Bismillahir Rahmnir Rahim,
On behalf of the members of the Board of Directors of your company and on my own behalf, I welcome you all to the 7th Annual General Meeting of FAR Chemical Industries Limited. We members of the Board are pleased to present Directors’ Report, Auditors’ Report and Audited Financial Statements for the year ended 30th June, 2015 before you for your consideration and approval.
You know that your company’s products are the raw materials of garments and textile sector. So our production and sales are depends on uninterrupted production of textile and garment industries. The garments and textile sectors has gone through lot of obstacles in the last one year. But this has not affected the growth of the sector, regardless of rising energy and raw material costs and ever growing labor unrest.
The ongoing global economic crisis is having an impact on all export dependent economies. Even high performing countries like China and India have recorded slowdowns. Other high performing economies like those of Malaysia, Thailand, Philippines and Indonesia are also suffering badly because of the ongoing crisis.
In contrast, export of textile products from Bangladesh surprisingly remains quite buoyant. Readymade Garments exports have increased by significant percent, during the year 2012-2013 over the corresponding period of last year.
The industry has set a target of USD 35 billion exports by 2015, which would create an additional 1.20 million job opportunities within the sector and subsequently open up opportunities across different occupations. Many challenges have remained unresolved, but the overall outlook for this nation’s industry remains bright.
The following table indicates revenue of major products and its contribution percentage for the last two comparative periods:
|Products||Year ended 30-6-2015||Year ended 30-6-2014|
You know that your company’s products selling is directly depends on the production of garments and textile sector. All sectors of the garments and textile industries face many of the same challenges. The main problems are lack of power and problem with labor unrest causing disruption of production. Price of grid electricity for industries is likely to increase as well. Gas price has not yet been increased for the industries but the government has hinted the raise as well. Hence, coming year could be a year when the industries may need to be prepared to pay more for energy and fuel. So, this forcing the sector to be more cost effective in the ever challenging international market.
This year’s cost of goods sold was Tk.998.74 million as compared to last year’s cost of goods sold of Tk.915.21 million. This is due to the fact that there has been an increase of raw materials, manufacturing overhead and average production quantity. Production capacity utilized during the year was 76.40%. There was an increase in wages and salaries to the tune of Tk. 0.09 million as compared to last year.
The company has achieved an export turnover of Tk. 1,308.37 million during the year ended 30th June, 2015. Last year’s turnover was Tk. 1,198.19 million. The increase in turnover is 9.19% over the last year. Gross profit earned during the year was Tk. 309.62 million as compared to last year’s gross profit of Tk 282.98 million.
Net profit (after tax) earned during the year was Tk. 298.46 million as compared to last year’s Net profit (after tax) of Tk. 281.71 million. During the year net profit after tax has increased by Tk. 16.75 million compared to last year.
During the year there have accrued profit as interest from share money deposit offered by Initial Public Offer (IPO) made by the company.
Company has expended Tk 106,790,553 from the proceeds of Initial Public Offer (IPO) which consisted of as below:
Building & Other Civil Construction : 12,576,000
Imported Machinery : 87,234,500
Spare Parts & Cleaning, Erection, Loading/ Unloading, Transportation, Installation cost : 6,980,053
During the year the company has carried out transactions with related parties besides the normal course of business, details are given below:
|Name of related party||Relationship||Nature of transaction||Transaction value during the year||Outstanding balance as on June 30, 2015|
|M.L Dyeing Ltd||Common Director||Sale of Goods||145,396,876||75,396,876|
There is no significant variance between the Quarterly Financial performance and Annual Financial Statements.
The remunerations of Directors are as follows:
|Name||Position||Amount in Taka|
|Mr. Abid Mustafizur Rahman||Chairman||Nil|
|Mr. Md. Shirazul Haque||Managing Director||6,00,000|
|Mr. Rezaur Rahman Rajon||Director||Nil|
|Mr. Faiaz Kader Sadman||Director||Nil|
|Mr. Akik Habibuzzaman||Independent director||Nil||Mr. Md. Abdullah||Independent director||Nil|
The financial statements prepared by the management of the issuer company present fairly its state of affairs, the result of its operations, cash flows and changes in equity.
a) Proper books of account of the issuer company have been maintained.
b) Appropriate accounting policies have been consistently applied in preparation of the financial statements and that the accounting estimates are based on reasonable and prudent judgment.
c) International Accounting Standard (IAS)/ Bangladesh Accounting Standard (BAS)/International Financial Reporting Standard (IFRS)/ Bangladesh Financial Reporting Standard (BFRS), as applicable in Bangladesh, have been followed in preparation of the financial statements and any departure there- from has been adequately disclosed
d) The system of internal control is sound in design and has been effectively implemented and monitored.
e) There are no significant doubts upon the issuer company’s ability to continue as a going concern.
There are significant improvement from the last year’s operating results. The growth in the business is very positive and management’s continuous endeavor to grow and sustain the pressure of international competitive market.
|Particulars||Year ended as on|
|Gross Profit (Tk)||309,624,377||282,983,442||404,456,039||220,567,157||70,617,944|
|Operating Profit (Tk)||293,728,345||237,638,491||397,323,834||215,261,682||65,201,787|
|Net Profit before tax (Tk)||298,461,130||281,711,185||395,582,363||213,153,602||64,355,771|
|Net Profit after tax (Tk)||298,461,130||281,711,185||395,582,363||213,153,602||64,355,771|
|Basic EPS (Tk)||2.73||3.45||5.01||4.05||64.42|
|Dividend per share (%)||91.57%||57.97%||50%||Nil||Nil|
|Particulars||Year ended as on|
|Authorized Capital (Tk)||1,310,000,000||1,310,000,000||1,010,000,000||1,010,000,000||1,010,000,000|
|Paid up Capital (Tk)||1,092,378,780||910,315,650||790,315,650||526,877,100||99,900,000|
|Face value per share (Tk)||10||10||10||10||100|
|Retained Earnings (Tk)||836,390,809||719,992,809||438,281,624||306,137,811||92,984,209|
|Current Assets (Tk)||1,113,378,741||918,381,573||605,954,364||449,690,120||206,299,838|
|Current Liabilities (Tk)||45,687,406||89,205,183||83,881,290||81,575,814||73,459,179|
|Time Interest Earned Ratio||1,618.12||361.06||197.07||90.23||65.933|
|Return on Assets||34.72%||35.23%||56.11%||46.00%||13.26%|
|Return on Equity||15.47%||17.28%||32.20%||25.59%||10.38%|
|Earnings per share||2.73||3.45||5.01||4.05||64.42|
|Dividend Payout Ratio||91.50%||57.97%||99.80%||Nil||Nil|
|Number of Shareholders||6909||3654||22||12||12|
The Board met 9 times during the year. Following table shows the attendance of Directors in the meeting:
|Name of the Director||Position||No of Meeting held during the year||No of Meeting attended|
|Mr. Abid Mustafizur Rahman||Chairman||9||4|
|Mr. Kim Jong Suk||Managing Director||9||5|
|Mr. Rezaur Rahman Rajon||Director||9||4|
|Mr. Lee Jung Kook||Director||9||1|
|Mr. Faiaz Kader Sadman||Director||9||6|
|Mr. Akik Habibuzzaman||Independent Director||9||6|
The members who could not attend the meeting were granted leave and outside of the country.
a) Parent/ Subsidiary/ Associated Companies and other related parities
Number of shares held: Nil
b) Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer and Head of Internal Audit:
|Name||Position||Number of share held|
|Mr. Abid Mustafizur Rahman||Chairman||5,025,000|
|Mr. Kim Jong Suk||Managing Director||22,005,000|
|Mr. Rezaur Rahman Rajon||Director||5,225,000|
|Mr. Faiaz Kader Sadman||Director||10,416,615|
|Mr. ABM Golam Mostafa,FCMA||Company Secretary||Nil|
|Mr. A.K.M Atiqur Rahman||CFO||Nil|
|Mr. Gopal Chandra Basak||Head of Internal Audit||Nil|
c) Senior Corporate Executives :
Number of shares held : Nil
d) Shareholders holding ten percent (10%) or more voting interest in the company
Mr. Kim Jong Suk : 22,005,000 Shares
Mr. Abid Mustafizur Rahman will resign and be reappointed.
Present Auditors AHMAD & AKHTAR, Chartered Accounts (Affiliated with Russell Bedford International, UK) will retire in the 8th AGM and being eligible to audit for the year ended 30th June 2016 as per order of Bangladesh Securities and Exchange Commission (BSEC) No BSEC/CMRRCD/2009-193/104/Admin dated July 27, 2011 they have conveyed their willingness to accept for reappointment.
In accordance with the requirement of the Bangladesh Securities and Exchange Commission, Corporate Governance Report is annexed.
The board of directors wishes to place on record their appreciation of thanks to shareholders, customers and suppliers for their continued support. Your Directors also wish to place on record their appreciation for the contribution made by the employees at all levels to the continued growth and prosperity of the company.
The Board would also like to thank all stakeholders including banks, Insurance Companies, BEPZA, BSEC, DSE, CSE, CDBL, RJSC and various government authorities, trade bodies for their extended cooperation.
It’s a great pleasure to inform all valued shareholders and other concern individuals that your company has been decided to expand and diversified its product categories as well as increase production capacity. In this regard the company has purchased 47.12 decimal of factory land out of 200 decimal of land at Rupgonj,Narayangonj. We hope that within next year we may complete purchase of total land and start of construction civil work as well as within next 1 ½ years commencement of production will be taken place.
On behalf of the Board
Abid Mustafizur Rahman