IPO NOTE ON

LUB-RREF (BANGLADESH) LIMITED

PRIMARY MARKET SERVICES

LANKABANGLA INVESTMENTS LIMITED | WWW.LANKABANGLA-INVESTMENTS.COM
 About the Issuer

Nature of Business
The principal activities of the company are to manufacture Automotive, Industrial, Marine, Power House
Lubricants, Lube Base oil Refining and Lubricating grease Blending. The principal activities of the Company are
to manufacture of lubricants & allied products in its factory at Plot No.-B-6 (part), 9, 10 BSCIC Industrial Estate,
Sagarika Road, Chittagong. The Lubricant manufacturing plant has modern and latest machinery to produce
various types and categories of lubricants, Automotive, Industrial, Marine lubricants and Grease as well as
laboratory Services and marketing same conforming to latest claims like of API, ACEA, VOLVO, BMW, MB,
Wartsila, MTU, DIN, MAN, Waukesha, Denison, Vickers, AFNOR, etc. and the project also envisages further
expansion, producing the specialty products in near future with foreign technical assistance through its divisional
Sales Points through the country.

Lub-rref (Bangladesh) Limited is considered to be the most trusted & reliable national lubricants manufacturer
and supplier of quality lubricants products in the Country, which facilitates and adds considerable value to its
business processes in providing consistently high-quality products of international standards in the local market
at a competitive price. In doing so the company shall endeavor to establish a loyal and mutually rewarding
relationship with customers, employees, associates, and shareholders of the company. The company is an ISO
9001:2015, ISOQAR 9001:2015, ISO-IEC 17025:2005, ISO 14001:2015 & OHSAS 18001:2007 certified company
and a regular participant in ASTM inter laboratory cross-check program always maintaining high ethical and
international quality standards.

Historically Important Information about the Issuer

Date of Incorporation November 18, 2001
Commencement of Commercial Operation December 18, 2006
Conversion to Public Limited Company Started as the Public Limited Company since incorporation
1. Mrs. Rubiya Nahar
2. Mr. Mohammed Yousuf
3. Mr. Md. Salauddin Yousuf
Promoters of the Company 4. Ms. Dr. Israt Jahan
5. Ms. Nusrat Nahar
6. Mr. Al-Haj Musharraf Hussain
7. Mr. Md. Jashim Uddin

Industry of the Issuer

The global lubricant market is expected to register a CAGR of 2.18% during the forecast period, 2018-2023. One
of the major factors driving the growth of the global market is the growing automotive production Asia-Pacific
and Europe, especially in countries, such as India, the United Kingdom, Italy, France, and Indonesia. Additionally,
the growing demand for and usage of high-performance lubricants (owing to their better and improved
properties, such as reduced flammability, reduced gear wear, and increased service life), is also driving the
growth of the market, as the aforementioned properties, make these lubricants suitable for high temperature
applications. Lubricants are majorly used in the industrial sector for the proper functioning of machines. They
are also used in an automobile for smooth functioning and longevity of engines and other components.
Lubricants are available in liquid, semi-fluid, or solid state, and possess various characteristics, such as, high
viscosity index, high level of thermal stability, low freezing point, and high boiling point, all of which help to
reduce friction between surfaces of machine parts and the rate of wear, without compromising operational
efficiency.

The increase of total demand of global lubricants demands mainly expected from the region of India & Asia
Pacific. In particular, the consumption in this region is expected to be increased by about 10% during 2015-2017.
The Asian share in total global consumption of lubricants is expected to range around 43% in 2017. Asia-Pacific
is the fastest growing lubricants market, at a cumulative annual growth rate (CAGR) of 3.0% (approx.) between
2014 and 2019.Asia-Pacific, Middle East & Africa regions are expected to drive the lubricants raw materials
market in the recent future. These markets together accounted for around 51.0% of the total market. The
growing automotive sector and industrial production have led to an enhanced demand for lubricants. The motor
vehicles, Power and the Marine sector in these regions have a high share in the lubricants market.

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 About the Initial Public Offering (IPO)

Method of IPO Book-building

Offer/Cut-off Price Not yet determined (NYD)
Number of Shares NYD
Offer Size BDT 1,500,000,000
Issue Manager NRB Equity Management Limited
1. Citizen Securities & Investment Limited
2. BMSL Investment Limited
3. UNICAP Investments Limited
4. Southeast Bank Capital Services limited
Underwriters
5. BLI Capital Limited
6. NBL Capital & Equity Management Ltd.
7. BetaOne Investments Limited
8. NRB Equity Management Limited

Capital Structure
Particulars No. of Ordinary Shares Face value in BDT Amount in BDT
Authorized Capital 250,000,000 10.00 2,500,000,000
Before IPO:
Paid up Capital 100,000,000 10.00 1,000,000,000
After IPO:
To be issued as IPO NYD 10.00 NYD
Paid up Capital (Post IPO) NYD 10.00 NYD

Category Wise Shareholding Structure

Sl. No. of Shares Holding Percentage of Holding
Name of Director & Sponsor
No. Pre-IPO Post-IPO Pre-IPO Post-IPO
1. Sponsors & Directors 53,846,301 NYD 53.85 NYD
2. Individual 24,753,699 NYD 24.75 NYD
3. Institutions 21,400,000 NYD 21.40 NYD
Total 100,000,000 NYD 100.00 NYD

Lock-in Provision
Sl. No. Name/Designation Shares Holding Pre-IPO (%) Lock-in
1. Sponsors & Directors 53,846,301 53.85 3 Years
2. Individual & Institutional Investors 46,153,699 46.15 2 Years
Total 100,000,000 100.00

Minimum Investment in Listed Securities

Each EI who intends to participate in the electronic bidding shall maintain a minimum investment of Tk. 1.00
crore only in listed securities as on the end of October 04, 2020.

Maximum Amount for Eligible Investors (EI)

Issue Size in amount for Eligible Investors BDT 750,000,000
Maximum amount allowed to bid by a bidder BDT 15,000,000
Minimum amount allowed to bid by a bidder BBT 5,000,000

Distribution Mechanism of Securities

Eligible Investor (EI) General Public (GP)
EI including Mutual Funds & CIS GP excluding NRB NRB
50% (NoS) 40% (NoS) 10% (NoS)

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Bidding period of the Issue:
Opening date of bidding 5:00 PM on October 12,2020
Closing date of bidding 5:00 PM on October 15,2020

Use of Proceeds, Capacity Utilization and Dividend History

Use of IPO Proceeds

Sl. No. Particulars Amount in BDT (%)
Expansion of Business
1. 980,000,000 65.33%
(Acquisition & Installation of Machineries)
2. Repayment of Bank loan 460,000,000 30.67%
3. IPO Expenses 60,000,000 4.00%
Total 1,500,000,000 100.00%

Capacity
Existing Capacity & Utilization: (As per Audited Financial Statement 30.06.2019)
2018 2019
Capacity of Production
Blending Re-refining Blending Re-refining
Single Shift Total Total
Unit Unit Unit Unit
Installed Capacity (MT) 12,550 4,527 17,077 12,550 4,527 17,077
Capacity Utilized (MT) 6,992 4,102 11,094 9,060 4,220 13,280
Capacity Utilized (%) 55.71% 90.61% 64.96% 72.19% 93.22% 77.77%

Projected Capacity & Utilization:

2021 2022
Capacity of Production
Blending Re-refining Blending Re-refining
Single Shift Total Total
Unit Unit Unit Unit
Installed Capacity (MT) 12,550 8814 21,364 12,550 8,814 21,364
Capacity Utilized (MT) 9,555 8,380 17,935 10,701 8,425 19,126
Capacity Utilized (%) 76.14% 95.08% 83.95% 85.27% 95.59% 89.52%

Dividend History
The company didn’t distribute any dividend for the shareholders in the form of cash or bonus during the last five
years.

Financial Information

Summary of Valuation Report (Prepared by the issue manager)

Sl. No Valuation Methods Fair Value (BDT)
Net Asset Value Per Share (with revaluation) 31.93
1.
Net Asset Value Per Share (without revaluation) 25.96
Earning based Value per Share (Considering Average Market P/E) 26.61
2.
Earnings-Based-Value Per Share (Considering Average Sector P/E) 23.90
3. Average Market Price of Similar Stock Based Valuation 733.96

Key Financial Parameters from Statement of Profit or Loss & Comprehensive Income
Amount in BDT (Million)
Particulars 30-Jun-19 30-Jun-18 30-Jun-17 30-Jun-16 31-Dec-15
Revenue 1,533.94 1,375.93 1,186.78 465.05 830.04
Gross Profit 493.06 442.08 384.87 140.66 245.10
EBITDA 594.20 508.74 411.64 151.61 274.13
Operating Profit/EBIT 305.99 272.78 207.01 72.63 89.45
Net Profit Before Tax 300.74 271.82 208.61 73.28 106.73
Net Profit after Tax 207.63 204.50 150.59 61.54 95.18
Earnings Per Share using latest NoS 2.08 2.05 1.51 0.62 0.95

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Growth Analysis
Particulars 30-Jun-19 30-Jun-18 30-Jun-17 30-Jun-16
Revenue Growth (%) 11.48% 15.94% 155.19% -43.97%
Gross profit Growth (%) 11.53% 14.86% 173.62% -42.61%
EBITDA Growth (%) 16.80% 23.59% 171.51% -44.69%
EBIT Growth (%) 12.17% 31.77% 185.02% -18.80%
EBT Growth (%) 10.64% 30.30% 184.67% -31.34%
Net Profit Growth (%) 1.53% 35.80% 144.70% -35.34%

Key Financial Parameters from Statement of Financial Position

Amount in BDT (Million)
Particulars 30-Jun-19 30-Jun-18 30-Jun-17 30-Jun-16 31-Dec-15
Non-Current Assets 3,627.45 3,356.50 2,883.32 2,306.32 2,076.57
Current Assets 1,419.88 1,294.61 1,276.97 790.02 784.99
Cash & Cash Equivalent 78.12 130.73 73.74 11.83 14.09
Total Assets 5,047.33 4,651.12 4,160.29 3,096.34 2,861.56
Total Debt 1,428.02 1,344.93 1,370.35 1,613.41 1,495.64
Paid up Capital 1,000.00 1,000.00 700.00 285.31 285.31
Retained Earnings 1,137.32 922.19 709.36 553.26 488.84
Shareholder's Equity 3,193.09 2,984.34 2,588.98 1,342.04 1,238.95
NAV (With Revaluation) 31.93 29.84 24.30 40.07 37.92
NAV (Without Revaluation) 25.96 23.81 20.13 29.39 27.13

Key Ratios
Particulars 30-Jun-19 30-Jun-18 30-Jun-17 30-Jun-16 31-Dec-15
Liquidity Ratios:
Current Ratio (x) 1.79 1.93 1.94 0.92 1.01
Quick Ratio (x) 1.14 1.20 1.34 0.69 0.75
Profitability Ratios:
Gross profit margin (%) 32.14% 32.13% 32.43% 30.25% 29.53%
EBITDA margin (%) 38.74% 36.97% 34.69% 32.60% 33.03%
EBIT margin (%) 19.95% 19.83% 17.44% 15.62% 10.78%
EBT margin (%) 19.61% 19.76% 17.58% 15.76% 12.86%
Net Profit margin (%) 13.54% 14.86% 12.69% 13.23% 11.47%
Efficiency Ratios:
Accounts receivable turnover ratio (x) 4.07 3.95 3.64 1.46 2.49
Inventory turnover ratio (x) 2.07 2.11 2.72 1.61 2.07
Asset turnover ratio (x) 0.32 0.31 0.33 0.16 0.29
Solvency Ratios:
Debt to total Asset Ratio (x) 0.28 0.29 0.33 0.52 0.52
Debt to Equity Ratio (x) 0.45 0.45 0.53 1.20 1.21
Time interest earned Ratio (x) 3.36 3.44 2.60 2.43 1.82
Debt service coverage ratio (x) 0.54 0.54 0.45 0.14 0.23
Cash Flow Ratios:
Net operating Cash Flow Per Share
3.99 4.23 0.34 4.41 3.29
(NOCFPS)
NOCFPS to EPS 1.92 2.04 0.16 3.21 0.63
Decomposition of ROE (5 factor DuPont Analysis):
EBIT/Sales(Operating profit margin) 19.95% 19.83% 17.44% 15.62% 10.78%
EBT/EBIT (Interest impact) 0.98 1.00 1.01 1.01 1.19
EAT/EBT (Tax impact) 0.69 0.75 0.72 0.84 0.89
Net Profit margin 13.54% 14.86% 12.69% 13.23% 11.47%
Sales/Assets (Asset turnover ratio) 0.30 0.30 0.29 0.15 0.29
Asset/ Equity (Financial leverage) 1.58 1.56 1.61 2.31 2.31
Return on Equity (ROE) (%) 6.50% 6.85% 5.82% 4.59% 7.68%

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Disclaimer
This report has been prepared by LankaBangla Investments Limited (“LBIL”) using information provided by the Company in the Prospectus and
other publicly available information. LBIL has not independently verified the information contained herein, nor does LBIL make any
representation or warranty, either express or implied, as to the accuracy, completeness or reliability of the information contained in this report.
Nothing contained herein is or shall be relied upon as, a promise or representation as to the past or future. LBIL expressly disclaims any and all
liability relating or resulting from the use of this report.
This report has been prepared solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities
or related financial instruments. The Investors should not construe the contents of this report as legal, tax, accounting or investment advice or
a recommendation. Investors should consult their own counsel, tax and financial advisors as to legal and related matters concerning any
transaction described herein. Materials presented here does not purport to be all-inclusive or to contain all of the information which the
Investors may require. No investment, divestment or other financial decisions or actions should be based solely on the information provided
herein.

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