aamra.com.bd
Information Memorandum aamra networks limited
aamra.com.bd
aamra.com.bd
aamra.com.bd
Information Memorandum
of aamra networks limited
Authorized Capital: BDT 1,000,000,000
(100,000,000 Ordinary Shares of BDT 10 each)
Paid Up Capital: BDT 260,000,000 (26,000,000 Ordinary Shares of BDT 10 each)
Proposed Issue Size: BDT 120,000,000 Offering of 12,000,000 Ordinary Shares of Face Value BDT 10/- each
MANAGER TO THE ISSUE
LANKABANGLA INVESTMENTS LIMITED Eunoos Trade Centre, Level - 21, 52-53, Dilkusha C/A, Dhaka - 1000, Bangladesh Phone: +88 02 711 35 85, 712 25 95 Fax: +88 02 711 57 56 e-mail: [email protected] Web site: www.lankabangla-investments.com
aamra.com.bd
Disclaimer
This Information Memorandum with respect to the Private Placement of ordinary shares of aamra networks limited has been prepared by LankaBangla Investment Limited to be circulated amongst potential investors.
The information forecast analysis, assumptions and opinions contained herein have been compiled or arrived at solely based on information obtained from aamra networks. Such information has not been independently verified and no guarantee, representation or warranty, expressed or implied is made as to its accuracy, completeness or correctness. Nothing contained in this document is, or shall be relied upon as, a promise or representation by LankaBangla Investments Limited. All such information is subject to change without notice and such changes could be due to unforeseen circumstances. This document is for information purposes only and does not purport to be a complete description of the subject matter referenced to herein.
Any estimate, projection, opinion, forecast and valuation contained in this Information Memorandum involves significant elements of subjective judgment and analysis, which may or may not be correct. No representation is made that any estimate, projection or forecast will be achieved. The actual future events may vary significantly from the estimates, projections, forecasts or valuation and each estimate, projection, forecast or valuation is based on a number of assumptions and is subject to matters which are outside the control of aamra networks limited and LankaBangla Investments Limited.
Accordingly, LankaBangla Investments Limited and aamra networks limited shall not be liable for any loss or damage howsoever arising as a result of any person acting or refraining from acting in reliance or any information, forecast analysis and opinion contained herein.
The recipients of this Information Memorandum are expected to carry out their own independent evaluations on the transaction contemplated herein taking into consideration macroeconomic variables and other relevant conditions.
The proposed Private Placement of ordinary shares of aamra networks would only be executed upon obtaining necessary regulatory approvals.
aamra.com.bd
Contents Abbreviations ...... 11
1 Proposed capital structure ...... 4
2 Profile of Aamra Networks Limited ...... 5
2.1 Fact Sheet ...... 5
2.2 Background ...... 6
2.3 Nature of Business ...... 6
2.4 Quality Policy...... 7
2.4.1 Certifications ...... 7 3 Principal Products & Services &Support ...... 8
3.1 Major Service Portfolio ...... 8
3.2 Service & Support ...... 10
3.3 Network Monitoring ...... 13
3.3.1 ATS Monitoring System ...... 14 3.4 Statement of Business Continuity & Disaster Recovery ...... 15
3.5 Revenue Mix...... 16
3.6 Subsidiaries and their core areas of business – Ace IT Networks Limited ...... 16
3.7 Associates, Subsidiaries or related holding company and their related transactions ...... 17
3.8 Distribution of Products and Services ...... 18
3.8.1 Sales and Marketing ...... 18 3.8.2 Capacity Distribution Flow Chart ...... 18 3.8.3 Service Flow Chart ...... 19 3.8.4 Principal Partners ...... 20 4 Industry Outlook ...... 21
4.1 Bangladesh Telecommunication Market ...... 21
4.2 Industry Structure ...... 21
4.2.1 Voice Services – Supply Chain ...... 22 4.2.2 Data Services – Supply Chain ...... 22 4.3 Voice Market ...... 22 aamra.com.bd
4.3.1 Key Drivers of the Voice Market ...... 23 4.3.2 Limitations in the Voice Market ...... 23 4.4 Data Market Scenario ...... 23
4.4.1 Internet Segment ...... 23 4.4.2 Internet Price ...... 26 4.4.3 Existing Operators ...... 27 4.4.4 Data Services ...... 27 4.4.5 Key Players in the Data Market ...... 28 4.4.6 Limitations of the Data Market ...... 29 4.4.7 Key Drivers of the Data Market ...... 30 4.4.8 Global Internet Penetration ...... 31 4.4.9 Factual Summary of the Voice and Data Market – Bangladesh ...... 32 4.5 The Regulatory Framework ...... 34
4.5.1 The Regulator ...... 34 4.5.2 Overall Regulatory Framework ...... 34 4.6 Types of Data Service Providers ...... 35
4.7 Guidelines for Infrastructure Sharing ...... 35
5 Competitive Conditions of Business ...... 36
5.1 SWOT Analysis – Aamra Networks Limited ...... 36
5.2 Barriers to run the business and Control of price on products/services ...... 36
5.3 Competitive Advantage ...... 37
6 Sources of and Requirements for Power, Gas and Water and any other utilities ...... 38
7 Number of Employees ...... 38
8 Selected Key Customers ...... 39
9 Management Profile ...... 40
9.1 Management Structure ...... 40
9.2 Departments ...... 41
9.3 Directors of the Company ...... 42
9.3.1 Short Biography of the Directors ...... 42 9.4 Senior Management ...... 44
9.4.1 Short Biography of Senior Management ...... 44 10 Description of Property ...... 47 aamra.com.bd
10.1 Location of the principal plant and other property of the company and their condition...... 47
10.2 Break down of existing machineries ...... 48
10.3 Lease Agreement (land and buildings) ...... 50
11 Plan of Operation and Financial Condition ...... 50
11.1 Internal and external sources of cash ...... 50
11.2 Causes for materials changes from period to period ...... 50
11.3 Any loan taken from holdings and or subsidiary company or loan given to a forsake company giving full details of the same ...... 50
11.4 The estimated amount of future expenditure ...... 50
11.5 Operating lease and financial lease commitment ...... 50
11.5.1 Financial Lease Commitment ...... 50 12 Ownership of the Companies Securities ...... 51
12.1 Shareholding Structure ...... 51
12.2 Existing Shareholding: ...... 51
12.3 Share Holding after Private Placement: ...... 51
13 Key Risk Factors &Risk Management ...... 52
14 Related Party Transactions ...... 55
15 Allotment of Shares ...... 56
Auditor’s Certificate regarding any allotment of shares to the directors and the subscriber to the Memorandum of Association and Article of Association for any consideration otherwise than for cash ...... 56
16 Determination of Offer Price ...... 57
Valuation under Different Methods ...... 57
NAV per Share ...... 57
Earnings Based Value Per Share ...... 57
Valuation Based of Market P/E ...... 57
Valuation Based on P/NAV ratio ...... 57
Based on the valuation mentioned above, aamra Networks Limited is offering 12,000,000 ordinary shares to the general public through private placement for a price of BDT 10/- ...... 57
17 Use of Proceeds ...... 59
17.1 Project Costs and Financing Means ...... 59 aamra.com.bd
17.2 Capacity Enhancement Plan ...... 59
17.2.1 New Revenue Wings - Collocation/Data Center Facilities ...... 59 17.2.2 New Revenue Wings - Intelligent Buildings ...... 60 17.2.3 New Revenue Wings – Office Suite ...... 62 17.2.4 New Revenue Wings – NTTN Operations ...... 63 17.3 Implementation Schedule of Private Placement Fund ...... 64
18 Rationale behind investments ...... 64
18.1 Financial Considerations ...... 64
18.2 Non-Financial Considerations ...... 64
18.3 Exit Strategy ...... 64
18.4 Investment Structuring ...... 65
18.5 Regulatory Framework ...... 65
19 Historical Financial Performance ...... 66
19.1.1 Revenue Trend ...... 66 19.1.2 Gross Profit Trend ...... 66 19.1.3 Net Profit Trend ...... 67 19.1.4 Fixed Asset Addition ...... 67 19.1.5 Ratios ...... 67 20 Audited Financial Statements ...... 68
19.1 AUDITORS' REPORTTO THE SHAREHOLDERS OF ...... 68
aamra networks limited ...... 68
20. Five Years (or from inception) comparative financial statements (aamra Networks Limited and ACE IT Networks Limited) ...... 102
21 Projected Financial Statements (Post Private Placement & IPO) ...... 114
21.1 Assumptions for Investment and Source of Fund ...... 114
21.2 Projected Balance Sheet (Post Private Placement and IPO) ...... 115
21.3 Projected Income Statement (Post Private Placement and IPO) ...... 117
21.4 Assumptions of Projected Income Statement (Post Private Placement and IPO) ...... 120
21.1 Projected Revenue Mix in 2020 ...... 121
21.2 Projected Cash Flow Statement(Post Private Placement and IPO) ...... 122
22 Ownership stake ...... 124
23 Investment plan for the upcoming years ...... 125 aamra.com.bd
24 Credit rating Report ...... 126
25 Profile – aamra companies (Holding Company and Sister Concerns) ...... 141
25.1 Textile and Apparels ...... 142
25.2 Professional Development & Lifestyle ...... 143
25.3 Information Technology ...... 144
25.4 Key Achievements ...... 145
25.5 Strategic Business Units ...... 146
25.6 Business & Technology Partners ...... 147
Annexure ...... 148
Annexure 2: Economic overview of Bangladesh ...... 148
Background ...... 148
Macroeconomic Overview ...... 148 Economic Outlook ...... 153
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Abbreviations
ANL aamra networks limited BB Bangladesh Bank BBS Bangladesh Bureau of Statistics BEPS Bangladesh Electronic Payment System NBFI Non-Banking Financial Institutions BIN Bank Identification Number CAGR Cumulative Average Growth Rate CMS Card Management System CSE Chittagong Stock Exchange DES Data Encryption System DRS Disaster Recovery Site/ System DSE Dhaka Stock Exchange EFT Electronic Fund Transfer EFTPOS Electronic Fund Transfer at Point of Sales EMV Europay Master Visa EPS Electronic Payment System FI Financial Institution FTB Foreign Trade Bank IP Internet Protocol IPS Islamic Payment System IT Information Technology MEPS Malaysian Electronic Payment System MOU Memorandum of Understanding OSI Open System Interconnection PIN Personal Identification Number POS Point of Sales RMG Ready Made Garments R&D Research and Development SEC Securities and Exchange Commission TCP Transmission Control Protocol NTTN Nationwide Telecommunication Transmission Networks aamra.com.bd
Executive Summary aamra networks limited (ANL) is one of the first Internet Service Providers (ISPs) in Bangladesh starting its operation in 2001 with a view to provide Internet access for Business houses only. The idea of positioning in the market as 'Corporate Only' ISP worked well and in 2001 the company decided to offer Broadband Internet with initial investment for end customers. This was the turning point for ANL (the then Global Online Services Limited) which helped to take significant lead from the competitors. ANL invested in the finest radios from Alvarion and partnered with four VSAT service providers where the competitors were happy with one or two VSAT service providers. Having multiple VSATs for redundancy and lowering latency worked like magic in striking deals with most of the blue- chip customers in the market. ANL was the only ISP in the market who could offer lower latency and redundancy through multiple VSATs. Most companies, who are sensitive to Quality of Service (QoS) and with good payment record, are ANL customers’ since 2003. It helped ANL to maintain its cash flow with a very optimal cost.
ANL is the first among the ISPs to offer professional ticketing system for customer care, introduced 24/7 call centre facilities with dedicated customer relationship managers, and independent third-party proactive monitoring system for all the active devices and customer routers/gateways. ANL is one of the permanent sponsors of Bangladesh Cricket Board (BCB) since 2004, and Bangladesh Olympic Association since 2007. In 2007, ANL signed a deal with Telekom Malaysia (TM) to offer Internet Private Leased Circuit (IPLC) for the first time in Bangladesh. The first connection was provided to Ericsson followed by reputed customers like IKEA, British High Commission, DHL, HSBC, Standard Chartered Bank and many more. The success of IPLC and public circuit sales and seamless infrastructure service provided by ANL convinced TM to make ANL the exclusive agent for Bangladesh. In 2008, ANL also signed agreement with Bangladesh Export Processing Zone (BEPZA) to provide Internet and Private Leased Circuits to all Export Processing Zones (EPZs) in Bangladesh. Today more than 90% of the data traffic in EPZs is routed through ANL network. ANL was awarded the Network Service Provider of Cricket World Cup 2011. ANL is also the obvious choice when any high profile event takes place in Bangladesh where network service is a critical input.
In 2007, ANL management realized that Internet would become a commodity and the company future cannot be vested on a commoditized product. The company then started investing in IT enabled services and infrastructure services other than Internet with a target of reducing the Internet down to 50% in the product portfolio within 2013. ANL upgraded the major POPs (DEPZ, Banani, Motijheel, and CTG) into small scale data centers and plans to build tier-3 data centers in the IT-Intelligent building in Chittagong and 2 other major cities in Bangladesh.
ANL is the first and the only ISO certified ISP upholding the certification since 2003. ANL is also among the top 500 companies since 2009 listed by Dun & Bradstreet. Skilled, experienced, and motivated human resources are the strength and contributor to the success of ANL. The wonderful work environment attributes average retention period of 5+ years of ANL workforce. ANL has more than 850 contracts with corporate houses of Bangladesh to offer Internet and other network services. More than 50,000 workstations are connected to ANL network.
ANL has STM-16 capacity among the major POPs and has invested in STM-64 capacity for International capacity. ANL is also one of the biggest buyers of NTTN capacity for metro underground cable network and has frame contract with two telcos for nationwide capacity. ANL has major competitive advantage since most of the large corporate houses in Bangladesh are connected to ANL data centers through its network backbone and are therefore capable of activating any IT enabled service without the hassle of investing multiple times on infrastructure. Any hosted/managed services can be commissioned very effectively and efficiently. ANL has also maintained a clean record with
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regulators and pertinent government bodies since its inception. ANL is a member of various relevant associations including ISPAB, BCS, and WIBA.
The company is planning to introduce new revenue wings as business expansion plan that includes introduction of IT Intelligent Building, Construction of Data Centers & Office Suites & NTTN Project. The IT Intelligent Building will be a 10-storied building with all the high-tech facilities with an area of 0.25 million square feet which may be extended to 20 storied building in future and the area will be 0.5 million square feet. The port city of Chittagong is selected for the purpose of currently owning the selected land in a prime location and keeping in mind the corporate houses (specially the MNCs) as target market. The customers will have ample opportunities to complete their back office operations.
The plan for data center includes 2 major districts of Bangladesh and another one in our own IT Intelligent building in Chittagong as target locations. All the data center facilities will be provided to clients from own buildings of the company. Each of these buildings will be 6-storied and a single floor of each of them will be dedicated for data centers and other for Rented Office Suites. The office suites will serve the customers who feel the need for registered addresses for their businesses. aamra networks limited is on its way to apply forNationwide Telecommunication Transmission Network license from BTRC and start offering underground cabling and capacity facilities to its customers and other interested parties and service providers. In this project, ANL will lease out already laid nationwide network of City Cell for a period of 15 years. ANL has over 900 customers who will directly and immediately be connected through this expanded network coverage system. By taking in the license and starting this operation, ANL will save 90% of this monthly expenditure and by selling remaining capacity make additional revenue.
It has been estimated that proposed expansion requires funding of approximately BDT 1,554Million over a period of 4 years. The Company plans to raise the required funding for Loan repayment as well as initiating the above mentioned projects through a PrivatePlacement and complete implementation of the projects through IPO fund, sale of floor spaces and internal cash generation.
This proposal involves Private Placement of 12 Million Ordinary Shares representing 31.58% stake in aamra networks limited immediately after the said capital raising. The proposed equity offering provides an attractive upside potential for prospective investors upon successful implementation of the proposed business plan. The company has a plan to go for IPO within one year time after completion of “Raising Additional Capital “through Private Placement as an exit route to investors in the ordinary shares of ANL.
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Company – Fact Sheet
Headquarter:
FR Tower (17th Floor), 32, Kemal Ataturk Avenue Banani, Dhaka - 1213 T: (88 02) 9841100 F: (88 02) 9840077
Offices:
CEPZ Office Sales and Marketing Chittagong Office Plot-3, Sector-5/A FR Tower (17th Floor), SFA Tower (3rd floor) 32, Kemal Ataturk Avenue 132, Panchlaish Chittagong Chittagong EPZ Banani, Dhaka – 1213 Bangladesh. Chittagong, Bangladesh Bangladesh Tel: +88-031-653314, 654521, Tel: +88-031-801048, Tel: +88-02-9841100 654664, 2551558 801049 Fax: +88-02-9840077 Fax: +88-031-653314 Fax: +88-031-801050
R&D and NOC DEPZ Office Adamjee EPZ Office Safura Tower (12th Floor) Room No-70, 3rd Floor Room No-101, Ground 20 Kemal Ataturk Avenue DEPZ Complex Bhaban Floor, Zone Services Banani C/A, Dhaka -1213 DEPZ, Ganakbari, Savar Complex Building, Adamjee Bangladesh Dhaka, Bangladesh EPZ Adamjee Nagar Tel: +88-02-9841100 Tel: +88-01711614414 Narayangonj, Bangladesh Fax: +88-02-9840077 Fax: +88-02-9840077 Tel: +88-01711614414 Fax: +88-02-984007
Key Events: . 1997: Started Dhaka Operations . 2002: Started Chittagong Operations . 2002: Becomes Official Sponsor of Bangladesh Cricket Board (running) . 2003: Quality Certification: ISO 9001:2000 (Certificate Number: 3738) . 2007: Brand Transition & renamed as aamra networks limited . 2008: Becomes the official provider of Internet and Private Leased Circuits to all Export Processing Zones (EPZs) in Bangladesh . 2009: Quality Certification: ISO 9001:2008 (Certificate Number: 3738) . 2009: Started Khulna &Mongla Operations . 2010: Recognized in Dun and Bradstreet as one of “Top 500 Companies in Bangladesh” (D&B D- U-N-S Number-731557124) . 2010: Started Sylhet&Rajshahi Operations . 2010: Built high-end Colocation Facilities for the corporate blue-chip customers . 2011: Becomes official IT vendor of ICC World Cup 2011 in Bangladesh . 2012: Started Cox’s Bazar Operations . 2013: Becomes BPL IT Partner for 2013-2017 . 2013: Largest buyer of NTTN capacity in Bangladesh
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1 Proposed capital structure
Existing Shareholdings Position-
No. of Face Percentage of Shareholders Taka Shares Value Shares aamra holdings Ltd 12,600,000 10 126,000,000 48.46% aamra resources ltd 4,522,030 10 45,220,300 17.39% Augere Holdings (Netherlands) B.V 8,477,970 10 84,779,700 32.61% Syed Faruque Ahmed 100,000 10 1,000,000 0.38% Syed Farhad Ahmed 100,000 10 1,000,000 0.38% SyedaMunia Ahmed 100,000 10 1,000,000 0.38% Fahmida Ahmed 100,000 10 1,000,000 0.38% Total 26,000,000 - 260,000,000 100%
After Private placement: (after addition of 12,000,000 Shares @ BDT 10.00)
No. of Face Percentage of Shareholders Taka Shares Value Shares aamra holdings Ltd 12,600,000 10 126,000,000 33.16% aamra resources ltd 4,522,030 10 45,220,300 11.90% Augere Holdings (Netherlands) B.V 8,477,970 10 84,779,700 22.31% Syed Faruque Ahmed 100,000 10 1,000,000 0.26% Syed Farhad Ahmed 100,000 10 1,000,000 0.26% SyedaMunia Ahmed 100,000 10 1,000,000 0.26% Fahmida Ahmed 100,000 10 1,000,000 0.26% Private Placement 12,000,000 10 120,000,000 31.58% Total 38,000,000 - 380,000,000 100%
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2 Profile of Aamra Networks Limited
2.1 Fact Sheet
Company Information
Incorporated in Bangladesh as a Private Limited Company on January 10, 2001. Its name has been changed from Global Legal Standing Online Services Limited to aamra networkslimited with effect from December 31, 2007.
Registration No. C 42228
Safura Tower (12th Floor), 20 Kemal Ataturk Avenue, Banani Registered Office C/A, Dhaka - 1213
Status Public Limited Company
Date/Place of January 10, 2001 Incorporation Dhaka, Bangladesh
Mr. Syed Faruque Ahmed – Chairman Mr. Syed Farhad Ahmed – Managing Director Board of Directors Ms. SyedaMunia Ahmed – Director Ms. Fahmida Ahmed – Director
Secretary to the Company Mr. AKM Quamruzzaman
Auditors to the Company KM Hasan & Co. Chartered Accountants
Bankers / Financial 1. Bank Asia Limited 3. Dhaka Bank Limited Institutions 2. Dutch Bangla Bank Limited 4. ONE Bank Limited
Lawyers to the Company Syed Ishtiaq Ahmed & Associates
1. Dhaka Chamber of Commerce and Industry; 2. Bangladesh Association of Software and Information Services 3. Bangladesh Computer Samity Member of 4. German Chamber of Commerce 5. Internet Service Providers Association of Bangladesh 6. Wireless Internet Broadband Association ISO 9001:2008 Quality Certifications (Certificate Number: 3738) Dun and Bradstreet rated "top 500 Companies in Bangladesh" Awards/Recognition (D&B D-U-N-S Number-731557124)
Number of Employees Full time - 185
Number of Customers 1020
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2.2 Background
aamra networks limited (ANL, formerly Global Online Services Limited) over the last decade has consistently provided its customers with the state-of-the-art IT communication solutions. The clients have been able to rely on ANL’s ability to provide stable and consistent connectivity solutions. Using the state of the art backbone and infrastructure, the company has ensured that the clients have had minimal worry when it comes to dependability of their IT Communication. That in turn has ensured it an enviable list of blue-chip customers. When Internet and related value added services are critical input to business, Corporate Bangladesh has but only one obvious choice.
aamra networks limited employs more than 185 employees with diverse skill sets and expertise. Through years of experience ANL has been able to accurately assess constantly changing customer requirements, offering the most extensive and affordable IT services available. ANL places due importance on quickly adopting new technology by investing 30% of its budget for R&D. The company also strives to maintain international standard products and services; ANL is upholding ISO9001:2008 certification for the last 7 years. The company is one of the 11 concerns of aamra Companies. The Group has diversified investment in ICT, Textile, and Lifestyle sectors in Bangladesh. Starting in 1985 the Group presently employs more than 550 individuals.
Vision Excellence and innovation …. Unlimited…. Through the power of we.
Mission Statement To empower our customers, employees, partners and communities by providing the finest products, services and practices.
2.3 Nature of Business
Aamra Networks Limited (ANL) is a telecommunication & technology company involved in Leased Bandwidth distribution, IAAS, SAAS and IP enabled value added services. ANL is one of the first private sector licensed Internet Service Provider (ISP) in Bangladesh. The company holds a major market share of the Leased Bandwidth Capacity in the corporate sector.
. Internet, IT Infrastructure and IT enabled value added services . Software Development . Bundled ITO + BPO Outsourcing . Contact/Call Centers
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2.4 Quality Policy
aamra networks limited is a Corporate Internet Service and IT Solution Provider. It has implemented a quality management system to ensure that the customers are served with professional standards. The company is committed to continually improving the effectiveness of its quality management system and services to attain maximum customer satisfaction. To attain these objectives the management is determined to ensure the following:
. Maintaining 99.9% service uptime . Ensuring at least 10% yearly revenue growth . Converting at least 50% of the paper work to digital version
The company desires, through dedication to customer service, technological innovation and realization of Quality Objectives, to become the most reputed Corporate IT Solution provider in the country. Management is committed to provide appropriate human resource, proper infrastructure, logistic support etc. for proper implementation of the Quality Management System (ISO 9001:2008) and maintain the same within the organization.
2.4.1 Certifications
Dun & Bradstreet - D&B has recognized aamra networks limited in the publication “Bangladesh’s Top 500 Companies” as one of the top 500 companies in Bangladesh since 2009. This premium publication enlisted top 500 performers and companies from various sectors in Bangladesh’s economy. D&B (NYSE:DNB) is World’s leading provider of global business information, knowledge and insight, established in 1841 and manages the world’s most valuable commercial database with information on over 131 million business entities. D&B features on FORTUNE Magazine's Most Admired Companies Industry List, ranking first in the Financial Data Services category.
ISO Certification - For maintaining proper organizational Quality Management Practices, aamra networks limited achieved an independent Quality System Certification body ISO 9001:2000 in the year 2003. Throughout the years we have maintained the value of the certification by following proper organizational procedures and also conducting quality audits within the organization. In 2009, as a reward of Quality Management, we were successful in converting the certificate into the latest recognition ISO 9001:2008.ISO is the International Standard for Quality Management Systems (QMS). It is awarded by The United Kingdom Accreditation Service (UKAS) which is the sole national accreditation body recognized by government to assess, against internationally agreed standards, organizations that provide certification, testing, inspection and calibration services.ISO provides our company with a set of principles that ensure a common sense approach to the management of your business activities to consistently achieve customer satisfaction.
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3 Principal Products & Services &Support
3.1 Major Service Portfolio
Datacenter & Colocation
Infrastructure As A Service (IAAS)
Software As A Service (SAAS)
Audio & Video Conferencing
Security & Storage
Monitoring
Bandwidth
. Internet Provides a world-class network that guarantees quality, high capacity and low latency internet connectivity ensuring fast and seamless access to the World Wide Web.
. International Private Leased Circuit &International Private Virtual Private Network Enables contact beyond Bangladesh shores, aamra networks ltd. in partnership with Telecom Malaysia (TM), offers a range of bandwidth services through TM's extensive international network infrastructure covering all the continents.
. IT Infrastructure Management Ensures reduced operational costs, increased operational efficiencies and a foundation for future growth. Aligns a client’s IT system with business priorities, all by single source service to simplify the IT Infrastructure with improved reliability and availability.
. Wide Area Network Generates redundant communication solutions to exchange data between separate office stations. The WAN solution delivers the necessity of maintaining correspondence between/among workplaces efficiently.
. Data Backup and Disaster Recovery Provide ample protection against the risk of losing valuable company data that might damage the efficiency of entire business. The application recovers and restores data to get up and running as soon as possible with minimum interruptions.
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. Colocation Facility and Data Center Our colocation services helpsusers to safeguard mission-critical data with the highest levels of security and operational reliability. Inside each data center, you also gain access to a vital ecosystem where major networks, enterprises and business partners interconnect to each other and to more than 950+ available networks.
. Virtual Office Offers the ‘green’ benefits of a virtual paperless office by facilitating customers to organize, manage and share data, documents, calendar etc. Enable efficient collaboration - all in a familiar, browser based secure environment.
. Network Monitoring For ensuring reliable, early problem and error detection of network equipment with multi-stage verification process, followed by real- time SMS alerts.
. Biometric Attendance System Automates time attendance through the latest biometric fingerprint solution through our remotely hosted application. All software and data are securely housed off site that will allow the customer to capture, manage and access data without the expense of internal infrastructure and software licenses.
. Remote Video Surveillance Facilitates with remote video surveillance. Sends sms, mms, and email if motion or intrusion detected. This can be a good value addition to the present security system.
. Web Based Helpdesk Outweighs the monthly expense of relationship management by subscribing to Hosted CRM solution that will enable business process automation and information analysis to better targeted marketing and an informed sales force, better managed support and service with online record keeping.
. Online Survey Facilitates paperless automated survey for measuring customer satisfaction, feedback on new products or learn about purchase behaviors, conduct employee performance reviews, measure employee satisfaction and gather feedback on corporate issues.
. Video Conferencing Creates the ability to be in several places at once without leaving a person’s office. It increases client’s productivity, saves time and money through the interactive audio and video conferencing solutions.
. Hosted Anti-Spam & Anti-Virus Firewall Provides comprehensive protection against most email borne threats (e.g. spam, viruses etc.) that can cripple any network if left unprotected.
. Business Email and Hosting Organizations seeking an Enterprise-level hosted e-mail system have many factors to consider: servers, software, data-redundancy, bandwidth, virus/junk-mail protection, and support and maintenance. ANL’s hosted solution delivers all at fractions of regular costs.
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3.2 Service & Support
ANL maintains 4 dedicated teams for after sales support comprising of 90+ technical services personnel in three shifts providing 24/7 support.
Quality and Performance
Team leaders are responsible for the overall quality and performance measurement of the customer touch points. Service Managers directly monitore the complain calls/mails by randomly checking in ongoing communications.
Dedicated Infrastructure Team
This department ensures that the last mile connectivity to the clients from different POPs of aamra networks is up and running. The team is headed by a Senior Manager and consists of 5 Assistant Managers, 10 executives and 20 Linemen. The team reports to DGM – TSD.
Escalation Chart (Critical Problem: Link down Etc.)
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Support Call Prioritization
Support Teams will use the priority specified by the user unless clearly inconsistent with the nature of the problem, in which case the revised priority will be agreed by both parties. One of four priorities will be assigned to a support call as described below.
Target Response and Resolution Times
The target response and resolution times for received issues are as follows:
Hours/days are working hours/days, usually 7 to 19.00 7 days a week excluding official Holidays. All calls once logged will be passed to a Team Support member for action. Times are targets and are not guaranteed. Teams will aim to achieve the target response and resolution times for 90% or more of the support issues logged for each Priority. Response is defined as contact by a Team support member. This may be to provide a solution, or request more information in order for investigation to commence. Resolution is defined as a course of action identified by a Team Support member. This may be a solution or a referral log or: Advice / Explanation of how the module or function should be used. Workaround provided where a defect has been identified and agreed.
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3.3 Network Monitoring
Network Status Monitoring ANL generates several network status and monitoring reports to make sure that each client is taken care of well and enjoys the best possible uptime and network quality.
Real Time Bandwidth Graph The web based Multi Router Traffic Grapher (MRTG) will give you visual report on bandwidth consumption in both local and WAN interface. Statistics are updated in every five minutes. Both inbound and outbound traffic statistics will be presented in daily, weekly, monthly and yearly basis. Monitor the traffic load on network-links Generates HTML pages containing GIF images which provide a LIVE visual representation of this traffic MRTG generates the Incoming and Outgoing traffic in Graph Multiple Ethernet traffic shows in one HTML page
Network Monitoring Dash-Board
Monitoring System- UPS Monitoring ANL’s all POPs are supported by UPS to avoid the downtime caused by power failure. The main reason of downtime is unexpected power disruption which could cause severe injuries, fatalities, serious business disruption or data loss to the client end.
For any company, it is not literally possible to physically monitor in a continuous basis whether the UPS of remote locations or in our case POPs is always working effectively or not during power failure. By failing to monitor the performance of UPS the client end may face the problem of downtime which might result in:
1. Power failure: defined as a total loss of input voltage. 2. Surge: defined as a momentary or sustained increase in the main voltage. 3. Sag: defined as a momentary or sustained reduction in input voltage. 4. Spikes, defined as a brief high voltage excursion. 5. Frequency instability: defined as temporary changes in the mains frequency.
Considering these ongoing issues, we have installed a system of Uninterrupted Power System for all our POPs that auto launches in the vent of main power backbone failure. Through this system we can always monitor the status of UPS through Internet to take proactive action when the electricity supply from PDB fails to cover the POPs. When there is no electricity the UPS will give enough battery backup. The monitoring of the percentage of left battery power is also counted in. This UPS Monitoring service can automatically observe the entire performance or status of UPS. The voltage provided by PDB can also be checked through this service.The overall result is, as the proactive actions can now be taken before any problems in the battery backup of UPS, it is now possible to maintain 99.9% service uptime.
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3.3.1 ATS Monitoring System This system allows for the monitoring and control of power transfer switches in your Emergency or Standby Power Distribution System which is also called UPS. This web-enabled communications allow access and monitor your power system from anywhere around the world to ensure its perfection.All the POPs of ANL are supported by many UPS for power backup. When there is problem of power failure this service monitors whether the auto Power Transfer Switches properly works or not. For individual client connection, there is a backup of 2 UPS for each POP location. In times of power failure when 1 UPS shuts down by running for a long time, immediately another one starts up automatically. This ensures that there is no downtime which maycasue long term negative impact in the client’s business transactions. Therefore it is now possible to maintain 99.9% service uptime right after an UPS gets down during electricity failure.
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3.4 Statement of Business Continuity & Disaster Recovery
aamra networks limited (ANL) together with each of its subsidiaries and affiliates, including its partners, is committed to safeguarding the interests of our clients and customers in the event of an emergency or significant business disruption. ANL’s comprehensive business continuity strategy is designed to enable ANL to meet its existing obligations to its clients and customers in the event of an emergency by safeguarding employees’ lives and firm property, making a financial and operational assessment, quickly recovering and resuming operations, protecting all of ANL’s books and records, and allowing customers to transact business.
ANL has a documented corporate policy requiring developing a Business Continuity Plan. Pursuant to this policy, ANL’s Service and Support and Technical departments has the full-time responsibility of coordinating the development, testing and maintenance of all ANL Business Continuity Plans. ANL also manages contracts with recovery services vendors and is responsible for management reporting on all aspects of continuity. A formal process that includes a continuous review of internal controls enforces the corporate policy on continuity. Business Continuity Plans have been developed tested and approved by management for all ANL business locations and IT systems and applications. The plans reside in a common database and are routinely updated by Application and Support staff. The database is replicated between two sites that are geographically separated. Recovery resources are identified in advance and are obtained from several sources. These resources either within ANL’s capabilities or are obtained from recovery services vendors under contract. Outsourced local crisis management teams are in place. These local crisis teams are charged with recording and managing any potential or actual crisis at the site from the time a situation occurs to the resolution of the incident and resumption of normal business operations. ANL’s Business Continuity Plans address advance preparations and actions to be taken in response to disruptions of various magnitudes.
The Business Continuity Plans address the potential impact of varying levels of disruptions to ANL employees, equipment, computer and telecommunications systems, and office facilities. While it is impossible to anticipate every type of disruption that could affect ANL’s businesses, examples of the incidents covered include, but are not limited to, terrorist’s attacks, hurricanes, fires, bomb threats, earthquakes, public transportation strikes, IT disruptions and cyber-threats. ANL maintains back-up systems and power supplies that allow critical computer and telecommunications systems and facility functions to be maintained in the event of minor, local disruptions. The duration of the disruption will depend on the nature and extent of the emergency. In the event of a major catastrophe, where it is not possible to conduct business from ANL’s offices, the company has selected remote alternate site equipped with sufficient resources to support critical business operations. ANL’s networks and major business applications are replicated daily in a different geographical location from the company’s offices; enabling it to access these systems from the remote site should the local systems become unavailable. As required in the Business Continuity Plans, ANL is generally prepared to restore critical business functionality at the alternate site no later than 48 hours after declaration of a disaster. Other employees have been designated to work from home during periods of major disruptions.
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3.5 Revenue Mix Current Revenue Mix
29% Internet Service
Web Page & Networking 0% Installation 63% 8% Domain Registration
IT Support & Software Services
Figure 3-1: Current Revenue Mix
3.6 Subsidiaries and their core areas of business – Ace IT Networks Limited
. Internet Services Provides localized internet service with low latency internet connectivity ensuring fast access to the public network. Ace IT Networks Limited specializes in providing affordable solutions targeting the SMEs and high end residence connectivity for CXO’s.
. Web Page & Networking Installation & Website Hosting Things that are considered during website design are Adhering to web design standards, Designing to usability guidelines, Minimizing download times, Designing for visitors and search engines
. IT Support and Software Services Through this service, Ace IT provides after sales services, Networking solutions and Value added services such as Software Installation, management and administration services.
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3.7 Associates, Subsidiaries or related holding company and their related transactions
Balance Total Balance as at as at Name of the transaction Relationship with Relationship with December 31, June 30, Company during the Company Company 2012 2013 year Taka Taka Taka aamra Concern under Training service and space management 574,100 161,750 common management rent for training. 166,350 solutions aamra Concern under Nil management 66,000 common management Internet Service Provider. 73,398 solutions Concern under aamra holdings Internet service, IT Service 484,504 common management 131,001 91,501 limited and software maintenance. Concern under Nil aamra holdings Relationship & management 21,400,000 common management Nil limited expenses and Royalty fee Concern under Nil aamra holdings Intercompany loan 5,000,000 common management limited transaction 2,000,000 Concern under aamra resources Internet service, IT Service 192,000 common management 8,588 limited and software maintenance. 200,588 aamra Concern under Internet service, IT Service embroideries 30,000 common management 21,900 and software maintenance. 51,900 limited aamra Concern under Intercompany loan embroideries 1,732,000 common management 500,000 transaction 1,100,000 limited aamra Concern under Intercompany loan technologies 3,039,662 common management Nil 3,039,662 transaction limited aamra Concern under Nil IIG bandwidth & Equipment technologies 232,253,795 common management Purchase 920,440 limited aamra Concern under Nil
technologies common management Advance against Purchase 8,346,960 7,685,000 limited aamra Concern under Internet service, IT Service technologies common management Nil 2,362,825 6,784,073 and software maintenance. limited Concern under Internet service, IT Service, Nil ACE IT Networks common management software, office rent and limited 3,585,014 1,063,838 utilities. Concern under aamra outsourcing Intercompany loan common management Nil 4,364,927 limited 12,559,898 transaction Concern under aamra infotainment Office rent, utilities and common management 2,786,443 limited 2,479,767 intercompany loan 1,855,122
Syed Faruque Chairman and NIL Directors remuneration NIL Ahmed 2,400,000 shareholder Syed Farhad Managing Director and NIL Directors remuneration NIL Ahmed 2,400,000 shareholder
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3.8 Distribution of Products and Services
3.8.1 Sales and Marketing
ANL is in the business of Leased Bandwidth, IP enabled value added services and Infrastructure outsourcing. The company uses Direct Marketing and Sales processes thus ensuring customer focus, satisfaction and accountability. Our customer touch points are continuously trained to ensure that proper and effective communication reaches our customers and that delivery of service and after sales service processes are smooth and hurdle free.
3.8.2 Capacity Distribution Flow Chart The company is authorized to sell or lease Bandwidth & Capacity services Nationwide through its multiple Point of Presence (POPs) in Dhaka, Chittagong, Sylhet and Cox’s Bazar.
Figure 3-2: Capacity Distribution Flow Chart
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3.8.3 Service Flow Chart
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3.8.4 Principal Partners
Figure 3-3: Technology Partners of aamra networks limited
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4 Industry Outlook
4.1 Bangladesh Telecommunication Market
Telecommunication is one of the vital sectors of the Bangladesh economy contributing approximately 6.0% of the GDP. Further, the Telecommunication sector had attracted Foreign Direct Investment to the value of USD 18.09 Million for the year 2011 according to World Investment Report, 2012. The sector is expected to play a dominant role in facilitating social and economic development of the country. Having identified the importance of the Telecommunication sector, the Government of Bangladesh established Bangladesh Telecommunication Regulatory Commission (BTRC) in 2002 as the regulatory body of Telecommunication industry with a view to liberalize the industry and create a regulatory policy framework that would support the growth of the industry.
As a result of the liberalization initiatives, the state monopoly was lifted and gradually the private sector was allowed to participate in the Telecommunication industry. Further, the state owned Bangladesh Telegraph and Telephone Board (BTTB) was converted to a limited liability Company named Bangladesh Telecommunications Company Limited (BTCL) to make it responsive to the market needs.
With the opening up of the sector, an intense competition has resulted in drastic reduction in tariff levels especially among mobile operators and ISPs. With significant reductions in tariff levels, Bangladesh is now one of the fastest growing telecommunication markets in the world as the mobile market passed 80 Million subscribers by the middle of 2011 as penetration neared 50%. This growth has supported the economic growth of Bangladesh both at urban and rural levels.
4.2 Industry Structure
The Industry structure is dictated by International Long Distance Telecommunication Services (ILDTS) Policy 2007. Accordingly, the industry is organized as reflected in the following diagram:
Telecommunication Industry
Voice Market Data Market
Fixed Mobile Internet Other Data Services
Figure 4-1: Telecommunication Industry Structure
The Telecommunication Industry is broadly categorized into Voice and Data Markets. The Voice market consists of fixed and mobile telephony and the Data Market consists of the internet and other data services such as intranet/networking services.
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4.2.1 Voice Services – Supply Chain
The relationship between different players in voice services is diagrammatically given below:
Network Service Submarine International Interconnection Operators Cable/Satellite Voice Gateway Exchange 1. Fixed Line Subscriber Connection 2. Mobile s
Figure 4-2: Supply Chain for Voice Services
As reflected by the diagram above, International Voice Gateway operators provide access to the submarine cable and satellite connectivity for international voice communication in the country. Network service operators are connected to each other and to International Voice Gateway through Interconnection Exchanges.
4.2.2 Data Services – Supply Chain
The relationship between different players in data services is diagrammatically given below:
International Submarine Network Service Operators International Internet Cable/Satellit 1. Internet Subscribers Gateway/Internet Exchange e Connection 2. Other Data Services
Figure 4-3: Supply Chain for Data Services
Internet Gateway provides access to the submarine cable and satellite connectivity for international data communication in the country. Network service operators are connected to each other and to International Internet Gateway through Internet Exchanges. However, in comparison to voice services, International Internet Gateway is also acting as an Internet Exchange in the data market.
4.3 Voice Market
The voice market consists of fixed line and mobile phone services. The fixed line operators mainly use CDMA technology except BTCL which is still on conventional wired technology while mobile phone operators use both GSM and CDMA technology. Telecom voice market in Bangladesh is dominated by Mobile phone operators with 97% share, while land phone has 3% share of which BTCL represents 2% and all private land phones represent 1%.
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The composition of the voice market as at December 2012 is given in the pie chart below:
Figure 4-4: Composition of Voice Market of Bangladesh
Source: BTRC
4.3.1 Key Drivers of the Voice Market The phenomenal growth in cellular mobile penetration level was driven by several factors i.e. the reduction of tariffs, increasing affordability of handsets, aggressive network expansion, intense advertising and multiple delivery channels used by cellular mobile operators.
The voice market has the potential to grow further given the fact that mobile density is still around 62%. The mobile operators would continue to penetrate further into the bottom of the income pyramid and rural areas through low cost tariff packages and handset prices. The growth of subscribers in the rural areas and lower income segment is indicated by falling Average Revenue per User (ARPU) by mobile operators. The issuance of IP Telephony licenses would further augment these growth initiatives by the present cellular mobile operators.
4.3.2 Limitations in the Voice Market Despite the rapid growth and healthy tele-density, the voice market has certain drawbacks. The voice services especially in the international segment are saddled with poor connectivity and voice clarity. International call origination especially during peak hours is difficult in the fixed line segment. Further, the fixed line market is much smaller and dominated by government owned BTCL. As a result, private sector fixed line operators do not have the scale to compete effectively with BTCL as well as cellular mobile operators. Private fixed line operators are struggling with poor network coverage, lack of value added services and uncompetitive tariffs in comparison to cellular mobile services.
4.4 Data Market Scenario The data market consists of the internet and other data services such as intranet/networking services.
4.4.1 Internet Segment In June 1996, the Satellite connectivity was established for the first time in the country. Upon VSAT commissioning, internet connectivity was also established and its services were made available to the
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public. At the end of 1996, there were only two ISPs in the country and the number of internet users was close to only one thousand. As the industry grew, more ISPs broke into the market. By the end of 1997, the total number of ISPs increased to a dozen and the subscriber number surpassed 10,000. More liberal Government policies followed in the subsequent years led to a rapid expansion of the industry, eventually resulting in over 180 registered ISPs by 2005.
In 2006, Bangladesh got connected to the SEA-ME-WE 4 submarine cable. With this development, many ISPs found the opportunity to connect to the submarine cable via BTCL. In 2014 the new SEA- ME-WE 5 cable is expected to provide an alternative operating at 100 Gbit/s, roughly 10 times faster than the current connection. With the submarine cable access, the quality of internet enhanced substantially and internet tariffs reduced. However, the tariff structure was still not affordable to the mass market, with only the affluent section of the population being able to use the internet. As a result, the internet penetration remained at 0.2% with a subscriber base of 300,000. The internet penetration started to pickup since 2007 and the total number of internet subscribers reached at 29.42 Million on July 2012, according to Bangladesh Telecommunication Regulatory Commission (BTRC).
SEAMEWE4 Bandwidth Capacity
. Total Capacity – 200 Gbps . Existing Usage – 39 Gbps
BW Import through ITCs from India . Total Capacity – 50 Gbps
. Existing Usage – 15 Gbps “28% of total current Capacity going through India at 40% growth/annum”
Today in Bangladesh, all the licensed ISP organizations under BTRC are divided into two categories: "Nationwide ISP License" and "Non-Nationwide ISP License." Under Nationwide ISP License, there are 94 organizations providing their services throughout the country.Furthermore, there are six Mobile and 2 PSTN Operators providing Internet services to their subscribers under Value Added Services (VAS). Currently ISPs have been providing Internet services to about 5,437,000 users and this number is growing day by day. The average growth rate is 3.83%. In order to spread the internet facilities into the rural areas of Bangladesh, BTRC has been working hand in hand with the ISP organizations. The following graph indicates how the percentage of internet users grew in Bangladesh:
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Figure 4-5: Penetration Rates for Voice and Data Services
Millions
Figure 4-6: Internet Market Scenario of Bangladesh – Coverage Operator Wise
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4.4.2 Internet Price
Figure 4-7: Price (BDT) of 1 Mbps Bandwidth over the years
The internet subscribers recorded an unprecedented growth of 866.67% to 2.9 million in 2008. In the first half of 2009, the subscriber base grew to 5.5 million recording an annualized growth rate of 179.3%. Accordingly, by June 2009, the internet penetration reached 3.52% in Bangladesh. This steep growth in internet penetration since 2007 was driven by two main factors namely tariff reductions and introduction of mobile internet by mobile phone operators. Having identified the importance of internet being available to the mass market, the Government made three significant tariff reductions since 2007. Accordingly, the bandwidth price of 1MB internet connection which was at BDT 72,000/- in Q4 2007 came down to BDT 4,800/- by 2013 which augmented the Internet penetration in the country.
Figure 4-7: Price (BDT) of 1 Mbps Bandwidth in the Sub Continent Page | 26 Information Memorandum – aamra networks limited aamra.com.bd
4.4.3 Existing Operators
4.4.4 Data Services
Other data services include intranet and other secured network services. An intranet is a private computer network that uses Internet Protocol technologies to securely share any part of an organization's information within the same organization. Intranet services are presently used mainly by banks in Bangladesh for the purpose of connecting branches and ATMs. In Bangladesh, there are 56 scheduled banks with approximately 8000 branches throughout the country. In addition, there are 31 Non Banking Financial Institutions (NBFIs), 62 insurance companies, about 374 stock dealers & brokers and a large number of garment/textile manufacturers, retail distribution companies, NGOs and other manufacturing companies with operations in multiple locations in the country. Private sector banks are aggressively expanding the branch network in both urban and rural areas of the country. As an example, 330 new bank branches were opened only in 2009. It is essential for the branches of these institutions to have connectivity with their headquarters and/or within branches to transmit/share information. Presently, only 50% of bank branches are online while connectivity ratio is even lower for other financial institutions like NBFIs and insurance companies. The usage of modern data services in the corporate sector is also relatively low with only a few corporate houses having opted for networking/connectivity solutions. However, with increasing competition and demand for faster response time, corporate houses are gradually realizing the need for timely availability of information. In another positive development, most of the larger manufacturing enterprises are moving into integrated IT services such as Enterprise Resource Planning (ERP). As such, demand for corporate networking solutions and secured mode of data transmission are expected to increase rapidly in the future.
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4.4.5 Key Players in the Data Market
A brief overview of key players in the data market other than aamra networks limited is given below.
COMPANY OVERVIEW Agni systems ltd. Has been offering internet and corporate networking solutions to individuals and corporate offices since 1995. Present subscriber base of Agni includes around 6,500 dial-up subscribers (prepaid), 1500 post-paid dial-up subscribers, around 300 DSL/FTTH Agni systems limited broadband subscribers and over 100 wireless broadband subscribers. In addition to connectivity services, Agni also provides web services. Net turnover of the company was approximately BDT 40.79 million for the year 2010-2011. Agni is a public company listed in the Dhaka stock exchange. Bangladesh online is a division of Bangladesh export import company limited. It started its commercial operations in December, 1999 and today Bangladesh online is one of the leading internet service providers in Bangladesh. In addition to internet services, it also provides web design and hosting and domain name registration. BDCom online limited started as an ISP in February 1997. Initially its operations were limited to only internet services. Presently, Bdcom provides internet services in different locations of the country and also Bdcom online limited provides other services like software development and automatic vehicle tracking. The net turnover of the company was approximately BDT 126 million during the year 2011. Bdcom is a listed company in the Dhaka stock exchange. Bangladesh telegraph and telephone board (BTTB) was converted into Bangladesh telecommunications company limited (BTCL) in July, 2008 in order to make it more responsive to market needs. BTCl is fully owned by the government of Bangladesh. BTCL has a mandate to provide a range Bangladesh of telecommunication services throughout the country. At present, BTCl is telecommunications providing telephone services to about 1 million telephone subscribers company limited down to upazila level. Most of them can also use dial-up internet service. (BTCL) BTCL has the largest telecom infrastructure comprising of copper cabling, microwave links, satellite links, optical fiber networks etc. The call rates and internet rates are cheaper than those of other operators. BTCL also provides broadband internet services along with web hosting and security solutions. Revenue earned by BTCL in 2007-08 was BDT 15,157 million. Bracnetis a joint venture between Brac and GnetDdhLlc, a San Francisco based consortium of investors and strategic partners. The services of Bracnet Bracnet includes broadband internet, networking solutions and software and web development. It also has a network of internet access points known as “e-huts” in rural areas of the country. Link3 introduced fiber based fttx technology to Bangladesh to provide Link3 technologies last-mile internet connectivity in 2007. In addition to internet and data limited connectivity services, the company also provides web services, software services, it security solutions.
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4.4.6 Limitations of the Data Market
There are certain factors that adversely affect growth of the data market of Bangladesh. A brief discussion of such factors is given below.
High Cost
Internet prices have decreased from $915 per Mbps in 2007 to $98 per Mbps presently. Despite such tariff reductions, internet prices are still not affordable to a larger section of the population. Tariffs are expected to come down further with the economies of scale associated with larger consumption of bandwidth in the country.
Low Speed
This is basically a result of higher cost associated with higher internet access speed. As explained earlier internet access with reasonable level of speed is still out of reach for most of the individuals. As a result, customers are opting for slow speed internet connections (effectively 256-512 kbps). As such, users would switch to high speed packages as the tariffs get lower in the future.
Further, in most of the areas outside Dhaka, Chittagong and Sylhet wireless internet services through GSM and CDMA technology and instable Broadband services are available. WiMAX has enhanced the capability of providing high speed data services in these regions.
Reliance on one Submarine Cable
Presently Bangladesh has access to a single submarine cable (SEA-ME-WE 4). There have been several interruptions to this lone submarine cable during the last 3 years due to natural disasters. Even though International Internet Gateways provide backup internet access using VSAT facilities, most of the time the access is limited to high end corporate users and government. As a remedy, new ITC licenses have been given through which Bangladesh has been connected to India via terrestrial connectivity for Backup.
Highly dispersed industry structure
Bangladesh has 180 regional and national ISPs in the country. Considering the size of the country and present internet penetration level, the number of ISPs appears to be high. As a result most of the ISPs cannot achieve the optimal economies of scale which drives up cost of internet to the public. Even a much bigger country like India with a population of 1.15 billion has only 45 ISPs.
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4.4.7 Key Drivers of the Data Market
Reduction in Tariff
As explained earlier in the report, further reduction in internet tariff is expected with the economies of scale associated with higher bandwidth sourcing by Bangladesh.
The impact of three recent tariff reductions is given in the graph below:
Tariff Reduction and Internet Usage 7.00 6.30
6.00 5.00 5.00 3.6 3.6 3.70 4.00 3.10 2.7 3.00 2.50 1.80 1.8 2.00 1.2 1 1.00 0.00 2007 2008 2009 2010 2011 2012
Percentage of Internet Users Internet Tariff
Figure 4-8: Impact of Tariff Reduction on Internet Usage in Bangladesh
Source: ITU, BTRC
As it can be seen from the graph above, the tariff cuts have made disproportionate increase in internet usage. The subscriber base has increased reflecting the kind of positive impact a tariff cut could make to enhance the internet penetration.
Government’s plan of “Digital Bangladesh”
The government has set a target of achieving ‘’Digital Bangladesh’’ status by 2021. This would mean activities such as governance, commerce, education, agriculture etc., would be facilitated through internet and modern telecommunication facilities.
The government is expected to play a facilitation role in this regard since it would help to reduce poverty levels and communication gap and provide under privileged people numerous learning and employment opportunities. Just after the formation, the government reduced the internet service tariff twice and has plans to install another submarine cable. These initiatives would act as major catalysts that would drive the growth of the industry.
Rising middle class population
Bangladesh is expected to maintain a minimum GDP growth rate of 6% in the next few years. With this expected economic development, the middle class population and overall disposable income level will continue to increase, making internet affordable to the general public. The estimated present middle class is approximately 10% (15 Million) of the total population.
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Untapped markets
The main ISPs and other data service providers are concentrating on key markets such as Dhaka, Chittagong and Sylhet. As a result, the other areas of the country provide attractive opportunities for data/internet services. With proper pricing and delivery channels, internet/data services can achieve mass market and rural penetration similar to the success of the mobile telephony services.
Globalization/Internationalization of Bangladesh Business Enterprises
Export sector’s contribution to GDP stood at 22.70% in 2011 according to the World Bank Report published in 2012. Further, new industries such as call centers, software development, business process outsourcings are emerging in the country. This substantial growth of international businesses demands quality international communication facilities such as high speed broadband connections around the clock.
Rising Migrant community
Bangladesh has growing migrant population working in different parts of the world which presently stands at 6.5 Million. A higher portion of this population is from rural areas and lower income segment. As a result such migrant community needs economical means of communication with their families in Bangladesh. With time, Internet will be a necessity for these people living in rural areas as it will provide cost effective communication services. As people get familiarize with internet usage in rural areas, such communication would also facilitate exchange of photographs and videos capturing personal moments like birthdays, marriages etc.
Rising trend in overseas higher education International Study
Bangladesh shows an increasing trend in sending students abroad for higher education. This trend is expected to continue with growing middle class in the country. As per the statistics of University Grant Commission, 50,000 students went abroad for higher education in 2008-09 alone. This creates a demand for frequent and cost effective communication with home. The e-mail and internet based voice communication tools such as Skype and MSN Messenger are getting popular to keep contacts with home for such overseas students.
Social Networking
With the changing and busy life style, physical contacts and relationships between individuals are getting blurred and as a result such individuals are turning into internet for different forms of social networking. The websites such as Facebook and Twitter are getting popular day by day especially amongst the younger population of Bangladesh. Further, internet provides an avenue to keep in touch with physically distanced friends and relatives. There were reportedly over 14,352,680 Facebook users as on May 30, 2013 in Bangladesh which indicates the direction of the society.
4.4.8 Global Internet Penetration Internet has become one of the main telecommunication medium in the world. By the end of 2011 there were 2.3 billion people online recording a penetration level of 32.5%. This indicates a 537.12% growth in subscriber base from year 2000 where it stood at 361.0 Million.
A careful analysis of internet penetration across the world reveals an exponential growth of penetration especially at the initial stage of internet use of a country. In fact, internet penetration mirrors the growth shown by cellular mobile telephony industry. The following table and graph related to global internet penetration substantiates this phenomenon.
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Figure 4-9: Individuals using the Internet per 100 inhabitants – Global Outlook, 2003-2012
Source: World Bank
4.4.9 Factual Summary of the Voice and Data Market – Bangladesh Bangladesh over the last 3 years has made significant improvements to its network capacity and infrastructure. The present government has recognized Information Technology as one of the thrust sectors. It is promoting IT to achieve a Digital Bangladesh by 2021. ‘Digital Bangladesh by 2021’ vision plans to mainstream ICTs as a pro-poor tool to eradicate poverty, establish good governance, ensure social equity through quality education, healthcare and law enforcement for all, and prepare the country for climate change. To achieve this roadmap, the present government has given 72 new gateway licenses. This has brought in increased competition and massive growth in infrastructure capacity. As a result end users are benefitting increasingly. Internet prices have decreased from $915 per Mbps in 2007 to $98 per Mbps presently. Around 40% of the total network infrastructure has been developed over the last 2 years only. One of the major issues of the IT industry in Bangladesh has been the single sea cable connecting Bangladesh. We are vulnerable to frequent outages with no backup in place. The good news is we are now connecting through multiple terrestrial operators with India for backup to SEAMEWE3 and other cables connecting India. The entire process should complete by beginning of 2013. A second sea cable, perhaps SEAMEWE5 is also in the pipeline. Gateway Operators are now able to offer both East and West segment routing with backup. Around 15 government and private sector operators are building the nationwide fiber optic backbone. The operators cumulatively have deployed well over 15,000 km optical fiber backbone covering 59 districts out of 66. 2 NTTN Operators are working on underground Fiber Optic Backbone offering FTTH services in Dhaka and Chittagong. Unfortunately, broadband services are yet to reach rural districts with little indication of implementation time frame from the operators.
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Fiber Optic Backbone Over 15,000 Km, 90% Coverage
The Telecom Sector in Bangladesh has seen growth in mobile penetration that has exceeded all expectations. The sector enjoys around 105 million subscribers as of August 2013 versus only 4 million in 2004. Mobile network coverage is reaching 98% of the population and covering nearly 99% of the geographical area of the land. Unfortunately, and if we compare with the growth of Telecom Sector, Internet penetration is still quite poor in Bangladesh. Roughly 40 million of the population has access to internet through the mobile operators, ISPs, PSTNs and the WIMAX operators. Broadband internet has grown quickly in Bangladesh in the last few years, although obviously from a very low base. With an estimated internet user-base of close to 850,000 coming into 2013, representing only a 0.53% user penetration, the local internet industry is preparing to move into the next stage of its development. Broadband internet is in its infancy, but the country has started moving into alternative channels such as WiMAX services in a significant fashion. Bangladesh witnessed the launching of 3G services through the state operator Teletalk from October 2012. 3G networks are expected to significantly enhance user experience of existing data services with the introduction of video and other high bandwidth services by the carriers. Low cost smart phones are widely available in the market now, and the launching of 3G should further accelerate the reach of internet throughout the country. The telecom regulator has auctioned off 4 more 3G licenses in September of 2013 and live operations started in October 2013
TeleTalk 3G - Live October ‘12 4 More Licenses – 3rd Quarter 2013
.
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We believe the impact of the growth of connectivity will be significant. Application services like Video Conferencing, VoIP, ERPs will grow among the Corporate Houses. Bandwidth capacity shall not be a scarce resource anymore; E-Commerce will play vital role for Internet Penetration, bringing seeds and urea to farmers, medicine to rural areas, products to consumers in general and not vice versa. IT services like Data Storage, Data Recovery Systems. Colo facilities, contact centres will be widely available, and the industry shall create millions of jobs the power of BPO.
Figure 4-8: Impact of Proposed increase in infrastructure Connectivity
4.5 The Regulatory Framework
4.5.1 The Regulator
Bangladesh Telecommunication Regulatory Commission (BTRC or the Commission) is the apex body authorized to regulate the telecommunication industry of Bangladesh. The Commission was established via Bangladesh Telecommunication Act 2001 and commenced its functions in January 2002. BTRC regulates fixed and mobile telephony, internet and data services, radio and television broadcasting services.
4.5.2 Overall Regulatory Framework
The industry is governed by The Bangladesh Telecommunication Act 2001 and several other Acts, policies, regulations and guidelines for specific purposes and segments of the industry as follows:
Acts Telecommunication Act, 2001, Telegraphy Act, 1933 and Telegraph Act, 1885. Information and Communications Policy, International Long Distance Policies Telecommunication Services Policy Infrastructure Sharing, International Internet Gateway, Interconnection Exchange, IP Guidelines Telephony Regulations Interconnection Regulations, 2004, Licensing Procedure, 2004
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4.6 Types of Data Service Providers
Service provider Overview
Nationwide License was issued to separate transmission from the access Telecommunication services and in the process to replace the overhead optical fibers Transmission Network and lay nationwide underground fiber backbone. The licensees Service Provider (NTTN) are Summit Power and Fiber @ Home Limited
This license was issued to promote broadband internet access Broadband Wireless Access using WiMAX technology. Operators are Augere Wireless (BWA) Broadband and Banglalion Communications Limited
To streamlinethe use of submarine cable, BTRC issued IIG International Internet licenses to Mango Teleservices Ltd. and BTCL who work as an Gateway (IIG) exchange to control international data traffic.
Licenses under this category are Nationwide ISP, Zonal ISP, and Central Zone ISP. Nationwide ISPs are eligible to provide intranet and internet services in any part of Bangladesh; Zonal ISP license Internet Service Provider permits an operator to provide services in certain zones of (ISP) Bangladesh other than Dhaka whereas a Central Zone ISP license is meant for those operators providing services only within Dhaka Metropolitan Area. There are about 200 Internet Service Providers in Bangladesh. Power Grid Company Bangladesh (PGCB) Limited, a company that provides electrical transmission, has laid nationwide fiber Nationwide Optical Fiber network along with the electrical transmission line. This license Telecommunication allows it to lease these fiber optic backbones to Telecom, internet Transmission Network and other data operators. The major difference between NTTN operators and PGCB is that PGCB does not provide backbone for last mile connections; it only provides backhaul connectivity.
4.7 Guidelines for Infrastructure Sharing
On September 8, 2008, the BTRC published guidelines for infrastructure sharing among telecommunication service providers. The guidelines provide for sharing certain infrastructure and facilities, including non-electronic infrastructure and fiber optic networks. Sharing infrastructure is an approach to minimize the cost of network deployment and to protect the environment by reducing the proliferation of towers and facilities installation. Operators will be required to provide capacity to other operators on a non-discretionary “first come, first serve” basis.
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5 Competitive Conditions of Business
5.1 SWOT Analysis – Aamra Networks Limited
Strengths S Weaknesses W
. Experience in the ISP market (12+ years) . Known and respected name . No local content . Innovation rd . Peering agreements . Infrastructure dependent on 3 parties . Experienced personnel . Purchasing behavior dependent on profit . Network management and economics knowledge . Ability to change rapidly in dynamic Marketplace . Can take advantage of best tariffs in country
OpportunitiesO Threats T
. Relationships with telcos, vendors, local . Entry of telcos/cable companies regulators . Price competition . Mergers with content providers . Saturation of the market . Acquire smaller enterprises . Development of web applications
5.2 Barriers to run the business and Control of price on products/services
The IT industry is heavily reliant on large scale deployment of network infrastructure capacity. Due to high import duty on hardware/software and frequently changing policies by the regulators, cost of operations for all IT companies in Bangladesh is high. As a result, IT consumers end up paying higher compared to our neighboring countries. For a developing country such as Bangladesh, this is a big hurdle as we need to keep our costs low to promote IT nationwide. With high inflation, the cost utilities are increasing day by day. As a result, in order to adjust with inflation, we are having to continuously adjust salary packages, increase our service charges etc. On an average, we can control just about 15 – 20 % of price of our services as the rest are dependent on inflation, cost of utilities, power and import duty.
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5.3 Competitive Advantage
. ISO 9001:2008 Certified (Certificate No. 9579) . Dun & Bradstreet rated ‘Top 500 Companies in Bangladesh’ (D&B D-U-N-S Awards/Recognition No. 731557124) . ‘Verisign Certified Company’ as the trusted provider of Internet infrastructure services in Bangladesh
. Connecting over 85,000 Corporate Workstations in Bangladesh . IT partner of Bangladesh Cricket Board (BCB) since 2004 Achievement . IT partner of Bangladesh Football Federation (BFF) since 2009 . IT partner of Bangladesh Olympic Association since 2009 . BEPZA partner – connectivity in all EPZs, covering 80% of clientele
. ISP Experience of over 16 years (since 1997) . ANL only caters to Companies sensitive to Quality of Service (QoS) . First ISP to offer professional ticketing system for customer care . First ISP to introduce 24/7 call center facilities . Dedicated relationship contact to manage all complaints and queries . 99.9% uptime guarantee (even on Sea-Me-We 4 Submarine Cable downtime) . Partnership with Telekom Malaysia (TM), Tata Communications, Airtel and Telekom Italia Sparkle to offer International Private Leased Circuit (IPLC) services in Bangladesh Competitive . Nationwide service offerings with support offices in all major divisions Advantage . Managing Concurrent Internet Bandwidth of 3.6Gbps + . Connected to Multiple IP Transit Provider . DC – DR Auto Redundancy of the ISP . Layer-3 connectivity to all end customers . Experience in creating 4 of the largest LAN projects in Bangladesh (up to June 2013) . Proven experience in creating Wireless Internet Zones for up to 100,000 concurrent users . Member of various relevant associations including ISPAB, BCS, and WIBA . Over 15 years+ industry experienced HR
. STM-16 capacity among the major POPs and STM-64 capacity for International capacity . One of the biggest buyers of NTTN capacity for metro underground cable Backbone Capacity network and has frame contract with 2 telecoms for nationwide capacity . IPv6 Ready . Round Trip Time of 50 – 300ms
. Connectivity to Tier 1 ISPs through Aamra Technologies Limited IIG service International . Current East Bound upstream is TM (Telekom Malaysia) & Tata Transmission Communications Connectivity . Current West Bound upstream is TIS (Telecom Italia Sparkle, Palermo), proposed West Bound upstream is Cable & Wireless
. Both static and dynamic routing (BGP4) Preferred Routing . Routing with the lowest possible latency
rd Monitoring . Proactive Network Monitoring & Helpdesk Support 24/7/365. Multiple 3 party monitoring tools are used to monitor entire network backbone, POPs and Facilities customer IP devices
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6 Sources of and Requirements for Power, Gas and Water and any other utilities
Utilities Sources Requirements/Remarks
Power DESCO 227,195
Gas Not Required N/A
Water WASA N/A
Aamra Networks Limited is a service oriented company and hence there is no requirement for Gas, Water and other utilities beyond those for daily office operations. The Company has own generator to provide backup at the time of power interruption for the NOC, Server Room and Data Centers. The company has also IPS system as backup for power generation.
7 Number of Employees Aamra Networks Limited currently has a pool of 185 employees:
Engineers 45
IT Analysts 15
Certified Professionals 35
Business Graduates 54
Skilled Technicians 36
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8 Selected Key Customers Aamra Networks Limited provides service to over 1100 of the top corporate house and organizations in Bangladesh. Below is a list of the top 100 clients as per Monthly Revenue:
1. Unilever Bangladesh Limited 51. Shafi Processing Industries Ltd 2. TM International-IPLC 52. Sainsbury's Asia Limited 3. Lafarge Surma Cement Limited 53. Wartsila Bangladesh Ltd 4. Ruposhi Bangla Hotel 54. SML Packaging Solution Bangladesh 5. Northern University Bangladesh 55. Ikea Trading (Hong Kong) Ltd 6. Standard Chartered Bank 56. Stamford University BD 7. Cemex Cement Bangladesh Ltd 57. Lakeshore Hotel 8. Paxar Bangladesh Limited 58. Goldenwear Outfitters Ltd 9. HSBC Bangladesh 59. Fly Dubai 10. Youngone Group 60. ULAB 11. American Efrid (BD) Ltd. 61. Ring Shine Textile 12. Embassy of Switzerland 62. Mashroom Project 2 (Orion ) 13. Partex-Star Particle Board Mills Ltd 63. Tetra Pak India Pvt Ltd 14. Radisson Water Garden Hotel 64. High commission of India 15. ACDI / VOCA 65. The Daily Ittefaq 16. Marico Bangladesh 66. Warnaco global sourcing ltd 17. Hutchison Global Comm. ltd 67. Playdom, Inc. 18. Partex-Danish Condensed Milk (BD) Ltd 68. Dhakarea Limited 19. Opex Group 69. Habib Group 20. APL (Bangladesh) Pvt Ltd 70. Kappahl Far East Ltd 21. World Cat Ltd 71. Orion Laboratories Ltd. 22. Transcom Food Limited 72. Western Union Services Singapore 23. TM International (Exclusive Agent) 73. Partex Furniture Industries Ltd 24. Checkpoint Systems Bangladesh L 74. Consumer Knittex Limited 25. Grey Advertising Bangladesh Ltd 75. Cosmos Telecom (Pvt.) Ltd 26. Coats Bangladesh Ltd 76. Dutch-Bangla Bank Limited 27. UNDP 77. TM Textiles & Garments Ltd 28. Biman Bangladesh Airlines Ltd 78. Next Sourcing (Bangladesh Liaison Office) 29. Linde Bangladesh Limited. (BOC) 79. SW Shipping Limited 30. Chemonics 80. LM Ericsson 31. BSRM 81. Wingroup Ltd 32. Compassion International Bangladesh 82. Pacific Jeans Ltd 33. Royal Park Residence, Dhaka 83. Best Seller 34. sanofi-aventis Bangladesh Ltd 84. Dhaka Stock Exchange 35. Ananta Group Ltd 85. Elegant Fashion Limited 36. Lenny Fashions Limited 86. FCI (BD) LTD 37. aamra resources limited 87. Galaxy Bangladesh Group 38. Karnafhuli Fertilizer (KAFCO) 88. Hotel Sarina Ltd 39. Kwun Tong Apparels Ltd 89. K line Bangladesh Ltd 40. GIZ Office Dhaka 90. Schlumberger Seaco Inc. 41. Fashionit Company Limited 91. Expolonka Bangladesh Ltd 42. Intertek Consumer Goods Banglad 92. Hellmann World Wide Logistics 43. LSI Industries Ltd 93. PranRfl Group (Badda Project) 44. Interstoff Apparel 94. Enam Labels Ltd 45. Evergreen Products Factory (BD) 95. Graphics Associate limited 46. LM Ericsson 96. JC Penney(Bangladesh Liaison Of 47. Transcraft ltd 97. Shanta Denims Ltd. 48. Chevron Bangladesh 98. Envoy Textile Limited (Kolabagan Office) 49. Robintex Group 99. PNS Group 50. (HCI) High Commission of INDIA 100. Experience Group
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9 Management Profile
9.1 Management Structure
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9.2 Departments
The Chairman and Managing Director of the company also own 11 other companies under the banner of aamra. ANL is run by a Chief Operating Officer who takes care of the overall operation of the company. The company is divided into 10 departments and the departments are:
Department Description Responsible to ensure that aamra networks is well connected with the worldwide web, security of the network, and proper functioning of all the network related services of Core Network aamra networks. The 3-member team is stationed in Network Operation Centre of aamra networks and headed by a 12-year experienced System Administrator (DGM). Responsible for generating new revenue for the company. The team also collects market information through informal channel and also responsible to communicate the Sales company products and services to the right target market. The department is divided into 3 territories Dhaka, Chittagong, and Industrial Zones. All teams are headed by experienced Sales Managers and DGM. This department is the customer touch point for system related issues. They ensure Technical that the system developed for the customers by aamra networks is working smoothly Support and also ensures that the system is up-to-date. 42 Members of the team are stationed throughout the country and headed by an experienced DGM This department ensures that the last mile connectivity to the clients from different POPs of aamra networks is running excellent. This team headed by Manager and Infrastructure consists of 13 members and 19 Linemen. This department runs its operation from aamra networks Operation Centre. The department issues bills, follows up with customers and ensure that the collections are made at the earliest possible time. The department also coordinates and Credit Control cooperates with customers to resolve and payment related issues. This 7-member team is headed by DGM The members of this department are the first contact for customers on day to day Helpdesk/ issues. The 24/7 call center is part of this department. This department maintains Contact Center liaison with all other departments to resolve customer care issues. This is presently a 3-member team headed by Senior Manager. This department looks after the branding and marketing activities that are required to Marketing ensure that the existing & prospective clients are well informed about the company and its products. This 3-member team is stationed in aamra networks corporate Office This department implements the organization’s human resource requirements. This Human team consists of 2 members. This department is stationed in aamra networks Resource corporate Office This department takes care of the Admin, procurement and logistics of the company. Admin & This 5-member team is headed by Manager and stationed both in aamra networks Logistics corporate Office and network Operation Centre This department keeps book of all the accounts of the company. The team members also ensure smooth functioning of future financing for the expansion of the company. Accounts & Timely payment to suppliers is also a key responsibility of the department. The Finance department is consists of 8 members and stationed in aamra networks Corporate Office This department is responsible for coordinating the activities of marketing, branding and sales departments while planning marketing efforts for a new/existing product or Product company branding. It is also responsible for estimating the consumer demand for new Development or existing services, stay informed of any competing products on the market and develop pricing strategies. This is presently a 5-member team headed by a Senior Manager.
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9.3 Directors of the Company
Name Designation Age Qualification Syed Faruque Ahmed Chairman 50 M.Com Syed Farhad Ahmed Managing Director 46 B.Com Syeda Munia Ahmed Director 43 M.A Fahmida Ahmed Director 41 B.Com
9.3.1 Short Biography of the Directors
Syed Faruque Ahmed Chairman
Syed Faruque Ahmed is the current Chairman of aamra networks limited as well as aamra Companies (formerly known as The Texas Group Bangladesh) and is one of its founder shareholders. The aamra Companies are a dynamic, futuristic and leading business group in the country involved in a wide range of businesses sectors like the Garments & Textile, ICT, Lifestyle and HR Development. Faruque, a post-graduate in Finance, helped starting the opening companies of aamra as one of the founder shareholders. He was the Director Finance of the Group from 1985. After having played a key role in setting up the Group’s export oriented readymade garment business unit from 1985 to 1988, he left for USA in 1988 in pursuit of exploring the Group’s garment export market. Through his 4 years stay in the U.S., he garnered a much wider exposure to the garment industry, in particular the US garment industry, as well as gained a rare insight into the corporate America. Upon returning home, Faruque engaged himself back into the family business with an added zeal to improve the processes and operations; much from what he learnt in the US. He successfully implemented computer automation throughout the Group companies for MIS and Accounting that eventually had far reaching implications on the rapid growth and success of aamra Companies. His effort in establishing the vigorous use of IT throughout the organization, for example in initiating use of network computing in the areas of Accounting, Sales and Production, resulted in huge savings of time and resources, as well as immensely improved the dynamism and responsiveness of the Group. Faruque takes the lead in the internal development of the aamra organizations and plays an active role in continual improvements in Human Resources, Organizational Development, MIS and Corporate Governance. Over the years he has helped introduce a number of important and far-reaching initiatives.
Syed Farhad Ahmed Managing Director
Syed Farhad Ahmed, a well acknowledged marketing expert and the driver of many successful business ventures in Bangladesh, leads one of the most successful IT companies in Bangladesh, aamra networks Limited, as well as aamra Companies, as its Managing Director.Farhad is a founder shareholder of aamra Companies (formerly known as The Texas Group Bangladesh) and started his career immediately after university graduation in the groups garments venture in 1985 (set up by his late father Mr. SSF Ahmed, a renowned Chartered Accountant of the country) as its Director of Operations. Making money and expanding business were never the only driving thoughts in his mind. Rather he always aims to contribute to the greater growth of the country and helps creating new job opportunities for its people. With this aspiration he concentrated on expanding business in new areas and in the country's nascent ICT field to boost the overall growth
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and advancement of the country. Under his able leadership, combined with his charismatic personality and motivational capabilities, he tends to bring out the very best in all of aamra's team members. Taking the responsibility of overseeing the operations of the Group's 11 companies dealing with ICT (Information & Communication Technology), Garments & Textile and Lifestyle and HR Development as its Managing Director, he also directly oversees aamra group's sales and marketing initiatives. Farhad has been an active participant in numerous business and professional organizations including: France-Bangladesh Chamber of Commerce & Industry, Bangladesh Garments Manufactures and Exporters Association, Bangladesh Computer Samity and Internet Service Providers Association of Bangladesh. Farhad was also an Executive Committee Member & Vice Chairman, Marketing Committee of the Bangladesh Cricket Board. He is a past president of France-Bangladesh Chamber of Commerce & Industry.
Syeda Munia Ahmed Director
Syeda Munia Ahmed, daughter of AHM Shafiul Islam was born in 1970. She is an M.A. in English from Dhaka University. She hasalso got “Special Diploma in Leadership and Diploma in Early Childhood” from Eaton house Singapore. Syeda Munia Ahmed has20 years of teaching experience both in Bangladesh and Singapore. Syeda Munia Ahmed is also engaged in various cultural and social welfare organizations. With a higher educational background and vast experience she is a very active Director of aamra networks limited. She spearheads the CSR activities of ANL, which includes assisting the management in identifying CSR projects and mapping the companies’ contribution effectively.
Fahmida Ahmed (Representative of aamra resources ltd.)
Fahmida Ahmed, daughter of Late Khalid Ibrahim, was born in 1972. After completing her graduation, Fahmida became theDirector of aamra networks limited and has been participating in making various policies and regulations of ANL. Fahmidaplays an active role in guiding the marketing and promotional activities of ANL, including assisting the management in identifyingand securing sponsorship opportunity for increasing the brand value of ANL.
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9.4 Senior Management
9.4.1 Short Biography of Senior Management
Educational Date of Job Job Last Name Age Position Qualification Joining Experience Five Years
Syed Faruque Ahmed 50 M.Com Executive Chairman 10/1/2001 27 Years ANL
Syed Farhad Ahmed 46 B.Com Managing Director 10/1/2001 27 Years ANL
SharfulAlam 40 BBA Chief Operating Officer 8/1/2003 15 Years ANL
AKM Quamruzzaman 41 MBA, MCom Company Secretary 9/1/2003 16 Years ANL
Md. Mahbubor 39 M.Sc Deputy General Manager 4/30/2001 15 Years ANL Rahman
Khaled AhamedNur 35 B.Sc Deputy General Manager 5/20/2003 11 Years ANL
Khandakar 40 M.Sc Deputy General Manager 6/1/2003 13 Years ANL Mohammad Moinuddin
A.M. Ehsan-ulHoque 34 MBA Deputy General Manager 12/1/2002 11 Years ANL
Mohammad 38 MBA Senior Manager 6/1/2000 13 Years ANL EhteshamFeroze
T. M. Mahbubur 42 B.S.S Senior Manager 5/11/2000 16 Years ANL Rahman
Muntasir Ahmed 31 BBA Senior Manager 11/1/2006 7 Years ANL
Goutam Sarkar 39 M.Sc Manager 7/1/2007 9 Years ANL
Golam Md. Hassan 38 M.A Manager 8/1/2007 15 Years ANL Mahmud
Musfiqur Rahman 35 MBA Senior Manager 9/9/2003 10 Years ANL Khan
Mohammed Sarwar M.Com 40 Manager 7/21/2001 14 Years ANL Hossain MBA, LLB
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Sharful Alam
Chief Operating Officer
Sharful Alam is a proven, result-oriented and dynamic leader in the country’s growing ICT industry. He is one of the key members who played key role to grow country’s leading ISP aamra networks limited manifold during the last few years. Sharful joined aamra networks back in August 2003 as Sales Manager. Before assuming the position of Chief Operating Officer in 2010 he served the company in various capacities such as AGM Sales & Marketing, DGM Sales & Marketing, and COO (Acting). Sharful oversees the everyday operations and functionalities of the company. He monitors work program of the organization and reports to the company's Board of Directors. He administers the designing, improvement and implementation phases the company uses to deliver its services. It is his responsibility to monitor and resolve issues regarding various aspects of the company's operations like sales, marketing, production, and human resources. He also assures the system-wide implementation of company policies and procedures and finds ways to improve those. Prior to joining aamra, Sharful served AccessTEL as Business Development Manager for three years. He is a BBA graduate from IBA, Dhaka University and completed his schooling from Faujdarhat Cadet College, Chittagong, Bangladesh.
A.K.M. Quamruzzaman Company Secretary
Zaman had joined aamra companies in 2003 as Manager of Accounts, where he used to managed accounts of aamra networks limited (Global Online Services Ltd.), aamra infotainment limited (Bangladesh Info) and aamra outsourcing limited (Stitel Outsourcing Ltd.). In his tenure of a decade he became Senior Manager, Assistant General Manager (AGM) of Credit Control and Administration & Accounts. Currently he is acting as the Group Financial Controller of aamra companies and company secretary of aamra networks limited. He was one of the key persons during the transition period from Texas to aamra and also acted a major role in times of public listing of aamra technologies. His dedication and astute apart from expertise knowledge on any account handling issues made him an essential leader of aamra companies’ accounts. Prior to joining aamra, Quamruzzaman was the Company Secretary and Head of Accounts in Padma Cement Limited. Quamruzzaman completed his Masters from Dhaka University and also completed his MBA. He is an ITP.
Md. Mahbubor Rahman DGM Core Network
Md. Mahabubor Rahman was born in 1974. Rahman joined aamra networks ltd. as Manager (System Administrator) in 2001 and got promoted as Senior Manager in 2003. Presently he is the AGM of aamra networks ltd. since 2006. Mahbubor Rahman performed at Information Services Networks Ltd. as a Assistant Manager from 1998 to 2001. He has 14 years of experience altogether. Mahbubor has completed Masters in Computer Science in the year 1998 from Dhaka University.
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Khaled Ahamed Nur DGM Technical Services
Khaled AhamedNur was born 1976. Khaled Ahmed Nur joined at aamra networks ltd. as Sr. Manager (Corporate Support) and Head of Application Services in 2003. Khaled was promoted as AGM in 2010. Nur worked at BTS Communication Ltd. as a System Administrator from 2002 to 2003 and also worked at ZerOOne Network as a System Admin since 2001 to 2002. He is experienced with establishing and developing full IT Projects, Networks and Infrastructures from initial conception to completion. He has 11 years of experience altogether. He has completed Bachelor in Computer Science in 2001 from National First Grade College, Bangalore, India. He is CISCO Certified Associate.
A.M. Ehsan-ul Haque DGM Sales
A.M. Ehsan-ul Haque joined aamra networks ltd as Manager (Sales) in 2002 and got promoted as AGM Sales in 2010. He has 10 years of experience altogether in B2B sales. He has completed M.Com and MBA from Dhaka University and East West University respectively.
Khandaker Mohd. Moinuddin DGM & Head of Credit Control Khandakar Mohd. Moinuddin was born in 1973. Moinuddin joined aamra networks ltd. as Assistant Manager and Head of Credit Control Department in the year 2003. Presently he is AGM and Head of Credit Control Department. Moinuddin has completed Masters in Economics from Jahangir Nagar University, Dhaka.
Mohammed Sarwar Hossain Manager and Head of Accounts
Mohammad Sarwar Hossain, born in 1973, joined aamra networks ltd as Executive (A & F) in 2001. Presently Sarwar is working as Manager and Head of Accounts. With 14 years of corporate experience, Sarwar previously served at RM Group. He has completed M.Com, MBA, LLB, CA (cc), ITP.
Muntasir Ahmed Senior Manager Branding and Product Development
Muntasir Ahmed joined aamra networks limited in 2006 and is currently heading the branding and product development for the company as well as ICT wing of aamra companies. Ahmed leads a team of 8 personnel that deals with every day company communication and PR, the companies brand visibility and works with the R&D and TSD departments for product development, packaging and delivery processes. Born in 1982, Ahmed has 9 years of work experience and has a Bachelor’s degree from North South University.
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10 Description of Property
10.1 Location of the principal plant and other property of the company and their condition
Dhaka Unit
30.06.2013 31.12.2012 31.12.2011 31.12.2010 Particulars (W.D.V) (W.D.V) (W.D.V) (W.D.V)
Land and Land Development 190,239,237 - - -
Furniture & Fixture 1,014,659 939,662 1,044,068 1,072,076
Office Equipment 12,364,002 12,140,401 8,059,600 5,014,740
Electric Installation 1,542,593 1,695,157 1,397,286 1,158,008
Telephone Installation 194,582 213,826 229,039 279,315
Computer & Comp. Equipment 3,287,027 3,652,252 4,347,609 4,695,211
Data Centre 3,228,614 3,587,349 - -
Fiber Optic Cable 23,841,454 13,218,206 12,674,700 7,471,024 Radio link/infrastructure & 69,592,889 65,596,577 52,698,168 46,233,401 Backbone
Motor Vehicle 3,693,686 604,096 677,120 846,400
Office Decoration 31,182,847 22,535,816 11,321,561 5,896,979
Total 340,181,589 124,183,342 92,449,152 72,667,154
DEPZ Unit
30.06.2013 31.12.2012 31.12.2011 31.12.2010 Particulars (W.D.V) (W.D.V) (W.D.V) (W.D.V)
Furniture & Fixture 128,788 135,566 150,629 167,365
Office Equipment 545,775 590,027 667,149 363,381
Computer & Comp. Equipment 129,230 143,589 179,487 224,358
Radio link/infrastructure & Backbone 574,967 631,832 770,526 939,666
Office Decoration 1,307,463 1,413,474 1,662,911 127,953
Total 2,686,223 2,914,487 3,430,702 1,822,725
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10.2 Break down of existing machineries SN Equipment Name Mode Qty Location 1 SU-2.4 and Accessories Set 67 Goran Pop.(address: G54, South Banashree, Goran) 2 SU-5.7 and Accessories Set 14 Goran Pop.(address: G54, South Banashree, Goran) 3 RB-2.4 and Accessories Set 24 Goran Pop.(address: G54, South Banashree, Goran) 4 BU-2.4 and Accessories Set 25 Goran Pop.(address: G54, South Banashree, Goran) 5 RB-5.8 and Accessories Set 7 Goran Pop.(address: G54, South Banashree, Goran) 6 BU-5.8 and Accessories Set 2 Goran Pop.(address: G54, South Banashree, Goran) 7 SU-3.5 and Accessories Set 225 Client side and Goran pop (Add: G54, South Banashree, Goran) 8 Willan and Accessories Set 13 Goran Pop.(address: G54, South Banashree, Goran) Safura pop (Add: 12th Floor, 20 Kemal Ataturk Avenue, Banani), DEPZ AU-3.5 and Accessories Pop (Add: Bepza Building, DEPZ), NOC Pop (Add: H#1/A, R# 84, 9 Set 10 Gulshan-2) 10 AU-2.4 and Accessories Set 14 Goran Pop.(address: G54, South Banashree, Goran) NOC(H#1A,R#84, Gulshan-2), Safura Pop (Add: 12th floor, 20 Kemal Dish Antenna and Accessories Ataturk Avenue, Banani), DEPZ (Bepza Building, DEPZ), Mawna Pop 11 Set 14 (CitycellNOC,Chowrashta, Mawna, Gazipur) NOC(H#1/A R#84, Gulshan-2), Safura Pop (12 th Floor, 20 Kemal Base ANT-3.5 and Accessories Ataturk Avenue, Banani), DEPZ (Bepza Building, DEPZ), Mawna Pop 12 Set 10 (G54, South Banashree, Goran) 13 UBNT-M5/M2 and Accessories Set 242 Different Client side and Different Pop Sides Nano Station- M5/ M2 and Different Client side and Different Pop Sides 14 Accessories Set 178 15 Air Point Nexus Unit 5 Goran Pop.(address: G54, South Banashree, Goran) 16 Canopy-5.2 and Accessories Set 7 Different Client side and Different Pop Sides 17 Canopy-5.7 and Accessories Set 5 Different Client side and Different Pop Sides 18 AU-5.7 and Accessories Set 2 Different Client side and Different Pop Sides 19 PDH-4E1 Unit 80 Different Client side and Different Pop Sides 20 PDH-8E1 Unit 86 Different Client side and Different Pop Sides 21 PDH-16 E1 Unit 14 Different Client side and Different Pop Sides 22 E1 Converter & Card (4E) Unit 47 Different Client side and Different Pop Sides 23 E1 Converter & Card (8E) Unit 27 Different Client side and Different Pop Sides 24 E1 Converter & Card (16E) Unit 4 Different Client side and Different Pop Sides 25 E1 to V.35 Converter Unit 5 Different Client side and Different Pop Sides 26 DXCO8 Unit 10 Different Client side and Different Pop Sides Safura pop (12 th Floor, 20 Kemal Ataturk Avenue, Banani),NOC Pop STM and Accessories 27 Unit 15 (H# 1/A, R# 84, South Banashree, Goran) Safura pop (12 th Floor, 20 Kemal Ataturk Avenue, Banani),NOC Pop SDH and Accessories 28 Unit 2 (H# 1/A, R# 84, South Banashree, Goran) Safura pop (12 th Floor, 20 Kemal Ataturk Avenue, Banani),NOC Pop Colon Server-Corei-7 29 Unit 10 (H# 1/A, R# 84, South Banashree, Goran) 30 Server- DELL Unit 5 Safurapop,NOC Pop and Goran pop Safura pop (12 th Floor, 20 Kemal Ataturk Avenue, Banani),NOC Pop TYAN & 1 U Server 31 Unit 42 (H# 1/A, R# 84, South Banashree, Goran) Safura pop (12 th Floor, 20 Kemal Ataturk Avenue, Banani),NOC Pop Server- CPU 32 Unit 5 (H# 1/A, R# 84, South Banashree, Goran) 33 Router- 3600-Cisco Unit 3 Safura Pop (12th Floor, 20 Kemal Ataturk Avenue, Banani) Safura pop (12 th Floor, 20 Kemal Ataturk Avenue, Banani),NOC Pop Router - 7200-Cisco 34 Unit 8 (H# 1/A, R# 84, South Banashree, Goran) 35 Router - 7606 S Cisco Unit 1 Safura Pop (12th Floor, 20 Kemal Ataturk Avenue, Banani) 36 Router - 7200 VXR Router Unit 1 Safura Pop (12th Floor, 20 Kemal Ataturk Avenue, Banani) 37 Router - 7200 G2 Unit 4 Safura Pop (12th Floor, 20 Kemal Ataturk Avenue, Banani) 38 Router-2500 Unit 2 Safura Pop (12th Floor, 20 Kemal Ataturk Avenue, Banani) 39 Router- 2811 (Cisco) Unit 4 Different Client side and Different Pop Sides Safura pop (12 th Floor, 20 Kemal Ataturk Avenue, Banani),NOC Pop 12 Port Switch-- Cisco 40 Unit 4 (H# 1/A, R# 84, South Banashree, Goran) 41 24 Port Switch-- Cisco Unit 31 Safurapop,NOC Pop, Motijhil Pop, Mawna pop, Safura pop (12 th Floor, 20 Kemal Ataturk Avenue, Banani),NOC Pop 48 Port Switch-- Cisco 42 Unit 19 (H# 1/A, R# 84, South Banashree, Goran) Safura pop (12 th Floor, 20 Kemal Ataturk Avenue, Banani),NOC Pop (H#1/A, R# 84, Gulshan-2), Motijhil Pop (28/1C rahmania complex, Sectorial Antenna kalvertroad,FakirapulMotijhil), Mawna pop (Citycell NOC, Chowrashta, 43 Unit 11 Mawna, Gazipur) Safura pop(12 th floor, 20 Kemal Ataturk Avenue, Banani),NOC Pop 42 U Rack (H#1/A, R# 84, South Banashree, Goran), Motijhil Pop (28/1C 44 Unit 23 Rahmania Complex, Kalvert Road, Fakirapul, Motijhil) 45 Quick Eagles Unit 7 Goran Pop.(address: G54, South Banashree, Goran) 46 Antena-5.8 Unit 11 Goran Pop.(address: G54, South Banashree, Goran)
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47 Barracuda Unit 1 Safura Pop (12th Floor, 20 Kemal Ataturk Avenue, Banani) 48 Polycom- VX-5000 Unit 1 Safura Pop (12th Floor, 20 Kemal Ataturk Avenue, Banani) 49 Polycom- SP-128 Unit 15 Safura Pop (12th Floor, 20 Kemal Ataturk Avenue, Banani) 50 Media Converter Mounting Rack Unit 35 Safurapop,NOC Pop, Motijhil Pop, lavinci pop, DEPZ, CEPZ pop 51 Media Converter Pair 883 Different Client side and Different Pop Sides 52 Wireless CPE(Ovislink) Unit 9 Different Client side and Different Pop Sides 53 Wireless Omni Unit 1 Safura Pop (12th Floor, 20 Kemal Ataturk Avenue, Banani) 54 Fiber Optic- 12 Core Meter 210000 Different Client side and Different Pop Sides 55 Fiber Optic -- 24 Core Meter 31000 Different Client side and Different Pop Sides 56 IP Phone Unit 68 Safura Pop (12th Floor, 20 Kemal Ataturk Avenue, Banani) 57 Fiber Optic-6 core Meter 205883 Different Client side and Different Pop Sides 58 ADSL Concentrator with Chasis Unit 27 Goran Pop.(address: G54, South Banashree, Goran) 59 SDSL Concentrator Unit 2 Goran Pop.(address: G54, South Banashree, Goran) 60 SDSL Modem Unit 312 Goran Pop.(address: G54, South Banashree, Goran) 61 ADSL Modem Unit 355 Goran Pop.(address: G54, South Banashree, Goran) Safura pop (12 th Floor, 20 Kemal Ataturk Avenue, Banani), Motijhil Pop Splicing Machine (28/1C, Rahmania Complex, Kalvert Road, Fakirapul, Motijhil), DEPZ 62 Unit 5 (Bepza Building DEPZ). 63 OTDR Unit 3 Safura Pop (12th Floor, 20 Kemal Ataturk Avenue, Banani) Data Center Equipment (Lan, Safura pop (12 th Floor, 20 Kemal Ataturk Avenue, Banani), Motijhil Pop Rack, raise floor & other (28/1C, Rahmania Complex, Kalvert Road, Fakirapul, Motijhil), DEPZ 64 accessories) Unit 4 (Bepza Building DEPZ). 65 CDMA Modem Unit 165 Different Clients sides 66 WimaxMadem Unit 160 Different Clients sides Safura pop (12 th Floor, 20 Kemal Ataturk Avenue, Banani), Motijhil Pop Tower, installation, other (28/1C, Rahmania Complex, Kalvert Road, Fakirapul, Motijhil), DEPZ accessories 67 Unit 7 (Bepza Building DEPZ). Safura pop (12 th Floor, 20 Kemal Ataturk Avenue, Banani), Motijhil Pop Earthling, Grounding and Others (28/1C, Rahmania Complex, Kalvert Road, Fakirapul, Motijhil), DEPZ 68 (Bepza Building DEPZ).
Point of Presence locations (POP)
Safura pop (address:12th floor, 20 Kemal Ataturk Avenue, Banani, Dhaka)
Noc (address: house# 1/a, road # 84, Gulshan-2)
Motijheel pop (address: 28/1c, Rahmania Complex, Culvert Road, Fakirapul, Motijheel)
Depz pop (address: Bepza Building, Depz)
La Vinci pop (address: La Vinci Hotel, Karwan Bazar, Dhaka)
Mirpur pop (address: prince hotel, Mirpur pop)
Khilgoan pop
NEPZ pop (BEPZA Building, Narayanganj)
Bashundhara pop (Block #A, house#82, Baridhara, Bashundhara)
Baridhara pop (Road#8, House# 462, Baridhara DOHS)
Stamford pop (Stamford University, Dhanmondi)
Sfa pop (add: Sfa Tower (3rd Floor).132 Panchlaish, Chittagong)
Agrabad pop ( add: Hotel Saintmartin, Roof Of The Building , 25, Sheikh Mujib Road Agrabad, Chittagong)
Cepz pop (add: sector # 5/a, plot # 03)
Kepz pop (add: Karnaphuli Export Processing Zone , Karnaphuli, Chittagong)
Peninsula pop ( add: bulbul center 486/b O.R Nizam road, cda avenue, Chittagong)
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10.3 Lease Agreement (land and buildings) The Company has purchased no land or building on lease.
11 Plan of Operation and Financial Condition 11.1 Internal and external sources of cash
As on June, 30, 2013 As on Dec. 31, 2012 As on Dec. 31, 2011 (Amount in Taka) (Amount in Taka) (Amount in Taka) Internal Sources of Cash: Share Capital 260,000,000 54,000,000 54,000,000 Retained Earnings 53,138,942 218,801,203 143,861,739 Sub-Total 313,138,942 272,801,203 197,861,739
External Sources of Cash: Long-term Loan 101,117,878 - - Short-term Loan 57,754,431 42,078,631 36,458,683 Sub-Total 158,872,309 42,078,631 36,458,683
Grand Total 472,011,251 314,879,834 234,320,422
11.2 Causes for materials changes from period to period The Company has no significant material changes over the years.
11.3 Any loan taken from holdings and or subsidiary company or loan given to a forsake company giving full details of the same The Company has not taken any loan from its holding or subsidiary company.
11.4 The estimated amount of future expenditure The Company does not have any plan for capital expenditure in near future other than as specified in ‘Use of Proceeds’ of this Information Memorandum
11.5 Operating lease and financial lease commitment
11.5.1 Financial Lease Commitment The Company has two lease agreements with LankaBangla Finance Ltd.and ONE Bank Ltd respectively. They are as follows:
Outstanding Lease Lease Rate of Monthly Balance as Name of Sanction Period Date of Facility Amount Interest Installment on Institutions Date (monthly Expiry Type (BDT) (%) (BDT) Dec. 31, basis) 2012 (BDT) Sale and ONE Bank Lease 5,00,00,000 17% 31.03.2013 16,25,000 48 31.03.2017 52,173,237 Ltd. Back Lanka Bangla Car Lease 2,500,000 19% 5.02.2013 64,852 60 5.02.2018 2,390,448 Finance Facility Limited
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12 Ownership of the Companies Securities
12.1 Shareholding Structure aamra networks limited is a public limited company by shares. The total invested capital by the sponsors’ amounts to BDT 260,000,000 as Paid up Capital consisting of 26,000,000 shares at par value of BDT 10 each. It’s authorized Share Capital is BDT 1,000,000,000 as per the half yearly audited report dated June 30, 2013.
12.2 Existing Shareholding:
No. of Face Percentage of Shareholders Taka Shares Value Shares aamra holdings ltd 12,600,000 10 126,000,000 48.46%
aamra resources ltd 4,522,030 10 45,220,300 17.39%
Augere Holdings (Netherlands) B.V 8,477,970 10 84,779,700 32.61%
Syed Faruque Ahmed 100,000 10 1,000,000 0.38%
Syed Farhad Ahmed 100,000 10 1,000,000 0.38%
Syeda Munia Ahmed 100,000 10 1,000,000 0.38%
Fahmida Ahmed 100,000 10 1,000,000 0.38%
Total 26,000,000 - 260,000,000 100%
12.3 Share Holding after Private Placement:
No. of Face Percentage of Shareholders Taka Shares Value Shares aamra holdings Ltd 12,600,000 10 126,000,000 33.16%
aamra resources ltd 4,522,030 10 45,220,300 11.90%
Augere Holdings (Netherlands) B.V 8,477,970 10 84,779,700 22.31%
Syed Faruque Ahmed 100,000 10 1,000,000 0.26%
Syed Farhad Ahmed 100,000 10 1,000,000 0.26%
Syeda Munia Ahmed 100,000 10 1,000,000 0.26%
Fahmida Ahmed 100,000 10 1,000,000 0.26%
Private Placement 12,000,000 10 120,000,000 31.58%
Total 38,000,000 - 380,000,000 100%
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13 Key Risk Factors &Risk Management
The proposed project and existing business of aamra networks limited is exposed to different types of risks. The sponsors have carried out a careful analysis of the internal/external risks involved and have identified risk mitigation and risk management strategies. A discussion of key risk factors involved is given below.
. Industry Risk
Liberalization of permission to set up new IT companies by government may result in severe competition amongst companies’ causes’ reduction of income and profitability of the company.
Management Perception
ANL provides comprehensive IT solutions and services including Systems Integration, Information Systems Outsourcing, Core Banking Software & Switching Solution supply, implementation & maintenance. Our positive attitude plays the dominant role in our success, in our ability to innovate and in our ability to serve valued clients. ANL loves to compete, because competition brings out the best in us. The Company has the finest people, the latest technology, the best spirit, and the best team in the industry. Each member of the company plays a vital role in the great chain of our success.
. Interest Rate Risk
Interest rate risk concerned with borrowed funds of short term and long term maturity, volatility of money market, which ultimately influences the interest rate structure of fund.
Management Perception
The Management of the Company is always aware of interest rate. If the interest rate increases the cost of credit fund will increase. ANL has always been a cash-rich company and operates with low dependence on debt. As the company maintains very low debt equity ratio, adverse impact of interest rate fluctuation is insignificant. Moreover the company is confident of meeting its need for future expenses from its internal sources. In addition, the company emphasizes on equity based financing to reduce the dependence on bank borrowings. Therefore the management perceives that the fluctuation of interest rate would have little impact upon the performance of the company.
ANL is currently carrying both long term and short term loans. All the facilities are subject to revision with change of interest rates in the market. The exposure will be minimized as ANL plans to retire some portion of the debt gradually in the following years.
. Exchange Rate Risk
Devaluation of local currency against major international currencies i.e. USD, GBP and Euro may affect company’s income.
Management Perception
Volatility of Taka against USD, GBP and Euro and recent trend of local currency devaluation may expose foreign currency risk. In such cases, the management of the company is confident to significantly cushion the foreign currency risk and price escalation risk through forward contracts if it is justifiable in terms of the cost benefit analysis. The company has been hedging exchange rate risk by strategic purchases of products of foreign currency.
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. Market and technology related Risk In the global market of 21st century, developed technology, products and services render obsolete the old service and product strategy. So, the existing organization may not be able to cope up with the future needs and demands.
Management Perception The market of IT sector in worldwide is full of risk. As soon as the new technology entered in the market, the previous products become obsolete. For this ANL always deals with latest technologies and the market analyzing team of ANL plays vital role in keeping and expand the present market.
. Technology related Risk Technology always plays a vital role for existence of any industrial concern. Innovation of new and cost effective technology may obsolescence existent technology, which may cause negative impact.
Management Perception Management of ANL is aware of recent technological developments in the IT sector and keeps their employees up to date by providing necessary training. Furthermore ANL is marketing latest technological equipment and also well equipped with latest technology.
. Potential or existing government regulations The company operates under Companies ACT, 1994, taxation policy adopted by NBR, SEC rules and rules adopted by other regulatory bodies. Any abrupt changes of the policies formed by those bodies may impact the business of the company adversely.
Management Perception Unless any adverse policy is taken, which may materially affect the industry as a whole; the business of the company will not be affected. Furthermore the government is encouraging private sector entrepreneurs in IT sector. Therefore it is expected that any new policies of this sector will be business favorable which also be helpful for expansion of business of the company.
. Potential changes in global or national policies The performance of the company may be affected by the political and economic instability both in Bangladesh and worldwide. Any instance of political turmoil and disturbance in the country may adversely affect the economy in general.
Management Perception The company can prosper in a situation of political stability and a congenial business environment. Political turmoil and disturbance are bad for the economy and so also for this sector. This is why the management of the company is always concerned about the prevailing and upcoming further changes in the global or national policy and shall response appropriately and timely to safeguard its interest.
. History of non-operation, if any Is there any history of the Company to become non-operative?
Management Perception The Company has no history of non-operation in the past. The Company is an independent body. It has been in operation by its Memorandum & Articles of Association and other applicable laws Implemented by the Government. Besides, the Company’s financial strength is satisfactory. It has very experienced Directors and Management team to make the Company more efficient and stronger in market capturing. So, the chance of becoming non-operative of the Company is minimum.
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. Operational risk
Shortage of power supply, human resources migration, unavailability or price increase of IT hardware and software, natural calamities like flood, cyclone, earthquake etc. may disrupt the activities of the company and can adversely impact on the profitability of the company. The present government has taken various necessary steps to increase the power supply of the country which will help us to run the day to day operations smoothly. Apart from this, the company is equipped with alternative electricity supply such as generator back-up to be operational during power shortage. Highly competitive compensation as well as benefit package will refrain the employees to leave their assignments and go for any movement of employees for higher benefit packages.
Management Perception
The location of the company premises is situated on a flood free Zone. The current office and storage building has strong RCC foundation with pre-fabricated steel structure to withstand wind, storm, heavy rain etc. with good drainage facilities. The risks from these factors are also covered through adequate insurance policies.
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14 Related Party Transactions
Total Balance Balance transaction Relationship with as at as at Name of the Relationship with company during the company 30.06.13 31.12.12 company year taka taka taka
Aamra Concern under Training service and space rent for management 574,100 166,350 161,750 common management training. solutions Aamra Concern under management 66,000 Internet Service Provider. 73,398 Nil common management solutions Aamra holdings Concern under Internet service, IT Service and 484,504 131,001 91,501 limited common management software maintenance. Aamra holdings Concern under Relationship & management 21,400,000 Nil Nil limited common management expenses and Royalty fee Concern under Aamra holdings 5,000,000 Intercompany loan transaction 2,000,000 Nil limited common management Aamra resources Concern under Internet service, IT Service and 192,000 200,588 8,588 limited common management software maintenance. Aamra Concern under Internet service, IT Service and embroideries 30,000 51,900 21,900 common management software maintenance. limited Aamra Concern under embroideries 1,732,000 Intercompany loan transaction 1,100,000 500,000 common management limited Aamra Concern under technologies 3,039,662 Intercompany loan transaction Nil 3,039,662 common management limited Aamra Concern under technologies 232,253,795 IIG bandwidth & Equipment Purchase 920,440 Nil common management limited Aamra Concern under technologies 8,346,960 Advance against Purchase 7,685,000 Nil common management limited Aamra Concern under Internet service, IT Service and technologies 6,784,073 Nil 2,362,825 common management software maintenance. limited Ace it networks Concern under Internet service, IT Service, software, 3,585,014 1,063,838 Nil limited Subsidiary Company office rent and utilities. Aamra Concern under outsourcing 12,559,898 Intercompany loan transaction Nil 4,364,927 common management limited Aamra Concern under Office rent, utilities and intercompany infotainment 2,479,767 1,855,122 2,786,443 common management loan limited Syed Faruque Chairman and 2,400,000 Directors remuneration NIL NIL Ahmed shareholder Syed Farhad Managing Director and 2,400,000 Directors remuneration NIL NIL Ahmed shareholder
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15 Allotment of Shares
Auditor’s Certificate regarding any allotment of shares to the directors and the subscriber to the Memorandum of Association and Article of Association for any consideration otherwise than for cash
After due verification, we certify that the paid-up capital of aamra networks limited as of June 30, 2013 was Taka 260,000,000 divided into 26,000,000 Ordinary shares of Taka 10/- each, made up as follows :
Number of shares issued Consideration Amount of Date of Consideration Particulars of allotment other than share capital Allotment in Cash Cash (Taka)
First (Subscription to the Memorandum & Articles of 10th January 5,400,000 - 54,000,000 Association at the time of 2001 incorporation)
5th June Second Allotment (Bonus Issue) 20,600,000 206,000,000 2013
Total 260,000,000
This is also certified that the amounts shown against paid-up capital as cash consideration was deposited in the company’s bank account.
The Company, however, has sub-divided the face value of its ordinary share from Taka 100/- to Taka 10/- by passing a special resolution in its extraordinary general meeting held on 5th June 2013 and necessary amendments in the capital clause of the Memorandum and Articles of Association were made accordingly. Hence, the paid up capital of the Company comes to Taka 260,000,000 divided into 26,000,000 ordinary shares of Taka 10/- each. However the number of shares shown in the above table has been considered at Taka 10/- each.
Dhaka, Sd/-
Date: September 25, 2013 KM Hasan & Co.
Chartered Accountants
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16 Determination of Offer Price
The offering price has been set in accordance with the provision of the Securities and Exchange Commission (Public issue), 2006.
Valuation under Different Methods Price in BDT NAV per Share 12.30 Earnings Based Value per Share 34.96 Valuation Based of Market P/E 73.60 Valuation Based on P/NAV ratio 17.71
Based on the valuation mentioned above, aamra Networks Limited is offering 12,000,000 ordinary shares of BDT 10/- each to the general public through private placement.
METHOD 1: VALUATION BASED ON NET ASSET VALUE (NAV) PER SHARE
Particulars Amount (in Taka) Share Capital 260,000,000 Retained Earnings 59,818,056 Total Shareholders' Equity 319,818,056
Number of Ordinary Shares 26,000,000 Net Asset Value (NAV) per share 12.30
METHOD 2: HISTORICAL EARNINGS BASED VALUE PER SHARE BASED ON WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING
Weighted Weight of Total Net Profit Year Net Profit Number of Shares Number of After Tax (Ended on December 31) After Tax Shares (BDT) (BDT) 2008 5,400,000 0.1134 5,156,055 584,931
2009 5,400,000 0.1134 24,811,576 2,814,759
2010 5,400,000 0.1134 51,861,653 5,883,465
2011 5,400,000 0.1134 58,163,152 6,598,341
2012 26,000,000 0.5462 80,545,174 43,995,263
Total 47,600,000 1.00 220,537,610 59,876,758
No. of Shares before Private Placement 26,000,000
EPS based on Weighted Average of Net Profit After Tax 2.30
Market Earnings Multiple (DSE Monthly Review, August-2013) 15.18
Price per share (BDT) 34.96
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Method 3: Valuation based on Average Market Price per Share of Similar Stocks
Closing Price (BDT) of Closing Price as on Last One Year Information In tech Agni BDCOM Online Services Network Online Systems September 21.9 26.2 21.1 35.5 October 19.6 27 21.8 33.7 November 17.3 20.3 20 25.5 December 16.4 19.1 17.7 23.9 January 18.4 21.5 21.6 25.6 February 17.3 21.5 19.2 23.7 March 15 17.4 17.8 21 April 14.1 16.6 14.5 19.6 May 15.8 22 17.6 23.7 June 14 20.9 15.7 23.1 July 13.3 20.1 12.7 21.5 August 13.4 22.8 14.5 23.6 Average Closing 16.38 21.28 17.85 25.03 Price (BDT)
Method 3 (A): Valuation with reference to the P/E ratio of similar stocks
Average EPS (BDT) as Closing Price Name of the Peer Companies on August, P/E Ratio (BDT) of Last 2013 One Year (i) (ii) (i)/(ii) Information Services Network 16.38 0.27 60.65 BDCOM Online 21.28 1 21.28 In Tech Online 17.85 0.94 18.99 Agni Systems 25.03 0.93 26.92 Average P/E Ratio 31.96 Diluted EPS (BDT) based on Weighted Average Net 2.30 PriceProfit perAfter share Tax of (BDT) The aamra based networks on P/E ratiolimited of similar (2.3 × 31.96) 73.60 stocks Method 3 (B): Valuation with reference to the P/NAV ratio of similar stocks
NAV (BDT) Average Closing Price P/NAV Name of the Peer Companies as on (BDT) of Last One Year Ratio August, 2013 (i) (ii) (i)/(ii)
Information Services Network 16.38 17.32 0.95 BDCOM Online 21.28 14.91 1.43 In Tech Online 17.85 10.08 1.77 Agni Systems 25.03 15.34 1.63 Average P/NAV Ratio 1.44
Net Asset Value per Share (BDT) of aamra 12.30 Networks Limited Price per share (BDT) based on P/NAV ratio (12.30 × 1.44) 17.71 of similar stocks
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17 Use of Proceeds 17.1 Project Costs and Financing Means
Breakdown of sources of fund and utilization of fund are as follows
A. Private Placement (12,000,000 shares @ BDT 10/- each) The Company has a plan to raise approximately BDT 480 million by issuing these 12,000,000 million ordinary shares.
Sl. No. Particulars Amount in Tk.
Source of fund 1 Private Placement 120,000,000 (12,000,000 Share @ Tk 10 Each) 2 Premium for private placement 360,000,000 (12,000,000 Share @ Tk30 Each) Sub Total 480,000,000 B Utilization of Fund 1 Loan Refund Including Interest 156,000,000 2 Land development 32,500,000 Repayment of lease finance ( In process for existing 3 40,000,000 infrastructure development) 4 Cost of Private Placement 15,000,000 5 Initial investment for IT intelligent building 236,500,000 Total: 480,000,000
17.2 Capacity Enhancement Plan 17.2.1 New Revenue Wings - Collocation/Data Center Facilities With the phenomenal increase in the use of Information Technology, telecommunication and the Internet, putting it all together to deliver seamless solutions has become a priority. aamra networks limited’s (ANL) dedication to a holistic approach to data technology is reflected in the various business solutions that it offers to face the challenges of the fast changing business environment in this e-age. As the leading IT Infrastructure and Application Service Provider, ANL is recognized as a pioneer in the development of Value Based Services in Bangladesh to push forward the frontiers of broadband technology relentlessly. In keeping with its drive towards total integration, ANL introduces telco-class internet Data Centers Solutions. Features: . The most advanced, scalable and reliable . Closed circuit video surveillance network architecture available . Security personnel . Raised floor climate controlled . On-line power back-up system (batteries environments and diesel generators) . Enterprise Level Environment . 24x7 network monitoring Management System . Knowledgeable on site engineers . Redundant Internet connections Service Offerings ANL provides the core data center infrastructure and services to maintain industry-class facilities and support for our Collocation customers. In addition, ANL’s Managed Collocation offerings allow customers to select the independent services required to support their critical applications — everything from managed Internet access and data backup, such as usage based tape and SAN services, to security services ranging from firewall and intrusion prevention to advanced offerings such as two-factor authentication and content filtering.
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Service Description
Provides physical space, partial or full rack space, power, and network capabilities in professionally-designed facilities offering reliability and security. Dedicated space in multi- Rack Space or tenant facility offers the potential for lower costs and higher quality. It can serve as the Collocation primary production location, or as a secondary data center for backup and recovery or testing and development and offers a lower-cost option for data center expansion or consolidation. Provides IT staffing for 24/7 support, monitoring, and management of customer-owned Managed equipment in leased space. Managed services can include backup, storage, and security, Collocation often backed by service level agreement (SLA) for information availability Server Support across a wide range of operating systems including AIX, OS/400, HP/UX, Linux (Red Management Hat), Microsoft Windows and Solaris Services Network Ranging from LAN and WAN management, Internet access services, remote infrastructure Services management, dedicated transport, and load balancing services Monitoring & Monitoring and reporting of Critical infrastructure supporting the application including server Reporting performance and network operations Services Storage Data backup services and SAN services to support storage and information backup, as well Services as data protection and compliance requirements Security Customized security solutions including IDS/IPS, firewall & VPN support, secure remote Services access, and advanced solutions based on compliance or industry requirements
17.2.2 New Revenue Wings - Intelligent Buildings
Intelligent Buildings: The Power of Intelligence
. Leverages the power of building automation and IP connectivity to monitor, control, rectify and repair equipment/systems remotely over the Internet/intranet/private networks. . Allows the customer to view real-time operations and gives early warnings and signals that equipment/systems are about to experience a problem/error. . Provides a comprehensive view into all assets to optimize their functions effectively, enhances performance efficiencies, reduce costs and generates maximum value from respective deployments.
An Opportunity to Save This is the power to gain intelligence through building automation which translates into one very important benefit: savings.By integrating and automating the control of all the systems in any building, or even just the mechanical systems, one can reduce design and building costs, lower energy costs, and increase system efficiency and tenant satisfaction. It also extends the life of the building and decreases possible emergency costs. This is all achieved by measuring, monitoring and maintaining the entire building systems through one integrated and intelligent solution.Furthermore, intelligent buildings are inherently green. At the heart of the most environmentally sound buildings is a smart infrastructure that commands and controls consumption of resources. Again, this all adds up to cost savings. Better still, it’s measurable and verifiable. When the building is intelligent, savings in two critical areas: energy and capital, can be clearly identified.
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Smart Systems. Brilliant Results. When the building is intelligent, it drives cost out of business and increases efficiencies. It also enhances operational capacities and abilities for both owners and property managers, which include:
. Less system downtime . Wired and wireless operation . Intelligent energy consumption decisions . Increase security, including anti-terrorism through metering . Enhance tenant services . Manage one or many systems virtually from . Build for the future today anywhere in the world . Optimize and integrate legacy systems . Create platform for future additions
A modern building typically has about 30 discrete subsystems including lighting, power, video surveillance, telephone, Internet, intercom, temperature and humidity control and ventilation. In contrast to traditional buildings, where each system requires its own network using propriety protocols, in the IT Intelligent building virtually all systems run over the converged IP network. The exception is fire protection, which by law, has to run over a separate system.
The network can be thought of in four modules: . LAN: This is the building’s nerve system across which the subsystems run and are monitored and managed, day and night, from a central control room. The LAN also supports TV, voice, data, and messaging services throughout the building, in addition to images from IP video surveillance cameras. . Internet: Secure Internet access is available to all tenants, typically at speeds of 50 to100 Mbps. . IP telephony: Cisco Unified Communications Manager (Call Manager) provides advanced voice and messaging facilities throughout IT Intelligent building. . Wireless: This provides tenants with complete flexibility within the building about where they access network services. IT Intelligent building personnel can also communicate wherever they are over wireless phones.
IT Intelligent building having a converged network which reduce capital cost by 20 to 25 percent which is typically required to build discrete networks for the various subsystems and services. It has also led to a 30 percent reduction of operating costs, including spending 40 percent less on power. Technology has also revolutionized security. Images from 300 IP video cameras are relayed to the central control room. Even the garages are fully monitored, with number plate recognition technology used to restrict access to authorized vehicles. At reception, visitors are given a smart card that enables them to access only those parts of the building that their host has 'authorized.' The building’s security system can be programmed to even monitor independent security system of each office unit. IT Intelligent building incorporates an advanced water and air temperature control system. Tenants set the in-room temperature, which is then achieved and maintained through a central computer system, with over 1000 sensors, running sophisticated algorithms that continually respond to changes in the weather. A small roof-top weather station enables changes to be anticipated, for example, by raising exterior shutters to reflect or retain heat.
Better energy management enables the building to benefit from the best possible energy tariffs. A central touch screen, video-based console, which can, of course, be remotely controlled, enables temperature, lighting, and security levels to be set room by room. Wireless connectivity does not just mean being able to access the Internet from a laptop. People can operate office unit systems via their mobile phones, for example, to turn on the cooling. Tenants also benefit from advanced IP-based telephony (fixed or wireless), high-speed Internet access. The unique range of features and facilities offered by IT Intelligent building means that aamra may be in a position to charge a 50 percent plus premium, compared to other prestigious developments in the city. The company is confident that the entire building can be occupied by its existing clients who are with them for a long period of time, and therefore not much effort will be required in identifying potential tenants.
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Furthermore, “Revenue from Rental” should be considered as only 50-60% of total revenue from the building, which means 40-50% revenue can be generated through VAS, Managed Services and Outsourcing opportunities.
17.2.3 New Revenue Wings – Office Suite
This is a ready office which is fully staffed and equipped to provide flexibility and are able to adapt to office space requirements and business needs. aamra networks limited (ANL) offers Virtual Office Suite which is a complete office solution, offering private and shared furnished offices. This rented office includes Internet access, phone and voice mail services, and access to meeting rooms. The friendly and professional staffs are always ready to greet the guests with tea and a smile. It also provides clerical support and makes available the business services that will allow anyone to devote all the time and attention to the business.There will be numerous facilities available to support a growing business. The shared office staffs and classy, affordable virtual office suite will be ready to be offered in lease terms.
Intelligent Office will give a customer’s business a desirable and virtual business address. This virtual business address will reflect customer’s company name. It is a smart, affordable way to establish a business' presence in another country/city. Offsite project teams, mobile consultants, and businesses that need professional and flexible shared offices for a short time or long-term basis will find that this suite’s business addresses meet their office space needs, precisely.
Professional & Flexible Office Space for Rent
The commercial office space is located at the 18th Floor of FaruqueRupayan Tower (FR Tower), 32 Kemal Ataturk Avenue, Banani C/A Dhaka-1213 Our office suite includes:
. 24/7 access to your shared office . Broadband Internet featuring both wired and Wi-Fi Internet access . Standard office furniture . Full-feature telephone handset with hands-free speaker . Printer Machines and Photocopiers . Incoming correspondence is received and personally delivered directly to client’s suite, and outgoing mail is posted daily. Mail forwarding services are available to any address.
Sophisticated Boardrooms and Conference Rooms
There will be appropriate sized conference room with luxurious sitting arrangements of 10-12 people, LCD television, wireless projector, and white board along with professionally equipped furniture.
Key Features
. Lease minimum for 7 days or longer . Remote receptionists provide administrative & secretarial support. . Access in virtual office 24/7
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17.2.4 New Revenue Wings – NTTN Operations
One of the main hurdles for all Telecommunications and IT service providers in Bangladesh is lack of proper network infrastructure. Due to lack of network coverage, existing ISPs are unable to provide connectivity services outside Dhaka and Chittagong. Even in Dhaka and Chittagong, service providers have to rely mostly on overhead cables that frequently gets cut or disrupted due to natural calamities. BTRC, in 2009 issued multiple licenses for NTTN operations in Bangladesh. Fiber@home and Summit Communications are the first two companies who have started rolling out underground cabling through their NTTN licenses. In the last 3 years only 50% of Dhaka and 25% of Chittagong have received underground cabling facilities. In this light, aamra networks limited wishes to acquire NTTN license from BTRC and start offering underground cabling facilities to its customers. In this project, ANL will lease out already laid nationwide network of City Cell for a period of 15 years. ANL has over 900 customers who will directly and immediately be connected through this expanded network coverage system. Additionally, ANL will resale the network facility to other interested parties (service providers) and corporate entities who require intercompany connectivity in multiple locations throughout the country. Currently, ANL leases around monthly BDT 1.5 million worth of network connectivity from the NTTN and Telco service providers. By taking in the license and starting this operation, ANL will save 90% of this monthly expenditure and by selling remaining capacity make additional revenue.
Once the ANL NTTN operation is completely set up in the country, it will be providing a very high- speed broadband internet service to the people and is likely to open up many possibilities and services like Telecommunication operators, ISPs, cable TV operators. Presently Bangladesh lacks a nationwide network infrastructure for common use by operators. Without infrastructure development, it is very difficult to make information technology available to the doorsteps of the rural people. If ANL can spread infrastructure facilities across the country implementation of e-governance will be easier. With the completion of NTTN, rural people will get the telecommunication and internet network facilities to a greater extent. It will stretch optical fiber network across the country through NTTN and gradually help remove the use of overhead cables in the cities and towns. As a result, separate network for each service provider will not be required. For this, operation and maintenance cost will come down significantly, which ultimately benefits the customers.
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17.3 Implementation Schedule of Private Placement Fund
PARTICULARS AMOUNT IMPLEMENTATION IN TAKA MONTH A. DEBT REDUCTION Within the month after completion of LOAN FROM ONEBANK 156,000,000 subscription REPAYMENT OF LEASE FINANCE ( Within the month after completion of IN PROCESS FOR EXISTING 40,000,000 subscription INFRASTRUCTURE DEVELOPMENT) B. INVESTMENT Within 6 months after completion of LAND DEVELOPMENT 32,500,000 subscription IT INTELLIGENT BUILDING Processing will start within 6 months of 236,500,000 CONSTRUCTION completion of subscription C. EXPENSES RELATED TO RAISING 15,000,000 Within December 14 CAPITAL EQUITY TOTAL 480,000,000
18 Rationale behind investments
18.1 Financial Considerations Key financial considerations related to proposed Private Equity investment are given below:
. This proposal involves Private Placement of Equity representing 31.58% stake in aamra networks limited at an investment of BDT 480.00 Million. The proposed equity offering provides an attractive upside potential for prospective investors upon successful implementation of the proposed business plan. The Company has a plan to go for IPO within one year time after completion of “Raising Additional Capital “through Private Placement.
18.2 Non-Financial Considerations Key qualitative aspects related to proposed Private Equity investment are highlighted below.
The potential investors
. would be given a reasonable representation in the board depending on the ownership stake in ANL . can conduct their own due diligence with regard to legal, regulatory, accounting and business aspects of ANL . and present shareholders would execute a share subscription agreement and/or shareholder agreement as the case may be prior to the investment
18.3 Exit Strategy
IPO: The most feasible and attractive exit option for potential Private Equity investor(s) especially given the liquidity and attractive valuations in the market. The supplies of quality stocks are still very low and thus there is a huge price appreciation potential in the secondary market. The majority IPOs are oversubscribed multiple times and investor base is rapidly expanding. However, IPO itself is not an exit for prospective investor(s) since present SEC regulations allow only offer for subscription in the IPO. Therefore, prospective investors would have to divest in the secondary market subject to lock-in provisions mentioned in Section 18.5 (vi) below.
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The probable timeframe for the IPO can be mutually agreed between ANL/present shareholders and potential private equity investors. Based on projected financial statements ANL has a plan to go for IPO within the one year time after completion of “Raising Additional Capital “through Private Placement.
18.4 Investment Structuring The Private Equity investment can be structured to meet the unique requirements of prospective investors. Following broad structures are available for consideration.
Entire investment in ordinary shares
This option is more appropriate for Private Equity investors who have a long term investment horizon of 4-7 years. This option gives the full equity exposure and hence huge upside potential in terms of capital gains.
18.5 Regulatory Framework The basic policy framework for foreign investment is provided below.
i. As per the regulations of Securities and Exchange Commission (SEC), issue of capital over BDT 100 Million requires the consent of commission. ANL would seek the consent of SEC for the proposed issue of capital upon reaching in principle agreement with potential Private Equity investor(s) ii. The foreign investment (promotion & protection) Act, 1980 guarantees protection to foreign investment against nationalization and also guarantees equitable treatment. iii. Foreign investors can obtain up to 100% equity stake in any industry except defence, atomic, reserve forestry, atomic energy and currency printing and minting. iv. Foreign investors are allowed to repatriate invested capital, profits and dividends v. Avoidance of double taxation in case of foreign investors on the basis of bilateral agreements. Agreements have been reached with Belgium, Canada, China, Denmark, France, Germany, India, Italy, Japan, Poland, Romania, Singapore, South Korea, Sri Lanka, Sweden, Thailand, The Netherlands, and United Kingdom (including Northern Ireland). Negotiations are ongoing with U.S.A, Iran, Philippines, Qatar, Australia, Nepal, Turkey, Indonesia, Cyprus, Norway, Finland and Spain. vi. All shareholders of a Company at the time of IPO are subject to a lock in period of one year. The Directors and shareholders with an ownership stake of over 5% are subject to a lock-in period of three years.
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19 Historical Financial Performance
19.1.1 Revenue Trend
Revenue 450000000 400000000 350000000
300000000 250000000 200000000
Axis Title Axis 150000000 100000000 50000000 0 1 2 3 4 5 Year 2008 2009 2010 2011 2012 Revenue 172,905,580 203,612,539 270,494,890 336,594,140 414,952,807
Figure 19-1: Historical Revenue Trend
19.1.2 Gross Profit Trend
Gross Profit 200000000 150000000 100000000 50000000 0 1 2 3 4 5 Year 2008 2009 2010 2011 2012 Gross Profit 44,340,948 66,810,613 102,363,782 132,556,957 175,683,502
Figure 19-2: Gross Profit Trend
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19.1.3 Net Profit Trend Net Profit 80000000 70000000 60000000 50000000 40000000 30000000 20000000 10000000 0 1 2 3 4 5 Year 2008 2009 2010 2011 2012 Net Profit after Tax 5,156,055 24,811,576 51,861,653 58,029,466 74,939,464
Figure 19-3: Net Profit Trend
19.1.4 Fixed Asset Addition Fixed Asset Addition 70000000 60000000 50000000 40000000 30000000 20000000 10000000 0 1 2 3 4 5 Year 2008 2009 2010 2011 2012 Fixed Asset Addition 33,896,059 27,551,140 17,445,960 41,917,871 58,068,698
Figure 19-4: Fixed Asset Addition Trend
19.1.5 Ratios 2013 (Half Key Ratios 2008 2009 2010 2011 2012 Yearly) Liquidity Ratio Current Ratio 1.03 1.50 2.40 2.98 3.89 1.73 Quick Ratio 0.92 1.44 2.34 2.77 3.16 1.44 Debt Equity Ratio(In times) 0.48 0.31 0.23 0.18 0.15 0.63 Operating Ratios Accounts Receivable Turnover 26.57 30.45 9.40 10.77 7.13 3.51 Inventory Turnover 40.34 77.36 83.76 26.95 7.74 4.35 Asset Turnover 1.84 1.76 1.58 1.44 1.32 0.44 Profitability Ratio Gross Margin Ratio 25.64% 32.81% 37.84% 39.38% 42.34% 45.02% Operating Income Ratio 4.22% 13.44% 17.64% 18.82% 21.30% 21.73% Net Income Ratio 2.98% 12.19% 19.17% 17.24% 18.06% 18.12% Return on Assets(ROA) 5.50% 21.46% 30.23% 24.77% 23.80% 7.90% Return on Equity (After Tax) 8.16% 28.20% 37.09% 29.33% 27.47% 12.88% Earnings Per Share (EPS) 0.95 4.59 9.60 10.75 13.88 1.55 Net Assets Value (NAV) 11.70 16.29 25.89 36.64 50.52 12.04
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20 Audited Financial Statements
19.1 AUDITORS' REPORTTO THE SHAREHOLDERS OF
aamra networks limited We have audited the accompanying consolidated financial statements of aamra networks limited, which comprise the statement of financial position as at 30 June 2013, the statement of comprehensive income, statement of change in equity and statement of cash flows for half year then ended and a summary of significant accounting policies, other explanatory notes and information. Management's Responsibility for the Financial Statements Management of aamra networks limited is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with Bangladesh Financial Reporting Standards (BFRS), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing (BSA). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amount and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Auditors' Opinion In our opinion, the consolidated financial statements, prepared in accordance with Bangladesh Financial Reporting Standards (BFRS), give a true and fair view of the company's financial position as on 30 June 2013, and of the result of its operations and cash flows for the half year then ended and comply with the Companies Act, 1994 and other applicable laws and regulations. We also report that: (a) we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof; (b) in our opinion, proper books of account as required by law have been kept by the company so far as it appeared from our examination of those books; and (c) the company's consolidated statement of financial position and consolidated statement of comprehensive income dealt with by the report are in agreement with the books of account.
Sd/- Dated, Dhaka K. M. HASAN & CO 22 September 2013 Chartered Accountants
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aamra networks limited CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at June 30, 2013 June 30, 2013 Dec'31, 2012
ASSETS: Notes Taka Taka
Non-current assets
Property, Plant & Equipment 4(a) 347,720,425 130,728,367
Investment 5(a) - 22,998,804
Current assets:
Inventories 6(a) 28,527,176 30,914,181
Accounts Receivables and Others 7(a) 65,125,314 60,512,826
Advances, Deposits & Prepayments 8(a) 45,390,901 50,553,499
Inter Company Current Account 9(a) 4,955,122 10,691,033
Cash & Cash Equivalents 10(a) 27,762,445 17,297,996
171,760,958 169,969,535
Total Assets 519,481,383 323,696,706
EQUITY AND LIABILITIES
Equity Attributable to Shareholders
Authorized Capital
100,000,000 shares @ Tk. 10 each 1,000,000,000 700,000,000
Issued, Subscribed & Paid up Capital
26,000,000 ordinary shares @ Tk. 10 each 11(a) 260,000,000 54,000,000
Retained Earnings 12(a) 59,818,056 225,334,316
Equity of aamra Networks Ltd. 319,818,056 279,334,316
Non-controlling Interest 77,566 76,091
Total Equity 319,895,622 279,410,407
Non -Current Liabilities
Long -Term Loan 13(a) 101,117,878 -
101,117,878 -
Current Liabilities:
Short Term Loan 14(a) 57,754,431 18,913,869
Liabilities for Expenses 15(a) 7,624,027 5,377,351
Liabilities for Other Finance 16(a) 2,685,677 3,139,121
Accounts Payable & Others 17(a) 16,132,124 5,892,222
Provision for Tax 18(a) 14,271,624 10,963,735
98,467,883 44,286,299
Total Liabilities 199,585,761 44,286,299
Total Equities and Liabilities 519,481,383 323,696,706
The annexed notes form an integral part of these financial statements
Sd/- Sd/- Sd/-
Managing Director Chairman Company Secretary
Signed in terms of our report of even date annexed. Sd/- Dated, Dhaka K. M. HASAN & CO 22 September 2013 Chartered Accountants
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aamra networks limited
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the half year ended 30 June 2013
01-01-2012 01-01-2013 to to 30-06-2013 30-06-2012
Notes Taka Taka
Revenue 19(a) 213,812,184 227,092,672
Less: Cost of Service 20(a) 126,947,127 125,300,088
Gross Profit 86,865,057 101,792,584
Less: Administrative Expenses 21(a) 42,089,998 53,049,123
Operating Profit 44,775,059 48,743,461 Add: Other Income 22(a) 441,410 511,948
45,287,007 49,184,871 Less : Loss on sales of shares & Securities 560,164 -
Profit before Interest and Tax 45,287,007 48,624,707
Less : Finance Cost 23(a) 1,498,995 4,831,602 Total comprehensive Income Before 43,788,012 Tax 43,793,105
Less :Provision for Tax 24(a) 2,670,600 3,307,889
Total comprehensive Income After Tax 41,117,411 40,485,215 Appropriations:
Attributable to the Shareholder of the aamra Networks 41,115,936 Ltd 40,483,740 Non-Controlling Interest 1,475 1,475
Accumulated profit transferred to retained earnings 41,117,411 40,485,215 Earnings Per Share of Tk. 10 each 26(a) 1.56 7.61
Earnings Per Share Re-stated - 1.58
The annexed notes form an integral part of these financial statements
Sd/- Sd/- Sd/- Company Secretary Managing Director Chairman
Signed in terms of our report of even date annexed. Sd/- Dated, Dhaka K. M. HASAN & CO 22 September 2013 Chartered Accountants
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aamra networks limited CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the half year ended 30 June 2013
Amount in Taka
Attributable to the Shareholder of the aamra Networks Ltd Non- Particulars Controlling Total Ordinary Interest Retained Earnings Total Share Capital
54,000,000 143,861,739 197,861,739 74,617 Balance at 01 January 2012 197,936,356 - - - - - Stoke dividend issued
- 81,472,577 81,472,577 1,474 Profit during the period 81,474,051
54,000,000 225,334,316 279,334,316 76,091 Balance as at 31 December 2012 279,410,407
Balance at 01 January 2013 54,000,000 225,334,316 279,334,316 76,091 279,410,407 Stoke dividend issued 206,000,000 (206,000,000) - - -
Profit during the period - 40,483,740 40,483,740 1,475 40,485,215
Balance at 30 June 2013 260,000,000 59,818,056 319,818,056 77,566 319,895,622
Sd/- Sd/- Sd/- Company Secretary Managing Director Chairman
Signed in terms of our report even date annexed.
Sd/ - Dated, Dhaka K. M. HASAN & CO 22 September 2013 Chartered Accountants
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aamra networks limited CONSOLIDATE STATEMENT OF CASH FLOWS For the half year ended 30 June 2013
01-01-2013 to 01-01-2012 to
30-06-2013 30-06-2012
Taka Taka
A. Cash flow from operating activities
Cash received from customers & other income 224,872,593 191,649,080 Cash paid to suppliers & others (59,983,187) (138,592,402) Operating expenses paid (41,749,622) (45,322,666) Finance Cost (4,831,602) (1,498,995) Income Tax Paid - (4,545,944) Net cash provided by/(Used in) operating activities 118,308,183 6,235,017
B. Cash flow from investing activities Acquisition of fixed assets (231,960,415) (24,564,349) Disposal of shares 22,998,804 - Net cash used in investing activities (208,961,611) (24,564,349)
C. Cash flow from financing activities Long-Term Loan 101,117,878 - Net cash provided by/(Used in) financing activities 101,117,878 -
D. Net cash increase/ (decrease) (A+B+C) 10,464,450 (18,329,333)
Cash & cash equivalent at the beginning of the period 17,297,996 44,091,896
Cash & cash equivalent at the end of the period 27,762,446 25,762,563
The annexed notes form an integral part of these financial statements
Sd/- Sd/- Sd/- Company Secretary Managing Director Chairman
Signed in terms of our report of even date annexed. Sd/- Dated, Dhaka K. M. HASAN & CO 22 September 2013 Chartered Accountants
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aamra networks limited STATEMENT OF FINANCIAL POSITION As at June 30, 2013 June 30, 2013 Dec'31, 2012
ASSETS: Notes Taka Taka
Non-current assets
Property, Plant & Equipment 4 342,867,812 127,097,829
Investment : 5 999,900 23,998,704
Current assets:
Inventories 6 28,159,796 30,914,181
Accounts Receivables and Others 7 63,428,377 58,198,936
Advances, Deposits & Prepayments 8 43,168,766 48,012,902
Inter Company Current Account 9 6,018,960 10,691,033
Cash & Cash Equivalents 10 26,023,187 15,966,250
166,799,086 163,783,302
Total Assets 510,666,798 314,879,835
EQUITY AND LIABILITIES
Equity Attributable to Shareholders
Authorized Capital
100,000,000 shares @ Tk. 10 each 1,000,000,000 200,000,000
Issued, Subscribed & Paid up Capital
26,000,000 ordinary shares @ Tk. 10 each 11 260,000,000 54,000,000
Retained Earnings 12 53,138,942 218,801,203
Total Equity 313,138,942 272,801,203
Non-Current Liabilities
Long -Term Loan 13 101,117,878 -
101,117,878 -
Current Liabilities:
Short Term Loan 14 57,754,431 18,913,869
Liabilities for Expenses 15 7,094,430 4,807,254
Liabilities for Other Finance 16 2,599,638 2,880,563
Accounts Payable & Others 17 16,132,124 5,892,222
Provision for Tax 18 12,829,355 9,584,723
96,409,978 42,078,632
Total Liabilities 197,527,856 42,078,632
Total Equities and Liabilities 510,666,798 314,879,835
The annexed notes form an integral part of these financial statements.
Sd/- Sd/- Sd/-
Company Secretary Managing Director Chairman
Signed in terms of our report of even date annexed.
Sd/- Dated, Dhaka K. M. HASAN & CO 22 September 2013 Chartered Accountants
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aamra networks limited STATEMENT OF COMPREHENSIVE INCOME
For the half year ended 30 June 2013
01-01-2013 to 01 -01-2012 to
30-06-2013 30-06-2012
Notes Taka Taka
Revenue 19 222,582,366 207,024,629
Less: Cost of Service 20 122,376,259 121,692,096
Gross Profit 100,206,107 85,332,533
GP % 45.02% 41.22%
Less: Administrative Expenses 21 51,836,876 40,775,662
Operating Profit 48,369,231 44,556,871
Add: Other Income 22 604,906 487,310
48,974,137 45,044,181
Less : Loss on sales of shares & Securities 560,164 -
Profit before Interest and Tax 48,413,973 45,044,181
Less : Finance Cost 23 4,831,602 1,498,995
Net Profit Before Tax 43,582,371 43,545,186
Less :Provision for Tax 24 3,244,632 2,613,070
Net Profit After Tax 40,337,739 40,932,115
#REF! #REF!
Earnings Per Share of Tk. 10 each 26 1.55 7.58
Earnings Per Share Re-stated - 1.57
The annexed notes form an integral part of these financial statements.
Sd/- Sd/- Sd/-
Company Secretary Managing Director Chairman
Signed in terms of our report of even date annexed.
Sd/- Dated, Dhaka K. M. HASAN & CO 22 September 2013 Chartered Accountants
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aamra networks limited STATEMENT OF CHANGES IN EQUITY For the half year ended 30 June 2013
Amount in Taka
Ordinary Share Retained Particulars Total Capital Earnings
Balance at 01 January 2012 54,000,000 143,861,739 197,861,739 Stoke dividend issued - - -
Profit during the period - 74,939,464 74,939,464 Balance as at 31 December 54,000,000 2012 218,801,203 272,801,203
Balance at 01 January 2013 54,000,000 218,801,203 272,801,203
Stoke dividend issued 206,000,000 - (206,000,000)
Profit during the period - 40,337,739 40,337,739
Balance as at 30 June 2013 260,000,000 53,138,942 313,138,942
Sd/- Sd/- Sd/-
Managing Company Secretary Chairman Director
Sd/- K. M. HASAN & CO Chartered Accountants
Signed in terms of our report even date annexed.
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aamra networks limited STATEMENT OF CASH FLOWS For the half year ended 30 June 2013
01-01-2013 to 01-01-2012 to 30-06-2013 30-06-2012 Taka Taka
A. Cash flow from operating activities Cash received from customers & other income 217,957,831 185,399,435 Cash paid to suppliers & others (56,266,251) (133,755,596) Operating expenses paid (40,499,205) (43,596,242) Finance Cost (4,831,602) (1,498,995) Income Tax Paid - (4,545,944) Net cash provided by/(Used in) operating activities 116,360,773 2,002,658 B. Cash flow from investing activities Acquisition of fixed assets (230,420,518) (24,360,569) Disposal of shares 22,998,804 - Net cash used in investing activities (207,421,714) (24,360,569) C. Cash flow from financing activities Long-Term Loan 101,117,878 - Net cash provided by/(Used in) financing activities 101,117,878 - D. Net cash increase/ (decrease) (A+B+C) 10,056,937 (22,357,912) Cash & cash equivalent at the beginning of the period 15,966,250 41,558,464 Cash & cash equivalent at the end of the period 26,023,187 19,200,552
Sd/- Sd/- Sd/- Company Secretary Managing Director Chairman
Signed in terms of our report even date annexed
Sd/- Dated, Dhaka K. M. HASAN & CO 22 September 2013 Chartered Accountants
Page | 76 Information Memorandum – aamra networks limited aamra.com.bd
aamra networks limited NOTES TO THE FINANCIAL STATEMENTS For the half year ended 30 June 2013
ABOUT THE ORGANIZATION 1. aamra networks limited (formerly Global Online Services Limited) was incorporated in Bangladesh under The Companies Act, 1994 on 10 January 2001 vide registered No. C - 42228(1587)/2001 as a private limited company. The company was converted in to a public company limited by share on May 08, 2013 under The Companies Act 1994.
Over the last decade, aamra networks limited has been consistently providing its customers with state-of-the-art IT communication solutions and services, which includes Internet Access, Web Page Development and Hosting, Leased Port Internet Access ,Total Network Solutions, Video Conferencing Solutions, various IT enable Support, Software Development and Maintenance Services etc. The registered office of the company is situated at Sapura Tower (12th floor), 20 Kendal Ataturk Avenue, Banana C/A, Dhaka - 1213.
2. SIGNIFICANT ACCOUNTING POLICIES 2.a Basis of preparation of Financial Statements These financial statements of aamra networks limited and its subsidiaries have been prepared
on a going concern basis under historical cost convention in accordance with Bangladesh Accounting Standards (BAS) as adopted laid down by the Institute of Chartered Accountants of Bangladesh. The disclosures of information are made in accordance with the requirements of the Companies Act 1994 and the financial statements have been prepared in accordance with BAS-1 (presentation of financial statements) using the accrual basis of accounting. In the preparation of these financial statements, management used available information to make judgments, estimate and assumption that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from those estimate. 2.a Basis of Consolidation The consolidated financial statements include the financial statements of aamranetworks limited made upto period ended 01 January to 30 June 2013. The consolidated financial statements have been prepared in accordance with Bangladesh Accounting Standards (BAS) - 27: Consolidated financial statements and separate financial statements. 2.1 Property, Plant And Equipment Property, plant and equipment are stated at historical cost less accumulated depreciation in compliance with the requirements of BAS 16: "Property, Plant and Equipment". The cost of acquisition of an asset comprises its purchase price and any directly attributable cost of bringing the assets to its working condition for its intended use inclusive of inward freight, duties and non-refundable taxes.
Depreciation has been charged to write-off the cost of property, plant & equipment less any residual value, over the period of their expected useful life, in accordance with the Provisions of BAS 16: "Property, Plant and Equipment". Depreciation is provided for the period in use of the assets. Acquisitions during the period are depreciated for full year.Depreciation is charged at the following rates on reducing balance basis: Items Rate (%) Furniture & Fixture 10 Office Equipment 15 Electric Installation 18 Telephone Installation 18 Computer & Comp. Equipment 20 Data Centre 20 Fibre Optic Cable 20 Radio link/infrastructure & Backbone 18 Motor Vehicle 20 15 Office Decoration
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2.2 Components of Financial Statements: a) Consolidated Statement of Financial Position b) Consolidated Statement of Comprehensive Income c) Consolidated Statement of Changes in Equity d) Consolidated Statement of Cash Flows e) Statement of Financial Position. f) Statement of Comprehensive Income. g) Statement of Cash Flows. h) Statement of Changes in Equity i) Accounting policies and explanatory notes. 2.3 Other Regulatory Compliances The Company is also required to comply with the following major legal provisions in addition to the Companies Act 1994 and other applicable laws and regulations: The Income Tax Ordinance 1984 The Income Tax Rules 1984 The Value Added Tax Act 1991 The Value Added Tax Rules 1991 The Customs Act 1969 Bangladesh Telecommunication Regulatory Commission Act. 2.4 Valuation of Inventories Inventories are stated at cost which is lower than net realizable value in compliance with the requirements of paras 21 and 25 of BAS-2 (Inventories). 2.5 Related Party Disclosures The company carried out a number of transactions with related parties in the normal course of business and on arm's length basis. The information as required by BAS 24: Related party Disclosures have been disclosed in note-26 to the financial statements. 2.6 Cash And Cash Equivalents Cash and cash equivalents include cash in hand and with banks on current and deposit accounts which are held and available for use by the company without any restriction. There is insignificant risk of change in value of the same. 2.7 Provision For Tax Provision for tax is made @ 37.5% on estimated taxable income in accordance with Income Tax Act. The Income Tax Assessment of the company for the Assessment Year 2013-2014 is completed. 2.8 Accrued Expenses And Other Payables Liabilities for goods and services received have been accounted for those goods & services for which no payment has been made. Payables are not interest bearing and are stated at their nominal value.
2.9 Accounts Receivables Trade and other receivables are recognized at fair value of the consideration given for them. 2.10 Advances, Deposits & Prepayments Advances are initially measured at cost. After initial recognition, advances are carried at cost less deduction, adjustment or charges to other account heads. Deposits are measured at payment value. Prepayments are initially measured at cost. After initial recognition prepayments are carried at cost less charges to Statement of Comprehensive Income. 2.11 Revenue Recognition
In compliance with the requirements of BAS 18: Revenue from receipts from customers against sales and services are recognized when products and services are provided to customers, that is, when the significant risk and rewards of ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible return of goods can be estimated reliably, and there is no continuing management involvement with the goods. 2.12 Earnings Per Share (EPS) This has been calculated in compliance with the requirements of BAS 33: Earnings Per Share by dividing the basic earnings by the number of ordinary shares outstanding at the end of the period. 2.13 Number Of Employees The number of employees engaged for the period who received a total remuneration of Taka
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36,000 and above per year was 185. None of them were receiving below Taka 3,000 per month. The company has not maintained a worker's profit participation fund (WPPF) for the period ended June 30, 2013, as this is a service-based company and employment within the organization do not fall within the definition of "worker" as per Bangladesh Labour Law 2006.
2.14 Statement Of Cash Flows The Statement of Cash Flows has been prepared in accordance with the requirements of "BAS 7: Statement of Cash Flows" using direct method.
2.15 Risk and Uncertainty for use of Estimates and Judgments The preparation of financial statements in conformity with Bangladesh Accounting Standards requires management to make judgments, estimates and assumptions that affect the applicable of accounting policies and the reported amounts of assets, liabilities, income and expenses, and disclosure requirements for contingent assets and liabilities during and at the date of the financial statements.
Actual result may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions of accounting estimates are recognized in the period in which the estimate is revised in any future years affected as required by BAS 8: Accounting Policies, Changes in Accounting Estimates and Errors.
2.16 Going Concern The Company has adequate resources to continue in operation for the foreseeable future. For this reason, the directors continue to adopt going concern basis in preparing the accounts.
2.17 Financial Instruments Non -derivative financial instruments comprise accounts and other receivables, cash and cash equivalents, borrowings and other payables are shown at transaction cost.
2.18 Provision For Expenses (Pending Tax Issue) The preparation of financial statements in conformity with BAS-37 Provision, Contingent Liabilities and Contingent Assets, requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses, assets and liabilities, and the disclosure requirements for contingent assets and liabilities during and at the date of the financial statements. Due to the inherent uncertainty involved in making estimates, actual result reported could differ from those estimates.
In accordance with the guidelines as prescribed by BAS-37 provisions were recognized in the following situations:
When the company has a present obligation as a result of past event.When it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; And
- Reliable estimates can be made of the amount of the obligation.
3 OTHERS 3.1 Employee Benefits The company maintains the following benefit schemes for their employees: (a) Defined Contribution Plan The company maintains a recognized contributory provident fund for all its permanent employees. Assets of provident fund are held in a separate trustee board administered fund as per the relevant rules and is funded by contributions from both the employees and the company at pre-determined rates. (b) Insurance Scheme Employees of the company are covered under group life insurance scheme & Medical Insurance.
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3.2 Reporting Period The reporting period covers 01 January 2013 to 30 June 2013.
3.3 Reporting Currency The financial statements are prepared and presented in Bangladesh Currency (Taka), which is the company's functional currency. All financial information presented have been rounded off to the nearest Taka except where indicated otherwise.
3.4 Comparative Information and Rearrangement Thereof Comparative information has been disclosed for the period of 06 months of previous year (from 01.01.2012 to 30.06.2012) in the financial statements except statement of financial position for all numerical information and also the narrative and descriptive information where it is relevant for understanding of the current period`s financial statements. Figures for the period have been re-arranged, wherever considered necessary, to ensure better comparability with the current period.
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PROPERTY, PLANT AND EQUIPMENT 4. (DHAKA UNIT) Taka
Cost Depreciation W.D.V.
Addition Disposal Balance as Rate of Charged Disposal Balance as Particulars Balance as on Balance as on as on 30-06- during the during on 30-06- Dep.(%) during the during on 30-06- 01-01-13 01-01-13 2013 year the year 2013 year the year 2013
Land and Land Development - - 190,239,237 - 190,239,237 - - - 190,239,237
Furniture & Fixture 10 1,771,304 2,710,966 128,400 - 2,839,366 53,403 - 1,824,707 1,014,659
Office Equipment 15 9,194,743 21,335,144 1,226,087 - 22,561,231 1,002,487 - 10,197,229 12,364,002
Electric Installation - 18 3,600,990 5,296,147 - 5,296,147 152,564 - 3,753,554 1,542,593
Telephone Installation - 18 2,781,705 2,995,531 - 2,995,531 19,244 - 2,800,949 194,582
Computer & Comp. Equipment - 20 11,806,566 15,458,818 - 15,458,818 365,225 - 12,171,791 3,287,027
Data Centre - 20 896,837 4,484,186 - 4,484,186 358,735 - 1,255,572 3,228,614
Fiber Optic Cable 20 9,209,539 22,427,745 13,272,299 - 35,700,044 2,649,050 - 11,858,590 23,841,454 Radio link/infrastructure & 18 83,109,694 Backbone 148,706,271 10,879,125 - 159,585,396 6,882,813 - 89,992,507 69,592,889
Motor Vehicle 20 531,904 1,136,000 3,500,000 - 4,636,000 410,410 - 942,314 3,693,686
Office Decoration 15 11,646,591 34,182,407 11,175,370 - 45,357,777 2,528,339 - 14,174,930 31,182,847
Total 134,549,873 258,733,215 230,420,518 - 489,153,733 14,422,270 - 148,972,144 340,181,589 Note : Total Depreciation has been apportioned as following:
Direct Expenses 9,531,864
Administrative Expenses 4,890,407
14,422,270
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PROPERTY, PLANT AND EQUIPMENT (DEPZ UNIT) Cost Depreciation W.D.V.
Addition Disposal Rate of Charged Disposal Particulars Balance as Balance as on Balance as Balance as on as on 30-06- during the during Dep.(%) during the during the on 01-01-13 30-06-2013 on 01-01-13 30-06-2013 2013 year the year year year
Furniture & Fixture 266,900 10 131,334 266,900 - - 6,778 - 138,112 128,788
Office Equipment 1,173,500 15 583,473 1,173,500 - - 44,252 - 627,725 545,775
Computer & Comp. Equipment 583,750 20 440,161 583,750 - - 14,359 - 454,520 129,230 Radio link/infrastructure & 2,141,589 18 1,509,757 Backbone 2,141,589 - - 56,865 - 1,566,622 574,967
Office Decoration 2,093,414 15 679,940 2,093,414 - - 106,011 - 785,951 1,307,463
Total 6,259,153 3,344,666 6,259,153 - - 228,265 - 3,572,930 2,686,223
Grand-Total 264,992,368 230,420,518 - 495,412,886 137,894,539 14,650,535 - 152,545,074 342,867,812 Note : Total Depreciation has been apportioned as following:
Direct Expenses 71,224
Administrative Expenses 157,041
228,265
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4.( CONSOLIDATED PROPERTY, PLANT AND EQUIPMENT a) (DHAKA UNIT) Cost Depreciation W.D.V.
Addition Disposal Rate of Charged Disposal Particulars Balance as Balance as on Balance as on Balance as on as on 30-06- during the during Dep.(%) during the during the on 01-01-13 30-06-2013 01-01-13 30-06-2013 2013 year the year year year
aamra networks limited 137,894,539 264,992,368 230,420,518 - 495,412,886 14,650,535 - 152,545,074 342,867,812
ACE IT Networks Limited 5,662,743 9,293,281 1,539,897 10,833,178 317,822 5,980,565 4,852,613
Total Consolidated 143,557,282 274,285,649 231,960,415 - 506,246,064 14,968,357 - 158,525,639 347,720,425
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30-06-2013 31-12-2012
Taka Taka
5. INVESTMENTS:
Investment in ACE IT Networks Ltd. (Note-5.1) 999,900 999,900
Investment in Shares & Securities - 22,998,804
999,900 23,998,704 5.1 Investment in ACE IT Networks Ltd.
aamra networks limited holds 9,999 shares of Tk.100 each of its subsidiary company ACE IT Networks Limited. The remaining 1 share of numbers of shares ACE IT Networks Limited is being held Syed Faruque Ahmed, Chairman of the company.
5.(a.) CONSOLIDATED INVESTMENTS:
Investment in ACE IT Networks Ltd. 999,900 999,900
Investment in Shares & Securities - 22,998,804
999,900 23,998,704
Less: Inter Company transaction 999,900 999,900
- 22,998,804 6. INVENTORIES:
Qty
Video & Audio Unit 47 5,863,588 1,709,963
Attendance Device & Accessories 24 1,803,394 301,005
Fibre Optic & Accessories 13638 384,290 93,551
Media Converter 90 243,203 80,200
Media converter Chassis - 1 13,000
MR-RB 450G 16 311,553 111,827
UBNT Device & Accessories 44 988,274 182,448
Security Camera & Accessories 15 127,326 326,606
DVR Recorder - 1 28,746
Switch 12 55,685 98,138
10 ft Tower 6 24,000 20,000
UPS & Inverter 6 29,263 303,375
Wimax& CDMA Modem 100,471 7,998
Wireless Access Router 46 342,838 88,251
Lan Accessories - 2 3,172
PDH & Converter 33 2,432,808 4,432,808
PDH & Converter Accessories 21,944 96,890
Lan Equipment (Cable, Patch Cord, Rack) 9,411,363 11,948,900
Alvarion Radio Device 5,974,879 11,112,220
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28,159,796 30,914,181 6.(a). CONSOLIDATED INVENTORIES:
aamra networks limited 28,159,796 30,914,181
ACE IT Networks Limited - 367,380
28,527,176 30,914,181 7. ACCOUNTS RECEIVABLES & OTHERS :
Balance as on 01 January 58,198,936 31,249,361
Add : Addition during the period 222,582,366 414,952,807
280,781,302 446,202,168
Less :Adjusted during the period 217,352,925 388,003,232
Balance as on 30 June 63,428,377 58,198,936 Aging Schedule of Trade Receivable:
31 - 60 1 - 30 days 61 - 90 days > 90 days TOTAL days
Trade Receivable 5,393,659 37,629,350 6,256,230 14,149,138 63,428,377 7.(a). CONSILIDATED ACCOUNTS RECEIVABLES & OTHERS :
aamra networks limited 63,428,377 58,198,936
ACE IT Networks Limited 1,696,937 2,313,890
65,125,314 60,512,826 8. ADVANCES, DEPOSITS & PREPAYMENTS:
Balance as on 01 January 48,012,902 28,302,944
Add : Addition during the period 38,716,981 94,971,549
86,729,883 123,274,493
Less : Advance Adjustment 43,561,117 75,261,591
Balance as on 30 June 43,168,766 48,012,902 This is made up as follows:
Advance & Deposit Against Office Rent (Note-8.1) 4,073,000 5,231,000
Bank Guarantee & Tender Deposit (Note-8.2) 6,405,856 2,951,053
Advance Income Tax ( AIT ) (Note-8.3) 13,016,237 12,095,677
Advance Against Expenses (Note-8.4) 11,557,480 20,385,670
Advance & Security Deposit (Note-8.5) 6,951,102 6,589,302
VAT Current Account (Note-8.6) 1,165,091 760,200
43,168,766 48,012,902 -
All the above advances, deposits and prepayments are considered as good and secured by the company management.
-
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8.1. Advance & Deposit Against Office Rent:
FaruqueRupayan Tower -17th Floor 3,759,000 4,893,000
Albatross Restaurant (Cox - Bazaar) 104,000 128,000.00 Banani Store 210,000 210,000.00
4,073,000 5,231,000 8.2. Bank Guarantee & Tender Deposit:
Basic Bank - 5,000
BEPZA 46,000 18,500
Best Holdings Ltd. - 2,294,613
Commandant, AITSO - 134,919
Comptroller, BUET - 250,000
Department of Women Affair - 60,000
East West University - 5,000
Indian High Commission - 1,000,000
International University of Bangladesh 24,553 24,553 Ministry of - Shipping 265,000
Officer Commanding HQ - 866,386
Prime Bank 1,150,000 550,000
Radisson Bay View Hotel - 875,000
ShahjalalIslami Bank Ltd. - 341,385
UCEP 28,000 28,000
World Vision Bangladesh - 60,000
Security Deposit - Tender submit - Other - 1,330,000
6,405,856 2,951,053 8.3. Advance Income Tax ( AIT ):
Balance as on 01 January 12,095,677 11,065,655
Add: Addition during the period 920,560 4,963,966
13,016,237 16,029,621
Less: Adjustment made during the period - 3,933,944
Balance as on 30 June 13,016,237 12,095,677 Year wise break up:
Income Year 2001/Assessment Year 2002-03 20,796 20,796
Income Year 2002/Assessment Year 2003-04 310,084 310,084
Income Year 2003/Assessment Year 2004-05 1,046,435 1,046,435 Income Year 2004/Assessment Year 2005-06 896,665 896,665
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Income Year 2005/Assessment Year 2006-07 486,244 486,244
Income Year 2006/Assessment Year 2007-08 1,437,135 1,437,135
Income Year 2007/Assessment Year 2008-09 2,934,352 2,934,352
Income Year 2012/Assessment Year 2013-14 4,963,966 4,963,966
Income Year 2013/Assessment Year 2014-15 920,560 -
13,016,237 12,095,677 8.4. Advance Against Expenses:
Balance as on 01 January - 20,385,670
Add: Addition during the period 8,527,440 37,611,523
28,913,110 37,611,523
Less: Adjustment during the period 17,355,630 17,225,853
Balance as on 30 June 11,557,480 20,385,670 8.5. Advance & Security Deposit:
Deposit against T & T 60,000 328,200
Deposit against rent-safura tower 343,575 343,575
Deposit against BTCL bandwidth bill 258,990 258,990
Deposit against ATL bandwidth bill 3,500,000 3,500,000
Deposit against POP 110,000 110,000
Deposit against rent - DEPZ 460,821 460,821
Deposit against CEPZ 57,716 57,716
Deposit against Fiber @ Home Underground Cabling Bill 500,000 500,000
Deposit against summit communication underground cabling bill 400,000 400,000
Deposit against rent F R Tower 1,260,000 630,000
6,951,102 6,589,302 8.6. VAT Current Account:
Balance as on 01 January 760,200 694,705
Add: Addition during the period 22,854,178 38,821,524
23,614,378 39,516,229
Less: Adjustment during the period 22,449,287 38,756,029
Balance as on 30 June 1,165,091 760,200 8.(a). CONSOLIDATED ADVANCES, DEPOSITS & PREPAYMENTS:
aamra networks limited 43,168,766 48,012,902
ACE IT Networks Limited 2,222,135 2,540,597
45,390,901 50,553,499
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9. INTER COMPANY CURRENT ACCOUNT:
Balance as on 01 January - 10,691,033
Add : Addition during the period 11,862,134 24,825,131
22,553,167 24,825,131
Less : Repayment during the period 16,534,207 14,134,098
Balance as on 30 June 6,018,960 10,691,033 The company wise breakup:
aamra embroideries Ltd.. 1,100,000 500,000
aamra holding Ltd. - 2,000,000
aamra infotainment limited 1,855,122 2,786,443
aamra outsourcing Ltd. - 4,364,927
aamra technologies ltd. - 3,039,662
ACE IT Networks Ltd. - 1,063,838
6,018,960 10,691,033 Inter company loans were verified by us and found that the company has complied section 103
of the companies Act, 1994
9.(a). CONSOLIADTED INTER COMPANY CURRENT ACCOUNT:
aamra networks limited 6,018,960 10,691,033 ACE IT Networks Limited - -
6,018,960 10,691,033
Less: Inter Company transaction - 1,063,838
4,955,122 10,691,033 10. CASH AND CASH EQUIVALENTS:
Cash in hand 566,990 446,679
Cash at Bank (Notes-10.1) 25,456,197 15,519,571
26,023,187 15,966,250 10.1. Cash at bank:
Bank Asia Limited , Banani Branch
A/C No: 01233052008 91,954 92,529
A/C No: 01233051466 - 422,912
91,954 515,441 Dhaka Bank Limited, Banani Branch
A/C No: 206.100. 3714 774,265 71,671
A/C No: 206.100. 3584 2,000,453 817,163 Dhaka Bank Limited, Local Branch
A/C No: 201.100.7356 71,131 72,006 Dhaka Bank Limited, Uttara Branch
A/C No: 204.100.552 15,863 16,738
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Dhaka Bank Limited , Dhanmondi Branch
A/C No: 205.100.1001 - 642
2,861,711 978,220 Dutch Bangla Bank Limited, Banani Branch
A/C No: 1031200000594 12,608,119 4,014,649
A/C No: 1031200001113 5,097,201 2,117,739
A/C No: 1031100016776 4,508,801 7,694,796
A/C No: 1031100016790 287,827 198,727
22,501,949 14,025,911 One bank Limited, Banani Branch
A/C No: 0181020001119 - 583
- 583
25,456,197 15,519,571 10.(a) CONSOLIDATED CASH AND CASH EQUIVALENTS: .
aamra networks limited 26,023,187 15,966,250
ACE IT Networks Limited 1,739,258 1,331,746
27,762,445 17,297,996 11. ISSUED, SUBSCRIBED & PAID UP CAPITAL:
26,000,000 ordinary shares of Tk. 10 each. 260,000,000 54,000,000 The detail of shareholding positions are as follows:
No. of Class Interval Shares
aamra Holdings Ltd 12,600,000 126,000,000 27,000,000
aamra Resources Ltd 4,522,030 45,220,300 9,391,900
Augere Holdings(Netherlands) B.V 8,477,970 84,779,700 17,608,100
Syed Faruque Ahmed - 100,000 1,000,000
Syed Farhad Ahmed - 100,000 1,000,000
SyedaMunia Ahmed - 100,000 1,000,000
Fahmida Ahmed - 100,000 1,000,000
26,000,000 260,000,000 54,000,000 11.(a) CONSOLIDATED ISSUED, SUBSCRIBED & PAID UP CAPITAL: .
aamra networks limited 260,000,000 54,000,000
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12. RETAINED EARNINGS:
Balance as on 01 January 218,801,203 143,861,739
Less: Stock dividend issued - 206,000,000
12,801,203 143,861,739
Add: Net profit after tax during the year 40,337,739 74,939,464
Balance as on 30 June 53,138,942 218,801,203 12.1 RETAINED EARNINGS:
Balance as on 01 January 218,801,203 143,861,739
Less: Stock dividend issued - 206,000,000
12,801,203 143,861,739
Add: Net profit after tax (1st six month) 40,337,739 40,932,115
Add: Net profit after tax (Remaining six month) - 34,007,349
Balance as on 30 June 53,138,942 218,801,203 12.(a) CONSOLIDATED RETAINED EARNINGS: .
aamra networks limited 53,138,942 218,801,203
ACE IT Networks Limited 6,679,114 6,533,113
59,818,056 225,334,316
13. LONG -TERM LOAN :
Balance as on 01 January - -
Add : Addition during the period - 102,500,000
Add : interest & bank charge during the Period - 4,561,182
Less : Repayment during the period - 347,960 Less: Transfer to Short Term Liability (Payable within this financial - year) 5,595,344
Balance as on 30 June - 101,117,878 The break -up of the above loan is as under:
One Bank Limited (Note-13.1) - 99,116,542
Lanka Bangla Finance Limited (Note-13.2) - 2,001,336
- 101,117,878 13.1 ONE Bank Limited: Tk. 99,116,542
The above represents the balance of a lease facilities obtained from ONE Bank Limited, on the following terms and conditions: a. The rate of interest: 17% per annum
Lease period b. 60 months : c. Installments : 16 quarterly equal installments
d. Security : i. Demand promissory note.
ii. Registered mortgage along with RIGPA of 0.983 acres (98.3) decimal land at Nasirabad, Chittagong. iii. Personal guarantee of the following Directors:
Mr. Syed Faruque Ahmed, Chairman
Mr. Syed Farhad Ahmed, Managing Director
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13.2. Lanka Bangla Finance Limited: Tk. 2,001,336
The above represents the balance of a car lease facilities obtained from Lanka Bangla Finance Limited, on the following terms and conditions: a. The rate of interest: 19% per annum
Lease period b. 60 months : c. Monthly rental : Taka 64,852
d. Security : i. Comprehensive Insurance and Registration of the vehicle
favoring LBFL.
ii. Personal guarantee of Mr. Syed Farhad Ahmed, Managing Director of the Company. iii. 60 nos. postdated cheques covering monthly rentals BDT 64,852 each and one cheque covering the full receivables of BDT 3,891,120. 13.(a) CONSOLIDATED LONG-TERM LOAN : .
aamra networks limited - 101,117,878 ACE IT Networks Limited - -
- 101,117,878 14. SHORT TERM LOAN:
Balance as on 01 January 18,913,869 15,952,158
Add : Addition during the period - 50,000,000
Add: Transferred from Long Term Loan (Note-14.1) - 5,595,344
Add : Interest & Bank charge during the Period 2,181,086 11,577,622
76,690,300 27,529,780
Less :Adjustment during the period 18,935,869 8,615,911
Balance as on 30 June 57,754,431 18,913,869 The break up is as follows:
One Bank Limited
A/C No. 0181020001096 - 52,159,086
A/C No. 018LFC1130900001 - 5,206,232 Lanka Bangla Finance Limited:
A/C No. 000170100000197 - 389,112
- 57,754,431 14.1. Current portion of Long Term Loan:
One Bank Limited - 5,206,232
Lanka Bangla Finance Limited - 389,112
- 5,595,344 14.(a) CONSOLIDATED SHORT TERM LOAN: .
aamra networks limited 57,754,431 18,913,869 ACE IT Networks Limited - -
57,754,431 18,913,869
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15. LIABILITY FOR EXPENSES:
Balance as on 01 January 4,807,254 4,150,976
Add : Addition during the period 41,942,288 75,687,109
46,749,542 79,838,085
Less : Payment during the period 39,655,112 75,030,831
Balance as on 30 June 7,094,430 4,807,254 The break up as follows:
Salary & allowances 5,473,157 4,061,978
Office & roof rent 971,720 232,638
Utilities expenses 414,352 385,088
Audit fee 64,800 27,000
Provision for telephone & mobile bill 170,401 100,550
7,094,430 4,807,254 15.(a) CONSOLIDATED LIABILITY FOR EXPENSES: .
aamra networks limited 7,094,430 4,807,254
ACE IT Networks Limited 529,597 570,097
7,624,027 5,377,351
16. LIABILITY FOR OTHER FINANCE :
Balance as on 01 January 2,880,563 1,604,375
Add : Addition during the period 6,872,855 11,366,183
9,753,418 12,970,558
Less : Adjustment during the period 7,153,780 10,089,995
Balance as on 30 June 2,599,638 2,880,563 This is arrived at as follows:
Tax deduction from employees salary 1,418,295 1,051,406
Tax & VAT deduction from various party 725,188 1,349,452
PF liabilities employees & company 456,155 479,705
2,599,638 2,880,563 16.(a) CONSOLIDATED LIABILITY FOR OTHER FINANCE : .
aamra networks limited 2,599,638 2,880,563
ACE IT Networks Limited 86,039 258,558
2,685,677 3,139,121 17. ACCOUNTS PAYABLE & OTHERS:
aamra Management Solutions 166,350 161,750 aamra Technologies Ltd. 920,440 -
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AD. Rupashi Bangla - 13,082
ARA Technologies 55,637 11,254
ARCHIVES - 80,000
Atomic Power & Co 92,300 137,000
Banglalink - 3,985,735
BD Air Solution - 1,093,933
Binimoy Refrigeration 69,750 644,625
BTCL 55,200 92,000
BTCL ( Northern University) 282,240 302,400
Cable TV Service 4,000
Chittagong Communications Ltd. 198,676 246,900
Computer City 171,356 130,893
Cox's Bazaar Communications 16,650
Computer Source 76,403 103,680
Diginet 121,670 86,350
Eurotelbd online ltd. 16,000
Fiber @ Home 1,500,695 1,114,686
Global Brand Pvt Ltd. 231,217 23,400
Marine Security Services 29,438
Pacific Bangladesh Ltd. - 3,052,500
Pathway Technology 293,977 274,696
Power-Link Electronics & Compute 213,574 319,410
Richman Informatics 71,274 680,402
Speed Technology & Engineering 103,120
Stargate Communications Ltd - 323,265
Summit Communications Ltd. 636,595 1,148,850
Transcom Electronics Ltd. - 1,486,230
Wings Classic Tours &Travels 770,817 413,926
16,132,124 5,892,222 17.(a) CONSOLIDATED ACCOUNTS PAYABLE & OTHERS: .
aamra networks limited 16,132,124 5,892,222 ACE IT Networks Limited - -
16,132,124 5,892,222 18. PROVISION FOR TAX:
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Balance as on 01 January 9,584,723 8,546,386
Add : Addition during the period 3,244,632 5,584,281
12,829,355 14,130,667
Less : Adjustment during the period - 4,545,944
Balance as on 30 June 12,829,355 9,584,723
Details of the above balance is stated below:
Income Year 2003/Assessment Year 2004-05 192,976 192,976
Income Year 2004/Assessment Year 2005-06 354,349 354,349
Income Year 2005/Assessment Year 2006-07 1,437,106 1,437,106
Income Year 2006/Assessment Year 2007-08 2,016,012 2,016,012
Income Year 2012/Assessment Year 2013-14 5,584,280 5,584,280
Income Year 2013/Assessment Year 2014-15 3,244,632 -
12,829,355 9,584,723
18.(a) CONSOLIDATED PROVISION FOR TAX:
. aamra networks limited 12,829,355 9,584,723
ACE IT Networks Limited 1,442,269 1,379,012
14,271,624 10,963,735
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19. REVENUE:
Internet Unit (Taxable) (Note-19.1.) 140,751,941 149,074,590 IT Support & Software Unit (Non Taxable) (Note- 55,220,324 19.2.) 59,103,558
EPZ Unit (Non Taxable) (Note-19.3.) 11,052,364 14,404,218
Net Revenue 207,024,629 222,582,366 Internet Unit 19.1. (Taxable) Gross Revenue from 134,127,992 internet service 162,564,318 Less: VAT 17,494,916 (15%) 21,204,041 Net Revenue from internet 116,633,076 service 141,360,277 Revenue from 23,226,802 Equipment Sale 7,519,103 Revenue from domain 892,063 registration 195,210
140,751,941 149,074,590 IT Support & Software Unit (Non 19.2. Taxable) Gross Revenue from IT 5,869,090 Support & Services 3,393,088 Software & 49,351,234 Website services 55,710,470
55,220,324 59,103,558 EPZ Unit (Non 19.3. Taxable) Gross Revenue from 7,921,707 internet service 9,990,830 Less: VAT 1,033,266 (15%) 1,303,152 Net Revenue from internet 6,888,441 service 8,687,678 Revenue from - Equipment Sale 20,000 Software & 4,163,923 Website services 5,696,540
11,052,364 14,404,218
19.( a). CONSOLIDATED REVENUE:
aamra networks limited 207,024,629 222,582,366
ACE IT Networks Limited 6,787,555 6,281,306
213,812,184 228,863,672
Less: Inter company transaction - 1,771,000
213,812,184 227,092,672 20. COST OF SERVICE:
Internet Unit (Taxable) (Note-20.1) 103,605,058 101,443,399
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IT Support & Software Unit (Non Taxable) (Note- 11,821,460 20.2) 12,611,940
EPZ Unit (Non Taxable) (Note-20.3) 6,265,578 8,320,920
121,692,096 122,376,259 20.1. Internet Unit (Taxable)
Wages, salary & others 11,230,068 allowances 13,003,848
PF expenses company 304,830 405,514
Equipment lease rental expenses, 5,141,448 679,680 Infrastructure, optical fiber& Networking 34,591,246 Equipment Cost 36,895,353
POP rent 1,137,720 1,254,499
Utilities bill 368,225 548,635
Repairs & maintenance 67,920 90,438
Bandwidth Charges 25,177,269 31,962,781
Cost of Equipment Sale 18,713,547 6,987,200
Domain cost 244,532 267,125
License& others fee 495,200 489,330
Telephone bill access 52,440 104,880
Entertainment 205,320 269,870
Research & development - 1,419,012
Mobile bill 56,745 202,291
Depreciation charges 5,818,549 6,862,942 101,443,399 103,605,058
01-01-2013 01-01-2012 to
to 30-06-2013 30-06-2012
IT Support & Software Unit (Non 20.2. Taka Taka Taxable) Wages, salary & others 3,743,356 allowances 5,057,052
PF expenses company 101,610 157,700
Equipment lease rental expenses 571,272 264,320
POP rent 379,240 487,861
Utilities bill 122,742 213,358
Repairs & maintenance 22,640 35,171
Research & development 4,922,169 3,648,888
Mobile bill 18,915 78,669
Depreciation charges 1,939,516 2,668,922
11,821,460 12,611,940
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20.3. EPZ Unit (Non Taxable)
Wages, salary & others 432,521 allowances 481,500
PF expenses company 16,020 18,228
Networking Equipment Cost 1,069,832 1,774,859
POP rent 91,910 165,922
Utilities bill 82,301 112,352
Bandwidth Charges 4,443,048 5,640,491
Mobile bill 42,650 56,345
Depreciation charges 87,296 71,224 8,320,920 6,265,578
CONSOLIDATED COST OF 20.(a). SERVICE:
aamra networks limited 121,692,096 122,376,259
ACE IT Networks Limited 5,255,031 4,694,829
126,947,127 127,071,088
Less: Intercompany transaction - 1,771,000 125,300,088 126,947,127
21. ADMINISTRATIVE EXPENSES:
Internet Unit (Taxable) (Note-21.1) 29,542,976 36,110,061 IT Support & Software Unit (Non Taxable) (Note- 9,847,659 21.2) 14,042,802
EPZ Unit (Non Taxable) (Note-21.3) 1,385,027 1,684,013 51,836,876 40,775,662
21.1. Internet Unit (Taxable)
10,039,451 Salary & others allowances 10,735,344
334,877 PF expenses - company contribution 302,098
2,881,368 Relationship & management expenses 5,651,754
310,230 Car lease rental expenses -
3,113,504 Office rent 3,733,906
1,133,634 Utilities bill 1,149,322
2,160,215 Travelling expenses 3,075,839
309,750 Training Expenses 296,028
443,089 Stationery expenses 378,867
237,405 Repair & maintenance 328,614
387,735 Telephone & mobile bill 469,699
1,156,553 conveyance 1,181,402
25,500 Audit fee 80,028
2,068,632 Royalty fee 2,052,246
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41,298 Courier & postage 45,796
1,970,774 Vehicle oil, fuel & lubricants 1,859,651
8,058 Papers & Periodicals 10,160
592,988 Insurance expenses 741,494
382,588 Office maintenance 496,722
1,945,329 Depreciation charges 3,521,093 36,110,061 29,542,976
01-01-2013 01-01-2012 to to 30-06-2013 30-06-2012
IT Support & Software Unit (Non 21.2 Taka Taka Taxable)
3,346,484 Salary & others allowances 4,174,856
111,626 PF expenses - company contribution 117,482 Relationship & management expenses ( Note- 960,456 21.2.1) 2,197,904
103,410 Car lease rental expenses -
1,037,835 Office rent 1,452,074
377,878 Utilities bill 446,959
720,072 Travelling expenses 1,196,159
103,250 Training Expenses 115,122
147,696 Stationery expenses 147,337
79,135 Repair & maintenance 127,794
129,245 Telephone & mobile bill 182,661
385,518 Conveyance 459,434
8,500 Audit fee 31,122
689,544 Royalty fee 798,096
13,766 Courier & postage 17,809
656,925 Vehicle oil, fuel & lubricants 723,197
2,686 Papers & Periodicals 3,951
197,663 Insurance expenses 288,359
127,529 Office maintenance 193,170
648,443 Depreciation charges 1,369,314 14,042,802 9,847,659
21.2.1 Relationship & Management Expenses - aamra Networks Limited (ANL) receives Internal Audit services, Corporate and legal services, Secretarial services, Taxation advisory services, investment and finance related services etc. from aamra holdings limited (AHL) against which a relationship & management expenses is paid to AHL. 21.3. EPZ Unit (Non Taxable):
1,020,000 Salary & others allowances 1,302,000
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47,700 PF expenses - company contribution 38,880
11,120 Stationery expenses 32,521
32,960 Repair & maintenance 30,920
20,370 Telephone & mobile bill 18,690
17,946 conveyance 10,567
50,620 Office maintenance 93,394
184,311 Depreciation charges 157,041 1,684,013 1,385,027
CONSOLIDATED ADMINISTRATIVE 21.(a). EXPENSES:
aamra networks limited 40,775,662 51,836,876
ACE IT Networks Limited 1,314,336 1,392,247
42,089,998 53,229,123
Less: Inter company transaction - 180,000 53,049,123 42,089,998
01-01-2013 01-01-2012 to to 30-06-2013 30-06-2012
22. OTHER INCOME: Taka Taka
Interest on Bank deposit 244,906 127,310
Rent & Utilities Recovered 360,000 360,000
604,906 487,310
CONSOLIDATED OTHER INCOME: 22.(a). aamra networks limited 604,906 487,310
ACE IT Networks Limited 16,503 24,638
621,410 511,948
Less: Inter company transaction 180,000 -
441,410 511,948
23. FINANCE COST:
Internet Unit (Taxable) 3,473,686 1,123,031
IT Support & Software Unit (Non 1,350,878 374,344 Taxable) EPZ Unit (Non Taxable) 7,039 1,620
4,831,602 1,498,995
Bank Interest
One Bank Limited 2,173,237 -
Lanka Bangla Finance Ltd. 184,958 1,480,882
One Bank Limited 2,180,836 -
4,539,031 1,480,882
Bank Charge 292,571 18,113
Total Finance Cost 4,831,602 1,498,995
23.(a) CONSOLIDATED FINANCE COST:
aamra networks limited 4,831,602 1,498,995
ACE IT Networks Limited - -
4,831,602 1,498,995
24. PROVISION FOR TAX:
Allowable Revenue 149,074,590 140,751,941
Allowable Cost of Service 101,443,399 103,605,058
Gross Profit 47,631,191 37,146,883
Allowable Administrative Expense (36,110,061) (29,542,976)
Allowable Other Income 604,906 487,310
Allowable Finance Cost (3,473,686) (1,123,031)
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Profit before Tax 8,652,350 6,968,185
Provision for Tax during the period @ 37.5% 3,244,632 2,613,070
01-01 -2013 01-01-2012 to to 30-06-2013 30-06-2012
24 CONSOLIDATED PROVISION FOR TAX : Taka Taka .(a). aamra networks limited 3,244,632 2,613,070
ACE IT Networks Limited 63,257 57,530
3,307,889 2,670,600
PAYMENTS TO DIRECTORS AND 25. MANAGERS: a) The aggregate amounts paid to/ provided for the Directors & Managers of the company are disclosed below :
Chairman and Managing Directors Remuneration 4,800,000 4,800,000 (Note-25.1) Managers' Salary & Allowances 8,922,000 6,981,000
Managers' Provident Fund 288,000 234,000
14,010,000 12,015,000
b) No amount of money was expensed by the company for compensating any member of the board for special services rendered. c) The company does not pay any board meeting attendance fee to the directors of the company.
Disclosure of Directors remuneration under para 4 of Schedule XI PART II of the Companies Act 25.1. 1994 : Two directors of aamra networks limited namely Mr. Syed Faruque Ahmed & Mr. Syed Farhad Ahmed are holding the position of Chairman and Managing Director in the company respectively. Accordingly, both of them are taking remuneration. However, no other facilities were taken by them from the
company for rendering their services. Details of remuneration paid to them during the period January 2013 to June 2013 is as follows: Monthly 30-06 -2013 30-06 -2012 Design Name Remuner Amount ation Amount Tk. ation Tk. Mr. Syed Chairma Faruque 400,000 2,400,000 2,400,000 n Ahmed Managi Mr. Syed ng 400,000 2,400,000 2,400,000 Farhad Ahmed Director Total: 4,800,000 4,800,000
26. EARNING PER SHARE (EPS):
Profit after tax 40,337,739 40,932,115
Number of ordinary shares 26,000,000 5,400,000 Outstanding EPS of Tk. 10 each 1.55 7.58
EPS of Tk. 10 each Re-stated - 1.57
26 CONSOLIDATED EARNING PER SHARE (EPS): (a) Profit after tax 40,485,215 41,117,411
Number of ordinary shares 26,000,000 5,400,000 Outstanding EPS of Tk. 10 each 1.56 7.61
EPS of Tk. 10 each Re-stated - 1.58
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RELATED PARTY DISCLOSURES 27.
Total Balance as at Balance as Name of the transaction Relationship Relationship December 31, at June 30, Company during the with Company with Company 2012 2013 Taka year Taka Taka Concern under Training service aamra management common and space rent 161,750 solutions 574,100 166,350 management for training. Concern under aamra management Internet Service common 73,398 Nil solutions 66,000 Provide. management Internet service, Concern under IT Service and aamra holdings limited common 131,001 91,501 484,504 software management maintenance. Relationship & Concern under management aamra holdings limited common Nil Nil 21,400,000 expenses and management Royalty fee Concern under Inter company aamra holdings limited common 2,000,000 Nil 5,000,000 loan transaction management Internet service, Concern under aamra resources IT Service and common 200,588 8,588 limited 192,000 software management maintenance. Internet service, Concern under aamra embroideries IT Service and common 51,900 21,900 limited 30,000 software management maintenance. Concern under aamra embroideries Inter company common 1,100,000 500,000 limited 1,732,000 loan transaction management Concern under aamra technologies Inter company common Nil 3,039,662 limited 3,039,662 loan transaction management Concern under IIG bandwidth & aamra technologies common Equipment 920,440 Nil limited 232,253,795 management Purchase Concern under aamra technologies Advance against common 7,685,000 Nil limited 8,346,960 Purchase management Internet service, Concern under aamra technologies IT Service and common Nil 2,362,825 limited 6,784,073 software management maintenance. Internet service, Concern under ACE IT Networks IT Service, Subsidiary 1,063,838 Nil limited 3,585,014 software, office Company rent and utilities. Concern under aamra outsourcing Inter company common Nil 4,364,927 limited 12,559,898 loan transaction management Office rent, Concern under aamra infotainment utilities and common 1,855,122 2,786,443 limited 2,479,767 intercompany management loan Chairman and Directors Syed Faruque Ahmed NIL NIL 2,400,000 shareholder remuneration Managing Directors Syed Farhad Ahmed Director and NIL NIL 2,400,000 remuneration shareholder
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20. Five Years (or from inception) comparative financial statements (aamra Networks Limited and ACE IT Networks Limited)
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21 Projected Financial Statements (Post Private Placement & IPO)
21.1 Assumptions for Investment and Source of Fund
Particulars Unit Amount (BDT) Period
INVESTMENT
A. Land and Land Development Cost
Land Cost - 40,Nasirabad, Chittagong (61 katha) 166,850,000 April - '13
Land Development Cost 32,500,000 Jan'14
Registration cost 21,216,000 April - '13
Total Land and Land Development Cost 220,566,000
B. Cost of Building Construction
Number of floors in the Building 10
Number of floor for Parking 3
Space per floor in sqft 25,000
Total Parking Space in sqft 75,000 March - '2014
Total Space for 10 Stored Building in sqft 250,000
Construction Cost for building per sqft. 2,500
Construction cost of foundation with parking per sqft 3,000
Construction cost of foundation with parking 225,000,000
Cost for Building Construction 625,000,000 2014 -2017
IT Cost for Full building 850 212,500,000 2017 Total: 1,062,500,000
C. NTTN Project
Equipment purchase for NTTN Project 80,000,000 2015
License fee 30,000,000 For 15 years
Line rent advance for 25 years 100,000,000 For 25 years
Total initial investment 210,000,000
Revenue generation from '14
D. Data centre and office suit in three location outside Dhaka
(10 katha land with 6 storied building in each location)
Purchase of Land in Katha 20
Cost of Land (Tk. 2,500,000 per katha) 2,500,000 50,000,000 January - '2015 Utilization of land - 40% (3,000 Sft. In each floor)
Total Space for two 6 Storied Building By Sft. 36,000
Construction Cost for per Sft. 3,000
Total Cost for Building Construction 108,000,000 Jan. 15 - June 17
Equipment Installation & Setup Cost - 3 locations 6,000,000 Apr 17 - June 17
Office Decoration for office suit - 2 locations 1,000 36,000,000 Apr 17 - June 17 Office Equipment for office suit - 2 locations 9,000,000 Apr 17 - June 17
Total: 209,000,000
Revenue Generation from July '17
E. Existing Infrastructure Development Cost
Software for Automation 7,500,000 Oct'2013
Networking development Hardwar 32,500,000 Oct'2013
Total Infrastructure Development Cost 40,000,000
SOURCES OF FUND
A. From Private Placement
Proposed Private Placement - face value (12,000,000 shares @ tk.10) Tk.10 120,000,000 Dec '2013 Share premium ( 12,000,000 shares @ tk. 30) Tk. 30 360,000,000 Dec '2013 Cost of private placement 15,000,000 Dec '2013
B. From IPO
Proposed IPO - face value (12,000,000 shares @ tk.10) Tk.10 120,000,000 Sep '2014 Share premium ( 12,000,000 shares @ tk. 15) Tk.15 180,000,000 Sep '2014 C. Sale of Floor Space
Saleable space in sqft (1st floor& 2nd floor) 50,000
Price per sqft in Tk. 20,000 for ground floor 20,000
Price per sqft for first floor 18,000
Sales proceeds Ground floor ( 25,000 sqft) 500,000,000 2015
Sales proceeds 1st floor ( 25,000 sqft) 450,000,000 2016
Total 950,000,000
Profit on sale of asset
Sale value 950,000,000
Cost of saleable space @ Tk. 6000 / Sft 6,000 300,000,000
Profit on sale of asset 650,000,000
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21.2 Projected Balance Sheet (Post Private Placement and IPO)
Particulars DEC - '2020 DEC - '2019 DEC - '2018 DEC - '2017 DEC - '2016 DEC - '2015 DEC - '2014 DEC - '2013
FIXED ASSETS: 1,257,241,251 1,314,461,639 1,366,263,615 1,739,050,759 1,422,198,957 1,043,945,346 641,072,378 340,173,521
INVESTMENT 999,900 999,900 999,900 999,900 999,900 999,900 999,900 999,900 CURRENT ASSETS:
Cash & Bank Balance 14,021,333 44,807,839 40,804,352 255,216,795 726,850,751 498,249,116 420,928,214 373,445,395
Accounts Receivable 183,703,019 196,898,527 176,435,976 134,336,119 118,304,618 102,187,700 83,314,250 61,589,583 Inter Company Current Account
Advance & Prepayments 70,936,923 67,558,975 64,341,881 61,277,982 58,359,982 55,580,936 52,934,224 50,413,547 Advance Against NTTN License & line rent 94,000,000 100,000,000 106,000,000 112,000,000 118,000,000 124,000,000
Inventory 52,906,470 47,255,646 42,344,634 32,240,668 28,393,108 24,525,048 19,995,420 17,737,800 FDR 1,400,000,000 900,000,000 550,000,000
1,815,567,745 1,356,520,987 979,926,844 595,071,564 1,049,908,460 804,542,800 577,172,108 503,186,326
3,073,808,896 2,671,982,526 2,347,190,358 2,335,122,223 2,473,107,317 1,849,488,046 1,219,244,387 844,359,746
Share Capital 500,000,000 500,000,000 500,000,000 500,000,000 500,000,000 500,000,000 500,000,000 380,000,000
Share Premium 504,000,000 504,000,000 504,000,000 504,000,000 504,000,000 504,000,000 504,000,000 345,000,000
Retain Earnings 2,008,707,410 1,614,146,213 1,297,702,121 1,075,888,362 488,203,767 319,078,135 192,340,869 96,099,273
3,012,707,410 2,618,146,213 2,301,702,121 2,079,888,362 1,492,203,767 1,323,078,135 1,196,340,869 821,099,273 CURRENT LIABILITIES:
Accounts Payable 7,520,134 7,520,134 7,520,134 7,520,134 7,162,033 6,820,983 6,496,175 6,186,833 Margin Loan ------
Advance Against Floor Sale - - - - 950,000,000 500,000,000
Liabilities For Other Finances 6,174,743 5,613,402 5,103,093 4,639,176 4,217,432 3,834,029 3,485,481 3,168,619
Liabilities for Expenses 10,304,776 9,367,978 8,516,344 7,742,131 7,038,301 6,398,455 5,816,777 5,287,979
Provision For Income Tax 37,101,833 31,334,799 24,348,667 235,332,420 12,485,785 9,356,442 7,105,084 8,617,042
61,101,486 53,836,314 45,488,238 255,233,860 980,903,550 526,409,910 22,903,518 23,260,474 LONG TERM LIABILITIES:
3,073,808,896 2,671,982,526 2,347,190,358 2,335,122,223 2,473,107,317 1,849,488,046 1,219,244,387 844,359,746
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Assumptions of Projected Balance Sheet (Post Private Placement and IPO)
Fixed Asset : As per depreciation schedule
Accounts Receivable : 1.5 month gross revenue
Advance & Prepayments : 5% increase from last year balance
Inventory : 3% of Gross revenue
Accounts Payable : 5% increase from last year balance
Liabilities for Expenses : 10% increase from last year balance
Liabilities for Other Expenses : 10% increase from last year balance
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21.3 Projected Income Statement (Post Private Placement and IPO)
Particulars 2020 2019 2018 2017 2016 2015 2014 2013
Gross Revenue Internet Access 609,110,504 553,736,822 503,397,111 457,633,737 416,030,670 378,209,700 343,827,000 312,570,000 IT Support & Software Maintenance 458,647,142 382,205,952 318,504,960 265,420,800 221,184,000 184,320,000 153,600,000 128,000,000 IPLC & NPLC 86,055,347 78,232,134 71,120,122 64,654,656 58,776,960 53,433,600 48,576,000 44,160,000 Equipment Sale & Installation 142,743,528 129,766,843 117,969,858 107,245,325 97,495,750 88,632,500 80,575,000 73,250,000 Application Services 119,248,257 99,373,548 82,811,290 69,009,408 57,507,840 47,923,200 39,936,000 33,280,000 Data Centre & Office suite 19,007,975 15,839,979 13,199,983 5,739,123 Office Space Rental (CTG) 105,000,000 105,000,000 105,000,000 Revenue from NTTN 139,736,232 127,032,938 115,484,489 104,985,899 95,441,727 64,982,600 Value Added Service in IT Intelligent Building 84,000,000 84,000,000 84,000,000 Gross Revenue 1,763,548,985 1,575,188,216 1,411,487,811 1,074,688,948 946,436,947 817,501,600 666,514,000 591,260,000 Less: VAT 195,512,508 162,927,090 135,772,575 113,143,812 94,286,510 78,572,092 65,476,743 54,563,953 Less: Sales Discount 8,456,880 7,047,400 5,872,833 4,894,028 4,078,356 3,398,630 2,832,192 2,360,160 Net Revenue 1,559,579,598 1,405,213,726 1,269,842,403 956,651,108 848,072,080 735,530,878 598,205,065 534,335,887 Less: COGS Variable COGS Cost of Bandwidth 243,644,202 221,494,729 201,358,844 183,053,495 166,412,268 151,283,880 137,530,800 125,028,000 Cost of IT Support 45,864,714 38,220,595 31,850,496 26,542,080 22,118,400 18,432,000 15,360,000 12,800,000 Cost for IPLC & NPLC 25,816,604 23,469,640 21,336,036 19,396,397 17,633,088 16,030,080 14,572,800 13,248,000 Cost of Installation & Equipment 114,194,822 103,813,475 94,375,886 85,796,260 77,996,600 70,906,000 64,460,000 50,600,000 Cost for Application Services 29,812,064 24,843,387 20,702,822 17,252,352 14,376,960 11,980,800 9,984,000 8,320,000 Cost for Data Center & Office suite 8,750,592 7,292,160 6,076,800 2,532,000 Cost for NTTN Project 33,688,948 30,734,270 28,249,904 24,952,138 23,301,580 20,920,000 Cost of - Value Added Service in IT Int. Build. 42,000,000 42,000,000 42,000,000 Service Charges 70,663,428 61,446,459 53,431,704 46,462,351 40,402,044 35,132,213 30,549,750 26,565,000 Connectivity Equipment 11,609,506 9,674,588 8,062,157 6,718,464 5,598,720 4,665,600 3,888,000 3,240,000 Sub Total: 626,044,880 562,989,303 507,444,649 412,705,537 367,839,660 329,350,573 276,345,350 239,801,000
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Fixed COGS Salary & Allowances 151,310,559 126,092,132 105,076,777 87,563,981 72,969,984 60,808,320 50,673,600 42,228,000 Telephone Access 450,965 375,804 313,170 260,975 217,479 181,233 151,027 125,856 License fees 2,564,351 2,229,871 1,939,018 1,686,103 1,466,176 1,274,936 1,108,640 964,035 Rent 16,253,308 13,544,423 11,287,020 9,405,850 7,838,208 6,531,840 5,443,200 4,536,000 Utilities 5,675,758 4,729,799 3,941,499 3,284,582 2,737,152 2,280,960 1,900,800 1,584,000 Amortization ------Depreciation 56,508,085 55,934,981 50,894,183 44,807,311 30,600,093 30,861,035 29,711,561 21,023,923 Subtotal 232,763,026 202,907,010 173,451,667 147,008,802 115,829,092 101,938,323 88,988,828 70,461,814 Total COGS 858,807,907 765,896,313 680,896,316 559,714,338 483,668,752 431,288,896 365,334,178 310,262,814 Gross Profit 700,771,691 639,317,413 588,946,087 396,936,770 364,403,328 304,241,982 232,870,887 224,073,074 GP Margin 45% 45% 46% 41% 43% 41% 39% 42% Admin Expenses: Expenses for Data Center & Office suite 3,767,814 3,171,240 2,670,000 1,112,500 Expenses for Space Rental 6,000,000 6,000,000 6,000,000 Expenses for NTTN Project 31,651,430 26,376,192 21,980,160 18,316,800 15,264,000 12,720,000 Audit & Consultancy Fee 29,255,593 26,595,994 24,178,176 21,980,160 673,486 612,260 556,600 506,000 Communication Expenses 5,144,613 4,676,921 4,251,746 3,865,224 3,513,840 3,194,400 2,904,000 2,640,000 Conveyance 5,916,305 5,378,459 4,889,508 4,445,008 4,040,916 3,673,560 3,339,600 3,036,000 Management fee & Royalty 38,584,599 35,076,908 31,888,098 28,989,180 26,353,800 23,958,000 21,780,000 19,800,000 Entertainment 1,286,153 1,169,230 1,062,937 966,306 878,460 798,600 726,000 660,000 Business Development and R&D 4,681,598 4,255,998 3,869,089 3,517,354 3,197,594 2,906,904 2,642,640 2,402,400 Insurance 481,585 458,653 436,812 416,012 396,202 377,335 359,366 342,254 Marketing & Promotion 15,433,839 14,030,763 12,755,239 11,595,672 10,541,520 9,583,200 8,712,000 7,920,000 Office Maintenance 2,057,845 1,870,768 1,700,699 1,546,090 1,405,536 1,277,760 1,161,600 1,056,000 News Paper & Periodicals 77,169 70,154 63,776 57,978 52,708 47,916 43,560 39,600 Office Rent 17,594,911 15,995,374 14,541,249 13,219,317 12,017,561 10,925,056 9,931,869 9,028,972 Salary & Allowances 79,797,237 72,542,943 65,948,130 59,952,845 54,502,587 49,547,806 45,043,460 40,948,600 Regulatory expenses 342,974 311,795 283,450 257,682 234,256 212,960 193,600 176,000 Printing & Stationeries 1,414,769 1,286,153 1,169,230 1,062,937 966,306 878,460 798,600 726,000 Provision for Bad debts 5,270,013 4,790,921 4,355,383 3,959,439 3,599,490 3,272,264 2,974,785 2,704,350 Repair & Maintenance 1,543,384 1,403,076 1,275,524 1,159,567 1,054,152 958,320 871,200 792,000 Security & Protection 874,584 795,077 722,797 657,088 597,353 543,048 493,680 448,800 Training Expenses 11,961,226 10,873,841 9,885,310 8,986,646 8,169,678 7,426,980 6,751,800 6,138,000
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Traveling & Accommodation 10,675,072 9,704,611 8,822,374 8,020,340 7,291,218 6,628,380 6,025,800 5,478,000 Utilities 6,173,536 5,612,305 5,102,096 4,638,269 4,216,608 3,833,280 3,484,800 3,168,000 Vehicle Expenses 6,430,766 5,846,151 5,314,683 4,831,530 4,392,300 3,993,000 3,630,000 3,300,000 Depreciation 75,712,304 90,866,995 111,892,961 22,340,887 21,146,296 22,265,998 8,389,581 9,966,386 Total Admin Expenses 362,129,321 349,160,523 345,059,427 225,894,829 184,505,866 169,635,486 130,814,542 121,277,362 Net Operating Profit 338,642,370 290,156,890 243,886,660 171,041,941 179,897,461 134,606,496 102,056,345 102,795,712 Financial Expenses: Interest on Loan/Lease ------12,000,000 Interest on margin loan ------Bank Charges 117,897 107,179 97,436 88,578 80,526 73,205 66,550 60,500 Total Financial Expenses 117,897 107,179 97,436 88,578 80,526 73,205 66,550 12,060,500 Net Profit 338,524,473 290,049,711 243,789,225 170,953,363 179,816,936 134,533,291 101,989,795 90,735,212 Other Income /(loss) 3,138,557 2,729,180 2,373,200 2,063,652 1,794,480 1,560,418 1,356,885 1,179,900 Other Income (Income from Sale of Space) 650,000,000 Interest on FDR 90,000,000 55,000,000 ------Net Profit Before Tax 431,663,030 347,778,891 246,162,425 823,017,015 181,611,416 136,093,709 103,346,680 91,915,112 Net Profit Margin 28% 25% 19% 86% 21% 19% 17% 17% Provision for Tax 37,101,833 31,334,799 24,348,667 235,332,420 12,485,785 9,356,442 7,105,084 8,617,042 Net Profit After tax 394,561,197 316,444,092 221,813,758 587,684,595 169,125,631 126,737,266 96,241,596 83,298,070 NPAT Margin 25% 23% 17% 61% 20% 17% 16% 16% Profit brought forward 1,614,146,213 1,297,702,121 1,075,888,362 488,203,767 319,078,135 192,340,869 96,099,273 218,801,203 Accumulated Profit available to distribute dividend 2,008,707,410 1,614,146,213 1,297,702,121 1,075,888,362 488,203,767 319,078,135 192,340,869 302,099,273 Stock Dividend Paid 206,000,000 Profit transferred to B/S 2,008,707,410 1,614,146,213 1,297,702,121 1,075,888,362 488,203,767 319,078,135 192,340,869 96,099,273 EBITDA 560,862,758 491,958,866 406,673,805 888,190,139 231,643,850 187,733,529 140,157,487 133,786,021 No. of Shares 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 50,000,000 38,000,000 EPS 7.89 6.33 4.44 11.75 3.38 2.53 1.92 2.19 NAV/ share 60.25 52.36 46.03 41.60 29.84 26.46 23.93 21.61
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21.4 Assumptions of Projected Income Statement (Post Private Placement and IPO)
1. Revenue Growth for existing product: Internet access 10%, IT Support & Software maintenance 20%, IPLC & NPLC 10%, Equipment sale & installation 10%, application 20% in every year New product : NTTN revenue will be generated from January'15 and in second Qtr. Of 2016 utilization will be 100%. 10 % revenue will be increased in every year from 2017 Rental Income from IT intelligent building will be generated from January'18. Rent will be Tk. 50 pwesqft ( Rentable space 175,000 sqft) Income from value added service of IT intelligent building will be tk 40 per sqft and cost against this revenue will be tk 20 per sqft. ( Space 175,000 sqft) Income from Data centre and office suit will be generated from July'17. 15 % revenue growth estimated
2. Variable COGS Variable COGS estimated @ following % of respective revenue: Internet access 75%, IT Support & Software maintenance 10%, IPLC & NPLC 30%, Equipment sale & installation 80%, application 25%, Data centre& office suite 45%,Value added service of IT intelligent building 50%
3. Fixed COGS : 20% of increment of all fixed COGS expenses estimated
4. Administrative expenses : 10% increment of all administrative expenses estimated Depreciation estimated as per schedule
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21.1 Projected Revenue Mix in 2020
Product Revenue Mix
Internet Access
6% IT Support & Software 1% 8% 5% Maintenance 34% IPLC & NPLC 7% 8% Equipment Sale & Installation
26% Application Services
5% Data Centre & Office suite
Office Space Rental (CTG)
Figure 6.1 Revenue Mix in 2020
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21.2 Projected Cash Flow Statement(Post Private Placement and IPO)
Particulars As on DEC. As on DEC. As on DEC. As on DEC. As on DEC. As on DEC. As on DEC. As on DEC. As on DEC.
2020 2019 2018 2017 2016 2015 2014 2013 2012
Operating Activities
Net Income from Operations 394,561,197 316,444,092 221,813,758 587,684,595 169,125,631 126,737,266 96,241,596 83,298,070 74,939,464
Adjustments For Non-cash items charged
to Income
Depreciation 132,220,388 146,801,976 162,787,144 67,148,198 51,746,389 53,127,033 38,101,142 30,990,309 26,850,723
Bad debts 5,270,013 4,790,921 4,355,383 3,959,439 3,599,490 3,272,264 2,974,785 2,704,350 2,229,669 Increase or decreases in Current Assets
Accounts Receivable 7,925,495 (25,253,472) (46,455,241) (19,990,939) (19,716,408) (22,145,714) (24,699,452) (6,094,997) (29,179,244)
Inter Company Current Account 10,691,032 (10,691,032)
Advance & Prepayments (3,377,949) (3,217,094) (3,063,899) (2,917,999) (2,779,047) (2,646,711) (2,520,677) (2,400,645) (19,709,958)
Advance Against NTTN License 6,000,000 6,000,000 6,000,000 6,000,000 6,000,000 (124,000,000) - -
Inventory (5,650,823) (4,911,012) (10,103,966) (3,847,560) (3,868,060) (4,529,628) (2,257,620) 13,176,381 (23,342,888) Total Increase or decreases in Current Assets 4,896,723 (27,381,578) (53,623,106) (20,756,498) (20,363,515) (153,322,053) (29,477,749) 15,371,771 (82,923,122)
Increase or decreases in Current
Liabilities
Accounts Payable - - - 358,102 341,049 324,809 309,342 294,611 (312,566)
Margin Loan ------(18,913,869) 2,961,711
Advance Against floor sale - - - (950,000,000) 450,000,000 500,000,000 - -
Liabilities For Other Finances 561,340 510,309 463,918 421,743 383,403 348,548 316,862 288,056 1,276,188
Liabilities for Expenses 936,798 851,634 774,213 703,830 639,846 581,678 528,798 480,725 656,278
Provision For Income Tax 5,767,035 6,986,132 (210,983,753) 222,846,635 3,129,342 2,251,358 (1,511,957) (967,681) 1,038,337
Total Increase or decreases in Current Liabilities 7,265,173 8,348,076 (209,745,622) (725,669,690) 454,493,640 503,506,393 (356,956) (18,818,157) 5,619,948
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Cash flow from direct Operational Activities 544,213,494 449,003,487 125,587,557 (87,633,956) 658,601,635 533,320,903 107,482,818 113,546,343 26,716,681
Investment Activities
Fixed Asset addition (75,000,000) (95,000,000) 210,000,000 (384,000,000) (430,000,000) (456,000,000) (339,000,000) (244,066,001) (58,068,697)
Investment ------22,998,804 5,759,801
FDR (500,000,000) (350,000,000) (550,000,000) ------
Net Cash Flow From Investing Activities (575,000,000) (445,000,000) (340,000,000) (384,000,000) (430,000,000) (456,000,000) (339,000,000) (221,067,197) (52,308,896)
Financial Activities ------
Share Capital ------120,000,000 326,000,000 -
Share premium ------159,000,000 345,000,000
Dividend Paid ------(206,000,000)
Net Cash Flow From Financial Activities ------279,000,000 465,000,000 -
Net Cash Increase (Decrease) in the Year (30,786,506) 4,003,487 (214,412,443) (471,633,956) 228,601,635 77,320,903 47,482,818 357,479,146 (25,592,214)
Add: Opening Cash 44,807,839 40,804,352 255,216,795 726,850,751 498,249,116 420,928,214 373,445,395 15,966,250 41,558,464
Closing Cash at the end of the period 14,021,333 44,807,839 40,804,352 255,216,795 726,850,751 498,249,116 420,928,214 373,445,395 15,966,250
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22 Ownership stake
The investment of BDT 480 Million offers an equity stake of 31.58% in ANL for potential equity investors. The resulting capital structure of the Company subsequent to the investment by potential Private Equity investor is provided below.
Shareholders No. of Shares Face Value Taka Percentage of Shares
aamra holdings Ltd 12,600,000 10 126,000,000 33.16% aamra resources ltd 4,522,030 10 45,220,300 11.90% Augere Holdings (Netherlands) B.V 8,477,970 10 84,779,700 22.31% Syed Faruque Ahmed 100,000 10 1,000,000 0.26% Syed Farhad Ahmed 100,000 10 1,000,000 0.26% SyedaMunia Ahmed 100,000 10 1,000,000 0.26% Fahmida Ahmed 100,000 10 1,000,000 0.26% Private Placement 12,000,000 10 120,000,000 31.58% Total 38,000,000 - 380,000,000 100%
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23 Investment plan for the upcoming years
Particulars Amount (BDT) A. Land and Land Development Cost Land Development Cost 32,500,000 Total Land and Land Development Cost 32,500,000
B. Cost of Building Construction Number of floors in the Building 10 Number of Parking Lot Floors 03 Space per floor in sqft 25,000 Total Space for 10 Stored Building in sqft 250,000 Total Space of Parking Lot (03 Floors) in Sqft 75,000 Construction Cost for Building per Sqft. 2,500 Construction Cost of foundation with parking per Sqft 3,000 Construction Cost of foundation with parking 225,000,000 Cost for Building Construction 625,000,000 IT Cost for Full building 850 212,500,000 1,062,500,000 C. NTTN Project Equipment purchase for NTTN Project 80,000,000 License fee 30,000,000 Line rent advance for 25 years 100,000,000 Total initial investment 210,000,000
Data centre and office suite in three location outside D. Dhaka (10 khata land with 6 storied building in each location) Purchase of Land in Khata 20 Cost of Land (Tk. 2,500,000 per khata) 2,500,000 50,000,000 Utilization of land - 40% (3,000 Sft. In each floor) Total Space for two 6 Storied Building By Sft. 36000 Construction Cost for per Sft. 3000 Total Cost for Building Construction 108,000,000 Equipment Installation & Setup Cost - 3 locations 6,000,000 Office Decoration for office suit - 2 locations 1000 36,000,000 Office Equipment for office suit - 2 locations 9,000,000 Total Data Center and Office Suite Cost 209,000,000
E. Existing Infrastructure Development Cost Software for Automation 7,500,000 Networking development Hardwar 32,500,000 Total Infrastructure Development Cost 40,000,000
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24 Credit rating Report
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25 Profile – aamra companies (Holding Company and Sister Concerns)
We believe in the power of partnership. The power to achieve.
Together. aamra is a family of businesses focused Vision towards participating in the modernization of Excellence and innovation unlimited, Bangladesh by providing technology driven through the power of “WE” solutions. aamra recognizes that Bangladeshi companies need modern, technology-driven Mission Statement systems, to be effective and competitive. aamra’s business was founded on providing To empower our customers, employees, partners and communities by providing the customized and integrated technology- basedsolutions that enable our customers to finest products, services and practices. maximize their business potential. aamra holds the distribution and marketing rights of a Recognitions number of world renowned, technology driven, . Denoted as one of the top 500 products and solutions in ICT, Garments, and companies in Bangladesh since 2007 by Professional Developments. Dun & Bradstreet. . Practicing Quality Management Aamra started its journey in 1985 as Texas Services (ISO 9001:2008) since 2003 Group of Companies. The Company had taken . Listed global supplier for United on various value-added roles and had stakes in Nations since 2010. a cross-section of businesses: We Promote Texas Group of companies, in order to better aamra is an avid supporter and sponsor of reflect its corporate philosophy, principals, Sports and have been supporting National core values and identity changed its name to Cricket, Football and the Athletics for the ‘aamra’in 2008. last 9 years. aamra is also promoting tourism in Bangladesh through sponsoring multiple events throughout the year since 'We believe our new name would prove our 2007. allegiance to our roots and origin, providing a reflection of our personal commitment to our core values.' Achievements WE contribute in- Syed Farhad Ahmed . 51% of total RMG units exported Managing Director annually . 36% of total annual revenue from RMG ‘aamra is the Bangla word for ‘we’. It sector recognizes the power that partnership and Market Leader in- cooperation has in achieving any goal. We . E-Payment Solutions believe that by harnessing the strength of WE are- togetherness with all our stakeholders, . BEPZA partner – connectivity in all including our customers and partners, we will EPZs, covering 80% of clientele be able to surmount any obstacle in our path . Connecting 85,000+ corporate work and scale new heights.’ stations
Syed Faruque Ahmed . IT Partner of BCB, BFF, BOA Chairman
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25.1 Textile and Apparels
The flagship of aamra companies, aamra Aamra Resources Limited also holds the resources limited (ARL) started its journey distribution and marketing rights of a number back in 1987. Decades later, ARL has of world renowned technology driven established itself as a market leaderowing to products. its customeroriented service and an uncompromising attitudeto provide high- aamra is the pioneer of computerized quality specialized products and services with embroidery and CAD/CAM in garments best available technology. sector in Bangladesh. Presently aamra has As one of the leading indenting houses in three separate concerns contributing to this Bangladesh, ARL plays an important role in the high yielding sector of our economy. fields of apparel and textiles. Driven by success from customer satisfaction, ARL is dedicated to provide the highest quality standards and ensure personalized service.
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25.2 Professional Development & Lifestyle
aamra has come forward to explore the rising “Better trained employees deliver better business prospects of the Lifestyle Services results” inspired the establishment of Aamra sector. Our world-class corporate fitness Management Solutions (AMS) in 2008. center in Chittagong is equipped with State-of- Offering a range of training to employees the-Art equipment. We aim to enhance the from various telecommunications, IT, financial wellness levels of corporate Bangladesh. It and development organizations, AMS brings has been scientifically proven that fitter together the best in technology with employees can actually lead to a better bottom extensively experienced personnel. With a line. focus on building the talent base in Bangladesh (both as individuals and in aamra believes that to succeed, corporate corporations), AMS is a one-of-a-kind Bangladesh needs highly trained human operation. resources. It is only through capable and well- qualified HR that a company can attain its fullest potentials. With this in mind aamra has recently invested into HR training and staffing services sector. We endeavor to partner with our clients to ensure they have a steady stream of human resource to help attain their business goals.
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25.3 Information Technology aamra is a pioneer in the Information and We also work with technology that provides Communication Technology industry of innovation for today’s converged Bangladesh, having launched our computer and communication networks. Our integrated network services back in 1987. We have communication gateway (ICG) product evolved our trade initiatives in the ICT sector portfolio helps enterprise, SME and SOHOs with an aim to serve the market demands of a nationwide migrate from legacy broad range of Business IT needs. We address communication networks to next generation all aspects of a product/project development packet network infrastructure, all through a lifecycle, ranging from preliminary analysis and single integrated suite of solutions. design to hardware and software specification, project implementation, and training, local and aamra ensures its clients an exceptional level International IP Capacity transmission. of service using appropriate mix of world- class talent, strong management focus, At aamra we provide corporate IT solutions dedicated business units and a strongly built offering various IT services nation-wide. We financial platform. We endeavor to provide have the expertise and specialization to provide superior services by handling knowledge world-class connectivitysolutions such as based and manpower intensive activities to IIG, IPLC, MPLS, and NPLC. aamra places improve the client's cost structure, special importance on quick adoption of new competitive efficiency, price-performance and technology. bottom line results.
We continuously strive to deliver true business Presently aamra has five separate business benefits by simplifying connectivity and units contributing to the ICT sector. providing effective IT solution for maximum performance, security and convenience. We provide complete Web Solutions and information services to both localandforeigncl ients, as well as E-commerce capabilities, order processing, payment handling,product/services delivery, and all other pertinent services throughout the transaction cycle.
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25.4 Key Achievements
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25.5 Strategic Business Units
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25.6 Business & Technology Partners
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Annexure
Annexure 2: Economic overview of Bangladesh
Background Bangladesh gained independence from Pakistan in 1971. Over the years the country went through famine, natural disaster and political turmoil. However, following the restoration of democracy in 1991, Bangladesh has set its course to become a stable political regime with rapid development, conducive regulatory environment and developing capital markets. Bangladesh is located in South Asia with close proximity to major emerging markets like China and India. This gives the country an added advantage because of easy access to cheap raw materials sourcing with lower transportation costs and shorter lead times. Bangladesh has reformed its regulations to improve the investment climate for foreign investors; it now allows 100% foreign ownership of companies other than defense equipments, reserve forestry, atomic energy, currency printing and minting with full repatriation of capital and interest.
Bangladesh has been included in the “Next Eleven” (N-11) economies of the world by Goldman Sachs. The N-11 countries are assumed to follow the BRIC nations, who are forecast to give the developed nations competition in the near future. J.P. Morgan included Bangladesh in the “The Frontier Five” in its publication in a report in 2007. “The Frontier Five” was selected on the relative attractiveness of these markets based on macro-economic and demographic trends. On the same note, PriceWaterHouseCoopers considered Bangladesh for a shortlist of 13 Emerging markets to achieve remarkable economic growth in the paper “The World in 2050”. Also, the World Bank has ranked Bangladesh as 17 for ‘Investor Protection’ above India (29) and Vietnam (143).
Macroeconomic Overview Bangladesh has been quite resilient to the effects of the global recession. During FY 2010/11, the Bangladesh economy attained 6.66% real GDP growth, mildly impacted by the global slowdown, due to limited exposure of the banking system to global financial markets and strong domestic demand. The main contributors to the Bangladeshi economy are the ready-made garments industry and the remittances from workers abroad.
GDP Growth
Bangladesh managed to maintain a satisfactory annual GDP growth rate of around 6% despite two major natural disasters, uncertain political landscape from September, 2006 to December, 2008 and aftermath of the global recession. The annual GDP Growth rates for the last six years are given in the graph below.
GDP Growth Rate of Bangladesh
GDP Growth Rate 6.66% 7.00% 6.63% 6.43% 6.19% 6.50% 6.07% 5.74% 6.00% 5.50% 5.00% 2006 2007 2008 2009 2010 2011
Figure 0-1: Resilience of Bangladesh Economy (Source: World Bank)
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Bangladesh economy has been quite impervious to external and natural shocks. The economy has bounced back strongly and speedily for a number of adverse economic and environmental events since its liberation, as indicated in the graph below.
Figure 0-2: Resilience of Bangladesh Economy
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Source: Bangladesh Bank
Composition of GDP
The economy of Bangladesh is dominated by the service sector which contributes to about 53% of the GDP of the country. The pie chart below shows the composition of the sector wise contribution to GDP. This mix has been fairly maintained over the past few years.
Figure 0-3: Composition of GDP
GDP
18% Agriculture 53% 29% Industry Services
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Fiscal and Monetary Aspects
Major fiscal and monetary aspects that have major implication on the investment environment are briefly discussed below.
Budget Deficit
Bangladesh has maintained a balanced fiscal deficit despite the continued economic growth. Over the last ten years, budget deficit had been moderate which limits financial risk associated with the economy. Further, the public debt as a % of GDP has been gradually falling towards 22% level by FY- 2010/11 from over 34%% due to moderate budget deficit and growing remittances.
Figure 0-4: Budget Deficit and Government Debt Ratios to GDP
Budget Deficit 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
-2 -1.6
-2.9 -4 -3.3 -3.2 -3.7 -3.4 -3.4 -3.7 -3.6
-6 -5.3 Percentage of GDP
Source: www.tradingeconomics.com | Bangladesh Bank
Government Debt Ratios to GDP 40 34.4 34.4 33.9 35 29.9 31.1 29.7 30 27.7 24.2 25 22.8 20 15 10 5 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011
Percentage of GDP
Source: www.tradingeconomics.com| Bangladesh Bank
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i. Balance of Payments
Although Bangladesh has trade deficit, the gap is shrinking with rising exports. The current account balance was positive since 1996 due to large inflows of remittances from the workers living outside Bangladesh.
Table 0-1: Balance of Payment
2007 2008 2009 2010 2011
Current Account Balance 936 702 2416 3724 995
Overall Balance 1493 331 2058 2865 -925
Source: Bangladesh Bank Annual Report
ii. Exchange Rates:
The exchange rate against dollar has been quite stable with 3.5% yearly depreciation over last 10 years. The exchange rate is determined by a floating rate exchange system from 2003.
Figure 0-5: Historical Exchange Rate Movement
BD Taka 100 81.2 80 67.08 69.03 68.6 68.8 69.18 71.71 57.43 57.9 58.94 61.39 60
40 BD Taka
20
0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: Bangladesh Bank
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iii. Inflation
The inflation rate of Bangladesh has been quite steady in the last few years. Inflation rate decreased to 8.8% in the last fiscal year mainly due to fall in food and petroleum price in the global market.
Figure 0-6: Historical Inflation Rate Movement
Inflation (%) 12 9.94 10 8.8 7.16 7.2 7.31 8 6.49 6.66 5.83 6 4.38 Inflation 4 2.79 2 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Source: Bangladesh Ban
Capital Markets Overview
Securities and Exchange Commission (SEC), formed in 1993, is the regulatory body to oversee the operations of capital market in Bangladesh. The country has two stock exchanges, one in Dhaka and the other in Chittagong, with Dhaka being the prime bourse in the country. The Central Depository Bangladesh Limited provides depository services to both exchanges. The key industry players of the capital market include commercial banks, merchant banks, stock brokers, credit rating agencies, asset management companies and mutual funds.
Market capitalization inclusive of new issues increased remarkably by 5.7 percent to Taka 2853.9* billion or 36.2 percent of GDP at the end of FY11 from Taka 2700.7 Billion at the end of FY10 in Dhaka stock exchange (DSE). In FY11, the amount of turnovers in the secondary market also increased by 27.1 percent and 48.2 percent respectively at DSE and CSE. In FY11, all-share price index in DSE and CSE decreased by 0.4 and 5.8 percent respectively. Day to day changes in price indices and market capitalization in FY11 were mainly reflected by local conditions with a momentous response during the year.
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Figure 0-7: Bangladesh Stock Market Highlights
Source: Bangladesh Bank Annual Report
Present Capital Market Trends
. Nineteen companies raised new equity of Taka 27.9 billion in the capital market in FY11 . In market capitalization excluding treasury bonds and debentures, the financial sector dominated with 49.2 percent share, followed by services and miscellaneous (26.2 percent), manufacturing (24.3 percent) and corporate bonds (0.3 percent) at end JuneFY11. . Book Building system has been introduced to price IPOs of companies with strong fundamentals, which is expected to increase the flow of quality stocks into the market. . The market had shortage of quality debt instruments. However, with the introduction of BASEL II, commercial banks are expected to bridge their capital shortfall via bonds. This is likely to help develop the secondary debt market. . SEC is striving to raise the quality of corporate governance to prevent any debacle of the stock market like 1996. . More mutual funds are being launched. The professionally managed funds would help to stabilize the market in an event of short term fluctuation or speculative bubble. Economic Outlook The medium to long term outlook of Bangladesh is highly attractive. Apart from the snapshot of economy, the following aspects also point to the potentials of the country. The country is expected to maintain its present growth rate and once it starts to capitalize on its geographical and other advantages, it IS expected to post double digit growth rate in the future. In fact, Bangladesh targets to achieve a GDP growth rate of 10% by the end of FY-2017 and by 2021 Bangladesh plans to meet the Millennium Developments goals to become a middle income country.
. Huge domestic market - A country of more than 160 million people, together with a rising middle income segment contributes to huge domestic demand. . Bangladesh is an ethnically homogeneous country with ample supply of skilled and unskilled manpower at wage rates amongst the lowest anywhere. Bangladesh has 60% of its population in 0-25 year’s class . Bangladesh is located virtually as a land-bridge between the emerging markets of South Asia and the fastest growing markets of South East Asia and the ASEAN countries. India and
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China which accommodate more than 25% of world population can act as a major catalyst behind Bangladesh’s growth. . The LDC status of Bangladesh is an important opportunity for foreign investors to use Bangladesh as a manufacturing base for preferential access to markets in advanced economies. . Bangladesh has been remarkably successful in controlling populating growth (from an average rate of 2.4% during 1980-90 to 1.5% in 2000) . Bangladesh has been mobilizing domestic resources at an increasing rate and domestic resources currently finance more than 50% of its development budget. . Private sector accounts for more than 90% of the economic activity unlike many other countries. . Bangladesh has never defaulted in its debt-service liabilities to multi-lateral and bilateral donors, has excellent relationships with all neighbouring countries and always has a neutral image in international disputes. Bangladesh achieves Ba3 (Moody's) stable rating for 3rd consecutive year and BB- (S&P) sovereign rating with stable outlook for three consecutive years 2010, 2011,2012.
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