statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading

√

3.3(a)(ii)

These statements together present a true and fair view of the company’s affairs and are in compliance with existing accounting standards and applicable laws;

√

3.3(b)

Do the MD or CEO and CFO certify that there are, to the best of knowledge and belief, no transactions entered into by the company during the year which are fraudulent, illegal or in violation of the code of conduct for the company’s Board or its members

√

107

3.3(c) Do the certification of the MD or CEO and CFO disclosed in the Annual Report.

√

4 Board of Directors’ Committee: For ensuring good governance in the company, the Board shall have at least following sub-committees:

4 (i) Is the company have Audit Committee √

4 (ii) Is the company have Nomination and Remuneration Committee.

√

5 Audit Committee

5.1 Responsibility to the Board of Directors

5.1 (a) The company have an Audit Committee as a subcommittee of the Board

√

5.1 (b)

The Audit Committee assist the Board in ensuring that the financial statements reflect true and fair view of the state of affairs of the company and in ensuring a good monitoring system within the business

√

5.1 (c) Does the Audit Committee is responsible to the Board; the duties of the Audit Committee clearly set forth in writing

√

5.2 Constitution of the Audit Committee

5.2 (a) Does the Audit Committee composed of at least 3 (three) members;

√

5.2 (b)

Does the Board appoint members of the Audit committee who shall be non-executive directors of the company excepting Chairperson of the Board and include at least1 (one) independent director;

√

5.2 (c)

Do members of the audit committee “financially literate” and at least 1 (one) member shall have accounting or related financial management background and 10 (ten) years of such experience;

√

5.2 (d)

When the term of service of any Committee member expires or there is any circumstance causing any Committee member to be unable to hold office before expiration of the term of service, thus making the number of the Committee members to be lower than the prescribed number of 3 (three) persons, the Board shall appoint the new Committee member to fill up the vacancy immediately or not later than 1 (one) month from the date of vacancy in the Committee to ensure continuity of the performance of work of the Audit Committee

- N/A

5.2 (e) Does the company secretary act as the secretary of the Committee

√

5.2 (f) Does the quorum of the Audit Committee meeting constitute with at least 1 (one) independent director.

√

5.3 Chairperson of the Audit Committee

108

5.3 (a)

The Board shall select 1 (one) member of the Audit Committee to be Chairperson of the Audit Committee, who shall be an independent director;

√

5.3 (b)

In the absence of the Chairperson of the Audit Committee, the remaining members may elect one of themselves as Chairperson for that particular meeting, in that case there shall be no problem of constituting a quorum as required under condition No. 5(4)(b). Does the reason of absence of the regular Chairperson duly recorded in the minutes.

√

5.3 (c)

Chairperson of the Audit Committee shall remain present in the Annual General Meeting (AGM): Provided that in absence of Chairperson of the Audit Committee, any other member from the Audit Committee shall be selected to be present in the annual general meeting (AGM) and reason for absence of the Chairperson of the Audit Committee shall be recorded in the minutes of the AGM.

√

5.4 Meeting of the Audit Committee

5.4 (a) The Audit Committee shall conduct at least its four meetings in a financial year.

√

5.4 (b)

The quorum of the meeting of the Audit Committee shall be constituted in presence of either two members or two-third of the members of the Audit Committee, whichever is higher, where presence of an independent director is a must.

√

5.5 Role of Audit Committee

5.5 (a) Oversee the financial reporting process; √

5.5 (b) Monitor choice of accounting policies and principles

√

5.5 (c)

Monitor Internal Audit and Compliance process to ensure that it is adequately resourced, including approval of the Internal Audit and Compliance Plan and review of the Internal Audit and Compliance Report

√

5.5 (d) Oversee hiring and performance of external auditors;

√

5.5 (e)

Hold meeting with the external or statutory auditors for review of the annual financial statements before submission to the Board for approval or adoption

√

5.5 (f)

Review along with the management, the annual financial statements before submission to the Board for approval

√

109

5.5 (g) Review along with the management, the quarterly and half yearly financial statements before submission to the Board for approval

√

5.5 (h) Review the adequacy of internal audit function

√

5.5 (i) Review the Management’s Discussion and Analysis before disclosing in the Annual Report

√

5.5 (j) Review statement of all related party transactions submitted by the management

√

5.5 (k) Review Management Letters or Letter of Internal Control weakness issued by statutory auditors;

√

5.5 (l)

Oversee the determination of audit fees based on scope and magnitude, level of expertise deployed and time required for effective audit and evaluate the performance of external auditors

√

5.5 (m)

Oversee whether the proceeds raised through Initial Public Offering (IPO) or Repeat Public Offering (RPO) or Rights Share Offer have been utilized as per the purposes stated in relevant offer document or prospectus approved by the Commission

√

5.6 Reporting of the Audit Committee

5.6 (a)(i) The Audit Committee shall report on its activities to the Board.

NA

5.6 (a)(i)(a)

The Audit Committee shall immediately report to the Board on the following findings report on conflicts of interests

NA

5.6 (a)(i)(b)

Suspected or presumed fraud or irregularity or material defect identified in the internal audit and compliance process or in the financial statements;

NA

5.6 (a)(i)(c)

Suspected infringement of laws, regulatory compliances including securities related laws, rules and regulations

NA

5.6 (a)(i)(d)

Any other matter which the Audit Committee deems necessary shall be disclosed to the Board immediately

NA

5.6 (b)

If the Audit Committee has reported to the Board about anything which has material impact on the financial condition and results of operation and has discussed with the Board and the management that any rectification is necessary and if the Audit Committee finds

NA

110

that such rectification has been unreasonably ignored, the Audit Committee shall report such finding to the Commission, upon reporting of such matters to the Board for three times or completion of a period of 6 (six) months from the date of first reporting to the Board, whichever is earlier

5.7

Report on activities carried out by the Audit Committee, including any report made to the Board under condition No. 5(6)(a)(ii) above during the year, shall be signed by the Chairperson of the Audit Committee and disclosed in the annual report of the issuer company

NA

6 Nomination and Remuneration Committee (NRC)

6.1 (a) Does the company have a Nomination and Remuneration Committee (NRC) as a sub-committee of the Board

√

6.1 (b)

The NRC shall assist the Board in formulation of the nomination criteria or policy for determining qualifications, positive attributes, experiences and independence of directors and top level executive as well as a policy for formal process of considering remuneration of directors, top level executive;

√

6.1 (c) Does the Terms of Reference (ToR) of the NRC clearly set forth in writing covering the areas stated at the condition No.6(5)(b).

√

6.2 Constitution of the NRC

6.2 (a) Does the Committee comprise of at least three members including an independent director;

√

6.2 (b) All members of the Committee shall be non-executive directors;

√

6.2 (c) Do members of the Committee nominated and appointed by the Board;

√

6.2 (d) Does the Board have authority to remove and appoint any member of the Committee;

√

6.2 (e)

In case of death, resignation, disqualification, or removal of any member of the Committee or in any other cases of vacancies, the board shall fill the vacancy within 180 (one hundred eighty) days of occurring such vacancy in the Committee;

√

6.2 (f)

The Chairperson of the Committee may appoint or co-opt any external expert and/or member(s) of staff to the Committee as advisor who shall be non-voting member, if the Chairperson feels that advice or suggestion from such external expert and/or member(s) of staff shall be required or valuable for the Committee;

√

111

6.2 (g) The company secretary shall act as the secretary of the Committee;

√

6.2 (h) The quorum of the NRC meeting shall not constitute without attendance of at least an independent director;

√

6.2 (i)

No member of the NRC shall receive, either directly or indirectly, any remuneration for any advisory or consultancy role or otherwise, other than Director’s fees or honorarium from the company

√

6.3 Chairperson of the NRC

6.3 (a) Does the Board select 1 (one) member of the NRC to be Chairperson of the Committee

√

6.3 (b)

In the absence of the Chairperson of the NRC, the remaining members may elect one of themselves as Chairperson for that particular meeting, the reason of absence of the regular Chairperson shall be duly recorded in the minutes;

√

6.3 (c) The Chairperson of the NRC shall attend the annual general meeting (AGM) to answer the queries of the shareholders:

√

6.4 Meeting of the NRC

6.4 (a) The NRC shall conduct at least one meeting in a financial year;

√

6.4 (b) Does the Chairperson of the NRC may convene any emergency meeting upon request by any member of the NRC;

√

6.4 (c)

Does the quorum of the meeting of the NRC constituted in presence of either two members or two third of the members of the Committee, whichever is higher, where presence of an independent director is must as required under condition No. 6(2)(h);

√

6.4 (d)

Do the proceedings of each meeting of the NRC shall duly be recorded in the minutes and such minutes confirmed in the next meeting of the NRC.

√

6.5 Role of the NRC

6.5(a) Does NRC independent and responsible or accountable to the Board and to the shareholders;

√

6.5 (b) NRC shall oversee, among others, the following matters and make report with recommendation to the Board:

6.5(b)(i) formulating the criteria for determining qualifications, positive attributes and independence of a director and recommend a policy to the Board, relating to the remuneration of the directors, top level executive, considering the following:

6.5(b)(i)(a)

Formulating the criteria for determining qualifications, positive attributes and independence of a director and

√

112

recommend a policy to the Board, relating to the remuneration of the directors, top level executive, considering the following

6.5(b)(i)(b)

The relationship of remuneration to performance is clear and meets appropriate performance benchmarks

√

6.5(b)(i)(c)

Remuneration to directors, top level executive involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals

√

6.5(b)(ii)

Devising a policy on Board’s diversity taking into consideration age, gender, experience, ethnicity, educational background and nationality

√

6.5(b)(iii)

Identifying persons who are qualified to become directors and who may be appointed in top level executive position in accordance with the criteria laid down, and recommend their appointment and removal to the Board

√

6.5(b)(iv) Formulating the criteria for evaluation of performance of independent directors and the Board

√

6.5(b)(v)

Identifying the company’s needs for employees at different levels and determine their selection, transfer or replacement and promotion criteria

√

6.5(b)(vi)

Developing, recommending and reviewing annually the company’s human resources and training policies;

√

6.5(c)

The company shall disclose the nomination and remuneration policy and the evaluation criteria and activities of NRC during the year at a glance in its annual report.

√

7. External or Statutory Auditors

7.1 The issuer company shall not engage its external or statutory auditors to perform the following services of the company, namely:-

7.1 (i) Appraisal or valuation services or fairness opinions;

√

7.1 (ii) Financial information systems design and implementation;

√

113

7.1 (iii) Book-keeping or other services related to the accounting records or financial statements;

√

7.1 (iv) Broker-dealer services; √

7.1 (v) Actuarial services; √

7.1 (vi) Internal audit services or special audit services;

√

7.1 (vii) Any service that the Audit Committee determines;

√

7.1 (viii)

Audit or certification services on compliance of corporate governance as required under condition No. 9(1)

√

7.1 (ix) Any other service that creates conflict of interest.

√

7.2

No partner or employees of the external audit firms shall possess any share of the company they audit at least during the tenure of their audit assignment of that company; his or her family members also shall not hold any shares in the said company:

√

7.3

Representative of external or statutory auditors shall remain present in the Shareholders’ Meeting (Annual General Meeting or Extraordinary General Meeting) to answer the queries of the shareholders.

√

8 Maintaining a website by the Company.

8.1 Does the company have an official website linked with the website of the stock exchange

√

8.2 Does the company keep the website functional from the date of listing

√

8.3

The company shall make available the detailed disclosures on its website as required under the listing regulations of the concerned stock exchange(s).

√

9 Reporting and Compliance of Corporate Governance.

9.1

The company shall obtain a certificate from a practicing Professional Accountant or Secretary (Chartered Accountant or Cost and Management Accountant or Chartered Secretary) other than its statutory auditors or audit firm on yearly basis regarding compliance of conditions of Corporate Governance Code of the Commission and shall such certificate shall be disclosed in the Annual Report.

√

9.2

The professional who will provide the certificate on compliance of this Corporate Governance Code shall be appointed by the shareholders in the annual general meeting

√

114

9.3

Does the directors of the company state, in accordance with the Annexure-C attached, in the directors’ report whether the company has complied with these conditions or not.

√

Dhaka, Dated October 02, 2018

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

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

committees operate.

Audit Committee Members Remuneration Committee Members

Md. Arfin Ali FCA Md. Arfin Ali FCA

Md. Ali Azgar Nasir Md. Ali Azgar Nasir

Md. Nadirul Islam Babu Md. Nadirul Islam Babu

Md Elias Md Elias

The terms of reference of the audit committee are as follows:

Oversee the financial reporting process;

Monitor choice of accounting policies and principles;

Monitor Internal Control Risk management process;

Oversee hiring and performance of external auditors;

Review along with the management, the annual financial statements before submission to the

board for approval;

Review along with the management, the quarterly and half yearly financial statements before

submission to the board for approval;

Review the adequacy of internal audit function;

Review statement of significant related party transactions submitted by the management;

Review Management Letters/ Letter of Internal Control weakness issued by statutory

auditors;

The terms of reference of the remuneration committee are as follows:

To assist the Board in developing and administering a fair and transparent procedure for

setting policy on the remuneration of directors and senior management of the Company

Determining the remuneration packages

Review the Annual Confidential Report ( ACR) of senior management of the company

Review and oversee the Company's overall human resources strategy.

115

Part XV

VALUATION REPORT OF SECURITIES PREPARED BY THE ISSUE

MANAGER

The valuation report is prepared analyzing relevant financial information as well as the information

directly or indirectly associated to the issue of securities. Incorporating the guided Rule No 4(2) (a) (i)

and Annexure- E (B) (14) of Bangladesh Securities and Exchange Commission (Public Issue) Rules 2015,

this valuation report is prepared.

While preparing the valuation report, a number of qualitative factors are measured to ensure the

optimum fair value of the securities. Apart from that, the probable impact of these mentioned

qualitative factors are reflected in the valuation.

Qualitative Factors:

1. The management body of the company are highly experienced in managing the operations of

the company. Additionally, the financial management history reveals that the firm has an

impressive track record of earnings management.

2. The company produces processed foods, and the major product is shrimp based products.

Hence, there is a low possibility of product line stretching or diversification.

3. The market trend is suggesting a steady growth in the demands for shrimps and sea foods,

which indicates the company will experience growth in future.

4. The company has potential for grabbing more market shares through the expansion of its

production facilities. As a Matter of fact, the company is currently realizing the need of a

capacity expansion.

Quantitative Valuation:

The guided principles of Rule No 4(2) (a) (i) and Annexure- E (B) (14) suggest that the valuation of a

company stock should be duly done under four (4) different methods. Hence, the quantitate valuation

of the company stock is done as per the prescribed Rules. The following table represents a summary of

the quantitative valuation.

Reference Valuation Method Calculated Fair Value

(BDT)

Method – 1 Net Asset Value (NAV) Per Share 15.42

Method- 2(A) Earning Based Value Per Share (Market P/E) 19.04

Method- 2(B) Earning Based Value Per Share (Sector P/E) 31.94

Method- 3 Average Market Price of Similar Stocks 341.14

Method- 4 P/BV Multiple of Similar Stocks 159.60

116

METHOD 1: VALUATION USING NET ASSET VALUE (NAV) PER SHARE

The Net Asset Value (NAV) is calculated using the information from the most recently published

audited financial statements on June 30, 2018. To calculate the NAV the net assets of the company is

divided by the total number of outstanding shares. The company didn’t have any revaluation surplus

in the reported year. Therefore, the NAV of the company without revaluation reserve is found to be

15.42 Taka per share. Details calculation of the valuation is given in the following table:

As on June 30, 2018

Particulars Note Taka

Share Capital A 203,239,400

Retained Earnings B 110,154,115

Total Shareholder's Equity A+B=C 313,393,515

Number of Shares Outstanding D 20,323,940

Net Asset Value Per Share [E/F] 15.42

METHOD 2(A): EARNING BASED VALUATION PER SHARE USING MARKET P/E

The base of earning based valuation is the historical financial information. To calculate the fair value

per share, last five years financial statements were used. Especially the historical net income after tax

of last five years were used along with the number of outstanding shares of the company in the

respective year. Using the cumulative shares, a weighted average earning per year is calculated, which

is then used to calculate weighted average net profit after tax. The weighted average EPS is calculated

to be BDT 1.16. The average market P/E is calculated assuming the “Food & Allied” sector as the ideal

match to the company. It is found that the average market P/E is 16.44, which is multiplied with the

weighted average EPS 1.16 to find the fair value of the share of BDT 19.04 per share. Detailed calculation

is given in the following table:

Year No. of Shares Net Profit After Tax

Weighted

Average no. of

shares

Weighted

Average net

profit after tax

30-Jun-18 20,323,940 25,100,557 0.254 6,376,297.86

June 30, 2017 20,323,940 22,128,993 0.254 5,621,431.06

June 30, 2016 20,323,940 15,714,779 0.254 3,992,027.42

June 30, 2015 9,517,100 27,131,879 0.119 3,227,467.20

June 30, 2014 9,517,100 36,289,334 0.119 4,316,790.42

Total 80,006,020 101,264,985 1 23,534,014

Total Number of Shares Before IPO 20,323,940

Weighted Average EPS 1.16

Average Market P/E 16.44

Earning Based Value of the Stock 19.04

117

THE MARKET P/E CALCULATION:

Achia Sea Foods Limited could be categorized as a company under “Food & Allied” category according

to the analysis on the Nature of the business. The monthly P/E of the market of last twelve months

were collected from the monthly review of DSE, and then the average P/E of the market is calculated,

which is 16.44. The details of the market P/E calculation is given in following table:

Month Sector P/E Market P/E

Jan-18 30.43 17.18

Feb-18 28.96 16.47

Mar-18 28.18 15.67

Apr-18 27.15 15.43

May-18 26.51 14.48

Jun-18 26.65 14.97

Jul-18 25.25 15.17

Average 27.59 16.44

METHOD 2(B): EARNING BASED VALUATION PER SHARE USING SECTOR P/E

To calculate the fair value per share, last five years financial statements were used. Especially the

historical net income after tax of last five years were used along with the number of outstanding shares

of the company in the respective year. Using the cumulative shares a weighted average earning per

year is calculated, which is then used to calculate weighted average net profit after tax. The weighted

average EPS is calculated to be BDT 1.16. The average sector P/E is calculated assuming the “Food &

Allied” sector as the ideal match to the company. It is found that the average sector P/E is 27.59, which

is multiplied with the weighted average EPS 1.16 to find the fair value of the share of BDT 35.18 per

share. Detailed calculation is given in the following table:

Year No. of Shares Net Profit After Tax

Weighted

Average no. of

shares

Weighted

Average net

profit after tax

30-Jun-18 20,323,940 25,100,557 0.254 6,376,297.86

June 30, 2017 20,323,940 22,128,993 0.254 5,621,431.06

June 30, 2016 20,323,940 15,714,779 0.254 3,992,027.42

June 30, 2015 9,517,100 27,131,879 0.119 3,227,467.20

June 30, 2014 9,517,100 36,289,334 0.119 4,316,790.42

Total 80,006,020 101,264,985 1 23,534,014

Total Number of Shares Before IPO 20,323,940

Weighted Average EPS 1.16

Average Sector P/E [Last 12 Months Sector Average] 27.59

Earning Based Value of the Stock 31.94

THE SECTOR P/E CALCULATION:

Achia Sea Foods Limited could be categorized as a company under “Food & Allied” category according

to the analysis on the Nature of the business. The monthly P/E of the sector of last twelve months were

collected from the monthly review of DSE, and then the average P/E of the sector is calculated, which

is 27.59. The details of the market P/E calculation is given in following table:

118

Month Sector P/E Market P/E

Jan-18 30.43 17.18

Feb-18 28.96 16.47

Mar-18 28.18 15.67

Apr-18 27.15 15.43

May-18 26.51 14.48

Jun-18 26.65 14.97

Jul-18 25.25 15.17

Average 27.59 16.44

METHOD 3: VALUATION USING THE AVERAGE MARKET PRICE OF SIMILAR STOCKS

Achia Sea Foods Limited is a company that process fish, shrimps, and sea foods, therefore, it is

categorized as a company under the “Food & Allied” sector. To determine the similar stocks that are

similar to the company a number of factors were considered.

Sources of Information:

Identification of peer companies required a thorough analysis on all the stocks that are being traded

under the “Food & Allied” sector of Dhaka Stock Exchange (DSE) & Chittagong Stock Exchange (CSE).

Hence, the primary information about the companies is collected from DSE and CSE websites.

Secondary information such as company operations, products, services, and facilities etc. is collected

from the respective company websites. Relevant financial information that is considered for the

valuation is taken from the last audited financial statements published on 30 June 2018.

Similarities That Were Considered:

Although many attributes are considered, while selecting the peer companies, such as company paid

up capital, dividend behavior, market category, gross turnover etc., but we put more emphasize on the

companies that produces similar products. The following condition would justify the action:

1. The shrimp and sea food processing is completely different than others food based production

companies. The production sea food processing companies are dependent on the fish

production in the country, while most of the companies in the sector do not depend on fish

production.

2. The risks of the business operations of a sea food processing companies are quite different from

the other food producing companies. The sea foods producing company experiences shipping

risks as majority of the company products are sold in the European and American consumers.

3. As the consumer of the shrimp based products are mainly from Europe and America, so the

sales of the sea foods depend on the economic conditions of the aforementioned regions.

4. Therefore, it is concluded that the ideal peer company of Achia Sea Foods Limited would be

the companies that produces similar products regardless of their capital, or size of the

operations.

The following matrix is used to determine the best possible peer company of Achia Sea Foods Limited.

119

SL.

No Company Name NAV/Share EPS/Share

Similar

Products

Share

Category

Regular

Dividend

1 Agricultural Marketing

Company Limited (PRAN) 71.72 6.87 No A Yes

2 Apex Food Limited 115.10 1.56 Yes A Yes

3 Gemini Sea food ltd. 26.03 13.06 Yes A Yes

4 Beach Hatchery ltd. 10.87 - 0.39 No Z No

5 Emerald oil Industries Ltd. 17.23 3.33 No Z No

6 Fine foods Ltd. 11.05 0.65 No B Yes

7 Fu Wang Food Ltd. 12.42 0.69 No A Yes

8 Golden Harvest industries Ltd. 22.20 1.89 No A Yes

9 Olympic Industries Ltd. 27.07 8.22 No A Yes

10 Rahima Food Corporation Ltd. 2.82 - 0.18 No Z No

11 Rangpur Dairy & Food

Products Ltd. 16.76 0.59 No A Yes

12 Zeal Bangla Sugar Ltd. -418.03 -54.09 No Z No

The matrix is suggesting that Apex Foods Limited and Gemini Sea Food Limited are the two companies

in the “Food & Allied” sector that produces similar products that are being produced by Achia Sea

Foods Limited. Hence, Apex and Gemini are used as the idea peer company to be used in the valuation.

Average Closing Price of Similar Stocks [1 Year]

Yearly Average Market Price of Similar Stocks

Month Gemini Sea Food Apex Food Limited

Aug-17 615 153.6

Sep-17 593.2 142.2

Oct-17 950.3 149.9

Nov-17 487.8 145.4

Dec-17 454.7 141.2

Jan-18 388.3 142.6

Feb-18 404.8 211.1

Mar-18 401.4 212

Apr-18 415.4 261.2

May-18 383.1 241.8

Jun-18 455 209.4

Jul-18 413.9 214

Average 496.91 185.37

Similar Stock Average 341.14

120

MTHOD 4: VALUATION OF STOCKS USING P/BV MULTIPLE OF PEER COMPANIES

Information collected from the audited accounts of the companies for the date June 30, 2017. To

calculate the value of stock, the average yearly market price of the peer companies are divided by their

respective NAV to find the P/E ratio of the respective companies. Then an average of the P/E ratio is

calculated, which is 10.35. The average P/E is then multiplied with the company NAV to find the fair

value of the stocks to be BDT 159.60 per share. The details calculation is given in the following table-

SL No Company Average Price of Last Year NAV P/BV

1 Gemini Sea Food 496.91 26.03 19.0898

2 Apex Foods Limited 185.37 115.1 1.6105

Average P/BV of Above Companies 10.35

NAV Per Share of Achia Sea Foods Limited 15.42

Share Price of Achia Under P/BV Valuation 159.60

121

Part XVI

DEBT SECURITIES

Achia Sea Foods Limited did not issue any debt securities, and the company does not have any plan to

issue any debt securities in the forthcoming six months of the publication of this prospectus.

122

Part XVII

PARTIES INVOLVED AND THEIR RESPONSIBILITIES

SL Parties Involved With Achia Sea Foods Limited Responsibilities

(a) Issue Manager AAA Finance & Investment Limited

The issue manager will manage the

public issue of ASFL securities

complying the Bangladesh Securities

& Exchange Commission (Public

Issue) Rules, 2015.

(b) Underwriters AAA Finance & Investment Limited

The underwriters are responsible for

underwriting the mentioned amount

of stocks of ASFL. Furthermore, the

underwriters shall carry out all the

activities specified in the Bangladesh

Securities & Exchange Commission

(Public Issue) Rules, 2015.

(c) Statutory

Auditors Mahfel Huq & Co.

To express an opinion on the

financial statements based on their

audit. Auditor will conduct the audit

in accordance with Bangladesh

Standards on Auditing (BSA).

(d) Cost Auditor N/A N/A

(e) Valuers To discover the fair value of the

asset of company.

(f) Credit Rating

Company N/A N/A

123

Part XVIII

MATERIAL CONTRACTS

a) Major agreements entered into by the issuer; 1. Underwriting Agreements between the Company and the Underwriters.

Contract Material parts of the agreements

Underwriting agreements with 1. AAA Finance & investment Ltd 2. IIDFC Capital Limited

3.Southeaset Bank capital services Limited 4. Sandhani Life Finance

Limited

5. EBL Investments Limited

Signing Date 17 September 2018

Tenure

This Agreement shall be valid until completion of subscription of shares and unless this Agreement is extended or earlier terminated in accordance with the terms of this Agreement

Principal Terms and Condition

1. In case of under-subscription in any category by up to 35% in an Initial Public Offer, the undersubscribed portion of securities shall be taken up by the underwriter. 2. In case of failure to deposit the remaining amount by the eligible investors, the unsubscribed securities shall be taken up by the underwriter. 3. If and to the extent that the shares offered to the public by a prospectus authorised hereunder shall not have been subscribed and paid for in cash in full by the Closing Date of subscription, the Company shall within 10 (Ten) days of the closure of subscription call upon the underwriter in writing with a copy of the said writing to the Bangladesh Securities and Exchange Commission, to subscribe the shares not subscribed by the closing date and to pay for in cash in full, for such unsubscribed shares within 15 (Fifteen) days after being called upon to do so. If payment is made by Cheque/Bank Draft by the underwriter it will be deemed that the underwriter has not fulfilled his obligation towards his underwriting commitment under this Agreement, until such time as the Cheque/Bank Draft has been encashed and the Company’s account credited. 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.

124

2. Issue Management Agreement between the Company and Issue Managers

Issue Management Agreement with 1. AAA Finance

& Investments Ltd

Signing Date: July 19, 2017

Tenure:

This Agreement shall automatically stand invalid upon completion of IPO Procedure and unless this Agreement is extended or earlier terminated in accordance with the terms of this Agreement.

Principal Terms and Condition:

1.The scope of services to be rendered by the Issue Managers to the Issuer under Fixed Price method shall be as detailed here under:

a. Regulatory Compliance b. Underwriting CO-Operation c. Issue Arrangements d. Public Offer and Distribution of Prospectus

2. The ISSUE MANAGERS takes the responsibility to take such steps as are necessary to ensure completion of allotment and dispatch of letters of allotment and refund warrants to the applicants according to the basis of allotment approved by the Bangladesh Securities and Exchange Commission. The ISSUER undertakes to bear all expenses relevant to share application processing, allotment, and dispatch of letters of allotment and refund warrant. The ISSUER shall also bear all expenses related to printing and issuance of share certificate and connected govt. stamps and hologram expenses. 3. Without prejudice ISSUER hereby declares that it agrees to comply with all statutory formalities under Companies Act, Guidelines issued by Bangladesh Securities and Exchange Commission and other relevant status to enable it to make the issue. 4. The ISSUE MANAGERS hereby undertake to keep in strict compliance all information (whether written or oral) proprietary documents and data secured in connection with or as a result of this Agreement (Confidential Information) and shall limit the availability of such information to employees, who have a need to see and use it for the express and limited purpose stated in this Agreement. 5. The Issuer and ISSUE MANAGERS shall ensure compliance of the Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015, The Listing Regulations of Stock Exchanges, The Companies Act, 1994, the Securities and Exchange (Amendment) Act, 2012 and other relevant rules, regulations, practices, directives, guidelines etc.

(c) Fees payable to different parties

Name of the Parties Role Fees Payable

1. AAA Finance & investment Ltd. 2. IIDFC Capital Limited 3. Sandhani Life Finance Limited 4. EBL Investments Limited 5. Southeast Bank Capital Services Limited

Underwriters

0.50% on the underwritten amount by the underwriters

125

AAA Finance & Investments Ltd.

Issue Managers Maximum 2.00% on the public offer amount.

Part XIX

LITIGATIONS, FINE, OR PENALTY

a. The following litigations including outstanding litigations against the issuer or any of its

directors and fine or penalty imposed by any authority:

i. Litigation involving Civil Laws;

There is no such litigation filed against the company or any of its directors by any authority.

ii. Litigation involving Criminal Laws;


iii. Litigation involving Securities, Finance and Economic Laws; There is no such litigation filed against the company or any of its directors by any authority.

iv. Litigation involving Labor Laws; There is no such litigation filed against the company or any of its directors by any authority.

v. Litigation involving Taxation (Income tax, VAT, Customs Duty and any other taxes or duties);


vi. Litigation involving any other Laws.


b. Outstanding cases filed by the Company or any of its directors:

i. Litigation involving Civil Laws; N/A

ii. Litigation involving Criminal Laws; N/A

iii. Litigation involving Securities, Finance and Economic Laws; N/A

iv. Litigation involving Labor Laws; N/A

v. Litigation involving Taxation (Income tax, VAT, Customs Duty and any other taxes or

duties); N/A

vi. Litigation involving any other Laws; N/A

126

Part XX

RISK FACTORS AND MANAGEMENT PERCEPTION ABOUT THE RISKS

An investment in shares involves a high degree of risk. The company operates in the field of technology, which is

dynamic and exposed to internal and external risk factors. Among these risks some are manageable and some are

not, which may become cause of loss for the company. Investors should carefully consider all the information

disclosed in this prospectus, including the risks and uncertainties described in this section of the prospectus prior

to make any decision regarding the purchase of the company shares. The management of Achia Sea Foods Limited

perceives the following risks:

(I) Internal risk factors

a. Credit Risk;

Credit risk is the probable risk of loss resulting from a borrower's failure to repay a loan or meet

contractual obligations. Traditionally, it refers to the risk that a lender may not receive the owed

principal and interest, which results in an interruption of cash flows and increased costs for

collection.

Management Perception:

Although ASFL is exposed to the credit risk due to the trading activities of the company, but the

company has been working with its dealers, distributors, and other trade related parties for a long

time now. The experience of ASFL is quite good any there were hardly some cases of default.

Considering these fact, it can be assert that ASFL’s profitability will not be affected due to credit

risk. Moreover, the company risk management policies are quite effective in terms of managing

credit risks arisen from daily transactions.

b. Liquidity Risk;

Liquidity risk is the risk that the company may be unable to meet its short term financial demands.

This usually occurs due to the inability to convert a security or hard asset to cash without a loss of

capital and/or income in the process.


Achia Sea Foods Limited understands the threat of liquidity crisis within the company. The

company is operating using an effective working capital management strategy, which essentially

is focused on the liquidity issue of the company. As a matter of fact, the company is maintaining

the optimum level of liquid assets to avoid any sort of risks raised due to insufficient liquidity. The

company is strictly controlling its inflows, outflows, and different use of liquid funds.

c. Risk associated with the issuer’s interest in subsidiaries, joint ventures and associates;


The subsidiary company is operating in the same industry and one business is complementary to

another. Hence, the interest in the subsidiary would not affect the performance of the business.

Therefore, the company is not threatened by such risks.

d. Significant revenue generated from limited number of customers, losing any one or more of

which would have a material adverse effect on the issuer;

127

Management Perception: The Company does not generate revenue from limited number of

customers. Hence, the company is not exposed to any risk due to the trading with a limited number

of customers.

e. Dependency on a single or few suppliers of raw materials, failure of which may affect

production adversely;

Management Perception: The Company does not depend on a single or few raw materials

suppliers. Considering the dependency on fewer suppliers a potential risk, the company is

continuously developing relations with new suppliers. Therefore, limited number of raw materials

suppliers should not be considered as a significant risk for ASFL.

f. More than 20% revenue of the issuer comes from sister concern or associate or subsidiary;

Management Perception: ASFL does not receive more than 20% of its revenue from its sister

concern, therefore it is not applicable for ASFL.

g. Negative earnings, negative cash flows from operating activities, declining turnover or

profitability, during last five years, if any;

Management Perception: The Company did not have any negative earnings, and the turnover has

been increasing over the period. The profitability of the company has declined due to increased

cost of production. The Company has been experiencing negative cash flow from operating

activities due to the nature of the business. ASFL is an export oriented Company that receives

revenue from foreign customers which involves collection of money through LC. Due to the process

involved in collection of sales revenue the cash collection cycle is longer than that the cash

disbursement cycle, which is the principal reason for some times the negative cash flow from

operating activities.

h. Loss making associate or subsidiary or group companies of the issuer;

Management Perception: ASFL does not have any loss making associate or subsidiary or group

companies of the issuer.

i. Financial weakness and poor performance of the issuer or any of its subsidiary or associates;

Management Perception: ASFL does not have any financial weakness, did not have any poor

performance or any of its subsidiary or associates.

j. Decline in value of any investment;

Management Perception: ASFL does not have any investment; therefore, there is no decline in

value of any investment to report.

k. Risk associated with useful economic life of plant and machinery, if purchased in second hand

or reconditioned;

Management Perception: Some of the machineries of ASFL were purchased second hand that is

being used in the production. There are some underlying risks associated with the use of second

hand machineries. The company has a contingency plan in case of machine failure or any kind of

emergency rose from the broken machines.

l. Adverse effect on future cash flow if interest free loan given to related party or such loans taken

from directors may recalled;

128

Management Perception: Not applicable for ASFL.

m. Potential conflict of interest, if the sponsors or directors of the issuer are involved with one or

more ventures which are in the same line of activity or business as that of the issuer and if any

supplier of raw materials or major customer is related to the same sponsors or directors;

Management Perception: There is no potential conflict of Interest as we do not have any venture which is in the same line of activity.

n. Related party transactions entered into by the company those may adversely affect competitive

edge;

Sometimes it is experienced that if the issuer company enters in to related party transaction conflict

of interest is created which reduces the competitive advantage of the issuer and ultimately affects

the shareholders.

Management Perception: The Company has made some related party transactions in the normal

course of business and on an arms' length basis and transactions with related parties were carried

out on commercial terms and conditions. These transactions are managed and accounted efficiently

by the management of the Company. From the previous years’ experience management of the

Company believes that related party transactions will not affect competitive edge of the Company.

o. Any restrictive covenants in any shareholders' agreement, sponsors' agreement or any agreement

for debt or preference shares or any restrictive covenants of banks in respect of the loan or

credit limit and other banking facilities;

Management Perception: ASFL is always aware of terms and conditions including any type of

restrictive covenants before entering in to and signing agreements. There are no restrictive

covenants in any shareholders’ agreement, sponsors’ agreement or any agreement relating to debt

or preference shares or any restrictive covenants of banks in respect of loan or credit limit and other

banking facilities.

p. Business operations may be adversely affected by strikes, work stoppages or increase in

wage demands by employees;

Management Perception: The management of the Company always believes that employees are

the main strength of a concern and if employees have job satisfaction then they will give their best

effort to perform their respective duties. ASFL is a profitable entity and the management of The

Company provides competitive package to employees and offer them different benefits. However,

employee unrest like strikes, work stoppages or increase in wage demands is part of business and

ASFL is always well aware of managing labor unrest efficiently. The Company has different

incentive packages for employees so that they can be beneficial to such package.

q. Seasonality of the business of the issuer;

Management Perception: By nature of business EIL has no seasonal aspect.

129

r. Expiry of any revenue generating contract that may adversely affect the business;

Management perception:

The Company has not entered into any such contract to its customers and suppliers. Besides, there

is demand of the products of ASFL round the year. Therefore, no such risk associated that may

adversely affect the business of ASFL.

s. Excessive dependence on debt financing which may adversely affect the cash flow;

Excessive dependence on debt causes huge interest burden of the company and high risk of

insolvency that may result in bankruptcy.

Management Perception: We have short-term bank loan for working capital. We don’t have any

long-term debt.

t. Excessive dependence on any key management personnel absence of whom may have adverse

effect on the issuer’s business performance;

Management Perception:The Company is operated under a well-organized organogram where

each position holder’s scope of job and responsibility are well described. As a big and well

performed organization ASFL has many qualified professionals in the team of operation,

management marketing and other areas. As a result, absence or change of any head of a team does

not affect the business performance significantly as other team members of his nearer position

capable of taking the his responsibility. Besides, the Company is aware of contingency plans in case

of the key individuals being absent as this is a critical and crucial aspect of business continuity.

u. Enforcement of contingent liabilities which may adversely affect financial condition;

Management Perception: Contingent liabilities may reduce the assets or create obligation to pay

the liabilities. Hence, the Company does not have any contingent liabilities which may adversely

affect its financial condition.

v. Insurance coverage not adequately protect against certain risks of damages;

Management Perception: The Company has different insurance coverage for all the relating

issues that are risky to operating the business.

w. Absence of assurance that directors will continue its engagement with Company after expiry of

lock in period;

Management Perception: The sponsors of the Company are directors from the inception of this

venture and it is a growing and profitable business and now going to be listed which will increase

the image, compliance issues and overall business of the Company. So, the management thinks

sponsor directors and other directors will remain with ASFL and will continue the business after

expiry of lock-in period after IPO.

x. Ability to pay any dividends in future will depend upon future earnings, financial condition,

cash flows, working capital requirements and capital expenditure;

130

Management Perception: ASFL is a profitable entity over long period which is in uptrend and it

has sufficient profit in present capacity to pay dividend. After going to IPO it will repay debt of

good amount and fulfill requirement of capital expenditure requirement and expand its business

to meet increased market demand of its product which will decrease financial expenses and

increase the profitability. As a result extra cash will be generated to pay more dividend in future.

y. History of non-operation, if any and short operational history of the issuer and lack of

adequate background and experience of the sponsors;

History of non-operation indicates weak operational management of the company. Non-operation

leads to negative cash flow, incurring of losses and bankruptcy in worst case scenario.

Management Perception: We know if operation is closed for one day it can hamper supply of

product to our valued customers. In any situation, we do not compromise with non- operation. Our

company started commercial operation from February 15, 1998 and the Company has never been

non-operative till date. Considering the frozen foods industry at world perspective, our sponsors

have adequate background and experience. We have own power supply back up with generator

and other required support for uninterrupted smooth operation.

z. Risks related to engagement in new type of business, if any;

Management perception: ASFL is engaged in sea foods processing industry since long with

profitability and reputation. So, the company has no plan to be engaged in new type of business as

there is risk associated with starting it for different reasons. As such there is no such type of risk.

aa. Risk in investing the securities being offered with comparison to other available

investment options;

Management perception: ASFL is a growing and profitable Company. The demand of its product

is increasing extensively day by day abroad. It has efficient management and manpower with

adequate experience and knowledge of its product and business. So, it is not risky in investing

securities in ASFL with comparison to other available investment options.

bb. Any penalty or action taken by any regulatory authorities for non-compliance with provisions

of any law;

Management Perception: No penalty or action has been taken against the Company by any

regulatory authority for noncompliance with provisions of any law. The Company is well aware of

fulfillment of all types of regulatory compliances and issues.

cc. Litigations against the issuer for Tax and VAT related matters and other government claims,

along with the disclosures of amount, period for which such demands or claims are

outstanding, financial implications and the status of the case;

Management perception: There is no litigation relating to Tax, VAT or other government claims

against of our company.

131

dd. Registered office or factory building or place of operation is not owned by the issuer;

Management Perception: Our factory building or registered office is owned by us.

ee. Lack of renewal of existing regulatory permissions or licenses;

Management Perception: All of the regulatory permission and licenses are up to date and duly

renewed time to time for smooth operation.

ff. Failure in holding AGM or declaring dividend or payment of interest by any listed securities of

the issuer or any of its subsidiaries or associates;

Management perception: The Company does not have any subsidiary or associate or listed

securities and thus no such risk arisen.

gg. Issuances of securities at lower than the IPO offer price within one year;

Management perception: ASFL never have issued any of its securities at lower than the IPO offer

price within one year.

hh. Refusal of application for public issue of any securities of the issuer or any of its subsidiaries or

associates at any time by the Commission.

Management Perception: Such cases did not happen for our company or holding or sister concerns

at any time by the Commission. We expect it will not be happened in future.

132

Part XXI

DESCRIPTION OF THE ISSUE

a. Issue Size: BDT 200,000,000

b. Number of Securities to be offered: Public issue of 20,000,000 ordinary shares

c. Authorized Capital and Paid –Up Capital:

Authorized Capital: BDT 1000,000,000

Pre IPO Paid Up Capital: BDT 203,239,400

Post IPO Paid Up Capital: BDT 403,239,400

d. Face Value, Premium, and offer price per unit of securities:

Face Value: BDT 10.00

Premium: No

General Public Offering Price: BDT 10.00 (At Par)

e. Number of securities to be entitled to each category of applicants:

The total number of 20,000,000 ordinary shares will be offered through public offering. The

shares will be distributed among four different group of applicants according to the Public

Issue rules of 2015, the distribution details is in the following table-

Applicant Group Amount of Shares Percentage

Eligible Investors (EI’s) 8,000,000 40%

Mutual Funds and Cis 2,000,000 10%

General Public 8,000,000 40%

NRBs 2,000,000 10%

f. Holding structure of different classes of securities before and after the issue:

Holding structure of different classes of securities of ASFL, before and after the issue is as

under:

SL

No. Category of Shareholders

Before Present Issue After Present Issue

Ordinary

Shares Percentage

Ordinary

shares Percentage

1 Directors & Sponsors 13,036,008 64.14% 13,036,008 32.33%

2 Shareholders other than Directors

& Sponsors 7,287,932 35.86% 7,287,932 18.07%

3 Mutual Fund & CIS 2,000,000 4.96%

4 EIs Other than Mutual Fund & CIS 8,000,000 19.84%

5 General Public 8,000,000 19.84%

6 NRBs 2,000,000 4.96%

Total 20,323,940 100% 40,323,940 100%

133

g. Objective of the issue including financing requirements and feasibility in respect of

enhanced paid-up capital:

The Proceeds from IPO of issuance of 20,000,000 nos. of ordinary shares at an issue price of Tk.

10.00 each at par totaling Tk.200,000,000 will be used for purchase of land and land

development, expansion of business including purchase of machineries for power plant, and

water treatment plant and equipment, repayment of term loan and payment of IPO expenses.

SL No. Particulars Amount in BDT

1 Business Expansion (Machineries & Equipment) 62,210,000

2 Land and Land Development 51,790,000

3 Repayment of Bank Loan 66,000,000

4 IPO Expense 20,000,000

Total 200,000,000

134

Part XXII

USE OF PROCEEDS

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

break-up;

Issue Size Issue Price Amount in BDT

20,000,000 ordinary shares BDT 10 Per Share 200,000,000

Less: IPO Expenses 20,000,000

Net IPO Proceeds 180,000,000

Use of net proceeds of the amount indicating the amount to be used for each purpose with head-wise

break up;

SL No. Particulars Amount in BDT

1 Business Expansion (Machineries & Equipment) 62,210,000

2 Land and Land Development 51,790,000

3 Repayment of Bank Loan 66,000,000

Total 180,000,000

1. Details cost of Machineries

The following table would provide a summary of the machineries that are proposed to be installed as

addition to the current production facilities. The objective of this machineries installation would be to

enhance the production capacity of the company. For this purpose we need to increase machineries in

each areas of production, a brief summary of the proposed machineries are given as follows-

Types of Machines Amount Required in USD Amount in BDT

Compressor, Receiver, Air cooler $185,000 15,355,000

Electricity Generation Facility - 18,800,000

Water Supply and Treatment Plant - 28,055,000

Total $185,000 62,210,000

*The exchange of USD is estimated to be 1 USD = 83 BDT

* There could be little fluctuations in the price of the machineries due to exchange rate fluctuation, inflation etc.

135

Compressor, Receiver, Air - Cooler

Sl.No

Machine description Origin capacity Suppliers Qty. Unit

price(USD) Total

price(USD) BDT

1 Compressor, Receiver, Air Cooler

China 211 KW Dalian Bingshan Engineering &

Trading Co. Ltd. 1 set $185,000 $185,000 15,355,000

Total Expense on the category $185,000 15,355,000

Electricity Generation Facility

A Backup Generator 594 KVA BDT 7,720,000

B Other Equipment for Generators BDT 80,000

C Substation point BDT 4,750,000

D Cable and other accessories for power setup BDT 1,150,000

E Airator BDT 5,100,000

Total BDT 18,800,000

Detail breakdown of machineries are given in the following-

A. Backup Generator 594 KVA

Sl.No Machine description Origin capacity Suppliers Qty. BDT

1 Cuummins Generator Turkey 100 KVA Lingcon Enterprise 01 1,500,000

2 Volvo Generator France 300 KVA Lingcon Enterprise 01 3,500,000

3 Cuummins Generator Turkey 182 KVA Lingcon Enterprise 01 2,500,000

4 Generator China 10 KVA Lingcon Enterprise 01 150,000

5 Generators China 2 KVA Lingcon Enterprise 01 70,000

Total Expense 7,720,000

B. Other Equipment for Generators

Sl. No Machine description Origin Suppliers Qty. Unit price (BDT) BDT

1 C D-75 Generator Accessories

China Lingcon Enterprise 02 15,000 30,000

2 Generator Accessories China Lingcon Enterprise 02 25,000 50,000

Total Expense 80,000

136

C. Sub- Station Point

Sl. No Machine description Capacity Suppliers Qty. BDT

1 Transformer

315 KVA

Lingcon Enterprise 01 3,500,000

2 Transformer’s accessories MDB Lingcon Enterprise 01 400,000

3 Transformer’s accessories CT, PT Lingcon Enterprise 01 350,000

4 Transformer’s accessories Load Lingcon Enterprise 01 500,000


D. Cable and Other Accessories For Power Set Up

Sl. No Item description Origin Suppliers Qty. Meter BDT

1 95 RM Cable Bangladesh Lingcon Enterprise 680 952,000

2 1.5 RM cable Bangladesh Lingcon Enterprise 2800 139,325

3 4.5 RM Cable Bangladesh Lingcon Enterprise 175 12,250




E. Airator

Sl. No Machine description Origin capacity Suppliers Qty. Unit price (BDT) BDT

1 Airator (Oxygen generating fan) Vietnam RPM Lingcon Enterprise 102 Pcs 50,000 5,100,000


137

Water Supply and Treatment Plant

A Water Supply Set & Machineries BDT 1,225,000

B Water Supply Drain BDT 2,000,000

C PVC Pipes BDT 994,850

D Flexible Pipes BDT 146,800

E Other Accessories for water treatment plant BDT 23,688,350

Total BDT 28,055,000

Details breakdown are given as follows-

A. Water Supply Set & Machineries

Sl. No Machine description Origin Suppliers Qty. Unit price(BDT) Total BDT

1 5 Hp Z Pump Italy Lingcon Enterprise 10 Pcs 25,000 250,000

2 25 H P vertical Pump Japan Lingcon Enterprise 1 Pic 50,00 50,000

3 10 H P Submersible Pump Italy Lingcon Enterprise 2 pcs 150,000 300,000

4 7 H P Submersible Pump Italy Lingcon Enterprise 1 Pic 100,000 100,000

5 2 H P Submersible Pump Italy Lingcon Enterprise 11 Pcs 30,000 330,000

6 5 H P Motor Pump Japan Lingcon Enterprise 1 Pic 30,000 30,000

7 1 H P Flower Pump China Lingcon Enterprise 23 Pcs 5,000 115,000

8 2 H P Shaved Pump China Lingcon Enterprise 2 Pcs 15,000 30,000

9 1 H P Motor Pimp Japan Lingcon Enterprise 2 Pcs 10,000 20,000


B. Water Supply Drain

Drain Construction Expense 2,000,000

C. PVC Pipes

Sl. No Item description Origin Suppliers Qty. Unit price (BDT) BDT

1 2” PVC Bangladesh Imran Trading 3800 feet 60/feet 228,000

138





6 12” PVC (1/4) Bangladesh Imran Trading 190 feet 810/feet 153,900

Total Expenses 994,850

D. Flexible Pipes

Sl. No

Item description Origin Suppliers Qty. Unit price BDT

1 2” Flexible Pipe Bangladesh Imran Trading 920 feet 50/ feet 46,000

2 3” Flexible ” Bangladesh Imran Trading 390 feet 80/feet 31,200




Total Expense 146,800

E. Other Accessories for Water Treatment

Item description Suppliers Kg. Unit

price(BDT) Total BDT

Potassium Permanganet medicine Pranti Trading 1450 400 580,000

Poly Aluminium Chloride (PAC) Pranti Trading 1600 60 96,000

BKC Pranti Trading 200 1400 280,000

Bleaching powder Pranti Trading 10000 50 500,000

Iodine Pranti Trading 11 4000 44,000

A-Soil Pranti Trading 3000 85 255,000

Sodamix Pranti Trading 10000 60 600,000

Calmag Pranti Trading 5000 60 300,000

Sea Max Pranti Trading 4000 70 280,000

K max Pranti Trading 3000 140 420,000

139

D-100 (Dolomite) Pranti Trading 3000 40 120,000

CaCO3 (Lime) Pranti Trading 10000 24.5 245,000

Sea Fresh Pranti Trading 1000 220 220,000

CaO (Hard Lime) Pranti Trading 2000 30 60,000

Super Ps Pranti Trading 4500 300 1,350,000

Super Biotic Pranti Trading 448 1250 560,000

pH Fixer Pranti Trading 200 630 126,000

Biotrim Pranti Trading 300 2250 675,000

Zymetin Pranti Trading 100 1100 110,000

Mutagen Pranti Trading 200 650 130,000

C-150 Pranti Trading 35 1400 49,000

Microbiology Lab Pranti Trading 1 404000 404,000

pH Test Kit Pranti Trading 25 1600 40,000

Alkalinity Test kit Pranti Trading 8 3500 28,000

Ammonia Test Kit Pranti Trading 8 3500 28,000

Shrimp PL Pranti Trading 10,00,000 1.2 /PL 1,200,000

Feed cost Pranti Trading 42,000 120 / Kg 7,560,000

Power Cost 3,150,000

Manpower cost for 12 months 3,000,000

Maintenance and transportation 500,000

Miscellaneous cost 500,000

Excavation 278,350

Total 23,688,350

140

2. Land and Land Development

Sl. No.

Details of the Land Development Amount in BDT

1 Land 41,250,000

2 Soil Excavation 6,128,000

3 REB connection 600,000

4 Boundary 3,812,000

TOTAL 51,790,000

3. Repayment of Bank Loan

SL. No.

Bank Name & Account No. Type of Account

Outstanding Balance (June

30,2018)

Repayment Amount

1 Mercantile Bank Ltd- 1719005308 Term Loan 23,138,320 20,000,000

2 Mercantile Bank Ltd. 112172921646834

CC HYPO 257,878,348 46,000,000

Total 281,016,668 66,000,000

Sd/- Sd/- Sd/- Md. Arifur Rahman Sagir Md. Tarqul Islam Zaheer Masuma Yasmin

Chairman Managing Director Chief Financial Officer

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

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

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

Accounting

Year Items Consideration

Amount in

BDT Reflected in Cash Flows

1993-1994 Preliminary

Expenses

Cash 200,000 In the statement of Cash Flows, this

figure is included as cash paid to

suppliers, employees and others

under the head of Operating

Activities.

1999-2000 Working

Capital


figure is included as Payment to

creditors, suppliers and for

expenses under the head of

Operating Activities.

2004-2005 Plant &

Equipment

Cash 24,733,200 In the statement of Cash Flows, the

figure is included in total amount of

fixed assets acquisition under the

head of Investing Activities.

2005-2006 Working

Capital


figure is included as Payment to

creditors, suppliers and for

expenses under the head of

Operating Activities.

141

2005-2006 Plant &

Equipment





2013-2014 Plant &

Equipment

other than

cash

59,500,000 N/A

2014-2015 Bonus 38,068,400 N/A

2015-2016 Plant &

Equipment





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

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

result of the investment, brief description of business and financials of such venture;

The Company has no objects to investment in such type of ventures by using Use of IPO proceeds.

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

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

submitted to the Commission. The means and source of financing, including details of bridge loan

or other financial arrangement, which may be repaid from the proceeds of the issue along with

utilization of such funds;

IPO proceeds are sufficient to complete the projects. Hence, the above mentioned information is not

required for ASFL.

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

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

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

projected date of full commercial operation etc. The schedule shall be signed by the Chief Executive

Officer or Managing Director, Chief Financial Officer and Chairman on behalf of Board of Directors

of the issuer;

SL Utilization of

Fund Progress So Far

Made

Schedule of Implementation

Approximate date of Completion

Projected Date of Commercial Operation

1 Land

Acquisition

There will be no land acquisition from the IPO proceeds.

Within six months of receiving IPO funds.

After completion of land development.

2 Civil Works Drain Constructions, Power plan facility, and Water treatment

Within 1 year of receiving the IPO

Fund

After Completion of the works.

142

plant facility installation.

3 Machineries

The process of importing machineries will start after receiving the IPO funds.

Within 1 year of receiving the IPO fund/ proceeds

After completion of the project

(Machineries installation)

4 Loan

Repayment

Loan Shall be paid after receiving the IPO fund

Within 30 days of receiving the IPO fund

N/A

5 IPO Expenses On turnkey basis N/A N/A

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

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

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

be enclosed as annexure to the prospectus;

There is no such contract yet to be engaged by the company.

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

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

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

reasons for financing short with long term investments and an item-wise break-up of last three years

working capital and next two years projection;

No objects of the issue are utilization of the issue proceeds for working capital.

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

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

be; 7410 evsjv‡`k †M‡RU, AwZwi³, 6 RyjvB, 2017.

The cost of the expansion and modernization is given in the clause (a) of this section “Use of Proceeds”.

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

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

The project will not be complete in a phase manner.

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

proceeds or project cost with sponsors, directors, key management personnel, associates and group

companies;

There are no such transaction occurred or shall be occurred in terms of utilization of IPO proceeds with sponsor, directors, Key management personnel, associate and Group companies .

143

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

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

weaknesses and threats, if any, as given in the appraisal or feasibility report.

The company would be expanding its business operations. Hence, no feasibility report is required for

ASFL.

144

Part XXIII

LOCK-IN

a) Provisions for lock-in:

As per Rule-10, of Bangladesh Securities and Exchange Commission (Public Issue) Rules, 2015

Ordinary shares of the issuer shall be subject to lock-in, from the date of issuance of prospectus or

commercial operation, whichever comes later, in the following manner:

(1) All shares held, at the time of according consent to the public offer, by sponsors, directors and

shareholders holding ten percent (10%) or more shares, other than alternative investment

funds, for 03(three) years.

(2) In case any existing sponsor or director of the issuer transfers any share to any person, other

than existing shareholders, all shares held by those transferee shareholders, at the time of

according consent to the public offer, for 03 (three) years.

(3) Twenty five percent (25%) of the shares allotted to eligible investors, for 06 (six) months and

other twenty five percent (25%) of the shares allotted to them, for 09 (nine) months.

(4) All shares held by alternative investment funds, at the time of according consent to the public

offer, for 01 (one) year.

(5) All shares held, at the time of according consent to the public offer, by any person other than

the persons mentioned in sub rules (1), (2) and (3) above, for 01 (one) year.

Provided that ordinary shares converted from any other type of securities shall also be subject to lock-

in as mentioned above.”

b) Statement of securities to be locked in for each shareholder along with BO account number,

lock-in period and number of securities to be locked-in of Achia Sea Foods Limited:

Name Position BO ID No. Total no.

of Shares

Pre IPO

Percenta

ge (%)

Post IPO

Sharehol

ding (%)

Lock In

Period

(Year)

Md. Tariqul Islam

Zaheer MD 1604630053987156 7,736,440 38.07% 19.19% 3 Years

Md. Arifur

Rahman Sagir Chairman 1604630041565468 1,270,224 6.25% 3.15% 3 Years

Md. Ali Asgar

Nasir Director 1604630013975606 1,325,390 6.52% 3.29% 3 Years

Md. Nadirul

Islam Director 1604630002603560 1,360,014 6.69% 3.37% 3 Years

Md. Riyaad

Mahmood Shareholder 1604630063604733 1,327,560 6.53% 3.29% 1 Years

A.K.M

Mostagawsul

Hoque

Shareholder 1604630078025639 16,380 .08% .04% 1 Year

Mashfiqul Islam Shareholder 1604630000582312 1,135,400 5.59% 2.82% 1 Year

Junayed Ahsan

Shuvro Shareholder 1604630000231475 1,120,084 5.51% 2.78% 1 Year

Naznin Nahar Shareholder 1604630000458556 238,308 1.17% .59% 1 Year

Ahmed Rosafi

Mamood Shareholder 1604630000125893 276,360 1.36% .96% 1 Year

145

Nahid Farhana Shareholder 1604630055669147 17,780 .09% .04% 1 Year

FAS Finance &

Investment ltd Shareholder 1604630019840113 1,000,000 4.92% 2.48% 1 Year

Grameen One Shareholder 1604620016329737 500,000 2.46% 1.24% 1 Year

Reliance One Shareholder 1604620041309123 500,000 2.46% 1.24% 1 Year

Popular life

insurance Shareholder 1204680000045409 500,000 2.46% 1.24% 1 Year

Captain M.

Moajjem Hossain Shareholder 1202880000037311 1,000,000 4.92% 2.48% 1 Year

Md. Shamsul

Alam Shareholder 1203880025907560 100,000 .49% .25% 1 Year

Md. Saiful Islam Shareholder 1203060012359790 50,000 .25% .12% 1 Year

Md.

Shamsuddoha

Tapos

Shareholder 1204240016889929 100,000 .49% .25% 1 Year

Md. Omar Sadek

Mollah Shareholder 1202950056525143 60,000 .29% .15% 1 Year

Mr. Mohammad

Helal Miah Shareholder 1204570003635981 390,000 1.92% .97% 1 Year

BD Finance

Securities Ltd Shareholder 1205150043284418 300,000 1.48% .74% 1 Year

146

Part XXIV

MARKETS FOR THE SECURITIES BEING OFFERRED

Stock Exchanges:

The issuer shall apply to the following bourses for listing shares within 7 (seven) working days from

the date of consent accorded by the Commission to issue the prospectus:

Dhaka Stock Exchange Limited (DSE)

9/F, Motijheel C/A, Dhaka-1000

And

Chittagong Stock Exchange Limited (CSE)

CSE Building, 1080 Sk. Mojib Road, Agrabad,

Chittagong

Declaration about Listing of Shares with Stock Exchanges:

None of the Stock Exchanges, if for any reason, grant listing within 75 days from the closure of

subscription, any allotment in terms of this prospectus shall be void and the Company shall refund

the subscription money within fifteen days from the date of refusal for listing by the stock exchange,

or from the date of expiry of the said 75 (seventy-five) days, as the case may be.

In case of non‐ refund of the subscription money within the aforesaid fifteen days, the Company

directors, in addition to the issuer company, shall be collectively and severally liable for refund of the

subscription money, with interest at the rate of 2% (two percent) per month above the bank rate, to

the subscribers concerned.

The issue 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.

Trading and Settlement;

Trading and Settlement Regulation of the stock exchanges will apply in respect of trading and

settlement of the shares of the Company.

THE ISSUE SHALL BE PLACED IN “N” CATEGORY

147

Part XXV

DESCRIPTION OF SECURITIES OUTSTANDING OR BEING OFFERRED

All types of securities outstanding or being offered with date or proposed date of such issue and to

whom those are offered, number of securities and issue or offer price along with the following

information:

(a) Dividend, voting and preemption rights;

The Share Capital of the company is divided into Ordinary Shares, carrying equal rights to vote and

receive dividend in terms of the relevant provisions of the Companies Act 1994 and the Articles of

Association of the company. All Shareholders shall have the usual voting rights in person or by proxy

in connection with, among others, election of Directors & Auditors and other usual agenda of General

Meeting – Ordinary or Extra-ordinary. On a show of hand, every shareholder presents in person and

every duly authorized representative of a shareholder present at a General Meeting shall have one

vote and on a poll every shareholder present or by proxy shall have one vote for every share held by

him or her.

In case of any additional issue of shares for raising further capital the existing shareholders shall be

entitled to Right Issue of shares in terms of the guidelines issued by the BSEC from time to time.

(b) Conversion and liquidation rights;

In terms of provisions of the Companies Act 1994, Articles of Association of the Company and other

relevant rules in force, the shares of the Company are freely transferable. The Company shall not

charge any fee for registering transfer of shares. No transfer shall be made to a firm, an infant or

person of unsound mind.

(c) Dividend policy;

i. The profit of the Company, subject to any special right relating thereto created or authorized

to be created by the Memorandum and subject to the provisions of the Articles of Association,

shall be divisible among the members in proportion to the amount of capital paid-up on the

shares held by them respectively.

ii. No large dividend shall be declared than is recommended by the Directors, but the Company

in its General Meeting may declare a smaller dividend. The declaration of Directors as to the

amount of Net profit of the Company shall be conclusive.

iii. No dividend shall be payable except out of the profits of the Company or any other

undistributed profits. Dividend shall not carry interest as against the Company.

iv. The Directors may from time to time pay the members such interim dividend as in their

judgment the financial position of the Company may justify.

v. A transfer of shares shall not pass the right to any dividend declared thereon before the

registration of transfer.

vi. No limitation in payment of dividend is stipulated in any debt instrument or otherwise.

(d) Other rights of the securities holders;

In terms of the provisions of the Companies Act 1994, Articles of Association of the Company and

other relevant rules in force, the shares of the Company are transferable. The Company shall not

charge any fee, other than Government duties for registering transfer of shares. No transfer shall be

made to a minor or person of unsound mind.

148

Part XXVI

FINANCIAL STATEMENTS

a. Auditor’s Report to the shareholders of Achia Sea Food Limited for the period

ended June 30, 2018

Private & Confidential

Auditors' Report

And

Financial Statements

Of


50/7 Shipyard Road, Labonchara

Khulna

For the year ended June 30, 2018

AUDITOR:

Mahfel Huq & Co.; Chartered Accountants

(A member Firm of AGN International)

BGIC Tower (4th Floor), 34 Topkhana Road, Dhaka-1000, Bangladesh.

149

CONTENTS

Auditors’ Report

To the Shareholders of Achia Sea Foods Limited

We have audited the accompanying financial statements of Achia Sea Foods Limited which

comprises the Statement of financial position as at June 30, 2018 along with Statement of Profit

or Loss and Other Comprehensive Income, Statement of Changes in Equity and Statement of

Cash Flows for the year then ended, and a summary of significant accounting policies and

other explanatory notes.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial

statements in accordance with Bangladesh Financial Reporting Standards, Companies Act

1994, the Securities and Exchanges Rules-1987 & other applicable rules & regulations. This

responsibility includes: designing, implementing and maintaining internal control relevant to

the preparation and fair presentation of financial statements that are free from material

misstatement, whether due to fraud or error; selecting and applying appropriate accounting

policies; and making accounting estimates that are reasonable in the circumstances.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with Bangladesh Standards on Auditing, those

standards require that we comply with ethical requirements and plan and perform the audit

to obtain reasonable assurance whether the financial statements are free from material

misstatement. An audit involves performing procedures to obtain audit evidence about the

amounts and disclosures in the financial statements. The procedures selected depend on the

auditor’s judgment, including the assessment of the risks of material misstatement of the

financial statements, whether due to fraud or error. In making those risk assessments, the

auditor considers internal control relevant to the entity’s preparation and fair presentation of

the financial statements in order to design audit procedures that are appropriate in the

circumstances, but not for the purpose of expressing an opinion on the effectiveness of the

entity’s internal control. An audit also includes evaluating the appropriateness of accounting

policies used and the reasonableness of accounting estimates made by management, as well

as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide

a basis for our audit opinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of

Achia Sea Foods Limited as of June 30, 2018 and of its financial performance and its cash

Flows for the year then ended in accordance with Bangladesh Financial Reporting Standards

and comply with the Companies Act-1994, the Securities and Exchanges 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 purpose of our audit and made due verification thereof;

150

b. in our opinion proper books of account as required by law have been kept by the company

so far as it appeared from our examination of those books;

c. the company’s statement of financial position, statement of profit or loss and other

comprehensive income and Statement of Cash Flows dealt with by the report are in agreement

with the books of accounts;

d. the expenditure incurred was for the purposes of the Company’s business.

Sd/-

Mahfel Huq & Co

Chartered Accountants Place: Dhaka; Dated: August 13, 2018.

151

Serial No Particulars Page No.

1 Auditors’ Report 01

2 Statement of Financial Position 02

3 Statement of Profit or Loss and Other Comprehensive Income 03

4 Statement of Changes in Equity 04

5 Statement of Cash Flows 05

6 Notes to the Financial Statements 06-18

7 Schedule of Property, Plant & Equipment (Annexure-A) 19

152


Statement of Financial Position

As at June 30, 2018

Particulars Notes Amount in Taka

June 30,2018 June 30,2017

A. Non-Current Assets 250,402,804 240,483,160

Property, Plant & Equipment 4.00 250,402,804 240,483,160

B. Current Assets 387,209,868 418,711,683

Inventories 5.00 205,176,037 237,995,495 Accounts Receivable 6.00 16,378,784 9,117,752 Advances, Deposits & Pre-Payments 7.00 164,663,097 170,698,006

Cash & Cash Equivalents 8.00 991,950 900,430

Total Assets (A+B) 637,612,672 659,194,843

Sources of Fund

Shareholders Equity & Liabilities

C. Shareholders’ Equity 313,393,515 288,292,958

Share Capital 9.00 203,239,400 203,239,400

Retained Earnings 10.00 110,154,115 85,053,558 Reserve & Surplus 11.00 - -

D. Non-Current Liabilities 38,579,894 10,434,597

Long Term Loan 12.00 23,138,320 -

Deferred Tax liabilities 13.00 15,441,574 10,434,597

E. Current Liabilities 285,639,263 360,467,289

Accounts Payable 14.00 6,614,065 14,273,161

Short Term Loan 15.00 270,372,943 336,492,617

Loan form Director 16.00 - 4,024,000

Provision for Income Tax 17.00 8,652,255 5,677,511

Total Equity & Liabilities (C+D+E) 637,612,672 659,194,843

Net Asset Value (NAV) per share 15.42 14.18

The annexed notes (1 to 26) form an integral part of these financial statements.

Sd/- Sd/- Sd/-


Signed as per our separate report on same date.

Sd/-

Place: Dhaka; Mahfel Huq & Co.

Dated: August 13, 2018. Chartered Accountants

153


Statement of Profit or Loss and other Comprehensive Income


Particulars Notes

Amount in Taka

2017-2018 2016-2017

Revenue 18.00 937,326,012 694,742,004

Cost of goods sold 19.00 (887,655,861) (657,929,787)

Gross Profit 49,670,151 36,812,217

Operating Expenses (67,838,982) (61,519,085)

General and Administrative Expenses 20.00 (23,294,142) (27,480,924)

Selling and Distribution Expenses 21.00 (44,544,840) (34,038,160)

Operating profit (18,168,831) (24,706,868)

Financial Expenses 22.00 (31,427,504) -

Non-Operating Income 88,356,125 50,301,954

Other Income 23.00 88,356,125 50,301,954

Profit before Tax 38,759,790 25,595,086

Tax Expense (13,659,232) (3,466,093)

Current income Tax 24.00 (8,652,255) (5,677,511)

Deferred Tax 25.00 (5,006,977) 2,211,418

Net profit after tax 25,100,557 22,128,993

Earning Per Share (EPS) 26.00 1.24 1.09

The annexed notes (1 to 26) form an integral part of these financial statements.

Sd/- Sd/- Sd/-



Sd/-



154


Statement of Changes in Equity


Particulars Amount in Taka

Share Capital Share Money

Deposit Reserve &

Surplus Retained Earning Total Amount

Balance as at July 01, 2017 203,239,400 - - 85,053,558 288,292,958

Net profit after tax for the year - - - 25,100,557 25,100,557

Balance as at June 30, 2018 203,239,400 - - 110,154,116 313,393,516

Statement of Changes in Equity For the year ended June 30, 2017

Particulars

Amount in Taka

Share Capital Share Money

Deposit Reserve &

Surplus Retained Earnings Total Amount

Balance as at July 01, 2016 203,239,400 - 310,686 62,613,879 266,163,965

Stock Bonus Paid for the year - - - - -

Reserve & Surplus adjustment during the year - - (310,686) 310,686 -

Ordinary Share - - - - -

Net profit after tax for the year - - - 22,128,993 22,128,993

Balance as at June 30, 2017 203,239,400 - - 85,053,558 288,292,958

The annexed notes (1 to 26) form an integral part of these financial statements. Sd/- Sd/-

_______________________ Sd/-


Signed as per our separate report on same date. Sd/- Place: Dhaka; Mahfel Huq & Co.


155


Statement of Cash Flows



2017-2018 2016-2017

Cash flows from operating activities (A):

Cash received from customer & others 1,018,421,105 747,128,796

Payment to creditors, suppliers & others (907,555,463) (768,958,599)

Financial expenses (31,427,504) (25,410,490)

Income tax paid (5,677,511) (7,214,133)

Net Cash used in operating activities 73,760,627 (54,454,426)

Cash flows from investing activities (B):

Acquisition of property, plant and Equipment (26,663,753) (46,444,775)

Net Cash used in investing activities (26,663,753) (46,444,775)

Cash flows from financing activities (C):

Long term bank loan (paid)/received 23,138,320 -

Short term bank loan (paid)/received (66,119,674) 100,969,986

Loan form director (4,024,000)

Net Cash provided by financing Activities (47,005,354) 100,969,986

Net Increase in cash & cash equivalents (A+B+C)

91,520 70,785

Cash & cash equivalents at the beginning of the year

900,430 829,646

Cash & cash equivalents at the end of the year 991,950 900,431

Net Operating Cash Flows per share 3.60 (2.68)

Sd/- Sd/- Sd/-

Chairman Managing Director CFO & Company Secretary


Sd/-



156


Notes to the Financial Statements


1.00 Status and Legal Form of the Company

Achia Sea Foods Limited was registered as a private limited company with the Registrar of Joint Stock Companies and Firms (RJSC) vide registration no. Khulna-178 dated December 27, 1993 under the Companies Act-1994. Subsequently the company was converted into a public limited company effective from September 27, 2014.

The registered office of the company is located 50/7 Shipyard Road, Labonchara, Khulna. 1.01 Nature and Place of Business Activities

The Company is engaged in the processing & exporting of the finest quality Sea Food products “Shrimps & Fish" in the foreign market.

2.00 Basis of preparation and significant accounting policies

2.01 Basis of Measurement of Elements of Financial Position

The financial statements of the company are prepared on going concern basis under historical cost convention and in accordance with the Bangladesh Accounting Standards (BASs), Bangladesh Financial Reporting Standards (BFRSs), the Companies Act 1994 and other laws & regulations applicable for the company.

The following Bangladesh Accounting Standards were applied for the preparation of the financial statements for the year.

BAS-1 Presentation of Financial Statements

BAS-2 Inventories

BAS-7 Statement of Cash Flows

BAS-8 Accounting Policies, Changes in Accounting Estimates and Errors

BAS-10 Events after the Reporting Period

BAS-12 Income Taxes

BAS-16 Property, Plant & Equipment

BAS-18 Revenue

BAS-19 Employee Benefits

BAS-21 The Effect of Changes in Foreign Exchange Rates

BAS-23 Borrowing Costs

BAS-24 Related Party Disclosures

BAS-32 Financial Instruments : Presentation

BAS-33 Earnings per Share

BAS-36 Impairment of Assets

BAS-37 Provisions, Contingent Liabilities and Contingent Assets

BAS-39 Financial Instruments: Recognition and Measurement

157

The following BFRS is applicable to the financial statements for the period under review:

BFRS-1 First-time adoption of Bangladesh Financial Reporting Standards

BFRS-7 Financial Instruments : Disclosures

2.02 Going Concern Basis

The company has adequate resources to continue its operation for the foreseeable future. As such, the directors intended to adopt the going concern basis in preparing the financial statements. The current credit facilities and resources of the company provides sufficient fund to meet the present requirements of its existing business.

2.03 Accrual Basis

The financial statements have been prepared except cash flow information using the accrual basis of accounting.

2.04 Structure, Content and Presentation of Financial Statements

Being the general purpose financial statements, the presentation of these financial statements is in accordance with the guidelines provided by BAS-1: “Presentation of Financial Statements”. A complete set of financial statements comprises:

a) Statement of Financial Position as at June 30, 2018.

b) Statement of Profit or Loss and other Comprehensive Income for the year ended June 30, 2018.

c) Statement of Changes in Equity for the year ended June 30, 2018.

d) Statement of Cash Flows for the year ended June 30, 2018.

e) Notes comprising a summary of significant accounting policies and other explanatory information to the financial Statements for the year ended June 30, 2018.

2.05 Accounting Convention and basis

The Company's Accounts have been prepared under the historical cost convention in accordance with the Bangladesh Accounting Standards.

2.06 Comparative information

Comparative information has been disclosed in respect of the previous year for all numerical information in the financial statements and also the narrative and descriptive information when it is relevant for understanding of the current year financial statements.

2.07

Reporting Currency and level of precision

The Financial Statements are prepared and presented in Bangladeshi currency (Taka) , Which is the functional currency of the company . All financial information presented has been rounded off to the nearest Taka except where indicated otherwise.

158

2.08 Reporting Period

The Financial year of the company under audit covers for a period of 1(One) year effective from July 01, 2017 to June 30, 2018.

2.09 Revenue

In compliance with requirements of BAS-18 Revenue, revenue receipts from customers against sales are recognized when products are dispatched to customers, that is when the significant risk and rewards of ownership have been transferred to the buyer, recovery of consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvements with the goods.

2.10 Property, Plant and Equipment

Initial Recognition and measurement

Property, plant and equipment are capitalized at cost of acquisition and subsequently stated at cost less accumulated depreciation in compliance with the requirements of BAS-16: Property, Plant and Equipment. The cost of acquisition of an asset comprises its purchase price and any directly attributable cost of bringing the assets to its working condition for its intended use inclusive of inward freight, duties, non-refundable taxes and un-allocated expenditures etc.

Depreciation on Fixed Assets

In accordance with the provisions of BAS-16: Property, Plant and Equipment. Depreciation on all fixed assets is computed consistently using the reducing balance method on monthly basis so as to written off the assets over their expected useful life from the date when the corresponding assets are ready for use as per management intention. The Rate of depreciation for this period as below:

SL No. Particulars Rate of Depreciation

01 Land and Land Development 0%

02 Factory Building 5%

03 Plant & Machinery 10%

04 IQF Machinery 10%

05 Cold Storage Compressor Unit 10%

06 Fleck Ice Machinery 10%

07 Factory Equipment 15%

08 Tools & Equipment 20%

09 Transformer 15%

10 I Phone & I Pad 15%

11 Processing Equipment 20%

12 Laboratory Equipment 20%

13 Electric Equipment 20%

14 Refrigeration Van 20%

15 Office Equipment 20%

16 Furniture & Fixture 10%

17 Jetty 20%

18 Crockery's & Cutleries 20%

159

19 Tube well & waterline 20%

20 Vacuums Machine 20%

21 Metal Ditector Machine 20%

22 Boundary Wall 20%

23 Vehicles 20%

2.11 Cash and Cash equivalents

Cash and cash equivalents comprise cash in hand, demand deposits and short term deposit, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

2.12 Inventories

Inventories are carried at the lower of cost or net realizable value as prescribed by BAS 2: Inventories. Cost is determined on weighted average cost basis. The cost of inventories comprises of expenditure incurred in the normal course of business in bringing the inventories to their present location and condition. Net realizable value is based on estimated selling price less any further costs expected to be incurred to make the sale.

2.13 Events after the Reporting Period

In compliance with the requirements of BAS-10: Events after the reporting period, post balance sheet events that provide additional information about the Company’s position at the reporting date are reflected in the financial statements and events after the balance sheet date that are not adjusting events.

2.14 Statement of Cash Flows

The Statement of Cash Flows is prepared in accordance with Bangladesh Accounting Standards BAS-7 Statement of Cash Flows and cash flows from the operating activities have been presented under direct method considering the provision of paragraph 19 of BAS-7 which provides that "Entities are encouraged to report cash flows from operating activities using the direct method".

2.15 Related Party Disclosures

Related party considered if the party is related to the company and exerts significant influence over the day to day transactions of the subject gain as per BAS-24. The following related party transactions have been appeared during the year.

Serial No. Name Position Type of Transaction

Amount in Taka

01 Md. Arifur Rahaman Sagir Chairman

Director Remuneration

420,000

02 Md. Tariqul Islam Zaheer

Managing Director


720,000

03 Md. Ali Azgar Nasir Director

160


240,000

04 Md. Nadirul Islam Babu Director Director Remuneration

240,000

05 A.K.M Mostagawsul Haque Director


120,000

06 Md. Riyad Mahmood Director Director Remuneration

480,000

07 Sundarban Shripps Pvt. Ltd.

Sister Concern Short Term Loan

12,494,595

2.16 Responsibility for preparation & presentation of Financial Statements

The Board of directors are responsible for the preparation & presentation of Financial Statements as per section 183 of The Companies Act-1994.

2.17 Authorization Date Issuing Financial statements:

The Financial Statements were authorised by The Board of Directors on August 13,2018.

2.18 Borrowing Cost

Borrowing costs are not directly attributable to the acquisition, construction or production of qualifying assets is recognized in profit or loss using effective interest method. Borrowing cost incurred against bank loan has been capitalized under effective interest rate method.

2.19 Impairment of Assets

I) Financial Assets

Accounts receivable and others receivables are assessed at each reporting date to determine whether there is any objective evidence of impairment. Financial assets are impaired if objective indicates that a loss event has occurred after the initial recognition of the asset and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably. Objective evidence that financial assets are impaired can include default of delinquency by a debtor, indicates that a debtor of issuer will enter bankruptcy etc. No Financial assets are impaired during the period.

II) Non-Financial assets

An asset is impaired when its carrying amount exceeds its recoverable amount. The company assesses at each reporting date whether there is any indication that an asset may be impaired. If any such indication exits, the company estimates the recoverable amount of the asset. The recoverable amount of an asset is the higher of its fair value less cost to sell and its value in use. Carrying amount of the assets is reduced to its recoverable amount by recognizing an impaired loss is recognized immediately in statement of comprehensive income unless the asset is carried at revalued amount. Any impaired loss of a revalued asset treated as a revaluation decrease. No non-financial assets are impaired during the period.

161

2.20 Financial Instruments

A financial instrument in any contract that gives rise to a financial asset of one equity and financial liability or equity instrument of another entity.

Financial Assets

Financial assets of the company include cash and cash equivalents, equity instrument of another equity, trade receivable and other receivables. The company initially recognizes receivable on the date they are originated. All other financial assets are recognized initially on the date which the company becomes a part to the contractual obligation of the transaction. The company derecognizes a financial asset when and only when contractual rights or probabilities of receiving the cash flows from the assets expire or it transfer the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risk and reward of ownership of the financial assets are transferred.

Initial Recognition

An entity recognizes a financial assets or liabilities in its statement of financial position when, and only when, the entity becomes a party to the contractual provision of the instrument and subsequently recognizes at their amortized cost.

Trade Receivables

Trade receivables are carried at original invoice amount.

Financial Liabilities

The company initially recognizes financial liabilities on the transaction date at which the company becomes a party to the contractual provisions of the liability. The company derecognizes a financial liability when it's contractual obligations are discharged or cancelled or expired. Financial liabilities include loan and borrowing trade creditors, Liabilities for expenses and liabilities for other finance.

2.21 Employee Benefits

The company maintains provident fund and gratuity fund for its eligible permanent employees. The eligibility is determined according to the terms and conditions set forth in the respective deeds. The company has accounted for and disclosed employees benefits in compliance with the provisions of BAS 19 : Employee Benefits. The cost of employee benefit is charged off as revenue expenditure in the period to which the contributions relate.The company has introduced WPPF benifits for the workers & employees.

2.22 Provisions

In accordance with the guidelines as prescribed by BAS-37 Provisions, Contingent Liabilities and Contingent Assets, provisions are recognized in the following situations:

a) when the company has an obligation (legal or constructive) as a result of past events;

162

b) when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

c) When reliable estimates can be made of the amount of the obligation.

2.23 Income Tax

Current Tax

Current tax has been made at the rate of 35% on operating income and 03% on cash subsidy as prescribed in the Income Tax Ordinance-1984 on the accounting profit made by the company in compliance with BAS-12 “Income Taxes”.

2.24 Foreign Currency Transaction:

Foreign currency transactions are recorded, on initial recognition in the functional currency at the spot exchange rate ruling at the transaction date.

At the end of each reporting period, in compliance with the provision of BAS 21: The Effects of Changes in Foreign Exchange Rates, are determined as under :

(a) Foreign currency monetary items are translated using the closing rate.

(b) Non-monetary items that are measured in terms of historical costs in a foreign currency are translated using the exchange rate at the date of the transaction.

(c) Non-monetary items that are measured at fair value in a foreign currency is translated using the exchange rate at the date when the fair value is determined.

Exchange differences arising on the settlement of monetary items or on translating monetary items at rate different from those at which they were translated on initial recognition during the period or in previous financial statements is recognized in profit or loss in the period in which they arise.

2.25 Creditors and Accrued Expenses

Liabilities are recognized for accounts to be paid in future for goods and services received from suppliers/ service providers.

2.26 Earnings Per Share (EPS)

This has been calculated in compliance with the requirement of BAS-33 : Earnings per share by dividing the net earnings after Tax by the weighted average number of ordinary shares outstanding during the period .

Basic Earnings per share (Numerator /Denomenator )

Earnings (Numerator)

163

*This represents earning for the period attributable to ordinary shareholders

No. of ordinary shares (Denominator)

This represents weighted average number of ordinary share outstanding during the period.

Diluted Earnings per share

As per the existing conditions of the loans taken by the company from various financial institutions or other contracts with various parties including employees, there is no condition related to conversion or stipulation related to share based payments for material and services supplied by them to the company. Hence, Diluted EPS of the company is same as basic EPS.

3.00 Risk exposure

3.01 Interest rate risk

Interest rate risk is the risk that Company faces due to unfavorable movements in the interest rates. Changes in the government’s monetary policy, along with increased demand for loans/ investments tend to increase the interest rates. Such rises in interest rates mostly affect companies having floating rate loans or companies investing in debt securities.

Management perception

The Company maintains low debt/ equity ratio and accordingly, adverse impact of interest rate fluctuation is insignificant. Considering the global economy and inflection of overseas financing, financial institutions in Bangladesh reducing lending rate creating an opportunity for saving in financial cost.

3.02 Exchange rate risk

Exchange rate risk occurs due to changes in exchange rates. As the Company imports materials and equipment from abroad and also earns revenue in foreign currency, unfavorable volatility or currency fluctuation may affect the profitability of the Company. If exchange rate increases against local currency, opportunity arises for generating more profit.


The company purchase raw materials and sells finished product mostly in US$ currency and the transaction would settle within very short period. Therefore, volatility of exchange rate will have no impact on profitability of the Company.

3.03 Industry risks

Industry risk refers to the risk of increased competition from foreign and domestic sources leading to lower prices, revenues, profit margin, and market share which could have an adverse impact on the business, financial condition and results of operation.


Management is optimistic about growth opportunity in textile sector in Bangladesh. Furthermore there is untapped international market.

164

3.04 Market risks

Market risk refers to the risk of adverse market conditions affecting the sales and profitability of the company. Mostly, the risk arises from falling demand for the product or service which would harm the performance of the company. On the other hand, strong marketing and brand management would help the company increase their customer base.


Management is fully aware of the market risk and act accordingly. Market for textile products in Bangladesh is growing at an exponential rate. Moreover the company has a strong marketing and brand management to increase the customer base and customer loyalty.

3.05 Operational risks

Non-availabilities of materials/equipment/services may affect the smooth operational activities of The Company. On the other hand, the equipment may face operational and mechanical failures due to natural disasters, terrorist attacks, unforeseen events, lack of supervision and negligence, leading to severe accidents and losses.


The company perceives that allocation of its resources properly can reduce this risk factor to great extent. The Company hedges such risks and also takes preventive measures therefor.

3.06 Liquidity risk

Liquidity risk is defined as the risk that the Company will not be able to settle or meet its obligations on time or at a reasonable price.


The Company's approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company's reputation. Typically, management ensures that it has sufficient cash and cash equivalent to meet expected operational expenses, including the servicing of financial obligation through preparation of the cash forecast, prepared based on time line of payment of the financial obligation and accordingly arrange for sufficient liquidity/fund to make the expected payment within due date.

165

Amount in Taka

June 30,2018 June 30,2017

4.00 Property, Plant & Equipment: Tk. 250,402,804

This is made up as follows:

Particulars

A. Cost:

Opening balance 323,435,772 276,990,997

Add: Addition during the year 26,663,753 46,444,775

Less: Disposal during the year - -

Closing balance: 350,099,525 323,435,772

B. Depreciation

Opening balance 82,952,613 67,660,059

Charge during the period 16,744,108 15,292,554

Closing balance: 99,696,721 82,952,613

Written Down Value (A-B) 250,402,804 240,483,160

* The details have been shown in Annexure: A

5.00

Inventories: Tk. 205,176,037


Particulars

Finished Goods:

BT HOSO 67,045,985 80,942,979

BT HLSO 128,657,593 147,055,859

BT PND 7,126,589 7,871,790

Closing Stock of Finished Goods 202,830,167 235,870,628

Packing Materials 1,420,520 1,864,857

Raw Materials 925,350 260,010

Total: 205,176,037 237,995,495

6.00 Accounts Receivable: Tk. 16,378,784


Particulars

Cash subsidy receivable (As per certificate) -

8,179,100

Receivable against Export (Mercantile Bank Ltd.) 16,378,784

938,652

Total: 16,378,784

9,117,752

_______________ ______________

166

7.00 Advances, Deposits & Pre-payments: Tk. 164,663,097


Particulars

Advances: 164,647,097 170,682,006

Advance against salary Note - 7.01 129,000 1,559,530

Advance income tax Note - 7.02 8,752,763 5,778,016

Other advance Note - 7.03 155,765,334 163,344,460

Deposits: 16,000 16,000

Security deposits 16,000 16,000

Total: 164,663,097 170,698,006

7.01 Advance against Salary: Tk. 129,000


Particulars

Opening balance 1,559,530 128,800

Addition during the year - 1,615,617

1,559,530 1,744,417

Adjustment during the year (1,430,530) (184,887)

Closing Balance: 129,000 1,559,530

7.02 Advance Income tax: Tk. 8,752,763


Particulars

Opening balance 5,778,016 -

Deducation against export 6,001,571 5,778,016

Deducation against cash subsidy 2,650,687 -

Total 14,430,274 5,778,016

Less: Adjustment during the period (5,677,511)

Closing Balance: 8,752,763 5,778,016

167

7.03 Other Advance: Tk. 155,765,334


Particulars

Advance for expenses 28,505,985 32,563,070

Advance to suppliers 68,176,925 68,425,619

Other advance 59,082,424 62,355,771

Total: 155,765,334 163,344,460

* All advances and deposits amount are considered good and recoverable.

8.00 Cash & Cash Equivalents: Tk. 991,950

The break-up of the amount is given below:

Particulars

Cash in hand Note - 8.01 528,588 327,601

Cash at banks Note - 8.02 463,362 572,829

Total: 991,950 900,430

8.01 Cash in Hand: Tk. 528,588


Particulars

Head Office 453,588 257,601

Factory 75,000 70,000

Total: 528,588 327,601

This balance represents as per cash folio of the Company.

8.02 Cash at Bank: Tk. 463,362


Particulars

Name of the Bank

Types of Account

Branch Name

Account Number

Taka Taka

Sonali Bank Ltd. Current Corporate 2715133009694

2,536

512,444

Social Islami Bank Ltd.

Current Khulna 0051330015943

745

2,395

Social Islami Bank Ltd.


-

1,141

168

Islami Bank BD Ltd.


5,505

7,093

Dutch Bangla Bank Ltd.


37,701

41,311

Southeast Bank Ltd.

Current Khulna 0011-1110020151

7,422

8,342

Mercantile Bank Ltd.

ERQ Main 110115024384408

408,416

-



1,037

104

Total: 463,362 572,829

All the Bank balances were confirmed by the respective Bank.

9.00 Share Capital: Tk. 203,239,400


Particulars

Authorized Capital:

100,000,000 ordinary shares of tk. 10/- each 1,000,000,000 1,000,000,000

Issued and Paid-up Capital:

20,323,940 Ordinary shares of tk. 10/- each 203,239,400 203,239,400

The aforesaid share capital is subscribed as under:

Name No. of Shares Amount (Tk.) Amount (Tk.)

Md. Arifur Rahman Sagir 1,270,224 12,702,240 12,702,240

Md. Tariqul Islam Zaheer 7,736,440 77,364,400 77,364,400

Md. Ali Azgar Nasir 1,325,390 13,253,900 13,253,900

Md. Nadirul Islam Babu 1,360,014 13,600,140 13,600,140

A.K.M. Mostagawsul Haque 16,380 163,800 163,800

Md. Riyad Mahmood 1,327,560 13,275,600 13,275,600

Md. Mashfiqul Islam 1,135,400 11,354,000 11,354,000

Md. Jonayed Ahsan Subro 1,120,084 11,200,840 11,200,840

Mrs. Naznin Nahar 238,308 2,383,080 2,383,080

Md. Ahmed Rosafi Mahmood 276,360 2,763,600 2,763,600

Mrs. Nahid Farhana 17,780 177,800 177,800

FAS Finance & Investment Ltd. 1,000,000 10,000,000 10,000,000

Grameen One 500,000 5,000,000 5,000,000

Reliance One 500,000 5,000,000 5,000,000

Popular Life Insurance 500,000 5,000,000 5,000,000

M Moazzam Hossain 1,000,000 10,000,000 10,000,000

Md Shamsul Alam 100,000 1,000,000 1,000,000

Md Saiful Islam 50,000 500,000 500,000

Md. Shamsuddoha Tapos 100,000 1,000,000 1,000,000

169

Md Omar Sadek Mollah 60,000 600,000 600,000

Mr. Mohammad Helal Miah 390,000 3,900,000 3,900,000

BD Finance Securities Ltd. 300,000 3,000,000 3,000,000

Total: 20,323,940 203,239,400 203,239,400

10.00 Retained Earnings: Tk. 110,531,730


Particulars

Opening balance 85,053,558 62,613,879

Add: Net Profit/(Loss) after tax for the year 25,100,557 22,128,993

Adjustment during the year - 310,686

Dividend paid during the year - -

Closing Balance: 110,154,115 85,053,558

11.00 Reserve & Surplus: Tk. 0


Particulars

Income from Subsidy - 310,686

adjustment during the year -

(310,686)

Closing Balance: - -

12.00 Long Term Loan: Tk. 23,138,320


Particulars

Mercantile Bank Ltd- 1719005308

23,138,320 -

Closing Balance: 23,138,320 -

13.00 Deferred Tax liabilities: Tk. 15,441,575

This is made up as follows

Particulars

Opening balance 10,434,597 12,646,015

Current year provision 5,006,977 (2,211,418)

Closing Balance: 15,441,574 10,434,597

14.00 Accounts Payables: Tk. 6,614,065


Particulars

Trade creditors Note - 14.01 4,903,000 9,210,597

Sundry creditor Note - 14.02 1,711,065 5,062,564

Total: 6,614,065 14,273,161

170

14.01 Trade Creditors: Tk. 4,903,000


Particulars

Liabilities for goods 4,903,000 9,210,597

Total: 4,903,000 9,210,597

* All creditors were paid on regular basis.

14.02 Sundry Creditor: Tk. 1,711,065


Particulars

Liabilities for expenses 1,621,065 4,902,564

Provision for professional fees - 110,000

Provision for audit fee 90,000 50,000

Total: 1,711,065 5,062,564

15.00 Short Term Loan: Tk. 270,372,943


Particulars

Bank Name A/C

Type Br.

Name Account Number

June 30,2018

June 30,2017

Mercantile Bank Ltd. CC

Hypo Khulna

112172921646834

257,878,348

248,772,948

Sonali Bank Ltd. STL Corpor

ate 271537001029

-

(371)

AAA Holdings Ltd. STL

-

30,000,000

Sundarban shrimps (Pvt.) Ltd.

Temporary Loan

12,494,595

57,720,040

Total:

270,372,943

336,492,617

171

16.00 Loan form Director: Tk. 0


Particulars

Opening Balance 4,024,000 4,000,000

Add: Addition during the year - 24,000

Total: 4,024,000 4,024,000

Less: Payments during the year 4,024,000 -

Closing Balance: - 4,024,000

17.00 Provision for Income Tax: Tk. 8,274,640


Particulars

Opening Balance 5,677,511 -

Addition during the year 8,652,255 5,677,511

Total 14,329,766 5,677,511

Less: Adjustment during the year (5,677,511) -

Closing Balance: 8,652,255 5,677,511

18.00 Revenue: Tk. 937,326,012


Particulars

Sales Note - 18.01 937,326,012 694,742,004

Total: 937,326,012 694,742,004

172

18.01

Sales: Tk. 937,326,012


Particulars

Sales a/c foreign (BT & Fresh Water) 937,326,012 694,742,004

White fish sales - -

Total: 937,326,012 694,742,004

19.00

Cost of Goods Sold: Tk. 887,655,861


Particulars

Raw material consumed Note - 19.01

792,873,508 612,885,138

Packing material consumed

Note - 19.02

16,536,024

14,664,551

Manufacturing expenses Note - 19.03

45,205,868

45,363,716

Interest expenses Note - 19.04

-

25,410,490

Cost of Production 854,615,400 698,323,895

Add: Opening stock of finished goods

235,870,628 195,476,520

Cost of Goods available for Sale 1,090,486,028 893,800,415

Less: Closing stock of finished Goods

202,830,167 235,870,628

Cost of Goods Sold 887,655,861 657,929,787

19.01

Raw Material Consumed: Tk. 792,873,508


Particulars

Opening Stock

260,010

197,038

Add: Purchase during the Period Note -

19.01.01 793,538,848

612,948,110

Less: Closing stock

925,350

260,010

Total: 792,873,508 612,885,138

173

19.01.01 Raw Material Purchase: Tk. 793,538,848


Particulars

Purchase of BT & Fresh Water 793,538,848 612,925,110

Purchase of White Fish -

23,000

Total: 793,538,848 612,948,110

19.02 Packing Material Consumed: Tk. 16,536,024


Particulars

Opening Stock

1,864,857

1,736,540

Add: Purchase during the year

16,091,687

14,792,868

Less: Closing stock

1,420,520

1,864,857

Total: 16,536,024 14,664,551

19.03 Manufacturing Expenses: Tk. 45,205,868


Particulars

Salary & allowances 6,012,500 8,941,402

Bonus 1,002,083

-

Causal wages 982,465 966,518

Depreciation 12,390,640 11,316,490

Gas & Chemical 1,260,568 1,394,000

Ice Purchase 965,468 1,125,900

Oil & Lubricant 504,687 488,750

Power & Fuel (Diesel) 775,986 979,000

Power & Fuel (Electricity) 13,725,331 12,211,936

Processing expenses 6,585,679 6,891,610

Production expenses 350,005 338,640

Repair & Maintenance (Machinery) 650,456 709,470

Total: 45,205,868

45,363,716

174

19.04 Interest Expenses: Tk. 0


Particulars

Interest on CC Pledged - 19,225,408

Interest on CC Hypo - 3,598,953

Interest on Short Term Loan - 2,586,129

Total: - 25,410,490

20.00 General and Administrative Expenses: Tk. 23,294,142


Particulars

Advertisement 70,000 79,000

Salary & Allowance 2,472,000 -

Audit Fee 90,000 50,000

Professional Fees 60,000 110,000

Bank Staff Salary & Bonus - 2,068,036

Bank Charges ,Commission & Others 160,454 1,379,157

Business Tour 518,567 914,377

Business promotion Expenses 645,400 1,062,865

Carriage 990,456 819,620

Ceremonial Expenses 80,562 76,250

Cleaning & Sanitation 299,653 201,550

Computer Expenses 288,698 416,500

Conveyance 500,786 510,282

Courier Service 54,365

Credit Rating Expenses 20,000 -

Director Remuneration 2,205,000 2,220,000

Remuneration -Mercantile Bank Advisor - -

Dish Bill 10,500 10,500

Donation & Subscriptions 340,500 773,260

Electric Expenses 620,784 517,880

Entertainment Expenses 210,742 209,685

Fees & Professional Charge 22,000 62,000

General Expenses 478,052 555,032

Gift & Charity 82,500 91,311

Insurance Premium 250,000 364,765

IT, Mobile & Telephone Expenses 590,426 550,116

Legal Fees 22,500 35,200

Medical Expenses 595,850 909,905

Miscellaneous Expenses 115,500 239,098

175

Newspaper & Periodical 5,510 5,415

Petrol, Octane & Oil 1,385,500 1,593,000

Picnic Expenses 450,890 403,202

Postage & Telegram 150,485 101,050

Printing & Stationery 365,896 324,592

Rent, Rates & Taxes 65,893 85,899

Renewal, Enhance & Registration 420,325 579,328

Repair & Maintenance (Vehicles)

345,879 535,304

Repair & Maintenance (Factory)

750,785 864,171

Repair & Maintenance (Others)

858,709 597,880

Staff Bonus 202,000 1,292,000

Stamp Fees 311,290 692,325

Survey Fees - 61,638

Vat & Others 99,103 131,395

TA/DA 375,481 434,048

Traveling Expenses 899,553 1,128,758

Water bill 82,000 78,000

Uniform Expenses 346,080 370,466

Website Development Expense 30,000 -

Depreciation 4,353,468 3,976,064

Total: 23,294,142 27,480,924

21.00 Selling & Distribution Expenses: Tk. 44,544,840


Particulars

Ocean freight 19,417,669 11,815,459

Quality control expenses 7,403,654 5,609,760

Survey fees 312,117 500,184

Toll expenses

55,769 33,190

Clearing & Forwarding expenses 1,391,484 1,091,294

Sales commission (Buyers) 3,818,710 5,292,197

Forigen sales expense 3,339,799 3,095,291

Shipment expenses 8,805,638 6,600,785

Total: 44,544,840 34,038,160

22.00 Financial Expenses: Tk. 31,427,504

176


Particulars

Marcentile Bank , Term Loan

2,011,599

-

Marcentile Bank , CC HYPO

29,032,905

-

Cash incentive handling charge

383,000

-

Total: 31,427,504

-

23.00 Other Income: Tk. 88,356,125


Bank Name A/C Type Br. Name June 30,2018 June 30,2017

Marcantile Bank Ltd. CC Hypo Khulna

80,178,025 50,301,954

Sonali Bank Ltd. STL

Corporate

8,178,100

88,356,125

50,301,954

24.00 Current Income Tax: Tk. 8,652,255


Particulars

Tax on Export @/Tk 0.6% as per 82 © Income Tax Ordinance, 1984

6,001,571

4,168,452

Tax on Cash Subsidy @Tk. 3% as per 82 © Income Tax Ordinance, 1984

2,650,684

1,509,059

Total:

8,652,255

5,677,511

25.00 Deferred Tax (Income)/Expenses: Tk. 5,006,978


Particulars

Closing deferred tax liability

15,441,574

10,434,597

177

Less: Opening deferred tax liability

10,434,597

12,646,015

Deferred Tax (Income)/Expenses

5,006,977

(2,211,418)

Particulars

Accounting Base

Tax Base

Taxable/ (Deductible) Temporary

Diff.

Tax Rate Deferred

Tax (Asset)/ Liability

Property, Plant &

Equipment

250,402,805

206,284,020

44,118,784 35% 15,441,575

Total:

15,441,575

26.00 Basic Earnings Per Share: Tk. 1.24


Particulars

Basic Earnings per Share

Earning attributable to the shareholders (Net profit after tax)

25,100,557 22,128,993

Weighted Average Number of Ordinary Shares

20,323,940

20,323,940

Basic Earnings Per Share

1.24

1.09

178


Schedule of Property, Plant & Equipment


Annexure:

A

Particulars

C o s t

Dep. Rate

D e p r e c i a t i o n

Written Down

Value as at June 30,

2018

Balance as at July 01,

2017

Addition during the

year

Adjustment during the year

Balance as at June 30,

2018

Balance as at July 01, 2017

Charged during the

year

Adjustment during the year

Balance as at June 30,

2018

Land and Land Development

66,100,194

3,507,580

-

69,607,774 0%

-

-

-

-

69,607,774

Factory Building

100,665,160

11,005,013 -

111,670,173

5%

16,697,455

4,473,511 -

21,170,966

90,499,207

Plant & Machinery

45,178,012

5,121,039 -

50,299,051

10%

19,553,977

2,818,455 -

22,372,432

27,926,619

IQF Machinery

22,931,703

- -

22,931,703

10%

4,655,136

1,827,657 -

6,482,793

16,448,910

Cold Storage Compressor Unit

5,011,806

-

-

5,011,806 10%

1,019,903

399,190

-

1,419,093

3,592,713

Fleck Ice Machinery

5,164,994

- -

5,164,994

10%

1,256,101

390,889 -

1,646,990

3,518,004

Factory Equipment

59,868,572

4,047,000 -

63,915,572

15%

31,562,943

4,549,369 -

36,112,312

27,803,260

Tools & Equipment

809,805

1,000,700 -

1,810,505

20%

542,154

153,600 -

695,754

1,114,751

Transformer

364,530

- -

364,530

15%

202,726

24,271 -

226,997

137,533

I Phone & I Pad

290,516

- -

290,516

15%

101,569

28,342 -

129,911

160,605

179

Processing Equipment

2,568,372

718,365 -

3,286,737

20%

1,376,760

310,159 -

1,686,919

1,599,818

Laboratory Equipment

625,739

150,500 -

776,239

20%

363,596

67,479 -

431,075

345,164

Electric Equipment

2,488,327

230,246 -

2,718,573

20%

1,280,394

264,611 -

1,545,005

1,173,568

Refrigeration Van

1,035,103

- -

1,035,103

20%

689,600

69,101 -

758,701

276,402

Office Equipment

1,725,153

1,940 -

1,727,093

20%

866,248

171,975 -

1,038,223

688,870

Furniture & Fixture

967,575

20,370 -

987,945

10%

403,914

57,385 -

461,299

526,646

Jetty

330,618

50,000 -

380,618

20%

221,304

26,863 -

248,167

132,451

Crockery's & Cutleries

27,277

13,500 -

40,777

20%

16,497

3,506 -

20,003

20,774

Tube well & waterline

1,035,943

120,000 -

1,155,943

20%

341,911

150,806 -

492,717

663,226

Vacuums Machine

760,015

- -

760,015

20%

479,843

56,034 -

535,877

224,138

Metal Ditector Machine

1,104,811

- -

1,104,811

20%

697,533

81,456 -

778,989

325,822

Boundary Wall

2,881,547

500,000 -

3,381,547

20%

473,048

531,700 -

1,004,748

2,376,799

Vehicles

1,500,000

177,500 -

1,677,500

20%

150,000

287,750 -

437,750

1,239,750

Balance as at June 30, 2018 323,435,772 26,663,753 - 350,099,525 82,952,612 16,744,108 - 99,696,720 250,402,805

Balance as at June 30, 2017 276,990,997 46,444,775 - 323,435,772 67,660,059 15,292,554 - 82,952,613 240,483,160

Depreciation Charged To- 30.06.2018 30.06.2017

General & Administrative Expenses

4,353,468

3,976,064

180

Manufacturing Expenses

12,390,640

11,316,490

Total: 16,744,108 15,292,554

i) Depreciation has been charged on addition of assets during the year when it is put in to available for use.

ii) Total depreciation Charge has been estimated for General & Administrative Expenses 26% and Factory Overhead 74% respectively.

b. Information as is required under section 186 of the company Law, 1994 relating to holding company.

Not Applicable for Achia Sea Foods Limited, as the company do not have any subsidiary.

181

c. Selected ratios as specified in Annexure-D:-

Achia Sea Foods Ltd

Statement of Ratio Analysis

For the year ended 30 June 2018, 2017, 2016, 2015 and 2014 respectively

SL No

Particulars

2018 2017 2016 2015 2014

Amount Ratio Amount Ratio Amount Ratio Amount Ratio Amount Ratio

1) Liquidity Ratios :

i

Current Ratio (Times)

= (Current Assets / Current liability)

387,209,868

1.36

418,711,684

1.16

322,210,971

1.27

249,457,632 1.21

250,999,401

1.30

285,639,263

360,467,288

252,731,929

205,709,290

193,413,096

ii

Quick Ratio (Times) = (Current Assets-Inventory- Adv payment) /(Current liability-Bank O/D)

17,370,734

0.06

10,018,183

0.03

12,032,236

0.05

11,874,738

0.06

32,021,406

0.17

285,639,263

360,467,288

252,731,929

205,709,290

193,413,096

2) Operating Efficiency Ratios :

i

Accounts Receivable turn over Ratio (Times) = (Total Sales/Average Accounts Receivable)

937,326,012

73.53

694,742,004

68.38

202,379,849

17.98

225,433,282

10.64

540,819,526

20.47

12,748,268

10,160,171

11,257,988

21,196,694

26,424,307

ii

Inventory Turn over

Ratio= (Cost of Sales/ Average inventory)

887,655,861

4.01

657,929,787

3.02

181,305,005

0.96

203,028,288 1.16

497,708,919

2.85

221,585,766

217,702,797

188,088,464

175,382,159

174,503,361

iii

Assets turn over Ratio= (Net sales/Average Total Assets)

937,326,012

1.45

694,742,004

1.17

202,379,849

0.42

225,433,282 0.53

540,819,526

1.49

648,403,758

595,368,376

487,438,829

424,433,491

363,347,323

3) Profitability Ratios :

182

i

Gross Margin Ratio (%) = (Gross profit/Net Sales)

49,670,151

5.30%

36,812,217

5.30%

21,074,844

10.41%

22,404,994 9.94%

43,110,607

7.97%

937,326,012

694,742,004

202,379,849

225,433,282

540,819,526

ii

Operating Income

Ratio (%) = (Operating profit/Net Sales)

(18,168,831)

-1.94%

(24,706,868)

-3.56%

3,097,995

1.53%

3,864,571 1.71%

11,848,463

2.19%

937,326,012

694,742,004

202,379,849

225,433,282

540,819,526

iii

Net Profit Ratio (%) = ( Profit after tax/Net Sales)

25,100,557

2.7%

22,128,993

3.2%

15,714,779

7.8%

27,131,879 12.0%

36,289,334

6.7%

937,326,012

694,742,004

202,379,849

225,433,282

540,819,526

iv

Return on Assets Ratio (%) = ( Profit after tax/Average Total Assets)

25,100,557

3.87%

22,128,993

3.72%

15,714,779

3.22%

27,131,879 6.39%

36,289,334

9.99%

648,403,758

595,368,376

487,438,829

424,433,491

363,347,323

v

Return on Equity Ratio (%) = (Profit after tax/Share holders equity)

25,100,557

12.35%

22,128,993

10.89%

15,714,779

7.73%

27,131,879 28.51%

36,289,334

38.13%

203,239,400

203,239,400

203,239,400

95,171,000

95,171,000

vi

Earnings per share (Taka) = ( Profit after tax/No of Share)

25,100,557

1.24

22,128,993

1.09

15,714,779

0.77

27,131,879 2.85

36,289,334

3.81

20,323,940

20,323,940

20,323,940

9,517,100

9,517,100

vii

Earnings before interest, taxes, depreciation and amortization (EBITDA) Margin =

(EBITDA/Net Sales)

86,931,401

9.27%

66,298,130

9.54%

57,618,556

28.47%

78,138,423

34.66%

84,482,848

15.62%

937,326,012

694,742,004

202,379,849

225,433,282

540,819,526

183

SL No

Particulars

2018 2017 2016 2015 2014

Amount Ratio Amount Ratio Amount Ratio Amount Ratio Amount Ratio

4) Solvency Ratios :

i

Debt to Total Assets (Times) = (Total Debt/Total Assets)

293,511,263

0.46

336,492,617

0.51

235,522,631

0.44

202,217,449

0.46

198,418,676

0.49

637,612,672

659,194,843

531,541,909

443,335,748

405,531,233

ii

Debt to Equity Ratio (Times) = (Total Debt/Total Shareholders' Equity)

293,511,263

0.94

336,492,617

1.17

235,522,631

0.88

202,217,449

0.98

198,418,676

1.11

313,393,515

288,292,958

266,163,965

205,449,186

178,428,386

iii

Time Interest Earned Ratio

(Times) = (Operating Profit/Net Interest Expenses)

(18,168,831)

(0.58)

(24,706,868)

(0.97)

3,097,995

0.12

3,864,571

0.15

11,848,463

0.51

31,427,504

25,410,490

25,338,530

25,098,057

23,112,712

iv

Debt service Coverage Ratio = (EBITDA/Total Debt Service)

86,931,401

0.27

66,298,130

0.18

57,618,556

0.22

78,138,423

0.34

84,482,848

0.38

324,555,767

361,903,107

260,027,623

226,886,259

221,531,388

5) Cash Flow Ratios :

184

i

Net Operating Cash Flows

Per Share= (Net Operating cash flow/No. Ordinary Shares)

73,760,627

3.63

(54,454,426)

(2.68)

(48,611,903)

(2.39)

46,466,475

4.88

8,462,557

0.89

20,323,940

20,323,940

20,323,940

9,517,100

9,517,100

ii

Net Operating Cash Flows Per Share/EPS =(Net Operating cash flow per Share/EPS)

3.63

2.94

(2.68)

(2.46)

(2.39)

(3.09)

4.88

1.71

0.89

0.23

1.24

1.09

0.77

2.85

3.81

Sd/-

Mahfel Huq & Co

Dhaka, September 16, 2018 Chartered Accountants

185

Ratio Comparison with The Industry

Selected Ratios as on June 30, 2017

Financial ratio ASFL

INDUSTRY

AVERAGE(Ratio

)

Remark/Explanation

Liquidity Ratio

Current Ratio 1.16 1.14

ASFL’S Current Ratio is higher than the

industry average current ratio

because of relatively higher current

assets.

Quick Ratio 0.03 0.51

ASFL'S Ratio is lower than the industry

average ratio as quick assets are

relatively lower.

Operating Ratios

Accounts Receivable

Turnover Ratio(In times) 68.38 20

ASFL'S Ratio is higher as collection

period is longer than the average

industry.

Inventory Turnover

Ratio (In times) 3.02 3.22

ASFL'S Ratio is lower because of

relatively high inventory level.

Asset Turnover Ratio (In

times) 1.17 1.34


average ratio as BPML generating

sales with a relatively much amount of

fixed assets.

Profitability Ratio

Gross Margin Ratio % 5.30 9.5


average ratio as higher overhead cost

Operating Profit Ratio % -0.04 0.056


average ratio as lower operating profit

Net Profit Ratio % 0.03 0.08


average ratio as lower net profit

Return on Assets Ratio

(ROA) % 0.04 0.0251

ASFL'S Ratio is higher than the industry

average ratio as higher net profit.

Return on Equity Ratio

(After Tax)% 10.89 0.042

ASFL'S Ratio is better than the industry

average ratio as higher net profit.

Earning Per Share Ratio

(EPS 1.09 7.31

ASFL’S EPS is lower than the industry

average EPS as higher net profit.

EBITDA Margin%

9.54 0.062

ASFL'S Ratio is higher than the industry

average ratio as higher net operating

profit.

Solvency Ratio

Debt to total Assets

Ratio .51 0.79

ASFL'S Ratio lower due to lower debt

than industry average.

Debt to Equity Ratio 1.17 7

ASFL's Ratio is lower as debt burden is

lowered than equity.

186

Times Interest Earned

Ratio (0.97) 1.52

ASFL's Ratio is lower than the industry

average ratio as operating profit

is relatively higher to pay financial

expense.

Debt Service Coverage

Ratio 0.18 14.5


relatively higher debt.

Cash Flow

Net Operating Cash

Flow Per Share (2.68) -65

ASFL's Ratio is better than the industry

average ratio as net operating cash flow

is relatively higher.

Net Operating Cash

Flow Per

Share/Earnings Per

Share(EPS)

(2.45) -9



is relatively higher.

1. While calculating the Industry Average, the out layer results have not been considered.

2. The ratios of Achia Sea Foos limited has been calculated based on Audited Financial

Statements and Industry average ratios are calculated on the basis of financial data

collected from Annual Report of following two publicly traded Companies corresponding

accounting years:

Name of the Company Considered accounting Years

Apex Foods limited For the year ended 30

June,2013,2014,2015,2016 and 2017

Gemini Sea Food Limited For the year ended 30 June,

2013,2014,2015,2016 and 2017

3. The companies considered as peer of ASFL are listed in the Stock Exchanges of

Bangladesh, which are Dhaka Stock Exchange Limited and Chittagong Stock Exchange

Limited.

4. Companies having annually published data have been considered only.


Financial ratio ASFL

Ratio

INDUSTRY

AVERAGE Remark/Explanation

Liquidity Ratio

Currnt Ratio 1.27 1.16

ASFL'S Current Ratio is higher than

industry average current ratio

because of relatively lower current

liabilities

Quick Ratio 0.05 0.51


average ratio as quick assets are

relatively lower.

Operating Ratios

187

Accounts Receivable Turnover

Ratio(In times) 17.98 0.05

ASFL'S Ratio is higher as collection

period is lower than the average

industry.

Inventory Turnover Ratio (In

times) 0.96 3.7


relatively high inventory level.

Asset Turnover Ratio (In times) 0.42 2.19


average ratio as ASFL generating

sales with a relatively much amount of

fixed assets.

Profitability Ratio

Gross Margin Ratio % 10% 9% ASFL'S Ratio is better than the industry

average ratio as lower overhead cost

Operating Profit Ratio % 1.53% 8% ASFL'S Ratio is lower than the industry

average ratio as lower operating profit

Net Profit Ratio % 7.8% 2% ASFL'S Ratio is higher than the industry

average ratio as higher net profit

Return on Assets Ratio (ROA)

% 3.22% 4%


average ratio as lower net profit.

Return on Equity Ratio (After

Tax)% 7.73% 50%


average ratio as lower net profit.

Earnings Per Share Ratio (EPS 0.77 11.51 ASFL’S EPS is lower than the industry

average EPS as lower net profit.

EBITDA Margin 28.47 0.057


average ratio as higher net operating

profit.

Solvency Ratios

Debt to total Assets Ratio 0.44 0.77 ASFL'S Ratio lower due to lower debt

than industry average

Debt Equity Ratio (In times) .88 7.95 ASFL'S Ratio is lower as debt burden is

higher than industry.

Times Interest Earned Ratio .12 1.54


average ratio as operating profit

is relatively lower to pay financial

expense.

Debt Service Coverage Ratio 0.22 0.25 ASFL'S Ratio is lower because of

relatively higher debt.

Cash Flow

Net Operating Cash Flow Per

Share (2.39) 33.59



is relatively lower.

Net Operating Cash Flow Per

Share/Earnings Per Share(EPS) (3.09) 2.92



is relatively lower.

188


Financial ratio ASFL Ratio

INDUSTRY AVERAGE

Remark/Explanation

Liquidity Ratio

Current Ratio 1.21 1.11 ASFL’s Current Ratio is higher than the industry average current ratio because of relatively higher current assets.

Quick Ratio 0.06 0.3 ASFL's Ratio is higher than the industry average ratio as quick assets are relatively higher.

Operating Ratios

Accounts Receivable Turnover Ratio(In times)

10.64 83.78 ASFL's Ratio is lower as collection period is longer than the average industry.

Inventory Turnover Ratio (In times)

1.16 3.62 ASFL's Ratio is lower because of relatively high inventory level.

Asset Turnover Ratio (In times)

0.53 1.98

ASFL's Ratio is lower than the industry average ratio as ASFL generating sales with a relatively much amount of fixed assets.

Profitability Ratio

Gross Margin Ratio % 10% 8% ASFL's Ratio is better than the industry average ratio as lower overhead cost

Operating Profit Ratio % 2% 3% ASFL's Ratio is lower than the industry average ratio as lower operating profit

Net Profit Ratio % 12% 2% ASFL's Ratio is higher than the industry average ratio as higher net profit

Return on Assets Ratio (ROA) %

6% 3% ASFL's Ratio is higher than the industry average ratio as higher net profit.

Return on Equity Ratio (After Tax)%

28.51% 169% ASFL's Ratio is lower than the industry average ratio as lower net profit.

Earnings Per Share Ratio (EPS)

2.85 11.09 ASFL’s EPS is lower than the industry average EPS as lower net profit.

EBITDA Margin 34.66% 4% ASFL's Ratio is higher than the industry average ratio as higher net operating profit.

Solvency Ratios

Debt to total Assets Ratio 0.46 0.82 ASFL's Ratio lower due to lower debt than industry average

Debt Equity Ratio (In times) .98 75.23 ASFL's Ratio is better as debt burden is lower than equity.


ASFL's Ratio is higher than the industry average ratio as operating profit is relatively higher to pay financial expense.

Debt Service Coverage Ratio 0.34 0.59 ASFL's Ratio is lower because of relatively higher debt.

Cash Flow

189

Net Operating Cash Flow Per Share

4.89 33.59 ASFL's Ratio is lower than the industry average ratio as net operating cash flow is relatively lower.

Net Operating Cash Flow Per Share/Earnings Per Share(EPS)

1.72

3.03

ASFL's Ratio is lower than the industry average ratio as net operating cash flow is relatively lower.



INDUSTRY AVERAGE

Remark/Explanation

Liquidity Ratio


ASFL's Current Ratio is lower than the industry average current ratio because of relatively lower current liabilities

Quick Ratio 0.17 2.57 ASFL's Ratio is lower than the industry average ratio as quick assets are relatively lower

Operating Ratios


20.47 33.4 ASFL's Ratio is lower as collection period is longer than the average industry




1.49 3.35

ASFL's Ratio is lower than the industry average ratio as ASFL generating sales with a relatively much amount of fixed assets.

Profitability Ratio

Gross Margin Ratio % 8% 3.89 ASFL's Ratio is better than the industry average ratio as lower overhead cost

Operating Profit Ratio % 2% 0.40% ASFL's Ratio is better than the industry average ratio as higher operating profit

Net Profit Ratio % 7% 0.93% ASFL's Ratio is better than the industry average ratio as higher net profit


10% 1.68% ASFL's Ratio is better than the industry average ratio as higher net profit.


38.13% -11% ASFL's Ratio is higher than the industry average ratio as higher net profit.

Earning Per Share Ratio (EPS 3.81 5.47 ASFL’s EPS is lower than the industry average EPS as lower net profit.

EBITDA Margin 15.62% 3.48 ASFL's Ratio is higher than the industry average ratio as higher net operating profit.

Solvency Ratios


Debt Equity Ratio (In times) 1.11 -22 ASFL's Ratio is better as debt burden is lower than equity.

190


ASFLL's Ratio is higher than the industry average ratio as operating profit is relatively higher to pay financial expense.


Cash Flow


0.89 68.63 ASFL's Ratio is lower than the industry average ratio as net operating cash flow is relatively higher.


0.23

12.55 ASFL's Ratio is lower than the industry average ratio as net operating cash flow is relatively lower.



INDUSTRY AVERAGE

Remark/Explanation

Liquidity Ratio


ASFL's Current Ratio is lower than the industry average current ratio because of relatively higher current liabilities

Quick Ratio 0.18 0.445 ASFL's Ratio is lower than the industry average ratio as quick assets are relatively lower

Operating Ratios


19.75 20.45 ASFL's Ratio is lower as collection period is longer than the average industry




1.33 2.24

ASFL's Ratio is lower than the industry average ratio as BPML generating sales with a relatively much amount of fixed assets.

Profitability Ratio

Gross Margin Ratio % 9% 4% ASFL's Ratio is better than the industry average ratio as lower overhead cost

Operating Profit Ratio % 2% 5% ASFL's Ratio is lower than the industry average ratio as lower operating profit

Net Profit Ratio % 12% 1% ASFL's Ratio is higher than the industry average ratio as higher net profit.


16% 7% ASFL's Ratio is higher than the industry average ratio as higher net profit.


64% 142% ASFL's Ratio is lower than the industry average ratio as lower net profit.

Earning Per Share Ratio (EPS 9.70 -6.42 ASFL’s EPS is higher than the industry average EPS as higher net profit.

EBITDA Margin 0.23 0.047 ASFL's Ratio is higher than the industry average ratio as higher net operating profit.

Solvency Ratios

191


Debt Equity Ratio (In times) 2.87 -23.09 ASFL's Ratio is better as debt burden is lower than equity.

Times Interest Earned Ratio 3.54 1.04 ASFL's Ratio is higher than the industry average ratio as operating profit is relatively higher to pay financial expense.


Cash Flow


0.15 -44.69 ASFL's Ratio is higher than the industry average ratio as net operating cash flow is relatively higher.


0.02

6.96 ASFL's Ratio is lower than the industry average ratio as net operating cash flow is relatively lower.

192

d. Auditor’s report under Section 135(1) Para 24(1) of Part II of Schedule III of the Company Law, 1994

Auditors’ report Under Section-135 (1) and Para-24(1) of Part-II of Schedule-III of the Companies Act 1994

We have examined the Financial Statements of Achia Sea Foods Limited for the year ended June 30, 2018 and for the year ended June 30, 2017, 2016, 2015 were audited by us and for the year ended June 30, 2014 was audited by Ahmed Zaker & Co. In pursuance of Section-135 (1) and Para-24 (1) of Part-II of Schedule-III of the Companies Act 1994, our report is as under:

A) Statements of Assets and Liabilities of the Company is as under

Assets & Properties 30-Jun-18 30-Jun-17 30-Jun-16 30-Jun-15 30-Jun-14

Assets

Non- Current Assets 250,402,804 240,483,160 209,330,938 193,878,116 154,531,832

Property, Plant & Equipment 250,402,804 240,483,160 209,330,938 193,878,116 154,531,832

Current Assets 387,209,868 418,711,683 322,210,971 249,457,632 250,999,401

Inventories 205,176,037 237,995,495 197,410,098 178,766,830 171,997,488

Accounts Receivable 16,378,784 9,117,752 11,202,590 11,313,385 31,080,003

Advances, Deposits & Pre-Payments 164,663,097 170,698,006 112,768,637 58,816,064 46,980,507

Cash & Cash Equivalents 991,950 900,430 829,646 561,353 941,403

Total 637,612,672 659,194,843 531,541,909 443,335,748 405,531,233


Shareholders Equity 313,393,515 288,292,958 266,163,965 205,449,185 178,428,386

Share Capital 203,239,400 203,239,400 203,239,400 95,171,000 95,171,000

Share Money Deposits - - - 25,000,000 25,000,000


Reserve & Surplus - - 310,686 310,686 310,686

Non- Current Liabilities 38,579,894 10,434,597 12,646,015 32,177,273 33,689,751

Long Term Bank Loan 23,138,320 - - 20,688,223 33,689,751

193

Deferred Tax Liabilities 15,441,574 10,434,597 12,646,015 11,489,050

Liabilities and Provisions 285,639,263 360,467,288 252,731,929 205,709,290 193,413,096

Accounts payable 6,614,065 14,273,161 13,209,298 20,180,065 24,684,171

Short Term Bank Loan 270,372,943 336,492,617 235,522,631 181,529,225 164,728,925

Others payable - 4,024,000 4,000,000 4,000,000 4,000,000

Provision for Income Tax 8,652,255 5,677,510 - - -

Total 637,612,672 659,194,843 531,541,909 443,335,748 405,531,233

Net Assets Value per Share(NAV) 15.42 14.18 13.10 21.59 18.75

The company has changed the face value of its ordinary share from Tk. 100.00 to Tk. 10.00 by passing a special resolution in its extraordinary general meeting held on 20 February 2014 and necessary amendments in Capital clause of the Memorandum and Articles of Association were made accordingly.

B) The statements of operating results of the Company is as follow:


Gross Profit 49,670,151 36,812,217 21,074,844 22,404,994 43,110,607

Revenue 937,326,012 694,742,004 202,379,849 225,433,282 540,819,526

Cost of goods sold (887,655,861) (657,929,787) (181,305,005) (203,028,288) (497,708,919)


General and Administrative Expenses (23,294,142) (27,480,925) (12,215,737) (10,923,906) (18,791,475)

Selling and Distribution Expenses (44,544,840) (34,038,160) (5,761,112) (7,616,517) (12,470,669)

Operating Profit (18,168,831) (24,706,868) 3,097,995 3,864,571 11,848,463

Financial Expenses (31,427,504) - - - -

194

Non - Operating Income 88,356,125 50,301,954 15,209,866 37,876,782 30,092,456

Other Income 88,356,125 50,301,954 15,209,866 37,876,782 30,092,456

Profit before Tax 38,759,790 25,595,086 18,307,861 41,741,353 41,940,919

Tax Expense (13,659,232) (3,466,093) (2,593,082) (14,609,474) (5,651,585)

Current income Tax (8,652,255) (5,677,511) (1,436,117) (3,120,424) (5,651,585)

Deferred Tax (5,006,977) 2,211,418 (1,156,965) (11,489,050)

Net profit after tax 25,100,557 22,128,993 15,714,779 27,131,879 36,289,334

Earning Per Share (EPS) 1.24 1.09 0.94 2.85 6.67

C) Dividend declared:


Dividend - - 38,068,400 - -

Cash Dividend Nil Nil Nil Nil Nil

Stock Dividend (Bonus Share) Nil Nil 38,068,400 Nil Nil

* Declared 40% of stock dividend

D) Achia Sea Foods Limited was registered as a private limited company with the Registrar of Joint Stock Companies and Firms (RJSC) vide registration no. Khulna-178 dated December 27, 1993 under the Companies Act-1994. Subsequently the company was converted into a public limited company effective from September 27, 2014.

E) The Company has no subsidiary as on the balance sheet date.

F) No proceeds or part of the proceeds of the issue of shares would be applied directly by the company in the purchase of any business.

G) The Company did not prepare any statement of accounts for the period subsequent to June 30,2018.

H) Figures related to previous years have been re-arranged whenever considered necessary.

Sd/-

Mahfel Huq & Co.

Dhaka, September 16 , 2018 Chartered Accountants

195

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


Statement of Financial Position As at June 30, 2018

Particulars Amount in Taka Percentage on

total Asets Grand Total

A. Non-Current Assets 250,402,804 39% 39%

Property, Plant & Equipment 250,402,804 39%

B. Current Assets 387,209,868 61% 61%

Inventories 205,176,037 32%

Accounts Receivable 16,378,784 3% Advances, Deposits & Pre-Payments

164,663,097 26%

Cash & Cash Equivalents 991,950 0%

Total Assets (A+B) 637,612,672 100%

Sources of Fund


C. Shareholders Equity 313,393,515 49% 49%

Share Capital 203,239,400 32%

Retained Earnings 110,154,115 17%

Reserve & Surplus -

D. Non-Current Liabilities 38,579,895 6% 6%

Long Term Loan 23,138,320 4%

Deferred Tax liabilities 15,441,575 2%

E. Current Liabilities 285,261,648 45% 45%

Accounts Payable 6,614,065 1%

Short Term Loan 270,372,943 42%

Loan form Director -

Provision for Income Tax 8,652,255 1%

Total Equity & Liabilities (C+D+E)

637,612,672 100%

196

Achia Sea Foods Limited Statement of Profit or Loss and other Comprehensive Income


Particulars Amount in Taka Percentage on total turnover

Revenue 937,326,012 100.00%

Cost of goods sold (887,655,861) -94.70%

Gross Profit 49,670,151 5.30%

Operating Expenses (67,838,982) -7.24%

General and Administrative Expenses (23,294,142) -2.49%

Selling and Distribution Expenses (44,544,840) -4.75%

Operating profit (18,168,831) -1.94%

Financial Expenses (31,427,504) -3.35%

Non-Operating Income 88,356,125 9.43%

Other Income 88,356,125 9.43%

Profit before Tax 38,759,790 4.14%

Tax Expense (13,659,233) -1.46%

Current income Tax (8,652,255) -0.92%

Deferred Tax (5,006,978) -0.53%

Net profit after tax 25,100,557 2.68%

197

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

SL No Particulars Amount in BDT(1st

July,2017-June 30, 2018)

1 Net profit after tax 25,100,557

2 No. shares before IPO 20,323,940

3 Earnings Per Share (EPS) 1.24

(g) Net profit excluding Extra-ordinary income or non-recurring income coming from other than

core operations:

SL No Particulars Amount in BDT(1st

July,2017-June 30, 2018)


2 Less: Extraordinary income -


4 No. of Shares before IPO 20,323,940

5 Earnings Per share excluding extraordinary income

1.24

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

ASFL has not annualized the quarterly or half yearly EPS.

(i) Net Asset Value per Share:

SL No Particulars Taka

1 Share Capital 203,239,400

2 Retained Earnings 110,154,115

3 Total Shareholder's Equity 313,393,515

4 Number of Shares Outstanding 20,323,940

5 Net Asset Value Per Share 15.42

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

deficiency or anomaly is found in the financial statements.

It may not applicable so far.

198

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

operation certified by the auditors:-

Auditor’s Certificates

(i) Certification on Statement of Long Term and Short Term Borrowings Including Borrowing from Related Party or Connected Persons with rate of interest and interest paid/accrued of Achia Sea Foods Limited.

After due verification, we certify that Achia Sea Foods Limited has not received any long term and

short term borrowing from related party or connected persons except the following secure loan from

Sonali Bank Ltd. and Mercantile Bank Ltd. and sister concern of Achia sea Foods Limited for the last

five years made up as follows :

For the year ended 30 June 2018

Name of Party Nature of

Relationship

Nature of

Borrowing

Balance as

30 June, 2018

Interest

Rate

Interest

Paid,

(BDT)

Interest

Accrued,

(BDT)

Mercantile

Bank Ltd. Lender Long Term 23,138,320 12.5% 2,011,599

-

Sub-Total 23,138,320 2,011,599 -

Mercantile

Bank Ltd. Lender Short Term 257,878,348 12% 29,032,905

Sundarban

shrimps (Pvt.)

Ltd.

Sister Concern Short Term 12,494,595 0% -

-

Sub-Total 270,372,943 29,032,905

Grand Total 293,511,263 31,044,504 -

199



Relationship

Nature of

Borrowing

Balance as

30 June, 2017

Interest

Rate

Interest

Paid,

(BDT)

Interest

Accrued,

(BDT)

Sonali Bank

Ltd. Lender Short Term - 19,225,408

Mercantile

Bank Ltd. Lender Short Term 248,772,948 12% 3,598,953 -

Sonali Bank

Ltd. Lender Short Term (371) 15%

AAA Holdings

Ltd. Lender Short Term 30,000,000 2,586,129

Sundarban

shrimps (Pvt.)

Ltd.

Sister Concern Short Term 57,720,040 0%

Sub-Total 336,492,617 25,410,490

Grand Total 336,492,617 25,410,490 -



Relationship

Nature of

Borrowing

Balance as

30 June,

2016

Interest

Rate

Interest

Paid,

(BDT)

Interest

Accrued,

(BDT)

Sonali Bank Ltd. Lender Long Term - 11% 1,081,563 -

Sub-Total - 1,081,563

Sonali Bank Ltd. Lender Short Term 195,629,631 15% 23,423,429 -

Sundarban shrimps

(Pvt.) Ltd. Sister Concern Short Term 39,893,000

Sub-Total 235,522,631 23,423,429

Grand Total 235,522,631 24,504,992 -

200



Relationship

Nature of

Borrowing

Balance as

30 June,

2015

Interest

Rate

Interest

Paid,

(BDT)

Interest

Accrued,

(BDT)

Sonali Bank

Ltd. Lender Long Term 20,688,223 11% 4,099,081 -

Sub-Total 20,688,223 4,099,081

Sonali Bank

Ltd. Lender Short Term 169,495,911 12% 20,569,729 -

Social Islami

Bank Ltd. Lender Short Term 12,033,315 12%

Sub-Total 181,529,226 20,569,729

Grand Total 202,217,449 24,668,810 -



Relationship

Nature of

Borrowing

Balance as

30 June,

2014

Interest

Rate

Interest

Paid, (BDT)

Interest

Accrued,

(BDT)

Sonali Bank

Ltd. Lender Long Term 33,689,751 11% 2,806,697 -

Sub-Total 33,689,751 2,806,697

Sonali Bank

Ltd. Lender Short Term 164,728,925 15.5% 20,306,015 -

Sub-Total 164,728,925 20,306,015

Grand Total 198,418,676 23,112,712 -

Sd/-

Mahfel Huq & Co.


201

Sd/-

Mahfel Huq & Co.


(ii) Certification on Statement of Principal Terms of Secured Loans and Assets on which Charge have been Created against Those Loans with names of lenders, purpose, sanctioned amount, rate of interest, primary security, collateral/other security, re-payment schedule and status of Achia Sea Foods Limited.

After due verification, we certify that the principal terms of secured loans as per loan agreement and assets on which charge have been created against those loans of achia sea foods limited from 1st july, 2014 to 30 june, 2018 were as follows:


Names of lenders Mercantile Bank Ltd.


Sonali Bank Ltd.

Sonali Bank Ltd. Sonali Bank

Ltd.

Purpose

To increase working capital and maintaining sufficient Stocks

To increase working capital and maintaining sufficient Stocks

Working Capital

Working Capital & for removing the present crisis of frozen

Working Capital & for removing the present crisis of frozen

Collateral Asset

275.81 Decimal Land of Achia Sea Foods limited

275.81 Decimal Land of Achia Sea Foods limited

84.00 decimal project land & building



Sanctioned Amount ( Taka in million)

2500 Lac & 500 Lac

2500 Lac & 500 Lac

225 Lac 1700 Lac & 225

Lac 1700 Lac & 225

Lac

Rate of Interest 12% 12% 15% 11% & 15% 11% & 15%

Re-payment schedule

Quarterly & 60 equal monthly

installment

Quarterly & 60 equal monthly

installment

1 Year 30 quarterly

installments & 1 year

30 quarterly installments &

1 year

Status (Outstanding balance Tk.)

270,372,943 336,492,617 235,522,631 202,217,449 198,418,676

202

(iii) Statement of unsecured loan with Terms and Conditions of Achia Sea Foods Limited

This is to certify that, Achia Sea Foods Limited has not taken any unsecured loan from any person/body/related party except Loan from Director which is interest free during the period from 01 July 2013 to 30 June 2018.


30-Jun-18 30-Jun-17 30-Jun-16 30-Jun-15 30-Jun-14

Loan from Director

- 4,024,000 4,000,000 4,000,000 4,000,000

Total - 4,024,000 4,000,000 4,000,000 4,000,000

Sd/-

Mahfel Huq & Co.


(iv) Certification on statement showing the amount of raw material, packing material, stock-in process and finished goods, consumable items, store & spare parts, inventory of trading goods etc. of Achia Sea Foods Limited

After due verification, we certify that the statement of inventories showing amount of raw material, packing material, stock-in process, finished goods, consumable items, store & spare parts, inventory of trading goods of Achia Sea Foods Limited from 1st July, 2013 to 30 June, 2018 were as follows:

Statement of Inventories



Raw Material 925,350 260,010 197,038 141,190 1,365,365

Finished Goods 202,830,167 235,870,628 195,476,520 178,036,140 170,632,123

Packing Material 1,420,520 1,864,857 1,736,540 589,500 -

Total 205,176,037 237,995,495 197,410,098 178,766,830 171,997,488

Sd/-

Mahfel Huq & Co.


203

(v) Auditor’s certificate regarding statement of trade receivables of Achia Sea Foods Limited

Based on our scrutiny of the relevant financial statements of Achia Sea Foods Limited which have been prepared by management and provided to us for review, we certify that as per disclosure provided in those financial statements, the company had following amount of trade receivables, including receivables from related party or connected persons during the last five years:



Receivable Against Export

16,378,784 938,652

Cash Subsidy Receivable

-

8,179,100 11,202,590 11,313,385 31,080,003

Total 16,378,784 9,117,752 11,202,590 11,313,385 31,080,003

Sd/-

Mahfel Huq & Co.


(vi) Auditor’s certificate regarding any loan given by the issuer including loans to related party or connected persons with rate of interest and interest realized / accrued by the Achia Sea Foods Limited.

This is to certify that, Achia Sea Foods Limited has given loan to Sundarban Shrimps (Pvt) Limited

which is sister concern of Achia Sea Foods Ltd. from 01 July 2013 to 30 June 2018.



Sundarban Shrimps (Pvt.) Ltd.

12,494,595

57,720,040

39,893,000

-

-

Total

12,494,595

57,720,040

39,893,000

-

-

Sd/-

Mahfel Huq & Co.


204

(vii) Certification on statement of other income showing interest income, dividend income, and discount received, other non-operating income of Achia Sea Foods Limited.

This is to certify that, other income showing interest income, dividend income, discount

received, other non operating income of Achia Sea Foods Limited during the period from 01

July 2013 to 30 June 2018 are as follows :

Particular Amount in Taka


Interest Income

-

-

-

-

-

Dividend Income

-

-

-

-

-

Discount Received

-

-

-

-

-

Other Non-Operating Income (Cash subsidy)

88,356,125

50,301,954

15,209,866

37,876,782

30,092,456

Total

88,356,125

50,301,954

15,209,866

37,876,782 30,092,456

Sd/-

Mahfel Huq & Co.

Dhaka: September 16 , 2018 Chartered Accountants

205

(viii) Auditor’s certificate on statement of turnover showing separately in cash and through banking channel of Achia Sea Foods Limited.

After due verification, we certify that the turnover showing separately in cash, through banking channel of Achia Sea Foods Limited from 1st July, 2013 to 30 June, 2018 were as follows:

Particular Amount in Taka


In Cash - - - - -

Through banking channel 937,326,012 694,742,004 202,37 9,849 225,433,282 540,819,526

Total Income 937,326,012 694,742,004 202,379,849 225,433,282 540,819,526

Sd/-

Mahfel Huq & Co.


206

(ix) Auditor’s certificate regarding Related Party Transactions of Achia Sea Foods Limited

After due verification, we certify that the status of related party transactions of Achia Sea Foods Limited from 1st July, 2013 to 30 June, 2018 were as follows:

SL. No Name of

person/party Relationship with

the issuer Nature of

Transaction

Amount in Taka


1 Mr. Md. Arifur Rahman Sagir

Chairman Director Remuneration

420,000 420,000 420,000 420,000 420,000

2 Mr. Md. Tariqul Islam Zaheer

Managing Director Director Remuneration

720,000 720,000 720,000 720,000 720,000

3 Mr. Md.Ali Azgar Nasir

Director Director Remuneration

240,000 240,000 240,000 240,000 240,000

4 Mr. Md. Nadirul Islam Babu


240,000 240,000 240,000 240,000 240,000

5

Mr. A.K.M Mostagawsul Haque


120,000 120,000 120,000 120,000 120,000

6 Mr. Md. Riyad Mahmood


480,000 480,000 480,000 480,000 480,000

7 Sundaban Shrimps Pvt. Ltd

Sister Concern Short Term Loan 12,494,595 5,772,040

39,893,000 -

-

Grand total 14,714,595 59,940,040 42,113,000 2,220,000 2,220,000

Sd/-

Mahfel Huq & Co.


207

(x) Auditor’s certificate regarding reconciliation of business income shown in tax return with net income shown in audited financial statements of Achia Sea Foods Limited from 1st July, 2013 to 30 June, 2018.

This is to certify that the business income of Achia Sea Foods Limited as per audited financial statements and income shown in tax return for the last five years were as follows:



Net income before tax as per Audited Financial Statements

38,759,790 25,595,086 18,307,861 41,741,353 41,940,919

Less: Reserve for exceptional losses

- - - - -

Business Income shown in Tax Return

38,759,790 25,595,086 18,307,861 41,741,353 41,940,919

Sd/-

Mahfel Huq & Co.


(xi)Auditor’s certificate on confirmation that all receipts and payments of Achia Sea Foods Limited above Tk. 500,000/- ( Five Lac) were made through Banking Channel.

This is to certify that, all receipts and payments of Achia Sea Foods Limited during the period from 01 July 2013 to 30 June 2018 above Tk. 5, 00,000/-(Five Lac) were made through banking channel.

Sd/-

Mahfel Huq & Co.


(xii) Auditor’s certificate on confirmation that Bank Statements of Achia Sea Foods Limited are in conformity with its books of accounts

This is to certify that, the Bank Statements of Achia Sea Foods Limited during the period from 01 July 2013 to 30 June 2018 are in conformity with books of accounts.

Sd/-

Mahfel Huq & Co.


208

(xiii) Auditor’s certificate on statement of payment status of Tax, VAT and Other taxes/duties of Achia Sea Foods Limited

This is to certify that, the payment status of income Tax, VAT and other Taxes or duties of Achia Sea Foods Limited during the period from 01 July 2013 to 30 June 2018 are as follows:

Particular Amount in BDT


Tax 8,652,255 5,677,511 1,436,117 3,120,424 5,651,585

VAT 99,103 131,395 52,787 28,216 -

Others Taxes/Duties N/A N/A N/A N/A N/A

Total 8,751,358 5,808,906 1,488,904 3,148,640 5,651,585

Sd/-

Mahfel Huq & Co.


209

Part XXVII

CREDIT RATING REPORT

As per Section 3 of Credit Rating Companies Rules, 1996, no Credit Reporting Report is required for

the Company.

210

Part XXVIII

PUBLIC ISSUE APPLICATION PROCEDURE

Step-1 (Applicant)

1. An applicant for public issue of securities shall submit application/buy instruction to the

Stockbroker Merchant Banker where the applicant maintains customer account, within the cut-off

date (i.e. the subscription closing date), which shall be the 25th (twenty fifth) working day from the

date of publication of abridged version of prospectus.

2. The application/buy instruction may be submitted in prescribed paper or electronic form, which

shall contain the Customer ID, Name, BO Account Number, Number of Securities applied for, Total

Amount and Category of the Applicant. At the same time:

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

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

c) Eligible investors shall submit application through the electronic subscription system of the exchange(s) and deposit the full amount intended to subscribe by the method as determined by the exchange(s).


3. The Stockbroker/Merchant Banker shall maintain a separate bank account only for this purpose

namely "Public Issue Application Account". The Stockbroker/Merchant Banker shall:

a) post the amount separately in the customer account (other than NRB and Foreign applicants), and upon availability of fund, block the amount equivalent to the application money;

b) accumulate all the application/buy instructions received up to the cut-off date, deposit the amount in the "Public Issue Application Account" maintained with its bank within the first

banking hour of next working day of the cut-off date;

c) Instruct the banker to block the account for an amount equivalent to the aggregate application money and to issue a certificate in this regard.

211

4. Banker of the Stockbroker/Merchant Banker shall block the account as requested for, issue a

certificate confirming the same and handover it to the respective Stockbroker/Merchant Banker.

5. For Non-resident Bangladeshi (NRB) and Foreign applicants, the Stockbroker/Merchant Banker shall

prepare a list containing the draft information against the respective applicant's particulars.

6. The Stockbroker/Merchant Banker shall prepare category wise lists of the applicants containing

Customer ID, Name, BO Account Number and Number of Securities applied for, and within 03 (three)

working days from the cut-off date, send to the respective Exchange, the lists of applicants in electronic

(text format with tilde’~’ separator) format, the certificate(s) issued by its banker, the drafts and

certificates received from Non-resident Bangladeshi (NRB) and Foreign applicants and a copy of the

list containing the draft information.

7. On the next working day, the Exchanges shall provide the Issuer with the information received from

the Stockbroker/Merchant Bankers, the drafts submitted by Non-resident Bangladeshi (NRB) and

Foreign applicants and the list containing the drafts and certificates information. Exchanges shall verify

and preserve the bankers' certificates in their custody.

8. The application/buy instructions shall be preserved by the Stockbroker/Merchant Bankers up to 6

months from listing of the securities with exchange.

Step-3 (Issuer)

9. The Issuer shall prepare consolidated list of the applications and send the applicants' BOIDs in

electronic (text) format in a CDROM to CDBL for verification. The Issuer shall post the consolidated list

of applicants on its website and websites of the Exchanges. CDBL shall verify the BOIDs as to whether

the BO accounts of the applicants are active or not.

10. On the next working day, CDBL shall provide the Issuer with an updated database of the applicants

containing BO Account Number, Name, Addresses, Parents' Name, Joint Account and Bank Account

information along with the verification report.

11. After receiving verification report and information from CDBL, the Issuer shall scrutinize the

applications, prepare category wise consolidated lists of valid and invalid applications and submit

report of final status of subscription to the Commission and the Exchanges within 10 (ten) working

days from the date of receiving information from the Exchanges.

12. The Issuer and the issue manager shall conduct category wise lottery with the valid applications

within 03 (three) working days from the date of reporting to the Commission and the Exchanges, if do

not receive any observation from the Commission or the Exchanges.

13. The Issuer and issue manager shall arrange posting the lottery result on their websites within 06

(six) hours and on the websites of the Commission and Exchanges within 12 (twelve) hours of lottery.

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

a) Send category wise lists of the successful and unsuccessful applicants in electronic (text format with tilde ' separator) format to the respective Exchange.

212

b) send category wise lists of unsuccessful applicants who are subject to penal provisions as per conditions of the Consent Letter issued by the Commission in electronic (text format with tilde separator) format to the Commission and Exchanges mentioning the penalty amount against each applicant.

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

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


15. On the next working day, Exchanges shall distribute the information and allotment letters to the

Stockbroker/Merchant Bankers concerned in electronic format and instruct them to:

a) remit the amount of successful (other than NRB and Foreign) applicants to the Issuer's respective Escrow Account opened for subscription purpose, and unblock the amount of unsuccessful applicants:

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

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

Stockbrokers/Merchant Banker shall request its banker to:

a) release the amount blocked for unsuccessful (other than NRB and foreign) applicants:

b) Remit the aggregate amount of successful applicants and the penalty amount of unsuccessful applicants (other than NRB and foreign) who are subject to penal provisions to the respective 'Escrow' accounts of the Issuer opened for subscription purpose.

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

bankers shall unblock the amount blocked in the account(s) and remit the amount as requested for to

the Issuer's 'Escrow' account.

18. Simultaneously, the stockbrokers/Merchant Bankers shall release the application money blocked

in the customer accounts: inform the successful applicants about allotment of securities and the

unsuccessful applicants about releasing their blocked amounts and send documents to the Exchange

evidencing details of the remittances made to the respective 'Escrow' accounts of the Issuer. The

unblocked amounts of unsuccessful applicants shall be placed as per their instructions. The

Stockbroker/Merchant Banker shall be entitled to recover the withdrawal charges, if any, from the

applicant who wants to withdraw the application money, up to an amount of Tk. 5.00 (five) per

withdrawal.

19. All drafts submitted by NRB or Foreign applicants shall be deposited in the Issuer's respective

'Escrow' accounts and refund shall be made by the Issuer by refund warrants through concerned

stockbroker or merchant banker or transfer to the applicant's bank account (FC account which has been

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debited to apply by NRB or foreign applicants) through banking channel within 10 (ten) working days

from the date of lottery.

Miscellaneous:

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

above.

21. The bank drafts (FDD) shall be issued considering TT Clean exchange rate of Sonali Bank Ltd. on

the date of publication of abridged version of prospectus.

22. Amount deposited and blocked in the "Public Issue Application Account" shall not be withdrawn

or transferred during the blocking period. Amount deposited by the applicants shall not be used by the

Stockbrokers/Merchant Bankers for any purpose other than public issue application.

23. The Issuer shall pay the costs related to data transmission, if claimed by the Exchange concerned up

to an amount of Tk.2,00,000.00 (taka two lac) for a public issue.

24. The Stockbroker/Merchant Bankers shall be entitled to a service charge of Tk.5.00 (taka five) only

per application irrespective of the amount or category. The service charge shall be paid by the applicant

at the time of submitting application.

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

drafts sent.

26. The Issuer shall accumulate the penalty amount recovered and send it to the Commission through

a bank draft/payment order issued in favor of the Bangladesh Securities and Exchange Commission.

27. The concerned Exchange are authorized to settle any complaints and take necessary actions against

any Stockbroker/Merchant Banker in case of violation of any provision of the public issue application

process with intimation to the Commission.

All eligible Stock Brokers and Merchant Bankers shall receive the IPO subscription.

Others:

The IPO subscription money collected from investors will be remitted in following bank accounts

with ………………………… Bank Limited:

SL# Account bearing number Account title Currency

For Resident Bangladeshis

01 [*] [*] [*]

For Non-resident Bangladeshis

02 [*] [*] [*]

03 [*] [*] [*]

04 [*] [*] [*]

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