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INFORMATION MEMORANDUM

OF

KYCR COIL INDUSTRIES LIMITED

for

Public offering of 30,000,000 ordinary shares of Tk. 10/- at an issue


price of Tk. 90 each including premium of Tk. 80 per share
under book building method.

Credit Rating Status


Rating Company Credit Rating Information and Services Limited
(CRISL)
Long Term AA-
Short term ST-3
Date of Rating: 01 November 2010

Manager to the Issue

Rahman Chamber (3rd floor)


12-13 Motijheel C/A, Dhaka- 1000
Tel: 9515468,9515469
Fax: 88-02-9515467
TABLE OF CONTENTS
Page No
Section I: Definition and Elaboration 5
General information 7
Section II: Capital Structure & Use of IPO Proceeds 7
Summary of Annual General Meeting of KYCR Coil Industries Limited 8
Use of IPO proceeds and utilization plan 8
Section III : Description of business 10
Overview of the Group 10
The Project 10
Nature of Business 11
Description of Products 11
Process Flow Charts 12
Details of Manufacturing of Products (Galvanized Products) 14
Market Overview 16
Strengths of KYCR Coil Industries Limited 17
Internal Controls & Corporate Practices 20
Relative contribution of Products contributing more than 10% of the total revenue 20
Associate, Subsidiary/Related Holding Company 21
Competitive condition in business 21
Sources and availability of raw materials and principal suppliers 21
Distribution of product/services 22
Sources of, and requirement for power, gas and water or any other utilities 22
Customers providing 10% or more revenues 22
Contract with principal customers and suppliers 22
Material patents, trademarks, licenses or royalty agreements 23
Number of Employees 23
Capacity and current Utilization 23
Section IV: Description of property 24
Section V: Financial Condition and Plan of Operation 25
Internal and external sources of fund 25
Material Commitment for Capital Expenditure 25
Causes for any Material Change from Period to Period 25
Seasonal aspect of the company’s business 27
Known trends, events or uncertainties 27
Changes in the assets of the company used to pay off any liabilities 27
Loan taken from holding/parent company or subsidiary company 27
Loan given to holding/parent company or subsidiary company 27
Future capital expenditure 28
VAT, income tax, customs duty or other tax liability 28
Operating lease agreement 28
Financial lease and other financial commitment 28
Personnel related scheme 28
Revaluation of Assets 29
Transaction with subsidiary/holding company or associate companies 29
Auditors’ certificate regarding allotment of shares to sponsor shareholders 30
Material information which is likely to have an impact 30
Section VI: Directors and officers 31
Information regarding directorship 31
Directors' involvement in other organization 31
TABLE OF CONTENTS
Page No
Family relationship among Directors and top five officers 32
Short bio-data of the directors 32
Credit Information Bureau (CIB) report 32
Description of senior executives and department heads 33
Section VII: Involvement of Directors and officers in certain legal proceedings 34
Certain Relationships and Related Transactions 34
Directors' facilities 35
Executive Compensation 35
Remuneration paid to top five salaried officers 35
Aggregate amount of remuneration paid to directors and officers 35
Remuneration paid to directors who was not an officer of the company 35
Future compensation to Directors or Officers 35
Options granted to Directors, officers and employees 36
Transaction with the Directors and subscribers to the Memorandum 36
Tangible assets per share 36
Ownership of the Company’s securities 36
Shares held by Directors/shareholders 36
Shareholding structure for 5% or more 37
Securities owned by the officers 37
Section VIII: Determination of offering price 38
Indicative Price for Book Building Purpose 38
Determining price under Book Building Method 42
Section IX: Allotment, Subscription and Market 44
Market for the securities being offered 44
Description of Securities outstanding or being offered 44
Debt securities 45
Section X: Risk factors & management perceptions about the risks 46
Section XI: Corporate Directory 49
Section XII: Auditors’ Report and related certificates 50
Audited Financial Accounts 51
Auditors’ Report under section 135(1), Para 24(1) of part II of schedule III to
80
Companies Act, 1994
Ratio Analysis 84
SECTION I
DEFINITION AND ELABORATION

Term Description
AGM Annual General Meeting
means banks so named in the Information Memorandum to collect
Banker to the Issue
money as subscription against security
Bidder means the eligible institutional investors;
Book Building means the process by which an issuer attempts to determine the price
Method to offer its security based on demand from institutional investors;
CDBL Central Depository Bangladesh Limited
CI Corrugated Iron
CIB Credit Information Bureau of Bangladesh Bank
means any money paid to any person in connection with public offering
Commission/fees
of security under these Rules;
CR Cold Rolled
CRCA Cold Rolled Close Annealed
CRFH Cold Rolled Full Hard
CSE Chittagong Stock Exchange Limited
means the lowest price offered by the bidders at which the total issue
Cut-off Price
could be exhausted;
DSE Dhaka Stock Exchange Limited
EGM Extra Ordinary General Meeting
EIIs Eligible Institutional Investors
EPS Earnings Per Share
means the lowest price of the price band within which the eligible
Floor price
institutional investors shall bid for security under Book-Building Method
GCI Galvanized Corrugated Iodized
HR Hot Rolled
means the price which the issuer indicates in the draft Information
Indicative price Memorandum taking input from the eligible institutional investors on
which the bidders bid for final determination of price;
Initial Public means first offering of security by an issuer to the general public
Offer/IPO
ISSUE Book Building of Shares of KYCR
KW Kilo Watt
KYCR KYCR Coil Industries Limited
NAV Net Asset Value
means an expatriate Bangladeshi or who has dual citizenship or
Non-Resident possesses a foreign passport bearing an endorsement from the
Bangladeshi (NRB) concerned Bangladesh Embassy to the effect that no visa is required for
him to travel Bangladesh
NOF Non-Oxidizing Furnace
Term Description
means a method of determining the price for a specific security through
Price Discovery
demand and supply factors related to the market
means any document prepared for the purpose of communicating to the
Information
general public an issuer's plan to offer for sale of its security under the
Memorandum
prescribed Regulations;
means public issue of security through initial public offering or repeat
Public Issue
public offering
R&D Research & Development
means the merchant banker or any person employed by the issuer
registered with or approved by the Commission for carrying on the
activities in relation to an issue including collecting applications from
investors, keeping record of applications and money received from
Registrar to the
investors, keeping record of applications and money received from
Issue
investors or paid to the seller of security, assisting in determining the
basis of allotment of security, finalizing the list of persons entitled to
allotment of security and processing and dispatching allotment letters,
refund orders or certificates and other related documents
RJSC Registrar of Joint Stock Companies & Firms
means presentation by an issuer of security to potential investors about
Road Show its issuance of security

SEC The Securities and Exchange Commission

Securities Shares of KYCR

Securities Market The Stock Market of Bangladesh

VAT Value Added Tax


General information
i. Alliance Financial Services Limited (AFSL) have prepared the Information
Memorandum based on information provided by KYCR Coil Industries Limited (KYCR)
(the Issuer Company) and also upon several discussions with the Chairman, Managing
Director, Directors and concerned executives of the issuer company. The Directors of
KYCR Coil Industries Limited and Alliance Financial Services Limited collectively and
individually, having made all reasonable inquiries, confirm that to the best of their
knowledge and belief, the information contained herein is true and correct in all
material aspects and that there are no other material facts, the omission of which
would make any statement herein misleading.

ii. No person is authorized to give any information or to make any representation not
contained in this Information Memorandum and if given or made, any such
information and representation must not be relied upon as having been authorized by
the issuer company or issue manager.

iii. The Issue as contemplated in this Information Memorandum is made in Bangladesh


and is subject to the exclusive jurisdiction of the Courts of Bangladesh. Forwarding
this Information Memorandum to any person resident outside Bangladesh in no way
implies that the issue is made in accordance with the laws of that country or is
subject to the jurisdiction of the laws of that country.

iv. A copy of this Information Memorandum may be obtained from the Corporate Head
Office of KYCR Coil Industries Limited, Alliance Financial Services Limited, the
Underwriters and the Stock Exchanges where the securities will be listed.
SECTION II
CAPITAL STRUCTURE & USE OF IPO PROCEEDS

Particulars No of shares Amount


Paid up Share Capital as on 31 December 2009 65,120,000 651,200,000
Bonus Share Issued in 2010 65,120,000 651,200,000
Paid up share Capital as on 31 October 2010 130,240,000 1,302,400,000
Proposed IPO (Initial Public Offering) 30,000,000 300,000,000
Total Capital after IPO 160,240,000 1,602,400,000

Summary of Annual General Meeting of KYCR Coil Industries Limited

AGM Date of AGM AGM Date of AGM


1st AGM 31 December 1996 9th AGM 30 December 2004
2nd AGM 31 December 1997 10th AGM 29 September 2005
3rd AGM 31 December 1998 11th AGM 18 September 2006
4th AGM 31 December 1999 12th AGM 30 September 2007
5th AGM 31 December 2000 13th AGM 30 September 2008
6th AGM 31 December 2001 14th AGM 30 September 2009
7th AGM 31 December 2002 15th AGM 25 August 2010
8th AGM 31 December 2003

USE OF IPO PROCEEDS AND UTILIZATION PLAN

Entire proceeds of the IPO shall be utilized for the proposed addition of CR Coil unit-2,
introduction of Color Coating Line, expansion of Galvanizing Line and the balance amount shall
be used as working capital as well as repayment of bank loan of the company.

CR Coil Mill

The new unit will be equipped with 1250mm single stand 6hi CVC cold rolling mill with annual
rated capacity of 120,000 MT per annum. This will increase the current capacity by two fold and
will allow KYCR to provide wider ( 1250mm) width material for better positioning in the
International market for wider width product range. Currently, no other mill in Bangladesh
offers 1250mm CR and honing into this capacity and product range expansion, KYCR will be
able to market its product for more diverse customer and product range, domestically and
globally.The plant will be installed in the same site of the existing one, to be imported from
Deniali, Italy as a turnkey basis. Total cost of the plant estimated to be Tk 1509.68 million and
expected to commence operation within December 2012.
Color Coating Line

Colour coated sheets will allow KYCR to offer a product base that has a specialized market. In
addition, having colour coated product in the existing product portfolio will allow the Company to
capture more market share of our dealers and customers, which is currently being catered by
other colour coated manufacturers. The state of the art colour line will also have the technology
to offer panel and other household finished application that will allow KYCR to offer higher value
added products to its market. The line will have production capacity of 36,000 TPA based on ref.
size of 0.50 mm thickness X 1250 mm wide @20.4 mm line speed @ 6000 working hours. It will
also be installed in the same factory site at an estimated cost of Tk 510.16 million.

Galvanizing Line

A second unit of fourth generation NOF ( Non Oxidized Furnace) technology having wider width
and heat based Coat Galvanizing Line with Strip thickness from 0.10 to 0.60 and strip width of
650 mm to 1250 mm to be implemented. Machineries of the plant will be brought from
Germany/India at an estimated cost of Tk 485.65 million. This plant will not only produce
superior quality galvanized sheet, but will also meet the company’s drive to offer fully
environment-friendly product as well as manufacturing process. It is expected to go into
operation within December 2011.

Proposed expenditure plan is summarized as follows:

Amount
Sl. Implementation
Utilization of Funds (million)
No. Target
Tk.
1 CR Mill-2nd unit 1,509.68 December 2012
2 Color Coating 510.16 December 2011
3 Galvanizing Line 485.65 December 2011
Working Capital/ re-payment of bank
4 Balance amount Continuous
loan
SECTION III
DESCRIPTION OF BUSINESS

Overview of the Group


KDS Group is one of the most renowned business and industrial conglomerates of Bangladesh,
based mainly in the port city of Chittagong having extensive operations throughout the country.
It has also established offices and agencies in Singapore, Hong Kong and is expanding into
United Kingdom, thereby paving the path into becoming a Bangladeshi based multinational.

The group was founded in 1983, through the establishment of one of the first garments
industries of Bangladesh, and over the last 27 years, through innovation, dynamism, untiring
effort and dedication, the business in terms of assets and revenues have grown exponentially by
sometimes over 500% a year. The fields of business have also extended from being just apparel
exports to a whole array of other industries. Today the total group can proudly declare over USD
350 million of annual revenues in total, with over 8000 employees, staff and workers.

KDS values human capital and is therefore committed to attract, groom and nurture talent
through competitive compensations and benefit packages apart from investing in training of its
potential employees under local as well as foreign trainers. KDS has engaged the internationally
renowned organizational development consultants “Ernst & Young” to develop upgraded Human
Resource Management practices such as appraisal through the Balance Score Card method,
talent mapping, etc.

The Group adheres to international compliance requirements closely, and has taken many social
initiatives for the betterment of the lives of its workforce, going even beyond foreign
requirements. KDS is always keen on taking new challenges and initiatives supported by the
robust financial appetite it enjoys along with the open support of all major financial institutions
in Bangladesh based on their healthy business track record with each of them.

KDS group has interests in various sectors that includes but does not limit by the following:

Apparel/Garments Other trading operations Insurance


Private Port – Inland Container Information & Communication Investment
Depot Technologies Management
Textiles IT Training Services Banking
Apparel Trims & Packaging Shares and securities trading Steel

The Group is also extensively involved with a large number of activities in relation to corporate
social responsibility and philanthropic initiatives.

The Project
The Company “KYCR Coil Industries Limited”, was incorporated in Bangladesh on 04 th November
1995 as a Private Limited Company registered under the Company Act, 1994 bearing
registration number CHC-2071 of 1995. The Company’s Registered office is at 1, Hajji Amir Ali
Chowdhury Road, Khatungonj- Chittagong, with factory at Boro Kumira, 25 kilometers away
from Chittagong main city.

The plant has been setup as a backward integration effort to provide necessary raw material for
the company’s own Galvanizing plant as well as the surplus to other consumers in the industry.
The plant notably is the only European plant of its kind in the country, supplied by SMS
DEMAG Germany, a world leader in this sector. The brand name of its corrugated sheet product
is popularly known as “MURGI” or “HEN”.

The Complex which is built on a 11.0421 acre site, houses pickling line, 6 Hi CVC cold rolling Mill
Slitting and rewinding line with an annual capacity of 120,000 Metric Tons of CR Coil,100%
Hydrogen based 4-base Annealing with 21,000 Mt. annual capacity, 4-hi Skin Pass mill,multi-
slitter line and Coil to coil/coil to sheet fully automated NOF TYPE Galvanizing plant for 70000
MT. Commissioned under direct supervision and technical assistance of SMS DEMAG Germany,
the result is a continuous and efficient supply of flawless quality product unrivalled by any other
in the industry, thus enabling us to be the most reliable supplier of cold rolled sheet in the
region. The Company has got its office in Chittagong city and also got liaison office at Dhaka.
Sales are generally done through more than 800 active dealers across the country.

Events Dates
Incorporation as a Private Company 04 November 1995
Acquisition of CR Coil Plant (SMS, Demag, Germany) 2001
Commercial Operation of CR Coil Plant 01 February 2002
Commercial Operation of NOF Plant 2008
Entry to Export Market 2005
Conversion into Public Limited Company 31 July 2010

Nature of business

The main objectives of the company is to own and establish mills, factories and workshop for
manufacturing CR Coil, GCI Sheet, Galvanized plain Sheet etc. of all kinds and description; and
to purchase or import raw materials to manufacture the same and its by-products and marketing
the products and by-products locally and abroad.

Description of Products
The Company maintains its standards in the manufacturing of the products. The Company
ensures qualities to meet the international standards such as ASTM, JIS, SI & BS etc. The
Company produces various types of steel products that are as follows:

Sl.
Product Form/Grade Thickness Width
No.
1 Cold Rolled Full Hard Coil/JIS G 3141 SPCC - 0.095 mm 762 MM. to
(CRFH) 1B/1D for base metal uses to 0.45 mm 1050 MM.
(main input) of galvanizing
plant to produce GP/GCI
sheet to use for roofing and
fencing/doors etc
2 Cold Rolled Close Annealed Coil and Sheet/ JISG 3141 0.3 MM to 660 mm to
(CRCA) SPCC-SD/SB for various 1.6 MM 1050 mm
appliances like barrels &
drum/containers, automobile
body, electric panels and
engineering fabrications.
3 Galvanized steel sheet in Sheet & Coil/ JIS G3302 0.11 MM to 762 MM to
coil and sheet SGCH FULL HARD ZINC 0.5 MM 1050 MM
COATED Z- 90GSM TO Z-180
GSM, REGULAR SPANGLE,
CHROMATED AND
DRY,BRIGHT FINISH.
4 Galvanized Plain and Sheet/ JIS G3302 SGCH FULL 0.11 MM to 600 MM to
Corrugated Sheet HARD ZINC COATED Z- 0.5 MM 815 MM
90GSM TO Z-180 where length
GSM,REGULAR is 6’ to 12’
SPANGLE,CHROMATED AND
DRY,BRIGHT FINISH.

Process Flow Charts

Following flowchart shall explain the broad path of formation of GCI (Galvanized Corrugated
Iodized) sheet starting from the iron ore.

Steel Manufacturing Hot Rolling


Iron ore/ limestone etc. Plant Plant Hot Rolled COIL

NOT IN BANGLADESH
Cold Rolling Plant
Cold Rolled Coil

Galvanization Plant
Galvanized Zinc for galvanization
NOF
Corrugated Sheet

As shown above, Hot Rolled coils that are imported goes through cold rolling plant to produce
cold rolled coils. The coils are then taken for galvanizing in the galvanizing plant along with zinc
that results in output “GP (Galvanized Plain) sheet” that goes to shearing line for 6 ft to 12
ft.(L)Again, these cut sheet goes to FORMING MACHINE where GCI(CORRUGATED SHEET) are
produced as a final product to use for roofing and fencing etc.. Corrugated sheet”.

Galvanizing NOF Line

BP coils are used as raw materials for galvanizing under NOF technology. Following such, surface
cleaning is done by non-oxidizing furnace at 950 deg C. Then it goes through molten zinc bath
for galvanizing at 460 deg C. For non-oxidization, it goes into the passivation section and after
drying, it is recoiled or sheared. Finally, corrugation is carried out in different width as per
parties demand.
Process Flow Chart for CRCA Product

(Cold Rolled Sheet in Coil JISG 3141 SPCC – 1B/1D )

EDD Grade HRC Pickling 6 HI Mill Rewinding Annealing


Input Rolling

CRCA CR Slitter 4 Hi Skin Pass


Coil(Output)

Packing

Hot Rolled Coils are used as input (raw materials) for manufacturing Cold Rolled Close Annealed
(CRCA) product. Following thus, pickling and mill rolling is carried out followed by rewinding,
annealing, Skin Pass, and Cold Rolled Slitting.

Hot Rolled Coils are pickled (Acid cleaning that removes Scale from the surface of the strip) and
processed into cold rolled (reducing the thickness) sheets. Annealing is carried out in a closed
atmosphere of hydrogen and/or other non-oxidizing gases. It softens the product back up whilst
protecting it from oxidization.

The product then goes through Skin Pass Mill (process of removing yield point elongation of
Annealed sheet) for improving surface finish and flatness of the strip. In this phase, rust
preventive oil is used and also the shape is controlled.

Process Flow Chart for RIM Product

RIM Grade Pickling 6 HI Mill Annealing 4 Hi Skin Pass


HRC Input Rolling

Output CR Multi Slitter

Packing
It is a similar process as CRCA product manufacturing except the input material which is RIM
grade HRC input, no rewinding, and it goes through CR Multi Slitter.

Process Flow Chart for CRFH Coil (End Use Galvanizing):

Pickling 6 HI Mill Rolling Rewinding & Side


Trimming

DD/EDD Grade Output CRFH Coil


HRC Input

Packing

To manufacture CRFH Products, rolling is carried out after pickling the raw materials and
following such, Rewinding & side trimming is carried out in order to produce the output.

Currently, the company is manufacturing CRFH, CRCA, GPFH, GP, and GCI products. It is
producing corrugated galvanized sheets from Cold Rolled (CR) Steel Sheets of various
thicknesses, length and width. Presently, the company has got four manual and an automatic
galvanizing lines with a total production capacity of about 70,000 MT of galvanized sheets of
various sizes per annum. GCI (Galvanized Corrugated) sheets are being widely used in
Bangladesh as roofing materials and also for making the sidewalls of the huts. Present annual
quantity of production of the company is approximately 60,000 Metric Tons of corrugated sheet.
The primary raw materials for production are Cold rolled sheet and Zinc to provide anticorrosive
coating on that sheet.

The CR (Cold Rolled) sheet is the product of Cold Rolling mill. Only few companies established
CR mills earlier in the country and KYCR was one of the followers. Previously, all the GCI sheet
manufacturers used to import CR sheet as raw material. Recently, few indigenous sources are
available for the CR Sheet. CR sheets are produced from HR (Hot Rolled) sheets which are the
output of full-fledged steel plant. Till date no such plant is available in the country and
companies manufacturing CR sheet, imports the HR sheet from foreign countries like Japan,
Thailand, China and Korea.

Details of Manufacturing of Products (Galvanized Products)

Corrugated galvanized sheet is fabricated from the Cold rolled steel sheet of varying
thicknesses. Some of the specifications of the HR Coil, being imported by the CR Plant are as
follows.

i) 1.6 mm x 800 mm
ii) 1.8 mm x 915 mm
iii) 2.0 mm x 915 mm
In the Cold rolling plant the HR Coils are rolled in the room temperature to reduce the thickness.
The degree of reduction depends on the number of passes, i.e. the number of times the sheet is
rolled. For example the 1.8 mm HR sheet may be converted into CR sheet of following thickness
in mm.

0.156 0.160 0.170 0.176 0.180 0.186 0.190 0.196 0.200 0.210

If the thickness of the sheet is 2.0 mm or 1.6 mm then reduction of thickness may take place as
follows.

For 1.6 mm thick sheet

0.120 0.125 0.130 0.140 0.150

For 2.0 mm thick sheet

0.220 0.230 0.240 0.250 0.260 0.270 0.280 0.290 0.300 0.310
0.320 0.330 0.340 0.350 0.360 0.370 0.380 0.390 0.400

There is no scope of change of the original width i.e. 840 mm in the first case and the original
width of CR coil would be carried throughout the entire transformation. So it is clear that the
width of the galvanized sheet would be identical as that of the CR coil. Once galvanization
process is complete, the sheet is passed through the corrugation machine and then effective
width of the coil is reduced by some proportion as explained below.

840 mm

720 mm
(approx.)

The reduction of width will depend on the depth of corrugation, but we can assume a reduction
of 12%-15% of the original width. The depth of corrugation is varied as per the requirements of
the final width. However it may be mentioned that for effectiveness, a minimum corrugation is
required beyond which the sheet will not serve its purpose of protection.

The range of thickness for the CR sheet starts from as low as about 0.095 mm and ends at 0.45
mm depending on the thickness of original HR sheet used. The lower thickness variety is
generally used for sidewalls, boundaries etc. whereas comparatively thicker materials are used
for construction of roof. Sheets are available in five lengths between 6 ft and 10 ft, with
increment of 1 foot. Width of the sheet also varies from 27 inch to 32 inch as explained above.
Generally the width increases with the thickness as we can see that 1.6 mm HR has got a width
of 780/800 mm whereas width of 2.0 mm HR sheet is 915 mm.

Normally the sheets are sold in pieces, Baans, and Pcs Tons. Baan is a unit exclusively used for
corrugated sheets, which denotes a running length of 72 feet. In case of 6 ft sheet, 12 sheets
make a Baan. However, for 7 feet sheets, only 10 sheets make a Baan using rounding off
technique.
Galvanization is done by platting a very fine zinc layer on the sheets to protect corrosion. There
are two types of galvanization as per the technology of galvanization line. One is continuous and
another is discrete type of operation, called CGL and GL respectively. CGL manufacturing is
continuous operation with very little manual interference. The entire roll of CR sheets are
galvanized and then cut into pieces with required length. Whereas in GL, roll of sheets are cut
first and then galvanized manually controlling the zinc consumption.

Market demand also varies for different types of thicknesses. Demand of lower thickness is
higher in the market compared to thicker variety. If we consider sheet thickness up to 0.2 mm,
the market share will be about 70% of the total, when remaining 30% will cater for the balance
part.

As already mentioned that Galvanized Corrugated sheets are widely used in Bangladesh
primarily as roofing materials. At least 75% of the household uses GC sheets for some
application or the other. These sheets are also used for making wall of the houses, boundaries
etc. being the most economic option.

CONTROLLED ANNEALING

The CRFH coils coming out from 6 HI Mill exhibit high hardness of the order of 90 to 95 HRB,
which is practically impossible for the forming industry to go for their application. The material is
then subjected to ANNEALING to get following properties:

1. Required ductility is achieved to facilitate drawing or any other kind of forming operations.

2. Uniform grain size imparts uniform properties through out the Sheet (recovery, re-
crystallization & grain growth takes place)

3. Required mechanical & physical properties are achieved.


(The tight wound coils are annealed in a protective atmosphere in a Bell Type annealing furnace
where temperature and protective gas are controlled through high-tech electronic instruments to
ensure perfect grain refinement and brightness to the strip)

SKIN PASS MILL

The purpose of skin passing is to give a controlled light cold reduction. Generally 1% to 3% cold
reduction is given to the strip by this operation. Gauge correction is never the intension of skin
passing operation. When annealed strip is given skin pass reduction, the operation imparts to
the annealed strip a certain degree of hardening while restoring the softness of the core. Also
the surface finish of the strip is improved by skin passing operation.

CR SLITTER

CR Slitter and side trimming line ensures different widths of the coils, tailor made by the
customer's use with crack free edges. The sheet surfaces are continuously and meticulously
checked to keep up the standard of quality.

MARKET OVERVIEW

This is a product for consumption by the masses, since 75% household uses GC sheet in some
form or other. There are not many distinctive factors with respect to quality of the product for
major five/six manufacturers and hence main criterion for decision making is the price.
Unhealthy price war is always going in the market and the market is mainly controlled by the
dealers and not the manufacturers.

Products are sold by manufacturer’s name as well as brand name. Major available brands in the
market vis-à-vis manufacturers’ names are as follows.

Brand Name of the Manufacturer


GARU Abul Khair Steel Mills Limited
HORSE PHP NOF Continuous Galvanizing Mills Limited
MURGI KYCR Coil Industries Limited
MORUG S. Alam Steels Limited
RANI Apollo Ispat Complex Limited
TOP Karnafully Galvanizing Mills Limited

Total number of Corrugated Galvanized sheet manufacturer is more than forty in Bangladesh.
However, only about 25% of them are major suppliers in the market. Rests are either local or
insignificant players. Following are the names of some major manufacturers in the market in
order of market share. We have formulated the market share % of each company in terms of
their Capacity as well as production.

Productio
Name of the Capacity
Capacity/ Production

n
Organization (MT) 250,000
(MT)
200,000
AK steel 240,000 200,000
PHP 200,000 120,000
150,000

KYCR 120,000 75,000


100,000

S.Alam 100,000 50,000


50,000

Apollo 100,000 50,000


0
AK steel PHP KYCR S.Alam Apollo Karnafully

Karnafully 60,000 50,000

Source: BCRCMEA (Bangladesh C.R. Coil Manufacturers & Exporters Association) Report

The brand is of more significance than the company to the customers. A single manufacturer
may produce more than one brands and supply those in the markets concerned. Popularity or
market share of the brand/manufacturer varies from one region to another. Moreover the
product is highly seasonal as the consumption picks up during the months November to April.
Price varies throughout the year as the product is seasonal. Market Price practically does not
seemingly move in a logical sequence. Manufacturers revise their price every now and then
depending on their stock and booking position. As a result competition is very high in this
market and margins also coming down sharply.

Strengths of KYCR Coil Industries Limited


The Company has latest machineries and equipment to carry out the factory operations as well
as administrative activities. The Company has a great amount of investment in the machineries
and equipment that are productive and effective as well. The CR plant that is unique in the
country gives the company an edge over its competitors. Besides, NOF technology and heavy
capital expenditures on brand new machineries provide the company with competitive edge in
the industry.

Existing Controls used in Operations


AEC: Automatic Edge Drop Control
AFC: Automatic Flatness Control
AGC: Automatic Gauge Control
ATC: Automatic Temperature Control
CVC: Continuous Variable Crown
HGC: Hydraulic Gap Control
IRB: Intermediate Roll Bending
MZC: Multi Zone Cooling
WRB: Work Roll Bending

Company’s Current Strengths (KYCR Coil Industries Limited)

1. Human Capital

i. Appropriate Skills employed for each functional activity that is being benchmarked
against the best in the industry.
ii. Suitability of employee and the designated tasks are always monitored.
iii. A pool of experienced professionals is available with the Company as its management
carries out extensive programs to recruit, train, select and motivate individuals of
various backgrounds across the country.
2. Financial Resources
i. It has very well-built relationship with the providers of finances to the company.
ii. Effective Management is carried out for Cash and other resources.
3. Machinery and Equipment
i. The company has all brand new machineries purchased from various sources. The
Plant that was imported from Germany.
ii. Depreciation charges are made in terms of the machinery’s estimated economic useful
life and its price competitiveness in the respective marketplace.
iii. At regular intervals, maintenance and necessary shut-down is carried out.

4. Material
i. Backward integration has already been carried out in order to get the accurate raw
materials at the right time and place.
ii. Relationship with the suppliers of HR coil has been very sound in the long run so far.
iii. Low cost of raw materials result in more added profits in the financial context.
iv. Accurate and timely supply of the raw materials has always been the quest for the
company and it has enjoyed smooth supply of such materials over the last few
decades and remained unchanged.
5. Process
i. Traditional method such as manual involvement is being focused into sophisticated
processes whilst the company is expanding its base where large sum of capital
expenditures are incurred for capital intensive facilities/equipment.
ii. Quality certificate i.e ISO certificate is available with the Company and up to date.
Quality does bring a change among the consumers regarding the preference in the
marketplace and hence Total Quality Management practice is carried out as a part of
contemporary management practices. Quality is never compromised so that the
customers receive value added products from the Company.
6. Management Information System
i. Information is sought out at every layer of the organization on a regular basis and
timely accurate information serves the key turn for every successful decision
preciously and concisely.
ii. For catering the information requirement, the company employed required hardware
equipment and software facilities; which are KICKS and Troyee. The software serves
various modules and applications throughout the functional departments.
iii. The information can be filtered as ERP system is available for a bird eye view as well
as close watch on each and every transaction and it captures information processed in
each and every functional area and matches with decision support system and
management information system. ERP system at the Company brings all the activities
in a single tray and helps management take prompt yet an informed strategic
decision.

7. Management
i. Management delegates the authority and responsibility to the subordinates who in
turn execute the actual implementation. Even though this has become a practice, the
Company has advanced itself by capturing raw data and information from the bottom
layer of the organization. In this way, it works as a feedback mechanism which would
ultimately work as feed-forward.
8. Culture
i. Organizational Culture is made up of the individuals working in the Company. The
norms, ethics, value, etc. fall in the category in which normal practices such as
working hours, approaches in the meeting/seminar/discussion, etc. are evaluated and
compared with the competitors whilst keeping in mind the welfare of the consumers
of the company’s products.

Besides, the Company has heavy capital investment for the development of Information
Technology. The IT development in the Company has been provided below:

Information Technology
The Company uses total 384 KBPS dedicated internet bandwidth in factory and Head office. The
head office and factory are connected via radio link. The intranet bandwidth of this connectivity
is 2 mbps.

ERP Software: The company uses an ERP (Enterprise Resource Planning) named KICKS
and TROYEE which are Integrated Client Server Application for assisting all the departments of
KYCR Steel Industry for precise and instantaneous reporting, decision making, optimizing
business cost and interdepartmental coordination. Oracle 9i database is used in backend and
Oracle developer 2000 is used as front end of Kicks and troyee is in SQL server.
Corporate Social Responsibility, Philanthropic Initiatives & Other Significant
Involvement

For the last two decades, the current Managing Director of the Group “Mr. Khalilur Rahman” has
been involved in various organizations, clubs & societies and founded school, college and other
learning centers. He founded Khalil Mir Girls School, Khalil Mir Degree College, Khalilur Rahman
Shishu Niketon, Saberia Khalilia Senior Madrasha, Khalilur Rahman Mohila Degee College,
Khalilur Rahman students Welfare Trust and Shandhir Gousia Tayobia Dilwara Begum Senior
Madrasha, etc. Furthermore, he is a member of few governing bodies; namely S A Noor High
School, Hulain Saleh Noor College, and Mafijur Rahman Girls High School.

Besides, He is holding membership with Chittagong Metropolitan Chamber, Chittagong Press


Club, Chittagong Club, Chittagong Institute, and Bhatiary Golf & Country Club, Chittagong. He is
the President of Amir Market & Khatnganj business Community as well as Patya Foundation; Ex-
vice President of BGMEA (Bangladesh Garment Manufacturer & Export Association); Chairman of
Pragati Insurance Company Limited, Bangladesh CI Sheet Manufacturers & Exporters Association
and Bangladesh CR Coil Manufacturers & Exporters Association; Executive Member of
Bangladesh CI Sheet & GP Sheet Manufactures Association.

Internal Controls & Corporate Practices


The Company KYCR Coil Industries Limited employs robust internal controls:
(1) Supervision at each layer of the Organization

Management has delegated certain skilled individuals to ensure that the new entrants
including rookies in the Company are well trained and motivated on a continuous basis.
Factory Supervision is crucial for the company and therefore the Company employed
experienced personalities recruited locally and internationally as well.

(2) Operations

Operations are handled by the experienced individuals and reporting is made at every
single interval. The procedures for operational activities are identified and strictly
adhered to as per guidance provided by the middle layer of the management.

(3) Accounting

Inventory calculation, Customer Records, Credit Status, Sales Ledger, etc. are carried
out through software applications which integrate all the business processes in a chain.

(4) Physical Assets

These are safeguarded by the security locks, passwords, locks on doors and other
defense mechanism. Regular Checks are also carried out in order to ensure that the
assets are safe and the registered individual is responsible in answering the risk and
expected outcome if need arises.

(5) Management Review

Management review is carried out on appropriate intervals so as to prevent, detect and


correct any error that has occurred or may occur in the forthcoming period. The review
can be either financial or non-financial or a combination of both.
(6) Information Strategy

The Company has its own strategy of being up to date in the industries concerned so
that more significant contribution can be made for the shareholders of the company as
well as other stakeholders.

Relative contribution of Products contributing more than 10% of the total revenue
The relative contribution to sales and income of each product that accounts for more than 10%
of the Company’s total revenue during the period ended 31 October 2010 are mentioned below:

As on 31 October 2010
Name of the Contribution to sales (Tk.) (%)
Sl. No.
products Local Export Total
1 CRC 1,261,691,967 40,012,038 1,301,704,005 24%
CI & GP
2 3,562,380,936 565,303,265 4,127,684,201 76%
Sheet
Total 4,824,072,903 605,315,303 5,429,388,206 100%

Associate, Subsidiary/Related Holding Company

The company has no associates, subsidiary/related holding company.

Competitive condition in business

Major competitors of the Company with their capacity and production are given below:

Name of the Organization Capacity (MT) Production (MT)


1.AK steel Products Ltd 240,000 200,000
2. PHP Re-Rolling Mills 200,000 120,000
3. KYCR Coil Industries Ltd 120,000 75,000
4. S.Alam Cold-Rolled Mills Ltd. 100,000 50,000
5. Apollo Ispat Ltd 100,000 50,000
6. Karnafully Steel Mills Ltd 60,000 50,000
Total Capacity & 820,000 545,000
Production

Source: BCRCMEA (Bangladesh C.R. Coil Manufacturers & Exporters Association) Report

Sources and availability of raw materials and principal suppliers

Sl Name of Principal Name of the raw


Address
no suppliers Materials
KOBE STEEL/ Metal 3-23-1, Shiba, Minato-Ku, Tokyo Prime Hot Rolled Steel
1
One Corporation 105-0014 Japan. Sheet in Coil (HR Coil)
Central Marketing Organisation
Steel Authority Of Ispat Bhawan" 40, Jawaharlal Prime Hot Rolled Steel
2
India Ltd Nehru Road Kolkata-700 Sheet in Coil (HR Coil)
071,India
NIPPON STEEL Nihonbashi 1-Chome Bldg, 4-1
Prime Hot Rolled Steel
3 JAPAN/Marubeni- Nihonbshi 1-Chome, chuo-Ku,
Sheet in Coil (HR Coil)
Itochu Steel Inc. Tokyo, 103-8247, Japan
Sk Myung-Dong Bld, 199-15,
POSCO/Sk Networks Prime Hot Rolled Steel
4 Ulchi Ro 2-Ga, Chung-Gu, Seoul,
Co Ltd Sheet in Coil (HR Coil)
korea
Stemcor (S.E.A) Pte 350 Orchard Road Unit 20-04 Prime Hot Rolled Steel
5
Ltd. Shaw House Singapore Sheet in Coil (HR Coil)
Eco Tropical Resources 531 Upper Cross Street 03-45 Lme Registered Brand SHG
6
Pte Ltd Hong Lim complex, Singapore Zinc Ingots
050531.3Shenton Way, Shenton Lme Registered Brand SHG
7 G-Steelmet Pte Ltd
House 08-09, Singapore 068805 Zinc Ingots

Distribution of product/services

The product distribution is mainly depends on the dealers, distributed within the country. The
major dealers interact directly with the company’s sales executives for purchasing the product.
Then they distribute products amongst sub-dealers who in turn sell those to retailer.
Presently at the time of preparation of this manual there are more than 800 active dealers in the
country, who do business with KYCR throughout the year, irrespective of season. Besides, there
are some who do business during the season only, i.e. between December and May. The Region
wise number of dealers are given below:

Belts Region Number of Parties


Sylhet B.Baria, Hobigong, Sylhet 97
Bogra Bogra, Pabna 53
Rajshahi Nator, Noagaon, Nababgong 30
Barishal Barishal, Perozpur, Faridpur, Patuakhali 65
Dhaka Dhaka, Narayangonj, Gazipur 96
Mymenshing Mymenshing, Tangail 40
Chittagong Chittagong, Cox’s Bazar, Chandpur 142
Rangpur Rangpur, Thakurgaon 47
Comilla Comilla, Noakhali 147
Faridpur Razbari, sariatpur 33
Khulna Khulna, Jessore, Meherpur, Kustia, Chuadanga, 51
Magura, Jhenaidha

Sources of, and requirement for power, gas and water or any other utilities
Power is very much essential for the factory operation. Any power interruption may cause the
Company to lose smooth production.
Power: The Company has accorded consent from Power Development Board (PDB) for a
capacity of 10 MW. Besides, HT line 33 KV is also available for the Company. For NOF plant,
captive power plant (by Gas Generator) having capacity of 2 MW was installed and currently
running at 50% utilization.

Gas: Karnafully Gas Distribution Company Limited provides uninterrupted gas supply to the
Company.
Water: The Company has unlimited water supply from own installed deep tube-well at all times
throughout the factory and office premises.
Customers providing 10% or more revenues
No single customer provides 10% or more of the total revenue generated by the Company.
Contract with principal customers and suppliers
The company does not make any specific agreement with the suppliers. However, when the
purchase order is raised, contract is made specifying the delivery amount, timing of delivery,
advance deposit amount, credit terms and other conditions.

However, it has contracts with its specific customers; usually having one year of validity of
agreement. Currently, the company has 89 numbers of customers who are from different
regions/belts but have contractual agreements with the Company on following conditions as on
31 October 2010.

Nature of Credit: Cheque, Bank guarantee, FDR


Limit: Tk. 500,000 to Tk. 15,000,000

Material patents, trademarks, licenses or royalty agreements


The Company has numerous licenses including patent/trademark for the brand “HEN” or “
Murgi”. Fire License is available with Company that is up to date. Moreover, it complies with
the environmental compliances as it obtains environmental certificate from time to time.
Also, to run the factory operations, management updates the Factory license regularly.
Besides, Boiler License is also updated by the Company at regular intervals.
Every year the Company updates Trade License from the respective regulatory authority at
regular intervals. Trademark license has always been updated on a year to year basis. In
addition, the Company has ISO certification that is valid up to February 07, 2012.
It is also worth mentioning that the Company has updated license for warehousing (Bond)
after the HR Coil is imported from abroad.
Number of Employees

Number of Employee
31.10.2010
Number of employees whose salary below Tk 3,000 per month -
Number of employees whose salary above Tk 3,000 per month 380
Total 380

Capacity and current utilization of the facility

CR Plant 31.10.2010
Installed Capacity (MT) Annual 120,000
Installed Capacity (MT) for the period 100,000
Actual Equivalent production (MT) 60,095
Capacity Utilized 60.10%

NOF Plant
Installed Capacity (MT) Annual 70,000
Installed Capacity (MT) for the period 58,333
Actual Equivalent production (MT) 45,410
Capacity Utilized 77.85%
SECTION IV
DESCRIPTION OF PROPERTY
A) The Company owns the following fixed assets at written down value as on 31 October 2010

(As per audited accounts)


Written Down Value after revaluation
Name of the Assets
As on 31 October 2010
Free Hold Land 772,947,000
Building and civil construction 686,666,575
Plant & Machinery 819,679,874
Office Equipment 483,530
Computer 2,959,009
Electric Installation & Air condition 24,572,040
Fire Extinguisher 109,461
Weight Scale 1,513,728
Furniture & Fixtures 2,201,115
Motor Vehicles 17,494,866
Total 2,328,627,198

B) All the above-mentioned assets are situated at Company’s Factory site at Juramtal ,Baro
Kumira, Sitakunda, Chittagong, Bangladesh as well as at head office premises and are in good
operating condition.

C) All the assets of the company are in its own name except 10.5921 acres of land out of
11.0421 acres, Capital Machinery , factory building with related structure are mortgaged with
following Banks:

Janata Bank Limited AB Bank Limited State Bank of India


Mutual Trust Bank Limited South East Bank Limited Mercantile Bank Limited
Standard Chartered Bank Social Islami Bank Limited Shahjalal Islami Bank Limited
Limited
Jamuna Bank Limited

D) No assets were taken under lease agreement.

E) No reconditioned or second hand plant and machinery are being used by the company.
SECTION V
FINANCIAL CONDITION AND PLAN OF OPERATION
Internal and external sources of fund
(as per audited accounts)
31-10-2010 31-12-2009 31-12-2008 31-12-2007
Internal Sources of Cash
Taka Taka Taka Taka
Paid-up Capital 1,302,400,000 651,200,000 651,200,000 651,200,000
General Reserve - 202,085,763 - -
Retained Earning 1,139,748,194 1,251,145,146 999,618,113 872,487,020
Tax holiday reserve - - 202,085,763 202,085,763
Sub Total: 2,442,148,194 2,104,430,909 1,852,903,876 1,725,772,783
External Sources of
Cash
Long term Liabilities - - 126,220,207 85,389,163
Short term Bank Loan 3,395,411,672 3,045,195,337 2,503,498,192 2,261,790,781
Sub Total 3,395,411,672 3,045,195,337 2,629,718,399 2,347,179,944
Grand Total 5,837,559,866 5,149,626,246 4,482,622,275 4,072,952,727

Material Commitment for Capital Expenditure

The company does not have any such commitment for capital expenditure except capital
expenditure that is expected to be incurred with the financing from IPO proceeds .

Causes for any Material Change from Period to Period


(as per audited accounts)
Particulars 31-10-2010 31-12-2009 31-12-2008 31-12-2007
Taka Taka Taka Taka
Sales 5,429,388,206 4,348,942,559 2,582,068,789 2,117,127,407
Less: Cost of sales 4,782,515,074 3,917,942,273 2,354,515,889 1,930,323,567
Gross profit 646,873,132 431,000,286 227,552,900 186,803,840
Less: Administrative, Finance 101,473,697 33,314,790 26,398,252 16,169,477
& Selling Expenses
Less: Amortization of - 593,574 -
Preliminary Expenses
Other Income 5,395,907 5,392,528 2,255,101
Net Operating Profit before 550,795,342 402,484,450 203,409,749
WPPF
Less: WPPF 27,539,767
Profit/(Loss) before Taxes 523,255,575 402,484,450 203,409,749 170,634,363
Less: Income tax expenses 185,538,290 150,957,417 76,278,656 63,987,886
Profit/(Loss) After Tax 337,717,285 251,527,033 127,131,093 106,646,477

The last three years and ten month’s financial performance shows a gradual growth on a year to
year basis clearly demonstrating success in perusing aggressive growth plan by the Company.
The turnover of the company has been increasing constantly and the gross profit has also been
increased substantially. WPPF has been charged in the year 2010 when it was implemented.
Profit After Tax is also showing a positive trend over the last years as mentioned above.
Graphical Presentation of KYCR’s Performance from 2005 to 2010

Net Asset Value (NAV)

Year NAV NAV


32.32

2005 20.88
35 28.45 29.74
26.5
30 24.85

2006 24.85 25 20.88

20
NAV
2007 26.50 15
10

2008 28.45 5
0

2009 32.32 2005 2006 2007 2008 2009 31-Oct-


10

31 October 2010 29.74 Ye ar

Explanation on the Graphical Presentation (as above)

Since the year 2005 until 2009, the share capital of the company remained the same; i.e.
Tk.651,200,000. In 2010, share capital of the company was increased to Tk.1,302,400,000
which has been reflected in the Financial Statements of October 2010.

Net Asset Value has been calculated for all the years from 2005 till 2010 and it shows a steady
and consecutive growth over the years until the year 2009. Due to issue of bonus shares in the
year 2010 that is reflected in the October 2010 Accounts, NAV has declined slightly; since the
denominator (number of shares) has been increased significantly. Nevertheless, NAV of 2010
(for the 10 month period) seems to be very much strong if compared to the previous years as
shown above.

Earnings Per Share (EPS)

EPS
Year EPS
3.97 3.86
4
2005 2.77 3.5 2.78
1.95
2.59
3
2006 3.97 EPS
2.5
2
1.64

2007 1.64 1.5


1

2008 1.95 0.5


0
2005 2006 2007 2008 2009 31 Oct
2009 3.86 2010

31 October 2010 2.59 Ye ar

Explanation on the Graphical Presentation (as above)

Basic Earnings Per Share (EPS) for the years 2005 was Tk.2.77 and increased to Tk.3.97 in the
year 2006 due to the tax holiday. However, in 2007, the tax holiday was expired and taxation
was charged on the earnings which is one of the critical factors that triggered EPS to decline to
Tk.1.64. Movement in the cost of production does not necessarily trigger any significant
variation compared to all the years listed above. Following the year 2007, EPS strengthened
throughout the years until 2009. Also, the EPS reported for 10 month period stands at Tk.2.59
which was derived after deducting the Worker’s Profit Participation Fund (WPPF), introduced in
the very same year 2010.
Turnover

Turn over (million)


5429.39
Year Turn over (million)
6000

5000 2005 3354.16


3354.16
4000
Turnover (ml)

3000
2117.13
4348.94
2006 2013.9
2582.07
2000

2013.9
2007 2117.13
1000

0
2008 2582.07
2005 2006 2007 2008 2009 31 Oct 2010

Year
2009 4348.94

Explanation on the Graphical Presentation (as above)31 Oct 2010 5429.39

The Sales revenue was decreased in 2006 as compared to the performance in 2005, but took a
positive upturn since 2006 and showed continuous growth until the year 2009. Sales revenue for
only 10 month period as on 31 October 2010 is still showing upward trend compared to 2009.

Seasonal aspect of the company’s business

The product is highly seasonal; consumption picks up from the month of November to April and
pick comes during January-February. It then starts declining from June onwards which continues
till September. Being seasonal, price also varies widely throughout the year. Prices become high
and sometime go bizarre without logic during the season, and sharp fall may be noticed, once
season is over.

Known trends, events or uncertainties

Known events that may affect the business operations of the company are:

1. Introduction of Government policy that may have adverse impact on the company operations.
2. Shortage of supply of power and other utilities required for the manufacturing of products.
3. Political and Labor Unrest
4. Natural Disaster
5. Entrant of Financially viable entities in the sector
6. Government intervention at different stages of the relevant industry.
7. Implementation of new legislation that may affect company’s affairs and most importantly,
8. The unavailability of raw materials on a regular basis (Level of scarcity of resources must be
taken into consideration)

Changes in the assets of the company used to pay off any liabilities

No asset of the company used to pay off any liabilities.

Loan taken from holding/parent company or subsidiary company

No loan was received from any holding/parent company or subsidiary company.

Loan given to holding/parent company or subsidiary company

No loan has been given to any holding/ parent company or subsidiary company.
Future capital expenditure

No future capital expenditure is planned except as noted under the heading “Material
commitment for capital expenditure”.

VAT, income tax, customs duty or other tax liability

VAT

The Company has 18 cases pending with the VAT authority against disputes arose during the
period from 2005 to 2010. All the cases relate to Duty differences, Audit demand, Price
declaration, Tariff value, etc. The Honorable High Court issued stay order against all of them
except 3 cases which are in Appellate Tribunal and awaits for final hearing. A provision for
contingent liability has been created against these cases.

Income tax

The IT assessment for the all years to 2008 (IT Assessment year 2009-2010) have been
completed and agreed with the Tax Authorities while the return for 2009 has been filed and
pending for assessment. Company paid Tk 167,507,130 as advance, which will be adjusted with
above provision on finalization of assessment for the year 2009.

Customs duty or other liabilities

No customs duty or similar liabilities of the company are outstanding as on 31st October 2010
except for the normal course of business.

Operating lease agreement

KYCR Coil Industries Limited did not have any operating lease agreement with any organization
on 31st October 2010.

Financial lease and other financial commitment


KYCR Coil Industries Limited did not have any Financial Lease agreement with any organization
at 31st October 2010.

Personnel related scheme


The Company believes in supporting its employees and is offering incentives and motivation for
its continued profitability and prosperity. It provides the employees the following schemes &
benefits:
(a) EBF (Employees benefit fund)
The management of the Company contributes 2% and the employees contribute 5% for the
entitlement of the benefits. The benefits are only for the employees who work more than 5 years
in the Company.

(c) Workers’ Profit Participation Fund


In the year 2010, the Company has introduced Workers’ Profit Participation Fund (WPPF) which
is reflected in the 31st October 2010 Accounts.

(a)Other Benefits and Allowances


The Company provides medical allowances to its employees. Furthermore, it also allows leave
encashment benefits, insurance, etc. to the employees.
Revaluation of Assets

The Company made revaluation of its assets in FY 2010 and reflected in the Financial
Statements of that year. Particulars of the valuer and summary of report are as follows:

Name : Shafiq Bashak & Co.


Qualification : A firm of Chartered Accountants
Work done (report date) : 20 September, 2010
Reason for Revaluation : To incorporate the fair present value of the major
assets of the company in the financial statements.
Other major works done by the valuer
As a Chartered Accountants Firm it did valuation jobs in addition to normal audit works namely : (i) IFIC Bank
Ltd (ii) Desh Garments Ltd (iii) Pacific Industries Ltd (iv) Therapeutics (BD) Ltd (v) National Banks Ltd (vi)
Lloyds (vii) Land & Building of Glaxo Wellcome Bd. Ltd (viii) Merimo Ltd .CEPZ (ix) Bangladesh Welding
Electrodes Ltd. (x) Land & Building of Hoechst Bangladesh Ltd.

Itemizing showing comparison Itemizing showing comparison

Asset Value
Revaluation
Before Revalued
Particulars Surplus
Revaluation Amount (Tk.)
(Tk.)
(Tk.)
Free Hold Land 30,607,953 772,947,000 742,339,047
Building and civil construction 198,978,066 704,840,300 505,862,234
Plant & Machinery 641,683,119 826,497,512 184,814,393
Electric Installation &Air
12,534,784 25,000,000 12,465,216
condition
Weight Scale 508,852 1,540,000 1,031,148
Motor Vehicles 17,796,359 17,812,935 16,576
Total 902,141,429 2,348,637,747 1,446,528,614

Methodology of Valuation

There are a couple of internationally recognized methodologies commonly applied for valuation
of property, plant & equipment. Out of these, market value method, considered most
appropriate, was applied for revaluation of KYCR Coil Industries Ltd. market value method
essentially estimates the cost of replacing the tangible assets of business. The replacement cost
takes into account the market value of various assets required to be acquired to create the
infrastructure exactly similar to that of the company being revalued. Alternatively, this
methodology can also determine the money value which can be realize by selling off all tangible
assets of a company.

Transaction with subsidiary/holding company or associate companies

The Company carried out a number of transactions with related parties in the normal course of
business.
(as per Audited Accounts)
Types of 31.12.09 31.10.10
Sl Name of Parties Relationship 31.12.06 Taka 31.12.07 Taka 31.02.08 Taka
Transaction Taka Taka

Sales of
Sister
1 KY Steel Mills Ltd. CR Coil 321,634,359 485,945,210 351,131,079 173,788,110 368,362,261
Concern

Sister Loan and


2 Steel Accessories Ltd. 163,350,778 148,826,920
Concern Investment 39,855,679 62,134,505 81,226,526

Auditors’ certificate regarding allotment of shares to promoters or sponsor


shareholders for any consideration other than in cash.

This is to certify that as per share register and other relevant records maintained by KYCR Coil
Industries Limited, the company did not allot any shares for consideration other than in cash to
any shareholders including its promoters and/or sponsor shareholders up to 31 October 2010
except 65,120,000 bonus share.

Sd/-
Dated, Chittagong Hoda Vasi Chowdhury & Co
03 January 2011 Chartered Accountants

Material information which is likely to have an impact

There is no other material information which is likely to have an impact on the offering or
change the terms and conditions under which the offer has been made to the public.
SECTION VI
DIRECTORS AND OFFICERS
Information regarding directorship

Date of
Date of
Sl Age becoming
Name of Director Position expiry of
No. (Years) director for the
current term
first time

1 Managing 65 Since Inception *


Mr. Khalilur Rahman
Director
2 Mr. Salim Rahman Chairman 37 Since Inception *

3 Ms. Tahsina Rahman Director 29 13.07.2010 *

*According to Articles of Association of the company, one-third of the directors or if their


number is not three or multiple of three then the number nearest to one-third shall retire from
office by rotation at the Annual General Meeting.

Directors' involvement in other organization

Name of the directors Name of the Company Relationship


KDS Garments Ltd Chairman
KDS Apparels Ltd Chairman
KDS Hi-tech Garments (BD) Ltd Chairman
KDS Fashion Ltd Chairman
KDS Textile Mills Ltd Managing Director
Mr. Khalilur Rahman KDS Cotton Poly Thread Ind. Ltd Managing Director & Chairman
KY Steel Mills Ltd Chairman
Steel Accessories Ltd Chairman
KDS Logistics Ltd Chairman
Vortex Multi Ind. Ltd Chairman
Sykes Securities Ltd Director
KIY Steel Ind. Ltd. Chairman
KDS Garments Ltd Managing Director
KDS Apparels Ltd Managing Director
KDS Hi-tech Garments (BD) Ltd Managing Director
KDS Fashion Ltd Managing Director
KDS Textile Mills Ltd Director
KDS Accessories Ltd Chairman
KDS Poly Industries Ltd Chairman
Mr. Salim Rahman KDS Cotton Poly Thread Ind. Ltd Director
Steel Accessories Ltd Managing Director
KDS Logistics Ltd Managing Director
Vortex Multi Ind. Ltd Director
Sykes Securities Ltd Chairman
Ms. Tahsina Rahman N/A N/A
Family relationship among Directors and top five officers

Name Position Relationship


Mr. Khalilur Rahman MD Father of Mr. Salim Rahman
Mr. Salim Rahman Chairman Son of Mr Khalilur Rahman
Ms. Tahsina Rahman Directors Wife of Mr. Salim Rahman

Short bio-data of the directors

Mr. Khalilur Rahman, Managing Director


MR. KHALILUR RAHMAN is a seasoned and experienced businessman. He is running several
industrial units as their Managing Director viz. (1) KDS Garment Industries Limited (2) KDS
Cotton Poly Thread Industries Limited (3) KYCR Coil Industries Limited (4) KDS Textile Mills
Limited. Besides, he has got a enormous experience in various manufacturing sectors as a
Chairman viz., Garment Division, Accessories Division, Steel Division, IT Sector, Textile, Agro
processing Sector, Telecommunication Sector, Power Plant Sector, Shipping (Inland Container
Depot), Fuel & Oil Sector, Securities Sector, Banking Sector, Insurance Sector.

He has been rewarded different types of award from home and abroad for his valuable
contribution in industrial sector of Bangladesh i.e. (1) President Gold Trophy for Highest Export
in Readymade Garments from 1985 to 1998. (2) Supplier of the year 2005 Award Received
from WALMART, CANADA, and WALMART, UK GEORGE. (3) VENDOR EXCELLENCE AWARD - 2004
from Charming Shoppes, Inc. USA (4) Business Innovative Director, Texas, USA (5) Award of
KMART Apparels Corporation, USA 1998,1999 & 2000 etc.

A large number of non-profit and entirely charitable educational institutions has been founded
by Mr. Khalilur Rahman. He is a resourceful member of the company and enjoying his status as
a CIP which is recognized by Bangladesh Government. He is an ex-vice president of BGMEA
(Bangladesh Garment Manufacturer & Export Association).

Mr. Salim Rahman, Chairman

He has completed MBA from USA and acting as a Director in the company. He has been actively
involved with different sectors like Garment, Accessories, steel, IT, Textile, Agro processing,
telecommunication, Power plant, Shipping, Fuel & oil, Securities, Banking and Insurance.
Besides KDS Group, he is also working as a Managing Director viz., (1.) DK Power Plant Limited
(Proposed), (2) Raman CNG Co. Ltd., (3) SKY Securities Limited. He is also involved with many
social organizations and activities.

Ms. Tahsina Rahman, Director

She is a graduate from University of Science and Technology Center. Currently, she is doing her
MBA at IUB. She has approximately five years of experience with different organizations and
currently holding the responsibility as a director of the Company.

Credit Information Bureau (CIB) report

Neither the company nor any of its directors or shareholders who holds 5% or more shares in
the Paid in Capital of the issuer is loan defaulter in terms of the CIB report of Bangladesh Bank.
Description of senior executives and department heads

Name Designation Education Qualification Experience


MD The founder of
Mr. Khalilur Rahman B.Com (Management)
KDS Group
MBA from University of
Mr. Munir Hussain Khan Director & CEO
Phoenix, Arizona 17 Years
Graduate-Mechanical
Mr. Gurdeep Singh Head of Plant 29 Years
Engineer
Mr. Moddassar Ahmed Sr. General Manager- Chartered Accountant
14 Years
Siddique Finance & Accounts (FCA)
General Manager-
Mr. M.A. Chowdhury M.A. (Political Science) 10 Years
Sales & MKT
Plant Head- BSC in Engineering &
Mr. Amir Hossain
Galvanizing Plant Technology- BUET 25 Years
Section VII
Involvement of Directors and officers in certain legal
proceedings
No director or officer of the Company was involved in any of the following types of legal
proceedings in the last ten years:

(a) Any bankruptcy petition filed by or against company of which any officer or director of the
issuer company filing the Information Memorandum was a director, officer or partner at
the time of the bankruptcy.

(b) Any conviction of director, officer in a criminal proceeding or any criminal proceeding
pending against him.

(c) Any order, judgment or decree of any court of competent jurisdiction against any
director, officer, permanently or temporarily enjoining, barring, suspending or otherwise
limiting the involvement of any director or officer in any type of business, securities or
banking activities.

(d) Any order of the Securities and Exchange Commission, or other regulatory authority or
foreign financial regulatory authority, suspending or otherwise limiting the involvement of
any director or officer in any type of business, securities or banking activities.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Transaction with related parties

Neither any proposed transaction nor had any transaction during the last two years, between the
issuer and any of the following persons:

(a) Any director or executive officer of the issuer;

(b) Any director or officer;

(c) Any person owning 5% or more of the outstanding shares of the issuer;

(d) Any member of the immediate family (including spouse, parents, brothers, sisters, children,
and in-laws) of any of the above persons.

(e) Any transaction or arrangement entered into by the issuer or its subsidiary for a person who
is currently a director or in any way connected with a director of either the issuer company or
any of its subsidiaries/holding company or associate concerns, or who was a director or
connected in any way with a director at any time during the last three years prior to the
issuance of Information Memorandum.

(f) Any loan either taken or given from or to any director or any person connected with the
director, any loan taken from any such person who did not have any stake in the issuer, its
holding company or its associate concerns prior to such loan.
(g) Any director holding any position, apart from being a director in the issuer company, society,
trust, organization proprietorship or partnership firm.
Except the transactions shown under “Related Parties Transactions”, note -27 of audited
accounts 31 October 2010 and directors facilities shown hereunder.

Closing Closing
Balance Balance
Sl. Name of the Types of
Relationship as at as at
No Parties Transaction
31.10.2010 31.12.2009
Taka Taka
1 KY Steel Mills Ltd. Sister Concern Sales of CR Coil 368,362,261 173,788,110
Steel Accessories Loan and
2 Sister Concern 148,826,920 163,350,778
Ltd. Investment
Total 517,189,181 337,138,888

Directors' facilities

The Directors of KYCR does not enjoy any facilities except Board meeting fee and full time car
facilities .

EXECUTIVE COMPENSATION

Remuneration paid to top five salaried officers

Sl. From 01.01.10 to 31.10.10


Name Designation
No. Amount in Tk.
1 Mr. Munir Hussain Khan Director & CEO 20,90,000
2 Mr. Gurdeep Singh Plant Head 35,00,000
Mr. Moddassar Ahmed Sr. General Manager-
3 10,00,000
Siddique Finance & Accounts
General Manager-
4 Mr. M.A. Chowdhury 10,72,560
Sales & MKT
Plant Head- Galvanizing
5 Mr. Amir Hossain 7,37,800
Plant

Aggregate amount of remuneration paid to directors and officers

(As per audited accounts)


Amount paid Amount paid
Group 01.01.10 to 01.01.09 to
31.10.10 31.12.09
Directors’ Remuneration 320,000 384,000
Officers’ salaries, benefits & bonuses including 60,836,555 65,227,425
management emoluments

Remuneration paid to directors who was not an officer of the company

None of the directors enjoys any remuneration except board meeting fees.

Future compensation to Directors or Officers

There is no contract with any director or officer for future compensation.

Pay increase intention


The company is yet to finalize its personnel policy. However, Periodical review of salaries and
benefits of the employees will be made depending on the growth of the company’s operation.
OPTIONS GRANTED TO DIRECTORS, OFFICERS AND EMPLOYEES

The company has not granted any option to directors, officers or employees.

TRANSACTION WITH THE DIRECTORS AND SUBSCRIBERS TO THE MEMORANDUM

(a) The Directors and subscribers to the memorandum have not received any benefits
except board meeting fees, directly or indirectly during the last five years. The issuer also
has not received any assets, services or other considerations from its Directors and
subscribers to the memorandum expect fund against allotment of shares.

(b) No assets were acquired or are planned to be acquired from the Directors and
subscribers to the memorandum.

TANGIBLE ASSETS PER SHARE

Particulars 31-10-2010
Taka
Share Capital (As per B/S) 1,302,400,000
Revaluation Reserve 1430576602
Retained Earnings 1,139,748,194
General Reserve -
Net Assets 3,872,724,796
Less: Intangible Assets ( Preliminary Expenses) -
Net Tangible Assets 3,872,724,796
Total Ordinary Shares 130,240,000
Net tangible assets per share ( Tk. 10 per Share) 29.74

OWNERSHIP OF THE COMPANY’S SECURITIES AS ON 31ST OCTOBER 2010

Shares held by Directors/shareholders

Names of the Total No. of Shareholding


Sl. No Status
Shareholders Share Issued Position
1 Mr. Khalilur Rahman MD 12,000,000 9.21%
2 Mr. Salim Rahman Chairman 18,000,000 13.82%
3 Mr. Tahsina Rahman Director 10,000,000 7.68 %
KDS Hi - Tech Garments Shareholder
4 28,000,000 21.50 %
(BD) Ltd.
KDS Garments Industries
5 Shareholder 22,240,000 17.08 %
Ltd.
6 KIY Steel Industries Ltd. Shareholder 3,000,000 2.30%
7 KY Steel Mills Ltd. Shareholder 37,000,000 28.41 %
Total 130,240,000 100%
Shareholding structure for 5% or more as on 31 October 2010

Names of the Total No. of Shareholding


Sl. No Status
Shareholders Share Issued Position
1 Mr. Khalilur Rahman MD 12,000,000 9.21%

2 Mr. Salim Rahman Chairman 18,000,000 13.82%

3 Mr. Tahsina Rahman Director 10,000,000 7.68 %

4 KDS Hi - Tech (BD) Ltd. Shareholder 28,000,000 21.50 %


KDS Garments Industries
5 Shareholder 22,240,000 17.08 %
Ltd.
6 KY Steel Mills Ltd. Shareholder 37,000,000 28.41 %

Total 127,240,000

Securities owned by the officers

No officer own shares of the company as on 31 October 2010 except Mr. Khalilur Rahman ,
Managing Director.
Section VIII
DETERMINATION OF OFFERING PRICE
The Fair Value will be determined by the Issuer in consultation with Issue Manager on the basis
of assessment of market demand for the offered Equity Shares by the Book Building Process.
The face value of the Equity Shares is Tk. 10/- . Investors should read the following summary
along with the risk factors and the details about the Company and its financial statements.

Indicative Price for Book Building Purpose

The following Quantitative and major Qualitative factors should be considered in assessing the
Fair Price of the shares of KYCR Coil Industries Limited and accordingly the indicative price may
be quoted.

QUALITATIVE FACTORS

Professional Management

The management recruits, employs, trains and motivates a pool of employees who carry out the
operations at every layer of the organization. The process of manufacturing of KYCR products
are operated by skilled professionals who are of various backgrounds such as engineering, etc. It
also has experienced marketing team and technicians. Their activities are driven with the
direction from the board of directors who have long years of exposure in the industry. The
background and activities of the board of directors must also be taken into consideration as it
counts a great deal for the efficiency and effectiveness of business operations.

Capital Equipments

KYCR owns and employs modern, specialized and critical equipments which are essential to
execute projects effectively. KYCR has the Cold Rolling Plant that is one of the most advanced
plant in Bangladesh; imported from Germany. Besides, the Company uses brand new
machineries and equipments for production of the products.

Quality Control

KYCR employed skilled staff for maintenance of quality and improvement of such over the period
of time. Continuous improvement while eliminating waste has always been the target of the
functional individuals involved. The Company has ISO certification and maintains its standards
as per local as well as international requirements.

Brand Value

The company has already established the brand “Murgi” in the marketplace that is well accepted
by the consumers and presently being one of the strongest and renowned five major brands
known throughout the country. The brand “Murgi” has been the only choice of people in certain
parts of the country even though other brands play their roles in a competitive manner in other
territories across various regions in the country.
QUANTITATIVE FACTORS

KYCR Coil Industries Limited is a growing company and the relevant highlights have been
provided below:

Financial Year Turnover (Tk.) Profit after Tax Fixed Assets NAV per EPS
(Tk.) (Tk.) share
October -2010 (10 5,429,388,206 337,717,285 2,328,627,198 29.74 2.59
Months)
2009 4,348,942,559 251,527,033 953,004,172 32.32 3.86
2008 2,582,068,789 127,131,093 1,009,134,700 30.39 1.95
2007 2,117,127,407 106,646,477 667,122,786 27.81 1.64
2006 2,013,900,743 258,686,924 748,488,626 27.27 3.97
2005 3,354,160,882 180,636,178 842,461,940 25.80 2.77

The following methods have been applied to obtain the fair price. The Prices derived from each
method have been averaged in order to minimize influence of any unusual factor, if any, in
obtaining the weighted average price as under:

Amount
Particulars
(Tk.)
Method 1: Net Asset Value 29.74

Method 2: Historical Earnings based value per share 78.80

Method 3: Market Price based value per Share 123.02

Method 4: Valuation with reference to P/E of similar stocks 159.20

Method 5: Valuation with reference to P/BV of similar stocks 208.77

Average 119.90

Based on conservative estimate fair price of KYCR Coil Industries Limited stands at Tk. 119.90.
However considering the attractiveness for the investors the management of KYCR in
consultation with the issue manager expects its share price at Tk. 90/- each. However,
indicative price will be fixed on the basis of price quoted by the EIIs.

VALUATION AND THE PROCEDURES USED

Valuation is an estimation of the market value of an entity. It differs from an appraisal which
only takes tangible assets into account. However, it is important to consider the relevant factors
relating to the firm in order to derive a value, which is relatively close to the actual worth of the
company. The valuation for KYCR Coil Industries Limited has been carried out based on
accumulated information; taken from internal and external sources that are reliable.

Few different methods have been used to determine the value of the shares of KYCR Coil
Industries Limited under book building method, each of which provides different types of values
as they cover different aspects of the company’s current position and future prospects. In order
to avoid the effect of differences in results produced in the methods, we have taken average of
the results with weight assigned for each method. The management always considered using
approaches which are reasonable so as to arrive at a justified price of the shares of the
company. However, the interpretation of the pricing methods by the investors is very subjective
in nature and may vary from one to another.
CALCULATIONS OF METHODOLOGIES
Method 1: Net Asset Value

Particulars 31-10-2010
Taka
Share Capital (As per B/S) 1,302,400,000
Revaluation Reserve 1430576602
Retained Earnings 1,139,748,194
General Reserve -
Net Assets 3,872,724,796
Less: Intangible Assets ( Preliminary Expenses) -
Net Tangible Assets 3,872,724,796
Total Ordinary Shares 130,240,000
Net tangible assets per share ( Tk. 10 per Share) 29.74

Method 2: Historical Earnings based value


Earnings based Value method is also based on historical performance sourced from previous
audited financial statements and statistics from Dhaka Stock Exchange. The value is calculated
by taking average of periodic EPS during last five years eight months based on current share
capital. To arrive at earning based value average, EPS is multiplied by average P/E ratio of DSE
during last twelve months.

Earning based valuation are appropriate for any matured company. KYCR has already proved
their market potentiality, strength of company’s asset as well as growth of market share. Set
out below the calculation:
Year NPAT EPS
Oct-2010 (annualized) 405,260,742 3.11
2009 251,527,033 3.86
2008 127,131,093 1.95
2007 106,646,477 1.64
2006 258,686,924 3.97
Average EPS 2.91
Earning based value per share 78.80
(EPS X Average DSE P/E for last one year*)

Note: Average Price to Earnings ratio (P/E) for all companies listed with DSE during the same
one year period from September, 09 to October, 10 was 25.73 as illustrated in the calculation
below:
Month P/E Ratio Month P/E Ratio
November,09 25.00 May,10 27.73
December,09 25.65 June,10 24.08
January,10 29.35 July,10 24.55
February,10 30.58 August,10 25.81
March,10 27.59 September,10 26.29
April,10 29.88 October,10 28.46
Average 27.08
Source: DSE monthly Review
Valuation with reference to Similar Stocks
Following assumptions were taken to find out the representative Price/earning (P/E) for
valuation of KYCR shares:

1. Analyzed the distribution of P/E multiples of the companies listed with Dhaka stock exchange.

2. Steel & steel related manufacturing companies are taken as similar company.

3. To remove the impact of regular price variations, average price of last 12 months (November
2009 to October 2010) has been taken in determining P/E multiples. The price of the
comparables at Dhaka Stock Exchange is used for this purpose

Method: 3 Market price based value per share

Sl. No. Company Name 12 Month Avg. Price


1 S Alam Cold Rolled Steels Ltd. 780.65
2 BSRM Steels Limited 1679.83
Total 2460.48
Average (Face Value Tk. 100) 1230.24
Average (Converted face value of Tk. 10) 123.02

Method: 4 Valuation with reference to P/E of similar stocks

Sl. No. Company Name 12 Month Avg. Price EPS P/E Ratio
1 S Alam Cold Rolled Steels Ltd. 780.65 14.57 53.58
2 BSRM Steels Limited 1679.83 34.43 48.79
Total 2460.48 102.37
Average 1230.24 51.19

Taking the weighted average P/E of S. Alam Cold Rolled Steels Limited and BSRM Steels Limited
for the period of 01 November, 2009 to 31 October, 2010 (workings above) value stands at:

Average DSE P/E X Annualized EPS of KYCR = 51.19 X 3.11 = Tk. 159.20

Method 5: Valuation with reference to P/BV of similar stocks (P/BV)

12 Month NAV Per


Sl. No. Company Name Avg. Price Share P/BV Ratio
S Alam Cold Rolled Steels
1 Ltd. 780.65 111.13 7.02
2 BSRM Steels Limited 1679.83 8.62 194.88
Total 2460.48 201.9
Average 1230.24 100.95

P/BV ratio of BSRM Steels Limited is abnormally high. To represent conservative valuation,
BSRM Steels is excluded and only the weighted average P/BV ratio of S. Alam Cold Rolled Steels
Limited is considered. Accordingly value stands at:

Average P/BV ratio of S Alam Cold Rolled Steels Ltd X NAV of KYCR = 7.02 X 29.74 = Tk.
208.77
Determining price under Book Building Method:
Book Building is a process through which an issuer attempts to determine the price to offer its
security based on demand from institutional investors. Under the process, the price of an IPO
share will be determined through an automated bidding to be participated by different financial
institutions and then the share will be opened for the IPO participant at the cut-off price
determined during the book building process. The bidding will be handled through a uniform and
integrated automated system of the stock exchanges, or any other organization as decided by
the Commission, especially developed for book building method. The entire procedure of price
discovery under book building method is delineated below.

(a) The issuer/issue manager shall issue invitation to the eligible institutional investors, both in
writing and through publication in at least 5 (five) widely circulated national dailies, giving at
least 10 (ten) working days time, to attend the road show/presentation/seminar indicating time
and venue of such event. The invitation letter shall accompany an information document
containing all relevant information covering the proposed issue of the issuer. The eligible
institutional investors shall submit indicative price to the issuer/issue manager, signed jointly by
the Chief Executive Officer (CEO) and the Financial Analyst, highlighting the factors taken into
consideration in support of the indicative price, within the next 3(three) working days of the said
road show/presentation/seminar;

(b) The Information Document (ID) Shall be sent to the following institutions/ associations,
unless otherwise directed by the Commission, at least 5(five) working days prior to the road
show/ presentation/ seminar:

(i) Stock Exchanges


(ii) Bangladesh Association of Publicly Listed Companies (BAPLC)
(iii) Bangladesh Merchant Bankers’ Association (BMMA)
(iv) Bangladesh Association of Banks (BAB)
(v) Bangladesh Leasing and Finance Companies Association (BLFCA)
(vi) Bangladesh Insurance Association (BIA)
(vii) Registered asset management Companies;

(c) Participation of the representatives of the stock exchanges and Bangladesh Merchant
Bankers’ Association in the road show/ presentation/ seminar as observer.
(d) The issuer, in consultation with the issue manager, shall quote its own indicative price in the
prospectus based on the indicative prices so obtained from the eligible institutional investors:
Provided that the quote of the indicative price in the prospectus shall not exceed the arithmetic
mean of the price offers so obtained from the eligible institutional investors;
(e) The prospectus shall simultaneously be submitted to the Commission and the stock
exchanges along with the due diligence statements issued by all concerned;

(f) If any issue fails to get indicative prices from at least 15 (fifteen) eligible institutional
investors covering at least 3 (three) categories, including at least 5 (five) registered merchant
bankers, the whole process shall be cancelled, which may be repeated with prior permission of
the Commission.

(g) Rationale for the indicative price must be included in the prospectus i.e. the issuer is
required to disclose in detail about the qualitative and quantitative factors justifying the
indicative price;

(h) The indicative price shall be the basis for formal price building with an upward and downward
band of 20% (Twenty Percent) of indicative price within which eligible institutional investors
shall bid for the allocated amount of security.
(i) Eligible institutional investors bidding shall commence after getting consent from the
Commission for this purpose.

(j) Institutional bidding period shall be 2(two) successive working days, which may be changed
with the approval of the Commission.

(k) The issuer and the issue manager shall submit the status of bidding and the cut off price,
along with the draft prospectus, simultaneously to the Commission and the stock exchanges
within 3(three) working days from the closing day of the bidding.

(l) If institutional quota is not cleared at 20% (Twenty Percent) below indicative price, the issue
will be considered cancelled unless the floor price is further lowered within the face value of
security. Provided that, the issuer’s chance to lower the price shall not be more than once.

(m) Prospectus will be posted on the Websites of the Commission, stock exchanges, issue
manager and issuer at least 2 (two) weeks prior to the start of the bidding to facilitate investors
to know about the company and all aspect of offering.

(n) No institutional investor shall be allowed to quote for more than 10% (Ten Percent) of the
total security offered for sale, subject to maximum of 5 (Five) bids.

(o) The bidding will be handled through a uniform and integrated automated system of the stock
exchanges, or any other organization as decided by the Commission, especially developed for
book building method;

(p) The volume and value of bid at different prices will be displayed on the monitor of the said
system without identifying the bidder.

(q) The institutional bidders will be allotted security on pro-rata basis at the weighted average
price of the bids that would clear the total number of securities being issued to them.

(r) Institutional bidders shall deposit their bid with 20% (Twenty Percent) of the amount of bid
in advance to the designated bank account and the rest amount to settle the dues against
security to be issued to them shall be deposited within 5 (Five) working days prior to the date of
opening subscription for general investors.

(s) In case of failure to deposit remaining amount that is required to be paid by institutional
bidders for full settlement of the security to be issued in their favor, 50% (Fifty Percent) of bid
money deposited by them shall be forfeited by the Commission. The securities earmarked for
the bidder who defaulted in making payment shall be added to the general investor quota.

(t) General investors, which include mutual funds and NRBs shall buy at the cut-off price;

(u) There shall be a time gap of not more than 15 (fifteen) working days or as may be
determined by the Commission, between closure of bidding by eligible institutional investors and
subscription opening for general investors;

(v) Subscription for general investors shall remain open for the period as specified by the
Commission;

(w) General investors shall place their application through banker to the issue; and

(x) All application money shall be kept in a separate escrow account opened with a designated
bank with prior intimation to the Commission. Issuer will not be allowed to utilize such money
until all the process of issue is completed and Commission’s consent to this effect is obtained.
Section IX
Allotment, Subscription and Market
MARKET FOR THE SECURITIES BEING OFFERED

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

Dhaka Stock Exchange Limited


9/F, Motijheel C/A,
Dhaka-1000

and

Chittagong Stock Exchange Limited


CSE Buildng, 1080 Sk. Mujib Road
Agrabad, Chittagong-4100

Declaration about listing of shares with the stock exchange(s)

None of the stock exchanges(s), if for any reason, grants listing within 75 days from the closure
of subscription, any allotment in terms of this Information Memorandum shall be void and the
company shall refund the subscription money within fifteen days from the date of refusal for
listing by the stock exchanges, or from the date of expiry of the said 75 (seventy five) days, as
the case may be.

In case of non-refund of the subscription money within the aforesaid fifteen days, the company
directors, in addition to the issuer company, shall be collectively as well as separately liable for
refund of the subscription money, with interest at the rate of 2% (two percent) per month above
the bank rate, to the subscribers concerned.

The issue manager, in addition to the issuer company, shall ensure due compliance of the above
mentioned conditions and submit compliance report thereon to the Commission within seven
days of expiry of the aforesaid fifteen days time allowed for refund of the subscription money.

Trading and settlement

Trading and settlement regulation of the stock exchanges shall apply in respect of trading and
settlement of the shares of the Company.

DESCRIPTION OF SECURITIES OUTSTANDING OR BEING OFFERED

Dividend, voting and pre-emption rights

The Share Capital of the Company is divided into Ordinary Shares, carrying equal rights to vote
and receive dividend in terms of the relevant provisions of the Companies Act 1994 and the
Articles of Association of the company. All shareholders shall have the usual voting right in
person or by proxy in connection with, among others, election of Directors & Auditors and other
usual agenda of General Meeting – Ordinary or Extra-ordinary. On a show of hand, every
shareholder present in person and every duly authorized representative of a shareholder present
at a General Meeting shall have one vote and on a poll every shareholder present or by proxy
shall have one vote for every share held by him or her.

In case of any additional issue of shares for raising further capital the existing shareholders shall
be entitled to Right Issue of shares in terms of the guidelines issued by the SEC from time to
time.
Conversion and liquidation rights
In terms of provisions of the Companies Act 1994, Articles of Association of the Company and
other relevant rules in force, the shares of the Company are freely transferable. The Company
shall not charge any fee for registering transfer of shares. No transfer shall be made to a firm,
an infant or person of unsound mind.
Dividend policy

(a) The profit of the Company, subject to any special right relating thereto created or
authorized to be created by the Memorandum and subject to the provisions of the Articles
of Association, shall be divisible among the members in proportion to the amount of
capital paid-up on the shares held by them respectively.

(b) No large dividend shall be declared than is recommended by the Directors, but the
Company in its General Meeting may declare a smaller dividend. The declaration of
Directors as to the amount of Net profit of the Company shall be conclusive.

(c) No dividend shall be payable except out of the profits of the Company or any other
undistributed profits. Dividend shall not carry interest as against the Company.

(d) The Directors may from time to time pay the members such interim dividend as in their
judgment the financial position of the Company may justify.

(e) A transfer of shares shall not pass the right to any dividend declared thereon before the
registration of transfer.

(f) No limitation in payment of dividend is stipulated in any debt instrument or otherwise.

Other rights of stockholders


In terms of the provisions of the Companies Act 1994, Articles of Association of the Company
and other relevant rules in force, the shares of the Company are transferable. The Company
shall not charge any fee, other than Government duties for registering transfer of shares. No
transfer shall be made to a minor or person of unsound mind.
The Directors shall present the financial statements as required under the law & International
Accounting Standard. Financial statements will be prepared in accordance with the International
Accounting Standards consistently applied throughout the subsequent periods and present with
the objective of providing maximum disclosure as par law and International Accounting Standard
to the shareholders regarding the financial and operational position of the company. The
shareholders shall have the right to receive all periodical statement and reports, audited as well
as un-audited, published by the company from time to time.

The shareholder holding minimum of 10% shares of paid-up capital of the company shall have
the right to requisition extra ordinary General Meeting of the company as provided for the
section 84 of the Companies Act 1994.

DEBT SECURITIES

There is no debt securities issued or plan to issue by the company within 6 (six) months.
Section X
RISK FACTORS & MANAGEMENT PERCEPTIONS ABOUT THE RISKS
Investors should be aware that there are risks associated with a particular investment in the
company. These risks may result in loss of income or capital investment. Investors should
carefully consider all the risks and uncertainties associated to the company along with all the
information provided in this Information Memorandum before taking decision to invest in shares
of KYCR Coil Industries Limited.
1. Interest Rate
Fluctuation of the interest rates (Cost of borrowed funds) in a country affects the profitability as
well as liquidity position of a company. (It is relevant for the companies having loans/borrowings
from banks/other financial institutions and significant for those with large loans/borrowings.) A
favorable movement in the interest rates for the company results in positive effect on
profitability of that company and an adverse volatility in such rates results in a negative
consequence thereof.
Management Perception
Interest charges are incurred by the Company for different types of loans taken from
Banks/Financial Institutions and these charges are negotiated by the Company with the
respective loan providers at regular intervals. A very competitive rate is attained by the
Company as it has very well-established goodwill in the marketplace in terms of loan
repayments in time. The confidence level of the loan providers is raised by the management of
the Company as it pursues growth and prosperity in terms of sales, assets, and other positive
qualitative and quantitative factors on a gradual basis.
2. Foreign Exchange rate
The project may face some degree of foreign exchange rate fluctuation risk as the Company
imports raw materials against payment of foreign currency and exports the products for receipts
of the same. Devaluation in the local currency may have significant impact on the profitability of
the Company.
Management Perception
Hedging mechanisms are employed by the company on a regular basis. If the price of the
foreign currency appreciates against the local currency during import and/or depreciates during
export, there will be a nationwide impact which would lead to market adjustment in the end
product prices.

3. Industry Risk

a. Volatility in the Earnings


Raw materials for the steel mill is fully imported and price in the international market is always
volatile. Effect of volatility in price seriously affects the profitability of the company.

Management Perception
KYCR imports most of the raw materials from abroad and exposed to such kind of risk. However,
this risk would affect the industry as a whole and after a certain period of time, the costs are
adjusted in prices offered by all companies operating in the industry. Furthermore, the company
has continuous monitoring, reporting and control to make the exposure below or within the
standards set by the industry.

b. Market is highly competitive


Some of the competitors of the Company are larger than the Company and have vast financial
resources that may enable them to deliver products on more attractive terms or to invest large
amounts of capital into their business, including greater expenditure for better and more
efficient production capabilities. These competitors may limit the opportunity of the Company to
expand its’ market share and may compete with it on pricing of products. The business, financial
condition and prospects of the Company could be adversely affected if it is unable to compete
with its competitors and sell its products at competitive prices.
Management Perception
Few companies with famous brands are the key players in the industry. The Company markets
the brand “Murgi ” all over the country that currently has captured a significant percentage of
market share in the industry. Besides, it has established the brand name across various
territories in the country that is believed to be a positive indicator for the Company in order to
grasp more market shares in the near future.
4. Technology
The technology used for manufacturing of steel determines not only the quality of steel
produced but also the cost of production. The more sophisticated the manufacturing process, the
lower will be the cost of production and therefore, higher the profitability.
Management perception
Highly automated and competitive machineries are available with the company for the
manufacturing of steel. In Bangladesh, the Company has so far been one of the pioneers in
setting up Cold Rolled Mill with State of the Art European Technology for further processing of
the input materials. Moreover, the company has NOF plant that gives the Company a
competitive edge as galvanization of steel is carried out rarely by companies in Bangladesh.
5. Potential and Existing Government Regulations
The company operates under The Companies Act, Taxation Policy adopted by NBR, Regulations
of Securities and Exchange Commission (SEC) and rules adopted by other relevant regulatory
organizations. Any abrupt changes in the policies formulated by those bodies may leave adverse
impact on the business of the Company.
Management perception
Any adverse policy, rule or regulation imposed on the overall sector may affect the Company’s
operation and hence affect the profitability in turn. The management of the Company is aware of
the recent guidelines prescribed by all the relevant authorities and complies with such from time
to time whilst enhancing the performance of the Company.
6. Raw materials supply
Steady supply of raw materials is important to the steel industry since steel manufacturing is a
continuous process. Companies which have control on over supply of their raw materials are
more capable of being cost efficient than the others which do not possess such control. The
control on over supply could be in the form of long-term supply contracts with suppliers.

Management perception
Management has long years of experience in this arena and also they have maintained a very
strong positive relationship with various suppliers (Large Supplier Base) where raw materials are
sourced at competitive prices. Main raw material of KYCR is the Hot Rolled Sheet and Zinc which
are imported from different sources. Over the last decade, the company has enjoyed continuous
flow of supply of raw materials in time and it has nevertheless forecasted better improvement in
the near future. For ensuring regular supply, the Company has MOU with leading global
suppliers like POSCO and HYUNDAI.

7. Power and Other Utilities


Power is an important factor in the steel manufacturing industry. Interruption of power supply
affects the flow of steel manufacturing. Companies with uninterrupted power supply can get
competitive edge over their competitors if such supply is in shortage in the overall industry.
Management perception
The company has supply of power from PDB for 10 MW, 33 KV HT line for operation of the
factory. Besides, the company has captive power plant having capacity of 2 MW (approx.) which
is used for NOF plant to ensure uninterrupted continuous line production.

8. Working capital management


Due to the long working capital cycle of the steel industry, efficient working capital management
to be an important factor for steel manufacturers. The management of working capital is very
much crucial for the profitability of the Company.

Management perception
Company’s liquidity position is currently at satisfactory level and the management is constantly
preparing the working capital budgets at regular intervals & also monitoring the actual
movement in the working capital movement against the standards set. In case of any significant
and unexpected variation, the Company takes necessary action after identifying the permanent
and floating working capital separately.

9. Distribution network
Distribution channel in the supply chain is very crucial in terms of marketing of products among
its customers. Any flaw or bottleneck in the chain will ultimately affect the company’s
competitiveness in the marketplace and hence may also affect the profitability in turn.

Management Perception
The Company has more than 800 active/seasonal dealers in different belts across the country.
The Company believes that this network and the cordial relationships that it enjoys with the
dealers/distributors/agents, enables it to market and distribute its steel widely and efficiently all
over the country. Moreover from FY 2005 the Company has started to export CR Coil which
currently comprises about 15% of its total sales quantity.

10. History of non-operation


Since inception , the company did not experience any closure of operation except for the
requirement of maintenance.

11. Implementation of proposed New project


The company proposed to invest its IPO proceeds for implementation of its new facilities to
increase value added products. Any new project carries some inherent risks and may not be
successful or may take long time to secure sustained profitability.

Management’s Perception
KYCR started its commercial operation on 01 February 2002 and subsequently increased its
production capacity by smooth implementation of NOF Plant. It is expected that the proposed
expansion can be done smoothly based on experience of the sponsors in establishing project of
this kind.
Section XI
CORPORATE DIRECTORY

Registered Office KYCR COIL INDUSTRIES LIMITED


Factory: Juramtal, Baro Kumira, Sitakunda, Chittagong,
Bangladesh.
Head Office: 255 Nasirabad I/A, Chittagong 4211,
Bangladesh
Phone: 880 31 681241-4 | 682474-8 Fax: 880 31 682836 |
681398, Web: www.kdsgroup.net

Auditor Hoda Vasi Chowdhury & Co.


Delwar Bhaban (4th floor)
104, Agrabad C/A
Chittagong-4100

Manager to the Issue Alliance Financial Services Limited


Rahman Chamber (3rd floor)
12-13 Motijheel C/A, Dhaka- 1000
Tel: 9515468, 9515469
Fax: 88-02-9515467
web: www.allfin.org

Valuer Shafiq Basak & Co.


National House (1st floor)
109, Agrabad Comercial Area
Chittagong-4100
Tel: 880-031-711561
Fax: 880-031-723680
E-mail: shafiq_basak@ctpath.net

Credit Rating Credit Rating Information and Services Limited (CRISL)


Nakshi Homes (4th floor)
6/A Segunbagicha
Dhaka-100
Tell: 880-2-7173700-1
Fax:880-2-9565783
E-mail:crisl@bdonline.com

Company’s Compliance Mr. Moddassar Ahmed Siddique FCA


Officer CFO
Section XII
AUDITORS’ REPORT TO THE SHAREHOLDERS
OF
KYCR COIL INDUSTRIES LIMITED

We have audited the accompanying balance sheet of the KYCR Coil Industries Limited as at
31 October 2010 and the related income statement to the period from 1 January to 31 October
2010, statement of cash flow and statement of changes in equity for the period then ended
together with the notes numbering 1 to 35 annexed thereto. The preparation of these financial
statements is the responsibility of the Company’s management. Our responsibility is to express
an independent opinion on these financial statements based on our audit.

Scope:

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

Opinion:

In our opinion, the financial statements, prepared in accordance with Bangladesh Accounting
Standards (BAS), give a true and fair view of the state of the Company’s affairs as of 31 October
2010 and of the results of it’s operations and it’s cash flow for the period then ended and comply
with the Companies Act 1994, the Securities and Exchange Rules 1987 and other applicable laws
and regulations.

We also report that:

(a) we have obtained all the information and explanations which to the best of our
knowledge and belief were necessary for the purposes of our audit and made due
verification thereof;

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

(c) the Company’s balance sheet and profit and loss account and it’s cash flow dealt with
by this report are in agreement with the books of account and returns.

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

Sd/-
Chittagong, 3 January 2011 Chartered Accountants
Hoda Vasi Chowdhury & Co
KYCR COIL INDUSTRIES LIMITED
BALANCE SHEET
AS AT 31 OCTOBER 2010
31-Oct-10 31-Dec-09
ASSETS & PROPERTIES Notes Taka Taka

NON CURRENT ASSETS &


2,615,018,054 1,007,786,722
PROPERTIES
Property, Plant & Equipment 3.1 2,328,627,198 953,004,172
Capital Work-in-Progress 3.3 - 7,715,050
Investment 4 286,390,856 47,067,500
Preliminary Expenses 5 - -

CURRENT ASSETS & PROPERTIES 5,056,888,229 4,446,151,159


Inventories 6 2,306,672,032 1,971,870,331
Receivables 7 1,756,020,785 1,744,751,099
Due from Sister Concern 8 517,189,181 337,138,888
Advances, Deposits and
9 351,964,090 316,920,642
Prepayments
Cash and Bank Balances 10 125,042,141 75,470,199

TOTAL ASSETS & PROPERTIES Taka 7,671,906,283 5,453,937,881

SHAREHOLDERS' EQUITY &


LIABILITIES
SHAREHOLDERS' EQUITY 3,872,724,796 2,104,430,909
Share Capital 11 1,302,400,000 651,200,000
General Reserve 12 - 202,085,763
Revaluation Reserve 13 1,430,576,602 -
Un-appropriated Profit 1,139,748,194 1,251,145,146

CURRENT LIABILITIES 3,799,181,487 3,349,506,972


Current Portion of Long Term Loan 14 - 126,220,207
Creditors and Accruals 15 114,514,696 13,087,676
Short Term Loan 16 3,395,411,672 2,918,975,130
Income Tax Provision 17 289,255,119 291,223,959
Taka 7,671,906,283 5,453,937,881

NET ASSETS VALUE PER SHARE


28 29.74 323.16
(Basic)

NET ASSETS VALUE PER SHARE (Restated) 29.74 16.16


CONTINGENT LIABILITIES &
34
COMMITMENTS
These financial statements should be read in conjunction with the annexed notes
and were approved by the Board of Directors on 02 January 2011
and were signed on its behalf by :

Sd/- Sd/- Sd/-


COMPANY SECRETARY
MANAGING DIRECTOR
DIRECTOR

Signed in terms of our separate report of even date annexed


Sd/-
Chittagong, 3 January 2011 CHARTERED ACCOUNTANTS
KYCR COIL INDUSTRIES LIMITED
INCOME STATEMENT
FOR THE PERIOD FROM 1 JANUARY TO 31 OCTOBER 2010
31-Oct-10 31-Oct-09
Notes Taka Taka

Net Turnover 18 5,429,388,206 3,647,818,018


(4,782,515,074
Cost of Goods Sold 19 (3,283,839,993)
)
Gross Profit 646,873,132 363,978,025
Operating Expenses
Administrative Expenses 20 (37,038,571) (23,165,331)
Selling and Distribution Expenses 21 (38,931,647) (6,500,898)
Trading Profit 570,902,914 334,311,796
Financial Expenses 22 (25,503,479) (939,037)
Gross Operating Profit 545,399,435 333,372,759
Amortization of Preliminary Expenses 5 - (527,439)
Profit after amortization of
545,399,435 332,845,320
Preliminary Expenses
Other Income 25 5,395,907 2,778,077
Net Operating Profit before WPPF 550,795,342 335,623,397
Provision for WPPF (27,539,767) -
Net Operating Profit before Income
523,255,575 335,623,397
Tax
Provision for Income Tax 17 (185,538,290) (125,858,774)
Profit after Income Tax 337,717,285 209,764,623

Earning Per Share (Restated) 29 2.59 1.61

Earning Per Share (Annualized) 3.11 1.93

These financial statements should be read in conjunction with the annexed notes
and were approved by the Board of Directors on 02 January 2011
and were signed on its behalf by :
Sd/- Sd/-
Sd/-
COMPANY SECRETARY
MANAGING DIRECTOR
DIRECTOR

Signed in terms of our separate report of even date annexed


Sd/-
Chittagong, 03 January 2011 CHARTERED ACCOUNTANTS
KYCR COIL INDUSTRIES LIMITED
CASH FLOW STATEMENT
FOR THE PERIOD ENDED 31 OCTOBER 2010
31-Oct-10 31-Oct-09
Notes Taka Taka
CASH FLOW FROM OPERATING ACTIVITIES
Cash received from customers & others 8,15,18,25 5,328,621,073 3,916,956,486
6,7,9,17,19,20,2
Cash paid to suppliers & employees (5,338,199,439) (3,191,355,982)
1
Cash received / (payment) from short term bank loan 15 476,436,542 (119,628,096)
Financial Expenses 21 (25,503,479) (939,037)
Cash Inflow / (Outflow) from Operating Activities 441,354,697 605,033,371

CASH FLOW FROM INVESTING ACTIVITIES


Purchase of Fixed Assets 3.1 (33,954,242) (54,412,030)
Addition of Capital Work in Progress 3.3 7,715,050 (5,104,550)
Investment 4 (239,323,356) (98,659,191)
Cash Inflow / (Outflow) from Investing Activities (265,562,548) (158,175,771)

CASH FLOW FROM FINANCING ACTIVITIES


(Repayment) / Receipt of Term Loan 14 (126,220,207) (428,689,483)
Cash Inflow / (Outflow) from Financing Activities (126,220,207) (428,689,483)

Net Increase/ (Decrease) in Cash & Cash Equivalents Taka 49,571,942 18,168,117

Cash and Cash Equivalents at the beginning of the period 10 75,470,199 47,212,862

Cash and Cash Equivalents at the end of the period Taka 125,042,141 65,380,979

Operating Cash Inflow / (Outflow) Per Share (Basic) 30 3.39 92.91

Operating Cash Inflow / (Outflow) Per Share (Restated) 3.39 4.65

These financial statements should be read in conjunction with the annexed notes
AUDITORS' REPORT TO THE SHAREHOLDERS
See Annexed Report
Sd/- Sd/- Sd/-
COMPANY SECRETARY DIRECTOR MANAGING DIRECTOR
KYCR COIL INDUSTRIES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD 31 OCTOBER 2010
Amount in Taka
General Revaluation Unappropriated
Particulars Share Capital Total Equity
Reserve Reserve Profit

Balance at the beginning of the period 651,200,000 202,085,763 - 1,251,145,146 2,104,430,909


Net Profit (after tax) transferred from Profit &
- - - 337,717,285 337,717,285
Loss Account

Revaluation Reserve from Revaluation Surplus - - 1,430,576,602 - 1,430,576,602

Bonus Share(Unappropriated Profit) 449,114,237 - - (449,114,237) -

Bonus Share(General Reserve) 202,085,763 (202,085,763) - - -


Balance at the end of the period 1,302,400,000 - 1,430,576,602 1,139,748,194 3,872,724,796

FOR THE PERIOD 31 OCTOBER 2009


Amount in Taka
Tax Holiday Unappropriated
Particulars Share Capital Total Equity
Reserve Profit
Balance at the beginning of the period 651,200,000 202,085,763 999,618,113 1,852,903,876
Net Profit (after tax) transferred from Profit &
- - 209,764,624 209,764,624
Loss Account
Balance at the end of the period 651,200,000 202,085,763 1,209,382,737 2,062,668,500

These financial statements should be read in conjunction with the annexed notes
AUDITORS' REPORT TO THE SHAREHOLDERS
See Annexed Report
Sd/- Sd/- Sd/-
COMPANY SECRETARY DIRECTOR MANAGING DIRECTOR
KYCR COIL INDUSTRIES LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 OCTOBER 2010
1 THE COMPANY & IT'S OPERATIONS
The Company was incorporated in Bangladesh on 04 th November 1995 as a Private Company registered under the
Companies Act, 1994 bearing registration number CHC - 2071 of 1995. The Company’s Registered office is at 1,
Hajji Amir Ali Chowdhury Road, Khatungonj - Chittagong with factory office at Jouramtall, Bara kumira,
Sitakunda. The main objectives of the company is to own and establish mills, factories and workshop for
manufacturing CR Coil, CI Sheet, Galvanizing Sheet, Plates etc. of all kinds and descriptions and to purchase or
import raw materials to manufacture the same and its by-products and marketing the products and by-products
locally and internationally. The Company started commercial production on 1 st February 2002. Subsequently the
Company was converted into Public Limited Company, along with the subdivision of face value of shares from Tk
100 to Tk 10 each and enhancement of Authorized Capital from Tk 1,000,000,000 to Tk 5,000,000,000 as per
special resolution passed in the Board of Directors meeting held on 31 July 2010.

2 SUMMARY OF SIGNIFICANT ACCOUNTING AND VALUATION POLICIES

2.1 Basis of preparation and presentation of the financial statements


The financial statements have been prepared and the disclosures of information made in accordance with the
requirements of the Companies Act 1994 and in compliance with the International Accounting Standards (IASs)
adopted by the Institute of Chartered Accountants of Bangladesh (ICAB), Bangladesh Accounting Standard (BAS)
& Bangladesh Financial Reporting Standard (BFRS). The balance sheet and profit & loss account have been
prepared according to BAS 1 “Presentation of Financial Statement” based on accrual basis of accounting
following going concern assumption under Generally Accepted Accounting Principles (GAAP) in Bangladesh and
cash flow statement according to BAS 7 “Cash Flow Statement”.

2.2 Accounting convention and assumption


The financial statements are prepared in accordance with the historical cost convention.

2.3 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 BAS 1 Preparation of Financial Statements. The previous years figures were prepared
according to the same accounting principles. Compared to the previous period/year, there were no
significant changes in the accounting 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.
2.4 Application of Standards

The following BASs are applied to the financial statements for the year under review:

BAS 1 Presentation of Financial Statements


BAS 2 Inventories

BAS 7 Cash Flow Statements


BAS 8 Accounting policies, changes in accounting estimates and errors
BAS 10 Events after the Balance Sheet date
BAS 12 Taxation
BAS 16 Property, Plant & Equipment
BAS 18 Revenue
BAS 24 Related Party Disclosures
BAS 33 Earnings Per Share
BAS 34 Interim Financial Reporting
BAS 37 Provisions, Contingent Liabilities and Contingent Assets
2.5 Property, Plant and Equipment
Property, Plant and Equipment are shown at historical cost less depreciation thereon.
Depreciation is charged on diminishing balance method on all Property, Plant & Equipment
except land. Depreciation on current period’s addition is charged for the full period
irrespective of the date(s) of acquisition. Revalued amount was incorporated on 31 st August
2010 and depreciation will be charged from that date. Depreciation on revalued amount for
two months has been adjusted with revaluation surplus.
Rates of depreciation on various categories of Property, Plant and Equipment are as follows:
Particulars Rate of Depreciation
Factory Building 15%
Plant & Machinery 10%
Equipment & Appliance 10%
Furniture & Fixtures 10%
Motor Vehicles 10%

2.6 Inventories
Inventories are stated at the lower of cost or net estimated realizable value in compliance with
the requirements of para 21 and 25 of BAS 2.

Category of Inventories Basis of valuation


Stores and Spares Weighted average (moving average) cost
Inventories-in-Trade:
Raw Materials Weighted average cost

Finished Products At lower of cost or net estimated realizable value

Stores and Spares Cost value

Materials-in-Transit At cost

2.7 Trade Receivables


Trade Receivables are recognized at cost which is the fair value of the consideration given.

2.8 Cash and cash equivalents

Cash and cash equivalents include cash in hand, cash at banks, term deposit, government Treasury bill
which are available for use by the company without any restrictions.

2.9 Foreign currency transaction

Foreign currency transactions are recorded at the applicable rates of exchange ruling at the transaction
date in accordance with BAS 21 the effect of changes in Foreign Exchange rates. Foreign currency
transactions are translated at the exchange rate ruling on the date of transaction.

2.10 Creditors and Accrued Expenses

2.10.1 Trade and other payables

Liabilities are recorded at the amount payable for settlement in respect of goods and services received by
the company.
2.10.2 Provision

The preparation of financial statements is in conformity with Bangladesh Accounting Standards BAS 37
provisions, contingent liabilities and contingent assets requires management to make estimates and
assumptions that affect the reported amounts of revenues and expenses, assets and liabilities during and
at the date of financial statements.

In accordance with the guidelines as prescribed by BAS 37 provisions were recognized in the following
situation:

 When the company has a present obligation as a result of past events;


 When it is probable that an out flow of resources embodying economic benefits will be
required to settle the obligation; and
 Reliable estimates can be made of the amount of the obligation.

We have shown the provisions in the balance sheet at an appropriate level with regard to an adequate
provision for risks and uncertainties. An amount recorded as a provision represented the best estimate of
the probable expenditure required to fulfill the current obligation on the balance sheet date.

Other provisions are valued in accordance with BAS 37 Provisions, Contingent Liabilities and Contingent
Assets and, if required, in accordance with BAS 19 Employee Benefits. Other Provisions comprise all
recognizable risks from uncertain liabilities and anticipated losses from pending transactions.

2.11 Taxation

2.11.1 The Company was allowed tax holiday for a period of five years from 1 st January 2002 to
31 December 2006.
2.11.2 Appropriate provision has been made for Income Tax on the Operating income of
the Company during the period under report.

2.11.3 Deferred income tax


Deferred Tax has not been considered consistently.

2.12 Contingent liabilities and assets


Contingent liabilities are current or possible obligations, 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 BAS 37 Provisions, Contingent Liabilities and
Contingent Assets they are disclosed in note - 34 to the financial statements.
2.13 Revenue Recognition
In compliance with the requirements of BAS 18 Revenue, revenue is recognized only when; Sale is
completed and final.
2.14 Financial Expenses

According to BAS 23 borrowing cost that are directly attributable to the acquisition, construction or
production of qualifying assets from part of the cost of that assets, other borrowing cost are recognized as
an expenses. A qualifying asset is an asset that necessarily takes a substantial period of time to get ready
for its intended use or sale. Inventories that require a substantial period of time to bring to a salable
condition can be regarded as qualifying assets for the purposes of this standard.

Imported HR Coil of various thickness and sizes stored in bonded warehouse for long period of time for
uninterrupted production and supply. Accordingly the financial expenses incurred for procurement of raw
materials have been included in “Cost of Raw Materials” as directly attributable cost in conformity with
the BAS 2 and BAS 23.

On the other hand, financial expenses of indirect nature have been charged under “Financial Expenses”.
2.15 Earning per share

The Company calculates Earning per Share (EPS) in accordance with BAS 33. Earning per Share has been
shown on the face of Profit and Loss Account.

2.15.1 Basic earnings

The Company calculates earnings for the year attributable to the ordinary share holders. As there is no
preference dividend, minority interest or extra ordinary items, the net profit after tax for the period has
been considered as fully attributable to ordinary shareholders.

2.15.2 Basic earning per share

This has been calculated by dividing the basic earnings by the number of ordinary shares outstanding
during the period under report.

2.15.3 Annualize earning per share

The financial period of the company covers from 01 January to 31 October 2010. For better
understanding compare with yearend proportionate of annual earnings per share has been disclosed.

2.16 Revaluation of Fixed Assets


The increased value of assets arised due to revaluation of assets has been credited to equity under
heading of Revaluation Surplus / Reserve as per BSA - 16: Property Plant & Equipment.

2.17 Workers Profit Participation Fund


The Company makes provision @ 5% on Net Operating Profit with effect from 01 January 2010 in
compliance with the Companies Profits (Workers Participation) Act, 1968 as amended in 1985.

2.18 Reporting Period


The financial period of the Company covers from 01 January to 31 October 2010.
3 PROPERTY, PLANT & EQUIPMENT

3.1 Operating Fixed Assets - at Cost Less Accumulated Depreciation - note 2.5
Cost (Amount in Taka) Depreciation (Amount in Taka)
Delet Written
Depreci
Opening Closing Opening ion Closing Down
Addition Deletion ation Charge
Particulars Balance Balance Balance Durin Balance Value as on
During During Rate During
as on as on as on g as on 31.10.2010
the Year the Year (%) the Year
01.01.2010 31.10.2010 01.01.2010 the 31.10.2010 (Taka)
Year
Land and Land Development:
Free Hold Land 28,839,503 1,768,450 - 30,607,953 - - - - 30,607,953
Building:
Factory Building 552,221,425 19,101,051 - 571,322,476 15% 350,235,736 27,635,843 - 377,871,579 193,450,897
Plant & Machinery:
Plant & Machinery 1,310,880,899 8,468,157 - 1,319,349,056 10% 623,408,271 57,995,064 - 681,403,335 637,945,721
1,310,880,899 8,468,157 - 1,319,349,056 623,408,271 57,995,064 - 681,403,335 637,945,721
Equipment & Appliance:
Office Equipment 1,104,504 11,800 - 1,116,304 10% 588,817 43,957 - 632,774 483,530
Computer 5,011,414 267,600 - 5,279,014 10% 2,051,004 269,001 - 2,320,005 2,959,009
Electric Installation & Air
24,394,479 40,440 - 24,434,919 10% 11,000,834 1,119,507 - 12,120,341 12,314,578
Conditioner
Fire Extinguisher 264,160 - - 264,160 10% 144,748 9,951 - 154,699 109,461
Weight Scale 1,050,000 - - 1,050,000 10% 504,801 45,433 - 550,234 499,766
31,824,557 319,840 - 32,144,397 14,290,204 1,487,849 - 15,778,053 16,366,344
Furniture & Fixtures 3,274,851 833,810 - 4,108,661 10% 1,707,445 200,101 - 1,907,546 2,201,115
Motor Vehicles 26,463,457 3,462,934 - 29,926,391 10% 10,858,864 1,588,961 - 12,447,825 17,478,566
31.10.2010 Taka 1,953,504,692 33,954,242 - 1,987,458,934 1,000,500,520 88,907,818 - 1,089,408,338 898,050,596
31.12.2009 Taka 1,893,784,841 59,719,851 - 1,953,504,692 884,650,141 115,850,379 - 1,000,500,520 953,004,172

31-Oct-10 31-Oct-09
Basis
3.2 Depreciation Allocated to: Taka Taka
Factory Overhead - note 19.2 80,017,036 103,771,363 90%
Administrative Expenses - note 20 4,445,391 5,765,076 5%
Selling Expenses - note 21 4,445,391 5,765,076 5%
Taka 88,907,818 115,301,515 100%

31-Oct-10 31-Dec-09
3.3Capital Work-in-Progress Taka Taka
Factory Building - 7,615,050
Power Plant - 100,000
Taka - 7,715,050
3.4 Revaluation Reserve
Cost (Amount in Taka) Depreciation (Amount in Taka)
Written
Depr Openin Deleti
Revaluatio Closing Down
Opening Closing eciat g on
n Deletion Charge Balance Value as
Particulars Balance Balance ion Balance Durin
Surplus During During as on on
as on as on Rate as on g
During the Year the Year 31.10.201 31.10.2010
01.01.2010 31.10.2010 (%) 01.01.20 the
the Period 0 (Taka)
10 Year
Land and Land
Development:
Free Hold Land - 742,339,047 - 742,339,047 - - - - 742,339,047
Building:
Factory Building - 505,862,234 - 505,862,234 15% - 12,646,556 - 12,646,556 493,215,678
Plant & Machinery:
Plant & Machinery - 184,814,393 - 184,814,393 10% - 3,080,240 - 3,080,240 181,734,153
- 184,814,393 - 184,814,393 - 3,080,240 - 3,080,240 181,734,153
Equipment & Appliance:
Office Equipment - - - - 10% - - - - -
Computer - - - - 10% - - - - -
Electric Installation & Air
- 12,465,216 - 12,465,216 10% - 207,754 - 207,754 12,257,462
Conditioner
Fire Extinguisher - - - - 10% - - - - -
Weight Scale - 1,031,148 - 1,031,148 10% - 17,186 - 17,186 1,013,962
- 13,496,364 - 13,496,364 - 224,940 - 224,940 13,271,424
Furniture & Fixtures - - - - 10% - - - - -
Motor Vehicles - 16,576 - 16,576 10% - 276 - 276 16,300
31.10.2010 Taka - 1,446,528,614 - 1,446,528,614 - 15,952,012 - 15,952,012 1,430,576,602

3.5 Revaluation Surplus


Represent revaluation surplus arised in accordance with the report on revaluation of assets carried out by Shafiq Basak & Co,
Chartered Accountants.
31-Oct-10 31-Dec-09
Taka Taka
4 INVESTMENT

KDS Logistics Ltd. 200,000 Shares @ Tk 100 each (non quoted) 20,000,000 20,000,000
Al - Arafah Islami Bank Ltd. - note 4.1 259,110,856 27,067,500
PHP First Mutual Fund 728,000 Shares @ Tk 10 each (non quoted) 7,280,000 -
Taka 286,390,856 47,067,500

4.1 Face Value of 10,853,700 nos shares @ Tk 10 each of Al - Arafah Islami Bank Ltd. is Tk 108,537,7000 and
Market Value as on that date Tk 696,807,540.

4.2 PHP First Mutual Fund was listed on 29 November 2010.

5 PRELIMINARY EXPENSES

Preliminary Expenses - 593,574


Amortized during the period - (593,574)
Taka - -

Amortization of Preliminary Expenses during the period ended on 31.10.2009 was Tk 527,439 is shown in
Income Statement.

6 INVENTORIES

Stores & Spares - note 6.1 30,971,989 32,737,443


Raw Materials in Stock - note 6.2 1,418,745,369 1,225,708,906
Stock - in - transit - note 6.3 562,647,194 568,237,721
Finished Goods - note 6.4 294,307,480 145,186,261
Taka 2,306,672,032 1,971,870,331

6.1 Stores & Spares - note 6

Stores & Spares 30,971,989 32,737,443


It includes Mechanical, Electrical & Consumable
Tk 30,971,989 32,737,443
Items

6.2 Raw Materials in Stock - note 6 Qty in MT

Direct Materials 19,662.85 1,407,495,793 1,220,894,870


Indirect Materials - 11,249,576 4,814,036
Indirect Materials are Consumable
19,662.85 Tk 1,418,745,369 1,225,708,906
Items
6.3 Stock - in - transit - note 6

Direct Materials 517,099,333 529,663,728


Indirect Materials 45,547,861 38,573,993
Tk 562,647,194 568,237,721
6.4 Finished Goods - note 6

Finished Goods 4,050.15 294,307,480 145,186,261


294,307,480 145,186,261
7 RECEIVABLES

Trade Receivable 1,751,347,222 1,742,629,834


Interest Receivable 4,673,563 2,121,265
Taka 1,756,020,785 1,744,751,099
i) Receivables are unsecured but considered good.
ii) There have been no receivables outstanding for the period exceeding six months.
iii) There is no such debt due by or to directors or other officers of the Company.
iv) Details of Trade Receivables are shown in Annexure - A.

8 DUE FROM SISTER CONCERN

Due from KY Steel Mills Ltd. 368,362,261 173,788,110


Due from Steel Accessories Ltd. 148,826,920 163,350,778
Taka 517,189,181 337,138,888

These represents the balancing amount receivables from sister concern on account of:
i) CR Product Sales to KY Steel Mills Ltd.
ii) CR Product Sales & Temporary Loan paid to Steel Accessories Ltd.

31-Oct-10 31-Dec-09
Taka Taka

9 ADVANCES, DEPOSITS AND PREPAYMENTS

Advances - note 9.1 339,004,802 307,045,574


Deposits - note 9.2 8,212,094 7,407,011
Prepayments - note 9.3 4,747,194 2,468,057
Taka 351,964,090 316,920,642

9.1 Advances - note 9


Advance to employee 420,545 388,437
Advance Against Supplies 6,151,300 -
Advance Against Expenses - 10,000,000
Advance Income Tax 112,180,629 167,507,127
VAT Current A/C 159,105,460 127,287,642
Earnest Money 170,630 1,862,368
Advance for Share Purchase 57,564,226 -
Alliance Financial Services 1,000,000 -
Advance to others 2,412,012 -
Tk 339,004,802 307,045,574
i) All the advances and deposits amount is considered good and recoverable.
ii) There is no agreement amount due from directors or officers of the Company.
iii) Represents the VAT paid on imported raw materials at the import stage but yet to be adjusted.
iv) Advance is paid to SKYS securities & Union capital Ltd. for purchase of Al-Arafah Islami Bank shares.

9.2 Deposits - note 9


Bakhrabad Gas System Ltd. 1,667,825 1,294,028
Bangladesh Telecommunication Company Ltd. 10,000 10,000
Power Development Board Chittagong 6,000,000 6,000,000
Bangladesh Oxygen Corporation 22,983 22,983
Bangladesh Railway 60,000 60,000
Security Money-Grameen Phone 20,000 20,000
Security Money- Ansar & VDP 431,286 -
Tk 8,212,094 7,407,011

i) All are security deposits against contractual services to be provided by the respective institutions.

9.3 Prepayments - note 9


Pragati Insurance Company Ltd. (from 01.05.2010 to 30.04.2011) 3,663,525 2,442,373
BSTI CM Licence Fee (from 01.07.2009 to 30.06.2012) 1,083,669 -
Northern Insurance Ltd. - 25,684
Tk 4,747,194 2,468,057

10 CASH AND BANK BALANCES

Cash in Hand
Cash in hand at Head Office 384,009 480,142
Cash in hand at Factory 247,418 237,124
631,427 717,266

Cash at Bank - note 10.1 120,113,247 72,209,815


Foreign Currency Accounts - note 10.2 4,297,467 2,543,118
124,410,714 74,752,933
Taka 125,042,141 75,470,199

31-Oct-10 31-Dec-09
Taka Taka
10.1 Balances with Schedule Banks - note 10
Arab Bangladesh Bank Ltd., Anderkilla Branch 3,023,707 831,578
Bangladesh Krishi Bank Ltd., Tea Board Branch 4,500 -
Bank Asia Limited, Agrabad Branch 261 836
Bank Asia Limited, CDA Avenue Branch 454,733 1,906,878
Bank Alfalah Limited, Chittagong Branch 67,215 68,485
Dutch-Bangla Bank Ltd., Agrabad Branch 3,169,683 2,154,732
Dhaka Bank Ltd., Agrabad Branch 104,292 93,672
EXIM Bank Ltd., Khatungonj Branch 34,100 -
EXIM Bank Ltd., Agrabad Branch 56,042 3,841
EXIM Bank Ltd., Sitakunda Branch 2,956,172 99,000
Eastern Bank Ltd., Agrabad Branch 104,130 25,775
HSBC Ltd., Chittagong Branch 1,763,423 3,890,651
Habib Bank Limited, Laldighi Branch 22,924 32,003
ICB Islami Bank Ltd,. 500 -
IFIC Bank Limited, Agrabad Branch 216,663 1,436,139
Islami Bank Bangladesh Ltd., Khatungonj Branch 584,452 -
Janata Bank Limited, Baijid Branch 767,555 405,583
Janata Bank Limited, Asadgonj Branch 170,389 170,964
Janata Bank Limited, Kumira Branch 92,686 1,965,386
Jamuna Bank Ltd., Agrabad Branch 3,113 3,688
Jamuna Bank Ltd., Khatungonj Branch 294,438 12,165
Mercantile Bank Ltd., Khatungonj Branch 2,047,807 -
Mutual Trust Bank Ltd., Agrabad Branch 813,450 972,420
Mutual Trust Bank Ltd., CDA Avenue Branch 37,505 -
National Bank Ltd., Khatungonj Branch 4,196,018 -
NCC Bank Ltd., Agrabad Branch 1,913,915 25,166
NCC Bank Ltd., Jubilee Road Branch 3,725 -
One Bank Ltd, Khatungonj Branch 1,605,750 -
Premier Bank Ltd.,Khatungonj Branch 4339 -
Prime Bank Ltd., Agrabad Branch 64,415 64,990
Prime Bank Ltd., Laldighi Branch 7,777,436 1,691,865
Pubali Bank Ltd., Khatungonj Branch 551,073 4,784,503
South East Bank Ltd., Khatungonj Branch 484,095 68,985
Social Investment Bank Ltd., Agrabad Branch 2,502 12,547,786
Social Investment Bank Ltd., Khatungonj Branch 3,705 -
Sonali Bank Ltd., Agrabad Branch 2,689,345 152,026
State Bank of India, Agrabad Branch 482,746 72,787
Standard Bank, Khatungonj Branch 196,400 -
Standard Chartered Bank, Agrabad Branch 1,253,482 515,310
Shahjalal Islami Bank Ltd., Khatungonj
320,191 74,909
Branch
The City Bank Ltd., Khatungonj Branch 793,493 1,003,326
The Trust Bank Ltd., Agrabad Branch 187,143 40,246
United Commercial Bank Ltd., Agrabad Branch 2,271,227 1,325,204
Uttara Bank Ltd., Khatungonj Branch 86,818 4,655
Fixed Deposit Receipts 78,435,689 35,764,261
Tk 120,113,247 72,209,815
10.2 Foreign Currency Accounts - note 10
HSBC Ltd., Chittagong Branch 1,181,686 2,543,118
Standard Charterd Bank., Chittagong Branch 3,115,781 -
Tk 4,297,467 2,543,118
31-Oct-10 31-Dec-09
Taka Taka
11 SHARE CAPITAL

11.
Authorized
1
Number
Ordinary Shares of Tk 10 1,000,000,00
500,000,000 5,000,000,000
each 0
1,000,000,00
Taka 5,000,000,000
0
11.
Issued, subscribed and paid-up
2
Ordinary Shares of Tk 10
130,240,000 1,302,400,000 651,200,000
each
Taka 1,302,400,000 651,200,000

11.3 Position of Shares holding


31-Oct-10 31-Dec-09
Name of the Shareholders
% Taka % Taka

Al - Haj Khalilur Rahman 9.21 120,000,000 9.21 60,000,000

Mr. Salim Rahman 13.82 180,000,000 13.82 90,000,000

Mrs. Tahsina Rahman 7.68 100,000,000 7.68 50,000,000

Mr. S.M. Shamim Iqbal - - 6.14 40,000,000

Mrs. Hasina Iqbal - - 6.14 40,000,000

KDS Hi - Tech Garments (BD) Ltd. 21.50 280,000,000 21.49 140,000,000

KDS Garment
17.08 222,400,000 17.07 111,200,000
Industries Ltd.

KIY Steel Industries Ltd. 2.30 30,000,000 2.30 15,000,000

KY Steel Mills Ltd. 28.41 370,000,000 16.15 105,000,000

Total 100.00 1,302,400,000 100.00 651,200,000

11.4 Classification of Shareholders by holding


Holdings No. of Holders No. of Shares Total Holdings
100,000 to 10,000,000 shares 2 13,000,000 9.98%
10,000,001 to 20,000,000 shares 2 30,000,000 23.04%
20,000,001 to 30,000,000 shares 2 50,240,000 38.57%
30,000,001 to 40,000,000 shares 1 37,000,000 28.41%
Total 7 130,240,000 100.00

Note: The authorized share capital of the company is Tk. 5,000,000,000 (Five hundred Crore) divided in to 500,000,000
(Fifty Crore) ordinary shares of Tk. 10/- each, which was converted into TK. 10/- per share from Tk. 100/- per share by
passing special resolution in the Extra Ordinary General Meeting (EGM) held on 31 .07.2010.
31-Oct-10 31-Dec-09
Taka Taka

12 GENERAL RESERVE

Opening Balance 202,085,763 -


Addition during the Period - 202,085,763
Transferred to Share Capital (202,085,763) -
Taka - 202,085,763

13 REVALUATION RESERVE

Opening Balance as on 01.09.2010 1,446,528,614 -


Charged during the year (15,952,012) -
Taka 1,430,576,602 -

i) Revaluation of Company's assets were carried out by Shafiq Basak & Co, Chartered Accountants
following Market value Method of Valuation as on 31 August 2010 & submitted their report on 20
September 2010. Revaluation surplus has been credited to Revaluation Reserve account.

14 LONG TERM LOAN

Due within one year - 126,220,207


Taka - 126,220,207

a) Eastern Bank Ltd., Agrabad Branch


Due within one year - 61,720,258
Tk - 61,720,258

b) South East Bank Ltd., Khatungonj Branch


Due within one year - 10,467,249
Tk - 10,467,249

c) National Credit and Commerce Bank Ltd., Agrabad Branch


Due within one year - 32,596,173
Tk - 32,596,173

d) Dutch Bangla Bank Ltd., Agrabad Branch


Due within one year - 21,436,527
Tk - 21,436,527

15 CREDITORS AND ACCRUALS

For Other finance - note 15.1 2,848,658 2,249,205


For Supplies expenses - note 15.2 69,704,757 4,588,106
For Revenue expenses - note 15.3 41,961,281 6,250,365
Taka 114,514,696 13,087,676
31-Oct-10 31-Dec-09
Taka Taka

15.1 For Other Finance - note 15

Tax Deducted at Source - Bill 55,306 33,824


Pragati Insurance 943,244 1,551,385
Liability for Staff EBF 1,750,457 663,996
VAT Payable 99,651 -
Tk 2,848,658 2,249,205

15.2 For Supplies expenses - note 15

Poly Cables 462,000 462,000


M.D Steel Casting Industries 5,052,000 400,000
New Sun Chemicals 30,636,423 426,884
Unite Engineering 16,624,959 2,900,000
Mitra Hardware 15,434,375 162,575
Others 1,495,000 236,647
Tk 69,704,757 4,588,106

15.3 For Revenue expenses - note 15

Employment Cost - Work Force Salary 3,876,057 617,335


Employment Cost - Mgt. Staff Salary 935,914 796,213
Electricity Bill Factory 6,009,398 2,924,204
Audit Fee 250,000 200,000
WPPF 27,539,767 -
Gas
1,829,235 1,000,000
Bill
Others 1,520,910 712,613
Tk 41,961,281 6,250,365

i) All accrued expenses were paid on regular basis.


ii) Salary and Allowances for the month of October 2010 has been paid in subsequent
month.

16 SHORT TERM BANK LOAN

Janata Bank Ltd., Asadgonj Branch (CC Pledge) 433,926,834 444,217,775


Janata Bank Ltd., Asadgonj Branch (CC Hypo) 103,064,556 36,178,348
Jamuna Bank Ltd., Khatungonj Branch(CC Hypo) 21,776,190 22,201,931
Social Islami Bank Ltd., Agrabad Branch (CC Hypo) 220,953,593 206,599,583
Mutual Trust Bank Ltd., CDA Avenue Branch (CC Hypo) 49,510,217 -
Mercantile Bank Ltd., Khatungonj Branch (SOD) 43,788,411 46,707,806
Janata Bank Ltd., Asadgonj Branch, PAD 190,774,041 288,776,547
Marcantile Bank Ltd., Kahtungonj Branch, LTR 611,803,516 374,712,972
South East Bank Ltd., Khatungonj Branch, LTR - 135,094,121
Janata Bank Ltd., Asadgonj Branch, LTR 126,496,938 212,453,862
Shahjalal Islami Bank Ltd., Khatungonj Branch, LTR 20,599,258 27,263,308
Social Islami Bank Ltd., Agrabad Branch, LTR 1,650,599 25,589,948
NCC Bank Ltd., Agrabad Branch, LTR 71,055,617 -
Jamuna Bank Ltd., Khatungonj Branch LTR 74,468,318 -
State Bank of India, Agrabad Branch, LTR 1,649,503 58,800,235
Mercantile Bank Ltd., Khatungonj Branch, ABP 249,094,505 195,868,352
Pubali Bank Ltd., Khatungonj Branch, LTR 774,916,065 13,273,580
Mutual Trust Bank Ltd., CDA Avenue Branch, LTR 26,024,232 -
Janata Bank Ltd., Asadgonj Branch, ABP 241,851,574 358,013,457
South East Bank Ltd., Khatungonj Branch, ABP 5,240,220 356,816,508
Pubali Bank Ltd., Khatungonj Branch, ABP 126,767,485 116,406,797
Taka 3,395,411,672 2,918,975,130

Major Terms and conditions of the said loans are presented in - note 26

31-Oct-10 31-Dec-09
Taka Taka

17 INCOME TAX PROVISION - note 2.12

Opening balance 291,223,959 140,266,542


Provision made during the period 185,538,290 150,957,417
476,762,249 291,223,959
AIT Adjusted (167,507,130) -
Paid during the period (20,000,000) -
Taka 289,255,119 291,223,959

i) The IT assessment for the all years to 2008 (IT Assessment year 2009-2010) have been completed and
agreed with the Tax Authorities while the return for 2009 has been filed and pending for assessment.
Company paid Tk 167,507,130 as advance, which will be adjusted with above provision on finalization of
the assessment upto the year 2009.
ii) Consistently deferred tax has not been considered.

31-Oct-10 31-Oct-09
Taka Taka
18 NET TURNOVER Qty in MT

Local Sales 50,951.10 4,862,895,492 3,692,216,734


Scrap Sales 2,477.20 91,111,439 66,855,964
Export Sales - note 18.1 8,349.52 605,315,303 229,427,639
61,777.82 5,559,322,234 3,988,500,337
Less: VAT 129,934,028 340,682,319
Taka 5,429,388,206 3,647,818,018
18.1 Export Sales - note 18

Export in Foreign Currency 8,349.52 USD 8,805,307 2,546,835


Export in Local Currency Taka 605,315,303 229,427,639

19 COST OF GOODS SOLD


Opening Stock of Raw Materials
Direct Materials 18,078.07 1,220,894,870 1,304,148,273
Indirect
- 4,814,036 2,479,577
Materials
18,078.07 1,225,708,906 1,306,627,850
Raw Materials Purchased
Direct Materials - note 19.1.1 66,044.34 4,708,802,244 2,856,068,919
Indirect Materials - note 19.1.2 - 133,785,989 140,630,676
66,044.34 4,842,588,233 2,996,699,595
Materials available for
84,122.41 6,068,297,139 4,303,327,445
consumption
Closing Stock of Raw Materials - note 6.2
Direct Materials (19,662.85) (1,407,495,793) (1,255,568,915)
Indirect Materials - (11,249,576) (12,881,995)
(19,662.85) (1,418,745,369) (1,268,450,910)
Raw Materials Consumption 64,459.56 4,649,551,770 3,034,876,535

Production Overhead - note 19.2 - 282,084,523 263,031,834


Cost of Production (Process Loss
63,432.03 4,931,636,293 3,297,908,369
1,027.53 MT)

Opening Stock of Finished


2,395.94 145,186,261 10,235,213
Goods
65,827.97 5,076,822,554 3,308,143,582
Closing Stock of Finished Goods -
(4,050.15) (294,307,480) (24,303,589)
note 6.4
61,777.82 Taka 4,782,515,074 3,283,839,993

31-Oct-10 31-Oct-09
Taka Taka
19.1 Raw Materials Purchase

19.1.1 Direct Materials note - 19 Qty in MT


HRC 62,214.77 3,998,385,325 2,489,209,721
ZN 3,699.93 656,004,516 327,834,915
Compound ZN 118.62 37,265,367 16,996,658
Tin Ingot 11.01 17,147,036 22,027,625
66,044.33 Tk 4,708,802,244 2,856,068,919
19.1.2 Indirect Materials note - 19
Rolling Oil 9,834,728 7,579,435
HCL 13,889,181 8,190,516
Consumable Stock 110,062,080 124,860,725
Tk 133,785,989 140,630,676

Taka 4,842,588,233 2,996,699,595

19.2 FACTORY OVERHEAD - note 19

Salaries and Wages 54,011,049 47,155,990


Bonus 709,456 568,313
Shifting Expenses 3,238,732 2,725,943
Mechanical Shutdown Expenses 787,094 698,085
Electricity Charges 49,009,049 45,964,827
Gas Bill 16,950,827 11,960,041
Laboratory Expenses 132,995 106,210
Electrical
3,489,503 2,429,429
Spares
Depreciation - note 3.2 80,017,036 103,771,363
Fire Insurance 6,105,973 3,677,364
Gas Line Repairing 1,124,150 1,425,803
Crane
533,003 743,356
Repairing
Crane Hire Charges 1,166,524 1,099,596
Loading Expenses 26,600 302,085
Un-loading Expenses 4,818,336 3,116,130
Canteen expenses 1,960,037 1,293,376
Store Material Consumption 58,004,159 35,993,923
Taka 282,084,523 263,031,834

31-Oct-10 31-Oct-09
Taka Taka

20 ADMINISTRATIVE EXPENSES

Salary & Allowances 3,706,910 2,362,896


Directors Remuneration - note 24 320,000 320,000
Depreciation - note 3.2 4,445,391 5,765,076
Festival Bonus 366,623 363,113
Telephone & Mobile charges 1,753,385 1,239,053
Traveling Expenses 3,846,802 2,925,993
Conveyance 482,071 405,279
Staff Fooding 254,878 219,702
Office Tea 323,875 133,261
Expenses
Entertainment Expenses 1,164,453 1,075,895
Postage & Stamp charges 100,713 124,117
Repairing Expenses 79,010 97,907
Courier Service Charges 13,870 69,000
Newspaper and Periodicals 4,709 10,716
Uniform & Liveries 14,740 700
Legal Expenses 3,561,600 184,510
Vehicles Fuel & Lubricants 2,772,504 897,868
Office Stationeries 368,354 407,917
Medical Expenses 868,664 37,324
Land Revenue Expenses 44,828 177,828
Subscription 2,797,785 77,125
Vehicle maintenance 679,745 614,259
Miscellaneous expenses 1,624,972 308,334
Registration & Renewal Expenses 1,747,239 190,255
Rent, Rates & Taxes 50,000 50,000
Electricity Charges 5,445,450 5,107,203
Audit fee - note 23 200,000 -
Taka 37,038,571 23,165,331

Salary & Allowances include payment to employees only.


21 SELLING AND DISTRIBUTION EXPENSES

Salary & Allowances 2,042,517 596,022


Depreciation - note 3.2 4,445,391 5,765,076
Sales Promotion Expenses 32,243,739 139,800
Sample Expenses 200,000 -
Taka 38,931,647 6,500,898

31-Oct-10 31-Oct-09
Taka Taka
22 FINANCIAL EXPENSES

Bank Interest 24,595,492 -


Bank Charge 907,987 939,037
25,503,47
Taka 939,037
9

i) The above amount was not directly attributable. Directly attributable cost incurred for cost of raw materials
was charged to cost of goods sold as per IAS 23.

23 AUDITOR'S REMUNERATION - note 20


Audit Fee (Statutory) 200,000 -
Taka 200,000 -
Audit fee represents auditor's remuneration only which is fixed up by the Board of Directors.
24 DIRECTOR'S REMUNERATION - note 20
Director's Remuneration paid to Mrs. Tahsina Rahman @ Tk 32,000 320,000 320,000
Taka 320,000 320,000

25 OTHER INCOME

ID Card Re-issue Compensation 1,800 1,030


Delivery Charge for Scrap Sales 2,487,485 2,307,747
Interest on FDR 2,906,622 469,300
Taka 5,395,907 2,778,077

26 BANK FACILITIES

The following facilities are available with the company's Bankers :


BDT in Crore

Term CC OD/CC
Sl LC LTR BG Rate of Sanction
Bank Name Loan Hypo Pledge
No Limit Limit Limit Interest Validity
Limit Limit Limit

Janata Bank -
1 100.00 50.00 56.17 13.30 43.00 15.00 12.00% 15.10.2010 *
Asadgonj
Mercantile Bank -
2 160.00 60.00 - 5.00 - 15.00 11.50% 30.09.2010 *
Ktg
Southeast Bank -
3 68.25 33.25 - - - 25.00 12.00% 28.02.2011
Ktg
4 Pubali Bank - Ktg SDB SDB - - - SDB 11.00% Specific
Shahjalal Bank -
5 50.00 35.00 - - - 10.00 11.50% 31.12.2010
Ktg
Jamuna Bank -
6 50.00 25.00 - 2.50 - - 11.50% 31.07.2010 *
Ktg
AB Bank -
7 45.00 40.00 8.00 - - - 13.00% 30.09.2010 *
Anderkilla
State Bank of
8 15.00 15.00 - - - - 12.00% 30.06.2010 *
India - Ktg
Social Islami Bank
9 100.00 25.00 - 25.00 - 10.00 11.00% 22.08.2010 *
- Agr.
Standard
10 120.00 60.00 - 2.00 - - 11.00% 12.04.2011
Chartered - Agr.
Mutual Trust Bank
11 40.00 20.00 - 5.00 - 5.00 11.00% 28.02.2011
- Agr.
12 NCCBL - Agr. 100.00 50.00 - 5.00 - 25.00 11.00% 30.09.2011
13 Dhaka Bank - Agr. 100.00 50.00 50.00 35.00 - 30.00 11.00% 31.07.2011
Dutch Bangla
14 88.00 50.00 - 20.00 - - 11.00% 30.09.2011
Bank - Agr

Total Exposure 1,036.25 513.25 114.17 112.80 43.00 135.00 - -

* Renewal of expired loans are under process.

27 RELATED PARTY TRANSACTIONS


The Company carried out a number of transactions with related parties in the normal course of business
on arms length basis

Closing Closing
Balance Balance
Sl. Name of the
No
Relationship Types of Transaction as at as at
Parties
31.10.2010 31.12.2009
Taka Taka

KY Steel Mills
1 Ltd. Sister Concern Sales of CR Coil 368,362,261 173,788,110
Steel Accessories Sales of CR Product &
2 Ltd. Sister Concern Temporary Loan 148,826,920 163,350,778

Total 517,189,181 337,138,888

31.10.2010 2009
Taka Taka
28 NET ASSET VALUE PER SHARE

Net Assets Value per Share (Basic) Value of Share 2010 Tk 10, 2009 Tk 100 29.74 323.16

Net Assets Value per Share (Restated) Value of Share 2010 Tk 10, 2009 Tk 10 29.74 16.16

Net Assets Value during the period Tk 3,872,724,796 (31.12.2009: Tk 2,104,430,909)

Number of Ordinary Shares at the close of business 130,240,000 nos (31.12.2009: 6,512,000 nos)

29 THE COMPOSITION OF EARNING PER SHARE (EPS) IS GIVEN BELOW :

Earning per share (Basic) Value of Share 2010 Tk 10, 2009 Tk 100 2.59 32.21

Earning per share (Restated) Value of Share 2010 Tk 10, 2009 Tk 10 2.59 1.61

(a) Earning attributed during the period to the ordinary shareholders Tk 337,717,285 (31.10.2009: Tk
209,764,623)

(b) Number of ordinary shares at the close of business 130,240,000 nos (31.10.2009: 6,512,000 nos)

30 VALUE PER SHARE ON THE BASIS OF CASH FLOW FROM OPERATING ACTIVITIES :

Operating cash Inflow/(Outflow) per share (Basic) Value of Share 2010


Tk 10, 2009 Tk 100 3.39 92.91

Operating cash Inflow/(Outflow) per share (Restated) Value of Share


2010 Tk 10, 2009 Tk 10 3.39 4.65

The composition of Opening Cash Inflow/(Outflow) Value per share is


given below:
(a) Operating Cash Inflow/(Outflow) during the period Tk 441,354,697 (31.10.2009: Tk 605,033,371)

(b) Number of ordinary shares at the close of business 130,240,000 nos (31.10.2009: 6,512,000 nos)

31 POST BALANCE SHEET EVENTS

No material events had occurred from the Balance Sheet date to the date of issue of this Balance Sheet,
which could materially affect the values stated in the Balance Sheet.

32 EMPLOYEES

Number of Number of
Employee Employee
31.10.2010 31.12.2009

Number of employees whose salary below Tk 3,000 per month - -


Number of employees whose salary above Tk 3,000 per month 380 434
Total 380 434

33 CAPACITY UTILIZATION

CR Plant
Installed Capacity (MT) Annual 120,000 120,000
Installed Capacity (MT) for the period 100,000 100,000
Actual Equivalent production (MT) 60,095 29,389
Capacity Utilized 60.10% 29.39%

NOF Plant
Installed Capacity (MT) Annual 70,000 70,000
Installed Capacity (MT) for the period 58,333 58,333
Actual Equivalent production (MT) 45,410 27,449
Capacity Utilized 77.85% 47.06%

34 CONTINGENT LIABILITIES AND COMMITMENTS

34.1
Appeal prefer to VAT Appellate Tribunal against Price Declaration of CR Coil amounting to Tk
1,227,623; GP Coil /Sheet Tk 352,249 and CI Sheet Tk 7,678,068 total Tk 9,257,940 which is
awaiting final hearing. In case of adverse decision by the Tribunal Company's liability will stand at Tk
9,257,940.

34.2 Dispute with the VAT authority prefer for writ petition against VAT:

15 Nos writ such as no : 7419/05 dated 20.10.2005, 8697/05 dated 05.12.05, 8696/05 dated
05.12.05, 8889/05 dated 13.12.05, 5964/06 dated 20.07.06, 7598/06 dated 10.08.06, 10847/07 dated
17.12.07, 1580/08 dated 26.02.08, 1520/08 dated 25.03.08, 4560/08 dated 19.06.08, 6398/09 dated
17.09.09, 7100/09 dated 29.10.09, 7297/09 dated 04.11.09, 4841/10 dated 16.06.10, 4843/10 dated
16.06.10 aggregating amounting to Tk 940,741,960.
Causes of cases were custom duty for bond; Audit demand & price declerance for VAT. The
Management of the Company informed that as the matter is sub-judice, provision for writ petition
against VAT would not be required as per Legal Advisor's opinion of the Company.

35 GENERAL

35.1 Figures appearing in these accounts have been rounded off to the nearest taka.

35.2 Previous year's/period's phrases & amounts have been re-arranged, wherever considered necessary,
to conform to the presentation for the year under review.

These financial statements should be read in conjunction with the annexed notes
and were approved by the Board of Directors on 02 January 2011
and were signed on its behalf by :

SD/- SD/- SD/-


COMPANY SECRETARY DIRECTOR MANAGING DIRECTOR

7.1 Trade Receivable as on 31st October 2010 Annexure-A


Particulars Taka
1 Zobaida Steel(Afzal Trading)--Acc.Rec 574,067.04
2 R.M.Steel--Acc.Rec. 473,312.10
3 M.R.Traders-Acc.Rec. 146,697.41
4 Eastern Refinery Limited--Acc.Rec. 115,877,666.83
5 Abul Khair Steel Mills Ltd.--Acc.Rec. 913,016.42
6 Fuad & Brothers--Acc.Rec. 340,431.34
7 M.Rahman & Brothers--Acc.Rec. 2,408,919.57
8 Samuda Containers--Acc.Rec. 63,936.68
9 I.I.Tubes Mills Ltd.--Acc.Rec. 8,155.69
10 Osaka Cycle Industries Ltd.-Acc.Rec. 830,664.09
11 Beg Steel Mills Ltd.--Acc.Rec.(C0794) 1,477,878.94
12 Jalalabad Steels Ltd.--Acc.Rec. 7,739.27
13 Nazrul & Brothers--Acc.Rec. 13,713.75
14 Bismillah Enterprise,CTG-Acc.Rec.(C0173) 114,770.92
15 Mcdonald Steel--Acc.Rec. 671,836.29
16 Madina Traders--Acc.Rec. 12,683.58
17 Vangaurd Steel Ind. Ltd--Acc.Rec. 62,435.45
18 Peerless Makers (pvt.) Ltd.--Acc.Rec. 384,474.45
19 Yunsco Steel and Engr. Ltd.--Acc.Rec. 542,823.88
20 Shafiq And Sons,Asadgonj-Acc.Rec 29,726.71
21 Ajmeer Khawja Enterprise-Acc.Rec 384,273.34
22 Rubel Steel Mills Ltd (Partex Group)-Acc.R 27,078.60
23 National Fan-Acc.Rec 3,252.23
24 Sristy Steel Enterprise-Acc Rec 1,346,131.43
25 Haji Motiur Rahman & Sons-Acc Rec 64,046.08
26 Janani Enterprise-Acc.Receivable 14,410.25
27 K.S. TRADING-Acc.Rec. 9,279,455.89
28 S.S.Traders--Acc.Rec. 587,041.58
29 Bhuiyan Enterprise,Ctg-Acc Rec 4,031,991.22
30 Saleh Engineering Works,Ctg (C0996) 5,875.86
31 Mohesen Awolia Traderse,Ctg(C0997) 435,599.45
32 Babul Chandra Dey, Ctg(C1024) 104,134.11
33 GMS PURNAMAX(M) SDN,BHD (X0001) 3,283.47
34 Venus Int Pte Ltd,Singapore(X0004) 22,286,653.08
35 Do International Trading Co.,Ltd,Thailand( 2,201.37
36 Atco Export, UK (X0008) 6,604.69
37 Portland Steel Int., South Africa(X0009) 684,460.69
38 Deepak Commercial Brokerage, Dubai(X0011) 4,414.02
39 Steel(Singapore) Trading Pte Ltd(X0013) 20,985,522.62
40 Wira Overseas Enterprise,Singapore(X0016) 48,265.65
41 Gloria Trading, Congo (X0017) 32,571.94
42 Salim Traders -B.Baria-(CB0007) 8,683,344.09
43 Rupali Traders-B.Baria(CC0007) 10,323,972.83
44 Alpana Traders -B.Baria(CC0008) 4,063,090.50
45 Padma Traders -B.Baria(CD0057) 2,502,689.03
46 Arif Traders -B.Baria(CD0076) 5,734,924.20
47 Abul Kashem,Casba-B.Baria(CD0333) 28,356,609.20
48 Sumon Ent-Bangura-B.Baria(CD0418) 528,023.60
49 Hobigonj Trading-B.Baria(CD0448) 20,911,653.25
50 New Madina Tinghor-B.Baria(CD0580) 45,382.68
51 Ananda Enterprise-B.Baria(CD0638) 9,456,153.61
52 Fahin & Maisa Enterprise-B.Baria(CD0691) 9,335,891.42
53 Ma Moni Traders-B.Baria(CD0692) 1,167,919.41
54 Haji Shahid Meah Traders-B.Baria(CD0695) 4,296,747.27
55 Minar Traders-Barguna(CD0428) 25,879,442.97
56 Al-Madina Store2-Barishal(CD0297) 29,263,500.05
57 Abu Bakar-Barishal(CD0482) 7,121.87
58 Hazi Traders-Barishal(CD0668) 1,228,386.44
59 Aktaruzzaman-Barishal(CD0665) 1,052,089.18
60 Bikrampur Ent-Bhola-(CB0015) 1,348,356.88
61 Five Star-Bhola(CD0325) 3,920,523.17
62 Samad Sarder-Bogra(CD0022) 7,783,167.53
63 Enam Corporation-Chandpur(CD0099) 11,782,257.12
64 Kazi Traders-Chandpur(CD0257) 15,829,309.72
65 Sagir & Brothers -Chittagong-(CB0001) 32,652,894.01
66 Liton Enterprise-Chittagong(CD0154) 517,957.56
67 Nureja Enterprise -Chittagong(CD0313) 23,927,290.75
68 Omar Farq. & Brothers-Ctg(CD0331) 1,056,591.58
69 A S Traders-Chittagong(CD0390) 30,122,250.81
70 Salim And Sons-Chittagong(CD0652) 3,221,428.77
71 Hj. Nazeer Ahamed Traders-Chuadanga(CD0672 9,284,895.79
72 Abdul Matin,Ramchanpur-Comilla(CC0026) 141,002.70
73 Musa & Sons -Comilla(CC0033) 8,404,421.16
74 Ali Akbar Traders -Comilla (CD0056) 1,298,544.17
75 Babul Traders-Comilla(CD0079) 12,828.33
76 Haji Moinul Islam -Comilla(CD0142) 972,699.39
77 ShakherGaon Store-Comilla(CD0180) 1,187,062.63
78 Khalu Meah Bapary-Comilla(CD0197) 20,354,350.58
79 Saiful enterprise -Comilla(CD0396) 1,467,803.77
80 Rafique Ting ghar-Comilla(CD0397) 7,209,195.93
81 Monindra Ch. Debnath-Comilla(CD0413) 20,760,206.00
82 Hafiz & Brothers-Comilla(CD0419) 4,019,307.04
83 Rony Tin ghar-Comilla(CD0452) 825,367.91
84 Hossain Enterprise-Comilla(CD0481) 1,345,757.27
85 Maruf Steel-Comilla(CD0499) 9,837,135.01
86 Abdul Karim -Comilla(CD0517) 2,260,468.73
87 Prodip Kumar Bhoumik,-L-Comilla(CD0538) 2,441,109.22
88 Nargis Hardware Store-Comilla(CD0563) 3,250,593.83
89 Nazrul Traders,Comilla (CD 0679) 623,341.32
90 H K Ali Bricks, Comilla (CE0005) 145,460.27
91 Karim Traders -CoxsBazar(CD0217) 2,910,499.11
92 Shah Alam Trading,Chokoria,Coxs Bazar(CD04 6,754,111.26
93 Kamru Traders -CoxsBazar(CD0521) 1,255,523.49
94 Chittagong Steel -Dhaka(CB0016) 1,442,344.38
95 Ayub & Sons -Dhaka (CD0270) 636,279.80
96 J. B. Enterprise-Dhaka(CD0286) 3,674,497.29
97 Dhaka Trading Corporation -Dhaka(CD0380) 2,787,568.79
98 Rakhi Steel Cor.-Dhaka(CD0415) 26,922,365.30
99 Jalalabad Steel Ltd -Dhaka(CD0458) 9,976,012.68
100 Samata Traders-Dhaka(CD0496) 180,390.72
101 Zaman & Sons-Dhaka(CD0653) 2,761,593.19
102 Fazlay Rabbi Ali-Faridpur(CD0654) 9,098,222.20
103 Abul Kashem -Feni(CD0105) 4,728,017.88
104 Adbur Quddus-Feni(CD0177) 1,728,589.59
105 Abdul Bashar-Feni (CD0200) 8,824,168.70
106 Abdul Momen Traders-s.Nay-Feni(CD0433) 2,856,790.51
107 Gopal Chandra Sarkar-Feni (CD0661) 947,746.16
108 Fathema Hardware Store-Feni (CD0647) 10,077,886.10
109 Raju Traders S.Gon-Gaibanda(CD0532) 7,791,858.07
110 Abul Kashem Traders-Gaibanda(CD0694) 1,076,682.67
111 Abed Ali Traders-Gazipur(CD0491) 3,835,352.19
112 Shahjalal Traders -Gazipur(CD0360) 664,459.85
113 Mojibor Traders-Gazipur(CD0225) 4,061,529.71
114 Shahin Enterprise-Gazipur(CD0631) 35,747,847.58
115 Sheuli Enterprise-Gazipur(CD0648) 9,488,330.10
116 Sikder Traders -Gopalgonj(CD0450) 17,052,402.46
117 Amin Traders,Gopalgonj(CD0697) 2,044,686.44
118 F Zaman & Sons,Gopalgonj(CD0704) 639,879.16
119 Ramash Ch.Gosh-Hobigonj(CD0462) 9,304,405.35
120 Al Mamun Enterprise-Hobigonj(CD0650) 15,839,633.87
121 Dalai Mia & Sons-Hobigonj(CD0677) 2,029,321.91
122 Sabib Enterprise-Hobigonj (CD0684) 1,534,928.63
123 Marwa Enterprise-Jalkhati(CC0018) 31,523,543.52
124 Tanim Enterpise -Jalkhati(CC0022) 4,805,664.80
125 Alam & Brothers-Jalkhati(CD0038) 6,076,475.96
126 Nayamat Ent-Jalkhati(CD0130) 7,953,582.07
127 Salam And Brothers-JhalKhati(CD0657) 9,251,682.40
128 Dhanshiri Enterprise-JhalKhati(CD0689) 35,559,678.98
129 Sharif & Borthers-Jessore(CD0522) 1,093,752.09
130 Ayian Steel Corporation-Jhenaidhah(CD0656) 198,464.37
131 Monir Ahamed -Khulna(CD0109) 32,902,259.92
132 Kazal Ghush -Kishoregonj-(CA0006) 32,016,725.70
133 Mujibur Rahman-2-Kishoregonj(CD0221) 33,787,823.80
134 Haji Motiur & Sons-Kishoregonj(CD0322) 6,928,038.50
135 Jaman & Hasan Ent. -Kishoregonj(CD0386) 17,196,030.39
136 Saidur Rahaman-Kishoregonj(CD0490) 735,845.03
137 Asha Enterprise-Kishoregonj(CD0504) 4,101,868.17
138 Bashar Traders-Kishoregonj(CD0622) 22,359,908.39
139 Haji Shahab Uddin & Sons-Kishoregonj(CD064 3,219,135.30
140 Seven Brothers-Kishoregonj (CD0682) 393,989.05
141 Sadek Traders-Kurigram(CD0574) 2,214,708.18
142 Janata Biponi -Kustia(CD0382) 1,353,308.24
143 Muntakim Traders -Kustia(CD0570) 1,805,393.02
144 Ali Hossain & Traders-Kustia(CD0636) 8,733,532.71
145 Mamun Enterprise-Kustia(CD0667) 1,316,674.18
146 Jilani Traders -Laxmipur(CD0174) 3,251,509.68
147 Laxmipur Ent.-Laxmipur(CD0226) 22,315,784.20
148 Mukbul & Brothers-Laxmipur(CD0243) 4,003,579.37
149 Mazumder & Co-Laxmipur(CD0404) 5,983,820.61
150 Basanti Traders-Alexgandar-Laxmipur(CD0573 5,307,263.20
151 Three Bany Traders-Laxmipur(CD0610) 4,616,615.76
152 Fatema Traders-Magura(CB0018) 1,091,405.47
153 Salam Traders- Manikgonj(CD0588) 1,684,614.63
154 M. A. Sattar-Molavibazar(CD0066) 15,615,619.80
155 Rahman Traders -Molavibazar(CD0510) 1,558,279.65
156 Shashanka Dutta -Molavibazar(CD0540) 10,093,855.22
157 Rakin Enterprise-Munshigonj(CD0666) 12,675,951.14
158 Shaha Trading -Narail(CC0041) 6,023,213.11
159 Showrav Traders-Narayangonj(CD0234) 4,348,680.53
160 Kakoli Enterpirse -Narayangonj(CD0262) 2,758,493.39
161 Haji Trader-Narayangonj(CD0283) 1,429,086.31
162 Sonia Trading-Narsindi(CD0346) 12,689,419.92
163 Shahid Trader-Narsindi(CD0409) 9,915,654.86
164 Muzibur Traders-Netrokona(CD0639) 5,558,718.86
165 N.K.Bhowmick-Noakhali-(CB0009)/T.K. Trader 27,424,083.47
166 B. K. Nath -Noakhali (CC0015) 4,041,978.65
167 Pubali Trading -Noakhali(CC0029) 17,602,952.16
168 R.M. Enterprise-Noakhali(CC0030) 28,057,871.90
169 Taz Enterprise-Noakhali(CD0042) 28,160,116.79
170 Abdur Rashid -Noakhali(CD0043) 17,298,756.26
171 Noor Traders-Noakhali(CD0080) 19,010,838.75
172 MaFatema Steel&Sons-Noakhali(CD0081) 3,395,066.52
173 Babul Traders-2 -Noakhali(CD0082) 3,732,501.43
174 Shebar Hat Khadda Vander-Noakhali(CD0132) 4,117,604.16
175 Fatema Trading -Noakhali(CD0135) 4,341,741.83
176 Shaha Steel-Noakhali(CD0254) 33,002,050.58
177 Allahar Dan-Noakhali(CD0315) 7,734,557.15
178 Haji. Younus & Sons-Noakhali(CD0324) 795,311.33
179 Femous Iron House-Noakhali(CD0387) 11,672,598.70
180 Popular Traders-Noakhali(CD0391) 5,458,999.93
181 Mohammed Ullah -Noakhali(CD0398) 7,750,332.21
182 Patwari Traders-Noakhali(CD0406) 1,245,955.08
183 Badal Traders-Chowm-Noakhali(CD0578) 875,188.94
184 Sokina Traders-Noakhali(CD0629) 189,043.27
185 Sufian Traders-Shbrhat-Noakhali(CD0642) 878,500.10
186 Manik Timber-Noakhali-(CD0673) 8,232,900.76
187 Monir & Sons-Chowmahoni,Noakhali(CD0702) 1,211,111.10
188 Shahanara Trading-Pabna(CD0246) 2,747,746.54
189 Shaha Trading Corp-Pabna (CD0412) 15,038,543.71
190 Mollah & Sons-2-Pabna(CD0608) 31,530,438.03
191 Jasmin Traders-Patuakhali(CD0431) 17,429,551.38
192 Islamia Traders-Patuakhali(CD0516) 2,749,783.19
193 Kajol Store-Patuakhali(CD0572) 12,145,119.14
194 Mitali Enterprise -Pirozpur(CD0074) 1,975,113.75
195 Makka Traders-Rajshahi(CD0031) 1,264,886.95
196 Rahman Traders,Baneshar,Rajshahi(CD0272) 5,760,928.62
197 Kismat Trading Corp-Rajshahi(CD0632) 11,312,190.02
198 Rahman Traders-2-Razbari(CD0199) 5,641,506.71
199 Talukder Traders -Sariadpur-(CB0012) 16,798,078.19
200 Laxmi Narayan Shaha-Sariadpur(CD0582) 6,060,478.02
201 Rahaman Traders -Shathkhira(CC0032) 21,464,362.56
202 Mofazzal Enterprize,Sherpur(CD0681) 32,328,550.06
203 A. Ali Trader -Sunamgonj(CD0508) 3,062,780.24
204 Abu Bakar & Sons-Sylhet(CD0048) 22,564,116.37
205 Jogajog Traders-Kalighat,Sylhet(CD0577) 1,768,633.20
206 Bashir Uddin & Sons, Chatak,Sylhet(CD0685) 5,355,548.42
207 Sikander & Sons-Sylhet (CD0674) 508,201.50
208 Akata Traders-Tangail(CD0446) 1,865,607.38
209 Kamrul & Brothers-Tangail(CD0633) 107,032.94
210 Jannat Steel Corporation-Tangail(CD0651) 34,218,796.41
211 Rahman Traders-Thakurgaon(CD0353) 17,662,650.31
212 Mahmud Machinary-Thakurgaon(CD0473) 19,770,434.43
213 H.R Brothers Pirgonj-Thakurgao(CD0609) 9,582,240.10
214 M.A.Hoque Traders-Thakurgaon(CD0670) 17,183,829.07
215 Jahirul Traders, Thakurgaon(CD0701) 91,849.01
216 Farhad Traders-Thakurgaon(CD0712) 1,020,982.25
217 Three Brothers-Thakurgaon(CD0717) 1,280,738.22
218 Nabi Trading--Mymensingh(CD0343) 985,803.95
219 Madina Traders-Mymensing(CD0693) 8,857,072.75
220 Janata Bank,Agrabad Branch(CE0024) 52,517.36
221 Ali Hossain,Office Assitt,KY Steel(CE0027) 15,385.66
222 Nawjesh Ali,SDS Director,Rajshahi(CE0031) 107,302.70
223 Zen Enterprise-Chittagong-2(CD0680) 1,699,209.06
224 K I Enterprise-Chittagong(CD0696) 1,069,676.73
225 Safrat Enterprise-Kornel-Chitt-2(CD0688) 783,161.88
Grand Total 1,751,347,222.00
KYCR COIL INDUSTRIES LIMITED
Auditors' Report under section 135(1) and paragraph 24(1) of Part -II of Third Schedule of the Companies Act 1994
For the periods from 01 January 2005 to 31 October 2010

We have examined the financial statements of KYCR Coil Industries Limited for the years ended 31st December 2005, 2006, 2007, 2008 and 2009 and for the period from 01 January 2010 to 31
October 2010 in pursuance of Section 135(1) under Paragraph 24(1) of Part -II of Third Schedule of the Companies Act 1994 our report is as under:
A. Statement of Assets and Liabilities:

31.10.2010 31.12.2009 31.12.2008 31.12.2007 31.12.2006 31.12.2005


Taka Taka Taka Taka Taka Taka

NON CURRENT ASSETS & 1,029,728,27


2,615,018,054 1,007,786,722 667,716,360 749,082,200 843,055,514
PROPERTIES 4
Property, Plant & Equipment 2,328,627,198 953,004,172 1,009,134,700 667,122,786 748,488,626 842,461,940
Capital Work-in-Progress - 7,715,050 - - - -
Investment 286,390,856 47,067,500 20,000,000 - - -
Preliminary Expenses - - 593,574 593,574 593,574 593,574

5,056,888,22 3,598,680,88 3,477,003,76 3,560,095,41 2,802,209,72


CURRENT ASSETS & PROPERTIES 4,446,151,159
9 8 6 7 5
Inventories 2,306,672,032 1,971,870,331 1,922,794,096 1,704,105,163 2,033,054,181 1,466,126,402
Receivables 1,756,020,785 1,744,751,099 960,189,314 953,249,731 717,716,530 830,622,016
Due from Sister Concern 517,189,181 337,138,888 432,357,605 548,079,715 361,490,039 74,200,468
Advances, Deposits and Prepayments 351,964,090 316,920,642 236,127,011 251,119,305 439,923,574 392,928,577
Cash and Bank Balances 125,042,141 75,470,199 47,212,862 20,449,852 7,911,093 38,332,262

7,671,906,28 4,628,409,16 3,645,265,23


TOTAL ASSETS & PROPERTIES 5,453,937,881 4,144,720,126 4,309,177,617
3 2 9

SHAREHOLDERS' EQUITY &


LIABILITIES
3,872,724,79 1,852,903,87 1,725,772,78 1,359,439,38
SHAREHOLDERS' EQUITY 2,104,430,909 1,618,126,306
6 6 3 3
Share Capital 1,302,400,000 651,200,000 651,200,000 651,200,000 651,200,000 651,200,000
Tax Holiday Reserve - - 202,085,763 202,085,763 202,085,763 98,610,994
General Reserve - 202,085,763 - - - -
Revaluation Reserve 1,430,576,602 - - - - -
Un appropriated Profit 1,139,748,194 1,251,145,146 999,618,113 872,487,020 764,840,543 609,628,389

NON CURRENT LIABILITIES - - 126,220,207 85,389,163 157,424,562 320,968,567


Long Term Loan - - 126,220,207 85,389,163 157,424,562 320,968,567

3,349,506,97 2,649,285,07 2,333,558,18 2,533,626,74 1,964,857,28


CURRENT LIABILITIES 3,799,181,487
2 9 0 9 9
Current Portion of Long Term Loan - 126,220,207 310,687,187 - - -
Creditors and Accruals 114,514,696 13,087,676 5,520,345 7,779,513 11,671,859 11,904,266
Short Term Loan 3,395,411,672 2,918,975,130 2,192,811,005 2,261,790,781 2,521,954,890 1,952,953,023
Income Tax Provision 289,255,119 291,223,959 140,266,542 63,987,886 - -
7,671,906,28 4,628,409,16 3,645,265,23
5,453,937,881 4,144,720,126 4,309,177,617
3 2 9

NET ASSETS VALUE PER


29.74 323.16 284.54 265.01 248.48 208.76
SHARE(Basic)

NET ASSETS VALUE PER


29.74 32.32 28.45 26.50 24.85 20.88
SHARE(Restated)

B. Statement of Operating Results:


31.10.2010 31.12.2009 31.12.2008 31.12.2007 31.12.2006 31.12.2005
Taka Taka Taka Taka Taka Taka

Net Turnover 5,429,388,206 4,348,942,559 2,582,068,789 2,117,127,407 2,013,900,743 3,354,160,882


(4,782,515,074
Cost of Goods Sold (3,917,942,273) (2,354,515,889) (1,930,323,567) (1,737,096,122) (3,153,720,280)
)
Gross Profit 646,873,132 431,000,286 227,552,900 186,803,840 276,804,621 200,440,602
Operating Expenses
Administrative Expenses (37,038,571) (24,772,605) (17,559,689) (14,060,144) (15,842,659) (17,970,714)
Selling and Distribution Expenses (38,931,647) (7,270,961) (7,484,713) (1,046,199) (1,253,653) (1,318,949)
Trading Profit 570,902,914 398,956,720 202,508,498 171,697,497 259,708,309 181,150,939
Financial Expenses (25,503,479) (1,271,224) (1,353,850) (1,063,134) (1,021,385) (514,761)
Gross Operating Profit 545,399,435 397,685,496 201,154,648 170,634,363 258,686,924 180,636,178
Amortization of Preliminary Expenses - (593,574) - - - -
Profit after amortization of Preliminary
545,399,435 397,091,922 201,154,648 170,634,363 258,686,924 180,636,178
Expenses
Other Income 5,395,907 5,392,528 2,255,101 - - -
Net Operating Profit before WPPF 550,795,342 402,484,450 203,409,749 170,634,363 258,686,924 180,636,178
WPPF (27,539,767) - - - - -
Net Operating Profit before Income Tax 523,255,575 402,484,450 203,409,749 170,634,363 258,686,924 180,636,178
Provision for Income Tax (185,538,290) (150,957,417) (76,278,656) (63,987,886) - -
Profit after Income Tax 337,717,285 251,527,033 127,131,093 106,646,477 258,686,924 180,636,178

Earning Per Share (Basic) 2.59 38.63 19.52 16.38 39.72 27.74

Earning Per Share (Restated) 2.59 3.86 1.95 1.64 3.97 2.77
C. Statement of Cash Flow:
31.10.2010 31.12.2009 31.12.2008 31.12.2007 31.12.2006 31.12.2005
Taka Taka Taka Taka Taka Taka
CASH FLOW FROM OPERATING ACTIVITIES
Cash received from customers & others 5,328,621,073 4,457,121,135 2,697,786,832 1,926,645,384 1,726,378,766 3,291,595,985
(4,748,567,111 (2,465,835,332 (4,022,617,899
Cash paid to suppliers & employees (5,338,199,439) (1,579,379,004) (2,161,236,411)
) ) )
Cash received / (payment) from short term bank
476,436,542 726,164,125 358,422,597 (260,164,109) 569,001,867 811,678,334
loan
Financial Expenses (25,503,479) (1,271,224) (1,353,850) (1,063,134) (1,021,385) (514,761)
Cash Inflow / (Outflow) from Operating
441,354,697 433,446,925 589,020,247 86,039,137 133,122,837 80,141,659
Activities

CASH FLOW FROM INVESTING ACTIVITIES


Purchase of Fixed Assets (33,954,242) (59,719,851) (466,373,095) (1,464,980) - (7,623,465)
Addition of Capital Work in Progress 7,715,050 (7,715,050) - - - -
Investment (239,323,356) (27,067,500) (20,000,000) - - -
Cash Inflow / (Outflow) from Investing
(265,562,548) (94,502,401) (486,373,095) (1,464,980) - (7,623,465)
Activities

CASH FLOW FROM FINANCING ACTIVITIES


(Repayment) / Receipt of Term Loan (126,220,207) (310,687,187) (75,884,142) (72,035,399) (163,544,005) (38,018,167)
Cash Inflow / (Outflow) from Financing
(126,220,207) (310,687,187) (75,884,142) (72,035,399) (163,544,005) (38,018,167)
Activities

Net Increase/ (Decrease) in Cash & Cash


49,571,942 28,257,337 26,763,010 12,538,758 (30,421,168) 34,500,027
Equivalents

Cash and Cash Equivalents at the beginning of the year 75,470,199 47,212,862 20,449,852 7,911,094 38,332,262 3,832,235

Cash and Cash Equivalents at the end of the year 125,042,141 75,470,199 47,212,862 20,449,852 7,911,094 38,332,262

Operating Cash Inflow / (Outflow) Per Share(Basic) 3.39 66.56 90.45 13.21 20.44 12.31

Operating Cash Inflow / (Outflow) Per


3.39 6.66 9.05 1.32 2.04 1.23
Share(Restated)
D. Dividend Declared:

31.10.201 31.12.200 31.12.200 31.12.200 31.12.200


Particulars 31.12.2006
0 9 8 7 5

Cash Dividend (%) - - - - - -

Stock Dividend (Bonus Share


100% - - - - -
%)

KYCR Coil Industries Limited is a public limited company which was incorporated 04 November
E.
1995.

F. The Company did not prepare any account for any period subsequent to 31 October 2010.

Figure related to previous years have been rearranged where considered


I.
necessary.

Sd/-
Chittagong, 3 January 2011 Chartered Accountants
Hoda Vasi Chowdhury & Co
Ratio Analysis

31 Dec, 31 Dec, 31 Dec, 31 Dec, 31 Dec, 31Oct,


Particulars 2005 2006 2007 2008 2009 2010
Liquidity Ratios:
Current Ratio 1.43 1.41 1.49 1.36 1.33 1.33
Quick Ratio 0.48 0.43 0.65 0.55 0.66 0.71
Debt Equity Ratio 1.67 1.66 1.36 1.42 1.45 0.88
Operating Ratios:
Accounts Receivable
Turnover Ratio 3.71 2.03 1.64 1.84 2.69 2.69
Inventory Turnover Ratio 2.18 1.00 1.04 1.31 2.04 2.27
Asset Turnover Ratio 0.92 0.47 0.51 0.56 0.80 0.71
Profitability Ratios:
Gross margin Ratio (%) 5.98 13.74 8.82 8.81 9.91 11.91
Operating Income Ratio (%) 5.40 12.90 8.11 7.84 9.17 10.52
Net Income Ratio (%) 5.39 12.85 5.04 4.92 5.78 6.22
Return on Asset Ratio (%) 4.96 6.00 2.57 2.75 4.61 4.40
Return on Equity Ratio (%) 13.29 15.99 6.18 6.86 11.95 8.72
Basic Earning Per Share (
Restated) 2.77 3.97 1.64 1.95 3.86 2.59
Net Asset Value per Share (
Restated) 20.88 24.85 26.50 28.45 32.32 29.74