HERRING PROSPECTUS Aman Cotton Fibrous Limited

328 Pages·2017·2.97 MB·English

Red-HHeerrrriinngg PPrroossppeeccttuussofACFL

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“““IIInnnvvveeessstttmmmeeennnttt iiinnn cccaaapppiiitttaaalll mmmaaarrrkkkeeettt iiinnnvvvooolllvvveeesss ccceeerrrtttaaaiii nnn dddeeegggrrreeeeee ooofff rrriiissskkksss... TTThhheee iiinnnvvveeessstttooorrrsss aaarrreee rrreeeqqquuuiiirrreeeddd tttooo rrreeeaaaddd
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ab ility before making tthheeiirr iinnvveessttmmeenntt ddeecciissiioonnss..””

RED--HERRING PROSPECTUS
Of
AAmmaann CCoottttoonn FFiibbrroouuss LLiimmiitteedd
f

PPUUBBLLIICC IISSSSUUEE OOFF [*] ORDINARY SHARES
OOOFFFFFFEEERRR PPPRRRIIICCCEEE TTTKKK... [[[***]]] EEEAAACCCHHH IIINNNCCCLLLUUUDDDIIINNNGGG PPPRRREEEMMMIIIUUUMMM OOOFFF TTTKKK... [[[***]]] PPPEEERRR SSSHHHAAARRREEE,,, TTTOOOTTTAAALLL SSSIIIZZZEEE OOOFFF FFFUUUNNNDDD TTTOOO BBBEEE
RAISED TK. 800,000,000.00

OOppeenniinngg ddaattee ooff SSuubbssccrription: ………………………. …………………, 2017
CClloossiinngg ddaattee ooff SSuubbssccrriippttiioonn (Cut-off date): …………………….…… , 2017

MANAGER TO THE ISSUE
ICB Capital Management Limited
Green City Edge (5th & 6th Floor), 89 Kakrail,
Dhaka-1000, www.icml.com.bd

CREDIT RATING BY
CCrreeddiitt RRaattiinngg AAggeennccyy ooff BBaannggllaaddeesshh LLiimmiitteedd ((CCRRAABB))

CREDIT RATING STATUS
Date of Rating: 1199 JJaannuuaarryy 22001177
Long Term Short Term
Rating A2 ST-2
Validity 18 January 2018

Issue DDaattee ooff the Prospectus: …………………………..
Red-Herring ProspectusofACFL

Preliminary Information and Declarations

I) Name(s), address(s), telephone number(s), web address(s), e-mail(s), fax number(s) and contact persons
of the issuer, issue manager(s), underwriter(s), auditors, credit rating company and valuer, where
applicable;

Issuer Company Contact person Telephone, Fax Number, email &
web address
Aman Cotton Fibrous Limited
Tel: [phone],
2 Ishakha Avenue,
Noornavi Bhuiyan, FCA FAX: [phone]
Sector - 06, Uttara,
Chief Financial Officer E-mail:[email protected]
Dhaka - 1230, Bangladesh
Web: www.amancotton.com

Manager to the Issue Contact person Telephone, Fax Number, email &
web address
ICB Capital Management Ltd. Md. Sohel Rahman Tel: [phone],
Green City Edge (5th & 6th Floor), Chief Executive Officer 8300555, 8300367
89 Kakrail, Dhaka-1000. (Additional Charge) FAX: [phone]
E-mail:[email protected]
Web: www.icml.com.bd

Underwriters Contact person Telephone, Fax Number, email &
web address
ICB Capital Management Ltd. Md. Sohel Rahman Tel: [phone],
Green City Edge (5th & 6th Floor), Chief Executive Officer (Additional 8300555, 8300367
89 Kakrail, Dhaka-1000. Charge) FAX: [phone]
E-mail:[email protected]
Web: www.icml.com.bd
Roots Investment Limited Mohammad Sarwar Hossain Tel: [phone],
Diganto Tower, 1st Floor Managing Director(Acting) [phone]
12/1, R.K. Mission Road, [phone],
Motijheel, Dhaka, 1203 FAX: [phone]
E-mail:[email protected]
Web: www.rootsinvestment.com
Prime Bank Investment Limited Md. Tabarak Hossain Bhuiyan Tel: [phone], 88 02
Peoples Insurance Bhaban (11th Floor) Managing Director & CEO 9557688
36, Dilkusha C/A, Dhaka-1ooo Fax : [phone]Email.
[email protected]
www.pbil.com.bd
Bengal Investments Limited M.M. Mostafa Bilal Tel: [phone],
Bilquis Tower (8th Floor) CEO & Managing Director FAX: [phone]
Plot # 6, Road 46, Gulshan Circle 2 E-mail: info@bengal-
Dhaka-1212 investments.com
www.bengal-investments.com
Lanka Bangla Investments Limited Khandakar Kayes Hasan, CFA [phone], 9561238
City Center, Level-24 Chief Executive Officer Fax : [phone]
90/1 Motijheel C.A, Dhaka –1000. Email. kayes@lankabangla-
investments.com
www.lankabangla-investments.com
Auditor Contact person Telephone, Fax Number, email &
web address
Mahfel Huq & Co.
Chartered Accountants Tel: [phone]
Md. Abu Kaiser FCA
BGIC Tower (4th Floor) E-mail: [email protected]
Partner
34, Topkhana Road. Dhaka-1000 Web: www.mahfelhuq.com

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Red-Herring ProspectusofACFL

Credit Rating Company Contact person Telephone, Fax Number, email & web
address
Credit Rating Agency of Bangladesh Ltd
(CRAB) Razib Ahmed Tel: [phone],
Asst. Vice President & Co-Head [phone]
Sena Kalyan Bhaban, 195 Motijheel C/A
(Corporate Rating Unit) Fax: [phone]
Floor 4, Suite 403
Email:[email protected]
Dhaka-1000
www.crabrating.com

Valuer Contact person Telephone, Fax Number, email & web
address
S.H. Khan & Co.
Chartered Accountants Tel: [phone]
Md. Shahadat Hossain Khan FCA FAX: [phone]
Raz Bhaban (1st Floor), 29, Dilkusha C/A,
Partner mail:[email protected]
Dhaka-1000

ii) "A person interested to get a Prospectus may obtain from the issuer and the issue manager"

iii) “If you have any query about this document, you may consult the issuer, issue manager and underwriter”

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IV) “CONSENT OF THE BANGLADESH SECURITIES AND EXCHANGE COMMISSION HAS BEEN OBTAINED TO THE

ISSUE OR OFFER OF THESE SECURITIES UNDER THE SECURITIES AND EXCHANGE ORDINANCE, 1969, AND THE

BANGLADESH SECURITIES AND EXCHANGE COMMISSION (PUBLIC ISSUE) RULES, 2015. IT MUST BE DISTINCTLY

UNDERSTOOD THAT IN GIVING THIS CONSENT THE COMMISSION DOES NOT TAKE ANY RESPONSIBILITY FOR THE

FINANCIAL SOUNDNESS OF THE ISSUER COMPANY, ANY OF ITS PROJECTS OR THE ISSUE PRICE OF ITS

SECURITIES OR FOR THE CORRECTNESS OF ANY OF THE STATEMENTS MADE OR OPINION EXPRESSED WITH

REGARD TO THEM. SUCH RESPONSIBILITY LIES WITH THE ISSUER, ITS DIRECTORS, CHIEF EXECUTIVE OFFICER,

MANAGING DIRECTOR, CHIEF FINANCIAL OFFICER, COMPANY SECRETARY, ISSUE MANAGER, ISSUE MANAGER’S

CHIEF EXECUTIVE OFFICER,UNDERWRITERS, AUDITOR(S), VALUER AND/OR CREDIT RATING COMPANY(IF ANY)."

V) Risks in relation to the First Issue

“This being the first issue of the issuer, there has been no formal market for the securities of the issuer. The face

value of the securities is Tk. 10.00 (Ten) and the issue price is Tk. [.], i.e. ‘[.] - times’ of the face value. The issue price

has been determined and justified by the issuer and the issue manager or bidding by the eligible investors as stated

under the paragraph on “Justification of Issue Price” should not be taken to be indicative of the market price of the

securities after listing. No assurance can be given regarding an active or sustained trading of the securities or the

price after listing”

VI) General Risk

“Investment in securities involves a degree of risk and investors should not invest any funds in this offer unless they

can afford to take the risk of losing their investment. Investors are advised to read the risk factors carefully before

taking an investment decision in this offer. For taking an investment decision, investors must rely on their own

examination of the issuer and the offer including the risks involved. The securities have not been recommended by

the Bangladesh Securities and Exchange Commission (BSEC) nor does BSEC guarantee the accuracy or adequacy of
this document. Specific attention of investors is invited to the statement of ‘risk factors’ given on page number(s) 135-
147.”
VII) Aman Cotton Fibrous Limited's Absolute Responsibility
"The issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this red-herring
prospectus contains all material information with regard to the issuer and the issue, that the information contained in
the red-herring prospectus are true, fair and correct in all material aspects and are not misleading in any respect, that
the opinions and intentions expressed herein are honestly held and that there are no other facts, the omission of
which make this document as a whole or any of such information or the expression of any such opinions or intentions
misleading in any material respect."
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Red-Herring ProspectusofACFL

AVAILABILITY OF RED-HERRING PROSPECTUS

(i) Names, addresses, telephone numbers, fax numbers, website addresses and e-mail addresses and names of
contact persons of the institutions where the prospectus and abridged version of prospectus are available in hard
and soft forms;

The Red-Herring Prospectus and Abridge version of Red-Herring Prospectus of Aman Cotton Fibrous Limited are available in hard and
soft forms at the following addresses

Issuer Company Contact person Telephone, Fax Number, email & web
address
Aman Cotton Fibrous Limited Tel: [phone],
2 Ishakha Avenue,
Noornavi Bhuiyan, FCA FAX: [phone]
Sector - 06, Uttara,
Chief Financial Officer E-mail:[email protected]
Dhaka - 1230, Bangladesh
Web: www.amancotton.com

Manager to the Issue Contact person Telephone, Fax Number, email & web
address
ICB Capital Management Ltd. Md. Sohel Rahman Tel: [phone],
Green City Edge (5th & 6th Floor), 89 Kakrail, Chief Executive Officer (Additional 8300367
Dhaka-1000. Charge) FAX: [phone]
E-mail:[email protected]
Web: www.icml.com.bd

Registrar to the Issue Contact person Telephone, Fax Number, email & web
address
Prime Bank Investment Limited Tel: [phone]
Peoples Insurance Bhaban (11th Floor) Md. Tabarak Hossain Bhuiyan Fax : [phone]
36, Dilkusha C/A, Dhaka-1ooo Managing Director & CEO Email. [email protected]
www.pbil.com.bd

Underwriters Contact person Telephone, Fax Number, email & web
address
ICB Capital Management Ltd. Md. Sohel Rahman Tel: [phone],
Green City Edge (5th & 6th Floor), Chief Executive Officer (Additional 8300367
89 Kakrail, Dhaka-1000. Charge) FAX: [phone]
E-mail:[email protected]
Web: www.icml.com.bd
Roots Investment Limited Mohammad Sarwar Hossain Tel: [phone]
Diganto Tower, 1st Floor Managing Director (Acting) [phone],
12/1, R.K. Mission Road, FAX: [phone]
Motijheel, Dhaka, 1203 E-mail:[email protected]
Web: www.rootsinvestment.com
Prime Bank Investment Limited Md. Tabarak Hossain Bhuiyan Tel: [phone]
Peoples Insurance Bhaban (11th Floor) Managing Director & CEO Fax : [phone]
36, Dilkusha C/A, Dhaka-1ooo Email. [email protected]
www. primebank.com.bd,
www.pbil.com.bd
Bengal Investments Limited M.M. Mostafa Bilal Tel: [phone],
Bilquis Tower (8th Floor) CEO & Managing Director FAX: [phone]
Plot # 6, Road 46, Gulshan Circle 2 E-mail: [email protected]
Dhaka-1212 www.bengal-investments.com
Lanka Bangla Investments Limited KhandakarKayesHasan, CFA [phone], 9561238
City Center, Level-24 Chief Executive Officer Fax : [phone]
90/1 Motijheel C.A, Dhaka –1000. Email. kayes@lankabangla-
investments.com
www.lankabangla-investments.com

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Red-Herring ProspectusofACFL

Telephone, Fax Number, email & web
Stock Exchanges Contact person
address
Dhaka Stock Exchange Ltd (DSE) Tel: [phone]
DSE Library, Research and Information [phone]
Department Md. Afzalur Rahman Fax: [phone]
9/F, Motijheel C/A, Dhaka-1000. Manager [phone]
E-mail: [email protected]; web:
www.dsebd.org
Chittagong Stock Exchange Ltd (CSE) Tel: [phone]
CSE Building, 1080, Sk. Mujib Road [phone]
Agrabad, Chittagong -4100 Fax: [phone]
Mohammed JabedSarwar
Dhaka Liaison Office: [phone]
Assistant Manager
Eunoos Trade Center (Level-15) E-mail: [email protected];
52-53 Dilkusha C/A, Dhaka-1000. Web: www.cse.com.bd

Prospectus is also available on the websites of Aman Cotton Fibrous limited (www.amancotton.com), ICB Capital
Management Limited (www.icml.com.bd), BSEC (www.sec.gov.bd), DSE (www.dsebd.org), CSE (www.csebd.com)
and Public Reference room of the Bangladesh Securities and Exchange Commission (BSEC) for reading and studying.

ii) Names and dates of the newspapers where abridged version of prospectus was published

Sl. No. Name of the News paper Date of Publication Page number of the newspaper
01
02
03
04

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Red-Herring ProspectusofACFL

iii) Definitions and Acronyms or Elaborations

Unless the context otherwise indicates, requires or implies, the following terms shall have the meanings set forth below in
this Draft Red-Herring Prospectus. References to statutes, rules, regulations, guidelines and policies will be deemed to
include all amendments and modifications notified thereto.

Term Description
ACFL : Aman Cotton Fibrous Limited
Allotment : Letter of Allotment for Shares
BERC : Bangladesh Energy Regulatory Commission
BSEC : Bangladesh Securities and Exchange Commission
BAS : Bangladesh Accounting Standards
BB : Bangladesh Bank
BSA : Bangladesh Standard of Auditing
BO A/C : Beneficiary Owner’s Account or Depository Account
CDBL : Central Depository Bangladesh Limited
Certificate : Share Certificate
CIB : Credit Information Bureau
Commission : Bangladesh Securities and Exchange Commission
Companies Act : Companies Act, 1994 (Act No. XVIII of 1994)
CSE : Chittagong Stock Exchange Limited
Depository Act : Depository Act, 1999
DSE : Dhaka Stock Exchange Limited
EPS : Earnings Per Share
FC Account : Foreign Currency Account
FI : Financial Institution
GOB : Government of The People’s Republic of Bangladesh
IAS : International Accounting Standards
IPO : Initial Public Offering
Issue : Public Issue of Shares of Aman Cotton Fibrous Limited
Issuer : Aman Cotton Fibrous Limited
NAV : Net Asset Value
NBR : National Board of Revenue
NRB : Non-Resident Bangladeshi
Offer Price : The Price of the Shares of Aman Cotton Fibrous Limited being Offered
Ordinance : Securities and Exchange Ordinance, 1969
P/BV : Price to Book Value
P/E : Price Earnings Ratio
PTS : Primary Textile Sector
Registered Office : Head Office of the Company
RMG : Ready-Made Garments
RJSC : Registrar of Joint Stock Companies & Firms
Securities/Shares : Shares of Aman Cotton Fibrous Limited
Sponsors : The Sponsor Shareholders of Aman Cotton Fibrous Limited
SND Accounts : Short Notice Deposit Account
Stockholders : Shareholders
Subscription : Application Money
WTP : Water Treatment Plant

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Red-Herring ProspectusofACFL

TABLE OF CONTENTS

Particulars Page No.
CHAPTER I EXECUTIVE SUMMARY 1-4
About the industry 1
About the Issuer 1
Financial Information 1
Features of the issue and its objects 2
Legal and Other Information 2
Promoters’ background 2-3
Capital structure and history of capital raising 4
Summary of Valuation Report of Securities 4
CHAPTER II CONDITIONS IMPOSED BY THE COMMISSION 5-7
Disclosure In Respect Of Issuance Of Security In Demat Form 5
Conditions Under 2cc Of The Securities And Exchange Ordinance, 1969 5-7
CHAPTER III DECLARATION AND DUE DILIGENCE CERTIFICATES 8-15
Declaration About The Responsibility Of The Directors, Including The Ceo Of The Issuer In 8
Respect Of The Prospectus
Due Diligence Certificate By Issue Manager 9-10
Due Diligence Certificate By The Underwriter 11-15
CHAPTER IV ABOUT THE ISSUER 16-17
CHAPTER V CORPORATE DIRECTORY OF THE ISSUER 18
CHAPTER VI DESCRIPTION OF THE ISSUER 19-80
Summary of the Industry 19
Summary of consolidated financial, operating and other Information 19
General Information 19-25
Capital Structure 26-31
Description of the Business 32-40
Description of Property 40-56
Plan of Operation and Discussion of Financial Condition 57-80
CHAPTER MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION 81-84
VII
Overview of business and strategies 81
SWOT analysis 81-82
Analysis of the financial statements of last five years with reason(s) of fluctuating 83-84
revenue/sales, other income, total income, cost of material, finance cost, depreciation
and amortization expense, other expense; changes of inventories, net profit before & after
tax, EPS etc.
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Red-Herring ProspectusofACFL

Known trends demands, commitments, events or uncertainties that are likely to 84
have an effect on the company’s business.
Trends or expected fluctuations in liquidity 84
Off-balance sheet arrangements those have or likely to have a current or future effect on 84
financial condition.
CHAPTER VIII DIRECTORS AND OFFICERS 85-99
Name, Father’s name, age, residential address, educational qualification, experience and 85-94
position of each of the directors of the company and any person nominated/represented to
be a director, showing the period for which the nomination has been made and the name of
the organization which has nominated him;
Changes in the key management persons during the last three years 94
A profile of the sponsors including their names, father’s names, age, personal addresses, 95-97
educational qualifications, and experiences in the business, positions/posts held in the past,
directorship held, other ventures of each sponsor and present position
If the present directors are not the sponsors and control of the issuer was acquired within 98
five years immediately preceding the date of filing Red-Herring Prospectus details regarding

the acquisition of control, date of acquisition, terms of acquisition, consideration paid for
such acquisition etc.
If the sponsors/directors do not have experience in the proposed line of business, the fact 98
explaining how the proposed activities would be carried out/managed
Interest of the Key management persons 98
All Interest and facilities enjoyed by the directors, whether pecuniary or non-pecuniary 98
Number of Shares held and percentage of Shareholding (Pre issue) 99
Changes in the Board of Directors in last three years 99
Director's engaged with similar business 99
CHAPTER IX CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 100-102
CHAPTER X EXECUTIVE COMPENSATION 103-104
The total amount of remuneration/salary/perquisites paid to the top five salaried officers of the 103
issuer in the last accounting year and the name and designation of each such officer:
Aggregate amount of remuneration paid to all directors and officers as a group during the last 103
accounting year:
If any shareholder director received any monthly salary/perquisite/benefit it must be mentioned 103
along with date of approval in AGM/EGM, terms thereof and payments made during the last
accounting year:
The board meeting attendance fees received by the director including the managing director 104
along with date of approval in AGM/EGM:
Any contract with any director or officer providing for the payment of future compensation 104
If the issuer intends to substantially increase the remuneration paid to its directors and officers 104
in the current year, appropriate information regarding thereto:
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Red-Herring ProspectusofACFL

Any other benefit/facility provided to the above persons during the last accounting year 104
CHAPTER XI OPTIONS GRANTED TO DIRECTORS, OFFICERS AND EMPLOYEES 105
CHAPTER XII TRANSACTION WITH THE DIRECTORS AND SUBSCRIBERS TO THE MEMORANDUM 106-107
CHAPTER XIII OWNWRSHIP OF THE COMPANY’S SECURITIES 108-114

The names, addresses, BO ID Number of all shareholders of the company before IPO, 108
indicating the amount of securities owned and the percentage of the securities represented by
such ownership:
There shall also be a table showing the name and address, age, experience, BO ID Number, 109-112
TIN number, numbers of shares held including percentage, position held in other companies of
all the directors before the public issue:
The average cost of acquisition of equity shares by the directors certified by the auditors 113
A detail description of capital built up in respect of shareholding (name-wise) of the issuer(cid:1)s 113-114
sponsors/ directors. In this connection, a statement to be included:
Detail of shares issued by the company at a price lower than the issue price: 114
History of significant (5% or more) changes in ownership of securities from inception 114
CHAPTER XIV CORPORATE GOVERNANCE 115-123
Management disclosure regarding compliance with the requirements of Corporate 115
Governance Guidelines of the Bangladesh Securities and Exchange Commission (BSEC);
A compliance report of Corporate Governance requirements certified by competent authority 115-121
Details relating to the issuer's audit committee and remuneration committee, including the 122-123
names of committee members and a summary of the terms of reference under which the
committees operate.
CHAPTER XV VALUATION REPORT OF SECURITIES PREPARED BY THE ISSUE MANAGER 124-128
CHAPTER XVI DEBT SECURITIES 129
CHAPTER XVII PARTIES INVOLVED AND THEIR RESPONSIBILITIES 129
CHAPTER MATERIAL CONTRACTS 130-133
XVIII
CHAPTER XIX OUTSTANDING LITIGATIONS, FINE OR PENALTY 134
CHAPTER XX RISK FACTORS AND MANAGEMENT’S PERCEPTIONS ABOUT THE RISKS 135-147
Internal risk factors may include, among others: 135-142
External risk factors may include among others: 143-147
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