Information Memorandum of Raya Spinning Mills Ltd. - MIDAS ...

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Information Memorandum

of Raya Spinning Mills Ltd.

PROPOSED ISSUE SIZE

Issuance of 15,300,000 ordinary shares of Tk. 10.00 each at par totaling Taka 153,000,000

ISSUER COMPANY

Raya Spinning Mills Ltd.

M.R. Khandakar Tower (5th Floor), 209/1, Culvert Road, Motijheel C/A, Dhaka 1000 Phone: +88 02 7195919; Email: [email protected]

Web: www.rayaspinningmills.com

MANAGER TO THE ISSUE

MIDAS Investment Limited MIDAS Center(10th Floor)

House #05, Road # 16(New) Dhanmondi, Dhaka-1209. Bangladesh

Phone: 8116186, 9144410 (PABX), 09611221055, 9119371 Fax : 880-2-8142085, Email : [email protected]

NAME OF THE AUDITOR AHMAD & AKHTAR

Chartered Accountants BCIC Bhaban (3rd Floor)

30-31, Dilkusha C/A, Dhaka-1000 Phone: +88-02-9561289; Fax: +88-02-9564366;

Email: [email protected]; Web: www.aacabd.org

“BY GIVING THIS CONSENT FOR RAISING PAID UP CAPITAL, THE COMMISSION DOES NOT GIVE ANY GUARANTY/ ASSURANCE OR INDICATION TO ANY FUTURE PUBLIC ISSUE OF SECURITIES BY THE COMPANY. INVESTORS SHALL ASSESS THEIR OWN RISKS AND PROSPECTS WHILE INVESTING IN THE COMPANY’S SECURITIES.”

mailto:[email protected]


Information Memorandum Raya Spinning Mills Ltd.

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DISCLAIMER This Information Memorandum with respect to the capital raising by issuing ordinary shares of Raya Spinning Mills

Ltd. (RSML) has been prepared by (MIDAS Investment Limited) to be circulated amongst potential investors.

The information forecast analysis, assumptions and opinions contained herein have been compiled or arrived at

solely based on information obtained from RSML. Such information has not been independently verified and no

guarantee, representation or warranty, expressed or implied is made as to its accuracy, completeness or correctness.

Nothing contained in this document is, or shall be relied upon as, a promise or representation by MIDAS Investment

Limited. All such information is subject to change without notice and such changes could be due to unforeseen

circumstances. This document is for information purposes only and does not purport to be a complete description of

the subject matter referenced to herein.

Any estimate, projection, opinion, forecast and valuation contained in this Information Memorandum involves

significant elements of subjective judgment and analysis, which may or may not be correct. No representation is made

that any estimate, projection or forecast will be achieved. The actual future events may vary significantly from the

estimates, projections, forecasts or valuation and each estimate, projection, forecast or valuation is based on a

number of assumptions and is subject to matters which are outside the control of RSML and MIDAS Investment

Limited.

Accordingly, MIDAS Investment Limited and RSML shall not be liable for any loss or damage howsoever arising as a

result of any person acting or refraining from acting in reliance or any information, forecast analysis and opinion

contained herein.

The recipients of this Information Memorandum are expected to carry out their own independent evaluations on the

transaction contemplated herein taking into consideration macroeconomic variables and other relevant conditions.

The proposed capital raising of Raya Spinning Mills Ltd.would only be executed upon obtaining necessary regulatory

approvals.


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DEFINITION AND ACRONYMS OR ELABORATIONS A Allotment Letter of allotment for shares B BAS Bangladesh Accounting Standard BDT Bangladeshi Taka BSEC Bangladesh Securities and Exchange Commission BFRS Bangladesh Financial Reporting Standard C Companies Act Companies Act, 1994 (Act. No. XVIII of 1994) CEO Chief Executive Officer CFO Chief Financial Officer E EPS Earnings per share I Issuer Raya Spinning Mills Ltd. Issue Manager MIDAS Investment Limited M MD Managing Director N NAV Net Asset Value

O Offering Price Price of the Securities of Raya Spinning Mills Ltd. being offered Our Company Raya Spinning Mills Ltd. P P/E Price earnings ratio R Registered Office Registered Office of RSML RSML Raya Spinning Mills Ltd. RJSC Registrar of Joint Stock Companies & Firms S Securities Shares of Raya Spinning Mills Ltd. Sponsors The Sponsor shareholders of RSML. T The Company Raya Spinning Mills Ltd. TIN Tax Identification Number Tk. Taka V VAT The value added tax W WDV Written Down Value

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TABLE OF CONTENTS

Particulars Page No.

Executive Summary 5

Synopsis of Raya Spinning Mills Ltd. 6

Due Diligence Certificate of Manager to the Issue 7

Declaration about the responsibility of the Directors, Including CEO of the “Raya Spinning Mills Ltd.” in respect of the Information Memorandum (IM)

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Profile of Raya Spinning Mills Ltd. 9-10

Corporate Directory of the Issuer 10

Description of the Issuer 11-12

Capital Structure 12-13

Description of Business 13-15

Description of Property 15-17

Plan of Operation and Financial Condition 20

Directors and Officers 20-21

Ownership of the Company’s Securities 22

Valuation of Securities 22

Risk Factors and Management Perception about the Risks 23-27

Description of the Issue 27

Use of Proceeds & Implementation Schedule of the Fund 27

Financial Statement 28-47

Application Form For Investors 48


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EXECUTIVE SUMMARY The garments industry acts as a catalyst for the development of Bangladesh. The "Made in Bangladesh" tag has

also brought glory for the country, making it a prestigious brand across the globe. Bangladesh, which was once

termed by cynics a "bottomless basket" has now become a "basket full of wonders." The country with its limited

resources has been maintaining 6% annual average GDP growth rate and has brought about remarkable social

and human development.

The tremendous success of readymade garment exports from Bangladesh over the last two decades has

surpassed the most optimistic expectations. Today the readymade garment sector is a multi-billion-dollar

manufacturing and export industry in the country. The overall impact of the readymade garment exports is

certainly one of the most significant social and economic developments in contemporary Bangladesh. With over

two million women workers employed in semi-skilled and skilled jobs producing clothing for exports, the

development of the apparel export industry has had far-reaching implications for the society and economy of

Bangladesh.

The industry that has been making crucial contribution to rebuilding the country and its economy is none other

than the readymade garment (RMG) industry which is now the single biggest export earner for Bangladesh. The

sector accounts for 81% of total export earnings of the country.

The industry that has changed lives of millions of people has undergone significant transformation in terms of

workplace safety and worker's rights. National and international reform platforms -National Action Plan (NAP),

Accord and Alliance have made visible progress to ensure workplace safety. Both Accord and Alliance have

completed inspection in 100% factories and the NAP will complete 100% factory inspection by this August. We

note with satisfaction that less than 2% of the inspected factories have been found vulnerable and closed down

immediately. Moreover, to make our progress more transparent and credible, the inspection reports of the

factories are made accessible at the Fair Factory Clearinghouse (FFC) database and the websites of the relevant

government department, Accord and Alliance. When all factories complete their corrective action plans (CAPs),

the RMG industry of Bangladesh can obviously be regarded as the safest industry in the world.


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SYNOPSIS OF RAYA SPINNING MILLS LTD.

Name of the Company : Raya Spinning Mills Ltd.

Registered Office M.R. Khandakar Tower (5th Floor), 209/1, Curvert Road, Motijheel C/A, Dhaka

1000

CorporateOffice : M.R. Khandakar Tower (5th Floor), 209/1, Curvert Road, Motijheel C/A, Dhaka

1000

Factory Address Nagapara, Duptara, Araihazar, Narayanganj

Legal Position : Private Limited Company

Date of Incorporation &

Registration No : October 11, 2004; C-54564(1250)/04

Board of Directors :

1. Md. Abdur Rahman, Chairman

2. Md. Abdul Hai, Managing Director

3. Mahmuda Yesmin EVA, Director

4. Anika Bushra Tabassum, Director

Principal Products : The company manufacturing and marketing of 50 (Auto) Yarn & 50 Normal

Yarn

Authorized Capital : Tk.320,000,000.00(Ninety five crore) only divided into 95,000,000 (Nine

crore fifty lac) Ordinary Shares of Tk.10 (Ten) each.

Paid up Capital : Tk.50,000,000.00(Taka five crore)only divided into 5,000,000(Fifty lac)

Ordinary Shares of Tk.10 (Ten) each.

Issue Size Tk. 320,000,000 (Taka thirty two crore only)

Total number of Shares

to be Issued : 32,000,000 (Three crore twenty lac) Ordinary Shares of Tk.10 (Ten) each.

Purposes : To raise Capital of the Company through issuance of ordinary share will be

used for repayment of loan and working capital of the Company.

Manager to the Issue : MIDAS Investment Limited

Auditor :

AHMAD & AKHTAR

Chartered Accountants

BCIC Bhaban (3rd Floor)

30-31, Dilkusha C/A, Dhaka-1000

Phone: ++88-02-9561289; Fax: +88-02-9564366;

Email: [email protected]; Web: www.aacabd.org


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DUE DILIGENCE CERTIFICATE OF MANAGER TO THE ISSUE Capital Raising of 15,300,000 Ordinary Shares of Tk. 10.00 each totalling Tk. 153,000,000 (One hundred

fifty three million) only out of which Tk. 113,000,000 (One hundred thirteen crore) only from existing

shareholders as bonus share & in cash consideration and Tk. 40,000,000 (Forty million) only from other

than existing as new shareholders of Raya Spinning Mills Ltd in cash consideration.

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

1. We, while finalizing the information memorandum pertaining to the said issue, have examined various

documents and other materials as relevant for adequate disclosures to the investors; and

2. On the basis of such examination and the discussions with the issuer company, it’s directors and officers,

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

contents of the documents and other materials furnished by the issuer company;-

WE CONFIRM THAT:

a) The draft information memorandum forwarded to the Commission is in conformity with the documents,

materials and papers relevant to the issue;

b) All the legal requirements connected with the said issue have been duly complied with; and

c) The disclosures made in the draft information memorandum are true, fair and adequate to enable the

investors to make a well informed decision for investment in the proposed issue.

For Manager to the Issue

Sd/- Mohammad Hafiz Uddin Chief Executive Officer Place: Dhaka Dated: March 8, 2018


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

SPINNING MILLS LTD.” IN RESPECT OF THE

INFORMATION MEMORANDUM (IM)

This Information Memorandum (IM) has been prepared, seen and approved by us, and we, individually and

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

given in the IM, documents, financial statements, exhibits, annexes, papers submitted to the Commission in

support thereof, and confirm, after making all reasonable inquiries that all conditions concerning this capital

issue and IM have been met and that there are no other information or documents the omission of which make

any information or statements therein misleading for which the Commission may take any civil, criminal or

administrative action against any or all of us as it may deem fit.

We also confirm that full and fair disclosure has been made in this IM to enable the investors to make a well

informed decision for investment.

Sd/- Md. Abdur Rahman

Chairman

Sd/- Md. Abdul Hai

Managing Director

Sd/- Mahmuda Yesmin EVA

Director

Sd/-

Anika Bushra Tabassum Director


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PROFILE OF RAYA SPINNING MILLS LTD. About the Issuer: Raya Spinning Mills Ltd. was incorporated on October 11, 2004 as a private limited company under

theCompanies Act 1994 vide registration no. C–54564(1250)/04 and started its commercial operation

ohnDecember 08, 2008. Subsequently, RSML was converted into a public limited company on January 23, 2019.

The registeredoffice of the Company is situated at 66, Akil Mansion, 2nd Floor, Islampur, Dhaka and Corporate

officer at M.R. Khandakar Tower (5th Floor), 209/1, Curvert Road, Motijheel C/A, Dhaka 1000.Factory of the

company is located at Nagapara, Duptara, Araihazar, Narayanganj.

Important dates:

Date of incorporation : October 11, 2004

Date of commencement of commercial operation : December 2008

Converted to Public Limited Company : August 14, 2012

Change of face value from Tk. 1,000 to Tk. 10 per share : January 23, 2019

Location of the Company:

The registered office is located at 66, Akil Mansion, 2nd Floor, Islampur, Dhaka &corporate office at M.R.

Khandakar Tower (5th Floor), 209/1, Curvert Road, Motijheel C/A, Dhaka 1000. The factoryof the company

situated at Nagapara, Duptara, Araihazar, Narayanganj.

Nature of Business:

Raya Spinning Mills Ltd. is engaged in production of 100% cotton yarn of different counts.

CORPORATE DIRECTORY OF THE ISSUER

Particulars Descriptions

Name of the issuer Raya Spinning Mills Ltd.

Date of incorporation October 11, 2004

Logo

Registered office 66, Akil Mansion, 2nd Floor, Islampur, Dhaka

Corporate office M.R. Khandakar Tower (5th Floor), 209/1, Curvert Road, Motijheel C/A, Dhaka 1000

Factory address Nagapara, Duptara, Araihazar, Narayanganj

Contact person Khairul Umam, Company Secretary

Telephone number +88 02 7195919

Email [email protected]

Web site www.rayaspinningmills.com


http://www.rayaspinningmills.com/


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DESCRIPTION OF THE ISSUER

(i) Name & Address: Name of the Company: Raya Spinning Mills Ltd.; Registered office: 66, Akil Mansion, 2nd Floor, Islampur,

Dhaka; Corporate office: M.R. Khandakar Tower (5th Floor), 209/1, Curvert Road, Motijheel C/A, Dhaka 1000;

Factory address: Nagapara, Duptara, Araihazar, Narayanganj; Phone:+88 02 7195919; E-mail:

[email protected], Web: www.rayaspinningmills.com

(ii) Board of directors:

Sl. Name Position Address Email

1 Md. Abdur Rahman Chairman Holding: 634, North

Shahjahanpur, Shantinagar, 1217

abdurrahman

@rayaspinningmills.com

2 Md. Abdul Hai Managing

Director

Holding: 634, North


abdulhai@

rayaspinningmills.com

3 Mahmuda Yesmin

EVA Director

Holding: 634, North


mahmudayesmin@


4 Anika Bushra

Tabassum Director

Holding: 634, North


anikabushra@


(iii) Information about top executives:

Sl. Name Designation Age

(Year) Qualification

Experience

(Year)

01 Md. Abdul Hai Managing Director 46 M.A 20

02 Mahmudul Hasan

Shovon Chief Financial Officer 34 MBA 05

03 A R M Fazrul Bari General Manager

Production 50 Textile Diploma 15

04 Khairul Umam Company Secretary 26 MBA 2

(iv) Information about issue manager:

Name MIDAS Investment Limited

Address MIDAS Center (10th Floor), House #05, Road # 16 (New), Dhanmondi, Dhaka-1209. Bangladesh

Telephone No. 8116186, 9144410 (PABX), 09611221055, 9119371

Fax No. +880-2-8142085

Contact person Mohammad Hafiz Uddin

Email [email protected]

Web address http://milbd.org/



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CAPITAL STRUCTURE

(i) Authorized and paid up capital:

Particulars No. of Share Face value Amount in BDT

Authorized Capital 75,000,000 10.00 750,000,000.00

Paid-Up Capital 10,000,000 10.00 100,000,000.00

The history of paid up capital raising of Raya Spinning Mills Ltd. is as follows:

Allotments No. of

shares Face value

Consideration In cash

Other than cash

Total Amount (BDT)

1st (As per Memorandum October 11, 2004)

2,500,000 10.00 25,000,000.00 - 25,000,000.00

2nd on December 20, 2018 (Bonus)

5,000,000 10.00 - 50,000,000.00 50,000,000.00

3rd on January 10, 2019 (Cash)

2,500,000 10.00 25,000,000.00 - 25,000,000.00

Total 10,000,000 10.00 50,000,000.00 50,000,000.00 100,000,000.00

(ii) Size of the present issue:

Particulars No. of Share Issue price Amount in BDT

Issue Size 15,300,000 10.00 153,000,000.00

(iii) Paid up capital before and after present issue:

Paid up capital

Before present issue After present issue

100,000,000.00 253,000,000

(iv) Shareholding structure:

Sl# Name Position Share Holding positions

on 30.06.2018

1 Mr. Md. Abdul Rahman Chairman 900,000

2 Mr. Md. Abdul Hai Managing Director

3 Mahmuda Yeasmin EVA Director

4 Anika Bushrah Tabassum Director

5 Amena Begum Shareholder

6 Nilufaryasmin Shareholder

7 Mohammad Iftekharul haque Shareholder

Total

(v) Share issued other than cash consideration: The Company has not issued any of its ordinary shares for consideration in other than cash at any point of time.


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DESCRIPTION OF BUSINESS (i) Principal Products of the Company: The principal products of the company is manufacturing & marketing of 100% cotton yarn of different counts. (ii) Description of Associates, subsidiary and holding company: The Company has no Associate, Subsidiary and holding company. (iii) Distribution of products: The company distribute its products from factory to client destination through rented vehicles. (iv) Competitive condition: Major competitor of Raya Spinning Mills Ltd.is given below:

Sl# Name Products

1 Zaheen Spinning Limited Yarn

2 Matin Spinning Mills Limited Yarn

3 Square Spinning Mills Ltd. Yarn

4 Viyellatex Spinning Mills Ltd. Yarn

5 R.A. Spinning Mills Ltd. Yarn

(v) Source and availability of raw materials:

Suppliers Name Address Products

Narr Cotton Export pvt Ltd. India Raw Cotton

Delhi Textile Traders India Tencel

Isis Commodities Uganda Raw Cotton

Raghunath Agrotech India Raw Cotton

M/S Sunny TreximPvt.Ltd. India Raw Cotton

DhancotFibresPvt.Ltd India Raw Cotton

Lakshmi Ring Travellers India Raw Cotton

Parvin Exim Pvt Ltd. India Raw Cotton

M/S Banarasi Das & Sons India Raw Cotton

PAUL REINHART AG Australia Raw Cotton

Sri Salasar Balaji India Raw Cotton

LENZING AG Australia Raw Cotton

Agrocorp International. India Raw Cotton

Devine World Wide PVT Ltd India Tencel

SK Trading Bangladesh Raw Cotton

RB Trading Bangladesh Raw Cotton

M/S Sunny TreximPvt.Ltd. India Raw Cotton

(vi) Sources and requirement of power, Gas and water: Power: Company has 500 KVA Mymensingh Palli Bidyut Samity -2 Connections and captive power supply facilities by two diesel generators of 500 KVA and 100 KVA capacities are used to avoid interruption of power supply. Water: Gardenia Wears Ltd (RSML) maintained the standard purity and hardness of the water, we are using iron free soft water by using three 10 HP each deep water pump.


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(vii) Information about major customers:

Export Local

1. Jabon Apparels. 1. Karnaphuli Yarn Trading.

2. Four Design Pvt. Ltd. 2. Jubair Traders.

3. Prominence Knitwear Pvt. Ltd. 3. Motalib Trading.

4. Annesha Style Ltd. 4. Abida Traders.

5. Raan Sports Knitwear Ltd. 5. Panchgaon Traders.

6. RankaShoel Composite textile. 6. Swapan Traders.

7. Dhaka Socks Manufacturing co. Ltd. 7. R. P. Traders.

8. NT Apparels Ltd. 8. Borkot Traders.

9. Fresh Apparels Ltd. 9. Nasim Traders.

(viii) Description of licenses:

Particulars License issuing authority License no. Issue Date Renewal

Date Expiry Date

Incorporation Certificate

The Registrar of Joint-stock Companies and Firms

C-54564/04 11.10.2004 - -

Trade Licenses

2no. Duptara Union Parishad, Araihazar

225/2018-19 09.08.2017 09.08.2017 30.06.2019

TIN Certificate National Board of Revenue 3756-5799-5511/

Circle-111(Companies) 30.10.2018 - -

Environmental Clearance Certificate

Environmental Authority 22.02.6700.140.71.

205.17-315 16.11.2017 16.11.2017 25.02.2018

Fire License Fire Service Authority DD/Dhaka/25481/2015 30.06.2016 30.06.2018 30.06.2019

VAT Certificate

Custom, Exercise & VAT Commissionerate

BIN: 00040606373 18.06.2017 - -

Import Registration Certificate

The Import & Export Control Bureau

BA - 0183123 09.10.2007 12.07.2018 -

Export Registration Certificate

The Import & Export Control Bureau

BA- 0086190 30.10.2007 - -

BTMA Bangladesh Textile Mills

Association 001-0056-1009 14.09.2017 01.12.2017

BIDA Bangladesh Investment Development Authority

L-52050706032-H 08.07.2007 - -

BCA Bangladesh Cotton Association 167 18.06.2018 18.06.2018 31.12.2018


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DESCRIPTION OF PROPERTY (i) Information about the property of the company: The Company possesses the following fixed assets at written down value as on June 30, 2018:

Particulars Written Down Value as on 30.06.2018

Land & Land Development 1,150,000

Factory Building 22,262,750

Tin Sheed 16,259,280

Furniture & Fixture 173,812

Plant & Machinery (Note-A) 287,500,292

Office Decoration 865,688

Office Equipment 87,335

Factory Equipment 604,058

Total 328,903,215

The entire assets are located at the Company’s Registered office, Corporate office and factory. All the above-mentioned assets of the Company are in its own name. (ii) Information about Land of the issuer:

Deed no.

Purchase date

Location Dag no Deed value Land area (Decimal)

3583 24/07/2007 Araihazar, Duptara,

SA: 1915, 1762, 1917, 1903, 623 RS: 1282, 33, 1036, 913, 471

1,000,000.00 140.00

Total 140.00

(iii) Lease and mortgage status of property: No property is taken by the company under lease agreement except the registered office & corporate office of the company is rental premises. (iv) List of Existing Machineries:

List of machineries Model No. Amount in BDST

Ring Frame-2015 (24 set) FA506 60,104,635

Ring Frame-2007 (24 set) HJ518 19,888,788

Simplex-2015 (01 set) FA486 3,329,077

Simplex-2018 (01 set) FA486 11,618,250

Cotton Blow Room-2017(01 set) Corosol 18,931,600

Draw Frame Machine -2014 (2 set) RSBD-35C 4,959,892

Drawing Machine -2018 (2 set) TMFD81S 6,720,000

Finisher Drawing Machine -2018 (1 set) RIETER RSB D35 2,100,000

Drawing Machine -2011 (2 set) HSD961 3,077,378

Carding Machine -2015 (4 set) 206B 11,942,877

Carding Section -2014 (2 set) 206B 3,201,399



Compressor Machine 2011 (2 set) LSB50-A & SAS 500 1,609,923

Dust Collection 2008 (1 set) SZGJ-(H1) 1,298,157

Dust Collection 2017 (1 set) JYFL23L 1298157

Automatic Cone Winder Mod Polar Spindless machine-2014 (04 sets)

POLAR - M 41,264,070

Automatic Cone Winder Mod Polar Spindle machine-2015 (02 sets) POLAR - M 20,706,998

Ring Frame-2014 (05 set) FA506 8,003,500


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Ring Frame-2011 (27 set) BS516 36,010,506

Simplex-2014 (01 set) FA486 4,726,778

Simplex-2011 (03 set) FA486 8,155,054

Simplex-2012 (01 set) FA486 2,343,994

Generator-2015 1.5 MW (01 set) JGS 420 GS-N. L 29,819,132

Generator-2009 1 MW (01 set) JGS 320 28,614,498

Transformer, PFI, H.T & L.T Switch Gear, Panel Board etc. 2,079,000

Electrical Cables & Equipment Installation (Declared by Insured) 7,462,500

(v) Condition of plant and machineries: All plants and machineries of the Company were purchased in brand new condition.There are no re-conditioned or second hand machineries installed in the Company.


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PLAN OF OPERATION AND FINANCIAL CONDITION (a) Internal and external sources of cash:

(As Per Audited Financial Statements)

Particulars 30-Jun-18 30-Jun-17 30-Jun-16

Internal sources of Cash:

Share Capital 25,000,000 25,000,000 25,000,000

Share Money Deposit 25,000,000 - -

Retained Earnings 115,849,477 65,718,280 6,623,770

Sub Total 165,849,477 90,718,280 31,623,770

External Sources of Cash:

Long Term Loan 84,560,469 114,332,349 157,319,985

Short Term Borrowings 172,355,440 102,574,204 200,103,000

Sub Total 256,915,909 216,906,553 357,422,985

Grand Total 422,765,386 307,624,833 389,046,755

(b) VAT, income tax, customs duty or other tax liability: Value Added Tax (VAT): The Company has VAT registration number BIN: 000406373. Income Tax: The E-TIN (Tax Payers Identification Number) of RSML is 375657995511 Taxes Circle-117 (Company), Tax Zone-06, Dhaka. Year wise income tax status of the Company is as under:

Income Year Assessment Year Status

2016-2017 2017-2018 Assessment has been completed.

2015-2016 2016-2017 Assessment has been completed.

2014-2015 2015-2016

This is to certify that Raya Spinning Mills Ltd. is a registered assesse of Circle-111 (Companies), Taxes Zone-6, Dhaka. Assessment of the Company has been completed for the assessment year 2015-2016 under section 82BB &Tax paid for the this year.

(c) Revaluation of assets: No revaluation has been made to the Company’s assets and liabilities.

DIRECTORS AND OFFICERS (a) Information about directors:

Name of the director Position Age Qualifications Experience

Md. Abdur Rahman Chairman 42 MBA 20

Md. Abdul Hai Managing Director 46 M.A 20

Mahmuda Yesmin EVA Director 38 Degree 05

Anika Bushra Tabassum Director 22 BAR at Law, UK

LLB (Hons) 05

(b) Family relationship among directors: There is no relationship among the directors of Raya Spinning Mills Ltd. except Md. Abdur Rahman and Md. Abdul Hai are brothers. Mahmuda Yesmin EVA is wife of Md. Abdul Hai. Anika Bushra Tabassum is daughter of Md. Abdul Hai.


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(c) Short bio-data of each director: (i) Md. Abdur Rahman, Chairman Md Abdur Rahman is the chairman of RAYA SPINNING MILLS LTD and proprietor of Amena Interlining. He has

nearly 20 years of experience in the textile business and continuing as a chairman from the date of RSM’s birth.

He completed his MBA from AIUB and BBA from Madras University, India.

(ii) Md. Abdul Hai, Managing Director Md Abdul Hai managing director of Raya Spinning Mills Ltd and proprietor of Amena Sizing and Anika Trading.

His experience and knowledge have led him to run the business as a managing director from 2004 to till now. He

completed his master’s from Dhaka University. He is an active member of BCA (Bangladesh Cotton Association)

and was finance director of BCA in the year 2015-2016.

(iii) Mahmuda Yesmin EVA, Director Mahmuda Yesmin Eva is director of Raya Spinning Mills Ltd and Proprietor of Eva Trading. Completed her

degree in 2000.

(iv) Anika Bushra Tabassum, Director Anika Bushra Tabassum a newly elected director of Raya Spinning Mills. Currently studying BAR at Law in

Northumbria University, Newcastle, UK. Completed LLB (Hons) from University of London.

(d) Number of shares and percentage of shareholding of the directors:

Sl. Name Position Share Holding position as on

30.06.2018

1 Md. Abdur Rahman Chairman

2 Md. Abdul Hai Managing Director

3 Mahmuda Yesmin EVA Director

4 Anika Bushra Tabassum Director

Total

OWNERSHIP OF THE COMPANY’S SECURITIES (a) List of shareholder of the company:

Sl. Name Position Share Holding position as on

30.06.2018

1 Mr. Md. Abdul Rahman Chairman

2 Mr. Md. Abdul Hai Managing Director

3 Mahmuda Yeasmin EVA Director

4 Anika Bushrah Tabassum Director

5 Amena Begum Shareholder

6 Nilufar Yasmin Shareholder

7 Mohammad Iftekharul Haque Shareholder

Total


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VALUATION OF SECURITIES

Methods followed Amount in BDT

Method-1: Net assets value per share 56.34

Method-2: Weighted average earnings per share 11.69

Method-1: Calculation of net asset value (NAV) per share:

(As per audited financial statements)

Particulars Amount in BDT.

Share Capital 25,000,000

Retained Earnings 115,849,477

Total Shareholder’s Equity 140,849,477

No. of Shares (considering face valueTk. 10 per share) 2,500,000

Net asset value (NAV) per share 56.34

Method-2: Historical earning based value per share: Historical earning based value calculated on the basis of weighted average net profit after tax for immediate preceding three years. Information extracted from audited financial statements.

Year/ period end

No. of shares

outstanding

Net profit after tax

(Amount in BDT)

Weight of total no. of shares

Weighted net profit after tax (BDT)

30-Jun-18 2,500,000 50,131,196 33.33% 16,708,728

30-Jun-17 2,500,000 40,055,857 33.33% 13,350,617

30-Jun-16 2,500,000 (2,475,391) 33.33% (825,048)

Total 7,500,000 100.00 29,234,297

Latest number of ordinary shares outstanding 2,500,000

Weighted average earnings per share 11.69


19

RISK FACTORS AND MANAGEMENT PERCEPTION ABOUT THE RISKS An investment in equity involves a risk. Investors should carefully consider all the information in this information memorandum, including the risks and uncertainties described below, before making an investment inRaya Spinning Mills Ltd.’s equity shares. Any of the following risks as well as other risks and uncertainties discussed in this Information Memorandum (IM) could have a material adverse effect on Companies business, financial condition and results of operations. In addition, the risks set out in this information memorandum may not be exhaustive and additional risks and uncertainties, not presently known to the Company, or which we currently deem immaterial, may arise or become material in the future. Unless otherwise stated in the relevant risk factors set forth below, The Company is not in a position to specify or quantify the financial or other risks mentioned herein. (I) Internal Risk Factors

a) Credit Risk; This is the risk of default on a debt that may arise because of default by the borrower to pay the loan. In

operating any business there is always credit risk lies in the business. As there is always lending and borrowing

between parties in the form of money and goods.

Management Perception Management has a credit policy in place and exposure to credit risk is well monitored. The company is in 100% export oriented industry and engaged in the business of manufacturing and exporting the manufactured goods as a deemed exporter. The company enjoys credit facilities from different financial institutions. Because of these credit facilities, the company faces a certain degree of credit risks. The management ensures strong credit control and collection policies to mitigate credit risks.

b) Liquidity risk: The risk that a company may be unable to meet short-term financial requirements. This usually occurs due to the inability to convert its current assets to cash without a loss of capital or income. Liquidity is a common phenomenon of the business. Management Perception Raya Spinning Mills Ltd. is doing its level best to manage working capital management in an efficient way to maintain liquidity risk. Management is dealing with accounts payable, inventory and accounts receivable efficiently. The company ensures of having sufficient cash and cash equivalents to meet expected operational expenses including financial obligations through the preparation of forecasted cash flow with due consideration of timeline of payment of the financial obligation and accordingly arrange for sufficient fund to make the expected payment with the due date.

c) Risk associated with the issuer’s interest in subsidiaries, joint ventures and associates: If the subsidiaries/ joint ventures/associates make loss, it affects parent company’s balance sheet. In case of associate,there is chance of decline value of investment in subsidiaries/ joint ventures/associates Company. Management perception Since RSML has no subsidiaries, joint ventures and associates concern. So, this risk is not applicable for this Company.

d) Significant revenue generated from limited number of customers, losing any one or more of which would have a material adverse effect on the issuer;

There is risk involved in having limited number of customer and losing of that particular customer has negative impact on company’s sales and cash flow as well. Management Perception Our management is always keen to find out new buyers to boost up the sales. So we are not dependent on any particular or limited number of customers to operate our business. Moreover, our reputation in the market always gives us an extra cushion.


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e) Dependency on a single or few suppliers of raw materials, failure of which may affect production adversely;

There is also risk involved in having limited number of suppliers as well. Single or few suppliers may exploit the company by price hike, untimely delivery and low quality of product. Management Perception The Company has many trusted suppliers of raw materials and thus it gets competitive advantage of cheaper price of raw materials. It imports raw materials from different suppliers of different countries and maintaining a good relationship with its suppliers. The management of The Company is aware of the risk and continues to search for low cost raw material suppliers from different countries. RSML has alternative options for purchasing raw materials. If any supplier is unable or disagree to supply raw materials then The Company will go for next best alternative supplier immediately.

f) Negative earnings, negative cash flows from operating acclivities, declining turnover or profitability, during last five years, if any:

Negative earning and negative operating cash flow is risk the going concern risk for the entity. Management Perception: We have been operating our business efficiently. We do not have any negative earning and negative cash flow from operation.

g) Decline in value of any investment; The value of any type of investment may decline. Management Perception: We do not have any investment.

h) Risk associated with useful economic life of plant and machinery, if purchased in second hand or reconditioned;

There is obsolescence risk relating to plant and machinery. If the machinery is purchased in second hand or reconditioned, there high risk of repair and maintenance which has impact on profitability of the company. Management Perception RSML does not purchase or use any second hand or recondition plant and machinery. Therefore, it is not applicable for us.

i) Related party transactions entered into by the company those may adversely affect competitive edge;

Related party transaction of the issuer creates conflict of interest which reduces the competitive advantage of the issuer. Management Perception RSML did not engage any such transaction, which may adversely affect competitive edge.

j) Business operations may be adversely affected by strikes, work stoppages or increase in wage demands by employees;

In such case, company’s business operation will be hampered.

Management Perception Employee unrest is part of business and it is important to deal with labor unrest efficiently. RSML has different incentive packages for their employees so that they can be beneficial to such package. Because they believe that employees are very important part of the business.

k) Seasonality of the business of the issuer; It is the risk involving that company is not doing business round the year. Management Perception There are no seasonal risk for this kind of business.


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l) Ability to pay any dividends in future will depend upon future earnings, financial condition, cash flows, working capital requirements and capital expenditure;

Dividend payment is highly dependent on company’s ability to generate positive cash flow from operating profit of the business. If company cannot earn good amount of profit from operation, it is unlikely to pay dividend. Management Perception We have been a profitable entity over 3 (three) years and the profit is on the uptrend. So we are in belief that we will be able to pay dividend from our earning profit.

m) History of non-operation, if any and short operational history of the issuer and lack of adequate background and experience of the sponsors;

History of non-operation indicates weak operational management of the Company. Non-operation leads to negative cash flow, incurring of losses and bankruptcy in worst case scenario. Management Perception Such case did not happen in the history of our company.

n) Litigations against the issuer for Tax and VAT related matters and other government claims, along with the disclosures of amount, period for which such demands or claims are outstanding, financial implications and the status of the case;

If any kind of Litigations against the issuer for Tax and VAT related matters and other government claims, along with the disclosures of amount, period for which such demands or claims are outstanding, financial implications and the status of the case.

Management Perception No, we did not have any litigation relating to Tax, VAT or other government claims against of our company.

o) Registered office or factory building or place of operation is not owned by the issuer; Factory building should be owned by the company. Otherwise, there is risk of hike in factory rent in the years to come and threat of shifting the factory as well.

Management Perception The factory building is owned by the Company but registered office and corporate office is rented. So it is not a risk.

p) Lack of renewal of existing regulatory permissions or licenses; In this case company is not following the law to renew its all licenses.

Management Perception A dedicated team supervises renewal processes of all the regularity permission/licenses. So, risk with regard to lack of renewal of existing regulatory permissions/licenses is very remote. (ii) External risk factors may include among others:

a) Interest Rate Risks: Interest rate risk is the risk that company faces due to unfavorable movement in the interest rates. Changes in the government’s monetary policy along with increased demand for loans/investments tend to increase the interest rates. Such rises in interest rates mostly affect companies having floating rate loans or companies investing in debt securities. Management Perception: The management of Raya Spinning Mills Ltd. is aware of the interest rate risk. Management intends to finance short-term funds at reasonable competitive rates.TheCompanyhasbeenrepayingborrowedfundsonacontinuousbasistoreducesuch interest risk.

b) Exchange rate risks; Exchange rate risk occurs due to changes in foreign currency exchange rates. As the company imports equipment from abroad and earns revenue in local currency, unfavorable volatility or currency fluctuation may


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affect the profitability of the company. If exchange rate is decreased against local currency opportunity will be created for generating more profit.

Management perception The risk of foreign exchange cannot be eliminated fully as we require importing raw materials. However, the management is always alert in minimizing the negative impact of currency fluctuation cost by looking for new sources of raw materials and constantly negotiating with suppliers in reducing price. It always takes steps to hedge all major currency dealings to safeguard the interest of the company. So, due to the fluctuation of exchange rate we experienced no loss in the past years.

c) Economic and political risks; Bangladesh is prone to serious unrest in the political condition which produces Hartal, Road‐Block and many other barriers to the business. This could also propel the cost of the product upwards.

Management Perception Although the country has passed through political turmoil in past few years a sound political atmosphere is prevailing these days and expected to be continued in future.

d) Market and technology-related risks; Technology always plays a vital role in each and every type of business. Better technology can increase

productivity and reduce costs of production. Firms are exposed to technology risks when there are better

technologies available in the market than the one used by the company which may cause technological

obsolescence and negative operational efficiency.

Management Perception The company is aware of technological changes and has adopted new technology according to its needs. Furthermore, routine and proper maintenance of the equipment carried out by the company ensures longer service life for the existing equipment and facilities.

e) Potential or existing government regulations; The company operates under Companies Act 1994, Customs Act 1969, and Labor Law 2006, Income Tax Ordinance 1984, Income Tax Rules 1984, Value Added Tax (VAT) Act 1991, Value Added Tax (VAT) Rules 1991 and other related regulations. Any abrupt changes of the policies made by the regulatory authorities may adversely affect the business of the company.

Management Perception Since, the company operates in RMG sector, the Government regulations are mostly investment-friendly. However, unless any policy change that may negatively and materially affect the industry as a whole, the business of the company is expected not to be affected. As it is an emerging sector, it is highly expected that the Government will not frustrate the growth of the industry with adverse policy measures.


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DESCRIPTION OF THE ISSUE

Number of securities to be issued, issue price and issue size: 15,300,000 ordinary shares of Tk. 10/- each (at par) totaling to Tk. 153,000,000.00. Raya Spinning Mills Ltd. will raise paid-up capital amounting to Tk. 153,000,000.00 (Taka one hundred fifty three million) only through Capital Raising out of which Tk. 55,000,000.00 (Taka fifty five million) only as Bonus share to existing shareholder, Tk. 58,000,000 (Taka fifty eight million) only in cash consideration against share money depositfrom existing shareholders and Tk. 40,000,000.00 (Taka forty million) onlyfrom other than existing as new shareholders in cash consideration.

USE OF PROCEEDS & IMPLEMENTATION SCHEDULE Raya Spinning Mills Ltd. will raise paid-up capital amounting toTk. 153,000,000.00 (Taka one hundred fifty three million) only through Capital Raising out of which Tk. 55,000,000.00 (Taka fifty five million) only as Bonus share to existing shareholder, Tk. 58,000,000 (Taka fifty eight million) only in cash consideration against share money deposit from existing shareholders and Tk. 40,000,000.00 (Taka forty million) only from other than existing as new shareholders in cash considerationin order to meet the following purposes in the following manner: Uses of cash proceed:

Description Amount in BDT

Bonus share (already utilized) 55,000,000.00

Factory building &shade (Godown for raw cotton), already utilized 15,000,000.00

Plant & machinery (already utilized) 43,000,000.00

Working capital for raw material (to be utilized) 40,000,000.00

Total 153,000,000.00

Sd/- Md. Abdul Hai Managing Director


24

FINANCIAL STATEMENT INDEPENDENT AUDITOR’S REPORT

TO THE SHAREHOLDERS OF RAYA SPINNING MILLS LTD.

Report on the Financial Statements We have audited the accompanying financial statements of RAYA SPINNING MILLS LTD. (the company), which comprises the Statement of Financial Position as at 30 June 2018 and 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 thereon. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards (IFRSs), International Accounting Standards (IASs) and for such internal control as management determines is necessary to enable the preparation of financial 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 International Standards on Auditing (ISA). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial Statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on 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 and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements give a true and fair view of the financial position of RAYA SPINNING MILLS LTD. as at 30 June 2018 and of its financial performance and its cash flows for the year then ended in accordance with International Financial Reporting Standards (IFRSs) and International Accounting Standards (IASs). Report on Other Legal and Regulatory Requirements In accordance with the Companies Act 1994, we also report that: (a) we have obtained all the information and explanations, which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof; (b) in our opinion, proper books of account as required by law have been kept by the company so far as it appeared from our examination of those books; and (c) the Statement of Financial Position, Statement of Profit or Loss and other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows dealt with the report are in agreement with the books of account. Dated: 28 October 2018 Place: Dhaka

Sd/- Ahmed & Akhtar

Chattered Accounts


25

RAYA SPINNING MILLS LTD. Statement of Financial Position

As at 30 June 2018 Notes

30 June 2018 30 June 2017 Taka Taka Assets

Non-Current Assets

328,903,215

227,947,528

Property, Plant and Equipment 4.00

328,903,215

227,947,528

Current Assets

241,465,331

230,412,850 Inventories 5.00

84,795,632

86,438,533

Trade & Other Receivables 6.00

110,830,908

127,957,006 Advances, Deposits & Prepayments 7.00

35,449,942

14,937,282

Cash & Cash Equivalents 8.00

10,388,849

930,029 Other Aseets (Preliminary exp.) 9.00

-

150,000

Total Assets

570,368,546

458,360,378

Shareholders Equity and Liabilities

Shareholders Equity

140,849,476

90,718,280 Share Capital 10.00

25,000,000

25,000,000

Retained Earnings 11.00

115,849,476

65,718,280

Non-Current Liabilities

114,518,110

82,901,827 Share money deposit 12.00

25,000,000

-

Deferred Tax Liability 13.00

17,692,848

6,680,261 Long Term Loan (Non-Current Portion) 19.01

71,825,262

76,221,566

Current Liabilities

315,000,960

284,740,271 Trade & Other Payable 14.00

102,603,626

125,724,513

Short Term Loan 15.00

172,355,440

102,574,204 Long Term Loan (Current Portion) 19.02

12,735,207

38,110,783

Liabilities for Income Tax 16.00

16,139,439

9,096,278 Liabilities for WPPF 17.00

5,768,257

2,358,910

Liabilities for Expenses 18.00

5,398,991

6,875,585

Total Shareholders Equity and Liabilities

570,368,546

458,360,378

The annexed notes form an integral part of these financial statements.

Net Asset Value (NAV) per share 5,633.98 3,628.73

Sd/- Sd/- Sd/- Chairman Managing Director Chief Financial Officer

Dated: 28 October 2018 Sd/- Place: Dhaka Ahmed & Akhtar

Chattered Accounts


26

RAYA SPINNING MILLS LTD. Statement of Profit or Loss and other Comprehensive Income

For the year ended 30 June 2018

Particulars Notes FY (2017-2018) FY (2016-2017) Taka Taka

Sales Revenue (Net off VAT) 20.00

580,129,902

501,243,123 Less: Cost of Goods Sold 21.00

469,972,350

413,477,696

Gross Profit/ (Loss)

110,157,552

87,765,427 Add: Other Income 24.00

185,690

228,033

110,343,242

87,993,460

Less: Operating Expenses

18,323,671

21,444,732 Administrative Expenses 22.00

15,510,586 15,393,573

Marketing Expenses 23.00

2,813,085 6,051,159

Profit from Operations

92,019,571

66,548,728 Less: Financial Expenses 25.00

20,423,279

17,011,626

Net Profit/ (Loss) before Charging WPPF

71,596,292

49,537,102 Less: Provision for WPPF 17.01

3,409,347

2,358,910

Profit/ (Loss) before Income Tax

68,186,945

47,178,193

Less: Tax Expenses

18,055,749

7,122,336 Current Tax Sch-E

7,043,161 4,339,714

Deferred Tax Sch-D

11,012,588 2,782,622

Net Profit/ (Loss) after Tax

50,131,196

40,055,857

Total Comprehensive Income

50,131,196

40,055,857

Earning Per Share (EPS) 2005.25 1602.23 The annexed notes form an integral part of these financial statements.


Dated: 28 October 2018 Sd/- Place: Dhaka Ahmed & Akhtar

Chattered Accounts


27

RAYA SPINNING MILLS LTD. Statement of Changes in Equity


Particulars

Share Capital

Retained Earnings

Total Equity

Balance as on July 01, 2017 25,000,000 65,718,280 90,718,280 Adjustment of Deferred Tax Expense - - - Net Profit after Tax for the period - 50,131,196 50,131,196 Balance as on June 30, 2018 25,000,000 115,849,476 140,849,476


Particulars Share

Capital Retained Earnings

Total Equity

Balance as on July 01, 2016 25,000,000 29,560,062 54,560,062 Adjustment of Deferred Tax Expense - (3,897,639) (3,897,639) Net profit after Tax for the period - 40,055,857 40,055,857 Balance as on June 30, 2017 25,000,000 65,718,280 90,718,280


Dated: 28 October 2018 Place: Dhaka


28

RAYA SPINNING MILLS LTD. Statement of Cash Flows


Particulars Notes FY (2017-2018) FY (2016-2017)

Taka Taka

A. Cash Flows from Operating Activities

Collection from Customers & Others

597,441,690

403,029,342 Payment to Suppliers & Others

(468,179,161)

(295,397,705)

Tax Paid

(2,370,436)

(2,406,688) Cash Generated from Operating Activities

126,892,093

105,224,949

Cash payment for Expenses

(17,064,578)

(15,798,796) Payment against Advance, Deposits & Prepayments

(18,142,224)

(2,300,001)

Finance Cost

(20,423,279)

(17,011,626) Net Cash Flows from Operating Activities

71,262,011

70,114,527

B. Cash Flows from Investing Activities Acquisition of Fixed Assets

(126,812,547)

(26,858,210)

Work in Progress

-

- Net Cash Flows from Investing Activities

(126,812,547)

(26,858,210)

C. Cash Flows from Financing Activities Receive/(Payment) in Share money deposit

25,000,000

-

Receive/(Payment) in short term bank loan

69,781,237

(97,528,796) Receive/(Payment) of long term loan

(29,771,880)

(42,987,636)

Net Cash Flows from Financing Activities

65,009,356

(140,516,432)

D. Net Cash inflow/(outflow) for the year (A+B+C)

9,458,820

(97,260,116)

E. Cash & Cash Equivalent at beginning of the period

930,029

98,190,145 F. Cash & Cash Equivalent at end of the year (D+E)

10,388,849

930,029


Dated: 28 October 2018 Place: Dhaka


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RAYA SPINNING MILLS LTD. Notes, summary of significant Accounting policies and other explanatory information

For the year ended 30 June 2018 1.00 The Company and its operations 1.01 Legal form of the Company The Company was incorporated on October 11, 2004 as a ‘Private’ Limited Company byShares registered under the Companies Act 1994 vide certificate of incorporation No.C-54564 (1250)/04. The company started commercial production on October 2007. 1.02 Address of the Registered and Corporate office The registered office is located at Akil Mansion, 66 Islampur, Dhaka- 1000. The Corporate office of the company is located at House # 209/1, M. R. Khandakar Tower(5thFloor), Culvert Road, Motijheel, Dhaka-1000, Bangladesh. 1.03 Nature of Business activities The principal activities of the Company are to carry on the business of Textile Spinning Millsto produce 100% Cotton Yarn for 100% export oriented dyeing & textiles industries andexport thereof. 1.04 Capital Structure of the Company

Particulars Taka Authorized Capital 2.50,000 ordinary shares of Taka 1,000/= each

25,00,00,000

Issued, subscribed, called-up and paid-up capital 25,000 Ordinary Shares of Tk. 1,000/= each fully paid-up

2,50,00,000

1.05 Production Unit Production unit of the company is situated at Nagarpara. Duptara. Araihazar, Narayangonj,Bangladesh. 2.00 Summary of significant accounting policies 2.01 Basis of preparation and presentation of the financial statements The financial statements have been prepared and the disclosures of information made inaccordance with the requirements of the Companies Act 1994 and International AccountingStandard (IAS) as adopted by the Institute of Chartered Accountants of Bangladesh (ICAB),International Financial Reporting Standard (IFRS) as far as applicable for the company. TheStatement of Financial Position and Statement of Profit or Loss and Other ComprehensiveIncome have been prepared according to IAS-1 Presentation of Financial Statements based onaccrual basis of accounting following going concern assumption under Generally Accepted Accounting Principles (GAAP) practices in Bangladesh and Statement of cash flows according to IAS-7: Statements of Cash flows. 2.02 Regulatory Compliances As required by the company, the management complies with the following major legal provisions in addition to the Companies Act 1994 and other applicable laws and regulations: The Income Tax Ordinance 1984; The Income Tax Rules 1984; The Value Added Tax Act 1991; The Value Added Tax Rules 1991; The Customs Act, 1969; and Bangladesh Labour Law, 2006 (Amendment 2013). 2.03 Components of the Financial Statements According to the International Accounting Standards (IAS)-1 “Presentation of Financial Statements” the complete set of financial statements includes the following components. i. Statement of financial position as at 30 June 2018; ii. Statement of profit or loss and other comprehensive income for the year ended 30 June 2018; iii. Statement of changes in equity for the year ended 30 June 2018; iv. Statement of cash flows for the year ended 30 June 2018; and


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v. Notes, summary of significant Accounting policies and other explanatory information for the year ended 30 June 2018. 2.04 Accounting convention and assumption The financial statements are prepared under the historical cost convention. 2.05 Principal Accounting Policies The specific accounting policies have been selected and applied by the company’s management for significant transactions and events that have a material effect within the Framework for the preparation and presentation of Financial Statements. Financial Statements have been prepared and presented in compliance with applicable IFRS & IAS. Previous year’s figures were re-arranged for comparisons. There were no significant changes in the accounting policies and valuation policies affecting the financial position and performance of the Company. However, changes made to the presentation are explained in the note for each respective item. Accounting and valuation methods are disclosed for reasons of clarity. The company classified the expenses using the function of expenses method as per IAS -1. 2.06 IAS and IFRS Adopted by the Management The following IAS and IFRS are applicable and adopted by management for preparation of financial statements for the year ended 30 June 2018. IASs: IAS 1 Presentation of Financial Statements IAS 2 Inventories IAS 7 Statement of Cash Flows IAS 8 Accounting policies, Changes in Accounting Estimates and Errors IAS 10 Events after the Reporting Period IAS 12 Income Taxes IAS 16 Property. Plant and Equipment IAS 18 Revenue IAS 19 Employee Benefits IAS 21 The Effects of Changes in Foreign Exchange Rates IAS 23 Borrowing Costs IAS 24 _ Related Party Disclosures IAS 32 _ Financial Instruments: Presentation IAS 33 Earnings Per Share (EPS) IAS 36 Impairment of Assets IAS 37 Provisions, Contingent liabilities and Contingent Assets IAS 39 Financial Instruments: Recognition and Measurement IFRSs: IFRS 7 Financial Instruments: Disclosures IFRS 8 Operating Segments 2.07 Property, Plant and Equipment Tangible fixed assets are accounted for according to IAS -16 Property, Plant and Equipmentat Historical cost less accumulated depreciation and the Capital work-in-progress is stated atcost. Both tangible and intangible assets are depreciated/ amortized according to the Written, Down Value method. The gain or loss arising on the disposal or retirement of an asset is determined as thedifference between the sales proceeds and the carrying amount of the asset and is recognizedas non-operating income and reflected in the Statement of Profit or Loss and OtherComprehensive Income. 2.08 Depreciation of Fixed Assets Depreciation is provided on written down value method except Land and Land Development. Depreciation has been charged on additions respective to the date of starting utilization. The depreciation / amortization rate(s) are as follows: Category of fixed assets Rate % Land & Land Development 0% Factory Building 10%


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Tin Sheed 10% Furniture & Fixture 10% Plant & Machinery (Note-A) 10% Office Decoration 10% Office Equipment 10% Factory Equipment 10% 2.09 Valuation of Stocks Inventories are stated at the lower of cost or net realizable value in compliance with the requirements of Para 21 and 25 of IAS-2. Category of stocks Basis of valuation Raw & packing materials including w-i-p

: Moving average (Weighted) Cost

Finished Goods at Factory : At lower of cost or estimated net realizable value At ware houses : At cost Stores Items : At cost Cost comprises of the value of materials and all other distributable direct labor & production overheads including depreciation. 2.10 Bills Receivable Bills Receivable is carried at invoice amount without making any provision for doubtful debts, because of the fact that sales / export are being based on 100% confirmed letter of credit basis with fixed maturity dates by L/C opening bank. 2.11 Cash and Cash Equivalents Cash and cash equivalents include cash in hand, cash at banks, term deposits etc. which are available for use by the company without any restrictions. There is an insignificant risk of change in value of the same. 2.12 Foreign Currency Transaction Foreign currency transactions are recorded at the applicable rates of exchange ruling at the transaction date in accordance with IAS 21 (the Effects of changes in Foreign Exchange Rates). Foreign currency transactions translated at the financial position date are charged/credited to the statement of Profit or Loss and Other Comprehensive Income whenever arise. 2.13 Creditors and Accrued Expenses 2.13.1 Trade and Other Payables Liabilities are recorded at the amount payable for settlement in respect of goods and services received by the company. 2.13.2 Provision The preparation of financial statements in conformity with International Accounting Standard IAS-37 Provisions, Contingent Liabilities and Contingent Assets requires management to make estimates and assumption that affect the reported amounts of revenues and expenses, assets and liabilities, and the disclosure requirements for contingent assets and liabilities during and at the date of the financial statements. In accordance with the guidelines as prescribed by IAS-37 provisions were recognized in the following situations:

When the Company has a present obligation as a result of past event; When it is probable that an outflow of resources embodying economic benefits will be required to settle

the obligation; and Reliable estimates can be made of the amount of the obligation.

An appropriate level with regard to an adequate provision for risks and uncertainties hasbeen shown in the Statement of Financial Position. An amount recorded as a provisionrepresents the best estimate of the probable expenditure required to fulfill the currentobligation on the date of Statement of Financial Position. 2.14 Employee Benefits


32

The company maintains defined benefit plan for its eligible permanent employees. Theeligibility is determined according to the terms and conditions set forth in the respectivedeeds. The company has accounted for and disclosed employee benefits in compliance with theprovisions of IAS 19: Employee Benefits.The cost of employee benefit is charged off as revenue expenditure in the period to whichthe contributions relate. The company’s employee benefits include the following: a) Short Term Employee Benefits Short-term employee benefits include wages, salaries, festival bonuses etc. Obligationsfor such benefits are measured on an undiscounted basis and are expensed as the relatedservice is provided. b) Contribution to Workers’ Profit Participation and Welfare Funds This represents 5% of net profit before tax, contributed by the company as perprovisions of the Bangladesh Labor (amendment) Act, 2013. The Company recognizescontribution to Workers Profit Participation and Welfare Fund in the accounts from theyear 2017. The fund transfer is under process and will be paid after completion ofnecessary legal process. 2.15 Taxation: i) Current Tax Current tax is the expected tax payable on the taxable income for the period ended, using tax rates enacted or subsequently enacted after the reporting date and any adjustment to tax payable in respect of previous years. Provision for taxation is calculated on the basis of applicable current tax rate and incompliance with Finance Act, 2017. ii) Deferred Tax Deferred tax arises due to temporary difference deductible or taxable for the transaction which 1s recognized in the income statement. A temporary difference between the tax base of an asset or liabilities and its carrying amount/or amount in the Statement of Financial Position. Deferred tax assets or liabilities are the income tax recoverable or payable in future period recognized in the current period “IAS-12: Income Tax”. 2.16 Contingent Liabilities and Assets Contingent liabilities and assets are current or possible obligations or assets, arising from past events and whose existence is due to the occurrence or non-occurrence of one or more uncertain future events which are not within the control of the company. In accordance with IAS-37 Provisions, Contingent Liabilities and Contingent Assets are disclosed in the notes to the financial statements. 2.17 Revenue recognition In compliance with the requirements of IAS - 18 Revenue, revenue is recognized only when; a) The products are invoiced and dispatched to the customers; b) Interest income is accrued on a time basis by reference to the principal outstanding at theeffective interest rate applicable; c) Income from export is recognized at delivery of the consignment on accrual basis. 2.18 Borrowing Costs In compliance with the requirements of IAS-23 Borrowing Costs, borrowing costs ofoperational period on short term loan and overdraft facilities from the South BanglaAgriculture& Commerce Bank Ltd. and Woori Bank Ltd. was charged off as revenueexpenditure as they incurred. 2.19 Repairs, upkeep and maintenance charges These are usually charged out as revenue expenditure in the period in which it is incurred. 2.20 Bad and doubtful debts No provision made for bad and doubtful debts because sales/export are based on 100%confirm letter of credit with fixed maturity date by L/C opening by bank. 2.21 Advertising and promotional expenses All costs associated with advertising and promotional activities are charged in the period theywere incurred.


33

2.22 Statement of cash flows Statement of Cash Flows is prepared principally in accordance with IAS-7 Statements of CashFlows and the cash flows from operating activities have been presented under direct methodas required by the Securities and Exchange Rules 1987 and considering the provisions that ‘Enterprises are Encouraged to Report Cash Flows from Operating Activities using the Direct Method”. 2.23 Earning Per Shares The Management calculates Earnings per Share (EPS) in accordance with IAS-33, Earnings per share, which has been shown on the face of Statement of Profit or Loss and Other Comprehensive Income; the same has been calculated dividing surplus available for ordinary shareholders by weighted average number of ordinary shares outstanding at the end of the period (note- 26.00). 2.23.1 Basic Earnings Per Shares This represents earnings for the period attributable to the ordinary shareholders. As there was no minority interest or extra ordinary items, the net profit after tax for the period has been considered as fully attributable to ordinary shareholders. 2.23.2 Weighted Average Number of Ordinary Shares Outstanding Computations of weighted average number of ordinary shares has been shown in note no. 26.01. 2.24 Related Party Disclosure The company carried out a number of transactions with related parties in the normal course of business and on arms’ length basis. The information as required by IAS-24: Related Party Disclosures has been disclosed in a separate note (note no: 31.00) to the accounts. 2.25 Segment Reporting No segmental reporting is applicable for the company as required by “IFRS-08: Operating Segments” as the company operates in a single industry segment and within as geographical segment. 2.26 Date of Authorization The financial statements were authorized for issue by the Board of Directors of the company on October 28, 2018. 2.27 Reporting period The financial period of the Company covers the period from 1 July 2017 to 30 June 2018 consistently. 2.28 Comparative Information Comparative figures have been re-arranged where considered necessary to ensure better comparability with the current period without causing any impact on the profit and value of assets and liabilities as reported in the financial statements. 2.29 Presentation Currency The annexed financial statements are presented in Bangladeshi currency (Taka), which have been rounded off to the nearest Taka.


34

30 June 2018 30 June 2017

Taka Taka

4.00 Property, Plant and Equipment

The details of Fixed Assets and allocation of depreciation has been shown in Annexure-A of the enclosed Financial Statement. The Break up is given below:

Name of Assets Cost Value

Accumulated Depreciation

Written Down Value

Written Down Value

Land & Land Development 1,150,000 - 1,150,000 1,150,000

Factory Building 44,877,637 22,614,887 22,262,750 33,176,251

Tin Sheed

42,078,251 25,818,971 16,259,280 17,574,903

Furniture & Fixture 543,655 369,843 173,812 660,097

Plant & Machinery 457,216,260 169,715,968 287,500,292 173,378,782

Office Decoration 1,125,000 259,313 865,688 961,875

Office Equipment 353,174 265,839 87,335 374,445

Factory Equipment 785,000 180,943 604,058 671,175

Total 548,128,977 219,225,762 328,903,215 227,947,529

5.00

Inventories

Raw Materials

45,836,078

55,890,870

Work-in-Process

4,800,110

3,489,008

Finished Goods

31,580,318

21,879,000

Wastage Goods

1,598,780

2,578,990

Packing Materials

444,545

1,254,876

Spare Parts

535,801

1,345,789

84,795,632

86,438,533

a) Quantity reconciliation of products were done properly.

b) The valuation of closing inventory has been made on the basis of lower of cost and net realizable value as per BAS-2.

c) The company has conducted a test (physical verification/stock taking) of above inventories as on 30.06.2018.

Details Shown in Annexure-B

6.00 Trade & Other Receivables

Opening Balance

127,957,006

29,515,191

Add: Sales during the year

580,129,902

501,243,123

Total

708,086,908

530,758,314

Less: Realized during the year

597,256,000

402,801,308

Closing Balance

110,830,908

127,957,006

This is considered as fully secured and is considered good & realizable within one year. The classification of receivables as required by the Schedule XI of the Companies Act, 1994 are given below:

Particulars

30 June 2018 (Taka)

30 June 2017

(Taka)

i. Receivables considered good in respect of which the company is fully secured

110,830,908

127,957,006

ii. Receivables considered good in respect of which the company holds no security other than the debtor personal security

-

-

iii. Receivables considered doubtful or bad -

-

iv. Receivables due by directors or other officers & staffs -

-

v. Receivables due from companies under same management -

-

vi. The maximum amount of receivable due by any director or other officer of the company

-

-

Total 110,830,908

127,957,006


35

Ageing of the above Trade Receivable is given below:

Particular 1-3 Months 3-6 Months

6 Months Above

Taka Total

Customers 67,606,854 32,140,963 11,083,091 110,830,908

127,957,006

Details Shown in Annexure-C

7.00

Advance, Deposit & Prepayments

Advances:

Salary & others

67,890

-

Tax, Vat & Others

2,752,282

4,596,481

Others Expenses

150,000

-

Contractor/ Supplier

19,438,970

2,300,001

Sub Total

22,409,142

6,896,482

Deposits:

Margin & Deposit

5,000,000

-

Security Deposit

8,040,800

8,040,800

Sub Total

13,040,800

8,040,800

Grand Total

35,449,942

14,937,282

There is no amount of loans advances due for payment for a period of more than 12 months from the date of Balance Sheet.

There is no aggregate amount due from Directors.

All advance and deposit amount considered good and recoverable.

There is no agreement with director and officers of the company regarding advance or due amount.

There are no claims against the company, which can be acknowledged as bad debt.

8.00

Cash & Cash Equivalents

a) Cash in Hand

10,347,047

925,186

b) Cash at Bank

41,802

4,843

Shahjalal Islami Bank Ltd. CD A/C No-401111100007008 6,887

1,835

Social Islami Bank Ltd. CD A/C No-0661330001653 1,128

3,008

United Commercial Bank Ltd. CD A/C No-0802112000003158 33,787

-

Total Cash & Cash Equivalents (a+b) 10,388,849

930,029

9.00

Others Asset (Preliminary exp.)

Opening Balance

150,000

150,000

Add: Charges during the year

-

-

150,000

150,000

Less: Full written off during the year

150,000

-

Closing Balance

-

150,000

The preliminary expense has been written off during the year.

10.00 Share Capital

Authorized Share Capital

250,000,000

250,000,000

250,000 Ordinary Shares of Tk. 1000.00 each

250,000,000

250,000,000

Issued, subscribed and paid up capital :

25,000,000

25,000,000

25,000 Ordinary Shares of Tk. 1000.00 each

Shareholding Position:

Shareholders Name No. of Share

Percentage (%)

Taka Taka

Alhaj Md. Samir Ali 5,000 20.00 5,000,000

5,000,000

Mr. Md. Abdul Rahman 5,000 20.00 5,000,000

5,000,000

Mr. Md. Abdul Hai 5,000 20.00 5,000,000

5,000,000

Mr. Md. Abdul Motaleb 5,000 20.00 5,000,000

5,000,000

Mr. Md. Shamsul Haque 5,000 20.00 5,000,000

5,000,000

25,000 100.00 25,000,000

25,000,000


36

11.00 Retained Earnings

Opening Balance

65,718,280

29,560,062

Less: Adjustment of Deferred Tax Expense

-

(3,897,639)

Add: Net Profit/during the year

50,131,196

40,055,857

115,849,476

65,718,280

12.00 Share money deposit

Opening Balance

-

-

Add: Addition during the year

25,000,000

-

Less: Adjustment/allotment/return

-

-

25,000,000

-

13.00 Deferred Tax Liability

Deferred tax liability has been calculated below at the applicable tax rate on the difference between the carrying value of property, plant and equipment as per financial statements and tax based written down value and financial position’s liability method for gratuity obligation.

Opening Balance (Adjusted)

6,680,261

3,897,639

Expenses/(Income) of Deferred Tax during the year 11,012,588

2,782,622

Deferred Tax Liability/(Assets) as on 30 June 2018 17,692,848

6,680,261

Details Shown in Annexure-D

14.00

Trade & Others Payable

Trade Payable

91,580,176

125,487,964

Others Payable

11,023,450

236,549

Total

102,603,626

125,724,513

This represents the amount payable to regular suppliers, packing materials, utilities and others services rendered to the company. All suppliers were paid on a regular basis.

15.00

Short Term Loan

Bank Overdraft

47,469,619

51,137,639

Rev. Time loan

111,737,908

51,436,564

Rev. Trust receipts

13,147,914

-

172,355,440

102,574,204

Above facility has been enjoyed against working capital sanctioned from AB Bank Ltd., Dilkusha, Dhaka and secured by hypothecation of stock & stores and collateral security of land.

Nature CC (Hypoo) Cash

Sanction Limit 17.50 million

Purpose of Loan Working Capital

Margin 25 % on Stock in Trade

Rate of Interest 16 % p.a& Late Payment Interest @ Tk. 2%.

Execution Date 14.05.2008

Mode of Adjustment Within 90 days from the date of advance and account outstanding.

Security

Stock of Imported raw materials, work-in-process and finished goods (yarn), spare p rts of machineries stores in office/factory located at Jhawgara, Araihazar, Narayanganj & security clause of term loan.

Bank Name

Sanction

Amount

Particulars

AB Bank Limited Overdraft

5.00 Crore

Purpose: Factory Building & Purchase of Import Machinery

Interest Rate: 13.00 % per annum

Security: Mortgage of Factory, Land & Building

Tenure: Validity 8 years from the date of sanction

AB Bank Limited Rev. Time loan

13.00 Crore





16.00 Liabilities for Income Tax


37

Opening Balances

9,096,278

4,756,564

Add: Provision for current year

7,043,161

4,339,714

16,139,439

9,096,278

Less: Tax Paid/Adjustment for the year -

-

Closing balance

16,139,439

9,096,278

Details shown in Annexure-E

17.00 Liabilities for Workers Profit Participation Fund (WPPF)

Opening Balances

2,358,910

-

Add: Provision for current year (Note-18.01)

3,409,347

2,358,910

5,768,257

2,358,910

Less: Current year payment

-

-

Closing balance

5,768,257

2,358,910

18.01 Provision for current year

5% of Profit before Tax

3,409,347

2,358,910

18.00 Liabilities for Expenses

Salary & Allowance

401,659

489,974

Wages

2,185,257

2,081,197

Director Remuneration

35,000

35,000

Transport expenses

183,000

-

Gas Bill

1,308,489

3,189,172

Tax Expenses on Gas bill 40,468

98,634

Audit Fee

50,000

50,000

Electricity & Utility Bill

1,195,118

619,065

Others

-

312,542

Total

5,398,991

6,875,585

19.00 Long Term Loan

19.01 Long Term Loan (Non-Current Portion):

Name of

Bank

Type of

A/C Branch Account No 30 June 2018 30 June 2017

AB Bank Limited

Term Loan

Islampur 0012-

5161000252 71,825,262

76,221,566

Total 71,825,262

76,221,566

19.02 Long Term Loan (Current Portion)

Name of

Bank

Type of

A/C Branch Account No 30 Jun. 2018

30 Jun. 2017

AB Bank Limited

Term Loan

Islampur 0012-

5161000252 12,735,207

38,110,783

Total 12,735,207

38,110,783

Bank Name

Sanction

Amount

Particulars

AB Bank Limited Term Loan

11.50 Crore





20.00 Sales Revenue

Export sales

393,587,895

268,624,802

A) Total Export

393,587,895

268,624,802

Local sales

187,378,934

233,648,321

Less: Value Added Tax (VAT)

836,927

1,030,000

B) Net Local Sales

186,542,007

232,618,321


38

Total Sales (A+B)

580,129,902

501,243,123

21.00 Cost of Goods Sold

Raw material consumed (Note-21.01) 381,161,704

336,394,108

Add: Work-in-process- Opening

3,489,008

3,254,965

384,650,712

339,649,073

Less: Work-in-process-Closing

4,800,110

3,489,008

Material consumed

379,850,602

336,160,065

Add: Factory overhead (Note-21.02) 99,331,504

79,413,692

Cost of goods manufactured

479,182,106

415,573,758

Add: Opening Finished goods

21,879,000

22,861,583

Add: Opening Wastage goods

2,578,990

-

Cost of goods available for sale

503,640,096

438,435,341

Less: Closing Finished goods

31,580,318

21,879,000

Less: Closing Wastage goods

1,598,780

2,578,990

Less: Free sample

488,648

499,655

Cost of goods sold for the period 469,972,350

413,477,696

21.01 Raw Material Consumed

Opening stock

55,890,870

50,804,163

Add: Purchase during the year

371,106,912

341,480,815

Raw material available for consumption

426,997,782

392,284,978

Less: Closing stock

45,836,078

55,890,870

Raw material consumed

381,161,704

336,394,108

Details shown in Annexure-B

21.02 Factory Overhead

Wages & salary

31,893,494

24,974,368

Festival Bonus

1,696,089

-

Carriage inward

3,378,388

-

Gas bill

20,825,732

19,808,442

Entertainment

201,305

-

Fuel & Lubricant

156,315

-

Electricity & others bill

10,021,226

8,667,689

Insurance (Factory)

1,183,472

1,050,730

Custom Duty

406,694

651,086

Packing Materials Consumed (21.02.1)

1,902,972

546,143

Spare Parts Consumed (21.02.2)

1,869,553

1,212,936

Repair & maintenance

2,525,089

1,165,456

Depreciation (Annexure-A)

23,271,175

21,336,842

99,331,504

79,413,692

21.02.1 Packing Materials Consumed

Opening stock

1,254,876

-


1,092,641

2,962,538

Packing material available for consumption

2,347,517

2,962,538

Less: Closing stock

444,545

1,254,876

Packing material consumed

1,902,972

1,707,662

21.02.2 Spare Parts Consumed

Opening stock

1,345,789

-


1,059,565

2,558,725

Spare Parts available for consumption 2,405,354

2,558,725

Less: Closing stock

535,801

1,345,789

Spare Parts consumed

1,869,553

1,212,936

22.00 Administrative Expenses

Directors remuneration

420,000

420,000

Salary &Allowances

4,416,280

5,879,690

Bonus

319,250

-

Travelling, tour and conveyance

625,785

475,845

Electricity & others bill

-

621,548

Foreign L/C expense

3,376,000

2,799,284


39

Insurance against Foreign L/C

1,182,731

-

Software expense ( Tally)

20,000

-

C & F expense

1,818,552

1,928,394

Postage & courier

4,725

-

Preliminary Expenses (Full written off)

150,000

-

Stationery & printing

43,410

170,215

Fax, telephone & photocopy expenses 14,705

12,548

Entertainment

281,424

254,853

Paper & Periodical

7,200

5,329

Repairs & maintenance (office)

14,858

254,125

Misc. & Others exp.

154,480

125,482

Audit fees

50,000

50,000

Legal fees

25,500

25,500

Depreciation (Annexure-A)

2,585,686

2,370,760

15,510,586

15,393,573

23.00 Marketing Expenses

Salary & Others exp.

340,960

2,132,562

Cooling &Cartage

229,000

1,254,852

Weight & Steaking

120,000

1,142,542

Free sample

488,648

499,655

Commission & Others

1,634,477

1,021,548

2,813,085

6,051,159

24.00 Other Income

Wastage sales

185,690

215,485

Interest Income from Bank (Note-24.01)

-

12,548

185,690

228,033

24.01 Interest Income from Bank

Interest Income

-

12,548

Total Income

-

12,548

25.00 Financial Expenses

Bank charges & Commission

10,245

63,779

Interest on OD

5,246,528

4,881,366

Interest on Trust Receipts

482,090

300,674

Interest on Time loan

3,922,682

3,630,360

Interest on Term loan

10,761,734

8,135,447

20,423,279

17,011,626

26.00 Earning Per Share (EPS)

Earnings attributable to ordinary shareholders during the period 50,131,196

40,055,857

Weighted average number of shares (Note-26.01)

25,000

25,000

Earnings Per Share (EPS)

2,005.25

1,602.23

Earnings Per Share (Restated)

2,005.25

1,602.23

EPS Excluding Extra Ordinary Income

Earnings attributable to ordinary shareholders during the period 50,131,196

40,055,857

Less: Other income

185,690

228,033

Earnings excluding extra ordinary income during the period 49,945,506

39,827,824

Weighted average no. of ordinary shares outstanding 25,000

25,000

EPS excluding extra ordinary income 1,997.82

1,593.11

EPS excluding extra ordinary income (Restated) 1,997.82

1,593.11

26.01 Weighted Average Number of Shares

Particulars

Number of Share outstanding

Weight average no of

share

Weight average no of

share

Opening Shares Capital 25,000 25,000

25,000

Total 25,000 25,000

25,000

27.00 Cash Received from Customers

Revenue

580,129,902

501,243,123


40

Add: Other income

185,690

228,033

Add: Income from investment in security -

-

Less: Increase in accounts receivable 17,126,098

(98,441,815)

Total Cash inflows

597,441,690

403,029,341

28.00

Cash paid to Suppliers

Cost of goods sold

469,972,350

413,477,696

Add: (increase)/decrease in inventory (1,642,901)

9,517,822

Add: (increase)/decrease in accounts payable

23,120,887

(106,260,970)

Less: Depreciation

(23,271,175)

(21,336,842)

Total Cash outflow

468,179,161

295,397,705

29.00

Cash Payment for Expenses

Administrative, selling & distribution expenses

15,510,586

15,393,573

Add: Marketing expenses

2,813,085

6,051,159

Add: increase in liabilities for expenses 1,476,593

(3,275,177)

Add: WPPF paid

(150,000)

-

Less: Depreciation

(2,585,686)

(2,370,760)

17,064,578

15,798,796

30.00 Finance Cost

Bank charges & Commission

10,245

63,779

Interest on OD

5,246,528

4,881,366

Interest on Trust Receipts

482,090

300,674

Interest on Time loan

3,922,682

3,630,360

Interest on Term loan

10,761,734

8,135,447

20,423,279

17,011,626

30.00 Related Party Transaction

During the period the Company carried out a number of transactions with related parties in the normal course of business on an arms' length basis. Names of those related parties, nature of those transactions and their total value have been set out in accordance with the provisions of IAS-24: Related Party Disclosures.

Particulars Relationship

Transaction during the

year / period

Outstanding as on

30.06.2018

Outstanding as on

30.06.2017

Alhaj Md. Samir Ali Director -

Mr. Md. Abdul Rahman Chairman -

Mr. Md. Abdul Hai

Managing Director

420,000

Mr. Md. Abdul Motaleb Director -

Mr. Md. Shamsul Haque Director -

Total 420,000 -

-

Board of Directors of RAYA SPINNING MILLS LTD. till now have not taken any board meeting attendance fees.


41

During the period from 01-07-2017 to 30-06-2018, there were 4 (Four) Board Meetings held. The attendance status of all the meetings is as follows:

Name of Directors Designation

No. of Meetings Attended

Mr. Md. Abdul Rahman Chairman 4

Mr. Md. Abdul Hai Managing Director 4

Alhaj Md. Samir Ali Director 2

Mr. Md. Abdul Motaleb Director 2

Mr. Md. Shamsul Haque Director 3

Transaction with Key Management Personnel of the entity:

(a) Managerial Remuneration paid or payable during the year to the directors, including managing directors, a managing agent or manager.

420,000

(b) Expenses reimbursed to Managing Agent

Nil (c) Commission or Remuneration payable separately to a managing agent or his associate

Nil

(d) Commission received or receivable by the managing agent or his associate as selling or buying agent of other concerns in respect of contracts entered into by such concerns with the company.

Nil

(e) The money value of the contracts for the sale or purchase of goods and materials or supply of services, entered into by the company with the managing agent or his associate during the financial year.

Nil

(f) Any other perquisite or benefits in cash or in kind stating, approximate money value where applicable.

Nil

(g) Other allowances and commission including guarantee commission

Nil (h) Pensions etc.

(i) Pensions

Nil

(ii) Gratuities

Nil

(iii) Payments from a provident funds, in excess of own subscription and interest thereon

Nil

(i) Share Based payments

Nil 31.00 Bank Guarantee

The company have no Bank Guarantee on the reporting date.

32.00 Capital Commitment

The company have no Capital Commitment at the reporting date.

42

RAYA SPINNING MILL LTD Schedule of Property, Plant and Equipment

As at 30 June 2018

Annexure-A

A. At Cost

(Amount in Taka)

Sl. No.

Particulars

Cost Rate

%

Depreciation W.D.V.

Balance as at 01.07.2017

Addition During the year



Charged During the

year

Total Charges 30.06.2018


1 Land & Land Development 1,150,000 - 1,150,000 0% - - - 1,150,000 2 Factory Building 35,051,356 9,826,281 44,877,637 10% 20,960,105 1,654,782 22,614,887 22,262,750 3 Tin Sheed 36,865,182 5,213,069 42,078,251 10% 24,446,807 1,372,164 25,818,971 16,259,280 4 Furniture & Fixture 543,655 - 543,655 10% 350,530 19,312 369,843 173,812 5 Plant & Machinery (Note-A) 345,533,657 111,682,603 457,216,260 10% 147,078,374 22,637,593 169,715,968 287,500,292 6 Office Decoration 1,125,000 - 1,125,000 10% 163,125 96,188 259,313 865,688 7 Office Equipment 262,580 90,594 353,174 10% 256,135 9,704 265,839 87,335 8 Factory Equipment 785,000 - 785,000 10% 113,825 67,118 180,943 604,058

Balance as on 30 June 2018 421,316,430 126,812,547 548,128,977

193,368,901 25,856,861 219,225,762 328,903,215 Balance as on 30 June 2017 - - - - - - -

Allocation of Depreciation:

Note: Depreciation Charged in the following Manner:

Particulars Rate Amount

Factory Overhead 90% 23,271,175

Administrative Expenses 10% 2,585,686

Total 100% 25,856,861

RAYA SPINNING MILL LTD Quantity-wise break- up of Inventory


43

As at June 30, 2018

Annexure-B

Raw Materials:

(Amount in Taka)

Items Name Balance as on 01.07.2017 Purchased Consumed/Used Balance as on 30.06.2018 Quantity

(LBS) Amount

Quantity (LBS)

Amount Quantity

(LBS) Amount

Quantity (LBS)

Amount

Sankar-6 218,438 15,509,098 1,718,777 134,064,923 1,838,021 137,851,636 99,194 11,722,385 MCU-5 448,391 34,974,498 2,901,291 229,201,989 3,095,009 235,220,684 254,673 28,955,803 CIS/Africa 68,192 5,407,274 112,000 7,840,000 109,316 8,089,384 70,876 5,157,890

Sub Total: 55,890,870 371,106,912 - 381,161,704 45,836,078

-

-

-

Finished Goods:

Items Name Balance as on 01.07.2017 Production Delivered Balance as on 30.06.2018 Quantity

(LBS) Amount

Quantity (LBS)

Amount Quantity

(LBS) Amount

Quantity (LBS)

Amount

50 (Auto) Yarn 96,459 14,114,520 3,616,347 521,191,995 3,510,180 512,486,280 202,626 22,820,235 50 Normal Yarn 60,660 7,764,480 250,280 32,035,840 244,411 31,040,237 66,529 8,760,083

Sub Total 21,879,000 - 553,227,835 543,526,517 31,580,318

- -

Work in Process:

Items Name Balance as on 01.07.2017 Production Delivered Balance as on 30.06.2018 Quantity

(LBS) Amount

Quantity (LBS)

Amount Quantity

(LBS) Amount

Quantity (LBS)

Amount

Blow room : Mixing 821 61,560 85,623 6,421,725 84,293 6,321,975 2,151 161,310 Lap 668 49,575 42,644 3,198,300 39,241 2,943,075 4,071 304,800 Carding Lap 3,404 356,800 68,520 5,139,000 69,941 5,243,383 1,983 252,417 Silver 2,310 273,250 88,567 6,642,525 85,690 6,426,750 5,187 489,025 D/Breaker : Card Silver 2,290 271,750 84,244 6,318,300 81,652 6,123,900 4,882 466,150 B/ Silver 2,664 199,735 23,241 1,743,075 22,757 1,706,840 3,148 235,970 D/Finisher: B/ Silver 1,115 83,625 102,347 7,676,025 98,560 7,392,000 4,902 367,650 F/Silver 95 7,433 141,379 10,603,425 137,020 10,276,500 4,454 334,358 Simplex : F/ Silver 2,615 296,125 110,657 8,299,275 109,625 8,221,875 3,647 373,525 Roving 2,861 390,130 80,076 6,005,700 75,307 5,648,025 7,630 747,805 Ring : Roving 1,345 290,875 130,459 9,784,425 131,082 9,831,150 722 244,150 Ring Cops 1,556 216,325 150,879 11,315,925 151,500 11,362,500 935 169,750 Finishing : Cone 1,585 218,875 78,898 5,917,350 79,450 5,958,750 1,033 177,475 Ring Cops 3,458 459,350 90,541 6,790,575 92,960 6,972,000 1,039 277,925 Pneumatic 2,848 313,600 70,024 5,251,800 71,568 5,367,600 1,304 197,800


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Sub Total 3,489,008 - 101,107,425 99,796,323 4,800,110

-

Wastage Goods:

Items Name Balance as on 01.07.2017 Production/Production Loss Delivered Balance as on 30.06.2018

Quantity (Kg) Amount Quantity (Kg) Amount Quantity (Kg) Amount Quantity (Kg) Amount Drofing -1 4,765 388,135 27,314 518,966 28,893 529,176 3,186 377,925 Drofing -2 11,431 596,193 25,098 250,980 25,513 559,130 11,016 288,043 Filter - 1 485 217,962 15,980 639,200 14,909 696,360 1,556 160,802 Filter - 2 3,616 296,163 12,765 191,475 14,900 369,500 1,481 118,138 Tuckering 2,114 287,004 11,765 352,950 12,900 457,000 979 182,954 Sweeping 1,444 228,220 11,899 154,687 10,940 242,220 2,403 140,687 Roving 4,331 425,986 15,143 1,060,010 19,224 1,205,680 250 280,316 Hardwest 331 134,796 7,990 399,500 7,800 490,000 521 44,296 Old PP Bag (Pcs.) 204 4,531 1,009 17,153 945 16,065 268 5,619 Sub Total 2,578,990 3,584,921 4,565,131 1,598,780 Spare Parts 1,345,789 1,059,565 1,869,553 535,801 Packing Materials 1,254,876 1,092,641 1,902,972 444,545 Total Amount 86,438,533 1,031,179,299 1,032,822,200 84,795,632

Raya Spinning Mill Limited

Schedule of Accounts Receivable as at June 30, 2018

Annexure-C


45

(Amount in Taka)

SL. No.

Name of the Party Items Address of the Party

Less than 3 Months

Over 3 Months less than 6 Months

Above 6 Months

30-Jun-18 30-Jun-17

Total BDT Total BDT

1 Mother Trading Yarn - 4,532,513 1,663,724 657,890 6,854,127 15,678,000 2 Karnaphuly Trading Yarn - 3,830,320 2,860,430 346,860 7,037,610 10,983,700 3 Sunny Trading Yarn - 6,134,227 2,674,968 456,890 9,266,085 17,679,800 4 ShilaEnterprize Yarn - 3,493,857 2,998,700 547,890 7,040,447 7,579,090 5 Younus Trading Yarn - 5,782,810 2,286,780 1,020,987 9,090,577 7,698,010 6 Motalib Trading Yarn - 5,104,764 2,580,300 789,089 8,474,153 10,759,900 7 Shambhu Nath Yarn - 3,848,743 2,190,870 791,277 6,830,890 10,857,090 8 Pankaj Shaha Yarn - 4,249,183 2,357,909 1,046,789 7,653,881 10,874,532 9 Omes Gopal Yarn - 5,719,772 2,790,443 1,087,600 9,597,815 8,574,525

10 Pachgaon Traders Yarn - 4,655,479 2,590,865 1,578,909 8,825,253 5,478,459 11 Haque Traders Yarn - 6,294,662 1,590,643 567,890 8,453,195 7,365,908 12 Lube Trading Yarn - 7,548,521 2,489,700 654,387 10,692,608 6,267,897 13 Baten Yarn - 4,937,939 1,630,987 897,654 7,466,580 4,937,899 14 Akatayan trading Yarn - 1,474,064 1,434,644 638,979 3,547,687 3,222,196

Total 67,606,854 32,140,963 11,083,091 110,830,908 127,957,006

RAYA SPINNING MILL LTD


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Deferred Tax Calculation as at 30 June 2018

Annexure-D

Deferred tax assets/liability recognized in accordance with the provision of BAS's-12, is arrived as follows:

(Amount in Taka)

Particulars Amount in BDT

30 June 2018 30 Jun 2017

Opening Balance 6,680,261 3,897,639

Deferred Tax Liability /(Assets) as on 30 June 2018 17,692,848 6,680,261

Increase/(Decrease) of Deferred Tax Liability 11,012,588 2,782,622

Particulars

Carrying Amount on Balance Sheet data (Taka)

Tax Base (Taka)

Temporary Differences

(Taka)

At 30 June 2018

Property, Plant & Equipment (excluding land), Annexure-A 327,753,215 204,032,636 123,720,579

Addition during the period - - -

Temporary difference for lease Assets - - -

Liability to Employees (5,768,257) - (5,768,257)

Net temporary difference 321,984,958 204,032,636 117,952,322

Applicable Tax rate 15%

Deferred Tax Liability/(Asset) 17,692,848

At 30 June 2017

Fixed Assets (At Cost less Accumulated Depreciation)-Excluding Land 226,797,529 179,903,547 46,893,982

Temporary difference for lease Assets - - -

Liability to Employees (2,358,910) - (2,358,910)

Net temporary difference 224,438,619 179,903,547 44,535,072

Applicable Tax Rate 15%

Deferred Tax Liability/(Asset) 6,680,261

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Raya Spinning Mill Ltd Income Tax Liabilities

as at 30 June 2018

Annexure-E

Particulars

Amount in BDT 30 June 2018 30 June 2017

Computation of Total Income Accounting Profit before other Income and Tax 68,001,255 46,950,159 Add: Other Inadmissible Allowances Accounting Depreciation 25,856,861 23,707,603 Provision for WPPF 3,409,347 2,358,910 Less: Items for Separate Consideration Depreciation as per 3rd Schedule 50,746,333 44,617,325 Payment for WPPF ( Previous) - - Total Taxable Income 46,521,130 28,399,347 Rate 15% 15% A. Tax on Total Taxable Income 6,978,170 4,259,902 Other Income 185,690 228,033 Rate 35% 35% B. Tax from Other Income 64,992 79,812 Total Tax Expenses (A+B) 7,043,161 4,339,714

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APPLICATION FORM FOR INVESTORS

“interested persons are entitled to an information memorandum, if they so desire and that copies of information memorandum may be obtained from the issuer and the issue manager”

RAYA SPINNING MILLS LTD.

APPLICATION FORM

The Managing Director & Director Applicant’s Sl. No. Raya Spinning Mills Ltd. M.R. Khandakar Tower (5th Floor), 209/1, Curvert Road, Motijheel C/A, Dhaka 1000 -1216.

Dear Sir, I/we apply for and request you to allot me/us ……………………..…. numbers of Shares and I/we agree to accept the same or any smaller number that may be allotted to me/us upon the terms of the Company’s Information Memorandum approved by the Bangladesh Securities and Exchange Commission and subject to the Memorandum and Articles of Association of the Company. Further, I/we authorize you to place my/our name(s) on the Register of Member(s) of the Company and deposit the said ordinary shares in my/our Beneficiary Owner ("BO") account; I/we further authorize you to send a crossed (Account Payee only) cheque in respect of any Application money refundable to me/us by post/courier at my/our risk to the first applicant’s address stated below: 1. No. of Ordinary Shares ………………………... of Tk. 10/- each. 2. Total subscription money amounting to Tk. …………..………… (Taka …………………………………………….. only) deposited vide

Cash/Cheque/Draft/Pay Order No. …..………………………..….….. Dated ………….………….…… on ……………………………………..… Bank ………………..…………………………… Branch.

3. Beneficiary Owner (BO) A/C No.

4. I/we agree to fully abide by the instruction given herein. 5. Particulars of Applicant(s): a) Sole/First Applicant Name: Father’s/Husband’s Name: Mother’s Name: Postal Address:

Contact number: Occupation: Nationality: Applicant’s Bank A/C No.: Name of the Bank: Branch: Taxpayer’s Identification Number (TIN): b) Second Applicant: Name: Father’s/Husband’s Name: Mother’s Name: Postal Address: Occupation: Nationality: Taxpayer’s Identification Number (TIN): 6. I/we hereby declare that I/we have read the Information Memorandum of Raya Spinning Mills Ltd. and have willingly

subscribed for ………….…… No. of Ordinary shares of Tk. 10/- each. 7. Specimen Signature(s): Name in Block Letters Signature Sole/First Applicant:

Second Applicant:

………………………………………………………………………………………………………………………………………………………………

OFFICIAL ACKNOWLEDGEMENT Certified that Raya Spinning Mills Ltd. has received Tk.…………………..… (Taka …………………..…….…………… only) from Mr./Mrs./Ms. ………………………………………….…… being the Application money for …………..….…… Ordinary Shares of Raya Spinning Mills Ltd.

Official Sl. No. Seal and Date: Authorized Signature (Name & Designation)

Information Memorandum of Raya Spinning Mills Ltd. - MIDAS ...

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