“If you have any queries about this document, you may consult issuer, issue managers.

Information Document
for
Direct Listing in DSE & CSE
of

Khulna Power Company Ltd.

Corporate Office: Summit Centre (5th Floor),
18 Karwan Bazar C/A, Dhaka-1215, Bangladesh
Phone: [+8802] 9132437-8; 8125142; 8125433;
Fax: [+8802] 9125682; Website: www.khulnapower.com

Offloading of 5,21,48,250 Ordinary Shares of Tk 10.00 each

Listing Date: 15th March 2010 DSE &
18th March 2010 CSE

Indicative Price for Book Building Purpose Tk.162.00

Eligible institutional investors’ bidding on April 04, 05, 06, 2010

Manager to the Issue

Amin Court, 4th Floor (Suite # 404),

31 Bir Uttam Shahid Ashfaqueus Samad Road, Motijheel C/A, Dhaka-1000
Phone: +8802 9559602, +8802 9567726 Fax: +8802 9558330
Web-site: www.aaawebbd.com, e-mail: info@aaawebbd.com

DATE OF THE INFORMATION DOCUMENT

18th March, 2010

Credit Rating Report by Credit Rating Information and Services Limited (CRISL)

Long Term Short Term

Entity Rating AA ST-1
Outlook Stable
Date of Rating 16 September, 2009

“CONSENT OF THE EXCHANGES HAS BEEN OBTAINED TO THE ISSUE/OFFER OF THESE SECURITIES UNDER
THE DHAKA STOCK EXCHANGE & CHITTAGONG STOCK EXCHANGE (DIRECT LISTING) REGULATIONS, 2006. IT
MUST BE DISTINCTLY UNDERSTOOD THAT IN GIVING THIS CONSENT THE EXCHANGES DO NOT TAKE ANY
RESPONSIBILITY FOR THE FINANCIAL SOUNDNESS OF THE COMPANY, ANY OF ITS PROJECTS OR THE ISSUE
PRICE OF ITS SHARE OR FOR THE CORRECTNESS OF ANY OF THE STATEMENTS MADE FOR OPINION
EXPRESSED WITH REGARD TO THEM. SUCH RESPONSIBILITY LIES WITH THE ISSUER, ITS DIRECTORS, CHIEF
EXECUTIVE OFFICER/ CHIEF FINANCIAL OFFICER, ISSUE MANGER AND/OR AUDITOR.

“THE MONEY (PROCEEDS) AGAINST SALE OF SHARES THROUGH THIS INFORMATION DOCUMENT WILL
BELONG TO THE SPONSORS/SHAREHOLDERS CONCERNED. THE COMPANY WILL NOT GET THIS MONEY.”
 Availability of Information Document

Information Document of the company may be available at the following address

Company Contact Person Contact Number

Khulna Power Company Ltd. M. Aminur Rahman 9132437-8

Corporate Office: Summit Centre (5th Floor), Financial Controller & 8125142
18 Karwan Bazar C/A, Dhaka-1215, Bangladesh Company Secretary

Manager to the Issue Contact Person Contact Number

AAA Consultants & Financial Advisers Ltd. Khwaja Arif Ahmed 9559602
Amin Court, 4th Floor (Suite # 404), Managing Director & CEO 9567726
31 Bir Uttam Shahid Ashfaqueus Samad Road
(Previous 62-63) Motijheel C/A, Dhaka-1000
Stock Exchanges Available at Contact Number

Dhaka Stock Exchange Ltd. DSE Library 9564601-7

9/F Motijheel C/A
Dhaka –1000

Chittagong Stock Exchange Ltd., CSE Building, CSE Library 031-714632-3

1080 Sheikh Mujib Road, Chittagong. 031-720871-3

Information document is also available on the website www.khulnapower.com,

www.aaawebbd.com, www.dsebd.com, www.csebd.com, www.secbd.org and public reference
room of the Securities and Exchange Commission (SEC) for reading and study.
 Definition and Abbreviations

AAA AAA Consultants and Financial Advisers Ltd.

Allotment Allotment of shares
BB Bangladesh Bank
BO A/C Beneficiary Owner’s Account
BPC Bangladesh Petroleum Corporation
BPDB Bangladesh Power Development Board
Certificate Share certificate
Commission Securities and Exchange Commission
Companies Act Companies Act, 1994 (Act No. XVIII of 1994)
CSE Chittagong Stock Exchange
DESA Dhaka Electric Supply Authority
DESCO Dhaka Electric Supply Company Ltd.
DSE Dhaka Stock Exchange Limited
Exchanges Stock Exchanges
FC Account Foreign Currency Account
FSA Fuel Supply Agreement
FT Fuel Tariff
GOB Government of Bangladesh
IFC International Finance Corporation
IPP Independent Power Producer
Issuer Khulna Power Company Ltd.
KPCL Khulna Power Company Ltd.
MEMR Ministry of Power, Energy and Mineral Resources
MW Megawatt
NAV Net Asset Value
NBFI Non-Banking Financial Institution
NBR National Board of Revenue
NRB Non Resident Bangladeshi
O&M Operation and Maintenance
PBSs Palli Bidyut Samities
PGCB Power Grid Company of Bangladesh
PPA Power Purchase Agreement
REB Rural Electrification Board
Summit Centre (5th Floor),
Registered Office
18 Karwan Bazar C/A, Dhaka-1215, Bangladesh
RJSCF Registrar of Joint Stock Companies & Firms
SC Share Certificate
SEC Securities and Exchange Commission
Securities Shares of KPCL
T&D Transmission & Distribution
Tk Taka
 Table of contents

Sl. Item Page No.

A. DISPOSAL OF SHARES 1
Details of offloading shares by the existing shareholders as per regulation of DSE & 1
CSE regulation
Procedures to be followed for determining price under book building method 2
Indicative price for book building purpose 2
B. RISK FACTORS AND MANAGEMENT PERCEPTION ABOUT RISK 6
C. DESCRIPTION OF THE BUSINESS 10
Information about the company 10
Background of the past shareholder 14
Background of Present Shareholders 15
Distribution procedure of products or services 23
Competitive Condition of the Business 23
Sources and availability of raw materials and the names of the principal suppliers 25
Sources of power, gas and water 25
Name of the customer who purchase 10% and more of the company’s products 25
Description of contract with suppliers and customer 25
Description of any material patents, trademarks, licenses or royalty agreements 26
Number of total and full time employees 26
Production capacity and current utilization 27
D. DESCRIPTION OF THE PROPERTY 27
Location of the power plant and other property and condition of such property 27
Ownership of property 27
Lien on property 27
Expiration date of Leasehold Property 27
E. PLAN OF OPERATION AND DISCUSSION OF FINANCIAL CONDITION 28
Internal and External Sources of cash 28
Commitment for capital expenditure 28
Material change from period to period as per audited accounts 28
Seasonal aspect 28
Known trends, events or uncertainties 28
Changes in the assets used to pay off any liability 29
Loan taken from the holding/subsidiary company or loans given to those companies 29
Future contractual liabilities 29
Estimated future capital expenditure 29
VAT, income tax, customs duty or other tax liability 29
Sources from which VAT, income tax, customs duty or other liabilities are to be paid 29
Lease commitment 29
Lease Details 30
Personnel related schemes to make provision in future years 30
Break down of issue expenses 30
Revaluation of Asset 30
Last five years’ transactions between the issuer company and its subsidiary/holding 30
company
 Auditors certificate on allotment of shares to shareholders including promoters and
sponsor shareholders for any consideration otherwise than for cash 30

Material information having impact on the affair of the company 31

F. DIRECTORS AND OFFICERS 31
Name, Age and Position of all Directors 31
Date of first becoming Director and date of expiry of current term 31
Involvement of Directors with Listed Company in terms of Dividend & Category 32
Involvement of Directors with another Company 32
Family relationship between the directors and officers 35
Short biography of the directors and officers 36
Ownership List of shareholders who owns 5% or more than 5% share of the Company 38
Name and qualifications of the Senior Officers 38
G. INVOLVEMENT OF THE DIRECTORS AND OFFICERS IN CERTAIN LEGAL PROCEEDINGS 39
H. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS WITH RELATED PARTIES 39
I. EXECUTIVE COMPENSATION 40
J. OPTION GRANTED TO OFFICER, DIRECTORS AND EMPLOYEES 40
K. TRANSACTION WITH PROMOTERS BENEFIT FROM THE COMPANY 40
L. TANGIBLE ASSETS PER SHARE 41
M. OWNERSHIP OF COMPANY’S SECURITIES 42
Ownership List of shareholders who owns 5% or more than 5% share of the Company 42
The shareholding position of ordinary shares 42
N. DESCRIPTION OF SECURITIES OUTSTANDING OR BEING OFFERED 43
Dividend, voting and pre-emption rights of the shares outstanding or being offered 43
Conversion and liquidation rights of any preferred stock outstanding or being offered 43
Limitations on the Payment of dividends to common or preferred stockholders 43
Other material rights of common or preferred stockholders 44
O. DEBT SECURITIES 44
Terms and conditions of debt securities that the company may have issued or to be 44
issued
Principal amount, maturity date, interest rate and other features of all debt 44
securities
All other material provisions giving or limiting the rights of the holders of debt 44
Trustees designated by the indenture for outstanding debt or for debt being offered 44
Preference Share 44
Corporate Directory 45
CREDIT RATING REPORT 46
AUDIT REPORT & FINANCIAL STATEMENT 61
Financial Projection 87
Auditors' report under section 135(1) and Para 24(1) of Part II of Schedule III of the 89
Companies Act 1994
Ratio Analyses 91
Additional Disclosure by the Management 93
A. DISPOSAL OF SHARES:
1. Details of offloading shares by the Existing Shareholders as per Regulation 5 of Dhaka &
Chittagong Stock Exchange (Direct Listing) Regulations, 2006 as amended
The existing shareholders of the company shall offload 5,21,48,250 ordinary shares of Tk.10.00 per
share worth Tk. 52,14,82,500 (Fifty Two crore Fourteen lac Eighty Two thousand and Five hundred)
with a minimum market lot of 100 (Hundred) shares following the Regulation 5 of Stock Exchange
(Direct Listing) Regulations,2006 as amended, the Depository Act,1999 and regulations issued there
under:
i. As resolved in the Board of Directors of KPCL and also as per resolution taken in the EGM of
KPCL, 25% or the minimum required by the regulation of the proposed offer (i.e.
5,21,48,250 shares) to be sold to the general public/institutions at Market Price.
ii. The information Document, as vetted by DSE/CSE, shall be published in at least two widely
circulated national dailies (One in English and one in Bengali) minimum 7 (Seven) days
before commencement of trade upon listing by DSE/CSE along with an electronic copy for
posting in the web page of DSE/CSE.
iii. The company shall simultaneously submit the vetted Information Document with all exhibits
to SEC, to the Stock Exchange(s) where it tends to list its securities.
iv. The existing shareholders of the company shall sell their shares through brokers of the
exchanges upon listing.
v. No existing shareholders of the company shall sell more then 50% of his existing
shareholdings until the company holds the annual general meeting after completion of one
full accounting year of the company upon listing with the exchanges.
vi. The conditions stated clauses 4 and 5 are subject to the provision that the existing
shareholders shall offer for sell at least 25% (twenty five percent) of the shareholdings in
the Company within 30 (thirty )trading days from the date of commencing the normal
trading, i.e., after the price of the listed share is discovered and fixed following the book
building method as prescribed by SEC through Securities and Exchange Commission (Public
Issue) Rules, 2006, to the extent those are applicable or relevant in these respect.
vii. A. Allocation/Distribution:
10% (ten percent) of the said 25% shareholdings shall be allocated/distributed to the eligible
institutional bidder following the procedures prescribed for determining price under the
book building method, balance quantity shall be available for general investors through
normal trading system of the stock exchanges.
B. Lock-in:
There shall be lock-in of 15 (fifteen) trading days from the first trading day on the security
issued to the eligible institutional investors through book building method.
C. Others:
(i) The existing shareholders (i.e. sponsors/directors) shall be restricted from buying the
company’s share until completed disposal of the targeted 25% shareholdings.
(ii) The selling broker of the existing shareholders shall disclose through the stock exchanges
the local number of shares sold everybody along with the cumulative quantity sold and the
quantity of unsold shares until completion of sale of the said targeted 25% shareholdings.
(iii) Normal trade for general investors begin two days after transfer of the shares allocated
to the eligible institutional bidders is completed.
viii. SEC decision shall be final on certain matter. Notwithstanding anything contained in these
Regulations, in the event of any confusion or difference of opinion on any matter
whatsoever, the decision of the SEC shall be final and binding on all concerned.

The following declaration shall be made by the company in the Information Document, namely:-

“Declaration about Listing of Shares with the stock exchanges:

Applications have been made to the Dhaka and Chittagong Stock Exchanges for permission of the shares of the
Company for dealing in the said Stock Exchanges and for the quotation of the stock exchanges. After fulfillment
of all requirements by the Company, the Exchanges shall list the Company’s shares within three weeks from the
date of Publication of the Information Document, as mentioned in regulation 4, under intimation to the
Commission, provided there is no contrary opinion of the Commission in this respect.
In case of failure to fulfill the requirements by the Company, the Exchanges shall reject the application for
listing showing reasons thereof, under intimation to the Securities and Exchange Commission within 60 (sixty)
days from the date of application.”

1
2. Procedures to be followed for determining price under book building method
i) The indicative price which has been determined by the issuer in association with issue
manager and eligible institutional investors 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;
ii) Eligible institutional investors bidding shall commence after getting consent from the
commission for this purpose;
iii) 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;
iv) No institutional investors shall be allowed to quote for more than 10 %( ten percent) of the
total security offered for sale through book building method, subject to maximum of 5 (five)
bids;
v) Institutional bidding period will be 3 to 5 (three to five) working days which may be
changed with the approval of the commission;
vi) The bidding will be handled through the uniform and integrated automated system of the
stock exchanges;
vii) The volume and value of bid at different prices will be displayed on the monitor of the said
system without identifying the bidder;
viii) The institutional bidders will be allotted security on pro-rata basis at the weighted average
price of the bids (within the cut off price) that would be clear the total number of securities
being issued to them;
ix) 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 2 (two) working days prior to the date
of opening normal trade for general investors;
x) In case of failure to deposit remaining amount that is required to be paid by institutional
bidders for 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 investor quota.
3. Indicative Price for Book Building Purpose
Based on Indicative Price Offers received from seven Institutional Investors from amongst four
groups of institutional investors referred in rule 8.B.(16)(4)(c) of the Securities And Exchange
Commission (Public Issue) Rules, 2006; the Indicative Price for Book Building Purpose is fixed, in
consultation with the issue Manager and price offer from the eligible institutional investors through
proper disclosure, presentation, document, etc. at Tk 162.00 only as follows:-
SI No Offered by Category Indicative
Price
1 Standard Bank Ltd Financial Institution 165
2 Continental Insurance Ltd Insurance company 167
3 Swadesh Investment Management Ltd Merchant Banker 160
Bangladesh Finance & Investment Non Banking
155
4 Company Ltd Financial Institution
5 SAR Securities Ltd. Stock-Dealer (DSE) 160
6 B & B Enterprise Ltd Stock-Dealer (DSE) 165
7 Royal Capital Limited Stock-Dealer (CSE) 165
Average 162

2
The Indicative Price for Book Building Purpose is justified on the basis of the following
qualitative and quantitative factors:-

A. Earnings Based Value per share (EBVPS) based on financial statement for the year ended
31 December 2009

A.1 Earnings per share (EPS) 2.79

A.2 Average Market P/E of the sector 30
A.3 Earnings Based Value Per Share (A.1x A.2) 83.7

B. Earnings Based Value per share (EBVPS) based on projected financial statement for the
year ended 31 December 2010 to 2014
B.1 Earnings per share (EPS) 6.62
B.2 Average Market P/E of the sector 30
B.3 Earnings Based Value Per Share (B.1x B.2) 198.6
C. Net Asset Value Per Share(NAVPS) based on financial statements for the year ended 31
December 2009
C.1 Net Asset Value 3,865,314,106
C.2 Number of Shares 208,593,000
C.3 Net Asset Value Per Share (NAVPS) (C.1/C.2) 18.53
D. Market Value Of similar share under Power industry:
Face Value Six Month Avg.
Company Name
(BDT) Price (BDT)
Dhaka Electricity Supply 10*
166.08*
Company Ltd
Summit Power Limited 10* 129.46*
Average 147.77
* In equivalent face value
These companies’ stock prices are greater than their issue prices and face value. The strongest
reasons are the earning potential of the companies. Most of the companies are operating in their
full capacity and they are consistent in their operating performance and market dominance.

Qualitative factors: Rationales for fixing indicative price of KPCL

A) CRISL has assigned “AA” (pronounced as double A ) rating in the Long Term and “ST-1” rating in the
Short Term to Khulna Power Company Ltd. based on financials and other relevant quantitative and
qualitative information. The above ratings have been done on the basis of its good fundamentals such
as sound equity based capital structure, sound debt repayment background, high quality plant,
satisfactory profitability, government guarantee against power purchase, insignificant market risk on
demand, government supportive policies for power sector etc. Entities rated in this category are
adjudged to be of high quality, offer higher safety and have high credit quality. This level of rating
indicates a corporate entity with sound credit profile and without significant problems. Risk factors
are modest and may vary slightly from time to time because of economic conditions. The short term
rating indicates highest certainly of timely payment. Short-term liquidity including internal fund
generation is very strong and access to alternative sources of fund is outstanding. Safety is almost risk
free like Government short-term obligations.
B) Bangladesh Power Development Board (BPDB), off-taker of KPCL, acknowledges KPCL as the best
available and the most reliable power plant for its excellent track record in operation. It has been
successfully supplying reliable power to the national grid since 1998 without any interruption for a
single day. KPCL plant has also been recognized by the third party inspectors, surveyors and
specialists as the best maintained fuel oil operated power plant. The plant availability has always
been near to 100%.

3
 C) KPCL never compromises with the quality of operation, maintenance, safety of plant and personnel
and in that consideration, engaged Wartsila, Finland, a world renowned equipment manufacture (also
the manufacturer of KPCL plant), for the operation and maintenance of KPCL plant. KPCL plant
operation has been certified by Bureau Veritas (BV) on :

• Quality Management System (QMS) with ISO 9001 – 2008

• Environmental Management System (EMS) with ISO 14001 – 2007
• Occupational Health and Safety Administration System (OHSAS) 18001 – 2007
D) KPCL plant engines are having the dual fired capability i.e it can be converted into natural gas
whenever gas will be available at the south-eastern region. Conversion into natural gas will enable
the company to earn more revenue as compared to running on furnace oil, since the gas tariff
structure as fixed by BPDB is more attractive than furnace oil based tariff structure.
E) The strategic location of the KPCL plant at the south-eastern region is an added advantage for KPCL.
There are only few power plants in that region and as such KPCL is required to meet major portion of
the demand of that region. Therefore, the utilization of the entire capacity of KPCL plant through out
the year is almost certain.
F) The useful life of KPCL plant is 30 years. Therefore, no further capital investment will be required for
the existing plant to carry out another extended term.
G) BPDB is the only buyer of KPCL and thus the revenues are 100% realizable. Unlike DESCO or DESA,
KPCL has no system loss or no bad or doubtful debt.
H) In the context of Bangladesh economy, the demand for power or the demand of power sector is
thriving and insatiable. At present, the demand and supply gap is 1,700 MW. In consideration of
current generation capacity, also together with the future planning for generation of additional
capacity, Bangladesh will not be able to meet the increasing demand for power. As a result, the
power sector will continue to rule as top most demanding and dominating sector in the economy and
no other sectors enjoys such a high demand profile. Therefore, KPCL’s revenue earnings and its
further growth and future potential is highly certain beyond any doubt.
I) The proposed expansion of KPCL plant will enhance the KPCL earnings almost three times higher than
the existing one. There will be no further fixed operating expenditure except the variables for the
additional unit as the same will be run by the same management and production team. No further
land will be required and the engines are likely to be more efficient for improved technology over the
years.
J) KPCL’s long eleven years of experience in running liquid fuel power plant and proven record of
operation will help KPCL management to run the expansion unit more efficiently and diligently and to
achieve more optimization and economy of operation which will contribute to the enhancement of
KPCL’s earning.

Extension for another term of the project and Expansion of the capacity for additional 100 MW
(+/- 10 MW):

Rationale:

i) The Article 2.3 of PPA has a clear provision that the project is renewable for a further period, subject to
agreement in writing by the parties at the latest twelve months prior to the expiry.

ii) The KPCL plant is most reliable and efficient plant in the BPDB grid, available for 365 days of the year and
with its 19 generating units, it is the most flexible and capable to meet BPDB’s ever varying load demand.

iii) For dwindling natural gas production in the country, the natural gas based power plants are in deep
crisis. Natural gas is being used in 85% of total generation and due to short supply, a few of the
existing plants running on gas may face shut down in the near future. Taking the above into
consideration, the Govt. has already adopted a policy to use liquid fuel for generation of electricity.
Accordingly, the future power plants will be built based on liquid fuel operation. Therefore, the
extension of the term of KPCL plant is the imperative for the BPDB to meet the shortage of power.

iv) KPCL plants runs on Furnace Oil, the least cost liquid fuel, shall be most viable commercially.

v) The existing shortage in generation capacity of the country shall continue to exist much beyond the
year 2013, when the tenure of the current PPA expires. Even in the year 2013 many of the BPDB old
plants shall retire and many will face shut down or capacity reduction owing to gas shortage

Therefore, the extension of current PPA with BPDB shall take place as a natural consequence.

Currently maximum generation capacity of all public and private power plants together is about 4,300 MW but
country’s peak demand is about 6,000 MW. There is a demand supply gap of 1,700 MW and it will be widen
further as a result of the general increase of demand. Considering of the increasing demand of power and the

4
govt.’s future planning for addition of new generation, yet the demand supply gap will be increasing like 2,648
MW in 2011, 3,132 MW in 2012, 3,259 MW in 2013, 3,799 MW in 2014 and 4,362 MW in 2015. Most interestingly,
in 1998 when KPCL plant was connected to the national grid, the demand supply gap was about 1,000 MW and
over the last 11 years it has gone up to 1,700 MW. In order to minimize the shortage of power, initiatives are
being taken by the Govt. to welcome private sectors to set up more power plants.

KPCL is currently in negotiation with BPDB for its expansion for additional capacity of 100 MW (+/-10 MW). In
view of the above mentioned existing shortage, further worsening in future due to gradual increase of demand
of the power and the short supply of natural gas, the Govt. has decided to offer the expansion of the capacity
of existing power plants which are running on liquid fuel. KPCL plant is among the two plants that are running
on liquid fuel and thus proposed for expansion which is in process.

Therefore, for the reasons stated above the Govt. of Bangladesh is strongly considering the expansion of KPCL
plant capacity by another 100 MW (+/- 10 MW).

Energy sector companies are strong player with huge operating profit and its shareholders have taken
the benefit of direct listing from the gain of offloading of shares. Superior asset management and
earning potential, strong fundamental position, greater liquidity and technological soundness make
these companies better player in the stock market. KPCL is a peer company of these companies
which also has a sound financial background and operational efficiency. So, it is optimistic to
expect that KPCL will perform better than its Competitors and Peer companies. Considering the
average value and the fact that the company is renowned “Electricity generating company” having
well known client’s base and brand image, so the indicative price is just and fair.

4. The company has opened an Escrow account with BRAC Bank Limited “Khulna Power EII Escrow
Account” No. 1501100976943002 for collecting bid money from the eligible institutional bidders
under Book Building Method.
To To
The Secretary The board of directors
Dhaka Stock Exchange Limited Chittagong Stock Exchange Limited
Dhaka Chittagong

Dear Sir,

UNDERTAKING

We undertake, unconditionally, to abide by the Listing Regulations of the Dhaka/Chittagong Stock

Exchange Limited which presently are, or hereinafter may be in force.

We further undertake:
That our shares and securities shall be quoted on the Ready Quotation List and /or the Cleared List
at the discretion of the Exchange.
That the Exchange shall not be bound by our request to remove the shares or securities from the
ready Quotation List and /or the Cleared List.
That the Exchange shall have the right, at any time to suspend or remove the said shares or
securities for any reason which the Exchange considers sufficient in public interest.
That such provisions in the Articles of Association of our company or in any declaration or basis
relating to any security as are or otherwise not deemed by the Exchange to be in conformity with
the Listing Regulations of the Exchange shall, upon being called upon by the Exchange, be amended
to supersede the Articles of Association of our company or the declaration or basis relating to any
security; and
That our company and /or the security may be de-listed by the Exchange in the event of non-
compliance and breach of the Regulations and/or of this undertaking after giving an opportunity of
being heard to us.

Yours faithfully,
Sd/-
Managing Director

5
B. RISK FACTORS AND MANAGEMENT PERCEPTION ABOUT RISK:
As with all investments, investors should be aware that there are some risks associated with an
investment in the Company. The investors should carefully consider the following risks in addition
to the information contained in the prospectus for evaluating the offer and taking decision whether
to invest in shares of the company.

a) Interest Rate Risk:

Interest/financial charge are paid against any kind of borrowed fund/ preference shares. Instability
in money market and increased requirement for fund may put pressure on interest rate structure.
Rising of interest rate increases the cost of borrowed fund and consequently it may impact on the
profitability.

Management Perception: Currently, KPCL has working capital debt obligation from several banks
and preference shares which are comprised with fixed financial charges. But the Company has solid
revenue source and is highly profitable. The rate for the financial charges are fixed so, KPCL
doesn’t have such risk.

b) Exchange Rate Risk:

KPCL imports mostly fuel against payment of foreign currency. Unfavorable volatility or currency
fluctuation may affect the profitability of the company.

Management Perception: KPCL is fully aware of the risk related to currency fluctuation but
practically doesn’t possess any foreign exchange risk as 99% of the Other Monthly Tariff (OMT)is
convertible and fuel is being imported through L/C and the exchange rate Sonali Bank Ltd. is
acceptable to BPDB under pass through payment process. Moreover, KPCL executes favorable and
competitive foreign exchange rate from its bankers against its L/C payments.

c) Industry Risk:

The supply of electricity and alternative energy is not adequate than the demand of it. For that
reason organizations engaged in generating electricity can’t provide all required amount of
electricity. Power companies mainly supply electricity to national power distributors to supply
electricity.

Management Perception: KPCL supplies electricity to BPDB in the south-western region of

Bangladesh and it’s a dedicated power plant with a guaranteed payment from BPDB and GoB under
the PPA. So, possibilities of entering new power companies wouldn’t create any industry risk for
the company.

d) Market and technology related Risk:

Technology is related to generation, transmission, distribution, quantity measuring and maintaining

of required electricity generation.

Management Perception: The Company is operated by the plant manufacturer, Wärtsilä, the
leading power plant manufacturer and plant operator in the world. Wärtsilä is technologically
advanced enough to keep KPCL plant out of such risk.

e) Potential or existing Government regulation:

The business activities of KPCL is fully controlled by policies, rules and regulation framed by
government, that is policies related to electricity price fixation, demand & supply and distribution
is fully under the control of Government. So, government policies in this regard may impact
business operation of KPCL.

6
Management Perception: The Power Purchase Agreement with BPDB safeguards KPCL from any
changes in government regulation. The PPA agreement is valid for 15 years till 2013 and can be
extended upon the consent of both parties. Moreover, in case of PPA termination, KPCL will get
compensation under the agreement from BPDB or GoB. Additionally, the huge shortage of power in
the country minimizes the chances of terminating the PPA agreement that mitigates related risks.

f) Potential changes in the global or national policies, natural calamities etc:

The performance of the company may be affected due to unavoidable circumstances in Bangladesh,
as such political turmoil, war, terrorism, political unrest in the country may adversely affect the
economy in general. Moreover, natural disasters like Cyclone, Tide, and Earthquake may hamper
normal performance of power generation.

Management Perception: The risk due to changes in global or national policies is beyond control
for any company. Yet the company is well prepared for adoption of policies and preventive
measures as and when required to reduce the risk. The routine & proper maintenance of the
distribution network undertaken by BPDB reduces major disruption due to natural calamities. But
severe natural calamities, which sometimes are unpredictable and unforeseen, have the potential
to disrupt normal operations of KPCL. But with prudent rehabilitation schemes and the very
effective and quick repair and maintenance lessened the damages caused by such disasters.
Political unrest leading to strikes, hortals etc. certainly plays negative impact in any business. But
electricity service being considered a daily necessity & in consideration of its use by all
irrespective of their political thoughts is always kept out of obstructions.

Furthermore, all such above risks are covered under the insurance agreement with CODAN Marine
(a subsidiary of RSA Group) to compensate the damages due to such uncertainties in extreme
cases. Thus, the risk due to natural calamities & political unrest is minimized.

g) Operational Risk:

ª Risk associated with limited tenure of the present Power Purchase Agreement:

The tenure of the present PPA between the Company and BPDB is limited to 15 (fifteen) years from
the date of commercial operation i.e. till 13th October, 2013.

Management Perception: On the backdrop of development need for the economy, power
generation is one of the priority sectors of the government. With the existing deficit in power
generation capacity, the government is expected to continue with the same policy level support
for the sector. Dispute with any one operator may lead to adverse repercussions throughout the
industry. As such, no major dispute with the government is envisaged. There is a provision in the
PPA for enhancement of the project life. BPDB and KPCL have been considering to expand the
capacity of the Berge Mounted Power Plant utilizing the area of its leasehold property, KPCL wants
to install additional 7 generation units with the capacity of 15 MW each to generate total 100 MW.
The strategy is to generate and produce more electricity by using fewer big engines with higher fuel
efficiency.

ª Risk associated with single party exposure:

The BPDB is the single buyer who purchases total electricity generated by the Company. The
Company’s ability to service its both existing and future financial obligations rest on the BPDB’s
ability to meet the tariff payments under the PPA.

Management Perception: KPCL is out of the single party risk exposure as it is guaranteed by BPDB
for the payment in case the plant runs lower than 50%. Moreover, L/C issued by BPDB for two
months’ minimum guaranteed payment. Therefore, the Implementation Agreement signed by the
Government through Ministry of Power, Energy and Mineral Resources is considered to be
Government guarantee to protect the Company from single party risk exposure.

7
 ª Risk associated with tariff of electricity:

The BPDB is the single buyer who purchases total electricity generated by the Company. In these
circumstances usually it is the buyer who may determine the tariff value of the electricity
generated by the Company.

Management Perception: In this case no risk is associated as BPDB and the Company have pre-
determined and contracted the terms and condition regarding the tariff of electricity, expressed
under two slabs – Other Monthly Tariff (OMT) and Fuel Tariff (FT) where OMT is based on delivered
MWh and FT is pass through. Tariff for each year is adjusted and indexed from time to time in
accordance with the PPA and the said Reference Tariff is used to calculate the Tariff in Effect for
any Billing Month during the Term of the Agreement.

ª Risk associated with supply of raw materials:

The main raw material for generating electricity is Heavy Fuel Oil (HFO). Any interruption of
supplies of the fuel to the power plants will hamper the generation of electricity, the only product
of the Company.

Management Perception: Kuo Oil Pte Ltd. Singapore has been supplying Heavy Fuel Oil (HFO) to the
Company through United Summit Coastal Oil Limited and the risk of price fluctuation in the global
oil market is automatically done by the very FT structure which is based on fuel cost as a pass
through item. Moreover, KPCL can source HFO from other sources if Kuo Oil is unable to supply.

ª Risk associated with supply of spare parts:

The power plants are dependent on timely supply of spare parts for smooth operation purpose. Any
disruption in supply flow of spares parts will put an adverse impact on power generation.

Management Perception: Under the Operations & Maintenance Contract with Wartsila, the
Company has signed a Spare Parts Support Agreement (SPSA). Wärtsilä also maintains sufficient
spares parts inventory for smooth operation of KPCL plants. In addition, KPCL maintains safety
spare parts stock of US$ 2 million.

ª Risk associated with payment:

There is an impending risk in the case of delayed payment from BPDB. In case of any dispute with
BPDB or failure to comply with certain rules and regulations, BPDB may stop making payments to
KPCL resulting into non-payment to its lenders.

Management Perception: KPCL is getting the payment regularly from BPDB. Sometimes, there are
delays in payment but that is mainly due to administrative reasons. Till date, no payment has been
defaulted. As per the PPA with BPDB, there is a penalty clause and BPDB needs to ensure minimum
guaranteed payment supported by Letter of Credit. .

Additionally, GoB through the Implementation Agreement provides sovereign guarantee with
regard to payments, hence possibly mitigating risk of any non-payments.

ª Risk associated with systems failure and sabotage:

System failure may take place resulting into damages for KPCL. Moreover, internal conflict among
the workers and engineers may also disrupt operation.

Management Perception: There is an agreement with the O & M Contractor and equipment
supplier to provide maintenance and equipment support. Additionally, any equipment and
mechanical support will be provided for in case the plant needs to be converted from a fuel based
to a gas based plant. In addition, the company has prudent insurance coverage with CODAN Marine
which covers all risks package including Machinery Breakdown, Business Interruption, Third Party
Liability, Sabotage and Terrorism.

8
 h) Force Majeure:

Force Majeure events are circumstances in which a delay in the performance of any obligation
under the PPA is beyond the reasonable control, and occurs without the faults or negligence, of the
parties concerned.

Management Perception: If the Company is affected by a Force Majeure event after commencement of
commercial operation, the BPDB will only pay capacity components and energy components to the Company,
to the extent that the unit is available. However, financial loss due to unavailability of the plant after a
Force Majeure event will be mitigated by the Company’s insurance policy. If BPDB is affected by a Force
Majeure event after commercial operation, it will pay the Company its debt servicing costs less insurance
proceeds and / or any available capacity component and energy component received by the company during
the Force Majeure period. In case of Political Force Majeure event or change in law, the BPDB will pay the
Company, to the extent that the unit is available and the Government of Bangladesh will pay required
amount to cover the capacity component up to 50%.

i) Risk associated with environmental pollution:

KPCL plant operation may cause air and water pollution which may affect the ecological balance
and living condition and health of the people around the plant.

Management Perception: The Operations and Maintenance (O&M) contractor of KPCL plant,
Wärtsilä Bangladesh Ltd, Khulna Plant (WBD-KP) is responsible for environmental management of
the project.
Plant operation is certified by Bureau Veritas (BV) on:
• Quality Management System (QMS) with ISO 9001 - 2008
• Environmental Management System (EMS) with ISO 14001-2007
• Occupational Health and Safety Administration System (OHSAS) 18001 - 2007

The EMS Manual covers all the elements that are required to be monitored for compliance of ISO 14001 and
local Department of Environmental Guidelines. Under the EMS, ambient air quality by passive sampling
method continuously, basin water quality and sanitary discharge tested on monthly basis and ambient noise
level is measured on monthly basis, and is monitored for compliance. Quarterly reports, compiling all the test
and measurement results are submitted to Department of Environment (DOE). Exhaust gas emission is
monitored by stack testing annually, and elaborate reports are submitted to DOE every year. For each and
every fuel oil delivery and handling, containment boom is used to minimize the risk of accidental spillage and
pollution. At regular intervals, independent auditors or Bureau Veritas carry out surveillance audit to assess
the compliance with the EMS of ISO 14001-2007 but so far no non-conformity noted. Similarly, DOE officials
inspect regularly and monitor environmental performance of the plant and till date no non-conformity
reported. Overall, plant operation does not pose any hazard to the environment of the plant area and its
surroundings.

j) Non-Operating history

There is no history of non-operation in the case of KPCL.

Management Perception: To overcome these uncertainties, the Company has its own extra Engine
and fuel backup, efficient management and continuous monitoring systems, which reduce the non-
operating risk.

k) Risk of “Operation and Maintenance Agreement” by “Wartsila”

There is a risk of on non-continuation of “Operation and Maintenance Agreement” (“O&M Agreement)

by “Wartsila”

Management Perception: In case of discontinuation of the O&M agreement with Wartsila, KPCL shall
take over the O&M under own management since Summit and United group have been operating &
maintaining their own power plants over 300 MW capacity by themselves. Moreover, the existing
personnel of the Wartsila can be retained too by KPCL if required.

9
C. DESCRIPTION OF THE BUSINESS:

Information about the Company

ƒ Background

In 1997 the Bangladesh Power Development Board (BPDB) was faced with the challenge to ease a
critically short power supply in the South Western Zone of Bangladesh. The electrical demand had
been consistently higher than available capacity, and generation costs in the area had been very
high due to the low efficiency of existing equipment and the heavy use of expensive, low-
availability fuel. In October 1997, BPDB signed a Power Purchase Agreement with Khulna Power
Company Ltd. for a 110 MW floating base load power plant at Khulna, to help ease the electricity
shortage.

ƒ Description

Khulna Power Company Ltd. is a public limited company which was incorporated as a private
limited company in Bangladesh on October 15, 1997. Its paid up capital is BDT 2085.93 million (US$
44.10 million) It is the first independent 110MW barge-mounted power plant that commenced
operation in October 1998 under a 15 year PPA from the government (expiry 2013). When
established, KPCL shareholders were Coastal Power Company (later Coastal was merged with El
Paso Corporation, USA) through its direct wholly-owned subsidiary El Paso Khulna Power ApS,
Summit Industrial & Mercantile Corporation (Pvt.) Ltd. (Bangladesh), United Enterprises & Co Ltd.
(Bangladesh) and Wärtsilä Development and Financial Services (Asia) Ltd. Now only local
shareholders hold 100% ownership of the company. KPCL project was initially financed by the IFC
and the sponsors’ equity with a debt-to-equity ratio of 54:46. The total initial project cost was USD
96.07 million

The principal activity of KPCL is to own and operate barge mounted power plants in Khulna and
supply electricity to the national grid of Bangladesh. The plant came into operation in October
1998. Nine engines generators are mounted on one barge and ten on the other. The barges, shipped
as deck cargo on a submersible dry tow ship, are moored in a closed basin. Each barge is
approximately 91 meters long and 24 meters wide. These two barge-mounted plants were
connected to the national grid. The plant consumes about 600 MT of Heavy Fuel Oil daily to
generate 110 MW power by the 19 generators on the two barges located in Khalishpur, Khulna.

The project was the first IPP implemented under the then new Government of Bangladesh
guidelines for private power projects. As Bangladesh has enjoyed steady growth in recent years, the
infrastructure to supply electricity to the economy has not kept pace with this growth. Reliability
of electricity supply, which has been a growing problem over the years, has now reached crisis
proportions. Peak demand is about 5500-6000 MW, whereas available generation is about 4200-4500
MW. The demand supply imbalance has now become a major bottleneck to economic growth. The
Khulna power project is a fast-track response to the power shortage.
KPCL plant was designed to alleviate the severe power shortages in the Khulna and adjacent areas,
identified as industrial growth Centres by the Government of Bangladesh, while improving the
overall reliability of the country's power supply. The facility displaced the generating capacity of
the older, less efficient, and high-cost plants in the region. The plant conformed to all applicable
environmental standards.

The plant has already changed the economy of the adjacent region directly and positively. It has
provided employment to over 110 people from the surrounding areas and many of the jobs are
technical and managerial in nature. Significant numbers of jobs have been created at the fuel
terminal, barges, restaurants, transportation services, and other ancillary businesses created to
serve the needs of the plant. New industrial and commercial establishments have been opened to
take advantage of the stable and reliable power, and existing establishments do not require back-
up generators. In addition, the plant has contributed significant funds toward social causes in the
region.

10
The plant is managed by the O&M operator – Wärtsilä, a globally recognized power plant
manufacturer and operator. A team of skilled technical people are engaged in the operations of the
plant. The operational process has been developed by an expert team. For any technical assistance,
the equipment suppliers extend their support, this is backed by other consultants support as and
when needed. Management team is professional and has a successful track record and possesses
requisite expertise to run the operations.

KPCL financials is audited by Rahman Rahman Huq, a member of KPMG. The company has shown
stable performance with steady sales as in any typical utility companies. The company has received
power a tariff of BDT 8.06/kWh during the January – December 2009 period, whereas it received a
tariff of BDT 10.51/kWh during the January – December 2008 period. The differences between the
period was due to tariff slabs variation of cost of fuel and foreign currency rate.

This is an environmental review category B project. Environmental and social issues associated with
the project include: site selection and land use, site contamination from past activities, air
emissions and noise from construction and plant operation, liquid effluents, liquid and solid waste
disposal, oil transportation safety and spill potential, social impacts, fire prevention and emergency
response, employee health and safety programs, and impact management and monitoring. KPCL has
prepared an environmental assessment for the project to address these issues and demonstrate that
the proposed project will comply with applicable governmental and World Bank requirements. The
proposed site for the project was identified by BPDB in their RFP for the project. The project is
located on an uninhabited, vacant property owned by PADMA, the state oil company. No
resettlement of residents or economic displacement was required.

ƒ Expansion plan

During establishment of the company, the project concept envisaged expansion. KPCL is now
discussing the next expansion plan of the company with BPDB which the management wants to
finalize within one year.

The experience gathered by the management during the implementation of initial 110 MW project
will be applied for formulating new strategy in tariff determination and operation of the future
projects. Accordingly management took the strategy of negotiating with BPDB for the revised Power
Purchase Agreement (PPA) and other project documents for easy operation, maintenance and better
return of the expansion project. Accordingly the BPDB and KPCL have been considering the
agreements to expand the capacity of its Berge Mounted Power Plant to land based power plant.
With the area of its leasehold property, KPCL wants to install additional 110 MW capacities with
power generating engines. The strategy is to generate and produce more electricity by using fewer
engines. The expansion plan will be for 22 years effective from Commercial Operation Date.

11
ƒ Ownership

The ownership structure of KPCL is as follows:

Summit Industrial and Mercantile Corporation (Pvt.) Ltd. 49.9832%

United Enterprises & Co. Ltd. 49.9832%
Others 0.0336%

ƒ Company At A Glance

Company Name : Khulna Power Company Ltd. (KPCL)

Registered Address : Summit Centre (5th Floor), 18 Karwan Bazar, Dhaka-1215
Plant Address : Goalpara, Khalishpur, Khulna
Paid Up Capital : Tk. 2,085,930,000.00 (Ordinary Shares)
Tk. 1,100,000,000.00 (Preference Shares)
Sponsors : Summit Industrial and Mercantile Corporation (Pvt.) Ltd.
United Enterprises & Co. Ltd.
Unique Client : Bangladesh Power Development Board
EPC Contractor : Wärtsilä NSD OY, Finland
Number of Employees : KPCL has 10 and plant has 113 engaged by Wärtsilä O&M operator
Total electric output : 110 MW
Electrical efficiency : 43.5 %
Engine type : 19 x Wärtsilä 18V32LN
Year of Starting Operation : 13th October 1998

Annual General Meeting held in last 5 years:

Year Date of AGM held Declared dividend

2004 (7th) 3 May 2005 7% Cash
2005(8th) 11 September 2006 Nil
2006(9th) 24 July 2007 Nil
2007(10th) 21 June 2008 57.53% Cash
th
2008(11 ) 23 June 2009 10% Cash

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(1) Principal Product or Service of the Company:

KPCL is engaged in business of generation of electricity and sells the same in bulk to BPDB through
its national transmission grid and BPDB distributes the energy in the south-western region of
Bangladesh.

(2) The relative contribution to sales and income of each product or service that accounts for
more than 10% of the company’s total revenues:

Electricity is the only product of KPCL. So, contribution of more than 10% by any other product to
the total revenue of the company doesn’t arise.

(3) Name of associates, the subsidiary/related holding company and their core areas of
business:

Khulna Power Company Ltd. (KPCL) has no associates, the subsidiary/related holding company
however there are common directorship in the following related companies:

Sponsors

KPCL is now fully owned by the local entrepreneur group, namely – Summit Industrial and
Mercantile Corporation (Pvt.) Ltd. and United Enterprises & Co. Ltd. However, the Khulna Power
Project was originally developed by a consortium led by Wärtsilä Corporation (“Wärtsilä”) with
which BPDB signed a Power Purchase Agreement (“PPA”). Wärtsilä is a leading manufacturer of
medium speed diesel engines and had successfully developed similar power projects at several
locations worldwide.

Coastal Power Company, a wholly owned subsidiary of The Coastal Corporation (“Coastal”), joined
the consortium in August 1998. Thereafter, Coastal and El Paso Energy Corporation merged in
January 2001 to form El Paso Corporation (“El Paso”). El Paso is one of the world’s largest and
most diversified natural gas exploration and pipeline companies with an enterprise value in excess
of $50 billion. As the major equity holder in KPCL with 73.9% interest, El Paso was responsible for
the management of the Plant up to April, 2008.

The local Shareholders are Summit Industrial and Mercantile Corporation (Pvt.) Ltd. (“Summit”) and
United Enterprises & Co. Ltd. (“United”). Summit is an investment group with significant holdings in
liquid fuel storage terminals. It is also an investor in six Rural Electrification Board (“BPDB”) small
power projects, gas pipeline construction on a build-transfer basis, liquid fuel shipping, and real
estate construction. United has ownership in Bangladesh’s largest private liquid product bulk
storage terminal, real estates, and one of the largest Hospitals and a private University. It has
implemented several BPDB small power projects, and has worked very closely with Summit. Summit
and United have contributed a combined 20% of the Project’s equity.

The sponsors have invested total equity capital of US$ 44 million, with 73.9% ownership by El Paso
Energy; 10% by Summit Industrial and Mercantile Corporation (Pvt.) Ltd.; 10% by United Enterprises
& Co. Ltd.; and 6.1% by Wärtsilä.

But changes were made in the Ownership Structure as El Paso Corporation, as part of its global
repositioning strategy, offered its stake of 73.9% in KPCL for sale. Reportedly CDC Globeleq has
principally agreed to purchase El Paso's interests in Asia on a portfolio basis (Bangladesh, Indonesia,
Pakistan, Philippines). However, for sale of shares in the company per terms of the shareholders'
agreement allows existing shareholders first right of refusal and therefore local shareholders –
Summit Industrial & Mercantile Corporation (Pvt.) Ltd. and United Enterprises & Co. Ltd. have
expressed interest to purchase El Paso's 73.9% stake in KPCL, at the offered price of CDC Globeleq.
Consequently, Summit and United jointly acquired El Paso shareholding and later Wärtsilä’s share
was also acquired by Summit and United.

13
Background of Past Shareholders
EL PASO

El Paso, North America’s leading provider of natural gas

services was a 73.9% shareholder in KPCL. The company has
core businesses in production, gathering, processing, and
transmission of natural gas, as well as liquefied natural gas
transport and receiving, petroleum logistics, power generation, and merchant energy services. It is
rich in assets and is fully integrated across in natural gas value chain and is committed to
developing new supplies and technologies to deliver energy to communities around the world.

El Paso Energy International pursues a low risk, power-oriented investment strategy, as a project
developer. This strategy has helped the company build diversified project portfolios supported by
fixed return contracts in countries around the world. These portfolios present significant
opportunities to build robust businesses in selected markets where the right combination of
economic, regulatory and industry conditions exist. By focusing on regional business growth, El Paso
can export the broader skill set of the entire company to produce significant growth.

WÄRTSILÄ

Wärtsilä Corporation is the leading global ship power and power

plant supplier. Wärtsilä enhances the business of its customers by
providing them with complete lifecycle power solutions. It is a
major provider of solutions for decentralized power generation and
of supporting services. Most of its IPP deliveries were directed to
Asia, North America and all other continents.

Wärtsilä plans to contribute to solving the global needs of sea transportation and power generation
by developing equipment and services that convert fuels into power efficiently at the lowest
possible environmental impact. It has its own worldwide service network in 80 countries. Wärtsilä
takes complete care of customers’ ship machinery and related equipment at every lifecycle stage.
It plans to expand the business by providing innovative, reliable and valuable service, such as non-
O&M service in key ports, scheduled and condition-based maintenance, as well as operations and
maintenance contracts.

14
Background of Present Shareholders

Summit Industrial & Mercantile Corporation (PVT.) Limited – SUMMIT GROUP

Summit Group is one of the reputed local conglomerates of the

country having interests in power, EPC contracting, tank terminal,
shipping, properties, petroleum, inland container depot, trading
and so on. The group sponsored the first independent 110 MW
barge-mounted power plant KPCL in 1998, three 11 MW power
plants for BPDB, the country's first and biggest private sector inland
container depot in Chittagong. They have also pioneered locally the first granite and marble
cutting, polishing and finishing plant. The group is recognized as a major infrastructure-industry
company of Bangladesh employing over 1,000 people.

Brief overview on Summit Group sister concerns are given in the following:

Summit Industrial & Mercantile Corporation (Pvt.) Limited

Summit Industrial & Mercantile Corporation (Pvt.) Limited (SIMCL) is a holding company established
in 1985 sponsoring fourteen different companies, ranging from shipping to power. SIMCL is one of
the largest companies in Bangladesh with a significant interest in infrastructural development. Out
of fourteen different companies, two of its holdings, Summit Power Limited (DSE: SUMITPOWER)
and Summit Alliance Port limited (DSE: SAPORTL) are publicly listed. Of these publicly listed
companies Summit Power Limited (SPL) accounts for supplying a total of 215 MWs of electricity in
Bangladesh. It has power plants located in various parts of Bangladesh mainly in the suburban
industrial areas where there is the greatest need for electricity. SPL has grown over 600 % in the
past 10 years resulting in increased efficiency and economies of scale.

Brief history of the growth and development of SIMCL

• SIMCL was incorporated as a private limited company in Bangladesh on 7th

December 1985.

• In 1988, the company in addition to the import business started the export of
Molasses from Bangladesh.

• The year 1989 marked SIMCL's first foray into infrastructure development with the
establishment of Summit United Tanks Terminal (SUTT), which established SIMCL
as the first owner in Bangladesh of a liquid storage tank terminal.

• In 1991 SIMCL bought Van Omaren Tanks Terminal becoming the largest private
terminal owner and operator in Bangladesh. Subsequently the two terminals were
sold off.

• In 1992, the SIMCL started to export Urea fertilizer becoming the largest fertilizer
exporter in Bangladesh. That same year SIMCL purchased BTT, the oldest liquid
Tanks Terminal depot in Chittagong Port area, renaming it to SUTTL. After the
purchase the storage capacity of SUTT expanded from 17200 MT to 65100 MT.
SUTT further increased after the acquisition of VOTTL, a private sector tank
terminal, in Chittagong port.

• In 1997 the company took another leap in infrastructure development by

establishing the first private sector electricity generation plant of 114 MW, which
operated on furnace oil. Khulna Power Company (KPCL) continues to flourish till
date and is planning on expanding and also going public.

15
 • The year 1999 marked one of the highest rates of growth in the company’s history
through the formation of various companies in partnership with other major
companies and conglomerates both domestic and international. In 1999 SIMCL
partnered the United Group and Wartsila USA to form KPCL, the country’s first
110 MW Barge Mounted power Generation plant. That year also led to the
formation of USPCL, an LPG plant in Mongla, in association with the United
Group. Finally, the year was rounded to a close, in terms of energy development
through the formation of USCOL, an energy oil company, in conjunction with EL
Paso USA and the United Group. The year 1999 also earmarks the establishment
and development of USSL, a shipping company, created with joint partnership
between Summit and United Group. In its year of conception it bought two Ocean
going tanker vessels and became the first ISO 9002 certified shipping company in
Bangladesh. Summit continued its extraordinary growth through the formation of
Summit Pipeco Limited in partnership with the Alliance Group. Summit Pipeco
teamed up with Daquing a company based out of China to execute the EPC of 54
Km Ashuganj- Hobiganj gas pipe line construction work in Bangladesh

• In 2000 summit power limited (SPL) was established to set up ‘distributed

power’ in Bangladesh. Presently SPL has seven power plants providing electricity
to 600,000 homes, generating 215 MWs of electricity with natural gas as its fuel.

• In 2004, the company formed SAPL to expand its capacity and operations in the
container terminal field. SAPL is also traded and publicly listed in the Dhaka Stock
Exchange and Chittagong Stock Exchange. OCL and SAPL together deals with 15%
of the country’s import cargo and 30% of the export cargos. The two companies
are both located in Chittagong port and helps facilitate port services, they over
50 acres of freehold land and operates a streamlined modern container handling
and empty storage facility with a capacity of 4000 tones.

• In 2006, the Summit acquired a Dhaka Stock Exchange membership (Membership #

146) in the name of Cosmopolitan Traders (Pvt.) Limited a sister company of
SIMCL and substantial share of the following companies:

i) National Housing Finance & Investments Limited.

ii) IPDC of Bangladesh Ltd.
iii) Bangladesh Commerce Bank Limited

• In 2009, the company set up SCL (Summit Communications Limited) to break into
the telecommunication sector to provide much needed revitalization to the
Bangladesh’s telecommunications. Improvement in the telecommunications
sector is a move towards ingratiating Bangladesh into the larger global
community. This project is yet another inference to the revolutionary nature of
SIMCL investment portfolio.

SIMCL’s financial position at the end of the accounting year as of 31st December 2009 was in a sound
and stable position having a total of Taka 593.70 crores in total assets with a net worth of Taka
560.32 crores. The total turnover for the year was Taka 198 crores with a net profit of Taka178.29
crores after tax.

Ocean Containers Ltd.

Ocean Containers Limited (OCL) is a pioneer in the inland container depot and freight stations and
is the largest privately owned land container port in Bangladesh. It is located at Patenga Industrial
Area of Chittagong on the international airport road, which is only 6 km from the country’s largest
seaport, Chittagong Port.

OCL owns 15 acres of custom bonded free hold land. Currently, OCL can stuff and de-stuff 50,000
containers annually. It also has an empty storage facility for 6,000 TEUs. OCL is a custom bonded
warehouse. With the logistic support of its surface transport subsidiary in Ocean Transport

16
Company, it can deliver containers anywhere in Bangladesh. The company currently operates a
fleet of 24 prime movers with 40 feet trailers.

Government customs officers and OCL are working round the clock to keep our commitment. Our
fully computerized system allows us to keep track of all containers. OCL is an ISO 9001: 2000
Quality Management Certified Company. It is the first company in Bangladesh to have the ISO
certification for Inland Container Depot (ICD) and container freight station (CFS) operators.

OCL clienteles include Maersk-Sealand, Yang Ming Line, Happag-Lloyd, Kuhene & Nagel, Danzas,
Zim Line etc. OCL is in discussion with APL-NOL to have long term contract for consolidating their
export bound cargoes from Bangladesh. OCL already has similar arrangement with Maersk-Sealand.
OCL currently caters to the 30% of the garment’s export bound cargoes. By the year 2004 OCL aims
to consolidate 50% export bound cargoes of Bangladesh.

Summit Power Limited

Summit Power Limited (SPL), a concern of Summit Group is the first Bangladeshi Independent
Power Producer (IPP) in Bangladesh and until now the only local company in private electricity
generation and supply business providing power to national grid. SPL was incorporated in
Bangladesh on March 30, 1997 as a Private Limited Company. On June 7, 2004 the Company was
converted to Public Limited Company under the Companies Act 1994. SPL’s shares are quoted on
both DSE and CSE. SPL is the first company signing PPA with BPDB to build small size power project
in private sector with the objective of providing electricity to PBS through national Grid.

SPL has so far successfully established seven power plants and is supplying total 215 MW of
electricity to the national grid. SPL’s power plants comprises as follows:

i) Ashulia plant - 44.75 MW

ii) Chandina plant - 24.50 MW
iii) Madhabdi plant- 35.30 MW
iv) Rupganj plant - 33 .00 MW
v) Jangalia plant- 33.00 MW
vi) Maona plant - 33.00 MW
vii) Ullapara plant - 11.00 MW

Considering the immense opportunities, the company is striving to establish more power plants
around the country. The company is also planning to explore energy markets in Sri Lanka and
Vietnam.

Cosmopolitan Traders (Pvt.) Ltd (CTL)

Cosmopolitan Traders (Pvt.) Ltd (CTL) is a holding company involved in port related businesses such
as container depot, liquid storage terminal, gas terminal, shipping and other businesses.

Summit Shipping Ltd. (SSL)

Summit Shipping Limited (SSL), a private limited company was incorporated in 2nd June 1998 to
operate in transportation of liquid products. Cosmopolitan Traders (Pvt.) Ltd., a sister concern of
Summit Group, is the major shareholder of the shipping company. Subsequent to its incorporation,
SSL executed a 15-year ‘Transportation Agreement’ with United Summit Coastal Oil Limited
(USCOL). Presently SSL operates two tankers with a load capacity of 1,800 MT and 1,200 MT
respectively.
Expansion plans of the company include procurement of ocean going tankers for transportation of
furnace oil, edible oil and LPG from international market to Bangladesh. SSL has also implemented
ISO 9002 Quality Management System (QMS) in 2001. This was the first ISO 9002 certified shipping
company in Bangladesh.

17
United Summit Coastal Oil Ltd. (USCOL)

United Summit Coastal Oil Ltd. (USCOL), a joint venture between Summit, United and El Paso
International, USA, is the first private sector energy oil management company of Bangladesh. This
company was formed with the goal of managing the furnace oil requirements of the country’s
emerging private sector power generation companies. Leveraging on the expertise of a major
integrated oil company El Paso International USA, USCOL actively participates in sourcing, trading
and supplying energy oil in Bangladesh. The principal client of USCOL is Khulna Power Company
Ltd., which requires furnace oil to fire its generators. USCOL also actively markets its expertise to
other barge mounted power plants operational in Bangladesh, to other power producers who
require oil-based fuel for power generation.

Summit Alliance Port Ltd.

Located on both sides of the Beach road which is 7 km away from the multipurpose berths of the
Chittagong port, Summit Alliance Port is currently spread over an area of 17 acres. The port has a
40,000 sft warehouse capable of handling CFS stuffing upto 1,000 TEUs monthly and ICD with
handling capacity of about 4,500 TEUs for storage of empty containers at any time.

SUMCYNET

SUMCYNET is an innovative Web Design and Software Development company. The company is
composed of team of talented, experienced professionals, inspired by life, to generate the best
quality work. The excellence of work supported by the company is reflected in the client's
satisfaction. With extended experience and comprehensive knowledge, Sumcynet believes to have a
full understanding of its client's requirements and how to attend to them in the best way possible
within their specific time frame.

The customers are presented with top of the range, user-friendly, striking and interactive updated
website. The focus is to make sure that the client’s business is SEEN! The web designs/pages are
100% originals and are designed to the highest standards. The company ensures that clients receive
personalized care round the clock. Everything at Sumcynet Web Design is done in-house. The
company strives to create professional website for businesses at affordable price.

UNITED ENTERPRISES & CO. LTD – UNITED GROUP OF BANGLADESH

United Group has grown into one of the leading business houses in Bangladesh since its inception in
1978. United Group focuses in providing value added services and fostering business including
provision of total solutions to an increasingly developing economy of Bangladesh. United Group’s
fundamental strength is its commitment and enthusiasm to provide an excellent service for
customers. Since the beginning of the last decade the objectives of the group has been to
participate and take up investment opportunities in selected key infrastructure sectors and enables
it to meet the challenges of the new century. From its inception the group’s focus has been to
invest in key infrastructure areas. The key sectors where the group is currently engaged are power
generation, civil & hydro engineering, real estate developments, land port services on a build, own
and operate basis, international university, multi specialty hospital, shared banking ATM network,
textile mills, polymer industries, heavy construction equipments division, passenger lift &
escalators, turnkey solutions etc. The key sector in which it is engaged includes:

ƒ Manufacturing
ƒ Energy& Power generation
ƒ Broadcasting and communications
ƒ Port & Maritime transportation
ƒ Textile mills
ƒ Real Estate and Constriction
ƒ Healthcare and Hospital
ƒ Education

18
United Enterprises & Company Limited

United Enterprises & Co. Ltd. was established in mid-July 1978. The company expanded its areas of
business covering power generation, sub-stations, broadcasting and telecommunications, maritime
transportation and freights and the turnkey solutions and system management. United Enterprises
participated in various nation-building tasks of the GOB.

NOVO Healthcare & Pharma Ltd.

NOVO Healthcare & Pharma Ltd. started its journey in 2004 and has since gone on to become one of
the most trusted brands by doctors across the various fields of medical practice. Keeping in line
with the norm at United Group, NOVO is also a pioneering company among the other key players in
the field of pharmaceutics. With its cutting edge technology, NOVO has been successfully
manufacturing bulk drugs (RTF Pellets) since its inception. As a matter of fact, it is the first
company in Bangladesh which has been approved by the Drugs Authority (DA) for producing such
bulk pellets. Through rigorous research and development and thorough dedication, they are
currently manufacturing very specialized pellets of PPIs, Hematinics, etc. As a matter of fact, a
significant quantity of this is presently being used by a large number of local pharmaceutical
companies on a daily basis. This alone is a testament to how the company has heralded a new era
in the Bangladesh Pharmaceutical sector with its ever-evolving portfolio of powerful and precision-
tuned pharmaceutical products that help people to live healthier lives.

NOVO's concern for quality is reflected in every aspect of its products – from raw materials to
packaging materials. Utilizing quality ingredients in our manufacturing processes, fully equipped
quality control laboratories and state of the art production plants, the firm has been organized with
modern sophisticated technology that is continuously upgraded and standardized to meet the
highest level of international standards. In fact we are one of the few companies in Bangladesh who
have received the World Health Organization (WHO) certification for Current Good Manufacturing
Practices from the Drug Directorate. In the analytical and the micro biological laboratories; young,
energetic and skilled professionals are working with a great sense of responsibility to ensure quality
of all the products that leave through the factory gates. Along with various commonly acceptable
dosage forms like tablets, capsules, liquid, cream & ointment (LCO) as well as Powder for
Suspension (PFS), a wide range of life saving antibiotics and other pharmaceutics are predominant
in NOVO's product line.

United Hospital Ltd

United Hospital Ltd was born out of a vision to provide a complete and one-stop healthcare solution
to the people of Bangladesh. Opening its doors in August 2006 and situated besides the picturesque
Gulshan Lake, this hospital is one of the largest private sector healthcare facilities in Bangladesh.
With a capacity to house over 450 patients and established across a total covered area of over
400,000 sft, the hospital has 11 state of the art operation theatres to cater to the needs of our
varied patient base.

Departments of cardiology, gynaecology, orthopaedic and paediatrics of United Hospital are staffed
by the most esteemed doctors in their respective fields. As an example, a glimpse at our cardiology
department would reveal that till date we have conducted over 2300 open heart surgeries and over
8300 angiograms and angioplasty operations. That’s over 12 heart related surgeries per day alone
since our inception. With its technology and expertise, and with the support of very friendly staff,
United Hospital strives each day to be the number one healthcare provider, not only within
Bangladesh but within the Asia-Pacific region.

Malancha Holdings Ltd

In January 2007 Malancha Holdings Ltd. was born out of the necessity for uninterrupted, quality
power supply to the industries housed within the Export Processing Zones (EPZ) of Bangladesh.
Currently operating a 35 megawatt unit in Dhaka EPZ and a 44 megawatt unit in Chittagong EPZ,
this company allows its clients to concentrate only on their core business rather than worrying

19
about their energy requirements. The total project cost of the plants stand at Tk. 3750 million and
is powered by the latest Wartsila gas engines with the ability to produce 8.73 megawatts of
electricity each. High voltage 33/11 KV substations comprising of two 16/25 MVA, 11/33 KV power
transformers along with required length of 11 KV distribution lines have been built by MHL under
each of the two project sites. Thus MHL has constructed multidisciplinary infrastructures like power
generation, high voltage transmissions and distribution and high/low pressure gas pipelines for the
project. In effect, this makes us the only true independent power generation and distribution
company in all senses of the term. It is a model that we plan to replicate across all the EPZs of the
country. On top of this unique achievement, MHL has been regularly providing its surplus energy to
the Rural Electrification Board (REB) of Bangladesh, thus lighting up thousands of homes across the
nation. We can only hope that one day our approach to power generation will make our country a
shining beacon within the Asian region.

Comilla Spinning Mills Ltd.

In a country where the textiles industry is one of the major contributors to the GDP and indeed one
of the largest earners of foreign exchange, Comilla Spinning Mills Ltd. has managed to make its
mark as a maker of high quality cotton, polyester and mixed yarns. Established in 1996, the factory
is nestled in the heart of Burichong, Comilla, spread over 13 acres of land, with 1100 full-time
dedicated workers managing and operating the plant around the clock. With 18,000 spindles
initially, it was projected to go under a progressive expansion program and methodical
development through scientific research, design and creative plan of operation. As it stands now,
the plant has almost 50,000 functioning spindles being complimented by other high-end European
machineries producing roughly 14 tons of yarn a day. A fun fact – that is almost enough high quality
yarn to cover over a 1000 kilometres a day. However, we have no plans of stopping now. In the near
future, we hope to increase this capacity to almost 70,000 spindles.

United International University

Proper education solidifies the backbone of a nation – the youth who are destined to lead the
country into the future. In 2003, United Group ventured into this noble professional sector by
uniting together some of the finest academic minds in the nation under the banner of United
International University.
With an excellent library, well equipped laboratories, proper classrooms and student recreational
facilities, it is an ideal place to excel in learning. It was surprising that even after a decade of
operations; similar educational institutions were yet to achieve the same. UIU believes that only by
providing the right environment could the desired results it achieved. Having such a campus was
thus an absolute necessity.

Even now the faculty is engaged in designing new disciplines that are relevant for the Bangladesh
economic context. They would of course include Accounting, Textile Engineering, Pharmacology
and Nursing departments, to name a few. With plans of opening a new major campus to ever-
growing student base and faculty, steadily but surely it plans on becoming the largest private
university in the country within the next few years.

Neptune Land Development Ltd.

Neptune Land Development Ltd. began its commercial operation as a premium real estate company
in 2003 with United City being its flagship project. Imagine a scenic landscape where all the beauty
that nature has to provide resides in perfect harmony with the excellence of Man’s creativity in the
field of architecture. Imagine wide open fields echoing with children’s laughter, a lake beside
which to sit and while an evening away, and the absolute tranquility of suburbia. It will be the most
beautiful setting within one of the largest metropolitan cities in the world. Located a stone’s throw
distance away from the US Embassy in Baridhara, it can simply be described as a piece of heaven in
Dhaka, where families can start their lives anew, secure in their knowledge that they reside in one
of the finest of localities in the capital.

With over 300 acres currently under development in United City and 650 plots already handed over
to a most excellent clientele, the main goal of NLDL is to become the premier and most trusted

20
developer of real estate projects in the nation. To back up the claim, it only sells land that is
absolutely undisputed and owned by the company. This project has been developed according to
full compliance with RAJUK guidelines, thus becoming one of the only such real estate ventures to
be fully approved by this government body.

United Property Solutions Ltd.

Over the years United Group has profitably ventured into various segments of the real estate
industry. It is currently involved in the construction and development of residential plots and
houses as well as commercial properties, which include some of the best known buildings of the
city today. Notable examples would includes, the United Hospital, United House and the United
International University buildings. While these projects have been completed under several
different company banners, the Group has decided to go by its namesake and bring all these
different projects under one roof. Thus, United Property Solutions Ltd. was born.

Providing total real-estate involvement from designing to construction and finally to management,
this company is dedicated to be a comprehensive one-stop solution for people interested to invest
in us, thus further simplifying things for them.

Hafez Zamirudding Fisheries Ltd.

In early 2009, United Group literally began treading new waters with Hafez Zamiruddin Fisheries
Limited and their fleet of fishing trawlers. With ample capacity upwards of 140 tons, these vessels
have been assembled locally in their entirety, not only saving valuable foreign currency for the
country but boosting the blossoming ship building industry.

The maiden voyage of the ships saw them venturing into the ever grand Bay of Bengal, known for
her abundant wealth of marine life. With nets and gears designed for white fishing, as opposed to
shrimp fishing, they can remain out at sea for a month at a time returning only with their holds
filled to the brim with some of the best fish that the Bay has to offer. And why not – we plan to
take this company to export markets where such products are much sought after and buyers are
quite often willing to pay a premium for quality.

United Makkah Madina Travel & Assistance Co. Ltd.

United Makkah Madina Travel & Assistance Co. Ltd. embarked upon its mission to be a facilitator
and guide for the hajjis during this holy duty. Recognized as one of the few registered travel
agencies authorized to deal with all Hajj and Umrah matters, this company has been organizing
such trips for nearly a decade now. By being fair and honest in its dealings and a strong adherence
to the Quran and Sunnah it have, by the Grace of the Almighty, become a market leader in this
profession. A testament of this lies in the fact that almost all of its dedicated clients have chosen
on referrals they get from pilgrims who have honored the company in the past by choosing to travel
with the company.

United Polymers Ltd.

Plastic is one of the core materials needed for many companies - from soda manufacturers to
pharmaceutical companies but there was a great lacking in quality plastic botling and other plastic
materials Thus United Polymers Ltd. was born as a value-based manufacturing unit focused on
innovating, manufacturing, and marketing of polyethylene (PET) products, as well as
comprehensive liquefied material handling systems for the consumer and industrial bottles. As a
pioneer in this sector, we introduced this product to many businesses since our inception, who just
happen to be our dedicated customers even to this day. With effort and our culture of innovation,
we have developed a full set of PET bottle products of high quality, which has been lauded
especially by the many pharmaceutical industries today.

21
United Land Port Teknaf Ltd.

United Land Port Teknaf Ltd is situated on 27 acres of land on the banks of the Naaf River at the
southernmost point of Bangladesh; this is a port of transit for goods between our country and
Myanmar. Winning a tender in 2006 from Bangladesh Land Port Authority has enabled to control
operations and management of the port while also signing Concession Agreement and Land Lease
Agreement with the same. Since then it has undergone both infrastructural and civil development
of the area, including earth filling, boundary wall construction, making pontoons, warehouses,
approach roads, a passenger jetty, cargo jetty and a rest house among other things. Through
significant ongoing investments, ULPTL plans to become a fully comprehensive port unit, providing
a one-stop solution for exporters, importers and the government alike.

22
(4) Distribution procedure of products or services:

KPCL purchases Heavy Fuel Oil from Kuo Oil Pte Ltd. Singapore and generates electricity as its sole
product and then sells to BPDB in bulk for electricity transmission through the national grid to
south-western region of Bangladesh.

(5) Competitive Condition of the Business:

As power sector is a capital-intensive industry, huge investment will be required for generation
capacity addition. Public sector is not in a position to secure this huge investment for power
generation. currently, at about 170 kWh per capita of energy consumption, Bangladesh ranks among
the lowest countries in the world in terms of electricity consumption per capita. Its distribution
networks currently serve only an estimated 43% of the total population of more than 150 million.
The severe shortage of electricity supply is due in part to BPDB’s inadequate generation capacity,
weak transmission and distribution systems, and operational difficulties at its existing power plants.

In addition to the overall demand-supply imbalance, the power sector in Bangladesh is also affected
by a regional imbalance 85% of the country’s generating capacity is located in the eastern zone,
where natural gas and associated infrastructure is available. The western zone, where the Plant is
located, has mostly smaller and less efficient power plants running on liquid fuel. The western zone
peak demand is about 1100 MW while its regional generating capacity is only about 600 MW.

According to the Power Cell, the Bangladesh Power Development Board generated 3400 MW of the
country’s 5245 MW of total commercial electricity, or about 64% of the total installed capacity.
Over the past several years although the demand of power and gas grew in geometric progression,
yet the power sector did not grow as per requirement and gas sector failed to explore its resources
and developed its reserve. Since natural gas dominates the power sector in Bangladesh, 95% of
electricity comes from conventional thermal power (primarily natural gas) and the remaining 5%
through hydroelectric power. In January 2006, Bangladesh’s first coal-fired power plant began
commercial production at the 250-MW Barapukuria facility in Parbotipur.

The installed generation capacity was about 5269 MW (as on June 2007) from a meager 88 MW in
1960. Electricity generation grew at about 7% p. a. during last fifteen (15) years compared with
average annual GDP growth rate of about 5.5%. Notwithstanding the progress made to date,
Bangladesh's per capita electricity generation of 165 kWh p.a. is still among the lowest in the
world. About 43% of the population has access to electricity, which is also low compared to many
developing countries. This implies that there is scope for significant growth in power sector. Given
the huge investment requirement for power development in the country, Bangladesh would be
looking forward to various sources of finance. The Government has already opened the power
sector for private investment and "The Private Sector Power Generation Policy" has been
formulated in 1996. The table bellow depicts power sector at a glance.

Generation
Installed Capacity
(a) BPDB 3,872 MW
(b) IPP & Mixed Sector Total 1,397 MW
Total 5,269 MW
Maximum Demand Served
Total 3,785 MW

Net Energy Generation 23,267 MkWh

Transmission
Transmission Line
230 kV 1,467 Ckt km
132 kV 5,578 Ckt km
Total 7,044 Ckt km
Capacity of Grid S/S
230/132 kV 5,175 MVA
132/33 kV 7,219 MVA

23
 Distribution
Distribution Line 2,71,142 km
(33 kV, 11 kV & 0.4 kV)
Total no. of Consumers 10.42 Million
Total no. of Agricultural Consumers 2 Lac 26 Thousand
Total no. of Village Electrified 50,360
Access to Electricity 43%
Per Capita Generation 165 kWh
System Loss (T&D) 19.30%
Source: www.powercell.gov.bd (visited September 01, 2009)

Currently, the GOB has no plans to have additional interconnection systems between the east and
west regions since it prefer to transport gas to the western region in order to build gas-fired plants
rather than transferring electricity. Natural gas availability in the western region is also likely to
spur further socio-economic developments in the region.

Bangladesh Power Development Board:

BPDB is responsible for generation and
distribution of electricity. Its distribution
jurisdiction covers mainly urban areas
except Metropolitan City of Dhaka. There
are a number of Independent Power
Producers (IPP) who generate and sell
power to BPDB. BPDB's retail sale through
own distribution accounts for about 32%
of total retail sales. KPCL is the leading
supplier of electricity of BPDB.

Power Grid Company of Bangladesh: PGCB, established under the Company's Act, 1994 is a
subsidiary of BPDB. PGCB is responsible for operation of the grid network of 230kV and 132kV
system. It is fully responsible for high voltage transmission as well as distribution.

Dhaka Power Distribution Company (formerly Dhaka Electric Supply Authority): DPDC (formerly
DESA) is responsible for distribution of electricity in a part metropolitan Dhaka and a few adjacent
areas. It purchases power from BPDB at 132 kV. DPDC's retail sale accounts for about 21% of total
sales.

Dhaka Electric Supply Company Limited: DESCO, established under Companies' Act of 1994 is
responsible for distribution of electricity in Mirpur and Gulshan area of the Metropolitan City of
Dhaka. DESCO's retail sale accounts for 9% of total national sales.

Rural Electrification Board: REB is responsible for distribution of electricity in rural areas through
a system of co-operatives known as Palli Biddyut Samities. It mainly purchases power from BPDB
and DESA at 33 kV; it also purchases from IPPs to a small extent. BPDB's retail sale accounts for
about 38% of total retail national sales. Sixty seven (67) PBS's are operating at present in rural
areas.

Ashuganj Power Company: Ashuganj Power Company is a generation subsidiary of BPDB created in
2002. The installed generation capacity of APC is 728 MW comprising steam, combined cycle and
gas turbine generating units. The gross energy generation is about 25% of total energy generation in
public sector.

West Zone Power Distribution Company: WZPDC is a distribution subsidiary of BPDB. WDPDC was
created under Companies act 1994 to handle distributions in the South West part of the country.
EA & CEI: The office of the Electrical Advisor and Chief Electrical Inspector has been established
under section 36 of the Electricity Act 1910. EA & CEI office performs the functions as specified in
the Electricity Act, Electricity Rule, Cinematograph Act to control and ensure safety of lives and
properties in electricity sector.

24
(6) Sources and availability of raw materials and the names of the principal suppliers:

The Khulna plant consists of two Wärtsilä floating baseload plants named Tiger I and Tiger III
designed for continuous operation and intended for electricity production. Wärtsilä is also providing
operational and maintenance services for the Khulna plant during the duration of BPDB's power
purchase agreement. The contract includes all aspects of operations and maintenance, which fixed
the long-term operations and maintenance costs for BPDB, and absorbed a good portion of the
operating risk as well enabling BPDB to concentrate on other aspects of their power business.

The plant has 110 MW Heavy Fuel Oil fired Diesel engines with Dual fuel capability plant at
goalpara, Khalishpur, Khulna Wärtsilä provides 19 18V32LN Diesel Engines each of 6.5 MW capacities
are installed on two power Berges. The Barges are permanently moored in manmade lagoon
specially created for the purpose and continuously generates electricity to the National Grid.

The project has been in operation since October 1998, with heavy fuel oil as the primary fuel. It
will use natural gas as it becomes available in the future. The Company is now the only IPP in
private sector Company which is operated by heavy fuel oil. KPCL was entered into a 15 years Fuel
Supply Agreement with United Summit Coastal Oil Limited for sourcing, procurement and delivery
of Heavy Fuel Oil (HFO) to the plant. KPCL’s annual requirement of HFO is about 180000 Metric Ton
at 80% dispatch. HFO is being procured from Kuo Oil PTE Limited, Singapore, one of the major oil
suppliers in Asia and transported to Chittagong in 17000 MT parcels. The HFO is stored at
Chittagong and transported to Khulna by Tanker Barges.

(7) Sources of power, gas and water:

Water: The Company uses close circuit cooling system for its generators and the cooling water
requirement is very minimal which is supplied from bore well through demineralization plant.

Power: The power requirement is met from company’s own generation; however any disruption is
met through supply from BPDB and is required for auxiliary use only.

(8) Name of the customer who purchase 10% and more of the company’s products:

Power generated by KPCL is sold in bulk to Bangladesh Power Development Board (BPDB) pursuant
to the term of 15 years Power Purchase Agreement. BPDB has obligated to purchase the entire
electrical output generated by the Plant pursuant to a 15-year PPA. The revenues are based on a
two-part tariff structure, and are designed to cover fixed and variable costs including debt service,
operations and maintenance expenses, fuel costs and a return to investors.

BPDB has committed to a minimum take or pay requirement at 50%dispatch factor on a monthly
basis. BPDB’s payment obligations are supported by a letter of credit for two months minimum
revenues. BPDB’s payment obligations are also guaranteed by the Government of Bangladesh
pursuant to an Implementation Agreement Revenues are based on a two-part tariff structure - a
Fuel Tariff (FT) Component, on a pass-through basis, and Other monthly Tariff (OMT) Component to
cover all other fixed and variable costs, adjusted for foreign exchange variations.

(9) Description of contract with suppliers and customer:

ƒ Implementation Agreement
The IA between KPCL and the GoB states that all the company’s transaction related to the project
that require foreign exchange, including debt servicing and repatriation of earnings, will be
initiated through bank accounts in Bangladesh, however, any payments in foreign exchange to
foreign parties may be paid directly through bank accounts of KPCL located outside Bangladesh.
The company shall make available to the GoB the statements and accounts reflecting all such
payments.

The GoB ensures that the Bangladesh Bank gives KPCL and its contractors, consents for operating
FCY bank accounts inside Bangladesh (including, without limitation, the payment of all FCY
received under the Financing Agreements or otherwise by the Company into such accounts and

25
withdrawals there from). The GoB shall ensure that the Bangladesh Bank gives the Company
permission to maintain bank accounts outside Bangladesh, and transfer any funds from its accounts
in Bangladesh to its accounts maintained outside Bangladesh as are necessary to implement and
carry out the project.

GoB through the IA provides sovereign guarantee with regard to payments, hence possibly
mitigating risk of any non-payments.

ƒ Power Purchase Agreement (“PPA”) with BPDB

BPDB has agreed to purchase the entire electrical output generated by the Plant pursuant to a 15-
year PPA. The revenues are based on a two-part tariff structure, and are designed to cover fixed
and variable costs including debt service, operations and maintenance expenses, fuel costs and a
return to investors. The PPA commits BPDB to a minimum take-or-pay requirement of 50% dispatch
factor on a monthly basis. BPDB’s obligations under the PPA are guaranteed by the GOB pursuant to
an Implementation Agreement (“IA”).

ª Term - 15 years, from commercial operations

ª BPDB commitment to a minimum purchase equivalent to 50% plant factor on a monthly basis
ª Two-part tariff structure
o Fuel Tariff (“FT”), with full cost pass through;
o Other Monthly Tariff (“OMT), 99% of which is US$ indexed;
ª Allows KPCL to source its own fuel supply
ª Tariff invoices payable within 45 days of the delivery of invoice
ª Payment Security back-up in the form of Letter of Credit covering two months of Minimum
Tariff Payments (and a Govt. of Bangladesh Guarantee)
ª The Minimum Tariff Payment obligations continue through political Force Majeure Events
ª Compensation Amount on Termination to cover 65% of the NPV of the Minimum
ª Tariff Payment for the remaining term of the PPA, plus consequent termination payment
liability to KPCL in respect of the O&M Agreement and the Fuel Supply Agreement, plus taxes.

ƒ O&M Agreement with Wärtsilä, Finland

¾ Term - 15 years
¾ Operator guarantees an 85% availability rate. The Operator will pay the Company a
penalty of US$ 15,000 for each percentage below the 85% availability rate to a maximum of
13%.
¾ The Company may terminate the O&M contract for convenience and without cause upon
90 days of notice and six months fixed O&M fees

ƒ Fuel Supply Agreement with United Summit Coastal Oil Limited

¾ The FSA is co-terminus with the PPA and can also be terminated upon conversion of Plant
to natural gas based Plant.
¾ Fuel price based on MOPS indexation and other costs as per the PPA provisions.

(10) Description of any material patents, trademarks, licenses or royalty agreements:

The company has not entered into any such agreement.

(11) Number of total and full time employees:

Number of full time employees KPCL Head Office is 10 people as on 31 December 2009 and in its
power plant has 113 employees of Wärtsilä Bangladesh Ltd., O&M Contractor, thus the total number
of employees of KPCL is 123.

26
(12) Production capacity and current utilization:
Currently, the power barge Tiger I and Tiger III consist of 19 Wärtsilä diesel engines capable of
producing 114MW of electricity. Each barge is 91.5 meter long and 24 meter wide. The floating
tigers generate electricity for supply to the national grid.

KPCL’s total installed gross generation capacity is 123.5 MW (19 Engine x 6.5 MW), and current net
generation capacity is 114 MW. But KPCL has total licensed capacity of 110 MW. In 2009, its average
monthly utilized capacity is 87.21% which is 12% more than that of 2008.

The operator of KPCL Wärtsilä Bangladesh Ltd. has earned the unique distinction of receiving both
ISO 9002 for quality management system (QMS), ISO 14001 certification for excellence in
environment management system and OHSAS 18001 for occupational health and safety standard.

D. DESCRIPTION OF THE PROPERTY

(1) Location of the power plant and other property and condition of such property:

Corporate office of the company is situated at Summit Centre (5th Floor), 18 Karwan Bazar C/A,
Dhaka-1215 and the power plant consists of 19 (Nineteen) 6.5 MW generating sets that are installed
on Two Power Barges are situated at Goalpara, Khalishpur, Khulna. Such property is in good
operating condition.

(2) Ownership of property:

Other than land, which is a leased property, the ownership of all the assets as per audited accounts
for the year ended 31 Dec, 2009, described below are in the name of the Company.
Particulars Amount in Taka
Power plant 3,303,599,925.00
Vehicles 3,038,494.00
Building and construction 188,150.00
Furniture and fixtures 47,400.00
Office equipment 259,330.00
Office renovation 33.00
Total Written Down Value 3,307,133,332.00

All the machineries imported were in brand new condition.

(3) Lien on property:

1. The company itself owns the entire fixed assets except the lease land.
2. The Plant & machinery and other assets of the company are mortgaged against the working
capital loan to the following banks:
a) BRAC Bank Limited
b) Citibank NA
c) Pubali Bank Limited
d) Shahjalal Islami Bank Limited
e) Standard Bank Limited

The leasehold land is approximately 4.7 Acres of land having border on the north by Bhoirab River,
on the east Goalpara Power Grid Station of Bangladesh Power Development Board (BPDB), on the
west petroleum terminal of Padma Oil Co. The existing power plants are situated on the leasehold
land. Details of leasehold lands are as follows:

ª Plant Address: Goalpara, Khalishpur, Khulna

ª Owner of the land: Padma Oil Co. Ltd.
ª Lessor: BPDB

27
 ª Rent payable: Taka 15.84 per square feet.
ª Changes in Rent: Rent payment can be adjusted by 20% in each five years of the contract

(4) Expiration date of Leasehold Property

The term of indenture is 17 years, from January 1, 1998 to January 1, 2015

E.PLAN OF OPERATION AND DISCUSSION OF FINANCIAL CONDITION:

(1) Internal and External Sources of cash:

Sources of Cash
DEC 31, 2009 DEC 31, 2008
Internal
Ordinary shares 2,085,930,000.00 2,085,930,000.00
Redeemable cumulative class 'A' preference 1,100,000,000.00 1,100,000,000.00
shares
Retained earnings 668,492,911.00 294,437,827.00
Total 3,854,422,911.00 3,480,367,827.00
External
Term Loan - net of current portion - 74,892,180.00

(2) Commitment for capital expenditure:

KPCL doesn’t have any commitment made for future capital expenditure as of 31 December 2009
except of an Alternator for which procurement order was being initiated amounting to Euro 287,745
but no shipment is being made.

(3) Material change from period to period as per audited accounts:

Particulars 2009 2008 2007 2006 2005

Taka Taka Taka Taka Taka
Operating revenues 6,393,267,345 8,160,423,118 5,698,208,430 6,311,059,931 4,243,767,556
Operating expenses (5,718,431,301) (7,664,817,721) (5,154,663,159) (5,762,523,349) (3,714,256,610)
General and (64,078,271) (61,504,226) (101,434,974) (92,377,904) (94,587,722)
administrative expenses
Other income 91,481,290 3,500,496 9,828,156 5,036,401 4,427,264
Exchange gain/(loss) 2,174,414 8,784,292 5,427,197 (7,593,746) (5,897,306)
Finance income 9,155,909 4,048,472 8,797,510 3,282,064 2,386,713
Financial charges (17,483,802) (177,911,217) (156,986,251) (200,693,799) (195,604,754)
Net profit for the year 696,085,584 272,523,214 309,176,909 256,189,598 240,235,141

The material changes from period to period have been occurred due the change in Tariff in Effect
and change of power generation.

(4) Seasonal aspect:

In general, there is no seasonal impact on the business because of serious dearth of electricity in all
seasons. But in previous years winter season results lower demand for electricity than summer.

(5) Known trends, events or uncertainties:

Force majeure such as political unrest, hartal and natural calamities are generally known events that
may affect the company business.

28
(6) Changes in the assets used to pay off any liability:

Cash disbursement of Tk. 13,894,196 was made during the accounting period ended 31 Dec, 2009 to
reimburse portion of the term loan.

(7) Loan taken from the holding/subsidiary company or loans given to those companies:

KPCL did neither take any loan from nor give loan to any company for the last five years.

(8) Future contractual liabilities:

The company has no future contractual liabilities that may have impact on the company’s financial
fundamentals.

(9) Estimated future capital expenditure:

The management of KPCL is currently in negotiation with BPDP for expansion of its existing plant for
an additional capacity of 110 MW which is expected to be in operation by the end of year 2010.
Other then above, there is no plan for capital expenditure in near future under caption ‘material
commitment for capital expenditure’

(10) VAT, income tax, customs duty or other tax liability:

a) VAT
VAT is not applicable for the company for sale of electricity.

b) Income tax
As per the Statutory Regulatory Order (SRO) 1999, SRO No. 114/99, the company is exempted from
income tax for a period of 15 years from the date of commercial operation.

c) Custom duty or other liability

The Company is exempted to import plant and machinery during construction and all other spare
parts up to 10% of the plant & machinery cost without payment of customs duties. Duties and taxes
are payable for other supplies as per provision of the Private Sector Power Generation Policy of
Bangladesh.

(11) Sources from which VAT, income tax, customs duty or other tax liabilities are to be paid:

The payments of duties and taxes on spare part import, if payable, are to be made in the ordinary
course of business.

(12) Lease commitment:

The company has signed lease agreement with BPDB for land usage for 17 years starting January 1, 1998, and
the lease commitment as above is being liquidated through repayment of monthly lease rental.

(13) Lease Details:

The company is obligated under non-cancelable lease for use of land leased out by BPDB that are
renewable on a periodic basis at the option of both lessor and lessee. During the period, rental
expenses under non-cancelable operating leases aggregated Tk.3,355,293 The future minimum
lease payments in respect of operating leases as at 31 Dec 2009 are as follows:
31 Dec-09 31-Dec-08 31-Dec-07
Amount due: Taka Taka Taka
Not later than one year 3,242,955 3,242,955 3,242,955
Later than one year
but not later than five years 14,268,998 13,620,407 12,971,820
Later than five years - 3,891,545 7,783,090

29
(14) Personnel related schemes to make provision in future years:

The Company has training schemes for human resource development and the following retirement
benefits for its employees:

1. Provident Fund

The Company operates a recognized Contributory Provident Fund for its permanent employees. The
fund is administered by a Board of Trustees and is funded by 10% contributions equally from the
employees and the company. The fund is managed separately from the company’s assets.

2. Gratuity

The Company also maintains non-funded Gratuity Scheme for confirmed employees of the company.

(15) Break down of issue expenses

The breakdown of issue expenses related to direct listing is as under:

Sl. Particulars Basis of calculation Amount

1 Issue Management fee At actual 1,200,000.00
2 Underwriting Commission At actual NIL
3 Application fees DSE & CSE At actual 20,000.00
4 Listing Fees DSE & CSE At actual 4,000,000.00
5 Annual Listing fees DSE & CSE At actual 200,000.00
6 CDBL Fees At actual 608,500.00
7 Registrar to the Issue Fees At actual 500,000.00
8 Printing and publication Estimated or At actual 2,000,000.00

(16) Revaluation of Asset:

KPCL didn’t revalue its assets.

(17) Last five years’ transactions between the issuer company and its subsidiary/holding
company:

No transactions have been made between the parties.

(18) Auditors' certificate on allotment of shares to shareholders including promoters or

sponsor shareholders for any consideration otherwise than for cash

We certify that as per the share register and other relevant records maintained by Khulna Power
Company Ltd., no shares have been allotted to promoters or sponsor shareholders for any
consideration otherwise than for cash.

Sd/-
Rahman Rahman Huq

30
(19) Material information having impact on the affair of the company:

DECLARATION REGARDING SUPPRESSION OF MATERIAL INFORMATION

This is to declare that to the best of our knowledge and belief no information, facts, circumstance,
that are disclosable has not been suppressed that can change the terms and conditions under which
the offer has been made to the public.

Sd/-
Md. Hasan Mahmood Raja
Managing Director

F. DIRECTORS AND OFFICERS

Name, Age and Position of all Directors:

Name of The Directors Position Age

Mr. Muhammed Aziz Khan Chairman 55
Mr. Hasan Mahmood Raja Managing Director 52
Mr. Muhammad Farid Khan Director 49
Mrs. Anjuman Aziz Khan Director 54
Mr. Latif Khan Director 51
Ms. Ayesha Aziz Khan Director 28
Ms. Adeeba Aziz Khan Director 26
Mr. Jafer Ummeed Khan Director 53
Mr. Ahmed Ismail Hossain Director 53
Mr. Khandaker Moinul Ahsan Shamim Director 52
Mr. Akhter Mahmud Rana Director 49
Mr. Faridur Rahman Khan Director 54
Mr. Abul Kalam Azad Director 54
Mr. Moinuddin Hasan Rashid Director 27

Date of first becoming Director and date of expiry of current term:

Name of The Directors Date of First becoming directors Date of Expiry of Current
Terms
Mr. Muhammed Aziz Khan 20-10-1997 Continuing
Mr. Muhammad Farid Khan 19-07-2009 Continuing
Mrs. Anjuman Aziz Khan 19-07-2009 Continuing
Mr. Latif Khan 29-04-2008 Continuing
Ms. Ayesha Aziz Khan 29-04-2008 Continuing
Mr. Jafer Ummeed Khan 19-07-2009 Continuing
Ms. Adeeba Aziz Khan 19-07-2009 Continuing
Mr. Hasan Mahmood Raja 20-10-1997 Continuing
Mr. Ahmed Ismail Hossain 29-04-2008 Continuing
Mr. Khandaker Moinul Ahsan 29-04-2008 Continuing
Shamim
Mr. Akhter Mahmud Rana 19-07-2009 Continuing
Mr. Faridur Rahman Khan 19-07-2009 Continuing
Mr. Abul Kalam Azad 19-07-2009 Continuing
Mr. Moinuddin Hasan Rashid 19-07-2009 Continuing

31
Involvement of Directors with Listed Company in terms of Dividend & Category:

Name of The Director Name of Listed Company Position

Listing Category
where Directors are involved
in DSE/CSE
Mr. Muhammed Aziz Khan Summit Power Limited Chairman A
Summit Alliance Port Chairman A
Ocean Containers Limited Chairman N
Mr. Muhammad Farid Khan Summit Power Limited Director
A
Mrs. Anjuman Aziz Khan Summit Power Limited Director A
Summit Alliance Port Limited Director A
Ocean Containers Limited Director N
Mr. Latif Khan Summit Power Limited Vice Chairman A
Summit Alliance Port Limited Director A
Ocean Containers Limited Director N
Ms. Ayesha Aziz Khan Summit Power Limited Director A
Summit Alliance Port Limited Director A
Ocean Containers Limited Director N
Ms. Adeeba Aziz Khan Summit Alliance Port Limited Director A
Ocean Containers Limited Director N
Mr. Jafer Ummeed Khan Summit Power Limited Executive Director
A

Involvement of Directors with another Company:

Summit Group
Name of The Director and associated Companies Position

Mr. Muhammed Aziz Khan

Summit Industrial & Merchantile Corporation Pvt. Ltd. Chairman & Managing Director
United Summit Coastal Oil Ltd. Chairman
Summit Shipping Ltd. Chairman
Cosmopolitan Traders (pvt) Ltd. Chairman
Summit Equities Limited Chairman
Khulna Power Company Ltd. Chairman
Ocean Container Ltd. Chairman
Summit Alliance Port Ltd. Chairman
Summit Power Limited Chairman
Alliance Leasing and Finance Co. Ltd. Director
Summit Electricity Limited Chairman
Summit Euro Refinery Ltd. Chairman
Summit Purbanchol Power Co. Ltd. Chairman
Summit Uttaranchal Power Co. Ltd. Chairman
Summit Holdings Limited Chairman
Summit Investment Limited Chairman
Summit communication Ltd Chairman

Mr. Muhammad Farid Khan

Summit Corporations Director
Summit Industrial & Mercantile Corporation Pvt. Ltd. Director
Cosmopolitan Traders (Pvt.) Ltd. Director
Ocean Container Ltd. Director
Summit Shipping Ltd. Director
Summit Power Limited Director
Alliance Leasing and Finance Co. Ltd. Director
Summit Holdings Limited Director
Summit Electricity Limited Director
Summit Euro Refinery Ltd. Director
Summit Purbanchol Power Co. Ltd. Director
Summit Uttaranchal Power Co. Ltd. Director
Khulna Power Company Ltd. Director
Summit Communications Limited Director
Summit Investment Ltd. Director

32
Mrs. Anjuman Aziz Khan
Summit Power Limited Managing Director
Cosmopolitan Traders (Pvt.) Ltd. Director
Summit Equities Limited Managing Director
Summit Alliance Port Ltd. Chair Person
Summit Shipping Ltd. Director
Summit Electricity Limited Director
Summit Euro Refinery Ltd. Director
Summit Industrial & Mercantile Corporation Pvt. Ltd. Director
Summit Purbanchol Power Co. Ltd. Director
Summit Uttaranchal Power Co. Ltd. Director
Khulna Power Company Ltd. Director
Summit Holdings Limited Director
Alliance Terminal Limited Director

Mr. Latif Khan

Summit Industrial & Mercantile Corporation Pvt. Ltd. Director
Cosmopolitan Traders (Pvt.) Ltd. Managing Director
Summit Shipping Ltd. Director
Syenergey Services Director
Summit Purbanchol Power Co. Ltd. Director
Summit Uttaranchal Power Co. Ltd. Director
Khulna Power Company Ltd. Director
Summit Power Limited Vice Chairman
Summit Alliance Port Ltd. Director
Ocean Container Ltd. Director
Alliance Terminal Limited Director
Sumcynet Limited Chairman
Summit Communications Limited Director
Summit Holdings Limited Director

Ms. Ayesha Aziz Khan

Summit Equities Limited Director
Summit Industrial & Mercantile Corporation Pvt. Ltd. Director
Cosmopolitan Traders (pvt) Ltd. Director
Summit Shipping Ltd. Director
Khulna Power Company Ltd. Director
Summit Power Limited Director
Ocean Container Ltd. Director
Summit Alliance Port Ltd. Director

Ms. Adeeba Aziz Khan

Summit Industrial & Mercantile Corporation Pvt. Ltd. Director
Summit Alliance Port Ltd. Director
Alliance Terminal Limited Director
Ocean Container Ltd. Director
Summit Communications Limited Director
Summit Holdings Limited Director
Khulna Power Company Ltd. Director

Mr. Jafer Ummeed Khan

Summit Industrial & Merchantile Corporation Pvt. Ltd. Director
Khulna Power Company Ltd. Director
Summit Power Limited Director
Summit communication Ltd Director
Summit Holdings Ltd Director
Cosmopolitan traders (pvt) Ltd Director
Summit Shipping Ltd Managing Director

33
United Group

Name of The Director and associated Companies Position

Mr. Hasan Mahmood Raja
United Enterprises & Co. Ltd. Chairman & Managing Director
United International University Chairman & Board of Governors
Malancha Holdings Ltd. Chairman & Managing Director
Khulna Power Company Ltd. Managing Director
United Makkah Madina Travel & Associate Co. Ltd. Chairman
United Hospital Ltd. Chairman
Neptune Commercial Ltd. Chairman
Comilla Spinning Mills Ltd. Director
United Management & Trading Services Ltd. Director
United Polymers Ltd. Chairman
United Rotospin Ltd. Chairman
Neptune Land Development Ltd. Chairman
United Land Port Teknaf Ltd. Chairman
Neptune Properties Ltd. Director
Novo Healthcare And Pharma Ltd. Chairman
Hafez Zamiruddin Fisheries Ltd. Chairman
Gulshan Properties Ltd. Chairman

Mr. Ahmed Ismail Hossain

United Enterprises & Co. Ltd. Director
United International University Member, Board of Governors
Malancha Holdings Ltd. Director
Khulna Power Company Ltd. Director
United Makkah Madina Travel & Associate Co. Ltd. Director
United Hospital Ltd. Vice Chairman
Neptune Commercial Ltd. Director
Comilla Spinning Mills Ltd. Managing Director
United Management & Trading Services Ltd. Director
United Polymers Ltd. Director
United Rotospin Ltd. Managing Director
Neptune Land Development Ltd. Director
United Land Port Teknaf Ltd. Director
Neptune Properties Ltd. Director
Novo Healthcare And Pharma Ltd. Managing Director
Hafez Zamiruddin Fisheries Ltd. Director
Gulshan Properties Ltd. Director
Chicken King International (BD) Ltd. Chairman
KMC Global Food Ltd. Chairman
Bari Studio Ltd. Director
Sight and Light Director
BM Cine Lab Services Director

Mr. Khandaker Moinul Ahsan Shamim

United Enterprises & Co. Ltd. Director
United International University Member, Board of Governors
Khulna Power Company Ltd. Director
United Makkah Madina Travel & Associate Co. Ltd. Director
United Hospital Ltd. Director
Neptune Commercial Ltd. Director
Comilla Spinning Mills Ltd. Director
United Management & Trading Services Ltd. Director
United Polymers Ltd. Director
United Rotospin Ltd. Director
Neptune Land Development Ltd. Director
United Land Port Teknaf Ltd. Director
Neptune Properties Ltd. Director
Novo Healthcare And Pharma Ltd. Director
Hafez Zamiruddin Fisheries Ltd. Managing Director
Gulshan Properties Ltd. Director

Mr. Akhter Mahmud Rana

United Enterprises & Co. Ltd. Director
United International University Member, Board of Governors
Malancha Holdings Ltd. Director

34
 Khulna Power Company Ltd. Director
United Makkah Madina Travel & Associate Co. Ltd. Director
United Hospital Ltd. Director
Neptune Commercial Ltd. Director
Comilla Spinning Mills Ltd. Director
United Management & Trading Services Ltd. Director
United Polymers Ltd. Director
United Rotospin Ltd. Director
Neptune Land Development Ltd. Director
United Land Port Teknaf Ltd. Director
Neptune Properties Ltd. Director
Novo Healthcare And Pharma Ltd. Director
Hafez Zamiruddin Fisheries Ltd. Director
Gulshan Properties Ltd. Director

Mr. Faridur Rahman Khan

United International University Member, Board of Governors
Malancha Holdings Ltd. Director
Khulna Power Company Ltd. Director
United Hospital Ltd. Managing Director
Neptune Commercial Ltd. Director
Comilla Spinning Mills Ltd. Director
United Management & Trading Services Ltd. Director
United Polymers Ltd. Director
United Rotospin Ltd. Director
Neptune Land Development Ltd. Director
United Land Port Teknaf Ltd. Director
Neptune Properties Ltd. Managing Directors
Novo Healthcare And Pharma Ltd. Director
Hafez Zamiruddin Fisheries Ltd. Director
Gulshan Properties Ltd. Director

Mr. Abul Kalam Azad

United International University Member, Board of Governors
Malancha Holdings Ltd. Director
Khulna Power Company Ltd. Director
United Hospital Ltd. Director
Neptune Commercial Ltd. Director
Comilla Spinning Mills Ltd. Director
United Polymers Ltd. Director
Neptune Properties Ltd. Director
United Rotospin Ltd. Director
Neptune Land Development Ltd. Managing Director
United Land Port Teknaf Ltd. Managing Director
Novo Healthcare And Pharma Ltd. Director
Hafez Zamiruddin Fisheries Ltd. Director
Gulshan Properties Ltd. Director

Mr. Moinuddin Hasan Rashid

United Enterprises & Co. Ltd. Director
United International University Member, Board of Governors
Malancha Holdings Ltd. Director
Khulna Power Company Ltd. Director
United Makkah Madina Travel & Associate Co. Ltd. Director
United Land Port Teknaf Ltd. Director

Family relationship between the directors and officers:

Name of the Director/officer Relationship

Mrs. Anjuman Aziz Khan Wife of Muhammed Aziz Khan, Chairman
Mr. Latif Khan Brother of Muhammed Aziz Khan, Chairman
Mr. Md. Farid Khan Brother of Muhammed Aziz Khan, Chairman
Ms. Ayesha Aziz Khan Daughter of Muhammed Aziz Khan, Chairman
Ms. Adeeba Aziz Khan Daughter of Muhammed Aziz Khan, Chairman
Mr. Jafer Ummeed Khan Brother of Muhammed Aziz Khan, Chairman
Mr. Akhter Mahmud Rana Brother of Mr. Hasan Mahmood Raja, Managing Director

35
 Mr. Moinuddin Hasan Rashid Son of Mr. Hasan Mahmood Raja, Managing Director
Mr. Md. Abdur Rahim, Uncle of Mr. Hasan Mahmood Raja, Managing Director
Project Director

Short biography of the directors and officers:

Mr. Muhammed Aziz Khan, Chairman

Mr. Muhammed Aziz Khan, a renowned and pioneering leading business personality in power sector
of Bangladesh. After graduation Mr. Khan did his MBA in 1980 from the Institute of Business
Administration (IBA), University of Dhaka. Mr. Khan has established himself as a dynamic and pro-
active entrepreneur who has built Summit Group-recognized as the largest infrastructure Industrial
organization of Bangladesh. He is also the Chairman of Khulna Power Co. Ltd., country's first
Independent Power Producer (IPP). Mr. Khan has helped to formulate the Private Sector Power
Generation Policy of Bangladesh. He has 36 years of business experience, setting up country's first
Inland Container Depot (ICD)-"Ocean Container Ltd", First Tanks Terminal- "Summit United Tanks
Terminal", now known as "South Eastern Tanks Terminal". Mr. Khan was the Founder President of
Bangladesh Energy Companies Association (BECA), which is formed to represent and to promote the
interests of private sector business organizations engaged in the energy sector.

Mr. Khan has set up "Siraj Khaleda Trust"- a social wing of Summit Group, which is setting up 200
beds for medical services on charitable basis in Dhaka Cantonment. He enthusiastically takes part &
contributes to social activities such as to help to acid burn and drug victims to mention a few
amongst host of other activities.

Mr. Muhammad Farid Khan, Director

Mr. Md. Farid Khan was born in 1960. Mr. Khan is a business graduate from Dhaka University. He is
involved in business since 1980. He started his business career with trading in plastic compound,
fertilizer and other commodities. He was an integral part of the team that pioneered export of
molasses and fertilizer from Bangladesh. Mr. Farid Khan has proved to be an entrepreneur with
special skills in the development of new projects. He was solely instrumental in setting up Liquefied
Petroleum Gas (LPG) project and Tanks Terminal in Mongla.

Mrs. Anjuman Aziz Khan, Director

Mrs. Anjuman Aziz Khan, wife of Mr. Muhammed Aziz Khan has 22 years of business experience in
Summit. Mrs. Khan is a member of Siraj Khaleda Trust- a social wing of Summit Group, which is
setting up 200 beds for medical services on charitable basis in Dhaka Cantonment. She
enthusiastically takes part & contributes to social activities such as "Assistance of Blind Children"
and "women's entrepreneurship development".

Mr. Latif Khan, Director

Mr. Latif Khan was born on 28 December 1958 in Dhaka. He pursued BA in Public Administration at
Dhaka University, and subsequently left for higher studies to the U.S. in 1981. There, he worked for
over 15 years in the financial sector. He was a stockbroker and a financial analyst at Prudential
Insurance of America where he received numerous sales achievement awards. He also worked as a
Financial Officer at Wells Fargo Bank in California. He returned to Bangladesh in 1997 and thereof
joined Summit Group as the Managing Director of Summit Shipping Limited. Mr. Khan has
established himself as a sound and dynamic businessman of the country.

Ms. Ayesha Aziz Khan, Director

Born in 1981, Ms. Ayesha Aziz Khan has completed her graduation in Economics and Business from
the University College of London in 2002 and Masters in Business Administration from Columbia

36
University, New York, USA. Presently, Ms. Khan is also holding the position of Director in several
companies of Summit Group.

Ms. Adeeba Aziz Khan, Director

Ms. Adeeba Aziz Khann was born on June 14, 1983. She has successfully completed her Bar
Vocational Cource fro Inns of Court School of Law, UK on 2005. From July 2006 she worked with Dr.
Kamal Hossain & Associates, Bangladesh as Pupil, after that she involved herself with Drew &
Nepier LLC, Singapore as an International Lawyer. Ms. Khan is holding the position of Director in
Several Companies.

Mr. Jafer Ummeed Khan, Director

Mr. Jafer Ummeed Khan was born on 10th May 1957. After completeing his studies in the United
Kingdom, he joined Summit Group in 1987. He spearheaded the development and expansion of
Summit Group, particularly of Summit Industrial and Mercantile Corporation (Pvt.) Limited and later
on Summit Power Limited. Because of his contribution in the power sector, Mr. Jafer Ummeed Khan
was also unanimously elected as the Vice President of Bangladesh Energy Companies Association,
which post Mr. Khan is holding till date.

Mr. Hasan Mahmood Raja, Managing Director

Born in 1957, Mr. Hasan Mahmood Raja has completed Bachelor of Commerce. He was associated
with different companies of United Group since 1978. He is the Chairman and Managing Director of
United Enterprises & Co. Ltd., Malancha Holding Limited and Khulna Power Company Limited and
many more as well as the Chairman, Board of Governors (BoG) of United International University.

He has extensively traveled in USA, UK, Australia, Canada, Finland, Switzerland, Germany,
Malaysia, Singapore, China, India, and so on. He is also a member of Dhaka Club and Savar Golf
Club.

Mr. Ahmed Ismail Hossain, Director

Born in 1956, Mr. Ahmed Ismail Hossain has completed BSS and MSS, International Relations,
University of Dhaka. He is the Vice Chairman of United Hospital and Managing Director of Comilla
Spinning Mills Limited, United Rotospin Ltd. And Novo Healthcare and Pharma Ltd. He is also a
Member, Board of Governors (BoG) of United International University. He has extensively traveled
in USA, UK, Australia, South Korea, Canada, Finland, Spain, Italy, Switzerland, Germany, Malaysia,
UAE, Singapore, China, India, and so on. He is also a member of Dhaka Club and Savar Golf Club.

Mr. Khandaker Moinul Ahsan Shamim, Director

Born in 1957, Mr. Khandaker Moinul Ahsan Shamim has completed Bachelor of Commerce. He is the
Managing Director of Hafez Zamiruddin Fisheries Ltd. and Director of United Enterprises Ltd.,
United Polymer Ltd., Neptune Commercial Ltd., United Hospital Limited etc. He is also a Member,
Board of Governors (BoG) of United International University. He has extensively traveled in USA,
UK, Australia, Netherlands, Canada, Finland, Spain, Italy, Switzerland, Germany, Japan, South
Korea, Malaysia, UAE, Singapore, China, India, and so on. He is also a member of Dhaka Club and
Savar Golf Club.

Mr. Akhter Mahmud Rana, Director

Born in 1960, Mr. Akhter Mahmud Rana has completed ‘A’ Level. Director of United Enterprises
Ltd., United Polymer Ltd., Neptune Commercial Ltd., Hafez Zamiruddin Fisheries Ltd., Gulshan
Properties Ltd., United Hospital Limited. He is also a Member, Board of Governors (BoG) of United
International University. He has extensively traveled in USA, UK, Australia, Canada, Saudi Arabia,
Hong Kong, Germany, Malaysia, India, Singapore, China, Thailand and so on. He is a member Savar
Golf Club.

37
Mr. Faridur Rahman Khan, Director

Born in 1955, Mr. Faridur Rahman Khan has completed Bachelor of Science. He is the Managing
Director of United Hospital and Managing Director of Neptune Properties Ltd. He is also Director of
United Polymer Ltd., Malancha Holding Ltd., United Land Port Teknaf Ltd., Neptune Commercial
Ltd., Hafez Zamiruddin Fisheries Ltd., Gulshan Properties Ltd. He is also a Member, Board of
Governors (BoG) of United International University. He has extensively traveled in Australia,
Finland, Netherlands, Soudi Arabia, Germany, Malaysia, India, Singapore, Pakistan, Thailand and so
on.

Mr. Abul Kalam Azad, Director

Born in 1955, Mr. Abul Kalam Azad has completed Bachelor of Science. He is the Managing Director
of Neptune Land Development Ltd. and United Land Port Teknaf Ltd. he is also director of United
Polymer Ltd., United Hospital, Malancha Holding Ltd., United Land Port Teknaf Ltd., Neptune
Commercial Ltd., Hafez Zamiruddin Fisheries Ltd., Gulshan Properties Ltd. He is also a Member,
Board of Governors (BoG) of United International University. He has extensively traveled in USA,
UK, UAE, Franch, Canada, Australia, Japan, Soudi Arabia, Malaysia, India, Singapore, Pakistan,
Thailand and so on.

Mr. Moinuddin Hasan Rashid, Director

Born in 1982, Mr. Moinuddin Hasan Rashid has completed B. Sc. Engineer (Electrical & Electronics,
London, UK. He is Director of United Enterprises Ltd. Polymer Ltd., United Hospital, Malancha
Holding Ltd., United Land Port Teknaf Ltd., Neptune Commercial Ltd., Hafez Zamiruddin Fisheries
Ltd., Gulshan Properties Ltd. He is also a Member, Board of Governors (BoG) of United International
University. He has extensively traveled in USA, UK, UAE, France, Canada, Australia, Japan, Saudi
Arabia, Malaysia, India, Singapore, Pakistan, Thailand and so on.

Ownership List of shareholders who owns 5% or more than 5% share of the Company:

Name of the Shareholder Entity Number of Share %

1. Summit Industrial & Mercantile Corporation (Pvt.) Ltd. 104,261,500 49.9832%
2. United Enterprises and Company Limited 104,261,500 49.9832%

CIB status:
Neither the company nor any of its sponsors or directors or associates is defaulter with any bank in
terms of the CIB Report of the Bangladesh Bank.

Name and qualifications of the Senior Officers:

Sl. Name Educational Experience Designation
Qualifications
B. Sc in
1 Md. Abdur Rahim 34 years Project Director
Marine Engineering
Financial Controller &
2 M. Aminur Rahman FCA; M. Com 22 years
Company Secretary

Mr. Md. Abdur Rahim, Project Director

Mr. Md. Abdur Rahim was born on 01 January 1947. He obtained B. Sc in Marine Engineering from
the Merchant Marine University College of Rijeka, Yugoslavia in 1968. He worked on board various
vessels of DDG “Hansa” Lines of West Germany upto 1975. Afterwards, he worked in Bangladesh
Steel & Engineering Corporation in various capacities from 1976 to 1993 starting as Deputy Chief
Engineer. He was the General Manager of Khulna Shipyard Ltd from 1982 to 1987 and the Managing
Director of Dockyard & Engineering Works Ltd. Narayangonj from 1987 to 1993. He served on
deputation as Technical Director in Bangladesh Shipping Corporation and Bangladesh Inland Water
Transport Corporation from 1993 to 1997. Thereafter, then he joined in Khulna Power Company
Ltd. in 1997 as a Project Director and he was actively involved in formation of the company and
was pivotal to timely implementation of the project.

38
Mr. Md. Aminur Rahman, FCA, Financial Controller & Company Secretary

Mr. Md. Aminur Rahman was born on 01 January 1959. He is a Chartered Accountant, qualified from
the Institute of Chartered Accountants of Bangladesh (ICAB). He also obtained his Master degree
with honors in Accounting from Dhaka University. He is having more than 22 years of service
experience in the field of accounts, finance and company secretarial matters in various
multinational companies like Rhone Poulenc, Duncan Brothers Ltd and Oxfam, including more than
10 years of service in Khulna Power Company Ltd. as Financial Controller & Company Secretary. He
has attended in various training courses and seminars in home and abroad.

G. INVOLVEMENT OF THE DIRECTORS AND OFFICERS IN CERTAIN LEGAL

PROCEEDINGS
No officer or director of the Company was involved in any of the following types of legal proceedings
in the last ten years:
1. Any bankruptcy petition filed by or against any company of which any officer or director or
nominee of the Company filing the Information Document was a director, officer or partner at the
time of the bankruptcy;
2. Any conviction of an officer, director or nominee in the criminal proceedings or any criminal
proceedings pending against him;
3. Any order, judgement or decree of any Court of competent jurisdiction against officer, director
or nominee permanently or temporarily enjoying, barring, suspending or otherwise limiting the
involvement of any officer or director or nominee in any type of business, securities or banking
activities.
4. 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 officer or
director or nominees in any type of business, securities or banking activities.

H. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS WITH RELATED PARTIES

The Company has no proposed transaction nor had any transaction during the last 2(two) years with
following related parties -
a. Any director or executive officer of the Company
b. Any nominee for director or officer, and
c. Any person owning 5% or more of the outstanding share capital of the company
d. Any member of the immediate family (including spouse, parents, children, brothers, sisters and
in-laws) of any of the above persons
e. Any transaction or arrangement entered into by the company 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 or sister 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 publication of the Information Document - except
related party disclosures.

Loan status:
The Company did not take or give any loan from any Director or any person connected with any
Director nor did any Director or any person connected with any Director.

39
I. EXECUTIVE COMPENSATION
Remuneration paid to top executives during January to December 2009 is given below, which
includes only two personnel paid by KPCL:

Total Compensation
Sl. Name Designation
(Jan - Dec 2009)
1 Md. Abdur Rahim Project Director 5,030,703.00
2 M. Aminur Rahman Financial Controller & Company Secretary 4,455,960.00

N.B. Plant Operation and maintenance has been outsourced from Wartsila under Operation &
Maintenance Agreement. Wartsila has employed 113 employees and their remuneration is paid by
Wartsila from the O&M Fees received from KPCL. The Fee includes a fixed fee per month ranging
from US$ 162,167 to US$ 201,583 depending on the plant load factor.

The company did not pay any amount to any director as the company has no policy regarding this.
There is no contract with any director or officer for the payment of future compensation.

2009 2008
Aggregate amount of Taka Taka

Salary and allowances 13,226,172 17,822,640

Pay increase intention

Except annual increment and allowances, there is no plan for substantial pay increase to its officers
and directors.

J. OPTION GRANTED TO OFFICER, DIRECTORS AND EMPLOYEES

The company did not grant any option for issue of shares to any officer, director and other
employees of the company or to any other person outside the country.

K. TRANSACTION WITH PROMOTERS BENEFIT FROM THE COMPANY

Promoters did not receive anything of value directly or indirectly from the company in the last five
years.

Promoters’ asset To Company

No assets were acquired or are to be acquired from any of the promoters.

40
L. TANGIBLE ASSETS PER SHARE

As on December 31, 2009, the Net Tangible Asset Value per share stands at Tk. 18.53 The
calculation of net assets value per share is given below:

2009 2008
Taka Taka
Assets
Property, plant and equipment, net 3,307,133,332 3,463,283,276
Total non-current assets 3,307,133,332 3,463,283,276
Inventories 981,640,270 762,728,652
Accounts receivable 387,940,605 885,777,668
Other receivables 12,497,004 8,008,915
Advances, deposits and prepayments 1,548,516 1,493,673
Cash and cash equivalents 701,135,588 100,899,376
Total current assets 2,084,761,983 1,758,908,284
Accounts payable 1,486,104,691 1,314,033,048
Working capital loan - 284,000,000
Term loan - current maturity portion - 30,883,364
Dividends payable - -
Preference stock dividends payable - -
Accrued expenses and others 40,476,518 13,470,889
Payable for interest and other financial - 14,335,472
charges
Total current liabilities 1,526,581,209 1,656,722,773
Net current asset 558,180,774 102,185,511
Net assets employed 3,865,314,106 3,565,468,787
No. of Shares 208,593,000 208,593,000
Tangible Asset Value per Share 18.53 17.09

41
M. OWNERSHIP OF COMPANY’S SECURITIES:

Ownership List of shareholders who owns 5% or more than 5% share of the Company:

Name of the Shareholder Entity Number of Share %

1. Summit Industrial & Mercantile Corporation (Pvt.) Ltd. 104,261,500 49.9832%

2. United Enterprises & Company Limited 104,261,500 49.9832%

The Shareholding Position of ordinary shares by the Owner of the Company

Face
% Of Total Shares Total value
Name of shareholders Value
Shareholdings (No) (Taka)
(Taka)
Summit Industrial & Mercantile
Corporation (Pvt) Ltd. (incorporation in 49.98% 104,261,500 10 1,042,615,000
Bangladesh)
United Enterprises & Company Ltd.
49.98% 104,261,500 10 1,042,615,000
(incorporated in Bangladesh)
Muhammed Aziz Khan 0.0024% 5,000 10 50,000
Anjuman Aziz Khan 0.0024% 5,000 10 50,000
Latif Khan 0.0024% 5,000 10 50,000
Muhammad Farid Khan 0.0024% 5,000 10 50,000
Jafer Ummeed Khan 0.0024% 5,000 10 50,000
Ayesha Aziz Khan 0.0024% 5,000 10 50,000
Adeeba Aziz Khan 0.0024% 5,000 10 50,000
Hasan Mahmood Raja 0.0024% 5,000 10 50,000
Ahmed Ismail Hossain 0.0024% 5,000 10 50,000
K.M. Ahsan Shamim 0.0024% 5,000 10 50,000
Akhter Mahmud Rana 0.0024% 5,000 10 50,000
Faridur Rahman Khan 0.0024% 5,000 10 50,000
Abul Kalam Azad 0.0024% 5,000 10 50,000
Moinuddin Hasan Rashid 0.0024% 5,000 10 50,000
Total 100% 208,593,000 2,085,930,000

As resolved in the Board of Directors meeting of KPCL and also as per resolution taken in the EGM of
KPCL, 25% of the existing paid-up capital (i.e. 5,21,48,250 shares) to be sold to the general
public/institutions at Market Price.

The existing shareholders shall offer for sell 25% (twenty five percent) of the shareholdings in the
Company within 30 (thirty) trading days from the date of commencing the normal trading, i.e.,
after the price of the listed share is discovered and fixed following the book building method as
prescribed by SEC through Securities and Exchange Commission (Public Issue) Rules, 2006, to the
extent those are applicable or relevant in these respect.

42
N. DESCRIPTION OF SECURITIES OUTSTANDING OR BEING OFFERED

Dividend, voting and pre-emption rights of the shares outstanding or being offered:
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.
Shareholders shall have the usual voting right in person or by proxy in connection with, among
others, selection of Directors & Auditors and other usual agenda of General Meeting – Ordinary or
Extra Ordinary. On a show of hand every shareholder present and every duly authorized
representative of a shareholder present at a General Meeting shall have one vote and on a poll
every shareholder present in person or by proxy shall have one vote for every share held by
him/her.
In case of any additional issue of shares for raising further capital the existing shareholders shall be
entitled to Right Issue of shares of in terms of the guidelines issued by the SEC from time to time.

Conversion and liquidation rights of any preferred stock outstanding or being offered:
If the company at any time issues convertible preference shares or Debenture or Bond with the
consent of SEC, such holders of securities shall be entitled to convert such securities into ordinary
shares if it is so determined by the company.
Subject to the provisions of the Companies Act, 1994, Articles of Association of the Company and
other relevant Rules in force, the shares, if any, of the company are freely transferable, the
company shall not charge any fee for registering transfer of shares. No transfer shall be made to
firms, minors or persons of unsound mental health.

Limitations on the Payment of dividends to common or preferred stockholders:

a) The profit of the company, subject to any special right relating thereto created or authorized to
be created by the Memorandum of Association subject to the provision of the Articles of
Association, shall be divisible among the members in proportion to the capital paid up on the shares
held by them respectively.
b) No longer 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 profits of the company or any other undistributed
profits. Dividends 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
judgments 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.

Other material rights of common or preferred stockholders:

The Shareholder shall have the right to receive all periodical reports and statements, audited as
well as un-audited, published by the company from time to time. The Directors shall present the
financial statements as required under the Law and International Accounting Standards. Financial
Statements will be prepared in accordance with International Accounting Standards, consistently
applied throughout the subsequent periods and present with the objective of providing maximum

43
disclosure as per law and International Accounting Standard to the shareholders regarding the
Financial and operational position of the company.
In case of any declaration of stock dividend by issue of bonus shares, all shareholders shall be
entitled to it in proportion to their shareholdings on the date of book closure for the purpose.
The shareholders’ holding not less than 10% of the issued/fully paid up capital of the company shall
have the right to requisition Extra-ordinary General Meeting of the Company as provided under
Section 84 of the Companies Act, 1994.

O. DEBT SECURITIES:

Terms and conditions of debt securities that the company may have issued or to be issued:
The company does not have any plan to issue Bond or any other debt securities.

Principal amount, maturity date, interest rate and other features of all debt securities:
Not applicable for KPCL due to the reasons stated above.

All other material provisions giving or limiting the rights of the holders of debt:
Not applicable for KPCL due to the reasons stated above.

Trustees designated by the indenture for outstanding debt or for debt being offered:
Not applicable for KPCL due to the reasons stated above.

Preference Share
The company issued 1,100,000 redeemable cumulative class 'A' preference shares to the above
shareholders on 14 May 2008. These shares, under ordinary circumstances, are redeemable in five
annual equal installments of 220,000 shares starting from 14 May 2010, the second anniversary of
the issue date.

Name of shareholders 31 Dec 2009 31 Dec 2009 31 Dec 2008

Number of Face value Total value Total value
shares Taka Taka Taka

The City Bank Limited 600,000 1,000 600,000,000 600,000,000

Pubali Bank Limited 200,000 1,000 200,000,000 200,000,000
One Bank Limited 200,000 1,000 200,000,000 200,000,000
Trust Bank Limited 100,000 1,000 100,000,000 100,000,000
1,100,000 1,100,000,000 1,100,000,000

44
Corporate directory
Head Office
Summit Centre (5th Floor)
18, Karwan Bazar C/A,
Dhaka 1215
Phone: [+8802] 9132437-8; 8125142; 8126665
Fax-[+8802] 9125682

Power Plants
Goalpara, Khalishpur
Khulna

Auditors
Rahman Rahman Huq
Chartered Accountants
9 Mohakhali C/A, Dhaka
Phone: [+8802] 9886450-2
Fax-[+8802] 9886449
E-mail-rrh@citechco.net

Legal Adviser
Dr. Kamal Hossain & Associates,
Chamber Building, 122-124 Motijheel C/A, Dhaka-1000

Principal Banker
Citibank NA.
23, Motijheel C/A, Dhaka-1000, Bangladesh.

Manager to the issue

AAA Consultants & Financial Advisers Ltd.
Amin Court, 4th Floor (Suite # 404)
31 Bir Uttam Shahid Ashfaqueus Samad Road
(Previous 62-63) Motijheel C/A, Dhaka-1000
Phone: +8802 9559602, +8802 9567726 Fax: +8802 9558330

45
 CREDIT RATING REPORT
ON
KHULNA POWER COMPANY LTD.

REPORT: RR/287/09

Address: This is a credit rating report as per the provisions of the Credit Rating Companies Rules 1996. The Long Term and Short
CRISL Term Ratings of the company are valid for one year and six months respectively. After the above periods, these rating
Nakshi Homes will not carry any validity unless the company goes for rating surveillance.
(4th Floor),
6/1A, Segunbagicha,
Dhaka-1000 Long Term Short Term
Tel: 7173700-1
Fax: 88-02-9565783 Entity Rating AA ST-1
Email: Outlook Stable
crisl@bdonline.com
Date of Rating 16 September, 2009

Analysts:
Akram H Siblee
siblee@crislbd.org
1.0 RATIONALE
Suman K Kundu
suman@crislbd.org CRISL has assigned “AA” (pronounced as double A ) rating in the Long Term and “ST-1” rating
in the Short Term to Khulna Power Company Ltd. (hereinafter referred “KPCL”) based on
financials and other relevant quantitative and qualitative information. The above ratings have
been done on the basis of its good fundamentals such as sound equity based capital
structure, sound debt repayment background, high quality plant, satisfactory profitability,
Entity Rating: government guarantee against power purchase, insignificant market risk on demand,
Long Term: AA government supportive policies for power sector etc. However, the ratings are constrained to
Short Term: ST-1 some extent by full dependency on O&M operator’s performance, low return compared to high
Outlook: Stable capital intensiveness, dependency on imported raw materials, tariff rate fixed by government
etc.
Rating based on
financials of
Entities rated in this category are adjudged to be of high quality, offer higher safety and have
1H 2009
high credit quality. This level of rating indicates a corporate entity with sound credit profile
and without significant problems. Risk factors are modest and may vary slightly from time to
time because of economic conditions. The short term rating indicates highest certainly of
KHULNA POWER timely payment. Short-term liquidity including internal fund generation is very strong and
COMPANY LTD. access to alternative sources of fund is outstanding. Safety is almost risk free like
Government short-term obligations.
PRINCIPAL
ACTIVITY KPCL has been operating with comfortable financial profile including good profitability and
Electricity sustained stability in revenue. Structured Power Purchase Agreement (PPA) with Bangladesh
Generation Power Development Board (BPDB) ensures payment for at least 50% deemed generation.
Moreover, pass-through nature of its fuel costs under the tariff guidelines resulting a low fuel
price risk for KPCL. Chronic power deficits in the country, growing demand for power in the
INCORPORATED economy and KPCL’s long term power purchase agreement with government depicts low off-
ON
take risk for the producer. KPCL has consistently achieved better operational performance
15 October, 1997
over the years i.e. plant factor 89.27% in 1H of 2009, 74.05% in 2008, 74.66% in 2007 and
BOARD 79.44% in 2006. In view of better operating efficiency the revenue of the company reached to
CHAIRPERSON Tk. 2,993.70 million in 1H of FY2009 (6 months operation), which was Tk. 8,160.42 million in
Mr. Muhammed Aziz FY2008 and Tk. 5,698.21 million in FY2007. With the favour of stable oil prices in the
Khan international market and low financial expenses, net profit reached to Tk. 437.32 million in 1H
of FY2009 against Tk. 272.52 million in FY2008 and Tk. 309.18 million in FY2007. The sound
MANAGING
equity base (74% contribution in total capital employed) with low financial leverage made its
DIRECTOR
Mr. Hasan Mahmood capital structure stronger.
Raja
KPCL is yet to develop core competency and is presently fully depends on O&M operator’s
EQUITY performance. However, ‘Summit’ and ‘United’ (shareholders of KPCL) has good exposures to
Tk. 2,495.86 million run different power plants having more than 200 MW capacity under own management. High
fuel prices put pressure on profitability as the company can realize about 90% of the fuel cost
from BPDB.
Page 1 of 15
CRISL also viewed the company with “Stable” outlook and believes that KPCL will be able to
maintain its good fundamentals in FY2009 also.
 CREDIT RATING REPORT
ON
KHULNA POWER COMPANY LTD.

2.0 CORPORATE PROFILE

2.1 The Genesis

Khulna Power Company Ltd. (KPCL) is an Independent Power Producer (IPP) established in
110 MW 1997 under the Government initiatives for private power projects. By considering that gas
Independent Power burning large land based power project requires relatively long preparation and construction
Producer period, this barge-mounted power plant was set up to alleviate the severe power crisis as a
faster track solution on short term basis. Through a public bidding process the consortium of
Wartsila NSD Power Development (Asia) Ltd., Summit Industrial & Mercantile Corporation
(Pvt.) Ltd. and United Enterprises & Co. Ltd. was awarded to establish this power plant in
Khulna. Two principal evaluation criteria of government were: early commissioning i.e. within
10 months of executing the Power Purchase Agreement (PPA) and the Implementation
Agreement (IA) and dual fuel capability. Liquid fuel fired with capacity of 110 Megawatts
(MW), KPCL is selling electricity to Bangladesh Power Development Board (BPDB) under PPA
between the company and BPDB. The plant started supply of electricity to the national grid
from 13 October, 1998. Initially the company was started as private limited company and
later in FY2009 converted into public limited company. The corporate office is located at
Summit Centre, 5th Floor, 18 Karwan Bazar C/A, Dhaka-1215. The company has planned to
go public through direct listing during 2009.

2.2 Ownership Structure

At present Summit Industrial & Mercantile Corporation (Pvt.) Ltd. (Summit) and United
Enterprises & Co. Ltd. (United) equally own 99.9664% of 2,085,930 ‘Class A & B’ ordinary
99.97% shares shares. Rest 0.0336% i.e. 700 ordinary shares were transferred in favor of 14 individuals at
owned by Summit 50 numbers of ‘Class-A’ shares each. Out of these shares, Summit and United each hold 3
and United group ‘Class-B’ ordinary shares, which get different treatment in respect of dividend payment
compared to ‘Class-A’ shares. However, the existing shareholders of the company on 19 July,
2009, in an Extraordinary General Meeting (EGM) passed and resolved that the existing
category of Ordinary ‘Class A’ and ‘Class B’ shares shall be reclassified as ordinary shares. At
the inception, El Paso Khulna Power ApS (incorporated in Denmark) were holding 73.90%,
Wartsila Development & Financial Services (Asia) Ltd. (incorporated in Cayman Island)
6.10%, Summit and United 10% each. Later in FY2008, EL Paso and in June, 2009 Wartsila
sold their holdings equally to Summit and United. El Paso determined share transfer package
through a competitive bid and Summit and United as existing shareholder got the first priority
to take the package. Other than ordinary shares, KPCL has issued 1,100,000 preference
shares of Tk. 1000 each on May 2008 to four private commercial banks. These preference
shares are cumulative and redeemable in five annual installments of 220,000 shares starting
from 14 May 2010, the second anniversary of the issue date.

3.0 SHAREHOLDERS’ GROUP PROFILE

3.1 Summit Group

Summit Group is one of the leading investment and industrial business houses in Bangladesh.
With the inception of a small thermo-plastic moulding compound trading company “Sanguine
Traders” in 1972, Mr. Muhammed Aziz Khan started his business career in a specialized
business sector. Under his direct leadership Summit Group has become a top tier business
establishment within a short period of time and now owns more than 10 companies. Out of
the above companies, only Summit Power Limited and Summit Alliance Port Ltd. are publicly
listed with both the bourses of the country. The major sectors of the Group investment cover
power generation, tanks terminal, shipping, real estate, construction, civil & hydro
engineering, container depots, trading etc. The sponsors of Summit Group are targeting the
niche sectors of the country and abroad. This has led to the establishment of a barge mounted
power plant in Bangladesh namely Khulna Power Company Ltd., Liquefied Petroleum Gas
(LPG) plant in gas starved area at Mongla, Bagerhat, Container Freight Station in Chittagong
etc. The Group is keen to invest in power sector, which has been opened to private
Page 2 of 15 investment in Bangladesh. At the end of 2008, the asset base of the group stood at Tk.
21,571.87 million against Tk. 5,720.43 million outside liabilities. Share capital of the group
stood at Tk. 5,807.26 million and net profit during the last period reached to Tk. 2,949.53
million.
 CREDIT RATING REPORT
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KHULNA POWER COMPANY LTD.

3.2 United Group

The United Group is a known name in the business arena of the country. The Group started its
business career in 1978; with its Flagship company United Enterprises and Co. Ltd. During the
last almost three decades of operation, the Group has expanded its business in various
sectors of the national economy such as Power Generation, Broadcasting and Communication,
Civil and Hydro Engineering, Real Estate Development, Land port Services, Hospital and
health care, Textiles, Polymer industries, Education etc.

Over the years, the Group has completed several large and unique projects that testify its
strength and capability in project management. Such projects include the 110 MW barge
mounted power plant in Khulna; 60 km Coastal Embankment Rehabilitation Project financed
by the World Bank; three 11 MW power plants in Ashulia, Narshingdi and Comilla; 450 bed
State -Of-The-Art hospital; Runway Overlay Project at Zia International Airport; E-cash ATM
Card Networking System; land port management services at Teknaf (ongoing) and others. At
end of 2008, the asset base of the group stood at Tk. 16,395.35 million against Tk. 10,482.16
million liabilities. Net worth of the group stood at Tk. 5,913.18 million and net profit for the
last period reached to Tk. 343.58 million.

4.0 PROJECT/PLANT DETAILS

4.1 Plant Location & Production Facilities

The plant is located near the city of Khulna. The riverbank project site provides easy access to
fuel shipments by river and is located next to an existing electrical substation and
Plant located at near transmission line. The plant consists of two barge-mounted facilities housing of a total 19
Khulna city Wartsila diesel engine generators of 6.5 MW capacities. Generators are featured with low NOx
and dual fuel capability. Nine engines-generators are mounted on one barge and ten on the
other. The barges, shipped as deck cargo on a submersible dry tow ship, are moored in a
closed basin. Each barge is approximately 91 meters long and 24 meters wide. The plant’s
shore side auxiliary facilities include two Heavy Furnace Oil (HFO) storage tanks (7,500 cubic
meters each) and pumps to transfer heavy fuel oil to a buffer tank on either barge.

4.2 Main Features of PPA

Considering the BPDB as the single buyer, the Power Purchase Agreement between BPDB and
KPCL plays a very important role. The PPA inter alia includes the following important
provisions:
a) The term of the contract is for 15 years from the date of commercial operations;
Guaranteed
b) BPDB is committed to a minimum guaranteed payment equivalent to 50% plant
payment for 50% of
deemed generation factor on a monthly basis;
c) Two part monthly tariff structure: Fuel Tariff (FT); with full cost pass through and
Other Monthly Tariff (OMT), 99% of which is US$ indexed;
d) Allows KPCL to source its own fuel supply;
e) Tariff invoices payable within 45 days of the delivery of invoices;
f) Payment security back-up in the form of Letter of Credit covering two months
minimum tariff payments;
g) The minimum tariff payment obligations continue through political and Force Majeure
Events;
h) Compensation amount on termination to cover 65% of the NPV of the minimum tariff
payment for the remaining term of the PPA, plus consequent termination payment
liability to KPCL in respect of the O&M agreement and Fuel Supply Agreement, plus
taxes;
i) KPCL is required to pay liquidated damages for lower output capacity and short
supply of energy;
j) BPDB would pay liquidity damages to KPCL in the event of failure by the GOB to meet
any of; its obligations provided under the Implementation Agreement (IA).

4.3 Tariff Structure

Page 3 of 15
The PPA contains a two-part tariff: fuel tariff (“FT”) and other monthly tariff (“OMT”). The FT
reflects the pass-through nature of fuel expenses to the extent that the plant operates at the
specified heat rate. Under the tariff structure, the fuel cost is calculated in terms of volume
rather than energy content (i.e. $/liter versus $/BTU), since HFO is sold by volume or mass.
 CREDIT RATING REPORT
ON
KHULNA POWER COMPANY LTD.

OMTs were quoted for 15 years at 50%, 60%, 70%, and 80% plant factors, and together with
FT, account for the payment to the Company for electricity produced on a per Kwh basis. At
Two part tariff i.e.
plant factors above 80%, the OMT used will be the same as that quoted for an 80% plant
Fuel Tariff & Other
Monthly Tariff
factor.

5.0 INDUSTRY OVERVIEW

The Ministry of Power, Energy, and Mineral Resources (MEMR) monitors the overall power
sector of the country through the Power Division and Power Cell. Generation and distribution
activities have been opened to foreign and private sector, although both the sectors remain
dominated by state-owned entities. Given the poor state-run electricity infrastructure, the
government issued the "Private Sector Power Generation Policy of Bangladesh" in 1996 and
began to invited proposals from Independent Power Producers (IPPs) in the private sector in
order to ease the country’s electricity supply shortage. In response, several IPPs were set up
after 1996. The Private Sector Power Generation Policy of 1996 (Amended a few clause in
September 11, 2001) offers attractive incentive packages to IPPs including exemption from
income tax for 15 years. However, the private power producers are still in hesitation due to
the tariff policy regarding gas supply and power sale etc. Recent move of the Government to
increase the tariff rate of gas supply is a major concern to the private power producers. Side
by side with the large IPP projects, the Government also adopted a policy of "Small Power
Generation Policy," which encourages development of small local generation projects of up to
10-MW in capacity in underserved areas. The country has an active rural electrification
program, which is supported by the ADB’s Power Sector Development Program (PSDP)
initiated in 2003.

Since natural gas dominates our power sector in Bangladesh, 95% of electricity comes from
conventional thermal power (primarily natural gas) and the remaining 5 percent through
hydroelectric power. In January 2006, Bangladesh’s first coal-fired power plant began
commercial production at the 250-MW Barapukuria facility in Parbotipur.

According to Power Cell, the Bangladesh Power Development Board (BPDB) generated 3400
MW of the country’s 5245 MW of total commercial electricity, or about 64% percent of the
total installed capacity. Over the last several years although the demand of power and gas
grew in geometric progression, yet the power sector did not grow as per requirement and gas
sector failed to explore its resources and developed its reserve. In the last one and half year’s
natural gas production, transmission and supply situation has deteriorated. PDB viewed that,
for gas supply shortage alone, it failed to generate about 850MW and for maintenance and
overhauling of plants another 323 MW power could not be generated.

Per capita Electricity in Bangladesh is one of the lowest in the world, at about 169.69 kilowatt-
hours (kwh) in 2006. At present only 42.09% percent of the population has access to
electricity, primarily in the more developed eastern zone of the country. Since much of the
country is disconnected from the national electricity grid, noncommercial sources of energy
such as biomass are estimated to represent more than half of Bangladesh’s energy
consumption.

6.0 CORPORATE GOVERNANCE

6.1 Board of Directors

The Board of KPCL consists of fourteen directors. Mr. Muhammed Aziz Khan, nominated from
Summit, is the Chairman of the company. Mr. Aziz Khan is a renowned and pioneer business
14- Member Board personality in private power sector of Bangladesh. After completion of MBA from Institute of
Business Administration of Dhaka University in 1980, he sponsored the Summit Group. He is
Page 4 of 15 also the chairman of Summit Power Limited; the first company in the private sector to go
public. Mr. Hasan Mahmood Raja nominated from United acts as Managing Director of the
company. The Board members have sound exposures in the operation and technical aspect of
the business, since they are involved in diversified business for a long.
 CREDIT RATING REPORT
ON
KHULNA POWER COMPANY LTD.

The Board formulated strategic objectives and policies for the company, provides leadership in
implementing those objectives as well as supervises management of the company’s affairs.
Under the supervision of the Board, Managing Director looks after the overall operational
activities as per the delegation of power and in accordance with the Memorandum and Articles
of Association.

6.2 Corporate Management and Human Resources

As the core operation of KPCL is completely outsourced from ‘Operation & Maintenance
Small management operator’ i.e. Wartsila, the supplier of the engines, the corporate management team and
team human resource size of the company is very small. The corporate management team is
headed by Mr. Hasan Mahmood Raja, the Managing Director of the company. Mr. Raja was the
leading sponsor of the United Group. He is also Chairman and Managing Director of United.
Managing Director is aided by Mr. Md. Abdur Rahim, the Project Director and Mr. Md. Aminur
Rahman FCA, Financial Controller and Company Secretary. Mr. Abdur Rahim, a marine
engineer having about 40 years experiences in steel, shipping, dockyard and power sector.
Mr. Aminur Rahman, a professional accountant having 22 year of service experience in the
field of accounts, finance and company secretarial matters in multinational companies. Total
human resource stood at 10, who are mainly for support services. The company formulated
structured ‘Employment Policy’ stating the benefits and privileges entitled by the employees.

6.3 Business Strategy

As mentioned earlier, KPCL an independent power producer operates under a 15-year PPA
with BPDB. A guarantee agreement between the company and Ministry of Energy and Mineral
Operation Resources (MEMR) also ensures the company regarding the payment obligations of the BPDB
outsourced form in the event of a breach, default or non-performance of BPDB under the PPA. Operation &
Wartsilla
Maintenance is totally outsourced from Wartsilla, the engine supplier and previous shareholder
of the company. Fuel is independently sourced from Singapore by KPCL and cost of fuel
passed through to the BPDB.

Though the tenure of existing PPA expires on 2013, under the present electricity situation it is
highly probable that government will extend the agreement for the next tenure. After the
expiry O&M agreement in 2013, KPCL thinks to take over the O&M under own management.
The existing personnel of the operator can be retained by KPCL. Moreover, Summit and United
group have been operating different power plants having about 200 MW capacity under own
management.

7.0 RISK MANAGEMENT

7.1 Plant Protection and Risk Mitigation

Plant is adequately Wartsila, the plant Operator has taken adequate protection measures to protect the plant. It
protected has established 42 fire hydrant points covering the key areas, 28 CO2 flooding fixed
installation for T1 & T3 (for control room, switchgear room and HFO separator room). There
are also about 200 hand-held fire extinguishers which include foam, powder and CO2 types.
The Khulna power plant has been identified as a Key Point Installation (KPI) by the
government of Bangladesh. Hence services of the Bangladesh Rifles, Army and private
security can be utilized. The Operator also established an Emergency Response Plan, which
address all types of emergency that may arise in the plant. KPCL is currently insured all risks
packages including machinery breakdown, increased cost of replacement payable, business
interruption, marine and non marine liabilities, sabotage and terrorism.

7.2 Operating and Maintenance Risk

KPCL has signed a 15-year O&M agreement with Wartsila, a leading supplier of flexible power
plants worldwide. The operator is responsible for the activities necessary to operate the plant
except fuel purchase. It will determine the needed spare parts and supplies and will provide
Page 5 of 15 all services necessary to obtain the parts and supplies. It will also employ and be responsible
for all operating personnel. The O&M costs include a fixed fee usually of US$ 144,000 per
month prorated for partial months; however, it may extend to US$ 179,000 for any month in
certain circumstances. The operator shall invoice at variable cost of US$ 5.05 per MWh during
 CREDIT RATING REPORT
ON
KHULNA POWER COMPANY LTD.

the months when capacity factor is below 30% or above 60% and US$ 4.6 per MWh when
Low Maintenance capacity factor is between 30% and 60%. Variable cost will be subject to annual adjustment
Risk
in certain circumstances. KPCL is responsible for unplanned maintenance in excess of
US$100,000 per event and extraordinary expenses for additional work. The operator
guarantees an annual availability rate for the plant at 85%. For each percentage below up to
a maximum of 13% the operator will pay KPCL US$15,000 and vice versa.

7.3 Counter Party Risk

Bangladesh Power Development Board (BPDB) is the only purchaser of electricity from the
KPCL. According to the agreement BPDB will pay all the net electricity output delivered to the
No counter party grid system from the plant with commitment to a minimum purchase equivalent to 50% plant
risk due to huge
power shortage
factor on a monthly basis. As additional, payment security is backed by Letter of Credit
covering two months of minimum tariff payments (and a Government of Bangladesh
Guarantee). Tariff invoice is payable within 45 days of the delivery of invoice. In last 12
months, the company received payment on an average 10 days ahead of due date. There has
been no dispute with BPDB regarding meter readings or invoice amounts. At present KPCL
does not seem counter party risk, because the country faces huge power shortage.

7.4 Foreign Exchange Risk

KPCL faces minimum foreign exchange risk. Presently there is no foreign currency
Minimum Foreign denominated loan amount. The company receives revenue almost fully in US dollars. The PPA
Exchange Risk provides exchange rate protection with the pass-through fuel cost and 99% of OMT (Other
Monthly Tariff) indexed to the exchange rate as applicable on the date of credit equivalent US
dollars in the company’s account.

7.5 Fuel Price Escalation Risk

The pass through of the fuel cost under the PPA is limited to the fuel cost if the plant was
Exposes fuel price
running at the heat rate as specified in the PPA. As the plant may not be running at that
escalation risk specified rate due to variation in fuel quality, the extra fuel cost will not be passed through
and there is a risk that earnings will be affected by extra cost especially in the period of
higher fuel prices in the international market However, the OMT portion of the tariff generates
sufficient revenues till present period to absorb the price escalation risk.

7.6 Supplies Risk

KPCL has formal Fuel Supply Agreement (FSA) with United Summit Coastal Oil Ltd. (USCOL),
Low supplies risk
a sister concern of Summit and United for only inland carrier. KPCL imports fuel on its own
account i,e. full responsibility bestowed on KPCL. KUO Oil (Singapore) PTE LTD, a foreign
company, commercially agreed to render the offshore services (such as procurement, freight,
FOB cost differential risk, inspection, supervision of loading). USCOL acts only onshore
(Bangladesh) in connection with the portion of services of unloading, storage, transportation
and delivery to the discharge port. KPCL faces low supply risk as it can import fuel from any
commercially viable supplier and MOPS (Mean of Platts Singapore) indexed fuel costs pass
through to BPDB.

8.0 BUSINESS PERFORMANCE

Indicators *1H 2009 2008 2007 2006

Better Operational 477,840 963,600 963,600 963,600
Licensed Capacity (MWh) [110]
Performance
Energy Generation (MWh) 416,707 705,384 730,987 776,653

Net Energy Output (MWh) 410,301 693,544 718,985 764,222

Plant Factor (%) 89.27 74.05 74.66 79.44

Economic Efficiency (TK/MWh) 6,267.70 10,866.16 7,051.65 7,419.68

Operational Efficiency (%) 87.21 73.20 75.86 80.60

Page 6 of 15 * 6 Months operation (January – June)

KPCL has dispatched 693,544 MWh of energy to national grid during FY2008 against 718,985
MWh of energy in FY2007 whereas licensed capacity was 963,600 MWh in both of the periods.
 CREDIT RATING REPORT
ON
KHULNA POWER COMPANY LTD.

During first half of FY2009, net energy dispatched was 410,301 MWh against 477,840 MWh of
installed capacity. The plant factor stood at 89.27% in 1H of FY2009 and 74.05% in FY2008
against 74.66% in FY2007. In terms of Economic Efficiency (production cost to energy output)
the company has improved its performance over last period. Cost per MWh of Tk. 6,267.70 in
1H of FY2009 was lower than Tk. 10,866.16 in FY2008 and Tk. 7,051.65 in FY2007. Volatility
of oil price in international market was the prime reason of volatility in ratio of economic
efficiency over the periods. Operational Efficiency (energy output to potential output at 100%
capacity) also improved in 1H of FY2009 at 87.21% from 73.20% in FY2008 and 75.86% in
FY2007.

9.0 FINANCIAL PERFORMANCE

9.1 Profitability

Indicators *1H 09 2008 2007 2006 2005

Return on Average Assets (ROAA)% 17.52 4.76 4.78 4.01 4.30
Sound profitable
company Return on Average Equity (ROAE)% 35.87 9.58 9.81 8.88 8.80
Return on Average Capital Employed % 24.44 6.99 7.30 6.00 5.55
Gross Profit Margin% 12.76 6.07 9.54 8.69 12.48
Operating Profit Margin% 11.70 5.32 7.76 7.23 10.25
Net Profit Margin% 14.61 3.34 5.43 4.06 5.66
Earning Per Share(Tk.1000) 352 88 141 110 102
* First Half growth of FY2009 has been annualized

KPCL is a highly profitable company and the profitability indicators were stable over the last
few years. The company enjoys exemption from tax on income for 15 years from the date of
its commercial operation. Net profit stood at Tk. 437.51 million during 1H of FY2009 against
Tk. 272.52 million in FY2008 and Tk. 309.18 million in FY2007. The profitability is highly
influenced by the fuel tariff, which is volatile in the international market. According to PPA,
PDB reimburses the fuel cost as per specified quantity of fuel per MW electricity generated.
However, due to different configuration of engines than specified in PPA, the burn rate of fuel
per MW is higher. Consequently KPCL can realize about 90% of fuel cost from BPDB and rest
10% put pressure on profitability, which were more acute during 2008 (Tk. 44,644 per MT)
and 2007 (Tk. 26,996 per MT) when fuel price was sky high than 1H of FY2009 (Tk. 23,733
per MT). Other than influence of fuel price, net profit of 1H, FY2009 substantially increased
from irregular income from EL Paso’s (a previous equity partner) term loan waiver (Tk. 91.48
million) and reduced financial expenses.

While analyzing profitability, Return on Average Asset (ROAA) has substantially increased to
17.52% (annualized) at end of 1H of FY2009 from 4.76% at YE2008 and 4.78% at YE2007.
By nature power generation industry is very capital intensive; moreover, significant trade
debtors and huge raw materials inventory induced to reduce the return on assets. Due to fall
in net profit by 11.80% and 4.25% increase in equity reduced Return on Average Equity
(ROAE) to 9.58% at YE2008 from 9.81% at YE2007. Though total amount of capital employed
decreased, the Return on Average Capital Employed (ROACE) declined further to 6.99% at
YE2008 from 7.30% at YE2007. However, at end of 1H of FY2009, both annualized ROAE and
ROACE increased substantially to 35.87% and 25.16% respectively. The Earning Per Share
(EPS) of Tk. 1000 stood at Tk. 352 (annualized) at end of 1H of FY2009 against Tk. 88 at
YE2008.

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 CREDIT RATING REPORT
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KHULNA POWER COMPANY LTD.

9.2 Cost Efficiency

Indicators *1H 09 2008 2007 2006 2005

Cost to Revenue Ratio (%) 87.24 93.93 90.46 91.31 87.52
Administrative Exp to Revenue Ratio % 1.05 0.75 1.78 1.46 2.23
Improved cost
Finance Cost to Revenue Ratio % 0.21 2.13 2.60 3.13 4.55
efficiency
* First Half growth of FY2009 has been annualized

The cost efficiency (cost of goods sold to sales revenue) was improved in 1H of FY2009
though the ratio was very high in the last several years. It stood at 87.24% in 1H2009 against
93.93% in FY2008 and 90.46% in FY2007. As mentioned earlier, high oil prices and freight
charges in international market caused to high cost to revenue ratio. KPCL imports furnace oil
from Singapore. C&F of fuel is calculated as the five day (immediately and after 2 days of date
of bill of lading) rolling average of MOPS (Mean of Platts Singapore). Contribution of raw
materials cost to cost of goods sold increased 90.56% in FY2008 from 85.26% in FY2007;
however, it was 84.86% in 1H of FY2009. It revealed that the price of heavy furnace oil
decrease by 46.84% in 1H of FY2009 than FY2008, however, it was 65.37% higher in FY2008
than FY2007.

Finance cost to revenue decreased to 0.21% in 1H of FY2009 against 2.13% in FY2008 and
2.60% in FY2007. Early payment of IFC term loan and preference share’s dividend, which
charged against retained earnings induced to improve the finance cost to revenue ratio in 1H
of FY2009. Administrative expense to revenue ratio stood at 1.05% in 1H of FY2009 against
0.75% in FY2008 and 1.78% in FY2007.

10.0 CAPITAL STRUCTURE AND LEVERAGE

Indicators *1H 09 2008 2007 2006 2005

Leverage Ratio (X) 0.92 1.19 0.88 1.24 1.18
Internal Capital Generation (%) 17.52 11.45 9.35 8.54 8.68
Net Asset Value Per Share (Tk. 1000) 1196.52 1141.15 1585.79 1437.57 1327.18
* First Half growth of FY2009 has been annualized

KPCL is a sound equity based company with good contribution from long term loan in the
capital structure. At end of 1H of FY2009, the capital structure revealed that almost 74% of
the net capital employed Tk. 3386.39 million was financed by equity i.e. Tk. 2,495.85 million.
The equity pie is composed of 83.58% paid up capital and 16.42% retained earnings. The
Equity based cumulative preference shares are redeemable in five annual installments starting from 14
company May, 2010 at the second anniversary of the date of issue. By considering its nature, these
preference shares are long term liability. The internal capital generation was good and stood
at 17.62% at end of 1H of FY2009 against 11.45% at YE2008. Other than Tk.113.44 million
preference dividend, Tk. 208.59 million and Tk. 1200 million paid for FY2008 and FY2007
respectively as cash dividend. Against the above equity structure, outside liabilities stood at
Tk. 2,264.58 million representing the leverage ratio 0.91 times as on 30 June 2009 against
1.19 times at YE2008. The leverage ratio consists 0.36 as long term gearing and 0.56 as short
term gearing. Net asset value per TK. 1000 share increased to Tk. 1196.52 at end of 1H of
FY2009 against Tk. 1141.15 at YE2008.

11.0 LIQUIDITY AND FUND FLOW ANALYSIS

Indicators *1H 09 2008 2007 2006 2005

Current Ratio (X) 0.99 1.06 1.30 1.15 1.13
Page 8 of 15 Quick Ratio (X) 0.83 0.60 0.82 1.00 0.90
Cash Conversion Cycle 19 8 4 18 44
* First Half growth of FY2009 has been annualized
 CREDIT RATING REPORT
ON
KHULNA POWER COMPANY LTD.

KPCL is basically an import based (considering volume of raw materials) company requiring
significant inventory (heavy furnace oil). Due to comparatively shorter receivable collection
period and lengthy repayment of payables, liquidity position of the company always remains
at modest level. It is reflected by its liquidity ratio which stood at 0.99 times, 1.06 times and
1.30 times at end of 1H of FY2009, FY2008 and FY2007 respectively. As per agreement, KPCL
has to keep 11,000 MT furnace oil in country for on an average 30 days production. Supplier’s
Small cash payment can be delayed upto 90 days as per L/C terms. The credit sales/receivables backed
conversion cycle by PPA realizable within 45 days induced to reduce average cash conversion cycle to 20-25
days. On the over, the liquidity cycle depends on as early as realization of receivables from
BPDB.

Analysis of the fund flow reveals that the company generated sufficient funds internally to
service its debt burden and other liabilities also. In FY2008, the company generated cash flow
from operation of Tk 546.87 million (1.11 times of debt coverage) and free operating cash
flow of Tk 546.45 million (1.10 times of debt coverage).

12.0 FINANCIAL FLEXIBILITY AND SOLVENCY

Indicators *1H 09 2008 2007 2006 2005

Debt Service Coverage Ratio (X) 14.53 1.26 1.44 1.31 1.35
Interest Coverage Ratio (X) 87.22 3.55 4.54 3.38 3.33
* First Half growth of FY2009 has been annualized

Due to sound equity and legal backings, KPCL enjoys good financial flexibility to raise funds
from different sources. With sound creditability, it enjoys a large credit limit from different
Sound debt servicing banks (BRAC Bank, Citibank NA, Pubali Bank, Shahjalal Islami Bank and Standard Bank).
capacity Presently, KPCL enjoys funded limit of Tk. 1,109 million and non-funded limit of Tk. 2,440
million as on 30 June, 2009. However, out of the above limit, the outstanding funded bank
loan liability was Tk. 293.70 (i.e. 26.48% utilization of the limit) and non funded liability was
Tk. 316.87 million (i.e. 13% utilization of limit) as on 30 June, 2009.

While analyzing creditworthiness of the company, it revealed that with the company has been
utilizing the revolving credit limits duly. Initially the company made agreement with IFC for
$51.968 million for project loan. However, due to some compliance fulfillment by KPCL, IFC
delayed to disburse the loan. Consequently, the then two foreign sponsors i.e. El Paso and
Wartsilla provided the amount as ‘Bridge Loan’ in the proportion of 85% and 15%
respectively. Later in August, 1999 IFC disbursed $22.539 million and in October, 2002
$21.539 million. Foreign two sponsors’ loan was partially replaced by IFC loan and remaining
amount of foreign sponsors’ loan treated as term loan. The above term loans were being
repaid in semi-annual installments for a term of 9 years effective from 15 December 2002.
The remaining balance of IFC loan of Tk. 1,120.58 million had fully re-paid earlier in FY2008
from the proceeds of redeemable cumulative preference share of TK. 1,100 million. The
balance i.e. Tk. 91.98 million of El Paso loan was waived by El Paso under share transfer deal
with Summit and United. Remaining balance of Wartsilla’s loan was fully repaid in March,
2009.

The cash generation of the company was good to serve the interest obligation against the
revolving loan. Debt service coverage ratio stood at 14.53 times in 1H of FY 2009 against
1.26 times in FY2008. In term of interest coverage ratio, the earnings against the fixed cost
burden was commendable to 87.22 times in 1H of FY2009 against 3.55 times in FY2008 due
to no long term loan except preference shares in FY2009. However, by considering
redeemable preferred share as liability, the interest coverage ratio (including preferred
dividend as fixed charge) stood at 4 times in 1H of FY2009.

Page 9 of 15
 CREDIT RATING REPORT
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KHULNA POWER COMPANY LTD.

13.0 OBSERVATION SUMMARY

Rating Comforts Rating Concerns:

• Sound equity base • Fully dependent on O&M
• Sound debt repayment background operator’s performance
• High quality plant • Low return compared to high
• Satisfactory profitability capital intensiveness
• Government guarantee against • Dependency mainly on imported
minimum power purchase raw materials
• No market risk regarding demand • Tariff rate fixed by government
• Government supportive policies
Business Opportunities: Business Challenges:
• Government Incentives • Volatility of oil prices in
• Increasing demand for electricity international market
• Dependency on foreign
technology

14.0 CONCLUSION

The power sector of Bangladesh has been passing through a critical stage due to many
reasons including shortage of production compared to demand. According to PBD, the demand
of electricity reached to 5500 MW, whereas daily power generation stayed between 3300 MW
to 3400 MW, the same was also produced in 2004-05. This wide gap between generation and
demand is not solely for no new production but also lack of consistent expansion of
transmission and distribution channels. Consequently, per capita electricity generation or
coverage of population under electricity not achieved as per Power Sector Master Plan (PSMP).
Moreover acute shortage of natural gas makes volatile the power generation. Overall, the
power sector of Bangladesh falls in a disaster. KPCL as a power generation company runs
successfully since its commercial operation. The profitability, solvency and efficiency of the
company improved over the periods. Good exposures of the entrepreneurs in power sector
and government supportive policy help to maintain company’s present stability.

END OF THE REPORT

[Information used herein is obtained from sources believed to be accurate and reliable. However, CRISL
does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for
any errors or omissions or for the results obtained from the use of such information. Rating is an opinion on
credit quality only and is not a recommendation to buy or sell any securities. All rights of this report are
reserved by CRISL. Contents may be used by news media and researchers with due acknowledgement.]

Page 10 of 15
 CREDIT RATING REPORT
ON
KHULNA POWER COMPANY LTD.

15.0 CORPORATE INFORMATION

Date of Incorporation : 15 October, 1997

Commencement of Operation: 13 October, 1998

Board of Directors Mr. Muhammed Aziz Khan Chairman

Mr. Hasan Mahmood Raja Managing Director
Mr. K.M. Ahsan Shamim Director
Mr. Latif Khan Director
Mr. Ahmed Ismail Hossain Director
Ms. Ayesha Aziz Khan Director
Mrs. Anjuman Aziz Khan Director
Mr. Akhter Mahmud Rana Director
Mr. Muhammad Farid Khan Director
Mr. Faridur Rahman Khan Director
Ms. Adeeba Aziz Khan Director
Mr. Abul Kalam Azad Director
Mr. Jafer Ummeed Khan Director
Mr. Moinuddin Hasan Rashid Director

Auditor Rahman Rahman Huq

Chartered Accountants

Key Management Mr. Hasan Mahmood Raja Managing Director

Mr. Md. Abdur Rahim Project Director
Mr. Md. Aminur Rahman FCA Financial Controller &
Company Secretary

Capital History:

Year Authorized Issued, Subscribed and Rate of Source of

Capital(M.Tk) Paid-up Capital (M. Tk.) Increase Paid-up Capital

2004 2085.93 2,085.93 - Cash

2005 2085.93 2,085.93 - Do
2006 2085.93 2,085.93 - Do
2007 2085.93 2,085.93 - Do
2008 3,000.00 2,085.93 Do
30 June, 3,000.00 2,085.93 - Do
2009

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 CREDIT RATING REPORT
ON
KHULNA POWER COMPANY LTD.

16.0 Financials

Balance Sheet (As on 31 December)

(Amount in Million Taka)
1H 2009 2008 2007 2006 2005
Non-Current Assets: --- ---
Property, Plant & Equipment 3,398.42 3,463.28 3,635.51 3,858.49 3,729.64
Other Non-Current Assets - - - - 342.99
Total Non-Current Assets 3,398.42 3,463.28 3,635.51 3,858.49 4,072.62

Current Assets: --- --- --- --- ---

Inventories 221.00 762.73 945.90 386.03 401.57
Trade Debtors 1,036.18 885.78 726.93 1,882.55 1,425.00
Adv. Deposits & Prepayments 89.38 1.49 88.21 147.00 46.32
Other Current Assets 8.01 8.01 48.18 27.11 15.19
Cash & Bank Balances 7.45 100.90 771.65 429.41 75.33
Total Current Assets 1,362.02 1,758.91 2,580.87 2,872.11 1,963.41

Current Liabilities: --- --- --- --- ---

Short Term Loan 293.70 284.00 - - 250.01
Long Term Loan-CP 220.00 30.88 316.65 318.71 312.94
Trade Creditors 620.44 1,314.03 1,395.33 1,981.70 1,079.77
Accrued Expenses & others 31.31 27.81 13.60 5.51 71.41
Proposed Dividend 208.59 - - - -
Other ST Liabilities - - 259.73 181.61 21.20
Total Current Liabilities 1,374.04 1,656.72 1,985.31 2,487.52 1,735.34

Net Current Assets (12.02) 102.19 595.56 384.58 228.07

Net Assets 3,386.39 3,565.47 4,231.07 4,243.07 4,300.69

Non-Current Liabilities: --- --- --- --- ---

Long Term Loan/Preference 880.00 1,174.89 911.56 1,236.20 1,526.77
Share
Deferred Liabilities 10.54 10.21 11.66 8.21 5.53
Other Non-Current Liabilities - - - - -
Total Non-Current Liabilities 890.54 1,185.10 923.22 1,244.41 1,532.30

Shareholders' Equity: --- --- --- --- ---

Share Capital 2,085.93 2,085.93 2,085.93 2,085.93 2,085.93
Other Reserve - - - - 240.24
Retained Earnings 409.92 294.44 1,221.91 912.74 442.23
Total Shareholder's Equity 2,495.85 2,380.37 3,307.84 2,998.67 2,768.40

Total Equity and LT Liabilities 3,386.39 3,565.47 4,231.07 4,243.07 4,300.69

Total Assets 4,760.44 5,222.19 6,216.38 6,730.60 6,036.03

Note: Above Financial statements are rearranged for analysis purpose

Page 12 of 15
 CREDIT RATING REPORT
ON
KHULNA POWER COMPANY LTD.

B. Income Statement (for the year ended 31 December)

(Amount in Million Taka)
1H 2009 2008 2007 2006 2005
Sales Revenue 2,993.70 8,160.42 5,698.21 6,311.06 4,243.77
COGS Excluding Depreciation 2,517.66 7,495.62 4,941.29 5,550.89 3,506.76
Depreciation-Mfg 94.13 169.20 213.38 211.64 207.49
Cost of Good Sold 2,611.79 7,664.82 5,154.66 5,762.52 3,714.26
Gross Profit 381.91 495.61 543.55 548.54 529.51
Salary & Allowances 5.28 17.82 20.44 18.66 17.22
Depreciation-Administrative 0.81 1.71 1.79 1.35 2.23
Other Administrative Expenses 25.25 41.97 79.21 72.39 75.41
Profit from Operation 350.57 434.10 442.11 456.16 434.92
Other Income 91.48 3.5 9.83 5.04 4.43
Financial Cost 6.18 173.86 148.19 197.41 193.22
Non Operating Income 1.64 8.78 5.43 - -
Non-Operating Exp. - - - 7.59 5.90
Profit Before Tax 437.51 272.52 309.18 256.19 240.24
Income Tax - - - - -
Profit After Tax 437.51 272.52 309.18 256.19 240.24
Note: Above Financial statements are rearranged for analysis purpose

Page 13 of 15
 CREDIT RATING REPORT
ON
KHULNA POWER COMPANY LTD.

CRISL RATING SCALES AND DEFINITIONS

LONG-TERM RATINGS OF CORPORATE

RATING DEFINITION
Investment Grade
AAA
Entities rated in this category are adjudged to be of best quality, offer highest
Triple A
safety and have highest credit quality. Risk factors are negligible and risk
(Highest
free, nearest to risk free Government bonds and securities. Changing
Safety)
economic circumstances are unlikely to have any serious impact on this
category of companies.
Entities rated in this category are adjudged to be of high quality, offer higher
AA+, AA,
safety and have high credit quality. This level of rating indicates a corporate
AA-
entity with a sound credit profile and without significant problems. Risks are
(Double A)
modest and may vary slightly from time to time because of economic
(High Safety)
conditions.
A+, A, A- Entities rated in this category are adjudged to offer adequate safety for timely
Single A repayment of financial obligations. This level of rating indicates a corporate
(Adequate entity with an adequate credit profile. Risk factors are more variable and
Safety) greater in periods of economic stress than those rated in the higher
categories.
Entities rated in this category are adjudged to offer moderate degree of
BBB+, BBB,
safety for timely repayment of financial obligations. This level of rating
BBB-
indicates that a company is under-performing in some areas. Risk factors are
Triple B
more variable in periods of economic stress than those rated in the higher
(Moderate
categories. These entities are however considered to have the capability to
Safety)
overcome the above-mentioned limitations.
Speculative Grade
BB+, BB,
BB-
Entities rated in this category are adjudged to lack key protection factors,
Double B
which results in an inadequate safety. This level of rating indicates a company
(Inadequate
as below investment grade but deemed likely to meet obligations when due.
Safety)
Overall quality may move up or down frequently within this category.
Entities rated in this category are adjudged to be with high risk. Timely
B+, B, B-
repayment of financial obligations is impaired by serious problems which the
Single B
entity is faced with. Whilst an entity rated in this category might be currently
(Risky)
meeting obligations in time through creating external liabilities.
Entities rated in this category are adjudged to be vulnerable and might fail to
CCC+,CCC,
meet its repayments frequently or it may currently meeting obligations in
CCC-
time through creating external liabilities. Continuance of this would depend
Triple C
upon favorable economic conditions or on some degree of external support.
(Vulnerable)
CC+,CC, CC- Entities rated in this category are adjudged to be very highly vulnerable.
Double C Entities might not have required financial flexibility to continue meeting
(High obligations; however, continuance of timely repayment is subject to external
Vulnerable) support.
C+,C,C- Entities rated in this category are adjudged to be with extremely speculative
(Extremely in timely repayment of financial obligations. This level of rating indicates
Speculative) entities with very serious problems and unless external support is provided,
they would be unable to meet financial obligations.
D Default Grade
(Default) Entities rated in this category are adjudged to be either already in default or
expected to be in default.

Note: For long-term ratings, CRISL assigns + (Positive) sign to indicate that the issue is ranked at
the upper-end of its generic rating category and - (Minus) sign to indicate that the issue is ranked at
the bottom end of its generic rating category. Long-term ratings without any sign denote mid-levels
of each group.
Page 14 of 15
 CREDIT RATING REPORT
ON
KHULNA POWER COMPANY LTD.

SHORT-TERM RATINGS OF CORPORATE

Highest Grade
Highest certainty of timely payment. Short-term liquidity including internal fund
ST-1 generation is very strong and access to alternative sources of funds is outstanding.
Safety is almost like risk free Government short-term obligations.

High Grade
High certainty of timely payment. Liquidity factors are strong and supported by good
ST-2
fundamental protection factors. Risk factors are very small.

Good Grade
Good certainty of timely payment. Liquidity factors and company fundamentals are
ST-3 sound. Although ongoing funding needs may enlarge total financing requirements,
access to capital markets is good. Risk factors are small.

Moderate Grade
Moderate liquidity and other protection factors qualify an entity to be in investment
ST-4
grade. Risk factors are larger and subject to more variation.

Speculative Grade
Speculative investment characteristics. Liquidity is not sufficient to ensure
ST-5 discharging debt obligations. Operating factors and market access may be subject to
a high degree of variation.

Default
Entity is in default or is likely to default in discharging its short-term obligations.
ST-6
Market access for liquidity and external support is uncertain.

Page 15 of 15
 Auditors’ Report to the Shareholders of
Khulna Power Company Ltd.

We have audited the accompanying balance sheet of Khulna Power Company Ltd. as at 31
December 2009 and the related profit and loss account, statement of changes in equity and
cash flow statement for the year then ended and a summary of significant accounting
policies and other explanatory notes. 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.
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
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.

In our opinion, the financial statements prepared in accordance with Bangladesh Accounting
Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS), give a true and fair
view of the state of the company’s affairs as at 31 December 2009 and of the results of its
operations and its cash flows for the year then ended and comply with the Companies Act
1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations.

We also report that:

a) we have obtained all the information and explanations which to the best of our
knowledge and belief were necessary for the purposes of our audit and made due
verification thereof;
b) in our opinion, proper books of account as required by law have been kept by the
company so far as it appeared from our examination of these books;

c) the company’s balance sheet and profit and loss account dealt with by this report are
in agreement with the books of account; and

d) the expenditures incurred were for the purposes of the company's business.

Dhaka, 20 February 2010 Sd/-

Rahman Rahman Huq
Chartered Accountants
 Khulna Power Company Ltd.

Balance Sheet
as at 31 December 2009

2009 2008
Notes Taka Taka
Assets
Property, plant and equipment (net) 4 3,307,133,332 3,463,283,276
Total non-current assets 3,307,133,332 3,463,283,276

Inventories 5 981,640,270 762,728,652

Accounts receivable 6 387,940,605 885,777,668
Other receivables 7 12,497,004 8,008,915
Advances, deposits and prepayments 8 1,548,516 1,493,673
Cash and cash equivalents 9 701,135,588 100,899,376
Total current assets 2,084,761,983 1,758,908,284

Accounts payable 10 1,486,104,691 1,314,033,048

Working capital loan 11 - 284,000,000
Term loan - current portion 12 - 30,883,364
Accrued expenses and others 13 40,476,518 13,470,889
Payable for interest and other financial charges - 14,335,472
Total current liabilities 1,526,581,209 1,656,722,773
Net current asset 558,180,774 102,185,511
Net assets employed 3,865,314,106 3,565,468,787

Shareholders' equity
Ordinary shares 14 2,085,930,000 2,085,924,000
Redeemable cumulative class 'A' preference shares 14 1,100,000,000 1,100,000,000
Retained earnings 668,492,911 294,437,827
3,854,422,911 3,480,361,827

Non-current liabilities
Term loan - net of current portion 12 - 74,892,180
Deferred liability for gratuity and earned leave 15 10,891,195 10,208,780
Total non-current liabilities 10,891,195 85,100,960
Total equity and long term liabilities 3,865,314,106 3,565,462,787

The annexed notes 1 to 31 form an integral part of these financial statements.

Sd/- Sd/- Sd/-

Managing Director Director Company Secretary

As per our report of same date.

Sd/-
Dhaka, 20 February 2010 Rahman Rahman Huq
 Khulna Power Company Ltd.

Profit and Loss Account

for the year ended 31 December 2009

Notes 2009 2008

Taka Taka

Operating revenues 16 6,393,267,345 8,160,423,118

Operating expenses 17 (5,718,431,301) (7,664,817,721)
Gross profit 674,836,044 495,605,397

General and administrative expenses 18 (64,078,271) (61,504,226)

Other income 19 91,481,290 3,500,496
Exchange gain 2,174,414 8,784,292
Result from operating activities 704,413,477 446,385,959

Finance income 9,155,909 4,048,472

Finance expenses 20 (17,483,802) (177,911,217)
Net financial expenses (8,327,893) (173,862,745)
Net profit for the year 696,085,584 272,523,214

Earning per share (EPS) 21 2.79 0.97

The annexed notes 1 to 31 form an integral part of these financial statements.

Sd/- Sd/- Sd/-

Managing Director Director Company Secretary

As per our report of same date.

Sd/-
Rahman Rahman Huq
Dhaka, 20 February 2010 Chartered Accountants
 Khulna Power Company Ltd.

Statement of Changes in Equity

for the year ended 31 December 2009

Redeemable
cumulative
class 'A'
Ordinary preference Retained
Particulars shares shares earnings Total
Taka Taka Taka Taka

Balance as at 1 January 2008 2,085,930,000 - 1,221,914,613 3,307,844,613

Issued during the year - 1,100,000,000 - 1,100,000,000
Dividend paid for the year 2007 - - (1,200,000,000) (1,200,000,000)
Net profit for the year - - 272,523,214 272,523,214
Balance as at 31 December 2008 2,085,930,000 1,100,000,000 294,437,827 3,480,367,827
Preference stock dividend paid - - (113,437,500) (113,437,500)
Dividend paid for the year 2008 - - (208,593,000) (208,593,000)
Net profit for the year - - 696,085,584 696,085,584
Balance as at 31 December 2009 2,085,930,000 1,100,000,000 668,492,911 3,854,422,911
 Khulna Power Company Ltd.

Cash Flow Statement

for the year ended 31 December 2009

2009 2008
Taka Taka
A. Cash flow from operating activities:

Collection from BPDB 6,891,104,408 8,001,571,584

Cash paid to suppliers and employees (5,897,972,092) (7,317,656,592)
Cash generated from operations 993,132,316 683,914,992
Finance income received 9,155,909 4,048,472
Interest and other financial charges paid (31,783,792) (141,096,988)
Net cash provided by operating activities 970,504,433 546,866,476

B. Cash flow from investing activities:

Acquisition of property, plant and equipment (34,343,525) (413,003)

Sale proceeds of property, plant and equipment - 1,303,534
Dividend received from offshore overnight investment - 2,408,996
Net cash provided by investing activities (34,343,525) 3,299,527

C. Cash flow from financing activities:

Term loan (13,894,196) (2,304,588)

IFC loans ('A' & 'B') - (1,118,611,237)
Redeemable cumulative class 'A' preference shares - 1,100,000,000
Preference stock dividend paid (113,437,500) -
Dividend paid (208,593,000) (1,200,000,000)
Net cash used in financing activities (335,924,696) (1,220,915,825)

D. Net cash inflow/(outflow) for the year (A+B+C) 600,236,212 (670,749,822)

E. Opening cash and cash equivalents 100,899,376 771,649,198

F. Closing cash and cash equivalents 701,135,588 100,899,376

 Khulna Power Company Ltd.

Notes to the Financial Statements

as at and for the year ended 31 December 2009

1. Reporting entity

1.1 Company profile

Khulna Power Company Ltd. (“the company”) was incorporated in Bangladesh on 15

October 1997 as a private limited company under the Companies Act 1994. The company
has converted into public limited company on 19 July 2009 .The plant came into operation
on 13 October 1998. The address of the company’s registered office is Summit Centre, 5th
floor, 18 Karwan Bazar C/A, Dhaka-1215, Bangladesh. The original authorised capital of
the company was Tk. 2,085,930,000 divided into 2,085,930 ordinary shares of Tk. 1,000
each. On 8 January 2007 the authorised capital was increased to Tk. 5,000,000,000 divided
into 3,000,000 ordinary shares of Tk. 1,000 each and 2,000,000 preference shares of Tk.
1,000 each. Out of 2,000,000 preference shares, 1,100,000 were issued and fully paid up.

Further, on 19 July 2009, at an extra ordinary general meeting (EGM), the existing
shareholders of the company passed and resolved that the existing category of ordinary
class A and class B shares shall be reclassified as ordinary shares. It was also decided that
the face value of each ordinary shares be fixed at TK. 10 each instead of TK. 1, 000 each.

1.2 Nature of business

The principal activity of the company is to set up a nominally rated 110 MW liquid fuel-
fired, convertible to dual fuel-fired (liquid gas), barge mounted power plant in Khulna,
Bangladesh for generation of electricity, to sell generated power to any legal entity and
to acquire fuel required for such power generation from home and abroad. Since inception
the company is supplying electricity to the national grid of Bangladesh through selling the
same to Bangladesh Power Development Board (BPDB) under Power Purchase Agreement
(PPA) between the company and BPDB.

2. Basis of preparation

2.1 Statement of compliance

The financial statements have been prepared in accordance with Bangladesh Accounting
Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS), the Companies Act
1994 and the Securities and Exchange Rules 1987.
2.2 Basis of measurement

The financial statements have been prepared on the historical cost basis. Exceptions are
property, plant and equipment where foreign exchange gain or loss arising from foreign
currency debts taken to finance the assets is adjusted against the value of the assets as
per Companies Act 1994 .

2.3 Functional and presentational currency

The financial statements (except notes 22 and 23, where the currency mentioned as USD
for presentation purpose) are prepared in Bangladesh Taka (Taka/Tk/BDT), which is the
company's functional currency and have been rounded off to the nearest integer.

2.4 Use of estimates and judgements

The preparation of financial statements in conformity with BAS and BFRS requires
management to make judgements, estimates and assumptions that affect the application
of accounting policies and the reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to

accounting estimates are recognised in the period in which the estimates are revised and
in any future periods affected.

In particular, information about significant areas of estimation uncertainty and critical

judgements in applying accounting policies that have the most significant effect on the
amounts recognised in the financial statements is included in the following notes:

Note 4 - depreciation
Note 5 - inventory valuation
Note 13 - accrued expenses and others
Note 15 - deferred liability for gratuity and earned leave

2.5 Reporting period

The financial period of the Company covers one year from 1 January to 31 December.

3. Significant accounting policies

The accounting policies set out below have been applied consistently to all periods
presented in these financial statements.
3.1 Property, plant and equipment

3.1.1 Recognition and measurement

Items of property, plant and equipment (PPE) are measured at cost less accumulated
depreciation and accumulated impairment losses, if any. Cost includes expenditures that
are directly attributable to the acquisition of the assets. Adjustment of power plant during
the year is the adjustment for foreign exchange loss or gain as stated in note 3.1.2.

3.1.2 Capitalisation of foreign exchange gain or loss

Foreign exchange difference arising from project debts foreign currency is adjusted
against the value of the assets financed by such debt, in accordance with the Schedule XI
Part I of the Companies Act 1994. BAS 21, The Effects of Changes in Foreign Exchange
Rates , however requires that such exchange gains/losses be recognised as
income/expense in the relevant period. The difference arising from capitalisation of
foreign exchange gain in accordance with the requirements of the Companies Act 1994 is,
however, not considered material by management.

3.1.3 Subsequent costs

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

3.1.4 Maintenance activities

The company incurs maintenance costs for all of its major items of property, plant and
equipment. Repair and maintenance costs are charged as expenses when incurred.

3.1.5 Depreciation

Depreciation on power plant has been charged considering 30 years of useful life and
residual value at 15%. Addition during the year is depreciated for full year irrespective of
date of purchase, while no depreciation is charged in the year of disposal.

The estimated useful lives of assets are as follows:

Power plant 30 years

Vehicles 4 years

Building and construction 10 years

Furniture and fixtures 5 years

Office equipment 5 years

Office renovation 5 years

3.1.6 Retirements and disposals

An asset is derecognised on disposal or when no future economic benefits are expected

from its use, whichever comes earlier. Gains or losses arising from the retirement or
disposal of an item of property, plant and equipment are determined by comparing the
proceeds from disposal with the carrying amount of the same, and are recognised net
within 'other income' in the profit and loss account.

3.2 Inventories

Inventories are measured at cost. The fuel tariff calculation formula as per PPA between
the company and BPDB assures recovery of cost. The cost of inventories is based on the
first in first out principle, and includes expenditure incurred in acquiring the inventories
and other costs incurred in bringing them to their existing location and condition. When
inventories are used, the carrying amount of those inventories is recognised in the period
in which the related revenue is recognised.

3.3 Cash and cash equivalents

Cash and cash equivalents comprise cash in hand and cash at bank.

3.4 Trade receivables and bad debts

Trade receivables are recognised at cost which is the fair value of the consideration given
for them.

Provision for debts doubtful of recovery, if any, are made at the discretion of management.

3.5 Provisions

A provision is recognised on the balance sheet date if, as a result of past events, the
company has a present legal or constructive obligation that can be estimated reliably, and
it is probable that an outflow of economic benefits will be required to settle the
obligation.
3.6 Impairment

The carrying amounts of the assets, other than inventories, are reviewed at each reporting
date to determine whether there is any indication of impairment. If any such indication
exists, then the assets' recoverable amount is estimated. No such indication of impairment
has been raised to date.

3.7 Revenue

Revenue is recognised in the profit and loss account upon supply of electricity to BPDB,
quantum of which is determined by survey of meter reading.

3.8 Foreign currency transactions

BAS 21, The Effect of Changes in Foreign Exchange Rates, requires balances resulting
from transactions denominated in a foreign currency to be converted into Taka at the rate
prevailing on the date of the transaction. All monetary assets and liabilities at balance
sheet date, denominated in foreign currencies, are to be retranslated at the exchange
rates prevailing on balance sheet date.

Foreign exchange difference arising from all foreign currency transactions, except for the
project debts, are charged or credited to profit and loss account. Foreign exchange
difference arising from project debts is adjusted against the value of the assets financed
by such debt, as provided in the Schedule XI Part I of the Companies Act 1994, which
requires all exchange differences arising from foreign currency borrowings for property,
plant and equipment to be added or deducted from the value of the assets which were
financed by such borrowings.

3.9 Lease

Lease payments under operating lease are recognised as expenses in profit and loss
account on a straight line basis over the lease term. The lessor reserves the right to revise
the rent after each period of five years and can increase the rent by a maximum of twenty
percent for five years.

3.10 Finance income and expenses

Finance income comprises interest income on funds invested. Interest income is

recognised on accrual basis.

Finance expenses comprise interest expense on borrowings and other finance related
costs. All borrowing costs are recognised in the profit and loss account when they accrue
using the nominal interest rate stated in related loan agreements.
3.11 Borrowing cost

Borrowing costs are recognised as expenses in the period in which they are incurred unless
capitalisation of such is allowed as an alternative under Bangladesh Accounting Standard
23 Borrowing Costs .

3.12 Provision for tax

No provision for tax has been made in the accounts as the company is entitled to tax
exemption for a period of 15 years with effect from commencement of commercial
production, vide SRO no. 114-Law/99 dated 26 May 1999 issued by Government of
Bangladesh, under private sector power generation policy.

3.13 Deferred tax

As there is considerable uncertainty with regard to the taxation of such companies after
the expiry of the tax exemption period, management feels it is not possible to make a
reasonable estimate of deferred tax assets/liabilities at this stage.

3.14 Employee benefit schemes

A defined benefit plan is a post-employment benefit plan other than a defined

contribution plan. The company operates an unfunded gratuity scheme, which is a defined
benefit scheme, a provision in respect of which is made periodically covering all
permanent employees by applying period of employment to latest basic salary. Although
no valuation was done to quantify actuarial liabilities as per Bangladesh Accounting
Standard 19 Employee Benefits for the year ended 31 December 2009, such valuation for
only 9 employees is not likely to yield a result significantly different from the current
provision.

The company maintains a provident fund for all local employees, recognised by the
National Board of Revenue, Bangladesh. This is a defined contribution scheme as per
Bangladesh Accounting Standard 19 Employee Benefits.

The company has also a policy of earned leave encashment. Under this policy, an
employee is allowed twenty one days earned leave for each completed twelve months of
continuous service with a maximum accumulation of one hundred and five days.
3.15 Earnings per share

The company presents basic earnings per share (EPS) data for ordinary shares.

3.15.1 Basic earning per share

Basic EPS is calculated by dividing the net profit or loss for the year attributable to
ordinary shareholders by the number of ordinary shares outstanding during the year.

3.16 Cash flow statement

Cash flow statement has been presented under direct method.

3.17 New standards not yet adopted

Bangladesh Accounting Standards 8 “Accounting policies: Changes in Accounting estimates

and Errors” para 30 requires that an entity makes certain disclosures when it does not
apply a new BAS/BFRS that has been issued but is not yet effective.

The Institute of Chartered Accountants of Bangladesh (ICAB) had made the following
standards effective for accounting periods beginning on or after 1 January 2010.

(a)     BAS 32: Financial Instruments Presentation

(b)     BAS 39: Financial Instruments: Recognition and Measurement
(c)     BFRS 7: Financial Instruments: Disclosures

Currently the company presents its redeemable cumulative class ‘A’ preference shares as
an equity instrument and dividend paid on such preference shares has shown in Statement
of Changes in Equity. However after adoption of above standards, redeemable cumulative
preference class ‘A’ shares will be treated as liability. Dividends paid under such
arrangements will be accounted for as interest and charged to Profit and Loss Account.
4. Property, plant and equipment
Cost Depreciation Carrying
amount
Particulars Balance as at Addition Disposal Adjustment Balance as at Balance as at Charge Disposal Adjustment Balance as at as at
1 January during during during 31 December 1 January for during during 31 December 31 December
2009 the year* the year the year** 2009 Rate 2009 the year the year the year** 2009 2009
Taka Taka Taka Taka Taka % Taka Taka Taka Taka Taka Taka

Power plant 5,133,347,383 30,956,118 - (27,552,938) 5,136,750,563 3.33 1,672,340,952 188,000,895 - (27,191,209) 1,833,150,638 3,303,599,925

Vehicles 2,000,000 3,384,657 - - 5,384,657 25.00 1,000,000 1,346,163 - - 2,346,163 3,038,494

Building and
construction 9,428,606 - - 9,428,606 10.00 8,629,939 610,517 - - 9,240,456 188,150

Furniture
and fixtures 1,073,758 - - - 1,073,758 20.00 1,007,770 18,588 - - 1,026,358 47,400

Office equipment 5,976,712 2,750 (380,000) - 5,599,462 20.00 5,564,555 155,577 - (380,000) 5,340,132 259,330

Office renovation 1,299,590 - - - 1,299,590 20.00 1,299,557 - - - 1,299,557 33

Total 2009 5,153,126,049 34,343,525 (380,000) (27,552,938) 5,159,536,636 1,689,842,773 190,131,740 - (27,571,209) 1,852,403,304 3,307,133,332

Total 2008 5,157,634,464 413,003 (3,405,030) (1,516,388) 5,153,126,049 1,522,124,292 170,984,409 (3,192,996) (72,932) 1,689,842,773 3,463,283,276

*Addition of power plant is the cost of newly installed Alternator by replacing the old one.
**Adjustment arises from foreign exchange gain/loss during the year ended 31 December 2009 on conversion of foreign currency loans taken to finance the power plant (see note 3.1). This also includes adjustment for Alternator.

Total depreciation has been allocated in the financial statements as follows:

2009 2008
Taka Taka

Depreciation charged during the year 190,131,740 170,984,409

Add: Adjustments made during the year (38,329) (72,932)
190,093,411 170,911,477
Allocation of depreciation
Operating expenses (power plant part after considering adjustment) 187,962,566 169,199,460
General and administrative expenses (other than power plant) 2,130,845 1,712,017
190,093,411 170,911,477
5. Inventories

Balance as at 1 January 2009 Addition during the year Consumption during the year Balance as at 31 December 2009
Particulars Quantity Amount Quantity Amount Quantity Amount Quantity Amount
(MT) (Taka) (MT) (Taka) (MT) (Taka) (MT) (Taka)

Heavy furnace oil (HFO) 26,284.21 662,741,360 173,630.59 5,143,280,116 177,353.48 4,923,655,550 22,561.32 882,365,926

Light furnace oil (LFO) 110,790 4,229,292 27,000 1,155,570 50,100 1,868,518 87,690.00 3,516,344

Spare parts for plant maintenance 95,758,000 - - 95,758,000

Total 2009 762,728,652 5,144,435,686 4,925,524,068 981,640,270

Total 2008 945,904,103 6,931,467,893 7,114,643,344 762,728,652

5.1 Spare parts inventory was acquired under a provision of the Engineering, Procurement and Construction (EPC) contract. The provision called for the
contractor to provide with safety spares on historical cost basis of USD 2,000,000 (prevailing rate was 1 USD= BDT 47.88). In addition to above safety spares,
the operator maintains usual maintenance spares at their cost against variable fees paid to them.
6. Accounts receivable
2009 2008
Taka Taka

Other monthly tariff 108,415,448 225,528,311

Fuel tariff 279,525,157 660,249,357
387,940,605 885,777,668

7. Other receivables

BPDB (agreed charges paid to BIWTA) 12,497,004 8,008,915

12,497,004 8,008,915

8. Advances, deposits and prepayments

Advances:
Car/motor cycle loan 114,375 433,542
Bank guarantee for spare parts - 840,000
Padma/Jamuna Oil for HFO supply 634,530 -
Dr. Kamal Hossain & Associates 400,000 -
Other advances 209,224 69,162
1,358,129 1,342,704

Deposits:
Bangladesh Telephone & Telegraph Board 16,000 16,000
Grameenphone Ltd. 89,006 89,006
Others 28,500 24,500
133,506 129,506

Prepayments:
General insurance premium (fire, fidelity, health, motor e 56,881 21,463
56,881 21,463
1,548,516 1,493,673
9. Cash and cash equivalents
2009 2008
Taka Taka

Cash in hand 99,943 183,422

Cash at bank:
Current account:
Citibank, NA (Operating account # 129039 -Taka) 3,706,884 13,050,702
Citibank, NA (Operating account # 129024 -Taka) 6,081 667,821
Citibank, NA (Operating account -US Dollar) 79,727,542 85,434,867
AB Bank Ltd. - 414
Bank Asia Ltd. 825 1,900
BRAC Bank Ltd. 18,969 307,313
Pubali Bank Ltd. 27,533 75,032
Shahjalal Islami Bank Ltd. 1,014 1,029,742
Standard Bank Ltd. 45,519 46,714
Standard Chartered Bank 87,957 97,518
Prime Bank Ltd. 2,781 3,931
83,625,105 100,715,954
STD account:
BRAC Bank Ltd. 617,400,135 -
Dutch Bangla Bank Ltd. 4,400 -
One Bank Ltd. 441 -
The City Bank Ltd. 463 -
Trust bank Ltd. 5,101 -
617,410,540 -
701,035,645 100,715,954
701,135,588 100,899,376

10. Accounts payable

Kuo Oil (S) Pte Ltd. - Handling commission 114,263,650 22,106,313

Kuo Oil (S) Pte Ltd. - Fuel cost 1,100,823,552 794,770,553
USCOL - Fuel carrying and storage 130,116,675 314,419,260
Wartsila-operation and maintenance - (O&M) 140,900,814 182,736,922
1,486,104,691 1,314,033,048
11. Working capital loan
2009 2008
Taka Taka

BRAC Bank Ltd. - 200,000,000

Shahjalal Islami Bank Ltd. - 84,000,000
- 284,000,000

Collateral includes registered mortgages of vessels “TIGER I” and “TIGER II”, a registered letter of
hypothecation by way of first priority fixed charge over plant, machinery and equipment, and a
registered letter of hypothecation by way of first priority floating charge over all fixed and floating
assets of the company.

12. Term loan

Term loans:
El Paso Power Khulna Holding Ltd. - 91,878,000
Wartsila Development & Financial Services (Asia) Ltd. - 13,897,544
- 105,775,544

Term loan from El Paso Power Khulna Holding Ltd. has been waived and considered as other
income (net of exchange differences). See note 19.1 for more details.

13. Accrued expenses and others

Electricity, gas and water 75,078 85,000

Legal, audit and other professional fees 620,000 881,000
Office rent and service charges 131,075 109,240
Lease rent payable-BPDB 3,167,709 3,541,814
Telephone, fax and e-mail 88,239 80,000
Employee expenses 3,098,149 1,307,757
Provision for withholding tax/VAT for O & M fees, 16,806,155 6,429,070
professional fees and others
Wartsila - river intake dredging 140,000 150,000
Falcon Securities Ltd - plant security 215,469 216,251
Employees' provident fund 96,460 101,875
Board meeting fees - 212,500
Kuo Oil (S) Pte Ltd. - Demurrage - Fuel (13.1) 15,458,537 -
Others 579,647 356,382
40,476,518 13,470,889
13.1 Demurrage is claimed by Kue Oil(s) Pte Ltd. on behalf of shipping company due to unusual delay in
unloading of Heavy Furnace Oil (HFO) at Chittagong Port in May 2009.

14. Share capital

2009 2008
Taka Taka
Authorised:

3,000,000 ordinary shares of Tk 1,000 each - 3,000,000,000

300,000,000 ordinary shares of Tk 10 each 3,000,000,000 -
2,000,000 preference shares of Tk 1,000 each 2,000,000,000 2,000,000,000
5,000,000,000 5,000,000,000

Issued and paid-up:

2,085,924 ordinary Class A shares of Tk 1,000 each - 2,085,924,000

6 ordinary Class B shares of Tk 1,000 each - 6,000
208,593,000 ordinary shares of Tk 10 each 2,085,930,000 -
1,100,000 redeemable cumulative class 'A' preference shares -
of Tk 1,000 each 1,100,000,000 1,100,000,000
3,185,930,000 3,185,930,000

For split off details see note 14.1.

The company issued 1,100,000 redeemable cumulative class 'A' preference shares in favour of The
City Bank Ltd. (600,000 shares), Pubali Bank Limited (200,000 shares), One Bank Limited (200,000)
shares) and Trust Bank Limited (100,000 shares) on 14 May 2008. These shares, under ordinary
circumstances, are redeemable at par value in five annual equal instalments from 14 May 2010,
the second anniversary of the issue date. Annual dividend on these preference shares is payable at
the rate 8.25% (net of withholding tax).
14.1 The shareholding position of ordinary shares

2009 2008
Face Class A Class B Total Face
Name of shareholders % of Shares value Total value % of shares shares shares value Total value
shareholding (No.) (Taka) (Taka) shareholding (No.) (No.) (No.) (Taka) (Taka)

1. Summit Industrial & Mercantile 49.9832% 104,261,500 10 1,042,615,000 46.95% 979,341 2 979,343 1,000 979,343,000
Corporation (Pvt.) Ltd.
(incorporated in Bangladesh)
2. United Enterprises & Company Ltd. 49.9832% 104,261,500 10 1,042,615,000 46.95% 979,341 2 979,343 1,000 979,343,000
(incorporated in Bangladesh)
3. Muhammed Aziz Khan 0.0024% 5,000 10 50,000 - - - - - -
4. Anjuman Aziz Khan 0.0024% 5,000 10 50,000 - - - - - -
5. Latif Khan 0.0024% 5,000 10 50,000 - - - - - -
6. Muhammad Farid Khan 0.0024% 5,000 10 50,000 - - - - - -
7. Jafer Ummeed Khan 0.0024% 5,000 10 50,000 - - - - - -
8. Ayesha Aziz Khan 0.0024% 5,000 10 50,000 - - - - - -
9. Adeeba Aziz Khan 0.0024% 5,000 10 50,000 - - - - - -
10. Hasan Mahmood Raja 0.0024% 5,000 10 50,000 - - - - - -
11. Ahmed Ismail Hossain 0.0024% 5,000 10 50,000 - - - - - -
12. K.M. Ahsan Shamim 0.0024% 5,000 10 50,000 - - - - - -
13. Akhter Mahmud Rana 0.0024% 5,000 10 50,000 - - - - - -
14. Faridur Rahman Khan 0.0024% 5,000 10 50,000 - - - - - -
15. Abul Kalam Azad 0.0024% 5,000 10 50,000 - - - - - -
16. Moinuddin Hasan Rashid 0.0024% 5,000 10 50,000 - - - - - -
17. Wartsila Development & - - - - 6.10% 127,242 2 127,244 1,000 127,244,000
Financial Services (Asia) Ltd.
(incorporated in Cayman Islands)
100.00% 208,593,000 2,085,930,000 100.00% 2,085,924 6 2,085,930 2,085,930,000

On 21 June 2009, the entire shares (Class A and Class B) of Wartsila Development & Financial Services (Asia) Ltd. has been transferred equally to Summit Industrial
 & Mercantile Corporation (Pvt.) Ltd. (Summit) and United Enterprises & Company Ltd. (United). As a result, the shareholding position of Summit and United was
increased to 50.00 percent from 46.95 percent each. Further on 22 June 2009, Summit and United each have transferred 350 shares (total 700 shares) in favour of
above 14 individuals, each getting 50 Class A ordinary shares.

The existing shareholders of the company on 19 July 2009, in an Extraordinary General Meeting (EGM) passed and resolved that the existing category of Ordinary
Class A and Class B shares shall be reclassified as ordinary shares. It was also decided that the face value of each ordinary shares shall be fixed at Tk.10 each
instead of existing Tk. 1,000 each. Accordingly, Clause V of the Memorandum of Association and Article 6 of the Articles of Association of the company has been
changed.

14.2 The shareholding position of redeemable cumulative class 'A' preference shares

As at 31 Dec 2009 2008

Name of shareholders Number of Nominal value Total value Total value
shares Taka Taka Taka

The City Bank Limited 600,000 1,000 600,000,000 600,000,000

Pubali Bank Limited 200,000 1,000 200,000,000 200,000,000
One Bank Limited 200,000 1,000 200,000,000 200,000,000
Trust Bank Limited 100,000 1,000 100,000,000 100,000,000
1,100,000 1,100,000,000 1,100,000,000
15. Deferred liability for gratuity and earned leave

2009 2008
Gratuity Earned leave Total Total
Taka Taka Taka Taka

Opening balance 7,051,344 3,157,436 10,208,780 11,663,278

Add: Provision made during
the year 828,153 62,462 890,615 1,789,142
7,879,497 3,219,898 11,099,395 13,452,420
Less: Payment made during
the year 145,200 63,000 208,200 3,243,640
Closing balance 7,734,297 3,156,898 10,891,195 10,208,780

16. Operating revenues

2009 2008
Taka Taka

Operating revenues comprise other monthly tariff and fuel tariff invoiced to BPDB:

Other monthly tariff 1,982,771,320 1,766,492,389

Fuel tariff 4,410,496,025 6,393,930,729
6,393,267,345 8,160,423,118

16.1 Other monthly tariff is the price component of all other costs including profit per KW of energy
supplied at the delivery point excluding fuel.

16.2 The price component of fuel tariff is comprised of the cost of fuel per KW of energy generated which is
reimbursable from BPDB after making some adjustments as per agreement.

17. Operating expenses

Consumption of Heavy Furnace Oil (HFO) and related expenses* 4,968,204,906 6,941,000,084
Consumption of Light Furnace Oil (LFO) 1,868,518 1,080,640
Fuel storage charges 11,054,211 11,685,465
Operation and maintenance cost to operator 496,387,941 455,870,479
Security service - Plant 2,609,210 2,613,768
Duty on spare parts 50,343,948 82,731,051
Repair and maintenance -Plant - 636,774
Depreciation of power plant 187,962,567 169,199,460
5,718,431,301 7,664,817,721

*The above expenses arise after considering various fuel related expenses and adjustments which are
not relevant with HFO inventory. That is why, the actual consumption shown in HFO inventory (note no.
5) is not directly matchable with the above mentioned expenses.
18. General and administrative expenses
2009 2008
Taka Taka

Salary and allowances 13,226,172 17,822,640

Employer's contribution to P.F. 554,400 734,558
Gratuity provision 828,153 1,334,844
Earned leave provision 62,462 454,298
Leave fare assistance 243,400 354,777
Office rent and maintenance 2,120,177 1,786,363
Telephone, fax and e-mail 391,012 681,340
Advertisement, publicity, press and seminar 81,480 56,150
Entertainment expenses 121,610 266,627
Bank charges and commission 214,373 999,156
Printing, postage and stationery 86,799 252,858
Travel and conveyance 507,736 2,395,429
Vehicles fuel and maintenance 124,582 503,612
Newspaper, books and periodicals 20,939 19,182
Social goodwill 636,712 26,685
Business promotion, subscription, gift and donation 683,634 216,865
Enlistment and annual licence fee - BERC 500,000 1,050,500
Uniform and liveries 18,200 16,920
Insurance premium 32,466,173 41,396,459
Lease rent - BPDB (18.1) 3,355,293 7,271,213
Directors' fees and board meeting expenses 152,186 336,566
Audit fee 375,000 375,000
Legal, tax and other professional fees 2,393,626 12,191,528
Survey, testing and inspection fees 376,322 459,162
Company matter expenses 938,000 697,200
Performance bond/bank guarantee charges - (33,356,039)
Environmental compliance expenses 864,371 998,124
Computer consumable and maintenance 275,143 100,907
Expenses of MD and Directors - 2,960
River intake dredging 130,000 150,000
Depreciation - Other property, plant and equipment 2,130,845 1,712,017
Miscellaneous and incidental expenses 199,471 196,325
64,078,271 61,504,226

18.1 Operating leases

The company is obligated under non-cancellable lease for use of land leased out by BPDB that are
renewable on a periodic basis at the option of both lessor and lessee. During the year, rental expenses
under non-cancellable operating leases aggregated Tk. 3,355,293 (2008: Tk. 3,355,293).

The future minimum lease payments in respect of operating leases as at 31 December 2009 are as
follows:
Amount due:
Not later than one year 3,242,955 3,242,955
Later than one year but not later than five years 14,268,998 13,620,407

Later than five years - 3,891,545

19. Other income
2009 2008
Taka Taka

Dividend income - 2,408,996

Gain on sale of property, plant and equipment - 1,091,500
Income from El Paso's term loan waiver (Note 19.1) 91,481,290 -
91,481,290 3,500,496

19.1 El Paso Power Khulna Holding Ltd., a company incorporated in the Cayman Islands, has issued a letter
to the Managing Director of Khulna Power Company Ltd. on 25 May 2009 stating that the amount due to
it by KPCL (equivalent USD 1,322,365.89) has been waived .The Company thus considered it as other
income. EL Paso Power Khulna Holdings Ltd. ceased to exist with effect from 30 September 2009.

20. Finance expenses

Interest on:

Term loan provided by El Paso Power Khulna Holding Ltd. (9,714,483) 9,307,891

Term loan provided by Wartsila Development and

Financial Services (Asia) Ltd. 224,919 1,504,713

"A" loan provided by International Finance Corporation (IFC) - 10,788,249

"B" loan provided by International Finance Corporation (IFC) - 9,564,996

Working capital facility -Taka 24,213,366 7,459,695

Preference share money deposit - 33,375,000

Others:

Front end fee - IFC A loan - 3,951,376

Front end fee - IFC B loan - 5,267,060
Arrangement and success fee - IFC B loan - 5,267,060
CAP agreement fee - IFC B loan - 12,323,496
Arrangement fee - working capital (club financing) - 25,415,000
Prepayment charge - IFC A loan - 45,276,707
Prepayment charge - IFC B loan - 2,887,449
Trust agent fee - Citibank, N.A. - 4,347,800
Escrow agency fees - Citibank, N.A. 1,174,725
Annual agency fee - Security & Facility Agent (preference shares) 2,760,000 -
17,483,802 177,911,217
21. Earnings per share (EPS)
2009 2008
Basic earnings per share Taka Taka

The computation of EPS is given below:

a) Profit attributable to the ordinary shareholders 582,648,084 201,624,776

b) Number of ordinary shares outstanding 208,593,000 208,593,000

c) Earnings per share (EPS) 2.79 0.97

Diluted earnings per share

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

22. Remittance of foreign currency

Purpose of payment Name of the recipient 2009 2008

USD USD

Trust agent fee Citibank, NA, New York - 40,000

Cash margin for import of spare Wartsila Finland OY 748,392 2,208,275

parts on behalf of Wartsila
Finland OY

Insurance premium CODAN Marine, Finland 462,081 -

Ltd, Singapore

Insurance premium JLT Risk Solutions Asia Pte - 597,077

Ltd, Singapore

Operation and maintenance Wartsila Finland OY - 260,688

expense

Purchase of fuel (HFO) Coastal Fuji Oil, Singapore - 13,145,224

Purchase of fuel (HFO) Kuo Oil (s) Pte Ltd. 7,396,659 10,083,199

Legal service/Barge registration Quijano & Associates 15,503 590

Consultancy services RW Beck International Ltd. - 635

Legal service Chadbourne & Parke LLP 7,599 11,714
Consultancy Fee Envirotech East Pvt Ltd. 6,100 6,052
Passive analysis (air) MAXXAM Analytics Inc. 3,872 7,611
Loan repayment with interest Wartsila Development and 214,172 45,199
Financial Services (Asia) Ltd.
Loan repayment with interest IFC, Washington DC - 1,407,130
 Purpose of payment Name of the recipient 2009 2008
USD USD

Bank charge Citibank, N A - 712

Bank Charges
Legal service fee
Legal service fee
Legal service fee
LC add confirmation charges
LC add confirmation charges
LC add confirmation charges
Dividend payment
Deferred interest for fuel L/C
Elpaso Energy International - 1,000
Thompson Hine LLP - 3,000
Fullbright & Jaworski, LLP - 149,021
Franco & Franco - 1,500
BRAC Bank Ltd. - 33,928
Standard Bank Ltd. - 34,398
Pubali Bank Ltd. - 10,940
Wartsila Dev. & Fin. Service - 949,292
Citibank, N A 9,226 -

23. Receipts of foreign currency

Nature of receipt Name of party 2009 2008

USD USD

Other monthly tariff (99%) BPDB 8,922,913 20,102,515

24. Value of imports calculated on CIF basis

2009 2008
Taka Taka

Heavy furnace oil (fuel) 3,874,798,895 5,351,606,441

25. Related party transactions

Nature of
Name of party Relationship transactions Transaction value (Taka)
2009 2008

United Summit Coastal Oil Subsidiary of Fuel carrying, storage 292,401,937 502,435,583
Ltd. shareholder and temporary loan

El Paso Power Khulna Subsidiary of Payable for interest - 9,342,620

Holding Ltd. parent company

Summit Industrial & Shareholder Temporary loan, office 84,306,222 946,708,429

Mercantile Corporation rent and dividend paid
(Pvt) Ltd.

Summit Corporation Subsidiary of Service charge for other 747,330 622,908

shareholder office facilities

Wartsila Development & Shareholder Repayment of loan, 14,118,362 80,960,331

Financial Services (Asia) Ltd. payment of interest and
dividend paid

Coastal Fuji Oil Subsidiary of Fuel cost and handling - 648,738,314

parent company commission

Summit Shipping Ltd. Subsidiary of Temporary loan - 38,225,000

shareholder

United Enterprises & Shareholder Temporary loan and 83,437,200 977,709,244

Company Ltd. dividend paid

Key management Board of Directors Directors fees 82,000 190,000

personnel
Key employees Salary, allowances and 7,980,663 12,699,150
long term benefits

Bonus 1,506,000 2,322,000

Key management personnel includes managing director, project director and financial controller. However,
the managing director did not receive any salary during the year under review.

26. Capacity
Licensed Installed Plant factor Energy Energy
capacity capacity (% on licensed generated sold
Period (MWh) (MWh) capacity) (MWh) (MWh)

January to December 2009 110 114 Average 83.55 792,887 780,178

Maximum 102.00

January to December 2008 110 114 Average 73.00 705,384 693,544

Maximum 94.50
27. Salary and allowances

Year wise break up of salary and allowances of the employees of the company for the since inception are as
follows:
Year Amount (Taka)
1998 (13 Oct to 31 Dec) 973,147
1999 5,517,180
2000 6,217,183
2001 6,198,705
2002 7,127,044
2003 10,839,299
2004 12,275,209
2005 17,220,059
2006 18,660,004
2007 20,438,758
2008 17,822,640
2009 13,226,172

28. Commitment for capital expenditure

There is no other commitment for capital expenditure as of 31 December 2009 for the company except of an
'Alternator' for which procurement order was being initiated by the company amounting to Euro 287,745 but no
shipment is being made by the seller.

29. Contingent liability

There is no contingent liability as of 31 December 2009 for the company.

30. Post balance sheet event

30.1 The company has applied to Dhaka Stock Exchange and Chittagong Stock Exchange for the purpose of direct
listing under the Direct Listing Regulations 2006 and the matter is in the process of approval.

30.2 There is no material event that has occurred after the balance sheet date to the date of issue of these
financial statements, which could affect the figures stated in the financial statements.

31. General

31.1 During the year the company had nine permanent employees and their individual remuneration rate was not
less than Tk 36,000 per annum (2008: ten permanent employees).

31.2 Previous year's figures have been rearranged, wherever considered necessary, to conform to current year's
presentation.
 Khulna Power Company Ltd
Projected Income Statement for the year ended 31 December

2009 2010 2011 2012 2013 2014

Taka Taka Taka Taka Taka Taka
Revenue
Fuel Tariff 4,410,304,818 7,980,019,317 13,817,350,187 14,272,563,416 14,659,976,586 15,100,287,579
OMT Tariff 1,982,771,320 2,775,869,075 4,649,962,505 4,803,011,181 4,933,299,290 5,081,357,739
Total Revenue 6,393,076,138 10,755,888,392 18,467,312,692 19,075,574,597 19,593,275,876 20,181,645,317

Fuel expense 4,979,552,938 8,577,539,929 14,445,141,275 14,920,922,283 15,326,404,432 15,786,522,644

Gross Margin 1,413,523,200 2,178,348,463 4,022,171,417 4,154,652,314 4,266,871,444 4,395,122,673

Operating Expenses
Operations and maintenance 496,387,941 704,627,345 1,009,786,516 1,055,908,154 1,098,742,466 1,146,270,553
Other Operating expenses 57,372,293 34,888,874 39,371,774 40,437,738 41,538,738 42,675,846
General & Administrative Expenses 22,880,851 33,043,718 38,631,482 40,949,563 43,466,125 46,199,543
Operating insurance 32,466,173 34,247,500 51,984,100 53,543,700 55,150,200 56,804,700
Depreciation and amortization 190,006,089 209,543,848 325,444,900 325,448,488 325,452,172 325,455,976
Total other operating expenses 799,113,347 1,016,351,285 1,465,218,773 1,516,287,644 1,564,349,700 1,617,406,618

Operating income (loss) 614,409,853 1,161,997,178 2,556,952,645 2,638,364,670 2,702,521,744 2,777,716,056

Other (income) and expense
Interest expenses & other financial charges 17,483,802 268,869,793 807,479,962 793,136,251 735,197,794 677,315,726
Interest & Other (income) (101,411,971) (5,611,875) (9,829,728) (9,996,828) (10,168,956) (10,346,172)
Exchange loss/(gain) (2,174,414) 5,901,251 8,713,148 8,824,556 8,939,300 9,057,452

Net profit before income tax 700,512,436 892,838,009 1,750,589,263 1,846,400,692 1,968,553,606 2,101,689,050

Income tax - - - - - -
Net profit after income tax 700,512,436 892,838,009 1,750,589,263 1,846,400,692 1,968,553,606 2,101,689,050

Accumulated Profit brought forward 85,844,827 255,733,763 287,393,982 1,032,618,555 1,617,661,809 2,269,121,927

Accumulated Profit before Preferred Dividend 786,357,263 1,148,571,772 2,037,983,245 2,879,019,247 3,586,215,415 4,370,810,977

Dividend on 10.3125% Preference Shares 113,437,500 113,437,500 90,750,000 68,062,500 68,062,500 68,062,500

Accumulated Profit after Preferred Dividend 672,919,763 1,035,134,272 1,947,233,245 2,810,956,747 3,518,152,915 4,302,748,477
Redemption of 10.3125% Preference Share - 220,000,000 220,000,000 220,000,000 220,000,000 220,000,000
Proposed Dividend -Equity Shareholders' 417,186,000 527,740,290 694,614,690 973,294,938 1,029,030,988 1,170,200,472

Accumulated Profit carried forward 255,733,763 287,393,982 1,032,618,555 1,617,661,809 2,269,121,927 2,912,548,005

Earnings per share 2.81 3.40 7.17 7.31 7.39 7.82

Note: Redemption of preference shares shall effective from May 2010.

Khulna Power Company Ltd.
Projected Balance Sheet
12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14
Taka Taka Taka Taka Taka Taka
Current Assets:
Cash 701,992,195 196,461,548 402,935,465 1,149,249,334 1,940,687,588 2,721,068,571
Accounts Receivable 387,749,398 2,411,582,694 2,483,995,560 2,558,584,496 2,635,416,454 2,689,886,558
Other Receivable 12,497,004 9,000,000 9,000,000 9,000,000 9,000,000 9,000,000
Fuel inventory 885,884,269 540,750,000 556,972,500 573,682,500 590,895,000 608,625,000
Consumables Inventory 95,758,000 95,758,000 95,758,000 95,758,000 95,758,000 95,758,000
Advances, Deposits & Prepaids 1,393,292 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000
Total Current Assets 2,085,274,158 3,256,052,242 3,551,161,525 4,388,774,330 5,274,257,042 6,126,838,129

Fixed Assets:
Property, Plant and Equipment 5,159,691,860 10,385,499,860 10,387,727,750 10,390,022,480 10,392,386,060 10,394,820,560
Less: Accumulated Depreciation (1,852,315,982) (2,061,859,830) (2,387,304,730) (2,712,753,218) (2,712,753,218) (2,712,753,218)
Net Fixed Assets 3,307,375,878 8,323,640,030 8,000,423,020 7,677,269,262 7,679,632,842 7,682,067,342

Total Assets 5,392,650,036 11,579,692,272 11,551,584,545 12,066,043,592 12,953,889,884 13,808,905,471

Current Liabilities:
Current portion of long term debt - - 504,700,000 504,700,000 504,700,000 504,700,000
Accounts Payable 1,533,800,273 2,297,800,000 1,336,734,000 1,376,838,000 1,418,148,000 1,460,700,000
Interest Payable & other financial charges - 25,235,000 25,235,000 22,711,500 22,711,500 22,711,500
Total Current Liabilities 1,533,800,273 2,323,035,000 1,866,669,000 1,904,249,500 1,945,559,500 1,988,111,500

Long-Term Liabilities:
Term Loan - 5,047,000,000 4,542,300,000 4,037,600,000 4,037,600,000 4,037,600,000
Total Long-Term Liabilities - 5,047,000,000 4,542,300,000 4,037,600,000 4,037,600,000 4,037,600,000

Stockholders' Equity/Preference Share:

Common Stock 2,085,930,000 2,294,523,000 2,315,382,300 2,433,237,345 2,572,577,469 2,600,445,494
10.3125% Redeemable Preference Shares 1,100,000,000 880,000,000 660,000,000 440,000,000 220,000,000 -
Capital Redemption Reserve A/C - 220,000,000 440,000,000 660,000,000 880,000,000 1,100,000,000
Dividend (Incl. TDS) -Equity Shareholders' 417,186,000 527,740,290 694,614,690 973,294,938 1,029,030,988 1,170,200,472
Retained Earnings 255,733,763 287,393,982 1,032,618,555 1,617,661,809 2,269,121,927 2,912,548,005
Total Stockholders' Equity/Pref Sha 3,858,849,763 4,209,657,272 5,142,615,545 6,124,194,092 6,970,730,384 7,783,193,971

Total Liabilities & Stockholders' Equity/Pref Share 5,392,650,036 11,579,692,272 11,551,584,545 12,066,043,592 12,953,889,884 13,808,905,471

Net asset value per share 13.23 14.51 19.36 23.36 26.24 29.93
 Additional disclosure by the management as requested by DSE
Khulna Power Company Ltd. (“KPCL”) shall continue its operation on expiry of the current Power
Purchase Agreement (“PPA”) with Bangladesh Power Development (“BPDB”) for the reasons:-

1.1 That Article 2.3 of the PPA has the clear provision for extension of duration of the PPA.
1.2 That KPCL plant is the most reliable plant in the BPDB grid, available for 363 days of the
year and with its 19 generating units, it is the most flexible and capable to meet BPDB’s
ever varying load demand.
1.3 That the plant operates on Furnace Oil, for dwindling natural gas production in the country,
the operation of the KPCL plant shall be continued for the years to come. The Government
policy on utilization of energy has already been shifted to use of liquid fuel for generation
of electricity, accordingly the future power plants are being built based on liquid fuel
operation.
1.4 That KPCL plant is the least cost plant operated on liquid fuel.
1.5 That the existing shortage in generation capacity of the country shall continue to exist
much beyond the year 2013, when the tenure of the current PPA expires.
1.6 That for the reasons stated above the Government of Bangladesh is actively considering
expansion the KPCL plant capacity by another 100 MW, its apparent that the extension of
the current PPA would be natural viable option for BPDB to minimize overall generation
shortfall.

Additional disclosure by the management as requested by CSE

1. El Paso Corporation (“El Paso”) was the sponsor shareholder of Khulna Power Company Ltd. (“KPCL”) and
provided Term Loan amounting to USD 44.17 million during the implementation of the project. The loan
was being repaid on 18 semi-annual installments. In the year 2008, before the full repayment of term
loan, El Paso, as a part of its corporate business strategy, decided to withdraw from the power sector of
this region. Accordingly disposed of their shareholding in KPCL to other existing sponsor shareholders, i.e
Summit Industrial & Mercantile Corporation (Pvt) Ltd. and United Enterprises & Co. Ltd. The outstanding
balance of Term Loan amounting to USD 1.322 million (Equivalent BDT 91.48 million) was waived as being
a part of total purchase consideration package.

2. As mentioned above, as a part of their corporate business strategy, El Paso had withdrawn their
investment from the power sector of this region. Apart from Bangladesh, they had also sold out their
power establishment in India, Pakistan, China, Phillipine and Korea. El Paso’s earnings from the power
segment comparing to their credit exposure, country risk and other financial involvement was
insignificant. Moreover, El Paso wanted to focus on their core business i.e, Gas exploration and pipeline
network. Therefore, their main object was to get rid of their power investment in this region. Under the
Members’ Agreement, El Paso was obligated to dispose their share holding in KPCL to the other interested
existing shareholders. Accordingly, El Paso had offered their shareholding to Summit and United. Under
the Members Agreement, El Paso was obligated to shoulder about USD 40 million exposure required for the
operation of the project. Therefore, in order to get rid of those obligations, El Paso had disposed of their
share under special consideration.

As per the Members Agreement, Wartsila was also required to provide corporate guarantee and other
undertakings required for the working capital facilities and operation of the project. Wartsila was not
interested to take all these huge exposure for their small shareholdings, rather wanted to focus on their
O&M operation business and other business prospect with Summit and United and therefore offered their
shareholding to the existing shareholders under special consideration.

93
 Name and Address of the shareholder of Summit Industrial and Mercantile Corporation (Pvt) Ltd and
United Enterprise & Co. Ltd.
United Enterprises & Company Ltd.
% of
Sl # Name Address
Shareholding
1 Hasan Mahmood Raja House # 10, Road # 55 Gulshan -2, Dhaka-1212 16.47%
Khandaker Moinul Ahsan
17.28%
2 Shamim House # 10, Road # 55 Gulshan -2, Dhaka-1212
3 Ahmed Ismail Hossain House # 10, Road # 55 Gulshan -2, Dhaka-1212 17.28%
4 Akhter Mahmud Rana House # 1/C, Road # 35 Gulshan -2, Dhaka-1212 17.28%
5 Hafeza Mahmood House # 10, Road # 55 Gulshan -2, Dhaka-1212 1.61%
6 Shirin Ahmed House # 10, Road # 55 Gulshan -2, Dhaka-1212 0.80%
7 Khaleda Ahsan House # 10, Road # 55 Gulshan -2, Dhaka-1212 0.80%
8 Nasrin Mahmud House # 10, Road # 55 Gulshan -2, Dhaka-1212 0.80%
9 Moinuddin Hasan Rashid House # 10, Road # 55 Gulshan -2, Dhaka-1212 18.08%
10 Faridur Rahman Khan House # 10, Road # 55 Gulshan -2, Dhaka-1212 5.02%
11 Abul Kalam Azad House # 10, Road # 55 Gulshan -2, Dhaka-1212 5.02%
100%

Summit Industrial & Mercantile Corporation (Pvt) Ltd.

% of
Sl # Name Address
Shareholding

1. Muhammed Aziz Khan 14/A Shaheed Sarani Road Dhaka Cantonment, Dhaka 16.01%

2. Anjuman Aziz Khan 14/A Shaheed Sarani Road Dhaka Cantonment, Dhaka 2.36%

3. Mohammad Farid Khan House # 68, Road # 7 Dhaka Cantonment, Dhaka 5.12%

4. Ayesha Aziz Khan 14/A Shaheed Sarani Road Dhaka Cantonment, Dhaka 15.81%

5. Adeeba Aziz Khan 14/A Shaheed Sarani Road Dhaka Cantonment, Dhaka 15.81%

6. Azeeza Aziz Khan 14/A Shaheed Sarani Road Dhaka Cantonment, Dhaka 15.81%

7. Sanadina Khan House # 5, Road # 32 Sector-7, Uttara, Dhaka 2.83%

8. Salman Khan House # 5, Road # 32 Sector-7, Uttara, Dhaka 2.83%

9. Jafer Ummeed Khan House # 5, Road # 32 Sector-7, Uttara, Dhaka 3.78%

10. Transnational Electricity Inc 11, Collyer Quay # 14-01 The Arcade, Singapore-049317 4.97%

11. Latif Khan House # 51, Road # 28 Gulshan, Dhaka 5.02%

12. Mohammad Faisal Karim Khan House # 68, Road # 7 Dhaka Cantonment, Dhaka 2.71%

13. Fadiah Khaleda Khan House # 68, Road # 7 Dhaka Cantonment, Dhaka 1.81%

14. Farhan Karim Khan House # 68, Road # 7 Dhaka Cantonment, Dhaka 2.71%

15. Farhana Khaleda Khan House # 68, Road # 7 Dhaka Cantonment, Dhaka 1.81%

16. Cosmopolitan Traders (Pvt) Ltd. Summit Centre (11th Floor) 18 Kawran Bazar, Dhaka 0.50%

17. Azharul Hoque, FCA Flat # N/4, Road # 4 House # 22, Dhanmondi, Dhaka 0.10%

Total: 100%

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CSE’s observation for Direct listing of Khulna Power Company Limited

1) The terms and conditions of El Paso’s term loan waiver resulting in an income of Tk. 91,481,290
(equivalent to USD 1,322,365.89) should be mentioned in the Information Document (ID). (ref. page # 83)

2) The per share price / consideration value at which the shares of El Paso (73.9%) and Wartsila (6.1%) in
Khulna Power Company Ltd. have been acquired by Summit Industrial and Mercantile Corporation (Pvt)
Ltd. and United Enterprises & Co. Ltd should be disclosed in ID. (ref. page # 13)

3) The names and addresses of shareholders of Summit Industrial and Mercantile Corporation (Pvt.) Ltd. and
United Enterprises & Co. Ltd. along with their holding positions in the share capital in these respective
companies and also their interest in other listed companies as sponsors/directors, if any, should be
provided in ID.

4) In justifying the indicative price the company has considered the following quantitative factors:

i) Earning Based Value Per Share (EBVPS) based on the last financial statement ended on December 31, 2009
with an average market P/E of 30.

ii) Earning Based Value Per Share (EBVPS) based on projected financial statements for the years ended
December 31, 2010 to 2014 with the same P/E.

It would have been more rational if EBVPS could be calculated also on weighted average basis considering the
financial statements for immediately preceding five years.

iii) The company has considered market value of some companies which are not similar as per the nature of
their businesses. Only the market value of Summit Power Limited should be considered as similar share,
the six months average price of which is Tk. 129.46 as mentioned in the ID.

5) The indicative price which has been determined by the company is seemed to be high in consideration of
the observations in serial (4) mentioned above. However, the company has given some qualitative
justifications in favor of their indicative price.

6) As per the indicative price mentioned in the information document the P/E stands at 58.06 which is
unusually high. As per SEC’s Directive, the investors are not presently allowed to use the security, having
P/E in excess of 50, as marginable securities and enjoy credit facility to purchase it under the Margin
Rules, 1999. This is presumably because the equity security with P/E exceeding 50 is too risky.

7) In order to have a full range of justification on the indicative price, other quantitative factors such as
Price /Book Value (P/BV) multiple, Dividend Discount Model etc. should also be provided for the interest
of the investors.

8) The Net Asset Value (NAV) per share on the basis of discounted cash flow considering the discount factor
should also be provided under the Projected Balance Sheet. (ref. page # 88)

9) The risk on non-continuation of “Operation and Management Agreement” by “Wartsila” along with the
management perceptions should be included in the risk factors as a separate point.

10) In page# 84 in serial 21.(a). detail calculation to arrive at the attributable profit (from net profit) to the
ordinary shareholders amounting Tk 582.65 mil should be provided in ID.

11) The designated bank account (Escrow Account) number for collecting bid money from the bidders should
be mentioned in ID.

12) Information on “non-operating history” should be mentioned in Risk Factors.

13) The latest development of the expansion plan with BPDB which was mentioned in the draft information
document should be furnished. (ref. page # 11)

14) “Break down of issue expenses” to be furnished in detail with figures (ref. page # 30).

15) No. of shares to be offloaded by each of the shareholders should be furnished.

16) Remuneration paid to top 10 executives should be furnished. (ref. page # 39)

17) Aggregate amount of remuneration paid to all officers in the last accounting year should be furnished.

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18) Ratios in the information document should be furnished under the respective heads like liquidity ratios,
operating ratios, profitability ratios and solvency ratios. (ref. page # 83)

19) The shares of the company which are intended to offload should be dematerialized as per relevant rules
and regulations prior to commencement of trading.

20) The words “exchange does” in the 3rd line of the statement in the cover page of the ID should be replaced
by the words “exchanges do”.

21) The web site addresses of CSE and DSE should be mentioned under the head of “Availability of Information
Document”.

22) The words “The company shall offload” under the head of A. 1. (page # 1) should be replaced by the
words “The existing shareholders of the company shall offload”.

23) In page # 2, the content should not include future direction under the head “Declaration about Listing of
Shares with the stock exchange(s)”.

24) The words “which has been hosted at DSE & CSE Trading System” mentioned in serial # 2. (vi) (page # 2)
should be omitted.

25) In serial # 3 (page # 3), the reference no. of rule should be mentioned as “8.B.(16)(4)( c)” in place of
“16(4)( c)”. Moreover, the words “five” and “three” in the first line should be consistent with the relevant
information in the table.

26) In page # 31 in serial # F, the title of Anjuman Aziz Khan should be mentioned as “Mrs” in place of “Mr”.

27) In page # 39 in serial # 1 of point G, the word “prospectus” should be replaced by the word “information
document” and the words “or within 2 (two) years prior to that time” should be removed.

28) Information regarding any loan either taken or given from or to any director or any person connected with
the director, any interest and facility enjoyed by a director is pecuniary or non-pecuniary etc. should be
provided under the head of “ certain relationships and related transactions with related parties”. (ref.
page #39)

29) In serial # “d” of point H, the words “brothers & sisters” should also be included with the information
provided in the bracket. (ref. page # 39)

KPCL Management’s perception regarding aforementioned observation of CSE

All the relevant above mentioned observation are accommodated in the relevant sections
of the Information Document (ID).

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