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Apex Tannery Limited
38th Annual General Meeting of the Company held on 23rd September, 2014
A partial view of the Shareholdes at the 38th Annual General Meeting
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A partial view of the Shareholders at the 38th Annual General Meeting
Annual Report 2015 3
Apex Tannery Limited
Our Vision, Mission, Values and Objectives 04
Corporate Directory 05
Directors and Management Team 06
Directors’ Profile 07
Report of the Directors 10
Financial Highlights 18
Financial Highlights (Graphical presentation) 19
Statement of Value Addition 20
Report on Corporate Social Responsibilities (CSR) 21
Report on Corporate Governance 23
Corporate Governance Compliance Report 26
Pattern of Shareholding 33
Audit Committee Report 34
Auditors’ Report 37
Statement of Financial Positon 38
Statement of Comprehensive Income 39
Statement of Cash Flow 40
Statement of Changes in Equity 41
Notes to the Financial Statements 42
Notice of the AGM 59
Attendance slip and Proxy form 61
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OUR VISION, MISSION, VALUES AND OBJECTIVES
Our VisionOur vision is to attain 100% customer satisfaction world wide through continual quality improvement of our products.
Our MissionTo understand and satisfy customer’s wants and needs, we always try to add value, reduce costs and provide innovative thinking for improvement of our product quality, with world class compliance and working standards.
Our ValuesTo our customers we offer
•Acommitmenttoprovidebestqualityproductandtimelydelivery•Productionofworld-classqualityleather,meettherequirementsofcustomerswithcompetitivepriceand
up to date fashion trends •Quickresponsetotheexpectationsofourvaluedcustomersintermsofqualityandproductdevelopment
To our employees we offer• Adesirableandrewardingplacetowork• Providemotivationforteamworkandcareerdevelopment• Theopportunitytogrowtoemployee’smaximumpotential• Sufficientoffsiteandonthejobtraining
To our shareholders we offer• Attractivereturnwithminimumriskoftheirinvestment•A commitment to continuous improvement and adding value through all activities and managing
resources
To our suppliers we offer• Easytermsoftrade• Paymentwithinduetime
Our Objectives• 100%ontimedeliveryoftheservicestoourvaluedcustomers• 100%accuracyindocumentation•100%customersacceptanceofourservicesasvalidandusablesinaccordancewiththeirrequirements• Overallreductionofcostby2%everyyear• Reductionofcustomercomplaintsby10%everyyear.
Apex Tannery Limited
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CORPORATE DIRECTORY
BOARD OF DIRECTORS
ChairmanSyedManzurElahi
Managing DirectorMd.Rahmatullah
DirectorsSyedNasimManzurMd.HedayetullahMd.FayekuzzamanFaruqAhmadSiddiqiSayedAlamgirFarroukChowdhury
AUDIT COMMITTEE
ChairmanFaruqAhmadSiddiqi
MembersSyedNasimManzurMd.HedayetullahSayedAlamgirFarroukChowdhury
MANAGEMENT COMMITTEE
ChairmanSyedManzurElahi
MembersMd.RahmatullahMd.HedayetullahAnsarul Islam M.AbdulMajedAnupKumarMukherjee
HUMAN RESOURCES COMMITTEE
ChairmanMd.Hedayetullah
MembersAnsarul Islam M.AbdulMajedAnupKumarMukherjeeMd.GolamSarwar
COMPANY SECRETARYJagadishKumarBhanja
AUDITORSChowdhuryBhattacharjee&Co.CharteredAccountants
CORPORATE GOVERNANCE AUDITOR
ARTISANCharteredAccountants
CHIEF FINANCIAL OFFICER
AnupKumarMukherjee
TAX ADVISER
KhandkerFazlulQuadir
LEGAL ADVISER
MohsenRashidAdvocate,SupremeCourt
BANKERS
Agrani Bank Ltd.AminCourtCorp.Branch,MotijheelC/A,Dhaka-1000
REGISTERED OFFICE
127HazaribaghT/ADhaka-1209
FACTORY
Unit I 127HazaribaghT/A,Dhaka-1209
Unit II ShafipurKaliakoir,Gazipur
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DIRECTORS AND MANAGEMENT TEAM
SyedManzurElahiChairman
SyedNasimManzurDirector
FaruqAhmadSiddiqiIndependent Director
Md.HedayetullahDirector
SayedAlamgirFarroukChowdhuryIndependent Director
Md.RahmatullahManagingDirector
M.AbdulMajedExecutiveDirector
AnupKumarMukherjeeChiefFinancialOfficer
JagadishKumarBhanjaCompanySecretary
Ansarul IslamExecutiveDirector
Md.FayekuzzamanDirector
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DIRECTORS’ PROFILE
Chairman• ApexFootwearLtd.• ApexInvestmentsLtd.• QuantumConsumerSolutionsLtd.• BlueOceanFootwearLtd.• ApexPharmaLtd.• GreyAdvertisingBangladeshLtd.
Director• InternationalPublicationsLtd.(FinancialExpress)• PioneerInsuranceCo.Ltd.• MutualTrustBankLtd.
Trustee• EastWestUniversity
Other Activities• Former Advisor, Caretaker Government of
Bangladesh,1996and2001• FormerDirector,BangladeshKrishiBank• FormerDirector,ExportPromotionBureau• FormerDirector,BangladeshBank• Former President, Metropolitan Chamber of
CommerceandIndustry• FormerDirector,SonaliBank• Former President, Bangladesh Employers
Association
EducationB. A. (Distinction) in 1962 from St. Xavier’sCollege, Kolkata &M. A. (Economics) in 1964from Dhaka University.
Chairman• Parliamentary Standing committee for
ministryofInformation(2009totilldate)• PioneerInsuranceCompanyLtd.• FBFootwearLtd.• FootbedFootwearLtd.
Managing Director• DaichipexTextileMillsLtd.• ApexPropertyDevelopmentLtd.
Member• Central working committee, Bangladesh
Awami League• Parliamentary Standing Committee on
MinistryofLiberationWarAffairs• ParliamentaryPublicAccountscommittee• Bangladesh Jatiya Sangshad (1986, 1988,
1996,2008totilldate)• Senate,DhakaUniversity
Chief Adviser• BangladeshFinishedLeather,Leathergoods
andFootwearExporters’Association• DhakaMahanagarSamity(DhakaSamity)
Founder• A. K. M. Rahmatullah University College,
Beraid,Gulshan,Dhaka• Roushan Ara Girls High School, Beraid,
Gulshan,Dhaka
EducationBachelorofArtsfromChittagongUniversity.
Syed Manzur ElahiChairman
Md. RahmatullahManaging Director
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DIRECTORS’ PROFILE
Md. HedayetullahDirector
Syed Nasim ManzurDirector
President• MetropolitanChamberofCommerceandIndustry
(MCCI)
Chairman• LandmarkFootwearLtd.
Managing Director• ApexFootwearLtd.
Founding Director• ApexFootwearLtd.• QuantumConsumerSolutionsLtd.• BlueOceanFootwearLtd.• ApexInvestmentsLtd.• GuardianLifeInsuranceLtd.
Director• ApexPharmaLtd.
• GreyAdvertisingBangladeshLtd.
• ApexEnterpriseLtd.
• PioneerInsuranceCo.Ltd.
• InternationalPublicationsLtd.
• Bangladesh Association of Publicly ListedCompanies(BAPLC)
• FRIENDSHIP (An Internationally acclaimed NonGovernment Organization which provides health andeducationalserviceinremoteandinaccessiblecharsofthenorthernregionoftheCountry)
• BangladeshBusinessLimited
Independent Director• WesternMarineShipyardLtd.
Education Graduated in Economics in EntrepreneurialManagement from the Wharton School of theUniversityofPennsylvania,USAin1990.
Chairman• HedayetullahSecuritiesLtd.
• ExecutiveCommitteeofMutualTrustBankLtd.
Managing Director• RMMPowerandEnergyLtd.
Director• MutualTrustBankLtd.
• DaichipexTextileMillsLtd.
• ApexPropertyDevelopmentLtd.
• FBFootwearLtd.
• FootbedFootwearLtd.
EducationB.Sc(Honors)inLeatherTechnologyfromtheBritish
School of Leather Technology, Northampton, UK
& M. A. in international Business from Webster
University, Regents College, London, United
Kingdom.
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DIRECTORS’ PROFILE
Md. FayekuzzamanDirector
Faruq Ahmad SiddiqiIndependent Director
Chairman• ICBCapitalManagementLtd.
Managing Director• InvestmentCorporationofBangladesh(ICB)
Director• Industrial and Infrastructure Development
FinanceCompanyLtd.(IIDFC)• BangladeshDevelopmentBankLtd.(BDBL)• StandardBankLtd.• British American Tobacco Bangladesh Ltd.
(BATB)• LindeBangladeshLtd.• GlaxoSmithKlineBangladeshLtd.• ACILtd.• RenataLtd.• Credit Rating Information and Services Ltd.
(CRISL)• Credit Rating Agency of Bangladesh Ltd.
(CRAB)• BangladeshInstituteofCapitalMarket(BICM)• CentralDepositoryBangladeshLtd.(CDBL)• NationalTeaCompanyLtd.• ApexFootwearLtd.• SBLCapitalManagementLtd.
Member• TheInstituteofBankers,Bangladesh(IBB)• Bangladesh Krishi Gobeshona Endowment
Trust(BKGET)
Past Responsibilities• DeputyManagingDirector,AgraniBankLtd.• GeneralManager,InvestmentCorporationof
Bangladesh(ICB)
EducationB.Com(Hons),M.CominManagement.PostGraduation Studies in Investment Planning,Appraisal and management of Development FinanceInstitutionfromBradfordUniversity,United Kingdom. Attended CambridgeLeadership Program organized by theUniversity of Cambridge, United Kingdomand Leadership Essential Program arrangedbytheColumbiaUniversity,USA.
Former Chairman• Bangladesh Securities and Exchange
Commission (March 2006 to March
2009)
Retired secretary to the Govt. ofBangladesh (2002 to 2006)• MinistryofEducation
• MinistryofCommerce
• MinistryofPost&Telecommunication
• MemberofNationalBoardofRevenue
EducationB.A.(Hons).M.A.EnglishLanguageand
Literature from the University of Dhaka.
Retired Secretary to the Govt. of Bangladesh• MinistryofHealthandFamilyWelfare• MinistryofCommerce• MinistryofLocalGovernment
Former President• NationalTennisFederation
Former Vice President• Bangladesh National Football and
CricketFederation
Former Chairman• SelectionCommitteefortheBangladesh
NationalCricketandSoccerteams
Former Commissioner• RajshahiDivision
Former Director General• IndustriesandFood
Former Advisor• BangladeshEnterpriseInstituteand
FBCCI
Former Partite consultant • CIDA,CUTS,EU,DFID,OxfordPolicy
Management,OPM,USAID
EducationMasters Degree in Economics from
UniversityofDhakain1964andMasters
Degree in Economics from Williams
College,USAin1978.
Sayed Alamgir Farrouk ChowdhuryIndependent Director
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DIVIDENDS
DuringtheyearEPSofyourCompanywasTaka6.25.DirectorsdecidedintheBoardMeetingheldonAugust16,2015torecommenddividendofTaka4.50pershareofTaka10/-each.AfteryourapprovalinthisGeneralMeeting,thedividendwillbepaidtotheShareholders.
EMPLOYMENT
Although the labour situation in the RMG sector was unsatisfactory, if not violent sometimes, the labourenvironmentintheleathersectorwasquiet.LabourrelationinyourCompanywascordialandmoraleoftheworkerswashigh.ThebreakdownofyourCompany’shumanresourcesare:
This YearTotal
Previous YearTotal
Workers 657 733
Staff 179 181
Management 32 32
INDUSTRY OUTLOOK AND POSSIBLE FUTURE DEVELOPMENTS
TherecessioninEuropecontinues,whichadverselyaffectedthedemandforleather,and,asexplainedlastyear,weexploredChinaandfoundtooursatisfactionthatthedemandforleatherinChinaissatisfactoryduetotheriseofthemiddleclass.PurchasingpowerinChinahasincreaseddramatically,withtheirgovernmentpushingitfurther.Consequently,thedemandforourleatherhasincreasedamongstthelocalshoeindustryinChina.
RISKS AND CONCERNS
During the year, the international and local media were highly critical of the environmental situation in Hazaribagh,whichwefeelisjustified.Nowhereintheworld,atannerywillbeallowedtofunctionwithouttheirownEffluentTreatmentPlant(ETP)oraCentralizedEffluentTreatmentPlant(CETP).WearecertainthatwithoutaCETPthereisnofutureforthissector.WefeelthatifwedonotrelocatetoSavarbyendofnextyear,EuropeandevenChinawillstopimportinganyleatherfromBangladesh.Inotherwords,thesoonerwerelocatetoSavar,thebetterfortheCompanyandtheCountry.
WehavebeenassuredbytheGovernmentofBangladeshthattheCETPwillbefullyfunctionalbymiddleof2016.YourCompanystartedtheconstructionofthenewtanneryinSavarabout06(six)monthsagoandtheprogressofconstructionissatisfactory.Hopefully,wewillbeabletogointocommercialproductionbyJune,2016.
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DIRECTORS ELECTIONMr.SyedManzurElahiandMr.SyedNasimManzurretire fromtheBoard intermsofArticlesofAssociation,andbeingeligible,offer them for re-election.TheBoardofDirectorsnominatedMr.SayedAlamgirFarroukChowdhury for appointment as an Independent Director, his appointment require approval in this AGMaccordingtoBSECCorporateGovernanceNotification.
BOARD MEETINGS AND ATTENDANCEDuringtheyearfourBoardMeetingswereheldandtheattendancebyeachDirectorwasasfollow:
Name of Directors No. of Meetings AttendedSyedManzurElahi 4Md.Rahmatullah 4SyedNasimManzur 3Md.Hedayetullah 4Md.Fayekuzzaman 4FaruqAhmadSiddiqi 4SayedAlamgirFarroukChowdhury 1TheDirectorswhocouldnotattendthemeetingsweregrantedleaveofabsence.
AUDIT COMMITTEETheAuditCommitteewassetuptoreviewthefinancialresults,auditandcompliancewiththestatutoryandregulatory requirements.TheCommittee recommended to theBoardofDirectors, the appointmentof theCompany’sauditorsandreviewedthescopeofinternalaudit.Auditcommitteereportisannexed.TheAuditCommitteewasformedbyfollowingDirectors:
1. FaruqAhmadSiddiqi,IndependentDirector Chairman2. Mr.SyedNasimManzur,Director Member3. Mr.Md.Hedayetullah,Director&HeadofInternalAudit Member4. SayedAlamgirFarroukChowdhury,IndependentDirector Member
CORPORATE & FINANCIAL REPORTINGTheCompanyhascompliedwithalltherequirementsofCorporateGovernanceasrequiredbytheBangladeshSecuritiesandExchangeCommission:
AccordinglytheDirectorsarepleasedtoconfirmthefollowing:
(a) Thefinancial statements togetherwith thenotes thereonhavebeendrawnup in conformitywith theCompanies Act 1994 and Securities and Exchange Rules 1987. These statements present fairly theCompany’sstateofaffairs,theresultsofitsoperations,cashflowandchangesinequity.
(b) ProperbooksofaccountsoftheCompanyhavebeenmaintained.
(c) Appropriateaccountingpolicieshavebeenconsistentlyappliedinthepreparationoffinancialstatementsandtheaccountingestimatesarebasedonreasonableandprudentjudgment.
(d) TheInternationalAccountingStandards,asapplicableinBangladesh,havebeenfollowedinpreparationoffinancialstatements.
(e) Thesystemsofinternalcontrolaresoundandhavebeeneffectivelyimplementedandmonitored.
(f ) ThecompanyhascarriedontransactionswithApexFootwearLimited,MutualTrustBankLtdandPioneerInsuranceCompanyLimitedinthenormalcourseofbusiness.
(g) TherearenosignificantdoubtsupontheCompany’sabilitytocontinueasagoingconcern.
(h) Thekeyoperatingandfinancialdataforlastfiveyearsisannexed.
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SHARE HOLDING
In accordance with the requirement of the Bangladesh Securities and Exchange Commission, pattern ofshareholdingsasof30thJune2015aregiveninAnnexureI.
REMUNERATION OF DIRECTORSinaccordancewiththerequirementoftheBangladeshSecuritiesandExchangeCommission,remunerationofdirectorsfortheyearended30thJune2015aregiveninnotenumber38.
CORPORATE GOVERNANCE COMPLIANCE REPORTIn accordance with the requirement of the Bangladesh Securities and Exchange Commission, “CorporateGovernanceComplianceReport”isannexed.
EXTERNAL AUDITORS APPOINTMENTM/SChowdhuryBhattacharjee&Co.,CharteredAccountants,AuditorsretiresatthisAnnualGeneralMeeting.M/S.MalekSiddiquiWali,CharteredAccountants,Auditorsofferthemselvesforappointmentfortheyear2015-2016.TheBoardofDirectorsrecommendsM/S.MalekSiddiquiWali,CharteredAccountantsforappoinment.
ACKNOWLEDGEMENTTheDirectorstakethisopportunitytoacknowledgethecontinuedsupportandeffortsofallmembersofthecompany, as well as all customers, suppliers and associates during the past year. Our performance would not havebeenpossiblewithouttheirsupport. OnbehalfoftheBoard,
August 16, 2015 Syed Manzur ElahiDhaka. Chairman.
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FINANCIAL HIGHLIGHTS
Taka in thousand
Particulars 2015 2014 2013 2012 2011
Sales 3,771,638 3,793,167 3,248,799 3,067,208 2,515,867
Grossprofit 273,390 225,764 253,309 271,157 225,046
Profitbeforetax 117,843 106,931 126,047 131,981 119,361
Netprofitaftertax 95,269 84,024 100,157 107,676 96,843
Authorizedcapital 500,000 500,000 500,000 500,000 500,000
Issued and paid up capital 152,400 152,400 152,400 152,400 152,400
Property,plant&equipment 270,134 277,953 280,531 241,175 209,719
Investment&NonCurrentAssets 608,940 375,989 323,791 283,146 218,508
Currentassets 1,144,001 1,109,035 1,112,356 1,313,429 1,394,792
Currentliabilities 542,389 313,070 311,474 525,849 651,702
Netcurrentassets 601,612 795,965 800,882 787,580 743,090
Dividend 68,580 68,580 60,960 53,340 45,720
Earningspershare(Taka) 6.25 5.51 6.57 7.07 6.35
Dividendpershare(Taka) 4.50 4.50 4.00 3.50 3.00
Marketvaluepershareatyearend(Taka) 110.70 142.60 86.70 103.10 136.20
NetAssetvaluepershare(Taka) 73.48 71.67 69.38 66.44 60.10
Netoperatingcashflowpershare(Taka) 6.05 4.97 31.12 9.35 (4.48)
PriceearningsRatio(Times) 17.71 25.88 13.20 14.58 21.43
Dividendyieldratio(%) 4.07 3.16 4.61 3.39 2.20
Currentratio 2.11 3.54 3.57 2.50 2.14
Quickratio 1.14 2.10 2.28 1.00 0.99
ReturnonShareholder’sFund(%) 8.87 8.02 9.77 11.01 10.57
Interest coverage ratio 3.23 3.70 3.34 2.79 2.95
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FINANCIAL HIGHLIGHTS (GRAPHICAL PRESENTATION)
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Profit before tax (Tk. in million)
Net profit after tax (Tk. in million)
Net asset value per share (Tk.) at year end
Market value per share (Tk.) at year end
Return on Shareholder’s fund (%)
Components of EPS (Tk.)
Net operating income Net other income
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STATEMENT OF VALUE ADDITIONTaka in thousand
Year Ended Year Ended
June 30, 2015 June 30, 2014
Value addedSales 3,771,638 3,793,167Bought in materials and services (3,479,616) (3,544,679)
292,022 248,488Other income 56,456 62,064Available for distribution 348,478 310,552
Distribution of value additionToGovernment(IncomeTax) 23,066 06.62% 24,770 07.98%ToEmployees&Workers(Salary,wagesandotherbenefits) 200,408 57.51% 185,026 59.58%ToBanks(Interestandcharges) 30,227 08.67% 18,595 05.99%ToShareholders(Dividend) 68,580 19.68% 68,580 22.08%
322,281 92.48% 296,971 95.63%Retained for reinvestment and future growth 26,197 07.52% 13,580 04.37%
348,478 100.00% 310,552 100.00%
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Employees&workers To Banks ToShareholders Retained for reinvestment ToGovernment
Distribution of Value Addition in 2014-2015
Distribution of Value Addition in 2013-2014
Employees&workers To Banks ToShareholders Retained for reinvestment ToGovernment
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REPORT ON CORPORATE SOCIAL RESPONSIBILITIES
ExecutiveDirectorM.A.Majedhandingover a cheque for financial assistancetoRozinaBegumofHazaribaghforherdaughter marriage.
Executive Director M. A. Majedhanding over a cheque for financialassistance to Kohinur Begum of Hazaribaghforherdaughtermarriage.
Executive Director M. A. Majedhandingoverachequeforfinancialassistance to Golam Mahiuddin ofHazaribaghforhistreatment.
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The Company gifted an air coolerto the Pashchimpara Mosque atChandertake,Beraid,Badda,Dhaka.
Executive Director M. A. Majedhanding over a cheque for financialassistance to Safiullah ofHazaribaghfor his treatment.
Executive Director M. A. Majedhanding over a cheque for financialassistance to Faruq Hossain (officeassistant of the Company) for hisson’s treatment.
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REPORT ON CORPORATE GOVERNANCECorporateGovernanceclearlydefinestherightsandresponsibilitiesoftheBoardofDirectors,Management,ShareholdersandotherStakeholders.TheBoardsupportsManagement, InternalandExternalAuditorsandother related parties including the Shareholders. A good corporate reputation is the most valuable andcompetitiveassetofacompany.ApexTanneryLimitedbelievesinthecontinuedimprovementofcorporategovernance.The Board of Directors and theManagementTeam of ApexTannery Limited is committed tomaintainingeffectiveCorporateGovernancethroughacultureofaccountabilityandtransparency.
Board of Directors
TheBoardofDirectorscomprisesof07(Seven)membersincludingtwoIndependentDirectors.AllDirectorshave soundknowledge in theareaof tannery,managerial expertise and soundacademicandprofessionalknowledge. They are well conversant with corporate governance.
Appointment of Board Members
The Directors of the Board are appointed by the Shareholders in the Annual General Meeting who areaccountabletotheShareholders.
Appointment of Independent Director
The Board of Directors in its 38th Annual General Meeting held on September 23, 2014 appointed anIndependentDirector. InselectingIndependentDirector,theCompanyalwayslookedforanindividualwhopossessesexperience,stronginterpersonalskillsandindependence. IndependentDirectorisconsideredbytheBoardtobeindependentoftheCompanyandfreeofanybusinessorotherrelationshipthatcouldinterferewiththeexerciseofhisindependentjudgment.TheBoardbelievesthathisexperienceandknowledgeassistsinprovidingbotheffectiveandconstructivecontributiontotheBoard.
The Role of the Chairman and Managing Director
PositionoftheChairmanandManagingDirector(CEO)areclearlyidentified.TheChairmanisresponsibleforleadingtheBoardanditseffectiveness.TheManagingDirectorservesastheChiefExecutiveoftheCompany.
Audit Committee
TheAuditCommitteewasestablishedasasub-committeeoftheBoardandhasjurisdictionoverApexTanneryLimited.TheauditcommitteeiscomprisedoffourmembersoftheBoardincludingtwoIndependentDirectorsoneofthemistheChairmanoftheCommittee.TheAuditCommitteeassiststheBoard.
Company Secretary
JagadishKumarBhanjahasbeenappointedas theCompanySecretaryof theCompany.Heprovides legalmatterstotheBoard.Amongotherfunctions,theCompanySecretary:
BridgesbetweentheBoardofDirectorsandShareholdersonstrategicandstatutorydecision
ActsasaqualityassuranceagentinallinformationtowardstheShareholdersandBoard
IsresponsibleforensuringthattheappropriateBoardproceduresarefollowed
Acts as the “Disclosure Officer” of the Company and monitors the compliance of the Acts, rules,regulations,notifications,guidelines,orders/directivesetc. issuedbytheBangladeshSecuritiesandExchangeCommission,StockExchange(s)applicabletotheconductofthebusinessactivitiesoftheCompany
The Company Secretary keeps the records of the Company’s compliance/noncompliance status of theconditionsimposedbyBSECwhichhasbeenshowninthecompliancereportonBSECNotification.
Chief Financial Officer
AnupKumarMukherjeehasbeenappointedastheChiefFinancialOfficeroftheCompany.HelooksaftertheoverallfinancialaffairsoftheCompany.Amongotherfunctions,theChiefFinancialOfficer:
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Preparesquarterlyandannuallyfinancialstatements
FinancialreportingproceduresinlinewiththerequirementofBangladeshAccountingStandards
ReportsfinancialpositionoftheCompanyinitsBoardmeeting
Financial Reporting and Transparency
Financial Statements have beenprepared in linewith the International Accounting Standards, BangladeshAccountingStandardsandotherlegislationsasapplicableinBangladesh.Timelypublicationofquarterlyandannualfinancialstatementswithcomprehensivedetailsbeyondthestatutoryrequirement.
Compliance with Applicable Rules and Regulations
TheCompany’sbusinessactivitiesareguidedandsupervisedbylocallawsandregulations:
TheCompaniesAct1994
TheBangladeshSecuritiesandExchangeCommission
ListingrulesofDhakaandChittagongStockExchangeLimited
BangladeshAccountingStandards
Purchase Committee
Apurchasecommitteeisfunctioningwithagroupofexecutives,headedbyaseniormostexecutivetoexaminethepurchaseproposalofgoods.Amongothers,thefollowingsarethemainresponsibilitiesoftheCommittee:
Toevaluatethereceivedproposalandfindouttheeffectivenessofeachproposal
Toprepareareportonthebasisofevaluationofthepurchaseproposalwithrecommendationandsenttoconcerneddepartmentsforobtainingapprovalfromthecompetentauthority
To supervise the entire activities of procurement
Statutory Audit
StatutoryAuditoftheCompanyisgovernedbytheCompaniesAct1994.TheCompanyActprovidesguidelinesfor theappointment, scopeofworkandretirementofauditors.Shareholdersappointauditorsandfix theirremunerationintheAnnualGeneralMeeting.
Internal Audit
InternalAuditsupporttheCompanytoachieveitsobjectivesbybringingasystematic,disciplinedapproachtoevaluateandimprovetheeffectivenessofitsriskmanagementandcontrol.InternalAuditactivityisgovernedbytheInternalTeam,whichisapprovedbytheBoard.
Internal Control
TheCompanyhasanInternalAuditdepartmentconsistingoffivemembersandheadedbytheHeadofInternalAuditor.TheInternalcontrolsystemismaintainedandreviewedbyaninternalauditfunctionthatreportstoManagementandtheAuditCommittee.
InternalControlmechanismisbuiltbytheCompany’ssystemsandprocedurestoreducetheriskoferrorandfraud.Itmaybeabletoreducetheriskthatfinancialstatementcontains.TheBoardofDirectorsensuressoundinternalcontroltoprovidereasonableassuranceregardingtheachievementoftheCompanyobjectivesintheareasof:
Effectivenessandefficiencyofoperations Reliabilityoffinancialreporting CompliancewithlawsandregulationsRE
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Code of Conduct
ApexTanneryLimitedhasadoptedCodesofConduct for securinggoodbusinessethicsandconduct inallaspectsoftheCompany’sactivities.TheCodeofConductisproperlycommunicatedtoandwithallemployeesandotheractivities,andisstrictlyrequiredtoabidebyit.
Management Committee
Theday-to-dayManagementoftheCompanyisentrustedwiththeManagingDirectorandtheManagementCommittee.TheManagementCommitteeservestheinterestoftheCompanyandachievessustainablegrowth.The members of the Management Committee are jointly accountable for the entire management of theCompanyanddecideonthebasicissuesofbusinesspolicyandcorporatestrategies.
Restrictions on dealing in the Company’s share by insiders
TheCompanyhasestablishedpolicyrelatingtotradingsharesbytheDirectors,employeesandotherinsiders.The securities laws also impose restrictions on similar sort of transaction.
Group Term Life Insurance Policy
The Board ofDirectors has approved for GroupTerm Life Insurance Policy for employees of ApexTanneryLimitedwithPrimeIslamiLifeInsuranceCompanyLimited.
Going Concern
TheCompanyhasadequate resources tocontinueoperationalexistence for the future.For this reason, theCompanycontinuestoadoptthegoingconcernbasisinpreparingthefinancialstatements.
Communication with Shareholders
Accountableto
Accountableto
The Company encourages communication with shareholders throughout the year and welcomes theirparticipationat shareholdersmeeting.TheCompany is transparentwith the stakeholdersof theCompany.Fourtimeseachyear,ApexTanneryLimitedreportstoitsshareholdersregardingitsbusiness,financialpositionand earnings. These include:
QuarterlyandAnnualfinancialstatements
AnnualGeneralMeeting
Price–SensitiveDisclosuresandotherdisclosurestotheBSECandStockExchanges
Inadditionalinformation,theCompanyisunderalegalandregulatoryrequirementtopublishviathewidlyforcasteddailyBanglaandEnglishnewspapers.ApexTanneryLimitedbelievesintransparencyandaccountabilitytothesocietyasawholethroughestablishmentofanefficientandeffectiveCorporateGovernanceprocedure.
Shareholders
Board of Directors
Management
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Apex Tannery Limited
Annual Report 201526
CORPORATE GOVERNANCE COMPLIANCE REPORTStatus of compliance with the conditions imposed by the Commissions Notification No. SEC/CMRRCD/2006-158/134/Admin/44dated07thAugust2012issuedundersection2CCoftheSecuritiesandExchangeOrdinance,1969(ReportunderConditionNo.7.00)
Condition No. Title Compliance
statusRemarks(If any)
1 Board of Directors:
1.1 Board’s Size:ThenumberoftheBoardmembersshallnotbelessthan5(five)andmorethan20(twenty);
CompliedThe ATL Board is comprised of 07(Seven)Directors
1.2 Independent Director:
(i) Atleastonefifth(1/5)oftotalnumberofdirectorsshallbeIndependentDirector;
Complied
There are two Independent Directors in the Board of ATL namely:Mr.FaruqAhmadSiddiqiandMr.SayedAlamgirFarroukChowdhury
(ii) For the purpose of this clause “independent director”meansadirector; Complied
(ii)a) Does not hold any share or holds less than 1% shares of thetotalpaid-upsharesoftheCompany; Complied The Independent Directors
declared their compliances.
(ii)b) Who is not a sponsor and not connected with anysponsor/director/ shareholder who hold 1% or moresharesofthetotalpaid-upsharesonthebasisoffamilyrelationship;
Complied DO
(ii)c) Does not have any other relationship, whether pecuniary or otherwise, with the company or its subsidiary/associatedcompanies;
Complied DO
(ii)d) Notamember,directororofficerofanystockexchange; Complied DO
(ii)e) Notashareholder,directororofficerofanymemberofstockexchangeoranintermediaryofthecapitalmarket; Complied DO
(ii)f ) Notapartneroranexecutiveorwasnotapartneroranexecutive during the preceding 3 (three) years of anystatutoryauditfirm;
Complied DO
(ii)g) Notbean independentdirector inmore than3 (three)listedcompanies; Complied DO
(ii)h) NotbeenconvictedbyacourtofcompetentjurisdictionasadefaulterinpaymentofanyloantoabankoraNon-BankingFinancialInstitution(NBFI);
Complied DO
(ii)i) Notbeenconvictedforacriminaloffenceinvolvingmoralturpitude; Complied DO
(iii) Nominatedby theBoardofDirectors andapprovedbytheshareholdersintheAGM; Complied In practice
(iv) The post of Independent Director can not remain vacant formorethan90(ninety)days; Complied
There was no vacancy in the position of Independent Director
(v) Board shall lay down a code of conduct of all Board members and annual compliance of the code to berecorded;
CompliedEveryDirectorsignedandconfirmedastoitscompliance
(vi) TenureofofficeofanIndependentDirectorshallbeforaperiodof3(three)years,whichmaybeextendedfor1(one)termonly;
CompliedThe Independent Directors are intheirfirsttermofofficeCO
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Annual Report 2015 27
Apex Tannery Limited
Condition No. Title Compliance
statusRemarks(If any)
1.3 Qualification of Independent Director:(i) ShallbeaKnowledgeableindividualwithintegritywhois
abletoensurecompliancewithfinancial,regulatoryandcorporatelawsandcanmakemeaningfulcontributiontothebusiness;
Complied Qualificationandbackgroundjustified
(ii) Should be a Business Leader/Corporate Leader/Bureaucrat/University Teacher with Economics orBusiness Studies or Law background/Professionalslike Chartered Accountants, Cost and ManagementAccountants, Chartered Secretaries. Must have at least12(twelve)yearsofcorporatemanagement/professionalexperiences;
Complied
ExistingIndependentDirectorsare Bureaucrat having more than12(Twelve)yearsofexperience
(iii) InspecialcasestheabovequalificationsmayberelaxedsubjecttopriorapprovaloftheCommission;
Notapplicable
1.4 Chairman of the Board and CEO:ChairmanandCEOshallbefilledbydifferentindividuals.ChairmanshallbeelectedfromamongtheDirectors.TheBoardofDirectorsshall clearly define respective roles and responsibilities of theChairmanandtheCEO.
CompliedBotharedifferentindividuals.TherolesandresponsibilitiesareapprovedbytheBoard
1.5 The Directors’ Report to Shareholders:(i) Industry outlook and possible future developments in
theindustry; Complied The Directors report complies withtheGuidelines
(ii) Segment-wiseorproduct-wiseperformance; Complied Do(iii) RisksandConcerns; Complied Do(iv) Discussiononcostofgoodssold,GrossProfitMarginand
NetprofitMargin; Complied Do
(v) Discussion on continuity of any Extra-ordinary gain orloss; Complied Do
(vi) Disclosureforrelatedpartytransactions; Complied Do(vii) Utilizationofproceeds frompublic issues, rights issues
and/orthroughanyothers;Not
applicable(viii) Explanation if thefinancial resultsdeteriorate after the
company goes for IPO, RPO, Rights Offer and DirectListing;
Notapplicable
(ix) Explanation about significant variance occurs betweenQuarterly Financial performance and Annual FinancialStatements;
Complied TheDirectorsReportComplieswiththeGuideline
(x) Remuneration to directors including independent directors; Complied Disclosed in the annual report
(xi) Fairnessoffinancialstatement; Complied(xii) Maintenanceofproperbooksofaccount; Complied(xiii) Application of appropriate accounting policies and
estimates; Complied
(xiv) FollowedIAS,BAS, IFRS,andBFRSinpreparationofthefinancialstatements; Complied
(xv) Soundnessofinternalcontrolsystem; Complied(xvi) Abilitytocontinueasagoingconcern; Complied(xvii) Significantdeviationsfromthelastyear; Complied(xviii) Key operating and financial data of at least preceding
5(five)years; Complied
(xix) Reasonsfornotdeclareddividend;Complied
Dividendhasbeendeclaredand mentioned in the Directors’ Report
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Annual Report 201528
Condition No. Title Compliance
statusRemarks(If any)
(xx) Number of Board meetings held during the year andattendance; Complied Disclosed in the Directors
Report(xxi) Patternofshareholdingsandnamewisedetailsdisclosing
aggregatenumberofshares; Complied Disclosed in the Annual Report
(xxi)a) Parent/Subsidiary/Associated Companies and otherrelatedparties(NamewiseDetails); Complied Do
(xxi)b) Directors,CEO,CS,CFO,HIAandtheirspousesandminorchildren(Namewisedetails); Complied Do
(xxi)c) Executives(namewisedetails); Complied Do(xxi)d) Shareholdersholdingtenpercent(10%)ormorevoting
interest(Namewisedetails); Complied Do
(xxii) Directorappointment/re-appointment; Complied Do(xxii)a) Abriefresumeofthedirector; Complied Do(xxii)b) Expertiseinspecificfunctionalareas; Complied Do(xxii)c) Holding the directorship and the membership of
committeesoftheboardotherthanthiscompany; Complied Do
2 Chief Financial Officer (CFO), Head of Internal Audit (HIA), Company Secretary (CS):1 The company shall appoint a Chief Financial Officer
(CFO), a Head of Internal Audit (Internal Control andCompliance) and aCompanySecretary (CS).TheBoardof Directors should clearly define respective roles,responsibilitiesanddutiesofCFO,TheHeadof InternalAuditandtheCS;
Complied
TheCompanyhasappointedCFO,CS,andHeadofInternalAudit.Thereareclearlydefinedroles,responsibilitiesanddutieswhichapprovedbytheBoard as per requirement of BSECnotification
2 The Chief Financial Officer (CFO) and the CompanySecretary(CS)oftheCompanyshallattendthemeetingsoftheBoardofDirectors;
Complied In practice
3 Audit Committee:(i) ThecompanyshallhaveanAuditCommitteeasa sub-
committeeoftheBoardofDirectors; Complied Already in place
(ii) Assistance of the Audit Committee to the Board ofDirectors; Complied In practice
(iii) TheAuditCommitteeshallberesponsibletotheBoardofDirectors.ThedutiesoftheAuditCommitteeshallbeclearlysetforthinwriting.;
Complied In practice
3.1 Constitution of the Audit Committee:(i) Compositions (At least three members should be in
AuditCommittee); Complied TheAuditCommitteeiscomposedof4(four)members
(ii) Appointment of Members of the Audit Committee(Members should be appointed by the Board with atleastoneIndependentDirector); Complied
ThemembersoftheAuditCommitteeappointedbythe Board who are Directors including02(two)IndependentDirectors
(iii) Qualification of Members of the Audit Committee(Membersshouldbe“financiallyliterate”andatleastone(01)member shall have accountingor relatedfinancialmanagementexperience);
Complied
Based on the academic qualificationandprofessionalexperiences,theBoardreviewed and considered thatalltheexistingmembersoftheAuditCommitteeare“FinanciallyLiterate”andtheyhave“RelatedFinancialManagementexperience”asperBSECnotificationCO
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Annual Report 2015 29
Apex Tannery Limited
Condition No. Title Compliance
statusRemarks(If any)
(iv) CasualvacancyintheAuditCommitteeshallbefilledbytheBoard; Complied
(v) TheCompanySecretaryshallactastheSecretaryofthecommittee; Complied In practice
(vi) ThequorumoftheAuditCommittee(AC)meetingshallnot constitute without at least 1 (one) IndependentDirector;
Complied In practice
3.2 Chairman of the Audit Committee:(i) The Board of Directors shall select 1 (one) member
of the Audit Committee to be Chairmen of the AuditCommittee,whoshallbeanIndependentDirector; Complied
Mr.FaruqAhmadSiddiqiappointed as Independent Director who is also the ChairmanoftheAuditCommittee
(ii) ChairmanoftheAuditCommitteeshallremainpresentintheAnnualGeneralMeeting(AGM); Complied In practice
3.3 Role of the Audit Committee:(i) Overseethefinancialreportingprocess; Complied In practice
(ii) Monitorchoiceofaccountingpoliciesandprinciples; Complied In practice
(iii) MonitorInternalControlRiskmanagementprocess; Complied In practice
(iv) Overseehiringandperformanceofexternalauditors; Complied In practice
(v) Review the annual financial statements beforesubmissiontotheboardforapproval; Complied In practice
(vi) Reviewthequarterlyandhalfyearlyfinancialstatementsbeforesubmissiontotheboardforapproval; Complied In practice
(vii) Reviewtheadequacyofinternalauditfunction; Complied In practice
(viii) Review statement of significant related partytransactions; Complied In practice
(ix) ReviewManagement Letters/ Letter of InternalControlweaknessissuedbystatutoryauditors; Complied In practice
(x) Disclosureabout theuses/ applicationsof funds raisedbyIPO/RPO/RightIssue;
Notapplicable
3.4.1 Reporting of the Audit Committee:(i) TheAuditCommitteeshallreportonitsactivitiestothe
BoardofDirectors; Complied In practice
(ii)a) ReportonconflictsofinteresttotheBoardofDirectors; Notapplicable
Therewasnoreportablecaseofconflictofinterestin2015
((ii)b) Will report any suspected or presumed fraud orirregularities or material defect in the internal control systemtotheBoard;
Complied Do
((ii)c) Willreportanysuspectedinfringementoflaws,includingsecuritiesrelatedlaws,rulesandregulationstotheBoard;
Notapplicable Do
((ii)d) WillreportanyothermatterswhichshallbedisclosedtotheBoardofDirectorsimmediately;
Notapplicable Do
3.4.2 Reporting to the Authorities (BSEC):If any materials impact on the financial condition & results ofoperation,unreasonablyignoredbythemanagement;
Notapplicable Do
3.5 Reporting to the Shareholders and General Investors:ReportonactivitiescarriedoutbytheAuditCommittee,includingany report made to the Board of Directors under condition 3.4.1 (ii)aboveduringtheyear,shallbesignedbytheChairmanoftheAuditCommitteeanddisclosedintheannualreportoftheissuercompany;
Complied
TheAuditCommitteereportdisclosed in the Annual Report andsignedbytheChairmanoftheCommittee
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Annual Report 2015 31
Apex Tannery Limited
CEO AND CFO’s CERTIFICATION TO THE BORAD
Dated : 16 August, 2015
The Board of Directors
ApexTanneryLimited
127,HazaribaghT/A
Dhaka-1209
DearSir,
(1)Wehavereviewedfinancialstatementsofthecompanyfortheyearended30thJune,2015andtothebestofourknowledgeandbelief.
(a)Thesestatementsdonotcontainanymateriallyuntruestatementsoromitanymaterialfactorcontainstatementsthatmightbemisleading.
(b)Thesestatementstogetherpresenttrueandfairviewofthecompany’saffairsandareincompliancewithBangladeshAccountingStandards(BAS)andotherapplicablelaws.
(2) Thereare,tothebestofourknowledgeandbelief,notransactionenteredintobythecompanyduringtheyear which is fraudulent, illegal or violation of the company’s code of conducts.
Md. Rahmatullah Anup Kumar Mukherjee FCA
ChiefExecutiveOfficer ChiefFinancialOfficer
CEO
AN
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CERT
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Apex Tannery Limited
Annual Report 201532
PATTERN OF SHAREHOLDINGAs of June 30, 2015
CERT
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ARTISANCHARTERED ACCOUNTANTS
BSEC BHABAN (Level-10),102,KaziNazrulIslamAvenueKawranBazar,Dhaka-1215Tel:028189885Mobile#01922797851
Certificate of Compliance to the Shareholders of
APEX TANNERY LIMITED
OntheConditionsofCorporateGovernanceGuidelines
We have reviewed the statement of compliance of Conditions of Corporate Governance guidelinesprepared by theManagement ofAPEX TANNERY LIMITED to complywith theNotificationNo. SEC/CMRRCD/2006-158/134/Admin/44 dated 7th August 2012 of Bangladesh Securities and ExchangeCommission(BSEC).
TheresponsibilityforcompliancewiththeConditionsofCorporateGovernanceGuidelineisthatoftheBoardofDirectorsofthecompany.Ourresponsibilityistoreview,totheextentwheresuchcompliancecanbeobjectivelyverified,whether thestatementofcompliance reflects thestatusof theCompany’scompliancewiththeprovisionsoftheconditionsofCorporateGovernanceguidelinesandreportifitdoesnot.
Based on our review, we certify that nothing has come to our attention except as stated in statusof Compliance statement which causes us to believe that the Statement of Compliance does notappropriatelyreflecttheCompany’scompliance,inallmaterialrespects,withthebestpracticescontainedintheConditionsofCorporateGovernanceasapplicabletotheCompanyfor theyearendedJune30,2015.
Md. Selim Reza FCA FCSDhaka,17August2015 Partner ARTISAN CharteredAccountants
Annual Report 2015 35
Apex Tannery Limited
Summary of Activities
TheAuditCommitteecarriedoutthefollowingactivitiesduringthefinancialyearendedJune30,2015
Regulatory Compliance
TheCommitteeexaminedwhethertheCompany‘sproceduresareinplacetoensurecompliancewith
thelawsandregulationsframedbytheregulatoryAuthorities (BSEC,DSE,CSEandRJSC)
InternalregulationsapprovedbytheBoardofDirectors.
TheCompany isduly following the rules and regulationsof theRegulatorybodiesandalso strictly followsareaswithconflictofinterest.TheCommitteewassatisfiedthattheCompanysubstantiallycompliedwiththeseregulatory requirements
Financial Reporting
The Committee assisted the Board of Directors and the management to carryout their responsibilities ofpreparing true and fair financial statements in accordance with the books of accounts and BangladeshAccountingStandardsby:
Reviewingtheadequacyandeffectivenessoftheinternalcontrolsystemandproceduresinordertoprovidereasonableassurancethatalltransactionsareaccuratelyandcompletelyrecordedinthebooksof account.
Reviewingtheintegrityoftheprocessbywhichfinancialstatementsarepreparedfromthebooksofaccount
ReviewingtheprocessbywhichcomplianceofprovisionofBangladeshAccountingStandards.
TheCommitteealsoreviewed:
Thequarterly,annualandinterimfinancialstatementsoftheCompanypriortorecommendingthem fortheapprovalbytheBoard.
Theannualauditedfinancialstatementsof thecompanywithexternalauditorsprior tosubmissionto the Board for approval. The review focused particularly on changes of accounting policy and compliance with applicable accounting standards as adopted in Bangladesh and other legal ®ulatory requirements.
Internal Control
TheCommitteeexaminedwhetherthemanagementhassetuptheappropriatecompliancecultureacrosstheCompanyinordertoensurethatallemployeeshaveaclearunderstandingoftheirrolesandresponsibilities.TheCommitteereviewedthearrangementsmadebythemanagementforbuildingupasuitableManagementInformationSystem(MIS)includingcomputerizedsystemsanditsapplicationsthereof.
Internal Audit
TheCommitteereviewedanddiscussedtherelevantreportsofspecialinvestigationswhichweresubmittedbytheAuditTeam.Theyareasfollows:
The annual audit plan for adequacy of scope and comprehensive coverage of these activities of the Company.
the audit programs, resources requirements for the year and assessed the performance of the internal audit functions A
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Apex Tannery Limited
Annual Report 201536
The internal audit reports, audit recommendations and management responses to these recommendations and actions taken to improve the system of internal control and procedures.
ExerciseInternalAuditofApexTanneryLimited.ReviewtheeffectivenessofInternalAuditfunctionsincluding performance and compliance with professional standards. Examine audit findings andmaterial weakness and monitor implementation of audit action plans.
TheCommitteeadvisedthemanagementtotakeeffectivestepsforrectificationofallthelapsesandweaknessesidentifiedbyinternalauditandtotakeutmostcare,sothatsuchweaknessesandlapsesshallnotberepeatedinfuture. Department heads attended the meetings when their reports were discussed.
External Audit
TheCommitteemetwiththeexternalauditorsattheconclusionoftheannualauditandexchangedviewsontheirAuditReport.TheCommitteereviewedthefindingsandrecommendationsmadebytheexternalauditorsinordertoremovetheweaknessesasdetectedintheexternalauditingprocess.
TheCommitteereviewedtheperformanceoftheExternalAuditorsandrecommendedtotheBoardontheirappointment and fees.
Approval of Financial Statements
The Audit Committee reviewed and examined the Annual Financial Statements 2015 prepared by theManagementandauditedby theExternalAuditorsChoudhuryBhattacharjee&Co.,CharteredAccountantsandrecommendedtoplacethesamebeforetheBoardforconsideration.
The Board approved the same at its 274th meeting held on 16th August 2015.
Acknowledgement
TheAuditCommitteeexpressedofsincerethankstotheChairmanandmembersoftheBoard,managementandtheAuditorsfortheirsupportincarryingoutitsdutiesandresponsibilitieseffectively.
On behalf of the Audit Committee,
Faruq Ahmad SiddiqiChairmanofAuditCommittee
AU
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Annual Report 2015 37
Apex Tannery Limited
AUDITORS’ REPORT To The Shareholders of Apex Tannery Limited
We have audited the accompanying Financial statements of“Apex Tannery Limited” which comprises thestatementoffinancialpositionasof30June,2015statementofComprehensiveIncome,StatementofChangesinEquityandStatementofCashFlowsfortheyearthenendedandasummaryofsignificantaccountingpoliciesandotherexplanatorynotes.
Management’s Responsibilities for the Financial StatementsManagementisresponsibleforthepreparationandfairpresentationofthesefinancialstatementsinaccordancewithBangladeshFinancialReportingStandards(BFRS),theCompaniesAct1994,theSecuritiesandExchangesRules1987andotherapplicablelawsandregulations.Thisresponsibilityincludes:designing,implementing,andmaintaining internal control relevant to the preparation and fair presentation of financial statementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror;selectingandapplyingappropriateaccountingpolicies;andmakingaccountingestimatesthatarereasonableinthecircumstances.
Auditors Responsibility Ourresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.Weconductedouraudit inaccordancewithBangladeshStandardsonAuditing(BSA).Thosestandardsrequirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassurancewhetherthefinancialstatements are free from material misstatement.Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosuresinthefinancialstatements.Theproceduresselecteddependontheauditor’sjudgment,includingtheassessmentoftherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoserisk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation ofthefinancialstatementsinordertodesignauditproceduresthatareappropriateinthecircumstances,butnot for thepurposeof expressinganopinionon theeffectivenessof theentity’s internal control.Anauditalso includesevaluatingappropriatenessofaccountingpoliciesusedandthereasonablenessofaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforouraudit opinion.
OpinionIn our opinion, the Financial Statements prepared in accordance with Bangladesh Financial ReportingStandards,giveatrueandfairviewofthestateofthecompany’saffairsasof30June,2015andoftheresultsof itsoperationsand its cashflows for theyear thenendedandcomplywith thecompaniesAct1994, theSecuritiesandExchangesRules1987andotherapplicablelawsandregulations.
Further to our opinion in the above paragraph, we state that1. Wehaveobtainedalltheinformationandexplanationswhichtothebestofourknowledgeandbelief
werenecessaryforthepurposeofourauditandmadedueverificationthereof;2. Inouropinion,properbooksofaccountasrequiredbylawhavebeenkeptby“Apex Tannery Limited”
sofarasitappearedfromourexaminationofthosebooks;3. Thecompany’sStatementofFinancialPosition,StatementofComprehensiveIncomeanditsStatement
ofCashFlowsdealtwithbythereportareinagreementwiththebooksofaccountandreturns;4. Theexpenditureincurredwasforthepurposeofthecompany’sbusiness
Dated: Dhaka B. K. Bhattacharjee, FCAAugust 16, 2015 PARTNER ChowdhuryBhattacharjee&Co. (CharteredAccountants)
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Apex Tannery Limited
Annual Report 201538
APEX TANNERY LIMITEDStatement of Financial Position as of June 30, 2015 Taka in thousand As of As of Notes June 30, 2015 June 30, 2014
Assets Non current assets Property,plantandequipment 4 270,134 277,953 Capitalwork-in-progress 5 223,074 - AdvanceforLandatSavar 6 57,431 41,034 Investments 7 52,764 51,957 Deferredtaxassets 8 5,537 5,045 608,940 375,989Current assets Inventories 9 525,785 450,624 Tradeandotherreceivables 10 163,829 161,361 Advances, deposits and prepayments 11 120,455 130,153 Cash&cashequivalents 12 333,932 366,897 1,144,001 1,109,035Total Assets 1,752,941 1,485,024
Equity and LiabilitiesShareholders’ equity Sharecapital 13 152,400 152,400 Sharepremium 425,333 425,333 Dividendequalizationfund 44,888 44,888 Retainedearnings 451,933 425,244 Fairvaluationsurplusofinvestment14 45,208 44,401 1,119,762 1,092,266
Non Current liabilities Retirementbenefitobligations 15 90,790 79,688 Current liabilities Short-termloan 16 - 90,957 Workingcapitalloan 17 423,488 139,219 Tradepayables 18 42,300 6,159 Otherpayables 19 19,255 16,722 Provisionforincome-tax 20 57,346 60,013 542,389 313,070Total Equity and Liabilities 1,752,941 1,485,024
STAT
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B. K. Bhattacharjee, FCAPARTNER
ChowdhuryBhattacharjee&Co.(CharteredAccountants)
Place : DhakaDate : August 16, 2015
Theannexednotesformanintegralpartofthesefinancialstatements.ForandonbehalfoftheBoardofDirectors
Md. Rahmatullah Md. Fayekuzzaman Jagadish Kumar Bhanja ManagingDirector Director CompanySecretary
Signedintermsofourannexedreportofevendate.
Annual Report 2015 39
Apex Tannery Limited
APEX TANNERY LIMITEDStatement of Comprehensive Income for the year ended June 30, 2015
Taka in thousand
Year Ended Year Ended Notes June 30, 2015 June 30, 2014
Sales 22 3,771,638 3,793,167Cost of sales Costofgoodssold 23 (3,431,702) (3,497,402)Freight&forwarding 24 (66,546) (70,001) (3,498,248) (3,567,403)Gross profit 273,390 225,764Operating expenses Administrativeexpenses 25 (40,399) (34,515)Marketingexpenses 26 (118,525) (107,080)Directors’remuneration (10,260) (8,550)Legal&auditfees 27 (513) (513)Depreciation(Sehedule-A-01) (6,187) (6,300) (175,884) (156,958)Operating Profit 97,506 68,806
Bankinterestexpenses&charges 28 (30,227) (18,595)
Non operating incomeOtherincome 29 56,456 62,064Profit for the year 123,735 112,275Contributiontoworkers’profitparticipationfund (5,892) (5,344)
Profit before income tax 117,843 106,931Income taxCurrenttaxexpenses 30 (23,066) (24,770)Deferredtaxincome 31 492 1,863 (22,574) (22,907)Net profit after tax 95,269 84,024Other Comprehensive IncomeFairvaluationsurplusofinvestments(unrealized) 807 11,879Total comprehensive Income 96,076 95,903Earnings per share without fair valuation surplus 32 6.25 5.51ST
ATEM
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B. K. Bhattacharjee, FCAPARTNER
ChowdhuryBhattacharjee&Co.(CharteredAccountants)
Place : DhakaDate : August 16, 2015
Theannexednotesformanintegralpartofthesefinancialstatements.ForandonbehalfoftheBoardofDirectors
Md. Rahmatullah Md. Fayekuzzaman Jagadish Kumar Bhanja ManagingDirector Director CompanySecretary
Signedintermsofourannexedreportofevendate.
Apex Tannery Limited
Annual Report 201540
APEX TANNERY LIMITEDStatement of cash Flow for the year ended june 30, 2015
Taka in thousand
Year Ended Year Ended June 30, 2015 June 30, 2014
A. Cash flow from operating activities Collectionsfromturnover/billsreceivableandotherincome 3,823,445 3,876,454 Paymentsforpurchaseofleather,chemicals,spare-parts, paymentsofcreditorsandotherexpenses (3,664,501) (3,734,631) Interestpaid (30,227) (18,595) Paymentstoworkers’profitparticipationfund (4,878) (6,350) Incometaxpaid (31,695) (41,177) Net cash generated by operating activities 92,144 75,701 B. Cash flow from investing activities Acquisitionofproperty,plantandequipment (12,550) (20,067) Capitalwork-in-progress (223,074) - AdvancepaymentforlandatSavar (16,397) - Net cash used in investing activities (252,021) (20,067) C. Cash flow from financing activities Loansreceived/(paid) 193,312 15,249 Dividendreceived/(paid) (66,400) (58,780)
Net cash used in financing activities 126,912 (43,531) Increase/(decrease) in cash and cash equivalents (A+B+C) (32,965) 12,103 Openingcashandcashequivalents 366,897 354,794 Closing cash and cash equivalents 333,932 366,897
STAT
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B. K. Bhattacharjee, FCAPARTNER
ChowdhuryBhattacharjee&Co.(CharteredAccountants)
Place : DhakaDate : August 16, 2015
Theannexednotesformanintegralpartofthesefinancialstatements.ForandonbehalfoftheBoardofDirectors
Md. Rahmatullah Md. Fayekuzzaman Jagadish Kumar Bhanja ManagingDirector Director CompanySecretary
Signedintermsofourannexedreportofevendate.
Annual Report 2015 41
Apex Tannery Limited
APEX TANNERY LIMITEDStatement of changes in equity
For the year ended June 30, 2015
Taka in thousand
Particulars Share Capital
Share Premium
Dividend Equalization
Fund
Retained Earnings
Fair Valuation Surplus Total
As at June 30, 2014 152,400 425,333 44,888 425,244 44,401 1,092,266
Netprofit 95,269 - 95,269
Cashdividendfor2013-2014 (68,580) - (68,580)
Fairvaluationsurplus 807 807
As at June 30,2015 152,400 425,333 44,888 451,933 45,208 1,119,762
For the year ended June 30, 2014
Taka in thousand
Particulars Share Capital
Share Premium
Dividend Equalization
Fund
Retained Earnings
Fair Valuation Surplus Total
As at June 30, 2013 152,400 425,333 44,888 402,180 32,522 1,057,323
Netprofit 84,024 - 84,024
Cashdividendfor2012-2013 (60,960) - (60,960)
Fairvaluationsurplus 11,879 11,879
As at June 30,2014 152,400 425,333 44,888 425,244 44,401 1,092,266
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B. K. Bhattacharjee, FCAPARTNER
ChowdhuryBhattacharjee&Co.(CharteredAccountants)
Place : DhakaDate : August 16, 2015
Theannexednotesformanintegralpartofthesefinancialstatements.ForandonbehalfoftheBoardofDirectors
Md. Rahmatullah Md. Fayekuzzaman Jagadish Kumar Bhanja ManagingDirector Director CompanySecretary
Signedintermsofourannexedreportofevendate.
Apex Tannery Limited
Annual Report 201542
APEX TANNERY LIMITEDNotes to the financial Statements for the year ended June 30, 2015
1. Reporting entitya) Company profile
ApexTanneryisthelargesttanneryinBangladeshandoneofthelargestinSouthAsia.Itisa100%exportorientedcompany.TheCompany isusingstateoftheartmachineries fromItaly,FranceandGermany. ApexTanneryLimitedwas incorporatedasaprivate limitedcompanyon26th day of July 1976underCompaniesAct1913andwasconvertedintoapubliclimitedcompanyin1986.ThesharesoftheCompanyarepubliclytradedatDhakaStockExchangeLimitedandChittagongStockExchangeLimited.Theaddressoftheregisteredofficeis127HazaribaghT/A,Dhaka-1209.
b) Nature of business
TheprincipalactivitiesofApexTanneryaretoproducehighqualityleather,byusingItalianchemicals,technology,complyingwithworldfashionstandardsandspecifications. Itsannualcapacityisabout26millionSft.offinishedgoatandcowleather.ApexexportstoEurope,China,SouthAmericaandallmajorleathermarketoftheworld.Ithastwomanufacturingfacilities;UnitIsituatedatHazaribaghandUnitIIsituatedatShafipur,Gazipurbothengagedinprocessingandfinishingcowandgoatleatherfor100%export.UnitIIhasbeenleasedouttoApexFootwearLtd.for10yearsfrom01.10.2011.
2. Basis of preparation of financial statements a) Statement of compliance
ThefinancialstatementshavebeenpreparedinaccordancewithBangladeshAccountingStandards(BAS), Bangladesh Financial Reporting Standards (BFRS), Companies Act 1994, The Securities andExchangeRules,1987andotherapplicablelawsandregulations.
b) Basis of measurement
ThefinancialstatementshavebeenpreparedonhistoricalcostbasisexceptI. Note7: InvestmentinmarketablesecuritieswhichismeasuredatfairvalueII. Note15: Retirementbenefitobligations
c) Date of authorizationTheboardofdirectorshasauthorizedthesefinancialstatementsonAugust16,2015
d) Functional and presentation currency
These financial statements are presented in Bangladesh Taka which is the company’s functionalcurrency.All financial informationpresented inTakahavebeen roundedoff to thenearestTaka inThousand(Taka000).
e) Use of estimates and judgmentsThe preparation of financial statements requires management tomake judgments, estimates andassumptions that affect the application of accounting policies and reported amounts of assets,liabilities,incomeandexpenses.Estimatesandunderlyingassumptionsarereviewedonanongoingbasis.Revisionsofaccountingestimatesarerecognizedintheperiodinwhichtheestimatesarerevisedoranyfutureperiodsaffected.
Inparticular,informationaboutsignificantareasofestimatesandjudgmentsinapplyingaccountingpoliciesthathavethemostsignificanteffectontheamountrecognizedinthefinancialstatementsaredescribedinthefollowingnotes:
i. Note8: Deferredtaxassetsii. Note9: Inventoryvaluationiii.Note20: Provisionfortax
f) Reporting periodThe reporting period of the company covers one year from July 1, 2014 to June 30, 2015.
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3. Significant accounting policies
Theaccountingpoliciessetoutbelowhavebeenappliedconsistentlytoallperiodpresentedinthesefinancialstatements.
a. Property, plant & equipmentI. Recognition and measurement: Property,plant&equipment(PPE)areinitiallymeasuredatcost.
AfterinitialrecognitionanitemofPPEcarriedatcostlessaccumulateddepreciationinaccordancewithBAS16“Propertyplant&equipment”.CostofPPErepresentscostofpurchaseprice,importdutiesandnonrefundablepurchasetaxesafterdeductingtradediscountsandrebatesandanycostdirectlyattributabletobringingtheassetstothelocationandconditionnecessaryforittobecapableofoperatinginthemannerintendedbymanagement.
II. Subsequent cost: Thecostsoftheday-to-dayservicingofPPEarerecognizedintheStatementofComprehensiveIncome.ThecostsofreplacingofPPEarerecognizedinthecarryingamountoftheitemifitisprobablethatthefutureeconomicbenefitsembodiedwithinthepartwillflowtotheCompanyanditscostcanbemeasuredreliably.
III. Depreciation: The Company uses reducing balance method to depreciate property, plant &equipment. No depreciation is charged on Land and Land development. Depreciation of anassetbeginswhenitisavailableforusei.e.whenitisinthelocationandconditionnecessaryforittobecapableofoperatinginthemannerintendedbymanagement.Depreciationofanassetceasesattheearlierofthedatethattheassetisclassifiedasheldforsale(orincludedinadisposalgroupthatisclassifiedasheldforsale)inaccordancewithBFRS5andthedatethattheassetsarederecognized.The ratesofdepreciationandcategoryofproperty,plant andequipmentare asfollows:
Building 10%Plant&machinery 15%Furniture&fittings 10%Vehicles 20%
Depreciationhasbeenchargedtocostofgoodssold&administrativeexpensesconsistently.b. Inventories
Inventoriescompriseofrawmaterials,work-in-processandfinishedgoods,chemicalsandspare-parts.Theyarestatedatalowerofcostandnetrealizablevalue,inaccordancewithBAS2“Inventories”.Thecostofinventoriesismeasuredbyusingtheweightedaveragecostformula.Thecostofinventoriesrepresentsallcostsofpurchase,costsofconversionandothercostsincurredinbringingtheinventoriestotheirpresentlocationandcondition.Netrealizablevalueistheestimatedsellingpriceintheordinarycourseofbusinesslesstheestimatedcostofcompletionandsellingexpenses.
c. Trade and other receivables
Thesearecarriedatoriginalinvoicevalueconsideredgoodandcollectible.d. Cash and cash equivalents
Cashandcashequivalentscomprisescashinhand,cashatBankandFDRwhichisreadilyconvertibletoaknownamountofcashandbesubjecttoaninsignificantriskofchangesinvalue.
e. Trade and other payables
Thesearerecognizedforamountstobepaidinthefutureforgoodsandservices.f. Income Taxes
I) Current Income Tax
The corporate tax rate for publicly listed companies is 25%. However companies deriving incomefromexportareentitledtoexemptionof50%taxonsuchincome.Sincethecompanyis100%export-oriented,50%oftradingincomewillnotbesubjecttotaxunderparagraph28ofPartAoftheSixthScheduleoftheITOrdinance,1984.Theprovisionmadehasbeencalculatedontheabovebasis,whichis adequate.
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II) Deferred Income Tax
Deferredtax is recognizedondifferencesbetweenthecarryingamountsofassetsand liabilities forfinancialreportingpurposeandthecorrespondingtaxbasesusedfortaxationpurpose.Deferredtaxliabilitiesaregenerally recognized forall taxable temporarydifferences,anddeferredtaxassetsaregenerally recognized for all deductible temporarydifferences to theextent that it is probable thattaxableprofitwillbeavailableagainstwhichthosedeductibletemporarydifferencescanbeutilized.
g. Employee Benefits
The Company maintains both defined contribution plan and defined benefit plan for its eligiblepermanent employees.
I) Definedcontributionplan(Providentfund)
TheCompanyoperatesacontributoryProvidentfundforitseligiblepermanentemployees.ThefundisapprovedbytheNationalBoardofRevenue(NBR).ThefundisadministeredbyaBoardofTrusteeandisfundedbycontributionpartlyfromtheemployeeandpartlyfromtheCompanyatpredeterminedrates.ThecontributionisinvestedseparatelyfromtheCompany’sassets.
II) Contributiontoworkers’profitparticipation/welfarefunds
TheCompanyprovides5%ofitsprofitasacontributiontoworkersprofitparticipation/welfarefundsbefore tax and charging such expenses in accordance with the Bangladesh Labour Act 2006 (asamendmentin2013).
III)Definedbenefitplan(Gratuity)
TheCompanymaintainsanunrecognizedgratuityfundforitspermanentemployees,underwhichanemployeeisentitledtothebenefitsdependingonthelengthofservicesandlastdrawnbasicsalary.
h. Statement of Cash Flow
StatementofCashflowispreparedinaccordancewithBAS-7underdirectmethodandasoutlinedintheSecuritiesandExchangeRule,1987.
i. Transaction with related parties
ThecompanyhascarriedinarmslengthtransactionswithApexFootwearLimited,PioneerInsuranceCompanyLimitedandMutualTrustBankLtd.inthenormalcourseofbusiness.
j. Comparative information
Figures of the year 2013-2014 have been rearranged whenever considered necessary to ensurecomparabilitywiththecurrentperiod.
k. Foreign currency transaction
TransactionsinforeigncurrenciesareconvertedintoBangladeshTakaattheexchangerateprevailingonthedateoftransactioninaccordancewithprovisionsofBAS21“Theeffectsofchangesinforeigncurrencyrates”.
l. Revenue recognition
I. Saleofgoods:TheCompanyrecognizesrevenuewhenriskandrewardsassociatedwithownershiphasbeentransferredtothebuyer,whichsatisfiedalltheconditionsfortherevenuerecognitionasprovidedinBAS18“RevenueRecognition”.
II. Dividendincomeisrecognizedwhentherighttoreceivedpaymentisestablished
III.Interestincomeisrecognizedwhenaccruedonatimeproportionbasis
IV.RentalIncomerecognitionwhenaccruedonthetenancyagreementbasism. Earnings per share (EPS)
TheCompanycalculatesearningspershare(EPS)inaccordancewithBAS33“Earningspershare”whichhasbeenshownonthefaceofStatementofComprehensiveIncome.N
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As ofJune 30, 2015
Taka
As ofJune 30, 2014
Taka10. TRADE AND OTHER RECEIVABLES
Exportbillsreceivable 155,612,462 152,772,984Rentalincomereceivable 5,000,000 5,000,000InterestonFDR 3,216,578 3,587,296
163,829,040 161,360,280
•MostoftheabovebillsreceivableremainedfromthesalesofJune2015andwereconsideredgoodwhichwillbecollectedwithin90days.
•RentalincomereceivablefromApexFootwearLimited.
11. ADVANCE, DEPOSITS & PREPAYMENTSL/Caccounts(Goodsintransit) 9,075,084 9,783,973Advanceincome-tax 100,957,226 94,996,148Advance rent 1,566,833 1,451,833Advancetostaffandworkers 559,250 912,700Advancetosuppliers&Contractors 1,163,652 15,875,181Bank guarantee margin 731,764 731,764Securitydeposit 6,401,200 6,401,200
120,455,009 130,152,799
• L/Caccounts(goods-in-transit)representcostincurredonimportofchemicals,sparepartswhichwillbeadjustedagainstrespectiveinventoryitems
• Advanceincometaxesaremadetostatutoryauthorities• Rent agreement made with Rana Leather Industries Ltd. for using their premises• Advanceduefromstaff&workersareregularlybeingrealizedthroughtheirsalaries• Advancestosuppliersmainlygavetosuppliersofrawhidesandskins.Advancesconsideredgoodbuthave
no security other than personal security of the concerned suppliers• IntheopinionoftheDirectors,allcurrentassets,investments,loansandadvanceshave,onrealizationinthe
ordinarycourseofbusiness,avalueatleastequaltotheamountsatwhichtheyarestatedintheStatementofFinancialPosition
• There is no amount of loans and advances due for payment for a period of more than 12 months from the dateofStatementofFinancialPosition
• ThereisnoaggregateamountduefromDirectors,OfficersoftheCompanyorbyanyassociatedcompanies.• Therearenoclaimsagainstthecompany,whichcanbeacknowledgedasbaddebt
12. CASH AND CASH EQUIVALENTSCash in hand
HeadOffice 5,439,561 3,560,827Factory 204,544 242,262
Cash at BanksAgrani Bank Ltd. 34,604,455 24,996,762Rupali Bank Ltd. 17,346 10,010,186MercantileBankLtd. 3,366,651 5,554,296MutualTrustBankLtd. 325,830 163,729StateBankofIndia 4,235,866 5,749,650
FDR 285,737,430 316,619,345333,931,683 366,897,057
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Total Takaas of
June 30, 2015
Total Takaas of
June 30, 2014
17. WORKING CAPITAL LOAN
Agrani Bank Ltd. 423,488,039 139,219,061
The company has taken cash-credit (hypothecation) facilities fromAgrani Bank Ltd. Amin CourtCorp.Branch,MotijheelC/A,Dhaka-1000againstexistingfixedassetsandinventoriesassecurities.Apartfromtheabove,companyhasnoothershorttermcreditfacilities.
18. TRADE PAYABLES
Hides&Skins 42,300,011 6,158,818
• Thisrepresentstheamountpayableforrawskins&hides
• Inordertoimprovethecashflowposition,tradepayablesweredeferred
• Therearenopayablesduemorethan12months
19. OTHER PAYABLES
ContributiontoWPP&WF 6,961,012 5,412,341
Liabilitiesforfreights,spareparts&otherexpenses 12,140,758 11,155,811
Audit fees 153,333 153,333
19,255,103 16,721,485
• Payment against outstanding expensesweremade subsequently in due time. For other credits,paymentsaregenerallymadebyduedate
• Therearenoliabilitiesforexpensesduemorethan12months
• IntheopinionoftheDirectors,noliabilitiesintheStatementofFinancialPositionareatavaluelessthantheamountatwhichitisrepayableatthedateoftheStatementofFinancialPosition
20. PROVISION FOR INCOME TAX
Balance as per last year 60,013,469 58,580,903
Add: During the year 23,066,073 24,769,819
83,079,542 83,350,722
Adjustmentofincometaxforassessmentyear2011-2012 - (23,337,253)
Adjustmentofincometaxforassessmentyear2012-2013 (25,733,586) -
57,345,956 60,013,469
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Year EndedJune 30, 2015
Taka
Year EndedJune 30, 2014
Taka
21. Proposed Dividend 68,580,000 68,580,000
TheBoardofDirectorsproposeddividend@45%fortheyearattheBoardMeetingheldonAugust16,2015.
Theproposeddividend isnot recognizedasa liabilityat theStatementofFinancialPositiondate inaccordancewithBangladeshAccountingStandard(BAS)10“EventsaftertheReportingDate”.
BangladeshAccountingStandard(BAS)1“PresentationofFinancialStatements”alsorequirethatthedividendproposedaftertheStatementofFinancialPositiondatebutbeforethefinancialstatementsareauthorizedforissue,bedisclosedeitheronthefaceoftheStatementofFinancialPositionasaseparatecomponentofequityorinthenotestothefinancialstatements.
TheprovisionofCompaniesAct,1994,requiresthatdividendstatedtobeinrespectofperiodcoveredbythefinancialstatementsandthatareproposedordeclaredaftertheStatementofFinancialPositiondatebutbeforeapprovalofthefinancialstatementsshouldbeeitheradjustedordisclosed.
ConsideringtherequirementsofBAS-1,BAS-10andCompaniesAct1994,proposeddividendhasbeendisclosedinthefinancialstatementsandnotshownasliability.
22. SALES
Sft. Taka Taka
FinishedCowLeather 17,744,467 3,105,350,707 3,086,144,472
FinishedGoatLeather 5,533,818 666,287,095 707,022,209
23,278,285 3,771,637,802 3,793,166,681
23. COST OF GOODS SOLD
Opening stock 935,777 115,783,500 112,563,808
Add:Costofproduction 23,561,193 3,460,056,617 3,500,621,039
Less:Closingstock 1,218,685 144,138,138 115,783,500
Costofgoodssold 23,278,285 3,431,701,979 3,497,401,347
Cost of production
Goatskinsconsumed 33 311,852,899 407,255,243
Cowhidesconsumed 34 2,017,914,642 2,002,540,536
Chemicalconsumed 35 859,612,385 806,964,567
Sparepartsconsumed 36 21,070,852 14,842,900
Packingmaterials 4,966,773 5,636,400
Directlabour 99,910,579 95,595,704
Depreciation(Schedule-A-01) 10,766,092 12,473,201
Factoryoverhead 37 133,962,395 155,312,488
3,460,056,617 3,500,621,039
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Year EndedJune 30, 2015
Taka
Year EndedJune 30, 2014
Taka
24. FREIGHT & FORWARDING 66,545,992 70,001,293
• Freight and forwarding represents cost of shipment of finished leather
25. ADMINISTRATIVE EXPENSES
Salary & allowances 21,941,201 19,336,295
Gratuity 5,121,923 2,162,823
Staff welfare 3,000,084 2,395,198
Telephone, telex & fax 186,106 221,393
Repairs & maintenance 219,830 274,550
Printing & stationery 196,032 199,203
Postage 39,137 40,875
Vehicle maintenance 1,515,222 1,227,857
Fuel & lubricant 1,755,171 1,767,418
Electricity & water 1,100,503 1,457,057
Social responsibilities (CSR) 1,150,223 882,690
Renewal & registration 1,010,784 770,966
Advertisement 998,235 803,985
Entertainment 233,868 229,852
AGM and EGM expenses 930,813 1,793,719
Forms & fees 309,667 303,954
Membership subscription 333,455 329,367
Board meeting fees 356,500 317,400
40,398,754 34,514,602
• Salary & allowances, Gratuity and Staff welfare increased because of annual increment
• Vehicle maintenance increased because of aged vehicles
• Social responsibilities (CSR) expenses increased because of more activities on CSR incurred during the year
• Renewal & registration increased due to increase of Bond License fee
• Advertisement expenses increased because of rate increase
• Entertainment expenses increased due to increased cost of food
26. MARKETING EXPENSES
Sales commission 104,304,311 89,802,711
Sales promotion 14,220,033 17,277,391
118,524,344 107,080,102
• Sales commission increased due to increase of sales volume of finished leather
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Sales commission
Wecertifythatthelocal&foreignagents,whosedetailsaregivenbelow,havenoconnectionwhatsoeverwithany Director.
Local/Foreign Agent Address Amount in Taka
ABCLeather House#50/1(1stfloor)Road#11/A,Dhanmondi,Dhaka-1209 7,823,805AbedinCorporation House#50/1(1stfloor)Road#11/A,Dhanmondi,Dhaka-1209 4,992,258Al-FallahLeather 6/C,Sher-E-BanglaRoad,Hazaribagh,Dhaka 287,232AshokLalLala A-15,Sector-9,Noida,India 3,427,931ConceriaEverest AGCastanoPrimo,Itally 6,256,923ChengHuiShan No.24,Alley-2,Lane–104,wenhuaS.Rd.Nantow,Taiwan 3,618,190KemaTrading 77,HazaribaghT/A,Dhaka 4,618,401LeeJeYong 191-28,KyohgsinriNammyeonYongju-City,Korea 2,521,910Schmenger SchmengerLederGMBH&Co.ZweibruckerStrabe29,Germany 5,382,681ShampanTradingcorp 49HazaribaghTanneryArea,Dhaka-1209 4,530,489SarmLeatherInternaional AponNibash,42/8,JigatalaNewRoad,Dhaka-1209 1,655,808DairathCo.Ltd. Vill:Chamta,PO:PuranDinaraHat.PS:Naria,Dist.:Shariatpur 488,699FairInternational 86,Shere-e-BanglaRoad,Dhaka-1209 52,052FamazInternational ViaGrande,22-24SantaCroce,Italy 8,671,075PRPInternational 594/C,KhilgaonPoliceLineKhilgaon,Dhaka-1219 4,978,438RidgeInternational 87/1,MoneshwarRoad,Dhaka-1209. 3,894,258MegumiInternational 66/14,WestRazabazar(1stfloor),Dhaka 4,066,846ProgressiveLeatherAgency 298/ATaliOfficeRoad,RayerBazar,Dhaka-1209 688,178UniversalLeatherCorporation 27DilkushaC/A,5thFloor,Dhaka-1000 8,161,036UnionLeather 262/1,Road-19,WestDhanmondi,Dhaka-1209 124,601TechnologistsLeatherTrader 96/4,MoneswarRd.,Jigatala,Dhaka-1209 30,599WorldTopTradeInt. 202,NewPaltanLine,Azimpur,Dhaka-1205 2,339,146WorldTradeLeather 68/7/A,Jigatala(3rdfloor),Dhaka-1209 1,103,308Interkid AGCastanoPrimo,Itally 957,731Inleather ViaDiPelle,2956029S.CroceSullArno(PI),Italy 1,551,241GlobalUnion House#25/A,Road#96,Gulshan,Dhaka 180,685GlobalLeatherExport House-86,Rd-17,Sector-14,UttaraModelTown,Dhaka-1230 75,683J.M.Corporation 20,Hazaribagh,Dhaka 187,456KashemEnterprise 68/7/A,Jigatala(3rdfloor),Dhaka-1209 55,672AmbicoTrade(Pvt.)Ltd. 124,Hazaribagh,Dhaka 1,932,230YeungHaiYing House#8,Narcissuspath,Phase1E,PalmSpringsYuenLong,HK 554,915KeywinTradingCorporation ConcordTower,123KaziNazrulIslamAvenue,Dhaka 13,701,624Md.Babul 202,NewPaltanLine,Azimpur,Dhaka-1205 3,955,323BanglaLeatherCorporation 124HazaribaghT/A,Room43-44,Dhaka-1209 1,345,869LeatherSource 10,MitfordRoad(ShoaibMarket),Dhaka-1100 61,909ZhichengCo. 69,ManesharRoad,Jigatala,Dhaka 30,109
Total 104,304,311
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Taka
Year EndedJune 30, 2014
Taka
27. LEGAL & AUDIT FEES
Legalfees(Professionalfees) 360,000 360,000
Audit fees 153,333 153,333
513,333 513,333
28. BANK INTEREST EXPENSES AND CHARGES
Bank interest 29,312,280 17,639,363
Bank charges 914,535 955,778
30,226,815 18,595,141
BankinterestandchargesincreasedduetotheCompanyavailedmoreamountofloanduringtheyear under audit as compared to the previous year.
29. OTHER INCOME
Dividendincome-Cash 2,179,803 2,179,803
InterestonFDR 28,863,885 34,630,377
Rental income 30,000,000
Less:Depreciation(4B) 3,415,914
Rent,rates&taxes 110,722
Insurance premium 1,061,302 (4,587,938) 25,412,062 25,254,009
Total 56,455,750 62,064,189
• CashdividendamountingTaka2,179,803includedcashdividendfromApexFootwearLimitedTk.751,850andTk.1,427,953fromCentralDepositoryBangladeshLimited.RentalincomeofUnitIIwasreceived/[email protected],500,000.
30. CURRENT TAX EXPENSES
Rate of Tax Taxable Profit Tax Tax
Onexportprofitafter 25 % on 50 % 61,387,413 9,061,125 7,865,652
adjustmentofgratuity of income
On other income
Dividend on investment (Cash) 20 % 2,179,803 435,961 435,961
Rental income 25 % 25,412,062 6,353,016 6,944,852
InterestonFDR 25 % 28,863,885 7,215,971 9,523,354
117,843,163 23,066,073 24,769,819
31. DEFERRED TAX EXPENSES / (INCOME)
DeferredTaxassetsclosing (5,537,353) (5,045,074)
DeferredtaxassetsOpening 5,045,074 3,181,848
Total (492,279) (1,863,226) NO
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Taka
Year EndedJune 30, 2014
Taka32. EARNINGS PER SHARE
COMPONENTS OF EARNINGS PER SHARE ARE AS FOLLOWS :Earnings per share without fair valuation surplus of investment:Netoperatingincome 3.46 2.55Netotherincome 2.79 2.96Earnings per share (Tk.) 6.25 5.51
33. GOATSKINS CONSUMED (RAW & WETBLUE)Sft. Taka Taka
Openingstock(raw) 185,325 12,694,732 10,084,368Add:Purchasethisyear 4,782,050 330,562,273 418,476,843Less:Closingstock 273,381 18,863,289 12,694,732
4,693,994 324,393,716 415,866,479Add:Openingstock(wetblue) 420,355 32,577,536 25,587,284Less:Closingstock 555,493 41,661,975 32,577,536
4,558,856 315,309,277 408,876,227Add:OpeningWIP 108,498 8,625,566 7,004,582Less:ClosingWIP 152,936 12,081,944 8,625,566
4,514,418 311,852,899 407,255,24334. COWHIDES CONSUMED (RAW & WETBLUE)
Openingstock(raw) 293,641 29,951,337 33,467,431Add:Purchasethisyear 19,371,598 2,054,086,427 1,992,272,367Less:Closingstock 411,807 42,416,121 29,951,337
19,253,432 2,041,621,643 1,995,788,461Add:Openingstock(wetblue) 634,948 73,812,674 80,571,997Less:Closingstock 802,968 93,144,288 73,812,674
19,085,412 2,022,290,029 2,002,547,784Add:OpeningWIP 108,606 14,471,718 14,464,470Less:ClosingWIP 147,243 18,847,105 14,471,718
19,046,775 2,017,914,642 2,002,540,536
35. CHEMICAL CONSUMEDOpeningStock 139,461,034 106,324,950Add:Purchasethisyear 853,773,034 840,100,651Less:Closingstock 133,621,683 139,461,034
859,612,385 806,964,567
Chemicalpurchaseduringtheyear:MT US$ Euro Taka Taka
Imported 5,706 5,711,248 3,538,673 746,264,522 813,438,900Local 879 00 00 107,508,512 26,661,751
6,585 5,711,248 3,538,673 853,773,034 840,100,651
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Year EndedJune 30, 2014
Taka
36. SPARE-PARTS CONSUMED
Opening stock 23,246,078 11,693,559
Add:Purchasethisyear 18,835,534 26,395,419
Less:Closingstock 21,010,760 23,246,078
21,070,852 14,842,900
37. FACTORY OVERHEAD
Salary&allowances 57,205,708 50,987,114
Gratuity 6,112,210 5,315,805
Staffwelfare 2,198,739 2,817,553
Entertainment 1,261,695 884,809
Postage 166,440 135,235
Printing&stationery 457,413 355,149
Repair&maintenance 11,177,430 12,059,151
Insurance premium 7,559,535 10,309,854
Telephone&fax 195,162 249,709
Vehiclemaintenance 2,065,210 2,143,867
Carriageinward 11,823,555 11,937,517
Power,gas&water 29,427,873 53,863,004
Consumablestore 576,759 496,239
Rent,rates&taxes 3,469,904 3,484,792
Conveyance 237,751 239,865
Sundryexpenses 27,011 32,825
133,962,395 155,312,488
• Salary&allowancesandgratuityincreasedbecauseofannualincrement
• Entertainmentexpensesincreasedduetoforeignersentertainment
• Postageincreasedduetorateincrease
• Printingandstationeryincreasedduetorateincrease
38. AGGREGATE AMOUNT PAID TO THE DIRECTORS Aggregate amount paid to the Directors for their services rendered are as follows:
Name Designation Per Year Amount (Taka) Remarks
SyedManzurElahi Chairman 3,600,000 Fulltimework Md.Rahmatullah ManagingDirector 3,600,000 Fulltimework Md.Hedayetullah Director 3,060,000 Fulltimework AnsarulIslam ExecutiveDirector 2,826,288 Fulltimework M.AbdulMajed ExecutiveDirector 2,826,288 Fulltimework
SyedManzurElahiistheChairmanoftheassociatecompaniesofApexTanneryGroupbutasafulltimeDirector,hedrawsremunerationfromApexTanneryLimited.
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Annual Report 201556
39. NUMBER OF EMPLOYEESNumberofemployeesandtheirsalaryandwagesrangearegivenbelow:
No. of Employees
EqualandaboveTaka3000permonth 868BelowTaka3000permonth -
40. PRODUCTION CAPACITY AND UTILIZATION
Particulars Sft. per year %
InstalledCapacity 18,500,000 71.00RentedCapacity(Wetblueonly) 7,500,000 29.00 Total Capacity 26,000,000 100.00 Actual Production 23,561,193 90.62
41. Allshareshavebeenfullycalledandpaidup.42. Therewerenopreferencesharesissuedbythecompany.43. Therewasnobankguaranteeissuedbythecompanyonbehalfoftheirdirectorsorthecompanyitself
exceptbankloans.44. NoexpensewaspaidasroyaltyandsalarytoTechnicalExpertsetc.[aspara-8(KHA)ofpart-II]inforeign
currencies.45. Nobrokeragewaspaidagainstsalesduringtheyearunderaudit.46. TherewasnosumforwhichthecompanywascontingentlyliableasonJune30,2015.47. Duringtheyearunderreview,4(Four)BoardMeetingswereheldandDirectorspresentwerepaid@Taka
10,000.00 per head per meeting.48. AuditorsarepaidstatutoryauditfeesasapprovedbytheshareholdersinthelastAnnualGeneralMeeting.49. ThecompanyearnedforeigncurrenciesofUS$49,233,533.99.50. Therewasnoforeignexchangeremitted,astherearenoforeignshareholders.51. Thereisnoclaimagainstthecompanynotacknowledgedasdebtexceptclaim,whichmayhavearisenas
insurance claim.52. NocompensationwaspaidtoanymemberoftheBoardforspecialservicerendered.
Md.Rahmatullah Md.Fayekuzzaman JagadishKumarBhanjaManagingDirectorDirector CompanySecretary
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Annual Report 201558
Part
icul
ars
CO
ST
DEP
RERI
ATIO
N
Wri
tten
D
own
Valu
e as
at
30.0
6.20
15
Bal
ance
as
at
01.0
7.20
14
Add
itio
n du
ring
the
year
Adj
ustm
ent/
disp
osal
dur
ing
the y
ear
Bal
ance
as
at
30.0
6.20
15
Rate
(%
)
Bal
ance
as
at
01.0
7.20
14
Cha
rged
du
ring
the
year
Adj
ustm
ent/
disp
osal
dur
ing
the y
ear
Bal
ance
as
at
30.0
6.20
15
Lan
d 12,76
9,24
6-
-
12,76
9,24
6-
--
-
-
12,76
9,24
6
Bui
ldin
g 121
,196
,341
-
-
121
,196
,341
10
98,79
1,08
1
2,2
40,5
26
-
101
,031
,607
20,
164,
734
Plant&M
achine
ry
113
,940
,412
-
-
113
,940
,412
15
106
,215
,850
1,158
,684
-
107
,374
,534
6,565
,878
Furniture&fixture
883
,041
-
-
883
,041
10
7
22,7
64
16,02
8-
73
8,79
2144
,249
Veh
icles
486
,500
-
-
486
,500
20
483
,122
676
-
48
3,79
8
2,70
2
Tot
al 2
014-
2015
24
9,27
5,54
0 -
- 24
9,27
5,54
0 -
206,
212,
817
3,41
5,91
4 -
209,
628,
731
39,6
46,8
09
Tot
al 2
013-
2014
249,
275,
540
-
-
249,
275,
540
- 20
2,34
1,53
3 3,
871,
284
-
206,
212,
817
43,0
62,7
23
Dep
reciationofUnitIITaka3,41
5,91
4ch
arge
dag
ainstren
talincom
e
•Ad
ditio
nofplant&m
achine
ryre
presen
tspurch
aseofEmbo
ssingmachine
•Ve
hiclepu
rcha
sedform
anag
emen
t•
Additio
noffu
rnitu
re&fittingsre
presen
tpurch
aseofcom
puter,printera
ndanc
illaries
•Th
ereareno
intang
ibleassets
•Dep
reciationha
sbe
encha
rged
onredu
cing
balan
cem
etho
d
Prop
erty
, P
lant
and
Equ
ipm
ent-
Uni
t-II
Sche
dule
-A-0
2
Am
ount
in T
aka
SCH
EDU
LE O
F FI
XED
ASS
SET
Annual Report 2015 59
Apex Tannery Limited
NOTICE OF ANNUAL GENERAL MEETING
Noticeisherebygiventhatthe39thAnnualGeneralMeetingofApexTanneryLimitedwillbeheldonSunday,October 04, 2015 at 10:00 a.m. at Spectra Convention Centre Ltd., House No. 19, Road No. 7, Gulshan-1,Dhaka-1212totransactthefollowingbusiness:
1 To receive and adopt the Audited Accounts for the year ended June 30, 2015 and the Reports of the Auditors and Directors thereon
2 To declare dividend3 To elect Director4. To appoint Independent Director5. Toappointauditorsfortheyear2015-2016andfixtheirremuneration
By Order of the BoardSeptember9,2015127HazaribaghT/A Dhaka-1209 (Jagadish Kumar Bhanja FCS) CompanySecretary
Notes:
1. September9,2015 is therecorddate.Shareholderswhosenameswillappear in theMembers registeroftheCompanyorintheDepositoryRegisteronthatdatewilleligibletoattendattheAnnualGeneralMeetingandreceivedividend.
2. AmemberentitledtoattendandvoteattheAnnualGeneralMeetingmayappointaproxyinhisstead.Theproxyform,dulystampedmustbedepositedattheCorporateOfficeoftheCompanynotlaterthan48(fortyeight)hoursbeforethetimefixedforthemeeting.Annualreportandproxyformcanbeavailableonthewebsitewww.apextannery.com.
3. Admissiontothehallwillbeonlyonproductionoftheattendanceslipsentwiththenotice.
4. In compliance with the Bangladesh Securities and Exchange Commission Circular No. SEC/CMRRCD/2009-193/154dated24October,2013noGift/GiftCoupon/FoodBox/BiscuitBox/CashorCashkindsshallbedistributedattheAnnualGeneralMeeting.
5. TheShareholdersarerequestedtosendtheir12digite-TINCertificatecopywithinSeptember28,2015fordeductionofTax@10%otherwiseTaxwillbededucted@15%ondividendasperFinanceAct2014.
NO
TICE
OF
AN
NU
AL
GEN
ERA
L M
EETI
NG
Annual Report 2015 61
Apex Tannery Limited
APEX TANNERY LIMITEDRegistered and Corporate Office:127HazaribaghT/A,Dhaka-1209,Bangladesh
PROXY FORM
I /We . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . … … … . . . . . . . . . .
o f . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .……….. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .…
beingMemberofApex Tannery Limited,herebyappoint...................................................................................................................................................of .......…...........................................................................................................................................................................................................................................................................……….............
asmy/ourproxytoattendandvoteforme/usandonmy/ourbehalfatthe39thAnnualGeneralMeetingofthecompanytobeheldonSunday,October04,2015at10:00a.m.and/oratanyadjournmentthereof.
As witness my hand this ........…......................………...... day of ..............……...........................................………........... 2015
--------------------------Signature of Proxy
-------------------------------------Signature of the Shareholder
No.ofsharesheld---------------------------------------------
RegisterFolio/BOIDNo.
Note : A Member entitled to attend and vote at the General Meeting may appoint a proxy to attend and vote on his behalf. The proxy form duly completed must be deposited at the registered office of the Company not later than 48 hours before the time fixed for the meeting.
APEX TANNERY LIMITEDRegistered and Corporate Office:127HazaribaghT/A,Dhaka-1209,Bangladesh
ATTENDANCE SLIP
Iherebyrecordmyattendanceatthe39thAnnualGeneralMeetingbeingheldonSunday,October04,2015at10:00a.m.atSpectraConventionCentreLtd.,HouseNo.19,RoadNo.7,Gulshan-1,Dhaka-1212.
Nameofmember/proxy........…......................………..............…......................………...... ........…......................………...... ........….........................................………......
RegisterFolio/BOIDNo.
Signature ........…......................……….......
Note: Shareholders attending meeting in person or proxy are requested to complete the attendance slip and hand it over at the entrance of the meeting hall.
AffixRevenueStampofTk. 10.00
PRO
XY
FORM
ATTE
ND
AN
CE S
LIP