shasha denims limited prospectus 20141112 4002

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

PROSPECTUS

PUBLIC ISSUE OF 50,000,000 ORDINARY SHARES OF BDT 10.00 EACH AT AN ISSUE PRICE OF BDT 35.00

EACH INCLUDING A PREMIUM OF BDT 25.00 PER SHARE AMOUNTING TO BDT 1,750,000,000.00

SHASHA DENIMS LIMITED

Mascot Plaza (10th Floor), Plot 107/A, Sonargaon Janapath,

Sector-7, Uttara C/A, Dhaka-1230, Tel: +88-02-8952801-3, +88-02-8952720-1

Fax: +88-02-8952748; E-mail: [email protected]; Website: www.shashadenim.com

SUBSCRIPTION OPENING AND CLOSING DATE:

For Resident Bangladeshis - Opening Date: December 14, 2014 Closing Date: December 21, 2014

For Non-Resident Bangladeshis - Opening Date: December 14, 2014 Closing Date: December 30, 2014

MANAGERS TO THE ISSUE:

AFC CAPITAL LIMITED

IMPERIAL CAPITAL LIMITED

Tanaka Tower (2nd Floor), 42/1/Gha,

Segun Bagicha, Dhaka-1000

Tel: +88-02-7120795; +88-02-7121348

Fax: +88-02-7121348, +88-02-9550040

Website: www.afccapital.org

Shaiham Sky View Tower (3rd Floor),

45 Bijoy Nagar, Dhaka-1000

Tel: +88-02-9361870; Fax: +88-02-9361870

Website: www.imperialcapital.org

CREDIT RATING STATUS:

Long Term Short Term Entity Rating A1 ST-3 Date of Credit Rating 08 July, 2014

Validity 30 June, 2015 30 June, 2015

Rating Assigned By: Credit Rating Agency of Bangladesh (CRAB)

UNDERWRITERS:

BMSL INVESTMENT LIMITED

Sadharan Bima Tower (7th Floor),

37/A Dilkusha C/A, Dhaka-1000.

CITIZEN SECURITIES & INVESTMENT LIMITED

Al-Razi Complex (Suite # G=802) 8th Floor, 166-167,

Saheed Syed Nazrul Islam Sarani, Purana Paltan, Dhaka-1000.

EBL INVESTMENTS LIMITED

59 Motijheel C/A, 1st Floor, Dhaka-1000.

UNICAP INVESTMENTS LIMITED

Noor Tower (5th Floor), 73, Sonargaon Road Dhaka-1205.

MTB CAPITAL LIMITED

WW Tower (5th Floor), 68 Dilkusha C/A, Dhaka-1000.

IL CAPITAL LIMITED Printers Building, 14th Floor, 5 Rajuk Avenue, Dhaka-1000.

PROGRESSIVE LIFE INSURANCE COMPANY LIMITED

National Scout Bhaban (4th,5th,6th,7th&11thFloor)

70/1 Inner Circular Road, Kakrail, Dhaka-1000.

SWADESH INVESTMENT MANAGEMENT LTD

Suite 01, Level 11, Unique Trade Center,

8 Panthapath, Karwan Bazar, Dhaka-1215.

PLFS INVESTMENT LIMITED

Paramonut Heights (13thFloor), 65/2/1, Box Culvert Road Purana Paltan, Dhaka-1000.

SBL CAPITAL MANAGEMENT LIMITED

2, D.I.T Avenue (Extension), 3rd Floor, Motijheel, C/A, Dhaka-1000.

AIBL CAPITAL MANAGEMENT LIMITED

Peoples Insurance Bhaban (7th Floor), 36 Dilkusha C/A, Dhaka

THE ISSUE SHALL BE PLACED IN N CATEGORY ISSUE DATE OF THE PROSPECTUS: November 11, 2014

CONSENT OF THE SECURITIES AND EXCHANGE COMMISSION HAS BEEN OBTAINED TO THE ISSUE/OFFER OF THESE SECURITIES UNDER THE SECURITIES AND EXCHANGE ORDINANCE, 1969, AND THE SECURITIES AND EXCHANGE COMMISSION (PUBLIC

ISSUE) RULES, 2006. IT MUST BE DISTINCTLY UNDERSTOOD THAT IN GIVING THIS CONSENT THE COMMISSION DOES NOT TAKE

ANY RESPONSIBILITY FOR THE FINANCIAL SOUNDNESS OF THE ISSUER COMPANY, ANY OF ITS PROJECTS OR THE ISSUE PRICE

OF ITS SECURITIES OR FOR THE CORRECTNESS OF ANY OF THE STATEMENTS MADE OR OPINION EXPRESSED WITH REGARD TO

THEM. SUCH RESPONSIBILITY LIES WITH THE ISSUER, ITS DIRECTORS, CHIEF EXECUTIVE OFFICER/CHIEF FINANCIAL OFFICER,

ISSUE MANAGER, UNDERWRITER AND/OR AUDITOR"

Shasha Denims Limited II

Issue Managers : AFC Capital Limited

Imperial Capital Limited

AVAILABILITY OF PROSPECTUS

The Prospectuses of the Company shall be available at the following addresses:

Source Address Contact Person Telephone

Company

SHASHA DENIMS LIMITED

Mascot Plaza (10th Floor), Plot-107/A, Sonargaon

Janapath, Sector-7, Uttara C/A, Dhaka-1230.

Md. Ahasanul Haque

Chief Financial Officer

Tel: +88-02-8952801-3, +88-02-8952720-1

Fax: +88-02-8952748 E-mail: [email protected]

Issue

Managers

AFC CAPITAL LIMITED

Tanaka Tower (2nd Floor), 42/1/Gha,

Segun Bagicha, Dhaka-1000.

Md. Abul Bashar Parvez

Sr. Executive Officer

Tel: +88-02-7120795, +88-02-9572001 Fax: +88-02-7121348, +88-02-9550040

Email: [email protected]

IMPERIAL CAPITAL LIMITED

Shaiham Sky View Tower (3rd Floor),

45 Bijoy Nagar, Dhaka-1000.

Md. Salauddin Sikder FCMA

CEO & Managing Director

Tel: +88-02-9361870


Underwriters

BMSL INVESTMENT LIMITED

Sadharan Bima Tower (7th Floor),

37/A Dilkusha C/A, Dhaka-1000

Md. Riyad Matin

Managing Director

Tel: +88-02-7169428, +88-02-9570624

Fax: +88-02-7123820

Email: [email protected] CITIZEN SECURITIES & INVESTMENT LIMITED Al-Razi Complex (Suite#G=802) 8th Floor, 166-167, Saheed Syed

Nazrul Islam Sarani, Purana Paltan, Dhaka-1000.

Tahid Ahmed Chowdhury

Managing Director & CEO

Tel: +88-02-9514542

Fax: +88-02-9570546

E-mail: [email protected]

EBL INVESTMENTS LIMITED 59 Motijheel C/A, 1st Floor, Dhaka-1000.

Md. Tanvir Hashem

Manager

Tel: +88-02-7118975 Fax: +88-02-7120251


IL CAPITAL LIMITED Printers Building, 14th Floor, 5 Rajuk Avenue, Dhaka-1000

Nehal Ahmed

Managing Director

Tel: +88-02-9559639 Fax: +88-02-7166093


MTB CAPITAL LIMITED

WW Tower (5th Floor), 68 Dilkusha C/A, Dhaka-1000.

Khairul Bashar A. T. Mohammed

Chief Executive Officer & SVP

Tel: +88-02-7170138-9, +88-02-7162943


PLFS INVESTMENT LIMITED

Paramonut Heights (13th Floor), 65/2/1, Box Culvert Road Purana Paltan, Dhaka-1000

Mustofa Kamal

Chief Executive Officer

Tel: +88-02-7119654


PROGRESSIVE LIFE INSURANCE COMPANY LIMITED

National Scout Bhaban (4th, 5th, 6th, 7th & 11th Floor), 70/1

Inner Circular Road, Kakrail, Dhaka-1000

Md. Enayet Ali Khan

Sr. GM

Tel: +88-02-9341277, +88-02-9350301

Fax: +88-02-8315373

Email: [email protected]

SBL CAPITAL MANAGEMENT LIMITED

2, D.I.T Avenue (Extension), 3rd Floor,

Motijheel, C/A, Dhaka-1000.

Mohammed Anisuzzaman Chowdury

First AVP

Tel: +88-02-7175698, +88-02-9515484

Fax: +88-02-9585985 Email:[email protected]

SWADESH INVESTMENT MANAGEMENT LTD

Suite 01, Level 11, Unique Trade Center,

8 Panthapath, Karwan Bazar, Dhaka-1215

Mamun Ahmed

Managing Director

Tel: +88-02-8158166 Fax: +88-02-8158344


UNICAP INVESTMENTS LIMITED

Noor Tower (5th Floor),

73, Sonargaon Road Dhaka-1205.

Mushfiq Ul Quayoom

EVP & Company Secretary

Tel: +88-02-9662888 Fax: +88-02-8616878


AIBL CAPITAL MANAGEMENT LIMITED

Peoples Insurance Bhaban (7th Floor),

36 Dilkusha C/A, Dhaka-1000.

Md. Golam Sarwar Bhuiyan

Chief Executive Officer

Tel: +88-02-9560198, +88-02-9568007

Fax: +88-02-9575379


Stock

Exchanges

DHAKA STOCK EXCHANGE LIMITED

9/F Motijheel C/A, Dhaka 1000 DSE Library Tel: +88-02-9564601, 9576210-18

Fax:+88-02-9564727,+88-02-9569755

CHITTAGONG STOCK EXCHANGE LTD.

CSE Building, 1080, Sheikh Mujib Road, Chittagong 4100 CSE Library

Tel: +880-2-9513911-15 Fax: +880-2-9513906

Prospectus would also be available on the web sites of BSEC (www.secbd.org), DSE (www.dsebd.org), CSE (www.csebd.com),

Shasha Denims Limited (www.shashadenim.com), AFC Capital Limited (www.afccapital.org) and Imperial Capital Limited

(www.imperialcapital.org) and at the Public Reference Room of the Bangladesh Securities and Exchange Commission (BSEC)

for reading and studying.

Auditors Information Name Address Contact No.

PINAKI & COMPANY

Chartered Accountants

Ahsandell, 2/A, Mymensingh Road

(2nd Floor) Shahbag, Dhaka-1000.

Tel: +88-02-9660944, +88-02-9665095

Fax: +88-02-9672726


Shasha Denims Limited III



TABLE OF CONTENTS

PARTICULARS Page No

PART I

STATUTORY DISCLOSURES AND CONDITIONS 1-11

A Disclosures in Respect of Issuance of Securities in Dematerialized Format 1

B Conditions under 2CC of the Securities and Exchange Ordinance, 1969 1-7

C Declarations and Due Diligence Certificates 8-11

PART II RISK FACTORS AND MANAGEMENT'S PERCEPTION ABOUT THE RISKS 12-15

(a) Interest Rate Risks 12

(b) Exchange Rate Risks 12

(c) Industry Risks 12-13

(d) Market and Technology Related Risks 13

(e) Potential or existing government regulations 13

(f) Potential changes in global or national policies 14

(g) History of non-operation, if any 14

(h) Operational Risks 14

(i) Other Risks 14-15

PART III USE OF PROCEEDS 16-18

(a) Capital structure of the company 16

(b) Net proceeds from the IPO 16

(c) Use of the net proceeds from the IPO fund 16-18

(d) Implementation Schedule 18

(e) Terms of Contract 18

PART IV DESCRIPTION OF BUSINESS 19-23

(1) Incorporation 19

(2) Commencement of commercial operation 19

(3) Nature of Business 19

(4) Principal products or services of the company 19

(5) Markets for such products or services 19

(6) Relative contributions of the products/services to sales or income that accounts

for 10% or more of the companys total revenue 20

(7) Name of associates, subsidiary/related holding company and their core area of

business 20

(8) Way of distribution of products and/or services 20

(9) Competitive conditions in the business 20

(10) Sources and availability of raw materials and the names of the principal

suppliers 20-21

(11) Sources of, and requirement for, power, gas and water, or any other utilities 21

(12) Name of the customers who purchase 10% or more of the companys products/services

21

(13) Description of any contract with principal suppliers or customers 21

(14) Description of any material patents, trademarks, licenses or royalty agreements 21-22

(15) Number of total employees and number of full-time employees 23

(16) Production/service capacity and its current utilization 23

Shasha Denims Limited IV



PART V DESCRIPTION OF PROPERTY 23

Details of the property of the company 23

PART VI PLAN OF OPERATION AND DISCUSSION OF FINANCIAL CONDITION 24-28

1 Internal and external sources of cash 24

2 Material commitments for capital expenditure and expected sources of such funds

for such commitments 24

3 Causes for any material changes from period to period in income, cost of goods

sold, other operating expenses and net income 24

4 Seasonal aspects of the companys business 24

5 Known trends, events and uncertainties that shall have a material effect on the

companys future business 24

6 Change in assets of the company used to pay off any liabilities 25

7 Details of loan taken from or given to its holding/parent company or subsidiary

company 25

8 Details of future contractual liabilities and their impact on companys financial fundamentals

25

9 Estimated future capital expenditure 25

10 VAT, Income Tax, Customs Duty or other tax liability, any including contingent

liability and reasons for their non-payment prior to the issuance of this prospectus 25

11 Details of operating lease created during last five years and companys plan to liquidate such lease.

25

12 Details of any financial commitment, including lease commitment during past five

years and way of their liquidation 26

13 Details of personnel related scheme 26

14 Break down of IPO issue expenses 26

15 Details about revaluation of companys assets 27

16 Details of transactions with holding/subsidiary company or associate company

during last five years 27

17 Auditors certificate regarding any allotment of shares to directors, promoters or sponsor shareholders for any consideration otherwise than for cash

28

18 Material information having an impact on the affairs of the company 28

PART VII DIRECTORS AND OFFICERS 29-31

(a) Name, age, qualification and experience of each director and nominated director. 29

(b) Tenure of directorship of the directors 29

(c) Involvement of directors in other organization 29

(d) Family relationship among director and top five officers of the company 30

(e) Short bio-data of each director 30-31

(f) CIB report regarding loan status of all directors and shareholders who hold 5% or

more shares in the companys paid up capital 31

(g)

Name, position, academic qualification, date of joining and experience of CFO,

CEO, CS, Advisors, Consultants, Additional and Deputy MD and all departmental

Heads

31

PART VIII INVOLVEMENT OF DIRECTORS AND OFFICERS IN CERTAIN LEGAL

PROCEEDINGS 31

PART IX CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS 32

Shasha Denims Limited V



PART X EXECUTIVE COMPENSATION 33

(a) Name, designation and remuneration paid to top five salaried officers in the last

accounting year 33

(b) Aggregate amount of remuneration paid to all directors and officers during the last

accounting year 33

(c) Remuneration paid to any director who was not an officer during the last

accounting year 33

(d) Contract with any director or officer regarding any future compensation 33

(e) Information regarding intention to substantially increase remuneration paid to

directors and officers. 33

PART XI DETAILS OF OPTIONS GRANTED TO DIRECTORS, OFFICERS AND

EMPLOYEES 33

PART XII TRANSACTIONS WITH THE DIRECTORS AND SUBSCRIBERS TO THE

MEMORANDUM 33

(a) Benefits From the Company during last five years 33

(b) Directors and Subscribers Assets to the Company 33

PART XIII TANGIBLE ASSETS PER SHARE 34

PART XIV OWNERSHIP OF THE COMPANY'S SECURITIES 35-36

(a) Ownership of the Securities 35

(b) Name and address of the person who owns, beneficially or of record, 5% or more

of the securities of the company 35

(c) Securities owned by each director 36

(d) Securities owned by each of top ten salaried officer, and all other officers as a group 36

PART XV DETERMINATION OF OFFERING PRICE: UNDER FIXED PRICE METHOD 37

PART XVI MARKET FOR THE SECURITIES BEING OFFERED 38

PART XVII

DESCRIPTION OF SECURITIES OUTSTANDING OR BEING OFFERED 39

(1) Dividend, voting, pre-emption rights 39

(2) Conversion and liquidation rights 39

(3) Dividend policy 39

(4) Other rights of stockholders 39

PAR XVIII DEBT SECURITIES 40

PART XIX LOCK IN PROVISION 40-41

PART XX REFUND OF SUBSCRIPTION MONEY 41

PART XXI SUBSCRIPTION BY AND REFUND TO NON-RESIDENT BANGLADESHI (NRB) 41

PART XXII AVAILABILITY OF SECURITIES 42

PART XXIII ISSUE MANAGER 42

PART XXIV UNDERWRITERS 43-44

PART XXV MATERIAL CONTRACTS 44-45

PART XXVI BANKERS TO THE ISSUE 46

PART XXVII CORPORATE DIRECTORY 47

PART XVIII INDEPENDENT AUDITORS' REPORT AND RELATED CERTIFICATES 48-188

Auditors report for the year ended 31 December, 2013 48-163

Auditors report under section 135(1), Para 24(1) of part II of the Third Schedule of Companies Act, 1994

164-173

Auditors certificate regarding selected ratios on liquidity, profitability and solvency of the company

174-177

Auditors additional disclosure 178-188

PART XXIX CREDIT RATING REPORT 189-201

PART XXX INFORMATION INCLUDED AS PER SECS NOTIFICATION NO. SEC/CMRRCD/2008/115/ADMIN/30 DATED OCTOBER 05, 2011

202

PART XXXI APPLICATION FORMS & NEW IPO APPLICATION PROCESS 203-216

Application Forms 203-209

New IPO Application Process 210-216

PART XXXIT MANAGEMENT DISCLOSURE 217-220

Shasha Denims Limited VI



ACRONYMS

A

I

Allotment Letter of allotment for shares

IPO Initial Public Offering

Issue Public offer of SDLs shares

B

Issuer Shasha Denims Limited

BB Bangladesh Bank

BO A/C Beneficiary Owner Account or Depository

Account N

BSEC Bangladesh Securities and Exchange

Commission NAV Net Asset Value of the Company

NBR National Board of Revenue

C

NRB Non Resident Bangladeshi

Commission Bangladesh Securities and Exchange

Commission Companies

Act Companies Act, 1994 (Act. No. XVIII of 1994)

O

CSE Chittagong Stock Exchange Limited

Offering Price Price of the securities of SDL being

offered

D

R

DSE Dhaka Stock Exchange Limited

Registered

Office Registered Office of SDL

RJSC

Registrar of Joint Stock Companies &

Firms

E

EPCL Energis Power Corporation Limited

S

SC Share Certificate

F

SDL Shasha Denims Limited

FC Account Foreign Currency Account

Securities Shares of Shasha Denims Limited

FI Financial Institution

Share Market Market of the Securities

Sponsors The sponsor shareholders of SDL

G

Stockholders Shareholders

GOB The Government of Peoples Republic of Bangladesh

Subscription Application money

STL Shasha Textiles Limited

H

SGL Shasha Garments Limited

HP Account High Performance Account

T

The Company Shasha Denims Limited

Shasha Denims Limited VII



GENERAL INFORMATION

AFC Capital Limited (AFCCL) and Imperial Capital Limited (ICL) (The Managers to the issue) have prepared

this Prospectus based on the information provided by Shasha Denims Limited (SDL) (the Issuer) and also upon

several discussions with the Chairman, Managing Director and related executives of the Company. The Directors

including Managing Director of the Issuer and that of the Issue Managers collectively and individually, having made

all reasonable inquiries, confirm that to the best of their knowledge and belief, the information contained herein is

true and correct in all material respect and that there are no other material facts, the omission of which, would make

any statement herein misleading.

The form and content of the prospectus was developed under the guidelines of the Securities and Exchange

Commission (Public Issue) Rules, 2006.

No person is authorized to give any information or to make any representation not contained in this Prospectus and

if given or made, any such information or representation must not be relied upon as having been authorized by the

Company or Issue Managers.

The Issue as contemplated in this document is made in Bangladesh and is subject to the exclusive jurisdiction of the

courts of Bangladesh. Forwarding this Prospectus to any person resident outside Bangladesh in no way implies that

the Issue is made in accordance with the laws of that country or is subject to the jurisdiction of the laws of that

country.

A copy of this Prospectus may be obtained from the Head Office of Shasha Denims Limited and that of the Issue

Managers, the underwriters and the Stock Exchanges where the securities will be traded.

Shasha Denims Limited



Page 1

PART I STATUTORY DISCLOSURES, CONDITIONS, DECLARATIONS AND DUE DILIGENCE CERTIFICATES

A. DISCLOSURES IN RESPECT OF ISSUANCE OF SECURITIES IN DEMATERIALIZED FORMAT

As per provision of the Depository Act, 1999 and regulation made there under, shares will be issued in demat

condition. All transfer/transmission/splitting will take place in the Central Depository Bangladesh Limited

(CDBL) system and any further issuance of shares (rights/bonus) will be issued in dematerialized form only.

B. CONDITIONS UNDER 2CC OF THE SECURITIES AND EXCHANGE ORDINANCE, 1969

PARTA

1. The Company shall go for Initial Public Offer (IPO) for 50,000,000 Ordinary Shares of Tk. 10.00 each at an

issue price of Tk. 35.00 each per share including a premium of Tk. 25.00 each worth Tk. 1,750,000,000 (One

Hundred Seventy Five Crore) following the Securities and Exchange Commission (Public Issue) Rules, 2006,

the Depository Act, 1999 and regulations made there under.

2. The abridged version of the prospectus, as approved by the Commission, shall be published by the issuer in 4

(Four) national daily newspapers (two in Bangla and two in English), within 05 (Five) working days of

issuance of the consent letter. The issuer shall post the full prospectus, vetted by the Bangladesh Securities and

Exchange Commission, in the issuers website and shall also put on the websites of the Commission, stock

exchanges, and the issue manager, within 05 (Five) working days from the date of issuance of this letter and

shall remain posted till the closure of the subscription list. The issuer shall submit to BSEC, the stock

exchanges and the issue managers a diskette containing the text of the vetted prospectus in MS -Word

format.

3. Sufficient copies of prospectus shall be made available by the issuer so that any person requesting a copy may

receive one. A notice shall be placed on the front of the application form distributed in connection with the

offering, informing that interested persons are entitled to a prospectus, if they so desire, and that copies of

prospectus may be obtained from the issuer and the issue managers. The subscription application shall indicate

in bold type that no sale of securities shall be made, nor shall any money be taken from any person, in

connection with such sale until 25 (Twenty Five) days after the prospectus has been published.

4. The Company shall submit 40 (Forty) copies of the printed prospectus to the Bangladesh Securities and

Exchange Commission for official record within 05 (Five) working days from the date of publication of the

abridged version of the prospectus in the newspaper.

5. The issuer company and the issue managers shall ensure transmission of the prospectus, abridged version of the

prospectus and relevant application forms for NRBs through email, simultaneously with publication of the

abridged version of the prospectus, to the Bangladesh Embassies and Missions abroad and shall also ensure

sending of the printed copies of abridged version of the prospectus and application forms to the said Embassies

and Missions within 05 (Five) working days of the publication date by Express Mail Service (EMS) of the

postal department. A compliance report shall be submitted in this respect to the BSEC jointly by the issuer and

the issue managers within 02 (Two) working days from the date of said dispatch of the prospectus and the

forms.

6. The paper clipping of the published abridged version of the prospectus, as mentioned at condition no. 2 above,

shall be submitted to the Commission within 24 hours of the publication thereof.

7. The Company shall maintain separate bank account(s) for collecting proceeds of the Initial Public Offering and

shall also open Foreign Currency (FC) account(s) to deposit the application money of the Non Resident

Bangladeshis (NRBs) for IPO purpose, and shall incorporate full particulars of said FC account(s) in the

prospectus. The Company shall open the above-mentioned accounts for IPO purpose; and close these accounts

after refund of over-subscription money. Non-Resident Bangladeshi (NRB) means Bangladeshi citizens staying

abroad including all those who have dual citizenship (provided they have a valid Bangladeshi passport) or

those, whose foreign passport bear a stamp from the concerned Bangladesh Embassy to the effect that no visa

is required for traveling to Bangladesh.




Page 2

8. The issuer company shall apply to all the stock exchanges in Bangladesh for listing within 07 (Seven) working

days from the date of issuance of this letter and shall simultaneously submit the vetted prospectus with all

exhibits, as submitted to BSEC, to the stock exchanges.

9. The following declaration shall be made by the Company in the prospectus, namely: -

Declaration about Listing of Shares with the stock exchange (s):

None of the stock exchange(s), if for any reason, grants listing within 75 (Seventy Five) days from the closure

of subscription, any allotment in terms of this prospectus shall be void and the Company shall refund the

subscription money within 15 (Fifteen) days from the date of refusal for listing by the stock exchanges, or

from the date of expiry of the said 75 (Seventy Five) days, as the case may be.

In case of non-refund of the subscription money within the aforesaid 15 (Fifteen) days, the Directors of the

Company, in addition to the issuer company, shall be collectively and severally liable for refund of the

subscription money, with interest at the rate of 2% (Two Percent) per month above the bank rate, to the

subscribers concerned.

The issue managers, in addition to the issuer company, shall ensure due compliance of the above mentioned

conditions and shall submit compliance report thereon to the Commission within 07 (Seven) days of expiry of

the aforesaid fifteen days time period allowed for refund of the subscription money.

10. The subscription list shall be opened and the sale of securities commenced after 25 (Twenty Five) days of the

publication of the abridged version of the prospectus and shall remain open for 05 (Five) consecutive banking

days.

11. A non-resident Bangladeshi shall apply either directly by enclosing a foreign demand draft drawn on a bank

payable at Dhaka, or through a nominee by paying out of foreign currency deposit account maintained in

Bangladesh or in Taka, supported by foreign currency encashment certificate issued by the concerned bank, for

the value of securities applied for through crossed bank cheque marking Account Payee only. The NRB

applicants shall send applications to the issuer company within the closing date of the subscription so as to

reach the same to the Company by the closing date plus 09 (Nine) days. Applications received by the

Company after the above time period will not be considered for allotment purpose.

12. The Company shall apply the spot buying rate (TT clean) in US Dollar, UK Pound Sterling and Euro of Sonali

Bank Ltd, which shall be mentioned in the Prospectus, as prevailed on the date of opening of the subscription

for the purpose of application of the NRBs and other non-Bangladeshi persons, wherever applicable.

13. The Company and the issue managers shall ensure prompt collection/clearance of the foreign remittances of

NRBs and other non-Bangladeshi(s), if applicable, for allotment of shares.

14. Upon completion of the period of subscription for securities, the issuer and the issue manager shall jointly

provide the Commission and the stock exchanges with the preliminary status of the subscription within 05

(Five) working days, in respect of the following matters, namely: -

a. Total number of securities for which subscription has been received;

b. Amount received from the subscription; and

c. Amount of commission paid to the bankers to the issue.

15. The issuer and the issue managers shall jointly provide the Commission and the stock exchanges with the list of

valid and invalid applicants (i.e. final status of subscription) in electronic form in 02 (Two) CDs and final

status of subscription to the Commission within 03 (Three) weeks after the closure of the subscription along

with bank statement (original), branch-wise subscription statement. The list of valid and invalid applicants shall

be finalized after examination with the CDBL in respect of BO accounts and particulars thereof.




Page 3

16. The IPO shall stand cancelled and the application money shall be refunded immediately (but not later than 05

(Five) weeks from the date of the subscription closure), if any of the following events occur:

a. Upon closing of the subscription list it is found that the total number of valid applications (in case of under

subscription including the number of the underwriter) is less than the minimum requirement as specified in

the listing regulations of the stock exchange(s) concerned; or

b. At least 50% of the IPO is not subscribed.

17. 20% of total public offering shall be reserved for Affected Small Investors, 10% of total public offering shall be reserved for non-resident Bangladeshi (NRB) and 10% for mutual funds and collective

investment schemes registered with the Commission, and the remaining 60% shall be open for

subscription by the general public. In case of under-subscription under any of the 10% and 20%

categories mentioned above, the unsubscribed portion shall be added to the general public category and,

if after such addition, there is over subscription in the general public category, the issuer and the

managers to the issue shall jointly conduct an open lottery of all the applicants added together.

18. All the applicants shall first be treated as applied for one minimum market lot of 200 shares worth Taka

7,000/- (Taka Seven Thousand only). If, on this basis, there is over subscription, then lottery shall be held

amongst the applicants allocating one identification number for each application, irrespective of the application

money. In case of over-subscription under any of the categories mentioned herein above, the issuer and the

issue managers shall jointly conduct an open lottery of all the applications received under each category

separately in presence of representatives from the issuer, the stock exchanges and the applicants, if there be

any.

19. An applicant cannot submit more than two applications, one in his/her own name and the other jointly with another person. In case an applicant makes more than two applications, all applications will be

treated as invalid and will not be considered for allotment purpose. In addition, 15% (fifteen) of

application money will be forfeited by the commission and the balance amount will be refunded to the

applicant.

20. The applicant shall provide with the same bank account number in the application from as it is in the BO account of the application.

21. The applicants who have applied more than two applications using same bank account, their

applications will not be considered for lottery and the commission will forfeit 15% of their subscription

money too.

22. Lottery (if applicable) shall be held within 04 (Four) weeks from closure of the subscription date.

23. The Company shall issue share allotment letters to all successful applicants within 05 (Five) weeks from the date of the subscription closing. Within the same time, refund to the unsuccessful applicants shall be made in

the currency in which the value of securities was paid for by the applicants without any interest, through direct

deposit to the applicants bank account as far as possible/ Account Payee Cheque/ refund warrants with bank account number, banks name and branch as indicated in the securities application forms payable at Dhaka/ Chittagong/ Khulna/ Rajshahi/ Barisal/ Sylhet/ Bogra, as the case may be subject to condition no. 19 & 21

above.

Refund money of the unsuccessful applicants shall be credited directly to their respective bank accounts, who

have chosen the option in the IPO application forms, as maintained with the bankers to the issue or any other

banks mentioned in the application.

A compliance report in this regard shall be submitted to the Commission within 07 (Seven) weeks from the

date of closure of subscription.

24. The Company shall furnish the List of Allotees to the Commission and the stock exchange(s) simultaneously in

which the shares will be listed, within 24 (Twenty Four) hours of allotment.

25. In the event of under-subscription of the public offering, the unsubscribed portion of securities shall be taken

up by the underwriter(s) (subject to Para -16 above). The issuer must notify the underwriters to take up the

underwritten shares within 10 (Ten) days of the closing of subscription on full payment of the share money

within 15 (Fifteen) days of the issuers notice. The underwriter shall not share any underwriting fee with the

issue managers, other underwriters, issuer or the sponsor group.




Page 4

26. All issued shares of the issuer at the time of according this consent shall be subject to a lock-in period of 3

(Three) years from the date of issuance of prospectus or commercial operation, whichever comes later.

Provided that the persons (other than Directors and those who hold 5% or more shares in the Company), who

have subscribed to the shares of the Company within immediately preceding two years of according consent

shall be subject to a lock-in period of 1 (One) year from the date of issuance of prospectus or commercial

operation, whichever comes later.

27. In respect of shares of Sponsors/Directors/Promoters (if in paper format) shall be handed over to

security custodian bank registered with BSEC and shall remain till completion of lock in and the name

and branch of the bank shall be furnished to the Commission jointly by the issuer and issue managers,

along with a confirmation thereof from the custodian bank, within one week of listing of the shares with

the stock exchange(s). Or they (shares of Sponsors/Directors/Promoters) can be demated and will remain

in lock-in under CDBL system and issuer will submit a dematerialization confirmation report generated

by CDBL and attested by Managing Director of the Company along with lock-in confirmation with

BSEC within one week of listing of the shares with the stock exchange(s). In respect of shares other than

Sponsors/Directors/Promoters the issuer will ensure their lock-in of those shares and submit a statement

to this effect to BSEC.

28. The Company shall apply to the stock exchanges for listing within 07 (Seven) working days of issuance of this

letter and shall simultaneously submit to the Commission attested copies of the application filed with the stock

exchanges.

29. The Company shall not declare any benefit/dividend other than cash based on the financial statements

for the year ended December 31, 2013 before listing of its capital with the Stock Exchange(s).

30. Making of any false statement in the application or supplying of incorrect information therein or

suppressing any relevant information in the application shall make the application liable to rejection and

subject to forfeiture of 25% of application money and/or forfeiture of share (unit) before and after

issuance of the same by the issuer. The said forfeited application money or share (unit) will be deposited

in account of Bangladesh Securities and Exchange Commission (BSEC). This is in addition to any other

penalties as may be provided for by the law.

31. Updated Corporate Governance Guide line has to be complied with and a compliance report there with

shall be submitted to the Commission befor 7 (Seven) days of opening of subscription.

PARTB

1. In addition to the existing IPO application process, applicants can also apply through their

Stockbroker/Merchant Bankers in the following process:

Step-1 (Applicant)

a. Applicants other than Nonresident Bangladeshi (NRB) and Foreign applicants for public issue of securities shall submit application/instruction, within the subscription period, to the Stockbroker/ Merchant

Banker where the applicant maintains BO account.

b. The application/instruction may be submitted in prescribed paper or electronic form, which shall contain the Customer ID, Name, BO Account Number, Number of Securities applied for, Total Amount and

Category of the Applicant. At the same time the applicant shall make the application money available in

respective customer account maintained with the Stockbroker/Merchant Banker. No margin facility,

advance or deferred payment is permissible for this purpose. Application/instructions shall be preserved by

the same Stockbroker/Merchant Banker up to 6 months from listing of the securities with exchange.




Page 5

Step-2 (Intermediary)

a. The Stockbroker/Merchant Banker shall maintain separate bank account only for this purpose namely Public Issue Application Account. The Stockbroker/Merchant Banker shall verify the availability of fund and if find in order, block the customer account for an amount equivalent to the application money, accumulate all the application/instructions received up to the subscription closing date, deposit the amount in the Public Issue Application Account maintained with its bank, instruct the banker to block the account for an amount

equivalent to the aggregate application money and to issue a certificate in this regard. In case of application

submitted by the Stockdealer or the Merchant Bankers own portfolio, the application amount should also be transferred to the Public Issue Application Account.

b. Banker of the Stockbroker/Merchant Banker shall block the account(s) as requested for, issue a certificate confirming the same and provide it to the respective Stockbroker/Merchant Banker. The

Stockbroker/Merchant Banker shall prepare category wise lists of the applicants containing Customer ID,

Name, BO Account Number and Number of Securities applied for, and within 03 (three) working days

from the subscription closing date, send it to the issuer both in electronic (text format with tilde ~ separator) and printed format along with the certificate issued by its banker.

Step-3 (Issuer)

a. The issuer shall prepare consolidated list of the applications and send the applicants BOIDs in electronic (text format with tilde ~ separator) format in a CDROM to CDBL for verification. CDBL shall verify the BOIDs as to whether the BO accounts of the applicants are active or not. Along with the verification report, CDBL shall

provide the issuer with an updated database of the applicants containing BO Account Number, Name,

Addresses, Parents Name, Joint Account Information and Bank Account Information. After receiving verification report and information from CDBL, the issuer shall scrutinize the applications, prepare category

wise consolidated lists of the valid and invalid applications, submit status reports of subscription to the

Commission and the stock exchanges and conduct lottery in line with the conditions of the consent letter.

b. Within 02 (two) working days of conducting lottery, the issuer shall: i. send the lists of the successful and unsuccessful applicants (other than NRB and foreign) in electronic

(text format with tilde ~ separator) and printed format to the Stockbroker/Merchant Banker, request them to unblock the amount blocked earlier and remit the amount of successful applicants to the

issuers respective Escrow Account opened for subscription purpose.

ii. issue allotment letters in the names of successful applicants in electronic format with digital signatures and send those to respective Stockbroker/Merchant Bankers. To credit the allotted shares to the

respective BO accounts, the issuer shall send consolidated allotment data (BOID and number of

securities) in text format in a CDROM to CDBL.

Step-4 (Intermediary)

a. On the next working day of receiving the documents from the issuer and issue manager, the stockbroker/Merchant Banker shall request its banker to release the amount blocked earlier and remit the

aggregate amount of successful applicants deducting service charge to the Escrow account of the issuer opened for the subscription purpose.

b. On the next working day of receiving request from the Stockbrokers/Merchant Bankers, their bankers shall unblock the amount blocked in the account(s) and remit the amount as requested for to the issuers Escrow account. Simultaneously, the stockbrokers/Merchant Bankers shall unblock the customer accounts; inform the

successful applicants about allotment of securities and the unsuccessful applicants about releasing their blocked

amounts. The unblocked amounts of unsuccessful applicants shall be placed as per their instructions.

Miscellaneous:

a. The issuer and Issue Manager(s) shall jointly ensure compliance of the above.

b. The Stockbroker/Merchant Banker shall be entitled to service charge at a rate of 0.05% on the total amount of application money received by them. The service charge shall be paid by the issuer and deducted by the

Stockbroker/Merchant Banker from the amount of successful applicants while remitting to the issuer. In

case of shortage of the service charge, the Stockbroker/Merchant Banker shall send a bill to the issuer and

the issuer shall pay it within 02 (two) working days. The Stockbroker/Merchant Banker shall provide the

issuer with a statement of the remittance amount and the processing fee.

2. The above application process is a pilot project and optional for investors, i.e. investors can apply either

following new process through stockbroker/merchant banker or in existing process through banker to the issue.

3. List of the Stockbroker/Merchant Bankers participating in the pilot project shall be disclosed in the prospectus

and abridged version thereof. Only the applicants maintaining accounts with the Stockbroker/Merchant

Bankers name contained in the list can apply through the new process.




Page 6

PARTC

1. The issuer and the Issue Manager shall ensure that the abridged version of the prospectus and the full

prospectus is published correctly and in strict conformity with the conditions of this letter without any

error/omission, as vetted by the Bangladesh Securities and Exchange Commission.

2. The issue manager shall carefully examine and compare the published abridged version of the prospectus on the date of publication with the copy vetted by BSEC. If any discrepancy/ inconsistency is found, both the

issuer and the issue manager shall jointly publish a corrigendum immediately in the same newspapers

concerned, simultaneously endorsing copies thereof to BSEC and the stock exchange(s) concerned, correcting

the discrepancy/inconsistency as required under Due Diligence Certificates provided with BSEC.

3. Both the issuer company and the issue manager shall, immediately after publication of the prospectus and its abridged version, jointly inform the Commission in writing that the published prospectus and its abridged

version are verbatim copies of the same as vetted by the Commission.

4. The fund collected through Public Offering shall not be utilized prior to listing with stock exchanges and that

utilization of the said fund shall be effected through banking channel, i.e. through account payee cheque, pay

order or bank drafts etc.

5. The Company shall furnish status report on utilization of Public Offering proceeds, audited by foreign affiliated auditors and authenticated by the board of directors to the Commission and to the stock

exchanges within 15 (Fifteen) days of the closing of each month until such fund is fully utilized, as

mentioned in the schedule contained in the prospectus, and in the event of any irregularity or

inconsistency, the Commission may employ or engage any person, at issuers cost, to examine whether the issuer has utilized the proceeds for the purpose disclosed in the prospectus. At the time of auditing

the auditors will perform the audit under the following terms of reference (TOR):

(a) Whether IPO proceeds have been utilized for the purposes/heads as specified in the prospectus; (b) Whether IPO proceeds have been utilized in line with the conditions (if any) of the Commissions

consent letter;

(c) Whether utilization of IPO proceeds have been completed within the time schedule/implementation schedule as specified in the published prospectus;

(d) Whether utilization of IPO proceeds is accurate and for the purpose of the company as mentioned/specified in the published prospectus; and

(e) The auditors should also confirm that: (i) assets have been procured/imported/constructed maintaining proper/required procedure as well as at a reasonable price; and (ii) auditors report has

been made on verification of all necessary documents/papers/vouchers in support of IPO proceeds

making reconciliation with Bank Statement.

6. All transactions, excluding petty cash expenses, shall be effected through the Companys bank account(s).

7. Proceeds of the Public Offering shall not be used for any purpose other than those specified in the prospectus.

Any deviation in this respect must have prior approval of the shareholders in the shareholders Meeting under

intimation to BSEC and stock exchanges.

8. Directors on the Companys Board will be in accordance with applicable laws, rules and regulations.

9. The financial statements should be prepared in accordance with Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS) as required by the Securities and Exchange Rules, 1987.

10. If any quarter or half-year of the financial year ends after publication of the abridged version of prospectus and before listing of its securities with any exchange, the Company shall

disseminate/transmit/submit the said quarterly/half yearly financial statements in accordance with the

Commissions Notification SEC/CMRRCD/2008-183/admin/03-34 dated September 27, 2009 and the section 13 of the Securities and Exchange Rules, 1987.

11. In the event of arising issues concerning Price Sensitive Information as defined under the wmwKDwiwUR I GP Kwgkb (myweavfvMx eemv wbwlKiY) wewagvjv 1995 after publication of the abridged version of prospectus and before listing of its securities with any exchange, the Company shall

disseminate/transmit/submit the information as price sensitive in accordance with the Commissions Notification No. SEC/SRMI/200-953/1950 dated October 24, 2000.

12. The issuer company shall not utilize 1/3rd (One third) of the fund raised through IPO for the purpose of loan repayment.




Page 7

PART-D

1. All the above conditions imposed under section 2CC of the Securities and Exchange Ordinance, 1969 shall be

incorporated in the prospectus immediately after the page of the table of contents, with a reference in the table

of contents, prior to its publication.

2. The Commission may impose further conditions/restrictions etc. from time to time as and when considered

necessary which shall also be binding upon the issuer company.

PART-E

1. As per provision of the Depository Act, 1999 and regulations made there under, shares will only be issued in

dematerialized condition. All transfer/transmission/splitting will take place in the Central Depository

Bangladesh Limited (CDBL) system and any further issuance of shares (Including rights/bonus) will be made

in dematerialized form only.

An applicant (including NRB) shall not be able to apply for allotment of shares without Beneficial Owners

(BO) account.

2. The Company and the issue managers shall ensure due compliance of all the above conditions and the

Securities and Exchange Commission (Public Issue) Rules, 2006.




Page 8

C. DECLARATIONS AND DUE DILIGENCE CERTIFICATES

Declaration about the Responsibility of the Directors including the CEO of the Issuer, Shasha Denims

Limited, in respect of the Prospectus

This prospectus has been prepared, seen and approved by us, and we, individually and collectively, accept full

responsibility for the authenticity and accuracy of the statements made, information given in the prospectus,

documents, financial statements, exhibits, annexes, papers submitted to the Commission in support thereof, and

confirm, after making all reasonable inquires that all conditions concerning this public issue and prospectus have

been met and that there are no other information or documents the omission of which make any information or

statements therein misleading for which the Commission may take any civil, criminal or administrative action

against any or all of us as it may deem fit.

We also confirm that full and fair disclosure has been made in this prospectus to enable the investors to make a well

informed decision for investment.

Sd/-

Parveen Mahmud

Chairman & Director

Sd/-

Shams Mahmud

Managing Director & Director

Sd/-

Aftabur Rahman Jafree

Nominee Director of Shasha Garments Limited

Sd/-

Zareen Mahmud

Director

Consent of the Director(s) to serve as Director(s)

We hereby agree that we have been serving as Director(s) of Shasha Denims Limited and continue to act as

Director(s) of the Company.

Sd/-

Parveen Mahmud

Chairman & Director

Sd/-

Shams Mahmud

Managing Director & Director

Sd/-

Aftabur Rahman Jafree

Nominee Director of Shasha Garments Limited

Sd/-

Zareen Mahmud

Director

Declaration about filing of Prospectus with the Registrar of Joint Stock Companies and Firms

A vetted and signed copy of this Prospectus has been filed for registration with the Registrar of Joint Stock A

vetted and signed copy of this Prospectus has been filed for registration with the Registrar of Joint Stock

Companies and Firms (RJSC), Bangladesh as required under Section 138 (1) of the Companies Act, 1994 on or

before the date of publication of this prospectus in the newspaper.




Page 9

Declaration by the Issuer about the approval from BSEC for any Material Changes

In case of any material changes in any agreement, contract, instrument, facts and figures, operational circumstances

and statement made in the Prospectus subsequent to the preparation of the Prospectus and prior to its publication

shall be incorporated in the Prospectus and the said Prospectus shall be published with the approval of the

Commission.

For Issuer

Sd/ Shams Mahmud

Managing Director


Declaration by the Issue Manager about the approval from BSEC for any Material Changes

In case of any material changes in any agreement, contract, instrument, facts and figures, operational circumstances

and statement made in the Prospectus subsequent to the preparation of the Prospectus and prior to its publication

shall be incorporated in the Prospectus and the said Prospectus shall be published with the approval of the

Commission.

For Managers to the Issue

Sd/ Mahbub H. Mazumdar FCMA

Chief Executive

AFC Capital Limited

Sd/-







Page 10

Due Diligence Certificate of Manager to the Issue

Sub: Public offer of 50,000,000 Ordinary Shares of BDT 10.00 each at an issue price of BDT 35.00 each,

including a premium of BDT 25.00 per share of Shasha Denims Limited.

We, the under-noted Manager to the Issue to the above mentioned forthcoming Issue, state as follows:

1. We, while finalizing the draft Prospectus pertaining to the said Issue, have examined various documents and

other materials as relevant for adequate disclosures to the investors; and

2. On the basis of such examination and the discussions with the issuer Company, its directors and

officers, and other agencies, independent verification of the statements concerning objects of the issue and the

contents of the documents and other materials furnished by the issuer company.

WE CONFIRM THAT:

a. the draft Prospectus forwarded to the Commission is in conformity with the documents, materials and

papers relevant to the Issue;

b. all the legal requirements connected with the said Issue have been duly complied with; and

c. the disclosures made in the draft Prospectus are true, fair and adequate to enable the investors to make

a well informed decision for investment in the proposed issue.

For Managers to the Issue

Sd/ Mahbub H. Mazumdar FCMA

Chief Executive

AFC Capital Limited

Sd/-







Page 11

Due Diligence Certificate of the Underwriter(s)

Sub: Public offer of 50,000,000 Ordinary Shares of BDT 10.00 each at an issue price of BDT 35.00 each,

including a premium of BDT 25.00 per share of Shasha Denims Limited.

We, the under-noted Underwriter(s) to the above-mentioned forthcoming Issue, state individually and collectively

as follows:

1. We, while underwriting the above mentioned issue on a firm commitment basis, have examined the draft

Prospectus, other documents and materials as relevant to our underwriting decision; and

2. On the basis of such examination, and the discussions with the issuer company, its directors and officers, and

other agencies, independent verification of the statements concerning objects of the issue and the contents of

the documents and other materials furnished by the issuer company;

WE CONFIRM THAT:

a. All information as are relevant to our underwriting decision have been received by us and the draft Prospectus

forwarded to the Commission has been approved by us;

b. We shall subscribe and take up the un-subscribed securities against the above-mentioned public issue within 15

(fifteen) days of calling up thereof by the issuer; and

c. This underwriting commitment is unequivocal and irrevocable.

For Underwriter(s)

Sd/-

Chief Executive/Managing Director/CEO

BMSL Investment Limited

Citizen Securities & Investment Limited

EBL Investments Limited

IL Capital Limited

MTB Capital Limited

PLFS Investment Limited

Progressive Life Insurance Company Limited

SBL Capital Management Limited

Swadesh Investment Management Limited

UniCap Investments Limited

AIBL Capital Management Limited




Page 12

PART II: RISK FACTORS AND MANAGEMENT'S PERCEPTION ABOUT THE RISKS

(a) Interest Rate Risks

As on December 31, 2013 SDL has short term & long term loan of total Tk. 2,426,438,891.00 and its

subsidiaries have total loan of Tk. 959,289,678.00. Interest rates on such loans ranges 14.50% to 16.50% per

annum. Hence, the Company is exposed to volatility of market-wide interest rates of bank loans. Due to several

macroeconomic and market driven factors, interest rates on short term and long term bank loans may fluctuate

over time. Inflationary pressure, increased demand for bank loan, increased volatility in money market,

restrictive monetary policy, increased Government borrowing from banking sector, etc. may compel the

Companys loan giving institutions to increase their interest rates. If the interest rates are increased beyond what the Company expects, then its cash flow and profitability will be affected adversely. This would also

affect its value of shares.

Management Perception:

The management of SDL always emphasizes on the management of its finance to maintain an optimum capital

structure of the Company, so that the cost of capital remains minimum. The management prefers procuring the

long-term fund with minimum fixed interest rate and the short-term fund with reasonable competitive rate. In

addition, the management of the Company has decided to liquidate a part of its outstanding bank loan with the

IPO proceeds to reduce the interest burden of the Company and to keep the Gearing Ratio at a satisfactory

level.

(b) Exchange Rate Risks

A business involved in overseas transactions may face a potential loss arising from fluctuation of foreign

currency rates. The loss may be aggravated due to consistently downwards trends of Bangladesh Taka against

other foreign currencies.


SDL settles its foreign transaction through US Dollars in cases of both export and import. While the value of

functional currency fluctuates, the loss or gain arising from currency fluctuation for export automatically sets

off against the loss or gain arising currency fluctuation for import. As the value of export is always greater

than the value of import, some balance is created in the foreign currency transaction. Furthermore, the

Company is contemplating about setting a system of hedging on foreign currency transactions in the future.

(c) Industry Risks

1) Market Demand:

Companys sales and revenues are dependent on the aggregate demand of its products. Any economic

recession, changes in requirements, national income and other related factors may cause to decline the

market demand of the Company products.


Strong brand loyalty of the Companys products to its customers has enabled the Company to capture

significant market share in the sector. Additionally, the Company is continuously penetrating into the

market and upgrading the quality of the products to minimize the market risks.

2) Competition and globalization effects:

SDL is operating in a free market economy regime. The Company might have to face stiff competition

from its competitors. Easily availability of global products in the local markets adds to the competition,

challenging the profitability of the business.


Bangladesh is the prime source of cheapest labor in the world, gaining comparative advantages for its

industries over their global competitors. Other overhead costs are also low in Bangladesh. As a result, the

Company has been able to maintain its cost of products most competitive. Moreover, over the last few

years the Company has built a trustworthy relationship with its customers, which helps the Company avoid

competition with others.




Page 13

3) Raw Materials and Energy costs:

Instability in raw materials and energy costs may hamper the profitability of the Company significantly. A

recent government decision regarding escalation of electricity prices will put a huge pressure on the

product cost of the local businesses.

Management perception:

Our management believe that efficient management of inventories, proper sourcing & timing, economic

order quantity and efficient handling of credit facilities can reduce the cost of procurement. For power and

electricity, SDL is totally independent, enabling itself to ensure low cost energy and uninterrupted

production process.

d) Market and Technology Related Risks

1) Market risks refer to the risk of adverse market conditions affecting the sales and profitability of the

Company. Such as, shortage in raw material supplies, inefficient labor supplies, fall in product demand,

etc. which signifies the adverse external and internal business environment. Those types of risks may

impede the success of the business.


The Company operates in the back-ward linkage industry of Garments sector in Bangladesh. The product

of the Company (denim fabrics) is ultimately consumed by the garment manufacturers, who finally export

their finished goods to the foreign markets. Examples of SDLs ultimate consumers include such world

renowned brand name as Marks & Spencer, George, Polo, Next, Tesco, Mexx, Wall-mart, JC Penny,

Tommy, Gap, Lee Hang Fat, Adams, Woolworth, Gulden Pfenning, Li & Fung. It is notable that

Bangladesh has recently been one of the prime denim producers in the world because of its low cost and

superior quality. Therefore, aggregate demands of the Company products remain always at high.

2) Technology risks stems from the contemporary changes in the technology which make the existing

technology obsolete or reduces its cost efficiency compared to that of the competitors. New entrant may

come forward with a more sophisticated technology which can give a threat to the cost efficiency of the

Company.


The plant and machinery implanted in the Companys manufacturing plant, which are imported from

world renowned brand name, are efficient and cost effective in its kind. The management of the Company

is aware of any technological changes in the future.

e) Potential or existing government regulations

The Company operates under the Companies Act, 1994; Securities Related Ordinance, Act, Rules and

Regulations; Income Tax Ordinance 1984; Value Added Tax (VAT) Act, 1991; and contemporary notifications

made under those laws. Any unexpected changes of the policies made by the regulatory authorities may

adversely affect the business of the Company.


Economy of Bangladesh has been developing over the decades because of business friendly rules and

regulations adopted by the various regulatory bodies of the country. Our fiscal policy gives various incentives

to the newly established companies so that it can grow and mature.




Page 14

f) Potential changes in global or national policies

Every company operates under the economic policies formulated and imposed by the political government. The

government tends to reshape these policies time to time for the sake of greater interest of the countrys

economy. Sometimes those changes in existing policy or any future policy framework adversely affects the

smooth operation of the companies.


Since the independence, all the governments of our country have shown objectivity and sincerity in developing

industrial sector of the country. In the fiscal policies, there are various protective measures to protect the local

industries against any sort of aggressive moves by global entrants. The government of the country has also

taken a number of initiatives for the local business to market their products in the international arena.

Different regional trade alliances and bilateral agreement can be taken as examples.

g) History of non-operation

For any instance of non-operation, the Companys production will be hampered. This would also increase the

costing and affect profitability. Above all, it would not be able deliver the products within the deadlines set by

the buyers.


Shasha Denims Limited (SDL), having been incorporated in 28th October, 1996, started its commercial

operation in July, 2000. After commencement of commercial operation SDL has never been non-operative. But

one of its subsidiaries Energis Power Corporation (EPCL) was out of operation from 6th May, 2013 to 8th

February, 2014.

EPCL one of the subsidiaries of SDL incorporated in Bangladesh on 28th December, 2008. The Company has

signed power supply agreement with Bangladesh Power Development Board (BPDB) on 28 th December, 2008

for a term of 3 (Three) years (Usually countdown starts from the first day of commercial production) to provide

55 MW net electricity to BPDB. EPCL started its commercial operation on 6th May, 2010 and supplied BPDB

from 6th May, 2010 to 5th May, 2013 under the agreement. BPDB has extended their agreement with EPCL for

further 5 (Five) years from 9th February, 2014 to 8th February, 2019 vide contract No-09932.

Signing a power supply agreement with BPDB is a time consuming process. For this reason, EPCL was bound

to stop its commercial operation from 6th May, 2013 to 8th February, 2014.

h) Operational Risks

Possible failure of human resources, failure of the production systems, inefficient internal control procedures

and most importantly, being a first mover in the industry may cause for the Company to make it a total

unsuccessful venture.


SDL has some key experts in this field who have academic and practical knowledge and also highly trained.

We have also a system of on-job training facilities so that the employee can have the opportunity to reshape

their skills. Most importantly, SDL has procured latest technology and world famous brand machinery for its

plant to ensure smooth operation of the production process. Finally, our research team is dedicated to

continuous developments of our products to satisfy the customers demand perfectly.

i) Other risk factors:

1) Political Unrest:

Bangladesh is prone to serious unrest in the political condition which produces Hartal, Road-Block and

many other barriers to the business. This could also propel the cost of the product upwards.


During the last forty years of post-independence period, Bangladesh has gone through a variety of

political situations. But presently, a sound political atmosphere is prevailing in the country. Both the

ruling and opposition parties are committed to the betterment of the country. Last democratic national

assembly election and local council polls are instances of peaceful political situation in Bangladesh.




Page 15

2) Possible slowdown in economic growth in Bangladesh.

Our performance and growth are dependent on the health of the Bangladesh economy. The economy could

be adversely affected by various factors such as political or regulatory action, including adverse changes in

liberalization policies, social disturbances, terrorist attacks and other acts of violence or war, natural

calamities, commodity and energy prices and various other factors. Any significant changes may adversely

affect our business and financials.


Bangladesh economy is booming for last few years. Consistent industrial growth along with increased

agricultural production has made the Per Capita Income higher than that of recent years. In addition,

favorable government policies and industry friendly policies by other regulatory bodies have proved to be

congenial to the economy of the country.

3) Natural calamities:

Bangladesh is a country where recurrent natural calamities take place every year. It is a serious threat to

the business.


This type of situation is totally beyond the control of human being. Though the management of SDL has a

very little to do with, we can and should have some precaution measures to minimize the damage of the

business in such situations. For example, all the assets of our company are insured.

4) Risk related to high debt burden of the Company:

The parent Company has short term & long term loan of total Tk. 2,426,438,891.00 and its subsidiaries

have total loan of Tk. 959,289,678.00 as per audited financial for the period ended December 31, 2013.

High debt financing can have an adverse affect on the cash flow and profitability of the Company.


SDL is engaged in manufacturing different types of classical Indigo Denim (denim fabric) through the

integrated manufacturing process of weaving, dyeing and finishing. The main raw materials used for the

production is yarn and sold in LC basis. As a result a huge amount of receivables and maintain a huge

amount of inventory in the form of raw material and work in progress. All the items are related to working

capital management and consequently that create short term loan like CC, IBP, OD etc. Furthermore, we

are trying to reduce SDLs debt burden by maximizing our profit through increasing these factories

productivity and sales.

5) Risk related to substaintial investment in the Companies which are not in commercial operation:

The Company has invested in Equity of Tk. 71,575,000.00 in Shasha Textiles Limited, Shasha Apperals

Limited, Shasha Spinnings Limited, Telstar Communication, Trade Matrix Bangladesh Limited, Energies

Venture Limited & Energies Holdings Limited and has deposited in share money of Tk. 27,858,643.00 in

the said Companies which are not in commercial operation.


Out of Tk. 9.93 Crore, SDL invested Tk. 9.75 Crore (Approx) in Shasha Textiles Limited and rest amount

has been invested in other six companies. Shasha Textiles Limited has invested most of its fund for buying

land for establishing a world class textile factory.

Similarly, our management believes in business diversification. For this reason, we are using rest of our

fund as investment and share money deposit with Shasha Apperals Limited, Shasha Spinnings Limited,

Telstar Communication, Trade Matrix Bangladesh Limited, Energies Venture Limited & Energies

Holdings Limited.




Page 16

PART III USE OF PROCEEDS AND CAPITAL STRUCTURE OF THE COMPANY

a. CAPITAL STRUCTURE OF THE COMPANY:

Particulars No of Shares Face Value (Tk.) Amount in Taka

Before IPO:

Authorized Capital 225,000,000 10.00 2,250,000,000

Paid up capital before IPO 48,076,200 10.00 480,762,000

Total paid up capital before IPO 48,076,200 10.00 480,762,000

After IPO:

To be issued as IPO 50,000,000 10.00 500,000,000

Paid up capital (Post IPO) 98,076,200 10.00 980,762,000

The Company has raised its paid-up capital in following phases:

Date of Allotment Basis (No. of Shares) Total Amount

(BDT) In cash Other than in cash Bonus Share

28.10.1996 (At the time of Incorporation) 20,000 - - 20,000,000

25.06.1999 (1stAllotment) 800,000 - - 80,000,000

20.02.2001 (2nd Allotment) 225,750 - - 22,575,000

29.04.2004 (3rd Allotment) 1,000,000 - - 100,000,000

30.08.2012 (4th Allotment) - - 17,806,000 178,060,000

23.02.2014 (5th Allotment) - - 8,012,700 80,127,000

Total 480,762,000

b. NET PROCEEDS FROM THE IPO:

Sources of Fund: Total Amount (BDT)

Total IPO Proceeds (5.0 crore ordinary shares @ Tk. 35.00 each) 1,750,000,000

Less: IPO Expenses (Details in Breakdown of IPO Expenses in Page- 26) 27,710,000

Net IPO Proceeds 1,722,290,000

c. USE OF THE NET PROCEEDS FROM THE IPO:

Net Proceeds from initial public offering (IPO) will be used for expansion of business activities, repayment of

high interest- bearing loan to boost up the profitability.

The details of which is stated as under:

Particulars Total Amount (BDT)

Short Term Loan Partial Pay off [Bank Asia Limited (Corporate Branch) - Tk. 18.229

Crore] 182,290,000

Business Expansion 1,540,000,000

Total 1,722,290,000




Page 17

Details Breakup of Business Expansion:

i) Details Cost of Building & Other Civil Construction:

SL. No Item Type of Construction Area Total Tk.

01.

Main Factory Building Comprising of weaving,

Dyeing, Finishing, Store, Raw Materials, Godown,

Finished Goods Godown, Substation room, pump

house, Office store, rest house, prayer room, Dining

room , Laboratory etc. complete.

Pre-Fabricated (import) Zamil

Steel Structure, Civil

Construction & Others work

7000

sq.m 109,185,000

02. AC Plant RCC 5207 sft 4,687,040

03. Duct Line G.P Sheet 2244 sft 1,146,960

04. False ceiling Gipsum Board 720,000

05. Boundary Wall Brick Wall 400 m 1,443,200

06. Road - 1148 sq.m 3,705,120

07. Surface Drain RCC 400 m 656,000

08. Water Reservoirs RCC 970 rft 484,960

Sub-Total 122,028,280

ii) Machinery & Equipments:

Sl. No Particulars Company Name & Country of Origin Qty Total Tk.

1 Dyeing Machine Master, Italy/ Karl Mayer, Germany 1 Set 325,999,242

2 Warping with Beam Karl Mayer, Germany/ Ramallumin, Italy/ Morrison, USA 1 Set 184,800,000

3 Sizing Karl Mayer, Germany/ Ramallumin, Italy / Ukil, Korea 1 Set

4 Loom (Air jet machine)

with beam accessories Picanol, Belgium/ Toyada, Japan 42 set 194,000,000

5 Warp Tying Machine Stabli, Switzerland / Groz-Beckert, ASSL Textiles 3 pcs 10,914,750

6 Finishing Machine Italy/Germany 1 set 97,251,000

7 Mercerizing China/Italy 1 set 84,700,000

8 Stanter Machine China/Italy 1 set 69,300,000

9 Inspection Machine Taiwan/Chaina 8 Pcs 5,097,400

10 Wrapping Machine Turkey/Chaina 1 pcs 7,700,000

11 Selvage Bobbin Machine Picanol, Belgium 1 set 972,000

12 Cloth carrier Suntech, China 2 set 480,000

13 Beam Stacker 30 Beam/set Network Technology, Bangladesh 2 set 8,320,000

Sub-Total (ii)

989,534,392

iii) Utility:

Sl. No Particulars Country of Origin Qty Total Tk.

1 Air Compressor, OIl free, VSD &

Atlas Cop co, Belgium/ Boge, Germany 2 set (1

set s/B) 17,264,000

Air Dryer

2 Air Compressor for Loom Atlas Cop co, Belgium/Boge, Germany 3 Set 41,580,000

3 Boiler Thermax, India / Omnical, Germany 1 set 20,514,000

4 Overhead Cleaner Electro Jet, Spain/ Luwa, Switzerland 3 set 8,064,000

5 A/C Plant Dextrous Engr., Bangladesh 1 set 22,176,000

6 A/C Plant for Warping Dextrous Engr., Bangladesh 1 Set 11,088,000

7 Chiller with flow meter, steam

valve, control valve

Thermax, India/ Wattson Engr.,

Bangladesh 1 set 15,400,000

8 Cooling Tower for Chiller Dextrous Engr./ Wattson Engr.

Bangladesh 2 set 3,520,000

9 N2 Generator with compressor,

Dryer (purity 99.9999%) Atlas cop co, Belgium 1 set 17,420,000

10 Nitrogen accessories, tank, piping etc Linde Bangladesh 1 lot 1,000,000

11 Gas Generator M.T.U, Germany/ Guascor, Spain/

Waukesha, USA

3 set (1

S/B) 118,500,000

12 Cooling tower for Generator Dana Engr., Bangladesh 3 set 1,680,000

13 Power Cable, HT Cable BRB Cable, Bangladesh 1 lot 23,100,000

14 Machine Cable BRB Cable, Bangladesh 1 lot 19,200,000

15 DB, MDB, SDM BRB Cable, Bangladesh 1 lot 2,400,000

16 Sub-Station, HT/LT switchgear,

PFI Transformer H.A. Engr., Bangladesh 1 Set 8,220,000

17 Lighting Phillips, Bangladesh 1 lot 3,200,000

18 Deposit for Electricity BEPZA - 4,820,000

19 Gas Deposit (Boiler & Generator) Titas Gas T & D - 10,753,200

20 Pump Dextrous Engr., Bangladesh 1 lot 560,000




Page 18

21 Piping (steam, water, air, cooling

system) Sohel & Brother, Bangladesh 1 lot 6,400,000

22

Steam accessories, valves, SS

decting, plates, Installation

fabrication

Sohel & Brother, Bangladesh 1 lot 8,000,000

23 Fork lift, Beam trolley, power

trolley Toyota, Japan / Novel Tek, Taiwan 1 lot 16,000,000

24 DTW Sohel & Brother, Bangladesh 1 set 2,856,000

25 DEPZ water connection 4 inch BEPZA 1 set 400,000

26 Water softener Bita Chemical, Bangladesh 1 set 4,000,000

27 Miscellaneous - - 2,150,440

Sub-Total (iii)

390,265,640

iv) Erection and Commissioning:

Sl. No Particulars Country of Origin Qty Total Tk.

1 Erection & Commissioning (iv) - - 20,000,000

Grand Total (i+ii+iii+iv) 1,540,000,000

d. IMPLEMENTATION SCHEDULE

Particulars Time schedule for completion of proposed work

Loan Pay off After 1 (One) month of receiving IPO fund

Business Expansion After 18 (Eighteen) months of receiving IPO fund

e. TERMS OF CONTRACT:

As per rule 8B4(C) of Securities and Exchange Commission (Public Issue) Rules, 2006 there is no contract

covering any of the activities of the issuer Company for which the proceeds of sale of securities from IPO is to

be used.

Sd/-

Md. Ahasanul Haque

Chief Financial Officer

Sd/-

Shams Mahmud

Managing Director




Page 19

PART IV DESCRIPTION OF BUSINESS

(1) Incorporation:

Shasha Denims Ltd., one of the leading denim fabric manufacturers in Bangladesh, was incorporated as a

private limited company on 28th October, 1996 and subsequently converted into a public limited company on

3rd August, 1997 with Register of Joint Stock Companies and Firms (RJSC) in Bangladesh under the

Companies Act, 1994.

(2) Commencement of commercial operation:

The Company started its commercial operation in July 2000.

(3) Nature of Business:

Shasha Denims Limited (SDL) is engaged in manufacturing different types of classical Indigo Denim (denim

fabrics) through the integrated manufacturing process of weaving, dyeing and finishing. SDL uses the most

modern computerized SLASHER DYEING technology in its production process. The main raw materials used

for the production is yarn, which the Company imports from the overseas markets mainly from China, India

and Pakistan.

(4) Principal products or services of the Company:

The Company produces a single product denim fabrics of varied specifications, compositions, color and

qualities. Following table shows various attributes of the Companys product denim fabrics:

Sl. No. Product Segmentation Product Type

1 By Fabric Effect

Basic Denim

Ring Denim

Slub Denim

Cross Slub Denim

2 By Composition

Cotton Stretch Denim

Cotton Polyester Stretch Denim

Cotton Denim

Tencel Denim

Cotton Polyester Denim

Cotton Jute Denim

3 By Color

Indigo

Blue Black

Black

Olive

Ecru

4 By Weaving

2/1 RHT

3/1 RHT, 3/1 LHT

Broken Twill

Satin

(5) Markets for such products:

SDL is a 100% export oriented textile industry. SDL sells its products through Back to Back L/Cs to the local

garments manufacturers and exporters who consume the denim fabrics as raw materials of their goods. The

garment manufacturers then export their goods to the overseas markets. Therefore, the final destination of the

Companys products appears to be the overseas market. Shasha Denims Limited ultimately produces denim

fabrics for such world renowned brand name as Next, Lee Hung Fat, Marks & Spencer, Teddy S.P.A,

Comdipunt S.A, Fashion Ling B.V, Pink Woman A.V.E.E, Etos Spolka Akcy JNA, Hype Project Gear S.L, S.

Oliver Bernd Freier, NV Balko, Texman I/S, ITX Trading S.A, DK Comapny Vejle A/S, DPAM, SA Auchan

France, Otto, Jeans Fritz, Daytex Mode, Best Sources Cor.




Page 20

(6) Relative contributions of the products to sales or income that accounts for 10% or more of the

Companys total revenue:

SDL produces a single product denim fabrics. Therefore, 100% revenue generated for the Company is

contributed by its only product denim fabrics.

(7) Name of associates, subsidiary/related holding company and their core area of business:

Sl. Name Relation Ship Area of Business % of

Holdings

01. Energis Power Corporation Ltd. Subsidiary 55 MW Power Plant in Operation 99.95%

02. Shasha Textiles Ltd. Subsidiary Not in Operation 99.57%

03. Shasha Garments Ltd. Subsidiary & Related holding Garment Manufacturing 96.46%

(8) Way of distribution of products: On receiving the orders from its customers, SHASHA DENIMS LTD. manufactures the products and supplies

them to the customers destination as per their requirements. Since the export of the Company is deemed export, it supplies the products to the local destinations. Top 10 (Ten) buyers name, address and their percentage (%) of purchase are as follows:

Sl. Name of the buyer Address % of purchase

1 Big Boss Corporation Ltd. Lutfun Tower (7th Floor), E-13, Middle Badda, Gulshan,

Dhaka-1212 11.34

2 Shasha Garments Ltd. Hashem Plaza (4th Floor), Ganak Bari, Savar, Dhaka 7.84

3 Tanaz Fashions Ltd. Shamim Complex, 216 Sataish Road, Tongi, Gazipur 7.12

4 Shanta Denims Ltd. Plot # 156 & 177, DEPZ (Extn), Savar, Dhaka. 6.49

5 Lee Hung Fat Garments Factory

Ltd. 8/F, Block-C, 760 Cheung Shawan Road, Kowloon, Hongkong. 5.53

6 Natural Denims Ltd. Plot-531 Tonga Bari Savar Ashulia, Dhaka 3.88

7 Dorren Garments Ltd. Dakkin Panishail, N.K Link Road, Gazipur 2.92

8 Yolk Apparels Ltd. 62, Kathgara, Bishmail Zirabo Road, Ashulia, Dhaka. 2.83

9 TM Fashions Ltd. Hazi Ismail Chowdhury Bhaban (1st Floor), Jobeda Tower,

Chandana, Gazipur. 2.54

10 Primordial Limited Feroza Complex (5th Floor) 88, K.N.I.A, Tejgaon, Dhaka-1215 2.01

(9) Competitive conditions in the business:

There is huge demand supply gap for the product of the Company in the denim fabric market (Local and

International market). Being one of the high quality denim fabric producers in the country, SDL (having

14.96% of total market share) is capable of exploiting the opportunities though there are a number of

competitors in the local market. Such as:

Sl. No. Name Market share of the competitors

1 Partex Denims Ltd. 17.03%

2 Chittagong Denim Mills Ltd. 9.93%

3 Mahmud Denims Ltd. 4.23%

4 Pacific Denims Ltd. 3.50%

5 Argon Denims Limited 7.80%

6 Envoy Denim Limited 12.86%

(Calculated by BTMA Year-2012)

(10) Sources and availability of raw materials and the names of the principal suppliers:

Sl. Name of Principal Suppliers Address

Name of

Raw

Materials

Country of

Origin

1 Square Textiles Ltd. Square Center, 48, Mohakhali C/A, Dhaka. Yarn Bangladesh

2 Salek Spinning House # 11A, Road # 130, Gulshan-1, Dhaka Yarn Bangladesh

3 Sinha Spinning House # 368, Road # 28, New DOHS, Mohakhali, Dhaka. Yarn Bangladesh

4 Purbani Rotor 68 Gushan Avenue, Gulshan-1, Dhaka. Yarn Bangladesh

5 Badsha Textiles 28, Dilkusha C/A, Dhaka. Yarn Bangladesh

6 Lucky Spinning 75/38-39, Ocean Tower 2, 21st Flr., Soi Sukhumvit

19, Khet Wattaana, Bangkok, Thailand. Yarn Thailand

7 Sapphire Textile 7-A/K Main Boulevard, Gulberg-2, Lahore, Pakistan. Yarn Pakistan

8 Quetta Textiles Nadir House, I.I Chundrigar Road, Karachi, Pakistan. Yarn Pakistan

9 Loyal And Trusty International 1/F., Block A, Kiu Kwong International Building,

6-10 Ka Hing Rd, Kwai Chung, N.T., Hong Kong. Yarn China




Page 21

10 Clariant 1 International Business Park, # 08-01-04 The

Synergy, Sing

shasha denims limited prospectus 20141112 4002

Documents

th floor

sbl capital management

sonargaon road dhaka

issue managers

ebl investments limited

mtb capital limited

issue price of bdt

date of credit rating