AnnualReport_2014final

Annual Report 2014Annual Report 2014 Page 1ACI's Mission is to enrich the quality of life of the peoplethroughresponsibleapplicationof knowledge, technologyandskills. ACI is committedtothepursuit of excellencethroughworld-class products, innovative processes and empoweredemployees, toprovidethehighest level of satisfactiontoourcustomers.Our MissionQualityCustomer FocusFairnessTransparencyInnovationContinuous ImprovementTo realise the Mission, ACI will :Provide products and services of high and consistent quality,ensuring value for money to our customers.Endeavour to attain a position of leadership in each categoryof our businesses.Developour employeesbyencouragingempowerment andrewarding innovation.Promote an environment for learning and personal growth.Attain a high level of productivity in all our operationsthrough effective utilisation of resources and adoption ofappropriate technology.Promoteinclusivegrowthbyencouragingandassistingourdistributors and suppliers in improving efficiency.Ensuresuperiorreturnoninvestmentthroughjudicioususeof resources and efficient operations, utilising our corecompetencies.Our VisionOur ValuesACI is committed to formulate and conduct all its operations in an environmentallyfriendlymanner, ensuringcontinual improvement intheutilisationof resourcesand prevention of pollution or degradation of the environment.ACI Environmental PolicyACI Quality PolicyISO 9001 Quality Management SystemACI in the first company in Bangladesh to have obtained ISO9001 Certification for Quality Management System across all categoriesOne of our important vision is to provide products and services of high andconsistent quality, ensuring value for money to our customers.To attain the Vision ACI will:Aimtoachievebusinessexcellencebyunderstanding,accepting,meetingandexceeding customer expectations.FollowInternational Standards on Quality Management Systemto ensureconsistent qualityof productsandservicestoachievecustomer satisfaction.ACI will also meet all national and regulatory requirements relating to itscurrent businesses and ensure that current Good Manufacturing Practice(cGMP) as recommended by World Health Organisation is followed for itspharmaceutical operations and conformto all other guidelines and bestpractices relating to its other businesses.Commit itself to quality as the prime consideration in all its business decisions.All employees of ACI follow documented procedures to ensure compliance withquality standards.Developapool of humanresources of theCompanytotheir full potentialthroughregulartrainingandparticipationinseekingcontinuousimprovementof the Quality Management System.In pursuit of this Goal, ACI will:Comply with all local and national legislations and regulations.Conserve natural resources like water and energy for sustainable development,and adopt environmentally safe processes.Ensure appropriate treatment of all effluents prior to discharge.Ensure appropriate communication with internal and external interested partieson environmental issues.Create awareness on environmental issues among our employees andcontractors.Ensurewastemanagementinanenvironmentallyresponsiblemannerthroughcontinuous upgradation of technology.ISO 14001 Environmental Management SystemACI is the first company in Bangladesh to have obtainedISO 14001 Certification for Environmental Management SystemFor further information on the Compact, please visit www.unglobalcompact.orgUN Global CompactWorld Economic ForumThe UNGlobal Compact is a strategic policy initiative for businesses that arecommitted to aligning their operations and strategies with the ten universallyacceptedprinciplesintheareasof humanrights, labour, environment andanti-corruption.Sincelaunchinginyear2000,theUnitedNationsGlobal Compacthasbeen encouraging businesses worldwide to adopt sustainable and sociallyresponsiblepolicies,andtoreportontheirimplementation.Atpresent,withover12,000 corporate participants and other stakeholders from over 145 countries, it isthelargest voluntarycorporateresponsibilityinitiativeintheworld. Overall, theGlobal Compact pursues two complementary objectives:1. MainstreamitsTenPrinciplesinbusinessstrategyandoperationsaroundtheworld; and2. Catalyze business action in support of broader UNgoals with emphasis oncollaboration and collective action.TheGlobal Compactincorporatesatransparencyandaccountabilitypolicyknownas theCommunicationonProgress (COP). Theannual postingof aCOPis animportant demonstration of a participant's commitment to the UN Global Compactanditsprinciples.Participatingcompaniesarerequiredtofollowthispolicy,asacommitment to transparency and disclosure is critical to the success of theinitiative.Since September 2003, ACI is a proudandactive member of The UNGlobalCompact. ACIisalsoaFoundingMemberof theCommunityof Global GrowthofCompanies, an initiative of World Economic Forum.ACI has been accepted as a FoundingMemberoftheCommunityofGlobalGrowth Companies by the WorldEconomic Forumwhichis the mostprestigious business networkingorganisation in the world.About CoverThe cover reflects theconglomerate nature of ACIbusiness profile, coveringthe most important sectorsand capturing the valuechain and utilising our corecompetencies reflecting ourvalues and linking them toour mission of improvingthe quality of life of thepeople.On the occasion of the Inaugural Annual Meeting of the New Champions,we are pleased to welcomeas a Founding Member of the Community of Global Growth CompaniesKlous SchwabFounder and Executive Chairman8 September 2007Advanced Chemical Industries LimitedBangladeshAbrochuretitledSustainabilityinACIwill bepublishedoutliningourvisiononCSR, Sustainability and Stakeholders' interest in the third quarter of the year inwhich our CSR initiatives will be discribed in details.CSR Activities of ACI in 2014ContentsAnnual Report 2014 Page 34 Board of Directors and Executive Management5 Notice of the 42nd Annual General Meeting6 Year 2014 - at a Glance6 ACI Group - Six Years' Comparative Statistics from 2009 - 20147 ACI Limited - Six Years' Comparative Statistics from 2009 - 20148 Message from the Chairman10 Audit Committee Report12 Report of the Directors' to the Shareowners30 Certificate of Compliance to the Shareholders38 Bangla Version of Message from the Chairman40 Certificate Of Due Diligence By CEO & CFO41 Bangla Version of Report of the Directors' to the Shareowners49 Auditors' Report51 Statement of Financial Position52 Statement of Profit or Loss53 Statement of Profit or Loss and other Comprehensive Income54 Statement of Changes in Equity55 Statement of Cash Flows56 Consolidated Statement of Financial Position57 Consolidated Statement of Profit or Loss58 Consolidated Statement of Profit or Loss and otherComprehensive Income59 Consolidated Statement of Changes in Equity60 Consolidated Statement of Cash Flows61 Notes to the Financial Statements118 ACI Formulations Limited130 ACI Logistics Limited136 ACI Pure Flour Limited142 ACI Foods Limited148 ACI Salt Limited154 ACI Motors Limited160 Creative Communication Limited166 Premiaflex Plastics Limited172 ACI Agrochemicals Limited176 Flyban Insecticides Limited180 ACI Edible Oils Limited186 ACI HealthCare Limited192 ACI Chemicals Limited198 Corporate Directory199 Proxy FormACI Quality Policy and ACI Environmental PolicySafety, Health and Environment (SHE) PolicyAttendance Slip (enclosed)Corporate InformationCorporate GovernanceFinancial Statements of ACIReport of the Directors andAudited Financial Statementsof the Subsidiary CompaniesAdditional InformationExecutive ManagementMr. M Mohibuz ZamanChief Operating Officer, PharmaceuticalsDr. F H AnsareyExecutive Director, AgribusinessesMr. Syed AlamgirExecutive Director, Consumer BrandsMr. Pradip Kar ChowdhuryExecutive Director, Finance & Planningand Chief Financial OfficerMr. Sabbir Hasan NasirExecutive Director, LogisticsMs. Sheema Abed RahmanDirector, Corporate AffairsMr. Priyatosh DattaDirector, Quality Assurance, PharmaMr. Abdus SadequeDirector, Marketing & Sales, PharmaMs. Sheema Abed RahmanCompany SecretaryMr. M. Sekander AliFinancial ConsultantMr. Md Monir Hossain KhanFinancial ControllerMr. Imam Ahmed IstiakDirector, Operations, PharmaRahman Rahman HuqChartered AccountantsAuditorsMr. Amitava SahaHead of Risk Management& Internal AuditBarrister Rafique-ul HuqHuq and CompanyLegal AdvisorPrincipal BankersStandard Chartered BankThe Hongkong and Shanghai BankingCorporation LimitedEastern Bank LimitedCommercial Bank of Ceylon PlcPubali BankThe City Bank LimitedBRAC Bank LimitedBank Alfalah LimitedAB Bank LimitedDutch Bangla Bank LimitedCorporate Information Board of DirectorsMr. M. Anis Ud DowlaChairmanMr. Golam MainuddinIndependent DirectorMrs. Najma DowlaDirectorMr. Md. FayekuzzamanDirectorDr. Arif DowlaManaging DirectorMs. Sheema Abed RahmanDirectorMr. Waliur Rahman Bhuiyan, OBEDirectorMr. Abdul-Muyeed ChowdhuryIndependent DirectorMr. Juned Ahmed ChoudhuryIndependent DirectorAnnual Report 2014 Page 4Ms. Shusmita AnisDirectorBy Order of the BoardSheema Abed RahmanCompany SecretaryDhaka7 May 2015Notice is hereby given that the 42nd Annual General Meeting of Advanced Chemical Industries Limited will be held on Thursday, 11 June 2015 at 10:30 am at Officers Club, 26 Baily Road, Dhaka to transact the following business:AGENDA1.Toreceive,considerandadopttheAuditedAccountsoftheCompanyfortheyearended31 December 2014 together with Reports of the Auditors and the Directors.2. To declare dividend for the year ended 31 December 2014.3 . To elect/re-elect Directors of the Company.4. To extend the tenure of Independent Directors, Mr. Abdul-Muyeed Chowdhury and Mr. Juned Ahmed Choudhury.5.Tore-appointDr.ArifDowlaasManagingDirectorforatermof5yearsfrom01.07.2015to 30.6.2020.6. To appoint Auditors for the year 2015 and to fix their remuneration.a . The Record Date shall be on Wednesday, 13 May 2015.b . TheShareowners'namesappearingintheRegisterofMembersoftheCompanyorinthe Depository on the Record Date will be eligible to receive the dividend.c . The Directors have recommended dividend as follows:a)Cash dividend: @100%.b)Stock dividend: @15%.d . A member entitled to attend and vote at the General Meeting may appoint a proxy to attend and vote on his/her behalf. The Proxy Form, duly completed, must be deposited at the Share Office of the Company at 9 Motijheel Commercial Area, Dhaka-1000 not later than 48 hours before the time fixed for the Meeting.e . Members are requested to notify the changes of address, if any, well in time. For BO A/C holders, the same to be notified through their respective Depository Participants.f . Admittance to the Meeting venue will be on production of the Attendance Slip that will be sent with the Notice.NotesNotice of the 42nd Annual General MeetingAnnual Report 2014 Page 5ACI Group - Six Years' Comparative Statistics from 2009-2014Particulars 2009 2010 2011 2012 2013 2014Taka in millionAuthorized capital 500 500 500 500 500 500Issued & paid capital 194 194 197 238 286 344Current assets 7,639 7,591 8,486 9,927 11,598 12,926Tangible fixed assets (gross) 4,394 5,255 6,322 7,826 8,819 9,852Shareowners' equity 3,200 4,328 4,195 3,797 3,792 4,138Turnover (net) 12,300 14,498 17,460 21,976 22,167 25,822Gross profit 3,584 4,140 4,835 5,640 6,598 8,051Profit before tax 769 471 593 104 560 1,059Profit after tax 598 216 238 (166) 204 573Current ratio (times) 1.07 1.05 0.88 0.84 0.84 0.81Quick ratio (times) 0.68 0.60 0.49 0.47 0.45 0.42Return on equity (%) 18.69 5.00 5.67 (4.37) 5.37 13.86Inventory turnover (times) 2.95 3.42 3.59 4.00 3.17 3.07Debtors turnover (times) 6.56 6.42 6.02 6.66 6.20 6.85Fixed assets turnover (times) 2.99 3.01 3.02 3.11 2.66 2.77Net asset per share (Taka) 164.91 223.05 212.78 174.79 141.36 124.27Earnings per share (Taka) 30.82 11.14 10.08 (5.82) 5.94 16.68Annual Report 2014 Page 6Shareowners' Equity(Taka in Million)Earnings Per Share (Taka) Net Sales Income &Profit Before Tax (Taka in Million)Net sales income Profit before tax2,00004,0006,0008,00010,00014,00012,0002009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014 2009 2010 2011 2012 2013 2014Regular Operation One off gainTurnover Contribution by Business Unit20142014 2013Pharmaceuticals 47% 47%Consumer Brands 29% 31%Animal Health 14% 12%ABCDEFSeeds 4% 4%Fertilizer 4% 2%Cropex 2% 4%ACFBDEACFBDE2013Year 2014 - at a Glance6,6073,2414,4584,7675,0815,63717.330.528.819.126.727.733.751.030.528.819.126.727.72014 2013Particulars 2009 2010 2011 2012 2013 2014Taka in millionAuthorized capital 500 500 500 500 500 500Issued & paid capital 194 194 197 238 286 344Current assets 5,369 5,856 6,955 8,335 9,462 9,927Tangible fixed assets (gross) 1,830 1,813 2,546 2,975 3,423 4,323Shareowners' equity 3,241 4,458 4,767 5,081 5,637 6,607Turnover (net) 7,228 7,915 8,514 9,680 10,684 12,319Gross profit 2,366 2,821 3,197 3,590 4,258 5,171Profit before tax 1,108 808 893 737 1,014 1,272Profit after tax 990 592 681 545 764 951Dividend 204 237 197 238 301 398Current ratio (times) 1.13 1.43 1.31 1.17 1.17 1.19Quick ratio (times) 0.66 1.01 0.98 0.87 0.85 0.83Return on equity (%) 30.55 13.28 14.29 10.73 13.56 14.39Inventory turnover (times) 2.83 3.08 3.05 3.12 2.74 2.59Debtors turnover (times) 7.61 7.27 7.92 7.99 7.44 8.41Fixed assets turnover (times) 4.13 4.35 3.91 3.51 3.34 3.18Net asset per share (Taka) 167.06 229.75 241.98 213.73 197.23 192.09Market price per share (Taka) 447.10 372.60 206.60 141.20 171.50 389.90Earnings per share (Taka) 51.00 30.49 28.83 19.11 22.27 27.65Dividend per share (Taka) 10.50 12.00 10.00 10.00 10.50 11.50Dividend rate (%) 105.00 120.00 100.00 100.00 105.00 115.00Dividend payout ratio (%) 20.59 39.36 34.69 52.33 47.15 41.59Price earnings ratio (times) 8.77 12.22 7.17 7.39 7.70 14.10Dividend yield (%) 2.35 3.22 4.84 7.08 6.12 2.95Number of employees 3,552 3,378 4,014 4,560 4,955 6,930ACI Limited - Six Years' Comparative Statistics from 2009-20142014 % 2013 %Turnover (Gross) 13,801.12 100 12,049.25 100Cost of Materials 5,957.79 43.17 5,169.74 42.91Expenses 3,072.84 22.27 2,504.71 20.79Duties & Taxes paid to Government Exchequer 2,157.69 15.63 2,165.96 17.98Salaries, Wages & Benefits paid to employees 1,662.08 12.04 1,444.65 11.99Profit 950.71 6.89 764.19 6.34Total 13,801.12 100.00 12,049.25 100.00Comparison of Turnover & Costs over Last YearAnnual Report 2014 Page 7Taka in millionAnalysis of Turnover (%) of ACI LimitedCost of Materials 43%Expenses 22%Duties & Taxes Paid toGovernment Exchequer 16%Salaries, Wages &Benefits Paid to Employees 12%Profit 7%ABCDEACBDEAnnual Report 2014 Page 8Assalamu Alaikum,Customer-care is adeep-rooted valuewhich requires us toconsistently deliver asolution by means of aproduct or a service.We have tried to excelin that aspectMessage from the ChairmanThe year 2014 was relatively peaceful andtherefore, the economic activities started togather momentum. All sectorsinour diversifiedbusiness portfolio did fairly well. Someperformances were excellent.The results we achieved are commendable, thankstoour employeesat all levels. Theyall workedhard and long to accomplish their tasks.Those who provided leadership inthe variousbusinesses were strategic in their decisionmaking, which has taken most of our businessesto a higher levelof performance, qualitatively aswell as in terms of growth and market share.We paid a great deal of attention to enhance thecapabilities of our people by encouragingandassistingthemtoimprovetheir knowledgeandskills. We are committed to raising the individualto the highest level of competence that he or shecan attain.Annual Report 2014 Page 9M. Anis Ud DowlaChairman, ACI GroupI want to assure you that thevalue of your investment willkeep on rising at an admirablerate in the years to comeDear Shareowners, let me reiterate that yourBoard is conscious of the trust you have on theirability to guide the Company strategically into adirectionof profitablediversificationtocapturethevalue-additionprospect tothemaximum. Iwant to assure you that the value of yourinvestment will keeponrisingat anadmirablerate in the years to come. I am thankful to you foryour support.Allah Hafez.Customer-care is a deep-rooted value whichrequiresustoconsistentlydeliver asolutionbymeans of a product or a service. We have tried toexcel in that aspect.The senior management of the Company isencouraging, acknowledging and rewardinginnovation and there is effort for continuousimprovementinourprocessesandengagementswith the consumers.The Company is value-driven and there isconsciousimplementationof gender-equality. Weare following the Corporate Governance guidelinesmeticulously and there is transparency in allourdealings and decision makings. Allprocesses arevalidated through the ISO 9001 Systems ofQuality Management.We practice our CSR activities with theconsciousness that thespends onthat accountincreases our stakeholders' equity and utilizes ourcore competencies, ensuring that we havesustainability as the major factor.We are pleased to present the report of the Audit Committee of ACI Limited pursuanttotheCorporateGovernanceGuidelines of BangladeshSecurities andExchangeCommission (BSEC). This report is a brief on the activities performed by the AuditCommittee and is hereby submitted to the Shareowners for their perusal.Annual Report 2014 Page 10Audit Committee ReportMonitorChoice of accounting policies and principles.Internal Control Risk management process.Funds utilized for the purposes other than thosestated in the offer document/prospectus.OverseeThe financial reporting process.Appointment of statutory auditors andtheirperformance.TheAuditCommitteemetfourtimesduringtheyear 2014. The details of attendance of eachmember at the Audit Committee meetings are asfollows:No. of MeetingAttendedMr. Golam Mainuddin 4ChairmanMs. Shusmita Anis 4MemberMs. Sheema Abed Rahman 3Member - SecretaryThe Audit Committee Meeting is attended by ChiefFinancial Officer, Headof Risk Management &Internal Auditaspermanentinviteesandall theabove Members of the Audit Committee areappointed by the Board of Directors. From time totime, the Managing Director also joins theMeeting.Summary of Activities 2014In 2014, the Audit Committee reviewed its TermsIn ACI Limited assessment and evaluation of theInternal Control Policy were made to ensure thatthe Company employs a sound system of internalcontrol including financial control. The Committeein its meetings reviewed among others theaccounting and financialreporting process of theCompanyandassistedtheBoardof Directorsinensuringthat thefinancial statements reflectedtrueandfair viewof thestate-of-affairsof thecompany and in ensuring a good monitoringsystem within the business.The Audit Committee is authorized by the Board ofDirectors to review any activity within thebusiness as per its Terms of Reference andCorporateGovernanceGuidelinesof BSEC. It isauthorizedtoseek any informationit requiresfrom, andrequirestheattendanceat anyof itsmeetings of, any Director or member ofmanagement, and allemployees are expected toco-operate with any request made by theCommittee.Thekeyresponsibilitiesof theAudit Committeeincludes:ReviewAlong with the management, the annualfinancial statementsbeforesubmissiontotheboard for approval.The adequacy of internal audit function. Statement of significant related partytransactions submitted by the management.Management Letters/Letter of InternalControlweakness issued by statutory auditors.Initial Public Offering (IPO)/Repeat PublicOffering (RPO)/Rights Issue.The Board reconstituted the Committee (as per BSEC's guidelines) as follows:Mr. Golam Mainuddin Independent Director ChairmanMs. Shusmita Anis Director MemberMs. Sheema Abed Rahman Director MemberMs. Sheema Abed Rahman Company Secretary SecretaryAnnual Report 2014 Page 11SpecifyObjectivesRiskAssessmentControlEnvironmentControlActivitiesInformation&CommunicationMonitoringSheema Abed RahmanSecretary, Audit CommitteeCompany Secretary, ACI Ltd.Golam MainuddinChairman(Independent Director)TheManagingDirector hastosatisfytheBoardadequacy on assigned Business Risk ManagementandInternal Control Process. Internal Audit isdedicated in a pivotal role into Risk ManagementProcess. As such, Risk Management and InternalAudit department conducts yearly review focusingontotheriskindicators, whereadetailedriskmap is prepared.TheAuditCommitteeandtheManagingDirectorreview this risk map periodically.2. Internal AuditAudit activitiesplayanessential anduseful roleinthe conduct of successful operations. Theseactivities serve to examine and evaluate financial,administrative andoperational activities of thecompany, supplying management personnel at alllevels with information to assist in their control ofthe assets and operations and their attainment ofobjectives for which they are responsible.The Internal Audit activity is established toprovide independent, objective assurance andconsultingservices designedtoaddvalue andimprovethecompany's operation. It helps theBusiness units achieving its objective by bringinga systematic, disciplined approach to evaluate riskmanagement, control and governance process. Itperforms ongoing evaluations of internal controls,advises the Audit Committee, managementand the statutory auditors of the result oftheir evaluations and makes recommendationto improve risk management, control andgovernance process. Acomprehensive internalaudit plan is prepared on a yearly basis andInternal Audit activityis always conductedwiththe highest standards of business ethics, integrityandhonest dealings inall areas andfunctionswithin the Company and with all outsidestakeholders. Internal Audit mainlyconcentratesonrisk-basedaudit approach, andthat allowsInternalAudit to provide assurance to the Boardthat risk management processes aremanagingthe risks effectively, in relation to the risksappetite of the Company.of Reference in line with the requirements of BSECnotification on Corporate Governance. TheCommitteecarriedout its duties inaccordancewith the Terms of Reference of the AuditCommittee.During the year 2014, the Audit Committeecarried out the following activities:1. Internal Control andBusiness RiskmanagementThe Board has established a process designed toprovide reasonable assurance by the Managementregardingtheachievementof objectivesrelatingto effectiveness and efficiency of operations,reliability of the information and reporting,compliancewithapplicablelaws, regulationandpolicy, procedures and safeguarding companyassets. The internal control system of thecompany has been working through fivecomponents.Tofurtherstrengthenthecontrols, thecompanyhas introduced and consistentlycomply withthefollowing international standards and guidelines:-ISO 9001: 2008 Quality Management SystemISO 14001: 2004Environmental ManagementSystemAdoptedTenPrinciplesof Global Compact, aninitiative taken by the Secretary General of theUnited Nations.Business Risk Management is an ongoing processin ACI where strategic business units identify therisk, recognizeriskfactors, reviewandevaluaterisks to the achievement of business objectives.Annual Report 2014 Page 12Report of the Directors' to the ShareownersACI Grouphadasuccessful year in2014witharevenue growthabove 16%over 2013. Thisachievement wasattainedthroughthecombinedeffort of our sales and marketing team supportedby services and factories. Most of the businessescontributed to this growth resulting in a robust andquality growth for ACI.The year was muchless politically active thanthe previous year. Most macroeconomic indicators,such as, GDP growth, inflation, exchange rate andforeign exchange reserve were favourable. Duringthe FY:2013-14, Bangladesh achieved a GDPgrowth above 6%. The 12-month average inflationwas 7.3%.Sustainedgrowthwas alsoprevailedinexportsand remittance inflows that led to the phenomenalriseinForeignExchangeReserve. Export about30.18billionUSdollarsandremittanceof 14.22billion US dollars, and current account surplus of1.55 billion US dollars in FY:2013-14 resulted intoForexReservearoundUSD22billionwhichwasequivalent to more than six months' importrequirements. This hugereservekept theTakastrongandstable inthe exchange rate during2014. On the other hand, the lending ratedecreasedthroughout the year, mainly due tolower deposit rates andexcess liquidity inthemoney market. ACI Group enjoyed the benefits ofpositive macroeconomic factors of the year.ACI continued its focus on business processefficiency, investment in human capital andimprovement of service quality toimprove ourbusinesses. Operational efficiency and productivitywere enhanced through benchmarking andevaluation as well as setting measurable andrelevant performanceindicators. Workingcapitalmanagement was intensified resulting in improvedinventory and credit management. This wasaccompanied by selective investments with strongreturns.ACI celebrated some noteworthy achievements in2014. Our pharmaceutical business has developeda more robust export market. They were alsoengagedwithleadingmedical andpublic healthresearchorganizations todeliver products thatimprove hygienic conditions during childbirth.Consumer Brands has further strengtheneditsdistributionchannel. Agribusinesshasperformedwell across all their business units. CaseConstructionEquipment wasaddedtoour salesanddistributionportfolio. Logistics strengthenedShwapno as a strong service brand as wellas launchingaflagshiphypermarket inUttara.Finance has launched an unsecured andtransferable commercial paper first time inBangladesh. Through these and many moreachievements, ACI has been able to deliver highquality sustainable growth.Strategic BusinessUnits and SubsidiariesACI remains committed to providing customers with a broadrange of quality products from its business operationsHealth CareConsumer BrandsAgribusinessLogisticsAnnual Report 2014 Page 13The Business has grown by 15% which is significantlyhigher than the market growth of 11.4% reported byIMS. Most of our major brands andtherapyareashave grown satisfactorily. Our brands of chronictherapyareas, suchascardiovascular, anti-diabetic,respiratory and Central Nervous System havedemonstrateda very highgrowthrate. Brands ofacute therapy have also registered a significantgrowth.Our newly launched product Cerox CV has become themost successful new launch in the industry accordingto the IMS data. We have introduced the latest oralanti-diabetic agents, SitapandSitomet. Our MeterDose Inhaler portfolio has been enriched through theintroduction of Combair HFARefill. We have alsointroduced ACI ORS which has been highly acceptedby the customers.ACI Pharmahas continuedtoincreaseits reachinexport operations. ACI Pharma products have reachedfivenewdestinations -Cameroon, Macau, SolomonIsland, VanuatuandSamoa. Atotal of 47productshave received marketing approvals from drugregulatory authorities in different countries. ACIPharmahas participatedinnumber of internationaltendersandhasbeenselectedfor supply. ACI hasbeenprivilegedtosupplytorenownedinternationalhospitalslikeKingAbdullaUniversityHospital intheMiddle East.Withour continuedcommitment tothesocietyandpeople of the country ACI Pharmais continuouslyAnnual Report 2014 Page 14Health Care DivisionOur newly launchedproduct Cerox CV hasbecome the mostsuccessful new launchin the industryaccording to the IMSdataAnnual Report 2014 Page 15participatinginclinical researchprojects conductedby internationally renowned institutions andorganizations. Following are some completed researchprojects:Applicationof '4%Chlorhexidine (ChlorhexidineGluconate 7.1%) in the umbilical cord of neonatesin coordination with Save the Children'.'Topical Applications of Chlorhexidine (4%Chlorhexidine aqua base) to the Umbilical Cord forPrevention of Umbilical infection: A Hospital BasedStudyinBangladesh' conductedbyBangabandhuSheikh Mujib Medical University (BSMMU).'Waterless handcleansingwithChlorhexidine: Anovel approach to prevent neonatal deaths'conductedbyInternational Centrefor DiarrhoealDisease Research, Bangladesh (icddr,b).Rural Medical Practitioners play a vital role indelivering healthcare to the people. In order toimprove their knowledge and skills to provide betterhealthcare, ACI Pharma and icddr,b, Dhaka hadorganized 'Refresher Training of Rural MedicalPractitioners'. A large number of Rural MedicalPractitioners fromdifferent areas of the countryparticipated in this training program which has beenacknowledgedintheannual report of icddr,basan'Innovative Training Partnership'.ACI's greatest asset is the human capital- not onlytheir individual skills, expertiseandvision, but alsotheir inspired personal commitment to the company'smission of making a difference in improving quality ofhealthcare in Bangladesh.With our continuedcommitment to thesociety and people of thecountry ACI Pharma iscontinuouslyparticipating in clinicalresearch projectsConsumer BrandsDivisionbusinessrevenuegrewby5%. TheflagshipbrandACIAerosol retained its market leader position with 86% market share. ACI mosquitocoil maintained its leadership position with 36% market share.Savloncontinuedtoproducegoodresultsbymaintainingmorethan75%market share. SavlonLiquidAntiseptic hadagrowthof 19%. Twonewvariants of toilet soap branded as 'Savlon Sports Soap' and 'Savlon Men'sSoap' were introduced with a viewto extend the range to newconsumers. The portfolio of Savlon Bar Soap achieved a 27% growth.Savlonantisepticbandagewaslaunchedwiththeaimtoprotectthe wound and accelerate healing under the umbrella brand ofSavlon, consisting of 2 SKU's - Savlon Antiseptic Bandage andSavlon Kids Bandage.In the Savlon Handwash category, two new variants 'Irish'and 'Lavender' were introduced following the success ofanother newvariant 'Marigold'. Liquid Handwashrecordedagrowthof 28%. Tocaterthegrowingneeds of institutions, Savlon Handwash launcheda new 5 Litre SKU.FreedomSanitaryNapkinestablisheditself asthe second largest market share in the categorywithin short span of time. However, FreedomSanitary Napkin has captured the leading position inmodern categories like Ultra-thin, by beating theinternational brand 'Stayfree'. Newly introduced FreedomPregnancy Test Strip has shown good prospects in the lessknown Chinese products dominated market and achieved asubstantial market presence in the first year.VanishQuickActionToilet Cleanerrecordedmajorgrowthandwas able to capture 14% of the market share.Angelic Air Freshener further strengthened its leadership position andenhancedits range by introducingthree newenticingvariants offragrances.Astepwas takento make the mark inMen's groomingcategory byintroducing four attractive SKUs of body spray by the name of Impact Alive,Impact Eclipse, Impact Safari and Impact Voyage.In the kitchen care category, a new brand Septex Anti-Bacterial dishwashing barwas introducedwiththepropositiontoensuresparkling, germ-freeandcleankitchen utensils.In the fabric care category, Smart Washing Powder was launched to cater to the growingdemand for quality fabric care products.Our International Business, comprising of world renowned brands like Colgate, Nivea, Laserand Canderel/Equal maintained its steady growth. Colgate rapidly gained market share in thehighly competitive category. Nivea registered a commendable growth of 22%.Consumer Brands DivisionElectrical and ElectronicsSparklewasre-launchedwithanewandattractivebrand logo and pack design thus creating a stir in themarket. National supply chain has been strengthenedand nationwide distribution coverage was developedby appointingdistributors strategically across thecountry. Newcategory of lamps and associatedproducts were launched. As a result of variousbusiness development activities during2014, ACIElectrical achieved an excellent growth of 121%.ACI Electronics has shownsigns of improvementandattained36%growth.Thebusinessintroducedelectronics appliances under its own brand 'Sparkle'.Theyalsoopenedtwonewshowrooms locatedinUttara and Rokeya Sarani and introduced new rangeof high-end Panasonic products in 2014.Paints2014 was a year for developing a platformforthe Dulux brand in the Bangladesh market bybuildingpositive relationships withthe customersand understanding their expectations fromthisbrand. Many improvements were made fromthisexperience. Dulux was launched in 2013 with alimitedandimportedproduct range. Toovercomethis limitation in 2014, Dulux entered into tollmanufacturing agreement with Aqua Paints toensure the supply of products like distempers,interior sealers andputty. At thesametime, ACIFormulations Limited initiated a project formanufacturing Dulux paints locally.SaltACI Pure Salt delivered excellent result and achieved16%growth over last year keeping the marketleader position intact. It has also received 'The BestBrand Award 2014' after an extensive research doneby MillwardBrownandBangladeshBrandForum.Beside these acheivements, ACI Pure Salt isgraduallybecomingabrandof first choicebythehouseholds all over the country.FlourInspiteof theincreasedcompetitionandvolatilityof the flour market, ACI Pure Flour Limited ismaintaining a steady performance. The business ranmarketing campaigns round the year. The companycontinued to utilize its 100%capacity for theconsecutiveyearssinceitsinceptionandincreasedpenetration further in the consumer packs.The range of multigrain flour products and Ricebranoil together formthehealthylifesytlebrandcalled'Nutrilife', whichhas beenwell receivedbyconsumers. The brand was heavily promoted throughthe doctors and nutritionists, Joggers' Park campaignand street shows.FoodsThe business registered 21%revenue growth.Proper optimizationof factory resources, efficientbuying, cost minimization, brand communicationand enhancement of retailcoverage helped developthe business during the year.Both the brand 'PURE'and 'Fun'performed steadilyintheconsumer market duetotheir uniquetasteand high quality. Both the brands successfullylaunched some new innovative products in themarket. Anationwidemarketingcampaignfor thenewly launched ACI Pure Stick Noodles wasundertakenforthedevelopment of thebrand. Theexport volumeandnumberof destinationsforACIFoods rose significantly in 2014. The companyexportedto18countriesandthegrowthof exportrevenue was 82%. The business is poised for highergrowth in the coming years.Edible OilACI Nutrilife Rice Bran Oilhas become a beacon ofhealth for the conscious people of Bangladesh. ACINutrilifeRiceBranOil hasbeengainingenormouspopularity since its launch and grew by 196% overlast year.Rice Bran Oil is produced from rice bran and is themost balanced and versatile edible oil in the market,and a rich source of Vitamin E. Its high smoke pointrequires less oil usage in cooking. Innovative,unconventional, niche marketingcampaigns wereundertakeninorder toincreasebrandawareness.This product has tremendous potential for growthandtakingbigger shareintheBangladeshedibleoil market.Annual Report 2014 Page 17Crop Care and Public HealthIn2014ACI Formulations Limited(ACI FL) hadanoutstandingachievement with commendable growth of 24% over previous year.Eachseparate portfolio(Herbicide, Fungicide, Insecticide) hadasignificant growth. The weather condition was favorable for farmersand there was less infestation. Some of the reasons for goodperformance were aggressive marketing strategy, tight credit policy,inventory control and promotional activities.In Crop Care business we achieved 34% growth over last year. UnderHerbicidecategory, wehavedonewell andinFungicidealsoweachievedexcellent growth. Insecticidemarket isstagnant, yet weachieved some growth. We have registered some additional productsfor export which will yield results in 2015.ACI FL is focused on creating value for our customers, providing highquality product portfolio, adheringtothe concept of sustainabledevelopment. We take our social responsibility very seriously.Occupational health, safety and environmental protection are alwaysourtoppriority. Weaspiretoachieveevenbetterresults. Wearedeveloping our business strategies accordingly.FertilizerACI Fertilizer has beenabletoprovideincrediblecontributioninmaintainingtheirleadershippositioninmicro-nutrient market with30% growth over last year. They are focusing on expanding capacityinproduction,distributionandmarketingof organicfertilizers,andpromoting its benefit.The business has launched Trichoderma based organic fertilizer whichwill act as bio-control agent and stimulate plant growth. It has alsointroduced crop specific foliar fertilizers, and developing polymerizedbalanced fertilizers for longer duration in the field.ACI Fertilizer hasconductedhugepromotional programpartneringwithgovernment andnon- government organizations ensuringdemand for micro-nutrients among farmers. ACI Fertilizer generatedtheir revenue stream mainly in rice, vegetable and potato market aswell as through institutional sales to BADCand Directorate ofAgriculture Extension projects - IAPP and BARI.ACI Fertilizer hasconducted hugepromotional programpartnering withgovernment andnon-governmentorganizationsensuring demand formicro-nutrientsamong farmersAgribusinesses DivisionACI Fertilizer aims to maintain their leadership through strongdistribution network, approaching modern geo marketing andbuilding their ability to produce and market superior qualityfertilizers.Seed2014hasbeenaremarkableyearforACISeedwith21%growthover previous year, withasignificant growthinVegetable Seed(38%), and Inbreed Rice Seed (35%).ACI R&D developed fifteen new varieties and commercialized sevennew varieties of vegetables. It has also developed indigenous potatowith30metrictonnesperhectareyield, andcanbestoreduptothree months inthe farmer's house. ACI Seedhas successfullyintroducednewvarieties throughextensivepromotional activities,enhancedfieldforce training, andhigher number of distributionchannel. Strongbrandvisibilityanddemonstrationswithextensivesupport from Agriculture Extension Service and Developing Partnerswerecritical enablers. ACI Seedpenetratedthejuteseedmarketeffectively with the new variety of Deshi Pat-CVL-1 which is used bothas vegetable and as fibre.The Business incorporated a new seed processing center in Jessorewithbothcontrolledandambient conditionwarehousingfacilitiesto support its accelerated growth. ACI Seed partnered with IRRI toexplore high yield rice seeds. Another partnership was with SwedishInternationalDevelopment Cooperation to promote climate resilientagriculture amongst marginal farmers in coastal districts.ACI Seed is utilizing their large trade network as well as partnershipwithmajor local andinternational NGOs todistribute their highquality seeds in remote areas of the country.CropexACI Cropex has performed better in attaining a substantial growth of8% over previous year. The business has initiated the supply of freshvegetables and fish along with the export of Agri-commodities.A joint stock operation has been started with internationallyrecognizedJapaneseorganizationMitsui, apartnershiptoexplorenew diversified market and products. Through this collaboration ACICropex has started importing Soya extraction for animal feedindustries.ACI Seed partneredwith IRRI to explorehigh yield rice seeds.Another partnershipwas with SwedishInternationalDevelopmentCooperation topromote climateresilient agricultureamongst marginalfarmers in coastaldistrictsAnnual Report 2014 Page 19Annual Report 2014 Page 20MotorsACI Motors has performed well with a sales growthof 25% over last year. ACI Motors focused on mostefficient after salesservicefor thecustomersandextended its reach by penetrating potential markets.ACI Motors ensured their trust and visibility throughintense promotional campaigns aligned with seasonalvariety. In 2014, ACI Motors was recognized with theISO 9001:2008 certification for Quality ManagementSystem.ACI-R24 Power Tiller ensures deeper and widerploughing for farmer's field to break the plough pan,hasdemonstratedhighpotential forgrowth. Therewas also significant contribution from the reaper andcultivation tractor. ACI Motors has also experiencedgoodresponsefrommarket withcollapsiblegraindryer, cocoon, and flat-bed dryer. They have openedfivenewdealershowroomsandthreenewservicecenters for higher market penetration and customersatisfaction.ACI Motors entered into a dealership agreement withCASE Construction Equipment, a world leadingconstruction equipment manufacturer, which willenable ACI Motors to act as both agent and dealerof CASE construction machineries; which is a majorintervention in terms of future prospect forinfrastructure development services. The majorclients of this business are corporate clients,government andnon-government authoritieswhichwill allow the business to increase its market shareand brand visibility among diversified stakeholders.Animal HealthACI Animal Health had an outstanding achievementin 2014 with a significant growth of 31% over thelast year. One of the most remarkable achievementsof this business was the launchingof electronicmastitisdetector tosupport farmersinidentifyingdisease for improving milk production and ensuringsafe milk.Animal HealthlaunchedGSL Artemia alongwithsomepro-bioticandshrimpfryfeedproductsformarinefisheries. Animal Healthhadlaunched46newproducts in2014amongwhich15productswereintroducedfor thefirst timeinBangladesh.Products with advanced technology like super-biotichas also beenlaunchedfor poultry industry forensuring better bird environment and health.ACI AnimalHealth became the sole agent of TaninSevnica, European Union Company to distributetheir Animal Care products in Bangladesh. ACIAnimal Health organized massive training to farmersfor better utilization of technology and tools with aview to taking a leadership role in transforming theindustry.Shwapno has achieved a revenue growth of 25% along with footfall growth of 21%. The basket size hasgrown along with an increased range of products offerings. Shwapno network has further extended withnew stores and dealers.Shwapno has developed a sizable dealer network outside Dhaka where non perishables are sold. Thissignifies Shwapno's increased acceptance and popularity. Shwapno has also launched a hypermarket inUttara that can be referred to as one of our flagship outlets. It is a multi-floor market with a diverserange of products including electronics, home decor and furniture, clothing, and a multi-vendor foodcourt. In addition, Shwapno has launched several new outlets across Dhaka.There has been significant work done to improve supply chain efficiency and backward linkage whichresulted in higher gross margin compared to the previous year. Product availability and range of offeringof local and international products in the outlets have improved significantly. Convenient merchandisinghas further helped our customers to navigate through the store and fully experience the choice anddecision making power that Shwapno unveils for them.Shwapno's quality perceptioncontinuedtoimprove resultinginhigher customer satisfactionandincreased market share. From internal quality audit teams to customer usable in-store formalin testers,our values of transparency and quality are fully embodied in Shwapno. In addition, customer interactionsare being monitored and evaluated by our staff, who are pushing the boundaries to provide a truly fivestar experience.The loyalty of the customers has become an important asset for Shwapno. The people of Shwapno wereexcited to see the relationship develop to this unprecedented level. The business is poised for significantgrowth in the coming years and hopes to delight and surprise its customers in new ways.LogisticsSeparate reports on each of the subsidiaries, alongwith their accounts are provided later in this report.ACI Formulations Ltd.ACI Formulations Ltd., a Public Listed Company hasprovided its own report for its shareowners.Premiaflex Plastics LimitedIn2014PremiaflexPlastics Limitedhadagrowthof 14% over the previous year. They have a numberof multinational as well as major local FMCGcompanies intheir customer list. Thegrowthwasdriven by increased production capacity, andpenetration of new markets.They have been able to manufacture raw materialssuch as MPET, MCPP by introducing Metalized CoatingTechnology, which eventually helped them to explorenewmarkets. Premiaflex has initiated advancedquality control laboratory for the first time inBangladesh.The business has already been recognized with theISO 9001:2008 and HACCP certification and is alsoworking for the recognition of FSSC 22000 assuringquality services in the transformation of thepackagingindustry. PremiaflexPlastics has built areputationforsuperiorcustomerservicewhichhasresulted in getting the most selective clients.ACI Godrej Agrovet Private LimitedACI-Godrej Agrovet Pvt. Ltd is a (50:50) Joint-venture company of ACI Ltd and Godrej Agrovet Pvt.Ltd, India. Despite of market disturbance in last yearthe company has achievedtotal turnover of BDT4,870 Million last year.Withincreaseinper capitaconsumptionof broilermeat and eggs, the poultry industry is expected togrow 20% annually over next 5 years as per worldpoultry science association, Bangladesh Chapter. Theoverall cultured fish production in Bangladesh is alsogrowing by 10% annually and farmers are shifting tofloatingfishfeedduetopositiveeconomicbenefit.Similarly the dairy feedindustry is also growingsignificantly with the growth of dairy industry.Thecompanyis alsoputtingupastate-of-the-artgreen field floating fish feed project with an annualproduction capacity of 122 thousands MT at Rajshahiwhich will be operative by June 2015.Tetley ACI (Bangladesh) Ltd.The year 2014 was very challenging for teamarketersduetounstableprices. Thisvolatilityinthe tea market was primarily a result of the variouschanges intheimport duty structureandrapidlydecreasing tea prices at the auctions during the lasttwoyears. This ledus toperiodicallyreduceourselling price, impacting overall brand realization andturnover.However, we were able to maintain our salesvolume, at the same time take corrective measuresto improve our buying efficiency. This ensuredsignificant improvement in our gross margins as theyear progressed. The improvement inmargins iswhat allowedus tocontinueinvestingbehindthebrandbuildingactivities, inthehighlycompetitivemarket of Bangladesh.Asian Consumer Care Pvt. Ltd.Thecompanyhadarevenuegrowthof 12%. Theyhave commencedcommercial productionfromthenewlyset upplant at Dhamrai ontheoutskirtsofDhaka while successfully closingdownoperationsfromtwo facilities existing at Narayanganj andManikganj. The Plant has commissioned facilitiesto manufacture range of Hair Oils, Shampoos,Toothpastes, Dabur Honey and Odonil under the trademark of 'Dabur'. The company expects businessperformance to improve in coming financial year.Subsidiaries and Associated CompaniesAnnual Report 2014 Page 23In the year 2014, ACI Limited registered a 15.30 percent growth in revenue fromits own operation compared to 2013. Total revenue has increased to Taka 12,319million in 2014 from Taka 10,684 million in 2013 with a net increase of Taka 1,635million. Higher sales volume aided by favorable product mixes, lower material costand selected product price increases has contributed to increase in Gross profit byTaka 913 million or 21.45 percent over last year. Profit after tax has increased toTk. 951 million from Tk. 764 million of 2013 resulting into 24.41 percent growthover 2013 due mainly to higher gross profit, containment of fixed expenses andlower growth in financing cost by enjoying better interest rate on bank borrowings.The basic earnings per share (BEPS) of the company was Tk. 27.65 in 2014 (Tk.22.27 in 2013) representing a favourable growth of 24.16 percent over last year.The diluted earnings per share (DEPS) of the company was Tk. 27.47 in 2014 (Tk.22.18 in 2013). The diluted earnings per share originated due to the existence ofdilutive potential ordinary shares in the balance sheet to be required to issue incase the bondholders of ACI 20% Convertible Zero Coupon Bonds exercise theirconvertibility option in the respective redemption dates.Appropriation of profitConsidering the financial results of the company during the year and free reservecarried over and in line with following a consistent dividend policy, the Directorsrecommended appropriation of net profit as follows:2014 2013Taka TakaUn-appropriated profit from the previous year 3,711,714,997 3,246,317,615Add: Net profit after tax for the year 950,713,609 764,187,906Add: Realization of revaluation reserve 1,595,289 2,158,044Add: Gain on amalgamation 197,510,510 -Total available for appropriation 4,861,534,405 4,012,663,565Appropriation proposed:Proposed dividend:Cash dividend 346,406,340 243,625,031Stock dividend 51,960,950 57,323,537Total dividend 398,367,290 300,948,568Balance carried forward 4,463,167,115 3,711,714,997With the balance carried forward in this year and with future ploughing back of theprofit, Directors areconfident that companywill beabletomaintainprudentdividend policy in years to come.DividendThe Board of Directors is pleased to recommend dividend @ 115% which includeTk. 10.00 per share (100%) as cash dividend and 15% as stock dividend for theyear 2014 to those shareowners whose names will appear in the Share Register ofMembers of the Company or in the Depository list of CDBL on the Record Datewhich is Wednesday, 13 May 2015.Contribution to the National ExchequerDuring 2014, the company contributed Tk. 2.16 billion to the National Exchequer intheformof corporatetax, customdutyandValueAddedTax(VAT). This isequivalent to 17.52 percent of the Company's net sales revenue for the year 2014.Cost of Goods Sold and Profit MarginsIn the year 2014, though revenue has been increased by 15.30 percent but COGShas been increased by 11.23 percent only. This has been achieved mainly for lowermaterialcost and stable exchange rate. This along with favorable product mixesand selected product price increases, we have been able to generate additionalGross Profit of Taka 913 million which is almost 21.45 percent higher than lastyear. However, with reasonable growth in operating expenses and comparativelylower growth in financing cost, the company registered higher PAT growth by 24.41percent compared to last year.Margins 2009-2014Turnover(Taka in billion)Profit after tax(Taka in billion)Annual retained earnings(Taka in Million)Dividend(Taka in Million)Financial Results - ACI Limited32.73%35.64%37.54% 37.09%39.85%40.98%13.70%7.48% 8.00%5.63%7.15% 7.72%2009 2010 2011 2012 2013 2014Gross Profit MarginProfit After Tax Margin10.6812.322013 20140.760.952013 20144483074645532011 2012 2013 20141972383013982011 2012 2013 2014In2014, consolidatedturnoverhasreachedtoTk. 25.82billionfromTk. 22.17billionof 2013, ariseofTk. 3,655 million or 16.49 percent over last year. On the other hand, the cost of sales has increased by 14.14percentagainst16.49percentgrowthof turnover.Grossprofithasshownasignificantpositivegrowthof22.03 percent mainly on account of improved product mix, lower materialcost, stable exchange rate andselective product price increases. The operating profit resultantly was significantly higher (28.90 percent) thanthecomparativeperiod. ThegroupPATregistered181.54percent growthover last year duemainlytogeneration of higher gross profit, increase in share of profit from Joint Ventures & Associates, containment offinancing cost by enjoying better rate of interest etc. The consolidated basic earnings per share in 2014 wasTk. 16.68 in comparison to last year's Tk. 5.94 resulting into 180.81 percent growth over previous year.Annual Report 2014 Page 24Directors Declaration as to Statutory InformationIn connection with preparation and presentation of the financial statements, the Directors also report that:Segment-wise performance has been shown in note-6 (ii) of the financial statements.The Company is aware of the different risks associated with doing business and is prepared to counterthose risks through systematic approach. Financial risks management has been disclosed in the Note-31of the Financial Statements.No extra-ordinary gain or loss exists during the year as prescribed by the Bangladesh Financial ReportingStandards (BFRSs).All transactions with related parties are made on a commercial basis and the basis was the principle of'ArmsLengthTransaction'. Detailsof relatedpartytransactionsaredisclosedintheNote-36of theFinancial Statement.No IPO or Right issue was made during the year.No significant variance occurs between Quarterly Financial Performance and Annual Financial Statement.Duringtheyear, Companyhaspaidatotal of Taka20,250asBoardmeetingattendancefees. Theremuneration of Directors has been mentioned in Note-26 and 36 (a) (ii) of the Financial Statements.The financial statements prepared by the management of the Company present a true and fair view ofCompany's state of affairs, result of its operation and changes in equity and cash flows.Proper books of account of the Company have been maintained.Appropriate accounting policies have been consistently followed in formulating the Financial Statementsand Accounting estimates are reasonable and accurate.Bangladesh Accounting Standards (BASs) and Bangladesh FinancialReporting Standards (BFRSs) havebeen followed in preparation of the financial statements.All significant variations in operating results from the previous year have been highlighted and reasonsthereof have been explained.The key financial and operating data for last six years is disclosed at year 2014-at a Glance.The Company has recommended dividend for the year 2014.During 2014 a total of four Board meetings were held, which conform the regulatory requirements whichare shown in Annexure-I.Financial Results - ACI GroupAnnual Report 2014 Page 25Shareholding pattern of the Company as on 31 December 2014 are shown in Annexure-II.The profiles of directors who have sought for appointment/re-appointment are shown in Annexure-IV.The CEO and CFO has certified to the Board that they have reviewed the Financial Statements and believethat these statements do not contain any material untrue statements or omit any material fact or certainstatements that might be misleading.The CEO and CFO further confirm that Financial Statements together present a true and fair view of theCompany's affairs and are in compliance with applicable laws.The CEO and CFO have further certified to the Board that there are, to the best of their knowledge andbelief, notransactionsenteredintobythecompanyduringtheyear whicharefraudulent, illegal orviolation of the Company's code of conduct.Composition of the BoardThe Board consists of 10 members drawn fromamongst the major shareowners and businessprofessionals. Mr. M. Anis Ud Dowla is the Chairmanof theBoardandDr. Arif Dowlais theManagingDirector. TherearethreeIndependent Directorsonthe Board.Role of the BoardThe Board is the highest level of authority ofthe Company to oversee its operations throughappropriate delegation, reporting, monitoring andcontrol.Responsibility of the BoardThe Directors hold the ultimate responsibility ofconducting the activities of the Company inaccordancewiththelawandintheinterest of itsshareowners and other stakeholders, keeping in viewthe long-term interest of the Company.Functioning of the BoardThe number of Board Meetings held in 2014 was four.The Board gets a thorough review of the performanceof the Company through a PowerPoint presentation bythe Managing Director. All pertinent matters arediscussed in details and decisions are taken. The ChiefFinancial Officer presentstheProfit &Losspositionand Cash Flow Statement. There is a procedure whichallows for Resolution by Circulation to be adopted bythe Directors present in Bangladesh, which takes careof any urgent matter requiring Board decision withouthaving to call a meeting.Management through PeopleTheBoardhasdelegatedadequateoperational andfinancial authoritytotheManagingDirector whichempowers him to set up the organizational structure,recruit appropriate people, empower them to managethe Strategic Business Units and functional areas andAnnual Report 2014 Page 26Election of DirectorsBy operation of Article 120 of the Company's Articlesof Association Mr. M. Anis Ud Dowla and Ms. SheemaAbedRahmanretirebyrotationandbeingeligible,offer themselves for re-election.Independent DirectorThe Board in its meeting held on Wednesday, 29 April2015 has extended the tenure of Mr. Abdul-MuyeedChowdhury and Mr. Juned Ahmed Choudhury asIndependent Directors of the Company for threeyears with effect from 28-May-2015 in terms of theprovision of BSEC guidelines.Brief resumeandother informationof theabovementioned Directors as per clause 1.5 (xxii) of SECNotificationdatedAugust07, 2012aredepictedinAnnexure-IV.Audit CommitteeFollowingthe Guidelines of BangladeshSecuritiesand Exchange Commission, the Board hasconstitutedanAudit Committeefor theCompanywhich is mentioned in the Compliance Reportenclosed herewith. The Committee comprises ofMr. Golam Mainuddin, Ms. Shusmita Anis andMs. Sheema Abed Rahman. Mr. Golam Mainuddin isanIndependent DirectorandalsotheChairmanofthe Audit Committee.The Audit Committee met four times duringtheyear 2014. TheCompanySecretaryfunctionedasSecretary of the Committee. The main performancesof theAudit Committeeduringtheyear wereasfollows:1. Reviewandappraisal of the performance ofinternal control system.2. Review of the risks associated with theCompany's operationincludingmitigationandawareness plan.3. Overseeinghiringandperformanceof externalauditors.provide themguidance for achievements of thedesired results.The Board is kept informed of the goals and targetsof theBusinessUnitsandapprisedof thefinancialperformance on a quarterly basis.The Managing Director manages the affairs oftheGroupthroughcloseconsultationwithrelevantpeople from within the Company and outsideexperts.Empowerment of PeopleThe Board has given clear guidelines to the ManagingDirector to ensure that there is appropriatedelegation of authority and clear statement ofaccountabilityof themanagement staff all thewaydown to the Supervisory level and that performanceof the individual is judged on the basis of clearly setmeasurable goals and through objective assessmentof their achievements.Reporting and CommunicationThe ManagingDirector reviews andapproves thestrategic plans of each Business Unit every quarter.He also reviews monthly report and commentary onthe sales and financialperformance of the businessfrom the heads of businesses and the activities of thefunctional and service heads. An elaborate MISsystem is in place.Communication with ShareownersThe Company holds the Annual General Meetingregularly in time. The Directors attending the AnnualGeneral Meetingnotetheviews, expectations andsuggestions of the shareowners and institutionalstakeholders offered at the AGM and consider themwith utmost seriousness. The Managing Director alsobrings to the notice of the Board any writtencommunication received by him from theshareowners.Annual Report 2014 Page 27Corporate Social Responsibility (CSR)CSRis a central functionof ACI Groupandtheprojectsandprogramsunder CSRareselectedonthebasisof theirrelevancetothebusinessof theGroup. A separate brochure on all the projects underCSRof theACI Groupwill bepublishedandourshareowners will receive accordingly. We areconscious of our responsibility to manage asustainable business organizationwhichrequire astrong team to manage CSR.Corporate Governance compliancestatementThe Directors of ACI are committed to meeting thehighest standards of corporate governance anddisclosure. The Directors are conscious of theirresponsibilities in supervision and direction ofthe affairs of the Company in conformity withthe practices of sound corporate governance. Infulfillment of those responsibilities the Directors haveset for themselves the principles that will be followedintheir owninvolvement intheoversight functionand in setting up clear guidelines for the executivemanagement.We confirm herewith that the Company hasmeanwhile complied with all the necessary guidelinesunder BSEC Notification No. SEC/CMRRCD/2006-158/134/Admin/44 dated 7 August 2012. Thecompliance report along with the necessaryremarks/disclosureis appendedinAnnexure-III ofthe Directors' Report for the year 2014 incontinuation pages of the Compliance Certificateprovided by Al-Muqtadir Associates, CharteredSecretaries.AuditorsOur Auditor Messrs Rahman Rahman Huq, CharteredAccountants has sought re-appointment for theyear 2015 and the Directors recommend theirre-appointment.4. Ensuringhighquality of Company's financialreporting process.5. Review of the operation as required under theGuidelines of Bangladesh Securities andExchange Commission.Going ConcernThe Board, through appropriate enquiries andanalyses, ensures that the resources are adequate tosupport theoperationandthat sufficient businessopportunitiesexist toqualifytheorganisationasagoing concern and the Directors analyse the financialstatements to ensure that. Accordingly, FinancialStatements are prepared on a going concern basis.Internal ControlThe Managing Director has to satisfy the Board thatadequateinternal checksandcontrolsareinplacethrough appropriate MIS and employment of InternalAudit team to check and validate the expenses andthe systems in operation. To further strengthenthe controls, the Company has introduced ISO9001:2008Quality Management System, thefirstCompanyinBangladeshtodosounder whichallactivitiesarecarriedout onthebasisof StandardOperatingProcedures. These standardproceduresare updatedonaregular basis inline withISOrequirements. The Company has also introduced ISO14001:2004 Environmental Management System,thefirst CompanyinBangladeshtodosoandasa result has undertaken a task of continuingimprovement throughannual goals. Internal Auditdepartment has been strengthened with induction ofqualifiedandexperiencedpersonnel, demonstratingtheBoard's commitment toensurethat adequaterisk management and internal control systems are inplace across the Company. In addition, the Companyhas adopted the Ten Principles of Global Compact, aninitiative taken by the Secretary General of theUnitedNationsandadoptedworld-widebybigandprogressive companies.ACI givesthehighest level of importancetothedevelopment of itspeople. Special emphasiswasgiven to developing our marketing and sales staff toadopt new innovative approaches toward excellenceintheir area. Our HRdepartment enhancedtheirlevel of engagement withthepeople. Trainingformiddle and senior management has increased bothin quantity and in the variety of offerings. We wantto strengthen the area of human capitaldevelopment further.We tried to bring the people with similar roles closertogether andshare experiences across businessunits. We also encouraged greater engagementbetween the services, businesses and factoriesthrough improved communication and feedback anddevelop a greater sense of ownership to thecommonendresult of improvedperformance. Astronger focus on operational key performanceindicators led to greater visibility of the processes.This required IT based training across selectedgroups of people.We have had numerous gatherings among factories,field force, services and businesses to reinforce ourcompanyvaluesof transparency, fairness, quality,customer focus, continuous improvement andinnovation. During these gatherings we try to createthis common culture throughout the diversity of ourbusinesses. Theexternal adversitythat wefacedthroughpolitical andsocial agitationonlybroughtustogether, andmadeusstronger. Alongsideourinternal development, we reached out to thecommunities we impact through CSR andsustainability, where we harmonize with theexternal environment through various activities, forwhich a separate report will be given.We thank the partners of ACI, shareowners,suppliers, customers, bankers, media and all otherwell wishers for their support andpatronage tobringus tothis level. Wevaluetheir continuedsupport tofulfill ourmissiontoimprovethelivesof people.Finally, and most importantly, I thank theemployees of ACI in factories, depots, officesandother locations across thecountry, for theiruntiringefforts. Theyhaveworkedhard, againstuncertainties and adversity, built a strongerorganization that can create a greater positiveimpact on the quality of life of people.Dr. Arif DowlaManaging DirectorWaliur Rahman Bhuiyan, OBEDirectorOn behalf of the BoardThe People of ACIAnnexure - IIPattern of ShareholdingAs per SEC guideline condition no-1.5 (xxi), the pattern of share holding status as on 31 December2014 is given below:1.5 (xxi) (a) Held by Parent / Subsidiary / Associates and other related parties: N/A1.5 (xxi) (b) Held by Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer,Head of Internal Audit and their spouses and minor children etc.:Name Position No. of SharesMr. M. Anis Ud Dowla Chairman 6,323,692Dr. Arif Dowla Managing Director 1,247,930Mrs. Najma Dowla Director 957,766Ms. Shusmita Anis Director 347,928Ms. Sheema Abed Rahman Director 17,107Mr. Md. Fayekuzzaman Director (Nominee of ICB) NilMr. Waliur Rahman Bhuiyan, OBE Director NilMr. Juned Ahmed Choudhury Independent Director NilMr. Abdul-Muyeed Chowdhury Independent Director NilMr. Golam Mainuddin Independent Director NilMr. Pradip Kar Chowdhury Chief Financial Officer NilMr. Amitava Saha Head of Risk Management and NilInternal Audit1.5 (xxi) (c) Held by ExecutivesName Position No. of SharesMs. Sheema Abed Rahman Company Secretary 17,107Name Position % of SharesMr. M. Anis Ud Dowla Chairman 18.39During the year four Board Meetings were held and the attendance by each Director was as follows:Name No. of Meeting AttendedMr. M. Anis Ud Dowla 4Dr. Arif Dowla 4Mr. Waliur Rahman Bhuiyan,OBE 4Mr. Golam Mainuddin 4Mr. Md. Fayekuzzaman 4Mrs. Najma Dowla 4Ms. Shusmita Anis 4Mr. Abdul-Muyeed Chowdhury 3Mr. Juned Ahmed Choudhury 4Ms. Sheema Abed Rahman 4Annexure - INumber of Board Meetings held and Attendance by the DirectorsAnnual Report 2014 Page 29Annexure-IIICertificate of Compliance to the Shareholders ofAdvanced Chemical Industries Limited(As required under the BSEC Corporate Governance Guidelines)We have examined compliance to the BSEC guidelines on Corporate Governance byAdvancedChemicalIndustriesLimited(ACI) for the year ended 31st December2014. These guidelines relate to the Notification no. SEC/CMRRCD/2006-158/134/Admin/44dated7thAugust2012of BangladeshSecuritiesandExchangeCommission (BSEC) on Corporate Governance.Such compliance to the codes of Corporate Governance is the responsibility of theCompany. Our examination was limited to the procedures and implementation thereofas adopted by the Management in ensuring compliance to the conditions of CorporateGovernance. This is a scrutiny and verification only and not an expression of opinionor audit on the financial statements of the Company.In our opinion and to the best of our information and according to the explanationsprovided to us, we certify that, subject to the remarks and observations as reported inthe attached Compliance Statement, the Company has complied with the conditions ofCorporateGovernanceasstipulatedintheabovementionedguidelinesissuedbyBSEC.We also state that such compliance is neither an assurance as to the future viability oftheCompanynor acertificationontheefficiencyor effectivenesswithwhichtheManagement has conducted the affairs of the Company. This is also no endorsementabout quality of contents in the Annual Report of the Company.Annual Report 2014 Page 30Dhaka, April 29, 2015 Chartered Secretaries & ConsultantsBusiness Office :Block : F, Rania AvenueApurba GardeniaHouse # 503, (5th floor)Bashundhara R/A, Dhaka - 1229BangladeshPhones: 01730 340 34001552 108 522e-mails : [email protected]@muqtadirbd.comURL www.muqtadirbd.comVAT Reg: 19041063900Chartered Secretaries & ConsultantsAnnual Report 2014 Page 31Contd.ConditionTitleCompliance StatusNo.as on Remarks31 December 2014Status of Compliance with the Corporate Governance Guidelines (CGG)Status of the compliance with the conditions imposed by the Notification No. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012of the Bangladesh Securities and Exchange Commission (BSEC) issued under section 2CC of the Securities and Exchange Ordinance 1969:(Report under Condition No. 7.00)Advanced Chemical Industries LimitedFor the year ended 31 December 20141 Board of Directors1.1 Boards Size Complied "Board consists of 10 (ten)The number of the Board members of the Company shall not be less members"than 5 (five) and more than 20 (twenty).1.2 Independent Directors1.2(i) At least one fifth (1/5) of the total number of directors in the Complied Board consists of 3 (three)Companys Board shall be Independent Directors. Independent Directors1.2(ii)(a) Who either does not hold share in the company or holds less than Complied "Required declarations givenone (1%) shares of the total paid up shares of the company; by the concerned Directors"1.2(ii)(b) Who is not sponsor of the Company and is not connected with any Complied Dosponsor or director or shareholder who holds one percent or moreshares of the Company;1.2(ii)(c) Who does not have any other relationship, whether pecuniary or Complied Dootherwise, with the company or its subsidiary/associated companies;1.2(ii)(d) Who is not a member, director or officer of any stock exchange; Complied Do1.2(ii)(e) Who is not a shareholder, director or officer of any member of stock Complied Doexchange or an intermediary of the capital market;1.2(ii)(f ) Who is not a partner or an executive or was not a partner or an Complied Doexecutive during the preceding 3 (three) years of the concernedcompanys statutory audit firm;1.2(ii)(g) Who shall not be an independent director in more than 3 (three) Complied Dolisted companies;1.2(ii)(h) Who has not been convicted by a court of competent jurisdiction as a Complied Dodefaulter in payment of any loan to a bank or a Non-Bank FinancialInstitution (NBFI);1.2(ii)(i) Who has not been convicted for a criminal offence involving moral Complied Doturpitude.1.2(iii) Independent Director(s) shall be appointed by the Board of Complied "Duly approved in AGM"Directors and approved by the shareholders in the Annual GeneralMeeting (AGM).1.2(iv) The post of independent director(s) cannot remain vacant for more Complied No vacancy occurredthan 90 (ninety) days.1.2(v) The Board shall lay down a code of conduct of all Board members and Complied Code of Conduct has laidannual compliance of the code to be recorded. down to which the Boardmembers are obliged tocomply with.1.2(vi) The tenure of office of an independent director shall be for a period Complied "The IDs are in theirof 3 (three) years, which may be extended for 1 (one) term only. regular term of office"ConditionTitleCompliance StatusNo.as on Remarks31 December 2014Annual Report 2014 Page 321.3 Qualification of Independent Director (ID)1.3(i) Independent Director shall be a knowledgeable individual with Complied "The IDs have requiredintegrity who is able to ensure compliance with financial, regulatory qualification and experience"and corporate laws and can make meaningful contribution to business.1.3(ii) The person should be a Business Leader / Corporate Leader / Complied DoBureaucrat / University Teacher with Economics or Business Studiesor Law background / Professionals like Chartered Accountants, Cost &Management Accountants, Chartered Secretaries. The independentdirector must have at least 12 (twelve) years of corporatemanagement / professional experiences.1.3(iii) In special cases the above qualifications may be relaxed subject to Not applicableprior approval of the Commission.1.4 Chairman of the Board and Chief Executive Officer: The positions Compliedof the Chairman of the Board and the Chief Executive Officer of thecompanies shall be filled by different individuals. The Chairman of thecompany shall be elected from among the directors of the Company.The Board of Directors shall clearly define respective roles andresponsibilities of the Chairman and the Chief Executive Officer.1.5 Directors Report to Shareholders shall include following additional statements on1.5(i) Industry outlook and possible future developments in the industry. Complied The Directors' reportcomplies with the guideline.1.5(ii) Segment-wise or product-wise performance. Complied Do1.5(iii) Risks and concerns. Complied Do1.5(iv) Discussion on Cost of Goods sold, Gross Profit Margin and Net Complied DoProfit Margin.1.5(v) Discussion on continuity of any Extra-Ordinary gain or loss. Not applicable No extraordinary gain orloss experienced duringthe period.1.5(vi) Statement of all related party transactions. Complied The Directors' reportcomplies with the guideline.1.5(vii) Utilization of proceeds from public issues, rights issues and/or Not applicable There was no IPO / RPO /through any others instruments. Right Issue in 2014.1.5(viii) An explanation if the financial results deteriorate after the company Not applicable Dogoes for Initial Public Offering (IPO), Repeat Public Offering (RPO),Rights Offer, Direct Listing, etc.1.5(ix) If significant variance occurs between Quarterly Financial Complied The Directors' reportperformance and Annual Financial Statements the management shall complies with the guideline.explain about the variance on their Annual Report.1.5(x) Remuneration to directors including independent directors. Complied Do1.5(xi) The financial statements prepared by the management of the issuer Complied Discussed in "Directors'company present fairly its state of affairs, the result of its operations, declaration as tocash flows and changes in equity. Statutory Information".1.5(xii) Proper books of account of the issuer Company have been maintained. Complied Do1.5(xiii) Appropriate accounting policies have been consistently applied in Complied Dopreparation of the financial statements and that the accountingestimates are based on reasonable and prudent judgment.Contd.ConditionTitleCompliance StatusNo.as on Remarks31 December 2014Annual Report 2014 Page 331.5(xiv) International Accounting Standards (IAS) / Bangladesh Accounting Complied DoStandards (BAS) / International Financial Reporting Standards (IFRS) /Bangladesh Financial Reporting Standards (BFRS), as applicable inBangladesh, have been followed in preparation of the financial statementsand any departure there-from has been adequately disclosed.1.5(xv) The system of internal control is sound in design and has been Complied Stated under section "Theeffectively implemented and monitored. system of Internal Control"in the Directors' Report.1.5(xvi) There are no significant doubts upon the issuer companys ability to Complied Stated under sectioncontinue as a going concern. If the issuer company is not considered to "Going Concern"be a going concern, the fact along with reasons thereof should be disclosed. in the Directors' Report.1.5(xvii) Significant deviations from the last years operating results of the Complied The Directors' reportissuer company shall be highlighted and the reasons thereof should complies with the guideline.be explained.1.5(xviii) Key operating and financial data of at least preceding 5 (five) years Complied Six years' key operatingshall be summarized. and financial data has beendisclosedat the "Year-2014at a Glance" of AnnualReport.1.5(xix) If the issuer company has not declared dividend (cash or stock) for the Not Applicable Dividend declaredyear, the reasons thereof shall be given.1.5(xx) The number of Board meetings held during the year and attendance Complied Stated in Annexure-I ofby each director shall be disclosed. the Directors' report whichcomply with the guideline.1.5(xxi) The pattern of shareholding shall be reported to disclose the aggregate number of shares (along withname wise details where stated below) held by:-1.5(xxi)(a) Parent / Subsidiary / Associated Companies and other related parties Complied Stated in Annexure-II of the(name wise details); Directors' report whichcomply with the guideline.1.5(xxi)(b) Directors, Chief Executive Officer, Company Secretary, Chief Financial Complied DoOfficer, Head of Internal Audit and their spouses and minor children(name wise details);1.5(xxi)(c) Executives; Complied Do1.5(xxi)(d) Shareholders holding ten percent (10%) or more voting interest in the Complied Docompany (name wise details).1.5(xxii) In case of the appointment / reappointment of a director the company shall disclose the following informationto the shareholders:-1.5(xxii)(a) A brief resume of the director; Complied The Directors' reportcomplies with the guidelinesAnnexure-IV1.5(xxii)(b) Nature of his / her expertise in specific functional areas; Complied Do1.5(xxii)(c) Names of companies in which the person also holds the directorship Complied Doand the membership of committees of the board.ConditionTitleCompliance StatusNo.as on Remarks31 December 2014Annual Report 2014 Page 342.0 Chief Financial Officer (CFO), Head of Internal Audit and Company Secretary (CS)2.1 The company shall appoint a Chief Financial Officer (CFO), a Head of Complied The CFO, HIA and CS areInternal Audit (Internal Control and Compliance) and a Company different individuals andSecretary (CS). The Board of Directors should clearly define respective their roles & responsibilitesroles, responsibilities and duties of the CFO, the Head of Internal are seperately defined.Audit and the CS.2.2 Requirement to attend the Board Meetings Complied The CFO and CSThe CFO and the Company Secretary of the companies shall attend participate in every Boardthe meetings of the Board of Directors, provided that the CFO and/or Meeting.the Company Secretary shall not attend such part of a meeting of theBoard of Directors which involves consideration of an agenda itemrelating to their personal matters.3.0 Audit Commmittee3.(i) The company shall have an Audit Committee as a sub-committee Complied Detailed in the Auditof the Board of Directors. Committee Report3.(ii) The Audit Committee shall assist the Board of Directors in ensuring Complied "The Committee dischargesthat the financial statements reflect true and fair view of the state of as per BSEC guidelines"affairs of the company and in ensuring a good monitoring systemwithin the business.3.(iii) The Audit Committee shall be responsible to the Board of Directors. Complied The ToR as approved byThe duties of the Audit Committee shall be clearly set forth in writing. the Board is available.3.1 Constitution of the Audit Committee3.1(i) The Audit Committee shall be composed of at least 3 (three) members. Complied "AC comprises 3 (three)members"3.1(ii) The Board of Directors shall appoint members of the Audit Committee Complied The members of the Auditwho shall be directors of the Company and shall include at least 1 Committee have been(one) Independent Director. appointed by the Board ofDirectors who are Directorsand which includes oneIndependent Director.3.1(iii) All members of the Audit Committee should be financially literate Complied "The members of theand at least 1 (one) member shall have accounting or related financial Commmittee is selected bymanagement experience. the Board as per givenguidelines."3.1(iv) Filling of casual vacancy in the Audit Committee. Complied No vacancy occurred3.1(v) The company secretary shall act as the secretary of the Committee. Complied In practice3.1(vi) The quorum of the Audit Committee meeting shall not constitute Complied In practicewithout Independent Director.3.2 Chairman of the Audit Committee3.2(i) The Board of Directors shall select 1 (one) member of the Audit Complied The Chairman of the AuditCommittee to be Chairman of the Audit Committee, who shall be an Committee is anindependent director. Independent Director.3.2(ii) Chairman of the audit committee shall remain present in the Annual Complied In practice.General Meeting (AGM).3.3 Role of Audit Committee3.3(i) Oversee the financial reporting process. Complied The ToR of the AuditCommittee clearly definesthe roles of the Committee.Contd.ConditionTitleCompliance StatusNo.as on Remarks31 December 2014Annual Report 2014 Page 353.3(ii) Monitor choice of accounting policies and principles. Complied3.3(iii) Monitor Internal Control Risk management process. Complied Do3.3(iv) Oversee hiring and performance of external auditors. Complied Do3.3(v) Review along with the management, the annual financial statements Complied Dobefore submission to the board for approval.3.3(vi) Review along with the management, the quarterly and half yearly Complied Dofinancial statements before submission to the Board for approval.3.3(vii) Review the adequacy of internal audit function. Complied Do3.3(viii) Review statement of significant related party transactions submitted Complied Doby the management.3.3(ix) Review Management Letters / Letter of Internal Control weakness Complied Doissued by statutory auditors.3.3(x) Declaration to Audit Committee by the Company regarding utilization Not applicable There was no IPO/of IPO / RPO, Right issue money. RPO/Right Issue in 2014.3.4 Reporting of the Audit Committee3.4.1(i) The Audit Committee shall report on its activities to the Board of Complied Audit committee informsDirectors. the Board periodicallythrough its minutes.3.4.1 (ii) The Audit Committee shall immediately report to the Board of Directors on thefollowing findings, if any:-3.4.1(ii)(a) Report on conflicts of interests; None There was no reportablecase of conflict of interestin 2014.3.4.1(ii)(b) Suspected or presumed fraud or irregularity or material defect in the None There was no such case ininternal control system; the year 2014.3.4.1(ii)(c) Suspected infringement of laws, including securities related laws, None Dorules and regulations;3.4.1(ii)(d) Any other matter which shall be disclosed to the Board of Directors None Doimmediately.3.4.2 Reporting to the Authorities (BSEC) None Do(if any material impact on the financial condition and results ofoperation, unreasonably ignored by the management).3.5 Reporting to the Shareholders and General Investors Complied The Audit Committee (AC)Report on the activities carried out by the Audit Committee, including report is disclosed in theany report made to the Board of Directors under condition 3.4.1 (ii). Annual Report and signedby the Chairman of the AC.4.0 External / Statutory Auditors4.0(i) Appraisal or valuation services or fairness opinions. Complied As declared by Auditors4.0(ii) Financial information systems design and implementation. Complied Do4.0(iii) Book-keeping or other services related to the accounting records or Complied Dofinancial statements.4.0(iv) Broker-dealer services. Complied Do4.0(v) Actuarial services. Complied Do4.0(vi) Internal Audit service. Complied DoConditionTitleCompliance StatusNo.as on Remarks31 December 2014Annual Report 2014 Page 364.0(vii) Any other services that the Audit Committee determines. Complied Do4.0(viii) No partner or employees of the external audit firms shall possess any Complied Doshare of the Company they audit at least during the tenure of theiraudit assignment of that Company.4.0(ix) Non-engagement audit/certification services on compliance of Complied Docorporate governance as required under Clause (i) of condition No.7.5.0 Subsidiary Company5.0(i) Provisions relating to the composition of the Board of Directors of the Complied In practiceholding company shall be made applicable to the composition of theBoard of Directors of the subsidiary company.5.0(ii) At least 1 (one) independent director on the Board of Directors of the Complied Doholding company shall be a director on the Board of Directors of thesubsidiary company.5.0(iii) The minutes of the Board meeting of the subsidiary company shall be Complied Doplaced for review at the following Board meeting of the holdingcompany.5.0(iv) The minutes of the respective Board meeting of the holding company Complied Doshall state that they have reviewed the affairs of the subsidiarycompany also.5.0(v) The Audit Committee of the holding company shall also review the Complied Dofinancial statements, in particular the investments made by thesubsidiary company.6.0 "Duties of Chief Executive Officer (CEO) and Chief Financial Officer (CFO)"The CEO and CFO shall certify to the Board that :-6.0(i)(a) These statements do not contain any materially untrue statement or Complied Certificate enclosed inomit any material fact or contain statements that might be misleading; Annexure-V of the AnnualReport and stated in theDirectors' declartion as well.6.0(i)(b) These statements together present a true and fair view of the Complied DoCompanys affairs and are in compliance with affairs and are incompliance with applicable laws.6.0(ii) There are, to the best of knowledge and belief, no transactions Complied Doentered into by the Company during the year which are fraudulent,illegal or violation of the Companys code of conduct.7.0 Reporting and Compliance of Corporate Governance7.0(i) The Company shall obtain a certificate from a practicing Professional Complied Required certificate obtainedAccountant / Secretary (Chartered Accountant / Cost and from Al-Muqtadir Associates,Management Accountant / Chartered Secretary) regarding compliance Chartered Secretaries andof conditions of Corporate Governance Guidelines of the Commission published in Annexure-IIIand shall send the same to the shareholders along with the Annual of this report.Report on a yearly basis.7.0(ii) The directors of the Company shall state, in accordance with the Complied Status of Compliance isAnnexure attached, in the directors report whether the company has published with the Directors'complied with these conditions. Report as required.Annexure-IVBrief resum of the Directors who seek appointment/re-appointmentDirectors re-electionMr. M. Anis Ud Dowla, ChairmanMr. M. Anis Ud Dowla has been the Chairman of ACI Formulations Limited since 30 November 1995.Mr. Dowla obtained his Masters in Public Administration from University of Karachi in 1959. Mr. M. AnisUd Dowla has worked with the British Oxygen Group of U.K. in Pakistan, Bangladesh and Kenya for 27yearsincluding12yearsasManagingDirectorof BangladeshOxygenLimited. HejoinedasGroupManaging Director of three ICI companies in Bangladesh in 1987 one of which has been divested and re-named as ACI Limited of which he is the Chairman. He occupies Directorship position in all subsidiaryand associate companies of ACI Limited. He is also the Director of Credit Rating Agency of BangladeshLtd. and Pioneer Insurance Company Limited.Ms. Sheema Abed RahmanMs. Sheema Abed Rahman joined the Company in the year 1987. Prior to joining in ACI she worked forBritish American Tobacco, Bangladesh (BAT) for 14 years. During the 39 years of service, her majorcontribution is in Corporate Management and Human Resource Management. She has done her PostGraduationinHumanResourceManagement andisaFellowMember of theInstituteof CharteredSecretariesof Bangladesh(ICSB). ShewasinductedasaDirectorintheyear2001. SheisalsoaDirector of Flyban Insecticides Ltd.Independent DirectorsMr. Abdul-Muyeed ChowdhuryMr. Abdul-Muyeed Chowdhury obtained Degree of Bachelor of Arts with honors in History and Master ofArts (1st Class) from University of Dhaka. Mr. Abdul-Muyeed Chowdhury a CSP, attended Certificate ofParticipation in an acceptable program of special study in Political Science, Public Administration in theUniversityof Tennessee, Knoxville. Heis alsoDirector of BRACNet, MJLBangladeshLtd; OmeraPetroleum Ltd., Opera Fuels Ltd., Pioneer Insurance Company Ltd., Summit Alliance Port Limited andTiger Tours Limited. He was also an Advisor in the non-party Care Taker Government of Bangladesh in2001 responsible for five Ministries - Information, Housing and Public Works, Environment and Forest,Land, and Food and also worked as Chairman, NBR, Managing Director, Bangladesh Biman, ExecutiveDirector, JamunaMultipurposeBridgeAuthorityandlastlyasCEOof thelargestNGOintheworld,BRAC.Mr. Juned Ahmed ChoudhuryMr. Juned Ahmed Choudhury obtained B.A (Hons) Degree in Economics from Dhaka University in 1957and Master of Public Administration from KarachiUniversity in 1959. He received training in HumanResource Development at the National Institute of Administration, Paris, and Institute of Labour Studiesin Geneva. He was Director of Shell Oil Company Ltd. and Public Affairs Adviser of Bangladesh ShellPetroleumDevelopment B.V. He was decoratedKnight of the Order of Arts andLetters by theGovernment of France for his contribution to promotion of better Bangladesh-France relationship in thefields of language and culture.Annual Report 2014 Page 37Advanced Chemical Industries LimitedAnnual Report 2014 Page 49Auditors' Report & AuditedFinancial Statements as at andfor the year ended 31 December 2014Report on the Financial StatementsWe have auditedthe accompanyingseparate financial statements of AdvancedChemical Industries Limited("theCompany") as well as the consolidated financial statements of Advanced Chemical Industries Limited and its subsidiaries,joint ventures and associates ("the Group") which comprises the separate and the consolidated statements of financialposition as at 31 December 2014, statements of profit or loss, statements of other comprehensive income, statements ofchanges in equity, statements of cash flows for the year then ended, and a summary of significant accounting policies andother explanatory information. The financial statements of 10 subsidiaries and 3 associates disclosed in note 40 to thesefinancial statements were not audited by us.Management's Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of the separate financial statements of the Companyand the consolidated financial statements of the Group in accordance with Bangladesh Financial Reporting Standards, andfor suchinternal control asmanagement determinesisnecessarytoenabletheprep