Prospectus. Paramount Textile Limited

Transcription

1 Prospectus Paramount Textile Limited

2 If you have any query about this document, you may consult Issuer, Issue Manager and Underwriter Prospectus Paramount Textile Limited Chaklader House (Level 6), House No. 22, Road No. 113/A, Gulshan 2, Dhaka 1212 Telephone: , , Fax: , Website: Public offer of 30,000,000 ordinary shares of BDT each at an issue price of BDT each including a premium of BDT per share totaling to BDT 840,000,000 General Subscription Period Non Resident Bangladeshi Subscription Period Opening date for subscription : September 01, 2013 Opening date for subscription : September 01, 2013 Closing date for subscription : September 05, 2013 Closing date for subscription : September 14, 2013 Issue Manager IDLC Investments Limited Eunoos Trade Center (Level 21), Dilkusha C/A, Dhaka 1000 Telephone: , Fax: , Website: Underwriters BMSL Investment Limited Sadharan Bima Tower (7th Floor), 37/A Dilkusha C/A, Dhaka 1000 Green Delta Insurance Co. Limited Green Delta AIMS Tower (6th Floor), 51/52, Mohakhali, Dhaka-1212 IDLC Investments Limited Eunoos Trade Center (Level 21), Dilkusha C/A, Dhaka 1000 IIDFC Capital Limited Eunoos Trade Center (Level 7), Dilkusha C/A, Dhaka 1000 Credit Rating Status Particulars Long Term Short Term Entity Rating A+ ST-3 Date of Rating November 29, 2012 November 29, 2012 Validity of Rating November 28, 2013 May 28, 2013 Rating By Credit Rating & Information Services Limited Mutual Trust Bank Limited MTB Centre, 26 Gulshan Avenue, Gulshan 1, Dhaka 1212 LankaBangla Investments Limited Eunoos Trade Center (Level 21), Dilkusha C/A, Dhaka 1000 Prime Finance Capital Management Limited 63 Dilkusha C/A (3 rd Floor), Dhjaka 1000 Sonali Investment Limited 11/A Toyeenbee Circular Road, Sara Tower, Motijheel C/A, Dhaka 1000 Date of BSEC Consent for Prospectus: July 25, 2013 Date of Publication of Prospectus: July 31, 2013 The issue shall be placed in N Category CONSENT OF THE SECURITIES AND EXCHANGE COMMISSION HAS BEEN OBTAINED TO THE ISSUE/OFFER OF THESE SECURITIES UNDER THE SECURITIES AND EXCHANGE ORDINANCE, 1969, AND THE SECURITIES AND EXCHANGE COMMISSION (PUBLIC ISSUE) RULES, 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/CHIEF FINANCIAL OFFICER, ISSUE MANAGER, UNDERWRITER AND/OR AUDITOR

3 Availability of the Prospectus Prospectus of Paramount Textile Limited may be obtained from following addresses Company Contact person Contact Number Paramount Textile Limited Chaklader House (Level 6), House No. 22 Road No. 113/A, Gulshan 2, Dhaka 1212 Mr. Md. Nuruzzaman Chowdhury Sr. DGM (Accounts & Finance) & Company Secretary (In charge) Tel: , Fax: Issue Manager Contact person Contact Number IDLC Investments Limited Eunoos Trade Center (Level 21) Dilkusha C/A, Dhaka 1000 Mr. Md. Moniruzzaman, CFA Managing Director Tel: Fax: Underwriters Contact person Contact Number BMSL Investment Limited Sadharan Bima Tower (7th Floor) 37/A Dilkusha C/A, Dhaka 1000 Green Delta Insurance Co. Limited Green Delta AIMS Tower (6th Floor) 51/52, Mohakhali, Dhaka 1212 IDLC Investments Limited Eunoos Trade Center (Level 21) Dilkusha C/A, Dhaka 1000 IIDFC Capital Limited Eunoos Trade Center (Level 7) Dilkusha C/A, Dhaka 1000 LankaBangla Investments Limited Eunoos Trade Center (Level 21) Dilkusha C/A, Dhaka 1000 Mutual Trust Bank Limited Corporate Head Office, MTB Centre 26 Gulshan Avenue Gulshan 1, Dhaka 1212 Prime Finance Capital Management Limited 63 Dilkusha C/A (3 rd Floor), Dhaka 1000 Sonali Investment Limited 11/A Toyeenbee Circular Road, Sara Tower Motijheel C/A, Dhaka 1000 Mr. Md. Golam Sarwar Bhuiyan Managing Director Mr. Syed Moinuddin Ahmed Company Secretary Mr. Md. Moniruzzaman, CFA Managing Director Ms. Zufa Mehrubeen Huq Manager Mr. M Shakil Islam Bhuiyan Chief Executive Officer Mr. Meer Sajeed-Ul-Basher Group Chief Financial Officer M. Mosharraf Hossain, PhD, FCA Managing Director & CEO Dr. Md. Waliar Rahman Chief Executive Officer Tel: , Fax: gsbhuiyan@gmail.com Tel: Ext. 207 Fax: ahmed.moin@yahoo.com Tel: Fax: mzaman@idlc.com Tel: Fax: icl@iidfc.com Tel: , Fax: , shakil.bhuiyan@lankabanglainvestments.com Tel: ext 2450, Fax: sajed@mutualtrustbank.com Tel: Fax: Tel: Fax: sblmbu@yahoo.com Stock Exchanges Available at Contact Number Dhaka Stock Exchange Limited 9/F Motijheel C/A, Dhaka 1000 Chittagong Stock Exchange Limited CSE Building, 1080, Sheikh Mujib Road Agrabad, Chittagong DSE Library CSE Library Prospectus would also be available on the web site of BSEC ( DSE (www. dsebd.org), CSE ( Paramount Textile Limited ( and Issue Manager (www. idlc.com) and Public Reference Room of the Bangladesh Securities and Exchange Commission (BSEC) for reading and studying. Name and Address of the Auditor Howladar Yunus & Co. Chartered Accountants 67, Dilkusha C/A (2 nd Floor), Dhaka 1000 Tel: , , Fax: , Website:

4 Content Section I: Statutory conditions Disclosure in respect of issuance of securities in demat form 10 Conditions under Section 2CC of the Securities and Exchange Ordinance, General information 16 Section II: Declarations and due diligence certificates Declaration about the responsibility of the director(s), including the CEO of the issuer company Paramount Textile Limited in respect of the prospectus 17 Consent of the director(s) to serve as director(s) 18 Declaration about filing of prospectus with the Registrar of Joint Stock Companies and Firms 18 Declaration by the issuer about the approval from Bangladesh Securities and Exchange Commission for any material changes 18 Declaration by the issue manager about the approval from Bangladesh Securities and Exchange Commission for any material changes 19 Due diligence certificate of the manager to the issue 19 Due diligence certificate of the underwriter(s) 20 Section III: Risk factors and management s perception about the risks Section IV: Issue size and purpose of the public offering Financial Structure 27 Use of IPO proceeds 27 Implementation Schedule 27 Terms of Contract 27 Section V: Information about the company Paramount Textile Limited company profile 28 Important Dates 29 Nature of business 29 Principal products and services 30 Products/service that accounts for more than 10% of the company s total revenue 31 Associates, subsidiary/related holding company and their core areas of business 31 Distribution of products/services 32 Competitive condition of business 32 Sources and availability of raw materials and principal suppliers 32 Sources of and requirement for power, gas and water or any other utilities 33 Customer providing 10% or more revenues 33 Description of contract with principal suppliers/customers 34 Description of any material patents, trademarks, licenses or royalty agreements 34 Number of employees 35 Production/service rendering capacity and current utilization 35

5 Section VI: Description of property Location of principal plants and other property of the company and their condition 36 Section VII: Plan of operation and discussion of financial condition Internal and external sources of cash (as per audited accounts) 38 Material commitment for capital expenditure 39 Causes for material changes 39 Seasonal aspect 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 41 Loan taken from or given to holding/parent company or subsidiary company 41 Future contractual liabilities 41 Estimated Future capital expenditure 41 VAT, income tax, customs duty or other tax liability 41 Operating lease agreement during last five years 42 Financial lease commitment during last five years 43 Personnel related scheme 43 Breakdown of estimated expenses for IPO 44 Revaluation of company s assets and summary thereof 44 Transaction between subsidiary/ associate/ holding company and issuer 44 Auditors certificate regarding allotment of shares to promoters or sponsor shareholders for consideration other than in cash 45 Declaration regarding non-suppression of material information 45 Section VIII: Information about the directors and officers Directors of the company 46 Information regarding directors and directorship 46 Directors involvement in other organization 47 Family relationship among directors and top officials 48 Short bio-data of the directors 48 Credit information Bureau (CIB) report 50 Description of top executives and departmental heads 50 Involvement of directors and officers in certain legal proceedings 51 Certain relationships and related transactions 52 Executive compensation 53 Options granted to directors, officers and employees 53 Transaction with the directors and subscribers to the memorandum 54 Auditor s Certificate Regarding Tangible assets per share 54 Ownership of the company s securities 55 Securities owned by the officers 56 Shareholder shareholding 5% or more 56 Section IX: Features of IPO Determination of offering price 57 Market for the securities being offered 59

6 Declaration about listing of shares with Stock Exchange 59 Description of Securities outstanding or being offered 59 Debt Securities 61 Section X: Plan of distribution Underwriting of shares 62 Principal terms and conditions of underwriting agreement 62 Commission for the underwriters 63 Relationship of officers or directors of the underwriter(s) with the member of board of the company 63 Section XI: Allotment, subscription and market Lock-in Provision 64 Refund of subscription money 64 Subscription by and refund to non-resident Bangladeshis (NRB) 65 Availability of securities 65 Allotment 66 Application for subscription 66 Trading and settlement 68 Bankers to the issue 69 Section XII: Material contract and others Material contract 71 Manager to the Issue 71 Commission to the bankers to the issue 71 Section XIII: Corporate directory Section XIV: Auditor s report and related certificates of Paramount Textile Limited Auditor s report to the shareholders 73 Auditor s report under section 135(1), Para 24(1) of part II of schedule III to Companies Act, Auditor s Certificate on Calculation of Various Accounting Ratios for the Years Ended on 30 June 2012, 2011, 2010 and Section XV: Management Disclosure 118 Section XVI: Credit rating report of Paramount Textile Limited Section XVII: Application forms

7 Forward Looking Statements This prospectus may include forward-looking statements. The use of the words may, will, would, could, should, believes, estimates, projects, potential, expects, plans, seeks, intends, evaluates, pursues, anticipates, continues, designs, impacts, forecasts, target, outlook, initiative, objective, designed, priorities, goal, or the negative of those words or other similar expressions is intended to identify forward-looking statements that represent our current judgment about possible future events. All statements in this prospectus, and in related comments by our management, other than statements of historical facts, including statements about future events or financial performance, are forward-looking statements that involve certain risks and uncertainties. These statements are based on certain assumptions and analyses made in light of our experience and perception of historical trends, current conditions, and expected future developments as well as other factors that we believe are appropriate in the circumstances. While these statements represent our current judgment on what the future may hold, and we believe these judgments are reasonable, these statements are not guarantees of any events or financial results. Whether actual future results and developments will conform to our expectations and predictions is subject to a number of risks and uncertainties, including the risks and uncertainties discussed in this prospectus under the caption Risk Factors and elsewhere.

8 Glossary A I AGM Annual General Meeting Issuer Paramount Textile Limited Allotment Allotment of shares Issue Manager IDLC Investments Limited B L BAS Bangladesh Accounting Standards L/C Letter of Credit BB Bangladesh Bank BDT Bangladeshi Taka M BO A/C Beneficiary Owner s Account MW Mega Watt BSEC Bangladesh Securities & Exchange Commission N C NAV Net Asset Value CAGR Cumulative Average Growth Rate NBFI Non Banking Financial Institution Certificate Share Certificate NBR National Board of Revenue CDBL Central Depository Bangladesh Limited NRB Non Resident Bangladeshi CIB Credit Information Bureau CSE Chittagong Stock Exchange P C&F Clearing & Forwarding Agent PSI Per Square Inch PE Price to Earning D P/NAV Price to NAV DSE Dhaka Stock Exchange E RJSC Registrar of Joint Stock Companies & Firms EPB Export Promotion Bureau RMG Ready Made Garments EU European Union ETP Effluent Treatment Plant S Exchanges Stock Exchanges Sponsors EPS Earnings per Share R The sponsor shareholders of Paramount Textile Limited U F USD United States Dollar FC Account Foreign Currency Account FY Fiscal Year V G GOB GSP Government of Bangladesh Generalized System of Preference VAT Value Added Tax I IDLCIL IPO IDLC Investments Limited Initial Public Offering

9 Certain Defined Terms and Conventions In this Prospectus, all references to: Articles or Articles of Association refer to our articles of association; Bangladesh or Bangladeshi refer to the People s Republic of Bangladesh and the Bangladeshi Government or Government refer to the Government of the People s Republic of Bangladesh; Bangladesh Securities and Exchange Commission or the BSEC refer to the Securities and Exchange Commission of Bangladesh; Banker to the Issue refers to a bank so named in the prospectus to collect money as subscription against security; Board or Board of Directors refer to our board of Directors; Commission means the Bangladesh Securities and Exchange Commission (BSEC) established under the Securities & Exchange Commission (Amendment) Act 2012 (Act No. XLV of 2012) Companies Act refers to the Companies Act, 1994 (Act No. XVIII of 1994) Depository Act refer to the Depository Act, 1999 as amended; Initial Public Offering means first offering of security by an issuer to the general public; Issue of Capital means the issuing of any securities whether for cash or otherwise; Issuer means any person who has issued or proposes to issue any security; Merchant Banker means person who, on behalf of client, undertakes fund management or is in underwriting business, or is involved with securities as underwriter, manager or adviser or provides service as corporate adviser in respect of performing all activities relating to issue management; Memorandum or Memorandum of Association refer to our memorandum of association; Non-Resident Bangladeshi (NRB) refers to an expatriate Bangladeshi or who has dual citizenship or possesses a foreign passport bearing an endorsement from the concerned Bangladesh Embassy to the effect that no visa is required for him to travel Bangladesh; Paramount, PTL, the Company, the Issuer, we, our, ourselves, or us refer to Paramount Textile Limited, a public limited company incorporated in Bangladesh; Prospectus refers to any document prepared for the purpose of communicating to the general public an issuer s plan to offer for sale of its security under the Security and Exchange Commission (Public Issue) Rules, 2006; Public Issue means to public issue of security through initial public offering or repeat public offering; Public Offering refer the offering of 30,000,000 ordinary shares of Paramount Textile Limited to the public of Bangladesh; Securities refer to shares of Paramount Textile Limited; Securities Market refer to the capital market of Bangladesh; Stock Exchange means any person who maintains or provides a market place or facilities for bringing together buyers and sellers of securities or for otherwise performing with respect to securities the functions commonly performed by a Stock Exchange, as that term is generally understood, and includes such market place and facilities; Taka, Tk. or BDT refer to the legal currency of Bangladesh, U.S dollar, US$ or USD refer to the legal currency of the United States of America; and Underwriters refer to BMSL Investment Limited, Green Delta Insurance Co. Limited, IDLC Investments Limited, IIDFC Capital Limited, LankaBangla Investments Limited, Mutual Trust Bank Limited, Prime Finance Capital Management Limited, Sonali Investment Limited.

10 S e c t i o n I Statutory Condition 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. CONDITIONS UNDER SECTION 2CC OF THE SECURITIES AND EXCHANGE ORDINANCE, 1969 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 BSEC, to the issue of 30,000,000 Ordinary Shares of Tk each at an issue price of Tk per share including a premium of Tk per share worth Tk. 840,000, (Tk. Eighty Four Crore) only through public offer and approves the prospectus of Paramount Textile Limited (hereinafter referred to as issuer or company ), subject to the following conditions imposed under section-2cc of the said Ordinance, as mentioned under Part-A, B, C and D namely: PART-A 1. The company shall go for Initial Public Offer (IPO) for 30,000,000 Ordinary Shares of BDT each at an issue price of BDT per share including a premium of per share worth Tk. 840,000,000 (Tk. Eighty Four Crore) only following the Securities and Exchange Commission (Public Issue) Rules, 2006, the Depository Act, 1999 and regulations made there under. 2. The abridged version of the prospectus, as approved by the Commission, shall be published by the issuer in 4 (Four) national daily newspapers (two in Bangla and two in English), within 5 (Five) working days of issuance of the consent letter. The issuer shall post the full prospectus, vetted by the Bangladesh Securities and Exchange Commission, in the issuer s website and shall also put on the websites of the Commission, stock exchanges and the issue manager, within 5 (Five) working days from the date of issuance of this letter and shall remain posted till the closure of the subscription list. The issuer shall submit to BSEC, the stock exchanges and the Issue manager a diskette containing the text of the vetted prospectus in MS -Word format. 3. Sufficient copies of the prospectus shall be made available by the issuer so that any person requesting a copy may receive one. A notice shall be placed on the front of the application form distributed in connection with the offering, informing that interested persons are entitled to a prospectus, if they so desire, and that copies of the prospectus may be obtained from the issuer and the Issue manager. The subscription application shall indicate in bold type that no sale of securities shall be made, nor shall any money be taken from any person, in connection with such sale until twenty five days after the prospectus has been published. 10

11 4. The company shall submit 40 (Forty) copies of the printed prospectus to the Bangladesh Securities and Exchange Commission for official record within 5 (Five) working days from the date of publication of the abridged version of the prospectus in the newspaper. 5. The issuer company and the issue manager shall ensure transmission of the prospectus, abridged version of the prospectus and relevant application forms for NRBs through , simultaneously with publication of the abridged version of the prospectus, to the Bangladesh Embassies and Missions abroad and shall also ensure sending of the printed copies of abridged version of the prospectus and application forms to the said Embassies and Missions within 5 (Five) working days of the publication date by Express Mail Service (EMS) of the postal department. A compliance report shall be submitted in this respect to the BSEC jointly by the issuer and the issue manager within 2 (Two) working days from the date of said dispatch of the prospectus and the forms. 6. The paper clipping of the published abridged version of prospectus, as mentioned at condition no. 2 above, shall be submitted to the Commission within 24 hours of the publication thereof. 7. The company shall maintain separate bank account(s) for collecting proceeds of the Initial Public Offering and shall also open Foreign Currency (FC) account(s) to deposit the application money of the Non Resident Bangladeshis (NRBs) for IPO purpose, and shall incorporate full particulars of said FC account(s) in the prospectus. The company shall open the above-mentioned accounts for IPO purpose; and close these accounts after refund of over-subscription money. Non-Resident Bangladeshi (NRB) means Bangladeshi citizens staying abroad including all those who have dual citizenship (provided they have a valid Bangladeshi passport) or those, whose foreign passport bear a stamp from the concerned Bangladesh Embassy to the effect that no visa is required for travelling to Bangladesh. 8. The issuer company shall apply to all the stock exchanges in Bangladesh for listing within 7 (Seven) working days from the date of issuance of this letter and shall simultaneously submit the vetted prospectus with all exhibits, as submitted to BSEC, to the Stock Exchanges. 9. The following declaration shall be made by the company in the prospectus, namely: Declaration about Listing of Shares with the Stock Exchange(s) None of the Stock Exchange(s), if for any reason, grants listing within 75 (Seventy Five) 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 15 (Fifteen) days from the date of refusal for listing by the stock exchanges, or from the date of expiry of the said 75 (Seventy Five) days, as the case may be. In case of non-refund of the subscription money within the aforesaid 15 (Fifteen) days, the Directors of the Company, 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 shall submit compliance report thereon to the Commission within 7 (Seven) days of expiry of the aforesaid fifteen days time period allowed for refund of the subscription money. 11

12 10. The subscription list shall be opened and the sale of securities commenced after 25 (Twenty Five) days of the publication of the abridged version of the prospectus and shall remain open for 5 (Five) consecutive banking days. 11. 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. The NRB applicants shall send applications to the issuer company within the closing date of the subscription so as to reach the same to the company by the closing date plus 9 (Nine) days. Applications received by the company after the above time period will not be considered for allotment purpose. 12. The company shall apply the spot buying rate (TT clean) in US Dollar, UK Pound Sterling and Euro of Sonali Bank Limited, which shall be mentioned in the Prospectus, as prevailed on the date of opening of the subscription for the purpose of application of the NRBs and other non-bangladeshi persons, where applicable. 13. The company and the issue manager shall ensure prompt collection/clearance of the foreign remittances of NRBs and other non-bangladeshis, if applicable, for allotment of shares. 14. Upon completion of the period of subscription for securities, the issuer and the issue manager shall jointly provide the Commission and the stock exchanges with the preliminary status of the subscription within 5 (Five) working days, in respect of the following matters, namely:- (a) Total number of securities for which subscription has been received; (b) Amount received from the subscription; and (c) Amount of commission paid to the banker to the issue. 15. The issuer and the issue manager shall jointly provide the Commission and the stock exchanges with the list of valid and invalid applicants (i.e. final status of subscription) in electronic form in 2 (Two) CDs and final status of subscription to the Commission within 3 (Three) weeks after the closure of the subscription along with bank statement (original), branch-wise subscription statement. The list of valid and invalid applicants shall be finalized after examination with the CDBL in respect of BO accounts and particulars thereof. 16. The IPO shall stand cancelled and the application money shall be refunded immediately (but not later than 5 (Five) weeks from the date of the subscription closure), if any of the following events occur: (a) Upon closing of the subscription list it is found that the total number of valid applications (in case of under subscription including the number of the underwriter) is less than the minimum requirement as specified in the listing regulations of the stock exchange(s) concerned; or (b) At least 50% of the IPO is not subscribed % of total public offering shall be reserved for wzmö z`ª wewb qvmkvix, 10% of total public offering shall be reserved for non-resident Bangladeshi (NRB) and 10% for mutual funds and collective investment schemes registered with the Commission, and the remaining 60% shall be open for subscription by the general public. In case of under-subscription under any of the 20% and 12

13 10% categories mentioned above, 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 managers to the issue shall jointly conduct an open lottery of all the applicants added together. 18. All the applicants shall first be treated as applied for one minimum market lot of 250 shares worth BDT 7,000 (Taka Seven Thousands only). If, on this basis, there is over subscription, then lottery shall be held amongst the applicants allocating one identification number for each application, irrespective of the application money. In case of over-subscription under any of the categories mentioned hereinabove, the issuer and the issue manager shall jointly conduct an open lottery of all the applications received under each category separately in presence of representatives from the issuer, the stock exchanges and the applicants, if there be any. 19. An applicant cannot submit more than two applications, one in his/her own name and the other jointly with another person. In case an applicant makes more than two applications, all applications will be treated as invalid and will not be considered for allotment purpose. In addition, 15% (fifteen) of the application money will be forfeited by the Commission and the balance amount will be refunded to the applicant. 20. The applicant shall provide the same bank account number in the application form as it is in the BO account of the application. 21. The applicants who have applied for more than two applications using same bank account, their application will not be considered for lottery and the Commission will forfeit 15% of their subscription money too. 22. Lottery (if applicable) shall be held within 4 (Four) weeks from closure of the subscription date. 23. The company shall issue share allotment letters to all successful applicants within 5 (Five) weeks from the date of the subscription closing. Within the same time, refund to the unsuccessful applicants shall be made in the currency in which the value of securities was paid for by the applicants without any interest, through direct deposit to the applicant s bank account as far as possible/ Account Payee Cheque/ refund warrants with bank account number, bank s name and branch as indicated in the securities application forms payable at Dhaka/ Chittagong/ Khulna/ Rajshahi/ Barisal/ Sylhet/ Bogra, as the case may be subject to condition no. 19 and 21 above. Refund money of the unsuccessful applicants shall be credited directly to their respective bank accounts, who have chosen the option in the IPO application forms, as maintained in with the bankers to the issue or any other banks mentioned in the application. A compliance report in this regard shall be submitted to the Commission within 7 (Seven) weeks from the date of closure of subscription. 24. The company shall furnish the List of Allotees to the Commission and the stock exchange(s) simultaneously in which the shares will be listed, within 24 (Twenty Four) hours of allotment. 25. In the event of under-subscription of the public offering, the unsubscribed portion of securities shall be taken up by the underwriter(s) (subject to Para 16 above). The issuer must notify the underwriters to 13

14 take up the underwritten shares within 10 (Ten) days of the closing of subscription on full payment of the share money within 15 (Fifteen) days of the issuer s notice. The underwriter shall not share any underwriting fee with the Issue manager, other underwriters, issuer or the sponsor group. 26. All issued shares of the issuer at the time of according this consent 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 shares in the company), who have subscribed to the shares of the company within immediately preceding 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. 27. In respect of shares of Sponsors/Directors/Promoters (if in paper format) shall be handed over to security custodian bank registered with BSEC and shall remain till completion of lock-in and name and branch of the bank shall be furnished to the Commission jointly by the issuer and Issue manager, along with a confirmation thereof from the custodian bank, within one week of listing of the shares with the stock exchange(s). Or they (shares of Sponsors/Directors/Promoters) can be demated and will remain in lock-in under CDBL system and issuer will submit a dematerialization confirmation report generated by CDBL and attested by the Managing Director of the company along with lock-in confirmation with BSEC within one week of listing of the shares with the stock exchange(s). In respect of shares other than Sponsors/Directors/Promoters the issuer will ensure their lock-in of those shares and submit a statement to this effect to BSEC. 28. The company shall apply to the stock exchanges for listing within 7 (Seven) working days of issuance of this letter and shall simultaneously submit to the Commission attested copies of the application filed with the stock exchanges. 29. The Company shall not declare any benefit/dividend based on the financial statements for the period ended June 30, 2013 before listing of its capital with stock exchange(s). 30. If applicable, the company shall deposit 3% tax to the Government Treasury on the share premium of the IPO and submit authenticated copy of Treasury Chalan to the commission, among others, to obtain consent for holding of lottery in line with the NBR s Order No. Rviv ev/avqki ev RU/2010/97 dated and Rviv ev/ki-4/awa Î/11(4)/2003(Ask)-1)/225 dated The company shall submit updated environmental certificate from the Directorate of Environment to the Commission at least before three working days of opening subscription of Initial Public Offering (IPO). PART B 1. The issuer and Issue Manager shall ensure that the abridged version of the prospectus and the full prospectus is published correctly and in strict conformity with the conditions of this letter without any error/omission, as vetted by the Bangladesh Securities and Exchange Commission. 14

15 2. The issue manager shall carefully examine and compare the published abridged version of the prospectus on the date of publication with the copy vetted by BSEC. If any discrepancy/ inconsistency is found, both the issuer and the issue manager shall jointly publish a corrigendum immediately in the same newspapers concerned, simultaneously endorsing copies thereof to BSEC and the stock exchange(s) concerned, correcting the discrepancy/inconsistency as required under Due Diligence Certificates provided with BSEC. 3. Both the issuer company and the issue manager shall, immediately after publication of the prospectus and its abridged version, jointly inform the Commission in writing that the published prospectus and its abridged version are verbatim copies of the same as vetted by the Commission. 4. The fund collected through Public Offering shall not be utilized prior to listing with stock exchanges and that utilization of the said fund shall be effected through banking channel, i.e. through account payee cheque, pay order or bank drafts etc. 5. The company shall furnish report to the Commission and to the stock exchanges on utilization of Public Offering proceeds within 15 (Fifteen) days of the closing of each month until such fund is fully utilized, as mentioned in the schedule contained in the prospectus, and in the event of any irregularity or inconsistency, the Commission may employ or engage any person, at issuer s cost, to examine whether the issuer has utilized the proceeds for the purpose disclosed in the prospectus. 6. All transactions, excluding petty cash expenses, shall be effected through the company s bank account(s). 7. Proceeds of the Public Offering shall not be used for any purpose other than those specified in the prospectus. Any deviation in this respect must have prior approval of the shareholders in the shareholders Meeting under intimation to BSEC and stock exchange(s). 8. Directors on the company s Board will be in accordance with the applicable laws, rules and regulations. 9. The financial statements should be prepared in accordance with Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS) as required by the Securities and Exchange Rules, PART-C 1. All the above conditions imposed under section 2CC of the Securities and Exchange Ordinance, 1969 shall be incorporated in the prospectus immediately after the page of the table of contents, with a reference in the table of contents, prior to its publication. 2. The Commission may impose further conditions/restrictions etc. from time to time as and when considered necessary, which shall also be binding upon the issuer company. 15

16 PART-D 1. 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 (including rights/bonus) will be made in dematerialized form only. An applicant (including NRB) shall not be able to apply for allotment of shares without Beneficial Owners (BO) account. 2. The company and the issue manager shall ensure due compliance of all above conditions and the Securities & Exchange Commission (Public Issue) Rules, GENERAL INFORMATION 1. IDLC Investments Limited, the Issue Manager has prepared this prospectus based on the information provided by Paramount Textile Limited, Issuer and also upon several discussions with the Managing Director & Director and concerned executives of the issuer company. The Directors, including Managing Director & Director, of Paramount Textile Limited, IDLC Investments Limited 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 Paramount Textile Limited, IDLC Investments Limited, the Underwriters and the Stock Exchanges where the securities will be listed. 16

17 S e c t i o n II Declaration & Due Diligence Certificates DECLARATION ABOUT THE RESPONSIBILITY OF THE DIRECTOR(S), INCLUDING THE CEO OF THE ISSUER COMPANY PARAMOUNT TEXTILE 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/- Anita Haque Chairman Sd/- Alock Das Director Sd/- Samsun Nahar Director Sd/- Shakhawat Hossain Managing Director & Director Sd/- Anita Rani Das Director Sd/- Aparna Ghosh Director Sd/- Iqbal Enamul Kabir Director (Representative: Paramount Spinning Limited) Sd/- Md. Nuruzzaman Chowdhury Director (Representative: Paramount Holdings Limited) 17

18 CONSENT OF DIRECTOR(S) TO SERVE AS DIRECTOR(S) We hereby confirm that we have been serving as Director(s) of Paramount Textile Limited and continue to act as Director(s) of the Company. Sd/- Anita Haque Chairman Sd/- Alock Das Director Sd/- Samsun Nahar Director Sd/- Shakhawat Hossain Managing Director & Director Sd/- Anita Rani Das Director Sd/- Aparna Ghosh Director Sd/- Iqbal Enamul Kabir Director (Representative: Paramount Spinning Limited) Sd/- Md. Nuruzzaman Chowdhury Director (Representative: Paramount Holdings Limited) DECLARATION ABOUT FILING OF PROSPECTUS WITH THE 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 before publication of the prospectus. DECLARATION BY THE ISSUER ABOUT THE APPROVAL FROM BANGLADESH 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 statements made in the Prospectus subsequent to the preparation of the Prospectus and prior to its publication, shall be incorporated in the Prospectus and the said Prospectus should be published with the approval of the Commission. For Issuer Sd/- Shakhawat Hossain Managing Director & Director Paramount Textile Limited 18

19 DECLARATION BY THE ISSUE MANAGER ABOUT THE APPROVAL FROM BANGLADESH 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, shall be incorporated in the Prospectus, and the said Prospectus should be published with the approval of the Commission. For Manager to the Issue Sd/- Md. Moniruzzaman Managing Director IDLC Investments Limited DUE DILIGENCE CERTIFICATE OF THE MANAGER TO THE ISSUE Subject: Public Offer of 30,000,000 Ordinary Shares of Tk each at an issue price of Tk each including a premium of Tk per share, totaling to Tk. 840,000,000 of Paramount Textile 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 company. 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/- Md. Moniruzzaman Managing Director IDLC Investments Limited Place : Dhaka Date : March 19,

20 DUE DILIGENCE CERTIFICATE OF THE UNDERWRITER(S) Subject: Public Offer of 30,000,000 Ordinary Shares of Tk each at an issue price of Tk each including a premium of Tk per share, totaling to Tk. 840,000,000 of Paramount Textile 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 to 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 company. WE CONFIRM THAT: (a) All information as are relevant to our underwriting decision have been received by us and that 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/- Sd/- Sd/- Md. Golam Sarwar Bhuiyan Managing Director BMSL Investment Limited Nasir A. Choudhury Managing Director & CEO Green Delta Insurance Co. Limited Md. Moniruzzaman Managing Director IDLC Investments Limited Sd/- Sd/- Sd/- Mohammed Saleh Ahmed Chief Executive Officer IIDFC Capital Limited M. Mosharraf Hossain, PhD, FCA Managing Director & CEO Prime Finance Capital Management Limited M Shakil Islam Bhuiyan Chief Executive Officer LankaBangla Investments Limited Sd/- Anis A. Khan Managing Director & CEO Mutual Trust Bank Limited Sd/- Dr. Md. Waliar Rahman Chief Executive Officer Sonali Investment Limited 20

21 S e c t i o n III Risk Factors & Management Perception Investment in capital market involves exposure to several types of risk. Paramount Textile Limited (PTL) operates in an industry that is shaped up by many external and internal risk factors over which PTL has little or no control. The following includes some of the significant risks that may affect the value of the company s shares. In addition, there might be some risk factors, currently unknown to the company or considered immaterial, may become material in future. If, at any point in time, the company s management fails to mitigate or avoid the following risk factors as well as those currently unknown or considered immaterial, the company s operational and financial performance may face adverse impacts. This would, in turn, affect the value of the company s shares. Hence, a rational investor should carefully consider all the information contained in this Prospectus including the risk factors elaborated below. INTEREST RATE RISKS As on June 30, 2012, the company had outstanding short and long term loans from different banks to the tune of BDT 1,982.5 million. Hence, the company is exposed to volatility of interest rates on its outstanding bank liabilities. Due to several macroeconomic and market driven factors, interest rates on short term and long term bank loans may fluctuate over time. Inflationary pressure, increased demand for bank loan, increased volatility in money market, restrictive monetary policy, etc. may compel the loan giving institutions to increase their interest rates on the company s outstanding liabilities. If the interest rates on the existing bank loans are increased from current levels, then the company s cash flow and profitability will be affected adversely. This may also affect the value of the shares. In addition, if the company has investment in tradable fixed income securities, then volatility in interest rates would affect the value of such investments. Eventually, this would affect the NAV per share of the company. Management perception As on June 30, 2012, the company s total short term and long term bank loan comprised of only 53.02% of its total assets. With the proceeds of the IPO, PTL will repay its outstanding long term loans to the tune of BDT 630 million. As a result, the company s financial leverage and interest burden will reduce significantly. Overall, the company intends to operate its business based mostly on equity financing in order to mitigate its exposure to interest rate related risks. As on June 30, 2012, the company did not have any tradable fixed income securities. Hence, marketwide volatility would not have any impact on the company s balance sheet. EXCHANGE RATE RISKS The company imports a significant portion of the raw materials and capital machinery from foreign sources and makes payments in foreign currency. On the other hand, it sells its entire merchandize to local export oriented RMG manufacturers. It receives its entire revenue in foreign currency as well. Most of its foreign currency transactions are settled in US Dollar (USD) and Pound Sterling (GBP). Hence, any significant volatility in the exchange rate of Taka against USD or GBP will increase the volatility of the company s cash flow and profitability. For a given depreciation of Taka against these currencies, the 21

22 company s import payment will increase. On the other hand, for a given appreciation of Taka against USD or GBP, its export receipts will be lower in terms of Taka. Once the company finalizes a contract for purchase of raw materials at prevailing exchange rates, it would incur foreign currency losses if Taka depreciates against dollars. Management Perception During the year ended on June 30, 2012, the company imported raw material and capital machinery worth BDT 1, million. On the other hand it received its entire sales proceeds in foreign currency amounting to BDT 2, million. Hence, the company s foreign currency payments are more than offset by its foreign currency receipts. For a given depreciation of Taka against a particular foreign currency like US Dollar, the import payment and export proceeds will both be higher in terms of Taka. In case of an appreciation of Taka against the same currency, the opposite will occur. Hence, the company has a natural hedge against exchange rate risk and is largely immune to fluctuation of exchange rates of BDT against US Dollars. INDUSTRY RISKS (i) Change in Rules-of-Origin regarding GSP (Generalized System of Preference) Facilities Very recently the European Union changed the Rules-of-Origin policy regarding GSP facilities. Under the GSP facilities, Bangladeshi products can get preferential treatment while exporting to EU countries. Under the previous rules, Bangladeshi garment manufacturers had to procure fabric from local sources in order to avail the GSP facility. Now, under the new Rules-of-Origin, Bangladeshi manufacturers would still get the GSP facility if they procure fabric from foreign sources. Hence, PTL will have to face stiffer competition from manufacturers of other countries since the local garment manufacturers do not necessarily need to procure fabric from PTL to avail the GSP facility. Management Perception The major competitive advantage of PTL is the quality of its products. The company has installed very sophisticated and high-end textile machineries. These machineries are capable of manufacturing very high quality fabric of different specification as per buyer s requirements. The production process is mostly automated and monitored closely at each stage for quality control. The company also has a well equipped testing laboratory and a design studio in order to achieve and maintain the optimum quality of the products. Apart from selling to local garment manufacturers, PTL exported fabric to foreign garment manufacturing companies in India and Turkey as well during the year ended on June 30, 2011 and in Thailand and India For the year ended June 30, For all these reasons, the company is placed at par with the foreign manufacturers in terms of quality. Moreover, PTL can deliver the products to local garment manufacturers within a shorter lead time compared to foreign manufacturers. (ii) Unavailability of Power At present the country s industrial sector is badly affected by shortage of power. The company s machineries run on electricity. Hence, power outage not only disrupts its operation and results in loss of revenue, but also causes inefficiency and increase of wastage. For such reasons, the financial performance of the company can be affected. 22