Fax - BSRM an Acclaimed Steel Re Rolling Mill in … · Fax +880 (31) 2520795 E-mail...

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Rahman Rahman Huq Chartered Accountants 102 Agrabad C/A (3rd Floor) Chittagong, Bangladesh Telephone +880 (31) 710704, 710996 Fax +880 (31) 2520795 E-mail [email protected] lnternet www.kpmg.com/bd INDEPENDENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF BANGLADESH STEEL RE-ROLLING MILLS LTD. Report on the Financial Statements We have audited the accompanying financial statements of BANGLADESH STEEL RE-ROLLING MILLS LTD. ("the Company") and its associates which comprise the statement of financial position as at 31 December 2013,the 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 information. Management's Responsibility for the Financial Statements Management is responsible for the preparation of financial statements that give a true and fair view in accordance with Bangladesh Financial Reporting Standards, and for such intemal control as management determines is necessary to enable the preparation of flnancial statements that are free from material misstatement, whether due to fraud or error. Auditor's 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 about 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 our 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, we consider internal control relevant to the entity's preparation of financial statements that give a true and fair view 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 the Company as at 3l December 2013, and of its financial performance and its cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards. Report on Other Legal and Regulatory Requirements In accordance with the Companies Act 1994 and Securities and Exchange Rules 1987, we also report the following: (a) we have obtained all the information and explanation which to the best of our knowledge and belief were necessary for the purpose of our audit and made due verification thereof; (b) in our opinion, proper books ofaccount as required by law have been kept by the Company so far as it appeared from our examination of those books; (c) the statement of financial position, and the statement of profit or loss and other comprehensive income dealt with by the report are in agreement with the books of account; and (d) the expenditure incurred was for the purposes of the Company's business. fZ,/a.n*,,r, ?^4*r*^ % Chittagong, 09 March 2014 ' M, Dhaka office address : Rahman Rahman Huq, a partnership firm registered in Rahman Rahman Huq Telephon8 +880 (2) 988 M50'2 Bangladesh and a member firm of the KPMG network of Chartered Accountants Fil +880 (2) 988 6449 lndependent member firms affilialed with KPMG intemational 9, M0hakhali CiA{llIh & 12h floors) E.mail [email protected] Cmperative ("KPMG lnternational'), a Swiss entity. Dhaka 1212, Bangladesh. lnternel w.kpmg.@trVbd 1 BSR[r_Ac. 13 (F)

Transcript of Fax - BSRM an Acclaimed Steel Re Rolling Mill in … · Fax +880 (31) 2520795 E-mail...

Rahman Rahman HuqChartered Accountants102 Agrabad C/A (3rd Floor)Chittagong, Bangladesh

Telephone +880 (31) 710704, 710996Fax +880 (31) 2520795E-mail [email protected] www.kpmg.com/bd

INDEPENDENT AUDITOR'S REPORT

TO THE SHAREHOLDERS OF BANGLADESH STEEL RE-ROLLING MILLS LTD.

Report on the Financial Statements

We have audited the accompanying financial statements of BANGLADESH STEEL RE-ROLLING MILLSLTD. ("the Company") and its associates which comprise the statement of financial position as at 31 December

2013,the 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

information.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance

with Bangladesh Financial Reporting Standards, and for such intemal control as management determines is

necessary to enable the preparation of flnancial statements that are free from material misstatement, whether due to

fraud or error.

Auditor's ResponsibilityOur 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 about 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 our judgment, including the assessment of the risks ofmaterial misstatement of the financial statements, whether due to fraud or error. In making those risk assessments,

we consider internal control relevant to the entity's preparation of financial statements that give a true and fair viewin 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.

OpinionIn our opinion, the financial statements give a true and fair view of the financial position of the Company as at 3lDecember 2013, and of its financial performance and its cash flows for the year then ended in accordance withBangladesh Financial Reporting Standards.

Report on Other Legal and Regulatory Requirements

In accordance with the Companies Act 1994 and Securities and Exchange Rules 1987, we also report the following:

(a) we have obtained all the information and explanation which to the best of our knowledge and beliefwere necessary for the purpose of our audit and made due verification thereof;

(b) in our opinion, proper books ofaccount as required by law have been kept by the Company so far as itappeared from our examination of those books;

(c) the statement of financial position, and the statement of profit or loss and other comprehensive income

dealt with by the report are in agreement with the books of account; and

(d) the expenditure incurred was for the purposes of the Company's business.

fZ,/a.n*,,r, ?^4*r*^ %Chittagong, 09 March 2014 ' M,Dhaka office address :

Rahman Rahman Huq, a partnership firm registered in Rahman Rahman Huq Telephon8 +880 (2) 988 M50'2Bangladesh and a member firm of the KPMG network of Chartered Accountants Fil +880 (2) 988 6449lndependent member firms affilialed with KPMG intemational 9, M0hakhali CiA{llIh & 12h floors) E.mail [email protected] ("KPMG lnternational'), a Swiss entity. Dhaka 1212, Bangladesh. lnternel w.kpmg.@trVbd

1BSR[r_Ac. 13 (F)

BANGLADESH STEEL RE-ROLLING MTLLS LTD.

STATEMENT OF FINANCIAL POSITIONAS AT 31 DECEMBER 2OI3

Assets

Non-current assets:

Property, plant and equiPrnent

Capital work-in-progress

Investtnent in associate

Other investments

Total non-current assets

Current assets:

InventoriesTrade receivables

Other receivables

Due from inter companies

Advances and deposits

Shorl term investments

Cash and cash equivalents

Total current assets

Total assets

Equity and LiabilitiesEquity:Share capital

General reserve

Revaluation surplus

Retained earnings

Fair Value reselve

Total equity

Liabilities:Non-current liabilitiesLong term loan

Deferred tax liabilitiesTotal non-current liabilitiesTrade payables

Short term liabilitiesLiabilities for expenses

Advance against sales

Due to inter companies

Long terrn loan-current PonionProvision for income tax

Provision for.WPPF and Welfare Fund

Other IiabilitiesTotal current liabilitiesTotal liabilitiesTotal equity and liabilities

The annexed notes I to 47 fornt an integral part

Notes

6

7

8.01

8.02

9

t011

12

13

8.0314

5,889,585,061404,867,36678,591,566

2,277,089,3791,597 ,513,355

78,011,7 52

99,302,648

31.12.2013Taka

7,006,114,629345,062,819

3,268,469,94499.527 ,',194

10,719,175,186

10,424,961,127--aT${I163tr

1,558,510,3 80

30,1 70,8 1 8

4,129,104,568

2,398,521,265

2,439,1528,1 18,746,183

1,406,182,6121.07 1 ,987 ,61 s

2,478,170,287

3,563,424,2293,631,028,292

216,856,037101 ,714,671

2,401,210,345492,699,s56t24,274,416

806,3 85

15,205,91210,547,219,843

13,025,390,130

31.12.2012

Taka

6,117,152,324414,664,946

1,984,714,56953,659,91 I

9J',14,191,750

4,766,400,890543,137,398148,881,245

1,409,473,023484,118,657

232,608,16085,564,964

7,670,184,33716.840,37

1,228,233,910882,458,633

7,203,368,444

9,314,060,947

15

t6.0r16.02

16.03

17.01

i8

l920

21

22

23

r7.0r2425

26

21,144,136,313 16,840,376,087

Company Secretary

As per our annexed report ofsame da;e.

qZ.^/_*.^W^/."r"^Rahman Rahman HuqChartered Accountants

I ,55 8,510,38030,170,81 8

4,189,255,1 l81 ,1 47 ,355,332

1.023.492

7,526,315,140

2,110,692,543

2,181,935,317

3,351,042,310111,142,297

54,956,861

369,924,6163\6,932,s94184,962,166

2,665,27323,806,970

Chittagong, 09 March 2014

BANGLADESH STEEL RE-ROLLING MILLS LTD.STATEMENT OF PROFIT OR LOSS AND OTHER. COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2013

IlcvcnueCost of sales

Gross profit

Selling and distribution costs

Administrative costs

Otlier income

0perating profitFinance costs

Finance income

Loss on revaluation of properry, plant and equipment

Profit before tax and WPPF and Welfare FundContribution to WPPF and Welfare Fund

Non-operating income

Share ofprofit ofassociates (Net oftax)

Profit before taxIncome tax expense:

Current Tax:Current year

Previous year

Deferred tax

Net profit after tax for the year

Other comprehensive income;

Items that will never be reclassified to profit or loss

Revaluation of property, plant and equipmentDeferred tax on revaluation surplus ofassets

Items that are or may be reclassified to profit or loss

Available for sale financial assets- net change in fair value

Share of revaluation surplus of associate

Other comprehensive income, net of tax

Total comprehensive income

Earnings per share:

Basic earnings per share

The annexed notes I to 47 form an integral par

Chittagong, 09 March 2014

BSRM-AC. 13 (F)

1,756.824 2,631,394,681

790,458,435 3,085,318,868

5.06 2.91

Company Secretary

As per our annexed report ofsame date.

Notes

27

28

29

30

31

32

JJ

34

35

2013

Taka

8,602,415,008(8,102,322,138)

500,092,270

(55,646,51 l)166,109,408

(221,155,919)278,336,351

6,652,224

2012

Taka

14,043,421,489( 13,345,900,813)

697,520,675

(35,414,97 1)

( 1 76,030,894)(211,445,865)486,074,81A

108,231

284,988,5'75(264,396,406)

23.390.549

(24t,00s,8s7)

48 6, 1 83,04 1

(218,832,330)

34,150,796(28,023,369

(272,704,903)

43,982,118(2,199,136)41,783,582

169,063,732

934,127,635

1 ,103,191 ,367

213,418,138(10,673,907)

202,804,231

150,068,986

312,954,478

463,023,4641,144,974,949

(t24,214,4t6)(6,612,039)25,3 86,883

(356,273,338)

665,827,695

(188,224,809)(87,652)

(23,s91,04

(21 1,903,508)

788,701,61 I

1,156,824

1,7 56,924

453,924,187

2,004,256,895(2t2,067,263)

t,192,t89,632

1,023,492

838,181,557

839,205,049

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BANGLADESH STEEL RE-ROLLING MILLS LTD.

STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 3I DECEMBER 2OI3

b.

OPERATING ACTIVITIES:

Paid against revenue expenditure

Receipts fi'om customers against sales

Receipt against other income

Payment for Workers' Profit participation fundPayment of interest-Net

Income Tax Paid

Net cash provided by/(used in) Operating Activities

INVESTING ACTIVITIES:

Acquisition of property, plant and equipmentProceeds from sale ofpropefty, plant and equipmentShort term loan to affiliated cornpanies

Investment

Proceeds from sale of investments in tradable securities and FDRsCapital Work-in-progress

Dividend income

Net cash used in Investing Activities

FINANCING ACTIVITIES:

Receipt/(Re-payment) of Term LoanLoan received from /(paid to) affiliated companies and othersDividend paid

Share application money refundedReceipts of Short term loan

Net cash (used in)/provided by Financing Activities

Total (a+b+c)

Opening eash and cash equivalentsClosing cash and cash equivalents

2,432,562 178 (1,129,946,088)

13,737,694 (9,151,725)

2013Taka

353,115,664

2,03t,285,729(232,425,197)

279.985.982

82,010,848 s33,676,699

(2,500,935,342) s87 ,1 11 ,664

2012

Taka

834,259,149(2,1 i 5,987,1 96)

(788,759)

t52,470,119

c.

85,564,964

99,302,64894,722,699

85,554,96413,737,694 (9,157,725.)

(8,555,015,71 8

8,787,022,059

190,805,958

(4,059,024)(110,392,847)( 166,350,s80

(12,694,38s,182)

13,896,097,393

I 35,994,990

(24,793,700)

(514,169,155)

265,067,537

(95,680,881)

33,393,389(867,6t6,356

( 1,397,0 t 3,893

157,727,397

(433,233,15A)

101,588,742

(116,139,631)

9,032,s00

932,616,174(121,226,303)

177,725,197

(3 87,980,463)

I 53,084, I 90

BSRM Ac. 13 (F)

BANGLADESH STEEL RE-ROLLING MILLS LTD.NOTES TO THE FINANCIAL STATEMENTS

AS AT AND FOR THE YEAR ENDED 3I DECEMBER 2OI3I.()O REPORTING ENTITY

l.0l Company Profile

Bangladesh Steel Re-Rolling Mills Limited is a public company limited by shares is domiciled in Bangladesh. .rheaddress of the company's registered office is AIi Mansion, tossttzol Sadarghat Road, chittagong, Bangladesh. Thecompany was formed and incorporated with the Registrar of Joint Stock companies and Firms in Bangladesh onDecember 28, 1960 vide the certificate c/186-No. 14gll92 E.P. of 1960-1961 under companies Act l9l3 (sincerepealed and substituted by the companies Act 1994) as a private company limited by share. The company wasconverted into a public limited company on November 03,2009 under the Companies lit ;p1sq.

1.02 Nature of the business

The rnain activity of the company is to manufacture M.S. products by setting up rolling and re-rolling mills. Thecompany has set up its Re-Rolling mill and Steel Melting workshop (s\4w preriiously known 1s MeghnaEngineering works Limited) at l47l148ll4g and 78179 Baizid Bostami Road, Nasirabad Industrial .,irea,chittagong, Bangladesh respectively and commenced its commercial production from lggT after first BMRE.M'S' billets is manufactured from scraps and sponge iron etc. at steel Melting workshop (sMw) and these billetsare re-rolled in the next step at Re-Rolling Mills to manufacture M.S. products. The company also deals in sale ofM'S' products like angle, channel, I Beam, H Beam and ingot etc. which is very insignificant compared to the saleof own manufactured products"

1.03 Description of associates

(i) Legalform of BSRM Steels Ltd.

BSRM Steels Ltd' was incorporated on 20th |uly,2002, vide the ceftificate C-No.4392 of 2002as a private limitedcompany under Companies Act 1994. The company was converted to a public limited company on 20 December2006' The company is listed with Dhaka Stock Exchange and chittagong Srock Exchange as a publicly quotedcornpany' Trading ofthe shares ofthe company started in two stock exchanges from lg laiuary 2009. BangLdeshSteel Re-Rolling Mills Limited directly holds 3 i.188% of ordinary shares in BSRM Sreels Ltd.

Nature ofthe businessThe main purpose or risma Steels Ltd. is to manufacture M.S.products by sefting up rolling and re-rolling mills.The company had set up its Rolling mill at 4 Fouzderhar Industrial Estate, l-atifpui, Sitakunda, chittagong andcommenced commercial production from 0l April 200g.

(ii) Legal form of BSRM Iron & Steel Co. Ltd.BSRM lron & Steel Co. Ltd' (BISCO) was incorporated as aprivate Limited Company on l3th April,2005, videcefiificate No' CH-5415 of 2005 under the Companies Act, (No-XVill), lgg4. The Company was converred into apublic limited company on March 15,2011 . The company's Registered and corporate office is situated at AliMansiott, Sadarghat Road, chittagong. It is a subsidiary company orssRM steels Limited that holds 95o/o ordinaryshares in (BISCO). As a result Bangladesh steel Re-Rolling Mills Limited indirectly hotds 29.629% shares inBISCO.and has significant influence over it.

Nature of the businessThe principal activities of the company are manufacturing M.S. Billets of different qualities and selling the same tosteel rolling mills. The company had set up its automatic steel melting plant at 202-205 Nasirabad Industrial Area,Baizid Bostami Road, Chittagong and commenced commercial production from 1st June, 20I0.(iii) Legal form of BSRM Steel Milts Ltd.BSRM steel Mills Ltd., was incorporated as a private limited company on l6 April 200g vide registration # cH-6561(267)12008 under the Companies Act, 1994 to set up one of thl largest production plant in the steel industriesin Bangladesh' The company was converted into public limited company on 12 November 2013. Bangladesh steelRe-Rolling Mills Limited holds 21.160/o of ordinary shares directly and 6.79% of ordinary shares indirectly inBSRM Steel Milts Ltd.

Nature ofthe businessThe company is engaged in sefting up an automatic steel melting plant for making different quality of M.S billet andsell the same to steel rolling mills. The company has not yet commenced commercial production.

2.OO BASIS OF PREPARATION

2.01 Statement of compliance

These financial statements have been prepared in accordance with Bangladesh Financial Reporting Standards(BFRSs), applicable sections of Companies Act 1994 and the Securities and Exchange Rules 1987. BFRSsconrprise the lol lowing:

(i) Bangladesh Financial Reporting Standards. (BFRSs)

(ii) Bangladesh Accounting Standards. (BASs)

(iii) Interpretations of BFRSs and BASs.

2.02 Date of authorization

These financial statements have been authorized for issue by the Board of Directors on 09 March 2014.

2.03 RegulatorycomplianceThe company is required to comply with amongst others, the following laws and regulations:

(D The Companies Act 1994

(ii) The Securities and Exchange Ordinance 1969 ,

(iii) The Securities and Exchange Rules 1987(iv) The Income Tax Ordinance 1984

(v) The Income Tax Rules 19.84

(vi) The Value Added Tax Act 1991

(vii) The Value Added Tax Rules 1991

(viii) Bangladesh Labour Act 2006

2.04 Basis of measurement

These financial statements have been prepared on going concern basis under the historical cost convention exceptfor investment in tradable shares and property, plant and equipment which are measured at fair value.

2.05 Functional and presentation currency

These financial statements are presented in Bangladesh Taka (BDT) which is the company's functional currency. Allfinancial information presonted in BD Taka has been rounded off to the nearest Taka except when otherwiseindicated.

2.06 Statement of Cash flows

Statement of cash flows has been prepared as per BAS 7: Statement of Cash Flows using Direct Method as per therequirement of Securities and Exchange Rules 1987 and the Companies Act 1994.

2.01 Use of estimates and judgments

The preparation of financial statements in conformity with BFRSs requires management to make judgments,estimates and assumptions that affect the application of accounting policies and the reported amounts of assets,liabilities, income and expenses. Estimates and assumptions are reviewed on an ongoing basis.

The estimates and underlying assumptions are based on past experience and various other factors that are believedto be reasonable under the circumstances, the result of which form the basis of making judgments about the carryingvalues of assets and liabilities that are not readily apparent fiom other sources. Actual results may differ from these

estimates.

Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affectsonly that period, or in the period of revision and future periods if the revision affects both current and futureperiods.

2.08 ComparativeinformationComparative information has been disclosed in respect of the year 2012 for all numeric information in the financialstatements and also the narrative and descriptive information where it is relevant for understanding of the currentyear's fi nancial statements.

Figures for the year 2012 have been rearranged wherever considered necessary to ensure comparability with thecurrent year.

2.09 Going concern

The Company has adequate resources to continue its operation for foreseeable future and hence, the financialstatements have been prepared on going concern basis. As per management's assessment there are no materialuncertainties related to events or conditions which may cast significant doubt upon the company,s ability tocontinue as a going concern.

2.10 Reporting period

These Financial Statements covered the reporting period of one year commencing ffom 0l January 2013 to 3lDecember 2013 which is followed consistently.

2.ll Merger of common control companyBy virtue of the decision of the High Court Division and approval of the Bangladesh Securities and ExchangeCommission, Meghna Engineering Works Limited was merged with Bangladesh Steel Re-Rolling Mills Ltd. witheffect from 0l January 2011 and a total of 27,160,056 Nos. Ordinary Shares of Tk. 10 each totaling Taka271,600,560 of Bangladesh Steel Re-Rolling Mills Ltd. was issued to shareholders of Meghna Engineering WorksLimited (MEWL).

In absence of specific accounting standards for recording such common control business combination, generallyaccepted accounting practices in other countries has been followed as per provisions of BAS 8.12. As per generallyaccepted accounting practices, polling of interests method has been followed by the company under which assets,liabilities and reserves of MEWL have been recorded under specific line items of the company and comparativesare restated as if the acquiree had always been merged with the company.

3.OO SIGNIFICANTACCOUNTING POLICIESThe accounting policies set out below have been applied consistently to all the years presented in these financialstatements by the company except otherwise mentioned.

3.01 Property, plant and equipment (PPE)

Items of propeffy, plant and equipment are stated at cost and re-valued amount less accumulated depreciation andaccumulated impairment losses, if any.

3.01.01 Recognition and measurement

The cost of an item of property, plant and equipment comprises its purchase price, irnport dury and non-refundabletaxes (after deducting trade discount and rebates) and any cost directly attributable to the acquisition ofthe assets.The cost ofselfconstructed/installed assets includes the cost ofmaterials, direct labour and any other costs directlyattributable to bringing the assets to the location and condition necessary for it to be capable of operating in theintended manner and the cost of dismantling and removing the items and restoring the site on which they arelocated"

When parls of an item of properfy, plant and equipment have different useful lives, they are accounted for asseparate items (major components) of properry, plant and equipment.

The gain or loss on disposal of an item of properfy, plant and equipment is detennined by comparing the proceedsfrorn disposal with the carrying amount of the properry, plant and equipment and is recognised under otherincome/expenses in profit or loss.

3.0I.02 Subsequent costs

The coit of replacing or upgrading part of an item of properfy, plant and equipment is recognised in the carryingamount of the item if it is probable that the future economic benefits embodied within the part will flow to thecompany and its cost can be measured reliably. The costs of the day-to-day servicing of properry, plant andequipment are recognized in profit or loss.

3.01.03 DepreciationDepreciation is based on the cosVrevalued amount ofan asset. Significant parts ofindividual assets are assessed andif a cornponent has a useful life that is different from the remainder of that asset, that component is depreciatedseparately.

Depreciation is recognised in profit or loss on diminishing balance method over the estimated useful lives of eachparts of properfy, plant and equipment. Depreciation is charged on addition cornmencing fiom the year ofacquisition and no depreciation is charged in the year ofdisposal. The principal annual rates are as follows.

Assets Rates (%o)

Land and land development NilPlant and Machinery 7.50% - 15%

Motor Vehicle 20%o

Air Conditioner and air compressor 15% - 20%Furniture and Fixtures 10%Office Equipments 15%Buildings and sheds 5% - 15%

Depreciation methods, useful lives and residual values are reassessed at the reporting date and adjusted ifappropriate.

3.01.04 Revaluation of Property, plant and equipment

All property, plant and equipment of the company were revalued by M/S Hoda Vasi Chowdhury & Co., CharteredAccountants, in 2008 and2012 considering the book value of such assets on December 31,2006 and December 31,2011 respectively. As per report of revaluation, net revaluation gain stands at Tk. 1,613,400, 176 and Tk.2,004,256,895 in 2008 and2012 respectively. These revaluations have been recognized in the financial statementsat the beginning of the year 2008 and2012 respectively.

Replacement cost and net realisable value method, as applicable, have been used by the independent valuer in re-valuation of properfy, plant and equipment.

Difference of depreciation befween revalued carrying amount and depreciation based on carrying amount as perassets' original cost has been transferred from Revaluation Reserve to Retained Earnings as shown in Statement ofChanges in Equify.

3.02 Capital work in progress

Capital work in progress consists of cost incurred for acquisition of new plant and machinery, civil structure, factoryshed for warehouse etc. which were not ready for use till reporting date.

3.03 Leases

At inception of an arrangement, the cornpany determines whether the arrangement is or contains a lease.

At inception or on reassessment of an arrangement that contains a lease, the entify separates payments and otherconsideration required by the arrangement into those for the lease and those for other elements on the basis oftheirrelative fair values.

3.03.01 Finance Lease

Leases in terms of which the company assumes substantially all the risks and rewards of ownership are classified asfinance leases. Upon initial recognition the leased asset is measured at an amount equal to the lower of its fair valueand the present value of the minimum lease payments. Subsequentto initial recognition, the asset is accounted for inaccordance with the accounting policy applicable to that asset. Minimum lease payments made under finance leaseare apportioned between the finance expense and the reduction of outstanding liability. The finance expense isallocated to each period during the lease term so as to produce a constant rate of interest on the remaining balanceof the liabiliry.

3.03.02 Operating lease

Leases that are not finance lease are considered as operating leases and the leased assets are not recognised in thecompany's Statement of Financial Position. Payments made under operating leases are recognised in profit or losson a straight line basis over the term ofthe lease.

3.03.03 Leasehold land

Factory buildings of the company are situated at Nasirabad Industrial Area, Chittagong on leasehold landsmeasuring 7.905 acres. These lands are taken on lease for 99 years on payment of salami and renewable thereafter.These lands are duly mutated in the name of the company.

These leasehold lands are recognised as assets under property, plant and equipment. Since significant risks andrewards incidental to ownership ofthese assets are transferred to the company, these are covered under revaluationof assets done in 2008 and 2012.Beingrights to use of these lands are of perpetual nature, no amortization of valueoflands are recognised in the financial statements over the lease period.

3.04 Inventories

lnventories are measured at lower ofcost and net realisable value. The cost of inventories is calculated based on theweighted average method and inciudes expenditure incurred in acquiring these inventories, production orconversion costs and other costs incurred in bringing them to their existing location and condition in accordancewith BAS-2.

Catcqorv

Finished Goods -

Raw materials -

Store items -

Net realisable value is the estimated selling price in the ordinary course of business less the estimated costs ofcompletion and selling expenses.

3.05 Trade and other receivablesTrade and other receivables are initially recognised at cost which is the fair value of the consideration given inreturn. After initial recognition, these are carried at cost less impairment losses, if any, due to uncollectibility of anyalnount so recognised.

There is no fixed company policy regarding provision for impairment loss on receivables, if any receivables are notrealized within the credit period. It has been dealt with on case to case basis.

3.06 Transactions with inter companies

These represent balance amounts due to /fiom sister concems which are derived from short term loan, sale/purchaseof goods from tirne to time. Sales and purchase of goods are made on arm's length basis and interest on balances arecharged at 15.50o/o per annum. These balances are unsecured but considered good and realisable.

3.07 Advances, deposits and prepayments

Advances are initially measured at cost. After initial recognition, advances are carried at cost less deductions,adjustrnents or charges to other account heads such as properfy, plant and equipment, inventory or expenses.

Deposits are measured at payment value.

Prepayments are initially measured at cost. After initial recognition, prepayments are carried at cost less charges toprofit or loss.

3.08 Cash dnd cash equivalents

Cash and cash equivalents include cash in hand, deposits held at call with banks and other short term fixed depositswith banks.

3.09 Impairment

Financial assets

Financial assets are impaired ifobjective evidence indicates that a Ioss event has occurred after initial recognition ofthe assets and that the loss event had a negative effect on the estimated future cash flows ofthat assets that can beestimated reliably.

Financial assets not classified as at fair value through profit or loss , including an interest in an equity accountedinvestee, are assessed at each reporting date to determine whether there is objective evidence of impairment.

Valuation

Finished Goods are valued at Cost or Net Realisable Value whichever is lower.

Raw Materials are valued at Cost or Net Realisable Value whichever is lower.

Based on weighted average method.

10

Objective evidence that financial assets are impaired includes :

- default or delinquency by a debtor- restt'ucturing of an amount due to the company on terms that the company would not consider otherwise- indications that a debtor or issuer will enter bankruptcy- adverse changes in the payment status ofborrowers or issuers

- the disappearance ofan active market for a security, or- observable data indicating that there is a measurable decrease in expected cash flows from a group of

financial assets

For an investment in an equity securify, objective evidence of impairment includes a significant or prolongeddecline in its fair value below its cost.

Financial Assets measured at Amortized cost

The company considers evidence of impairment for these assets at both an individual asset and a collective level.All individually significant assets are individually assessed for impairment. Collective assessment is carried out bygrouping together assets with similar risks characteristics.

ln assessing collective impairment, the company uses historical information on the timing of recoveries and theamount of loss incurred, and makes any adjustment if current economic and credit conditions are such that the actuallosses are likely to be greater or lesser than suggested by historical trends.

An irnpairment loss is calculated as the difference between an asset's carrying amount and the present value of theestimated future cash flows discounted at the assets'original effective interest rate. Losses are recognized in profitor loss and reflected in an allowance account. When the company considers that there is no realistic prospects ofrecovery of the asset, the relevant amounts are written off. If the amount of impairment loss subsequently decreasesand the decrease can be related objectively to an event occurring after the impairment was recognized, then thepreviously recognized impainnent loss is reversed through profit or loss.

Available for sale financial assets

lmpairment losses on available for sale financial assets are recognized by reclassifoing the losses accumulated in thefail value reserve to profit or loss. The amount reclassified is the difference between the acquisition cost (net of anyprincipal repayment and amortization) and the current fair value, less any impairment loss previously recognized inprofit or loss. Ifthe fair value ofan impaired available for sale debt securiry subsequently increases and the increasecan be related objectively to an event occurring after the impairment loss was recognized, then the impairment lossis reversed through profit or loss; otherwise, it is reversed through other comprehensive income.

Equity accounted investees

An impairment loss in respect of an equity accounted investee is measured by comparing the recoverable amount ofthe investment with its carrying amount. An impairment loss, is recognized in profit and loss, and is reversed if therehas been a favourable change in the estimates used to determine the recoverable amount.

Non financial assets

The carrying amounts of the company's property, plant and equipments are reviewed at each reporting date todetermine whether there is any indication of impairment. If any such indication exists then the property, plant andequipment's recoverable amount is estimated. An impairment loss is recognized if the carrying amount of an asset orits cash-generating unit exceeds its recoverable amount. Impairment losses, if any, are recognized in the statementof profit or loss and other comprehensive income.

3.10 Employee benefit schemes

3.10.01 Short-term employee benefitsShort-term employee benefits are expensed as the related service is provided. A liability is recognized for theamount expected to be paid if the company has a present legal or constructive obligation to pay this amount as aresult of past service provided by the employee and the obligation can be estimated reliably.

3.10.02 Defined contribution plan (Recognized provident fund)

A defined contribution plan is a post-employment benefit plan under which the company pays fixed contributionsinto a separate fund and will have no legal or constructive obligation to pay further amount. The Employees,Provident Fund was obtained recognition from lncome Tax Authority on August 05, 1975 which was effective fromSeptember 30, 1973 and is considered as defined contribution plan as it meets the recognition criteria specified forthis purpose in BAS-19.

11

Obligation for contribution to defined contribution plan is recognized as provident fund (PF) contribution expenses

in profit or loss in the period during which services are rendered by employees. Advance against PF is recognized as

an asset to the extent that a cash refund or a reduction in future payments is available.

The company maintains the Recognized Provident Fund for all permanent employees at which both the company

and employees contribute @ 10% of basic salary.

Appropriate provision has been made for Workers' Profit Participation Fund and Workers' Welfare Fund as per

provisions of law. Currently the rate of provision is 5% on net profit before tax and WPPF and Welfare fund.

3.11 Provisions and contingencies

3.ll.0I A provision is recognized in the financial statements if, as aresult of apast event, the company has apresent legal

or constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefit willbe required to settle the obligation.

3.I 1.02 Contingencies arising fiom claim, lawsuit, etc. are recorded when it is probable that a liability has been incurred and

the amount can reasonably be measured.

3.12 Earnings Per Share (EPS)

Basic Earnings:

This represents profit for the year attributable to ordinary shareholders. As there is no preference dividend, non-

controlling interest or extra ordinary items, the net profit after tax for the year has been considered fully anributable

to the ordinary shareholders (refer to Note-36 to the Financial Statements).

Diluted Eamings:

No diluted earnings per share is required to be calculated for the year as there is no scope for dilution during the

year under audit.

3.13 Finance income and expenses

lnterest income on FDR and STD Account has been recognized on cash basis.

interest income/expenses on amount due toldue from inter companies has been recognized periodically.

3.14 Foreign currencytransactions

Transactions in foreign currencies are translated to the functional currency (BDT) at exchange rates at the dates oftransactions. Monetary assets and liabilities denominated in foreign currencies at reporting date are re-translated

into Bangladesh Taka at the exchange rates ruling at the reporting date. Non-monetary assets and liabilities

denominated in foreign curencies, stated at historical cost, are translated into Bangladesh Taka at the exchange rate

ruling at the date oftransaction. Foreign exchange differences arising on translation are recognized in profit or loss.

3.15 'Income tax expenses

Tax expenses comprises current and deferred tax. Current tax and deferred tax are recognized in profit and loss

except to the extent that it relates to items recognized directly in equity or in other comprehensive income.

Current tax:Cument tax is the expected tax payable or receivable on the taxable income or loss for the period, using rates

enacted or substantially enacted at the reporting date and any adjustment to tax payable in respect ofprevious years.

Cuirent tax also includes any tax arising from dividends.

Deferred tax:Deferred tax is recognized in compliance with BAS 12: Income taxes, providing for temporary differences between

the carrying amounts of assets and liabilities for financial reporting purposes and amount used for taxation purposes.

Defened tax is measured at the tax rates that are expected to be applied to the temporary differences when they

reverse, based on the laws that have been enacted or substantively enacted at the reporting date. Deferred tax assets

and liabilities are offset if there is a legally enforceable right to offset current tax liabilities and assets, and they

relate to income taxes levied by the authority on the same taxable entity.

A deferred tax asset is recognized to the extent that it is probable that future taxable profits wili be available against

which the deductible temporary differences can be utilized. Deferred tax assets are reviewed at each reporting date

and are reduced to the extent that it is no longer probable that the related tax benefit will be realized.

12

Deferred tax on temporary differences between carrying amounts of investments in associates and tax bases has

been recognised following the tax rates applicable for profit on disposal of investments as well as distributions fromassociates.

Defened tax on revaluation surplus of lands has not been recognized in the financial statements on the ground that

incorne tax payable at source on capital gain during registration of sale of land are generally borne by the buyer.

Hence, possibilify of having any income tax implications on land is very remote.

3.16 Rcvenue

Revenue fiom sale of goods is measured at the fair value of the consideration received or receivable, net of returns

and allowances, trade discounts and rebates, ifany. Revenue is recognized when the significant risks and rewards ofownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and

possible return of goods can be estimated reliably, there is no continuing management involvement with the goods

and the amount of revenue can be measured reliably.

The tirning of the transfer of risk and rewards depends on the individual terms of the sales agreement.

3.17 Management fees

Bangladesh Steel Re-Rolling Mills, the reporting entity, entered into a management sharing agreement withBSRM Steels Ltd., an investee company, on October 15,2005 for allowing BSRM Steels Ltd. to use its goodwill.

According to the terms of the agreement, Bangladesh Steel Re-Rolling Mills Ltd. is entitled to receive Tk. 300 per

MT (in 2012: Tk.250 per MT) of monthly production as management fee on monthly basis provided that BSRM

Steels Ltd. has net profit in its rnonthly financial statements.

3.18 Borrowing costs

Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifuing assets

are recognized in profit or loss using effective interest method. Borrowing cost incurred against loan for BMREproject have been capitalized under effective interest rate method.

3.19 Interest on balance of inter companies

Interest on balances due to /due ffom inter companies has been recognized in the financial statements periodically.

Interest @ 15.50% per annum is charged to these short term loan balances as per Board's Resolution dated January

04,2012.

3.20 Investments in associates

An associate is an entity in which the Company has significant influence and which is neither a subsidiary nor a

joint venture. The Company's investment in associates is accounted for in the Financial Statements using the Equity

Method in accordance with BAS 28: 'Accounting for investment in associates'. Such investments are classified as

non-current assets in the statement of financial position and the share of profit/loss of such investment is classified

under as share of profit form associate in the statement of profit or loss and other comprehensive income.

The excess of company's share of net assets' value of associates over cost of investments has been recognized in

proflt or loss as share of associate's profit or loss during the year following the provisions of BAS-28.

Unrealized gains and losses arising from transactions with associate are eliminated against the investment to the

extent of the company's interest in investee.

3.21 FINANCIALINSTRUMENTSA financial instrument is any contract that gives rise to a financial asset of one entity and a financial liabiliry or

equity instrument of another entity.

3.21.01 Financial assets

The Company initially recognizes loans and receivables on the date that they are originated, All other financial

assets are recognized initially on the date at which the company becomes a party to the contractual provisions of the

instrument.

The Company derecognizes a financial asset when the contractual rights to the cash flows frorn the asset expire, or ittransfers the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially

all the risks and rewards ofownership ofthe financial assets are transferred.

Financial assets are classified into the following categories: financial assets at fair value through profit or loss, held

to maturity, loans and receivables and available-for-sale financial assets.

13

At fair value through profit or loss

A financial asset is classified as at fair value through profit or loss if it is classified as held for trading or is

designated as such on initial recognition. Financial assets are designated as at fair value through profit or loss ifthecompany manages such investment and makes purchase or sale decisions based on their fair value in accordance

with the company's documented risk management or investment strategy. Attributable transactions costs are

recognized in profit and loss as incurred. Financial assets at fair value through profit or loss are measured at fairvalue and changes therein which take into account and dividend income are recognized in profit or loss.

Held to maturityThese assets are initially recognized at fair value plus any directly attributable transaction cost. Subsequent to initialrecognition, they are measured at amortized cost using the effective interest method.

Loans and receivables

Loans and receivables are financial assets with fixed or determinable payments that are not quoted in an active

market. Such assets are recognized initially at fair value plus any directly aftributable transaction costs. Subsequent

to initial recognition, loans and receivables are measured at amortized cost.

Loans and receivables comprise cash and cash equivalents, loans and trade and other receivables.

(a) Cash and cash equivalents

Cash and cash equivalents comprise cash in hand, cash at bank which are available for use by the company withoutany restriction.(b) Trade and other receivables

Trade and other receivables represent the amounts due from customers for delivering goods or rendering services.

Trade and other receivables are initially recognized at cost which is the fair value of the consideration given in

return. After initial recognition these are carried at amortized cost less impairment losses due to uncollectibiliry ofany amount so recognised.

Ava ilable-for-sale

Available-for-sale financial assets are non-derivative financial assets that are designated as available for sale and are

not classifled in any other categories of financial assets. Generally available-for-sale flnancial assets are recognised

initially at fair value plus any directly attributable transaction costs and subsequent to initial recognition at fair valueand changes therein other than impairment losses are recognized in other comprehensive income and presented in

the fair value reserve in equity. Financial assets which are not traded in the market have been valued at cost unless

any indication of impairment in value of such financial assets exist. Cumulative gain/losses recognized in the othercomprehensive income are reclassified from equity to profit or loss upon derecognition.

Available-for-sale financial assets comprise investment in equity securities and debt securities.

3.21.02 Financial liabilities

The company initially recognises financial liabilities on the date that are originated.

The company derecognises a financial liability when its contractual obligations are discharged, cancelled or expired.

The company classifies non-derivative financial liabilities into the other financial liabilities category. Such financialliabilities are recognised initially at fair value less directly attributable transaction cost. Subsequent to initialrecognition, these financial liabilities are measured at amorlized cost.

Other financial liabilities comprise loans and borrowings, bank overdrafts and trade and other payables.

(a) Trade and other payables

Trade and other payables represent the amounts due to customers for receiving goods or services. Trade and otherpayables are initially recognised at cost which is the fair value of the consideration received. After initialrecognition these are carried at arrortised cost.

(b) Other liabilitiesOther liabilities represents the amounts due to various parties for receiving services. These are initially recognisedat cost which is the fair value. After initial recognition these are caried at amortised cost.

3.21.03 Equity Instruments' Share capital (.ordinary shares)

Ordinary shares are classified as equity. lncremental costs directly attributable to the issue

recognised as expenses.

of ordinary shares are

6Raww

14

4.OO MEASUREMENT OF FAIR VALUES

When rneasuring the fair value of an asset or liabiliry, the entity uses market observable data as far as possible. Fairvalues are categorized into different levels in a fair value hierarchy based on the inputs used in the valuationtechniques as follows.

Level l: Quoted prices (unadjusted) in active markets for identical assets and liabilities.Level2: Inputs other than quoted prices included in Level I that are observable for the asset or liability,

either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level 3: Inputs fbr the assets or liability that are not based on observable market data.

If the inputs used to measure the fair value of an asset or liabiiity might be categorized in different levels of the fairvalue hierarclty as the lowest level input that is significant to the entire measurement.

Property, plant and equipment

The fair value of items of property, plant and equipments has been determined based on the depreciated replacementcost method and net realizable value method as applicable.

Equity and debt securities

Fair values of tradable equity and debt securities are determined by reference to their quoted closing price in activemarket at the reporting date which are categorized under'Level 1'ofthe fair value hierarchy.

5.00 Ncw Standards and interpretations not yet adopted

New standards or interpretations that have been adopted by the Institute of Chartered Accountants of Bangladesh(ICAB) and effective from January 01 ,2013 are duly adopted by the company.

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Summary of financial information of equity accounted investee:

Name of the investee: BSRM Steels Ltd.

Reporting date: 3l December 2013

BSRM Steel Mills Ltd.

31 December 2013

31.12.2013

31.190

31.12.2012

3l.l9o/o

31.12.2413

21.760h

31.12.2012

13.500Ownership

Current assets

Non-current assets

Total assets

Current Iiabilities

Non-current liabil ities

Total liabilities

Revenue

Other income

Expenses

Profit for the year

Profit attributable to the

owners of the company

Total Comprehensive

income attributable toowners of the company

Tk.17,171,400,659

9,635,182,66126.806,s83.326

Tk.18,037,267,454

10,1 18,158,864

Tk. Tk.901 ,272,669 14t,612,073

5,194,648,732 3,572,102,4296,101,921,401 3,713,714,502

834,288,912 658,553,463

834,288,912 658,553,463

28,755,426,318

19,104,954,216 18,822,222,385

1,520,165,489 1,536,770,98520,62s,119,70s 20,358,993,370

36,294,868,280 38,262,395,136

8.02 Other investments

Investment in non-tradable shares at cost (Note - 8.02.01)

investment in shares of sister company, BSRM Steel Mills Ltd.-at cost

Investmeints in Fixed Deposit Receipts Q\ote - 8.02.02)

8.02.0I Investment in non-tradable shares at cost

Islamic Stearnship Co. Ltd.Apollo Hospital Ltd.

151,433,367 524,464,195(3 5,044,7 12,529) (3'7,7 85,652,254)

_J,4U{gUl_q_ *_l_g!1 zoLgJ_ 9.771.817

1,394,553,917 997,165,27A (9,771,817)

1,394,553,917 3,684,643,333 (9,771,817) 2,279,227,589

The company owns i06,594,173 nos. Ordinary Shares of Tk. 10 each in BSRM Steels Limited as on 31 December20l3.This represents3l.l9o/o of paid up capitalof BSRM Steels Limited (BSL). The market price of these Ordinary shares was

Tk. 68.70 per share on 3 I December 2013. Fair value of investments in BSL has been estimated alTk. 7,323,0 i 9,685.

Out of 106,594,173 nos. ordinary shares, 6,000,000 nos., 3,823,000 nos., 500,000 nos., 388,890 nos., 800,000 nos. and

2,200,000 of ordinary shares are pledged againstbridge finance andterm loans from United Commercial Bank Ltd., IDLCFinance Ltd., IPDC Ltd., United Leasing Company Ltd., National Housing Finance and Investments Ltd. and International

Leasing and Financial Services Ltd. respectively.

90,000(9,861,817)

31.12.2013

Taka

1,000,300

98,527,494

31.12.2012

Taka

1,000,300

13,500,000

39,159,61 r

99,527,794 53,659,911

300

1,000,000

300

r,000,000

19

--r;000300- -----l;000mr

8.02,02 lnvestments in Fixed

Name of banks

Deposit Receipts3t.12.2013

Taka

13,146,7 44

15,000,000

683,673

21,813,090

417,484

79,5561,326,947

20,000,000

20,000,000

31.12.2012Taka

11,821,792

614.90s

25,043,204

415,330

71,6181,192,762

BASIC Bank Ltd.

BD Finance Ltd.Dhaka Bank Ltd.

IPDC of Bangladesh Ltd.

Mercantile Bank Ltd.

The Ciff Bank Ltd.International Leasing and

Financial Services Ltd.

Fareast Finance &Investment Ltd.

ACI Zero Coupon BondLafarge Surma Cement Ltd.ACI Ltd.Eastem Insurance Co" Ltd.Pragati Life Insurance Ltd.Progressive Life Insurance Ltd.

Investments in Fixed Deposit

Name of banks

AB Bank Ltd.Dutch Bangla Bank Ltd.Pubali Bank Ltd.Standard Chartered BankLtd.

Habib Bank Ltd.

PurDose

Security depositSecurity deposit

Investment

Investment

Security DepositInvestment

Investment

Investment

Investment

Receipts

Purpose

LlCMarginL/C MarginL/CMargn

L/C Margin

Investment

Rate of interest

12.50%

ls.00%11.2s%

1250%12.50%

12.s0%

11.00%

14.25%

13.50%

Equivalentopening fair

value

98,527,494 39,159,611

Period

3 years

5 years

2 years

2 years

5 years

1 year

1 year

I year

I year

8.03 Short term investments

Investment in Tradable securities at fair value (Note - 8.03.01)Investments in Fixed Deposit Receipts (Note - 8.03.03)

8.03.01 Investment in Tradable securities at fair value

ACI Zero Coupon BondLafarge Surma Cement Ltd.ACI Ltd.Eastem Insurance Co. Ltd.Pragati Life Insurance Ltd.Progressive Life Insurance Ltd.

8.03.02 Fair value of tradable securities

Cost

15,711,44962,300,303

18,506,4602t4,101.700

78,011,752 232,609,160

10,785,3202,604,2901,691,676

78,120216,219335,824

14,352,9682,557,6701,135,192

13,600141,120245,920---Brr7o-

--18F06;260-

Closing fairvalue

Increase/(Decrease) in

Fair valuereserve

Tk.Tk. Tk.g,gg6,3 17

3,101,9001,176,693

t79,537319,606497,476

9,569,6452,ss7,6701,135,182

73,600141,120245,920

10,785,3202,604,2901,691,676

78,120216,219335,824

1,216,61546,620

556,4944 \)O

75,Ogg

89,90414,161,529 13,722,137 15,711,449

8.03.03

Period

6 months

6 months

6 months

6 months

6 months

Rate of interest

9.50%11.00%tL.00%

10.00%

12.50%

31.12.2013

Taka3,838,796

13,987,.100

1,640,509

42,833,909

31.12.2012

Taka

39,10 1,700

175,000,000

20

62,300,303 214,101,700

9.00 Inventories

Raw Materials-BilletsRaw Materials-ScrapsFinished Goods-Own production

Finished Goods-lmportedFinished Goods- Locally purchased

Mechanical stores

M.S. Roll

Electrical stores

General stores

Fuel and Lubricants

Consumable stores

Fire bricks

9.0I Quantitative movement of raw materials and finished goods

Raw Materials

Opening stock as on January I

Add: Imported during the year

Produced by SMW

Purchased from local market

Available for consumption

Less: Consumed /Sold/returned during the year

Closing inventories

Finished Goods

Opening stock as on January 1

Add: Produced during the year

Imported/ Purchased from sister concern

Less: Sold during the year

Sale offinished goods procured from outside

Closing inventories

10.00 Trade Receivables

From sale of M.S. product

From sale ofscrap and billet

53,203 47,022

191,628

50,000 27,586.

Otv. (MT)

22,89730,30647,464

2,358178

31.12.2013

Taka

1,106,847 ,1031,004,970,3682,690,98s,208

163,028,54611,452,427

384,736,720220,815,29213s,962,464

35,825,377

3,477,65113 1,483,305

31.12.2012

Taka

1,114,680,721

969,853,3581,325,565,778

262,960,302144,292,364

41 1,1 18,846

216,960,125130,200,820

33,731,1724, lg5,ggg

148,517,349

M.Ton M.Ton

47,022

63,485

119,289

73,939

256.713

64,013

80,1 33

95,810

34.774

210,717

303,735

250,532274,730227.708

The management believes that above receivables are good and fully realisable.

stage.

10.01 Party-wise breakup of Trade receivables

Inter companies:

Karnapuli Engineering Works Ltd.

Other customers

3t.12.2012Taka

542.712,306

425.092

404,867,366 543,137,398

been made at thisHence, no provision has

6,102 I,194,000404,861,264 541,943,398

____4!eg;ss_ __343 J37_3e!_

31.12.2013Taka

404,442,214

425,092

176,714

126,714

21

Ageing of Trade receivables

Due fbr 3 rnonths

Due for 3 to 6 months

Due for above 6 rnonths

Trade receivables- Classification by security and related party

i) Debts considered good and in respect of which the company is fully secured

ii) Debts considered good for which the company holds no securify other than thedebtors' personal security

iii) Debts considered doubtful or bad

iv) Debts due by directors or other officers of the company or debts due by firms orprivate companies in which any director is a partner or a director or a member

v) Debts due by companies under the same management

vi) Maxirnum amount due by directors or other officers of the company at any timeduring the year

I 1.00 Other receivables

Interest receivable

Rent receivable

12.00 Due from inter companies

H Akberali& Co. Ltd.

Chittagong Power Company Ltd.

East Bengal Trading & Industries Corp. Ltd.BSRM Real Estates Ltd.BSRM Steel Mills Ltd.BSRM Recycling Industries Ltd.BSRM Logistics l,td.BSRM Ispat Ltd.BSRM Metals Ltd.

13.00 Advances.and deposits

Advances(Note- 13.01)Deposits(Note- 13.02)

13.91 Advances:

Land

Staff loan against salary

Income tax-corporate

Against revenue expenses

Against scrap purchase- others

L/C margin

Against L/C' Share money deposit to BSRM Steel Mills Ltd. (Associate)

VAT current account and DEDO recoverable accountIncome tax of staff

31.12.2013

Taka

271 ,198,57174,582,812

59.085,923

31.12.20t2

Taka

437,508,78245,087,764

60,540,852

__!lass55_

399,288,440

5,518,926

6,102

6,102

78,496,566

95,000

543,137,398

s35,301,312

7,836,086

1,194,000

1,194,000

148,881,2-45

1,441,905,988

20,295,654r 00,000200,000

252,410,77588,004,1 89

182,472,39829t,700,37s

78,59I,566 __llg$141r

843,257,266

68,027,565129,934,144\33,516,258234,130,37 5

341,0921,409,47rA232,277,099,379:

These represent short term loans given to these sister companies as and when required to meet funding requirement.

All transactions were done through account payee cheque. No amount is receivable fiom Directors at the reporting date.

1,57 5,465,864 461,673,05422,445,60322.047.491

I,597,513,355 494,119,657

17,282,327

4,429,179

136,306,623

68,032,134

9,132,726

25,053,501

341,665,330

900,000,000

73,565.A44

16,462,3274,20 i,868

161,530,248

35, I 53,070

27,143,375

39,722,124

111,289,545

65,964,659

206,838461,673,054

22

1,575,465,864

13.02 De posits:

Customs Authority against clainrAnsar & VDP

l&TandothersPower Development Board

KarnaphuliGas Distribution Co. Ltd. (KGDCL)Bakhrabad Gas System Ltd.Bank guarantee to Bakhrabad Gas Systems Ltd.Linde Bangladesh Ltd.Meghna Petroleum Ltd.Others

I4.00 Cash and cash equivalents

Cash in hand (Note-i4.01)Cash at Banks (Note-14.02)Fixed Deposit Receipts ( Note - 14.03)

14.01 Cash in hand

Corporate of'ficeFactory ofliceDhaka ofliceOverseas otlice

31.12.2013Taka

1,545,145674,221

191,444

13,917,969

1,921,423

422,576

549,491

879,90040,000

31.12.2012Taka

1 ,545 ,145674,221

191,444

13,917,969

1,909,266

422,576

1 ,141 ,7 67g7g,g00

40,0001,924,316-----T4n]SE

ThedirectorsconsiderthatalItheaboveadvances,depositsandpre-paymentSare"i.ffioffiffiin kind and for that no provision against them are required at this stage.

2.005."117

3,996,343

95,316,305

99,302,649

3,822,55573,765,5257,976,994

1,037,0481,893,953I ,055, I 0l

241

1,954,950800,000

1,051,597

23

14.02 Cash at Banks:

Agrani Bank Ltd., Laldighi East Br., Ctg. - CD AiCAgrani Bank Ltd., Baizid Bostami Br., Ctg. - CD A/C

Agrani Bank Ltd., Tomson Bridge Br., Comilla -CD AiCAB Bank Ltd., Agrabad Br., Ctg.- CD AiCAl- Arafah lslamiBank Ltd., Agrabad Br., Ctg. - CD A/C

Bank Al-Falah Ltd., Agrabad Br., Ctg. - CD A/C

Bank Al-Falah Ltd., Agrabad Br., Ctg. - STD AiCBASIC Bank Ltd., Dewanhat Br., Ctg. - CD A/C

Commercial Bank of Ceylon, Agrabad Br., Ctg.- CD A/C

EXIM Bank Ltd., CDA Avenue Br., Ctg.- CD A/C

Dhaka Bank Ltd., Jubilee Road Br., Ctg.- CD A/CDutch Bangla Bank Ltd., Agrabad Br., Ctg. - CD A/C

Dutch Bangla Bank Ltd., Jubilee Road Br.,Ctg. - CD A/C

Habib Bank Ltd., Laldighi East Br., Ctg. - CD A/C

HSBC Ltd., Agrabad Br. Ctg.- CD A/C

HSBC Ltd. KolkataHSBC Ltd.,- Agrabad Br., - USD Exporters FCY A/C

IFIC Bank Ltd., Agrabad - CD A/CIndian Overseas Bank Ltd. (AiC No 817)

Islami Bank Bangladesh Ltd., Jubilee Road Br., Ctg. - CD A/C

Jamuna Bank Ltd., Khatungonj Br., Ctg. - CD A/CJanata Bank Ltd., Laldighi East Corporate Br., Ctg. - CD AiCJanata Bank Ltd. , Laldighi East Br., Ctg. - CD AiC (Old)

Janata Bank Ltd. Agrabad Br., Ctg - CD A/C

Janata Bank Ltd., Local office, Dhaka CD A/C

Mercantile Bank Ltd., Jubilee Road Br., Ctg. - CD A/C

Mutual Trust Banl< Ltd., Jubilee Road Br., Ctg. - CD A/C

National Bank Ltd., Jubilee Road Br. Ctg. - CD A/C

National Credit and Commerce Bank Ltd., Agrabad Br. Ctg. - CD A/C

NRB Cornmercial Bank Ltd.One Bank Lirnited., Agrabad Br. Ctg. - CD A/CPrime Bank Ltd., O. R. Nizam Road Br.,Ctg. - CD A/C

Premier Bank Ltd., O. R. Nizam Road Br., Ctg. - CD A/C

Premier Bank Ltd., I(hatungonj Br., Ctg. - CD A/CPubaliBank Ltd., Agrabad Br. Ctg. - CD AiCShahjalal Islami Bank Ltd., Jubilee Road Br., Ctg. - CD A/CSocial Islami Bank Ltd., Jubilee Road Br., Ctg. - CD A/C

Sonali Bank Ltd., Kalibari Br., Ctg. - CD A/C

Sonali Bank Ltd., I(alibari Br., Ctg. - STD A/C

Sonali Bank Ltd., Cable Shilpa Br., Khulna - CD A/C

Southeast Bank Ltd., CDA Avenue Br., Ctg. - CD AiCSoutheast Bank Ltd. , Pahartali Br., Ctg. - CD A/C

Standard Bank Ltd., Sadarghat Br., Ctg.- CD A/C

Standard Charlered Bank Ltd., Agrabad Br., Ctg.- CD A/C

Standard Chartered Bank Ltd., Motiiheel Br., Dhaka- CD A/C

State Bank of hidia,Agrabad Br., Ctg. - CD A/CTrust Bank Ltd., CDA Avenue Br., Ctg. - CD A/CThe City Bank Ltd., Agrabad Br., Ctg. - CD A/CUnited Commercial Bank Ltd., Jubilee Road Br. Ctg. - CD A/C

All bank balaltces are reconciled with bank statements and negative

overdraft.

95,316,305 73,765,525

31.12.2013Taka

/? lq5

2,046,21211,27 5

8,546,514

916,24511,124)'t 1<1

52,80614,090

641,5306,276

45,62825,334,452

6,881,1253,144,901

109,3 10

149,942

37 5,563i,8024,060

82,s311 ,485,167

1,008

7611,911

12,135

850,9s 1

74,83341,317,362

3,8167,532

4,459,48320,6051 1,53 1

33,76489,363

384,9747,526

512

2,672,422

1,016,7822,576,986

(17,656,904)134,745

10,3 82

13.1 ,852368,029

) )\'7 \'7)

31.12.2012Taka

27,5761,448,41'1

72,5493,592,8 l0

65,123

.37,33523,0224g,5gg33,740

4,419,61830,439

7,767293,119

30,801 ,78545,578,456

19,828

1,407

1,802161 ,558

2,166,408129,629

1,008

761

3,12724,404

2,771,9643 8,50248,039

30,014204,289

1,99569,88090,279

199,612485,015

84,503

71 ,5143,789

3,564,28682,502

(32,939,762)

206,9932,172,785

132,79123,983

6,821,276

24

balances shown in the bank book represent book

14.03 Fixed Deposit Receipts

Name of banks

31.12.2013

Taka31.12.2012

Taka

3,464,3704,512,514

7,976,994

5,000,000,0005,000,000.000

Purpose

L/C MarginL/C Margin

Period

1 month

3 months

Rate of interest

t2.00%12.50%

AB Bank Ltd.

Pubali Bank Ltd.

15.00 Share capital

Authorised capital:500,000,000 Ordinary Shares of Tk. 10 each

Issued, Subscribed and Paid-up capital:

64,345,491 Ordinary Shares of Tk. l0/- each issued in cash

64,345,491 Ordinary Shares of Tk. I 0/- each

fully paid-up as Bonus Shares

27,160,056 Ordinary shares of Tk. 10/- each

fully paid up (other than cash)

15.01 Shareholding position

Name of shareholders

Mr. Alihussain AkberaliMr. Aarneir AlihussainMrs. Bilkis AlihussainMr. Saifuddin Abbas UnwalaMr. lqbal Hussain

Mr. Abbas Jurnani

Mr. Ali Asgar Badruddin

Mr. Zohair Taherali

Mrs. Tehseen Zohair TaheraliVORTEX Investments Ltd.Mrs. Sabeen AameirMr. Abdul Qadir ZohairMrs. Munira Saif UddinMr. Md. Hussain HabibMr. Faisal Iqbal PoonawaiaMrs. Shahnaz Hussain

H. Akberali& Co. Ltd.I(arnafully Engineering Works Ltd.Mrs. Rizwana Khandwala

Mrs. Fatema JangbarwalaMr. Yusuf Nosir Jangbarwala & Batul Alibhoy TyebkhanMr. AquilHatim BhaiVarious employees of BSRM Group

5,000,000,0005,000,000,000

643,454,910

643,454,910

271,600,560

643,454,910

643,454,910

271,600,560

1,558,510,380 1,558,510,390

Number ofo//o Number of shares

21,967,13017,069,95516,143,581

8,399,000

10,870,000

10,000,000

20,000,000

s,682,204

6,147,8223,645,8904,004,600

4,60013,880

4,6504,520

35,84026,210,116

4,000,950

r0 r,000

245,000

900,000

t4.09%t0.95%t0.36%539%6.97%

6.42%

t2.83%3.6s%3.94%2.34%2.57Yo

0.00%0.01%0.00%0.00%0.02%

t6.86%2.57%

0.06%0.16%0.58%0.00%0.22% 340,400

shares

21,967,t3017,069,95516,322,540

9,400,000

10,870,000

i 0,000,000

20,000,000

5,682,204

6,1 88,6633,645,8904,004,600

4,60013,880

4,650' 4,52035,840

26,270,1164,000,850

zo,ooo34s,600

25

1000 155,851,038 155,851,038

15.02 DividendsThe following dividends were declared and paid/ payable by

year:

l5% Cash dividend (Tk. I .5) per qualifuing ordinary share (for

100% Stock dividend per qualifoing ordinary share (for 2011)

the company for the

2012)

31.12.2013

Taka

233,776,557

31.12.2012

Taka

643.454.9r0233,'176,557 643,454,910

During the year 20 1 3,

oftax at source.

Tk. 67,jj8,860 was remitted to non-resident shareholders as dividend after making required deduction

After the reporting date, the following dividends were proposed by the Board of directors.

l5% Cash dividend (Tk. 1.5) per qualifying ordinary share 233,776,557

16.00 Reserves

16.01 General reserve

The general reserve is used ftom time to time to transfer profits from retained earnings for appropriation purposes and to

meet future known or unknown requirements. There is no policy of regular transfer. As the general reserve is created by a

. transfer from one component of equity to another and is not an item of other comprehensive income, items included in the

general reserve will not be reclassified subsequently to profit or loss.

t 6.02 Revaluation reserve

Revaluation reserve relates to the revaluation of properly plant and equipment (Note- 3.01.04)'

16.03 Fair value reserve

The fair value reserve comprises the cumulative net change in the fair value of available for sale financial assets until the

assets derecognised or impaired (Note-3'21.01).

16.04 Reserve for issuance ofshare against merger

This represents total face value of shares issued against acquisition of assets and liabilities of Meghana Engineering Works

Lrd. as on December 3 1, 2010. As per calculation 27 ,160,056 nos Ordinary Shares of Tk. l0 each totaling Tk' 271,600,560

of Bangladesh Steel Re-Rolling Mills Ltd. has been allotted subsequently after getting approval from Securities and

Exchange Commission (SEC) vide letter of consent (ref: SEC/CIICPLC-2131200911582) dated September 30,2012.

The procedure for transferring the legal title of all movable and immovable properties of Meghna Engineering Works

Limiied due to acquisition is under process. However, physical possession of movable and immovable properties of Meghna

Engineering Works Limited continues to remain with the reporting Entify.

26

31.12.2012Taka

627,490,645917 ,67 5,959

__1S45J_66,504_

17.01 Long term loan -Maturity analysis

Long term loans received fiom Banks and financial institutions are re-payable as per the following schedule from April,2013:

I7.00 Long'ferm Loan

Project loan and syndicated term loan(Note- 17.03)Other Term loan (Note- 17.04)

Due within one year-Current portionDue after more than one year-Long term portion

17,02 Long Term Loan- Long term portion

Agrani Bank Ltd. - Project loanOne Bank Ltd. - Svndicated term loanOther term loan

17.03 Project Ioan and syndicated term loan

Agrani Bank Ltd. - Project loan (Note - 17.03.01)One Bank Ltd. - Syndicated term loan ( Note - 17.03.02)

31.12.2013Taka

592,804,2761,306,077,992

1.898.882.168

492,699,5561,406,182,612I ,898,882,168

qsz,erc,lst

913,565,815'--T7[;6r8trfiT

10,820,97458 r,983,302

316,932,5941,229,233,910

:lFa5;ir-6,56T-

9,594,631579,796,22963 8,843,051w27,490.64s

600,000,000

627,49A,645592,804,276

17.03.01 Terms of project loan

Lenders:

Agrani Bank Ltd. sanctioned an amount of Tk. 1,119.36 lac as project loan against BMRE and disbursed the full amountwithin 2nd November,2005. Total loan amount was divided into two parts as long term loan Tk. 1.008.43 lac andinterest during irnplementation Tk. 1 10.93 lac.

Total Ioan facilities: Tk. 1,119.36 lac.

Interest rate:

Interest rale is 12oh per annum or at applicable rate as detennined from time to time on half yearly basis.

Disbursement:

The first disbursement was made on 18.12.2004.

Repayments

Long tenn loan is being re-paid in 16 half-yearly equal installments starting from 18 June 2007.

Interest for the period of implementation is being re-paid in five equal yearly installments commencing from completionof one year from the commencement of the commercial production of the project.

Loan period

The entire loan amount shall be re-paid by ten (10) years including grace period oftwo (2) years.

Securities:i. Mortgage of land area of 1.98 acre and building thereon.ii. Hypothecation on all existing and proposed machineries and furniture of the projectiii. Personal guarantee of all directors of the company.

Lender's covenants

Any subsequent requirement of working capital for BMRE Project shall be financed by entrepreneurs.

Purpose:

For meeting expenditure for capital machineries.

27

17.03.02 Terms of Syndicated term loan

Lendersl

The cornpany entered into a syndicated loan agreement for BMRE on May 15,2012 with One Bank Limited. the lead

arranger and 6 (Six) other Banks and Financial lnstitutions'

Total loan facilities: Tk. 60 crore.

Interest rate:

lnterest rate is l5%-l 6o/o per annum calculated on quarterly basis and variable depending on the situation of money

market.

f)isbursement:

The first disbursement was made on September 16,2012'

Repayments

This term loan is repayable in 60 (sixty) monthly installments after 1 (one) year of grace period'

Securities:i. Registered Mortgage on 827 decimals of land at Sitakunda, Chittagong along with building and

or to be constructed thereon on first ranking parri passu basis'

ii. Fixed and floating charge over assets.

iii. irrevocable general power of attomey.

iv. Demand promissory note covering full amount'

Purpose:

For acquisition of plant and machineries to enhance the production capacity

product quality, undertake civil construction etc' for BMRE'

17.04 Other Term Loan

AB Bank Ltd.

IPDC of Bangladesh Ltd.

IDLC Finance Ltd.

Jamuna Bank Ltd.

Lanka Bangla Finance Ltd.

MIDAS Financing Ltd.

Fbreast Finance & Investment Ltd'

International Leasing and Financial Services Ltd'

National Housing Finance and lnvestments Ltd'

Prime Bank Ltd.

United Leasing ComPanY Ltd.

National Credit and Commerce Bank Ltd.

Shahjalal Islami Bank Ltd.

United Comrnercial Bank Ltd.

Terms and conditions of above term loans are shown in Note-17.04.01 below:

1,306,077,892 917,675,859

to 450,000 metric tons Per

31.12.2013

Taka

32,991,605

17 ,429,105140,619,142

23,151,941

459,350,025

18,748,307

i 86,880,733

250,000,000

94,855,836

24,480,131

51,504,461

structures constructed

year, improve

31.12.2012Taka

68,998,756

48,233,275

I 1,678,075

46,522,139

500,000,000

56,244,9_23

ez,lzs,est67,724,0r916,533,718

26,118,90211,886,361

28

18.00 Deferred tax liabilities

Opening balance as on January 1

Provided during the period:

Investments in associates

Increases in fair value oftradable securities

Revaluation surplus of PPE (excluding land)

Taxable temporary difference of PPE (excluding land)

Adjusted during the period:

Deductible temporary difference of PPE

Sale ofrevalued assets

Loss on revaluation ofPPEImpact of depreciation on revaluation surplus

Closing balance

18.01 Reconciliation of deferred tax liabilities/ (assets)

1,071,987,675 882,458,633

31.12.2013Taka

882,458,633

171,455,321

232,488

53.931.s62

(5,012,482)

Q1,A77,847)

189.529.042

31.12.2012Taka

682,920,590

44,5?1,271

212,067,263

(10,42t,460)(r,845, l l

( 10,508,763

(34,27s,ts0)

199,538,043

Carryingamount

Tax base

TaxableiTax ro.ar.rrnl.r Deferred tax

rate '"'"-':.;-- liabilities/ (assets)temnorarv (llllerence

Property, plant &equipment (except

land)

Tradable securities

Tal<a Tal<a

3,232,887 "537 I ,021 ,386,196

ls.711,449 14,161,529

37.5%

t5%

Taka

2,211,501,341

1.s49,920

3,s63.424,229

Taka

829,313,002

232,488

242,442,185Deferred tax liability on investment in associates

Total deferred tax liabilities

19.00 Trade payables

BSRM Steels Ltd.

Purchase from outsiders

BSRM Wires Ltd.

20.00 ShoI't term liabilities

Loan against Trust Receipt (LTR) (Note - 20.01)Bridge Loan from United Commercial Bank Ltd.Time Loan from AB Bank Ltd.Time Loan from Habib Bank Ltd.Time Loan from One Bank Ltd.Factoring Loan against sales invoice (Note - 20.02)

Loan against CC Pledge and Hypo (Note - 20.03)

Inland Foreign Documentary Bills For Collection (IFDBC) (Note-20.04)

Time Loan from Trust Bank Ltd.

Terms and conditions of the above liabilities are shown in Note-47.

1,071,987,675

2,775,603,565

5,368,952

962,800

______3;$ele2*

1,089,112,121

s30,390,716149,108,293100,069,444

118,327,083

4,783,3601,125,898,695

s13,337,980

_____?$1&5;J1_

886,787,5 i 5

518,929,3791 1,700,000

14,047,257

1,219,739,906598,31 1,309

101,526,944

30

3,631,028,292 3,351,042,310

20.01 Loan against Trust Receipt (LTR)

Bank Alfalah Ltd.HSBC Ltd.Islami Bank Bangladesh Ltd.Mercantile Bank Ltd.Prime Bank Ltd.Pubali Bank Ltd.Standard Chartered Bank Ltd.Shahjalal Islarni Bank Ltd.Trust Bank Ltd.

Al-Arafah Islami Bank Ltd.Dutch Bangla Bank Ltd.National Credit and Commerce Bank Ltd.One Bank Ltd.

20.02 Details of Factoring LoanUnited Leasing Co. Ltd. (Note - ZO.O2.0|)

l,ogqltl7lrt- ------BE6-7gim-

31.12.2013

Taka

56,759,955284,156,4362s9,669,880

5,718,85630,343,731

1 85,1 57,5871 05,367,50074,530,1002,959,142

2,929,36113,500,292

34,960,993

33,158,982

3t.t2.2vnTaka

54,374,199299,813,278

95,432,0871 ,491,146

19 I ,8 12,87812,757,10979,420,25693,993,38057,693,183

68,964,095

431,152,637

187,260

65,164,s44

32,424,32s

16,516,222

141,094,424

69,779,967

79,718,114

5,818,357

14,309,721

200,768,429

134,306,51 I

429,049,469

11,665,249

45,143,157

18,589,514

47,926,506

139,931,200

249,261,212

67,439,402

16,169,091

44,988,794

9,726,8872,001,889

3,642,025

4,793,360 14,047,257

20.02.01 Terms and conditions

i. 80% of gross sales invoice/billed amount is paid by discounting sales invoice.ii. Interest rate is l5olo per annum along with processing and collection fees of 0.25oh on the invoice amount.Security:Personal guarantee of directors of the company and deed of floating charge on all accounts receivables (present andfuture).

20.03 Loan against CC Pledge, Hypo and Overdraft

Agrani Bank Ltd. - CC (Hypo) A/CAgrani Bank Ltd., Laldighi East Br. Ctg. - CC (pledge) A/CBASIC Bank Ltd. - OD AiCHabib Bank Ltd., Laldighi Br. Ctg. - CC AICJamuna Bank Ltd. - CC (Hypo) A/CNational Bank Ltd. - CC AIC (Hypo)Prime Bank Ltd. - CC (Hypo) A/CPubali Bank Ltd., Agrabad Br., Ctg. - CC (Hypo)Sonali Bank Lrd., K.C. Dey Road Br. Ctg.- CC (Hypo) A/CSonali Eank Ltd., Kalibari Br. Ctg.- CC (Hypo) A/CTrust Bank Ltd. - OD A/CStandard Bank Ltd" - CC (Hypo) A/CDhaka Bank Ltd.Shahjalal Islami Bank Ltd.Sociallslami Bank Ltd. - (CC Hypo) A/C

____u3$29f2!_ 1,219,739,906

20.04 Inland Foreign Documentary Bills For Collection (IFDBC)

HSBC Ltd.

Shahjalal Islarni Bank Ltd.

One Bank Limited.

Pubali Bank Ltd"

Islami Bank Bangladesh Ltd.Prime Bank Ltd.IFIC Bank Ltd.United Commercial Bank Ltd.Standard Chartered Bank Ltd.Dhaka Bank Ltd.Dutch Bangla Bank Ltd.AB Bank Ltd.

Mercantile Bank Ltd.

State Banl< of India

National Bank Ltd.

Agrani Bank Ltd.

21.00 Liabilities for expenses

Audit Fees

Karnaphuli Gas Distribution Co. Ltd.Power Development Board for electricify (Factory)

Godown rent

C & F Bill and othersOthers

Carriage on sales

Salary & AllowancesFinancial expenses

Linde Bangladesh Ltd. (formerly BOC)Telephone expenses

Carrying charges

Medical expenses

ConveyanceCasual wages

Fees and renewals

Power Development Board for electriciry (Depot, godown etc.)

Guest House rent

ULC Bill Collection charges and interest

Printing'and stationeryPostage and telegramLegal expenses

Fuel and lubricantsSpare parts

Carriage on purchase

Repair and maintenance

Entertainment expenses

22.00 Advance against sales

3r.12.2012Taka

62,597,982

39,207,622

37,345,038

117,264,979

26,272,490

73,299,153

37,346,870

66,549,086

85,631,731

33,796,086

18,997,272

513,337,980 598,3 I 1,309

360,0002,451,150

49,550,779

I 13,100

3,594,131I 85,836

10,03 1 ,86821,283,04615,965,289

293,32075,279

2,857,154277,859

91,0291,670,595

158,650

40,100

208,613

3,06093,1 80

24,40016,644

7,51 8,570178,086

72,50028,459

216,856,037 117,142,297

101,714,671 54,956,861

These represent advances received from different parties against sale offinished goods. Coods have not been deliver'ed to

them within the reporting date.

31.12.2013

Taka

23,660,101

10,444,473

27,804,729

32,080,348

58,243,226

42,758,175

71,158,984

23,379,408

31,656,333

31,999,946

160.152.2s1

360,0002,079,848

t33,947,055133,050

8,294,817120,102

4,167,27723,046,70839,584,169

317,090191,097

1,339,378782,928

14,400

1,863,868

614,250

JZ

23.00 Due to inter companies

Karnaphuli Engineering Works Ltd.

BSRM Metals Ltd.

Section Steel Ind. Ltd.

BSRM Wires Ltd.

BSRM Steels Ltd.

Bangladesh Steels Ltd.

These balances represent short term financial arrangement availed fromworking capital. Interest @ 15.50% has been charged to these balances.

All transactions were made through account payee cheques.

24.00 Provision for income tax

Opening balance as on January I

Provided during the period:

Against current year

Against previous years

Less: Adjusted with advance income tax paid at source

Closing balance

Year wise Income Tax assessment status is as follows:Accounting

year

2008

2009

2010

2011'

2012

25.00 Provision for WPPF and Welfare Fund

Opening balance as on January 1

Provided during the period

Less:.Paid during the period with salary

Closing'balance

26.00 Othet'liabilities

Liability for other finance

Earnest Money

Security Deposit

Retention MoneyIncome Tax deducted at source from salary

Income Tax deducted at source-others

VAT deducted at source

Dividend payable

Employees' Provident Fund

2,407,2\0,345 369,924,616

inter companies as and when required to meet

184,962,166 256,237,264

31.12.2013Taka

6,000,000

988,918

550,000

12,81 1,3 I 8

2,37 5,947 ,7114,912,398

31.12.2012Taka

6,949,912

362,970,206

4,498

124,274,416

6,612,039

188,224,809

97,652

Assessment year

2009-2010

2010-2011

2011-2012

2012-2013

2013-2014

130,886,455 188,312,461

19t,574,205 ?59,587,559

124,274,416 184,962,166

Present status

Assessment of Meghna Engineering WorksLtd. is pending at High Court Division

Assessment corhpleted

Assessment completed

Assessment completed

Assessment completed

2,665,273 16,775,0662,199,136 10,673,9074,864,4094,059,024

806,385

27,448,97324,783,700

2,665,273

150,000

50,000

953,762

7,744,989

7,724,335

2,564,198

1,267,2681,351 ,360

150,000

50,000

8,598,448

11,787,273

1,162,918

843,3_40

1.214.991

15,205,912 23,906,970

Income Tax and VAT deducted at source above have subsequently been paid to the Govt. Exchequer.

JJ

27.00 Revenue

Local sales

Export sales (Note-27.0 1)

Sale ofscrapSale ofby-products

2013Taka

8,341,552,98548,263,134

116,370,841

96,228,048

2012Taka

12,971,618,436

52,132,524

977,371,266

36,239,262

8,602,415,008 141043,421,499

27.01 Export sales

TotalexportsalesduringthisperiodwasUSD 623,364 againstexporting of 797.87 MTgoods.

28.00 Cost of sales

Cost of sales-own production (Note -28.01)Cost of sales- finished goods purchased Q.{ote - 28.02)Cost ofsale ofscrapCost of sale of billet

28.01 Cost of sales-own production

Opening Stock of raw materials - BilletsAdd: Purchased during the year

Consumption of scrap and spongeQ,{ote - 28.01.01)

Less: Closing Stock of Raw Materials

Cost of sale of billets to other parties

Raw Materials Consumed- BilletsAdd: Manufacturing Expenses:

Direct expenses

Direct materials consumed

Factory overhead (ltlote - 28.03)Power

Gas

Welding gas and liquid oxygenFuel and LubricantsRepair and maintenance of furnace

Consumption of mechanical stores

Consumption of MS RollConsumption electrical stores

Consumption general stores

Depreciation (Note- 6.00)

Cost of Goods ManufacturedAdd: Opening stock of Finished Goods

Less: Closing stock of Finished Goods

Cost of sales of manufactured finished goods

28.01.0I Raw materials consumed - scrap and sponge

Opening Stock of raw materialsAdd: Purchased during the year

8,102,322,739

4,738,149,906

6,510,766,441

1,32s,s65.7',18

5,145,347,0112,863,475,160

93,s00,567

5,129,813,667

6,287,904,039

964,002,867

964,190,241

13,345,900,913

1,106,847,703

4,745,981"824

5,123,236,549

5,770,211,J43

2,078,860,962

3,691,410,391

5,074,643,9021,380,735,643

1,836,332,2192,690,985,208

6,455,379,4451,325,565,779

5,145,347,011 5,129,813,667

Less: Closing Stock of raw materials

Cost ofsale ofscrap

969,853,359

4,771,465,2805,741,318,638

1,004,970,368

93,s00,s671,098,470,93s

2,079,694,997

3,962,957,001

6,041,541,888

969,853,358

964,002,867

1,933,856,225

4,107,695,663

74,550,985397,762,542272,038,973

596,745,125

27 ,641,1273,186,939

14,947,651

48,276,631

35,896,526

18,854,670

6,850,395

268,033,053

1,7 64,784,617

71,340,455

346,936,923

193,232,774

418,907,137

27,224,67t2,998,402

8,865,594

3,578,41035,244,681

26,551,305

9,143,057

2,236,395

237,073,137

1,383,233,427

.ffi 4,642,847,703

2012

Taka2013

Taka

28.02 Cost of sales-finished goods imported and locally purchased

Opening stock of finished goods

Add: Finished goods imported

Finished goods locally purchased

Less: Closing stock of finished goods

28.03 Factory overhead

Salaries and allowances

Godown rent

Carrying charges-raw materials

Conveyance expenses

Electricity expenses

Water bill-WASAEntertainment

Travelling expenses

Factory office expenses

General expenses

Guest house rent

Guest house expenses

Insurance expenses

Medical expenses

Paper and periodical

Postage and telegram

Printing & stationery

Repairs and Maintenance

Land revenue, Municipal tax

Generator expenses

29.00 Selling and distribution costs

Advertisement

Brokerage and commission

Carriage on sales

Travelling expenses

Exporl charges

Debtors written offSales commission

Godown rent

407,252,666

205,308,252

2.425.395.215

3,037,956,133

174,480,973

260,086,164

471,037 ,6945,964,032,846

6,695,156,704

407,252,666

I 98,01 0,034

7,612,770

27,057,387

9,686,277

4,250,526

54,423

4,793,322

2,083,8 1 0

|,206,03s474,917

1,s23,280

867,285

581,561

1,960,488

10,515

133,374

814,829

10,319,17 4

548,766

50,200

__ 272,03!fE_

301,294

50,000

50,934,483

2,361,021

663,769

420,791

360,255

548,898

2,863,475,160 ____q28Uqfl$_

t24,444,5846,926,640

23,806,656

3,263,754

5,1 88,471

75,432

3,625,007

965,640

706,680

13 3,960

81 1,550

548,807

359,281

941,582

12,984

62,253

1,115,411

17,159,462

554,815

2,563,805

193,232,774

450,826

66,233

25,654,496

3,308,978

1 ,3 84,1 08

3,760,676

789,6s455,646,511 35,414,971

35

30.00 Administrative costs

Salaries and allowancesDirectors' remuneration (Note - 30.01)Rent (Office, depot and others)Fees and renewals

Land revenue, Municipal tax

Audit fees

Conveyance expenses

Donation and subscriptions

Entertainment

General expenses

Guest house expenses

Legal expenses

Professional expenses

Motor vehicle expenses

Office expenses

Postage expenses

Computer expenses

Printing expenses

Stationery expenses

Laboratory expenses and others

Paper and Periodicals

Telephone and e-mail expenses

Training expenses

Depreciation (Note- 6.00)Electricify expenses

Medical expenses

Staff welfare

Travelling expenses

30.01 Directors' Remuneration

Details of Directors' remuneration paid during

Name

Mr. Alihussain Akberali-Managing DirectorMr. Aarneir Alihussain-DirectorMr. Zohair Taherali-DirectorMrS. Tehseen Zohair Taherali-DirectorMrs. Sabeen Aameir- Director

31.00 Other Income

Profit/(Loss) on sale of motor carProfit on sale of machineryMiscellaneous incomeLoss on sale of office equipment

2013Taka

99,421,29024,600,000

s,420,0403,17 5,453

1,125

790,525

1,449,423

562,336

2,929,564

217,293

132,660

909,536

1,457 ,4405,839,905

1 ,555,343463,909

7,653

38, I 33

43,937

72,506

34,548

3,24s,429

254,261

11 ,105,1321,287 ,2761,094,891

2012Taka

79,383,945

24,600,000

21,182,096

1,491,043

195,054

868,300

658,312

1,951,932

3,145,402246,661

r 80,000

1,479,492

2,765,762

12,261,500

t,961,172

650,737

1,295,597

296,279

667,369

29,376

48,265

3,937,930

200,9s7

10,712.,097

986,609

2,112,421

32,4342,701,173

166,109,409 176,030,994

the year are as follows:Gross

RemunerationIncome TaxDeducted Net Paid

Taka

7,200,000

4,800,000

1,200,0004,800,000

600,000

Taka

1,900,000

1,200,000

1,800,000

r,200,000

49,500

Taka

5,400,000

3,600,000

5,400,000

3,600,000

550,50024,600,000 6,049,500

In addition to remuneration, Directors avail company vehicles for transportation purposes.

18,550,500

827,295

2,951,567

2.873,362

(610,131)

744,862- (26,500)

6,652,224 109,231

2013

Taka

158,815,914

14,358,440

1,467,553

206,137,5526,7 55,340

130,77 4

(279,203,494)

166,931,728

(10,997,401)

2012Taka

144,499,441

4,959,270

1,358,644

111,592,129

7,412,237

14,530(108,536,253)

158,011,447

(2,040,999)

1 ,571 ,gg5

32.00 Finance costs

Interest on LTRInterest on Demand and Time loanInterest on factoring loanInterest on Term loan

Bank charges

Bank Guarantee Commission

lnterest on balance due to inter companies-Net

Interest on OverdraftIroreign currency exchange rate fluctuation gain

Interest on BMRE Term loan

33.00 Finance income

Interest income from FDR

34.00 Non- operating income

Dividend income

Management fees

Profit on sale of investment in shares

Rental incorne

Irrrpairment loss on investment in tradable shares

264,396,406 278,932,330

2339A,s49 34,1s0.79623,390,549 34,150,796

70,482163,550,409

1,492,941

3,960,000

56,800

99,159,222

50,034,634

1,940,000

(1,121,'t20)

I50,068,986169,063,732

35.00 Share of profit of associate (Net oftax)

Net profit attributable to the

shareholders of associates

Ownership

Net (loss)/profit attributable toBSRM Ltd.

Excess ofproportionate net asset

value of associates over acquisitioncost

Adjustment against unrealized profi ton inventories-net

BSML BSLTotal20t3

BSL2012

(9,771,811) 1,394,553,917

21.76% 31.19%

434,939,131 433,395,135

498,898,126

1.833.7741,833,714

497354J30 436J?r,905* Share of loss fiom BSML has been calculated from the day it has become an associate i.e., I 1

997,165,270

(1,543,996) *

498,898,726

310,ggg,g4g

t,954,530

312,954,479

April2013.

36.00 Basic earnings per share (EPS)

Profit attributable to the ordinary shareholders (Taka) 788,741,611 453.924.187

weighted Average number of shares outstanding during the year (Nos.) 155,g51,03g I 55,85 I ,03 8

Basic earnings per share (EPS)-Taka 5.06 2.91

37.00 Related party transactions

During the year, the company carried out a number of transactions with related parties in the normal course of business

and on ams length basis. The name of these related parlies, nature of transactions, their total value and balances on

reporling date have been set in accordance with the provisions of BAS-24.

Related parties comprise of companies under common ownership and common management control.

Name of parties

H Akberali& Co. Ltd.

Karnaphuli Engineering Works Ltd.Chittagong Power Company Ltd.

BSRM Wires Ltd.BSRM Recycling Industries Ltd.

Bangladesh Steels Ltd.

BSRM Logistics Ltd.

BSRM Ispat Ltd.

BSRM RealEstates Ltd.

BSRM Metals Ltd.Section Steel Ind. Ltd.East Bengal Trading & Industries

Corp. Ltd.

BSRM Steels Ltd.BSRM Steel Mills Ltd.BSRM Steels Ltd.Karnaphuli Engineering Works Ltd.

37.01 Details of transactions

Narne of inter comnanies

H Akberali& Co. Ltd.

Karnaphuli Engineering Works Ltd.

Chittagong Power Company Ltd.BSRM Wires Ltd.BSRM Recycling Industries Ltd.

BSRM Iron & SteelCo. Ltd.

Bangladesh Steels Ltd.

BSRM Logistics Ltd.

BSRM Ispat Ltd.

BSRM Real Estates Ltd.

Section Steel Ind. Ltd.

BSRM Metals Ltd.

East Bengal Trading & Industries

Corp. Ltd.

BSRM Steels Ltd.BSRM Steel Mills Ltd.Burhani Scrap Traders

BSRM Wires Ltd.BSRM Iron & Steel Co. Ltd.

BSRM Steels Ltd.

H Akberali& Co. Ltd.

I(arnaphuli Engineering Works Ltd.

BSRM Steets Ltd.

BSRM Steel Mills Ltd.BSRM Logistics Ltd.

BSRM Iron and Steel Co. Ltd.Bangladesh Steels Ltd.

Nature of Outstanding as

Tru,rr*tio,o ffi ComPensation

laka

Relationship

Sister Company

and shareholder

-DO-Sister Company

-DO--DO--DO--DO--DO-

-DO--DO--DO-

_DO-

Investee

Investee

Investee

-DO-

Orreningbalances

Taka843,257,266 Dr.

266,333 Dr.6,949,912 Cr.

t29,934,144 Dr.

4,498 Cr.

133,516,258 Dr.

234,130,375 Dr.

341,082 Dr.

362,970,206 Cr.68,021,5_65 Dr.

962,800 Cr.

2,775,603,565 Cr.

t,tg+,000 or.

Short term loan

Short term loan

Short term loan

Short term loan

Short term loan

Short term loan

Short term loan

Short term loan

Short term loan

Shoft term loan

Short term loan

Shorl term loan

Short term loan

Short term loan

Purchase

Sales

Provided duringthe year

Taka1,1a2,192,t49

7,61 1,060

20,928,821

99,444,506

91,429,164

3,824,310,335

4,907,900

1 I 1,669,61 I

63,820,000

200,000

600,000.00

720,000

650,000

12,879,736,472

2,202,797,993

6,350,000

39,804,1 s0

1,639,086,005

264,441

8,469,002I 8,93 8,903

33,034,657

6,222,7791,163,077

46,480

1,441,905,988 Dr

6,000,000 cr.20,295,654 Dri2,811,318 Cr.

88,004,189 Dr4,912,398 Cr.

182,412,398 Dr291,700,375 Dr

200,000 Dr

988,918 Cr.

550,000 Cr.

100,000 Dr

2,37 5 ,947 ,7 1 I Cr .

252,410,77 5 Dr3,563,424,229 Cr.

6,102 Dr

Adiusted durinsthe vear

Taka503,543,421

1 ,61 1 ,060899,500

93,583,1 00

133,359,1 19

3,824,310,335

62J12,471

6,250,000

50,000

2,050,000

550,000

10,866,7s8,96'7

2,018,404,773

6,350,000

38,841,350

2,426,906,669

264,441

9,656,900

r 8,938,903

33,034,657

6,222,779

1,163,077

46,480

Market price

Market price

Market price

Market price

Market price

Market price

Market price

Market price

Market price

Market price

Market price

Market price

Market priceMarket price

Market price

Market price

Closinsbalances

Taka1,441,905,988 Dr.

6,000,000 cr.20,295,654 Dr.12,811,318 Cr.

88,004,189 Dr.

4,912,398 Cr.

182,412,398 Dr.291,700,375 Dr.

200,000 Dr.

550,000 Cr.

988,918 Cr.

100,000 Dr.

2,375,947,7|I Cr.252,410,775 Dr.

3,563,424,229 Cr.

6,102 Dr.

38.00 Contingentliabilities

The company had contingent liabilities at the reporting date which are as follows:

ParticularsAmount(Taka)

Present status

Against approval ofvalue addition in 2003

Pending for hearing and amount of liabilitycan not be estimated at this stage

Penalty imposed by VAT Authority in2004 100,000

Pending before the High Court Division ofSupreme CourtDemand raised by VAT Authority in 2004 for

difference in selling price536,17 4

Against trade VAT in 2006 178.415

Against percentage ofwastage (4oh in place of2.50%) in2011

Pending before the High Court Division ofSupreme Court and liability of which can

not be estimated at this stage.

38.0I Status of pending litigation with the Income Tax authority for dispute with respect to income tax

liability.

Disputed amount of tax liability has already been deducted by Income Tax authority and shown as advance

income tax under advance, deposits and pre-payments.Present status

Pending before High Court Division ofSupreme Court for hearing as the company

appealed against the order ofAppellateTribunal.

31.12.2013 37.12.2A12

Taka Taka39.00 Guarantees

39.01 Bank guarantees

Bank Guarantee Against Bakhrabad Gas System

- Deposit to Customs Authority against claim under appeal

Name of inter companies

BSRM Steels Ltd.BSRM Iron and Steel Co. Ltd.

Assessment year

2001-20022002-20032005-20062003-20042005-20062009-2010

Unit Amount (Tk.)BSRMBSRMBSRMSMWSMWSMW

4,900,00010,561,5629,861,000

t4,764,0003,266,0002,320,000

45,672,562

s49,497

1,545,145

1,138,472

t,545,145

2,094,642

The above margin and deposits have been included in Advance, Depo-sits and Pre-payments.

39.02 Corporate guarantees

The company has a policy to extend corporate guarantee for the financial arrangements ofthe sister' cgmpanies within the group. At the reporting date, status of such guarantee was as follows:

2,693,617

Asainst Maximum limit (in million) (Taka)

L/C liability 2A,115

L/C liability 15,430

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41.00 Financial instruments- Financial risk management-l'he

Company has exposure to the following risks from its use of financial instruments:(i) Crcditrisk( ii ) Liquidity risk( iii ) Market risk

41.01 Risk management frameworkl'he company management has overall responsibility for the establishment and oversight of the Company,s risk managementllamework. The company's management poticies are established to identify and analyze the risks faced by the Company to setappropriate risk limits and controls and to monitor risks and adherence to limit. Risk management policies, procedures and systemsare I'eviervcd regularly to reflect changes in market conditions and the company's activities.

41.02 Crcdit risk

Credit risk is lisk of frnancial loss to the company if a customer or counterparty to a financial instrument fails to meet its contractualobligations which arises principally from the Company's receivables and investments.

41.02.01 Exposure to credit risk

Thc canying amount of financial assets represents the maximum credit exposure. The maxirnum exposure to credit risk at thereporting date was as ibllows:

31.12.2013 31.12.7,012

Taka

15,7 1l ,4491,000,300

160,827,797

1,597,513,355

483,458"932

2,277,089,379 1,409,473,023

95,316,305 81,742,4094,630,917,517 2,940,120,903

The company's exposure to credit risk is influenced mainly by the individual characteristics of each customer. However,management also considers the factors that may influence the credit risk of its c.ustomer base, including the default risk of theindustry in which customers operate. During 2013, 99.25 % (2012:99.78%) of the company's receivables balance was with variousoutside parties. However, based on the company's operations there is no concentration ofcredit risk.

The company's management has established a credit policy under which each new customer is analyzed individually forcreditworthiness before the company's standard payment and delivery terms and conditions are off'ered. The company reviewincludes clients goodwill and in some cases bank ref'erences. Customers that fails to meet the company's standard credit policy maytransact with the conlpany only on a pre-payment basis.

Ageing of trade and other receivables

The ageing of gross value at the reporting date that was not impaired was as follows:

31.12.2013 31.12.2012

lnvestment in quoted shares and debt securitiesInvestments in non-tradable shares

lnvestments in FDRs (Short term & long term)Advances and deposits

Trade and other receivables

Due ll'om inter companies

Cash and cash equivalents

(a) Trade and othcr receivables

0-90 days

91- 180 davs

Over 180 days 59,085,923 60,540,852

Taka

i 8,s06,460

1,000,300

253,261,311

484,118,557

692,018,643

Taka

349,790,137

74,582,872

Taka

s86,390,027

45,087,764

__ls3lig, e3 2_ ____!z'01qff _The management believes that the amounts are collectible in frtl, baod on histo.i" puy**t U"t urioilIna extensive analysis ofcustomer cledit risk, including underlying customers,credit ratings ifthey are available.(b) Due from inter companies

The carrying amount represents amount paid to one of the inter companies to meet its operational finance from time to time. Theoutstanding balance is redeemable including 15.50% interest per annum and has no prescribed repayment schedule.(c) Cash and cash equivalents

The cornpany held cash at bank of Tk. 95,316,305 at December 31,2013 (2012:Tk. Bl,742,4og), which represents its maximumcredit exposure on these assets. The balancc with banks are maintained with both local branch of International banks and domesticscheduled banks.

(d) Cuarantees

The conrpany's policy is to provide financial guaranl.ees only to its sister companies. At December 31,2013 the company has anumber of corporate guarantees for L/C liabilities of sister companies (refer to Note - 39.02).

41

41.03 Liquidity rislr

Liquidity risk is the risk that the Company will encounter difficulty in meeting the obligations associated with its financial liabilitiesthat are settled by delivering cash. The Company's approach to managing liquidity is to ensure, as far as possible, that it will alwayshave sufflcient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incuning unacceptablelosses or risking damage to the Company's reputation.

41.03.01 Exposure to Liquidity risk-fhe lbllowing are the contractual maturities of financial liabilities:

Non-dcrivative fi nancialliabilities carrving

amount

Contractual cash flows

Within l2 months 1 to 5 vears More than 5 years Total

Taka Taka Taka Taka Taka

1,898,882,168 492,699,556 1,406,182,612

3,s63,424,229 3,s63,424,229

3,631,028,292 3,631,028,292

216,856,037 216,856,037

2,401,210,345 2,401,210,345

r,898,882, I 68

3,563,424,229

3,631,028,292

216,956,037

2,401,210,345

806,385

ts,205.912

806,385

15,205,912

806,385

15,205,912

As at 31.12.2013

Long term Ioan

Trade creditors

Short term liabilitiesLiabilities for expenses

Due to inter companies

Provision for WPPF and

Welt'are Fund

Other liabilities

Non-derivative fi nancialliabilitiesAs at31.12.2012

L,ong term loan'll'adc creditors

Short tcrm liabilitiesLiabi I ities lbr expenses

Due to inter companies

Provision for WPPF and

Welfare Fund

Other Iiabilities

11,727,413,368 10,321,230.7s6 1,406,182,612 11,727,473.368

1,102,694.386 t2s,539,524

8.191.683,287 6,963,449,377 t,102,694,386 125,539,524

41.04 Market risk

Market risk is the risk that changes in market prices such as foreign exchange rates, will affect the Company's income or the valueof its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposureswithin acceptable parameters, while optimizing the return.

4I.04.01 Currency risk exposure and its management

The company is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency other than thelirnctional currencies of the company. To manage this exposure, the company is adapted direct risk reduction methods based onmatching receipts and payments on assets and liabilities.

The Company is exposed to foreign currency risk relating to purchases, sales and other transactions which are denominated inloreign currencies. As at 31 December 2013, the Company was exposed to foreign currency risk in respect of financial liabilitiesdenominated in the fbllowing curencies:

I ,545,1 66,504

2,781,935,317

3 ,3s t ,042,310t17,142,297

369,924,616

2,665,273

23.806,970

316,932,594

2,781.935,317

3,35 I ,042,3 l0117,142,297

369,924,616

2,66s,273

23,806.970

1,545,166,504

2,781,935,317

3,351,042,310

1t7 ,142,297369,924,616

2,665,273

?3,806,970

____!:121f8r8?_

ExDosure to currencv riskESIgLs^n curren cv denom i

Cash and cash equivalents

ll'adc and othcr receivables

Iirreign currency denominated liabi I ities:

Inland Foreign Documentary Bills For

Collection (IFDBC)

Net exposure

Fixed.- rate instruments

Financial assets

Financial liabilities

Variable- rate instruments

Financial assets

Financial Iiabilities

31.12.2013

US$

1,921

152,723

Taka

149,942

11,813,086

31.12.2012

91

US$ Taka

7,4_07

7,407

6,s60,230 7,478,891 598,3 I 1,309

6,560,230 513,337,980 7,478,991 598,311,309

6,714,874 525,301,008 7,478,982 598,3I8,716

The following significant exchange rate is applied during the period:

tJS dollar

Sensitivity analysis

A reasonably possible strengthening (weakening) of the US Dollar against BD Taka at the reporting date would have affected themeasurement of financial instruments denominated in a foreign cuffency and aff-ected equity and profit or loss by the amounts shownbelow. l'he analysis assumes that all other variables, in particular interest rates, remain constant and ignores any impact offorecastsales aud purchases.

Profit or loss Equity- net of tax3.1 December 2013

154,644 ______ll263:!?q_

5 13,337,980

9t

8078

USD (20% movement) (10,027,499) 10,027,499 (6,267,187) 6,267,187

3l December 2012

usD (2oz movement) (11,966,078) 11,966,078 (7,478,799) 7,478,799

41,04.02 Transaction risk

Transaction lisk is the risk that the company will incur exchange losses when the accounting results are translated into the homecurrency.

41.04.03 Economic risk

Economic risk refers to the eft'ect of exchange rate movements on the international competitiveness of the company.

41.04.04 Interest risk

'lnterest rate risk arises from movement in interest lates. The company needs to manage interest rate risk so as to be able to re-paydebts as they fall due and to minimize the risks surrounding interest payments and receipts.

Exposure to interest rate risk

The interest rate profile of the company's interest- bearing financial instruments as reported to the management of the company is astbllorvs.

Strengthening

Taka

Weakenins

Taka

Strengthening

Taka

Weakening

Taka

2012Taka

1,670,711,218

z013

Taka

2,437,917,176(7,931,120,805) (5,266,133,+30)

(5,493,203,629) (3,595,422,2t2)

41.05 Other market price risk

The company is exposed to equity price risk, which arises from available for sale equity and debt securities. Management of thecompany monitors its investment pottfolio based on market indices and all buy and sell decisions are approved by the Directors. .

^a

!l

I

42.00 Operating lease

Operating Iease rentals as per BAS I7: Leases are payable as follows :

Within one year

Within2to5yearsAllcr 5 ycars

44.00 Productioncapacity

lnstalled Capacity (ln M.Ton) yearly

Production (ln M.Ton)

Capaci ty utilized (o/o)

45.00 Employees

Number of employees whose monthly salary was below Tk. 3,000

Nurnber of employees whose monthly salary was above Tk. 3,000

46.00 Events After Reporting DateNo material events have occurred fiom the repofting date to the date

values stated therein.

106,8 r 0 94,127

78.4489.01

712

of issuing of these financial statements which could affect the

31.12.2013 3"t.12.2012

Taka

17,386,275

54,842,4_48

Taka

9,916,144

6,173,725

____*l-q08ef!2_ _____J2 328 J 23_

43.00 Capitalcommitment

The company has decided to increase its production capacity to 450,000 MT from existing 120,000 MT per annum by modemizingits existing Re-rolling plant located at Nasirabad Industrial Area, Baizid Bostami Road, Chittagong. The entire plant will be futlyautomated and configured in such a way so as to maximize the output and reduce production cost. The estimated proiect cost stands

at Tk. 4,800 million. Out of required amount, Tk. 600 million has been financed by One Bank Ltd.- the lead arranger and 6 (Six)other Banks and Non-Banking Financial Institutions under syndication. A further sum ofTk. 2,790 million will be financed under a

syndicated term loan facility arranged by UCBL as lead arranger and other 15 participants. Balance amount will be financed fromthe sponsors' own soul'ces.

2013

I 20,000

2012

r 20,000

718

712718

44