Environment ANNUAL REPORT 2014 Viable

Bearable Sustainable Economic BSRM STEELS LIMITED

Equitable

Social

SUSTAINABILITY IS THE KEY TO PROGRESS ANNUAL REPORT 2014

BSRM STEELS LIMITED ANNUAL REPORT 2014

BSRM STEELS LIMITED THE 3 PILLARS OF SUSTAINABILITY

33 Key Management The quality of life on the planet depends on adequate energy generation and consumption; safe and dependable mass transportation and extraction of Chairman’s Message 35 mineral resources from the bowels of the earth. All these activities come at a price for the environment. There is a limit to the extent the environment can 39 From the desk of endure human activity Managing Director

Sustainability is based on a simple principle: Everything that we need for Directors’ Report 43 survival and well-being depends, either directly or indirectly, on our natural CONTENTS Corporate Social environment. Sustainability creates and maintains the conditions under which 67 Responsibilities human beings and nature can exist in productive harmony, that permit fulfilling Sustainable Growth-Green BSRM Vision, Values Environment, Human 05 Resource and Information 73 the social, economic and other requirements of present and future generations. and Code of Conduct Technology Developmen

BSRM Group’s 11 75 Corporate Sustainability is important to making sure that we have and will continue to milestones Governance Report have, the water, materials, and energy resources to protect human health and Certificate on Compliance with the our environment for generations to come. 13 Awards & Recognitions conditions of Corporate 77 Governance Guideline Report of the The 3 pillars of sustainability are Economic, Social and Environment. The Performance at 17 78 a Glance - 2014 Audit Committee interaction of economic and social factors develops Equitable distribution of Statement of CEO & resources. The interaction of social and environmental factors makes human 19 Key Financial Highlights CFO on 80 development Bearable. Finally, the interactions of economic and environmental Financial Statements factors make human life Viable. All the 3 factors combine to make Sustainable Key Performance Indicators Auditors’ Report 20 83 & Financials 2014 development a reality. Value Added Board of Directors’ 133 22 Statement & EVA Report – BISCO

Auditors’ Report & Products & Markets 23 134 Financial of Subsidiary – 2014

Shareholders’ 26 Letter of Transmittal Information 157

Notice of AGM 27 161 Events and Images

Corporate & Glossary of terms 163 29 Contact Information

Attendance & Board of Directors 30 167 Proxy Form SOLAR POWER

Solar power is an important and relatively inexpensive source of electrical energy where grid power is inconvenient, unreasonably expensive to connect, or simply unavailable. Solar power is also increasingly being used even in grid-connected situations as a way to feed low-carbon energy into the grid. These systems use no fuel and typically last 25 to 40 years.

BSRM VISION We at BSRM group aspire to...

Maintain our leadership position in the steel industry by producing the best quality steel products, continuously enhancing customer satisfaction and becoming a reliable business partner of our customers and suppliers. Be an employer of choice, with focus on nurturing talent and developing future leaders of the organization. Protect the interest of our shareholders through sustainable growth and value creation. Preserve the trust of all our stakeholders by adopting ethical business practices. Support the society through Corporate Social Responsibility initiatives.

BSRM Steels Limited Annual Report 2014 05 BSRM Values SUSTAINABLE GROWTH Consistent improvement in the quality of products and services, efficiency of processes and profitability of business; continuously anticipating and responding to the changing business and environmental needs using innovation and sharing knowledge and experience within the organization. QUALITY Creating products and services valued by our customers, constantly improving our processes through innovation and adopting best practices, reducing wastage, minimizing costs, investing in systems and technology and developing our people to build a highly capable workforce. Reliability Be the preferred business partner of our customers and suppliers by offering quality products, providing our best timely services before, during and after the business transactions and honouring all our commitments despite challenges. Trust Preserve the faith and goodwill of all our stakeholders - customers, shareholders, suppliers, employees, regulatory bodies and society by adopting ethical and transparent business practices, being fair and honest in all our dealings and building robust governance and risk management processes. DEEP SEA PORT Leadership Be a role model, by setting benchmarks through our products, processes and people, constantly moving A deep sea port will not only increase ahead of competition by differentiating our products, innovating our processes, increasing our market share and nurturing talent to develop leaders within the organization. Bangladesh’s capacity to handle sea borne trade, but also make Social Responsibility Bangladesh a major economic hub, Acknowledge and fulfill our obligations towards society by undertaking initiatives for the general owing to its strategic location around upliftment, building capability and making facilities available to the underprivileged. the Bay of Bengal. This will boost the economy of the country, ensuring Customer Satisfaction Bangladesh’s place in the world as a Delight our external and internal customers at every stage of our interaction with them by truly middle-income country in the understanding their needs, offering them our best products and services, treating them with respect and foreseeable future. actively seeking and acting on their feedback.

BSRM Steels Limited Annual Report 2014 07 NUCLEAR POWER PLANT

A nuclear power plant will help Bangladesh meet the accelerating demand for electricity and reduce its dependency on natural gas. Nuclear power is an environmentally-friendly and cost-effective option for generating electricity. It would bring a revolutionary change in Bangladesh’s economy and improve the standard of life of its people.

CODE OF CONDUCT

BSRM always adopt the best, ethical and transparent business practices to be fair and honest all our dealings.

We always acknowledge and fulfill our obligations towards the society and offer our best services to our coustomers and treat them with respect and honor.

BSRM Steels Limited Annual Report 2014 09 WIND BSRM Group's Milestones TURBINES Wind energy offers many advantages 2014 1996 and is the fastest-growing energy 2006 ST source in the world. Wind energy Oracle e-BS -12 went GO LIVE on 1 Commissioned the then largest March 2014. Oracle Financials, Introduced micro reinforcement doesn't pollute the air nor produce Costing, purchasing, Manufacturing, billet making plant in the country atmospheric emissions that cause EAM, Inventory & order management wires, below 8mm, for low cost - Meghna Engineering Works are now integrated on a single rural construction. Limited, now known as Steel acid rain or greenhouse gasses. It is platform which ensure the accuracy, Melting Works (SMW) unit of one of the lowest-priced renewable accountability and reliability of the Bangladesh Steel Re-rolling energy technologies available today, Group. Mills Ltd. costing between four and six cents per kilowatt-hour. 2013 2008 1987 BSRM Steels Limited A syndicated term loan of US$ 40 commenced production of Introduced High Strength million and BDT 5,908 million, raised by a consortium of 25 banks and internationally recognized Deformed reinforcing steel bars financial institutions, for BSRM Steel Grade 500 steel bars branded conforming to ASTM 615 Grade Mills Limited. It is the largest ever as “Xtreme500W” conforming 60 for the construction industry. syndicated loan facility arranged for to ISO 6935-2. a private company in Bangladesh. The Plant will produce billets.

1984 2012 2009 Introduced high strength cold Production capacity of BSRM Entrance in the Capital Market twisted steel bars (TORSTEEL) to the construction industry. Steels Limited enhanced to Shares of BSRM Steels Limited, 600,000 MT per year. the flagship company of BSRM Group was listed with the country’s premier bourses Dhaka Stock Exchange (DSE) Ltd. and Chittagong Stock Exchange (CSE) Ltd. as on 18 January 2009. 2010 Market Capitalization as on 31 1952 December 2014 is Tk. 29,974 million. The public shareholding BSRM Iron and Steel Co. Ltd. including institutional investors is The BSRM saga began with the largest billet making plant in 29.13%. first steel re-rolling mills to the country started commercial emerge in the then East production on June 01, 2010. Bengal.

What’s Next? Start of commercial production of world’s largest induction furnace based billet casting project –“BSRM Steel Mills Limited” to 1 feed BSRM Steels Limited and Bangladesh Steel Re-Rolling Mills Limited. 2 Enhancing capacity of BSRM Steels Limited to 700,000 M. Ton per annum by July, 2015. Increasing capacity of Bangladesh Steel Re-Rolling Mills to 540,000 M. Ton per annum which will be the first and largest 3 merchant mill in Bangladesh. 4 Completion of all process for listing Bangladesh Steel Re-Rolling Mills Limited with the stock exchanges. 5 Setting up a coal based 150 MW power plant to meet the internal demand as well as to supply to the national grid.

BSRM Steels Limited Annual Report 2014 11 AWARDS AND RECOGNITIONS

MONORAIL

Monorail can transform the traffic situation of the capital city without the government having to invest in acquiring land or squeeze the existing road facility, as the line for monorail would be built on pillars in the middle of existing roads. The construction of monorail will cost one billion dollar less than constructing an underground metro rail for Dhaka city.

Annual Report 2014 82 BSRM Steels Limited Annual Report 2014 13 AWARDS AND Best Enterprise of the year 2010 Achieved ICAB National Awards for Best Presented RECOGNITIONS BSRM was judged the Best Enterprise of the year for Annual Reports 2010 by the Bangladesh Business Award hosted by the BSRM Steels Limited was placed in the 1st position in “14th ICAB National DHL-Daily Star. Awards” and 3rd position in “13th ICAB National Awards” for best presented Annual Report 2013 & 2012 respectively under the manufacturing category from the Institute of Chartered Accountants of Bangladesh (ICAB).

D & B Corporate Awards 2010 & 2012 Dun & Bradstreet South Asia Middle East Limited (DNBSAME) awarded “D & B Corporate Awards 2010” to BSRM Steels Limited under Steel Category and ranked BSRM Steels Limited as 23rd company among Bangladesh’s Top 500 companies 2010. BSRM Steels Limited awarded in same category in 2012. DNBSAME initiated a Achieved Certificate of Merit from SAFA series of corporate awards to recognize the corporate leaders of Bangladesh based South Asian Federation of Accountants (SAFA) also awarded the Certificate of Merit for the Best Presented Annual Report 2012 & on their performance and contribution to the economy. 2013 to BSRM Steels Ltd.

Best Brand of Bangladesh in Steel Category in 2011, 2013 & 2014 th BSRM has been recognized as the best brand of 5 Standard Chartered-Financial Express CSR Award Bangladesh in the Steel Category at the Best Brand BSRM won the “5th SCB-FE CSR Award” for undertaking CSR projects which have Award Bangladesh 2011, 2013 & 2014 ceremony, empowered 100 women through job creation, ensured pure drinking water for 300 organized by Bangladesh Brand Forum. families, and made solar power available for 40 families in Sylhet. After extensive research across the nation conducted by Millward Brown on 5000 in different categories, samples to identify the winning Brands, BSRM was voted as the best known brand in the steel category.

Achieved IIUC Business Awards BSRM achieved the International Islamic University Chittagong (IIUC) Business Awards for business performance excellence. Pride of Chittagong (Chattagramer Ahonkar) Mr. Alihussain Akberali FCA, CIP – Chairman of BSRM Group has been recognized as one of the persons who worked and contributed to the growth of Chittagong by The Daily Purbokone & Grameen Phone for his outstanding contribution to the development of Chittagong through Industrialization.

Japan Bangladesh Chamber of Commerce & Industry (JBCCI) Awards BSRM also achieved Japan Bangladesh Chamber of Commerce & Industry Business Achieved Divisional Environment Award 2013 Excellence Award 2014. BSRM Iron & Steel Co. Limited (BISCO) has received the “Divisional Environment Award 2013”, organized by Department of Environment (DOE), Chittagong on World Environment Day 2013.

Annual Report 2014 14 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 15 PERFORMANCE AT A GLANCE - 2014

METRO RAIL

The Dhaka Metro Rail system will solve the extreme traffic jams and congestion that Dhaka city faces. Metro Rail has a much greater traffic Revenue: Tk. 38,536 million capacity than road traffic capacity, is Growth: 6.37% environmentally friendly, produces no air pollution, consumes lower energy and reduces journey time by Gross profit: Tk. 2,807 million 50%-70%. Metro Rail System has Growth: (1.69%) proven to be most efficient in terms of energy consumption, space Operating Profit: Tk. 1,893 million occupancy and numbers transported. Growth: (1.48%)

Profit before Tax: Tk. 1,511 million Growth: (2.48%)

Net Profit after Tax: Tk. 1,086 million Growth: (1.85%)

Earnings per Share: Tk. 3.18 Growth: (35.76%)

NAV per share: Tk. 21.93 Growth: 8.40%

NOCF per share: Tk. (8.76) Growth: (165.13%)

Annual Report 2014 82 BSRM Steels Limited Annual Report 2014 17 Key Financial Highlights Taka in '000

HYDROELECTRICITY 2014 2013 2012 2011 2010 Assets Employed Hydroelectricity is the most widely Non-current Assets 8,539,818 8,559,490 7,523,279 5,057,576 4,868,209 used form of renewable energy, Net Current Assets 155,529 (512,598) (1,247,175) (1,210,790) (1,535,710) accounting for 16% of global Total Assets Employed 8,695,347 8,046,892 6,276,104 3,846,786 3,332,499 electricity generation. The cost of hydroelectricity is relatively low, Financed by making it a competitive source of Share Capital 3,417,750 3,417,750 3,255,000 3,255,000 2,712,500 renewable energy. It is also a flexible Revaluation Reserve 2,137,028 2,153,627 2,171,100 - - source of electricity since the amount produced by the station can be Retained Earnings 1,940,313 1,343,873 114,554 (280,919) (577,624) changed up or down very quickly to Shareholders' Equity 7,495,091 6,915,250 5,540,654 2,974,081 2,134,876 adapt to changing energy demands. Long Term borrowings 431,897 425,051 218,866 872,705 1,197,623 Retirement benefit obligations - Gratuity 39,020 26,291 17,622 - - Deferred Tax Liabilities 729,338 680,300 498,962 - - Total Capital Employed 8,695,347 8,046,892 6,276,104 3,846,786 3,332,499

Operational Results Revenue 38,535,937 36,229,051 38,253,465 31,234,710 22,007,682 Gross Profit 2,807,325 3,250,149 1,888,439 1,914,575 1,929,718 Profit from Operations 1,892,834 2,314,398 1,160,385 1,369,696 1,551,538 Profit before Interest, Taxes & Depreciation Allowances 2,119,630 2,538,472 1,382,576 1,560,701 1,737,732 Profit before Tax 1,510,680 2,318,924 1,296,810 962,121 967,674 Profit after Tax 1,086,208 1,693,469 865,331 839,205 964,886

Ratios Gross Profit ratio - % 7.28% 8.97% 4.94% 6.13% 8.77% Net Profit ratio - % 2.82% 4.67% 2.26% 2.69% 4.38% EBITDA margin to Sales - % 5.50% 7.01% 3.61% 5.00% 7.90% Return on Shareholders Equity - % 14.49% 24.49% 15.62% 28.22% 45.20% Return on Capital Employed - % 12.49% 21.05% 13.79% 21.82% 28.95% Current Ratio - Times 1.01 0.97 0.92 0.93 0.83 Quick / Acid test ratio 0.40 0.61 0.44 0.57 0.42 Inventory turnover ratio - Times 3.42 6.37 4.87 4.84 6.03 Total Assets turnover ratio - Times 1.42 1.52 1.70 1.45 1.80 Earnings per Share (EPS) - Taka 3.18 4.95 2.53 2.46 2.82 Price/Earnings (P/E) ratio - Times 27.58 13.87 26.82 48.26 74.69 Price/Equity ratio - Times 8.77 6.87 6.79 11.85 21.09 Dividend per share (DPS) - Taka 1.50 1.50 1.50 1.50 2.00 Dividend Payout ratio 0.47 0.30 0.59 0.61 0.71 Dividend Cover ratio 2.12 3.30 1.77 1.72 1.78 Net Assets Value (NAV) per share - Taka 21.93 20.23 17.02 9.14 7.87 Net Operating Cash Flow per share - Taka (8.76) 13.45 (2.24) (14.14) 3.83 Debt Equity ratio - Times 2.36 1.99 2.81 5.20 4.07 Interest coverage ratio 6.32 5.83 3.98 3.39 2.90 Market price per share at 31 December - Taka 87.70 68.70 67.90 118.50 210.88 Market Capitalization at 31 December (Taka million) 29,974 23,480 22,101 38,572 57,200 Contribution to National Exchequer (Taka million) 2,949 2,454 2,028 1,451 1,280 Average Number of Employees 553 573 523 472 392

Annual Report 2014 82 BSRM Steels Limited Annual Report 2014 19 Key Performance Indicators Key Performance Indicators

Shareholders' Equity (Taka in Million) Gross Profit (Taka in Million) Net Assets Value (Taka) Dividend per Share (Taka)

2014 2014 2014 2010 7,495 2,807 2010 2014 2010 1.50 2,135 2010 21.93 2010 2010 2011 2010 1,930 7.87 2013 2010 1.50 2,974 2011 2011 2011 2011 2.00 2011 2013 9.14 2012 2011 2012 2012 2012 2013 3,250 2013 2012 1,915 2013 2013 6,915 2013 2013 20.23 2012 2012 2011 5,541 2012 1.50 2014 17.02 2014 1.50 2014 1,888 2014

Operating Profit (Taka in Million) Net Profit after Tax (Taka in Million) Price Earnings Ratio (Times) Market price per share as at 31 December (Taka)

2014 2014 2014 2010 2014 2010 1,086 2013 27.59 2013 87.70 1,893 2010 2010 2010 2010 2012 13.87 68.70 1,552 2011 965 2011 2013 26.82 2011 2012 2011 2013 2010 2010 2012 1,693 2012 2012 67.90 210.88 2,314 2011 2011 74.69 2012 2013 1,370 2013 839 2013 2011 2011 2012 2012 2013 48.26 2014 118.50 1,160 2014 865 2014 2014

EBITDA to Sales(%) Return on Capital Employed (%) Market Capitalization (Taka in Million) Production Qty. (MT)

2014 2014 2014 2014 5.50% 2010 2013 12.49% 29,974 623,918 2010 2010 2010 2013 2010 2013 2010 21.05% 433,823 2011 2010 23,480 2013 2011 7.01% 7.90% 2011 2010 2011 2012 28.95% 2012 57,200 630,305 2012 2012 2012 2011 2012 22,101 2013 13.79% 523,625 2013 2012 2013 2013 2012 2011 2011 2014 3.61% 2014 21.82% 2011 2014 580,148 5.00% 2014 38,572

Return on Shareholders' Equity (%) Earnings per Share (Taka) Sales Qty. (MT) Contribution to National Exchequer (Taka in Million)

2014 2014 2014 2014 2013 2010 3.18 2010 679,803 2010 2,949 2010 14.49% 2010 2010 2010 24.49% 2.82 442,707 1,280 2011 2011 2011 2010 2013 2011 2013 2011 2012 601,935 45.20% 2012 4.95 2011 2012 2013 1,451 2012 15.62% 2011 2012 517,887 2,454 2013 2.46 2013 2012 2013 2011 2013 2012 2014 2012 579,376 2014 2,028 2014 28.22% 2.53 2014

Annual Report 2014 20 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 21 VALUE ADDED STATEMENT

2014 % 2013 % TK TK PRODUCTS AND MARKETS Value Added: Revenue 38,535,936,754 36,229,050,933 Founded in 1952, BSRM Group broadened its business to Product-wise performance Other Income 195,792,229 242,874,841 produce advanced technology based steel products in A. Xtreme500W 38,731,728,983 36,471,925,774 Bangladesh. BSRM Steels Limited is the flagship concern of Less : Paid to suppliers for materials and services 36,214,464,703 33,509,602,846 BSRM Group which is a high grade steel manufacturing Why Xtreme500W…. 2,517,264,280 100 2,962,322,928 100 company. The main product of BSRM Steels is Xtreme500W Distributed as follows: According to European Steel Code EN 10002, Elongation at which is only EMF tested and Fatigue tested ductile rod in EMPLOYESS Maximum Force (EMF) test is mandatory to measure the Bangladesh. Wages, Salaries, bonus, commssions, pensions and ductility of steel. Bangladesh Standard BDS:ISO:6935-2 of other benefits 292,806,728 11.63 280,783,914 9.48 2009 also requires EMF in Steel. Fatigue tests are conducted QUALITY is the standard of something as measured against PROVIDERS OF FINANCE 486,981,060 19.35 635,896,922 21.47 with the object of determining the number of cyclic loadings a agreed standards. It means conforming to specifications. GOVERNMENT 424,472,568 16.86 625,455,060 21.11 steel can endure, within a stress range. BSRM Steels products RELIABILITY has two related definitions. One is the state of DIVIDEND 512,662,500 20.36 512,662,500 17.32 were subjected to 5 million cyclic load reversals which was 1,716,922,856 68.21 2,054,798,396 69.36 being dependable. The other is consistency – that is, the tested in UK. At present in Bangladesh BSRM is the only degree to which something yields the same or compatible company to ensure EMF and Fatigue Test in steel. RETAINED FOR REINVESTMENT & FUTURE GROWTH result time after time. RELIABILITY is a function of the design; Depreciation & Amortization 226,796,118 9.01 224,073,251 7.56 QUALITY is a result of the manufacturing. Therefore, we can Xtreme500W also demonstrated superior yield strength and Retained Profit 573,545,306 22.78 683,451,281 23.07 state while the Tensile Test is the measure of Quality of the ductility compared to the traditional Grade 60 rebar. This 800,341,424 31.79 907,524,532 30.64 steel, the Fatigue Test is the measure of Reliability of Steel. 2,517,264,280 100 2,962,322,928 100 reduced the quantity of steel consumed in any building by 15%.

Market performance Today our journey has been vindicated by the overwhelming BSRM is the market leader in the national steel industry. Net support of our loyal and dear customers who have put faith in sales for 2014 were 679,803 MT with value in Taka 3,853.59 2014 2013 our products. EMPLOYEES 9.48 EMPLOYEES 11.63 Crore. The Chart shows sales growth of BSRM Steels Limited DIVIDEND 17.32 DIVIDEND 20.36 for the last Five years. PROVIDERS OF Following Graph shows the last 5 year’s performance of our FINANCE 21.47 branded product Xtreme 500W: PROVIDERS OF FINANCE 19.35 Sales Qty. (MT) Performance of Xtreme500W DEPRECIATION & RETAINED 2014 2010 DEPRECIATION & RETAINED GOVERNMENT 16.86 PROFITS 30.64 679,803 2010 PROFITS 31.79 GOVERNMENT 21.11 442,707 2011 2013 800,000 601,935 2011 2012 600,000 ECONOMIC VALUE ADDED (EVA) 517,887 2012 400,000 Economic value added attempts to capture the true economic profit of a company. It is also provides a measurement of a 2013 579,376 200,000 company's economic success (or failure) over a period of time. 2014 (MT) Qty. 0 Amount in '000 2010 2011 2012 2013 2014 Calculation of EVA 2014 2013 Qty. (MT) 396,132 486,461 567,908 592,625 657,550 Net Operating profit after Tax (NOPAT) 1,372,305 1,677,939 Total Capital Employed 8,695,347 8,046,892 Cost of Capital in % 12.00% 15.00% Cost of Capital (COC) 1,043,442 1,207,034 EVA = NOPAT - COC 328,863 470,905

The positive number of EVA reveals that the Company is more than covered its cost of capital.

Annual Report 2014 22 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 23 www.bsrm.com

Unique Feature of Xtreme500W 1. High design yield strength of 500 Mpa (72,500psi) (Min)

2. Requires 15% less steel in construction compared to Grade 60 rebar’s available in the market. According to 3. The bars have superior ductility and can be safely bent without cracking. BDS-ISO-6935 4. All bar sizes are rolled to a very close tolerance (possible on a DANIELI computerized rolling mill) so that customers get more meters of steel per ton - more value for money without having to sacrifice structural integrity. standards, a complete 5. De-scaled bars have better bonding with concrete and less wastage at site. Estimated savings: 0.5% 500W requires 6. Xtreme bars are safely weld-able under field conditions. Another 0.5% to 1.5% of steel is saved by avoiding large splices if the steel is welded. Our Xtreme500W was tested for weldability by a global electrode manufacturer, in Bangladesh, Linde. They have published a brochure to promote the unique welding features of Xtreme500W, a rare honor for the company.

7. The bars are needle-straight, thanks to the Danieli QTB process - no need for straightening on the construction site. Yield Chemical Strength Test Landmark Infrastructure where Xtreme500W was used: Test

As the premier reinforcing steel bar and only EMF tested ductile rod of the country, Xtreme500W has put its indelible stamp on the infrastructure projects of the country. It has emerged as the rebar of choice among international contractors in high value projects where the reliability and quality of construction materials are of paramount importance. BSRM is proud to be associated with some of the largest and most visible projects of the country. These are:

Ultimate 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 • Padma Multipurpose Bridge Strength Diameter • Maghbazar Mouchak Flyover Test • Boirab Railway Bridge • Boirab Asugonj Power Plant

Elongation at maximum force (EMF) • Double line project of Chittagong Railway. Elongation • The pride of Dhaka, the 9.6 kilometer Gulistan-Jatrabari fly-over (Mayor Mohammad Hanif Flyover) Elongation at Maximum • Saidabad Water Treatment Plant Phase-II Force • Hatirjheel Integrated Development Project • Zillur Rahman Flyover (Mirpur-Airport & Banani)

Pin B. Other Products Pin

BSRM also manufactures the traditional Grade 60/420 and bars for customers who are comfortable in using the older Mandrel Size 100 mm Bend Mandrel Size 100 mm Re-bend steel grades. 20 mm Rod Pin 20° Test Test 20 mm Rod

Pin

y Surface Geometry x Fatigue Test Test

Annual Report 2014 24 BSRM Steels Limited LETTER OF NOTICE OF THE 13TH ANNUAL TRANSMITTAL GENERAL MEETING

Date: May 10, 2015 Notice is hereby given that the 13th Annual General Meeting of shareholders of BSRM Steels Limited will be held on June 15, 2015 at 10.30 am at the Institution of Engineers of Bangladesh, Chittagong Center, S. S. Khaled Road, Chittagong to transact the All Shareholders following businesses and to adopt necessary resolutions: Bangladesh Securities and Exchange Commission 1. To receive, consider and adopt the Audited Financial Statements along with Consolidated Audited Financial Statements Registrar of Joint Stock Companies & Firms of the Company for the year ended 31st December 2014 together with the Directors' Report and the Auditors' Report on Dhaka Stock Exchange Ltd. those Financial Statements. Chittagong Stock Exchange Ltd. 2. To elect /re-elect the Director(s) of the company. 3. To appoint Auditors for the year 2015 & fix their remuneration. Dear Sir(s) 4. To declare Dividend for the year ended 31st December 2014. Annual Report for the year ended December 31, 2014

We are pleased to enclose a copy of the Annual Report of BSRM Steels Limited together with the Audited Financial Statements, By order of the Board Consolidated Financial Statements, Report of the Board of Directors and Auditor’s Report thereon for the year ended December 31, 2014 for your information and records.

Yours sincerely

Chittagong Shekhar Ranjan Kar FCA 10th May 2015 Group CFO & Company Secretary

Shekhar Ranjan Kar FCA Notes: Group CFO & Company Secretary • 12th April 2015 was scheduled as Record Date. • Shareholders whose name appears in the share register of the company or in the Depository Register on the record date will be entitled to attend the AGM and receive the dividend. • A shareholder entitled to attend and vote at the meeting may appoint a proxy or proxies in his/her stead and forms of proxy must be lodged at the Company’s Share Office, Ali Mansion, 1207/1099 Sadarghat Road, Chittagong not later than 48 hours before the AGM. • Shareholders are requested to update their 12 digit ETIN information through their respective Depository Participant (DP) before the AGM date.

Please note that no gifts or gift coupons will be given to the shareholders for attending the Annual General Meeting.

Annual Report 2014 26 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 27 DHAKA-CHITTAGONG CORPORATE AND CONTACT 4 LANE HIGHWAY INFORMATION The government is planning to expand the current 2-lane Dhaka-Chittagong Highway, the lifeline of Bangladesh’s export-import activities, into a 4-lane COMPANY NAME LOCATIONS: highway. This will decrease traffic BSRM STEELS LIMITED PLANT 4, Fouzderhat Industrial Estate, Chittagong, tailback and maximize the movement DATE OF INCORPORATION Tel: +88(031) 2770192-3 of trade goods and passengers by 20th July 2002 accommodating the regional demand CORPORATE OFFICE for the use of Chittagong Port. The DATE OF COMMERCIAL OPERATION Ali Mansion, 1207/1099, Sadarghat Road project will improve Bangladesh’s 1ST APRIL 2008 Chittagong, Bangladesh. economy by utilizing its strategic Tel: +880 31 2854901-10 SHARE CAPITAL Web: www.bsrm.com location in South Asia. Authorized capital BD Tk. 500.00 crore DHAKA OFFICE Paid Up Capital Mahbub Castle (2nd & 4th Floor) BD Tk. 341.775 crore 35, Purana Paltan Line Inner Circular Road (VIP Road), Dhaka. BORAD OF DIRECTORS Tel: 88 02 8311994, 8313135, 9358135 Mr. Alihussain Akberali FCA, Chairman Fax: 88 02 8312905, [email protected] Mr. Aameir Alihussain, Managing Director Mr. Zohair Taherali, Director UTTARA OFFICE Mrs. Tehseen Zohair Taherali, Director H-14, Road-6, Sector: 1, Uttara Dhaka. Mr. Mono Ranjan Dey FCA, Independent Director (Opposite side of 1no BDR Camp) T&T numbers: 8957027, 8958029, Fax # 8956496 AUDIT COMMITTEE REGIONAL OFFICES: Mr. Mono Ranjan Dey FCA, Chairman Sylhet Mr. Alihussain Akberali FCA, Member Samad Mansion Mr. Zohair Taherali, Member Mendibag, Upa-Shahar, Sylhet. Mr. Shekhar Ranjan Kar FCA, Secretary Tel:0821-721239, 01714080514, COMPANY SECRETARY Fax-0821-2832751, [email protected] Mr. Shekhar Ranjan Kar FCA Bogra Tin Matha Rail Gate, Puran Bogra, Bogra. MANAGEMENT COMMITTEE Tel-051-60792, 01711-795148 Mr. Tapan Sengupta, Executive Director Mr. Kazi Anwar Ahmed, Head of Corporate Affairs Comilla Chandrima Super Market, Mr. M. Firoze, Head of Marketing & Product Development Airport Road (Near to EPZ Main Gate), Comilla. Mr. Shekhar Ranjan Kar FCA, Group CFO and Company Secretary Tel-081-71988, 01714-080544. Mr. Sunil Kumar Das, Country Director (Kolkata) E-mail- [email protected] Mr. Mohammed Reazul Kabir FCA, Head of Finance & Accounts Mr. Mohd. Imtiaz Uddin Chowdhury-Head of SCM Khulna Plot # C-7, Road # 4, EXECUTIVE COMMITTEE Shiromoni I/A, Khulna. Mr. Alihussain Akberali FCA, Chairman Tel-041-785303, 01714-031110 Mr. Aameir Alihussain, Managing Director [email protected] Mr. Zohair Taherali, Director Finance Barishal Mr. Tapan Sengupta, Executive Director Amtala Panir Tank Mr. Kazi Anwar Ahmed, Head of Corporate Affairs South Alekanda, Barishal. Mr. Sunil Kumar Das, Country Director (Kolkata) Tel-0431-217518 Mr. M. Firoze, Head of Marketing & Product Development Rajshahi Mr. Shekhar Ranjan Kar FCA, Group CFO and Company Secretary Alupatti, Ghoramara, Mr. Jamil Ahmed, Head of HR Boalia (Behind of Grameen Phone Office), Rajshahi. AUDITOR Tel- 01755-538353, 01730-087537 Syful Shamsul Alam & Co. Rangpur Chartered Accountants House # 71/01, Road # 2, Yunusco City Center (9th Floor) Islambag, RK Road, Rangpur 807, CDA Avenue, Nasirabad, Chittagong. Tel- 01711-795148, 01730-784821

BSRM Steels Limited Annual Report 2014 29 Director BOARD OF DIRECTORS Mrs. Tehseen Zohair Taherali Mrs. Tehseen Zohair Taherali was born in 1970. She completed her Bachelors of Arts and Bachelors of English Language Teaching from Chittagong, Bangladesh. She guides and directs the company regularly in strategic policy making decision Chairman Mr. Alihussain Akberali FCA, is an eminent and experienced industrialist in steel sector in Bangladesh. He was born in 1949. He is also a seasoned business as a Director. She is involved with many charitable organizations and is a highly Mr. Alihussain Akberali FCA entrepreneur and always eager to harness any unexploited opportunity in the regarded personality in the society. industry. He was recognized as CIP from large scale industry sector for ten times. She holds 6,835,500 Voting Shares of the Company. His father Mr. Akberali Africawala was a renowned businessman in steel sector. He is a Fellow of The Institute of Chartered Accountants of Bangladesh (ICAB). He is also engaged in various social activities like Rotary Club, Ma O Shishu Hospital, Chirayata Shanti Society, Patient Welfare Committee of Chittagong Medical College and Hospital and founder of a School at Nasirabad, Chittagong which imparts free education to more than 350 underprivileged students. He is the Vice Chairman of Chittagong Metropolitan Chamber of Commerce and Industry. Independent Director Mr. Mono Ranjan Dey FCA He holds 34,987,995 Voting Shares of the Company and also a member of Audit Committee. Mr. Mono Ranjan Dey FCA was appointed as Independent Director of the Company in 2012. He was born in 1954. He has 26 years of experience in internal and external audit and assurance, developing internal control system, company related matters and taxation and VAT matters. He is Qualified Chartered Accountants and Fellow Member of the Institute of Chartered Managing Director Accountants of Bangladesh (ICAB). Currently he is Managing Partner of reputed Mr. Aameir Alihussain Chartered Accountancy firm namely MRH Dey & Co., Chartered Accountants. Mr. Aameir Alihussain, son of Mr. Alihussian Akberali FCA, Chairman of the He holds 113,410 Voting Shares of the Company and also Chairman of Audit Committee. Company has joined the family business in 2001 after completion the MBA degree from LUMS University in Pakistan. Before that he graduated in Economics from McGill University, Canada. He was born in 1975. He is active in the day to day operation of the company as the Managing Director. He is introducing modern Names of companies in which directors hold the directorship and the membership of committees of the board management practices in the company and instilling a team spirit to excel in the Name of the Directors industry. Ensuring quality and focusing on customers’ satisfaction are his top Name of Companies Mr. Alihussain Mrs. Tehseen priorities. Mr. Aameir Alihussain Mr. Zohair Taherali Akberali FCA Zohair Taherali He holds 6,835,500 Voting Shares of the Company. Bangladesh Steel Re-Rolling Mills Ltd Managing Director Chairman Director Director

BSRM Wires Limited Managing Director Director Chairman Director BSRM Recycling Industries Limited Managing Director Director Chairman Director Managing Director BSRM Iron & Steel Co Limited Director Director Director & Chairman Managing Director Director Chittagong Power Company Limited Director Director - & Chairman Mr. Zohair Taherali Bangladesh Steels Limited Director Managing Director Chairman Director East Bengal Trading & Industrial Director Managing Director Chairman Director Mr. Zohair Taherali involved for last 23 years in the steel business as a Director of Corporation Limited the Company. He was born in 1963. He is commerce graduate from University of BSRM Ispat Limited Chairman Managing Director Director Director Karachi in Pakistan. He is responsible for the management of the Financial, and BSRM Steel Mills Limited Chairman Managing Director Director Director Administrative aspects of the company. He is actively involved in various social BSRM Logistics Limited Chairman Director Managing Director - activities. BSRM Real Estates Limited Chairman Managing Director Director Director He holds 8,932,980 Voting Shares of the Company and also a member of Audit BSRM Metals Limited Chairman Managing Director Director Director Committee. Managing Director H. Akberali & Co. Limited Director Director Director & Chairman Karnafully Engineering Works Ltd. Chairman Director Managing Director Director Section Steel Industries Ltd. Managing Director Chairman - -

Annual Report 2014 30 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 31 KEY MANAGEMENT

Tapan Sengupta, Executive Director Kazi Anwar Ahmed, Head of Corporate Affairs M. Firoze, Head of Marketing & Product Development Shekhar Ranjan Kar FCA, Group CFO & Company Secretary S. K. Das, Country Director, Kolkata Shobhon Mahbub Shahabuddin, Head of National Sales A. F. M. Mizanur Rahman, Plant Head Azizul Haque, Plant Head (BISCO) Jasim Uddin Ahmed, Head of Technical Projects Jamil Ahmed, Head of HR Mohammed Reazul Kabir FCA, Head of Finance & Accounts Rajesh Banerjee, Lead Operations Mohd. Imtiaz Uddin Chowdhury, Head of Supply Chain Mohammad Arif ACA, ACMA, Chief Financial Officer Muhammad Ashiqur Rahman ACA, Lead Compliance & Accounts – Dhaka Abdur Rahim, Head of Internal Audit A. K. M. Saifuddin Khan, Head of Administration Mohammed Tamim Wahid Al-Helal, Head of IT

RAMPAL & MOHESKHALI COAL-BASED POWER PLANT ADVISERS The government is going to reduce its Moize Hussain, Group Adviser dependency on natural gas and costly fuel-based power plants by building Tapan K. Poddar FCA, FCMA, Financial Consultant two new coal-based power plants, a 1320 MW power plant at Rampal and a 1200 MW power plant at Matarbari in Cox's Bazar. Both the plants will use 'ultra super critical technology' to give the coal-fired power plant higher efficiency in electricity production.

BSRM Steels Limited Annual Report 2014 33 CHAIRMAN’S MESSAGE

Dear shareholders, Assalamualikum and very good morning. I am delighted to welcome you all to the 13th Annual General Meeting of the Company. I trust you must have gone through the annual report in detail and gathered information on your company's performance. I am pleased to report to you that your company registered record sales of 679,803 MT of MS Product in 2014 which is highest in your company’s history. Now I would like to present some facts and figures regarding our performance in 2014.

Business and Financial Performance: During the year 2014 your company produced 623,918 M. Ton MS Rod. In this year total turnover was Tk. 38,536 Million which is 6.37% higher than last year. However, in terms of quantity your Company registered 12.94% higher sales. However, gross profit percentage of the Company declined by 1.69%, due to low sales price of steel products. We were able to minimize the costs almost in all categories i.e. Admin, Selling and distribution, Finance etc. This year your company invested Tk. 213.16 million for purchase of Fixed Assets. A Balancing, Modernization, Rehabilitation and Expansion (BMRE) project is going on which will be completed by mid -2015. It will increase the capacity of the plant to 700,000 M. Ton per annum. The Company will able to supply its product at a more competitive price after completion of BMRE.

Future Outlook: Financial indicators are the milestones of yesteryears performance. Future revenue and income growth will come from innovative new products and processes. BSRM strives to be the best and most efficient producer of steel in a manner consistent with one of its core values: Sustainability. Our beloved country, Bangladesh, has just embarked on massive public, private and foreign funded investments to create a sustainable living environment for all of us. BSRM is proud to be associated with some of the most innovative projects in the country. Some of the projects which merit mention are the Padma Bridge where you will all be proud to know that BSRM Steels Ltd. has started supplying steel for the pile and pile caps. The other upcoming projects are the two large coal fired power plants, one in Khulna, the other in Chittagong. Moreover, now people are more conscious about quality and safety leading to sustainable construction. You will be glad to know BSRM is the preferred name in the construction of all tall buildings and large residential and commercial structures. By mid 2015, BSRM Steel Mills Limited- an Associate Company of BSRM Steels Limited will start commercial production. This induction furnace based billet making plant will make the company self -dependent for its raw material i.e M S Billet.

CSR activities: You are well informed that, BSRM Group is keen to participate in social development. For years, we are involved in tree plantation, city beautification, supporting free education, assisting various educational institutions, blanket distribution among the poor people. Now we have a separate CSR wing to serve the people in more proficient and professional way. We have agreements with several NGOs for Solar house System, establishing training center for poor woman, prevent de-forestation etc. Your any new idea on CSR activities will always be appreciated.

ALIHUSSAIN AKBERALI FCA, CHAIRMAN

BSRM Steels Limited Annual Report 2014 35 Dear shareholders, To prevail as the market leader in the steel sector in Bangladesh, we are always keen to ensure raw material security, attain maximum efficiency by well- trained manpower and modern technology and explore new opportunities. We assure you, we shall do everything to remain the market leader in the future. We know for prosperous Bangladesh, environmental conservation and protection is important. We have taken steps to mitigate the effects of environmental pollution, and installed modern Air Pollution Control and Water Treatment Plant. Moreover we have under taken tree plantation program to make the environment more livable and natural.

Acknowledgement: I must gratefully acknowledge the contribution made by our management teams and workers and results you see are due to their tireless efforts. I also wish to thank our bankers, suppliers, Dhaka Stock Exchanges Limited, Chittagong Stock Exchanges Limited, Bangladesh Securities and Exchanges Commission, Central Depository Bangladesh Limited, Registrar of Joint Stock Companies and Firms, Tax authorities, and different government bodies and as well as our valued customers, I’m assure you, we shall do everything possible for maximizing the net worth of our honorable shareholders.

Thank you, for being with us today.

Allah Hafiz

Alihussain Akberali FCA Chairman

Annual Report 2014 36 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 37 FROM THE DESK OF MANAGING DIRECTOR

I am delighted to welcome you all at the 13th Annual General Meeting of the Company. I consider it a unique opportunity to exchange our views and ideas with you.

This year we have performed satisfactorily and efficiently. Sales reached 679,803 MT; which is highest in the history of the Company.

A Balancing, Modernization, Rehabilitation and Expansion (BMRE) project is going on to enhance the capacity of the plant to 700,000 M. ton to cater to the growing demand for Xtreme500W. Hopefully, this project will be completed within next couple of months.

Ensuring uninterrupted supply of raw material is a vital for sustainability and profitability of the Company. Considering this factor, BSRM Steel Mills Limited has invested, in the biggest billet making plant of BSRM Group. BSRM Steels Ltd. is holding 21.76% of this company’s share and hence now it is our associated company. This company will begin commercial production within few months.

Our Subsidiary Company- BSRM Iron & Steel Co. Ltd. has also performed well in this year. It has registered Tk. 166.84 Million in profits with record production of 180,677.59 MT.

For sustainability of a Company, high standard of corporate governance is must. It needs prompt and correct information generation system in a transparent way. We have implemented Enterprise Resource Planning (ERP) for generating accurate information within reasonable time. We believe it will help us ensure transparency, accountability, correct decision making as well as ensure good corporate governance.

The next few years will be very important for Bangladesh. Construction of many important projects like coal based power plant, Padma Bridge, Rooppur nuclear power plant, deep sea port etc will be started. All these will create huge demands for quality steel both in private and public sectors. We are eager to play an important role in this national development by supplying our quality products.

AAMEIR ALIHUSSAIN, MANAGING DIRECTOR BSRM Steels Limited Annual Report 2014 39 We are relentlessly trying to tap all the market opportunities to remain as the unparalleled market leader. The future is bright as the company is engaged in new projects currently and once they come into production this year, the company will perform even better.

I note with gratitude your support and encouragement. Your constructive suggestions, co-operation and guidance will encourage us and will help us to achieve our goal.

Thank you very much.

Aameir Alihussain Managing Director

Annual Report 2014 40 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 41 DIRECTORS’ REPORT BHAIRAB RAILWAY BRIDGE Distinguished Shareholders Assalamualikum. It is our Great pleasure to welcome you all at the 13th Annual General Meeting of BSRM Steels Limited. We are The government will build a second presenting the Report of the Board of Directors along with the audited financial statements of the Company for the period ended st Bhairab Railway Bridge over the 31 December 2014. We have prepared this Report in compliance with the Companies Act 1994 and Bangladesh Securities and Meghna River to reduce the time of Exchange Commission Notification No: SEC/CMRRCD/2006/158/143/Admin/44, dated: August 07, 2012. travel and ensure greater connectivity Review of 2014: between Dhaka and Chittagong, the two major hubs for sustainable Economic Scenario and steel industry in Bangladesh: economic development. The greater In comparison with 2013, this year (2014) was largely favorable for economy and business. There was no major natural calamity connectivity will translate to a or political unrest. Various infrastructural projects have been undertaken both in private and Public sector. Now we are optimistic stronger economy with more volume to see some gigantic infrastructural development within next couple of years like long dreamed Padma bridge, Coal based power of people and goods transferred in plant, Ruppoor Nuclear Power plant, Sonadia deep sea ports, Karnafully Tunnel, Alleviated Metro Rail etc along with some roads lesser time. and bridges, power plants, industries which are under construction and your company’s participation will be there. Bangladesh aspires to be a middle income country by 2021. This will require increased GDP growth to 7.50%-8.00% per year based on accelerated export and remittance growth. For becoming a middle income country, it will require substantial efforts on many fronts. These include maintaining macroeconomic stability-strengthening revenue mobilization, tackling energy and infrastructural deficit, external trade reforms, economic governance and urban management etc. Though Bangladesh in an emerging developing country and has been growing at over 6% on average for last one decade, its per capita consumption of steel is well below the world average of 217 Kg. Bangladesh’s current per capita finished steel consumption stands at 26 Kg only. The construction sectors especially real estate business could not fully recover from the socio-political uncertainty prevailed since 2013. The low demand of MS Steel in the last two years affected the price of our products and we had to sell our products at a low profit margin. Operational and Financial Performance: Some operational and financial data is given below for better understanding of the overall performance of the Company: Operational Performance: Particulars 2014 2013 2012 2011 Installed Capacity (M. Ton) 600,000 600,000 600,000 550,000 Production (M. Ton) 623,918 630,305 580,147 523,624 Capacity Utilization (%) 104 105 97 95 Sales (M. Ton) 679,803 601,935 579,377 517,887 Due to massive maintenance program our production slightly reduced this year but in terms of volume of sales it was increased by 12.94%. We registered continuous sales growth in terms of quantity. It indicates that, demand for BSRM product has been increasing consistently even in this slump market scenario. Financial Performance: Amount in BDT in million Particulars 2014 2013 2012 2011 Sales 38,535.94 36,229.05 38,253.46 31,234.71 Gross Profit 2,807.32 3,250.15 1,888.44 1,914.57 Profit before interest, taxes, WPP&WF 1,892.83 2,314.39 1,160.39 1,369.70 Less: Interest & WPP&WF (378.95) (492.82) 136.42 (407.58) Add/(Less): Share of profit/(Loss) of associate (3.20) 497.36 - - Less: Tax expenses & Provision for income tax (424.47) (625.46) (431.48) (122.92) Net Profit 1,086.21 1,693.47 865.33 839.20

In terms of value, sales were increased by 6.37% in this year. However, average market price per M. Ton was Tk. 56,687 which was Tk. 60,187 in 2013. Due to reduction in selling price Net Profit to Sales ratio has also declined to 2.82% which was 4.67% in the last year.

BSRM Steels Limited Annual Report 2014 43 Other Financial Performance: Amount in BDT in million Particulars 2014 2013 2012 2011 There are many factors that are helping to grow the Bangladeshi steel market which are – Paid Up Capital 3,417.75 3,417.75 3,255.00 3,255.00 • Rural demand picking up. Share Holders’ Equity 7,495.09 6,915.25 5,540.65 2,974.08 • Investment in the communication sectors. Current Liabilities 18,445.30 15,858.17 16,178.60 17,763.31 • Construction of Power plants. Non-current Liabilities 1,200.26 1,131.64 735.45 872.70 • Construction of mills and factories. Addition to fixed assets & CWIP 213.16 325.47 347.75 382.96 • Export to neighboring countries. Operating cash flow (2,995.28) 4,595.39 (727.69) (4,603.89) However, there are also some challenges that your company must overcome to remain as the business leader - Operation of Subsidiary Company: • Volatile market price of billets. BSRM Steels Limited is holding 95% ordinary shares of BSRM Iron & Steel Co. Ltd. (BISCO), a billet manufacturing plant • Scarcity for power. since 2010. • Efficient distribution channel. Financial and quantitative performance of the company is given below in the tabular form: • Optimum use of plants and people. • Cost reduction. Particulars 2014 2013 2012 2011 M. Ton M. Ton M. Ton M. Ton • Political and social unrest. Production Qty. 180,678 168,326 138,725 121,679 You are already informed that, BSRM Steels Limited has invested in 21.76% of BSRM Steel Mills Limited which will produce billets Sales Qty. 182,083 167,066 137,947 122,433 with a capacity of 862,000 M. Ton per annum. BSRM will be free from volatile billet price fluctuation risk and be able to supply its Amount in BDT million product at a competitive price. Sales 9,374.11 8,861.77 8,004.95 6,507.63 With new billet casting plant and enhanced capacity of existing mills after BMRE, BSRM Group of Companies will need huge power Gross Profit 686.17 513.39 598.48 603.99 supply. Hence we are planning to set up a coal based power plant. Profit before Interest, Taxes & WPP&WF 668.26 489.07 562.39 569.60 We have already set up some warehouses across the country and we have also appointed 602 dealers to sell our products. When Less: Interest & WPP&WF 432.83 317.84 354.38 419.61 our production will increase after BMRE, we shall undertake several other plans for smooth and swift delivery of our products. We also arrange internal and external training for our staffs to increase their efficiency. Less: Tax expenses & Provision for Income Tax 68.59 30.53 60.75 13.01 Net Profit 166.84 140.70 147.26 136.98 Campaign: Steel is an ‘elastic-plastic’ material. In the developed world ‘Elongation at Maximum Force’ or EMF is an essential property of Operation of Associated Companies: reinforcing steel. The European Union Standard for materials testing EN 10002* prescribes EMF as mandatory in testing all types BSRM Steels Limited has acquired 21.76% of shares of BSRM Steel Mills Limited as of December 31, 2014.Total investment in of steel materials. Bangladesh and ISO standard BDS ISO 6935-2 of 2009 requires reporting of EMF mandatory in testing of the company is Tk. 451,146,000. This project will start commercial production by the middle of 2015. It will be the world’s largest reinforcing steel. EMF is a quantitative measure of Ductility. Ductility as measured by EMF is the only true measure of safe induction furnace based billet casting plant. It will reduce BSRM’s dependency on the imported billets and save foreign currency. reinforcing bar. BSRM which pioneered new steel technology in the country during the last 60 years is the only steel company BSRM Steels Limited will be able to supply MS Rod at more competitive price when this plant will start commercial production. which achieved the coveted status of being a ‘Ductile Bar’ producer. Industry out Look and Possible future development: Segment wise or product wise performance: Bangladesh has entered an era of growth and prosperity. We foresee a huge demand of quality steel products for urbanization, Company produces various sizes of product in one production centre. Detailed product wise performances are as follows: industrialization and infrastructural development. Now people are very cautious about safety and quality. BSRM Products are their Production (M. Ton) Sales ( M. Ton) best option for its unparalleled quality as well as it can also reduce the cost of construction. For managing huge demand of BSRM Products products, we have already undertaken a BMRE project to enhance the capacity of our plant to 700,000 M. Ton per annum. This 2014 2013 2014 2013 will also enable us to increase our profitability. Xtreme500W 605,516 621,276 657,550 592,625 We are always keen to contribute to the national development. We feel that BSRM Steels Limited alone can’t meet the huge Others 18,402 9,029 22,253 9,310 demand for quality products. For this reason we have already undertaken another BMRE project to upgrade the production Total 623,918 630,305 679,803 601,935 capacity of Bangladesh Steel Re-Rolling Mills Limited to 540,000 M. Ton per annum. This plant will also produce MS Channel, Angle, and Bars etc. It will start commercial production by mid 2015. Risks & Concerns: Market of BSRM Xtreme500W and challenges: Risk assessment and mitigation is the integral part of any business. The Board of Directors are regularly monitoring, assessing Presently, the Company can supply 600,000 M. Ton of finished products in the market. Now the Company can meet up about 20% and identifying potential risk and threats to our profitability and sustainable growth. Our Risk Management capabilities are of demand of the Country. With its production and supply capacity now it is the biggest and only fully automated rolling plant in supported by a strong management structure, information system, regular analysis of market, economic scenario and robust Bangladesh. policies to cope the challenges. A summary of the significant risks and the way of managing risks adopted by our company is included in Annexure-2 and Note -42 of the Financial Statements.

Annual Report 2014 44 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 45 Management Discussion: Related Party Transactions: Board of Directors periodically discusses on the increase/decrease of cost of goods sold, gross and net profit margin and takes Basis of the related party transactions with the Company have been elaborated in the audited financial statements in note 37 in immediate measures on the analysis as required. A detailed report on discussion is included in Annexure-1. accordance with relevant Bangladesh Accounting Standards (BAS). Credit Rating: Utilization of IPO proceeds and Financial Result after IPO: Credit Rating information and Services Limited (CRISL) assigned rating as below: Company had no unutilized IPO fund since 2009, Company is maintaining a stable financial performance. Long Term Short Term Significant variance in the quarterly and annual report: AA ST-2 There were no significant variance between Quarterly performance and overall annual performance. Throughout the year company The entities rated “AA” are adjudged to be of high quality, offer higher safety and have high credit quality. This level of rating was able to maintain a judicious performance both in operational and financial perspectives. indicates a corporate entity with a sound credit profile and without significant problems. Risks are modest and may vary slightly Remuneration of Directors including Independent Director: from time to time because of economic conditions. Directors were remunerated as per the decision of the Board and a detailed report of the Directors’ Remuneration is included in “ST-2” indicates high certainty of timely payment. Liquidity factors are strong and supported by good fundamental protection Annexure-3 and Note 29.01 of Financial Statements. factors. Risk factors are very small. Dividend: Our Company in the evaluation of Credit Rating Company was also placed with “Stable Outlook”. Your directors are pleased to recommend 15% Cash dividend on equity shares for the year ended December 31, 2014 for Board of Directors: consideration and approval by the shareholders in the annual general meeting. The dividend on equity shares, if approved would be paid to those members whose name appears on the register of members as on record date. i. Composition and size of the Board: Contribution to National Exchequer: On 31st December 2014, there were 5 members on the Board, The Board comprises Chairman, Managing Director, two directors and one independent director. BSRM is paying and facilitating collection of Government’s revenue. In 2014, we paid, collected & deposited a significant amount of Income Tax, VAT and Duties. All due and applicable taxes were paid, collected and deposited in time. During the year 2014, ii. Board Meeting and attendance: BSRM Steels Limited contributed to the government exchequer along with utility about a sum of Tk. 2,948.84 million which is The Board met 16 times during the year. Following table shows the attendance of directors in the meeting. appended below:

No. of meeting No. of meeting Name of the directors Position held during the year attended Contribution to National Exchequer Mr. Alihussain Akberali FCA Chairman 16 13 Mr. Aameir Alihussain Managing Director 16 16 3% Mr. Zohair Taherali Director 16 16 Mrs. Tehseen Zohair Taherali Director 16 14 12% 22% Income Tax & VAT Mr. Mono Ranjan Dey FCA Independent Director 16 6 Custom Duty The member who could not attend the meeting was granted leave or was outside the country. Power iii. Details of Directors being appointed/ re-appointed: Gas Mr. Aameir Alihussain and Mr. Zohair Taherali will retire by rotation at the conclusion of this AGM as per Section 97 & 98 of 63% the Articles of Association of the Company and being eligible they offer themselves for re-appointment. iv. Names of Companies in which Directors holds the directorship and membership have been disclosed in Board of Directors segment.

Internal Control system: Corporate Social Responsibilities: The Company has adopted Standard Operating Procedures (SOP) for the betterment of internal control system. To ensure effective BSRM is active in this area since its inception. Now we are trying to play more meaningful role in this area. A separate wing has internal control system, safe guard assets of the Company and to generate accurate data and information within reasonable time already been created. Our vision on CSR is: frame, we have already commissioned most modern software called Enterprise Resource Planning (ERP). “To integrate social responsibility in to BSRM Core business decisions, we want to have CSR at every steps of the heart of our A professional team of 12 members have been engaged in the internal audit department to oversee the transactions and to ensure business process. effective internal control system. We envisage CSR strategy that demonstrates BSRM intent for caring, supporting and returning to society where we anchored our Audit Committee regularly monitors and review the reports generated by the internal audit department and takes corrective business decades ago – this is how we define CSR and search and support interventions encompassing this scope”. measures. We have undertaken a number of programs which are as follows: Extra-ordinary gain or loss: • Supporting free education There is no extra ordinary gain or loss during the year. • Solar house system (SHS) by providing electricity to poor families.

Annual Report 2014 46 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 47 • Solar power water pump for hilly areas of Sylhet. Reporting and Compliance of Corporate Governance: • BSRM training centre for women to create an alternative option of earnings for uneducated young women. Status of compliance with the requirements / conditions of Bangladesh Securities and Exchange Commission (BSEC) Notification • Arranging alternative earning option to prevent deforestation. No: BSEC/CMRRCD/2006-158/134/Admin dated 07 August, 2012 on corporate governance has been included in the Report in Annexure-6. • Matching Fund Scheme, a BSRM innovative initiative to support and increase the capacity of women to work at home. Subsequent Events: • Green Hut is a tree plantation partnership program between Karnaphuli EPZ and BSRM Group of Companies under BSRM CSR activities. The project supports maintaining ecological balance and purifying air. There is no subsequent event after the date of Financial Position and till the date of this report which could affect the ability of the users of these financial statements to make an appropriate evaluation. • Crab cultivation projects in Bagerhat, Khulna will create revenue opportunities, empower the under privileged farmers. 358 farmers to come under this project gradually over the next 5 years which will be implemented by VSOB- an Directors’ Responsibilities Statements: international development organization. Pursuant to the BSEC notification No. BSEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012 the Directors confirm that: • Poverty reduction program in Urban area. a) The financial statements prepared by the management of BSRM Steels Limited fairly present its state of affairs, the • BSRM is running a free school educating 430 students. result of its operations, cash flows and changes in equity. • BSRM also involved in donating different educational institutions, relief funds, tree plantations, road dividers to ease b) Proper Books of Account of the Company has been maintained. traffic jams, blanket distribution, etc. c) Appropriate accounting policies have been consistently applied in preparation of the financial statements and that the • BSRM was one of the sponsors for Spelling Bee Contest –the most popular TV show for students. accounting estimates are based on reasonable and prudent judgment. Award and Recognition: d) International Accounting Standard (IAS) / Bangladesh Accounting Standards (BAS) / International Financial Reporting Standards (IFRS) / Bangladesh Financial Reporting Standards (BFRS), as applicable in Bangladesh, have been followed It is our great pleasure to let you know that, we have achieved some prestigious award during this year. A few of them are in preparation of the financial statements and any departure there from has been adequately disclosed. mentioned below: e) The system of internal controls sound in design and has been effectively implemented and monitored. • BSRM Steels Limited has secured first position in the 14th ICAB National Award for best presented Annual Report -2013 in manufacturing sector declared by the Institution of Chartered Accountant of Bangladesh. f) There are no doubts upon the company’s ability to continue as a going concern and the annual accounts have been prepared as a going concern basis. • BSRM Steels Limited also won “Certificate of Merit” for best presented Annual Report Awards and SAARC Anniversary Award for Corporate Governance Disclosure-2013 announced by South Asian Federation of Accountants. g) The significant deviations from last year in the operating results of the company have been highlighted in the reports and reason thereof has been explained. • IIUC Business Award 2014. h) The key operating and financial date for the last six year is disclosed in Annexure-4. • Best Rod Brand Award 2014. i) The pattern of shareholding is disclosed in Annexure-5. • Standard Chartered Financial Express CSR Award 2014. j) A compliance status report with requirements of corporate governance as required by BSEC has been disclosed in • Japan Bangladesh Chamber of Commerce and Industry (JBCCI) Business Excellence Award 2014. Regulatory Compliance Report segment. Information Technology k) Directors’ profile and their directorship and business interest in other organizations have been disclosed in Board of Expected growth could not be achieved without adopting proper and contemporary Information Technology (IT). We have already Directors segment. advanced one step ahead for the adoption of real time integration in our business through ERP software namely Oracle ERP which was Acknowledgements: officially launched on March 1, 2014. Now we are able to operate and manage our business and to connect our customers faster. On behalf of the entire Board I wish to acknowledge the contribution and support of the all Government agencies, bankers, our Human Resource Management shareholders, BSEC, DSE, CSE, CDBL, RJSC and our honorable customers and suppliers. Finally I also wish to place on record my Employee motivation is a vital factor for the growth and development of an organization because of its direct impact on personal sense of appreciation for the committed services rendered by the employees of the company without which it would not productivity. Considering “Motivation” BSRM HR team focuses on valued employees to optimize their creativity, performance and have been possible to realize significant business and profit during the year. sustainable improvement, cohesive corporate culture, proper training, reward and recognition, various employee benefits scheme. Inshallah we will continue to add value to our shareholders and achieve our long term visions. BSRM vision is, “Be an employer of choice, with focus on nurturing talent and developing future leaders of the organization”. Code of Conduct: Allah Hafiz, The Board of Directors of the Company has adopted a Code of Conduct for the Directors. All the Directors have signed an acceptance to its compliance.

Auditors: Alihussain Akberali FCA Present auditor Syful Shamsul Alam & Co, Chartered Accountants (A member firm of UHY), will retire in 13th AGM and they are not Chairman eligible for re appointment for the year 2015 as they are the auditors of the Company for last consecutive three years as mentioned in the order of Bangladesh Securities and Exchange Commission (BSEC) No. SEC/CMRRCD/2009-193/104/Admin dated July 27, 2011. Pursuant to BSEC order, a new auditor will be appointed for the year ended 2015. On the basis of the proposal of Board’s audit Committee, the board is recommending to appoint M/S Rahman Rahman Huq, Chartered Accountants (Representative of KPMG in Bangladesh), 102 Agrabad C/A, Chittagong as the auditor of the Company for the year 2015 at a remuneration of Tk 480,000/=.

Annual Report 2014 48 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 49 We are hugely involved with Foreign Trade i.e. Import & Export and thus we are also exposed to Foreign Currency Risks. Exchange MANAGEMENT DISCUSSION AND ANALYSIS ANNEXURE - 1 RISK FACTORS AND CONCERNS ANNEXURE - 2 rate gains or losses related to foreign currency transactions are recognized as transaction gains and losses in our income statement as incurred. We also maintain foreign currency account in which local export collection in foreign currency are directly deposited to meet foreign exchange payment requirement. In the Year 2014 company has not been affected significantly by the normal trend of Foreign Currency fluctuation. Management Discussion and Analysis are designed to provide readers with an overview of the business and an analysis on Cost 1. Business Risks of Goods Sold, Gross and Net Profit margin. a) Risks associated with sourcing of Raw Materials Competition and Economic conditions BSRM Steels Limited is heavily dependent for its basic raw materials-MS Billets on international market. In case of billet Competition refers to the risks of decreasing present market share caused by new entrants. FINANCIAL PERFORMANCE price fluctuation in the international market, the company suffers and it’s profitability is also affected. The subsidiary Company- BSRM Iron and Steel Co. Ltd. (BISCO) can meet a small portion of billet demand by supplying We try to mitigate this risk through active, brand management and customer relationship, and by ensuring quality product. 2014 2013 Growth Particulars BDT BDT % 180,000 M. Ton MS Billet per annum . As we are continuously in attempts to explore any untapped opportunity and also to adopt customer’s needs, we believe we would As up gradation of mill is going on to enhance the production capacity to 700,000 M. Ton per annum, needs for secured be able to cope with any situation in the industry we are working. Cost of Goods Sold 35,728,612,252 32,978,902,353 8.34% supply chain for MS Billets should top priority. Gross Profit 2,807,324,502 3,250,148,580 (1.69%) To meet the challenge a separate company –“BSRM Steel Mills Limited” is going to be commissioned by this year to produce 862,000 M. Ton MS billet per year. BSRM Steels Limited is holding 21.76% equity shares of this company. Net Profit 1,086,207,806 1,693,468,511 (1.85%) 3. Operational Risks b) Risks associated with Power Supply There are several processes involved in steel production and disruptions in one process may have serious effects in other process As you know, presently the main constraint of economic development of Bangladesh is acute shortage of power for streams. There is risk that operational downtime caused by factors such as transport problems or process disruptions will become which thousands of new industrial investment proposal from home and aboard have failed to materialize. very costly. These risks are mitigated by optimizing raw materials inventories, and finished goods inventories. COST OF GOODS SOLD (COGS) For ensuring uninterrupted power supply BSRM Group has made a deal with PGCB and installed substation for tapping There is another regular risk of having adequate and regular supply of GAS, Power for production .Your Company is also aware of Cost of goods sold (COGS for short) is the expense a company incurred in order to manufacture, create, or sell a product. It includes power from grid line from the 230 KV national grid. such risks and its mitigation through alternative supply of fuel. the purchase price of the raw material as well as the expenses of turning it into a finished product. Moreover now more than 10,000 MW power can be produced in Bangladesh. Government is also planning for setting up COGS vary directly with sales and production; the more items we sell or make, the more stock or components we need to buy. some big power stations. Cost of Goods Sold in 2014 has been increased by 8.34% than 2013 due to increase the consumption of LDO as well as some We are also planning to set up a 150 MW coal based power plant in Mireshorai. Government approval has already been obtained indirect cost. for setting up this plant.

GROSS PROFIT MARGIN RATIO 2. Market Risks Gross profit is the difference between sales and the cost of goods sold. Like other industry, trade and commerce, we are also exposed to market risks arising from adverse changes in: Gross Profit = Sales – Cost of Goods Sold • Interest Rate; The gross profit margin is one indicator of the financial health of a business. Larger gross profit margins are better for business – the higher the percentage, the more the business retains of each Taka of sales for other expenses and net profit. • Currency Rate (foreign exchange rates); Gross Profit Margin % = (Gross Profit ÷ Sales) x 100 • Competition, and During the year 2014, Gross Profit Margin was 7.28% against 8.97% in 2013. Due to increase of Cost of Goods Sold as well as • Economic conditions decreased of average selling price, GP margin reduced. To manage these risks, we undertake various risks specific measures and strategies.

NET PROFIT MARGIN RATIO Interest Rates Net Profit is calculated by subtracting expenses including Tax and WPPF from the gross profit, showing what the business has earned (or lost) in a given period of time. Interest rate risk refers to the risk that increases in money market rates will have adverse impact on consolidated net financial income. Net Profit = Gross Profit – Expenses with Tax & WPP&WF The business of BSRM Steels Limited requires huge working capital. Although the company closely monitors and manages Net Profit percentage of the company in the year 2014 has decreased by 1.85% compared to 2013. As per “BAS 28: Investment requirement of capital investment, the actual capital requirement may deviate from the projected one due to factors beyond its in Associates & Joint Ventures” share of profit of associate amounting to Tk. 497,354,730 accounted in 2013 and that’s why profit control, thus potentially affecting the borrowing costs. was increased in 2013 compared to current year. Prudent financial management and strong negotiation with the lenders and timely collection from customers are few of major steps to reducing funding cost.

Foreign Exchange Fluctuations Foreign currency risk is the risk of changes in exchange rates that adversely affect the company’s earnings, equity and competitiveness.

Annual Report 2014 50 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 51 We are hugely involved with Foreign Trade i.e. Import & Export and thus we are also exposed to Foreign Currency Risks. Exchange rate gains or losses related to foreign currency transactions are recognized as transaction gains and losses in our income REMUNERATION PAID TO DIRECTORS IN 2014 ANNEXURE - 3 statement as incurred. We also maintain foreign currency account in which local export collection in foreign currency are directly deposited to meet foreign exchange payment requirement. In the Year 2014 company has not been affected significantly by the normal trend of Foreign Currency fluctuation. Members of the board of directors were entitled and paid as follows: 1. Business Risks Name Position Attendance Fees Remuneration Total Paid a) Risks associated with sourcing of Raw Materials Competition and Economic conditions Mr. Alihussain Akberali FCA Chairman 8,625 19,800,000 19,808,625 BSRM Steels Limited is heavily dependent for its basic raw materials-MS Billets on international market. In case of billet price fluctuation in the international market, the company suffers and it’s profitability is also affected. Competition refers to the risks of decreasing present market share caused by new entrants. Mr. Aameir Alihussain Managing Director 11,500 16,800,000 16,808,625 The subsidiary Company- BSRM Iron and Steel Co. Ltd. (BISCO) can meet a small portion of billet demand by supplying We try to mitigate this risk through active, brand management and customer relationship, and by ensuring quality product. Mr. Zohair Taherali Director 11,500 9,000,000 90,11,500 180,000 M. Ton MS Billet per annum . As we are continuously in attempts to explore any untapped opportunity and also to adopt customer’s needs, we believe we would Mrs. Tehseen Zohair Taherali Director 11,500 4,980,000 49,91,500 As up gradation of mill is going on to enhance the production capacity to 700,000 M. Ton per annum, needs for secured be able to cope with any situation in the industry we are working. Mrs. Sabeen Aameir Director 8,625 722,500 731,125 supply chain for MS Billets should top priority. Mr. Mono Ranjan Dey FCA Independent Director 59,800 - 59,800 To meet the challenge a separate company –“BSRM Steel Mills Limited” is going to be commissioned by this year to Total Taka 111,550 51,302,500 51,414,050 produce 862,000 M. Ton MS billet per year. BSRM Steels Limited is holding 21.76% equity shares of this company. 3. Operational Risks th b) Risks associated with Power Supply There are several processes involved in steel production and disruptions in one process may have serious effects in other process Mrs. Sabeen Aameir was resigned from the Board w.e.f. 15 September 2014 due to her busyness with other business. Now the Board consists of five Directors including one Independent Director. As you know, presently the main constraint of economic development of Bangladesh is acute shortage of power for streams. There is risk that operational downtime caused by factors such as transport problems or process disruptions will become which thousands of new industrial investment proposal from home and aboard have failed to materialize. very costly. These risks are mitigated by optimizing raw materials inventories, and finished goods inventories. For ensuring uninterrupted power supply BSRM Group has made a deal with PGCB and installed substation for tapping There is another regular risk of having adequate and regular supply of GAS, Power for production .Your Company is also aware of power from grid line from the 230 KV national grid. such risks and its mitigation through alternative supply of fuel. KEY OPERATING AND FINANCIAL DATA OF PRECEDING 6 YEARS ANNEXURE - 4 Moreover now more than 10,000 MW power can be produced in Bangladesh. Government is also planning for setting up 2014 2013 2012 2011 2010 2009 some big power stations. Operations and Market: We are also planning to set up a 150 MW coal based power plant in Mireshorai. Government approval has already been obtained Production (Qty) MT 623,918 630,305 580,147 523,625 433,823 350,326 for setting up this plant. % of Production Growth % (1.01%) 8.65% 10.79% 20.70% 23.83% 194.49% Sales (Qty) MT 679,803 601,935 579,377 517,887 442,707 356,190 2. Market Risks % of Sales Growth (Qty) % 12.94% 3.90% 11.87% 16.98% 24.29% 336.72% Like other industry, trade and commerce, we are also exposed to market risks arising from adverse changes in: Financial Results: • Interest Rate; Turnover TK 38,535,936,754 36,229,050,933 38,253,464,657 31,234,710,327 22,007,682,247 15,843,586,337 TK 2,807,324,502 3,250,148,580 1,888,439,411 1,914,574,972 1,929,718,476 1,581,634,316 • Currency Rate (foreign exchange rates); Gross Profit % 7.28% 8.97% 4.94% 6.13% 8.77% 9.98% • Competition, and Earnings before interest, TK 1,892,833,850 2,314,398,453 1,160,385,361 1,369,695,830 1,551,537,999 1,367,048,990 • Economic conditions WPP&WF and Tax % 4.91% 6.39% 3.03% 4.39% 7.05% 8.62% To manage these risks, we undertake various risks specific measures and strategies. TK 1,086,207,806 1,693,468,511 865,331,036 839,205,050 964,885,985 574,084,231 Net Profit after tax % 2.82% 4.68% 2.26% 2.69% 4.38% 3.62% Interest Rates Earnings Per Share (EPS)* TK 3.18 4.95 2.53 2.46 2.82 1.68 Interest rate risk refers to the risk that increases in money market rates will have adverse impact on consolidated net financial Financial Position: income. Current Ratio (Times ) 1.01 0.97 0.92 0.93 0.83 0.77 The business of BSRM Steels Limited requires huge working capital. Although the company closely monitors and manages Net Asset Value TK 7,495,091,260 6,915,249,792 5,540,653,743 2,974,080,646 2,134,875,596 124,989,611 requirement of capital investment, the actual capital requirement may deviate from the projected one due to factors beyond its Net Asset Value Per Share TK 21.93 20.23 17.02 9.14 7.87 0.86 control, thus potentially affecting the borrowing costs. Net operating Cash TK (8.76) 13.44 (2.24) (14.38) 6.67 (9.21) Prudent financial management and strong negotiation with the lenders and timely collection from customers are few of major Flow Per Share * steps to reducing funding cost. Paid -up Capital (In Crore ) TK 341.775 341.775 325.50 325.50 271.25 145.00

Foreign Exchange Fluctuations *As per BAS 33 Earnings per share are computed based on current year’s number of outstanding shares. Foreign currency risk is the risk of changes in exchange rates that adversely affect the company’s earnings, equity and competitiveness.

Annual Report 2014 52 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 53 THE PATTERN OF SHAREHOLDING AS ON 31 DECEMBER 2014 ANNEXURE - 5 REPORT OF THE STATUS OF COMPLIANCE OF CORPORATE GOVERNANCE ANNEXURE - 6 a) Parent/Subsidiary/Associated companies and other related parties Status of compliance with the conditions imposed by the Commission’s Notification No. SEC/CMRRCD/2006-158/134/Admin/44 dated 07 August 2012 issued under section 2CC of the Securities and Exchange Ordinance, 1969:

NAME RELATION NO. OF SHARES HELD (Report under condition No: 7) Bangladesh Steel Re-Rolling Mills Limited Affiliated Company 106,594,173 Compliance Status H. Akberali & Co. Ltd. Affiliated Company 76,864,620 (Put √ in the appropriate Condition Remarks Title column) Total 183,458,793 No. (if any) Complied Not Complied b) Directors /CEO/CS/CFO/Head of Internal Audit and their spouses and minor children. 1 BOARD OF DIRECTORS 1.1 Board’s Size √ NAME RELATION NO. OF SHARES HELD 1.2 Independent Directors Mr. Alihussain Akberali FCA Chairman 34,987,995 1.2 (i) Minimum Number of Independent Director(s) √ Mr. Aameir Alihussain Managing Director 6,835,500 1.2 (ii) (a) Shareholding by Independent Director(s) √ Mr. Zohair Taherali Director 8,932,980 1.2 (ii) (b) Relationship with Company’s sponsor √ Mrs. Tehseen Zohair Taherali Director 6,835,500 1.2 (ii) (c) Other relationship with Company or its subsidiary / Mr. Mono Ranjan Dey FCA Independent Director 113,410 associated companies √ Mrs. Sabeen Aameir Wife of Mr. Aameir Alihussain 7,245 1.2 (ii) (d) Member, Director or Officer of any Stock Exchange √ Mrs. Bilkis Alihussain Wife of Mr. Alihussain Akberali 1,168,272 1.2 (ii) (e) Shareholder/Director/Officer of any member of Stock Exchange or an intermediary of the Capital Market √ Mr. Shekhar Ranjan Kar FCA Group CFO & CS 27,279 1.2 (ii) (f) Association with statutory audit firm (currently or preceding 3 years engaged as auditor of the Company) √ c) Shareholding status of top 5 salaried employees other than CEO, CS, CFO & HIA 1.2 (ii) (g) Holding same position in more than three listed companies √ 1.2 (ii) (h) Defaulter in payment of any loan to a Bank / NBFI √ NAME DESIGNATION NO. OF SHARES HELD 1.2 (ii) (i) Conviction for Criminal Offence involving moral turpitude √ M. Firoze Head of Marketing & Product Development Nil 1.2 (iii) Appointment and approval of Indipendent Director(s) by BOD and AGM √ A.F.M Mizanur Rahman Plant Head Nil 1.2 (iv) Vacancy of post of Independent Director(s) for not more than 90 Days NA Jasim Uddin Ahmed Head of Technical Projects 4,270 1.2 (v) The Board shall lay down a Code of Conduct of all Shobhon Mahbub Shahabuddin Head of National Sales Nil Board Members and Annual compliance of the code to be recorded √ Md. Imtiaz Uddin Chowdhury Head of Supply Chain Management Nil 1.2 (vi) Tenure of office of an Independent Director(s) √ 1.3 Qualification of Independent Director (ID) 1.3 (i) Knowledge and Integrity of Independent Director(s) √ d) Shareholders holding 10% or more voting interest in the company. 1.3 (ii) Academic background and experiences of Independent Director(s) √ NAME RELATION NO. OF SHARES HELD 1.3 (iii) Relaxation of qualification of Independent Director(s) NA Mr. Alihussain Akberali FCA Chairman 34,987,995 1.4 Chairman of the Board & Chief Executive Officer √ 1.5 The Directors’ Report to Shareholders Bangladesh Steel Re-Rolling Mills Ltd. Affiliated Company 106,594,173 1.5 (i) Industry outlook and possible future developments in the industry. √ H. Akberali & Co. Ltd. Affiliated Company 76,864,620 1.5 (ii) Segment-wise or product-wise performance √ 1.5 (iii) Risks and concerns √ 1.5 (iv) A discussion on Cost of Goods sold, Gross Profit Margin and Net Profit Margin. √ 1.5 (v) Discussion on continuity of any Extra-Ordinary gain or loss. √

Annual Report 2014 54 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 55 Compliance Status Compliance Status (Put √ in the appropriate (Put √ in the appropriate Condition Remarks Condition Remarks Title column) Title column) No. (if any) No. (if any) Complied Not Complied Complied Not Complied

1.5 (vi) Basis for Related Party transactions √ Appointment of Members and inclusion of Independent 3.1 (ii) √ Director as member Utilization of proceeds from public issues, rights issues and/or through 1.5 (vii) NA any others instruments 3.1 (iii) Qualification of Members √

Explanation of deteriotion of financial results after IPO, RPO, Rights Offer, 3.1 (iv) Filling of Vacancy NA 1.5 (viii) NA Direct Listing, etc. 3.1 (v) Company Secretary is the Secretary of the Committee √

Explanation of significant variance between Quarterly Financial 3.1 (vi) Quorum of meeting of the Audit Committee √ NA 1.5 (ix) performance and Annual Financial Statements 3.2 Chairman of the Audit Committee 1.5 (x) Remuneration to Directors including Independent Directors √ 3.2 (i) Selection of Chairman of the Audit Committee √ 1.5 (xi) Fairness of Financial Statements √ 3.2 (ii) Requirement of presence in the AGM √ 1.5 (xii) Proper books of account of the issuer company have been maintained √ 3.3 Role of Audit Committee 1.5 (xiii) Adoptation of appropriate accounting policies and estimates √ 3.3 (i) Oversee the financial reporting process √ 1.5 (xiv) Compliance with IAS/BAS/IFRS/BFRS √ 3.3 (ii) Monitor choice of accounting policies and principles √ The system of internal control is sound in design and has been 3.3 (iii) Monitor Internal Control Risk management process √ 1.5 (xv) √ effectively implemented and monitored. 3.3 (iv) Oversee hiring and performance of external auditors √ 1.5 (xvi) Ability to continue as a Going Concern √ 3.3 (v) Review the annual Financial Statements √ 1.5 (xvii) Significant deviations in operating results compared to last year NA 3.3 (vi) Review the quarterly and half yearly Financial Statements √ Presentation of summarized key operating and 3.3 (vii) Review the adequacy of internal audit function √ 1.5 (xviii) √ financial data of preceding 5 (five) years 3.3 (viii) Review of the significant related party transactions √ 1.5 (xix) Reasons for not declaring dividend NA Review of the Management Letters / Letter of Internal Control 3.3 (ix) NA Number of Board meetings held during the year and weakness issued by statutory auditors 1.5 (xx) √ attendance by each director 3.3 (x) Application of fund raised through IPO/RIPO/Right Issue NA

Shareholding by Parent/Subsidiary/Associated Companies and 3.4 Reporting of the Audit Committee 1.5 (xxi) (a) √ other related parties 3.4.1 (i) Reporting to the Board of Directors √ 1.5 (xxi) (b) Shareholding by Directors, CEO, CS, CFO, HIA √ 3.4.1 (ii) (a) Report on conflicts of interests NA 1.5 (xxi) (c) Shareholding by Executives (Top 5 salaried) √ ) Suspected or presumed fraud or irregularity or 3.4.1 (ii) (b NA 1.5 (xxi) (d) Shareholders holding ten percent (10%) or more voting interest √ material defect in the internal control system 1.5 (xxii) (a) A brief resume of the Directors √ Suspected infringement of laws, including securities related laws, 3.4.1 (ii) (c) NA 1.5 (xxii) (b) Nature of his/her expertise in specific functional areas √ rules and regulations 1.5 (xxii) (c) Directorship in other companies √ 3.4.1 (ii) d) Any other matter which shall be immediately disclosed to the BOD NA 2 CHIEF FINANCIAL OFFICER (CFO), HEAD OF INTERNAL AUDIT AND COMPANY SECRETARY (CS) 3.4.2 Reporting to the Authorities NA 2.1 Appointment of CFO, HIA & CS √ 3.5 Reporting to the Shareholders and General Investors √ 2.2 Requirement to attend the Board Meetings by CFO & CS √ 4 EXTERNAL / STATUTORY AUDITORS 3 AUDIT COMMITTEE 4 (i) Appraisal or valuation services or fairness opinions √ 3 (i) Audit Committee as a sub-committee of the Board of Directors √ 4 (ii) Financial information systems design and implementation √ 3 (ii) Function of Audit Committee √ Book-keeping or other services related to the accounting records or 4 (iii) √ 3 (iii) Reporting to the Board of Directors & duties of the Committee in writing √ Financial Statements 3.1 Constitution of the Audit Committee 4 (iv) Broker-dealer services √ 3.1 (i) Composition of the Audit Committee √ 4 (v) Actuarial services √

Annual Report 2014 56 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 57 Compliance Status (Put √ in the appropriate Condition Remarks Title column) No. (if any) Complied Not Complied

4 (vi) Internal audit services √ 4 (vii) Any other service that the Audit Committee determines √ 4 (viii) Possess of share by Partner or Employee of Audit Firm √ 4 (ix) Audit/certification services on compliance of Corporate Governance √ 5 SUBSIDIARY COMPANY 5 (i) Composition of the Board of Directors √

At least 1 (one) independent director on the Board of Directors 5 (ii) of the holding company shall be a director on the Board of Directors √ of the subsidiary company.

5 (iii) Submission of minutes to the Board Meeting of holding company √ 5 (iv) Review of affairs by the holding company √

Review of Financial Statement in particular Investment activities by the 5 (v) √ Audit Committee of holding company

6 DUTIES OF CHIEF EXECUTIVE OFFICER (CEO) AND CHIEF FINANCIAL OFFICER (CFO) 6 (i) (a) Financial Statements do not contain any materially untrue or misleading statement √

Financial Statements presents a true and fair view of the company’s 6 (i) (b) affairs and are in compliance with existing accounting standards √ and applicable laws

Certification that there are no fraudulent, illegal or in violation of 6 (ii) √ the Company’s code of conduct

7 REPORTING AND COMPLIANCE OF CORPORATE GOVERNANCE 7 (i) Certification on compliance of Corporate Governance √ Directors’ statement on the compliance of the above conditions in 7 (ii) √ the Directors’ Report

Annual Report 2014 58 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 59 Annual Report 2014 60 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 61 xrTJrL ßTJwJVJPr ImhJj

3%

12% 22% AjTJo aqJé S nqJa TJˆo KcCKa KmhMqf VqJx 63%

Annual Report 2014 62 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 63 Annual Report 2014 64 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 65 CORPORATE SOCIAL RESPONSIBILITIES

MEGHNA WATER PURIFICATION BSRM CSR VISION PLANT To integrate social responsibility into BSRM core business decisions, we want to have CSR at every steps of the heart of The government will set up the largest our business process. water treatment plant in the country We envision CSR strategy that demonstrates BSRM intent for for treating the water of Meghna river Caring, Supporting, and Returning to society where we in Narayanganj to provide safe water anchored our business decades ago – this is how we define to all and reducing dependency on ground water. This will be largest CSR and search and support interventions encompassing investment by Dhaka WASA for this scope. supplying pipe water to Dhaka city, home of nearly 14 million people. This installation will improve supply to 70% instead of the current rate of 13% in the next 10 years.

BSRM CSR PRINCIPLES BSRM commits resources to the extent that it can reasonably afford, not in one-off philanthropic project, rather in a set of strategically planned efforts consistent with BSRM's own corporate strengths and complementary to programmes offered by the Government, to sustain and improve a healthy and prosperous environment, and improve the quality of life of the people living in poverty.

SUPPORTING FREE EDUCATION

BSRM provides free education from nursery to grade 8 including books, extra coaching, computer training, sports/arts facilities, uniform since 2006. After grade 8, BSRM continues to support these students financially to continue their study in nearby schools,for facilitating higher education. At present there are 430 slum kids. These are the children of ultra poor and poor families, who tend to send their kids to street for begging or houses as domestic help. BSRM Group directors oversee the overall affairs of the school through an independent school management committee, head master being responsible for running the operation.

BSRM Steels Limited Annual Report 2014 67 SOLAR HOUSE SYSTEM (SHS) BSRM TRAINING CENTRE FOR WOMEN

To provide electricity to poor people’s houses where government facilitated gridline electricity does not reach, BSRM has set up this project at Asampara Adarshagram (Hill tract area in Jaintapur, Sylhet). During day time, no light enters the houses, not allowing children to study, stay safe during rainy season and night time - lighting lamps forcing inhaling gases dangerous for health. As pilot project BSRM is supporting 40 families with SHS, their houses have been lighted leading to increased opportunity for education , lower fuel cost, ensured sufficient light arrangement for safe movement of women & children, increased income, reduced health hazard caused by Kerosene lamp & smokes, offering better quality of lives.

Thengamara Mohila Sabuj Sangha (TMSS), a renowned NGO in Uneducated young women who never put step out of the village but poised to give good food and better education to their children Bangladesh is responsible for successful implementation of the at any cost are often exposed to many kinds of exploitations and health hazards. The dalals of the villages are very active to take project including erection, commissioning and supervising for years. advantage of the situation by luring them to go to neighbouring countries for good jobs.

BSRM Livelihood programme has been initiated to create an SOLAR POWER WATER PUMP alternative option of earning, attain self sufficiency and help avoid such temptation and change the lives of the women vulnerable to irregular migration and trafficking. The centre will be equipped with machines, materials and the programme encompassing a series of teaching assistance on tailoring, stitching cloths, embroidery, block printing, financial management with working capital. Three NGOs have been engaged: Management and Resources Development Initiative (MRDI), Alternative Development Organization for Research & Evaluation (ADORE), and Gramer Kagoj (GK) to implement the project.

PREVENT DEFORESTATION For a 7 year old kid and many others, no more climbing up a steep, rough slippery road of about 400 feet to fill water pitchers. Now they will be going to school, having a happy and safe childhood and getting the opportunity to build a meaningful life. Instead of BSRM has taken this initiative to give an alternative earning pitcher she will carry school bag. This project will put an end to the inhuman, hard and laborious water lifting by women and option and divert the source of income from forest to agriculture. related physical problems. Started as a pilot project, if succeeded, similar projects surrounding BSRM Steel Mills Ltd, Mirserai area will be funded. This will give opportunities to the factory workers to engage BSRM has initiated solar power water pump project to their family members to earn extra income and develop the transform the lives of 300 families and preserve water community. reservoir with a capacity of 15,000 liter on the top of the hill of Adarshagram, Jaintapur, Sylhet by end 2014. Poor and landless, forest dependent community maintain their NGO Thengamara Mohila Sabuj Sangha (TMSS-RES) has livelihood by collecting forest product like bamboo, fuel wood taken the responsibility for the installation, supervision, and some other minor forest products. Their dependency on troubleshooting and maintenance of the project. forest causes over exploitation and forest loses its biodiversity day by day. Young Power in Social Action (YPSA), a nonprofit, social development organization is supervising the implementation of the programme.

Annual Report 2014 68 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 69 LIVELIHOOD PROGRAMME FOR WOMEN LIVELIHOOD PROJECT IN SALINE WATER AREA

Crab cultivation projects in Bagerhat, Khulna, will create ‘Matching Fund Scheme’, a BSRM innovative initiative to revenue opportunities, empower the under privileged farmers support and increase the capacity of women to work at with access to environmental friendly technologies, training home at Sitakunda, Chittagong. This is a pilot project for and access to local government service providing agencies, particularly in the areas of primary health, fisheries, water women who want their children to go to school and sanitation. Farming couple will contribute to the village improve the quality of lives of their family members, but economy, and involved in decision-making processes of do not have the opportunities to look for work out cooperative management, work in a group for overall of home. development of their own community.

As grant they have been given seed money to pick up work as per their skills such as farming, stitching, cane products, 358 farmers to come under this project gradually over the next weaving etc. The group will save a percentage of the seed 5 years, the project implemented by Volunteer Service money in savings account in a bank and every six month Oversees Bangladesh ( VSOB), VSO is the world’s leading BSRM will match the deposit amount till it feels appropriate. independent international development organization working since 1958 started in UK as charity, now to an international Zonta International, a global organization of executives and development organization. professionals working together to change the lives of women and girls in their local communities and around the world, is helping BSRM to implement the project.

CONSERVATION OF ENVIRONMENT POVERTY REDUCTION PROGRAMME IN URBAN AREA

Green Hut is a tree plantation partnership programme The BSRM Group has joined a partnership programme with the between Karnaphuli EPZ and BSRM group of companies under United Nations Development Programme (UNDP) to empower BSRM CSR activities. A mango tree sapling planted by BSRM the urban poor. Group Managing Director Mr. Aameir Alihussain and Under this joint-programme, the two sides is financing the Karnaphuli EPZ General Manager (IC) Md. Khorshid Alam, in urban poor involved in different income-generating activities, Northern Areas Reduction of Poverty Initiatives (NARI) project, thus empowering them economically.The project styled Urban Karnaphuli EPZ, Patenga, Chittagong on October 22, 2014. Partnerships for Poverty Reduction Project (UPPRP) is a UK-aided project managed by the UNDP. The project supports maintaining ecological balance and purifying air, KEPZ hosts a large number of manufacturing The pilot project started from July 2014 and a group of 30 companies which produce carbon dioxide making the people have been selected from Jalalabad area in Chittagong environment poisonous, these trees will consume these gas city, if proven successful, such project will be undertaken in and keep environment safer. The importance of trees as other parts of the country. natural resources is universal, fruits and flowers, among many other benefits, will be enjoyed by the women workforce residing in the residential buildings, NARI project has been constructed with the financial support of World Bank.

Annual Report 2014 70 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 71 SUSTAINABLE GROWTH - GREEN ENVIRONMENT, HUMAN RESOURCE AND INFORMATION TECHNOLOGY DEVELOPMENT

BSRM Group of Companies is involved in production and supply of steels products. To keep our human resources safe and sound and to keep the environment of mill clean, we have taken number of projects and to alleviate all problems. Green Environment In BSRM Steels Limited we are using world class Water Treatment Plant (WTP) for recycling the water for reusing and to keep the environment free from pollution. We have commissioned Air Pollution Control (APC) system in BSRM Iron & Steel Co. Ltd. (BISCO) to keep the air free from Pollution. In the same way, we are going to implement a rain water harvesting project for our new billet casting plant at Mirershorai. It will have marvelous positive impact on the environment. As a recognition of your effort to keep the environment clean and greener, we were awarded the “Divisional Environmental Award” by Poribesh Odhidaptar. Human Resource Development We have highly professional and experienced team in each department which actually enables us to maintain our quality of product, sustainable growth, efficiency in production and marketing as well as to retain our position as the leader in this sector. Capacity building For capacity building we regularly arrange training for all of our staffs. Both in house and outside training is arranged for them. Usually, such big steel mill needs a significant number of foreign expatriates. As we were able to develop our people, now minimum foreign expatriates are engaged at our plants. Safety, Health and Environment Policy We have created a separate desk called SHE (Safety, Health and Environment) to oversee and take necessary measures regarding safety, health and environment. Our Group is ISO certified and obtained ISO-90001:2008 (QMS) and ISO-14001:2004 (EMS) for its compliance on HR and safety related issues. Our main principles are as follows • Provide visible and active leadership in regards to SHE and will seek opportunities to exceed regulatory requirements • Increase SHE awareness and competence by training and education • Integrate SHE into the existing operations, as well as in to planning and execution of projects • Continuously seek to recognize hazards and assess SHE risks with in the operations ELEVATED • Strive to reduce the environmental impact of the operations and optimize resource consumption by planning and carrying EXPRESSWAY out operations through environmentally responsible processes and practices

The government is planning to • Promote safe behavior among those who work for BSRM including employees, contractors, service provider and visitors construct an Elevated Expressway, • Ensure through appropriate supervision that employees understand and follow established job safe practices and one of the biggest infrastructure procedures and that work which is deemed to be unsafe is immediately stopped projects initiated by the incumbent government, in the northern part of • Minimize environmental emissions, foster continual improvement, establish objectives and targets, benchmark Dhaka City to minimize the acute performance and adopt best practices traffic congestion in Dhaka. It will increase traffic capacity within and • Comply with all relevant statutory and other requirements pertaining to SHE around the city by improving • Investigate accidents and incidents and occurrences of occupational exposure to prevent a recurrence connectivity between the northern part of Dhaka City with the Central, • Ensure that all supervisors understand and fulfill their accountabilities to ensure safe and health working conditions South and South-Eastern part. are maintained

BSRM Steels Limited Annual Report 2014 73 • Ensure that all employees understand and fulfill their accountabilities to perform their jobs safely and to follow established safe work practices and procedures REGULATORY COMPLIANCE REPORT Safety Committee CORPORATE GOVERNANCE REPORT In each plant there is a safety committee headed by the plant head. There are also some sub-committee which are working under Corporate governance refers to the structures and processes for the direction and control of companies. Sound corporate the main committee. The committee ensures the compliance with the safety policy, train and encourages staffs to follow the safety governance is a fundamental part of the culture of the company and ensures long term success. Corporate governance concerns guidelines, use proper machineries. If the committee finds any weakness then it takes the corrective measures. the relationships among the management, Board of Directors, controlling shareholders, minority shareholders and other stakeholders. Good corporate governance contributes to sustainable economic development by enhancing the performance of Staff Succession Plan companies. The Board of Directors of BSRM Steels Limited is firmly committed to upholding principles of sound corporate Succession planning is a process whereby an organization ensures that employees are recruited and developed to fill each key governance. The main objective of corporate governance is creation of lasting value for stakeholders. Transparency in business role within the company. Through our succession planning process, we recruit superior employees, develop their knowledge, skills, transaction and disclosure of information to regulatory bodies as part of its legal obligations constitute sound corporate governance. and abilities, and prepare them for advancement or promotion into ever more challenging roles. Actively pursuing succession Good corporate governance also means conformity to sound ethical principles and a code of conduct in business dealings. planning ensures that employees are constantly developed to fill each needed role. As our organization expands, provides promotional opportunities and increases sales, our succession planning guarantees that we have employees on hand ready and Board of Directors waiting to fill new roles. We have also appointed number of trainees in various areas as a supportive measure. Board of Directors is the representative and trustee of the shareholders of the company. The Board of directors of BSRM Steels Limited comprises of five members including Chairman, Managing Director and one Independent Director in compliance with the Policy of the safety of records of the entity Corporate Governance Guidelines of BSEC. Board of Directors is performing the responsibilities, among others, setting the Our company has comprehensive records for safety of all the company’s data and information. As per law, all kinds of vouchers, company’s strategic objectives, providing leadership, supervision and safeguarding shareholders’ interest. Ledger, sales invoice and other books and records has been kept for 12 years. For online data back-up we have installed several backup servers as follows: Audit Committee BSRM Steels Limited has an Audit Committee as a sub-committee of the Board of Directors. This committee is assisting the Board Oracle Database Backup of Directors in ensuring that the financial statements reflect true and fair view of the state of affairs of the company and in ensuring i) BSRM has installed 2 Database Server with Linux clustering, so that if the primary database fails then we will switch to the a good monitoring system within the business. This committee is responsible to the Board of Directors and its duties and secondary database. responsibilities are clearly set forth in writing. Audit Committee is reconstituted as per the guidelines of BSEC. ii) BSRM is using RMAN (Recovery Manager) to take their backup and this system is taking incremental backup every hour Audit Committee holds regular meetings on the following major issues: and this backup files are transferring to two different location every midnight. Also BSRM is taking weekly backup in Tape • to review the financial statements (consolidated and separate) and reporting process and monitor the choice of accounting Drive and put the drive in a safe vault. policies and principles Disaster Recovery • to review the business risk management BSRM has installed a Failover Server in a different location so that if any disaster occurred then user can switch to that server. • to review the internal audit assessment • to oversight the good corporate practices • to review the adequacy of internal audit function etc. A separate report of the audit committee is included in the annual report. Chairman of the Board and Managing Director In BSRM Steels Limited, Chairman and Managing Director are two separate individuals selected from the Board of Directors. Both are performing defined responsibilities and focusing on the strategic value addition of the company. Managing director is performing the role of Chief Executive. Directors’ report to Shareholders Board of Directors is reporting the performance, annual achievements and status of the company’s activities to the shareholders. They are also conveying the future plan and outlook of the industry and company in their report. Chief Financial Officer, Company Secretary and Head of Internal Audit Company has appointed a qualified Chartered Accountant as well as a qualified Cost Accountant designated as Chief Financial Officer and a fellow member of ICAB as Company Secretary. The CFO & Company Secretary regularly advise and assist the Board on financial strategy and compliance issues of the regulatory bodies. Chief Financial Officer and Company Secretary are

Annual Report 2014 74 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 75 also attending Board Meetings as per Corporate Governance notification of the BSEC. Company’s internal audit department is also headed by a Head of Internal Audit having professional expertise and experiences in the field of internal audit. Board of Directors clearly defined respective roles, responsibilities and duties of the CFO, Company Secretary and Head of Internal Audit. Internal Audit and Control BSRM Steels Limited established an Internal Audit Department consisting of professional and knowledgeable employees. Internal Audit Department directly reports to the Board of Directors. Internal Audit department regularly conducts their audit based on a yearly Internal Audit Plan and checks, verifies and reviews the compliance of Internal Control Procedure and other regulatory requirements. External Auditors External Auditors of BSRM Steels Limited is appointed in every Annual General Meeting (AGM) by the Shareholders of the company as per Company Act 1994. Company also conforms to the requirement of Bangladesh Securities and Exchange Commission in appointing external auditors. External Auditors are not engaged to perform any of the tasks other than external /statutory audit. Subsidiary Company Board of the Directors of BSRM Iron & Steel Co. Ltd. - Subsidiary Company of BSRM Steels Limited is also constituted in line with the guidelines of BSEC as per Corporate Governance Notification. Independent Director of holding company has also been director of subsidiary company. Minutes of the Board of directors’ meeting of subsidiary company are reviewed by the Board of holding company. The Audit Committee of the BSRM Steels limited (holding company) also reviews the financial statements of the subsidiary company. Key Management Committee There are other sub-committees to the Board of Directors to assist the Board of Directors in making and formulating company’s strategic objectives and policies namely Management Committee & Executive Strategy and Planning Cell (ESPC). These committee members sit regularly for discussing and reviewing the activities of the company. Certification on the Compliance of Corporate Governance Guidelines of BSEC A certificate regarding compliance of conditions of Corporate Governance Guidelines of the Bangladesh Securities and Exchange Commission issued by M. A. Mallik & Co., Chartered Accountants is included in this annual report.

Annual Report 2014 76 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 77 REPORT OF THE AUDIT COMMITTEE Reporting of the Committee On discharging its responsibilities, the audit committee has ensured the followings: As per Bangladesh Securities and Exchange Commission’s notification, BSRM Steels Limited has an Audit Committee as a • Financial statements have been prepared and presented in compliance with all laws, regulations & standards sub-committee of the Board of Directors. At the beginning of this year the Committee was consists five members. Mrs. Sabeen as applicable Aameir (representative Director of Bangladesh Steel Re-Rolling Mills Ltd.) has resigned from the Board due to her busyness with other businesses on 15th September 2014 and after that a revised Committee has been formed by the following members: • Adequate controls and procedures are in place to provide reasonable assurance that the Company’s assets are safeguarded 1. Mr. Mono Ranjan Dey FCA Chairman and that the financial position of the Company is adequately managed 2. Mr. Alihussain Akberali FCA Member 3. Mr. Zohair Taherali Member Observations, findings and suggestions of the committee were communicated to the Board of Directors and the Board of Directors 4. Mr. Shekhar Ranjan Kar FCA Secretary had taken appropriate measures on the report.

Terms of Reference On behalf of the Audit Committee The terms of reference of the audit committee has been determined by the Board in accordance with the BSEC notification. The Committee is responsible to the Board of Directors and reports on its activities regularly. The Committee assists the Board of Directors in its general oversight of financial reporting, internal controls and functions relating to internal audit.

Meetings and attendance Mono Ranjan Dey FCA Independent Director and Chairman of Audit Committee During the year under review, the Committee held four meetings. Meeting of the Committee were attended by the Managing March 30, 2015 Director, Head of Accounts & Finance and Head of Internal Audit of the Company on invitation. The attendance of the members at these meeting is as under:

Name of the members No. of meetings held whilst Meetings attended a committee member Mr. Mono Ranjan Dey FCA 4 4 Mr. Alihussain Akberali FCA 4 4 Mr. Zohair Taherali 4 4 Mr. Shekhar Ranjan Kar FCA 4 4

Mandate and Role The Audit Committee assists the Board of Directors in fulfilling effectively its oversight responsibilities for the company’s accounting and financial reporting processes and internal control systems of the company. The Committee has been mandated to: • Examine all relevant issues relating to the financial and other connected affairs of the Company • Monitor the financial reporting systems in place to ensure the integrity and the soundness of the information provided to the Board of Directors, Regulatory Authorities, Management and other Stakeholders • Review the quarterly and the appropriateness of accounting policies and their adherence to statutory and regulatory compliance and applicable accounting standards • Identify, analyze and monitor the risks faced by the Company and examine the adequacy, efficiency and effectiveness of internal controls and procedures in place to avoid, mitigate or transfer such risks • Monitor all internal audit and inspection programmes, review internal audit / inspection reports and follow-up on their findings and recommendations • Review the Interim Financial Statements and the Company’s Annual Financial Statements prepared for disclosure, prior to submission to the Board of Directors

Annual Report 2014 78 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 79 STATEMENT OF CEO AND CFO ON FINANCIAL STATEMENTS

The Board of Directors BSRM Steels Limited

We certify that:-

(i) We have reviewed financial statements for the year ended December 31, 2014 and to the best of our knowledge and belief: a) these financial statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading; b) these financial statements together present a true and fair view of the company’s affairs and are in compliance with existing accounting standards and applicable laws;

(ii) To the best of our knowledge and belief, the company did not enter in to any transactions which are contrary to the laws of the land or the ethical standards which the company adheres to.

CHITTAGONG-LUKSHAM Aameir Alihussain Mohammad Arif ACA, ACMA DOUBLE RAIL LINE Managing Director Chief Financial Officer The government will upgrade the most important single-track line between Dhaka and Chittagong to a double-track line to facilitate the volume of both passenger and freight trains at a reduced time. At present, the single track is both impeding the movement of both passenger and freight trains, but the double track will increase connectivity between the two most important economic hubs of the country.

Annual Report 2014 80 BSRM Steels Limited AUDITORS' REPORT TO THE SHAREHOLDERS OF BSRM STEELS LIMITED

AUDITORS' REPORT & We have audited the accompanying consolidated financial statements of BSRM Steels Limited and its subsidiary ("the Group"), as well as the financial statements of BSRM Steels Limited which are comprised of the Statement of Financial Position as at 31 December 2014, Statement of Profit or Loss and Other Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and a summary of significant accounting policies and other explanatory information. FINANCIALS 2014 Financial statements of the subsidiary, BSRM Iron & Steel Co. Limited for the year ended 31 December 2014 were audited by Basu Banerjee Nath & Co., Chartered Accountants who issued an unqualified opinion on 22 March 2015. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Bangladesh Financial Reporting Standards (BFRS), the Companies Act 1994 and other applicable laws and regulations 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. Auditor's Responsibility Our responsibility is to express an opinion on these 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 amounts 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 the accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. BSRM Steels Limited and its subsidiary The financial statements of the company's subsidiary namely, BSRM Iron & Steel. Co. Ltd. (BISCO) were audited by Basu Banerjee st Nath & Co., Chartered Accountants and they expressed an unqualified opinion on these financial statements. Our opinion, in so far As at and for the year ended 31 December 2014 as it relates to the amounts included in respect of the company's subsidiary, is based on the reports of subsidiary's auditors as mentioned above. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion: In our opinion, the financial statements present fairly, in all material respects, the financial position of BSRM Steels Limited as at 31 December 2014 and its financial performance and its cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards (BFRS) 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 purpose 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; (c) the Statement of Financial Position and Statement of Profit or Loss and Other Comprehensive Income dealt with by the report are in agreement with the books of accounts; and (d) the expenditure incurred was for the purposes of the company's business.

31 March 2015 Syful Shamsul Alam & Co. Chittagong. Chartered Accountants

Annual Report 2014 80 BSRM Steels Limited Annual Report 2014 83 BSRM Steels Limited and its subsidiary BSRM Steels Limited and its subsidiary Consolidated Statement of Financial Position Consolidated Statement of Profit or Loss and Other Comprehensive Income As at 31 December 2014 For the year ended 31 December 2014

Note(s) 2014 2013 (Re-stated) Note(s) 2014 2013 (Re-stated) Taka Taka Taka Taka

ASSETS Revenue 26.a 38,571,105,303 36,294,868,280 Non-current assets Cost of sales 27.a (35,083,090,919) (32,466,554,850) Property, plant and equipment 4.a 9,478,012,241 9,361,781,880 Capital work-in-progress 5.a 52,120,752 257,428,476 Gross profit 3,488,014,384 3,828,313,429 Intangible assets 6.a 42,671,865 83,707 Selling and distribution costs 28.a (672,978,687) (739,443,903) Intangible assets - Development phase (Software) 7.a - 47,718,801 Administrative costs 29.a (283,360,280) (233,349,260) Investment 8.a 945,301,128 948,500,730 Other operating income 30.a 16,361,164 5,165,110 Total non-current assets 10,518,105,986 10,615,513,594 Profit from operating activities 2,548,036,581 2,860,685,377 Current assets Finance costs 31.a (873,602,989) (844,891,039) Short term investment 9.a 254,178,594 239,525,510 Finance income 32.a 153,486,963 138,708,257 Inventories 10.a 13,627,336,725 7,883,356,183 (720,116,026) (706,182,782) Trade and other receivables 11.a 2,973,028,898 4,932,230,959 Current account with related companies 12.a 3,040,570,533 3,148,249,274 Profit before WPPF and Welfare Fund 1,827,920,555 2,154,502,595 Advances, deposits and prepayments 13.a 1,394,394,506 1,265,487,671 Contribution to WPPF and welfare fund 24.a (91,670,284) (104,486,564) Cash and cash equivalents 14.a 573,851,351 597,043,710 Non-operating income 34.a 7,570,500 7,560,000 Total current assets 21,863,360,607 18,065,893,308 Share of profit/(Loss) of associate 35 (3,199,602) 497,354,730 Total Assets 32,381,466,593 28,681,406,902 Profit before income tax 1,740,621,169 2,554,930,762 EQUITY AND LIABILITIES Provision for income tax: Equity -Current tax (369,138,077) (437,489,805) Share capital 15 3,417,750,000 3,417,750,000 -Deferred tax (123,924,225) (218,497,109) Retained earnings 2,609,417,357 1,859,967,666 Revaluation reserve 2,635,014,277 2,651,613,249 (493,062,302) (655,986,914) Equity attributable to owners of the company 8,662,181,634 7,929,330,915 Profit after tax for the year 1,247,558,867 1,898,943,848 Non- controlling interest 106,672,238 98,330,428 Other comprehensive income - - Total equity 8,768,853,872 8,027,661,342 Total comprehensive income for the year 1,247,558,867 1,898,943,848 Liabilities Non-current liabilities Profit attributable to: Long term borrowings 16.a 614,600,476 711,803,061 Owners of the company 1,239,217,057 1,891,908,646 Defined benefit obligations - Gratuity 17.a 53,029,475 36,783,181 Deferred tax liability 19.a 889,207,310 771,579,247 Non-controlling interest 8,341,810 7,035,201 Total non-current liabilities 1,556,837,261 1,520,165,489 1,247,558,867 1,898,943,848 Current liabilities Total comprehensive income attributable to: Trade payable 20.a 53,285,610 - Owners of the company 1,239,217,057 1,891,908,646 Short term borrowings 21.a 20,676,016,939 17,287,245,058 Non-controlling interest 8,341,810 7,035,201 Current account with related companies 22.a 1,645,134 350,000 1,247,558,867 1,898,943,848 Liabilities for expenses 23.a 424,159,111 460,008,178 Earnings per share Current tax liability 18.a 495,092,588 496,867,314 Provision for WPPF and Welfare Fund 24.a 91,670,284 104,486,564 Basic earnings per share 36.a 3.63 5.54 Other liabilities 25.a 313,905,794 784,622,958 Total current liabilities 22,055,775,460 19,133,580,071 Total liabilities 23,612,612,721 20,653,745,560 The annexed notes 1 to 42 form an integral part of these financial statement Total Equity and Liabilities 32,381,466,593 28,681,406,902

The annexed notes 1 to 42 form an integral part of these financial statement Managing Director Director Company Secretary As per our annexed report of same date Managing Director Director Company Secretary As per our annexed report of same date Syful Shamsul Alam & Co. Chittagong, 31 March, 2015 Chartered Accountants Syful Shamsul Alam & Co. Chittagong, 31 March, 2015 Chartered Accountants

Annual Report 2014 84 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 85 BSRM Steels Limited and its subsidiary - - Consolidated Statement of Cash Flows

For the year ended 31 December 2014 Total Equity Total 2014 2013 (Re-stated) Amount in Taka Taka Taka - 6,627,539 - (325,500,000) a. Cash flows from operating activities - -

Cash receipts from customers 49,727,650,990 44,501,704,061 Cash payments to suppliers and employees (51,844,879,737) (40,131,185,512) interest Income tax paid (370,912,803) (12,666,203) Interest paid (299,275,981) (396,957,569) Net cash (used in)/generated by operating activities (2,787,417,531) 3,960,894,777

- - - - Non-controlling

b. Cash flows from investing activities

Total Acquisition of Property, plant and equipment (311,997,374) (419,872,726) Disposal of Property, plant and equipment 7,264,562 698,773 Increase in Investment (11,453,482) (1,165,555,239) Software - Development/implementation (47,646,754) (29,244,130)

Realized from related companies against Software development 52,530,467 - Trade Mark (106,000) - Share money deposit to BSRM Steel Mills Limited (348,854,000) - Net cash (used in)/generated by investing activities (660,262,581) (1,613,973,322)

c. Cash flows from financing activities - 6,627,539 6,627,539 - (325,500,000) (325,500,000) - (162,750,000) - 1,891,908,646 1,891,908,646 7,035,201 1,898,943,848 (Repayments) / Receipts of Term Loan (97,202,585) (265,258,247) Dividend Paid (512,662,500) (325,500,000) Loan to/from Related Companies 4,435,282,516 (1,996,788,740) Reserve Earnings Short Term Borrowings (400,929,678) (286,748,337) Net cash provided by /(used in) financing activities 3,424,487,753 (2,874,295,324)

d. Net increase in cash and cash equivalent (a+b+c) (23,192,359) (527,373,869) Retained Revaluation - 6,296,162 6,296,162 - - - (17,472,602) 17,472,602 - 1,239,217,057 - (512,662,500) 8,341,810 1,247,558,867 - - (512,662,500) (16,598,972) 16,598,972 - - e. Opening cash and cash equivalent 597,043,710 1,124,417,579

f. Closing cash and cash equivalent (d+e) 573,851,351 597,043,710 162,750,000 3,417,750,000 3,417,750,000 2,651,613,249 1,859,967,666 2,651,613,249 7,929,330,915 1,859,967,666 7,929,330,915 98,330,428 8,027,661,343 98,330,428 8,027,661,343 3,417,750,000 2,635,014,277 2,609,417,357 8,662,181,634 106,672,238 8,768,853,872 3,255,000,000 2,669,085,851 432,208,879 6,356,294,730 91,295,226 6,447,589,956 Share Capital

(Re-stated) BSRM Steels Limited and its subsidiary Consolidated Statement of Changes in Equity 2014 For the year ended 31 December, Depreciation on revalued assets Balance as at 31 December 2013

Balance as on 1 January 2014 Profit after tax for the year 2014 Cash dividend paid for the year 2013 Adjustment of deferred tax on revaluation of assets Depreciation on revalued assets Balance as at 31 December 2014 (i) Revaluation surplus amounting to Tk. 16,598,972 (2013: Tk. 17,472,602) has been transferred to retained earnings for the difference between depreciation based on the revalued carrying amount of Tk. 16,598,972 (2013: Tk. (i) Revaluation surplus amounting to The amount has been netted off tax. the asset and depreciation based on the assets' original cost. Cash dividend paid for the year 2012 Adjustment of deferred tax on revaluation of assets Issue of Bonus Shares for the year 2012 Balance as on 1 January 2013 Profit after tax for the year 2013

Annual Report 2014 86 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 87 BSRM Steels Limited BSRM Steels Limited Statement of Financial Position Statement of Profit or Loss and Other Comprehensive Income As at 31 December 2014 For the year ended 31 December 2014

2014 2013 (Re-stated) 2014 2013 (Re-stated) Note(s) Taka Taka Note(s) Taka Taka

ASSETS Revenue 26 38,535,936,754 36,229,050,933 Non-current assets Cost of sales 27 (35,728,612,252) (32,978,902,353) Property, plant and equipment 4 6,464,419,933 6,315,431,098 Capital work-in-progress 5 51,881,394 202,756,077 Gross profit 2,807,324,502 3,250,148,580 Intangible assets 6 33,215,332 83,707 Selling and distribution costs 28 (672,978,687) (739,443,903) Intangible assets - Development phase (Software) 7 - 47,718,801 Administrative costs 29 (249,599,115) (200,241,712) Investment in Subsidiary 8.01 1,045,000,000 1,045,000,000 Other operating income 30 8,087,150 3,935,488 Investment in Associate 8.02 945,301,128 948,500,730 Profit from operating activities 1,892,833,850 2,314,398,453 Total non-current assets 8,539,817,787 8,559,490,413 Finance costs 31 (486,981,060) (635,896,922) Current assets Finance income 32 187,705,079 238,939,353 Short term investment 9 220,102,334 208,344,441 Profit before WPPF and Welfare Fund 1,593,557,869 1,917,440,885 Inventories 10 11,274,456,739 5,684,973,546 Contribution to WPPF and welfare fund 24 (79,677,893) (95,872,044) Trade and other receivables 11 2,971,813,680 4,931,416,587 1,513,879,976 1,821,568,840 Current account with related companies 12 2,605,398,576 3,148,249,274 Advances, deposits and prepayments 13 1,007,964,702 778,052,624 Share of profit/(Loss) of associate (Net of tax) 35 (3,199,602) 497,354,730 Cash and cash equivalents 14 521,092,776 594,536,979 Profit before income tax 1,510,680,374 2,318,923,570 Total current assets 18,600,828,807 15,345,573,452 Provision for income tax : Total Assets 27,140,646,594 23,905,063,865 -Current tax 18 (369,138,077) (437,489,805) EQUITY AND LIABILITIES -Deferred tax 19 (55,334,491) (187,965,255) Equity (424,472,568) (625,455,060) Share capital 15 3,417,750,000 3,417,750,000 Profit after tax for the year 1,086,207,806 1,693,468,511 Retained earnings 1,940,312,986 1,343,872,546 Other comprehensive income - - Revaluation reserve 2,137,028,274 2,153,627,246 Total comprehensive income for the year 1,086,207,806 1,693,468,511 7,495,091,260 6,915,249,792

Liabilities Non-current liabilities Earnings per share Long term borrowings 16 431,897,159 425,050,569 Basic earnings per share 36 3.18 4.95 Defined benefit obligations - Gratuity 17 39,019,866 26,291,272 Deferred tax liability 19 729,338,236 680,299,907 Total non-current liabilities 1,200,255,261 1,131,641,748 Current liabilities Trade payable 20 53,285,610 278,463,358 Short term borrowings 21.01 17,024,368,151 13,164,955,518 Current portion of long term borrowings 21.07 228,481,946 196,694,374 Current account with related companies 22 - 441,352,057 Liabilities for expenses 23 361,444,962 408,499,401 The annexed notes 1 to 42 form an integral part of these financial statement Current tax liability 18 495,092,588 496,867,314 Provision for WPPF and Welfare Fund 24 79,677,893 95,872,044 Other liabilities 25 202,948,923 775,468,260 Total current liabilities 18,445,300,073 15,858,172,325 Managing Director Director Company Secretary Total liabilities 19,645,555,334 16,989,814,073 As per our annexed report of same date Total Equity and Liabilities 27,140,646,594 23,905,063,865

Syful Shamsul Alam & Co. The annexed notes 1 to 42 form an integral part of these financial statement Chittagong, 31 March, 2015 Chartered Accountants

Managing Director Director Company Secretary As per our annexed report of same date

Syful Shamsul Alam & Co. Chittagong, 31 March, 2015 Chartered Accountants

Annual Report 2014 88 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 89 2.03 Other Regulatory Compliances - - - BSRM Steels Limited BSRM Steels Limited and its Subsidiary The group entities are also required to comply with the following major laws and regulations along with the Companies Act 1994: Total Statement of Cash Flows Notes to the consolidated and separate financial statements The Income Tax Ordinance, 1984

6,627,539 For the year ended 31 December 2014 6,296,162 As at and for the year ended 31 December 2014 The Income Tax Rules, 1984 (512,662,500) (325,500,000) 2014 2013 (Re-stated) 1. THE REPORTING ENTITY The Value Added Tax Act, 1991 Taka Taka The Value Added Tax Rules, 1991 1.01 Legal form of Enterprise The Customs Act, 1969 a. Cash flows from operating activities BSRM Steels Limited (hereinafter referred to as BSRMSL, the company or the Parent) was incorporated on 20 July, 2002, Bangladesh Labour Law, 2006 Amount in Taka Cash receipts from customers 40,058,936,081 35,638,353,590 vide the certificate C-No. 4392 of 2002 as a Private Limited Company registered in Bangladesh under Companies Act The Securities and Exchange Ordinance, 1969 Cash payments to suppliers and employees (42,384,022,980) (30,633,344,653) 1994. The company was converted to a Public Limited Company on 20 December 2006. The Company is listed with Dhaka The Securities and Exchange Rules, 1987 Income tax paid (370,912,803) (12,666,203) Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) as a publicly quoted company. Trading of the shares of the 6,296,162 6,627,539 Securities and Exchange Commission Act, 1993 16,598,972 17,472,602 Interest paid (299,275,981) (396,957,569) company started in two stock exchanges from 18 January 2009. 114,553,895 5,540,653,743 (162,750,000) (325,500,000) 1,343,872,546 1,343,872,546 1,086,207,806 6,915,249,792 6,915,249,792 1,086,207,806 1,693,468,511 1,693,468,511 1,940,312,986 7,495,091,260 (512,662,500) Net cash (used in)/generated by operating activities (2,995,275,683) 4,595,385,165 The company has set up its rolling mill at 4 Fouzderhat Industrial Estate, Latifpur, Sitakunda, Chittagong and commenced 2.04 Authorization for issue Retained Earnings commercial production from 1 April 2008. The principle place of business is at Ali Mansion, 1207/1099, Sadarghat Road, The Consolidated and Separate Financial Statements have been authorized for issue by the Board of Directors on 31 b. Cash flows from investing activities Chittagong, Bangladesh. March 2015. Acquisition of Property, plant and equipment (227,391,297) (296,229,813) 1.02 Nature of the Business 2.05 Basis of Measurement Disposal of Property, plant and equipment 5,517,886 204,442 The main purpose of the company is to manufacture M.S. products by setting up rolling and re-rolling mills and marketing The Financial Statements have been prepared on going concern basis under the historical cost convention except for some Increase in Investment (8,558,291) (1,134,374,170) the same. classes of Property, Plant and Equipment which are measured at revalued amount.

------Software - Development/implementation (47,646,754) (29,244,130) - 1.03 BSRM Iron & Steel Co. Limited- Subsidiary Company 2.06 Functional and Presentation Currency Realized from related companies against Software development 61,987,000 - BSRMSL acquired 95% equity interest in BSRM Iron & Steel Co. Limited (BISCO) i.e. 104,500,000 Ordinary Shares of Tk. These Financial Statements are prepared in Bangladesh Taka, which is the company’s functional currency. All financial Trade Mark (106,000) - 10 each on 10 November 2010 in exchange of 104,500,000 Ordinary Shares of Tk. 10 each of BSRM Steels Limited. information presented in Taka has been rounded off to the nearest integer. (16,598,972) (17,472,602) Share money deposit to BSRM Steel Mills Limited (348,854,000) - 2,153,627,246 2,153,627,246 2,171,099,848 2,137,028,274 BISCO was incorporated on 13 April 2005 as a Private Limited Company and was subsequently converted to a Public 2.07 Going Concern Net cash (used in)/generated by investing activities (565,051,456) (1,459,643,671) The group entities have adequate resources to continue its operation in foreseeable future. For this reason the directors Limited Company on 15 March 2011. The principal activity of BISCO is to manufacture and sales of M.S. Billets. It continue to adopt going concern basis in preparing the Financial Statements. The current revenue generations and commenced commercial production from 1 June 2010. The Financial Statements of this subsidiary company is included resources of the group provide sufficient fund to meet the present requirements of its existing business and operations. c. Cash flows from financing activities in the Consolidated Financial Statements according to BFRS 10 - “Consolidated Financial Statements”. (Repayment) / Receipt of Long term loans 6,846,590 206,184,480 2.08 Applicable Accounting Standards Dividend paid (512,662,500) (325,500,000) 1.04 BSRM Steel Mills Limited- Associate Company The following BASs and BFRSs are applicable for preparation and reporting of the Financial Statements for the period

BSRM Steel Mills Limited (BSRMSML) was incorporated on 16 April 2008 as a Private Limited Company and was (Repayment) / Receipt of short term borrowings 3,891,200,205 (1,997,138,740) under review: ------subsequently converted to a Public Limited Company on 12th November 2013. The main objective of BSRMSML is to Loan to/from related companies 101,498,641 (1,513,251,700) BAS - 1 Presentation of Financial Statements manufacture and sell M.S. Billets. Paid up Capital of BSRMSML is Tk. 207.30 Crore divided into 20.73 Crore Ordinary BAS - 2 Inventories Net cash provided by /(used in) financing activities 3,486,882,936 (3,629,705,960) Shares of Tk. 10 each. BSRM Steels Limited has acquired 21.76% equity interest in BSRMSML i.e. 45,114,600 Ordinary BAS - 7 Statement of Cash Flows Shares of Tk. 10 each. BSRMSML has not started its commercial operation yet and is expected to start its commercial 162,750,000 BAS - 8 Accounting Policies, Changes in Accounting Estimates and Errors Share Capital Reserve Revaluation 3,255,000,000 3,417,750,000 3,417,750,000 3,417,750,000 d. Net increase/(decrease) in cash and cash equivalent (a+b+c) (73,444,203) (493,964,466) production by 2015. BAS - 10 Events after the reporting period e. Opening cash and cash equivalent 594,536,979 1,088,501,445 2. BASIS OF PREPARATION, PRESENTATION AND DISCLOSURES OF FINANCIAL STATEMENTS BAS - 12 Income Taxes f. Closing cash and cash equivalent (d+e) 521,092,776 594,536,979 BAS - 16 Property, Plant and Equipment 2.01 Statement of Compliance BAS - 17 Leases The Financial Statements have been prepared on a going concern basis following accrual basis of accounting except for BAS - 18 Revenue Cash Flow Statement in accordance with the International Accounting Standards (IASs) and International Financial BAS - 19 Employee Benefits Reporting Standards (IFRSs) as adopted in Bangladesh by the Institute of Chartered Accountants of Bangladesh (ICAB) as BAS - 21 The Effects of Changes in Foreign Exchange Rates Bangladesh Accounting Standards (BASs) and Bangladesh Financial Reporting Standards (BFRSs). BAS - 23 Borrowing Costs BAS - 24 Related Party Disclosures (Re-stated) 2.02 Basis of Reporting BAS - 27 Separate Financial Statements The financial statements are prepared and presented for external users by the company in accordance with identified BAS - 28 Investment in Associates & Joint Ventures financial reporting framework. Presentation has been made in compliance with the requirements of BAS 1 – “Presentation BAS - 33 Earnings Per Share of Financial Statements”. The financial statements comprise of: BAS - 36 Impairment of Assets a) A statement of financial position as at 31 December 2014 BAS - 37 Provisions, Contingent Liabilities and Contingent Assets BAS - 38 Intangible Assets b) A statement of profit or loss and other comprehensive income for the year ended 31 December 2014 BAS - 39 Financial Instruments: Recognition and Measurement c) A statement of changes in equity for the year ended 31 December 2014 BFRS - 5 Non-current Assets Held for Sale and Discontinued Operations d) A statement of cash flows for the year ended 31 December 2014 BFRS - 7 Financial Instruments: Disclosures BSRM Steels Limited Statement of Changes in Equity For the year ended 31 December 2014

carrying amount of the asset and depreciation based on the assets' original cost. The amount has been netted off tax. The amount has been netted off tax. carrying amount of the asset and depreciation based on the assets' original cost. BFRS - 10 Consolidated Financial Statements e) Notes, comprising a summary of significant accounting policies and explanatory information. BFRS - 12 Disclosure of interest in other entities Balance as on 1 January 2014 Profit after tax for the year 2014

Balance as on 1 January 2013 Profit after tax for the year 2013 Adjustment of deferred tax on revaluation of assets Cash dividend paid for the year 2013 Issue of Bonus Shares for the year 2012 Cash dividend paid for the year 2012 Adjustment of deferred tax on revaluation of assets Depreciation on revalued assets Balance as at 31 December 2014 (i) difference between depreciation 17,472,602) has been transferred to retained earnings for the based on the revalued Tk. 16,598,972 (2013: Tk. Revaluation surplus amounting to Balance as at 31 December 2013 Depreciation on revalued assets BFRS - 13 Fair value measurement

Annual Report 2014 90 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 91

2.09 Use of Estimates and Judgments the investee. The financial statements of subsidiary are included in the consolidated financial statements from the date 3.02.03 Depreciation Category Valuation The preparation of the Financial Statements in conformity with BAS and BFRS requires management to make judgments, that control commences until the date that control ceases. The consolidated financial statements have been prepared in Land is held on a freehold basis and is not depreciated considering the unlimited life. In respect of all other property, plant estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, accordance with BFRS 10 Consolidated Financial Statements. and equipment, depreciation is recognized in statement of profit or loss and other comprehensive income on diminishing Finished Goods Finished goods are valued at cost or net realizable value whichever is lower. liabilities, income and expenses. Actual results may differ from these estimates. balance method over the estimated useful lives of property, plant and equipment. Raw Materials Raw materials are valued at cost or net realizable value whichever is lower. BISCO is a subsidiary company of BSRMSL. The Company has made 95% investment in its subsidiary. BSRMSL is exposed Store items Based on weighted average method. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are to and has rights, to variable returns from the subsidiary and also has the ability to affect those returns through its power Depreciation is charged on addition from the month (date of service) of acquisition/addition and no depreciation is charged recognized in the period in which the estimates are revised and in any future periods affected. over BISCO. in the month of disposal. The depreciation method used reflects the pattern in which the asset's economic benefits are Weighted average cost method has been used to determine the cost of inventories. consumed by the entity. The depreciation charge for each period is recognized as an expense unless it is included in the In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting The Financial Statements of the subsidiary company are incorporated on a line by line basis and the investment held by carrying amount of another asset. 3.06 Transactions in Foreign Currencies policies that have the most significant effect on the amounts recognized in the financial statements is included in the the parent is eliminated against the corresponding share capital of subsidiary in the consolidated financial statements. The Foreign currency transactions are recorded at the applicable rates of exchange ruling on the date of transactions. following notes: accounting policies of subsidiary have been changed when it is necessary to align them with the policies adopted by The principal annual rates and allocation method are as follows: Exchange difference on borrowings denominated in foreign currencies to finance the imported Plant & Machinery is BSRM Steels Limited (Parent entity). Category of Assets Rate of depreciation (%) Allocated to included in the carrying amount of related plant and/or machinery. Other monetary assets & liabilities, if any, denominated Note: 4 Property, plant and equipment The group eliminates in full intra-group assets and liabilities, equity, income, expenses and cash flows relating to Plant and Machinery 5% in foreign currencies at the Statement of Financial Position date are translated at the applicable rates of exchange ruling Note: 6 Intangible assets transactions between entities of the group (profits or losses resulting from intra-group transactions that are recognized in Motor Vehicle 20% at that date and the related exchange differences are recognized as finance income or cost in the Statement of Profit or Note: 10 Inventories assets, such as inventory and fixed assets, are eliminated in full). Furniture and Fixtures 20% (2013: 10%) Loss and Other Comprehensive Income respectively. Office Equipment 20% (2013: 10%) Note: 11 Trade and other receivables Non-controlling Interests 3.07 Investment in Associate Factory Buildings 5% Note: 17 Provision for gratuity The group presents non-controlling interests in its consolidated statement of financial position within equity, separately The company’s investment in associates is accounted for in the Financial Statements using the Equity Method in Roads and Pavements 10% (2013: 5%) from the equity of the owners of the parent. accordance with BAS 28: ‘Investment in Associates & Joint Ventures’. Investment in an associate is initially recognized at Note: 18 Current tax liability Computer & IT equipment 20% (2013: 10%) cost, and the carrying amount is increased or decreased to recognize the investor's share of the profit or loss of the Note: 19 Deferred tax liability The group attributes the profit or loss and each component of other comprehensive income to the owners of the parent investee after the date of acquisition. The investor’s share of investee’s profit or loss is recognized in the investor’s profit Depreciation methods, useful lives and residual values are reassessed at the reporting dates. Note: 25 Other liabilities and to the non-controlling interests. The proportion allocated to the parent and non-controlling interests are determined or loss. Adjustment after the date of acquisition to the carrying amount has been made for changes in the investor’s proportionate interest in the investee that arising from the revaluation of property, plant & equipment and from foreign on the basis of present ownership interests. Upon retirement of assets, the cost and related accumulated depreciation are eliminated from the accounts and resulting Note: 38 Contingent liabilities currency translation differences. The investor’s share of those changes is recognized in other comprehensive income of gain or loss is charged or credited to statement of profit or loss and other comprehensive income. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES the investor. 3.03 Capital Work-In-Progress 2.10 Changes in Accounting Policy The specific accounting policies selected and applied by the company’s directors for significant transactions and events Property, Plant and Equipment under construction/acquisition is accounted for as capital work-in-progress until The excess of company’s share of net assets’ value of associate over cost of investment has been recognized in profit or The company has applied the following BFRSs from the year 2013. that have material effect within the framework of BAS-1 “Presentation of Financial Statements”, in preparation and construction/acquisition is completed and measured at cost. loss as share of associate’s profit or loss during acquisition period as per provision of BAS-28. presentation of financial statements have been consistently applied throughout the year and were also consistent with BFRS - 10 Consolidated Financial Statements those used in earlier years. 3.04 Intangible Assets 3.08 Financial Assets BFRS - 12 Disclosure of interest in other entities The group initially recognizes loans and receivables and deposits on the date that they are originated. All other financial For a proper understanding of the financial statements, these accounting policies are set out below in one place as 3.04.01 Recognition and measurement assets are recognized initially on the trade date, which is the date the group becomes a party to the contractual provisions BFRS - 13 Fair value measurement prescribed by the BAS-1 “Presentation of Financial Statements”. The recommendations of BAS-1 relating to the format of Intangible Assets that are acquired by the company and have finite useful lives are measured at cost less accumulated of the instrument. financial statements were also taken into full consideration for fair presentation. amortization and accumulated impairment loss, if any. Intangible Assets are recognized when all the conditions for The group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers These standards are applicable to companies from 1 January 2013. recognition as per BAS 38: “Intangible Assets” are met. The cost of an intangible asset comprises its purchase price and 3.01 Consistency any directly attributable cost of preparing the asset for its intended use. the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks Unless otherwise stated, the accounting policies and methods of computation used in preparation of Financial Statements 2.11 Change in Accounting Estimate and rewards of ownership of the financial asset are transferred. for the period ended 31 December 2014 are consistent with those policies and methods adopted in preparing the Financial 3.04.02 Subsequent Costs From the year 2013, depreciation is charged on addition from the month (date of service) of acquisition/addition and no Financial assets include Short Term Investments; Trade and Other Receivable; Advances, Deposits and Prepayments; Loan Statements for the year ended 31 December 2013. Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset depreciation is charged in the month of disposal. Previously, full year’s depreciation was charged on addition irrespective to Related Companies and Cash and Bank balances etc. to which it relates. All other expenditures are recognized in profit or loss as incurred. of the date of acquisition/addition and no depreciation was charged in the year of disposal. 3.02 Property, Plant and Equipment 3.08.01 Trade and Other Receivables 3.04.03 Amortization The company in its Board Meeting held on 26 December 2013 has reviewed the useful life and residual value of all Trade and other receivables are initially recognized at cost which is the fair value of the consideration given in return. After 3.02.01 Recognition and Measurement Amortization is recognized in profit or loss on a straight line basis over the estimated useful lives of intangible assets, from property, plant and equipment and decided to change the depreciation rates for the following assets w.e.f. initial recognition, these are carried at cost less impairment losses, if any, due to un-collectability of any amount so Property, Plant and Equipment are stated at cost less accumulated depreciation except Land & land development and the date that they are available for use. The estimated useful lives and rates of amortization are as follows: 1January 2014: Factory Building which are carried at revalued amount, being fair values at the date of revaluation less subsequent recognized. accumulated depreciation and subsequent impairment losses, if any. Category of Assets Rate of amortization Useful lives Category of asset Current depreciation rate Previous depreciation rate Provisions for bad debts are shown in other liabilities. Provision for doubtful debts is made based on the company policy. Cost includes expenditures that are directly attributable to the acquisition of an asset. The cost of self-constructed / Software – old 33.33% 3 years Bad debts are written off on consideration of the status of individual debtors. Furniture & fixture 20% 10% installed assets includes the cost of materials and direct labor, any other costs directly attributable to bringing the asset Trade Marks 5% 20 years 3.08.02 Advances, Deposits and Prepayments Office equipment 20% 10% to the working condition for its intended use and the cost of dismantling and removing an item and restoring the site on Oracle eBS software 10% 10 years Advances are initially measured at cost. After initial recognition, advances are carried at cost less deductions, adjustments Computer & IT equipment 20% 10% which they are located. 3.05 Inventories or charges to other account heads such as Property, Plant and Equipment, Inventory or Expenses. Roads & pavements 10% 5% When parts of an item of Property, Plant and Equipment have different useful lives, they are accounted for as separate Deposits are measured at payment value. items (major components) of Property, Plant and Equipment. Nature of inventories 2.12 Reporting Period Inventories comprise Raw Materials (Billets and Melting Scrap), Packing Materials, Consumable Stores, Fuel and Prepayments are initially measured at cost. After initial recognition, prepayments are carried at cost less charges to profit or loss. The Financial Statements of the group cover one year from 1 January to 31 December and is followed consistently. 3.02.02 Subsequent Costs Lubricants & Finished Goods (MS Rods/Billets) etc. The cost of replacing part of an item of Property, Plant and Equipment is recognized in the carrying amount of the item, if it 3.08.03 Cash and Cash Equivalents 2.13 Basis of Consolidation and Disclosure of Interest in Other Entities is probable that the future benefit embodied within the part will flow to the company and its cost can be measured reliably. Valuation of the inventories Cash and cash equivalents comprise cash on hand and demand deposits, together with short-term, highly liquid Subsidiary is an enterprise controlled by the parent entity. Control exists when an investor is exposed, or has rights, to The costs of the day to day servicing of Property, Plant and Equipment are recognized in profit and loss as incurred. Inventories are measured at lower of cost and net realizable value. The cost of inventories includes expenditure incurred in investments that are readily convertible to a known amount of cash, and that are subject to an insignificant risk of changes variable returns from its involvement with the investee and has the ability to affect those returns through its power over acquiring these inventories and bringing them to their existing location and condition in accordance with BAS-2 “Inventories”. in value.

3.09 Financial Liabilities Deferred tax on revaluation surplus of land and land development has not been recognized in the Financial Statements on 3.20.02 Basic Earnings Per Share The group recognizes all financial liabilities on the trade date which is the date the group becomes a party to the the ground that income tax payable at source on capital gain during registration of sale of land is generally borne by the This has been calculated by dividing the basic earnings by the weighted average number of ordinary shares outstanding contractual provisions of the instrument. The group derecognizes a financial liability when its contractual obligations are buyer. Hence possibility of having income tax implication on land is very remote. during the year. discharged, cancelled or expired. Financial liabilities comprise Trade Creditors and other financial obligations. 3.15 Share Capital 3.20.03 Diluted Earnings Per Share 3.09.01 Trade and Other Payables Paid-up-capital represents total amount contributed by the shareholders and bonus shares issued by the company to the Diluted earnings per share is required to be calculated for the year when there is scope for dilution exists. The group recognizes a financial liability when its contractual obligations arising from past events are certain and the ordinary shareholders. Incremental costs directly attributable to the issue of ordinary shares are recognized as expenses settlement of which is expected to result in an outflow from the company of resources embodying economic benefits. as and when incurred. Holders of ordinary shares are entitled to receive dividends as declared from time to time and are 3.21 Duty Drawback entitled to vote at shareholders' meetings. In the event of a winding up of the company, ordinary shareholders rank after Duty drawback claimed on export sales is adjusted against cost of imported raw materials. 3.10 Impairment all other shareholders. Creditors are fully entitled to any proceeds of liquidation before all shareholders. 3.22 Measurement of Fair Values 3.10.01 Financial Assets 3.16 Employee Benefits When measuring the fair value of an asset or liability, the entity uses market observable data as far as possible. Fair values Financial assets are impaired if objective evidence indicates that a loss event has occurred after initial recognition of the The group maintains both defined contribution plan and defined benefit plan for its eligible permanent employees. are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as assets and that the loss event had a negative effect on the estimated future cash flows of that assets that can be follows. estimated reliably. 3.16.01 Defined Contribution Plan Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. The group maintains a recognized provident fund @ 10% of basic pay (Equally contributed by employee & employer) for Financial assets not classified as at fair value through profit or loss, loans, receivables and investment in an equity all eligible permanent employees from 1st day of January 2010. The said fund is managed by the Board of Trustees. Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. accounted investee are assessed at each reporting date to determine whether there is objective evidence that it is as prices) or indirectly (i.e. derived from prices). impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial 3.16.02 Defined Benefit Plan recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that The group maintains an unfunded gratuity scheme and provision in respect of which is made annually for the employees. Level 3: Inputs for the assets or liabilities that are not based on observable market data. can be estimated reliably. Gratuity payable at the end of each year is determined on the basis of following rules and regulations of the company. If the inputs used to measure the fair value of an asset or liability might be categorized in different levels of the fair value 3.10.02 Non Financial Assets Service length Payment basis hierarchy as the lowest level input that is significant to the entire measurement. The carrying amounts of the group's non-financial assets, other than inventories and deferred tax assets, are reviewed at Less than Five (5) years Nil Property, plant and equipment each reporting date to determine whether there is any indication of impairment. If any such indication exists then the The fair value of items of property, plant and equipment has been determined based on the depreciated replacement cost For Five (5) years and more Two (2) times of last month basic salary multiplied by year of services recoverable amount of the asset is estimated. An impairment loss is recognized if the carrying amount of an asset or its method and net realizable value method as applicable. related cash-generating unit (CGU) exceeds its estimated recoverable amount. 3.16.03 Workers' Profit Participation and Welfare Funds Equity and debt securities 3.11 Cash Flow Statement The company also recognizes a provision for Workers' Profit Participation and Welfare Funds @ 5% of net profit before tax Fair values of tradable equity and debt securities are determined by reference to their quoted closing price in active market Statement of Cash Flows is prepared principally in accordance with BAS 7 (Cash Flow Statement) and the cash flow from as per Bangladesh Labour Law, 2006. at the reporting date which are categorized under ‘Level 1’ of the fair value hierarchy. operating activities have been presented under direct method. 3.17 Revenue Recognition 3.23 Events After the Reporting Period 3.12 Provisions, Contingent Liabilities and Contingent Assets Revenue from sale of goods is measured at the fair value of the consideration received or receivable, net of returns and Events after the reporting period that provide additional information about the company's position at the date of Statement A provision is recognized in the Statement of Financial Position when the group has a legal or contractual obligation as a allowances, trade discounts and rebates, if any. Revenue is recognized when the significant risks and rewards of of Financial Position or those that indicate the going concern assumption is not appropriate are reflected in the Financial result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible Statements. Events after the reporting period that are not adjusting events are disclosed in the notes when material. reliable estimate can be made of the amount of the obligation. Contingencies arising from claims, litigations, assessments, return of goods can be estimated reliably and there is no continuing management involvement with the goods. Sales fine, penalties etc. are recorded when it is probable that a liability has been incurred and the amount can be reasonably revenue is recognized when the goods are delivered. 3.24 Comparative Information estimated. Contingent assets are not recognized. Comparative information has been disclosed in respect of the year 2013 in accordance with BAS-1: Presentation of 3.18 Finance Income and Costs Financial Statements, for all numeric information in the financial statements and also the narrative and descriptive 3.13 Borrowing Costs information where it is relevant for understanding of the current year's Financial Statements. Interest and other costs incurred by the group in connection with the borrowing of funds are recognized as expense in the 3.18.01 Finance Income period in which they are incurred, unless such borrowing cost relates to acquisition / construction of assets in progress Interest income from bank deposits and loan to related-companies is recognized on accrual basis following specific rate 3.25 General that are capitalized as per BAS 23 "Borrowing Costs". of interest in agreement with banks and related companies. i) Prior year's figures have been rearranged wherever considered necessary to ensure comparability with the current year. 3.14 Taxation 3.18.02 Finance Costs Interest expenses except expenses related to acquisition/construction of assets, incurred during the year are charged to ii) Figures of 2013 have been restated due to recognition of share of profit / (loss) of Associates at the time of acquisition. 3.14.01 Current Tax Statement of Profit or Loss and Other Comprehensive Income on accrual basis. The group has been maintaining provision for taxation using rates enacted at the reporting date as per Income Tax iii) Bracket figures denote negative. Ordinance, 1984. The applicable rates are 27.5% for BSRMSL and for BISCO at reduced rate as per SRO 172/2009 dated 3.19 Other Operating Income 30 June, 2009. Other operating income includes interest income on delayed receipts from customers, gain / (loss) on sale of fixed assets and miscellaneous receipts. Other operating income is recognized as revenue income as and when realized. 3.14.02 Deferred Tax Deferred tax liabilities are the amount of income taxes payable in the future periods in respect of taxable temporary 3.20 Earnings Per Share (EPS) differences. Deferred tax assets are the amount of income taxes recoverable in future periods in respect of deductible The company calculates its earnings per share in accordance with Bangladesh Accounting Standard BAS-33 “Earnings temporary differences. Deferred tax assets and liabilities are recognized for the future tax consequences of timing per Share” which has been reported on the face of Statement of Profit or Loss and Other Comprehensive Income. differences arising between the carrying values of assets, liabilities, income and expenditure and their respective tax bases. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or 3.20.01 Basis of Earnings substantially enacted at the Statement of Financial Position date. The impact of changes on the account in the deferred This represents profit for the year attributable to ordinary shareholders and Non- Controlling shareholders. As there were tax assets and liabilities has also been recognized in the statement of profit or loss and other comprehensive income as no preference shares requiring returns or dividends, the net profit after tax for the year has been considered as fully per BAS-12 ''Income Taxes''. attributable to the ordinary shareholders. 2.03 Other Regulatory Compliances BSRM Steels Limited and its Subsidiary The group entities are also required to comply with the following major laws and regulations along with the Companies Act 1994: Notes to the consolidated and separate financial statements As at and for the year ended 31 December 2014 The Income Tax Ordinance, 1984 The Income Tax Rules, 1984 1. THE REPORTING ENTITY The Value Added Tax Act, 1991 The Value Added Tax Rules, 1991 1.01 Legal form of Enterprise The Customs Act, 1969 BSRM Steels Limited (hereinafter referred to as BSRMSL, the company or the Parent) was incorporated on 20 July, 2002, Bangladesh Labour Law, 2006 vide the certificate C-No. 4392 of 2002 as a Private Limited Company registered in Bangladesh under Companies Act The Securities and Exchange Ordinance, 1969 1994. The company was converted to a Public Limited Company on 20 December 2006. The Company is listed with Dhaka The Securities and Exchange Rules, 1987 Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) as a publicly quoted company. Trading of the shares of the company started in two stock exchanges from 18 January 2009. Securities and Exchange Commission Act, 1993

The company has set up its rolling mill at 4 Fouzderhat Industrial Estate, Latifpur, Sitakunda, Chittagong and commenced 2.04 Authorization for issue commercial production from 1 April 2008. The principle place of business is at Ali Mansion, 1207/1099, Sadarghat Road, The Consolidated and Separate Financial Statements have been authorized for issue by the Board of Directors on 31 Chittagong, Bangladesh. March 2015. 1.02 Nature of the Business 2.05 Basis of Measurement The main purpose of the company is to manufacture M.S. products by setting up rolling and re-rolling mills and marketing The Financial Statements have been prepared on going concern basis under the historical cost convention except for some the same. classes of Property, Plant and Equipment which are measured at revalued amount.

1.03 BSRM Iron & Steel Co. Limited- Subsidiary Company 2.06 Functional and Presentation Currency BSRMSL acquired 95% equity interest in BSRM Iron & Steel Co. Limited (BISCO) i.e. 104,500,000 Ordinary Shares of Tk. These Financial Statements are prepared in Bangladesh Taka, which is the company’s functional currency. All financial 10 each on 10 November 2010 in exchange of 104,500,000 Ordinary Shares of Tk. 10 each of BSRM Steels Limited. information presented in Taka has been rounded off to the nearest integer. BISCO was incorporated on 13 April 2005 as a Private Limited Company and was subsequently converted to a Public 2.07 Going Concern The group entities have adequate resources to continue its operation in foreseeable future. For this reason the directors Limited Company on 15 March 2011. The principal activity of BISCO is to manufacture and sales of M.S. Billets. It continue to adopt going concern basis in preparing the Financial Statements. The current revenue generations and commenced commercial production from 1 June 2010. The Financial Statements of this subsidiary company is included resources of the group provide sufficient fund to meet the present requirements of its existing business and operations. in the Consolidated Financial Statements according to BFRS 10 - “Consolidated Financial Statements”. 2.08 Applicable Accounting Standards 1.04 BSRM Steel Mills Limited- Associate Company The following BASs and BFRSs are applicable for preparation and reporting of the Financial Statements for the period BSRM Steel Mills Limited (BSRMSML) was incorporated on 16 April 2008 as a Private Limited Company and was under review: subsequently converted to a Public Limited Company on 12th November 2013. The main objective of BSRMSML is to BAS - 1 Presentation of Financial Statements manufacture and sell M.S. Billets. Paid up Capital of BSRMSML is Tk. 207.30 Crore divided into 20.73 Crore Ordinary BAS - 2 Inventories Shares of Tk. 10 each. BSRM Steels Limited has acquired 21.76% equity interest in BSRMSML i.e. 45,114,600 Ordinary BAS - 7 Statement of Cash Flows Shares of Tk. 10 each. BSRMSML has not started its commercial operation yet and is expected to start its commercial BAS - 8 Accounting Policies, Changes in Accounting Estimates and Errors production by 2015. BAS - 10 Events after the reporting period BAS - 12 Income Taxes 2. BASIS OF PREPARATION, PRESENTATION AND DISCLOSURES OF FINANCIAL STATEMENTS BAS - 16 Property, Plant and Equipment 2.01 Statement of Compliance BAS - 17 Leases The Financial Statements have been prepared on a going concern basis following accrual basis of accounting except for BAS - 18 Revenue Cash Flow Statement in accordance with the International Accounting Standards (IASs) and International Financial BAS - 19 Employee Benefits Reporting Standards (IFRSs) as adopted in Bangladesh by the Institute of Chartered Accountants of Bangladesh (ICAB) as BAS - 21 The Effects of Changes in Foreign Exchange Rates Bangladesh Accounting Standards (BASs) and Bangladesh Financial Reporting Standards (BFRSs). BAS - 23 Borrowing Costs BAS - 24 Related Party Disclosures 2.02 Basis of Reporting BAS - 27 Separate Financial Statements The financial statements are prepared and presented for external users by the company in accordance with identified BAS - 28 Investment in Associates & Joint Ventures financial reporting framework. Presentation has been made in compliance with the requirements of BAS 1 – “Presentation BAS - 33 Earnings Per Share of Financial Statements”. The financial statements comprise of: BAS - 36 Impairment of Assets a) A statement of financial position as at 31 December 2014 BAS - 37 Provisions, Contingent Liabilities and Contingent Assets BAS - 38 Intangible Assets b) A statement of profit or loss and other comprehensive income for the year ended 31 December 2014 BAS - 39 Financial Instruments: Recognition and Measurement c) A statement of changes in equity for the year ended 31 December 2014 BFRS - 5 Non-current Assets Held for Sale and Discontinued Operations d) A statement of cash flows for the year ended 31 December 2014 BFRS - 7 Financial Instruments: Disclosures BFRS - 10 Consolidated Financial Statements e) Notes, comprising a summary of significant accounting policies and explanatory information. BFRS - 12 Disclosure of interest in other entities BFRS - 13 Fair value measurement

Annual Report 2014 92 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 93

2.09 Use of Estimates and Judgments the investee. The financial statements of subsidiary are included in the consolidated financial statements from the date 3.02.03 Depreciation Category Valuation The preparation of the Financial Statements in conformity with BAS and BFRS requires management to make judgments, that control commences until the date that control ceases. The consolidated financial statements have been prepared in Land is held on a freehold basis and is not depreciated considering the unlimited life. In respect of all other property, plant estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, accordance with BFRS 10 Consolidated Financial Statements. and equipment, depreciation is recognized in statement of profit or loss and other comprehensive income on diminishing Finished Goods Finished goods are valued at cost or net realizable value whichever is lower. liabilities, income and expenses. Actual results may differ from these estimates. balance method over the estimated useful lives of property, plant and equipment. Raw Materials Raw materials are valued at cost or net realizable value whichever is lower. BISCO is a subsidiary company of BSRMSL. The Company has made 95% investment in its subsidiary. BSRMSL is exposed Store items Based on weighted average method. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are to and has rights, to variable returns from the subsidiary and also has the ability to affect those returns through its power Depreciation is charged on addition from the month (date of service) of acquisition/addition and no depreciation is charged recognized in the period in which the estimates are revised and in any future periods affected. over BISCO. in the month of disposal. The depreciation method used reflects the pattern in which the asset's economic benefits are Weighted average cost method has been used to determine the cost of inventories. consumed by the entity. The depreciation charge for each period is recognized as an expense unless it is included in the In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting The Financial Statements of the subsidiary company are incorporated on a line by line basis and the investment held by carrying amount of another asset. 3.06 Transactions in Foreign Currencies policies that have the most significant effect on the amounts recognized in the financial statements is included in the the parent is eliminated against the corresponding share capital of subsidiary in the consolidated financial statements. The Foreign currency transactions are recorded at the applicable rates of exchange ruling on the date of transactions. following notes: accounting policies of subsidiary have been changed when it is necessary to align them with the policies adopted by The principal annual rates and allocation method are as follows: Exchange difference on borrowings denominated in foreign currencies to finance the imported Plant & Machinery is BSRM Steels Limited (Parent entity). Category of Assets Rate of depreciation (%) Allocated to included in the carrying amount of related plant and/or machinery. Other monetary assets & liabilities, if any, denominated Note: 4 Property, plant and equipment The group eliminates in full intra-group assets and liabilities, equity, income, expenses and cash flows relating to Plant and Machinery 5% in foreign currencies at the Statement of Financial Position date are translated at the applicable rates of exchange ruling Note: 6 Intangible assets transactions between entities of the group (profits or losses resulting from intra-group transactions that are recognized in Motor Vehicle 20% at that date and the related exchange differences are recognized as finance income or cost in the Statement of Profit or Note: 10 Inventories assets, such as inventory and fixed assets, are eliminated in full). Furniture and Fixtures 20% (2013: 10%) Loss and Other Comprehensive Income respectively. Office Equipment 20% (2013: 10%) Note: 11 Trade and other receivables Non-controlling Interests 3.07 Investment in Associate Factory Buildings 5% Note: 17 Provision for gratuity The group presents non-controlling interests in its consolidated statement of financial position within equity, separately The company’s investment in associates is accounted for in the Financial Statements using the Equity Method in Roads and Pavements 10% (2013: 5%) from the equity of the owners of the parent. accordance with BAS 28: ‘Investment in Associates & Joint Ventures’. Investment in an associate is initially recognized at Note: 18 Current tax liability Computer & IT equipment 20% (2013: 10%) cost, and the carrying amount is increased or decreased to recognize the investor's share of the profit or loss of the Note: 19 Deferred tax liability The group attributes the profit or loss and each component of other comprehensive income to the owners of the parent investee after the date of acquisition. The investor’s share of investee’s profit or loss is recognized in the investor’s profit Depreciation methods, useful lives and residual values are reassessed at the reporting dates. Note: 25 Other liabilities and to the non-controlling interests. The proportion allocated to the parent and non-controlling interests are determined or loss. Adjustment after the date of acquisition to the carrying amount has been made for changes in the investor’s proportionate interest in the investee that arising from the revaluation of property, plant & equipment and from foreign on the basis of present ownership interests. Upon retirement of assets, the cost and related accumulated depreciation are eliminated from the accounts and resulting Note: 38 Contingent liabilities currency translation differences. The investor’s share of those changes is recognized in other comprehensive income of gain or loss is charged or credited to statement of profit or loss and other comprehensive income. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES the investor. 3.03 Capital Work-In-Progress 2.10 Changes in Accounting Policy The specific accounting policies selected and applied by the company’s directors for significant transactions and events Property, Plant and Equipment under construction/acquisition is accounted for as capital work-in-progress until The excess of company’s share of net assets’ value of associate over cost of investment has been recognized in profit or The company has applied the following BFRSs from the year 2013. that have material effect within the framework of BAS-1 “Presentation of Financial Statements”, in preparation and construction/acquisition is completed and measured at cost. loss as share of associate’s profit or loss during acquisition period as per provision of BAS-28. presentation of financial statements have been consistently applied throughout the year and were also consistent with BFRS - 10 Consolidated Financial Statements those used in earlier years. 3.04 Intangible Assets 3.08 Financial Assets BFRS - 12 Disclosure of interest in other entities The group initially recognizes loans and receivables and deposits on the date that they are originated. All other financial For a proper understanding of the financial statements, these accounting policies are set out below in one place as 3.04.01 Recognition and measurement assets are recognized initially on the trade date, which is the date the group becomes a party to the contractual provisions BFRS - 13 Fair value measurement prescribed by the BAS-1 “Presentation of Financial Statements”. The recommendations of BAS-1 relating to the format of Intangible Assets that are acquired by the company and have finite useful lives are measured at cost less accumulated of the instrument. financial statements were also taken into full consideration for fair presentation. amortization and accumulated impairment loss, if any. Intangible Assets are recognized when all the conditions for The group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers These standards are applicable to companies from 1 January 2013. recognition as per BAS 38: “Intangible Assets” are met. The cost of an intangible asset comprises its purchase price and 3.01 Consistency any directly attributable cost of preparing the asset for its intended use. the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks Unless otherwise stated, the accounting policies and methods of computation used in preparation of Financial Statements 2.11 Change in Accounting Estimate and rewards of ownership of the financial asset are transferred. for the period ended 31 December 2014 are consistent with those policies and methods adopted in preparing the Financial 3.04.02 Subsequent Costs From the year 2013, depreciation is charged on addition from the month (date of service) of acquisition/addition and no Financial assets include Short Term Investments; Trade and Other Receivable; Advances, Deposits and Prepayments; Loan Statements for the year ended 31 December 2013. Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset depreciation is charged in the month of disposal. Previously, full year’s depreciation was charged on addition irrespective to Related Companies and Cash and Bank balances etc. to which it relates. All other expenditures are recognized in profit or loss as incurred. of the date of acquisition/addition and no depreciation was charged in the year of disposal. 3.02 Property, Plant and Equipment 3.08.01 Trade and Other Receivables 3.04.03 Amortization The company in its Board Meeting held on 26 December 2013 has reviewed the useful life and residual value of all Trade and other receivables are initially recognized at cost which is the fair value of the consideration given in return. After 3.02.01 Recognition and Measurement Amortization is recognized in profit or loss on a straight line basis over the estimated useful lives of intangible assets, from property, plant and equipment and decided to change the depreciation rates for the following assets w.e.f. initial recognition, these are carried at cost less impairment losses, if any, due to un-collectability of any amount so Property, Plant and Equipment are stated at cost less accumulated depreciation except Land & land development and the date that they are available for use. The estimated useful lives and rates of amortization are as follows: 1January 2014: Factory Building which are carried at revalued amount, being fair values at the date of revaluation less subsequent recognized. accumulated depreciation and subsequent impairment losses, if any. Category of Assets Rate of amortization Useful lives Category of asset Current depreciation rate Previous depreciation rate Provisions for bad debts are shown in other liabilities. Provision for doubtful debts is made based on the company policy. Cost includes expenditures that are directly attributable to the acquisition of an asset. The cost of self-constructed / Software – old 33.33% 3 years Bad debts are written off on consideration of the status of individual debtors. Furniture & fixture 20% 10% installed assets includes the cost of materials and direct labor, any other costs directly attributable to bringing the asset Trade Marks 5% 20 years 3.08.02 Advances, Deposits and Prepayments Office equipment 20% 10% to the working condition for its intended use and the cost of dismantling and removing an item and restoring the site on Oracle eBS software 10% 10 years Advances are initially measured at cost. After initial recognition, advances are carried at cost less deductions, adjustments Computer & IT equipment 20% 10% which they are located. 3.05 Inventories or charges to other account heads such as Property, Plant and Equipment, Inventory or Expenses. Roads & pavements 10% 5% When parts of an item of Property, Plant and Equipment have different useful lives, they are accounted for as separate Deposits are measured at payment value. items (major components) of Property, Plant and Equipment. Nature of inventories 2.12 Reporting Period Inventories comprise Raw Materials (Billets and Melting Scrap), Packing Materials, Consumable Stores, Fuel and Prepayments are initially measured at cost. After initial recognition, prepayments are carried at cost less charges to profit or loss. The Financial Statements of the group cover one year from 1 January to 31 December and is followed consistently. 3.02.02 Subsequent Costs Lubricants & Finished Goods (MS Rods/Billets) etc. The cost of replacing part of an item of Property, Plant and Equipment is recognized in the carrying amount of the item, if it 3.08.03 Cash and Cash Equivalents 2.13 Basis of Consolidation and Disclosure of Interest in Other Entities is probable that the future benefit embodied within the part will flow to the company and its cost can be measured reliably. Valuation of the inventories Cash and cash equivalents comprise cash on hand and demand deposits, together with short-term, highly liquid Subsidiary is an enterprise controlled by the parent entity. Control exists when an investor is exposed, or has rights, to The costs of the day to day servicing of Property, Plant and Equipment are recognized in profit and loss as incurred. Inventories are measured at lower of cost and net realizable value. The cost of inventories includes expenditure incurred in investments that are readily convertible to a known amount of cash, and that are subject to an insignificant risk of changes variable returns from its involvement with the investee and has the ability to affect those returns through its power over acquiring these inventories and bringing them to their existing location and condition in accordance with BAS-2 “Inventories”. in value.

3.09 Financial Liabilities Deferred tax on revaluation surplus of land and land development has not been recognized in the Financial Statements on 3.20.02 Basic Earnings Per Share The group recognizes all financial liabilities on the trade date which is the date the group becomes a party to the the ground that income tax payable at source on capital gain during registration of sale of land is generally borne by the This has been calculated by dividing the basic earnings by the weighted average number of ordinary shares outstanding contractual provisions of the instrument. The group derecognizes a financial liability when its contractual obligations are buyer. Hence possibility of having income tax implication on land is very remote. during the year. discharged, cancelled or expired. Financial liabilities comprise Trade Creditors and other financial obligations. 3.15 Share Capital 3.20.03 Diluted Earnings Per Share 3.09.01 Trade and Other Payables Paid-up-capital represents total amount contributed by the shareholders and bonus shares issued by the company to the Diluted earnings per share is required to be calculated for the year when there is scope for dilution exists. The group recognizes a financial liability when its contractual obligations arising from past events are certain and the ordinary shareholders. Incremental costs directly attributable to the issue of ordinary shares are recognized as expenses settlement of which is expected to result in an outflow from the company of resources embodying economic benefits. as and when incurred. Holders of ordinary shares are entitled to receive dividends as declared from time to time and are 3.21 Duty Drawback entitled to vote at shareholders' meetings. In the event of a winding up of the company, ordinary shareholders rank after Duty drawback claimed on export sales is adjusted against cost of imported raw materials. 3.10 Impairment all other shareholders. Creditors are fully entitled to any proceeds of liquidation before all shareholders. 3.22 Measurement of Fair Values 3.10.01 Financial Assets 3.16 Employee Benefits When measuring the fair value of an asset or liability, the entity uses market observable data as far as possible. Fair values Financial assets are impaired if objective evidence indicates that a loss event has occurred after initial recognition of the The group maintains both defined contribution plan and defined benefit plan for its eligible permanent employees. are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as assets and that the loss event had a negative effect on the estimated future cash flows of that assets that can be follows. estimated reliably. 3.16.01 Defined Contribution Plan Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. The group maintains a recognized provident fund @ 10% of basic pay (Equally contributed by employee & employer) for Financial assets not classified as at fair value through profit or loss, loans, receivables and investment in an equity all eligible permanent employees from 1st day of January 2010. The said fund is managed by the Board of Trustees. Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. accounted investee are assessed at each reporting date to determine whether there is objective evidence that it is as prices) or indirectly (i.e. derived from prices). impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial 3.16.02 Defined Benefit Plan recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that The group maintains an unfunded gratuity scheme and provision in respect of which is made annually for the employees. Level 3: Inputs for the assets or liabilities that are not based on observable market data. can be estimated reliably. Gratuity payable at the end of each year is determined on the basis of following rules and regulations of the company. If the inputs used to measure the fair value of an asset or liability might be categorized in different levels of the fair value 3.10.02 Non Financial Assets Service length Payment basis hierarchy as the lowest level input that is significant to the entire measurement. The carrying amounts of the group's non-financial assets, other than inventories and deferred tax assets, are reviewed at Less than Five (5) years Nil Property, plant and equipment each reporting date to determine whether there is any indication of impairment. If any such indication exists then the The fair value of items of property, plant and equipment has been determined based on the depreciated replacement cost For Five (5) years and more Two (2) times of last month basic salary multiplied by year of services recoverable amount of the asset is estimated. An impairment loss is recognized if the carrying amount of an asset or its method and net realizable value method as applicable. related cash-generating unit (CGU) exceeds its estimated recoverable amount. 3.16.03 Workers' Profit Participation and Welfare Funds Equity and debt securities 3.11 Cash Flow Statement The company also recognizes a provision for Workers' Profit Participation and Welfare Funds @ 5% of net profit before tax Fair values of tradable equity and debt securities are determined by reference to their quoted closing price in active market Statement of Cash Flows is prepared principally in accordance with BAS 7 (Cash Flow Statement) and the cash flow from as per Bangladesh Labour Law, 2006. at the reporting date which are categorized under ‘Level 1’ of the fair value hierarchy. operating activities have been presented under direct method. 3.17 Revenue Recognition 3.23 Events After the Reporting Period 3.12 Provisions, Contingent Liabilities and Contingent Assets Revenue from sale of goods is measured at the fair value of the consideration received or receivable, net of returns and Events after the reporting period that provide additional information about the company's position at the date of Statement A provision is recognized in the Statement of Financial Position when the group has a legal or contractual obligation as a allowances, trade discounts and rebates, if any. Revenue is recognized when the significant risks and rewards of of Financial Position or those that indicate the going concern assumption is not appropriate are reflected in the Financial result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible Statements. Events after the reporting period that are not adjusting events are disclosed in the notes when material. reliable estimate can be made of the amount of the obligation. Contingencies arising from claims, litigations, assessments, return of goods can be estimated reliably and there is no continuing management involvement with the goods. Sales fine, penalties etc. are recorded when it is probable that a liability has been incurred and the amount can be reasonably revenue is recognized when the goods are delivered. 3.24 Comparative Information estimated. Contingent assets are not recognized. Comparative information has been disclosed in respect of the year 2013 in accordance with BAS-1: Presentation of 3.18 Finance Income and Costs Financial Statements, for all numeric information in the financial statements and also the narrative and descriptive 3.13 Borrowing Costs information where it is relevant for understanding of the current year's Financial Statements. Interest and other costs incurred by the group in connection with the borrowing of funds are recognized as expense in the 3.18.01 Finance Income period in which they are incurred, unless such borrowing cost relates to acquisition / construction of assets in progress Interest income from bank deposits and loan to related-companies is recognized on accrual basis following specific rate 3.25 General that are capitalized as per BAS 23 "Borrowing Costs". of interest in agreement with banks and related companies. i) Prior year's figures have been rearranged wherever considered necessary to ensure comparability with the current year. 3.14 Taxation 3.18.02 Finance Costs Interest expenses except expenses related to acquisition/construction of assets, incurred during the year are charged to ii) Figures of 2013 have been restated due to recognition of share of profit / (loss) of Associates at the time of acquisition. 3.14.01 Current Tax Statement of Profit or Loss and Other Comprehensive Income on accrual basis. The group has been maintaining provision for taxation using rates enacted at the reporting date as per Income Tax iii) Bracket figures denote negative. Ordinance, 1984. The applicable rates are 27.5% for BSRMSL and for BISCO at reduced rate as per SRO 172/2009 dated 3.19 Other Operating Income 30 June, 2009. Other operating income includes interest income on delayed receipts from customers, gain / (loss) on sale of fixed assets and miscellaneous receipts. Other operating income is recognized as revenue income as and when realized. 3.14.02 Deferred Tax Deferred tax liabilities are the amount of income taxes payable in the future periods in respect of taxable temporary 3.20 Earnings Per Share (EPS) differences. Deferred tax assets are the amount of income taxes recoverable in future periods in respect of deductible The company calculates its earnings per share in accordance with Bangladesh Accounting Standard BAS-33 “Earnings temporary differences. Deferred tax assets and liabilities are recognized for the future tax consequences of timing per Share” which has been reported on the face of Statement of Profit or Loss and Other Comprehensive Income. differences arising between the carrying values of assets, liabilities, income and expenditure and their respective tax bases. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or 3.20.01 Basis of Earnings substantially enacted at the Statement of Financial Position date. The impact of changes on the account in the deferred This represents profit for the year attributable to ordinary shareholders and Non- Controlling shareholders. As there were tax assets and liabilities has also been recognized in the statement of profit or loss and other comprehensive income as no preference shares requiring returns or dividends, the net profit after tax for the year has been considered as fully per BAS-12 ''Income Taxes''. attributable to the ordinary shareholders. 2.03 Other Regulatory Compliances BSRM Steels Limited and its Subsidiary The group entities are also required to comply with the following major laws and regulations along with the Companies Act 1994: Notes to the consolidated and separate financial statements As at and for the year ended 31 December 2014 The Income Tax Ordinance, 1984 The Income Tax Rules, 1984 1. THE REPORTING ENTITY The Value Added Tax Act, 1991 The Value Added Tax Rules, 1991 1.01 Legal form of Enterprise The Customs Act, 1969 BSRM Steels Limited (hereinafter referred to as BSRMSL, the company or the Parent) was incorporated on 20 July, 2002, Bangladesh Labour Law, 2006 vide the certificate C-No. 4392 of 2002 as a Private Limited Company registered in Bangladesh under Companies Act The Securities and Exchange Ordinance, 1969 1994. The company was converted to a Public Limited Company on 20 December 2006. The Company is listed with Dhaka The Securities and Exchange Rules, 1987 Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) as a publicly quoted company. Trading of the shares of the company started in two stock exchanges from 18 January 2009. Securities and Exchange Commission Act, 1993

The company has set up its rolling mill at 4 Fouzderhat Industrial Estate, Latifpur, Sitakunda, Chittagong and commenced 2.04 Authorization for issue commercial production from 1 April 2008. The principle place of business is at Ali Mansion, 1207/1099, Sadarghat Road, The Consolidated and Separate Financial Statements have been authorized for issue by the Board of Directors on 31 Chittagong, Bangladesh. March 2015. 1.02 Nature of the Business 2.05 Basis of Measurement The main purpose of the company is to manufacture M.S. products by setting up rolling and re-rolling mills and marketing The Financial Statements have been prepared on going concern basis under the historical cost convention except for some the same. classes of Property, Plant and Equipment which are measured at revalued amount.

1.03 BSRM Iron & Steel Co. Limited- Subsidiary Company 2.06 Functional and Presentation Currency BSRMSL acquired 95% equity interest in BSRM Iron & Steel Co. Limited (BISCO) i.e. 104,500,000 Ordinary Shares of Tk. These Financial Statements are prepared in Bangladesh Taka, which is the company’s functional currency. All financial 10 each on 10 November 2010 in exchange of 104,500,000 Ordinary Shares of Tk. 10 each of BSRM Steels Limited. information presented in Taka has been rounded off to the nearest integer. BISCO was incorporated on 13 April 2005 as a Private Limited Company and was subsequently converted to a Public 2.07 Going Concern The group entities have adequate resources to continue its operation in foreseeable future. For this reason the directors Limited Company on 15 March 2011. The principal activity of BISCO is to manufacture and sales of M.S. Billets. It continue to adopt going concern basis in preparing the Financial Statements. The current revenue generations and commenced commercial production from 1 June 2010. The Financial Statements of this subsidiary company is included resources of the group provide sufficient fund to meet the present requirements of its existing business and operations. in the Consolidated Financial Statements according to BFRS 10 - “Consolidated Financial Statements”. 2.08 Applicable Accounting Standards 1.04 BSRM Steel Mills Limited- Associate Company The following BASs and BFRSs are applicable for preparation and reporting of the Financial Statements for the period BSRM Steel Mills Limited (BSRMSML) was incorporated on 16 April 2008 as a Private Limited Company and was under review: subsequently converted to a Public Limited Company on 12th November 2013. The main objective of BSRMSML is to BAS - 1 Presentation of Financial Statements manufacture and sell M.S. Billets. Paid up Capital of BSRMSML is Tk. 207.30 Crore divided into 20.73 Crore Ordinary BAS - 2 Inventories Shares of Tk. 10 each. BSRM Steels Limited has acquired 21.76% equity interest in BSRMSML i.e. 45,114,600 Ordinary BAS - 7 Statement of Cash Flows Shares of Tk. 10 each. BSRMSML has not started its commercial operation yet and is expected to start its commercial BAS - 8 Accounting Policies, Changes in Accounting Estimates and Errors production by 2015. BAS - 10 Events after the reporting period BAS - 12 Income Taxes 2. BASIS OF PREPARATION, PRESENTATION AND DISCLOSURES OF FINANCIAL STATEMENTS BAS - 16 Property, Plant and Equipment 2.01 Statement of Compliance BAS - 17 Leases The Financial Statements have been prepared on a going concern basis following accrual basis of accounting except for BAS - 18 Revenue Cash Flow Statement in accordance with the International Accounting Standards (IASs) and International Financial BAS - 19 Employee Benefits Reporting Standards (IFRSs) as adopted in Bangladesh by the Institute of Chartered Accountants of Bangladesh (ICAB) as BAS - 21 The Effects of Changes in Foreign Exchange Rates Bangladesh Accounting Standards (BASs) and Bangladesh Financial Reporting Standards (BFRSs). BAS - 23 Borrowing Costs BAS - 24 Related Party Disclosures 2.02 Basis of Reporting BAS - 27 Separate Financial Statements The financial statements are prepared and presented for external users by the company in accordance with identified BAS - 28 Investment in Associates & Joint Ventures financial reporting framework. Presentation has been made in compliance with the requirements of BAS 1 – “Presentation BAS - 33 Earnings Per Share of Financial Statements”. The financial statements comprise of: BAS - 36 Impairment of Assets a) A statement of financial position as at 31 December 2014 BAS - 37 Provisions, Contingent Liabilities and Contingent Assets BAS - 38 Intangible Assets b) A statement of profit or loss and other comprehensive income for the year ended 31 December 2014 BAS - 39 Financial Instruments: Recognition and Measurement c) A statement of changes in equity for the year ended 31 December 2014 BFRS - 5 Non-current Assets Held for Sale and Discontinued Operations d) A statement of cash flows for the year ended 31 December 2014 BFRS - 7 Financial Instruments: Disclosures BFRS - 10 Consolidated Financial Statements e) Notes, comprising a summary of significant accounting policies and explanatory information. BFRS - 12 Disclosure of interest in other entities BFRS - 13 Fair value measurement

2.09 Use of Estimates and Judgments the investee. The financial statements of subsidiary are included in the consolidated financial statements from the date 3.02.03 Depreciation Category Valuation The preparation of the Financial Statements in conformity with BAS and BFRS requires management to make judgments, that control commences until the date that control ceases. The consolidated financial statements have been prepared in Land is held on a freehold basis and is not depreciated considering the unlimited life. In respect of all other property, plant estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, accordance with BFRS 10 Consolidated Financial Statements. and equipment, depreciation is recognized in statement of profit or loss and other comprehensive income on diminishing Finished Goods Finished goods are valued at cost or net realizable value whichever is lower. liabilities, income and expenses. Actual results may differ from these estimates. balance method over the estimated useful lives of property, plant and equipment. Raw Materials Raw materials are valued at cost or net realizable value whichever is lower. BISCO is a subsidiary company of BSRMSL. The Company has made 95% investment in its subsidiary. BSRMSL is exposed Store items Based on weighted average method. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are to and has rights, to variable returns from the subsidiary and also has the ability to affect those returns through its power Depreciation is charged on addition from the month (date of service) of acquisition/addition and no depreciation is charged recognized in the period in which the estimates are revised and in any future periods affected. over BISCO. in the month of disposal. The depreciation method used reflects the pattern in which the asset's economic benefits are Weighted average cost method has been used to determine the cost of inventories. consumed by the entity. The depreciation charge for each period is recognized as an expense unless it is included in the In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting The Financial Statements of the subsidiary company are incorporated on a line by line basis and the investment held by carrying amount of another asset. 3.06 Transactions in Foreign Currencies policies that have the most significant effect on the amounts recognized in the financial statements is included in the the parent is eliminated against the corresponding share capital of subsidiary in the consolidated financial statements. The Foreign currency transactions are recorded at the applicable rates of exchange ruling on the date of transactions. following notes: accounting policies of subsidiary have been changed when it is necessary to align them with the policies adopted by The principal annual rates and allocation method are as follows: Exchange difference on borrowings denominated in foreign currencies to finance the imported Plant & Machinery is BSRM Steels Limited (Parent entity). Category of Assets Rate of depreciation (%) Allocated to included in the carrying amount of related plant and/or machinery. Other monetary assets & liabilities, if any, denominated Note: 4 Property, plant and equipment The group eliminates in full intra-group assets and liabilities, equity, income, expenses and cash flows relating to Plant and Machinery 5% in foreign currencies at the Statement of Financial Position date are translated at the applicable rates of exchange ruling Note: 6 Intangible assets transactions between entities of the group (profits or losses resulting from intra-group transactions that are recognized in Motor Vehicle 20% at that date and the related exchange differences are recognized as finance income or cost in the Statement of Profit or Note: 10 Inventories assets, such as inventory and fixed assets, are eliminated in full). Furniture and Fixtures 20% (2013: 10%) Loss and Other Comprehensive Income respectively. Office Equipment 20% (2013: 10%) Note: 11 Trade and other receivables Non-controlling Interests 3.07 Investment in Associate Factory Buildings 5% Note: 17 Provision for gratuity The group presents non-controlling interests in its consolidated statement of financial position within equity, separately The company’s investment in associates is accounted for in the Financial Statements using the Equity Method in Roads and Pavements 10% (2013: 5%) from the equity of the owners of the parent. accordance with BAS 28: ‘Investment in Associates & Joint Ventures’. Investment in an associate is initially recognized at Note: 18 Current tax liability Computer & IT equipment 20% (2013: 10%) cost, and the carrying amount is increased or decreased to recognize the investor's share of the profit or loss of the Note: 19 Deferred tax liability The group attributes the profit or loss and each component of other comprehensive income to the owners of the parent investee after the date of acquisition. The investor’s share of investee’s profit or loss is recognized in the investor’s profit Depreciation methods, useful lives and residual values are reassessed at the reporting dates. Note: 25 Other liabilities and to the non-controlling interests. The proportion allocated to the parent and non-controlling interests are determined or loss. Adjustment after the date of acquisition to the carrying amount has been made for changes in the investor’s proportionate interest in the investee that arising from the revaluation of property, plant & equipment and from foreign on the basis of present ownership interests. Upon retirement of assets, the cost and related accumulated depreciation are eliminated from the accounts and resulting Note: 38 Contingent liabilities currency translation differences. The investor’s share of those changes is recognized in other comprehensive income of gain or loss is charged or credited to statement of profit or loss and other comprehensive income. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES the investor. 3.03 Capital Work-In-Progress 2.10 Changes in Accounting Policy The specific accounting policies selected and applied by the company’s directors for significant transactions and events Property, Plant and Equipment under construction/acquisition is accounted for as capital work-in-progress until The excess of company’s share of net assets’ value of associate over cost of investment has been recognized in profit or The company has applied the following BFRSs from the year 2013. that have material effect within the framework of BAS-1 “Presentation of Financial Statements”, in preparation and construction/acquisition is completed and measured at cost. loss as share of associate’s profit or loss during acquisition period as per provision of BAS-28. presentation of financial statements have been consistently applied throughout the year and were also consistent with BFRS - 10 Consolidated Financial Statements those used in earlier years. 3.04 Intangible Assets 3.08 Financial Assets BFRS - 12 Disclosure of interest in other entities The group initially recognizes loans and receivables and deposits on the date that they are originated. All other financial For a proper understanding of the financial statements, these accounting policies are set out below in one place as 3.04.01 Recognition and measurement assets are recognized initially on the trade date, which is the date the group becomes a party to the contractual provisions BFRS - 13 Fair value measurement prescribed by the BAS-1 “Presentation of Financial Statements”. The recommendations of BAS-1 relating to the format of Intangible Assets that are acquired by the company and have finite useful lives are measured at cost less accumulated of the instrument. financial statements were also taken into full consideration for fair presentation. amortization and accumulated impairment loss, if any. Intangible Assets are recognized when all the conditions for The group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers These standards are applicable to companies from 1 January 2013. recognition as per BAS 38: “Intangible Assets” are met. The cost of an intangible asset comprises its purchase price and 3.01 Consistency any directly attributable cost of preparing the asset for its intended use. the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks Unless otherwise stated, the accounting policies and methods of computation used in preparation of Financial Statements 2.11 Change in Accounting Estimate and rewards of ownership of the financial asset are transferred. for the period ended 31 December 2014 are consistent with those policies and methods adopted in preparing the Financial 3.04.02 Subsequent Costs From the year 2013, depreciation is charged on addition from the month (date of service) of acquisition/addition and no Financial assets include Short Term Investments; Trade and Other Receivable; Advances, Deposits and Prepayments; Loan Statements for the year ended 31 December 2013. Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset depreciation is charged in the month of disposal. Previously, full year’s depreciation was charged on addition irrespective to Related Companies and Cash and Bank balances etc. to which it relates. All other expenditures are recognized in profit or loss as incurred. of the date of acquisition/addition and no depreciation was charged in the year of disposal. 3.02 Property, Plant and Equipment 3.08.01 Trade and Other Receivables 3.04.03 Amortization The company in its Board Meeting held on 26 December 2013 has reviewed the useful life and residual value of all Trade and other receivables are initially recognized at cost which is the fair value of the consideration given in return. After 3.02.01 Recognition and Measurement Amortization is recognized in profit or loss on a straight line basis over the estimated useful lives of intangible assets, from property, plant and equipment and decided to change the depreciation rates for the following assets w.e.f. initial recognition, these are carried at cost less impairment losses, if any, due to un-collectability of any amount so Property, Plant and Equipment are stated at cost less accumulated depreciation except Land & land development and the date that they are available for use. The estimated useful lives and rates of amortization are as follows: 1January 2014: Factory Building which are carried at revalued amount, being fair values at the date of revaluation less subsequent recognized. accumulated depreciation and subsequent impairment losses, if any. Category of Assets Rate of amortization Useful lives Category of asset Current depreciation rate Previous depreciation rate Provisions for bad debts are shown in other liabilities. Provision for doubtful debts is made based on the company policy. Cost includes expenditures that are directly attributable to the acquisition of an asset. The cost of self-constructed / Software – old 33.33% 3 years Bad debts are written off on consideration of the status of individual debtors. Furniture & fixture 20% 10% installed assets includes the cost of materials and direct labor, any other costs directly attributable to bringing the asset Trade Marks 5% 20 years 3.08.02 Advances, Deposits and Prepayments Office equipment 20% 10% to the working condition for its intended use and the cost of dismantling and removing an item and restoring the site on Oracle eBS software 10% 10 years Advances are initially measured at cost. After initial recognition, advances are carried at cost less deductions, adjustments Computer & IT equipment 20% 10% which they are located. 3.05 Inventories or charges to other account heads such as Property, Plant and Equipment, Inventory or Expenses. Roads & pavements 10% 5% When parts of an item of Property, Plant and Equipment have different useful lives, they are accounted for as separate Deposits are measured at payment value. items (major components) of Property, Plant and Equipment. Nature of inventories 2.12 Reporting Period Inventories comprise Raw Materials (Billets and Melting Scrap), Packing Materials, Consumable Stores, Fuel and Prepayments are initially measured at cost. After initial recognition, prepayments are carried at cost less charges to profit or loss. The Financial Statements of the group cover one year from 1 January to 31 December and is followed consistently. 3.02.02 Subsequent Costs Lubricants & Finished Goods (MS Rods/Billets) etc. The cost of replacing part of an item of Property, Plant and Equipment is recognized in the carrying amount of the item, if it 3.08.03 Cash and Cash Equivalents 2.13 Basis of Consolidation and Disclosure of Interest in Other Entities is probable that the future benefit embodied within the part will flow to the company and its cost can be measured reliably. Valuation of the inventories Cash and cash equivalents comprise cash on hand and demand deposits, together with short-term, highly liquid Subsidiary is an enterprise controlled by the parent entity. Control exists when an investor is exposed, or has rights, to The costs of the day to day servicing of Property, Plant and Equipment are recognized in profit and loss as incurred. Inventories are measured at lower of cost and net realizable value. The cost of inventories includes expenditure incurred in investments that are readily convertible to a known amount of cash, and that are subject to an insignificant risk of changes variable returns from its involvement with the investee and has the ability to affect those returns through its power over acquiring these inventories and bringing them to their existing location and condition in accordance with BAS-2 “Inventories”. in value.

Annual Report 2014 94 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 95

3.09 Financial Liabilities Deferred tax on revaluation surplus of land and land development has not been recognized in the Financial Statements on 3.20.02 Basic Earnings Per Share The group recognizes all financial liabilities on the trade date which is the date the group becomes a party to the the ground that income tax payable at source on capital gain during registration of sale of land is generally borne by the This has been calculated by dividing the basic earnings by the weighted average number of ordinary shares outstanding contractual provisions of the instrument. The group derecognizes a financial liability when its contractual obligations are buyer. Hence possibility of having income tax implication on land is very remote. during the year. discharged, cancelled or expired. Financial liabilities comprise Trade Creditors and other financial obligations. 3.15 Share Capital 3.20.03 Diluted Earnings Per Share 3.09.01 Trade and Other Payables Paid-up-capital represents total amount contributed by the shareholders and bonus shares issued by the company to the Diluted earnings per share is required to be calculated for the year when there is scope for dilution exists. The group recognizes a financial liability when its contractual obligations arising from past events are certain and the ordinary shareholders. Incremental costs directly attributable to the issue of ordinary shares are recognized as expenses settlement of which is expected to result in an outflow from the company of resources embodying economic benefits. as and when incurred. Holders of ordinary shares are entitled to receive dividends as declared from time to time and are 3.21 Duty Drawback entitled to vote at shareholders' meetings. In the event of a winding up of the company, ordinary shareholders rank after Duty drawback claimed on export sales is adjusted against cost of imported raw materials. 3.10 Impairment all other shareholders. Creditors are fully entitled to any proceeds of liquidation before all shareholders. 3.22 Measurement of Fair Values 3.10.01 Financial Assets 3.16 Employee Benefits When measuring the fair value of an asset or liability, the entity uses market observable data as far as possible. Fair values Financial assets are impaired if objective evidence indicates that a loss event has occurred after initial recognition of the The group maintains both defined contribution plan and defined benefit plan for its eligible permanent employees. are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as assets and that the loss event had a negative effect on the estimated future cash flows of that assets that can be follows. estimated reliably. 3.16.01 Defined Contribution Plan Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. The group maintains a recognized provident fund @ 10% of basic pay (Equally contributed by employee & employer) for Financial assets not classified as at fair value through profit or loss, loans, receivables and investment in an equity all eligible permanent employees from 1st day of January 2010. The said fund is managed by the Board of Trustees. Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. accounted investee are assessed at each reporting date to determine whether there is objective evidence that it is as prices) or indirectly (i.e. derived from prices). impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial 3.16.02 Defined Benefit Plan recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that The group maintains an unfunded gratuity scheme and provision in respect of which is made annually for the employees. Level 3: Inputs for the assets or liabilities that are not based on observable market data. can be estimated reliably. Gratuity payable at the end of each year is determined on the basis of following rules and regulations of the company. If the inputs used to measure the fair value of an asset or liability might be categorized in different levels of the fair value 3.10.02 Non Financial Assets Service length Payment basis hierarchy as the lowest level input that is significant to the entire measurement. The carrying amounts of the group's non-financial assets, other than inventories and deferred tax assets, are reviewed at Less than Five (5) years Nil Property, plant and equipment each reporting date to determine whether there is any indication of impairment. If any such indication exists then the The fair value of items of property, plant and equipment has been determined based on the depreciated replacement cost For Five (5) years and more Two (2) times of last month basic salary multiplied by year of services recoverable amount of the asset is estimated. An impairment loss is recognized if the carrying amount of an asset or its method and net realizable value method as applicable. related cash-generating unit (CGU) exceeds its estimated recoverable amount. 3.16.03 Workers' Profit Participation and Welfare Funds Equity and debt securities 3.11 Cash Flow Statement The company also recognizes a provision for Workers' Profit Participation and Welfare Funds @ 5% of net profit before tax Fair values of tradable equity and debt securities are determined by reference to their quoted closing price in active market Statement of Cash Flows is prepared principally in accordance with BAS 7 (Cash Flow Statement) and the cash flow from as per Bangladesh Labour Law, 2006. at the reporting date which are categorized under ‘Level 1’ of the fair value hierarchy. operating activities have been presented under direct method. 3.17 Revenue Recognition 3.23 Events After the Reporting Period 3.12 Provisions, Contingent Liabilities and Contingent Assets Revenue from sale of goods is measured at the fair value of the consideration received or receivable, net of returns and Events after the reporting period that provide additional information about the company's position at the date of Statement A provision is recognized in the Statement of Financial Position when the group has a legal or contractual obligation as a allowances, trade discounts and rebates, if any. Revenue is recognized when the significant risks and rewards of of Financial Position or those that indicate the going concern assumption is not appropriate are reflected in the Financial result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible Statements. Events after the reporting period that are not adjusting events are disclosed in the notes when material. reliable estimate can be made of the amount of the obligation. Contingencies arising from claims, litigations, assessments, return of goods can be estimated reliably and there is no continuing management involvement with the goods. Sales fine, penalties etc. are recorded when it is probable that a liability has been incurred and the amount can be reasonably revenue is recognized when the goods are delivered. 3.24 Comparative Information estimated. Contingent assets are not recognized. Comparative information has been disclosed in respect of the year 2013 in accordance with BAS-1: Presentation of 3.18 Finance Income and Costs Financial Statements, for all numeric information in the financial statements and also the narrative and descriptive 3.13 Borrowing Costs information where it is relevant for understanding of the current year's Financial Statements. Interest and other costs incurred by the group in connection with the borrowing of funds are recognized as expense in the 3.18.01 Finance Income period in which they are incurred, unless such borrowing cost relates to acquisition / construction of assets in progress Interest income from bank deposits and loan to related-companies is recognized on accrual basis following specific rate 3.25 General that are capitalized as per BAS 23 "Borrowing Costs". of interest in agreement with banks and related companies. i) Prior year's figures have been rearranged wherever considered necessary to ensure comparability with the current year. 3.14 Taxation 3.18.02 Finance Costs Interest expenses except expenses related to acquisition/construction of assets, incurred during the year are charged to ii) Figures of 2013 have been restated due to recognition of share of profit / (loss) of Associates at the time of acquisition. 3.14.01 Current Tax Statement of Profit or Loss and Other Comprehensive Income on accrual basis. The group has been maintaining provision for taxation using rates enacted at the reporting date as per Income Tax iii) Bracket figures denote negative. Ordinance, 1984. The applicable rates are 27.5% for BSRMSL and for BISCO at reduced rate as per SRO 172/2009 dated 3.19 Other Operating Income 30 June, 2009. Other operating income includes interest income on delayed receipts from customers, gain / (loss) on sale of fixed assets and miscellaneous receipts. Other operating income is recognized as revenue income as and when realized. 3.14.02 Deferred Tax Deferred tax liabilities are the amount of income taxes payable in the future periods in respect of taxable temporary 3.20 Earnings Per Share (EPS) differences. Deferred tax assets are the amount of income taxes recoverable in future periods in respect of deductible The company calculates its earnings per share in accordance with Bangladesh Accounting Standard BAS-33 “Earnings temporary differences. Deferred tax assets and liabilities are recognized for the future tax consequences of timing per Share” which has been reported on the face of Statement of Profit or Loss and Other Comprehensive Income. differences arising between the carrying values of assets, liabilities, income and expenditure and their respective tax bases. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or 3.20.01 Basis of Earnings substantially enacted at the Statement of Financial Position date. The impact of changes on the account in the deferred This represents profit for the year attributable to ordinary shareholders and Non- Controlling shareholders. As there were tax assets and liabilities has also been recognized in the statement of profit or loss and other comprehensive income as no preference shares requiring returns or dividends, the net profit after tax for the year has been considered as fully per BAS-12 ''Income Taxes''. attributable to the ordinary shareholders. 2.03 Other Regulatory Compliances BSRM Steels Limited and its Subsidiary The group entities are also required to comply with the following major laws and regulations along with the Companies Act 1994: Notes to the consolidated and separate financial statements As at and for the year ended 31 December 2014 The Income Tax Ordinance, 1984 The Income Tax Rules, 1984 1. THE REPORTING ENTITY The Value Added Tax Act, 1991 The Value Added Tax Rules, 1991 1.01 Legal form of Enterprise The Customs Act, 1969 BSRM Steels Limited (hereinafter referred to as BSRMSL, the company or the Parent) was incorporated on 20 July, 2002, Bangladesh Labour Law, 2006 vide the certificate C-No. 4392 of 2002 as a Private Limited Company registered in Bangladesh under Companies Act The Securities and Exchange Ordinance, 1969 1994. The company was converted to a Public Limited Company on 20 December 2006. The Company is listed with Dhaka The Securities and Exchange Rules, 1987 Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) as a publicly quoted company. Trading of the shares of the company started in two stock exchanges from 18 January 2009. Securities and Exchange Commission Act, 1993

The company has set up its rolling mill at 4 Fouzderhat Industrial Estate, Latifpur, Sitakunda, Chittagong and commenced 2.04 Authorization for issue commercial production from 1 April 2008. The principle place of business is at Ali Mansion, 1207/1099, Sadarghat Road, The Consolidated and Separate Financial Statements have been authorized for issue by the Board of Directors on 31 Chittagong, Bangladesh. March 2015. 1.02 Nature of the Business 2.05 Basis of Measurement The main purpose of the company is to manufacture M.S. products by setting up rolling and re-rolling mills and marketing The Financial Statements have been prepared on going concern basis under the historical cost convention except for some the same. classes of Property, Plant and Equipment which are measured at revalued amount.

1.03 BSRM Iron & Steel Co. Limited- Subsidiary Company 2.06 Functional and Presentation Currency BSRMSL acquired 95% equity interest in BSRM Iron & Steel Co. Limited (BISCO) i.e. 104,500,000 Ordinary Shares of Tk. These Financial Statements are prepared in Bangladesh Taka, which is the company’s functional currency. All financial 10 each on 10 November 2010 in exchange of 104,500,000 Ordinary Shares of Tk. 10 each of BSRM Steels Limited. information presented in Taka has been rounded off to the nearest integer. BISCO was incorporated on 13 April 2005 as a Private Limited Company and was subsequently converted to a Public 2.07 Going Concern The group entities have adequate resources to continue its operation in foreseeable future. For this reason the directors Limited Company on 15 March 2011. The principal activity of BISCO is to manufacture and sales of M.S. Billets. It continue to adopt going concern basis in preparing the Financial Statements. The current revenue generations and commenced commercial production from 1 June 2010. The Financial Statements of this subsidiary company is included resources of the group provide sufficient fund to meet the present requirements of its existing business and operations. in the Consolidated Financial Statements according to BFRS 10 - “Consolidated Financial Statements”. 2.08 Applicable Accounting Standards 1.04 BSRM Steel Mills Limited- Associate Company The following BASs and BFRSs are applicable for preparation and reporting of the Financial Statements for the period BSRM Steel Mills Limited (BSRMSML) was incorporated on 16 April 2008 as a Private Limited Company and was under review: subsequently converted to a Public Limited Company on 12th November 2013. The main objective of BSRMSML is to BAS - 1 Presentation of Financial Statements manufacture and sell M.S. Billets. Paid up Capital of BSRMSML is Tk. 207.30 Crore divided into 20.73 Crore Ordinary BAS - 2 Inventories Shares of Tk. 10 each. BSRM Steels Limited has acquired 21.76% equity interest in BSRMSML i.e. 45,114,600 Ordinary BAS - 7 Statement of Cash Flows Shares of Tk. 10 each. BSRMSML has not started its commercial operation yet and is expected to start its commercial BAS - 8 Accounting Policies, Changes in Accounting Estimates and Errors production by 2015. BAS - 10 Events after the reporting period BAS - 12 Income Taxes 2. BASIS OF PREPARATION, PRESENTATION AND DISCLOSURES OF FINANCIAL STATEMENTS BAS - 16 Property, Plant and Equipment 2.01 Statement of Compliance BAS - 17 Leases The Financial Statements have been prepared on a going concern basis following accrual basis of accounting except for BAS - 18 Revenue Cash Flow Statement in accordance with the International Accounting Standards (IASs) and International Financial BAS - 19 Employee Benefits Reporting Standards (IFRSs) as adopted in Bangladesh by the Institute of Chartered Accountants of Bangladesh (ICAB) as BAS - 21 The Effects of Changes in Foreign Exchange Rates Bangladesh Accounting Standards (BASs) and Bangladesh Financial Reporting Standards (BFRSs). BAS - 23 Borrowing Costs BAS - 24 Related Party Disclosures 2.02 Basis of Reporting BAS - 27 Separate Financial Statements The financial statements are prepared and presented for external users by the company in accordance with identified BAS - 28 Investment in Associates & Joint Ventures financial reporting framework. Presentation has been made in compliance with the requirements of BAS 1 – “Presentation BAS - 33 Earnings Per Share of Financial Statements”. The financial statements comprise of: BAS - 36 Impairment of Assets a) A statement of financial position as at 31 December 2014 BAS - 37 Provisions, Contingent Liabilities and Contingent Assets BAS - 38 Intangible Assets b) A statement of profit or loss and other comprehensive income for the year ended 31 December 2014 BAS - 39 Financial Instruments: Recognition and Measurement c) A statement of changes in equity for the year ended 31 December 2014 BFRS - 5 Non-current Assets Held for Sale and Discontinued Operations d) A statement of cash flows for the year ended 31 December 2014 BFRS - 7 Financial Instruments: Disclosures BFRS - 10 Consolidated Financial Statements e) Notes, comprising a summary of significant accounting policies and explanatory information. BFRS - 12 Disclosure of interest in other entities BFRS - 13 Fair value measurement

2.09 Use of Estimates and Judgments the investee. The financial statements of subsidiary are included in the consolidated financial statements from the date 3.02.03 Depreciation Category Valuation The preparation of the Financial Statements in conformity with BAS and BFRS requires management to make judgments, that control commences until the date that control ceases. The consolidated financial statements have been prepared in Land is held on a freehold basis and is not depreciated considering the unlimited life. In respect of all other property, plant estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, accordance with BFRS 10 Consolidated Financial Statements. and equipment, depreciation is recognized in statement of profit or loss and other comprehensive income on diminishing Finished Goods Finished goods are valued at cost or net realizable value whichever is lower. liabilities, income and expenses. Actual results may differ from these estimates. balance method over the estimated useful lives of property, plant and equipment. Raw Materials Raw materials are valued at cost or net realizable value whichever is lower. BISCO is a subsidiary company of BSRMSL. The Company has made 95% investment in its subsidiary. BSRMSL is exposed Store items Based on weighted average method. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are to and has rights, to variable returns from the subsidiary and also has the ability to affect those returns through its power Depreciation is charged on addition from the month (date of service) of acquisition/addition and no depreciation is charged recognized in the period in which the estimates are revised and in any future periods affected. over BISCO. in the month of disposal. The depreciation method used reflects the pattern in which the asset's economic benefits are Weighted average cost method has been used to determine the cost of inventories. consumed by the entity. The depreciation charge for each period is recognized as an expense unless it is included in the In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting The Financial Statements of the subsidiary company are incorporated on a line by line basis and the investment held by carrying amount of another asset. 3.06 Transactions in Foreign Currencies policies that have the most significant effect on the amounts recognized in the financial statements is included in the the parent is eliminated against the corresponding share capital of subsidiary in the consolidated financial statements. The Foreign currency transactions are recorded at the applicable rates of exchange ruling on the date of transactions. following notes: accounting policies of subsidiary have been changed when it is necessary to align them with the policies adopted by The principal annual rates and allocation method are as follows: Exchange difference on borrowings denominated in foreign currencies to finance the imported Plant & Machinery is BSRM Steels Limited (Parent entity). Category of Assets Rate of depreciation (%) Allocated to included in the carrying amount of related plant and/or machinery. Other monetary assets & liabilities, if any, denominated Note: 4 Property, plant and equipment The group eliminates in full intra-group assets and liabilities, equity, income, expenses and cash flows relating to Plant and Machinery 5% in foreign currencies at the Statement of Financial Position date are translated at the applicable rates of exchange ruling Note: 6 Intangible assets transactions between entities of the group (profits or losses resulting from intra-group transactions that are recognized in Motor Vehicle 20% During 2013, depreciation was allocated to at that date and the related exchange differences are recognized as finance income or cost in the Statement of Profit or Note: 10 Inventories assets, such as inventory and fixed assets, are eliminated in full). Furniture and Fixtures 20% (2013: 10%) Factory overhead and Administrative Loss and Other Comprehensive Income respectively. Office Equipment 20% (2013: 10%) expenses but this year depreciation are Note: 11 Trade and other receivables Non-controlling Interests 3.07 Investment in Associate Factory Buildings 5% charged / allocated on the basis of location Note: 17 Provision for gratuity The group presents non-controlling interests in its consolidated statement of financial position within equity, separately The company’s investment in associates is accounted for in the Financial Statements using the Equity Method in Roads and Pavements 10% (2013: 5%) of respective assets. from the equity of the owners of the parent. accordance with BAS 28: ‘Investment in Associates & Joint Ventures’. Investment in an associate is initially recognized at Note: 18 Current tax liability Computer & IT equipment 20% (2013: 10%) cost, and the carrying amount is increased or decreased to recognize the investor's share of the profit or loss of the Note: 19 Deferred tax liability The group attributes the profit or loss and each component of other comprehensive income to the owners of the parent investee after the date of acquisition. The investor’s share of investee’s profit or loss is recognized in the investor’s profit Depreciation methods, useful lives and residual values are reassessed at the reporting dates. Note: 25 Other liabilities and to the non-controlling interests. The proportion allocated to the parent and non-controlling interests are determined or loss. Adjustment after the date of acquisition to the carrying amount has been made for changes in the investor’s proportionate interest in the investee that arising from the revaluation of property, plant & equipment and from foreign on the basis of present ownership interests. Upon retirement of assets, the cost and related accumulated depreciation are eliminated from the accounts and resulting Note: 38 Contingent liabilities currency translation differences. The investor’s share of those changes is recognized in other comprehensive income of gain or loss is charged or credited to statement of profit or loss and other comprehensive income. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES the investor. 3.03 Capital Work-In-Progress 2.10 Changes in Accounting Policy The specific accounting policies selected and applied by the company’s directors for significant transactions and events Property, Plant and Equipment under construction/acquisition is accounted for as capital work-in-progress until The excess of company’s share of net assets’ value of associate over cost of investment has been recognized in profit or The company has applied the following BFRSs from the year 2013. that have material effect within the framework of BAS-1 “Presentation of Financial Statements”, in preparation and construction/acquisition is completed and measured at cost. loss as share of associate’s profit or loss during acquisition period as per provision of BAS-28. presentation of financial statements have been consistently applied throughout the year and were also consistent with BFRS - 10 Consolidated Financial Statements those used in earlier years. 3.04 Intangible Assets 3.08 Financial Assets BFRS - 12 Disclosure of interest in other entities The group initially recognizes loans and receivables and deposits on the date that they are originated. All other financial For a proper understanding of the financial statements, these accounting policies are set out below in one place as 3.04.01 Recognition and measurement assets are recognized initially on the trade date, which is the date the group becomes a party to the contractual provisions BFRS - 13 Fair value measurement prescribed by the BAS-1 “Presentation of Financial Statements”. The recommendations of BAS-1 relating to the format of Intangible Assets that are acquired by the company and have finite useful lives are measured at cost less accumulated of the instrument. financial statements were also taken into full consideration for fair presentation. amortization and accumulated impairment loss, if any. Intangible Assets are recognized when all the conditions for The group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers These standards are applicable to companies from 1 January 2013. recognition as per BAS 38: “Intangible Assets” are met. The cost of an intangible asset comprises its purchase price and 3.01 Consistency any directly attributable cost of preparing the asset for its intended use. the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks Unless otherwise stated, the accounting policies and methods of computation used in preparation of Financial Statements 2.11 Change in Accounting Estimate and rewards of ownership of the financial asset are transferred. for the period ended 31 December 2014 are consistent with those policies and methods adopted in preparing the Financial 3.04.02 Subsequent Costs From the year 2013, depreciation is charged on addition from the month (date of service) of acquisition/addition and no Financial assets include Short Term Investments; Trade and Other Receivable; Advances, Deposits and Prepayments; Loan Statements for the year ended 31 December 2013. Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset depreciation is charged in the month of disposal. Previously, full year’s depreciation was charged on addition irrespective to Related Companies and Cash and Bank balances etc. to which it relates. All other expenditures are recognized in profit or loss as incurred. of the date of acquisition/addition and no depreciation was charged in the year of disposal. 3.02 Property, Plant and Equipment 3.08.01 Trade and Other Receivables 3.04.03 Amortization The company in its Board Meeting held on 26 December 2013 has reviewed the useful life and residual value of all Trade and other receivables are initially recognized at cost which is the fair value of the consideration given in return. After 3.02.01 Recognition and Measurement Amortization is recognized in profit or loss on a straight line basis over the estimated useful lives of intangible assets, from property, plant and equipment and decided to change the depreciation rates for the following assets w.e.f. initial recognition, these are carried at cost less impairment losses, if any, due to un-collectability of any amount so Property, Plant and Equipment are stated at cost less accumulated depreciation except Land & land development and the date that they are available for use. The estimated useful lives and rates of amortization are as follows: 1January 2014: Factory Building which are carried at revalued amount, being fair values at the date of revaluation less subsequent recognized. accumulated depreciation and subsequent impairment losses, if any. Category of Assets Rate of amortization Useful lives Category of asset Current depreciation rate Previous depreciation rate Provisions for bad debts are shown in other liabilities. Provision for doubtful debts is made based on the company policy. Cost includes expenditures that are directly attributable to the acquisition of an asset. The cost of self-constructed / Software – old 33.33% 3 years Bad debts are written off on consideration of the status of individual debtors. Furniture & fixture 20% 10% installed assets includes the cost of materials and direct labor, any other costs directly attributable to bringing the asset Trade Marks 5% 20 years 3.08.02 Advances, Deposits and Prepayments Office equipment 20% 10% to the working condition for its intended use and the cost of dismantling and removing an item and restoring the site on Oracle eBS software 10% 10 years Advances are initially measured at cost. After initial recognition, advances are carried at cost less deductions, adjustments Computer & IT equipment 20% 10% which they are located. 3.05 Inventories or charges to other account heads such as Property, Plant and Equipment, Inventory or Expenses. Roads & pavements 10% 5% When parts of an item of Property, Plant and Equipment have different useful lives, they are accounted for as separate Deposits are measured at payment value. items (major components) of Property, Plant and Equipment. Nature of inventories 2.12 Reporting Period Inventories comprise Raw Materials (Billets and Melting Scrap), Packing Materials, Consumable Stores, Fuel and Prepayments are initially measured at cost. After initial recognition, prepayments are carried at cost less charges to profit or loss. The Financial Statements of the group cover one year from 1 January to 31 December and is followed consistently. 3.02.02 Subsequent Costs Lubricants & Finished Goods (MS Rods/Billets) etc. The cost of replacing part of an item of Property, Plant and Equipment is recognized in the carrying amount of the item, if it 3.08.03 Cash and Cash Equivalents 2.13 Basis of Consolidation and Disclosure of Interest in Other Entities is probable that the future benefit embodied within the part will flow to the company and its cost can be measured reliably. Valuation of the inventories Cash and cash equivalents comprise cash on hand and demand deposits, together with short-term, highly liquid Subsidiary is an enterprise controlled by the parent entity. Control exists when an investor is exposed, or has rights, to The costs of the day to day servicing of Property, Plant and Equipment are recognized in profit and loss as incurred. Inventories are measured at lower of cost and net realizable value. The cost of inventories includes expenditure incurred in investments that are readily convertible to a known amount of cash, and that are subject to an insignificant risk of changes variable returns from its involvement with the investee and has the ability to affect those returns through its power over acquiring these inventories and bringing them to their existing location and condition in accordance with BAS-2 “Inventories”. in value.

Annual Report 2014 96 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 97

3.09 Financial Liabilities Deferred tax on revaluation surplus of land and land development has not been recognized in the Financial Statements on 3.20.02 Basic Earnings Per Share The group recognizes all financial liabilities on the trade date which is the date the group becomes a party to the the ground that income tax payable at source on capital gain during registration of sale of land is generally borne by the This has been calculated by dividing the basic earnings by the weighted average number of ordinary shares outstanding contractual provisions of the instrument. The group derecognizes a financial liability when its contractual obligations are buyer. Hence possibility of having income tax implication on land is very remote. during the year. discharged, cancelled or expired. Financial liabilities comprise Trade Creditors and other financial obligations. 3.15 Share Capital 3.20.03 Diluted Earnings Per Share 3.09.01 Trade and Other Payables Paid-up-capital represents total amount contributed by the shareholders and bonus shares issued by the company to the Diluted earnings per share is required to be calculated for the year when there is scope for dilution exists. The group recognizes a financial liability when its contractual obligations arising from past events are certain and the ordinary shareholders. Incremental costs directly attributable to the issue of ordinary shares are recognized as expenses settlement of which is expected to result in an outflow from the company of resources embodying economic benefits. as and when incurred. Holders of ordinary shares are entitled to receive dividends as declared from time to time and are 3.21 Duty Drawback entitled to vote at shareholders' meetings. In the event of a winding up of the company, ordinary shareholders rank after Duty drawback claimed on export sales is adjusted against cost of imported raw materials. 3.10 Impairment all other shareholders. Creditors are fully entitled to any proceeds of liquidation before all shareholders. 3.22 Measurement of Fair Values 3.10.01 Financial Assets 3.16 Employee Benefits When measuring the fair value of an asset or liability, the entity uses market observable data as far as possible. Fair values Financial assets are impaired if objective evidence indicates that a loss event has occurred after initial recognition of the The group maintains both defined contribution plan and defined benefit plan for its eligible permanent employees. are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as assets and that the loss event had a negative effect on the estimated future cash flows of that assets that can be follows. estimated reliably. 3.16.01 Defined Contribution Plan Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. The group maintains a recognized provident fund @ 10% of basic pay (Equally contributed by employee & employer) for Financial assets not classified as at fair value through profit or loss, loans, receivables and investment in an equity all eligible permanent employees from 1st day of January 2010. The said fund is managed by the Board of Trustees. Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. accounted investee are assessed at each reporting date to determine whether there is objective evidence that it is as prices) or indirectly (i.e. derived from prices). impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial 3.16.02 Defined Benefit Plan recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that The group maintains an unfunded gratuity scheme and provision in respect of which is made annually for the employees. Level 3: Inputs for the assets or liabilities that are not based on observable market data. can be estimated reliably. Gratuity payable at the end of each year is determined on the basis of following rules and regulations of the company. If the inputs used to measure the fair value of an asset or liability might be categorized in different levels of the fair value 3.10.02 Non Financial Assets Service length Payment basis hierarchy as the lowest level input that is significant to the entire measurement. The carrying amounts of the group's non-financial assets, other than inventories and deferred tax assets, are reviewed at Less than Five (5) years Nil Property, plant and equipment each reporting date to determine whether there is any indication of impairment. If any such indication exists then the The fair value of items of property, plant and equipment has been determined based on the depreciated replacement cost For Five (5) years and more Two (2) times of last month basic salary multiplied by year of services recoverable amount of the asset is estimated. An impairment loss is recognized if the carrying amount of an asset or its method and net realizable value method as applicable. related cash-generating unit (CGU) exceeds its estimated recoverable amount. 3.16.03 Workers' Profit Participation and Welfare Funds Equity and debt securities 3.11 Cash Flow Statement The company also recognizes a provision for Workers' Profit Participation and Welfare Funds @ 5% of net profit before tax Fair values of tradable equity and debt securities are determined by reference to their quoted closing price in active market Statement of Cash Flows is prepared principally in accordance with BAS 7 (Cash Flow Statement) and the cash flow from as per Bangladesh Labour Law, 2006. at the reporting date which are categorized under ‘Level 1’ of the fair value hierarchy. operating activities have been presented under direct method. 3.17 Revenue Recognition 3.23 Events After the Reporting Period 3.12 Provisions, Contingent Liabilities and Contingent Assets Revenue from sale of goods is measured at the fair value of the consideration received or receivable, net of returns and Events after the reporting period that provide additional information about the company's position at the date of Statement A provision is recognized in the Statement of Financial Position when the group has a legal or contractual obligation as a allowances, trade discounts and rebates, if any. Revenue is recognized when the significant risks and rewards of of Financial Position or those that indicate the going concern assumption is not appropriate are reflected in the Financial result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible Statements. Events after the reporting period that are not adjusting events are disclosed in the notes when material. reliable estimate can be made of the amount of the obligation. Contingencies arising from claims, litigations, assessments, return of goods can be estimated reliably and there is no continuing management involvement with the goods. Sales fine, penalties etc. are recorded when it is probable that a liability has been incurred and the amount can be reasonably revenue is recognized when the goods are delivered. 3.24 Comparative Information estimated. Contingent assets are not recognized. Comparative information has been disclosed in respect of the year 2013 in accordance with BAS-1: Presentation of 3.18 Finance Income and Costs Financial Statements, for all numeric information in the financial statements and also the narrative and descriptive 3.13 Borrowing Costs information where it is relevant for understanding of the current year's Financial Statements. Interest and other costs incurred by the group in connection with the borrowing of funds are recognized as expense in the 3.18.01 Finance Income period in which they are incurred, unless such borrowing cost relates to acquisition / construction of assets in progress Interest income from bank deposits and loan to related-companies is recognized on accrual basis following specific rate 3.25 General that are capitalized as per BAS 23 "Borrowing Costs". of interest in agreement with banks and related companies. i) Prior year's figures have been rearranged wherever considered necessary to ensure comparability with the current year. 3.14 Taxation 3.18.02 Finance Costs Interest expenses except expenses related to acquisition/construction of assets, incurred during the year are charged to ii) Figures of 2013 have been restated due to recognition of share of profit / (loss) of Associates at the time of acquisition. 3.14.01 Current Tax Statement of Profit or Loss and Other Comprehensive Income on accrual basis. The group has been maintaining provision for taxation using rates enacted at the reporting date as per Income Tax iii) Bracket figures denote negative. Ordinance, 1984. The applicable rates are 27.5% for BSRMSL and for BISCO at reduced rate as per SRO 172/2009 dated 3.19 Other Operating Income 30 June, 2009. Other operating income includes interest income on delayed receipts from customers, gain / (loss) on sale of fixed assets and miscellaneous receipts. Other operating income is recognized as revenue income as and when realized. 3.14.02 Deferred Tax Deferred tax liabilities are the amount of income taxes payable in the future periods in respect of taxable temporary 3.20 Earnings Per Share (EPS) differences. Deferred tax assets are the amount of income taxes recoverable in future periods in respect of deductible The company calculates its earnings per share in accordance with Bangladesh Accounting Standard BAS-33 “Earnings temporary differences. Deferred tax assets and liabilities are recognized for the future tax consequences of timing per Share” which has been reported on the face of Statement of Profit or Loss and Other Comprehensive Income. differences arising between the carrying values of assets, liabilities, income and expenditure and their respective tax bases. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or 3.20.01 Basis of Earnings substantially enacted at the Statement of Financial Position date. The impact of changes on the account in the deferred This represents profit for the year attributable to ordinary shareholders and Non- Controlling shareholders. As there were tax assets and liabilities has also been recognized in the statement of profit or loss and other comprehensive income as no preference shares requiring returns or dividends, the net profit after tax for the year has been considered as fully per BAS-12 ''Income Taxes''. attributable to the ordinary shareholders. 2.03 Other Regulatory Compliances BSRM Steels Limited and its Subsidiary The group entities are also required to comply with the following major laws and regulations along with the Companies Act 1994: Notes to the consolidated and separate financial statements As at and for the year ended 31 December 2014 The Income Tax Ordinance, 1984 The Income Tax Rules, 1984 1. THE REPORTING ENTITY The Value Added Tax Act, 1991 The Value Added Tax Rules, 1991 1.01 Legal form of Enterprise The Customs Act, 1969 BSRM Steels Limited (hereinafter referred to as BSRMSL, the company or the Parent) was incorporated on 20 July, 2002, Bangladesh Labour Law, 2006 vide the certificate C-No. 4392 of 2002 as a Private Limited Company registered in Bangladesh under Companies Act The Securities and Exchange Ordinance, 1969 1994. The company was converted to a Public Limited Company on 20 December 2006. The Company is listed with Dhaka The Securities and Exchange Rules, 1987 Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) as a publicly quoted company. Trading of the shares of the company started in two stock exchanges from 18 January 2009. Securities and Exchange Commission Act, 1993

The company has set up its rolling mill at 4 Fouzderhat Industrial Estate, Latifpur, Sitakunda, Chittagong and commenced 2.04 Authorization for issue commercial production from 1 April 2008. The principle place of business is at Ali Mansion, 1207/1099, Sadarghat Road, The Consolidated and Separate Financial Statements have been authorized for issue by the Board of Directors on 31 Chittagong, Bangladesh. March 2015. 1.02 Nature of the Business 2.05 Basis of Measurement The main purpose of the company is to manufacture M.S. products by setting up rolling and re-rolling mills and marketing The Financial Statements have been prepared on going concern basis under the historical cost convention except for some the same. classes of Property, Plant and Equipment which are measured at revalued amount.

1.03 BSRM Iron & Steel Co. Limited- Subsidiary Company 2.06 Functional and Presentation Currency BSRMSL acquired 95% equity interest in BSRM Iron & Steel Co. Limited (BISCO) i.e. 104,500,000 Ordinary Shares of Tk. These Financial Statements are prepared in Bangladesh Taka, which is the company’s functional currency. All financial 10 each on 10 November 2010 in exchange of 104,500,000 Ordinary Shares of Tk. 10 each of BSRM Steels Limited. information presented in Taka has been rounded off to the nearest integer. BISCO was incorporated on 13 April 2005 as a Private Limited Company and was subsequently converted to a Public 2.07 Going Concern The group entities have adequate resources to continue its operation in foreseeable future. For this reason the directors Limited Company on 15 March 2011. The principal activity of BISCO is to manufacture and sales of M.S. Billets. It continue to adopt going concern basis in preparing the Financial Statements. The current revenue generations and commenced commercial production from 1 June 2010. The Financial Statements of this subsidiary company is included resources of the group provide sufficient fund to meet the present requirements of its existing business and operations. in the Consolidated Financial Statements according to BFRS 10 - “Consolidated Financial Statements”. 2.08 Applicable Accounting Standards 1.04 BSRM Steel Mills Limited- Associate Company The following BASs and BFRSs are applicable for preparation and reporting of the Financial Statements for the period BSRM Steel Mills Limited (BSRMSML) was incorporated on 16 April 2008 as a Private Limited Company and was under review: subsequently converted to a Public Limited Company on 12th November 2013. The main objective of BSRMSML is to BAS - 1 Presentation of Financial Statements manufacture and sell M.S. Billets. Paid up Capital of BSRMSML is Tk. 207.30 Crore divided into 20.73 Crore Ordinary BAS - 2 Inventories Shares of Tk. 10 each. BSRM Steels Limited has acquired 21.76% equity interest in BSRMSML i.e. 45,114,600 Ordinary BAS - 7 Statement of Cash Flows Shares of Tk. 10 each. BSRMSML has not started its commercial operation yet and is expected to start its commercial BAS - 8 Accounting Policies, Changes in Accounting Estimates and Errors production by 2015. BAS - 10 Events after the reporting period BAS - 12 Income Taxes 2. BASIS OF PREPARATION, PRESENTATION AND DISCLOSURES OF FINANCIAL STATEMENTS BAS - 16 Property, Plant and Equipment 2.01 Statement of Compliance BAS - 17 Leases The Financial Statements have been prepared on a going concern basis following accrual basis of accounting except for BAS - 18 Revenue Cash Flow Statement in accordance with the International Accounting Standards (IASs) and International Financial BAS - 19 Employee Benefits Reporting Standards (IFRSs) as adopted in Bangladesh by the Institute of Chartered Accountants of Bangladesh (ICAB) as BAS - 21 The Effects of Changes in Foreign Exchange Rates Bangladesh Accounting Standards (BASs) and Bangladesh Financial Reporting Standards (BFRSs). BAS - 23 Borrowing Costs BAS - 24 Related Party Disclosures 2.02 Basis of Reporting BAS - 27 Separate Financial Statements The financial statements are prepared and presented for external users by the company in accordance with identified BAS - 28 Investment in Associates & Joint Ventures financial reporting framework. Presentation has been made in compliance with the requirements of BAS 1 – “Presentation BAS - 33 Earnings Per Share of Financial Statements”. The financial statements comprise of: BAS - 36 Impairment of Assets a) A statement of financial position as at 31 December 2014 BAS - 37 Provisions, Contingent Liabilities and Contingent Assets BAS - 38 Intangible Assets b) A statement of profit or loss and other comprehensive income for the year ended 31 December 2014 BAS - 39 Financial Instruments: Recognition and Measurement c) A statement of changes in equity for the year ended 31 December 2014 BFRS - 5 Non-current Assets Held for Sale and Discontinued Operations d) A statement of cash flows for the year ended 31 December 2014 BFRS - 7 Financial Instruments: Disclosures BFRS - 10 Consolidated Financial Statements e) Notes, comprising a summary of significant accounting policies and explanatory information. BFRS - 12 Disclosure of interest in other entities BFRS - 13 Fair value measurement

2.09 Use of Estimates and Judgments the investee. The financial statements of subsidiary are included in the consolidated financial statements from the date 3.02.03 Depreciation Category Valuation The preparation of the Financial Statements in conformity with BAS and BFRS requires management to make judgments, that control commences until the date that control ceases. The consolidated financial statements have been prepared in Land is held on a freehold basis and is not depreciated considering the unlimited life. In respect of all other property, plant estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, accordance with BFRS 10 Consolidated Financial Statements. and equipment, depreciation is recognized in statement of profit or loss and other comprehensive income on diminishing Finished Goods Finished goods are valued at cost or net realizable value whichever is lower. liabilities, income and expenses. Actual results may differ from these estimates. balance method over the estimated useful lives of property, plant and equipment. Raw Materials Raw materials are valued at cost or net realizable value whichever is lower. BISCO is a subsidiary company of BSRMSL. The Company has made 95% investment in its subsidiary. BSRMSL is exposed Store items Based on weighted average method. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are to and has rights, to variable returns from the subsidiary and also has the ability to affect those returns through its power Depreciation is charged on addition from the month (date of service) of acquisition/addition and no depreciation is charged recognized in the period in which the estimates are revised and in any future periods affected. over BISCO. in the month of disposal. The depreciation method used reflects the pattern in which the asset's economic benefits are Weighted average cost method has been used to determine the cost of inventories. consumed by the entity. The depreciation charge for each period is recognized as an expense unless it is included in the In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting The Financial Statements of the subsidiary company are incorporated on a line by line basis and the investment held by carrying amount of another asset. 3.06 Transactions in Foreign Currencies policies that have the most significant effect on the amounts recognized in the financial statements is included in the the parent is eliminated against the corresponding share capital of subsidiary in the consolidated financial statements. The Foreign currency transactions are recorded at the applicable rates of exchange ruling on the date of transactions. following notes: accounting policies of subsidiary have been changed when it is necessary to align them with the policies adopted by The principal annual rates and allocation method are as follows: Exchange difference on borrowings denominated in foreign currencies to finance the imported Plant & Machinery is BSRM Steels Limited (Parent entity). Category of Assets Rate of depreciation (%) Allocated to included in the carrying amount of related plant and/or machinery. Other monetary assets & liabilities, if any, denominated Note: 4 Property, plant and equipment The group eliminates in full intra-group assets and liabilities, equity, income, expenses and cash flows relating to Plant and Machinery 5% in foreign currencies at the Statement of Financial Position date are translated at the applicable rates of exchange ruling Note: 6 Intangible assets transactions between entities of the group (profits or losses resulting from intra-group transactions that are recognized in Motor Vehicle 20% at that date and the related exchange differences are recognized as finance income or cost in the Statement of Profit or Note: 10 Inventories assets, such as inventory and fixed assets, are eliminated in full). Furniture and Fixtures 20% (2013: 10%) Loss and Other Comprehensive Income respectively. Office Equipment 20% (2013: 10%) Note: 11 Trade and other receivables Non-controlling Interests 3.07 Investment in Associate Factory Buildings 5% Note: 17 Provision for gratuity The group presents non-controlling interests in its consolidated statement of financial position within equity, separately The company’s investment in associates is accounted for in the Financial Statements using the Equity Method in Roads and Pavements 10% (2013: 5%) from the equity of the owners of the parent. accordance with BAS 28: ‘Investment in Associates & Joint Ventures’. Investment in an associate is initially recognized at Note: 18 Current tax liability Computer & IT equipment 20% (2013: 10%) cost, and the carrying amount is increased or decreased to recognize the investor's share of the profit or loss of the Note: 19 Deferred tax liability The group attributes the profit or loss and each component of other comprehensive income to the owners of the parent investee after the date of acquisition. The investor’s share of investee’s profit or loss is recognized in the investor’s profit Depreciation methods, useful lives and residual values are reassessed at the reporting dates. Note: 25 Other liabilities and to the non-controlling interests. The proportion allocated to the parent and non-controlling interests are determined or loss. Adjustment after the date of acquisition to the carrying amount has been made for changes in the investor’s proportionate interest in the investee that arising from the revaluation of property, plant & equipment and from foreign on the basis of present ownership interests. Upon retirement of assets, the cost and related accumulated depreciation are eliminated from the accounts and resulting Note: 38 Contingent liabilities currency translation differences. The investor’s share of those changes is recognized in other comprehensive income of gain or loss is charged or credited to statement of profit or loss and other comprehensive income. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES the investor. 3.03 Capital Work-In-Progress 2.10 Changes in Accounting Policy The specific accounting policies selected and applied by the company’s directors for significant transactions and events Property, Plant and Equipment under construction/acquisition is accounted for as capital work-in-progress until The excess of company’s share of net assets’ value of associate over cost of investment has been recognized in profit or The company has applied the following BFRSs from the year 2013. that have material effect within the framework of BAS-1 “Presentation of Financial Statements”, in preparation and construction/acquisition is completed and measured at cost. loss as share of associate’s profit or loss during acquisition period as per provision of BAS-28. presentation of financial statements have been consistently applied throughout the year and were also consistent with BFRS - 10 Consolidated Financial Statements those used in earlier years. 3.04 Intangible Assets 3.08 Financial Assets BFRS - 12 Disclosure of interest in other entities The group initially recognizes loans and receivables and deposits on the date that they are originated. All other financial For a proper understanding of the financial statements, these accounting policies are set out below in one place as 3.04.01 Recognition and measurement assets are recognized initially on the trade date, which is the date the group becomes a party to the contractual provisions BFRS - 13 Fair value measurement prescribed by the BAS-1 “Presentation of Financial Statements”. The recommendations of BAS-1 relating to the format of Intangible Assets that are acquired by the company and have finite useful lives are measured at cost less accumulated of the instrument. financial statements were also taken into full consideration for fair presentation. amortization and accumulated impairment loss, if any. Intangible Assets are recognized when all the conditions for The group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers These standards are applicable to companies from 1 January 2013. recognition as per BAS 38: “Intangible Assets” are met. The cost of an intangible asset comprises its purchase price and 3.01 Consistency any directly attributable cost of preparing the asset for its intended use. the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks Unless otherwise stated, the accounting policies and methods of computation used in preparation of Financial Statements 2.11 Change in Accounting Estimate and rewards of ownership of the financial asset are transferred. for the period ended 31 December 2014 are consistent with those policies and methods adopted in preparing the Financial 3.04.02 Subsequent Costs From the year 2013, depreciation is charged on addition from the month (date of service) of acquisition/addition and no Financial assets include Short Term Investments; Trade and Other Receivable; Advances, Deposits and Prepayments; Loan Statements for the year ended 31 December 2013. Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset depreciation is charged in the month of disposal. Previously, full year’s depreciation was charged on addition irrespective to Related Companies and Cash and Bank balances etc. to which it relates. All other expenditures are recognized in profit or loss as incurred. of the date of acquisition/addition and no depreciation was charged in the year of disposal. 3.02 Property, Plant and Equipment 3.08.01 Trade and Other Receivables 3.04.03 Amortization The company in its Board Meeting held on 26 December 2013 has reviewed the useful life and residual value of all Trade and other receivables are initially recognized at cost which is the fair value of the consideration given in return. After 3.02.01 Recognition and Measurement Amortization is recognized in profit or loss on a straight line basis over the estimated useful lives of intangible assets, from property, plant and equipment and decided to change the depreciation rates for the following assets w.e.f. initial recognition, these are carried at cost less impairment losses, if any, due to un-collectability of any amount so Property, Plant and Equipment are stated at cost less accumulated depreciation except Land & land development and the date that they are available for use. The estimated useful lives and rates of amortization are as follows: 1January 2014: Factory Building which are carried at revalued amount, being fair values at the date of revaluation less subsequent recognized. accumulated depreciation and subsequent impairment losses, if any. Category of Assets Rate of amortization Useful lives Category of asset Current depreciation rate Previous depreciation rate Provisions for bad debts are shown in other liabilities. Provision for doubtful debts is made based on the company policy. Cost includes expenditures that are directly attributable to the acquisition of an asset. The cost of self-constructed / Software – old 33.33% 3 years Bad debts are written off on consideration of the status of individual debtors. Furniture & fixture 20% 10% installed assets includes the cost of materials and direct labor, any other costs directly attributable to bringing the asset Trade Marks 5% 20 years 3.08.02 Advances, Deposits and Prepayments Office equipment 20% 10% to the working condition for its intended use and the cost of dismantling and removing an item and restoring the site on Oracle eBS software 10% 10 years Advances are initially measured at cost. After initial recognition, advances are carried at cost less deductions, adjustments Computer & IT equipment 20% 10% which they are located. 3.05 Inventories or charges to other account heads such as Property, Plant and Equipment, Inventory or Expenses. Roads & pavements 10% 5% When parts of an item of Property, Plant and Equipment have different useful lives, they are accounted for as separate Deposits are measured at payment value. items (major components) of Property, Plant and Equipment. Nature of inventories 2.12 Reporting Period Inventories comprise Raw Materials (Billets and Melting Scrap), Packing Materials, Consumable Stores, Fuel and Prepayments are initially measured at cost. After initial recognition, prepayments are carried at cost less charges to profit or loss. The Financial Statements of the group cover one year from 1 January to 31 December and is followed consistently. 3.02.02 Subsequent Costs Lubricants & Finished Goods (MS Rods/Billets) etc. The cost of replacing part of an item of Property, Plant and Equipment is recognized in the carrying amount of the item, if it 3.08.03 Cash and Cash Equivalents 2.13 Basis of Consolidation and Disclosure of Interest in Other Entities is probable that the future benefit embodied within the part will flow to the company and its cost can be measured reliably. Valuation of the inventories Cash and cash equivalents comprise cash on hand and demand deposits, together with short-term, highly liquid Subsidiary is an enterprise controlled by the parent entity. Control exists when an investor is exposed, or has rights, to The costs of the day to day servicing of Property, Plant and Equipment are recognized in profit and loss as incurred. Inventories are measured at lower of cost and net realizable value. The cost of inventories includes expenditure incurred in investments that are readily convertible to a known amount of cash, and that are subject to an insignificant risk of changes variable returns from its involvement with the investee and has the ability to affect those returns through its power over acquiring these inventories and bringing them to their existing location and condition in accordance with BAS-2 “Inventories”. in value.

3.09 Financial Liabilities Deferred tax on revaluation surplus of land and land development has not been recognized in the Financial Statements on 3.20.02 Basic Earnings Per Share The group recognizes all financial liabilities on the trade date which is the date the group becomes a party to the the ground that income tax payable at source on capital gain during registration of sale of land is generally borne by the This has been calculated by dividing the basic earnings by the weighted average number of ordinary shares outstanding contractual provisions of the instrument. The group derecognizes a financial liability when its contractual obligations are buyer. Hence possibility of having income tax implication on land is very remote. during the year. discharged, cancelled or expired. Financial liabilities comprise Trade Creditors and other financial obligations. 3.15 Share Capital 3.20.03 Diluted Earnings Per Share 3.09.01 Trade and Other Payables Paid-up-capital represents total amount contributed by the shareholders and bonus shares issued by the company to the Diluted earnings per share is required to be calculated for the year when there is scope for dilution exists. The group recognizes a financial liability when its contractual obligations arising from past events are certain and the ordinary shareholders. Incremental costs directly attributable to the issue of ordinary shares are recognized as expenses settlement of which is expected to result in an outflow from the company of resources embodying economic benefits. as and when incurred. Holders of ordinary shares are entitled to receive dividends as declared from time to time and are 3.21 Duty Drawback entitled to vote at shareholders' meetings. In the event of a winding up of the company, ordinary shareholders rank after Duty drawback claimed on export sales is adjusted against cost of imported raw materials. 3.10 Impairment all other shareholders. Creditors are fully entitled to any proceeds of liquidation before all shareholders. 3.22 Measurement of Fair Values 3.10.01 Financial Assets 3.16 Employee Benefits When measuring the fair value of an asset or liability, the entity uses market observable data as far as possible. Fair values Financial assets are impaired if objective evidence indicates that a loss event has occurred after initial recognition of the The group maintains both defined contribution plan and defined benefit plan for its eligible permanent employees. are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as assets and that the loss event had a negative effect on the estimated future cash flows of that assets that can be follows. estimated reliably. 3.16.01 Defined Contribution Plan Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. The group maintains a recognized provident fund @ 10% of basic pay (Equally contributed by employee & employer) for Financial assets not classified as at fair value through profit or loss, loans, receivables and investment in an equity all eligible permanent employees from 1st day of January 2010. The said fund is managed by the Board of Trustees. Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. accounted investee are assessed at each reporting date to determine whether there is objective evidence that it is as prices) or indirectly (i.e. derived from prices). impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial 3.16.02 Defined Benefit Plan recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that The group maintains an unfunded gratuity scheme and provision in respect of which is made annually for the employees. Level 3: Inputs for the assets or liabilities that are not based on observable market data. can be estimated reliably. Gratuity payable at the end of each year is determined on the basis of following rules and regulations of the company. If the inputs used to measure the fair value of an asset or liability might be categorized in different levels of the fair value 3.10.02 Non Financial Assets Service length Payment basis hierarchy as the lowest level input that is significant to the entire measurement. The carrying amounts of the group's non-financial assets, other than inventories and deferred tax assets, are reviewed at Less than Five (5) years Nil Property, plant and equipment each reporting date to determine whether there is any indication of impairment. If any such indication exists then the The fair value of items of property, plant and equipment has been determined based on the depreciated replacement cost For Five (5) years and more Two (2) times of last month basic salary multiplied by year of services recoverable amount of the asset is estimated. An impairment loss is recognized if the carrying amount of an asset or its method and net realizable value method as applicable. related cash-generating unit (CGU) exceeds its estimated recoverable amount. 3.16.03 Workers' Profit Participation and Welfare Funds Equity and debt securities 3.11 Cash Flow Statement The company also recognizes a provision for Workers' Profit Participation and Welfare Funds @ 5% of net profit before tax Fair values of tradable equity and debt securities are determined by reference to their quoted closing price in active market Statement of Cash Flows is prepared principally in accordance with BAS 7 (Cash Flow Statement) and the cash flow from as per Bangladesh Labour Law, 2006. at the reporting date which are categorized under ‘Level 1’ of the fair value hierarchy. operating activities have been presented under direct method. 3.17 Revenue Recognition 3.23 Events After the Reporting Period 3.12 Provisions, Contingent Liabilities and Contingent Assets Revenue from sale of goods is measured at the fair value of the consideration received or receivable, net of returns and Events after the reporting period that provide additional information about the company's position at the date of Statement A provision is recognized in the Statement of Financial Position when the group has a legal or contractual obligation as a allowances, trade discounts and rebates, if any. Revenue is recognized when the significant risks and rewards of of Financial Position or those that indicate the going concern assumption is not appropriate are reflected in the Financial result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible Statements. Events after the reporting period that are not adjusting events are disclosed in the notes when material. reliable estimate can be made of the amount of the obligation. Contingencies arising from claims, litigations, assessments, return of goods can be estimated reliably and there is no continuing management involvement with the goods. Sales fine, penalties etc. are recorded when it is probable that a liability has been incurred and the amount can be reasonably revenue is recognized when the goods are delivered. 3.24 Comparative Information estimated. Contingent assets are not recognized. Comparative information has been disclosed in respect of the year 2013 in accordance with BAS-1: Presentation of 3.18 Finance Income and Costs Financial Statements, for all numeric information in the financial statements and also the narrative and descriptive 3.13 Borrowing Costs information where it is relevant for understanding of the current year's Financial Statements. Interest and other costs incurred by the group in connection with the borrowing of funds are recognized as expense in the 3.18.01 Finance Income period in which they are incurred, unless such borrowing cost relates to acquisition / construction of assets in progress Interest income from bank deposits and loan to related-companies is recognized on accrual basis following specific rate 3.25 General that are capitalized as per BAS 23 "Borrowing Costs". of interest in agreement with banks and related companies. i) Prior year's figures have been rearranged wherever considered necessary to ensure comparability with the current year. 3.14 Taxation 3.18.02 Finance Costs Interest expenses except expenses related to acquisition/construction of assets, incurred during the year are charged to ii) Figures of 2013 have been restated due to recognition of share of profit / (loss) of Associates at the time of acquisition. 3.14.01 Current Tax Statement of Profit or Loss and Other Comprehensive Income on accrual basis. The group has been maintaining provision for taxation using rates enacted at the reporting date as per Income Tax iii) Bracket figures denote negative. Ordinance, 1984. The applicable rates are 27.5% for BSRMSL and for BISCO at reduced rate as per SRO 172/2009 dated 3.19 Other Operating Income 30 June, 2009. Other operating income includes interest income on delayed receipts from customers, gain / (loss) on sale of fixed assets and miscellaneous receipts. Other operating income is recognized as revenue income as and when realized. 3.14.02 Deferred Tax Deferred tax liabilities are the amount of income taxes payable in the future periods in respect of taxable temporary 3.20 Earnings Per Share (EPS) differences. Deferred tax assets are the amount of income taxes recoverable in future periods in respect of deductible The company calculates its earnings per share in accordance with Bangladesh Accounting Standard BAS-33 “Earnings temporary differences. Deferred tax assets and liabilities are recognized for the future tax consequences of timing per Share” which has been reported on the face of Statement of Profit or Loss and Other Comprehensive Income. differences arising between the carrying values of assets, liabilities, income and expenditure and their respective tax bases. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or 3.20.01 Basis of Earnings substantially enacted at the Statement of Financial Position date. The impact of changes on the account in the deferred This represents profit for the year attributable to ordinary shareholders and Non- Controlling shareholders. As there were tax assets and liabilities has also been recognized in the statement of profit or loss and other comprehensive income as no preference shares requiring returns or dividends, the net profit after tax for the year has been considered as fully per BAS-12 ''Income Taxes''. attributable to the ordinary shareholders.

Annual Report 2014 98 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 99 2.03 Other Regulatory Compliances BSRM Steels Limited and its Subsidiary The group entities are also required to comply with the following major laws and regulations along with the Companies Act 1994: Notes to the consolidated and separate financial statements As at and for the year ended 31 December 2014 The Income Tax Ordinance, 1984 The Income Tax Rules, 1984 1. THE REPORTING ENTITY The Value Added Tax Act, 1991 The Value Added Tax Rules, 1991 1.01 Legal form of Enterprise The Customs Act, 1969 BSRM Steels Limited (hereinafter referred to as BSRMSL, the company or the Parent) was incorporated on 20 July, 2002, Bangladesh Labour Law, 2006 vide the certificate C-No. 4392 of 2002 as a Private Limited Company registered in Bangladesh under Companies Act The Securities and Exchange Ordinance, 1969 1994. The company was converted to a Public Limited Company on 20 December 2006. The Company is listed with Dhaka The Securities and Exchange Rules, 1987 Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) as a publicly quoted company. Trading of the shares of the company started in two stock exchanges from 18 January 2009. Securities and Exchange Commission Act, 1993

The company has set up its rolling mill at 4 Fouzderhat Industrial Estate, Latifpur, Sitakunda, Chittagong and commenced 2.04 Authorization for issue commercial production from 1 April 2008. The principle place of business is at Ali Mansion, 1207/1099, Sadarghat Road, The Consolidated and Separate Financial Statements have been authorized for issue by the Board of Directors on 31 Chittagong, Bangladesh. March 2015. 1.02 Nature of the Business 2.05 Basis of Measurement The main purpose of the company is to manufacture M.S. products by setting up rolling and re-rolling mills and marketing The Financial Statements have been prepared on going concern basis under the historical cost convention except for some the same. classes of Property, Plant and Equipment which are measured at revalued amount.

1.03 BSRM Iron & Steel Co. Limited- Subsidiary Company 2.06 Functional and Presentation Currency BSRMSL acquired 95% equity interest in BSRM Iron & Steel Co. Limited (BISCO) i.e. 104,500,000 Ordinary Shares of Tk. These Financial Statements are prepared in Bangladesh Taka, which is the company’s functional currency. All financial 10 each on 10 November 2010 in exchange of 104,500,000 Ordinary Shares of Tk. 10 each of BSRM Steels Limited. information presented in Taka has been rounded off to the nearest integer. BISCO was incorporated on 13 April 2005 as a Private Limited Company and was subsequently converted to a Public 2.07 Going Concern The group entities have adequate resources to continue its operation in foreseeable future. For this reason the directors Limited Company on 15 March 2011. The principal activity of BISCO is to manufacture and sales of M.S. Billets. It continue to adopt going concern basis in preparing the Financial Statements. The current revenue generations and commenced commercial production from 1 June 2010. The Financial Statements of this subsidiary company is included resources of the group provide sufficient fund to meet the present requirements of its existing business and operations. in the Consolidated Financial Statements according to BFRS 10 - “Consolidated Financial Statements”. 2.08 Applicable Accounting Standards 1.04 BSRM Steel Mills Limited- Associate Company The following BASs and BFRSs are applicable for preparation and reporting of the Financial Statements for the period BSRM Steel Mills Limited (BSRMSML) was incorporated on 16 April 2008 as a Private Limited Company and was under review: subsequently converted to a Public Limited Company on 12th November 2013. The main objective of BSRMSML is to BAS - 1 Presentation of Financial Statements manufacture and sell M.S. Billets. Paid up Capital of BSRMSML is Tk. 207.30 Crore divided into 20.73 Crore Ordinary BAS - 2 Inventories Shares of Tk. 10 each. BSRM Steels Limited has acquired 21.76% equity interest in BSRMSML i.e. 45,114,600 Ordinary BAS - 7 Statement of Cash Flows Shares of Tk. 10 each. BSRMSML has not started its commercial operation yet and is expected to start its commercial BAS - 8 Accounting Policies, Changes in Accounting Estimates and Errors production by 2015. BAS - 10 Events after the reporting period BAS - 12 Income Taxes 2. BASIS OF PREPARATION, PRESENTATION AND DISCLOSURES OF FINANCIAL STATEMENTS BAS - 16 Property, Plant and Equipment 2.01 Statement of Compliance BAS - 17 Leases The Financial Statements have been prepared on a going concern basis following accrual basis of accounting except for BAS - 18 Revenue Cash Flow Statement in accordance with the International Accounting Standards (IASs) and International Financial BAS - 19 Employee Benefits Reporting Standards (IFRSs) as adopted in Bangladesh by the Institute of Chartered Accountants of Bangladesh (ICAB) as BAS - 21 The Effects of Changes in Foreign Exchange Rates Bangladesh Accounting Standards (BASs) and Bangladesh Financial Reporting Standards (BFRSs). BAS - 23 Borrowing Costs BAS - 24 Related Party Disclosures 2.02 Basis of Reporting BAS - 27 Separate Financial Statements The financial statements are prepared and presented for external users by the company in accordance with identified BAS - 28 Investment in Associates & Joint Ventures financial reporting framework. Presentation has been made in compliance with the requirements of BAS 1 – “Presentation BAS - 33 Earnings Per Share of Financial Statements”. The financial statements comprise of: BAS - 36 Impairment of Assets a) A statement of financial position as at 31 December 2014 BAS - 37 Provisions, Contingent Liabilities and Contingent Assets BAS - 38 Intangible Assets b) A statement of profit or loss and other comprehensive income for the year ended 31 December 2014 BAS - 39 Financial Instruments: Recognition and Measurement c) A statement of changes in equity for the year ended 31 December 2014 BFRS - 5 Non-current Assets Held for Sale and Discontinued Operations d) A statement of cash flows for the year ended 31 December 2014 BFRS - 7 Financial Instruments: Disclosures BFRS - 10 Consolidated Financial Statements e) Notes, comprising a summary of significant accounting policies and explanatory information. BFRS - 12 Disclosure of interest in other entities BFRS - 13 Fair value measurement

2.09 Use of Estimates and Judgments the investee. The financial statements of subsidiary are included in the consolidated financial statements from the date 3.02.03 Depreciation Category Valuation The preparation of the Financial Statements in conformity with BAS and BFRS requires management to make judgments, that control commences until the date that control ceases. The consolidated financial statements have been prepared in Land is held on a freehold basis and is not depreciated considering the unlimited life. In respect of all other property, plant estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, accordance with BFRS 10 Consolidated Financial Statements. and equipment, depreciation is recognized in statement of profit or loss and other comprehensive income on diminishing Finished Goods Finished goods are valued at cost or net realizable value whichever is lower. liabilities, income and expenses. Actual results may differ from these estimates. balance method over the estimated useful lives of property, plant and equipment. Raw Materials Raw materials are valued at cost or net realizable value whichever is lower. BISCO is a subsidiary company of BSRMSL. The Company has made 95% investment in its subsidiary. BSRMSL is exposed Store items Based on weighted average method. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are to and has rights, to variable returns from the subsidiary and also has the ability to affect those returns through its power Depreciation is charged on addition from the month (date of service) of acquisition/addition and no depreciation is charged recognized in the period in which the estimates are revised and in any future periods affected. over BISCO. in the month of disposal. The depreciation method used reflects the pattern in which the asset's economic benefits are Weighted average cost method has been used to determine the cost of inventories. consumed by the entity. The depreciation charge for each period is recognized as an expense unless it is included in the In particular, information about significant areas of estimation, uncertainty and critical judgments in applying accounting The Financial Statements of the subsidiary company are incorporated on a line by line basis and the investment held by carrying amount of another asset. 3.06 Transactions in Foreign Currencies policies that have the most significant effect on the amounts recognized in the financial statements is included in the the parent is eliminated against the corresponding share capital of subsidiary in the consolidated financial statements. The Foreign currency transactions are recorded at the applicable rates of exchange ruling on the date of transactions. following notes: accounting policies of subsidiary have been changed when it is necessary to align them with the policies adopted by The principal annual rates and allocation method are as follows: Exchange difference on borrowings denominated in foreign currencies to finance the imported Plant & Machinery is BSRM Steels Limited (Parent entity). Category of Assets Rate of depreciation (%) Allocated to included in the carrying amount of related plant and/or machinery. Other monetary assets & liabilities, if any, denominated Note: 4 Property, plant and equipment The group eliminates in full intra-group assets and liabilities, equity, income, expenses and cash flows relating to Plant and Machinery 5% in foreign currencies at the Statement of Financial Position date are translated at the applicable rates of exchange ruling Note: 6 Intangible assets transactions between entities of the group (profits or losses resulting from intra-group transactions that are recognized in Motor Vehicle 20% at that date and the related exchange differences are recognized as finance income or cost in the Statement of Profit or Note: 10 Inventories assets, such as inventory and fixed assets, are eliminated in full). Furniture and Fixtures 20% (2013: 10%) Loss and Other Comprehensive Income respectively. Office Equipment 20% (2013: 10%) Note: 11 Trade and other receivables Non-controlling Interests 3.07 Investment in Associate Factory Buildings 5% Note: 17 Provision for gratuity The group presents non-controlling interests in its consolidated statement of financial position within equity, separately The company’s investment in associates is accounted for in the Financial Statements using the Equity Method in Roads and Pavements 10% (2013: 5%) from the equity of the owners of the parent. accordance with BAS 28: ‘Investment in Associates & Joint Ventures’. Investment in an associate is initially recognized at Note: 18 Current tax liability Computer & IT equipment 20% (2013: 10%) cost, and the carrying amount is increased or decreased to recognize the investor's share of the profit or loss of the Note: 19 Deferred tax liability The group attributes the profit or loss and each component of other comprehensive income to the owners of the parent investee after the date of acquisition. The investor’s share of investee’s profit or loss is recognized in the investor’s profit Depreciation methods, useful lives and residual values are reassessed at the reporting dates. Note: 25 Other liabilities and to the non-controlling interests. The proportion allocated to the parent and non-controlling interests are determined or loss. Adjustment after the date of acquisition to the carrying amount has been made for changes in the investor’s proportionate interest in the investee that arising from the revaluation of property, plant & equipment and from foreign on the basis of present ownership interests. Upon retirement of assets, the cost and related accumulated depreciation are eliminated from the accounts and resulting Note: 38 Contingent liabilities currency translation differences. The investor’s share of those changes is recognized in other comprehensive income of gain or loss is charged or credited to statement of profit or loss and other comprehensive income. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES the investor. 3.03 Capital Work-In-Progress 2.10 Changes in Accounting Policy The specific accounting policies selected and applied by the company’s directors for significant transactions and events Property, Plant and Equipment under construction/acquisition is accounted for as capital work-in-progress until The excess of company’s share of net assets’ value of associate over cost of investment has been recognized in profit or The company has applied the following BFRSs from the year 2013. that have material effect within the framework of BAS-1 “Presentation of Financial Statements”, in preparation and construction/acquisition is completed and measured at cost. loss as share of associate’s profit or loss during acquisition period as per provision of BAS-28. presentation of financial statements have been consistently applied throughout the year and were also consistent with BFRS - 10 Consolidated Financial Statements those used in earlier years. 3.04 Intangible Assets 3.08 Financial Assets BFRS - 12 Disclosure of interest in other entities The group initially recognizes loans and receivables and deposits on the date that they are originated. All other financial For a proper understanding of the financial statements, these accounting policies are set out below in one place as 3.04.01 Recognition and measurement assets are recognized initially on the trade date, which is the date the group becomes a party to the contractual provisions BFRS - 13 Fair value measurement prescribed by the BAS-1 “Presentation of Financial Statements”. The recommendations of BAS-1 relating to the format of Intangible Assets that are acquired by the company and have finite useful lives are measured at cost less accumulated of the instrument. financial statements were also taken into full consideration for fair presentation. amortization and accumulated impairment loss, if any. Intangible Assets are recognized when all the conditions for The group derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers These standards are applicable to companies from 1 January 2013. recognition as per BAS 38: “Intangible Assets” are met. The cost of an intangible asset comprises its purchase price and 3.01 Consistency any directly attributable cost of preparing the asset for its intended use. the rights to receive the contractual cash flows on the financial asset in a transaction in which substantially all the risks Unless otherwise stated, the accounting policies and methods of computation used in preparation of Financial Statements 2.11 Change in Accounting Estimate and rewards of ownership of the financial asset are transferred. for the period ended 31 December 2014 are consistent with those policies and methods adopted in preparing the Financial 3.04.02 Subsequent Costs From the year 2013, depreciation is charged on addition from the month (date of service) of acquisition/addition and no Financial assets include Short Term Investments; Trade and Other Receivable; Advances, Deposits and Prepayments; Loan Statements for the year ended 31 December 2013. Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset depreciation is charged in the month of disposal. Previously, full year’s depreciation was charged on addition irrespective to Related Companies and Cash and Bank balances etc. to which it relates. All other expenditures are recognized in profit or loss as incurred. of the date of acquisition/addition and no depreciation was charged in the year of disposal. 3.02 Property, Plant and Equipment 3.08.01 Trade and Other Receivables 3.04.03 Amortization The company in its Board Meeting held on 26 December 2013 has reviewed the useful life and residual value of all Trade and other receivables are initially recognized at cost which is the fair value of the consideration given in return. After 3.02.01 Recognition and Measurement Amortization is recognized in profit or loss on a straight line basis over the estimated useful lives of intangible assets, from property, plant and equipment and decided to change the depreciation rates for the following assets w.e.f. initial recognition, these are carried at cost less impairment losses, if any, due to un-collectability of any amount so Property, Plant and Equipment are stated at cost less accumulated depreciation except Land & land development and the date that they are available for use. The estimated useful lives and rates of amortization are as follows: 1January 2014: Factory Building which are carried at revalued amount, being fair values at the date of revaluation less subsequent recognized. accumulated depreciation and subsequent impairment losses, if any. Category of Assets Rate of amortization Useful lives Category of asset Current depreciation rate Previous depreciation rate Provisions for bad debts are shown in other liabilities. Provision for doubtful debts is made based on the company policy. Cost includes expenditures that are directly attributable to the acquisition of an asset. The cost of self-constructed / Software – old 33.33% 3 years Bad debts are written off on consideration of the status of individual debtors. Furniture & fixture 20% 10% installed assets includes the cost of materials and direct labor, any other costs directly attributable to bringing the asset Trade Marks 5% 20 years 3.08.02 Advances, Deposits and Prepayments Office equipment 20% 10% to the working condition for its intended use and the cost of dismantling and removing an item and restoring the site on Oracle eBS software 10% 10 years Advances are initially measured at cost. After initial recognition, advances are carried at cost less deductions, adjustments Computer & IT equipment 20% 10% which they are located. 3.05 Inventories or charges to other account heads such as Property, Plant and Equipment, Inventory or Expenses. Roads & pavements 10% 5% When parts of an item of Property, Plant and Equipment have different useful lives, they are accounted for as separate Deposits are measured at payment value. items (major components) of Property, Plant and Equipment. Nature of inventories 2.12 Reporting Period Inventories comprise Raw Materials (Billets and Melting Scrap), Packing Materials, Consumable Stores, Fuel and Prepayments are initially measured at cost. After initial recognition, prepayments are carried at cost less charges to profit or loss. The Financial Statements of the group cover one year from 1 January to 31 December and is followed consistently. 3.02.02 Subsequent Costs Lubricants & Finished Goods (MS Rods/Billets) etc. The cost of replacing part of an item of Property, Plant and Equipment is recognized in the carrying amount of the item, if it 3.08.03 Cash and Cash Equivalents 2.13 Basis of Consolidation and Disclosure of Interest in Other Entities is probable that the future benefit embodied within the part will flow to the company and its cost can be measured reliably. Valuation of the inventories Cash and cash equivalents comprise cash on hand and demand deposits, together with short-term, highly liquid Subsidiary is an enterprise controlled by the parent entity. Control exists when an investor is exposed, or has rights, to The costs of the day to day servicing of Property, Plant and Equipment are recognized in profit and loss as incurred. Inventories are measured at lower of cost and net realizable value. The cost of inventories includes expenditure incurred in investments that are readily convertible to a known amount of cash, and that are subject to an insignificant risk of changes variable returns from its involvement with the investee and has the ability to affect those returns through its power over acquiring these inventories and bringing them to their existing location and condition in accordance with BAS-2 “Inventories”. in value.

3.09 Financial Liabilities Deferred tax on revaluation surplus of land and land development has not been recognized in the Financial Statements on 3.20.02 Basic Earnings Per Share The group recognizes all financial liabilities on the trade date which is the date the group becomes a party to the the ground that income tax payable at source on capital gain during registration of sale of land is generally borne by the This has been calculated by dividing the basic earnings by the weighted average number of ordinary shares outstanding contractual provisions of the instrument. The group derecognizes a financial liability when its contractual obligations are buyer. Hence possibility of having income tax implication on land is very remote. during the year. Total discharged, cancelled or expired. Financial liabilities comprise Trade Creditors and other financial obligations. 3.15 Share Capital 3.20.03 Diluted Earnings Per Share 3.09.01 Trade and Other Payables Paid-up-capital represents total amount contributed by the shareholders and bonus shares issued by the company to the Diluted earnings per share is required to be calculated for the year when there is scope for dilution exists. Amount in Taka The group recognizes a financial liability when its contractual obligations arising from past events are certain and the ordinary shareholders. Incremental costs directly attributable to the issue of ordinary shares are recognized as expenses settlement of which is expected to result in an outflow from the company of resources embodying economic benefits. as and when incurred. Holders of ordinary shares are entitled to receive dividends as declared from time to time and are 3.21 Duty Drawback entitled to vote at shareholders' meetings. In the event of a winding up of the company, ordinary shareholders rank after Duty drawback claimed on export sales is adjusted against cost of imported raw materials. 3.10 Impairment all other shareholders. Creditors are fully entitled to any proceeds of liquidation before all shareholders. 3.22 Measurement of Fair Values 3.10.01 Financial Assets When measuring the fair value of an asset or liability, the entity uses market observable data as far as possible. Fair values - (5,228) (168,996) - (42,000) (8,686,489)

3.16 Employee Benefits - (40,500) 358,900) Financial assets are impaired if objective evidence indicates that a loss event has occurred after initial recognition of the The group maintains both defined contribution plan and defined benefit plan for its eligible permanent employees. are categorized into different levels in a fair value hierarchy based on the inputs used in the valuation techniques as assets and that the loss event had a negative effect on the estimated future cash flows of that assets that can be follows. estimated reliably. 3.16.01 Defined Contribution Plan Level 1: Quoted prices (unadjusted) in active markets for identical assets and liabilities. The group maintains a recognized provident fund @ 10% of basic pay (Equally contributed by employee & employer) for Financial assets not classified as at fair value through profit or loss, loans, receivables and investment in an equity all eligible permanent employees from 1st day of January 2010. The said fund is managed by the Board of Trustees. Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly (i.e. accounted investee are assessed at each reporting date to determine whether there is objective evidence that it is as prices) or indirectly (i.e. derived from prices). impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial 3.16.02 Defined Benefit Plan recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that The group maintains an unfunded gratuity scheme and provision in respect of which is made annually for the employees. Level 3: Inputs for the assets or liabilities that are not based on observable market data. can be estimated reliably. Gratuity payable at the end of each year is determined on the basis of following rules and regulations of the company. If the inputs used to measure the fair value of an asset or liability might be categorized in different levels of the fair value 3.10.02 Non Financial Assets Service length Payment basis hierarchy as the lowest level input that is significant to the entire measurement. The carrying amounts of the group's non-financial assets, other than inventories and deferred tax assets, are reviewed at Less than Five (5) years Nil Property, plant and equipment each reporting date to determine whether there is any indication of impairment. If any such indication exists then the The fair value of items of property, plant and equipment has been determined based on the depreciated replacement cost For Five (5) years and more Two (2) times of last month basic salary multiplied by year of services recoverable amount of the asset is estimated. An impairment loss is recognized if the carrying amount of an asset or its method and net realizable value method as applicable. - - - related cash-generating unit (CGU) exceeds its estimated recoverable amount. ------(10,332) (5,852,531) - - - 3.16.03 Workers' Profit Participation and Welfare Funds Equity and debt securities 3.11 Cash Flow Statement The company also recognizes a provision for Workers' Profit Participation and Welfare Funds @ 5% of net profit before tax Fair values of tradable equity and debt securities are determined by reference to their quoted closing price in active market Statement of Cash Flows is prepared principally in accordance with BAS 7 (Cash Flow Statement) and the cash flow from as per Bangladesh Labour Law, 2006. at the reporting date which are categorized under ‘Level 1’ of the fair value hierarchy. operating activities have been presented under direct method. 3.17 Revenue Recognition 3.23 Events After the Reporting Period 3.12 Provisions, Contingent Liabilities and Contingent Assets Revenue from sale of goods is measured at the fair value of the consideration received or receivable, net of returns and Events after the reporting period that provide additional information about the company's position at the date of Statement - A provision is recognized in the Statement of Financial Position when the group has a legal or contractual obligation as a allowances, trade discounts and rebates, if any. Revenue is recognized when the significant risks and rewards of of Financial Position or those that indicate the going concern assumption is not appropriate are reflected in the Financial result of a past event, it is probable that an outflow of economic benefits will be required to settle the obligation and a ownership have been transferred to the buyer, recovery of the consideration is probable, the associated costs and possible Statements. Events after the reporting period that are not adjusting events are disclosed in the notes when material. reliable estimate can be made of the amount of the obligation. Contingencies arising from claims, litigations, assessments, return of goods can be estimated reliably and there is no continuing management involvement with the goods. Sales fine, penalties etc. are recorded when it is probable that a liability has been incurred and the amount can be reasonably revenue is recognized when the goods are delivered. 3.24 Comparative Information - (8,644,489) - (163,768) - (318,400) estimated. Contingent assets are not recognized. Comparative information has been disclosed in respect of the year 2013 in accordance with BAS-1: Presentation of - (5,842,199)

3.18 Finance Income and Costs Financial Statements, for all numeric information in the financial statements and also the narrative and descriptive 0.05 0.20 0.05 0.20 0.20 0.10 0.20 3.13 Borrowing Costs information where it is relevant for understanding of the current year's Financial Statements. Interest and other costs incurred by the group in connection with the borrowing of funds are recognized as expense in the 3.18.01 Finance Income period in which they are incurred, unless such borrowing cost relates to acquisition / construction of assets in progress Interest income from bank deposits and loan to related-companies is recognized on accrual basis following specific rate 3.25 General 226,443,188 224,005,362 that are capitalized as per BAS 23 "Borrowing Costs". of interest in agreement with banks and related companies. i) Prior year's figures have been rearranged wherever considered necessary to ensure comparability with the current Taka Taka

2014 2013 - - 45,654,216 23,701,695 223,542,935 4,653,028 6,591,578 1,712,040 8,306,626 314,162,118 - - 15,755,715 14,351,569 - 329,473,090 140,862,730 2,330,869 13,459,837 9,854,059 66,128,705 235,200 2,388,239 2,659,700 2,805,652 378,265,980 472,662 1,493,315 224,005,362 - - 669,950,496 22,620,851 - 45,750,846 810,813,226 - 8,165,902 32,311,142 9,667,897 111,879,551 10,554,141 1,353,312 12,473,549 3,515,721 1,825,974 761,025,025 5,003,808 984,861,391 year. - 134,393,982 11,388,868 64,693,194 5,023,764 6,113,576 1,041,773 3,788,031 226,443,188 - 810,813,226 32,311,142 111,879,551 10,554,141 12,473,549 1,825,974 5,003,808 984,861,391 - 945,207,208 37,857,811 176,572,745 15,577,905 18,587,125 2,867,747 8,781,507 1,205,452,048 28.00 3,602,040 29.00 21,006,483 17,013,927 27.01 201,834,665 206,991,435 3.14 Taxation 3.18.02 Finance Costs Note Interest expenses except expenses related to acquisition/construction of assets, incurred during the year are charged to ii) Figures of 2013 have been restated due to recognition of share of profit / (loss) of Associates at the time of acquisition. 3.14.01 Current Tax Statement of Profit or Loss and Other Comprehensive Income on accrual basis.

The group has been maintaining provision for taxation using rates enacted at the reporting date as per Income Tax iii) Bracket figures denote negative. development Machinery Vehicles Building and Fixtures Equipment Pavements IT Equipment Land and Plant and Motor Factory Furniture Office Roads and Computer & Ordinance, 1984. The applicable rates are 27.5% for BSRMSL and for BISCO at reduced rate as per SRO 172/2009 dated 3.19 Other Operating Income 30 June, 2009. Other operating income includes interest income on delayed receipts from customers, gain / (loss) on sale of fixed assets and miscellaneous receipts. Other operating income is recognized as revenue income as and when realized. 3.14.02 Deferred Tax Deferred tax liabilities are the amount of income taxes payable in the future periods in respect of taxable temporary 3.20 Earnings Per Share (EPS) differences. Deferred tax assets are the amount of income taxes recoverable in future periods in respect of deductible The company calculates its earnings per share in accordance with Bangladesh Accounting Standard BAS-33 “Earnings temporary differences. Deferred tax assets and liabilities are recognized for the future tax consequences of timing per Share” which has been reported on the face of Statement of Profit or Loss and Other Comprehensive Income. differences arising between the carrying values of assets, liabilities, income and expenditure and their respective tax bases. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or 3.20.01 Basis of Earnings were not considered for revaluation. substantially enacted at the Statement of Financial Position date. The impact of changes on the account in the deferred This represents profit for the year attributable to ordinary shareholders and Non- Controlling shareholders. As there were i) Accountants (Representative of KPMG in Bangladesh) Chartered Rahman Huq, Name of valuer: ii) Market value approach for land and depreciated replacement cost approach for factory method : building. Valuation iii) Revaluation surplus capitalized on 31 December 2012. Date of Capitalization: iv) were registered in the name of company but yet to be muted and Kumira and land purchased from Modern Karilin Silk Mills Ltd. Boalkhali, 401.43 decimals land situated at Fouzdarhat, Total tax assets and liabilities has also been recognized in the statement of profit or loss and other comprehensive income as no preference shares requiring returns or dividends, the net profit after tax for the year has been considered as fully Notes: Land and Factory Buildings have been revalued at 31 May 2012 by an independent valuer At cost Balance as on 01 January 2013 Additions during 2013 Disposal during 2013 2,210,257,975 3,462,444,384 60,815,723 1,163,144,963 30,779,965 34,133,348 10,443,179 14,469,735 6,986,489,272 4.00 Property, plant and equipment - at revalued model plant and equipment - at revalued Property, 4.00

Administrative costs Total Balance as at 31 December 2013 Balance as on 01 January 2014 2,210,257,975 Additions during 2014 3,508,098,600 Disposal during 2014 2,210,257, 975 3,508,098,600 Balance as at 31 December 2014 1,386,687,898 35,432,993 40,724,926 84,199,018 84,199,018 12,155,219 2,210,257,975 Accumulated depreciation 22,735,861 7,300,292,490 1,386,687,898 Balance as on 01 January 2013 35,432,993 3,523,854,315 Charged for the year 2013 40,724,926 Adjustment for disposal during 2013 89,906,098 Balance as at 31 December 2013 12,155,219 1,716,160,988 Balance as on 01 January 2014 37,763,862 Depreciation Rate 22,735,861 54,184,763 7,300,292,490 12,390,419 25,353,561 Carrying amount 7,669,871,981 As at 31 December 2014 As at 31 December 2013 Depreciation allocated to: 2,210,257,975 2,210,257,975 Cost of sales 2,578,647,107 Selling & distribution costs 2,697,285,374 52,048,287 51,887,876 1,539,588,243 1,274,808,347 22,185,957 24,878,852 35,597,638 28,251,377 9,522,672 10,329,245 16,572,054 17,732,053 6,464,419,933 6,315,431,098 per BAS-12 ''Income Taxes''. attributable to the ordinary shareholders. Charged for the year 2014 Adjustment for disposal during 2014 Balance as at 31 December 2014

Annual Report 2014 100 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 101

Total Total Amount in Taka Amount in Taka - - - - (5,228) (168,996) - - - - (40,500) (358,900) - - - - (10,332) (5,852,531) - - - - (42,000) (8,686,489) - (9,985,100) (1,129,832) - - - (80,000) (11,194,932) - (5,842,199) - (8,644,489) - - (6,578,820) (4,708) - - - (34,538) (6,618,066) - (318,400) - (163,768) 0.05 0.20 0.05 0.20 0.20 0.10 0.20 0.05 0.20 0.05 0.20 0.20 0.10 0.20 2013

- 134,366,261 14,633,369 340,189,626 2,629,778 14,338,818 8,050,646 3,096,600 517,305,098 - - - - 669,950,496 140,862,730 22,620,851 171,443,645 9,854,059 8,165,902 42,028,565 9,667,897 2,388,239 1,353,312 2,805,652 3,515,721 472,662 886,717,824 1,493,315 199,905,222 - - 45,654,216 23,701,695 223,542,935 4,653,028 6,591,578 1,712,040 8,306,626 314,162,118 - 810,813,226 - - 32,311,142 134,393,982 213,472,210 10,554,141 11,388,868 12,473,549 41,798,061 1,825,974 5,023,764 6,113,576 5,003,808 1,086,454,050 1,041,773 3,788,031 203,548,055 - - 15,755,715 14,351,569 329,473,090 2,330,869 13,459,837 235,200 2,659,700 378,265,980 - 810,813,226 32,311,142 213,472,210 10,554,141 12,473,549 1,825,974 5,003,808 1,086,454,050 - 945,207,208 37,857,811 255,270,271 15,577,905 18,587,125 2,867,747 8,781,507 1,284,149,574 - - 1,270,547,936 50,000,410 195,526,858 13,427,373 21,414,983 2,619,568 7,659,865 1,561,196,993 - 268,967,198 15,203,689 88,779,865 5,736,541 8,985,782 4,347,175 4,477,622 396,497,872 - - 1,539,515,134 58,625,279 284,302,015 19,163,914 30,400,765 6,966,743 12,102,949 1,951,076,799 2014 Taka Taka Taka 3,602,040 21,006,483 17,013,927 development Machinery Vehicles Building and Fixtures Equipment Pavements IT Equipment 388,610,165 388,610,165 2,578,647,107 2,697,285,374 52,048,287 1,104,580,706 51,887,876 22,185,957 35,597,638 816,905,676 24,878,852 9,522,672 28,251,377 10,329,245 16,572,054 4,207,764,586 17,732,053 4,035,880,618 Land and Plant and Motor Factory Furniture Office Roads and Computer & 178,939,532 182,891,295 203,548,055 199,905,222 development Machinery Vehicles Building and Fixtures Equipment Pavements IT Equipment Land and Plant and Motor Factory Furniture Office Roads and Computer & depreciation not considered for revaluation. revaluation. for considered not amount Land and Factory Buildings have been revalued at 31 May 2012 by an independent valuer i) Accountants (Representative of KPMG in Bangladesh) Chartered Rahman Huq, Name of valuer: ii) Market value approach for land and depreciated replacement cost approach for factory method : building. Valuation iii) Revaluation surplus capitalized on 31 December 2012. Date of Capitalization: iv) were registered in the name of company but yet to be muted and were Kumira and land purchased from Modern Karilin Silk Mills Ltd. Boalkhali, 401.43 decimals land situated at Fouzdarhat, Total Notes: 4.a Consolidated Property, plant and equipment - at revalued model plant and equipment - at revalued Consolidated Property, 4.a

At cost Balance as on 01 January 2014 Additions/revaluation during 2014 Disposal during 2014 2,951,690,591 5,715,736,822 121,646,521 1,954,192,694 46,227,513 59,663,102 45,147,462 28,674,169 10,922,978,874 Balance as at 31 December 2014 2,951,690,591 Accumulated 5,850,103,083 Balance as on 01 January 2014 126,294,790 2,293,252,488 Depreciation Rate 48,857,291 74,001,920 53,198,108 Balance as at 31 December 2014 31,690,769 11,429,089,040 Carrying As at 31 December 2014 As at 31 December 2013 2,951,690,591 2,951,690,591 4,310,587,949 4,445,188,886 67,669,511 2,008,950,473 71,646,111 29,693,377 1,758,665,836 43,601,155 32,800,140 46,231,365 38,248,119 42,527,894 19,587,820 9,478,012,241 21,014,304 9,361,781,880 Charged for the year 2014 Adjustment for disposal during 2014 4.01 Property, plant and equipment - at cost model Property, 4.01 Balance as on 01 January 2013 Charged for the year 2013 Adjustment for Disposal during 2013 At cost Balance as on 01 January 2013 Additions during 2013 Disposal during 2013 388,610,165 3,462,444,384 60,815,723 806,834,951 30,779,965 34,133,348 10,443,179 14,469,735 4,808,531,450 Balance as at 31 December 2013 Balance as on 01 January 2014 Depreciation Rate Charged for the year 2014 Adjustment for Disposal during 2014 Balance at 31 December 2013 Balance as on 01 January 2014 388,610,165 Additions during 2014 Disposal during 2014 3,508,098,600 388,610,165 84,199,018 3,508,098,600 1,030,377,886 35,432,993 84,199,018 40,724,926 1,030,377,886 12,155,219 35,432,993 40,724,926 22,735,861 12,155,219 5,122,334,668 22,735,861 5,122,334,668 Balance as at 31 December 2014 Carrying amount 2014 As at 31 December, 2013 As at 31 December, Depreciation allocated to: Cost of sales Selling & distribution costs Administrative costs Balance as at 31 December 2014 Accumulated depreciation 388,610,165 3,523,854,315 89,906,098 1,359,850,976 37,763,862 54,184,763 12,390,419 25,353,561 5,491,914,159

Annual Report 2014 102 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 103 2014 2013 Taka Taka

Total 5.00 Capital work-in -progress Opening balance 202,756,077 220,688,383

Amount in Taka Add: Addition during the year 178,210,607 211,713,909 380,966,684 432,402,292 Less: Capitalized during the year (329,085,290) (229,646,215) 51,881,394 202,756,077

5.01 Details of Capital work-in -progress

Capitalized Closing balance Particulars Opening balance Addition during the year Civil Construction 202,598,872 126,329,213 (328,928,085) - Plant & Machinery - 51,881,394 - 51,881,394 Security training center at Caroline 157,205 - (157,205) - 202,756,077 178,210,607 (329,085,290) 51,881,394

These costs include costs incurred initially to construct property, plant and equipment (PPE). Construction costs are transferred to PPE when the construction is complete.

2014 2013 Notes Taka Taka 5.a Consolidated capital work in progress BSRM Steels Limited 5.00 51,881,394 202,756,077 BSRM Iron & Steel Co. Limited 239,358 54,672,399 52,120,752 257,428,476 6.00 Intangible assets Trade Mark 6.01 114,932 14,755 Software 6.01 33,100,400 68,952 33,215,332 83,707 - (9,985,100) (1,129,832) - - (6,578,820) - (4,708) - - (80,000) (11,194,932) - - (30,769) (6,614,297) 0.05 0.20 0.05 0.20 0.20 0.10 0.20 6.01 Intangible assets schedule 2014 2013 Trade Mark Software Taka Taka Cost Opening balance 19,300 202,800 222,100 222,100

Add: Addition during the year 106,000 33,378,555 33,484,555 - - - 134,366,262 14,633,369 340,189,626 2,629,777 14,338,819 - - 8,050,646 268,967,198 3,096,600 15,203,689 517,305,099 65,884,732 5,736,541 8,985,782 4,347,175 4,473,855 373,598,972 - 1,270,547,936 50,000,410 297,119,517 13,427,373 21,414,983 2,619,568 7,659,865 1,662,789,652 - - 1,539,515,134 58,625,279 362,999,541 19,163,914 30,400,765 6,966,743 12,102,951 2,029,774,327 Less: Disposal during the year - - - - Closing balance 125,300 33,581,355 33,706,655 222,100 605,846,988 605,846,988 4,310,587,950 4,445,188,886 67,669,511 1,573,942,936 71,646,111 29,693,376 1,300,763,165 43,601,156 32,800,140 46,231,365 38,248,119 42,527,894 19,587,818 6,697,161,100 21,014,304 6,558,035,607 development Machinery Vehicles Building and Fixtures Equipment Pavements IT Equipment Land and Plant and Motor Factory Furniture Office Roads Computer & Accumulated amortization Opening balance 4,545 133,848 138,393 70,504 Add: Amortized during the year - Note 29.00 5,823 347,107 352,930 67,889 Closing balance 10,368 480,955 491,323 138,393

Carrying amount 114,932 33,100,400 33,215,332 83,707 depreciation amount At cost Balance as on 01 January 2014 Additions/revaluation during 2014 Disposal during 2014 605,846,988 5,715,736,822 121,646,521 1,597,882,682 46,227,513 59,663,102 Charged for the year 2014 45,147,462 Adjustment for Disposal during 2014 28,674,169 8,220,825,259 4.a.i Consolidated Property, plant and equipment - at cost model Consolidated Property, 4.a.i Accumulated Balance as on 01 January 2014 Depreciation Rate Balance as at 31 December 2014 605,846,988 5,850,103,084 126,294,790 1,936,942,476 48,857,290 74,001,921 53,198,108 Balance as at 31 December 2014 31,690,769 Carrying 8,726,935,426 As at 31 December 2014 As at 31 December 2013

Annual Report 2014 104 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 105 2014 2013 Notes 2014 2013 6.a Consolidated intangible assets Taka Taka Taka Taka BSRM Steels Limited 6.00 33,215,332 83,707 Share capital 2,073,000,000 2,073,000,000 BSRM Iron & Steel Co. Limited 9,456,533 - Share money deposit 1,880,659,000 909,305,000 Less: Inter-company elimination - - Retained earnings (22,254,242) (7,552,182) 42,671,865 83,707 7.00 Intangible assets - Development phase (Software) Revaluation reserve 2,292,879,671 2,292,879,671 Opening Balance 47,718,801 18,474,671 Shareholders' equity 6,224,284,429 5,267,632,489 Expenditure incurred during the year 47,646,754 29,244,130 Transfer to intangible assets 6.01 (33,378,555) - Non-current liabilities 7,168,138,581 - Cost allocated and realized from related companies (61,987,000) - Current liabilities 1,423,352,712 834,288,912 - 47,718,801 Total liabilities 8,591,491,293 834,288,912 Total Equity & Liabilities 14,815,775,722 6,101,921,401 The Company developed Oracle EBS with assistance of PricewaterhouseCoopers (PWC) during this reporting period which went Net Assets Value (NAV) per share 30.03 25.41 live on 1st March 2014 and capitalized on December 2014. Decision has been taken at Board Meeting held on 24 December 2014 that total cost of this software were allocated to BSRM Steels Limited (35%), Bangladesh Steel Re-Rolling Mills Ltd. (35%), BSRM KPMG Bangladesh (Rahman Rahman Huq, Chartered Accountants, 102, Agrabad C/A, Chittagong) has been been revalued Steel Mills Limited (20%) and BSRM Iron & Steel Co. Ltd. (10%). All amounts have subsequently been realized from those the land of the Company in different locations in Bangladesh with assistance from Asian Surveyors Ltd., 28 Dilkhusha C/A, companies. Dhaka as at 30 November 2012. The valuation has been conducted using the market value method. As per revaluation 2014 2013 report, the net revaluation gain stood at Tk. 2,292,879,671. This revaluation gain has recognized in the books of the Notes Taka Taka Company in 2012. 7.a Consolidated Intangible assets - Development phase (Software) 2014 2013 Notes Taka Taka BSRM Steels Limited 7.00 - 47,718,801 BSRM Iron & Steel Co. Limited - - Revenue - - Less: Inter-company elimination - - Other income 120,000 90,000 - 47,718,801 Expenses (14,822,060) (9,861,817) 8.00 Investment Profit/(loss) for the year (14,702,060) (9,771,817) In subsidiary company-BSRM Iron & Steel Co. Limited 8.01 1,045,000,000 1,045,000,000 Profit attributable to the owners of the company (14,702,060) (9,771,817) In associate company-BSRM Steel Mills Limited 8.02 945,301,128 948,500,730

1,990,301,128 1,993,500,730 8.a Consolidated investment BSRM Steels Limited 8.00 1,990,301,128 1,993,500,730 8.01 Investment in subsidiary company- BSRM Iron & Steel Co. Ltd. BSRM Iron & Steel Co. Limited - - BSRM Steels Limited has acquired 95% equity interest in BSRM Iron and Steel Co. Limited (104,500,000 Ordinary Shares Less: Investment in subsidiary-BSRM Iron & Steel Co. Limited (1,045,000,000) (1,045,000,000) of Tk. 10 each) on 10 November 2010 in exchange of 104,500,000 Ordinary Shares of Tk. 10 each in BSRM Steels Limited. An amount of Tk. 1,045,000,000 being face value of shares issued against acquisition of this subsidiary has been shown 945,301,128 948,500,730 as investment in subsidiary at cost as per BAS 27. BSRM Steels Limited and BSRM Iron & Steel Co. Limited have been 9.00 Short term investment operating under common control. Name of the banks Rate of Interest IDLC Finance Limited 12.00% 2,216,000 2,000,000 8.02 Investment in associate company- BSRM Steel Mills Limited Dhaka Bank Limited 11.00% 10,966,182 9,979,238 BSRM Steels Limited has acquired 21.76% equity interest in BSRM Steel Mills Limited (BSRMSML) i.e. 45,114,600 Ordinary Habib Bank Limited 8.50% 10,300,000 10,200,000 Shares of Tk. 10 each. This investment has been shown as investment in associates as equity accounted investee and Mercantile Bank Limited 12.60% 2,048,869 1,841,679 recognized initially at cost as per BAS 28. BSRM Steels Limited and BSRM Steel Mills Limited have been operating under Pubali Bank Limited 8.75% 12,304,000 - common control. Profit or loss has been recognized using equity method of accounting. Reporting date of this company is Trust Bank Limited 11.25% - 16,181,278 31 December 2014. Standard Chartered Bank 7% ~ 10% 182,267,283 168,142,246 Movement of Investment in Associates 2014 2013 220,102,334 208,344,441 Taka Taka Term deposit with Dhaka Bank Limited was made against Opening Balance Share Application Money (IPO). Addition during the period 948,500,730 13,500,000 Investment in associate - 437,646,000 9.a Consolidated short term investment Share of profit /(loss) of equity accounted investee (associates) (3,199,602) (1,543,996) BSRM Steels Limited 9.00 220,102,334 208,344,441 Excess of proportionate net assets' value of associate over acquisition cost - 498,898,726 BSRM Iron & Steel Co. Limited 34,076,260 31,181,069 (3,199,602) 935,000,730 Closing Balance 945,301,128 948,500,730 254,178,594 239,525,510 Summary of financial information of equity accounted investee: Non-current assets 13,734,734,773 5,194,648,732 Current assets 1,081,040,949 907,272,669 Total assets 14,815,775,722 6,101,921,401

Annual Report 2014 106 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 107 10.00 Inventories 2014 2013 2014 2013 (Metric Ton) Taka Taka Notes Taka Taka Raw Material 11.04 Ageing of accounts receivables are as follows- Billets 182,813 8,684,672,880 519,919,793 Less than 3 months 2,201,670,586 1,116,481,050 Packing Materials 129 7,686,115 3,090,708 Over 3 months but less than 6 months 113,394,866 192,526,625 Direct Consumables 1,701,302 - Over 6 months 148,216,807 3,366,574,821 8,694,060,297 523,010,501 2,463,282,259 4,675,582,496 Finished Goods 11.a Consolidated trade and other receivables Finished Goods-Own production 37,225 1,881,977,698 4,504,426,159 BSRM Steels Limited 11.00 2,971,813,680 4,931,416,587 Finished Goods-Procured 147 8,702,296 52,542,652 BSRM Iron & Steel Co. Limited 1,215,218 279,277,730 37,372 1,890,679,994 4,556,968,811 Less: Inter-company receivables - (278,463,358) Stores and Spares 2,973,028,898 4,932,230,959 Mechanical stores 408,007,277 434,566,195 12.00 Current account with related companies MS Roll 18,533,808 18,568,553 Bangladesh Steel Re-Rolling Mills Limited 1,303,031,742 2,375,947,710 Electrical stores 199,091,899 122,752,568 BSRM Iron & Steel Co. Ltd. 542,787,176 - General stores 13,969,184 8,077,569 Chittagong Power Company Limited 263,263,550 173,725,550 Civil Store 21,951,183 - BSRM Wires Limited 53,086,805 84,194,983 Others 21,473,014 - BSRM Recycling Industries Limited 6,332,082 11,644,082 683,026,365 583,964,885 BSRM Logistics Limited 189,511,400 127,004,494 Fuel and Lubricants 6,690,083 21,029,349 BSRM Steels Mills Limited - 216,645,912 11,274,456,739 5,684,973,546 BSRM Ispat Limited 175,316,500 141,516,500 BSRM Metals Limited 32,070,000 150,000 H. Akbarali & Co. 39,999,321 17,420,043 2014 2013 Notes 2,605,398,576 3,148,249,274 Taka Taka All transactions among the related companies have been made through 10.a Consolidated inventories account payee cheques or bank transfers and interests were charged BSRM Steels Limited 10.00 11,274,456,739 5,684,973,546 on all related companies balances. BSRM Iron & Steel Co. Limited 2,360,021,212 2,200,038,730 Provision for unrealized profit (7,141,226) (1,656,093) 12.a Consolidated current account with related companies 13,627,336,725 7,883,356,183 BSRM Steels Limited 12.00 2,605,398,576 3,148,249,274 11.00 Trade & Other Receivables BSRM Iron & Steel Co. Limited 977,959,133 441,352,057 Trade Receivables 11.01 2,463,282,259 4,675,582,495 Less: Inter-company elimination (542,787,176) (441,352,057) Other Receivables 11.03 508,531,421 255,834,092 3,040,570,533 3,148,249,274 2,971,813,680 4,931,416,587 13.00 Advances, deposits and prepayments The directors have estimated that the above receivables are good Advances 13.01 989,896,920 757,603,830 and realizable. No provision has been kept against these receivables. Deposits 13.03 15,162,714 15,437,714 Prepayments 13.04 2,905,068 5,011,080 11.01 Trade Receivables Bangladesh Steel Re-Rolling Mills Ltd. 109,526,139 3,563,424,229 1,007,964,702 778,052,624 BSRM Steel Mills Limited 32,205,780 7,985,041 13.01 Advances BSRM Logistics Limited 259,600 - Staff loan 1,491,362 788,802 Advance Income tax-corporate 378,959,284 363,889,618 BSRM Recycling Industries Limited 75,839,766 - Against expenses 104,231,187 39,914,583 Other Parties 11.02 2,245,450,974 1,104,173,225 Bank guarantee margin 2,105,155 3,841,463 2,463,282,259 4,675,582,495 Advance against L/C 1,402,331 51,701,094 LC Margin 138,614,148 292,752,872 Trade VAT account (Godown) 13.06 13,349 7,070 11.02 Of these receivables, there are pending litigation against 21 parties (worth Tk. 25,278,950). These receivables are Secured VAT chargeable account (Godown) 4,389,210 2,872,731 by Post Dated Cheques. VAT current account 9,836,894 1,835,597 2014 2013 Share money deposit to BSRM Steel Mills Limited 13.02 348,854,000 - Notes Taka Taka 11.03 Other Receivables 989,896,920 757,603,830 Interest Receivables 405,237,502 165,989,342 Accrued Interest from FDR 11,102,876 11,585,422 13.02 The company in its 162nd Borad Meeting held on 4th November 2012 has decided to invest Tk. 1.00 billion to BSRM Steel DEDO and Others Receivables 92,191,043 78,259,328 Mills Limited (BSRMSML). Accordingly the Company has invested Tk. 451,146,000 and shares were also alloted by 508,531,421 255,834,092 BSRMSML. During the year the company deposited amounting to Tk. 200,000,000 and Tk. 148,854,000 on 11.08.14 & 14.08.14 respectively to BSRMSML's bank account no. 0003-0210022524 of NCC Bank Limited, Agrabad Branch, Chittagong as share money. Shares have not yet issued against of the said amount.

Annual Report 2014 108 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 109 2014 2013 14.02 Cash at Banks Notes Taka Taka 2014 2013 13.03 Deposits Name of the Banks Branch Account type Taka Taka Ansar/VDP 1,260,752 1,260,752 Agrani Bank Limited Laldighi East Current 3,176,816 2,931,662 Bangladesh Tele Commission Limited (BTCL) 24,000 24,000 Agrani Bank Limited- Escrow Laldighi East Escrow 39,097 40,597 City Cell 15,000 15,000 Agrani Bank Limited Colonel Hat Current 46,129 47,399 Power Development Board 3,703,020 3,703,020 Agrani Bank Limited Thomson Bridge Current 143,050 144,200 Ranks Tel 10,000 10,000 Al-Arafah Islami Bank Agrabad Current 7,384,949 3,047,101 Karnaphuli Gas distribution Co. Limited 9,179,192 9,179,192 Bank Alfalah Limited Agrabad Current - 10,026,042 Kolkata office premises 37,750 37,750 Bank Asia Limited Agrabad Current 4,394,195 325,164 Central Depository Bangladesh Limited 500,000 500,000 BASIC Bank Limited Dewanhat Current 1,115,653 2,136,013 BOC Bangladesh Ltd. 16,000 16,000 Commercial Bank of Ceylon PLC Agrabad Current 284,064 (40,542) Others 417,000 692,000 Dhaka Bank Limited Jubilee Road Current 6,711,630 3,561,238 Dutch Bangla Bank Limited Jubilee Road Current 102,118,536 26,925,216 15,162,714 15,437,714 Dutch-Bang Bank Limited Agrabad Current 92,678 4,820 13.04 Prepayments Eastern Bank Limited Agrabad Current 42,539 1,818,394 BSTI License fees 2,250,400 3,750,600 Habib Bank Limited Laldighi Current 39,405,029 14,205,777 Insurance 654,668 1,260,480 HSBC Agrabad Current (13,402,029) (7,354,660) 2,905,068 5,011,080 HSBC -STD A/c Agrabad STD 4,621 4,621 HSBC- USD Exporter's A/C Agrabad USD 3,854,947 3,153,407 HSBC-MDA USA A/C Agrabad USD 3,749,301 394,941 13.05 The directors consider that all the above advances, deposits and prepayments are either adjustable or recoverable in kind or in cash IFIC Bank Limited Agrabad Current 117,185 90,743 and that no provision against them are required at this stage. Islami Bank Bangladesh Ltd. Jubilee Road Current 19,234,398 230,008,827 Jamuna Bank Limited Khatungong Current 1,199,844 2,323,656 13.06 An amount of Tk. 23,053,915.27 was claimed by Custom, Excise & VAT authority, Bondor circle, Narayangonj vide nothi no. Mercantile Bank Limited Jubilee Road Current 1,308 63,323 04/VAT/Warehouse (02)/Bondor circle/2012/207 dated 3rd November 2014 for trade VAT on sale of 115,269 MT finished goods. The Mutual Trust Bank Limited CDA Avenue Current 26,725 - Company filed a writ petition no. 10833 of 2014 before the Hon'ble High Court Division of the Supreme Court of Bangladesh and the National Bank Limited Jubilee Road Current 3,868,827 14,776,447 court stayed the claim. In view of above no provision for this claim has been made in the financial statements. NCC Bank Ltd. Agrabad Current 1,170,659 13,899,558 NRB Bank Limited Agrabad Current 541,626 - One Bank Limited Agrabad Current 9,113,217 29,360 2014 2013 Prime Bank Limited OR Nizam Road Current 11,555,765 14,391,451 Notes Taka Taka Premier Bank Limited Agrabad Current 13,871 28,959 13.a Consolidated advances, deposits and prepayments Shahjalal Islami Bank Limited Jubilee Road Current 2,208,310 233,224 BSRM Steels Limited 13.00 1,007,964,702 778,052,624 Social Islami Bank Ltd. Jubilee Road Current 23,416 8,674 Sonali Bank Cable Shilpa, Khulna STD 157,976 2,125 BSRM Iron & Steel Co. Limited 386,429,804 487,435,047 Sonali Bank Kalibari Current 781,614 1,043,319 Less: Inter-company elimination - - Southeast Bank Ltd. Pahartali Current 6,354,895 4,205,940 1,394,394,506 1,265,487,671 Standard Chartered Bank Agrabad Current (26,556,810) (27,208,801) 14.00 Cash and cash equivalents Standard Chartered Bank Gulshan Current 3,366 4,941 Cash in hand 14.01 2,496,048 1,572,057 State Bank of India Chittagong Current 21,227 110,763 Cash at banks 14.02 211,644,064 328,937,480 The City Bank Limited VIP Road, Dhaka Current 26,422 93,346 Fixed deposit 14.05 306,952,664 264,027,441 The City Bank Limited Agrabad Current 3,863,593 36,198 The Trust Bank Limited CDA Avenue Current 62,341 9,712,927 521,092,776 594,536,979 United Commercial Bank Ltd Jubilee Road Current 11,572,855 1,685,951 14.01 Cash In hand Uttara Bank Limited Agrabad Current 868,817 15,746 Head office 157,473 179,120 Sub total 205,392,652 326,928,064 Factory office 397,339 1,000,000 Dhaka office 1,456,705 91,395 14.03 HSBC Bank - Note 14.04 Sylhet office 100,000 1,676 HSBC Bank Agrabad STD 425,651 438,884 Comilla office 65,000 65,000 HSBC Bank Agrabad EURO 28,226 28,324 Khulna office 68,925 200,000 HSBC Bank Agrabad GBP 759 759 Bogra office 200,000 34,823 HSBC Bank Agrabad USD 17,318 17,423 Rangpur office 20,000 - HSBC Bank Agrabad Dividend 5,779,458 1,524,026 Barishal office 30,606 43 Sub total 6,251,412 2,009,416 2,496,048 1,572,057 Grand Total 211,644,064 328,937,480 14.04 These accounts were opened for deposit of Share Money (IPO) and payment of dividend. Balances in these accounts represent amount refundable to the applicants to whom shares were not allotted and unclaimed dividend.

Annual Report 2014 110 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 111 14.05 Fixed Deposits 15.01 Classification of shares by holding 2014 2013 Name of the banks Purpose Rate of Interest Taka Taka Class by number of shares No. of Holders No. of Shares Holding (%) AB Bank Ltd. LC Margin 8.50% ~ 10% 42,126,633 60,135,974 Less than 500 3,718 483,234 0.14 Al Arafah Islami Bank Limited LC Margin 8.5% ~ 10.85% 22,186,616 21,522,899 From 500 to 5,000 8,732 12,415,621 3.63 Bank Al Falah Limited LC Margin 11.50% - 23,480,355 From 5,001 to 10,000 763 5,614,356 1.64 Bank Asia Limited LC Margin 8.25% ~ 9.25% 34,100,574 18,921,567 From 10,001 to 20,000 352 5,040,391 1.48 Commercial Bank of Ceylon plc LC Margin 5.50% 24,097,797 - From 20,001 to 30,000 139 3,439,469 1.01 The City Bank Limited LC Margin 9.25% ~ 10% 11,859,035 13,870,704 From 30,001 to 40,000 76 2,713,980 0.79 Dhaka Bank Limited LC Margin 8.25% 23,808,613 21,693,514 From 40,001 to 50,000 41 1,910,047 0.56 Dutch Bangla Bank Limited LC Margin 7.00% 30,926,025 10,440,975 IFIC Bank Limited LC Margin 8.50% 10,000,000 - From 50,001 to 100,000 92 6,624,808 1.94 Jamuna Bank Limited LC Margin 11.50% - 10,795,000 From 100,001 to 1,000,000 115 27,926,736 8.17 Mercantile Bank Limited BG & LC Margin 9% ~ 12.60% 10,461,644 12,595,113 From 1,000,001 to above 23 275,606,358 80.64 NCC Bank Limited LC Margin 8% ~ 8.50% 42,925,091 32,990,472 14,051 341,775,000 100.00 National Bank Limited LC Margin 9.00% 12,535,913 - 15.02 Composition of Shareholders at 31 December 2014 ONE Bank Limited LC Margin 8.75% 10,293,000 - Pubali Bank Limited LC Margin 11.00% - 10,710,000 Name of shareholders No. of Holders No. of Shares Holding (%) Shahjalal Islami Bank Limited LC Margin 8.50% 10,692,742 - Social Islami Bank Limited LC Margin 11.00% - 10,711,611 Sponsor Shareholders 7 165,361,665 48.38 Trust Bank Limited LC Margin 8.25% 10,412,485 - Foreign Shareholders 7 1,177,921 0.34 Uttara Bank Limited LC Margin 7.75% 10,526,496 16,159,257 Other Shareholders 14,037 175,235,414 51.28 306,952,664 264,027,441 14,051 341,775,000 100.00

2014 2013 2014 2013 Notes Taka Taka Notes Taka Taka 14.a Consolidated cash and cash equivalents 16.00 Long term borrowings BSRM Steels Limited 14.00 521,092,776 594,536,979 Term loan for BMRE 16.01 - 100,865,388 BSRM Iron & Steel Co. Limited 52,758,575 2,506,731 BD Finance Term Loan 16.02 167,469,149 216,802,336 573,851,351 597,043,710 IPDC Term Loan 16.03 58,304,999 107,382,845 Jamuna Bank Term Loan 16.04 3,969,313 - 15.00 Share capital Meghna Bank Term Loan 16.05 155,230,764 - Authorized capital ULC Term Loan 16.06 46,922,934 - 475,000,000 Ordinary Shares of Tk. 10 each 4,750,000,000 4,750,000,000 431,897,159 425,050,569 25,000,000 Preference Shares of Tk. 10 each 250,000,000 250,000,000 16.01 Term loan for BMRE 5,000,000,000 5,000,000,000 Due within one (1) year 21.07 72,176,164 67,214,272 Denomination of ordinary shares and preference shares of Tk. 100 each has Due more than one (1) year 16.00 - 100,865,388 been changed to Tk. 10 each in terms of the resolution in the Extra ordinary General Meeting of BSRM Steels limited held on 14th November 2011. 72,176,164 168,079,660

Issued, Subscribed and Paid-up capital Terms of BMRE loan: 145,000,000 Ordinary Shares of Tk.10 each 1,450,000,000 1,450,000,000 Lenders

Agrani Bank Ltd. has sanctioned an amount of Tk. 32 crore as term loan against BMRE. 104,500,000 Ordinary Shares of Tk.10 each fully paid-up for consideration other than cash 1,045,000,000 1,045,000,000 Total loan facilities: Tk. 32 crore.

21,750,000 Ordinary Shares of Tk.10 each Interest rate fully paid-up as Bonus Shares (For the Year 2009) 217,500,000 217,500,000 Interest rate is 12% per annum and will be calculated on half-yearly basis.

54,250,000 Ordinary Shares of Tk. 10 each Disbursement fully paid up as Bonus Shares (For the year 2010) 542,500,000 542,500,000 The first disbursement was made on 26.09.2010

16,275,000 Ordinary Shares of TK. 10 each 162,750,000 162,750,000 Repayments Above term loan will be re-paid by 48 monthly installments starting from October, 2011. Installment due within 31 December, 2014 Fully paid-up as Bonus Shares (For the year 2012) 3,417,750,000 3,417,750,000 were dully paid.

Annual Report 2014 112 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 113 Securities Securities: Registered Mortgage on project land, building on first ranking parri passu basis and hypothecation of Machinery, Furniture & Fixtures, Floating charge by way of hypothecation on all the movable assets of BSRMSL duly registered with RJSC, Legally Equipment etc. enforceable Corporate Guarantee of BSRM Limited, Pledge of dematted shares in the capital of BSRMSL covering 125% of exposure against this facility, Personal Guarantee of all the sponsor directors, Post dated cheques for the total amount, Post Purpose dated cheques for quarterly loan installments, Demand Promissory note along with letter of continuation For acquisition of plant and machineries to enhance the production from 375,000 Metric Tons per year to 500,000 Metric Tons Purpose: per year. To meet working capital requirement. 2014 2013 Notes 2014 2013 Taka Taka Notes Taka Taka 16.04 Jamuna Bank Term Loan 16.02 BD Finance Term Loan Due within one (1) year 21.07 6,626,212 - Due within one (1) year 21.07 48,417,560 33,197,664 Due more than one (1) year 16.00 3,969,313 - Due after more than one (1) year 16.00 167,469,149 216,802,336 10,595,525 - 215,886,709 250,000,000 Terms of Jamuna Bank Term Loan: Terms of BD Finance term loan: Lenders: Lenders: Jamuna Bank Limited has sanctioned an amount of Tk. 2.767 crore as term loan and disbursed a partial amount of Tk. 1.05 BD Finance has sanctioned an amount of Tk. 25 crore as term loan and disbursed the full amount within 2013. crore during the reporting period and remaining balance also disbursed on 12 January 2015. Total loan facilities: Tk. 25 crore. Total loan facilities: Tk. 2.767 crore. Interest rate: Interest rate: Interest rate is 15% (2013: 17%) per annum and will be calculated on monthly basis. Interest rate is 15.5% per annum.

Disbursement: Disbursement: Full disbursement was made on 26.08.2013 Full disbursement was made on 12.01.2015 Repayments Repayments Above term loan is being re-paid in 8 quarterly installments starting from September 2015. Above term loan is being re-paid in 60 monthly installments starting from September 2013. Securities: Securities: Modification of charge with RJSC on machinery & inventory installed through BMRE. Cross corporate guarantee of the Post dated cheques for the total amount, Post dated cheques for monthly loan installments, personal guarantee of all directors of the company and also personal guarantee of all directors. Signed security cheques covering each installment. company, corporate guarantee of H. Akberali & Co. Ltd. Purpose: Purpose: To import Magnet Cranes for own use. To meet working capital requirement. 2014 2013 Notes Taka Taka 16.05 Meghna Bank Term Loan 2014 2013 Notes Due within one (1) year 21.07 35,900,819 - Taka Taka Due more than one (1) year 16.00 155,230,764 - 16.03 IPDC Term Loan Due within one (1) year 21.07 50,125,183 42,617,155 191,131,583 - Due more than one (1) year 16.00 58,304,999 107,382,845 Terms of Meghna Bank Term Loan: 108,430,182 150,000,000 Lenders: Terms of IPDC Term Loan: Meghna Bank Limited has sanctioned an amount of Tk. 20 crore as term loan and disbursed the full amount within 2014.

Total loan facilities: Tk. 20 crore. Lenders: Industrial Promotional and Development Company of Bangladesh has sanctioned an amount of Tk. 15 crore as term loan and Interest rate: disbursed the full amount within 2013. Interest rate is 14% per annum. Disbursement: Total loan facilities: Tk. 15 crore. Full disbursement was made on 03.02.2014 Interest rate: Repayments Interest rate is 13% (2013: 15.5%) per annum. Above term loan is being re-paid in 54 monthly installments starting from September 2014. Securities: Disbursement: Lien of 29.20 lac shares of BSRM Steels Limited and personal guarantee of all directors of the company. Post dated cheques Full disbursement was made on 17.12.2013 covering the facility. Repayments Purpose: Above term loan is being re-paid in 12 quarterly installments starting from March 2014. To set up a warehouse at Jangal, Madanpur, Narayangonj.

Annual Report 2014 114 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 115 2014 2013 Year wise income taxes assessment status is as follows: Notes Taka Taka Accounting Assessment Opening balance Provided during Adjusted during Balance Taka Remarks 16.06 ULC Term Loan Year Year Taka the year Taka the year Taka Due within one (1) year 21.07 15,236,008 - Prior to 2010 - - - - Assessment completed Due more than one (1) year 16.00 46,922,934 - 2010 2011-2012 - 110,043,425 110,043,425 - Assessment completed 62,158,942 - 2011 2012-2013 110,043,425 12,872,260 (110,043,425) 12,872,260 Assessment completed Terms of ULC Term Loan: 2012 2013-2014 12,872,260 72,043,712 (12,872,260) 72,043,712 Assessment completed Lenders: 2013 2014-2015 72,043,712 437,489,805 (12,666,203) 496,867,314 Assessment completed United Leasing Company has sanctioned an amount of Tk. 7 crore as term loan and disbursed the full amount within 2014 2014 2015-2016 496,867,314 369,138,077 (370,912,803) 495,092,588 Return due by 15th July 2015 Total loan facilities: Tk. 7 crore. 18.01 The company, following decision of the Board of Directors in its Meeting held on 7 March, 2012 filed a Writ Petition on 22 Interest rate: March, 2012 before the High Court Division of Supreme Court of Bangladesh challenging the legality of Section 16CCC of Interest rate is 14% per annum. Income Tax Ordinance 1984 imposing minimum income tax of 0.50% of the gross receipts of the company regardless of profit or loss as per financial statements. Accordingly, the High Court issued a Rule Nisi calling the Government Authorities to show Disbursement: cause as to why Section 16CCC of the Income Tax Ordinance 1984 should not be declared to be illegal and of no legal effect Full disbursement was made on 29.05.2014 and pending hearing of the Rule restrained the Government Authorities from charging minimum tax under the said Section. In view of above, no provision for income tax up to 2012 envisaged u/s 16CCC has been made in the financial statements. Repayments Above term loan is being re-paid in 48 monthly installments starting from June 2014. 2014 2013 Notes Taka Taka Securities: 18.a Consolidated current tax liability Charge creation with RJSC on all fixed and floating assets covering value of loan. Personal guarantee of all directors and a BSRM Steels Limited 18.00 495,092,588 496,867,314 post dated cheque amount of Tk. 94,365,120 in favour of ULC to cover the loan. BSRM Iron & Steel Co. Limited - - Purpose: Less: Inter-company elimination - - To meet working capital requirement. 495,092,588 496,867,314 19.00 Deferred tax liability 2014 2013 Deferred tax liability has been calculated below at the applicable tax rate on the difference between the carrying value of property, plant Notes Taka Taka and equipment as per financial statements and tax written down value and financial position liability method for gratuity obligation.

16.a Consolidated long term borrowings Opening balance 680,299,907 498,962,191 BSRM Steels Limited 16.00 431,897,159 425,050,569 Provided during the year: BSRM Iron & Steel Co. Limited 182,703,317 286,752,492 Against temporary difference 55,334,491 187,965,255 Less: Inter-company elimination - - Adjusted during the year against impact of Depreciation on revaluation surplus (6,296,162) (6,627,539) 614,600,476 711,803,061 Closing balance 729,338,236 680,299,907 17.00 Defined benefit obligations - Gratuity Reconciliation of Deferred tax liabilities/(assets) are as follows- Opening balance 26,291,272 17,621,521 Carrying Tax Taxable/ (Deductible) Provision made during the period 27.04, 28 & 29 12,842,618 9,075,440 amount base temporary difference 39,133,890 26,696,961 Taka Taka Taka Payment made during the period (114,024) (405,689) a) As at 31 December 2014 39,019,866 26,291,272 Property, plant and equipment 4,254,161,959 1,563,003,053 2,691,158,906 17.a Consolidated defined benefit obligations - Gratuity Provision for gratuity (39,019,866) - (39,019,866) BSRM Steels Limited 17.00 39,019,866 26,291,272 Net taxable temporary difference 2,652,139,040 BSRM Iron & Steel Co. Limited 14,009,609 10,491,909 Applicable tax rate 27.5% Less: Inter-company elimination - - Deferred tax liability 729,338,236

53,029,475 36,783,181 2014 2013 18.00 Current tax liability Notes Taka Taka Opening balance 496,867,314 72,043,712 19.a Consolidated deferred tax liability Add: Provided during the year 369,138,077 496,867,314 BSRM Steels Limited 19.00 729,338,236 680,299,907 Less: Over Provision for Previous year - (59,377,509) BSRM Iron & Steel Co. Limited 159,869,074 91,279,340 369,138,077 437,489,805 889,207,310 771,579,247 866,005,391 509,533,517 20.00 Trade payable Adjusted during the year (370,912,803) (12,666,203) Bangladesh Steel Re-Rolling Mills Limited 45,173,981 - BSRM Logistics Limited 8,111,629 - Closing balance 495,092,588 496,867,314 BSRM Iron & Steel Co. Ltd. - 278,463,358

53,285,610 278,463,358 This represents amounts payable against supply of raw materials and services.

Annual Report 2014 116 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 117 2014 2013 Notes 2014 2013 Taka Taka Taka Taka 20.a Consolidated trade payable 21.05 Bank overdraft, SOD and cash credit BSRM Steels Limited 20.00 53,285,610 278,463,358 Bank Alfalah Limited - OD 94,503,386 - BSRM Iron & Steel Co. Limited - - AB Bank Limited - OD 204,285 28,625,854 Less: Inter-company elimination - (278,463,358) BRAC Bank Limited - OD 9,421,293 27,543,289 53,285,610 - Dhaka Bank Limited - OD 603,498 1,257,120 21.00 Short term borrowings Dutch Bangla Bank Limited - OD 138,509,041 80,308,184 Short term borrowings 21.01 17,024,368,151 13,164,955,518 National Credit and Commerce Bank Limited - CC (137,903,261) 35,259,447 Long term borrowings-current portion 21.07 228,481,946 196,694,374 National Credit and Commerce Bank Limited - SOD 1,923,174 32,918,138 17,252,850,097 13,361,649,893 Premier Bank Limited - SOD 23,677,876 - 21.01 Short term borrowings Premier Bank Limited - CC 20,239,270 7,872,498 Loan against Trust Receipt (LATR) 21.02 344,471,999 2,028,456,721 Pubali Bank Limited 13,001,323 3,047,002 Time loan 21.03 1,789,574,763 1,120,713,120 South Bangla Agriculture & Commerce Bank Limited - SOD 22,031,331 - Demand Loan 21.04 3,958,717,700 733,369,798 Uttara Bank Limited - CC 3,818,286 8,871,225 Bank overdraft and cash credit 21.05 190,029,502 225,702,757 190,029,502 225,702,757 Factoring Loan-United Leasing Co. Limited 34,515,394 25,036,422 Inward Foreign Documentary Bills for Collection-IFDBC 21.06 10,707,058,793 9,031,676,700 17,024,368,151 13,164,955,518 21.06 Details of inward foreign documentary bills for collection (IFDBC) 21.02 Loan against Trust Receipt (LATR) AB Bank Limited 592,605,088 920,036,413 Al Arafah Islami Bank Limited 1,327,378 440,342,677 Al Arafah Bank Limited 450,385,930 197,083,299 Bank Asia Limited - 1,350,343 Bank Alfalah Limited - 210,476,981 HSBC Limited 10,218,396 - Bank Asia Limited 1,060,461,498 239,635,083 IFIC Bank Limited 16,566,766 169,871,653 BRAC Bank Limited - OD - 236,801,534 Mercantile Bank Limited 13,744,673 - Commercial Bank of Ceylon plc. 428,166,895 - National Credit and Commerce Bank Limited 217,797,582 228,404,195 Dhaka Bank Limited 230,226,434 877,798,634 Premier Bank Limited 1,512,180 19,908,655 Dutch Bangla Bank Limited 625,207,492 216,031,576 Pubali Bank 1,088,343 447,213,190 Eastern Bank Limited 633,576,519 313,675,326 Shajalal Islami Bank Limited - 387,456,440 Habib Bank Limited 208,430,300 208,185,502 Trust Bank Limited - 250,488,715 HSBC Limited 589,317,090 666,800,916 Uttara Bank Limited 12,692,692 12,904,975 IFIC Bank Limited 443,406,915 - Social Islami Bank Limited 69,523,989 70,515,878 Islami Bank Limited 630,376,119 920,587,334 Mercantile Bank Limited 337,355,379 472,021,437 344,471,999 2,028,456,721 National Bank Limited 269,670,042 199,322,126 21.03 Time Loan BRAC Bank Limited 609,626,796 623,946,705 National Credit and Commerce Bank Limited 617,198,633 692,386,872 Commercial Bank of Ceylon Plc. - 193,703,195 ONE Bank Limited 221,151,545 - Dutch Bangla Bank Limited - 214,229,167 Prime Bank Limited 218,253,945 - Jamuna Bank Limited 432,360,045 - Pubali Bank Limited 275,307,365 - NRB Bank Limited 99,766,446 - Premier Bank Limited 192,529,940 - Uttara Bank Limited 507,922,630 - Shajalal Islami Bank Limited 187,870,474 671,557,211 United Commercial Bank Limited 139,898,846 88,834,053 Social Islami Bank Limited - 200,650,124 Standard Chartered Bank 1,038,702,710 438,241,194 1,789,574,763 1,120,713,120 21.04 Demand Loan The City Bank Limited 185,349,216 233,239,850 Bank Asia Limited 696,659,006 260,050,026 Trust Bank Limited 841,126,498 300,508,029 Eastern Bank Limited 1,172,323,988 350,505,612 United Commercial Bank Limited 210,264,969 508,207,842 Dutch Bangla Bank Limited 222,616,283 - Uttara Bank Limited 220,117,797 308,429,417 National Credit & Commerce Bank Limited 942,285,500 - 10,707,058,793 9,031,676,700 The City Bank Limited 884,666,839 - Standard Chartered Bank 40,166,084 - Trust Bank Limited - 25,568,783 IFIC Bank Limited - 97,245,377 3,958,717,700 733,369,798

Annual Report 2014 118 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 119 2014 2013 2014 2013 Notes Taka Taka Notes Taka Taka 21.07 Long term borrowings-current portion 23.a Consolidated liabilities for expenses This represent current portion of long term loans from financial BSRM Steels Limited 23.00 361,444,962 408,499,401 institutions which are repayable within next twelve months from BSRM Iron & Steel Co. Limited 62,714,149 51,508,777 January, 2015 and consist of as follows: Less: Inter-company elimination - - Syndicated term loan - 53,665,283 424,159,111 460,008,178 Term loan for BMRE 16.01 72,176,164 67,214,272 24.00 Provision for WPPF and Welfare Fund BD Finance Term Loan 16.02 48,417,560 33,197,664 Opening balance 95,872,044 68,253,148 IPDC Term Loan 16.03 50,125,183 42,617,155 Add: Provided during the year 79,677,893 95,872,044 Jamuna Bank Term Loan 16.04 6,626,212 - Less: Paid during the year (95,872,044) (68,253,148) Meghna Bank Term Loan 16.05 35,900,819 - Closing balance 79,677,893 95,872,044 ULC Term Loan 16.06 15,236,008 - 228,481,946 196,694,374 24.a Consolidated provision for WPPF and Welfare Fund 21.a Consolidated short term borrowings BSRM Steels Limited 24.00 79,677,893 95,872,044 BSRM Steels Limited 21.00 17,252,850,097 13,361,649,893 BSRM Iron & Steel Co. Limited 11,992,391 8,614,520 BSRM Iron & Steel Co. Limited 3,423,166,842 3,925,595,165 91,670,284 104,486,564 Less: Inter-company elimination - - 25.00 Other liabilities

20,676,016,939 17,287,245,058 Advance against sales 137,137,747 579,144,549 22.00 Current account with related companies Income Tax deducted at source from salary 2,047,117 1,107,287 BSRM Iron & Steel Co. Limited - 441,352,057 Security Deposit 15,888,625 12,131,184 - 441,352,057 22.a Consolidated current account with related companies Income Tax deducted at source-others 7,373,390 13,253,814 BSRM Steels Limited 22.00 - 441,352,057 VAT deducted at source 1,359,716 3,940,636 BSRM Iron & Steel Co. Limited 544,432,310 350,000 Earnest/Retention Money 17,703,841 22,385,338 Liability against fractional bonus share 1,163,929 1,163,929 Less: Inter-company elimination (542,787,176) (441,352,057) Unclaimed dividend 7,206,599 2,938,898 1,645,134 350,000 Liability against share application money 7,581,814 7,601,814 23.00 Liabilities for expenses Interest payable 3,041,622 130,410,027 Audit Fees 445,500 569,250 Provision for bad debts 621,777 662,618 Printing and stationeries 372,613 1,163,769 Provident fund 1,822,746 728,168 Brokerage and commission 65,400,000 36,312,574 202,948,923 775,468,260 Bank Guarantee 17,707,745 15,961,554 Income Tax and VAT deducted at source have subsequently been C & F Bill Payable 158,774 435,314 deposited to the Government Exchequer. Advertisement expense 45,723,444 81,103,193 25.a Consolidated other liabilities Godown rent - 121,250 BSRM Steels Limited 25.00 202,948,923 775,468,260 Imprest cash settlement - 276,226 BSRM Iron & Steel Co. Limited 110,956,871 9,154,698 Insurance Payable 7,177 94,119 Less: Inter-company elimination - - Liability against supply of goods 21,016,850 8,153,418 313,905,794 784,622,958 Carrying expenses 157,196,454 144,550,583 26.00 Revenue Gas bill payable 6,219,628 9,219,089 Xtreme-500W 36,882,370,602 35,257,582,572 Pixel Studio - 3,060 D-Bar Grade-B420DWR 97,097,872 - Salary & Allowances 17,547,862 14,735,911 D-Bar GR 400 941,661,831 419,315,586 Travelling Bill 750 308,133 D-Bar Grade-75 223,489,460 155,277,483 Rent payables 6,805 70,539 D-Bar Grade-60 - 5,337,068 Electrical supplies - 12,960 D-Bar GR300 - 2,918,681 Concord Ready Mix & Concrete Products Ltd - 1,536,000 Miss Rolls 391,316,989 388,619,544 Electricity Charges - 28,645 Generator rent - 59,500 38,535,936,754 36,229,050,933 Consultancy fees 559,930 17,700 26.01 Break-up of Revenue Fee/Agency Fee 12,006 758,886 Local sales 37,479,406,719 35,493,089,539 Domiciliary expenses 692,285 582,401 Export sales 1,056,530,035 735,961,394 Inspection expense 28,425 14,305 38,535,936,754 36,229,050,933 Sales promotion expense 2,315,345 321,125 26.a Consolidated revenue Production incentive payables 945,588 - BSRM Steels Limited 26.00 38,535,936,754 36,229,050,933 Others 25,087,781 92,089,896 BSRM Iron & Steel Co. Limited 9,374,112,186 8,861,773,842 Less: Inter-company sales by subsidiary (9,338,943,637) (8,795,956,495) 361,444,962 408,499,401 38,571,105,303 36,294,868,280

Annual Report 2014 120 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 121 2014 2013 2014 2013 Notes Taka Taka Notes Taka Taka 27.00 Cost of sales Less: Sold during the year Cost of sales- own production 27.01 35,455,365,915 32,817,307,393 From own production 676,161 599,542 Cost of sales-finished goods procured and sold 27.02 273,246,337 161,594,959 From procured sources 3,642 2,393 35,728,612,252 32,978,902,353 679,803 601,935 27.01 Cost of sales-own production Closing stock 37,372 89,458 Opening stock of raw materials 523,010,501 3,797,786,784 Add: Purchase during the year 39,463,570,525 29,192,108,426 27.04 Factory overhead Ex-Gratia allowance 162,950 142,400 39,986,581,026 32,989,895,210 Bonus 4,311,950 3,932,341 Less: Closing stock of raw materials 10.00 (8,694,060,297) (523,010,501) Gratuity 17.00 6,589,631 7,167,219 Raw materials consumed 31,292,520,729 32,466,884,709 Carrying charges -Raw materials 68,233,484 111,427,071 Add: Manufacturing expenses Computer expenses 122,535 5,400 Salary and wages 112,253,880 104,179,484 Consulting Fees 1,110,950 425,662 Overtime 1,925,779 1,598,567 Carrying charges -Finished goods 57,413,326 66,227,526 Casual wages 10,114,057 3,673,460 Fees & Renewals 622,235 - Factory overhead 27.04 173,669,592 224,264,735 Conveyance expenses 7,262,544 8,576,661 Power 352,134,455 317,826,082 Car Allowance 1,055,364 1,091,664 Gas 105,255,777 117,831,463 Motor Car Expenses 291,648 112,193 Management expenses 171,664,309 163,550,409 Travelling Expenses 602,993 962,122 Fuel and Lubricants consumption 202,914,871 55,451,243 Testing charges 32,300 448,565 Mechanical store consumption 133,451,642 135,150,593 Entertainment 3,770,277 3,180,682 MS Roll consumption 39,629,960 46,329,747 Factory office expenses 162,370 100,676 Electrical store consumption 27,557,879 22,009,748 Generator expenses 244,178 340,000 General store consumed 5,217,351 10,783,448 Guest house expenses 525,151 475,924 Warehouse rent 2,772,508 1,890,563 Guest house rent 1,474,610 1,272,617 Depreciation 4.00 201,834,665 206,991,435 Insurance Expenses 3,463,926 3,802,764 1,540,396,725 1,411,530,978 Leave Assistance 95,000 190,000 Cost of Goods Manufactured 32,832,917,454 33,878,415,687 Medical expenses 1,418,688 620,020 Add: Opening stock of Finished Goods 4,504,426,159 3,443,317,865 Mobile/Telephone expenses 13,200 - 37,337,343,613 37,321,733,552 Domiciliary Expenses 5,958 522,633 Less: Closing stock of Finished Goods 10.00 (1,881,977,698) (4,504,426,159) Paper and periodical 7,706 7,154 Cost of sales - own production 35,455,365,915 32,817,307,393 Postage and telegram 20,025 39,672 27.02 Cost of sales-finished goods procured and sold Electric expenses 192,853 356,133 Opening stock of finished goods 52,542,652 15,067,236 Printing 28,808 - Add: Finished goods purchased from outside 229,405,981 199,070,375 Stationery 1,835,854 1,774,997 281,948,633 214,137,611 Repairs and maintenance 12,559,452 10,990,245 Less: Closing stock of finished goods 10.00 (8,702,296) (52,542,652) Uniform expenses 39,626 72,395 Cost of sales-finished goods procured and sold 273,246,337 161,594,959 173,669,592 224,264,735 27.a Consolidated cost of sales 27.03 Quantitative movement of inventories 2014 2013 BSRM Steels Limited 27.00 35,728,612,252 32,978,902,353 Raw Materials M. Ton M. Ton BSRM Iron & Steel Co. Limited 8,687,937,171 8,348,380,303 Opening stock 10,744 71,252 Less: Inter-company sales by subsidiary to BSRM Steels Limited (9,338,943,637) (8,795,956,495) Add: Imported during the year 567,543 414,930 Less: Adjustment for unrealized profit on opening inventory (1,656,093) (66,427,404) Add: Purchased from related companies 242,774 174,361 Add: Provision for unrealized profit on closing inventory 7,141,226 1,656,093 821,061 660,543 Less: Consumed /Sold during the year 640,892 649,799 35,083,090,919 32,466,554,850 Add: Adjustment 2,644 - 28.00 Selling and distribution costs Closing stock 182,813 10,744 Salaries & Allowances 49,159,781 41,417,115 Advertisement 162,722,247 176,345,223 Finished Goods Opening stock 89,458 58,070 Brokerage and commission 151,012,413 196,743,498 Add: Produced during the year 623,918 630,305 Carriage on sales 217,512,214 230,009,222 Add: Purchased from related companies 3,799 3,023 Conveyance expenses 3,246,826 2,014,140 Add: Stock adjustment - (5) Car allowance 1,718,000 1,363,500 Stock available for sale 717,175 691,393

Annual Report 2014 122 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 123 2014 2013 2014 2013 Notes Taka Taka Notes Taka Taka Motor car expenses 3,076,359 - Motor cycle allowance 427,750 311,943 Motor cycle allowance 941,787 686,813 Repair and maintenance 6,428,342 5,741,629 Depreciation expenses 4.00 3,602,040 - Generator expenses 57,198 1,238,209 Export charges 2,871,302 1,814,665 Office & miscellaneous expenses 2,517,140 2,683,721 Electricity expenses-Depot 1,405,071 1,075,747 Office rent 5,985,060 6,252,372 Entertainment 17,787,642 14,620,826 Postage expenses 430,453 763,726 Fees & Renewals 1,252,516 1,091,358 Printing 233,118 2,739,846 Generator Rent & fuel 138,975 - Stationery 3,438,532 4,051,003 Gratuity expenses 17.00 2,829,537 863,488 Paper and periodicals 549,988 505,760 Internet expenses 429,309 17,197 Telephone expenses 1,551,198 2,877,693 Loss on Goods in Transit 437,356 509,754 Training expenses 965,129 1,777,577 Legal expenses 61,760 264,867 Traveling expenses 5,423,925 5,943,386 Leave assistance 120,000 145,000 Depreciation 4.00 21,006,483 17,013,927 Medical expenses 488,968 - Amortization 6.01 352,930 67,889 Office expenses 2,441,402 2,569,841 Advertisement 714,637 - Professional & consultant fee 168,900 - Electricity expenses 2,173,679 1,494,075 Printing Charges 4,644,149 7,027,547 Domiciliary expenses 507,409 565,123 Sales promotion expenses 32,912,986 53,054,719 Maternity Scheme Benefit 395,097 345,188 Stationary expenses 447,304 - Hospitalization scheme 413,071 455,034 Paper & periodicals 82,069 44,661 Medical expenses 477,961 20,107 Repair & Maintenance 186,081 - Health check-up scheme 36,140 500 Travelling expenses 6,550,906 5,012,537 Leave assistance 370,000 265,000 Testing Charges 1,629,420 425,108 249,599,115 200,241,712 Warehouse rent 3,101,367 2,327,077 29.01 Directors' remuneration 672,978,687 739,443,903 Details of directors' remuneration paid during the year are as follows:

28.a Consolidated selling and distribution cost Name Gross Income Tax Net Paid BSRM Steels Limited 28.00 672,978,687 739,443,903 Remuneration Deducted BSRM Iron & Steel Co. Limited - - Mr. Alihussain Akberali - Chairman 19,808,625 4,951,125 14,857,500 672,978,687 739,443,903 Mr. Aameir Alihussain - Managing Director 16,811,500 4,201,500 12,610,000 Mr. Zohair Taherali - Director 9,011,500 2,251,500 6,760,000 29.00 Administrative costs Mrs. Tehseen Zohair Taherali - Director 4,991,500 1,246,500 3,745,000 Directors' remuneration 29.01 51,414,050 30,707,975 Mrs. Sabeen Aameir - Director 731,125 71,575 659,550 Salaries and allowances 87,481,330 72,880,152 Mr. Mono Ranjan Dey - Independent Director 59,800 7,800 52,000 Fees and renewals 1,899,407 2,517,507 Audit and other fees 580,750 973,450 Total 51,414,050 12,730,000 38,684,050 Bonus 3,071,902 3,826,111 In addition to remuneration, directors avail company vehicles for transportation purposes. No amount is lying as receivable from the directors. Gratuity expenses 17.00 3,423,450 1,044,733 th Professional & Consulting fee 1,592,048 - Mrs. Sabeen Aameir was resigned from the Board w.e.f. 15 September 2014 due to her busyness with other business. Now the Board consists of five Directors including one Independent Director. Conveyance expenses 3,283,278 2,036,752 CSR expenses 4,060,407 3,046,660 2014 2013 Donation and subscriptions 18,878,706 11,508,807 Notes Taka Taka Entertainment 8,716,744 7,434,110 29.a Consolidated administrative cost Internet expenses 3,036,591 1,245,495 BSRM Steels Limited 29.00 249,599,115 200,241,712 Insurance expenses 48,533 - BSRM Iron & Steel Co. Limited 33,761,165 33,107,548 General expenses - 1,121,754 283,360,280 233,349,260 Legal expenses 417,925 677,094 30.00 Other operating income Land revenue 261,177 321,681 Miscellaneous income 5,403,222 3,920,950 Gain/(loss) on sale of fixed assets 2,683,928 14,538 Motor car expenses 2,633,634 1,710,896 8,087,150 3,935,488 Motor cycle expenses 32,302 74,929 30.a Consolidated other operating income Motor car repair 1,184,817 1,135,279 BSRM Steels Limited 30.00 8,087,150 3,935,488 Motor cycle repairs 14,578 96,276 BSRM Iron & Steel Co. Limited 8,274,014 1,229,622 Car allowance 3,112,246 2,768,344 16,361,164 5,165,110

Annual Report 2014 124 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 125 2014 2013 2014 2013 Notes Taka Taka Taka Taka 31.00 Finance costs 36.00 Earnings per share (EPS) Interest on cash credit 55,405,407 33,887,932 36.01 Basic EPS Interest on LATR 225,015,681 293,552,549 Net profit after tax 1,086,207,806 1,693,468,511 Interest on demand and time loan 579,360,172 248,036,627 Number of ordinary shares at the year end 341,775,000 341,775,000 Interest on syndicated term loan 1,449,707 55,764,111 Weighted Average number of ordinary shares outstanding during the year 341,775,000 341,775,000 Interest on term loan 88,772,216 38,430,069 Basic EPS 3.18 4.95 Bill collection charge 863,649 6,077,364 Bank charges & others 29,132,985 8,542,491 Earnings per share (EPS) has been computed by dividing the net profit after tax (NPAT) by the weighted average number Bank guarantee commission 792,339 518,851 of ordinary shares outstanding as on 31 December 2014 as per BAS-33" Earnings Per Share". No diluted EPS was Interest income from loan to related companies (493,811,096) (48,913,072) required to be calculated for the year since there was no scope for dilution of shares during the year. 486,981,060 635,896,922 31.a Consolidated finance cost 2014 2013 BSRM Steels Limited 31.00 486,981,060 635,896,922 Taka Taka BSRM Iron & Steel Co. Limited 432,209,441 339,404,144 36.a Consolidated earnings per share (CEPS) Less: Inter Company Finance Income (45,587,512) (130,410,027) Net profit after tax 1,239,217,057 1,891,908,646 873,602,989 844,891,039 Weighted Average number of ordinary shares outstanding during the year 341,775,000 341,775,000 32.00 Finance income Consolidated earnings per share (CEPS) as per share-attributable to Interest on IPO deposit 4,288 6,869 equity holders of the parent 3.63 5.54 Interest income from FDR 50,302,623 50,727,333 Interest on STD 5,482 21,717 37.00 Related party transactions Foreign currency exchange gain 33.00 129,685,151 177,914,493 During the period the Company carried out a number of transactions with related parties in the normal course of business Interest on trade debtors 7,707,535 10,268,941 on an arms' length basis. Names of those related parties, nature of those transactions and their total value have been set 187,705,079 238,939,353 out in accordance with the provisions of BAS-24: Related Party Disclosures. 32.a Consolidated finance income Nature Mode of Outstanding as BSRM Steels Limited 32.00 187,705,079 238,939,353 Name Relationship BSRM Iron & Steel Co. Limited 11,369,396 30,178,931 Transactions transaction on of 31.12.2014 Less: Inter Company Finance Income (45,587,512) (130,410,027) Bangladesh Steel Re-Rolling Mills Shareholder Material supply/Short term Market price 1,303,031,742 153,486,963 138,708,257 Limited Loan/Sale of Rod 33.00 Foreign currency exchange gain/(loss) BSRM Wires Limited Affiliated Company Material supply/STL Market price 53,086,805 Realized foreign currency transaction gain/ (loss) 33.01 98,716,817 184,510,982 BSRM Iron and Steel Co. Limited Subsidiary Inter Company Transactions Market rate 542,787,176 BSRM Ispat Limited Affiliated Company Inter Company Transactions Market rate 175,316,500 Unrealized foreign currency translation gain/ (loss) 33.02 30,968,334 (6,596,489) BSRM Steels Mills Limited Associate Inter Company Transactions Market rate - 129,685,151 177,914,493 BSRM Logistics Limited Affiliated Company Inter Company Transactions Market rate 189,511,400 33.01 Foreign currency transaction gain/ loss BSRM Recycling Industries Ltd. Affiliated Company Inter Company Transactions Market rate 6,332,082 This represents net gain/(loss) on transaction in foreign currency during the year BSRM Metals Limited Affiliated Company Inter Company Transactions Market rate 32,070,000 H. Akbarali & Co. Limited Affiliated Company Inter Company Transactions Market rate 39,999,321 33.02 Foreign currency translation gain/loss Chittagong Power Company Ltd. Affiliated Company Inter Company Transactions Market price 263,263,550 This represents net gain/(loss) on translation of foreign currencies into Bangladeshi Taka at the rate prevailing on reporting date. 38.00 Contingent liabilities 2014 2013 Contingent liabilities at the reporting date are as follows: Notes Taka Taka 2014 2013 34.00 Other Non Operating Income - - Taka Taka 38.01 Bank guarantee 34.a Consolidated Other Non Operating Income IFIC Bank Limited 15,961,555 23,389,555 BSRM Steels Limited - - HSBC 779,500 776,301 BSRM Iron & Steel Co. Limited 7,570,500 7,560,000 Trust Bank Limited 912,431 - 7,570,500 7,560,000 Al Arafah Islami Bank Ltd. 2,636,194 2,636,000 35.00 Share of profit of associate (Net of tax) Mercantile Bank Limited- Jubliee Road Branch 10,912,500 10,912,500 Net profit attributable to the shareholders' of associate (14,702,060) (9,771,817) 31,202,180 37,714,356 Ownership 21.76% 21.76% 38.02 L/C liabilities Net profit / (Loss) attributable to BSRM Steels Ltd.* (3,199,602) (1,543,996) AB Bank - 193,249,391 Excess of proportionate net assets' value of associate Al Arafah Islami Bank Limited - 232,824,701 over acquisition cost - 498,898,726 Bank Asia Limited, Agrabad Branch - 11,769,085 (3,199,602) 497,354,730 Mercantile Bank Limited, Jubilee Road Branch - 128,113,563 * Share of loss from BSRM Steel Mills Limited has been calculated from the day it has become an associate i.e. 11 April 2013

Annual Report 2014 126 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 127 2014 2013 a) Exposure to credit risk Notes Taka Taka The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was: IFIC Bank Limited - 11,430,805 2014 2013 Commercial Bank of Ceylon - 231,231,000 Taka Taka Shahjalal Islami Bank Limited, Jubilee Road Branch - 236,698,789 Trade receivable-Local customer 2,463,282,259 4,675,582,495 State Bank of India - 124,588,125 Other Receivables 508,531,421 255,834,092 United Commercial Bank Limited, Jubilee Road Branch - 209,370,800 Advance, deposit and prepayments 1,007,964,702 778,052,624 Islami Bank Bangladesh Limited - 1,697,335,848 Cash and bank balances 521,092,776 594,536,979 National Credit & Commerce Bank Limited - 220,277,861 Jamuna Bank Limited - 11,631,390 4,500,871,158 6,304,006,190 b) Ageing of receivables - 3,308,521,358 Dues within 3 months 2,201,670,586 1,116,481,050 38.03 Minimum tax liability under section 16 CCC of ITO,1984 18.01 278,127,327 278,127,327 Dues over 3 months but less than 6 months 113,394,866 192,526,625 Dues over 6 months 148,216,807 3,366,574,821 38.04 Claim against trade VAT by Customs, Excise & VAT authority 13.06 23,053,915 - 2,463,282,259 4,675,582,496 38.05 Capital expenditure commitment c) Impairment losses - - The company has signed an agreement with suppliers for supplying and commissioning of machineries to increase the Total impairment loss at the reporting date - - production capacity from 600,000 MT to 700,000 MT per annum. Total approximate cost to complete the modernization scheme will be Taka 45.00 crore. The modernization work is expected to be completed by July 2015. d) Credit exposure by credit rating 39.00 Production capacity As on 31 December 2014 Installed Capacity (In M. Ton) yearly 600,000 600,000 Credit rating Amount (%) Production (In M. Ton) 623,918 630,305 Trade receivable NR 2,463,282,259 54.73% Capacity utilized (%) 104 105 Other receivables NR 508,531,421 11.30% Advance, deposit and prepayments NR 1,007,964,702 22.39% The above mentioned production capacity represents the normal production capacity of BSRM Steels Ltd. (i.e. Parent Company) only. Cash and Bank Balances Cash in hand 2,496,048 0.06% 40.00 Employees Cash at bank 518,596,728 11.52% Number of employees whose salary was below Tk. 3,000 - - Agrani Bank Limited AAA 3,405,092 0.08% Number of employees whose salary was above Tk. 3,000 553 573 AB Bank Limited AA3 42,126,633 0.94% 553 573 Al - Arafah Islami Bank Limited AA3 29,571,565 0.66% Bank Asia Limited AA3 38,494,769 0.86% The above mentioned number of employees represent employees working for BSRM Steels Ltd. (i.e. Parent Company) only. Basic Bank Limited CCC1 1,115,653 0.02% Commercial Bank of Ceylon AAA 24,381,861 0.54% 41.00 Even after the reporting period Dhaka Bank Limited A1 30,520,243 0.68% The Board of Directors in their meeting held on 31 March 2015 recommended 15% Cash dividend for the year 2014. Dutch Bangla Bank Limited AA1 133,137,239 2.96% 42.00 Financial risk management Eastern Bank Limited AA 42,539 0.00% Bangladesh Financial Reporting Standard BFRS 7 - Financial Instruments: Disclosures - requires disclosure of information Habib Bank Limited AA- 39,405,029 0.88% relating to both recognized and unrecognized financial instruments, their significance and performance, accounting policies, HSBC Bank AAA 458,252 0.01% terms and conditions, net fair values and risk information- the Group's policies for controlling risks and exposures. IFIC Bank Limited AA2 10,117,185 0.22% Islami Bank Bangladesh Limited AA+ 19,234,398 0.43% The management has overall responsibility for the establishment and oversight of the group's risk management framework. Jamuna Bank Limited A1 1,199,844 0.03% The group's risk management policies are established to identify and analyze the risks faced by the group, to set Mercantile Bank Limited AA- 10,462,952 0.23% appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies, procedures Mutual Trust Bank Limited AA- 26,725 0.00% and systems are reviewed regularly to reflect changes in market conditions and the group's activities. This note presents National Bank Limited AA- 16,404,740 0.36% information about the group's exposure to each of the following risks, the group's objectives, policies and processes for National Credit and Commerce Bank Limited AA 44,095,750 0.98% measuring and managing risk, and the group's management of capital. The company has exposure to the following risks NRB Bank Limited BBB2 541,626 0.01% from its use of financial instruments. One Bank Limited AA- 19,406,217 0.43% a) Credit risk Premier Bank AA 13,871 0.00% b) Liquidity risk Prime Bank Limited AA2 11,555,765 0.26% c) Market risk Shajalal Islami Bank Limited AA3 12,901,052 0.29% Social Islami Bank Limited AA- 23,416 0.00% 42.01 Credit risk Sonali Bank Limited AAA 939,590 0.02% Credit risk is the risk of a financial loss to the group if a customer or counterparty to a financial instrument fails to meet its Southeast Bank Limited AA- 6,354,895 0.14% contractual obligations, and arises principally from the group's receivables from distributors, institutional and export customers etc. Standard Chartered Bank AAA (26,553,444) -0.59% State Bank of India AA+ 21,227 0.00% Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. The City Bank Limited AA3 15,749,050 0.35% In monitoring credit risk, debtors are grouped according to their risk profile, i.e. their legal status, financial condition, ageing profile The Trust Bank Limited AA3 10,474,826 0.23% etc. Accounts receivable are related to sale of steels (MS Rod and allied products). United Commercial Bank Limited A+ 11,572,855 0.26% The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of Uttara Bank Limited AA3 11,395,313 0.25% financial position.

Annual Report 2014 128 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 129 42.02 Liquidity risk Sensitivity for foreign currency expenditures Strengthening profit/(loss) Weakening profit/(loss) Liquidity risk is the risk that the group will not be able to meet its financial obligations as they fall due. The group's Taka Taka approach to managing liquidity (cash and cash equivalents) is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unaccept- At 31 December 2014 USD 137,259,888 (137,259,888) able losses or risking damage to the group's reputation. Typically, the group ensures that it has sufficient cash and cash equivalents to meet expected operational expenses, including financial obligations through preparation of the cash flow b) Interest rate risk forecast, based on time line of payment of financial obligations and accordingly arrange for sufficient liquidity/fund to Interest rate risk is the risk that arises due to changes in interest rates on borrowings. Short term bank borrowings are, make the expected payments within due dates. Moreover, the group seeks to maintain short term lines of credit with however, not significantly affected by fluctuations in interest rates. The group has not entered into any type of derivative scheduled commercial banks (Note 21) to ensure payment of obligation in the event that there is insufficient cash to instrument in order to hedge interest rate risk as at the reporting date. make the required payment. The requirement is determined in advance through cash flow projections and credit lines with banks are negotiated accordingly. (i) Profile As at 31 December, the interest rate risk profile of the group's interest bearing financial instruments was: In extreme stressed conditions, the group may get support from the subsidiary and associate company in the form of inter-company loan. Type of instruments Carrying amount (BDT) The following are the contractual maturities of financial liabilities: 2014 Fixed rate instrument Category of Liabilities Carrying amount Maturity Nominal Contractual Within 6 Within 6-12 Financial asset 527,054,998 As on 31 period Interest rate cash flows months months Financial liability 17,684,747,256 December 2014 (estimated) or less Variable rate instrument Taka Taka Taka Taka Financial asset Nil Financial liability Nil Expenses and other liabilities 564,393,885 Mar-15 N/A 564,393,885 564,393,885 - Short term bank loan 17,024,368,151 Jun-15 10.60%~15.50% 17,024,368,151 17,024,368,151 - (ii) Cash flow sensitivity analysis for variable rate instruments Current portion of long term loan 228,481,946 Dec-15 12.00%~17.00% 228,481,946 114,240,973 114,240,973 There being no variable rate instruments, sensitivity analysis has not presented. Contribution to WPPF & WF 79,677,893 Mar-15 N/A 79,677,893 79,677,893 - 42.04 Accounting classification and fair value Fair value of financial assets and liabilities together with carrying amount shown in the statement of financial position are as follows: 42.03 Market risk Market risk is the risk that any change in market prices, such as foreign exchange rates and interest rates will affect the Carrying amount Fair value group's income or the value of its holdings of financial instruments. (Taka) (Taka) a) Currency risk Assets carried at fair value through profit and loss Nil Nil The group is exposed to currency risk on certain purchase such as import of raw material. Majority of the company's foreign currency transactions are denominated in USD and relate to procurement of raw materials from abroad. Held to maturity assets i) Exposure to currency risk FDR with banks 527,054,998 527,054,998 Foreign currency monetary assets and liabilities Receivables and other assets 2014 2013 Trade and other receivable 2,971,813,680 2,971,813,680 (BDT equivalent) (BDT equivalent) Security deposit 15,162,714 15,162,714 Assets Current account with associate 2,605,398,576 2,605,398,576 Trade receivables Nil Nil Cash and bank balances 521,092,776 521,092,776 Cash at bank 7,650,551 3,594,854 Available for sale financial assets Nil Nil 7,650,551 3,594,854 Liabilities Liabilities carried at fair value through profit and loss Nil Nil Bank borrowing 10,707,058,793 9,031,676,700 Liabilities carried at amortized cost Trade and other payables 53,285,610 53,285,610 Net exposure 10,699,408,242 9,028,081,846 Short term bank borrowing 17,024,368,151 *N/A The following significant exchange rates are applied at the balance sheet date: Current portion of long term borrowing 228,481,946 *N/A Contribution to WPPF & WF 79,677,893 *N/A Exchange rate of US Dollar 77.95 78.25

*Determination of fair value is not required as per the requirements of IFRS/BFRS 7 : Financial Instruments: Disclosures (ii) Foreign exchange rate sensitivity analysis for foreign currency expenditures (ref: Para 29). However, fair value of such instruments is not likely to be significantly different from the carrying amounts A strengthening or weakening of the Taka, as indicated below, against the USD at 31 December would have increased/ of such instruments. (decreased) equity and profit or loss by the amounts shown below. This analysis is based on foreign currency exchange

rate variances that the Group considered to be reasonably possible at the reporting date. The analysis assumes that all

other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2013, albeit

that the reasonably possible foreign exchange rate variances were different, as indicated below:

Annual Report 2014 130 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 131 DIRECTORS’ REPORT

Dear Shareholders We have passed another operational year of BSRM Iron & Steel Co. Ltd. engaged in the manufacturing of Billets. Year 2014 was the fifth year of operation since commencement of business. AUDITORS’ REPORT & Your Directors are pleased to present their report and audited financial statements for the year ended 31st December 2014 before you for your review, approval and adoption. Review of Operation In the year 2014, the company’s production was increased by 7.34% while sales were also increased by 8.99%. In 2014, your FINANCIALS 2014 OF company produced 1,80,678 MT Billet. Sales were limited to the parent company and other group concerns. Company also to battle with the volatile price of scrap both in home and abroad. SUBSIDIARY Operating Results Amount in Crore Taka Particulars 2014 2013 Sales 937.41 886.18 Gross Profit 68.62 51.34 Profit before int. taxes & WPPF 67.21 51.17 Less: Interest & WPPF 44.42 34.80 Less: Income Tax 6.86 3.05 Net Profit 16.68 14.07 EPS 1.52 1.28 Net Assets Value 232.59 215.91 Net Assets Value Per Share 21.14 19.63 BSRM Iron & Steel Co. Ltd. Directors In accordance with the provision of the Article of Association of the company Mr. Alihussain Akberali FCA & Mrs. Tehseen Zohair st Taherali, the two directors of the company, representing one third of the number of existing directors retire by rotation in the Annual As at and for the year ended 31 December 2014 General Meeting and being eligible Mr. Alihussain Akberali FCA & Mrs. Tehseen Zohair Taherali offer themselves for re- appointment. Dividend Directors didn’t recommend any dividend for the year ended December 31, 2014 considering further investment of the company from retained earnings. Auditors The Company’s Auditors M/s Basu Banerjee Nath & Co. Chartered Accountants, retire and are eligible for reappointment. Board of Directors recommend their appointment for the ensuing year. Outlook for 2015 Management of your company will continue its efforts to achieving sustainable growth of the company by adopting and investing in the state-of-the-art technology and management practices. Events after the date of Financial Position There is no subsequent event after the date of the Financial Position and till the date of this report which could affect the ability of the users of these financial statements to make an appropriate evaluation. Gratitude The Board thanks all shareholders for placing their trust on us and thanks also goes to our regulatory bodies, employees and bankers for their support in operating our business.

By order of the board

Alihussain Akberali FCA Chairman 15th March 2015

BSRM Steels Limited Annual Report 2014 133 BSRM Iron & Steel Co. Ltd. STATEMENT OF FINANCIAL POSITION INDEPENDENT AUDITORS’ REPORT AS OF DECEMBER 31, 2014

TO THE SHAREHOLDERS OF 2014 2013 BSRM Iron & Steel Co. Ltd. Notes Taka Taka Assets: Report on the Financial Statements: Non-Current Assets: We have audited the accompanying financial statements of BSRM Iron & Steel Co. Ltd. namely, Statement of financial position Property, Plant and Equipment 04 3,759,217,059 3,622,686,384 as of December 31, 2014 and the related Statement of profit or loss account & other comprehensive income for the year ended Less:Accumulated Depreciation 745,624,753 576,335,602 December 31, 2014. Statement of Changes in Equity, Statement of Cash flows and a summary of significant accounting policies 3,013,592,306 3,046,350,782 and other explanatory information. Capital Work in Progress 05 239,358 54,672,397 Management’s Responsibility for the Financial Statements: Intangible Asset 06 9,456,533 - Total Non-Current Assets 3,023,288,197 3,101,023,179 Management is responsible for the preparation and fair presentation of these financial statements in accordance with Bangladesh Current Assets: Financial Reporting Standards (BFRS) and for such internal control a management determines is necessary to enable the Short Term Investment 07 34,076,260 31,181,069 preparation of financial statements that are free from material misstatement, whether due to fraud or error. Inventories 08 2,360,021,212 2,200,038,730 Trade Receivables 09 1,215,218 279,277,730 Auditor’s Responsibility: Due from Affiliated Companies 10 977,959,133 441,352,057 Our responsibility is to express an expert opinion on these financial statements based on our audit. We conducted our audit in Advance, Deposits & Prepayments 11 386,429,804 487,435,047 accordance with Bangladesh Standards on Auditing (BSA). Those standards require that we comply with ethical requirements and plan Cash and Cash Equivalents 12 52,758,575 2,506,731 and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Total Current Assets 3,812,460,202 3,441,791,364 Scope: Total Assets 6,835,748,399 6,542,814,543 An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risk of material misstatement of the Equity: Share Capital 13 1,100,000,000 1,100,000,000 Financial Statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control Retained Earnings 701,708,043 534,871,849 relevant to the entity’s preparation and fair presentation of the Financial Statements in order to design audit procedures that are Revaluation Reserve 14 524,195,793 524,195,793 appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal Total Equity Attributable to Owners of the company 2,325,903,836 2,159,067,642 control. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of accounting estimates made by management as well as evaluating the overall presentation of the Financial Statements. Liabilities: Non-Current liabilities We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Long Term borrowings 15 182,703,317 286,752,492 Retirement Benefit Obligations-Gratuity 14,009,609 10,491,909 Opinion: Deferred Tax 27 159,869,074 91,279,340 In our opinion, the financial statements of the company prepared in accordance with Bangladesh Financial Reporting Standards Total Non-Current liabilities 356,582,000 388,523,741 (BFRS), including Bangladesh Accounting Standards (BAS) give a true and fair view of the state of the Company’s affairs as of December 31, 2014 and the results of its financial performance, Statement of cash flows and Statement of Changes in Equity for Current Liabilities: the year then ended. Current Portion of Term Loan 15.01 211,671,595 522,974,038 Short Term Borrowings 16 3,211,495,247 3,402,621,127 Report on other legal and regulatory requirements: Liabilities for Expenses 17 62,714,149 51,508,777 In our opinion, the Financial Statements comply with the applicable sections of the Companies Act.1994 and other applicable laws Due to Affiliated Companies 18 544,432,310 350,000 and regulations. Other Liabilities 19 110,956,871 9,154,698 Provision for WPPF & WWF 25 11,992,391 8,614,520 a) Our examination and checking of records, relevant books of accounts, registers, schedules and financial statements Total Current Liabilities 4,153,262,563 3,995,223,160 were sufficient to enable us to form an informed and assessed opinion on the authenticity and accuracy of the financial Total Liabilities 4,509,844,563 4,383,746,901 statements. Total Equity and Liabilities 6,835,748,399 6,542,814,543 b) We have obtained all the information and explanations which to the best of our knowledge and belief were necessary for Net Asset Value (NAV) Per Share 21.14 19.63 the purpose of our audit and made due verification thereof. c) In our opinion, proper books of account as required by law have been kept by the company so far as it appeared from our Note: The annexed notes 01 to 30 form an integral part of these financial statements. examination of those books. d) The company’s Statement of financial position, Statement of comprehensive income dealt with by this report are in agreement from our examination of those books. Managing Director Director Company Secretary Signed in items of our annexed report of even date

(Basu Banerjee Nath & Co.) Chittagong, March 22, 2015 BASU BANERJEE NATH & CO. Chartered Accountants Date: Chittagong, March 22, 2015 Chartered Accountants

Annual Report 2014 134 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 135 BSRM Iron & Steel Co. Ltd. BSRM Iron & Steel Co. Ltd. STATEMENT OF PROFIT OR LOSS ACCOUNT AND OTHER COMPREHENSIVE INCOME STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31, 2014 FOR THE YEAR ENDED DECEMBER 31, 2014

2014 2013 Share Retained Revaluation Notes Taka Taka Particulars Capital Earnings Reserve Total

Taka Taka Taka Taka Revenue 9,374,112,186 8,861,773,842 Cost of goods sold 20 (8,687,937,171) (8,348,380,303) Gross Profit 686,175,015 513,393,539 Balance as on January 01, 2013 1,100,000,000 394,167,823 524,195,793 2,018,363,616 General & Administrative Cost 21 (33,761,165) (33,107,548) Net Profit/(Loss) after tax for the year - 140,704,026 - 140,704,026 652,413,850 480,285,991 Other Income 22 8,274,014 1,229,622 Balance as on December 31, 2013 1,100,000,000 534,871,849 524,195,793 2,159,067,642 Net Operating Profit 660,687,864 481,515,613 Balance as on January 01, 2014 1,100,000,000 534,871,849 524,195,793 2,159,067,642 Financial Expenses 23 (432,209,441) (339,404,144) Net Profit/(Loss) after tax for the year - 166,836,194 - 166,836,194 Financial Income 24 11,369,396 30,178,931 (420,840,045) (309,225,213) Balance as on December 31, 2014 1,100,000,000 701,708,043 524,195,793 2,325,903,836 Net Profit BeforeTax, WPPF and WWF 239,847,819 172,290,400 Contribution to Workers' Profit Participation

Fund (WPPF) & Workers' Welfare Fund 25 (11,992,391) (8,614,520) 227,855,428 163,675,880 Non Operating Income 26 7,570,500 7,560,000 Net Profit Before Tax 235,425,928 171,235,880 Income Tax Expenses: Deferred Tax 27 (68,589,734) (30,531,854) Net Profit After Tax Transferred to Statement of Changes in Equity 166,836,194 140,704,026

Earnings Per Shares (EPS) 28 1.52 1.28

Note: The annexed notes 1 to 30 form an integral part of these financial statements.

Managing Director Director Company Secretary Signed in items of our annexed report of even date

BASU BANERJEE NATH & CO. Date: Chittagong, March 22, 2015 Chartered Accountants

Annual Report 2014 136 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 137 BSRM Iron & Steel Co. Ltd. STATEMENT OF CASH FLOWS BSRM Iron & Steel Co. Ltd. FOR THE YEAR ENDED DECEMBER 31, 2014 NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED DECEMBER 31, 2014 2014 2013 Taka Taka 1.00 Legal form of Enterprise The company was incorporated as a private Limited Company on April 13, 2005, vide certificate of incorporation No. A. CASH FLOW FROM OPERATING ACTIVITIES: CH-5415 of 2005 under the Companies Act, (No-XVIII), 1994. The Company was converted into a public limited company Cash collection from customers 9,668,019,212 8,863,350,471 on March 15, 2011. The Company's Registered and Corporate Office is situated at Ali Mansion, Sadarghat Road, Cash payment for cost and expenses (9,460,161,059) (9,497,840,859) Chittagong. It is a subsidiary company of BSRM Steels Limited.The shares of the Company are not quoted for public issue Net cash provided by / (Used in) Operating Activities 207,858,153 (634,490,388) for the public subscription. 1.01 Nature of the business B. CASH FLOW FROM INVESTING ACTIVITIES: The principal activities of the company are manufacturing different quality of M.S. Billets and sell the same to steel rolling Acquisition of Property, Plant & Equipment (139,039,116) (78,810,796) mills.The company had set up its automatic steel melting plant at 202-205 Nasirabad Industrial Area, Baizid Bostami Road, Chittagong and commenced commercial production from June 01, 2010. Acquisiton of Intangible Assets (9,456,533) - Disposal of Property, Plant & Equipment 1,746,676 494,331 2.00 Basis of Preparation Capital work in progress 54,433,039 (44,832,117) 2.01 Application of Standards Short Term Investment (2,895,191) (31,181,069) The following BFRSs and BASs are applicable for the financial statements of the company for the year under audit: Net cash provided by / (Used in) Investing Activities (95,211,125) (154,329,651) BAS 1 Presentation of Financial Statements C. CASH FLOW FROM FINANCING ACTIVITIES: BAS 2 Inventories BAS 7 Statement of Cash Flows Affiliated Company's Transaction 544,082,310 350,000 BAS 8 Accounting policies, Changes in Accounting Estimates and Errors Received /( Payment) of Short Term Loan (502,428,319) 1,226,503,363 BAS 10 Events after the Reporting Period Repayment of Long Term Borrowings (104,049,175) (471,442,727) BAS 12 Income Taxes Net cash provided by / (Used in) Financing Activities (62,395,184) 755,410,636 BAS 16 Property, Plant and Equipment BAS 17 Leases Net Cash Increase/(Decrease) in Cash & Cash Equivalents (A+B+C) 50,251,844 (33,409,403) BAS 18 Revenue BAS 19 Employee Benefits Cash and Cash Equivalents at the Beginning of the Year 2,506,731 35,916,134 BAS 21 The Effects of Changes in Foreign Exchange Rates Cash and Cash Equivalents at the End of the Year 52,758,575 2,506,731 BAS 23 Borrowing Costs 50,251,844 (33,409,403) BAS 24 Related Party Disclosures BAS 33 Earning Per Share Net Operating Cash Flow per Share 1.89 (5.77) BAS 37 Provisions, Contingent Liabilities and Assets

BAS 38 Intangible Assets

2.02 Statement of compliance The financial statements have been prepared in compliance with Bangladesh Accounting Standards (BAS) and Bangladesh Financial Reporting Standards (BFRS). 2.03 Basis of measurement These financial statements have been prepared on a going concern basis under historical cost convention. 2.04 Use of estimates and judgments The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and assumptions are reviewed on an on going basis.

2.05 Reporting period The financial statements of the company cover one year from January 01 to December 31 and is followed consistently.

3.00 Significant Accounting Policies The accounting policies set out below have been applied consistently to all the years presented in these financial statements.

Annual Report 2014 138 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 139 3.01 Foreign currency 3.03 Inventories Transactions in foreign currency are translated at the rates ruling on the dates advices are received. Monetary assets and Inventories are valued at the lower of cost and estimated net realizable value (NRV). The cost of inventories is valued at liabilities denominated in foreign currencies are retranslated at rates ruling at the reporting date. All exchange differences weighted average method and includes expenditures for acquiring the inventories and bringing them to their existing are charged/credited to statement of comprehensive income by being absorbed in the respective date of income & location and condition in accordance with BAS-2. Net realizable value (NRV) is the estimated selling price in the ordinary expenditure. course of business less the estimated cost of completion and selling expenses. When inventories are used, the carrying amount of those inventories is recognized in the period in which the related revenue is recognized. Inventories comprise 3.02 Property, Plant & Equipment Raw Materials (Heavy Melting steel scarp, Shredded scarp & Sponge Iron), Store items, Finished goods etc. 3.02.01 Recognition and measurement 3.04 Trade receivables Property, Plant & Equipment except land & land development are stated at cost less accumulated depreciation. Cost Trade & other receivables are recognized at cost which is the fair value of the consideration given. includes expenditures that are directly attributable to the acquisition of the assets. The cost of self constructed /installed assets includes the cost of materials and direct labour and any other costs directly attributable to bringing the assets to 3.05 Advance, deposits & prepayments the working condition for its intended use and the cost of dismantling and removing the items and restoring the site on Advance are initially measured at cost. After initial recognition, advance are carried at cost less deductions, adjustments which they are located. or charges to other account heads, such as, property, plant and equipment, inventory or expenses. When parts of an items of Property, Plant & Equipment have different useful lives, they are accounted for as separate items Deposits are measured at payment value. (major components) of Property, Plant & Equipment. KPMG Bangladesh (Rahman Rahman Huq, Chartered Accountants), 102 Agrabad C/A, Chittagong, has been engaged by the Prepayments are initially measured at cost. After initial recognition, prepayments are carried at cost less charges to the company to estimate fair market value of the land at different locations in Bangladesh as at 31st May 2012. Rahman statement of comprehensive income. Rahman Huq also engaged qualified surveyors from Asian surveyors Ltd, 28 Dilkhusha C/A, Dhaka 1000, for veryfing the land and it's market price. 3.06 Cash & Cash Equivalents Cash and cash equivalents comprise of cash in hand, FDR and cash at bank, which are available for use of the Company The valuation had been conducted using the market value method as this is the most commonly used and appropriate for without any restriction. valuation of lands under prevailing circumstances. In the process of valuation, Information from the Land brokers and other related sources, price factors of similar land in the locality, published mouza rates, recent transfer of land in this area 3.07 Impairment have been considered. Financial Assets As per valuation report the net revaluation gain stood TK. 524,195,793 (Note No. 14.00). This Revaluaton gain has been Financial Assets are impaired if objective evidence indicates that a loss event has occured after initial recognition of the recognized in these Financial Statements. assets and that the loss event had a negative effect on the estimated future cash flows of that assets that can be estimat- ed reliably. 3.02.02 Subsequent costs The cost of replacing parts of an item of property, plant and equipment is recognised in the carrying amount of the item if Non-financial Assets it is probable that the future benefit embodied within the part will flow to the company and its cost can be measured The carrying amount of the company's assets are reviewed at each reporting date to determine whether there is any reliably. The costs of the day to day servicing of property, plant and equipment are recognized in the statement of compre- indication of impairment. If any such indication exists then the asset's recoverable amount is estimated. An impairment hensive income as expenses. loss is recognized if the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount.

3.02.03 Depreciation 3.08 Employees benefit schemes Land is held on a freehold basis and is not depreciated considering the unlimited life. In respect of all other Property, Plant A contributory provident fund has been introduced and the fund has obtained recognition from tax authority on & Equipment, depreciation is recognized in The Statement of Comprehensive Income on diminishing balance method over 13.04.2011. The provident Fund starts its operation from July 01, 2011. Both employees & company contribute equally the estimated useful lives of Property, Plant & Equipment. Depreciation is charged on addition from the month of (10% of basic salary). acquisition/addition (date of service) and no depreciation is charged in the month of disposal. The depreciation method used reflects the pattern in which the assets economic benefits are consumed by the entity. The depreciation charge for Appropriate Provision has been made for Workers' Profit Participation Fund and Workers' Welfare Fund as per provisions of law. each period should be recognized as an expense unless it is included in the carrying amount of another asset. The principal annual rates are as follows. 3.09 Earnings per Share (EPS) Basic Earnings: This represents profit for the year attributable to ordinary shareholders. As there is no preference dividend, noncontrolling Name of the Assets Current Year Rates (%) Previous Year Rates (%) Allocation interest or extra ordinary items, the net profit after tax for the year has been considered fully attributable to the ordinary Plant & Machinery 7.50% 7.50-20% shareholders (refer to note-28 of the financial statements). Motor Vehicles 20% 20% During 2013 depreciation was allocated on the basis of nature Diluted Earnings per share: Furniture & Fixture 20% 10% No diluted earnings per share is required to be calculated for the year as there is no scope for dilution during the year Office Equipment 20% 10% of assets but during 2014 under audit. Factory Building 5% 5% depreciations are charged on location basis 3.10 Provisions Roads & Pavements 10% 5% A provision is recognized if, as a result of a past event, the company has a present legal or constructive obligation that can IT Equipment 20% 20% be estimated reliably, and it is probable that an outflow of economic benefit will be required to settle the obligation.

On December 26, 2013, management has revised the estimated useful life of all property, plant & equipment & decided 3.11 Finance income and expense to change the depreciation as per above current rate of all assets were effected from January 01, 2014. Interest income has been recognised on cash basis. Interest expenses incurred during the year has been charged to the Statement of Comprehensive Income. 3.02.04 Capital work in progress 3.12 Contingencies Property, plant and equipment under construction/acquisition is accounted for as capital work-in-progress until construc- Contingencies arising from claims, litigation, assessment, fines, penalties etc. are recorded when it is probable that a tion/acquisition is complete and measured at cost. liability has been incurred and the amount can be reasonably estimated.

Annual Report 2014 140 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 141 3.13 Income tax expenses Current tax:

The company in terms of decision of the board of directors in its meeting held on March 07,2012 filed a Writ petition on 2014 31, 2014 31, August 06,2012 before the High Court Division of Supreme Court of Bangladesh challenging the legality of Section 16CCC of Income Tax Ordinance 1984 imposing minimum income tax of 0.50% of the gross receipts of the company regardless of profit or loss as per accounts. Accordingly the High Court issued a Rule Nisi calling the Government Authorities to show - 217,236,823

cause as to why Section 16CCC of the Income Tax Ordinance 1984 should not be declared to be illegal and of no legal - 741,432,616 effect and pending hearing of the Rule restrained the Government Authorities from charging minimum tax under the said section. In view of above, no provision for income tax envisaged u/s 16CCC has been made in these financial statement. 2014 31, 2014 31, Deferred tax: The Company has adopted deferred tax accounting policy as required in BAS-12/ IAS-12 (Income taxes). Accordingly

deferred tax assets/ liabilities is accounted for on all temporary timing differences arising from the tax base of the assets and liabilities and their carrying value for financial reporting purpose. Depreciation Depreciation 3.14 Comparative Information and Rearrangement thereof In accordance with the provisions of BAS-34, Comparative information has been disclosed for all numerical information in the financial statements and also the narrative and descriptive information where it is relevant for understanding of the current period's financial statements. Figures for the year 2013 have been rearranged wherever considered necessary to ensure comparability with the current year.

3.15 Revenue Recognition 2014 01, the year 2014 01, the year Revenue from sale of goods is measured at the fair value of the consideration received or receivable, net off returns and allowances, Value Added Tax etc. 3.16 Financial Instruments

Non-derivative financial instruments comprise cash & cash equivalents, advance from customers, trade creditors, trade debtors and share capital etc. Cash and cash equivalents Cash and cash equivalents comprise cash in hand, bank balances & FDR (3 Months). - - - - 36,388,693 577,091,499 - 17,689,268 - 40,807,689 83,647,307 3,814,821 11,093,428 24,086,671 19,817,158 793,594 736,621 2,873,232 6,337,208 4,708 8,950,269 3,305,402 712,777 20,767,468 2,647,222 2,872,206 107,729,270 685,824 - 15,621,225 469,362,229 - - 20,437 4,098,996 3,586,009 11,822,475 3,312,609 36,708,693 7,507,419 7,994,683 3,024,599 - 2,326,248,768 459,734,710 134,573,216 - 594,307,926 1,731,940,842 - 217,236,823 - - - - - 3,235,021,266 576,335,602 3,098,490,591 170,050,917 397,659,984 179,029,172 761,766 353,554 745,624,753 576,335,602 2,489,396,513 2,522,154,989 - - 741,432,616 2,326,248,768 459,734,710 134,573,216 - - - 594,307,926 1,731,940,842 - - - - - 40,807,689 11,093,428 19,817,158 793,594 2,873,232 6,337,208 8,950,269 3,305,402 712,777 2,647,222 2,872,206 - 685,824 - - 20,437 4,098,996 3,586,009 11,822,475 3,312,609 36,708,693 7,507,419 7,994,683 3,024,599 - 36,388,693 17,689,268 3,814,821 736,621 20,767,468 15,621,225 - 577,091,499 83,647,307 24,086,671 4,708 107,729,270 469,362,229 - 3,622,686,384 397,659,984 179,029,172 353,554 576,335,602 3,046,350,782 - 3,759,217,059 576,335,602 170,050,917 761,766 745,624,753 3,013,592,306 Trade receivables Trade receivables are recognised at fair value. 2013 TAKA

Advance from customers 8,656,174 170,372,998 Revaluation Closing balance as on Opening balance Charged Adjustment Closing balance Carrying amount Advance from customers are recognised at fair value at the date of transactions. Revaluation Closing balance as on Opening balance Charged Adjustment Closing balance Carrying amount Disposal gain on revaluation Disposal gain on revaluation

Trade payables and other liabilities Revaluation

Trade payables and other liabilities are recognized at fair value on the date of transactions. The company derecognizes a financial liabilities when its contractual obligations are discharged, cancelled or expired.

Share capital 2014 Ordinary share are classified as equity. TAKA 170,050,917 179,029,17 Cost

3.17 General i) Amount in the Financial Statement have been rounded off to the nearest taka. TK. TK. TK. TK. TK. TK. TK. TK. TK. TK. TK. TK. TK. TK. TK. TK. TK. TK. TK. TK. TK. 2014 2014 5,938,308 436,900 38,000 5,938,308 436,900 38,000 32,992,243 10,794,520 7,815,446 18,938,176 298,908 878,982 37,447,503 281,800 1,340,610 37,447,503 281,800 1,340,610 ii) Bracket figure denote negative. 10,794,520 18,938,176 298,908 878,982 - - 32,992,243 7,815,446 - 567,504,796 10,716,535 1,129,832 as on January 01, as on January 01, Addition Adjust / adjustment for 2014 December 31, as on January during for disposal as on December as on December as on January 01, Addition Adjust / adjustment for 2014 December 31, as on January during for disposal as on December as on December 567,504,796 10,716,535 1,129,832 Opening balance Opening balance 2,207,638,222 118,610,546 2,207,638,222 118,610,546 - 3,622,686,384 139,039,117 2,508,442 3,544,723,474 78,810,796 847,886 3,098,490,591 139,039,117 3,020,527,681 2,508,442 78,810,796 847,886 BALANCE AS AT DECEMBER 31,2014 BALANCE AS AT DECEMBER 31,2013 BALANCE AS AT DECEMBER 31,2014 BALANCE AS AT DECEMBER 31,2013 BALANCE AS AT Building Factory Roads & Pavement Furniture & Fixture Office Equipment IT Equipment Vehicles Motor Plant & Machinery

Depreciation allocated to: 20.00) Manufacturing expenses( NO. 21.00) Administrative Cost( NO. General & 168,653,040 1,397,877 4.00 Plant and Equipment: Property, Model: At Revalued Assets Category Land & Development 741,432,616 - - At Cost Model: Assets Category Land & Development 217,236,823 Plant & Machinery Vehicles Motor Building Factory Roads & Pavement Furniture & Fixture Office Equipment IT Equipment

Annual Report 2014 142 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 143 2014 2013 2014 2013 Taka Taka Taka Taka 5.00 Capital Work in Progress: 9.00 Trade Receivables: Civil Construction - 6,819,848 BSRM Steels Limited. - 278,463,358 Scrap Cleaning Machine - 47,852,549 Others 1,215,218 814,372 Motor Vehicle 239,358 - 1,215,218 279,277,730 239,358 54,672,397 10.00 Due From Affiliated Companies: Bangladesh Steel Re-Rolling Mills Ltd. 977,959,133 - 6.00 Intangible Assets (Software): BSRM Steels Limited. - 441,352,057 Cost 977,959,133 441,352,057 Opening Balance - - Add: Addition During The Year 9,536,000 - Note: All Transactions among the affiliated companies have been made through Less: Disposal During The Year - - A/C Payee cheque/Bank Transfer & interest were charged accordingly. Closing Balance 9,536,000 - Accumulated Amortization 11.00 Advance, Deposits & Prepayments: Opening Balance - - For Expenses (Note No.11.01) 12,798,777 180,049,564 Add: Amortization During The Year 79,467 - Security Deposit (Note No.11.02) 28,959,461 24,378,453 Less: Disposal During The Year - - Guarantee Margin (Note No.11.03) 1,389,428 1,305,378 Closing Balance 79,467 - Advance against LC 17,418,352 55,721,076 Carrying Amount 9,456,533 - Staff Loan 192,078 1,264,022 LC Margin 96,173,720 108,841,734 7.00 Short Term Investment: Advance Income Tax 134,845,393 115,667,844 Name Of The Bank Rate of Interest VAT Current Account 7,098,334 206,976 United Commercial Bank Limited 10%-12% 34,076,260 31,181,069 Advance For Scrap 87,554,261 - 34,076,260 31,181,069 386,429,804 487,435,047 8.00 Inventories: 11.01 Advance for Expenses: Raw Materials (Note No.20.00) 1,948,127,797 1,810,865,772 Bangladesh Power Development Board (12KM Power Line Construction) 255,800 45,380,204 Finished Goods (Note No.20.00) 72,308,618 144,382,360 Construction & Engineering works 2,329,968 2,079,116 Consumable Stores (Note No.8.03) 339,584,797 244,790,598 Land Purchases 305,000 305,000 2,360,021,212 2,200,038,730 Insurance expenses 2,494,846 1,322,566 Receivable against interest - 129,657,859 8.01 Raw Materials (In Quantity): MT MT Fuel, Oil & Lubricants 1,201,590 908,346 Opening Stock of Raw Materials 52,607.08 42,818.34 Energypac Engineering Limited 1,320,000 - Add: Purchase/Import during the year: Nikko Systems Private Ltd. 337,980 14,745 Local Purchase 69,945.43 88,411.76 Clearing & Forwarding expenses 10,571 211,414 Import-Scrap 108,802.92 78,273.66 Others 4,543,022 170,314 Import- Sponge Iron 20,054.78 25,170.65 12,798,777 180,049,564 Raw Material Available for Manufacture 251,410.21 234,674.41 11.02 Security Deposits: Less: Sale of Raw Material 14.73 93.52 Power Development Board, Ctg (33kv) 18,600,000 18,600,000 Less: Closing Stock of Raw Materials 56,034.26 52,607.08 T & T Department Chittagong 2,000 2,000 Consumption 195,361.22 181,973.81 Kolkata Office, Howrah (IRS 25,000) 37,750 37,750 Chittagong Mohanagar Package (Guest House Rent) 60,000 60,000 8.02 Finished Goods (In Quantity): MT MT Sharif Alam (Guest House Rent) 48,000 48,000 Opening Stock of Finished Goods 3,037.50 1,777.86 Bakhrabad Gas Systems Limited 1,347,588 1,347,588 Add: Manufactured 180,677.59 168,325.78 Brothers Prokaushali Workshop (Gas Cylindar) 400,000 400,000 Goods Available for Sales 183,715.09 170,103.64 Premier LP GAS Ltd. (Gas Cylindar) 46,000 46,000 Less: Sales 182,083.10 167,066.14 Zilla Commandant Anser & VDP 270,511 270,511 Closing Stock of Finished Goods 1,631.99 3,037.50 Bangladesh Oxygen Corporation Limited - 448,000 8.03 Consumable Store: Power Development Board, (Barawlia) 1,800,000 1,800,000 Mechanical Store 92,297,645 49,326,865 Power Development Board, (Bhatiary) 1,500 - Electrical Store 84,329,578 18,047,093 Mohammadia Trading, (Gas Cylindar) 250,800 250,800 General Store 2,543,912 17,098,069 Nurul Alam (Guest House) 14,000 14,000 Fuel & Lubricants Store 3,462,076 10,405,090 GBX Logistics Limited 140,000 - Other Consumable Store 156,951,586 149,913,481 GP Shipping Lines Limited 35,000 - 339,584,797 244,790,598 Linde Bangladesh Limited 824,000 120,000

Annual Report 2014 144 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 145 2014 2013 2014 2013 Taka Taka Taka Taka Sea Borne (Pvt.) Limited 5,000 - Al-Arafah Islami Bank Limited 19,782 273,407 Trident Shipping Line Limited 210,000 - (Agrabad Branch, Chittagong.) CMA CGM BD Shipping Limited-Damarage 1,338,000 140,000 Standard Bank Limited 3,532 41,040 Mearsk Bangladesh Limited 2,989,044 651,036 (Agrabad Branch, Chittagong.) Bangladesh Railway(33KV Electric Line Expansion) 140,000 140,000 Shahjalal Islami Bank Limited 84,069 74,661 Birds Bangladesh Agencies Limited 400,268 2,768 (Jubilee Road Branch, Chittagong.) 28,959,461 24,378,453 Prime Bank Limited 79,715 (851,143) 11.03 Guarantee Margin: (O.R.Nizam Road,Branch, Chittagong.) BG # 13/09 (Trust) 460,303 460,303 Meghna Bank Limited 149,809 34,047 BG # 03/10 (AAIBL) - 26,275 (Principal Branch,Dhaka.) BG # 30/14 (MBL) 1,325 - Mercantile Bank Limited 3,981 7,047 BG # 28/12 (MBL) 122,000 122,000 (Jubilee Road Branch, Chittagong.) BG # 30/12 (MBL) 104,000 104,000 Social Islami Bank Limited 31,892 4,795 BG # 32/12 (MBL) 40,000 40,000 (Jubilee Road Branch, Chittagong.) BG # 34/12 (MBL) 72,000 72,000 Dutch Bangla Bank Limited 90,105 - BG # 40/12 (MBL) 109,000 - (Jubilee Road Branch, Chittagong.) Bakhrabad Gas System Ltd. 480,800 480,800 National Bank Limited - 234,807 1,389,428 1,305,378 (Jubilee Road Branch, Chittagong.) 12.00 Cash & Cash Equivalents: Standard Chartered Bank Limited 18,669 - Cash in Hand (No. 12.01) 1,634,591 1,455,627 (Agrabad Branch, Chittagong.) Cash at Bank (No. 12.02) (5,260,531) 1,051,104 Jamuna Bank Limited 55,567 20,823 FDR Account (No. 12.03) 56,384,515 - (Khatunganj Branch, Chittagong.) 52,758,575 2,506,731 Bank Al-Falah Limited 14,511 26,698 12.01 Cash in Hand: (Agrabad Branch, Chittagong.) Head Office 134,589 37,916 Eastern Bank Limited 14,552 969,722 Factory Office 1,300,000 1,300,000 (Agrabad Branch, Chittagong.) Imprest Cash ( Baro Aulia Office) 200,002 117,711 State Bank Of India Limited 7,140 15,365 1,634,591 1,455,627 (Agrabad Branch, Chittagong.) 12.02 Cash at Bank: IFIC Bank Limited 1,794 32,756 Agrani Bank Limited 388,693 267,261 (Agrabad Branch, Chittagong.) (Laldighi corporate Branch, Chittagong.) National Credit & Commerce Bank Limited - 1,689,596 City Bank Limited 554,335 265,129 (Agrabad Branch, Chittagong.) ( Agrabad Branch, Chittagong.) Bank Asia Limited 174 13,825 Trust Bank Limited 2,822 1,080 (Agrabad Branch, Chittagong.) (O.R.Nizam Road,Branch, Chittagong.) Sonali Bank Limited 7,932 7,932 United Commercial Bank Limited 966 125 (Laldighi Br. Ctg.) (5,260,531) 1,051,104 (Jubilee Road Branch, Chittagong.) Islami Bank Bangladesh Limited 751,731 24,410 Note: a) Bank amount represents book balance which has been reconciled with the bank statement & conformed by the banker's certificate. (Jubilee Road Branch, Chittagong.) b) The negative balance shows in the notes represents book overdraft. Sonali Bank Limited 146 95,046 (Kalibari Branch.) 12.03 Fixed Deposit: Hongkong Shanghai Banking Corporation Limited (7,719,255) (1,878,677) Name Of The Banks Purpose Rate of Interest 2014 (Taka) 2013 (Taka) (Chittagong Branch.) Mutual Trust Bank Limited 24,394 989 United Commercial Bank Limited LC Margin 8.25% 9,735,000 - (Chittagong Branch.) City Bank Limited LC Margin 8.25%-11.00% 14,268,525 - United Commercial Bank Limited (ESCROW A/C) 59,751 10,445 Jamuna Bank Limited LC Margin 9.5%-11.5% 1,844,181 - (Jubilee Road Branch, Chittagong) Dutch Bangla Bank Limited LC Margin 4%-9% 2,199,349 - Dhaka Bank Limited 4,967 20,693 Bank Asia Limited LC Margin 8.75% 1,630,500 - Shahajalal Islami Bank Limited LC Margin 8.50% 4,571,384 - (Jubilee Road Branch, Chittagong.) Dhaka Bank Limited LC Margin 8.25% 6,675,074 - Habib Bank Limited - (445,000) Arab-Bangladesh Bank Limited LC Margin 8.75%-10.80% 4,680,234 - (Chittagong Branch.) National Credit & Commerce Bank Limited LC Margin 8%-8.5% 10,780,268 - Janata Bank Limited 87,695 94,225 (Laldighi Br. Ctg.) 56,384,515 -

Annual Report 2014 146 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 147 13.00 Share Capital: 2014 2013 Authorised Capital: Taka Taka 300,000,000 Ordinary shares of Tk.10.00 each 3,000,000,000 3,000,000,000 Issued, Subscribed & Paid up Capital: 1,100,000,000 1,100,000,000 Janata Bank Limited 21,325,233 59,676,143 110,000,000 Ordinary shares of Tk.10.00 each fully paid up in cash. Details of Shareholding position are given below: Mutual Trust Bank Limited 14,218,844 39,782,926 One Bank Limited 11,793,726 32,997,682 Name of the Shareholders No.of Shares Held 2014 (Taka) 2013 (Taka) Rupali Bank Limited 14,204,637 39,754,868 Sonali Bank Limited 27,681,227 77,449,347 Mr. Alihussain Akberali FCA 1,258,250 12,582,500 12,582,500 Standard Bank Limite 21,345,292 59,722,024 Mr.Aameir Alihussain 59,250 592,500 592,500 Trust Bank Limited 7,115,097 19,907,341 Mr. Zohair Taherali 247,090 2,470,900 2,470,900 United Commercial Bank Limited 21,328,266 59,664,826 Mrs.Tehseen Zohair Taherali 25,500 255,000 255,000 Dhaka Bank Limited 7,102,936 19,873,317 Mrs.Bilkis Alihussain 44,910 449,100 449,100 H.Akberali & Co. Ltd 3,649,050 36,490,500 36,490,500 198,235,864 554,562,511 VORTEX investments Ltd 215,950 2,159,500 2,159,500 Note: Syndicated Loan: BSRM Steels Limited 104,500,000 1,045,000,000 1,045,000,000 Lenders: 110,000,000 1,100,000,000 1,100,000,000 The company has entered into a syndicated loan agreement on 01-06-2009 with IIDFC the lead arranger and with 13 (thirteen) other Banks. 14.00 Revaluation Reserve: Total Loan Facilities: Taka 136.20 crores. KPMG Rahman Rahman Huq, Chartered Accountants has revalued the land of the company in different location as at 31st Interest Rate: May 2012 which is appended below: Initially interest rate was 14.50%, During the year 2013 it was 15.50% but during this year it is 14.50% as per Bangladesh Bank Circular. Location of the Lands Area in Mutated at Per Decimal Book Value Revalued Gain on Decimals Decimals Price Tk Amount Tk Revaluation Tk Disbursement: The first disbursement was made on February 2009. i) Nasirabad I/A Baizid Bostami Road Chittagong on the side of Repayments: Baizid Bostami Road. 221 221 2,500,000 168,860,441 553,125,000 384,264,559 The facility will be repayable by 18 (eighteen) quarterly installments commencing from 15.01.2011 to 15.04.2015. ii) Baroawilia in Sitakunda Police Station. 36 36 1,000,000 2,102,550 35,500,000 33,397,450 Securities: iii) West Gomdandi, Boalkhali, Chittagong. 747 697 175,000 15,360,716 121,894,500 106,533,784 Registered mortgage on project land, building on first ranking parri passu basis and hypothecation of machinery, furniture Total: 1,004 954 - 186,323,707 710,519,500 524,195,793 & fixtures, equipments etc. The revaluations has been accounted for on 31.12.2012 Purpose: 2014 2013 The purpose of the loan is to set up a computer- controlled, fully automatic billet making plant. Taka Taka 15.00 Long Term Borrowings: 2014 2013 Syndicate Term Loan (Note No.15.02) - 210,345,581 Taka Taka Lease Liability (DBL) - 11,587,075 16.00 Short Term Borrowings: IPDC Term Loan 100,000,000 - Loan Against Trust Receipt (LTR) (Note No: 16.01) 450,527,854 762,499,319 ULC Term Loan - 1,830,140 Inland Foreign Documentary Bills for collection (IFDBC) (Note No: 16.02) 2,159,087,429 800,508,292 Meghna Bank Term Loan 82,703,317 62,989,696 Cash Credit (C.C) & Overdraft (Note No: 16.03) 226,343,163 131,203,036 182,703,317 286,752,492 Time Loan (Note No: 16.04) 252,081,837 291,075,411 15.01 Current Portion of Long Term Borrowings: Demand Loan (Note No: 16.05) 123,454,964 1,417,335,069 Syndicate Term Loan (Note No.15.02) 198,235,864 344,216,930 3,211,495,247 3,402,621,127 IPDC Term Loan - 30,994,166 16.01 Loan Against Trust Receipt(LTR) ULC Term Loan 1,830,146 20,214,343 IFIC Bank Limited - 16,854,700 Lease Liability(DBL) 11,605,585 127,548,599 Trust Bank Limited - 34,945,470 211,671,595 522,974,038 Shahjalal Islami Bank Limited 24,462,669 211,323,960 15.02 Syndicate Term Loan: Mercantile Bank Limited 293,274,792 65,390,802 Due within one year 198,235,864 344,216,930 Dutch Bangla Bank Limited 53,210,433 8,298,253 Due after more than one year - 210,345,581 One Bank Limited - 81,626,893 198,235,864 554,562,511 Dhaka Bank Limited. 1,472,005 - Lender Wise Details of Syndication Term Loan are as Follows : Social Islami Bank Limited - 707,685 Bangladesh Development Bank Limited (Former BSRS) 8,817,346 24,670,067 Prime Bank Limited 78,107,955 93,065,198 Bank Asia Limited 7,115,097 19,907,341 Bank Asia Limited - 19,960,333 City Bank Limited 14,226,472 39,804,267 National Credit & Commerce Bank Limited - 230,326,025 Eastern Bank Limited 14,228,904 39,811,072 450,527,854 762,499,319 Industrial & Infrastucture Development Finance Company (IIDFC) Limited 7,732,786 21,541,290

Annual Report 2014 148 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 149 2014 2013 2014 2013 Taka Taka Taka Taka 16.02 Inland Foreign Documentary Bills for Collection (IFDBC): 17.01 For Expenses: IFIC Bank Limited 76,768,446 32,472,406 Salary & Allowances 6,023,906 1,730,118 Dhaka Bank Limited 137,674,343 30,936,940 Bonus - 298,157 Habib Bank Limited - 29,090,593 Godown Rent - 199,500 National Credit & Commerce Bank Limited 135,310,034 32,491,356 Basu Banerjee Nath & Co. 60,000 50,000 Trust Bank Limited 284,861,907 79,878,417 C & F Expenses 146,835 660,997 Jamuna Bank Limited - 47,828,154 Carrying Expenses 7,873,820 1,904,547 Bank Asia Limited 59,193,857 - Insurance Expenses 137,047 218,241 Standard Bank Limited - 13,206,842 Electricity Expenses 1,195,106 1,375,071 Mutual Trust Bank Limited 12,111,816 - Domicillary Expenses 186,123 217,852 Islami Bank Limited 361,031,592 167,228,312 Casual wages - 891,793 Mercantile Bank Limited 280,170,628 168,505,296 Tiffin Allowance 181,950 179,350 United Commercial Bank Limited 29,031,239 - Mill Over Time 686,893 507,952 Hongkong Shanghai Banking Corporation Limited 205,315,756 - Oil, Fuel & Lubricant 332,654 - Prime Bank Limited 195,361,220 65,179,990 Leave Salary 315,410 456,677 One Bank Limited 58,839,162 30,820,247 Production Incentive 38,520 - AB Bank Limited 136,507,379 6,980,924 Others 1,584,316 242,013 Eastern Bank Limited 16,407,721 79,655,794 18,762,580 8,932,268 Shahajalal Islami Bank Limited 93,637,066 15,085,151 17.02 Liabilities for Scrap Purchase: Dutch Bangla Bank Limited 29,385,823 1,147,870 Capital Refractories Limited 1,283,689 - Standard Chartered Bank Limited 17,782,485 - Grindwell Norton Limited 1,304,818 - City Bank Limited 29,696,954 - Ferro Alloy Co. Pvt. Limited 9,105,600 - Linde Bangladesh Limited 332,335 - 2,159,087,429 800,508,292 Moushi Enterprise 403,143 - 16.03 Cash Credit (CC) & Overdraft: Abul Khair Steel Industries 2,118,306 - Mutual Trust Bank Limited (SOD) 23,198,021 21,213,949 Tata International Limited 337,500 - IFIC Bank Limited 54,504,635 - S L Ship Recycling Industries Limited 3,338,419 - Janata Bank Limited ( CC HYPO) 21,790,391 20,819,834 Burhani Steel Corporation 238,448 - Dutch Bangla Bank Limited - 3,382,199 Gen Air Technology 316,200 - AB Bank Limited. 385,634 19,576,356 Shahab Uddin 201,081 - City Bank Limited( CC HYPO) (684,330) 13,797,376 Bismillah Iron Store 139,700 - One Bank Limited 43,649,902 21,225,003 Baroawlia Lime Store 119,543 - Dhaka Bank Limited 292,381 7,714,643 Nitol Motors Limited 148,553 - Standard Bank Limited 6,215,513 23,473,676 Shital Enterprise 117,150 - Habib Bank Limited 23,555,945 - BSRM Logistics Limited 1,960,237 - National Credit & Commerce Bank Limited 53,435,071 - BSRM Wires Limited 140,800 - 226,343,163 131,203,036 Local Purchase 19,325,106 4,172,506 16.04 Time Loan: J.N. Enterprise - 385,308 AB Bank Limited 16,968,350 60,728,730 Pioneer Trading - 5,195,599 Social Islami Bank Limited 4,763,625 - M. Rahaman & Brothers - 27,659 One Bank Limited - 101,390,694 Monsur & Brothers - 1,177,890 KYRC Coil Industries Limited - 1,349,066 City Bank Limited 230,013,812 - T.N. Brothers - 3,520,668 Dutch Bangla Bank Limited 336,050 128,955,987 China National Electrical Engineering Company Limited - 498,850 252,081,837 291,075,411 M. Hossen - 1,513,558 16.05 Demand Loan: Kamal Iron Mart - 912,082 Bank Asia Limited - 61,202,496 New Soudia Loha Bitan - 365,168 Mercantile Bank Limited - 285,275,025 Nizam Enterprise - 13,771,689 Bank Al Falah Limited 123,454,964 356,033,496 S.S.Enterprise - 2,716,724 Islami Bank Limited - 302,650,163 Pacific Traders - 5,585,490 City Bank Limited - 412,173,889 Others 3,020,941 - 123,454,964 1,417,335,069 43,951,569 41,192,257 17.00 Liabilities for Expenses: 18.00 Due To Affiliated Companies: For expenses 18,762,580 13,104,774 BSRM Wires Limited 1,645,134 350,000 Liabilities for Scrap Purchase (Note No: 17.01) 43,951,569 37,019,751 BSRM Steels Limited 542,787,176 - Liabilities for L/C (Note No: 17.02) - 1,384,252 544,432,310 350,000 62,714,149 51,508,777 Note: All Transactions among the affiliated companies have been made through A/C Payee cheque/Bank Transfer & interest were charged accordingly.

Annual Report 2014 150 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 151 2014 2013 2014 2013 Taka Taka Taka Taka 19.00 Other Liabilities: Fees & Renewal 327,225 - Retention Money 4,611,165 3,700,874 Paper & Periodical 10,394 9,514 Staff Income Tax 91,633 464,279 Telephone & Mobile Expenses 199,315 - TAX deduction at source 1,716,726 1,697,476 VAT Deduction at Source 354,731 583,593 Fire Insurance 2,409,085 2,366,682 Provident Fund 406,039 321,972 Insurance (Others) 75,952 19,132 Payable Against Interest 103,080,881 - Guest House Expenses 2,045,212 2,528,568 Advance against sale 695,696 2,386,504 145,604,685 117,525,125 110,956,871 9,154,698 20.02 Consumable Store Consumed: NOTE: VAT & TAX deduction at source have been deposited to Govt. Exchequer subsequently. Lining Materials 136,513,014 57,627,326 20.00 Cost of Goods Sold: Opening Stock of Raw Materials 1,810,865,772 1,691,324,272 Tundish consumable store 3,716,497 1,530,085 Add: Purchase during the year 7,059,308,822 7,040,008,479 Consumable Store 125,945,231 155,927,748 Raw material available for consumption. 8,870,174,594 8,731,332,751 266,174,742 215,085,159 Less: Sales of Scrap 27,035,171 4,912,838 21.00 General & Administrative Cost: Less: Closing Stock of Raw Materials 1,948,127,797 1,810,865,772 Directors Remuneration (Note No. 21.01) 12,000,000 12,000,000 1,975,162,968 1,815,778,610 Depreciation (Note No. 04) 1,397,877 8,656,174 Raw Material Consumed 6,895,011,626 6,915,554,141 Add: Production/Manufacturing Overhead Amortization (Note No. 06) 79,467 - Salaries & Allowances 119,801,187 111,957,192 Motor Car Expenses 296,711 12,919 Casual Wages 23,403,071 18,382,773 Travelling Expenses 317,146 613,751 Factory Overhead (Note No. 20.01) 145,604,685 117,525,125 Salaries & Allowances 8,203,304 4,611,727 Power Consumed 844,549,261 711,573,901 Office Rent 1,633,897 1,644,876 Fuel & Lubricants Consumed 23,281,591 24,004,184 Mechanical store 101,388,037 84,198,143 Advertisement Expenses 14,040 17,250 Electrical store 12,879,303 15,772,443 Office Expenses 59,272 15,821 General Store 7,858,190 7,217,920 Professional Fees 2,924,520 1,983,372 Godown Rent 7,258,696 5,738,820 Conveyance Expenses 415,110 159,201 Consumable Store Consumed (Note No. 20.02) 266,174,742 215,085,159 Stationery 22,996 21,954 Depreciation (Note No. 04) 168,653,040 170,372,998 Guest House Expenses 45,477 - 1,720,851,803 1,481,828,658 Repair & Maintenance 1,341,804 3,400 Cost of Goods Manufactured 8,615,863,429 8,397,382,799 Add: Opening Stock of Finished Goods 144,382,360 95,379,864 Postage & Telegram 17,645 7,581 Goods available for Sale 8,760,245,789 8,492,762,663 Mobile & Telephone Expenses 385,791 568,368 Less: Closing Stock of Finished Goods 72,308,618 144,382,360 Audit Fee 75,667 65,950 Cost of Goods Sold 8,687,937,171 8,348,380,303 Entertainment Expenses 2,238,985 630,182 Legal Expenses 205,382 195,035 20.01 Factory Overhead: Factory Office Expenses 110,551 193,675 Training Expenses 88,090 331,987 Repairs & Maintenance 13,995,750 8,676,276 Fees & Renewals 773,053 846,477 Printing Expenses 42,451 81,367 Electricity Expenses 509,643 370,139 Generator Expenses 1,313,369 299,313 Subscription 100,000 101,000 Medical Expenses 1,409,533 1,246,930 Medical Expenses 174,871 6,707 Postage & Telegram 24,472 17,344 Donation Expenses 82,000 75,000 Electric Expenses 7,676,409 7,217,139 Travelling 1,157,602 1,635,348 Gratuity 358,417 168,677 Conveyance 5,999,071 7,685,864 33,761,165 33,107,548 Entertainment 3,832,043 6,010,059 Guest House Rent 1,318,976 1,122,116 Carrying Charge 99,616,564 74,008,085 Computer Expenses 4,500 15,600 Gratuity 3,159,283 4,392,113 Consultancy Fee 876,928 -

Annual Report 2014 152 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 153 21.01 Directors Remuneration: 2014 2013 Taka Taka Name Designation Basic Salary 2014 2013 Per Month Taka Taka 28.00 Earnings Per Share (EPS): The computation of EPS is given below: Mr. Alihussain Akberali FCA Managing Director 300,000 3,600,000 3,600,000 a) Profit attributable to the Ordinary Shareholders (Net Profit After Tax) 166,836,194 140,704,026 Mr. Zohair Taherali Director 300,000 3,600,000 3,600,000 b) No. of Shares Outstanding for the year (1,100,000,000/10) 110,000,000 110,000,000 Mrs.Tehseen Zohair Taherali Director 200,000 2,400,000 2,400,000 1.52 1.28 Mr.Aameir Ali Hussain Director 200,000 2,400,000 2,400,000 29.00 Capacity Utilization: 2014 2013 Total 1,000,000 12,000,000 12,000,000 29.01 Production Capacity: MT MT Installed Capacity (In M.Ton) yearly 190,000.00 170,000.00 Actual Production (In M.Ton) 180,677.59 168,325.78 % of capacity utilization 95% 99% 2014 2013 Taka Taka 30.00 Number of Employees: 22.00 Other Income: 2014 2013 Miscellaneous Income 7,839,938 1,011,628 Persons Persons Profit on sale of Property, Plant & Equipment 434,076 217,994 Number of employees whose salary was below Tk. 3,000 - - 8,274,014 1,229,622 Number of employees whose salary was above Tk. 3,000 305 308

23.00 Financial Expenses: Total No. of Employees: 305 308 Bank Charges 2,469,560 3,725,399 Interest on Loan Against Trust Receipts 195,463,126 293,303,254 Interest on Term Loan 80,107,448 149,310,750 Interest on Cash Credit & Overdraft 12,194,638 22,722,600 Interest Income/ (Expenses) on Related Companies 141,974,669 (129,657,859) 432,209,441 339,404,144 24.00 Financial Income: Interest on FDR (Gross) 5,848,714 8,348,232 Foreign Currency Gain ( Note No-24.01) 5,520,682 21,830,699 11,369,396 30,178,931 24.01 Foreign Currency Gain/ (Loss): Foreign Currency Gain/ (Loss) Transaction (8,134,143) 22,803,544 Foreign Currency Gain/ (Loss) Translation 13,654,825 (972,845) 5,520,682 21,830,699 25.00 Provision For WPPF & WWF: Opening balance as on January 01, 2014 8,614,520 10,546,581 Provided during the year 11,992,391 8,614,520 20,606,911 19,161,101 Paid during the year (8,614,520) (10,546,581) Closing Balance as on December 31, 2014 11,992,391 8,614,520

26.00 Non Operating Income: Truck/Trailor Rent Received 7,570,500 7,560,000 7,570,500 7,560,000 27.00 Deferred Tax: Opening balance as on January 01, 2014 91,279,340 60,747,486 Due to temporary difference 68,589,734 30,531,854 Closing Balance as on December 31, 2014 159,869,074 91,279,340

Annual Report 2014 154 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 155 SHAREHOLDERS’ INFORMATION

PADMA BRIDGE ANNUAL GENERAL MEETING (AGM) The Padma Bridge is expected to facilitate regional trade, reduce No. of AGM : 13th AGM poverty and accelerate growth and development in the country as a Date : June 15, 2015 whole, making the investment a Venue : Institution of Engineers of Bangladesh, Chittagong Center sustainable venture for the country. It is expected to raise Bangladesh’s S. S. Khaled Road, Chittagong. GDP by 1.2%, pushing it over 7% and Time : 10.30 AM thus enabling it to become a middle-income country by World Bank standards, with over $1,000 per capita income by 2020. FINANCIAL CALENDAR Financial Year: 1st January to 31st December.

During the year 2014 operational results of the company were announced on:

January February 1st Quarter Report: 14th May 2014 March April May 2nd Quarter Report: 24th July 2014 June 2014 July August 3rd Quarter Report: 30th October 2014 September October November Annual Report: 31st March 2015 December

RECORD DATE The record date is April 12, 2015.

BSRM STEELS SHARE PERFORMANCE ON STOCK EXCHANGES Monthly Open, High, Low and Close share price and volume of the Company’s share traded on Dhaka Stock Exchange Ltd. (DSE) during the year 2014:

BSRM Steels Limited Annual Report 2014 157 Month Open (BDT) High (BDT) Low (BDT) Close (BDT) Total Volume EPS January 68.70 84.00 68.80 83.20 13,486,000 Year Taka February 83.20 83.20 70.00 72.70 7,846,500 2014 3.18 March 72.70 74.00 65.50 66.80 3,620,000 2013 4.95 April 66.80 72.40 63.00 66.90 4,518,000 2012 2.53 May 66.90 77.40 64.10 74.50 9,286,500 2011 2.46 June 74.50 97.20 75.00 83.80 35,568,500 2010 2.82 July 83.80 84.60 76.80 80.70 6,869,000 2009 1.68 August 80.70 104.80 75.90 97.50 36,642,500 September 97.50 125.00 92.80 115.60 56,267,500 MARKET CAPITALIZATION October 115.60 118.70 100.30 102.50 11,417,500 November 102.50 104.90 85.00 88.40 6,707,000 Year Taka in million December 88.40 94.00 85.00 87.70 3,100,787 2014 29,974 2013 23,480 Total shares traded during the year 195,329,787 2012 22,101 2011 38,572 2010 57,200 DIVIDEND DATE 2009 14,670 A final dividend @ 15% cash has been recommended on 31 March 2015 and after having approval of the shareholders at the AGM, dividend will be distributed within 30 days from the date of AGM.

LISTING The company’s shares are listed at the Stock Exchanges at Dhaka and Chittagong of Bangladesh. PLANT LOCATION

4, Fouzderhat Industrial Estate, Chittagong, Bangladesh FACE VALUE PER SHARE: Tk. 10/= Tel: +88(031) 2770192-3. CLOSING PRICE OF PER SHARE Closing Price of per share of your company as at 30th December 2014 was Taka 87.70 INVESTOR CORRESPONDENCE Mail to: BSRM Steels Ltd., Ali Mansion, 1207/1099, Sadarghat Road, Chittagong, Bangladesh, DIVIDEND Voice: +880 31 2854901-10, E-mail:[email protected] Year Rate of Dividend Form of Dividend Fax: +880 31 610101 Web: www.bsrm.com 2014 15% Cash (Recommended) 2013 15% Cash 2012 10% and 5% Cash and Stock respectively 2011 15% Cash 2010 20% Stock (Bonus) 2009 15% Stock (Bonus)

Annual Report 2014 158 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 159 EVENTS AND IMAGES

BSRM Steels Limited has been ranked as first for an Award of the Annual Report of year 2013 under the Category-IV: Manufacturing Sector by the Institute of Chartered Accountants of Bangladesh (ICAB). The awardees were A view of shareholders attended in 12th Annual General Meeting held on evaluated on the basis of the Evaluation Criteria set by SAFA Committee for 24th April, 2014 at The Institution of Engineers Bangladesh (IEB) improvement in Transparency, Accountability and Governance. The Award was handed over at a ceremony organized on Sunday, 30 November, 2014 at the Ball Room of Pan Pacific Sonargaon Hotel, Dhaka. Mr. Abul Maal Abdul Muhit, MP, Hon’ble Minister for Finance, Government of Republic of Bangladesh graced the ceremony as Chief Guest. Mr. Aameir Alihussain, Managing Director- BSRM Group, received the award at the event.

Many of the shareholders among attendees participated in question & answer session at the 12th Annual general meeting and shared their valuable opinion

Mr. Alihussain Akberali, Chairman of BSRM Group along with company secretary and other directors addressed number of issues to the KARNAPHULI shareholders TUNNEL

The government has decided to build a tunnel to unify and increase connectivity between the two parts of Chittagong. The proposed tunnel would ease the traffic congestion as it would be connected with National Highway and Asian Highway. It would benefit the port city immensely by BSRM Board of directors along with accounts high officials and team ensuring proper connectivity of members celebrated the success of ICAB 1st prize award winning for best Chittagong city with the proposed presented annual report 2013 at BSRM head quarter. deep-sea port and Dhaka-Chittagong Mr. Mohammed Rezaul Kabir FCA, Head of Accounts & Finance received Highway. the certificate of Merit on behalf of BSRM Steels Limited for the best presented Annual report 2012 from South Asian Federation of Accountants (SAFA) on 3rd May 2014 at Islamabad, Pakistan.

BSRM Steels Limited Annual Report 2014 161 EVENTS AND IMAGES GLOSSARY OF TERMS

Terms Brief description The Company / Parent BSRM Steels Limited Subsidiary BSRM Iron & Steel Co. Ltd. Associate BSRM Steel Mills Limited Revenue Turnover or Sales Profit Income BSRM has started organizing workshops on Structural Concept and Design of Open Web Joist. These workshops are part of the continuous endeavor of Profit attributable to the shareholders’ Net profit after tax BSRM to engage designers and planners of the country in addressing the Basic Earnings per Share (Profit attributable to the Ordinary shareholders aspects of safety in Structural Design. To create awareness on the subject of Basic EPS Mr. Mohammad Arif ACA, ACMA, Chief Financial Officer, BSRM Steels pre engineered steel building components. Marketing department effectively divided by weighted average number of Ordinary shares) th Limited received the Certificate of Merit on behalf of BSRM Steels Limited organized two workshops on 29 January at Sundarban Hotel, Dhaka and on for the best presented Annual Report 2013 from South Asian Federation of 8th February at BATON ROUGE Hotel, Dhaka. Diluted EPS Diluted Earnings or Income per Share Accountants (SAFA) on 4th December 2014 at Bhubaneswar, India. Difference between the carrying value of property, plant & equipment as per Deferred Tax financial statements and tax written down value and financial position liability method for gratuity obligation.

Equity Shareholders’ Fund or Owners’ Fund Net Current Assets Current Assets less Current Liabilities Capital Employed Non-current Assets plus Net Current Assets Revaluation Reserve Reserve created from assets re-valuation EBITDA Earnings before Interest, Tax & Depreciation Allowance Return on Shareholders’ Equity Net Profit after Tax divided by Shareholders’ Equity 5th SCB-FE CSR Award Return on Capital Employed Net Profit after Tax divided by Capital Employed BSRM was recognized as the best brand in the category of reinforced Current Ratio Current Assets divided by Current Liabilities steel for 3rd year in a row. Bangladesh Brand Forum in collaboration with world's leading brand research company, Millward Brown, hosted the 6th Quick / Acid Test Ratio Current Assets less Inventories divided by Current Liabilities Best Brand Award 2014 at Sonargaon Hotel in Dhaka on 22nd November. Mr. Kazi Anwar Ahmed, Head of Dhaka Corporate Office (left in photo) Inventory Turnover Ratio Revenue divided by Inventories received this prestigious award from Khandaker Samina Afrin, Country Manager of Millward Brown Bangladesh (right in photo). Total Assets Turnover Ratio Revenue divided by Total Assets P/E Ratio Market value per share as at reporting date divided by EPS Price/Equity Ratio Market price divided by face value per share Dividend Payout Ratio Yearly dividend per share divided by EPS Dividend Covered Ratio Net Profit after Tax divided by declared Dividend Debt-equity Ratio Current plus long term liabilities divided by shareholders’ equity

The 5th V & V Celebration took place on 31st January in 2 sessions at BSRM Interest Coverage Ratio EBIT divided by Interest expenses head office & Hotel Peninsula Chittagong. The day long V&V celebration started with an executive session where achievements based on BSRM Market Capitalization Market price per share multiple by Ordinary number of Shares Vision & values are discussed and new commitment for 2015 are made. Selected projects and activities related to respective values are presented by each of the Business / Function Heads. BSRM Chairman Mr. Alihussain Akberali addressed the audience on the state of Company and Mr. Aameir A.B.M. Sazzad Hossain, Design and Structural Engineer (Left Photo) Alihussain Managing Director of BSRM spoke on Goals & Future Plans of presented the keynote speech . He shared his thoughts about open web the company. joist with the valued participants. Apart from BSRM product engineers, Mr. Kazi Anwar Ahmed, Head of Dhaka Corporate Office & Abul Hasnat, AGM-Marketing were also present in this event.

Annual Report 2014 162 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 163 BSRM OFFICE MAP NOTES

Annual Report 2014 164 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 165 NOTES BSRM Steels Limited Registered office: Ali Mansion, 1207/1099 Sadarghat Road, Chittagong PROXY FORM

I/We ...... (Name)

of ...... (Address) being a Shareholder of BSRM Steels Limited (“the company”) hereby appoint, Mr. /Ms...... (Name)

of ...... (Address)

as my /our proxy, to attend on my/our behalf at the 13th Annual General Meeting (AGM) of the Company to be held on June 15, 2015 and at any adjournment thereof or any poll that may be taken in consequence thereof and to vote on my /our behalf as he /she thinks appropriate on all resolutions.

Dated this------day of ------2015.

------Signature of the Shareholder Signature of the Proxy Folio /BO ID No: Folio/BD ID No :

Dated ------Dated ------

------Signature of the witness

Note: The Proxy Form, dully filled in and stamped, must be deposited at the Registered Office of the Company, Ali Mansion, 1207/1099 Sadarghat Road, Chittagong not later than 48 hours before the time fixed for the holding of the meeting.

Signature Verified

------Authorized Signature BSRM Steels Limited

BSRM Steels Limited Registered office: Ali Mansion, 1207/1099 Sadarghat Road, Chittagong ATTENDANCE SLIP

I hereby record my presence at the 13th Annual General Meeting of BSRM Steels Limited on 15th June 2015.

Name ------BO ID

------Signature Signature Verified

------Authorized Signature BSRM Steels Limited Note: Please complete this Attendance Slip and deposit at the registration counter on the day of the meeting.

Annual Report 2014 166 BSRM Steels Limited BSRM Steels Limited Annual Report 2014 167