“cyuwRevRv‡i wewb‡qvM SzuwKc~Y©| †R‡b I ey‡S wewb‡qvM Ki~b|” ―Investment in capital market involves certain degree of risks. The investors are required to read the prospectus and risk factors carefully, assess their own financial conditions and risk taking ability before making their investment decisions.‖ PROSPECTUS of Yeakin Polymer Limited ISSUE SIZE: PUBLIC ISSUE OF 20,000,000 (TWO CRORE) ORDINARY SHARES OF TK.10.00 EACH AT PAR OF TOTALING TK. 200,000,000.00 (TWENTY CRORE). OPENING AND CLOSING DATE OF SUBSCRIPTION: Opening date of subscription: July 10, 2016 Closing date of subscription (Cut-off date): July 20, 2016 MANAGERS TO THE ISSUE: IMPERIAL CAPITAL LIMITED FAS CAPITAL MANAGEMENT LIMITED Saiham Sky View Tower (3rd Floor), Zahed Plaza (5th Floor), 45 Bijoy Nagar, Dhaka-1000. 30 Gulshan Avenue North C/A, Dhaka-1212. Tel: +88-02-9361870 Tel: +88-02-8834253-4 Fax: +88-02-9361870 (Ext.-102) Fax: +88-02-8834456 E-mail: [email protected] E-mail: [email protected] Web: www.imperialcapital.org Web:www.fcmlbd.com ISSUE DATE OF THE PROSPECTUS: June 13, 2016 Page | 1 Preliminary Information and Declarations: NAME & ADDRESS CONTACT PERSON TELEPHONE & FAX NUMBER, E-MAIL, WEB ADDRESS ISSUER Tel: +88-02-8314498 YEAKIN POLYMER LIMITED (YPL) Md. Akhtaruzzaman Fax: +88-02-9359526 83, Siddheswari Circular Road, Manhattan Tower (6th Company Secretary Email: [email protected] Floor) Malibagh, Dhaka-1217. Web: www.yeakingroupbd.com ISSUE MANAGERS Tel: +88-02-9361870 IMPERIAL CAPITAL LIMITED Md. Salauddin Sikder FCMA Fax: +88-02-9361870 (Ext.-102) Saiham Sky View Tower (3rd Floor), CEO & Managing Director E-mail: [email protected] 45 Bijoy Nagar, Dhaka-1000 Web: www.imperialcapital.org Tel: +88-02-8834253-4 FAS CAPITAL MANAGEMENT LIMITED Md. Shahidul Alam Fax: +88-02-8834456 Zahed Plaza (5th Floor), Chief Executive Officer (C.C.) E-mail:[email protected] 30 Gulshan Avenue North C/A, Dhaka-1212. Web:www.fcmlbd.com UNDERWRITERS Tel: +88-02-7169428 BMSL INVESTMENT LIMITED Md. Riyad Matin Fax: +88-02-9570624 Sadharan Bima Tower (7th Floor), Managing Director Email: [email protected] 37/A Dilkusha C/A, Dhaka-1000. Web: www.bmslinvestment.com Tel: +88-02-9560198, +88-02-9515071 AIBL Capital Management Limited Md. Golam Sarwar Bhuiyan Fax: +88-02-7170391 Peoples Insurance Bhaban (7th Floor), Chief Executive Officer E-mail: [email protected] 36 Dilkusha C/A, Dhaka-1000. Web: www.al-arafahbank.com Tel: +88-02-9004923 GRAMEEN CAPITAL MANAGEMENT LIMITED Mohammed Ahsan Ullah Fax: +88-02-8057618 Grameen Bank Complex (10th Floor), Managing Director Email: [email protected] Mirpur-2, Dhaka-1216 Web: www.grameencapitalbd.org AUDITOR Artisan Tel: +88-02-8189883 Chartered Accountants A F M Alamgir FCA Fax: +88-02-8180187 BSEC Bhaban (Level-10), 102, Kazi Nazrul Islam Avenue Chief Executive Partner Email:[email protected] Kawran Bazar, Dhaka-1215 Web: www.artisan-ca.com A person interested to get a prospectus may obtain from the issuer and the issue managers. ―If you have any query about this document, you may consult the issuer, issue manager and underwriter‖ Page | 2 ―CONSENT OF THE BANGLADESH SECURITIES AND EXCHANGE COMMISSION HAS BEEN OBTAINED TO THE ISSUE/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) "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. 10.00, i.e. of the face value. The issue price has been determined and justified by the issuer and the issue managers 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." "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) 104-110" "The issuer, having made all reasonable inquiries, accepts responsibility for and confirms that this prospectus contains all material information with regard to the issuer and the issue, that the information contained in the 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." Page | 3 AVAILABILITY OF PROSPECTUS The Prospectus and abridged version prospectus in hard and soft forms of the Company shall be obtained from the following addresses: NAME & ADDRESS CONTACT PERSON TELEPHONE & FAX NUMBER, E-MAIL, WEB ADDRESS ISSUER Tel: +88-02-8314498 YEAKIN POLYMER LIMITED (YPL) Md. Akhtaruzzaman Fax: +88-02-9359526 83, Siddheswari Circular Road, Manhattan Tower (6th Floor) Company Secretary Email: [email protected] Malibagh, Dhaka-1217. Web: www.yeakingroupbd.com ISSUE MANAGERS Tel: +88-02-9361870 IMPERIAL CAPITAL LIMITED Md. Salauddin Sikder FCMA Fax: +88-02-9361870 (Ext.-102) Saiham Sky View Tower (3rd Floor), CEO & Managing Director E-mail: [email protected] 45 Bijoy Nagar, Dhaka-1000. Web: www.imperialcapital.org Tel: +88-02-8834253-4 FAS CAPITAL MANAGEMENT LIMITED Md. Shahidul Alam Fax: +88-02-8834456 Zahed Plaza (5th Floor), Chief Executive Officer (C.C.) E-mail: [email protected] 30 Gulshan Avenue North C/A, Dhaka-1212. Web: www.fcmlbd.com STOCK EXCHANGES Tel: +88-02-9564601, 9576210-18 DHAHA STOCK EXCHANGE LIMITED Afzalur Rahaman Fax: +88-02-9564727, +88-02-9569755 DSE LIBREY, Manager E-mail: [email protected] 9/F Motijheel C/A, Dhaka-1000 Web: www.dsebd.org CHITTAGONG STOCK EXCHANGE LIMITED Tel: 031-714632-3 CSE LIBREY, Mohammed Jabed Sarwar Fax: 031-714101 CSE Building, 1080, Sheikh Mujib Road Agrabad, Assistant Manager E-mail: [email protected] Chittagong- 4100. Web: www.cse.com.bd Prospectus would also be available on the web sites of BSEC (www.secbd.org) at the Public Reference Room of the Bangladesh Securities and Exchange Commission (BSEC) for reading and studying. Names and dates of the newspapers where abridged version of prospectus was published: Sl. No. Newspaper Name Date 1 2 3 4 Page | 4 Definitions and Acronyms/Elaborations A I AGM Annual General Meeting IBBL Islami Bank Bangladesh Ltd. Allotment Allotment of shares ICL Imperial Capital Limited IPO Initial Public Offering B Issue Imperial Capital Limited & FAS Managers Capital Management Limited BAS Bangladesh Accounting Standards Issuer Yeakin Polymer Limited L BDT Bangladeshi Taka BO A/C Beneficiary Owner's Account L/C Letter of Credit BOI Board of Investment L.S. Lump-Sum Bangladesh Plastic Goods Manufacturers & BPGMEA Exporters Association N BB Bangladesh Bank Bangladesh Securities and Exchange BSEC NAV Net Asset Value Commission NBR National Board of Revenue C NRB Non Resident Bangladeshi Bangladesh Securities and Exchange Commission NBFI Non-Banking Financial Institution Commission O CDBL Central Depository Bangladesh Limited CFO Chief Financial Officer Offering Price Price of the Securities of YPL CIB Credit Information Bureau P CSE Chittagong Stock Exchange Limited Certificate Share Certificate PE Price to Earnings PP Polypropylene D R DSE Dhaka Stock Exchange Limited Registered Registered Office of YPL Office E Registrar of Joint Stock Companies RJSC and Firms EPB Export Promotion Bureau S EU European Union ETP Effluent Treatment Plant Sponsors The sponsor shareholders of YPL Exchanges Stock Exchanges STD A/C Short Term Deposit Account F T FCML FAS Capital Management Limited FC A/C Foreign Currency Account TPMC Thermo Plastic Molding Compound U FDR Fixed Deposit Receipt FOB Free on Board USD United States Dollar FY Fiscal Year V FIBC Flexible Intermediate Bulk Container VAT Value Added Tax G Y GBP Great Britain Pound GOB Government of Bangladesh YPL Yeakin Polymer Limited Page | 5 Table of Contents CHAPTER (I): EXECUTIVE SUMMARY ....................................................................................................... 8 (a) About the industry: ............................................................................................................................. 8 (b) About the Issuer: ................................................................................................................................. 8 (c) Financial Information: ....................................................................................................................... 8 (d) Features of the issue and its objects: ................................................................................................. 9 (e) Legal and other Information: ............................................................................................................ 9 (f) Promoters‘ background: .................................................................................................................. 10 (g) Capital structure and history of capital raising: ........................................................................... 11 (h) Summary of Valuation Report of securities: ................................................................................. 11 CHAPTER (II): CONDITIONS IMPOSED BY THE COMMISSION IN THE CONSENT LETTER .............. 12 CHAPTER (III): DECLARATION AND DUE DILIGENCE CERTIFICATES ................................................. 18 CHAPTER (IV): ABOUT THE ISSUER ......................................................................................................... 25 CHAPTER (V): CORPORATE DIRECTORY OF THE ISSUER ..................................................................... 27 CHAPTER (VI): DESCRIPTION OF THE ISSUER ........................................................................................ 28 (a) Summary: ......................................................................................................................................... 28 (b) General Information: ...................................................................................................................... 28 (c) Capital Structure: ............................................................................................................................ 32 (d) Description of Business: .................................................................................................................. 40 (e) Description of Property: .................................................................................................................. 48 (f) Plan of Operation and Discussion of Financial Condition: .......................................................... 59 CHAPTER (VII): MANAGEMENT‘S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS .......................................................................................................................... 72 CHAPTER (VIII): DIRECTORS AND OFFICERS ......................................................................................... 76 CHAPTER (IX): CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS ....................................... 82 CHAPTER (X): EXECUTIVE COMPENSATION .......................................................................................... 84 CHAPTER (XI): OPTIONS GRANTED TO DIRECTORS, OFFICERS AND EMPLOYEES ........................... 85 CHAPTER (XII): TRANSACTION WITH THE DIRECTORS AND SUBSCRIBERS TO THE MEMORANDUM ........................................................................................................................................ 85 CHAPTER (XIII): OWNERSHIP OF THE COMPANY‘S SECURITIES ........................................................ 86 CHAPTER (XIV): CORPORATE GOVERNANCE ........................................................................................ 95 CHAPTER (XV): VALUATION REPORT OF SECURITIES PREPARED BY THE ISSUE MANAGERS ....... 100 CHAPTER (XVI): DEBT SECURITIES ........................................................................................................ 101 CHAPTER (XVII): PARTIES INVOLVED AND THEIR RESPONSIBILITIES .............................................. 102 CHAPTER (XVIII): MATERIAL CONTRACTS ........................................................................................... 102 CHAPTER (XIX): OUTSTANDING LITIGATIONS, FINE OR PENALTY ................................................. 103 CHAPTER (XX): RISK FACTORS AND MANAGEMENT‘S PERCEPTIONS ABOUT THE RISKS ............ 104 Page | 6 CHAPTER (XXI): DESCRIPTION OF THE ISSUE..................................................................................... 111 CHAPTER (XXII): USE OF PROCEEDS .................................................................................................... 116 CHAPTER (XXIII): LOCK-IN ................................................................................................................... 130 CHAPTER (XXIV): MARKETS FOR THE SECURITIES BEING OFFERED ................................................. 132 SECTION (XXV): DESCRIPTION OF SECURITIES OUTSTANDING OR BEING OFFERED ................... 133 CHAPTER (XXVI): FINANCIAL STATEMENTS ....................................................................................... 134 CHAPTER (XXVII): PUBLIC ISSUE APPLICATION PROCEDURE .......................................................... 173 CHAPTER (XXVIII): OTHERS .................................................................................................................. 177 Page | 7 CHAPTER (I): EXECUTIVE SUMMARY (a) About the industry: According to annual report (2014-15) of Bangladesh Plastic Goods Manufacturers & Exporters Association (BPGMEA), Bangladesh has around 5000 small, medium and large size plastic goods manufacturing units with around 1 million workforces directly or indirectly employed in this sector. In Bangladesh a number of industries are now engaged in manufacturing PP Woven fabric for manufacturing PP Woven bag, FIBC bag, recyclable & reusable shopping bag, tarpaulin other bag which use for bagging of cement, poultry & aqua feed, food grain, seed, bulk carrier (i.e. spinning cone carrier, detergent, tea, confectionery, others), riverbank embankment bag, fashionable shopping bag, etc. all over the world. The woven-bag industry is flourishing fast as Bangladesh is one of the prime sources of cheap labor in the world. At present, Bangladesh annually earn foreign exchange revenue of nearly US$ 100.00 million for the country, as per the BPGMEA data. The overall investment in Bangladesh‘s WPP bags manufacturing sector has approx. Tk. 70 billion. Currently, the sector is growing at 20 percent per year. (b) About the Issuer: Yeakin Polymer Limited is a Polypropylene (PP) Woven bagging industry. Yeakin Polymer Limited (former Yeakin Business Limited) was incorporated in Bangladesh on 8thFebruary, 2001 as a Public Limited Company. It May be noted here that the company was converted into a Private Limited Company on 10thNovember, 2003 and again it was re-converted into a Public Limited Company on 15thMay, 2012. The Name of the Company was changed on 15th December, 2010 from Yeakin Business Limited to Yeakin Polymer Limited The principal activities of the company are to carry on the business of manufacturing and marketing (local & export) of PP woven regular bags [laminated & un-laminated], BOPP film/Sack Kraft paper attach bag, Jumbo/FIBC bag and HDPE/LDPE liner in different size, color, denier, mash. The bags are used for bagging, food grain, onion, potato, pulse, dates, powder milk, flex, fruits, poultry and fish feeds and other customer items. The registered office of the company is located in a rented premises at 83, Siddheswari Circular Road, Manhattan Tower (6th Floor) Malibagh, Dhaka-1217. Our manufacturing unit is situated at Labsha, Satkhira, Khulna in the southwest region of Bangladesh and our local office located in a rented premises at House#291, Road: Sonadanga, R/A (2nd Phase), Khulna-9000. We have been using state of the art plants and machinery from companies of India (Lohia Starlinger), China, Taiwan throughout the whole process. The bags and sacks as well as our woven fabric are very strong, durable, attractive, and are offered with the most competitive price. We are already being named with a reputation of meeting up the customer specification of the products for size, capacity, mesh, gusset, denier, color, printing, auto-filling. Our company also obtained certificate ISO 14001:2004 and ISO 9001:2008 from Bureau of Assessment Services. (c) Financial Information: Major financial information of Yeakin Polymer Limited (YPL) is as follows. Sl. No. Particulars 30-Jun-15 30-Jun-14 30-Jun-13 30-Jun-12 30-Jun-11 1 Sales Revenue 419,920,083 316,742,010 223,921,340 151,270,156 148,427,415 2 Gross Profit 112,987,168 83,648,876 60,164,592 34,594,481 29,614,807 3 Net profit before tax 84,729,263 60,085,193 41,256,916 18,391,285 17,023,225 4 Net Profit after tax 55,074,021 36,953,428 25,785,572 11,494,553 10,639,516 5 Total Assets 740,488,306 505,104,150 394,346,304 238,060,614 182,549,066 6 Share Capital 390,000,000 240,000,000 169,590,000 96,100,000 60,000,000 7 Retained Earnings 147,403,482 97,759,461 65,575,283 48,763,250 46,878,697 8 No. of Shares 39,000,000 24,000,000 16,959,000 9,610,000 6,000,000 9 Face Value 10.00 10.00 10.00 10.00 10.00 10 NAV Per Share 14.61 15.43 15.78 17.59 21.84 11 Earnings per Share (EPS) 1.98 1.64 1.96 1.20 1.77 Page | 8 (d) Features of the issue and its objects: The principal activities of the company are to carry on the business of manufacturing and marketing (local & export) of PP woven regular bags [laminated & un-laminated], BOPP film/Sack Kraft paper attach bag, Jumbo/FIBC bag and HDPE/LDPE liner in different size, color, denier, mash. The Company intends to issue 20,000,000 ordinary shares of Tk. 10.00 each at par through Initial public offering (IPO) totaling to Tk. 200,000,000.00 subject to regulatory approvals. Proceeds from Initial Public Offering (IPO) will be used for acquisition of Machinery, Construction of Building and for IPO Expenses. (e) Legal and other Information: Yeakin Polymer Limited Name of License Issuer/Issuing Certificate / License Remark SL Certificate/license/Regi Expiry Date Authority No. s stration/ NOC Public Limited Company dated 1 Incorporation RJSC February 8, 2001 & N/A - C- 42423/(1782)/2001 Certificate of 2 Commencement of RJSC July 15, 2003 N/A - Business Dhaka South City 3 Trade License 0103849 30.06.2016 - Corporation 4 TIN Certificate National Board of Revenue 844035540611 N/A - Customs, Excise & VAT 5 VAT Reg. No. 15071023377 N/A - Commissionerate, Khulna Export Registration 6 Controller of Import & R 0094487 30.06.2016 - Certificate (ERC) Export, Government of Import Registration 7 Bangladesh M 132366 30.06.2016 - Certificate (IRC) Bangladesh Plastic Goods 8 BPGMEA Manufacturers & 103 31.12.2016 - Exporters Association Bangladesh Fire Services 9 Fire License Khulna/3462/04-05 30.06.2016 - and Civil Defense Board of Investment 10 BOI License L-39010106247-H N/A - Bangladesh Environment Clearance Department of 11 2186/2008 08.06.2016 - Certificate Environment Trade License from Labsha Union Parishad, 12 26 30.06.2016 - local authority Satkhira 13 Factory License Department of Factory 365/Khulna 30.06.2017 - Bureau of Assessment 14 ISO 14001: 2004 AE-BAS-E0001798 27.07.2016 - Services Bureau of Assessment 15 ISO 9001: 2008 AE-BAS-Q0001797 27.07.2016 - Services Page | 9 (f) Promoters‘ background: When the Company was incorporation time following persons were the subscribers to the memorandum: Sl. No. Name of 01 S.M. Akter Kabir 02 Md. Rezaul Islam Chowdhury 03 Sk. Jamil Hossain 04 Quazi Anwarul Haque 05 Mrs. Maliha Parvin 06 Engg. Quazi Shafiqul Haque 07 Quazi Emdadul Haque Their background is stated below: S.M. Akter Kabir: S.M Akter Kabir, S/o- Late Khalilur Rahman, Address: 23, R.K Mission Road, Wari, Motijheel, Dhaka, is a Bangladeshi national and was born on 08.07.1959. He completed M.Com (Accounting) degree from Dhaka University. He has been engaged in trading and manufacturing business for a long time. He travelled India, Malaysia, Singapore, Thailand, UAE, and Vietnam in connection with his business. Md. Rezaul Islam Chowdhury Reajul Islam Chowdhury, S/O- Ahmed Hossain Chodhury Address: 169/1, Malibagh Bazar Road, Plot no: 01, 1st Floor, Malibagh. After Completion Master in Commerce degree in Marketing he joined in Miracle Industries Limited as Marketing Executive. In 2001 he resigned from service of Miracle Industries and involved with the Yeakin Polymer Limited as a promoter. In 2005 he transferred his shares. Sk. Jamil Hossain: Sk. Jamil Hossain, S/O- Sk. Abdul Majed of Address: Vill: Jhikra, P.O & P.S: Kalaroa, Satkhira. He completed Bachelor Arts degree from Satkhira. He served 7 years in German & Kuwait. Quazi Anwarul Haque: Quazi Anwarul Haque, S/O-Quazi Rahmatul Haque, Addres: 3/A, 13/19, Sir Syed Road, Mohammadpur Dhaka. He is a Bangladeshi National and was born on 25.01.1962. He completed his M.Com (Accounting) degree from Dhaka University and passed C.A (Inter) from ICAB. He is Vice President of BPGMEA; Chairman of pp woven sack manufactures standing committee under BPGMEA, member National Jute act advisory committee, member FBCCI, Director HARDCO International School. From the inception he is the chairman of Yeakin Polymer Ltd. and under his leadership established other three organizations Satkhira Feed Industries Ltd. for production of fish, shrimp & poultry feed, Yeakin Agro Products Ltd. fish culture & boiler chicken rearing house, RR Enterprise – an indenting & trading house. Mr. Haque has visited several times to India, Singapore, Thailand, Hong Kong, Taiwan, China, Malaysia, South Korea, Japan, Europe and UAE in connection with the business. Mrs. Maliha Parvin Ms. Maliha Parvin, W/O- Quazi Anwarul Haque, Address: Flat 3/A, 13/19 Sir Syed Road, Mohammadpur, Dhaka. Nationality: Bangladeshi. She is a B.A Degree holder and engaged with Business with her husband from 2001 from inception of Yeakin Polymer Ltd. She is one of the shareholders of the company. Engg. Quazi Shafiqul Haque Engineer Shafiqul Haque S/O- Quazi Rahmatul Haque Address: 54/Kh, PC Culture Housing Society Limited Shamoly, Dhaka-1207. Shafiqul Haque got the Diploma in Mechanical Engineering degree from Khulna Ploy Technical Institute. After obtained the Diploma degree he went to Singapore and completed BSc Engineering on mechanical and fly USA under L-1 Category visa with confirmation of engineering service at California, USA. In 2001 he came to Bangladesh and involved with Yeakin Polymer Limited as promoters. In 2005 he transferred his entire share. Quazi Emdadul Haque Quazi Emdadul Haque S/O- Quazi Rahmatul Haque Vill- Labsha, P.O/P.S- Satkhira. After obtaining the Bachelor in Commerce degree he started business on motor parts and involved with Yeakin polymer limited as the promoter. Page | 10