If you have any query about this document, you may consult issuer, issue

manager and underwriter

PROSPECTUS
INITIAL PUBLIC OFFER OF 34,000,000 ORDINARY SHARES OF TK. 10/- EACH AT PAR
TOTALING TK. 340,000,000/OF

ABC TAXTILES LIMITED

For General Public Quota
Opening date for subscription: December 17, 2015
Closing date for subscription (Cut-off date): December 27, 2015

MANAGER TO THE ISSUE

BETAONE INVESTMENTS LIMITED
Green Delta AIMS Tower (Level-4)
51-52, Mohakhali C/A, Dhaka-1212
Phone: +88 02 9883820; +88 02 9887337; Fax:
+88 02 9880733
E-mail: info@betaone.com.bd; Website:
www.betaone.com.bd

UNDERWRITERS
PRIME FINANCE CAPITAL MTB CAPITAL LIMITED
MANAGEMENT LTD MTB Tower (Level 3), 111 Kazi Nazrul Islam
PFI Tower (6th Floor),
56-57 Dilkusha, Dhaka-1000
Tel: +88 02 9584874-6; Fax: +88 02
9584922

Avenue,
Bangla Motor, Dhaka-1000
Tel: +88 02 8321714; Fax: +88 02
8321543

NBL CAPITAL AND EQUITY ICB CAPITAL MANAGEMENT

MANAGEMENT LTD LIMITED
Printers Building (8th Floor),
5 Rajuk Avenue, Dhaka-1000
Tel: +88 02 7118869; Fax: +88 02
7118840

BDBL Bhaban (Level 12-15), 8 Rajuk

Avenue,
Dhaka 1000
Tel: +88 02 9563455; +88 02 7160326

BETAONE INVESTMENTS LIMITED

Green Delta AIMS Tower (Level-4)
51-52, Mohakhali C/A, Dhaka-1212
Phone: +88 02 9883820; Fax: +88 02 9880733

Date of Publication of the Prospectus: November 17, 2015

The Issue shall be placed in N Category

ABC TEXTILES LIMITED

House # 20/B, Road # 14, Sector # 04, Uttara, Dhaka-1230, Bangladesh.
Phone: 8950643, 8950376, Fax: 88-02-8950425
E-mail: abcltd@org.com.bd , Web: www.abcltd.com

INFORMATION ABOUT THE COMPANY

SECTION: I
COMPANY PROFILE
ABC Textiles Ltd. is a pioneer and well established 100% Export Oriented joint
venture garment factory in Bangladesh. It is the Manufacturer & Exporter of all
kinds of Knit & Woven Garments from CEPZ, Chittagong, Bangladesh. The
Company incorporated on July 27, 2003 as a Private Limited Company and
converted into Public Limited Company on December 06, 2011 and started its
commercial operation on August 1, 2006 with vision to be an exemplary garments
manufacturer and exporter of Fashion Apparel as judged by international norms of
Professionalism, Quality and Systems. The Company has authorized share capital
of Tk. 1,400,000,000 (Taka One Hundred and Forty Crore) only, divided into
140,000,000 (Fourteen Crore) Ordinary Shares of Tk. 10.00 (Taka Ten) each. The
existing paid up capital of the Company is Tk. 1,050,623,000 (Taka One Hundred
and Five Crore Six Lac Twenty Three Thousand) only.
The registered office and as well as the manufacturing plant of the company is
located at Plot# 4748, Road# 5, Sector# 4, Chittagong Export Processing Zone,
Chittagong, Bangladesh. The corporate office of the Company is at M. L. Tower
(5th Floor), 1 East Rampura, DIT Avenue, Dhaka1219. The plant is built on about
3,763 sq. meters (approximately) lease land at Chittagong Export Processing
Zone. Promoted by a team of highly experienced professionals in the Readymade
Garments Manufacturer and backed by worlds most advanced management
information system, the Company fully capable to meet the specific requirements
of the buyers.

Important dates
Date of Land lease Agreement signed with BEPZA: 09.05.2004
Date of Incorporation as Private Limited Company: 27.07.2003
Commencement

of

Commercial

Operation

as

Private

Limited

Company:

01.08.2006
Conversion date from Private Limited to Public Limited Company: 06.12.2011
Date of changes in denomination of face value of share from Tk. 100 to Tk. 10:
08.12.2011

NATURE OF BUSINESS
The principal activities of the company are to carry on the business of
manufacturing and exporting knit and woven readymade garments to USA,
Canada and European countries for different product categories.
PRINCIPAL PRODUCTS AND SERVICES
Woven Product
All Types of Short & Long Pant
Jacket/Vest
Swim Trunk
Denim Pant

Knit Product
Fleece Top & Bottom
Children Dress
Sports Wears
Wash & Non Wash

MARKET FOR THE PRODUCTS

ABC Textiles Ltd. is a 100% export oriented readymade garments manufacturing
company that exports Woven and Knit Products basically to European Union, UK
and USA. Dependency on a single product for overall revenue generation creates
some product non diversification risk, but its widely diversified customer base and
sound relationship maintenance make them a successful player in the relevant
market. Most importantly their buyer composition remains more or less same over
last three years.
RELATIVE CONTRIBUTION OF THE PRODUCTS CONTRIBUTING MORE THEN 10%
OF THE TOTAL REVENUE

Serial No.
1
2

Product
Woven Bottoms
Knit Tops/Bottoms

Percentage (%)
40
60

ASSOCIATES, SUBSIDIARY/RELATED OR HOLDING COMPANY

ABC Textiles Ltd. has no Associates or Subsidiary company.

DISTRIBUTION OF PRODUCTS/SERVICES
The Company supplies its products from its own factory premises to its customers
at the risk of customers against delivery order. We may demonstrate the
distribution process of company production as follows:
Raw Material Import

Ware House

Lab for Testing

Sample Production

Garments Production

Hydro-Dry

Quality Check

Packing

Finished Ware House

Export/Delivery

COMPETITIVE CONDITIONS OF BUSINESS

There is a huge demandsupply gap for the product of the company in the
readymade garments market. The company earned good name & fame in the
international market of the country for its quality. The following are the major
readymade garments producers in Bangladesh:
Name of the Company
Square Fashions

DADA Garments

Desh Garments Ltd

Cotton Group

Al Muslim Fashions Wear Ltd.

Amazone Garments Ltd.

Elegant Fashion

Viyallatex Group

4 Star Fashions Ltd.

Jeans Plus Ltd.

ACME Apparels (PVT) Ltd.

AlMuslim Garments ltd.

ABC Garments Ltd.

ACME Textile & garments Industries

(Pvt.) Ltd.

NUMBER OF EMPLOYEES
As of December 31, 2011 the total numbers of employees of the company (Head
Office & Service Center) were 1,460 as follows:
Salary Range
(Monthly)
Above BDT
3,500/=
Below BDT
3,500/=
Total

Officers & Staffs

Worker
(permane
nt)

Total

Head Office

Factory

27

452

487

15

950

973

16

42

1,402

1,460

PRODUCTION CAPACITY AND CURRENT CAPACITY UTILIZATION

Yearly Production Capacity
(Pieces)

Current Utilization Capacity

(Pieces)

Percentage
(%)

3,400,000 (by average product

mix)

2,631,578 pieces

77.40

ISSUE SIZE AND PURPOSE OF PUBLIC OFFERING

SECTION: II
FINANCIAL STRUCTURE OF THE COMPANY
Particulars

No. of Shares

Amount (BDT)

Authorized Capital

140,000,000

1,400,000,000.0
0

Pre-IPO Paid-up Capital*

105,062,300

1,050,623,000

34,000,000

340,000,000

139,062,300

1,390,623,000

Capital to be issued as IPO

Post IPO Paid-up Capital

* The company raised its paid up capital from Taka 99,998,000/ to Taka 1,050,623,000/
on November 24, 2013 in terms of Bangladesh Securities and Exchange Commission
Consent letter no. SEC/CI/ CPLC (Pvt.)371/2011/936 dated December 28, 2013.

USE OF IPO PROCEEDS

ABC Textiles Limited will raise the capital through Initial Public Offering (IPO) in
order to meet increasing need for fund for the purpose of expansion and
repayment of its debt. Increase in turnover and saving in financial cost will lead to
higher profitability. The Company will utilize the total proceeds of BDT
340,000,000 as per following schedule:
Sl.
No.

Particulars

Amount in BDT

1.

Expansion of business

250,000,000

2.

Repayment of long-term loan

50,000,000

3.

Working Capital

32,000,000

4.

IPO Expenses

8,000,000
Total

340,000,000

IMPLEMENTATIONS SCHEDULE
Sl.
No.

Particulars

Implementation Schedule

1.

Expansion of business

2.

Repayment of long-term loan

3.
4.

Within 15 months of receiving the IPO

proceeds
As soon as the IPO Proceeds are
available
As soon as the IPO Proceeds are
available
As or when required

Working Capital including

enhanced capacity
IPO Expenses

DIRECTORS PROFILE
SECTION: III
DIRECTORS OF THE COMPANY

Name
Roksana Morshed
Mohammed
Morshed
Meraj-E-Mostafa
Tabassum Karim

Designation
Chairman
Managing
Director
Director
Director

Age
(Years
)
37

Educational
Qualification

Experienc
e

MBA

10 years

44

Bachelor of Commerce

20 years

36
28

MBA
MBA

9 years
5 years

INFORMATION REGARDING DIRECTOR AND DIRECTORSHIP

Name

Designation

Date of becoming
Director for the
first time

Roksana Morshed

Chairman

07-03-2014

15-10-2015

Mohammed
Morshed

Managing
Director

07-03-2014

15-10-2017

Meraj-E-Mostafa

Director

07-03-2014

15-10-2015

Tabassum Karim

Director

07-03-2014

15-10-2015

Date of Expiration
of Current Term

DIRECTORS INVOLVEMENT WITH OTHER ORGANIZATION

There is no ownership of Directors of ABC Textiles Limited as owner or partner
in other organizations except the following:
Name

Designatio
n

Name of the
Organization

Position

Roksana Morshed

Chairman

Mohammed
Morshed

Managing
Director

Sonar Cotton Ltd.

IFCO Garments & Textile
Ltd.
Sonar Cotton Ltd.
Ozir Ali Textile Ltd.
Wajib Traders

Director
Managing Director
Managing Director
Managing Director
Managing Director

FAMILY RELATIONSHIP AMONG DIRECTORS AND TOP OFFICIALS

No family relationship exists between the members of the Board of Directors and
top Officers of the Company. The relationship among board of directors is given
below:
Name

Position in the
Company

Relationship

Roksana Morshed

Chairman

Wife of Mr. Mohammed Morshed

Managing Director

Husband of Mrs. Roksana Morshed

Meraj-E-Mostafa

Director

N/A

Tabassum Karim

Director

N/A

Mohammed
Morshed

FEATURES OF IPO
SECTION:IV
DETERMINATION OF OFFERING PRICE
The company will issue 34,000,000 shares of BDT 10.00 each at par through IPO
under fixed price method.

Sl. No.
a.
b.

Particulars
Net Asset Value per share
Earning based value per share

BDT
11.82
9.57

a. Net Asset Value per Share

Particulars

Amount in BDT
(31.12.2014)

A.
B.
C.
D.
E.

Non-current Assets
Current Assets
Total Assets
Noncurrent Liabilities
Current Liabilities
Total Liabilities
Net Asset Value (AB)
No. of Share
Net assets value per share of Tk. 10 each
(C/D)

965,592,646
814,722,413
1,780,315,059
255,265,987
282,997,882
538,263,869
1,242,051,190
105,062,300
11.82

b. Earning based Value per Share

Particulars
Net Profit (BDT)
No. of Shares
Weight of Shares
Weighted Net
Profit (BDT)

2010

2011

2012

2013

2014

18,146,2
36
6,000,00
0

8,199,0
13
6,000,0
00

30,932,0
02
6,000,00
0

48,993,3
31
6,000,00
0

96,217,21
0
105,062,3
00

Aggregat
ed
202,487,79
2
129,062,30
0

0.046

0.046

0.046

0.046

0.814

1.00

843,604

381,165

1,438,00
3

2,277,66
0

78,324,97
5

83,265,407
105,062,3
00

No. of Shares before IPO

EPS based on weighted average net profit (BDT)

0.793

DSE Market PE

12.07

Price based on Earning based Value per Share (BDT)

9.57

OFFER PRICE
Based on the above-mentioned valuation methodologies as per Securities and
Exchange Commission (Public Issue) Rules, 2006, the management of the
Company in consultation with the Issue Manager has set the issue price at BDT
10.00 each.
MARKET FOR THE SECURITIES BEING OFFERED
The issuer shall apply to all the stock exchanges in Bangladesh within seven
working days from the date of consent accorded by the Commission to issue
prospectus.

10

Dhaka Stock Exchange Limited

(DSE)
Stock Exchange Building, 9/F Motijheel
C/A, Dhaka.
Chittagong Stock Exchange
Limited (CSE)
CSE Building, 1080, Sk. Mujib Road
Agrabad, Chittagong.
AUDITORS REPORT
SECTION:V
ABC Textiles Limited
Statement of Financial Position
As at December 31, 2014
Particulars

Amount in BDT
31-12-2014
31-12-2013

ASSETS
Non-Current Assets:
Property, Plant & Equipment
Security Deposit
Total Non-Current Assets

962,763,048

1,034,539,388

2,829,598

2,829,598
1,037,368,98
6

965,592,646

Current Assets:
Inventories
Trade and other receivables
Advance ,Deposits and Prepayments
Cash and bank balances
Total Current Asset
TOTAL ASSETS

434,708,022
367,791,266

444,151,223
230,250,314

2,570,138
9,652,987

14,184,280
6,598,803

814,722,413
1,780,315,05
9

695,184,620
1,732,553,60
6

1,050,623,000
-

60,000,000
950,625,000

191,428,190

95,210,980

Capital and Reserves:

Share Capital
Share money deposit
Retaining Earnings

11

Non-Current Liabilities:
Long Term Borrowings
Total Non-Current Liabilities

1,242,051,19
0

1,105,835,98
0

255,265,987

251,849,189

255,265,987

251,849,189

84,198,571
138,000,000

148,596,564
138,000,000

49,344,077
11,455,234

78,977,600
9,294,273

282,997,882
538,263,869
1,780,315,05
9

374,868,437
626,717,626
1,732,553,60
6

Current Liabilities:
Trade and other payables
Current portion of Long Term Loan
Short Term Borrowings
Provision for expenses
Total Current Liabilities
Total Liabilities
TOTAL EQUITY & LIABILITIES

ABC Textiles Limited

Statement of Comprehensive Income
For the Year ended December 31, 2014

Particulars

Amount in BDT
31-12-2014

31-12-2013

1,006,879,167

934,751,217

808,687,093

791,366,281

198,192,074

143,384,936

24,354,621

22,011,276

173,837,453

121,373,660

205,982

161,455

173,631,471

121,212,205

78,259,051

73,442,699

95,372,420

47,769,506

844,790

1,223,825

96,217,210

48,993,331

Provision for taxation

Net Profit after tax

96,217,210

48,993,331

Sales
Less: Cost of goods sold
Gross Profit
Less: operating expenses
Operating Income
Less: Other operating Expenses
Net Operating Income
Financial expenses
Net operating Profit
Add: Other non-operation income
Net profit before tax

12

13

ABC Textiles Limited

Cash Flow Statement
For the year ended on December 31, 2014
Particulars

Amount in BDT
31-12-2014
31-12-2013

A .Cash Flow From Operating Activities:

Collection from Turnover

869,338,215

8 89,410,391

844,790

1,223,825

(778,580,167)

( 885,551,597)

(21,301,584)

( 30,425,704)

(205,982)

(161,455)

(78,259,051)

( 73,146,129)

8,163,779

98,650,669

(2,563,312)

(47,185,924)

(2,563,312)

(47,185,924)

(29,633,523)

3 9,656,844

3,416,798

(42,749,567)

39,998,000

153,800,000

13,781,275

150,707,277

D. Increase/(Decrease) cash and cash

equivalents (A+B+C)

3,054,184

4 ,870,684

E. Opening cash and cash equivalents

6,598,803

1 ,728,119

F. Closing cash and cash equivalents (E + D)

9,652,987

6 ,598,803

Collection from other non-operating income

Payment for Cost of Expenses
Paid for operating Expenses
Expenses paid for other operating activities
Payment for financial Expenses
Net cash flow from operating activities

B. Cash Flow From Investing Activities:

Purchase of Fixed Assets
Net cash flow from Investing activities

C. Cash Flow From Financing Activities:

Increase/ Decrease in Short term loan from bank
Decrease in Long term loan from bank
Increase in Capital
Increase in Share money deposit
Net Cash flow from financing activities

14

Auditors Certificate Regarding calculation of Ratios

Amount in Taka
Year ended December 31, 2014, 2013, 2012, 2011 and 2010
Particulars

Formula

2014

2013

2012

2011

2010

Current asset/current
liabilities

2.88

1.86

1.36

1.43

0.36

Current assets- Inventory

1.33

0.63

3.62

1.10

0.29

Operating profit/Net
interest expense

2.22

1.65

2.48

1.44

3.90

Total debt / Total equity

0.32

0.35

.33

.36

.34

Average accounts
receivable/2

3.37

4.50

4.77

4.78

9.56

Cost of goods sold /

Average inventory

1.84

2.75

7.46

16.87

14.9
6

Sales / Average total assets

0.57

0.60

0.57

0.58

1.20

19.68

15.34

14.00

10.11

12.5
9

9.47

5.11

8.00

2.06

6.80

9.5

5.2

2.1

6.9

9.99

4.74

6.00

0.90

9.90

7.75

4.43

12.00

1.61

27.0
5

11.45

8.17

5.16

1.37

3.02

LIQUIDITY RATIO
Current Ratio
(Times)
Quick(Acid Test)
Ratio (Times)
Times Interest
Earned Ratio
(Times)
Debt to Equity
Ratio (Times)
OPERATING RATIO
Accounts
Receivable
Turnover Ratio
Inventory Turnover
Ratio
Total Assets
Turnover Ratio

PROFITABILITY RATIO
Gross Profit Margin

(Gross profit*100)/Sales

Operating Profit
Margin
Net Profit Margin
(%)
Return On Assets
(ROA)%
Return on Equity
(ROE)%
Earnings Per Share
(Taka)

(Operating
profit*100)/Sales
(Net profit*100)/Sales
(Net profit*100)/Average
total assets
(Net profit*100)/Average
total equity
Net profit /Weighted
Average no of shares

15

ANALYSIS OF MAJOR RATIOS

SECTION:VI

Inventory Turnover:
Inventory turnover is the ratio of cost of goods sold to inventory. This ratio
indicates how many times inventory is created and sold during the period that
means it measures the efficiency of the firms inventory management.

Inventory Turnover
16.87

18

14.96

16
14
12
10

Inventory Turnover

7.46

8
6
4

2.75
1.84

2
0
2014

2013

2012

2011

2010

Recommendation:
As we can see, efficiency in inventory management is going downward that must
turn the management concentration about identifying the underlying deficiency.

16

Accounts Receivable Turnover:

Receivables Turnover measures the effectiveness of the firms credit policy and
also
indicate the level of investments in receivables needed to maintain the firms
sales level.

Receivables Turnover
9.56

10
9
8
7
6

ReceivablesTurnover

4.5

5
4

4.77

4.78

3.37

3
2
1
0
2014

2013

2012

2011

2010

Recommendation:
Company seems to be very lenient about the credit term and policy. Collection
inefficiency of the credit may cause them liquidity problem.

17

Current Ratio:
It measures a firm's ability to pay off its short-term liabilities with its current
assets.

Current Ratio
3

2.88

2.5
1.86

Current Ratio

1.36

1.5

1.43

0.36

0.5

0
2014

2013

2012

2011

2010

Recommendation:
Company is preserving CU3 of asset against CU1 of liability which indicates a good
liquidity prospect.

18

Debt to Equity:
The debt to equity ratio shows the percentage of company financing that comes
from creditors and investors.

Debt to Equity
36%
36%
35%
35%

34%
34%
33%

Debt to Equity

33%
32%
32%

31%

30%
2014

2013

2012

2011

2010

Recommendation:
Consistency in capital structure shows management long term planning in terms
of investment and return to shareholders.

19

Net Profit Margin:

It measures the amount of net income earned with each dollar of sales generated
by comparing the net income and net sales of a company. Creditors and investors
use this ratio to measure how effectively a company can convert sales into net
income.

NetProfit Margin
10%

10%

9%

8%

8%

7%

7%
5%

6%

Net Profit Margin

5%
4%

2%

3%
2%
1%
0%
2014

2013

2012

2011

2010

Recommendation:.
Inconsistency in the trend of this ratio indicates that company is still struggling to
achieve economic scale

20

Return on Equity:
It measures the ability of a firm to generate profits from its shareholders investments in the company. In
other words, the return on equity ratio shows how much profit each dollar of common stockholders'
equity generates.

Return on Equity
30

27

25

20

Return on Equity

15

10

12
7.75
4.43

1.61

0
2014

2013

2012

2011

2010

Recommendation:
Company is loosing control over its capital utilization efficiency.

21

Return on Asset:
It measures the net income produced by total assets during a period by comparing net income to the
average total assets.

Return on Asset
9.99

9.9

10
9
8
7

Return on Asset

4.74

5
4
3
2

0.9

1
0
2014

2013

2012

2011

2010

Recommendation:
As like return on equity company is not competent enough to maintain a steady
flow of return on asset. It shows lack of efficiency in asset management.

22

CREDIT RATING REPORT

SECTION: VII
Credit Rating Information and Services Limited (CRISL) has rated the Company as
"AA" in the long term and "ST-2" in the short term along with a stable outlook in
consideration of its audited financials up to December 31, 2014, unaudited
financials up to March 31, 2015 and other relevant quantitative as well as
qualitative information up to the date of rating declaration.

23