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Prospectus

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PROSPECTUS

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Contents

Contents 1
1. STATUTORY CONDITIONS 6
DISCLOSURE IN RESPECT OF ISSUANCE OF SECURITY IN DEMAT FORM 6
CONSENT TO COMMENCE BIDDING BY THE ELIGIBLE INSTITUTIONAL INVESTORS FOR PRICE DISCOVERY OF ISSUANCE OF 38,600,000 ORDINARY SHARES OF HAMID FABRICS LTD 6
GENERAL INFORMATION 8
2. DECLARATIONS AND DUE DILIGENCE CERTIFICATES 9
DECLARATION ABOUT THE RESPONSIBILITY OF THE DIRECTOR(S), INCLUDING THE MANAGING DIRECTOR OF “HAMID FABRICS LIMITED” IN RESPECT OF THE PROSPECTUS 9
CONSENT OF DIRECTOR(S) TO SERVE AS DIRECTOR(S) 10
DECLARATION ABOUT FILING OF PROSPECTUS WITH REGISTRAR OF JOINT STOCK COMPANIES AND FIRMS 10
DECLARATION BY THE ISSUER ABOUT THE APPROVAL FROM SECURITIES AND EXCHANGE COMMISSION FOR ANY MATERIAL CHANGES REGARDING PROSPECTUS OF HAMID FABRICS LIMITED 10
DECLARATION BY THE ISSUE MANAGER ABOUT THE APPROVAL FROM SECURITIES AND EXCHANGE COMMISSION FOR ANY MATERIAL CHANGES 10
DUE DILIGENCE CERTIFICATE OF THE ISSUE MANAGER 12
DUE DILIGENCE CERTIFICATE OF THE UNDERWRITER(S) 13
3. RISK FACTORS & MANAGEMENT’S PERCEPTION ABOUT RISKS 14
EXTERNAL RISK FACTORS 14
INTERNAL RISK FACTORS 17
4. ISSUE SIZE AND PURPOSE OF PUBLIC OFFERING 19
IPO SIZE AND ISSUE PRICE 19
USE OF IPO PROCEEDS 19
5. INFORMATION ABOUT THE COMPANY 20
PROFILE OF HAMID FABRICS LIMITED 20
NATURE OF BUSINESS 21
PRINCIPAL PRODUCTS AND SERVICES 21
PRODUCTS/SERVICES THAT ACCOUNT FOR MORE THAN 10% OF THE COMPANY’S TOTAL REVENUE 22
ASSOCIATES, SUBSIDIARY/RELATED HOLDING COMPANY AND THEIR CORE AREAS OF BUSINESS 22
DISTRIBUTION OF PRODUCTS AND SERVICES 22
COMPETITIVE CONDITION OF BUSINESS 22
SOURCES AND AVAILABILITY OF RAW MATERIALS AND PRINCIPAL SUPPLIERS 23
SOURCES OF AND REQUIREMENT FOR POWER, GAS AND WATER OR ANY OTHER UTILITIES 23
CUSTOMERS PROVIDING 10% OR MORE REVENUE 23
DESCRIPTION OF CONTRACTS WITH PRINCIPAL SUPPLIERS/CUSTOMERS 24
DESCRIPTION OF MATERIAL PATENTS, TRADEMARKS, LICENSES OR ROYALTY AGREEMENTS 25
NUMBER OF EMPLOYEES 25
PRODUCTION/SERVICE RENDERING CAPACITY AND CURRENT UTILIZATION 26
6. TEXTILE & APPAREL INDUSTRY OF BANGLADESH 27
BACKGROUND 27
INDUSTRY VALUE CHAIN 28
PREFERENTIAL ACCESS UNDER THE GSP FACILITY TO EU MARKET 29
GOVERNMENT POLICY SUPPORT FOR THE BACKWARD LINKAGE INDUSTRY 29
OUTLOOK FOR THE TEXTILE & APPAREL INDUSTRY 29
7. EXPANSION PLAN 31
INTRODUCTION 31
RATIONALE FOR YARN DYEING PROJECT 31
PRODUCT MIX AND PRODUCTION CAPACITY 32
PROJECT COST & MEANS OF FINANCING 33
PROJECT LOCATION 33
BUILDING AND OTHER CIVIL WORKS 33
MACHINERY AND EQUIPMENT (IMPORTED) 34
LOCAL MACHINERY AND EQUIPMENT 34
INSTALLATION COST 34
RAW MATERIALS 34
UTILITIES 34
ENVIRONMENTAL ASPECTS 34
OTHER PERMISSIONS 35
MANAGERIAL ASPECTS 35
HUMAN RESOURCES 35
FINANCIAL ASPECTS 35
MANUFACTURING PROCESS 35
8. DESCRIPTION OF PROPERTY 37
LOCATION OF PRINCIPAL PLANTS AND PROPERTY 37
9. PLAN OF OPERATION AND DISCUSSION OF FINANCIAL CONDITIONS 40
INTERNAL AND EXTERNAL SOURCES OF CASH 40
MATERIAL COMMITMENT FOR CAPITAL EXPENDITURE 40
CAUSES FOR MATERIAL CHANGES 40
SEASONAL ASPECTS OF THE COMPANY’S BUSINESS 41
KNOWN TRENDS, EVENTS OR UNCERTAINTIES 41
CHANGE IN THE ASSETS OF THE COMPANY USED TO PAY OFF ANY LIABILITIES 42
LOAN TAKEN FROM OR GIVEN TO HOLDING/PARENT COMPANY OR SUBSIDIARY COMPANY 42
FUTURE CONTRACTUAL LIABILITIES 42
ESTIMATED FUTURE CAPITAL EXPENDITURE 42
VAT, INCOME TAX, CUSTOMS DUTY OR OTHER TAX LIABILITY 42
TRANSACTION BETWEEN SUBSIDIARY/ASSOCIATE/HOLDING COMPANY AND ISSUER FOR LAST 5 YEARS 45
AUDITORS’ CERTIFICATE ON ALLOTMENT OF SHARES TO SHAREHOLDERS INCLUDING PROMOTERS OR SPONSOR SHAREHOLDERS FOR ANY CONSIDERATION IN CASH/OTHERWISE THAN FOR CASH 45
DECLARATION REGARDING SUPPRESSION OF MATERIAL INFORMATION 46
10. INFORMATION ABOUT DIRECTORS AND OFFICERS 47
INFORMATION REGARDING DIRECTORS AND DIRECTORSHIP OF THE COMPANY 47
DIRECTORS’ INVOLVEMENT IN OTHER ORGANIZATIONS 47
FAMILY RELATIONSHIPS AMONG TOP DIRECTORS AND TOP OFFICIALS 48
SHORT BIO-DATA OF DIRECTORS 48
INVOLVEMENT OF DIRECTORS AND OFFICERS IN CERTAIN LEGAL PROCEEDINGS 50
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 50
EXECUTIVE COMPENSATION 51
AGGREGATE AMOUNT OF REMUNERATION PAID TO ALL DIRECTORS AND OFFICERS 51
REMUNERATION PAID TO DIRECTOR WHO WAS NOT AN OFFICER DURING THE LAST ACCOUNTING YEAR 52
CONTRACT WITH DIRECTOR OR OFFICER PROVIDING FOR THE PAYMENT OF FUTURE COMPENSATION 52
PAY INCREASE INTENTION 52
OPTIONS GRANTED TO DIRECTORS, OFFICERS AND EMPLOYEES 52
TRANSACTION WITH THE DIRECTORS AND SUBSCRIBERS TO THE MEMORANDUM 52
TANGIBLE ASSETS PER SHARE 52
OWNERSHIP OF THE COMPANY’S SECURITIES 52
SECURITIES OWNED BY THE OFFICERS 53
11. FEATURES OF IPO 54
BOOK BUILDING METHOD 54
DETERMINATION OF OFFERING PRICE 55
CONSENT OF THE ELIGIBLE INSTITUTIONAL INVESTORS REGARDING INDICATIVE PRICE 58
MARKET FOR SECURITIES BEING OFFERED 58
DECLARATION ABOUT LISTING OF SHARES WITH STOCK EXCHANGE(S) 58
DESCRIPTION OF SECURITIES OUTSTANDING OR BEING OFFERED 59
12. PLAN OF DISTRIBUTION 61
UNDERWRITING OF SHARES 61
PRINCIPAL TERMS AND CONDITIONS OF THE UNDERWRITING AGREEMENT 61
COMMISSION FOR THE UNDERWRITERS 62
RELATIONSHIP OF OFFICERS OR DIRECTORS OF THE UNDERWRITER(S) WITH THE MEMBER OF BOARD OF THE COMPANY 62
13. ALLOTMENT, SUBSCRIPTION AND MARKET 63
LOCK-IN ON SPONSOR’S SHARES 63
REFUND OF SUBSCRIPTION MONEY 63
SUBSCRIPTION BY AND REFUND TO NON-RESIDENT BANGLADESHIS (NRB) 63
AVAILABILITY OF SECURITIES 64
ALLOTMENT 65
APPLICATION FOR SUBSCRIPTION 65
TRADING AND SETTLEMENT 67
BANKERS TO THE ISSUE 67
14. MATERIAL CONTRACTS AND OTHERS 68
MATERIAL CONTRACTS 68
MANAGER TO THE ISSUE 68
REGISTRAR TO THE ISSUE 68
COMMISSION TO THE BANKERS TO THE ISSUE 68
15. CORPORATE DIRECTORY 69
1. ADDITIONAL DISCLOSURES 70
STATEMENT REGARDING ANNUAL GENERAL MEETING (Jewel would update) 70
AUDITORS’ CERTIFICATE REGARDING PROJECTED EARNINGS PER SHARE AS PER RULES 8(B)(16)(1) (B)(III) OF THE PUBLIC ISSUE RULES 2006 OF SECURITIES AND EXCHANGE COMMISSION 70
Disclaimer ?

STATUTORY CONDITIONS

DISCLOSURE IN RESPECT OF ISSUANCE OF SECURITY IN DEMAT FORM

As per provision of the Depository Act, 1999 and regulations made there under, shares will only be issued in dematerialized condition. All transfer/transmission/splitting will take place in the Central Depository Bangladesh Ltd. (CDBL) system and any further issuance of shares (right/bonus) will be issued in dematerialized form only.

CONSENT TO COMMENCE BIDDING BY THE ELIGIBLE INSTITUTIONAL INVESTORS FOR PRICE DISCOVERY OF ISSUANCE OF 38,600,000 ORDINARY SHARES OF HAMID FABRICS LTD

The Commission hereby accords its consent under section 2A, sub-sections (2)(a) and (2)(b), read with section 2B of the Securities and Exchange Ordinance, 1969 and the Securities and Exchange Commission (Public Issue) Rules, 2006, based on all the above documents and information provided to SEC, to commence bidding by the eligible institutional investors for price discovery of further issue of 38,600,000 ordinary shares of Hamid Fabrics Ltd (hereinafter referred to as ‘HFL’, ‘Issuer’ or ‘the Company’) through public offer, subject to the following conditions imposed under section-2CC of the said Ordinance:

1. The indicative price Tk 32.00 (Taka Thirty Two) only 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;

2. 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;

3. Prospectus will have to be posted on the websites of the Commission , stock exchanges, issue manager and issuer at least two weeks prior to the start of the bidding to facilitate investors to know about the company and all aspects of the offering;

4. No institutional investor shall be allowed to quote for more than 10% (ten percent) of the total security offered for sale, subject to maximum of 5 (five) bids;

5. Institutional bidding period will be 3 to 5 (three to five) working days;

6. The bidding will be handled through a uniform and integrated automated system of the stock exchanges, especially developed for book building method;

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

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

9. Institutional bidders shall deposit their bid with 20% (twenty percent) of the amount of bid in advance to the designated bank account and the rest amount to settle the dues against security to be issued to them shall be deposited within 5(five) working days prior to the date of opening subscription for general investors. In case of failure to deposit remaining amount that is required to be paid by institutional bidders for full settlement of the security to be issued in their favor, 50% (fifty percent) of bid money deposited by them shall be forfeited by the commission. The securities earmarked for the bidder who defaulted in making payment shall be added to the general investor quota;

10. General investors, which include mutual funds and NRBs, shall buy at the cut-off price;

11. There shall be a time gap of 25 (twenty five) working days between closure of bidding by eligible institutional investors and subscription opening for general investors;

12. Subscription for general investors shall remain open for 5 (five) consecutive banking days;

13. General investors shall place their application through bankers to the issue;

14. All application money shall be kept in a separate escrow account opened with a designated bank with prior intimation to the Commission. Issuer will not be allowed to utilize such money until all the process of issue is completed and Commission’s consent to this effect is obtained;

15. There shall be lock-in of 15 (fifteen) trading days from the first trading day on the security issued to the eligible institutional investors;

16. Within 5 (five) days of completion of the bidding process, the issuer and issue managers shall submit to the Commission, the following papers/documents for final approval of the prospectus:

i. 10 (ten) copies of draft prospectus duly signed by the issuer and issue manager(s) containing among others, the cut-off price and weighted average price as discovered through the bidding process, date of opening and closing of subscription for the general investors, number of shares to be allotted to each category of investors and a statement of shares to be allotted to each of the eligible institutional investors;

ii. Statement of the designated bank account evidencing deposit of money paid in advance by the eligible institutional investors;

iii. Hard copy and soft copy of the bidding results;

17. The Company shall appoint a registered Merchant Banker as Registrar to the Issue before submission of the prospectus for vetting and subsequent publication.

18. The company along with the issue Manager(s) and Registrar to the Issue shall ensure due compliance of the above and the Securities and Exchange Commission (Public Issue) Rules, 2006.

GENERAL INFORMATION

1. NDB Capital Ltd, the sole Issue Manager has prepared this prospectus based on the information provided by Hamid Fabrics Limited (Issuer) and also upon several discussions with the Managing Director and concerned executives of the issuer company. The Directors, including Managing Director of Hamid Fabrics Limited, NDB Capital Ltd collectively and individually, having made all reasonable inquires, confirm that to the best of their knowledge and belief, the information contained herein is true and correct in all material aspects and that there are no other material facts, the omission of which would make any statement herein misleading.

2. No person is authorized to give any information or to make any representation not contained in this Prospectus, and if given or made, any such information or representation must not be relied upon as having been authorized by the Issuer Company or Issue Manager.

3. The Issue as contemplated in this document is made in Bangladesh and is subject to the exclusive jurisdiction of the courts of Bangladesh. Forwarding this Prospectus to any person resident outside Bangladesh in no way implies that the Issue is made in accordance with the laws of that country or is subject to the jurisdiction of the laws of that country.

4. A copy of this Prospectus may be obtained from the Head Office of Hamid Fabrics Limited, NDB Capital Ltd, the Underwriters and the Stock Exchanges where the securities will be listed.

DECLARATIONS AND DUE DILIGENCE CERTIFICATES

DECLARATION ABOUT THE RESPONSIBILITY OF THE DIRECTOR(S), INCLUDING THE MANAGING DIRECTOR OF “HAMID FABRICS LIMITED” IN RESPECT OF THE PROSPECTUS

This Prospectus has been prepared, seen and approved by us, and we, individually and collectively, accept full responsibility for the authenticity and accuracy of the statements made, information given in the prospectus, documents, financial statements, exhibits, annexes, papers submitted to the Commission in support thereof, and confirm, after making all reasonable inquiries that all conditions concerning this public issue and prospectus have been met and that there are no other information or documents, the omission of which make any information or statements therein misleading for which the Commission may take any civil, criminal or administrative action against any or all of us as, it may deem fit.

We also confirm that full and fair disclosure has been made in this prospectus to enable the investors to make a well-informed decision for investment.

|Sd/- |Sd/- |
| | |
|Mr. A.H.M. Mozammel Haque |Mr. Abdullah Al Mahmud |
|Chairman |Managing Director |
|Sd/- |Sd/- |
| | |
|Eng. Abdullah Hasan |Mrs. Salina Mahmud |
|Director |Director |
|Sd/- |Sd/- |
| | |
|Ms. Nabila Mahmud |Ms. Nusrat Mahmud |
|Director |Director |

CONSENT OF DIRECTOR(S) TO SERVE AS DIRECTOR(S)

We hereby confirm that we have been serving as Director(s) of Hamid Fabrics Limited and will continue to act as a Director of the Company.

|Sd/- |Sd/- |
| | |
|Mr. A.H.M. Mozammel Haque |Mr. Abdullah Al Mahmud |
|Chairman |Managing Director |
|Sd/- |Sd/- |
| | |
|Eng. Abdullah Hasan |Mrs. Salina Mahmud |
|Director |Director |
|Sd/- |Sd/- |
| | |
|Ms. Nabila Mahmud |Ms. Nusrat Mahmud |
|Director |Director |

DECLARATION ABOUT FILING OF PROSPECTUS WITH REGISTRAR OF JOINT STOCK COMPANIES AND FIRMS

A dated and signed copy of the Prospectus has been filed for registration with the Registrar of Joint Stock Companies and Firms, Government of the Peoples’ Republic of Bangladesh, as required under Section 138(1) of the Companies Act, 1994 on or before the date of publication of the prospectus.

DECLARATION BY THE ISSUER ABOUT THE APPROVAL FROM SECURITIES AND EXCHANGE COMMISSION FOR ANY MATERIAL CHANGES REGARDING PROSPECTUS OF HAMID FABRICS LIMITED

In case of any material changes in any agreement, contract, instrument, facts and figures, operational circumstances and statements made in the Prospectus subsequent to the preparation of the Prospectus and prior to its publication, such changes shall be incorporated in the Prospectus and the said Prospectus should be published with the approval of the Commission.

Sd/-

Mr. Abdullah Al Mahmud
Managing Director
Hamid Fabrics Limited

DECLARATION BY THE ISSUE MANAGER ABOUT THE APPROVAL FROM SECURITIES AND EXCHANGE COMMISSION FOR ANY MATERIAL CHANGES

In case of any material changes in any agreement, contract, instrument, facts and figures, operational circumstances and statement made in the Prospectus subsequent to the preparation of the Prospectus and prior to its publication, such changes shall be incorporated in the Prospectus, and the said Prospectus should be published with the approval of the Commission.

For the Manager to the Issue
Sd/-

Kusal Jayawardana
CEO & Managing Director
NDB Capital Limited

DUE DILIGENCE CERTIFICATE OF THE ISSUE MANAGER

Subject: Public Offer of 38,600,000 Ordinary Shares of Tk 10/- each at an indicative price of Tk 32/- each, including a premium of Tk. 22/- per share totaling to Tk. 1,235,200,000/- of Hamid Fabrics Limited

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

1. We, while finalizing the draft prospectus pertaining to the said issue, have examined various documents and other materials as relevant for adequate disclosures to the investors; and

2. On the basis of such examination and discussions with the issuer company, it’s Directors and officers, and other agencies, independent verification of the statements concerning objects of the issue, and the contents of the documents, and other materials furnished by the Issuer;

We confirm that:

a) The draft prospectus forwarded to the Commission is in conformity with the documents, materials and papers relevant to the issue; b) All the legal requirements connected with the said issue have been duly complied with; and c) The disclosures made in the draft prospectus are true, fair and adequate to enable the investors to make a well informed decision for investment in the proposed issue.

For Manager to the Issue
Sd/-

Kusal Jayawardana
CEO & Managing Director
NDB Capital Limited

DUE DILIGENCE CERTIFICATE OF THE UNDERWRITER(S)

Subject: Public Offer of 38,600,000 Ordinary Shares of Tk. 10/- each at an indicative price of Tk. 32/- each, including a premium of Tk. 22/- per share totaling to Tk. 1,235,200,000/- of Hamid Fabrics Limited

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

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

2. On the basis of such examination; and the discussions with the issuer company, it’s Directors and officers, and other agencies, independent verification of the statements concerning objects of the issue, and the contents of the documents, and other materials furnished by the Issuer.

We Confirm That:

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

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

c) This underwriting commitment is unequivocal and irrevocable.

For Underwriter(s)
Sd/-

RISK FACTORS & MANAGEMENT’S PERCEPTION ABOUT RISKS

Risk refers to the variability of expected outcome, which is a complex and multifaceted phenomenon. Investment in equity securities involves a high degree of risk, which needs to be evaluated explicitly while making an investment appraisal. Hamid Fabrics Ltd is operating in an industry that is subject to both external and internal risk factors. Some of these risks can be managed while some are beyond control, which may result in loss for investors. On the other hand, the management of the Company constantly explores ways and means of mitigating such risks. The following part of this section describes some of the significant risks that could affect HFL and the value of its shares. In the event any of the following risk factors actually affects the business of the Company, its financial condition could deteriorate, the trading price of its equity shares might plunge and investors may lose a part or all of their investment. It is, therefore, strongly recommended that the prospective investors carefully consider all of the information in this Prospectus, including the risk factors as well as management perception thereabout discussed hereunder before making an investment decision.

EXTERNAL RISK FACTORS

INTEREST RATE RISK

This risk arises due to unfavorable fluctuations in the interest rate at which the Company borrows from external sources. If interest rate goes high it adversely affects the business by increasing financial expenses, reducing profitability of the business, which in turn negatively affects shareholders’ wealth. Fall in market interest rate could result in an ‘Opportunity Lost’ in the event the Company has obtained long term credit facilities at fixed rates. A couple of factors that are mainly responsible for interest rate fluctuations include volatility in the money market, rising investment demand, increasing demand for bank borrowings and changes in the Government’s monetary policy.

Management Perception about this Risk
The majority of long term borrowings of Hamid Fabrics Ltd are in foreign currency loans, which results in relatively lower effective interest rates compared to local borrowing. Further, the long term Debt to Equity ratio as at 31st March, 2010 is relatively low, 21.50%. Due to the above reasons, the interest rate risk faced by HFL is moderate. A part of the proceeds of the IPO would be used to repay long term loans, which would further minimize the interest rate risk faced by the Company.

EXCHANGE RATE RISK

Exchange rate risk is quite prominent for Hamid Fabrics Limited due to the specific nature of business. HFL is a 100% export oriented textile manufacturer whose revenue and a large part of the raw material purchases are transacted in foreign currencies. Furthermore, the Company borrowed in foreign currencies from various local and foreign sources that are repayable in respective currencies. Therefore, any unfavorable volatility in price of raw materials and/or currency fluctuation can negatively affect the profitability of the Company.

Management perception about this Risk

The company maintains an Exporter’s Retention Quota (ERQ) account as “deemed exporter” where merchandise exporters are entitled to a foreign exchange retention quota of repatriated Freight on Board (FOB) value of their exports. Balances in these accounts can be used by the exporters for bona fide business purposes, such as import of raw materials, capital machineries and spares, business visits abroad, participation in export fairs and seminars, establishment and maintenance of offices abroad without prior approval Bangladesh Bank, which reduces exchange rate fluctuation risk to a certain extent. As a 100% export oriented company HFL avails Export Development Fund (EDF) of Bangladesh Bank for opening Cash LCs. Repayment of foreign currency loans by equity financing raised through IPO will mitigate uncertainties related to the cost of debt-servicing denominated in foreign currencies. Further, at macro level, Bangladeshi Taka has been fairly stable against the US Dollar in the recent years.

MARKET RISK

Due to fall in demand for its products, the Company might experience reduction of sales revenue. Market risk arises from market conditions adversely affecting sales and profitability. Few factors may trigger market risk for HFL such as changes in consumer behaviors, demographics, introduction of substitute products, competition and other unfavorable global conditions such as economic depression, wars etc.

Management perception about this Risk

HFL’s final product is used as raw material by the manufacturers of export oriented Ready Made Garment units in Bangladesh. Because of its established track record of short lead time and quality of products, the Company enjoys a steady growth in supply orders. In addition to this, strong research & development, marketing and brand management have helped the company to increase its customer base. As a result Hamid Fabrics Limited has already achieved recognition from globally renowned buyers like Marks & Spencer, H&M, PVH, Tema, Next, C&A, S’Oliver etc. and remains as the market leader in Bangladesh for solid dyeing of fabrics.

Further, as discussed in details in Section 6, Bangladesh’s current demand-supply gap of fabric is about 50% for cotton-based products and around 25% for non-cotton based products in the RMG sector (Source: United States Department of Agriculture). Therefore, Bangladesh has a huge untapped internal demand for textile products, which is currently being satisfied through imports. As a result, the market risk for HFL is fairly moderate.

INDUSTRY RISKS

Unexpected technological developments and regulatory changes that are specific to the Textile & Apparel industry might have an adverse impact on the business performance of the Company. It also involves the risk of increased competition arising from foreign and domestic textile manufacturers resulting in contraction of profit margin and loss of market share. Further, the textile industry is heavily dependent on the performance of RMG industry, which faces threats stemming from international competitors viz. China, India and Vietnam etc. Hence the textile industry of Bangladesh is always under pressure to deliver cost-efficient and quality fabrics.

Management perception about this Risk

HFL uses modern machineries and equipments. The Company keeps pace with technological advancements. Moreover, the modern technology has not cannibalized the traditional manufacturing methods such as hand looms indicating a lower level of obsolescence risk. The economy of Bangladesh is heavily dependent on the Textile & Apparel sector. As a result, the Textile & Apparel is a priority sector for the Government and it is unlikely that the Government will impose unfavorable regulatory changes to this industry.

As discussed in details in Section 6, Bangladesh’s current demand-supply gap of fabric is about 50% for cotton-based products and around 25% for non-cotton based products in the RMG sector (source: United States Department of Agriculture). Therefore, Bangladesh has a huge untapped internal demand for textile products, which is currently being satisfied through imports, which reduces the risk arising from the domestic competition. Further, high start up costs and lack of expertise discourage new entrants into the sector. In the context of international competition, Bangladesh Apparel industry has a promising growth potential due to unique competitive advantages that minimizes the international competition.

UTILITY RISK

Frequent disruptions and unreliable electricity and gas supply have become foremost challenges to the country’s manufacturing sector. This has resulted in lower capacity utilization (low production), higher cost of production, tighter lead time, failure to meet export deadlines and loss of buyers’ confidence. Frequent fluctuations in power supply may cause fatal damage to the machinery of the mill.

Management perception about this Risk

Hamid Fabrics Limited has installed two Sub-Stations of 2230 KVA power generation that ensures a backup power supply. Further, the Company has installed 3 Gas Generators of 1.85 MW. The spare parts for these generators are also widely available in the country. The Company has also installed 3 boilers with a total capacity of 22.50 tons. Till date, gas supply has not been a concern and there was uninterrupted supply of gas due to the location advantage of the factory.

RISK ASSOCIATED WITH LABOR UNREST

Labor unrest, nowadays is a serious concern for the Textile & Apparel sector of Bangladesh. A growing awareness and demand for higher minimum wage, bonus, timely payment of wage, other benefits and better working environment etc. often create disputes between workers and employers. This leads to uprising among workers and cause great havoc by way of damages and losses to capital machineries. Such situations halt production, create staff crisis, failure of timely shipment/ delivery of goods, stock-pile/stock-lot, cash crunch and loan default etc. that may lead to an unrecoverable damage at times. Political uncertainty adjoined with the restoration of Collective Bargaining Agent may pose a great challenge for the Company.

Management perception about this Risk

The Company maintains an open and participatory management style from workers to senior level management. It adheres to high level of ethical standards, international labor laws and various workplace regulations. The Company offers attractive remuneration, performance based rewards and other welfare benefits for employees. These initiatives boost motivation, establish mutual respect and strengthens bond between employee and employers, which minimizes the risk of labor unrest. HFL has never faced any labor unrest because of its healthy management-employees relationship and conducive work environment as discussed above.

TECHNOLOGY RELATED RISKS

Technology is a dynamic term that changes its shape and nature frequently. Every capital intensive industry has to rapidly synchronize itself with technological changes and invest in sophisticated machinery. A right technology is a crucial determinant of competitiveness that ensures better product and services to the customers while minimizing costs. Adjustment to new technologies thus involves relatively large scale investments as well as a longer pay-back period.

Management perception about this Risk

HFL has established the most advanced dyeing set up in the country. The production facility is based on flexible technology that enables it to efficiently switch between different products. Management of the Company ensures regular maintenance and up-gradation to ensure long term sustainability, durability and competitiveness. HFL has strategic relationships with reputed international companies for receiving technical support for operation. Further, HFL is planning to introduce a modern yarn-dyeing facility through the IPO proceeds. The above measures taken by the Company reduces the technology risk.

CHANGES IN THE GOVERNMENT POLICY

Textile & Apparel sector operates under various government regulations related to imports, exports, fiscal and monetary policy. Further, as part of Government policy, the Textile & Apparel industry enjoys various incentive schemes. Changes in the existing Government policy or regulations may adversely affect the business performance of the industry or HFL.

Management perception about this Risk

Textile sector is highly competitive and is the largest industrial sub-sector in Bangladesh. It is the highest contributor to the country’s export earnings and industrial value addition. Moreover, there are about 5 million people who are directly working in this sector. In these circumstances, it is unlikely that the Government would bring any uncongenial policy changes that could hurt the industry.

INTERNAL RISK FACTORS

MANAGEMENT RISK

The textile industry of Bangladesh already experiences a great shortage of skilled management personnel. Because of high demand from employers they tend to switch between jobs for financial and other benefits. Hence, if a key manager, executive or employee quits his/her job, it could affect business continuity, operating results and future growth of Hamid Fabrics Ltd. Management risk also arises from succession crisis if subsequent teams of leadership are not created within the organization.

Management perception about this Risk

The Company places a great importance to human resource and leadership development. The staff is brought under relevant on-the-job, in-house and external training programs. HFL recognizes the commitment and contribution of employees for the growth of the Company. A culture of objective performance appraisal and effective reward system has helped to create job-security and motivation of employees. As a result, HFL has relatively low employee turnover in key management positions. Key management team of Hamid Fabrics Ltd is almost unchanged for more than five years, which shows the general loyalty to the organization. Hamid Fabrics Ltd has developed layers of alternative leaderships in all critical areas of its activities.

BUSINESS CONTINUITY RISK

Business continuity risk involves stoppage of business operations due to various internal and external factors.

Management perception about this Risk

There is no history of non-operation of the Company since the commencement of commercial weaving unit in 1995 and dyeing unit in 2003. To overcome such business continuity risk, HFL has installed 3 gas-based power generators with total capacity of 1.85MW, own water supply system and stat of the art inventory management system. Management has selected the factory in a location where there was no record of flood in the recent past. The problem of adverse weather conditions is also not likely to hamper the operations, since the factory building has strong Reinforced Cement Concrete (RCC) prefabricated structure to withstand wind, storm, rain etc. along with good drainage facility.

INPUT RISK

At present, HFL is dependent on imported raw materials such as grey fabrics, dyes and chemicals of certain categories. After it goes into expansion, the Company will be largely dependent on imported yarns. These raw materials cannot be reliably procured from any local source. Efficient sourcing of raw materials is vital for gaining operational efficiency. Further, the prices of such raw materials can be subject to frequent price fluctuations in the world market.

Management perception about this Risk

Since inception, HFL has been procuring yarns from local sources, grey from mostly India and Thailand. Dye stuffs and chemicals are mostly imported from European countries depending upon quality required and competitive prices. HFL has a sound business relationship with a wide variety of suppliers in home and abroad. It largely mitigates the risk of depending on any particular supplier. HFL has a specialized ‘Procurement Research Team’ dedicated for processing latest market information. They can make immediate arrangement of quality raw materials from cost-efficient sources. It significantly reduces the operational risk involved with sourcing of raw materials. Further, any significant increase in raw material prices can be passed on to the buyers in the medium to long term.

IMPLEMENTATION RISK

A part of IPO proceeds are to be used to set up a yarn dyeing project. Therefore, investors are subjected to implementation risk which involves potential cost overruns and time over runs. Any significant cost and time overruns can negatively affect the profitability of the company. In addition, implementation risk also involves entrepreneurial and managerial capabilities to implement a project of this scale.

Management perception about this Risk

The sponsors and management team of HFL have been in the Textile & Apparel industry since 1995 with wealth of experience and expertise. Further, previously they have been involved in conceptualization, planning and implementation of projects. As a result, Hamid Fabrics Limited has the entrepreneurial and management capabilities to implement a project of this scale.

The estimation of project cost has been carried out based on reliable quotation from machinery suppliers. Further, an adequate level of contingency margin has been provided in the project cost in order to absorb any cost overruns. Considering the past experience of sponsors in project implementation, the expected time schedule of implementing the project within a period of 1 year from IPO proceeds available is reasonable.

ISSUE SIZE AND PURPOSE OF PUBLIC OFFERING

IPO SIZE AND ISSUE PRICE

Table 1: Capital Structure

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The Company is issuing 38,600,000 ordinary shares of BDT 10 each through Initial Public Offering (IPO) at an issue price of BDT 32.0 each including premium of Tk 22.0 per share, of which 7,720,000 ordinary shares will be placed for bidding of Eligible Institutional Investors and 30,880,000 will be placed for General Investors.

USE OF IPO PROCEEDS

Hamid Fabrics Ltd plans to utilize the IPO proceeds in the following manner:

Table 2: Implementation Schedule

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Any additional fund raised from the IPO will be used to meet the working capital requirements and to reduce the debt component of the expansion project. The estimated cost of the expansion project is BDT 1,064.15 million as detailed in Section 5.0 of the Prospectus.

Note 1: Settlement of Loans

The Company plans to settle following loans with the IPO proceeds:

Table 3: Loan Settlement

|Sl.# |Lenders |Outstanding as at 31st March 2010 in |Exchange Rate |Outstanding in BDT |
| | |Foreign Currency | | |
|2 |The OPEC Fund for International |USD 2,663,201.78 |1 USD = BDT 69.60 | 185,358,774.00 |
| |Development | | | |
|Total |526,932,278.00 |

Sd/- Sd/-

Mr. Abdullah Al Mahmud Mr. Mushaddeque Ali
Managing Director GM -Finance & Accounts

INFORMATION ABOUT THE COMPANY

PROFILE OF HAMID FABRICS LIMITED

Hamid Fabrics Ltd. is the flagship Company of Mahin Group. It is a Public Limited Company registered in Bangladesh and incorporated under the Companies Act, 1994. It is engaged in manufacturing of ‘solid’ dyed fabrics for the 100% export oriented Ready Made Garment (RMG) industry of Bangladesh. After the planned expansion through IPO, the Company will be able to step into ‘yarn dyeing’ venture, a more value adding segment and will ultimately enrich its product line with ‘yarn dyed fabrics’.

Mahin Group has six business units, engaged in Ready Made Garment exports, Apparel Manufacturing, Woven Grey Manufacturing, Dyeing and Finishing and Insurance business. The Group is one of the vertically integrated players in export of apparel and textile products in Bangladesh.

HFL was formed as a Private Company limited by shares with the name and style of Hamid Fabrics Private Limited on 27 April 1995. Later, the Company was converted into a Public Limited Company vide a resolution passed in the Extraordinary General Meeting held on 25 February 2010 and its name was thus changed to Hamid Fabrics Limited. The related Certificate from the Registrar of Joint Stock Companies (RJSC) was received on 2 March 2010.

HFL is one of the leading manufacturers of high quality textiles in Bangladesh. Due to its superior product quality, HFL has been directly nominated by globally renowned buyers such as GAP, Zara, C&A, Marks & Spencer, UniQlo, BHS, Tesco, Wal-Mart, Tommy Hilfiger, George, Levi’s, H&M, S.Oliver, Nike, Dickies, Charles Vogele, Carrefour, Miles and Lcwaikiki (Tema) for sourcing textile to RMG manufacturers in Bangladesh.

HFL has been assigned a credit rating of A+ by Credit Rating Information and Services Limited (CRISL). This is the highest credit rating achieved by a textile Company in Bangladesh. Entities rated A+ are adjudged to offer adequate safety for timely repayment of financial obligations. This level of rating indicates a corporate entity with an adequate credit profile. Risk factors are more variable and greater in periods of economic stress than those rated in the higher categories.

Reputed international lending agencies viz. Deutsche Institutions - UND Entwicklungsgesellschaft MBII (DEG) and The OPEC Fund for International Development had extended credit facilities to HFL at the inception of the Dyeing & Finishing Unit.

The Company provides highest priority to maintain global benchmarks for quality throughout the value chain commencing from raw material sourcing, manufacturing, finishing and delivery. HFL achieved several certifications in recognition of its continuous efforts towards quality such as OEKO-Tex Association Certificate.

HFL is a member of Bangladesh Textile Mills Association. Factories of HFL are located in Shilmandi, Narsingdi, in the close vicinity of Dhaka-Sylhet highway (only about 50 yards inside). Head Office of the Company is located at Hamid Tower, 5th & 6th Floor, 24 Gulshan C/A, Circle 2, Dhaka 1212, Bangladesh.

Hamid Fabrics Ltd has two production units:
1) Weaving
2) Dyeing & Finishing

Weaving unit has an annual capacity of 6.85 million yards of grey fabrics, started commercial production on 16 November, 1995. Its Dyeing and Finishing unit is equipped with state-of-the-art fully-automatic machineries with an installed annual capacity to produce 21.60 million yards of finished dyed fabrics. This unit started commercial production on March 2003.

Mr. Abdullah Al Mahmud is the founding Managing Director of HFL who owns 62.46% stake of the Company. Mr. Mahmud is a reputed businessman of the country having vast experience in Textiles and Apparel industry. He was the ex-president of Bangladesh Garments Manufacturers and Exporters’ Association.

Hamid Fabrics Ltd is one of the pioneers to bring attention to environmental issues. It set up a large scale Effluent Treatment Plant with a capacity of 50 cubic meters per hour following World Bank guidelines to reduce environmental hazard since commencement of operation. At the same time the Company also has established two water treatment plants to keep its water supply into production at more neutralized level, which allows less injection of heavy neutralizing chemical into production. The Company is also in the process to start its Caustic recovery plant to reduce the caustic consumption and enable more efficiency in chemical usage.

NATURE OF BUSINESS

Presently, Hamid Fabrics Ltd is engaged in weaving, solid-dyeing and finishing of woven fabrics for 100% export oriented RMG units. It plans to set up a yarn-dyeing facility under the proposed expansion plan through IPO proceeds. Under solid dyeing, woven fabrics go through a single color dyeing process whereas yarn dyeing allows multi-colored dyeing of woven fabrics with a maximum range of 8 colors.

Solid Dyeing and Yarn Dyeing processes include the following activities:

Table 4: Production Process

|Steps |Activities under Solid Dyeing |Activities under Yarn Dyeing |
|Step 1 |Sizing |Yarn Dyeing (New Facility) |
|Step 2 |Weaving |Weaving (New Facility) |
|Step 3 |Pre-Treatment |Pre-Treatment (Existing facility will be utilized) |
| |Sinzing & Desizing |Sinzing & Desizing |
| |Scouring & Bleaching |Mercerizing (Occasional) |
| |Mercerizing |Emerizing/Peaching (Occasional) |
| |Emerizing/Peaching (Occasional) | |
|Step 4 |Dyeing Process |Washing (Existing facility will be utilized) |
| |Dyeing | |
| |Washing | |
|Step 5 |Finishing |Finishing (New + Existing Facility) |
| |Stentering |Stentering (1 new will be added) |
| |Sunforizing |Sunforizing (1 new will be added) |
| |Inspection |Inspection |
| |Packaging |Packaging |

PRINCIPAL PRODUCTS AND SERVICES

The products of Hamid Fabrics Ltd can be categorized in terms of raw material mix, weight range, design and finishing features.

The product range offers 100% cotton fabrics as well as blended fabrics such as cotton/polyester, cotton/viscose, nylon/cotton and cotton/lycra. The weaving unit produces grey fabrics in various design and constructions such as Twill, Canvas, Oxford, Rib stop, Rib cord, Ottoman, Herringbone, and various dobby designs with weight range of 100-450 GSM. The finishing mix of Hamid Fabrics Limited comprises water repellent, fire proof, wrinkle free, teflon coating, aero finish and chintz finish etc.

PRODUCTS/SERVICES THAT ACCOUNT FOR MORE THAN 10% OF THE COMPANY’S TOTAL REVENUE

Products of Hamid Fabrics Limited (HFL) includes hundred types of construction in various types of yarn count, weaving design and finishing process. Only a few products with special characteristics of finishing process contribute more than 10% of the company’s total revenue. The following table contains the list of products which has higher volume of sales and its percentage on total revenue for last two accounting periods:

Table 5: Products with high sales volume

|Product Category |July 2008 – June 2009 |July 2009 – March 2010 |
| |Sales in BDT |Percentage |Sales in Taka |Percentage |
|40X40 Poplin* | | | | |
|7X7/72X42 | | | | |
|Total | | | | |

* There are 4 types of construction combinations considered under 40X40 Poplin

ASSOCIATES, SUBSIDIARY/RELATED HOLDING COMPANY AND THEIR CORE AREAS OF BUSINESS

Hamid Fabrics Limited does not own any subsidiary or associate Company.

DISTRIBUTION OF PRODUCTS AND SERVICES

Hamid Fabrics Ltd. sells its products directly to the country’s RMG units. Most of the sales go to RMG units situated within the range of greater Dhaka region as well as Chittagong who are nominated by the ultimate foreign buyers.

COMPETITIVE CONDITION OF BUSINESS

There is a range of external and internal competitive conditions affecting the business of Hamid Fabrics Ltd.

Critical external competitive conditions influencing the business of HFL include demand-supply gap of fabrics, future outlook for RMG industry, low cost labor, government policy and availability of GSP facility. Given the comparative cost advantage of Bangladesh together with stimulating government policy, the textile industry has attractive growth opportunities.

The main (internal) competitive advantage of HFL lies in its ‘robust production process’ that encompasses state of the art machineries, preventive maintenance, quality control, motivated workforce, visionary entrepreneurship and expert management leading to superior product quality and established track record. The Company has already placed itself as one of the leading manufacturers of solid dyed fabrics in Bangladesh. The proposed expansion plan would open up a new avenue of growth for the Company.

The manufacturers of solid dyeing fabrics are scattered around with small scale production facilities with the exception of a few large-scale players as given in table 6.

Table 6: Major competitors

|Major Competitors |
|South China Bleaching and Dyeing Ltd |
|Sinha Textiles Ltd, |
|Zaber & Zubair |
|Beximco Textiles Ltd etc. |

Bangladesh produces only about 50% of the fabric requirement of export oriented RMG units. Given this demand supply gap, all players would have ample space for growth without cannibalizing each other’s sales.

SOURCES AND AVAILABILITY OF RAW MATERIALS AND PRINCIPAL SUPPLIERS

HFL never compromises on quality of raw materials it uses for the manufacturing process. Therefore, HFL procures raw materials from leading raw material suppliers both locally and globally. Main raw materials of Hamid Fabrics Limited include (a) yarn and sizing chemical for its weaving unit (b) various types of grey fabrics, dyes, chemicals for pretreatment, finishing and specialized chemicals for special fabrics finishing.

After many years of sourcing, HFL is quite stable in vendor selection. The Company has built up a strong relationship with raw material suppliers based on mutual benefit. Names of the key suppliers of the raw materials are given in the table below:

Table 7: Raw Material Suppliers
|Unit |Major Raw Materials |Key Suppliers and Origin |
|Weaving |Yarn (Imported) |Nahar Spinning Mills Ltd (India), Vardhaman Textile Mills Ltd (India) |
| | | |
| |Yarn (Local) |Square Textiles Ltd, Ashique Composite Textile Mills Ltd |
|Dyeing & |Grey Fabrics (Imported) |Bangkok Weaving Mills Ltd (Thailand) |
|Finishing | | |
| |Grey Fabrics (Local) |Hamid Weaving Mills Ltd (Sister concern of HFL) |
| | | |
| |Dyes (Imported) |Huntsman (Switzerland), BASF (Germany), Bezema ( Switzerland ) |
| | | |
| |Chemicals (Imported) |AGC Chemical Ltd (Thailand), Chang Chung Petro (Korea), Everlight (Taiwan) |

SOURCES OF AND REQUIREMENT FOR POWER, GAS AND WATER OR ANY OTHER UTILITIES

Power: Sources of electricity supply are the Rural Electrification Board (REB) as well as 3 Gas Generators (2 X 678 KW and 1 X 510 KW, totaling 1.86 MW) from combination of USA and Germany origin to support its expanded facilities and two sub-stations of 2230 KVA to ensure the backup power supply.

Water: Water supply is ensured from own deep tube-well and treated in water treatment plant.

Steam: Most of the machineries of HFL are heavily dependent on high pressured steam. The Company has 3 boilers of European origin with a total capacity of 14 tons to ensure the demand.

Gas: Gas is supplied from the Titas Gas Transmission & Distribution Company Ltd.

CUSTOMERS PROVIDING 10% OR MORE REVENUE

Most of the export orders of Hamid Fabrics Limited are directly negotiated with the ultimate overseas buyers and such buyers finalize the price with indicative quantity with HFL. Accordingly, local RMG units procure fabrics from HFL since it is already nominated by the overseas buyers. HFL maintains a strong strategic relationship with global buyers, which is based on long standing track record of quality and reliability. Some of the major global buyers who preferred HFL fabrics are as follows:

Table 8: Major Customers

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However, there is a few RMG customers who negotiate with HFL directly as they do not have nomination for procurement of fabrics.

No single RMG unit has purchased 10% or more production of HFL. It signifies that the Company’s revenue flow is not over concentrated on a single local RMG unit. As explained earlier, apparels made of HFL fabrics are exported to a large group of globally renowned buyers as mentioned in the table below:

Table 9: Name of International Buyers who Imported RMGs made of HFL Fabrics in Last Two Years

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DESCRIPTION OF CONTRACTS WITH PRINCIPAL SUPPLIERS/CUSTOMERS

Hamid Fabrics Ltd does not have any material contract with its principal suppliers or customers.

DESCRIPTION OF MATERIAL PATENTS, TRADEMARKS, LICENSES OR ROYALTY AGREEMENTS

Patents

Presently the Company has no material patent.

Name and Trade Mark

The Company has its registration as Hamid Fabrics Limited in the Registrar of Joint Stock Companies of Bangladesh in respect of name, style and trading class.

Licenses

Hamid Fabrics Limited is a 100% Export oriented textile manufacturing Company. The Company needs Export Registration Certificate (ERC) for exporting finished goods and Import Registration Certificate (IRC) for import of raw materials from abroad. HFL has obtained both registration certifications from the Chief Controller of Import and Export (CCI&E) division of the Government of the People’s Republic of Bangladesh. Both certificates are issued for one year and need to be renewed every year.

Hamid Fabrics Limited procures yarn, grey fabrics, dyes and chemical from abroad under duty free bonded category and it maintains stocks of such raw materials in its storage at any given time to maintain smooth operation. Therefore, the Company needed to obtain Bonded Warehouse License from the Customs Bond Commissionerate of the Government of the People’s Republic of Bangladesh. Hamid Fabrics Limited obtained Bonded Warehouse license since commencement of production. The license for ‘deem exporter’ is given for a year and needs renewal after year end to recalculate the capability of import volume for the current year.

Environment Clearance Certificate HFL has obtained Environmental Clearance Certificate from the Department of Environment, Government of The People’s Republic of Bangladesh for its factory situated at Shilmondi, Narshingdi. The Company obtained this Certificate from the very beginning of the production and keeps renewing it every year.

The company has been certified as Oeko-Tex Standard 100 or Öko-Tex Standard 100 since 2007. Oeko-Tex Standard 100 is an international testing and certification system for textiles, limiting the use of certain chemicals. It was developed in 1992. This certification for companies requires, among other things, compliance with specified criteria for avoiding or limiting the use of harmful substances in production.

The other licenses are also obtained from the respective authorities, namely Registration from Board of Investment of Bangladesh (BOI), Fire License from Department of Fire, Labor License from Ministry of Labor and also has the membership of Bangladesh Textile Mills Association (BTMA).

Royalty

Hamid Fabrics Limited is an independent Bangladeshi company and is not involved with any royalty arrangement.

NUMBER OF EMPLOYEES

As on March 31, 2010 the total number of full time permanent employees of Hamid Fabrics Limited was 777. The division of employees was as follows:

Table 10: No. of Employees in different division

|Work Divisions |As on 31st March 2010 |As on 30th June 2009 |
| |Full Time |Part-Time |Full Time |Part-Time |
|Administration & Sales |169 |N/A |164 |N/A |
|Production – Weaving |262 |N/A |251 |N/A |
|Production – Dyeing |346 |N/A |325 |N/A |
|TOTAL |777 |0 |740 |0 |

PRODUCTION/SERVICE RENDERING CAPACITY AND CURRENT UTILIZATION

Following table illustrates the production capacity of Grey and Finished Fabrics and its utilization as per audited accounts on 31 March, 2010.

Table 11: Capacity Utilization

(Capacity in Yards)
|Particulars |Installed Capacity |Utilization |% of Utilization |
| |Annual |For the period Jul-09 to Mar-10 |
|1 |Land Acquisition |31st January 2011 |
|2 |Loan Settlement |31st January 2011 |
|3 |Building & Civil Works* |30th June 2011 |
|4 |Plant & Machinery Acquisition |31st August 2011 |
|5 |Installation & Erection of Plant & Machinery |31st October 2011 |
|6 |Utilities & Other Installation |31st October 2011 |
|7 |Trial Run |30th November 2011 |
|8 |Full Commercial Production |1st January 2012 |

* Stage 3 above would cover the period until all Plant & Machineries reach the factory site.

The above implementation schedule has been prepared on the assumption that IPO proceeds would be available to HFL by 31st December, 2010.

Sd/- Sd/-

Mr. Abdullah Al Mahmud Mr. Mushaddeque Ali
Managing Director GM -Finance & Accounts

PROJECT COST & MEANS OF FINANCING

The estimated cost of expansion project is given in the table below:

Table 15: Project Cost

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The cost of expansion project is estimated at BDT 1,064.15 million which includes a contingency margin of 10% (excluding Land cost). The total funding requirement will be met in the following manner.

Table 16: Means of financing

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The above computation is based on an indicative price of BDT 32/= per share. However, depending on the cut-off price determined through the Book-Building Process, the IPO proceeds may vary. Any changes to the IPO proceeds would be adjusted through bank borrowings. Based on the strength of the post-IPO Balance Sheet of HFL, the management is confident of securing necessary funding facilities to finance the remaining cost of the expansion project after utilizing the IPO proceeds in full.

PROJECT LOCATION

The project will be set up at Shilmandi, Narsingdi next to the existing production facility of HFL. The area of the land will be about 300 decimal (10 Bighas) with an estimated value of BDT 30.00 Million (at a rate of BDT 100,000/decimal). The land development will cost another BDT 4.3 Million. It has got excellent transportation facilities. The site is well connected with Dhaka, the capital city and the port city of Chittagong by road.

BUILDING AND OTHER CIVIL WORKS

The proposed project will require a built up area of 130,000 sft comprising of 3 pre-fabricated factory floors, godown of 10,000 sft and utility building of 10,000 sft. Factory Office Administration 10,000 and a 5 storied staff quarter consisting 25,000 sft. Total estimated cost would be BDT 110.29 Million.

MACHINERY AND EQUIPMENT (IMPORTED)

The project will be equipped with brand new modern machineries together with all auxiliaries and equipments. The main machineries of Yarn Dyeing section of the project will be imported from reputed vendors from Europe and Weaving section will be procured from both Japan and Europe. Total cost of the imported machinery, spares and accessories are estimated to be BDT 835.28 Million.

LOCAL MACHINERY AND EQUIPMENT

In addition to the imported machineries, the project will also require some local machinery and equipments viz. electric cable, piping etc. The cost of local machinery and equipment would be BDT 17.05 Million, approximately.

INSTALLATION COST

The estimated installation cost which includes erection and installation cost of all the machineries as well as security deposit to REB, Titas etc. for utilities amounts to approximately BDT 34.65 Million.

RAW MATERIALS

The project requires various types of raw materials such as, raw yarn, chemicals, dyes etc. which would mostly be procured from foreign reputed suppliers and a part would be sourced from local sources. In this regard, HFL can leverage its existing supplier relationships.

UTILITIES

The proposed project site adjacent to the existing factory has good utility facilities.

Water

The project will require water for various civil works during implementation as well as regular operations. The proposed project will have water supply from the existing facilities (deep tube-well) installed in HFL. Another deep tube-well will also be installed to meet additional water requirements. A soft water treatment plant will be set up to meet the requirements.

Power

The project would require connected load of 2300 KVA. The maximum demand has been estimated at 1900 KW. HFL will install 2 gas generators each having capacity of 1 MW, which would be used for the expanded capacity. The electricity connection from Rural Electrification Board will remain as back-up support.

Gas

Gas would be needed to run generator and boiler. The annual consumption of natural gas for the project is estimated to be 336,22 million cft (17,655 cft/h for 2 generators and 22,951.50 cft/h for boiler). The gas supply in the region, by Titas Gas Transmission and Distribution Company Ltd, is stable and satisfactory.

ENVIRONMENTAL ASPECTS

Hamid Fabrics Ltd has obtained an environmental clearance since start of its operation. For the expansion project the Company shall obtain a separate environmental Clearance Certificate from the Department of Environment of Bangladesh. To ensure that the expansion project will not release any toxic material hazardous to environmental ecological balance the expansion project will establish an Effluent Treatment Plant with a capacity of 2,050 cubic meters per day.

OTHER PERMISSIONS

For the expansion project the Company will obtain amended registration from the Board of Investment, Bonded Warehouse License from the Commissioner of Customs, permissions from Titas Gas Transmission and Distribution Company and Rural Electrification Board.

MANAGERIAL ASPECTS

The sponsors of Hamid Fabrics Ltd are reputed entrepreneurs of the country who have extensive hands-on experience in Textiles & Apparels industry. They are counting over two decades of experience in managing large scale textiles & apparel projects starting from conceptualization, planning and implementation to commercial operation. Over the years, the sponsors have built on expertise on efficiently and effectively managing the entire value chain ranging from raw materials sourcing, production to marketing. Moreover, the Company is planning to recruit both foreign and local industry experts with appropriate managerial capabilities for production management.

HUMAN RESOURCES

The project would require a total of 561 employees as given in the table below:

Table 17: Human Resource

|Sl.# |Staff Type |Staff Numbers |
|1 |Administration |150 |
|2 |Production: | |
| |Yarn Dyeing |130 |
| |Weaving |281 |
| |Total Production |411 |
|Grand Total |561 |

The Company will enjoy support from the existing workforce in the Administration, Finance & Accounts and Marketing etc.

FINANCIAL ASPECTS

The project is expected to break-even in the 3rd year of commercial operation and would generate an Internal Rate of Return of X%.(figures needs updating with the latest projections)

MANUFACTURING PROCESS

The process flow diagram is given below

Figure 2: Manufacturing Process

DESCRIPTION OF PROPERTY

LOCATION OF PRINCIPAL PLANTS AND PROPERTY

1. Hamid Fabrics Limited has its own factory land at Shilmandi, Narshingdi; about 35 km from Dhaka City measuring 709.32 decimals (23.644 bigha) and total land area is in the name of Hamid Fabrics Limited.

The buildings of Weaving Unit of HFL include factory building (35,000 sft.), 3-storeyed raw material go-down (5,800 sft.), 3-storeyed staff accommodation (8,600 sft.) and fabric go-down building (7,600 sft.) and 3-storeyed office building (4,000 sft.). The other civil works include generator and substation room (1,000 sft.), boiler room (765 sft.) and a workshop (540 sft.).

Dyeing & finishing unit consist of state of the art pre-fabricated structure of 134,000 sft including 20,000 sft floor office rooms and laboratory with modern furniture and fixtures. Apart from that another 10,000 sft floor space three storied building also has been completed including installation of utility facilities like boiler, generator, sub-station etc. and finally structure for pump house and gas / electricity meter. (figures don’t match with valuation report)

2. Company owns the following operating fixed assets and they are situated at Company’s office and factory premise; and written down value of the assets are given below:

Table 18: Fixed Assets

In BDT
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3. All the assets of the company are owned by the Company and there is no other mortgage except Long Term Lenders DEG, The OPEC Fund for International Development and IPDC of Bangladesh Ltd. and working capital financiers Janata Bank Ltd., Prime Bank Ltd. and Bank Asia Ltd.

4. Hamid Fabrics Ltd. owns factory land measuring 7.10 acre. The total land area is allocated between two units of Weaving and Dyeing & Finishing as follows:
Table 19: Land Title Deed (Jewel would provide Due Diligence documents)

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5. The company owns brand new Plant & Machineries as per the following schedule:

Table 20: Description of Machineries(Jewel to provide restated figures and march 2010 figures)

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PLAN OF OPERATION AND DISCUSSION OF FINANCIAL CONDITIONS

INTERNAL AND EXTERNAL SOURCES OF CASH

Table 21: Internal and external sources of cash (Jewel to provide restated figures)

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MATERIAL COMMITMENT FOR CAPITAL EXPENDITURE

HFL does not have any material commitment for capital expenditure.

CAUSES FOR MATERIAL CHANGES

Table 22: Material changes

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The turnover of HFL recorded a compounded annual growth of 32% to BDT 1,660.0 Million from BDT 1,470.2 Million during the financial years 2006-07 to 2008-09. Further, the turnover recorded a steep increase in the financial year 2008-09 by 61% due to enhanced capacity utilization of the Dyeing and Finishing Unit with the commencement of sister concern Hamid Weaving Mills Limited in 2008. The annual Dyeing and Finishing capacity of HFL was 21.6 Million yards compared to the weaving capacity of 6.85 million yards. As a result, until Hamid Weaving Mills Limited commenced operations in 2008, the Dyeing and Finishing Unit was operating at around 30% capacity utilization level (below the optimal level), which affected the net profitability adversely.

It may be further noted that the gross profit margin increased to 23% for the period ended 31st March 2010 from 19% in the previous financial year despite declining sales (22%). It was due to a larger part of the revenue of the Company was generated from relatively higher value-adding segment viz. commission dyeing and resultant higher capacity utilization of the Dyeing and Finishing units.

The administrative expenses shows a declining trend since the financial year 2007-08 due to sharing of head office expenses with Hamid Weaving Mills Limited.

Jewel would insert an explanation why Distribution Expenses differ with Audited Accounts

The income tax provision increased by 10 folds for the 9 months ended 31st March 2010 compared to the previous financial year due to deferred tax provision made with regard to revaluation of fixed assets and gratuity provision.

SEASONAL ASPECTS OF THE COMPANY’S BUSINESS

The demand for HFL fabrics is subject to natural variations depending upon seasonal changes in Summer, Spring and Winter. E.g. during the winter season in the Europe and USA, there is a high demand for clothes made out of thicker fabrics, which declines during summer and spring. Keeping this trend in mind fabric producers set their production cycle. Due to the lead time needed for procurement of raw materials, production and supply of fabrics and the time needed for RMG units to manufacture apparels, textile manufacturers need to produce fabrics 5-6 months ahead of the season. It is pertinent to mention that despite seasonal aspects there is a steady trend of demand for certain types of fabrics throughout the year. Production remains fairly stable for such clothes.

Due to long standing experience in the market and in most cases on the basis of advance confirmation from the buyers company retains its production plan to minimize the lead time for the forthcoming season.

KNOWN TRENDS, EVENTS OR UNCERTAINTIES

Known trends, events or uncertainties applicable to HFL include the following.

Global

a) Global demand for woven fabrics can considered to be stable

b) Increasing trend of relocating manufacturing facilities to low cost countries like Bangladesh

c) Technological advancements

d) Speed of global economic recovery

Local

a) Globally competitive cost structure making Bangladesh an attractive destination for global buyers

b) Conducive government policy towards Apparel and Textile Industry

c) Shortage of gas and power to manufacturing industries

d) Political unrest, hartal and labor unrest

e) Natural calamities

CHANGE IN THE ASSETS OF THE COMPANY USED TO PAY OFF ANY LIABILITIES

The Company did not use any of its assets to pay off its liabilities. All liabilities are being paid off by cash generated through exports/sales of products of the Company.

LOAN TAKEN FROM OR GIVEN TO HOLDING/PARENT COMPANY OR SUBSIDIARY COMPANY

HFL does not have any holding/parent company or subsidiary company.

FUTURE CONTRACTUAL LIABILITIES

HFL presently has no material contractual liabilities other than in the normal course of business that would impact the financial fundamentals of the Company. However, the Company would enter into contractual liabilities with regard to setting up of the Yarn Dyeing project as detailed in Section 7 of the Prospectus.

ESTIMATED FUTURE CAPITAL EXPENDITURE

[pic]

HFL does not anticipate any material capital expenditure for the FY 2012-13.

VAT, INCOME TAX, CUSTOMS DUTY OR OTHER TAX LIABILITY

a) Value Added Tax

HFL is a 100% export oriented company. Government of Bangladesh has declared that there is no VAT on 100% export oriented project except local sale. There is no outstanding VAT claim as at 31st December 2009.

b) Income Tax –(Jewel to confirm the accuracy of table)

The income tax assessment status of the company for the last 7 (Seven) years is given below:

Table 23: Income Tax Status

[pic]Remove the Remark “Assessment Completed” for the 2009-2010.

c) Customs Duty or Other Tax Liability

Hamid Fabrics Limited does not have any outstanding liability or duty demand or any other related liability as at 31st March 2009. (Jewel to confirm)

OPERATING LEASE AGREEMENT DURING LAST FIVE YEARS

The company has not entered into any operating lease commitment in the last five years.

FINANCIAL LEASE COMMITMENT DURING LAST FIVE YEARS

The company has not entered into any financial lease commitment in the last five years.

PERSONNEL RELATED SCHEME

Considering human resources as the key success factor of the Company, HFL offers attractive incentives and motivation to its employees for continued profitability and prosperity. HFL’s remuneration benefits include salary and allowances, festival bonus and performance bonus. The Employee retirement benefits include Gratuity, Provident Fund, Workers’ Profit Participation Fund, Group Insurance etc.

BREAKDOWN OF ESTIMATED EXPENSES FOR IPO

Table 24: IPO related expenses

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REVALUATION OF COMPANY’S ASSETS AND SUMMARY THEREOF

A revaluation of Company’s land and building was carried out by Unique Survey Service Bureau, a professional insurance surveyor and valuation consultant.

Profile of the Valuer (to be inserted by Jewel)

Qualification of the Valuer (to be inserted by Jewel)

Previous works done by the Valuer (to be inserted by Jewel)

Purpose of Revaluation

The revaluation of land and building was carried out to reflect the fair value of such assets in the balance sheet of HFL.

Valuation Result

The summary of the revaluation report dated 17th April, 2010 is given below.

Table 25: Revaluation of Land and Building

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The Company has incorporated the “distressed value” into the financial statements for the period ending 31st March 2010 as a measure of conservativeness.

Valuation Summery

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TRANSACTION BETWEEN SUBSIDIARY/ASSOCIATE/HOLDING COMPANY AND ISSUER FOR LAST 5 YEARS

HFL does not have any holding/parent company or subsidiary company.

AUDITORS’ CERTIFICATE ON ALLOTMENT OF SHARES TO SHAREHOLDERS INCLUDING PROMOTERS OR SPONSOR SHAREHOLDERS FOR ANY CONSIDERATION IN CASH/OTHERWISE THAN FOR CASH

After due verification, it is certified that Hamid Fabrics Limited has allotted ---------------- ordinary shares of Taka ………… each in cash or consideration other than cash to its shareholders including the promoters or sponsor shareholders up to ……………….

Table 26: Allotment of Shares

|Particulars of Allotment |Date of |Number of Shares Issued |Amount of Share |
| |Allotment | |Capital |
| | |Consideration in |Consideration Other | |
| | |Cash |Than Cash | |
|Second | | | | |
|Third | | | | |
|Fourth | | | | |

DECLARATION REGARDING SUPPRESSION OF MATERIAL INFORMATION

This is to declare that to the best of our knowledge and belief, no information, facts, circumstances that should be disclosed have been suppressed that can change the terms and conditions under which the offer has been made to the public.

INFORMATION ABOUT DIRECTORS AND OFFICERS

INFORMATION REGARDING DIRECTORS AND DIRECTORSHIP OF THE COMPANY

Table 27: Directors’ Information

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(Mention 1 year Experience for Ms. Nusrat. Fill in the last column.

DIRECTORS’ INVOLVEMENT IN OTHER ORGANIZATIONS

Table 28: Directors’ involvement in other organization

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Brief descriptions about some of the major companies are given below:

Hamid Weaving Mills Limited (HWML) is a fully Air Conditioned 100% export oriented weaving unit with capacity of 14 million yards of grey fabrics per annum. The project is equipped with all brand new upgraded machinery which includes 104 Air Jet Looms, Sizing Machine, Warping Machine, Warp Tying/Knotting Machine, Warp Leasing Machine, Warp Reaching-in Machine, Reed Drawing Machine, Warp Beam Carrier, Cloth Roll Doffer Carrier, Empty Beam Carrier, Traveling Cleaner, Air Compressor. All these machinery are sourced from Japan and Europe. The project also facilitate with ancillary machinery which includes boiler, generators, electrical sub-station, and laboratory equipments. High speed Air Jet looms of HWML capable to weave more complicated deign and finer high quality of grey adding more value addition on its sales. The Company is a private limited Company incorporate on 6 June 2006 and commenced its production at full swing on July 2009 and eventually after commencement, HWML occupied the idle capacity of Dyeing Units of HFL by commission dyeing of its weaved grey.

Mahin Apparels Limited (MAL) is a 100% export oriented tops and bottoms ready-made garments manufacturing unit. The company was incorporated in 1993. It went into commercial operation in 1994. MAL has a production capacity of 4.5 million pieces of trousers (including cargos, chinos, five pocket jeans, etc.) pa. The Company also sources woven fabrics as its raw material occasionally from HFL to perform some of its orders.

Crystal Insurance Company Limited (CICL) was incorporated and registered as a private limited company in 1999. The company has started its commercial operation since mid 2000. Hamid Fabrics Limited has insured its asset and property under full coverage insurance policy from Crystal Insurance Company Ltd.

FAMILY RELATIONSHIPS AMONG TOP DIRECTORS AND TOP OFFICIALS

➢ Mr. Abdullah Hassan is the elder brother of Mr. Abdullah Al Mahmud

➢ Mr. A.H.M. Mozammel Haque is Mr. Abdullah Al Mahmud’s Father-In-Law

➢ Ms. Nusrat Mahmud and Ms. Nabila Mahmud are daughters of Mr. Abdullah Al Mahmud

➢ Mrs. Salina Mahmud is the daughter of Mr. Haque and Mr. Abdullah Al Mahmud’s wife

SHORT BIO-DATA OF DIRECTORS

Mr. Abdullah Al Mahmud, 47, is the Managing Director of HFL. He is the founder and majority (62.46%) shareholder of Hamid Fabrics Ltd., which is a concern of Mahin Group. Upon completion of his graduation from the USA in 1992, Mr. Mahmud returned to Bangladesh with a vision to set up something on his own. In the following year, he established an RMG business related Washing Plant and set up an RMG unit named Mahin Apparels Ltd. which was specialized in making bottoms. During that time, he acknowledged the need for backward linkage in the industry. With his vision, he eventually set up Hamid Fabrics Ltd. with its Weaving Unit in Shilmandi, Narsingdi, in 1996, and subsequently the Dyeing and Finishing Unit in 2003.

Mr. Mahmud is in the Board of a few other companies. He is the Chairman of Crystal Insurance Company Ltd. and the Managing Director of Hamid Weaving Mills Ltd., which is the latest addition to the “Hamid” family. With diversification in mind, he also made investment in other companies namely Grameen Solutions Ltd. (IT), and Millennium Holdings Ltd (Real Estate).

Mr. Mahmud had been elected as a Director of BGMEA (Bangladesh Garment Manufacturers & Exporters Association) for the year of 2007-08 and was selected as a Member of the Executive Committee of BTMA (Bangladesh Textile Mills Association) in the year 2005-06. He took part in many business dialogues as delegate member representing Bangladesh. He is also involved in various business forums and social causes. He also holds CIP status as recognition to his contribution to the country’s GDP.

Mr. Mahmud is one of the well known business personalities in Bangladesh. He is an enthusiastic and dynamic young entrepreneur of the country, and has been involved in the RMG and Textile sector for 17 years. The Group has experienced a rapid, yet steady growth under his leadership and vision.

Mr. Mozammel Hoque, 62, is one of the Directors of HFL. He completed his Bachelors of Commerce degree from Jagannath College in 1960. He has been actively involved in the textile sector for more than 16 years. Prior to joining HFL, he was the Deputy Chief Accountant in Bangladesh Jute Mill Corporation (BJMC) for 22 years after which he entered the RMG business in 1993. Apart from being the founder director of HFL, Mr. Hoque is also the founder Director of Hamid Weaving Mills Ltd. and Crystal Insurance Company Ltd.

Since his enrollment in business, he dedicated himself towards control and maintenance of accounts and finance. He oversees total management operations for all companies he is involved with. His guidance and supervision is one of the main reasons behind Mahin Group’s success.

Engr. Abdullah Hassan, 52 and a founder Director of Hamid Fabrics Ltd., has been working in the RMG and Textile sector for more than 25 years. Prior to HFL, he was the Head of operations in Atlantic Garments in 1985, and eventually Mahin Apparels in 1993. He is a vibrant entrepreneur. His expertise and experience have been vital for the enhancement and eventual growth of the textile and garment division of Mahin Group.

Mr. Hassan is also the founder Director of Hamid Weaving Mills Ltd., and Crystal Insurance Company Ltd.

Mrs. Salina Mahmud, 45, is a shareholder Director of Hamid Fabrics Ltd. She graduated from Eden College and from then onwards was involved in various social activities in Dhaka. Her enduring inspiration and support nurtured the growth of Mahin Group from its inception in 1993 to date. She is also the proprietor of New Generation Food, a food franchising concern in Bangladesh.

Miss Nusrat Mahmud, 24, is a significant shareholder in the textile division of Mahin Group, and has joined in the team management of the RMG and Textile division of the Group last year. She has successfully completed a Bachelors of Science in Marketing from Bentley University, in Waltham, Massachusetts, in 2008 after which completed her Masters in Management from Cass Business School, City University in London with a Merit in 2009.

Miss Mahmud is a dynamic and avid learner and it is expected that she will further enhance and build on the “Hamid” brand. She is also the founder Director of Hamid Weaving Mills Ltd.

Miss Nabila Mahmud, 19, is a shareholder of Hamid Fabrics Ltd. She has been exposed to the family business from a very early age. She is expected to actively work for the company after her graduation from the USA.

CREDIT INFORMATION BUREAU (CIB) REPORT

Neither the Company nor any of its directors or shareholders who hold 5% or more shares in the paid-up capital of the issuer is loan defaulter in terms of the CIB Report of the Bangladesh Bank.

DESCRIPTION OF TOP EXECUTIVES AND DEPARTMENTAL HEADS

Table 29: Senior Management

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Mention HFL’s name under “Last Five Years Experience” column.

INVOLVEMENT OF 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.

a) Any Bankruptcy Petition filed by or against any company of which any Officer or Director or Nominee of the Company filing the Prospectus was a Director, Officer or General Partner at the time of the bankruptcy or within 2 (Two) years prior to that time

b) Any conviction of an Officer, Director or Nominee in a criminal proceeding or any criminal proceeding pending against him

c) Any Order, Judgment or Decree of any Court of competent jurisdiction against any Officer, Director or Nominee permanently or temporarily enjoining, barring, suspending or otherwise limiting the involvement of any Officer or Director or Nominee in any type of business, securities or banking activities

d) Any Order of the Securities and Exchange Commission, or other Regulatory Authority or Foreign Financial Regulatory Authority, suspending or otherwise limiting the involvement of any Officer or Director or in any type of business, securities or banking activities

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

List of related parties with whom transactions have taken place and their relationship as identified and certified by Management is as under:

Financial involvement between Related Parties and Hamid Fabrics Limited are as follows:

Table 30: Related party transactions

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The following amount has been paid to the Directors of the Company as remuneration for their services:

|Name of the Director |31 March 2010 |30 June 2009 |
|Mr. Abdullah Al-Mahmud |765,000 |1,020,000 |
|Engr. Abdullah Hassan |550,000 |600,000 |
|Mr. A. H. M. Mozammel Hoque |450,000 |600,000 |
|Total |1,765,000 |2,220,000 |

One of the Director Mr. Abdullah Al Mahmud has provided an interest-free temporary loan to the Company. During the period ended 31March 2010, Tk 615,457 of this loan is repaid (note 20).

Other than those, the Company has no proposed transaction nor had any transaction during the last 2 (Two) years with the following related parties: a) Any director or executive officer of the Company

b) Any 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, 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 prospectus.

f) Any loans either taken or given from or to any director or any person connected with the director, clearly specifying details of such loan in the Prospectus, and if any loan has been taken from any such person who did not have any stake in the Issuer, its holding company or its associate concerns prior to such loan, rate of interest applicable, date of loan taken, date of maturity of loan.

g) Any director holding any position, apart from being a director in the issuer company, in any company, society trust, organization or proprietorship or trust.

h) All interest and facilities enjoyed by a director whether pecuniary or non-pecuniary.

EXECUTIVE COMPENSATION

Table 31: Executive Compensation (Both 31.06.2009 and 30.03.2010)

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AGGREGATE AMOUNT OF REMUNERATION PAID TO ALL DIRECTORS AND OFFICERS

Table 32: Remuneration paid to directors (Both 31.06.2009 and 30.03.2010)

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REMUNERATION PAID TO DIRECTOR WHO WAS NOT AN OFFICER DURING THE LAST ACCOUNTING YEAR

The Company did not pay any remuneration to any director who was not an officer during the last accounting year.

CONTRACT WITH DIRECTOR OR OFFICER PROVIDING FOR THE PAYMENT OF FUTURE COMPENSATION

There is no contract with any Director or officer providing for the payment of any future compensation.

PAY INCREASE INTENTION

Except for normal annual increment and allowances, there is no plan for substantial pay increase to its officers and directors in the current year.

OPTIONS GRANTED TO DIRECTORS, OFFICERS AND EMPLOYEES

The Company did not grant any option to any Officer, Director and all other officers of the Company or to any other person involved with the Company.

TRANSACTION WITH THE DIRECTORS AND SUBSCRIBERS TO THE MEMORANDUM

The information related to “Transaction with the Directors and Subscribers to the Memorandum” have been detailed in the sub-section: “Certain Relationships and Related Transactions” above.

TANGIBLE ASSETS PER SHARE

Auditors’ certification to be inserted

OWNERSHIP OF THE COMPANY’S SECURITIES

Table 33: Ownership of the Company’s securities

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Hamid Fabrics Limited has conducted offering of ……………….,000 ordinary shares of Tk 100 each, at an issue price of Tk ………… each, including a premium of Tk………. per share, totaling to Tk ……………………….. through Capital Raising to institutional/individual investors and to its employees.

The ordinary shares shall be allotted at the time of allotment of shares under IPO subject to approval from SEC and some customary provisions. These shares are subject to one year lock in from the date of allotment.

SECURITIES OWNED BY THE OFFICERS

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SHAREHOLDER SHAREHOLDING 5% OR MORE

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FEATURES OF IPO

BOOK BUILDING METHOD

Book Building is a process through which an issuer attempts to determine the price to offer its security based on demand from institutional investors. Under the process, the price of an IPO share will be determined through an automated bidding to be participated by different financial institutions and then the share will be opened for the IPO participant at the cut-off price determined during the book building process. The bidding will be handled through a uniform and integrated automated system of the stock exchanges, or any other organization as decided by the Commission, especially developed for book building method. The entire procedure of price discovery under book building method is delineated below.

a. Issuer shall invite the indicative price offer from the eligible institutional investors through proper disclosure, presentation, document, seminar, road show etc.

b. The indicative price band will be fixed based on the past performance, expected future earnings of the issuer and the P/E ratio of other peer companies in the industry and the determination of indicative price involve the following institutional investors registered with or approved by SEC in this regard

- Merchant Bankers except the issue manager of the proposed issue

- Foreign institutional investors

- Recognized pension funds and provident funds

- Banks and NBFIs under regulatory control of Bangladesh Bank

- Insurance Companies regulated under Insurance Act, 1938

- Institutional venture capital and institutional investors

- Stock Dealers

- Any other artificial juridical person permitted by the SEC for this purpose

c. Issuer in association with issue manger and eligible institutional investors quote an indicative price in the prospectus with the rationale for such price and submit the prospectus to the Commission with copy to the stock exchanges.

d. The indicative price range shall be determined as per price indications obtained from at least 5 (five) eligible institutional investors covering at least 3 (three) different categories of such investors.

e. Eligible institutional investors bidding shall commence after getting consent from the Commission for this purpose. Institutional bidding period will be 3 to 5 (Three to Five) working days which may be changed with the approval of the Commission.

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

g. The indicative price shall be the basis for formal price building with an upward and downward band of 20% (Twenty Percent) of indicative price within which eligible institutional investors shall bid for the allocated amount of security.

h. 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.

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

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

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

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

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

n. The time gap between closure of bidding by Eligible Institutional Investors and subscription opening for general investors is 25 working days or as may be determined by the Commission.

o. The securities will be offered to the general investors, NRBs and Mutual Funds at the cut-off price determined during the book building process.

DETERMINATION OF OFFERING PRICE

VALUATION

Several valuation techniques reflecting both fundamental and comparative value of the Company were used to determine the indicative price for the shares of Hamid Fabrics Limited. Considering the increased earnings potential in the future stemming from the proposed Yarn Dyeing project, valuation techniques that are based on future profitability of the Company are more appropriate to value the shares of HFL.

The valuation results derived from various techniques is tabulated in the table below.

Table 34: Consolidated Pricing Matrix

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* Trailing P/E multiple is based on Annualized EPS of HFL for the period ended 31st March 2009-10

** The forward P/E multiple is based on the arithmetic mean EPS of HFL for the three year period 2010-11 to 2012-13

The valuation range for the shares of HFL is BDT 34.53 – BDT 65.41 per share. However, the indicative price is set at BDT 32.0 per share which is approximately 7.3% below the minimum value of the above range. Based on the indicative price of BDT 32.0 per share, the P/E and PBV multiples of HFL together with industry and market comparable multiples are shown below.

Table 35: Comparison Matrix

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According to the above table, the multiples used to determine the indicative price of HFL are below the market and industry parameters.

The valuation results shown in Table 39 are elaborated below under each valuation technique.

VALUATION TECHNIQUES

i. Price to Book Value Method (PBV)

The valuation based on PBV method is given below.

Table 36: Valuation based on Price to Book Value

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The valuation based on PBV multiple is BDT 65.41 per share.

Note 1: The Reserves & Surplus include the revaluation reserve of land and building of BDT 289,526,305 Million.

Note 2: Last six months average Industry PBV has been used to minimize the impact of market volatilities.

ii. Trailing Price to Earnings Multiple Method (Trailing P/E)

In this instance, the value of shares of HFL is determined by applying comparable P/E Multiples of the textile industry and the market over the trailing Earnings per Share for the 9 months period ended 31.03.2010.

Accordingly, the valuation is as follows.

Table 37: Trailing P/E based Valuation

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Based on the trailing P/E, the range for the valuation is BDT 34.53 – 45.44 per share.

iii. Valuation based on Forward P/E Multiple Method

The valuation based on forward P/E multiple uses the future earnings per share of HFL. The future profitability of HFL has been estimated including the contribution of the proposed Yarn Dyeing project.

The expansion project is assumed to be commenced upon receiving funds raised from the IPO. It is further assumed that the implementation of the project would take one year from the receipt of IPO proceeds. Accordingly, the commercial production is expected to start in the second half of FY 2011-12.

Therefore, in computing forward earnings per share, the average figures of the 3 year period FY 2010-11 to FY 2012-13 has been taken into consideration.

The valuation based on forward P/E multiple is given below.

Table 38: Forward P/E based Valuation

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Last six month’s average Market and Industry P/E multiples were used with a discount of 40% to determine the indicative price under this method.

Based on the forward P/E, the range for the valuation is BDT 40.43 – 53.20 per share.

CONSENT OF THE ELIGIBLE INSTITUTIONAL INVESTORS REGARDING INDICATIVE PRICE

To be inserted after obtaining Indicative Prices from Eligible Institutional Investors

MARKET FOR SECURITIES BEING OFFERED

The issuer shall apply to all the stock exchanges in Bangladesh within seven (7) working days from the date of consent accorded by the Commission to issue prospectus.

The issuer will apply at:

Dhaka Stock Exchange Limited.
9/E, Motijheel Commercial Area, Dhaka 1000.

And

Chittagong Stock Exchange Limited
CSE Building, 1080, Sheikh Mujib Road, Chittagong 4100

DECLARATION ABOUT LISTING OF SHARES WITH STOCK EXCHANGE(S)

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

In case of non-refund of the subscription money within the aforesaid fifteen (15) days, the company’s directors, in addition to the issuer company, shall be collectively and severally liable for refund of the subscription money, with interest at the rate of 2% (Two Percent) per month above the bank rate, to the subscribers concerned.

The Issue Manager, in addition to the Issuer Company, shall ensure due compliance of the above mentioned conditions and submit compliance report, thereon, to the Commission within seven (7) days of expiry of the aforesaid fifteen (15) days time period allowed for refund of the subscription money.

Trading and settlement regulation of the stock exchanges shall apply in respect of trading and settlement of the share of the company.

DESCRIPTION OF SECURITIES OUTSTANDING OR BEING OFFERED

Dividend, Voting, Preemption Rights

The share capital of the company is divided into ordinary shares and is eligible to receive dividend in terms of the relevant provisions of the Companies Act, 1994 and the Articles of Association of the company. All Shareholders shall have the usual voting right in person or by proxy or power of attorney in connection with, among others, selection of Directors and Auditors and other usual General Meeting whether ordinary or extraordinary. On a show of hands 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 in terms of the guidelines issued by SEC time to time.

Conversion and Liquidation Rights

If the Company at any time issues convertible preferences shares or debentures with the consent of SEC or/and other regulatory authority, such holders of securities shall be entitled to convert such securities into ordinary shares if it is so determined by the Company.

In terms of the provisions of the Companies Act, 1994, Articles of Association of the Company and other relevant rules in force, the shares of the company are freely transferable. The company shall not charge any fee for registering transfer of bonds. No transfer shall be made to firms, minors or persons of unsound mind.

Dividend Policy

1. The Company in General Meeting may declare dividends but no dividend shall exceed the amount recommended by the Directors. The dividends shall be declared on the basis of shares allotted irrespective of whether the same by fully or partly paid-up.

2. The Directors may, from time to time, pay to the members, such interim dividend, as appear to the directors to be justified by the profits of the Company.

3. a. The Directors shall have absolute discretion as to the employment of the Reserve Fund created out of the net profits of the Company.

b. No dividend shall be paid otherwise than out of the profits of the year or any other undistributed profit.

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

5. There is no limitation on payment of dividends to common stockholders.

6. The profit of the company, subject to any special right relating thereto created or authorized to be created by the Memorandum of Association and 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.

Other Rights of the Shareholders

In terms of provisions of the Companies Act 1994, Articles of Association of the Company and other relevant rules in force, the shares of the Company are transferable. The Company shall not charge any fee, other than government duties for registering transfer of shares. No transfer shall be made to a minor or person of unsound mind. The shareholders 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 Bangladesh Accounting Standards (BAS). Financial Statements will be prepared in accordance with the Bangladesh Accounting Standards, consistently applied throughout the subsequent periods and present with the objective of providing maximum disclosure as per law and Bangladesh 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 shareholder 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.

Debt Securities

The Company has not issued any debt securities and has no future plan as such within six months.

PLAN OF DISTRIBUTION

UNDERWRITING OF SHARES

Initial Public Offering (IPO) is for 38,600,000 ordinary Shares of Taka 10/- each, at an indicative price Tk 32/- each, including a premium of Tk 22/- per share amounting to Taka 1,235,200,000.00 (Taka one billion two thirty five million and two hundred thousand). As per SEC’s guideline 50% of the remaining amount i.e. 15,440,000 ordinary Shares at an indicative price of Tk 32 /- each amounting to Tk 494,080,000/- (Taka four hundred ninety four Million and eighty thousand only) has been underwritten by the following institutions:

Table 39: Underwriting of Shares

|Sl. |Name of Underwriter |Number of shares underwritten |Amount (BDT) |
| | | | |
| | | | |
| | | | |

PRINCIPAL TERMS AND CONDITIONS OF THE UNDERWRITING AGREEMENT

1) If and to the extent that the shares offered to the public by a Prospectus authorized hereunder shall not have been subscribed and paid for in cash in full by the closing date, the Company shall within 10 (Ten) days of the closure of subscription call upon the underwriter in writing with a copy of said writing to the Securities and Exchange Commission, to subscribe for the shares not subscribed by the closing date and to pay for in cash in full for such unsubscribed shares in cash in full within 15(Fifteen) days of the date of said notice and the said amount shall have to be credited into shares subscription account within the said period.

2) If payment is made by Cheque/Bank Draft by the underwriter it will be deemed that the underwriter has not fulfilled his obligation towards his underwriting commitment under the Agreement, until such time as the Cheque/Bank Draft has been en-cashed and the Company’s account has been credited.

3) In any case within 7 (Seven) days after the expiry of the aforesaid 15 (Fifteen) days, the Company shall send proof of subscription and payment by the underwriter to the Commission.

4) In the case of failure by the underwriter to pay for the shares under the terms mentioned above, the said Underwriter will not be eligible to underwrite any issue, until such time as he fulfills his underwriting commitment under the Agreement and also other penalties as may be determined by the Commission may be imposed on him.

5) In case of failure by any underwriter to pay for the shares within the stipulated time, the Company/Issuer will be under no obligation to pay any underwriting commission under the Agreement.

6) In case of failure by the Company to call upon the underwriter for the aforementioned purpose within the stipulated time, the Company and its Directors shall individually and collectively be held responsible for the consequence and/or penalties as determined by the Securities and Exchange Commission under the law may be imposed on them.

COMMISSION FOR THE UNDERWRITERS

The company shall pay to the underwriter an underwriting commission at the rate of 0.50% of 50% of the IPO amount of the issue value of shares underwritten by them out of the Public Issue.

RELATIONSHIP OF OFFICERS OR DIRECTORS OF THE UNDERWRITER(S) WITH THE MEMBER OF BOARD OF THE COMPANY

No Officer or Director of the Underwriter(s) is presently engaged as the Director of the company

ALLOTMENT, SUBSCRIPTION AND MARKET

LOCK-IN ON SPONSOR’S SHARES

All issued shares of the issuer at the time of according consent to public offering shall be subject to a lock-in period of 3 (Three) years from the date of issuance of prospectus or commercial operation, whichever comes later.

Provided that the persons, other than directors and those who hold 5% or more, who have subscribed to the shares of the Company within immediately preceding 2 (Two) years of according consent, shall be subject to a lock-in period of 1 (One) year from the date of issuance of prospectus or commercial operation, whichever comes later.

The following table indicates the pre IPO shareholders position.

Table 40: Pre IPO Shareholding position with Lock in provision

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REFUND OF SUBSCRIPTION MONEY

As per SEC Notification Dated February 9, 2010, the issuer shall refund application money to the unsuccessful applicant of the public offer by any of the following manner based on the option given by the applicant in the application form;-

(a) Through banking channel for onward deposit of the refund money into the applicant’s bank account as provided in the respective application form for subscription;

or

(b) Through issuance of refund warrant in the name and address of the applicant as provided in the respective application form for subscription:

Provided that, in case of deposit into the applicant’s bank account, the applicant will bear the applicable service charge, if any, of the applicant’s banker, and the issuer shall simultaneously issue a letter of intimation to the applicant containing, among others, the date and amount remitted with details of the bank through and to which bank such remittance has been effected.

SUBSCRIPTION BY AND REFUND TO NON-RESIDENT BANGLADESHIS (NRB)

1. A Non-Resident Bangladeshi shall apply either directly by enclosing a foreign demand draft drawn on a bank payable at Dhaka, or through a nominee by paying out of foreign currency deposit account maintained in Bangladesh or in Taka, supported by foreign currency encashment certificate issued by the concerned bank, for the value of securities applied for through crossed bank cheque marking “Account Payee only”.

2. The value of securities applied for by such person may be paid in Taka or US dollar or UK pound sterling or EURO at the rate of exchange mentioned in the securities application form.

3. Refund against oversubscription shall be made in the currency in which the value of securities was paid for by the applicant through Account Payee bank cheque payable at Dhaka with bank account number, Bank’s name and Branch as indicated in the securities application form. If the applicants’ bank accounts as mentioned in their IPO Application Forms are maintained with the Bankers to the Issue and other banks as mentioned below, refund amount of those applicants will be directly credited into the respective bank accounts as mentioned in their IPO Application Forms.

AVAILABILITY OF SECURITIES

1. Securities

Table 41: Distribution of securities

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2. All as stated in 1 (A), 1(B), 1(C) and 1(D) shall be offered for subscription and subsequent allotment by the Issuer, subject to any restriction, which may be imposed, from time to time, by the Securities and Exchange Commission.

3. Under the clause 1(A), the Institutional Investors will be allotted security on a pro-rata basis at the weighted average price of the bids that would clear the total number of securities being offered to the Institutional Investors.

4. The securities offered to the investors under clause 1(B), 1(C) and 1(D) will be at the cut-off price determined during the Book Building Process.

5. In case of over-subscription under any of the categories mentioned in the clause 1(B), 1(C) and 1(D), the Issue Manger shall conduct an open lottery of all the applications received under each category separately in accordance with the letter of consent issued by the Securities and Exchange Commission.

6. In case of under-subscription under any of the 10% category as mentioned in clause 1(B) and 1(C), the unsubscribed portion shall be added to the general public category, and, if after such addition there is over-subscription in the general public category the issuer and the issue manager shall jointly conduct an open lottery of all the applicants added together.

7. In case of under-subscription of the public offering, the unsubscribed portion of shares shall be taken up by the underwriter(s).

8. The lottery as stated in clause (5) and (6) should be conducted in the presence of the representatives of Issuer, Stock Exchange(s) and the applicants, if there be any.

ALLOTMENT

The company reserves the right of accepting any application, either in whole, or in part, successful applicants will be notified by the dispatch on an allotment letter by registered post/courier. Letter of allotment and refund warrants will be issued within 5(five) weeks from the closing of the subscription. After allotment the company will have to transfer the shares to the allotees’ Beneficiary Owners (BO) account, which has been mentioned in the application form.

The company shall issue share allotment letter to all successful applicants, within 5(five) weeks, from the date of the subscription closing date. At the same time, the unsuccessful application shall be refunded with the application money within 5 (five) weeks from the closing of the subscription date, by Account Payee Cheque, without interest payable at Dhaka/Chittagong/Khulna/Rajshahi/Barisal/ Sylhet as the case may be.

Where allotment is made, in whole or in part in respect of joint application, the allotment letter will be dispatched to the person whose name appears first in the application form notwithstanding that the shares have been allotted to the joint applicants. Where joint applicant is accepted in part, the balance of any amount paid on application will be refunded without interest to the person named first in the application form.

APPLICATION FOR SUBSCRIPTION

1. Application for shares may be made for a minimum lot of 200 units of shares to the value of BDT 6,800 (Taka Six Thousand Eight Hundred Only) and should be made on the company’s Printed Application Forms. Application Forms and Prospectus may be obtained from the Registered Office of the Company, members of Dhaka Stock Exchange Limited, Chittagong Stock Exchange Limited, or from the Bankers to the issue. In case, adequate Forms are not available, applicants may use photocopied/ cyclostyled/ handwritten/typed copies of the Forms. Applications must not be for less than 200 units of share. Any application not meeting this criterion will not be considered for allotment purpose.

2. Joint application form for more than two (2) persons will not be accepted. In the case of joint application, each party must sign the application form.

3. Application must be in full name of individuals, or limited companies, or trusts or societies, and not in the name of minors or persons of unsound mind. Applications from of insurance, financial and market intermediary companies must be accompanied by Memorandum and Articles of Association of that company.

4. An applicant cannot submit more than two applications, one in his own name and another jointly with another person. In case an applicant makes more than two applications, all the application will be treated as invalid and will not be considered for allotment purpose. In addition whole or part of application money may be forfeited by the Commission.

5. Bangladeshi Nationals (including non-resident Bangladeshi Nationals working abroad) and foreign nationals shall be entitled to apply for the share.

6. Payment for subscription by investors other than Non-Resident Bangladeshi may be made to the said branches/offices of the banks mentioned in the application forms in Cash/Cheque/Pay Order/Bank Draft. The Cheque/ Pay Order/ Bank Draft shall be made payable to the bank to which it is sent, be marked “Hamid Fabrics Ltd”, shall bear the crossing “A/C Payee Only” and must be drawn on a bank in the same town of the bank to which application form is deposited.

7. All completed application forms together with remittances for the full amount, payable on application, shall be lodged by investors other than Non-Resident Bangladeshis with any of the branches of the Bankers to the Issue.

8. A Non-Resident Bangladeshi (NRB) shall apply against the Public Offer either directly by enclosing a foreign demand draft, drawn on a bank payable at Dhaka, or through a nominee (including a Bank or a Company) by paying out of foreign currency deposit account maintained in Bangladesh, for the value of securities applied for. The value of securities applied for may be paid in Taka, US Dollars, Great Britain Pounds or Euro Dollars at the spot buying (TT Clean) rate of exchange prevailing the date of opening of subscription. Refund against over subscription of shares shall be made in the currency, in which the value of shares, applied for, was paid by the applicant. Shares application form against the quota for NRB shall be sent by the applicant directly along with a bank draft or cheque to the company at its registered office. Copies of application form and prospectus shall be available with the Bangladesh Embassy/High Commission in USA, UK, Saudi Arabia, UAE, Qatar, Kuwait, Oman, Bahrain, Malaysia, and South Korea and on the website of the SEC, Issuer Company, Issue Managers, DSE and CSE.

9. A separate escrow account has been opened by the company in compliance with letter issued by SEC/CI/IPO-113/2009/390, dated January 10, 2010 (Clause 15) for depositing bidding and subscription money by Eligible Institutional Investors (EII). The issuer has opened the account named “HAMID FABRICS EII ESCROW ACCOUNT” in XXX Bank Limited. The account no is XXXXX.

10. The IPO subscription money collected from investors (other than non-resident Bangladeshis) by the Bankers to the Issue will be remitted to the “HFL-IPO Collection Account (BDT)” Current A/C No. XXXX of XXXX Bank for this purpose and subsequently it will be in “HFL-IPO Central Account (BDT)” SND A/C No. XXXXX of XXX Bank.

11. The subscription money collected from Non-Resident Bangladeshis in US Dollars or Great Britain Pounds or Euro Dollars shall be deposited to three FC accounts opened by the Company for IPO purpose as follows:

Table 42: NRB Account Details 1

|SL |Name of the FC Accounts |Currency |Account No. |Bank |
|1. |HFL-IPO NRB Subscription |US Dollar | | |
| |Account (USD) | | | |
|2. |HFL-IPO NRB Subscription |GB Pound | | |
| |Account (GBP) | | | |
|3. |HFL-IPO NRB Subscription |Euro | | |
| |Account (EUR) | | | |

The subscription money collected from Non-Resident Bangladeshis in Taka shall be deposited in the following current account opened by the company for IPO purpose

Table 43: NRB Account Details 2

|Name of the Account |Currency |Account No. |Bank |
|HFL-IPO NRB Subscription |BDT | | |
|Account (BDT) | | | |

12. In the case of over-subscription of securities to the NRB applicants, refund shall be made by Hamid Fabrics Limited out of the “FC Account for IPO NRB Subscription”. Hamid Fabrics Limited has already opened the aforesaid FC Accounts & Current Account and shall close these accounts after refund of over-subscription, if any.

13. Applications not in conformity with the above requirements and the instructions printed on the applicant form are liable to be rejected.

TRADING AND SETTLEMENT

Trading and settlement regulation of the Stock Exchanges shall apply in respect of trading and settlement of the shares of the Company.

The issues shall be placed in Category ‘N’ with DSE and CSE

BANKERS TO THE ISSUE

MATERIAL CONTRACTS AND OTHERS

MATERIAL CONTRACTS

i. Underwriting Agreements between the Company and the Underwriters. ii. Issue Management Agreement between the Company and NDB Capital Limited iii. Contract between the company and the Central Depository Bangladesh Limited (CDBL) iv. Registrar to the Issue Agreement with the Company and Satcom It Limited

The copies of the aforementioned contracts and documents and a copy of Memorandum of Association and Articles of Association of the Company and the Consent Order from SEC may be inspected, on any working day, during office hours, at the Registered Office of the Company and the ISSUE MANAGER.

MANAGER TO THE ISSUE

NDB Capital Limited, Bilquis Tower (5th floor), Plot-06, Gulshan-2, Dhaka-1212, Bangladesh is the Manager to the Issue. The Client shall pay NDB Capital an Issue Management Fee of 1.0% on the aggregate quantum of funds raised through the IPO.

REGISTRAR TO THE ISSUE

XXX Ltd, (Address), is acting as the Registrar to the Issue for the IPO of Hamid Fabrics Ltd.

COMMISSION TO THE BANKERS TO THE ISSUE

Commission at the rate of 0.10% of the amount collected will be paid to the Bankers to the Issue for the services to be rendered by them.

CORPORATE DIRECTORY

Registered and Corporate Office Hamid Fabrics Limited [CORPORATE ADDRESS]

Auditors

Legal Advisor to the Issue

Issue Manager NDB Capital Limited, Bilquis Tower (5th floor), Plot-06, Gulshan-2, Dhaka-1212, Bangladesh

Registrar to the Issue

Company’s Compliance Officer

All investors are hereby informed that Mr. …………… would be designated as Compliance Officer who will monitor the compliance of the acts, and rules, regulations, notifications, guidelines, conditions, orders/directions etc. issued by the Commission and/or stock exchange(s) applicable to the conduct of the business activities of the Company so as to promote the interest of the investors in the security issued by the Company, and for redressing investors’ grievances.

ADDITIONAL DISCLOSURES

STATEMENT REGARDING ANNUAL GENERAL MEETING (Jewel would update)

The Company incorporated on November 26, 1998 and has been holding Annual General Meeting regularly since its inception. The details about Annual General Meeting of the company are as follows:
|Year |No. of AGM |Date of Holding AGM |Declared |Declared |Status |
| | | |Cash Dividend |Stock Dividend | |
|1999 |2nd | | | |Regular |
|2000 |3rd | | | |Regular |
|2001 |4th | | | |Regular |
|2002 |5th | | | |Regular |
|2003 |6th | | | |Regular |
|2004 |7th | | | |Regular |
|2005 |8th | | | |Regular |
|2006 |9th | | | |Regular |
|2007 |10th | | | |Regular |
|2008 |11th | | | |Regular |
|2009 |12th | | | |Regular |

AUDITORS’ CERTIFICATE REGARDING PROJECTED EARNINGS PER SHARE AS PER RULES 8(B)(16)(1) (B)(III) OF THE PUBLIC ISSUE RULES 2006 OF SECURITIES AND EXCHANGE COMMISSION

-----------------------
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Warping

Sizing

Drawing & Denting

Tying

Weaving

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Prospectus for Ath Fiji

...AMALGAMATED TELECOM HOLDINGS LIMITED AND SUBSIDIARY COMPANIES 2nd Floor Harbour Front Rodwell Road | Suva | Fiji Islands +679 330 8700 +679 330 8044 | AMALGAMATED TELECOM HOLDINGS LIMITED AND SUBSIDIARY COMPANIES 2nd Floor Harbour Front Rodwell Road | Suva | Fiji Islands +679 330 8700 +679 330 8044 | 1.0 EXECUTIVE SUMMARY Trends and ratios calculated for the historical years 2006-2010 has been fluctuating, indicating effects of elements such as global recession, devaluation of currency, political situation, slow economic growth and competition. A thorough analysis was done on the internal and external factors and duly taken into consideration when forecasting numbers for 2011 - 2015. For comparison, a sensitivity analysis is carried out to show the company performances during good times and bad times. Telstra Corporation Limited is taken as a benchmark due to its huge success in Australia. The trends show very positive results indicating management efficiency, asset efficiency and operations efficiency. ATH beta was calculated against the STRI values of the market and ATH. This was then used to determine WACC of the company. Beta was found to be 0.6 indicating ATH’s lower risk portfolio compared to the market. Required rate of return was calculated to be 9%. A discount factor of 7% was obtained, as the company has about 1:1 debt to equity funding. Some strategies used to arrive at forecast......

Words: 5265 - Pages: 22