Information Document - Dhaka Stock Exchange

2. Procedures to be followed for determining price under book building methodi) The indicative price which has been determined by the issuer in association with issuemanager and eligible institutional investors shall be the basis for formal price building with anupward and downward band of 20% (twenty percent) of indicative price within which eligibleinstitutional investors shall bid for the allocated amount of security;ii) Eligible institutional investors bidding shall commence after getting consent from thecommission for this purpose;iii) If institutional quota is not cleared at 20% (twenty percent) below indicative price, the issuewill be considered cancelled unless the floor price is further lowered within the face value ofsecurity;Provided that, the issuer’s chance to lower the price shall not be more than once;iv) No institutional investors shall be allowed to quote for more than 10 %( ten percent) of thetotal security offered for sale through book building method, subject to maximum of 5 (five)bids;v) Institutional bidding period will be 3 to 5 (three to five) working days which may bechanged with the approval of the commission;vi) The bidding will be handled through the uniform and integrated automated system of thestock exchanges;vii) The volume and value of bid at different prices will be displayed on the monitor of the saidsystem without identifying the bidder;viii) The institutional bidders will be allotted security on pro-rata basis at the weighted averageprice of the bids (within the cut off price) that would be clear the total number of securitiesbeing issued to them;ix) Institutional bidders shall deposit their bid with 20% (twenty percent) of the amount of bid inadvance to the designated bank account and the rest amount to settle the dues againstsecurity to be issued to them shall be deposited within 2 (two) working days prior to the dateof opening normal trade for general investors;x) In case of failure to deposit remaining amount that is required to be paid by institutionalbidders for settlement of the security to be issued in their favor, 50% (fifty percent) of bidmoney deposited by them shall be forfeited by the commission. The securities earmarked forthe bidder who defaulted in making payment shall be added to the investor quota.3. Indicative Price for Book Building PurposeBased on Indicative Price Offers received from seven Institutional Investors from amongst fourgroups of institutional investors referred in rule 8.B.(16)(4)(c) of the Securities And ExchangeCommission (Public Issue) Rules, 2006; the Indicative Price for Book Building Purpose is fixed, inconsultation with the issue Manager and price offer from the eligible institutional investors throughproper disclosure, presentation, document, etc. at Tk 162.00 only as follows:-SI No Offered by Category IndicativePrice1 Standard Bank Ltd Financial Institution 1652 Continental Insurance Ltd Insurance company 1673 Swadesh Investment Management Ltd Merchant Banker 160Bangladesh Finance & InvestmentNon Banking1554 Company LtdFinancial Institution5 SAR Securities Ltd. Stock-Dealer (DSE) 1606 B & B Enterprise Ltd Stock-Dealer (DSE) 1657 Royal Capital Limited Stock-Dealer (CSE) 165Average 1622

The Indicative Price for Book Building Purpose is justified on the basis of the followingqualitative and quantitative factors:-A. Earnings Based Value per share (EBVPS) based on financial statement for the year ended31 December 2009A.1 Earnings per share (EPS) 2.79A.2 Average Market P/E of the sector 30A.3 Earnings Based Value Per Share (A.1x A.2) 83.7B. Earnings Based Value per share (EBVPS) based on projected financial statement for theyear ended 31 December 2010 to 2014B.1 Earnings per share (EPS) 6.62B.2 Average Market P/E of the sector 30B.3 Earnings Based Value Per Share (B.1x B.2) 198.6C. Net Asset Value Per Share(NAVPS) based on financial statements for the year ended 31December 2009C.1 Net Asset Value 3,865,314,106C.2 Number of Shares 208,593,000C.3 Net Asset Value Per Share (NAVPS) (C.1/C.2) 18.53D. Market Value Of similar share under Power industry:Company NameDhaka Electricity SupplyCompany LtdFace Value(BDT)10*Six Month Avg.Price (BDT)166.08*Summit Power Limited 10* 129.46*Average 147.77* In equivalent face valueThese companies’ stock prices are greater than their issue prices and face value. The strongestreasons are the earning potential of the companies. Most of the companies are operating in theirfull capacity and they are consistent in their operating performance and market dominance.Qualitative factors: Rationales for fixing indicative price of KPCLA) CRISL has assigned “AA” (pronounced as double A ) rating in the Long Term and “ST-1” rating in theShort Term to Khulna Power Company Ltd. based on financials and other relevant quantitative andqualitative information. The above ratings have been done on the basis of its good fundamentals suchas sound equity based capital structure, sound debt repayment background, high quality plant,satisfactory profitability, government guarantee against power purchase, insignificant market risk ondemand, government supportive policies for power sector etc. Entities rated in this category areadjudged to be of high quality, offer higher safety and have high credit quality. This level of ratingindicates a corporate entity with sound credit profile and without significant problems. Risk factorsare modest and may vary slightly from time to time because of economic conditions. The short termrating indicates highest certainly of timely payment. Short-term liquidity including internal fundgeneration is very strong and access to alternative sources of fund is outstanding. Safety is almost riskfree like Government short-term obligations.B) Bangladesh Power Development Board (BPDB), off-taker of KPCL, acknowledges KPCL as the bestavailable and the most reliable power plant for its excellent track record in operation. It has beensuccessfully supplying reliable power to the national grid since 1998 without any interruption for asingle day. KPCL plant has also been recognized by the third party inspectors, surveyors andspecialists as the best maintained fuel oil operated power plant. The plant availability has alwaysbeen near to 100%.3

C) KPCL never compromises with the quality of operation, maintenance, safety of plant and personneland in that consideration, engaged Wartsila, Finland, a world renowned equipment manufacture (alsothe manufacturer of KPCL plant), for the operation and maintenance of KPCL plant. KPCL plantoperation has been certified by Bureau Veritas (BV) on :• Quality Management System (QMS) with ISO 9001 – 2008• Environmental Management System (EMS) with ISO 14001 – 2007• Occupational Health and Safety Administration System (OHSAS) 18001 – 2007D) KPCL plant engines are having the dual fired capability i.e it can be converted into natural gaswhenever gas will be available at the south-eastern region. Conversion into natural gas will enablethe company to earn more revenue as compared to running on furnace oil, since the gas tariffstructure as fixed by BPDB is more attractive than furnace oil based tariff structure.E) The strategic location of the KPCL plant at the south-eastern region is an added advantage for KPCL.There are only few power plants in that region and as such KPCL is required to meet major portion ofthe demand of that region. Therefore, the utilization of the entire capacity of KPCL plant through outthe year is almost certain.F) The useful life of KPCL plant is 30 years. Therefore, no further capital investment will be required forthe existing plant to carry out another extended term.G) BPDB is the only buyer of KPCL and thus the revenues are 100% realizable. Unlike DESCO or DESA,KPCL has no system loss or no bad or doubtful debt.H) In the context of Bangladesh economy, the demand for power or the demand of power sector isthriving and insatiable. At present, the demand and supply gap is 1,700 MW. In consideration ofcurrent generation capacity, also together with the future planning for generation of additionalcapacity, Bangladesh will not be able to meet the increasing demand for power. As a result, thepower sector will continue to rule as top most demanding and dominating sector in the economy andno other sectors enjoys such a high demand profile. Therefore, KPCL’s revenue earnings and itsfurther growth and future potential is highly certain beyond any doubt.I) The proposed expansion of KPCL plant will enhance the KPCL earnings almost three times higher thanthe existing one. There will be no further fixed operating expenditure except the variables for theadditional unit as the same will be run by the same management and production team. No furtherland will be required and the engines are likely to be more efficient for improved technology over theyears.J) KPCL’s long eleven years of experience in running liquid fuel power plant and proven record ofoperation will help KPCL management to run the expansion unit more efficiently and diligently and toachieve more optimization and economy of operation which will contribute to the enhancement ofKPCL’s earning.Extension for another term of the project and Expansion of the capacity for additional 100 MW(+/- 10 MW):Rationale:i) The Article 2.3 of PPA has a clear provision that the project is renewable for a further period, subject toagreement in writing by the parties at the latest twelve months prior to the expiry.ii) The KPCL plant is most reliable and efficient plant in the BPDB grid, available for 365 days of the year andwith its 19 generating units, it is the most flexible and capable to meet BPDB’s ever varying load demand.iii)iv)For dwindling natural gas production in the country, the natural gas based power plants are in deepcrisis. Natural gas is being used in 85% of total generation and due to short supply, a few of theexisting plants running on gas may face shut down in the near future. Taking the above intoconsideration, the Govt. has already adopted a policy to use liquid fuel for generation of electricity.Accordingly, the future power plants will be built based on liquid fuel operation. Therefore, theextension of the term of KPCL plant is the imperative for the BPDB to meet the shortage of power.KPCL plants runs on Furnace Oil, the least cost liquid fuel, shall be most viable commercially.v) The existing shortage in generation capacity of the country shall continue to exist much beyond theyear 2013, when the tenure of the current PPA expires. Even in the year 2013 many of the BPDB oldplants shall retire and many will face shut down or capacity reduction owing to gas shortageTherefore, the extension of current PPA with BPDB shall take place as a natural consequence.Currently maximum generation capacity of all public and private power plants together is about 4,300 MW butcountry’s peak demand is about 6,000 MW. There is a demand supply gap of 1,700 MW and it will be widenfurther as a result of the general increase of demand. Considering of the increasing demand of power and the4

govt.’s future planning for addition of new generation, yet the demand supply gap will be increasing like 2,648MW in 2011, 3,132 MW in 2012, 3,259 MW in 2013, 3,799 MW in 2014 and 4,362 MW in 2015. Most interestingly,in 1998 when KPCL plant was connected to the national grid, the demand supply gap was about 1,000 MW andover the last 11 years it has gone up to 1,700 MW. In order to minimize the shortage of power, initiatives arebeing taken by the Govt. to welcome private sectors to set up more power plants.KPCL is currently in negotiation with BPDB for its expansion for additional capacity of 100 MW (+/-10 MW). Inview of the above mentioned existing shortage, further worsening in future due to gradual increase of demandof the power and the short supply of natural gas, the Govt. has decided to offer the expansion of the capacityof existing power plants which are running on liquid fuel. KPCL plant is among the two plants that are runningon liquid fuel and thus proposed for expansion which is in process.Therefore, for the reasons stated above the Govt. of Bangladesh is strongly considering the expansion of KPCLplant capacity by another 100 MW (+/- 10 MW).Energy sector companies are strong player with huge operating profit and its shareholders have takenthe benefit of direct listing from the gain of offloading of shares. Superior asset management andearning potential, strong fundamental position, greater liquidity and technological soundness makethese companies better player in the stock market. KPCL is a peer company of these companieswhich also has a sound financial background and operational efficiency. So, it is optimistic toexpect that KPCL will perform better than its Competitors and Peer companies. Considering theaverage value and the fact that the company is renowned “Electricity generating company” havingwell known client’s base and brand image, so the indicative price is just and fair.4. The company has opened an Escrow account with BRAC Bank Limited “Khulna Power EII EscrowAccount” No. 1501100976943002 for collecting bid money from the eligible institutional biddersunder Book Building Method.ToThe SecretaryDhaka Stock Exchange LimitedDhakaDear Sir,UNDERTAKINGToThe board of directorsChittagong Stock Exchange LimitedChittagongWe undertake, unconditionally, to abide by the Listing Regulations of the Dhaka/Chittagong StockExchange Limited which presently are, or hereinafter may be in force.We further undertake:That our shares and securities shall be quoted on the Ready Quotation List and /or the Cleared Listat the discretion of the Exchange.That the Exchange shall not be bound by our request to remove the shares or securities from theready Quotation List and /or the Cleared List.That the Exchange shall have the right, at any time to suspend or remove the said shares orsecurities for any reason which the Exchange considers sufficient in public interest.That such provisions in the Articles of Association of our company or in any declaration or basisrelating to any security as are or otherwise not deemed by the Exchange to be in conformity withthe Listing Regulations of the Exchange shall, upon being called upon by the Exchange, be amendedto supersede the Articles of Association of our company or the declaration or basis relating to anysecurity; andThat our company and /or the security may be de-listed by the Exchange in the event of noncomplianceand breach of the Regulations and/or of this undertaking after giving an opportunity ofbeing heard to us.Yours faithfully,Sd/-Managing Director5

B. RISK FACTORS AND MANAGEMENT PERCEPTION ABOUT RISK:As with all investments, investors should be aware that there are some risks associated with aninvestment in the Company. The investors should carefully consider the following risks in additionto the information contained in the prospectus for evaluating the offer and taking decision whetherto invest in shares of the company.a) Interest Rate Risk:Interest/financial charge are paid against any kind of borrowed fund/ preference shares. Instabilityin money market and increased requirement for fund may put pressure on interest rate structure.Rising of interest rate increases the cost of borrowed fund and consequently it may impact on theprofitability.Management Perception: Currently, KPCL has working capital debt obligation from several banksand preference shares which are comprised with fixed financial charges. But the Company has solidrevenue source and is highly profitable. The rate for the financial charges are fixed so, KPCLdoesn’t have such risk.b) Exchange Rate Risk:KPCL imports mostly fuel against payment of foreign currency. Unfavorable volatility or currencyfluctuation may affect the profitability of the company.Management Perception: KPCL is fully aware of the risk related to currency fluctuation butpractically doesn’t possess any foreign exchange risk as 99% of the Other Monthly Tariff (OMT)isconvertible and fuel is being imported through L/C and the exchange rate Sonali Bank Ltd. isacceptable to BPDB under pass through payment process. Moreover, KPCL executes favorable andcompetitive foreign exchange rate from its bankers against its L/C payments.c) Industry Risk:The supply of electricity and alternative energy is not adequate than the demand of it. For thatreason organizations engaged in generating electricity can’t provide all required amount ofelectricity. Power companies mainly supply electricity to national power distributors to supplyelectricity.Management Perception: KPCL supplies electricity to BPDB in the south-western region ofBangladesh and it’s a dedicated power plant with a guaranteed payment from BPDB and GoB underthe PPA. So, possibilities of entering new power companies wouldn’t create any industry risk forthe company.d) Market and technology related Risk:Technology is related to generation, transmission, distribution, quantity measuring and maintainingof required electricity generation.Management Perception: The Company is operated by the plant manufacturer, Wärtsilä, theleading power plant manufacturer and plant operator in the world. Wärtsilä is technologicallyadvanced enough to keep KPCL plant out of such risk.e) Potential or existing Government regulation:The business activities of KPCL is fully controlled by policies, rules and regulation framed bygovernment, that is policies related to electricity price fixation, demand & supply and distributionis fully under the control of Government. So, government policies in this regard may impactbusiness operation of KPCL.6

Management Perception: The Power Purchase Agreement with BPDB safeguards KPCL from anychanges in government regulation. The PPA agreement is valid for 15 years till 2013 and can beextended upon the consent of both parties. Moreover, in case of PPA termination, KPCL will getcompensation under the agreement from BPDB or GoB. Additionally, the huge shortage of power inthe country minimizes the chances of terminating the PPA agreement that mitigates related risks.f) Potential changes in the global or national policies, natural calamities etc:The performance of the company may be affected due to unavoidable circumstances in Bangladesh,as such political turmoil, war, terrorism, political unrest in the country may adversely affect theeconomy in general. Moreover, natural disasters like Cyclone, Tide, and Earthquake may hampernormal performance of power generation.Management Perception: The risk due to changes in global or national policies is beyond controlfor any company. Yet the company is well prepared for adoption of policies and preventivemeasures as and when required to reduce the risk. The routine & proper maintenance of thedistribution network undertaken by BPDB reduces major disruption due to natural calamities. Butsevere natural calamities, which sometimes are unpredictable and unforeseen, have the potentialto disrupt normal operations of KPCL. But with prudent rehabilitation schemes and the veryeffective and quick repair and maintenance lessened the damages caused by such disasters.Political unrest leading to strikes, hortals etc. certainly plays negative impact in any business. Butelectricity service being considered a daily necessity & in consideration of its use by allirrespective of their political thoughts is always kept out of obstructions.Furthermore, all such above risks are covered under the insurance agreement with CODAN Marine(a subsidiary of RSA Group) to compensate the damages due to such uncertainties in extremecases. Thus, the risk due to natural calamities & political unrest is minimized.g) Operational Risk: Risk associated with limited tenure of the present Power Purchase Agreement:The tenure of the present PPA between the Company and BPDB is limited to 15 (fifteen) years fromthe date of commercial operation i.e. till 13 th October, 2013.Management Perception: On the backdrop of development need for the economy, powergeneration is one of the priority sectors of the government. With the existing deficit in powergeneration capacity, the government is expected to continue with the same policy level supportfor the sector. Dispute with any one operator may lead to adverse repercussions throughout theindustry. As such, no major dispute with the government is envisaged. There is a provision in thePPA for enhancement of the project life. BPDB and KPCL have been considering to expand thecapacity of the Berge Mounted Power Plant utilizing the area of its leasehold property, KPCL wantsto install additional 7 generation units with the capacity of 15 MW each to generate total 100 MW.The strategy is to generate and produce more electricity by using fewer big engines with higher fuelefficiency. Risk associated with single party exposure:The BPDB is the single buyer who purchases total electricity generated by the Company. TheCompany’s ability to service its both existing and future financial obligations rest on the BPDB’sability to meet the tariff payments under the PPA.Management Perception: KPCL is out of the single party risk exposure as it is guaranteed by BPDBfor the payment in case the plant runs lower than 50%. Moreover, L/C issued by BPDB for twomonths’ minimum guaranteed payment. Therefore, the Implementation Agreement signed by theGovernment through Ministry of Power, Energy and Mineral Resources is considered to beGovernment guarantee to protect the Company from single party risk exposure.7

Risk associated with tariff of electricity:The BPDB is the single buyer who purchases total electricity generated by the Company. In thesecircumstances usually it is the buyer who may determine the tariff value of the electricitygenerated by the Company.Management Perception: In this case no risk is associated as BPDB and the Company have predeterminedand contracted the terms and condition regarding the tariff of electricity, expressedunder two slabs – Other Monthly Tariff (OMT) and Fuel Tariff (FT) where OMT is based on deliveredMWh and FT is pass through. Tariff for each year is adjusted and indexed from time to time inaccordance with the PPA and the said Reference Tariff is used to calculate the Tariff in Effect forany Billing Month during the Term of the Agreement. Risk associated with supply of raw materials:The main raw material for generating electricity is Heavy Fuel Oil (HFO). Any interruption ofsupplies of the fuel to the power plants will hamper the generation of electricity, the only productof the Company.Management Perception: Kuo Oil Pte Ltd. Singapore has been supplying Heavy Fuel Oil (HFO) to theCompany through United Summit Coastal Oil Limited and the risk of price fluctuation in the globaloil market is automatically done by the very FT structure which is based on fuel cost as a passthrough item. Moreover, KPCL can source HFO from other sources if Kuo Oil is unable to supply. Risk associated with supply of spare parts:The power plants are dependent on timely supply of spare parts for smooth operation purpose. Anydisruption in supply flow of spares parts will put an adverse impact on power generation.Management Perception: Under the Operations & Maintenance Contract with Wartsila, theCompany has signed a Spare Parts Support Agreement (SPSA). Wärtsilä also maintains sufficientspares parts inventory for smooth operation of KPCL plants. In addition, KPCL maintains safetyspare parts stock of US$ 2 million. Risk associated with payment:There is an impending risk in the case of delayed payment from BPDB. In case of any dispute withBPDB or failure to comply with certain rules and regulations, BPDB may stop making payments toKPCL resulting into non-payment to its lenders.Management Perception: KPCL is getting the payment regularly from BPDB. Sometimes, there aredelays in payment but that is mainly due to administrative reasons. Till date, no payment has beendefaulted. As per the PPA with BPDB, there is a penalty clause and BPDB needs to ensure minimumguaranteed payment supported by Letter of Credit. .Additionally, GoB through the Implementation Agreement provides sovereign guarantee withregard to payments, hence possibly mitigating risk of any non-payments. Risk associated with systems failure and sabotage:System failure may take place resulting into damages for KPCL. Moreover, internal conflict amongthe workers and engineers may also disrupt operation.Management Perception: There is an agreement with the O & M Contractor and equipmentsupplier to provide maintenance and equipment support. Additionally, any equipment andmechanical support will be provided for in case the plant needs to be converted from a fuel basedto a gas based plant. In addition, the company has prudent insurance coverage with CODAN Marinewhich covers all risks package including Machinery Breakdown, Business Interruption, Third PartyLiability, Sabotage and Terrorism.8

C. DESCRIPTION OF THE BUSINESS:Information about the Company• BackgroundIn 1997 the Bangladesh Power Development Board (BPDB) was faced with the challenge to ease acritically short power supply in the South Western Zone of Bangladesh. The electrical demand hadbeen consistently higher than available capacity, and generation costs in the area had been veryhigh due to the low efficiency of existing equipment and the heavy use of expensive, lowavailabilityfuel. In October 1997, BPDB signed a Power Purchase Agreement with Khulna PowerCompany Ltd. for a 110 MW floating base load power plant at Khulna, to help ease the electricityshortage.• DescriptionKhulna Power Company Ltd. is a public limited company which was incorporated as a privatelimited company in Bangladesh on October 15, 1997. Its paid up capital is BDT 2085.93 million (US$44.10 million) It is the first independent 110MW barge-mounted power plant that commencedoperation in October 1998 under a 15 year PPA from the government (expiry 2013). Whenestablished, KPCL shareholders were Coastal Power Company (later Coastal was merged with ElPaso Corporation, USA) through its direct wholly-owned subsidiary El Paso Khulna Power ApS,Summit Industrial & Mercantile Corporation (Pvt.) Ltd. (Bangladesh), United Enterprises & Co Ltd.(Bangladesh) and Wärtsilä Development and Financial Services (Asia) Ltd. Now only localshareholders hold 100% ownership of the company. KPCL project was initially financed by the IFCand the sponsors’ equity with a debt-to-equity ratio of 54:46. The total initial project cost was USD96.07 millionThe principal activity of KPCL is to own and operate barge mounted power plants in Khulna andsupply electricity to the national grid of Bangladesh. The plant came into operation in October1998. Nine engines generators are mounted on one barge and ten on the other. The barges, shippedas deck cargo on a submersible dry tow ship, are moored in a closed basin. Each barge isapproximately 91 meters long and 24 meters wide. These two barge-mounted plants wereconnected to the national grid. The plant consumes about 600 MT of Heavy Fuel Oil daily togenerate 110 MW power by the 19 generators on the two barges located in Khalishpur, Khulna.The project was the first IPP implemented under the then new Government of Bangladeshguidelines for private power projects. As Bangladesh has enjoyed steady growth in recent years, theinfrastructure to supply electricity to the economy has not kept pace with this growth. Reliabilityof electricity supply, which has been a growing problem over the years, has now reached crisisproportions. Peak demand is about 5500-6000 MW, whereas available generation is about 4200-4500MW. The demand supply imbalance has now become a major bottleneck to economic growth. TheKhulna power project is a fast-track response to the power shortage.KPCL plant was designed to alleviate the severe power shortages in the Khulna and adjacent areas,identified as industrial growth Centres by the Government of Bangladesh, while improving theoverall reliability of the country's power supply. The facility displaced the generating capacity ofthe older, less efficient, and high-cost plants in the region. The plant conformed to all applicableenvironmental standards.The plant has already changed the economy of the adjacent region directly and positively. It hasprovided employment to over 110 people from the surrounding areas and many of the jobs aretechnical and managerial in nature. Significant numbers of jobs have been created at the fuelterminal, barges, restaurants, transportation services, and other ancillary businesses created toserve the needs of the plant. New industrial and commercial establishments have been opened totake advantage of the stable and reliable power, and existing establishments do not require backupgenerators. In addition, the plant has contributed significant funds toward social causes in theregion.10

• OwnershipThe ownership structure of KPCL is as follows:Summit Industrial and Mercantile Corporation (Pvt.) Ltd. 49.9832%United Enterprises & Co. Ltd. 49.9832%Others 0.0336%• Company At A GlanceCompany Name: Khulna Power Company Ltd. (KPCL)Registered Address: Summit Centre (5 th Floor), 18 Karwan Bazar, Dhaka-1215Plant Address: Goalpara, Khalishpur, KhulnaPaid Up Capital: Tk. 2,085,930,000.00 (Ordinary Shares)Tk. 1,100,000,000.00 (Preference Shares)Sponsors: Summit Industrial and Mercantile Corporation (Pvt.) Ltd.United Enterprises & Co. Ltd.Unique Client: Bangladesh Power Development BoardEPC Contractor: Wärtsilä NSD OY, FinlandNumber of Employees : KPCL has 10 and plant has 113 engaged by Wärtsilä O&M operatorTotal electric output: 110 MWElectrical efficiency : 43.5 %Engine type: 19 x Wärtsilä 18V32LNYear of Starting Operation : 13 th October 1998Annual General Meeting held in last 5 years:Year Date of AGM held Declared dividend2004 (7 th ) 3 May 2005 7% Cash2005(8 th ) 11 September 2006 Nil2006(9 th ) 24 July 2007 Nil2007(10 th ) 21 June 2008 57.53% Cash2008(11 th ) 23 June 2009 10% Cash12

Background of Past ShareholdersEL PASOEl Paso, North America’s leading provider of natural gasservices was a 73.9% shareholder in KPCL. The company hascore businesses in production, gathering, processing, andtransmission of natural gas, as well as liquefied natural gastransport and receiving, petroleum logistics, power generation, and merchant energy services. It isrich in assets and is fully integrated across in natural gas value chain and is committed todeveloping new supplies and technologies to deliver energy to communities around the world.El Paso Energy International pursues a low risk, power-oriented investment strategy, as a projectdeveloper. This strategy has helped the company build diversified project portfolios supported byfixed return contracts in countries around the world. These portfolios present significantopportunities to build robust businesses in selected markets where the right combination ofeconomic, regulatory and industry conditions exist. By focusing on regional business growth, El Pasocan export the broader skill set of the entire company to produce significant growth.WÄRTSILÄWärtsilä Corporation is the leading global ship power and powerplant supplier. Wärtsilä enhances the business of its customers byproviding them with complete lifecycle power solutions. It is amajor provider of solutions for decentralized power generation andof supporting services. Most of its IPP deliveries were directed toAsia, North America and all other continents.Wärtsilä plans to contribute to solving the global needs of sea transportation and power generationby developing equipment and services that convert fuels into power efficiently at the lowestpossible environmental impact. It has its own worldwide service network in 80 countries. Wärtsilätakes complete care of customers’ ship machinery and related equipment at every lifecycle stage.It plans to expand the business by providing innovative, reliable and valuable service, such as non-O&M service in key ports, scheduled and condition-based maintenance, as well as operations andmaintenance contracts.14

• The year 1999 marked one of the highest rates of growth in the company’s historythrough the formation of various companies in partnership with other majorcompanies and conglomerates both domestic and international. In 1999 SIMCLpartnered the United Group and Wartsila USA to form KPCL, the country’s first110 MW Barge Mounted power Generation plant. That year also led to theformation of USPCL, an LPG plant in Mongla, in association with the UnitedGroup. Finally, the year was rounded to a close, in terms of energy developmentthrough the formation of USCOL, an energy oil company, in conjunction with ELPaso USA and the United Group. The year 1999 also earmarks the establishmentand development of USSL, a shipping company, created with joint partnershipbetween Summit and United Group. In its year of conception it bought two Oceangoing tanker vessels and became the first ISO 9002 certified shipping company inBangladesh. Summit continued its extraordinary growth through the formation ofSummit Pipeco Limited in partnership with the Alliance Group. Summit Pipecoteamed up with Daquing a company based out of China to execute the EPC of 54Km Ashuganj- Hobiganj gas pipe line construction work in Bangladesh• In 2000 summit power limited (SPL) was established to set up ‘distributedpower’ in Bangladesh. Presently SPL has seven power plants providing electricityto 600,000 homes, generating 215 MWs of electricity with natural gas as its fuel.• In 2004, the company formed SAPL to expand its capacity and operations in thecontainer terminal field. SAPL is also traded and publicly listed in the Dhaka StockExchange and Chittagong Stock Exchange. OCL and SAPL together deals with 15%of the country’s import cargo and 30% of the export cargos. The two companiesare both located in Chittagong port and helps facilitate port services, they over50 acres of freehold land and operates a streamlined modern container handlingand empty storage facility with a capacity of 4000 tones.• In 2006, the Summit acquired a Dhaka Stock Exchange membership (Membership #146) in the name of Cosmopolitan Traders (Pvt.) Limited a sister company ofSIMCL and substantial share of the following companies:i) National Housing Finance & Investments Limited.ii) IPDC of Bangladesh Ltd.iii) Bangladesh Commerce Bank Limited• In 2009, the company set up SCL (Summit Communications Limited) to break intothe telecommunication sector to provide much needed revitalization to theBangladesh’s telecommunications. Improvement in the telecommunicationssector is a move towards ingratiating Bangladesh into the larger globalcommunity. This project is yet another inference to the revolutionary nature ofSIMCL investment portfolio.SIMCL’s financial position at the end of the accounting year as of 31 st December 2009 was in a soundand stable position having a total of Taka 593.70 crores in total assets with a net worth of Taka560.32 crores. The total turnover for the year was Taka 198 crores with a net profit of Taka178.29crores after tax.Ocean Containers Ltd.Ocean Containers Limited (OCL) is a pioneer in the inland container depot and freight stations andis the largest privately owned land container port in Bangladesh. It is located at Patenga IndustrialArea of Chittagong on the international airport road, which is only 6 km from the country’s largestseaport, Chittagong Port.OCL owns 15 acres of custom bonded free hold land. Currently, OCL can stuff and de-stuff 50,000containers annually. It also has an empty storage facility for 6,000 TEUs. OCL is a custom bondedwarehouse. With the logistic support of its surface transport subsidiary in Ocean Transport16

Company, it can deliver containers anywhere in Bangladesh. The company currently operates afleet of 24 prime movers with 40 feet trailers.Government customs officers and OCL are working round the clock to keep our commitment. Ourfully computerized system allows us to keep track of all containers. OCL is an ISO 9001: 2000Quality Management Certified Company. It is the first company in Bangladesh to have the ISOcertification for Inland Container Depot (ICD) and container freight station (CFS) operators.OCL clienteles include Maersk-Sealand, Yang Ming Line, Happag-Lloyd, Kuhene & Nagel, Danzas,Zim Line etc. OCL is in discussion with APL-NOL to have long term contract for consolidating theirexport bound cargoes from Bangladesh. OCL already has similar arrangement with Maersk-Sealand.OCL currently caters to the 30% of the garment’s export bound cargoes. By the year 2004 OCL aimsto consolidate 50% export bound cargoes of Bangladesh.Summit Power LimitedSummit Power Limited (SPL), a concern of Summit Group is the first Bangladeshi IndependentPower Producer (IPP) in Bangladesh and until now the only local company in private electricitygeneration and supply business providing power to national grid. SPL was incorporated inBangladesh on March 30, 1997 as a Private Limited Company. On June 7, 2004 the Company wasconverted to Public Limited Company under the Companies Act 1994. SPL’s shares are quoted onboth DSE and CSE. SPL is the first company signing PPA with BPDB to build small size power projectin private sector with the objective of providing electricity to PBS through national Grid.SPL has so far successfully established seven power plants and is supplying total 215 MW ofelectricity to the national grid. SPL’s power plants comprises as follows:i) Ashulia plant - 44.75 MWii) Chandina plant -24.50 MWiii) Madhabdi plant-35.30 MWiv) Rupganj plant -33 .00 MWv) Jangalia plant- 33.00 MWvi) Maona plant -33.00 MWvii) Ullapara plant -11.00 MWConsidering the immense opportunities, the company is striving to establish more power plantsaround the country. The company is also planning to explore energy markets in Sri Lanka andVietnam.Cosmopolitan Traders (Pvt.) Ltd (CTL)Cosmopolitan Traders (Pvt.) Ltd (CTL) is a holding company involved in port related businesses suchas container depot, liquid storage terminal, gas terminal, shipping and other businesses.Summit Shipping Ltd. (SSL)Summit Shipping Limited (SSL), a private limited company was incorporated in 2nd June 1998 tooperate in transportation of liquid products. Cosmopolitan Traders (Pvt.) Ltd., a sister concern ofSummit Group, is the major shareholder of the shipping company. Subsequent to its incorporation,SSL executed a 15-year ‘Transportation Agreement’ with United Summit Coastal Oil Limited(USCOL). Presently SSL operates two tankers with a load capacity of 1,800 MT and 1,200 MTrespectively.Expansion plans of the company include procurement of ocean going tankers for transportation offurnace oil, edible oil and LPG from international market to Bangladesh. SSL has also implementedISO 9002 Quality Management System (QMS) in 2001. This was the first ISO 9002 certified shippingcompany in Bangladesh.17

United Summit Coastal Oil Ltd. (USCOL)United Summit Coastal Oil Ltd. (USCOL), a joint venture between Summit, United and El PasoInternational, USA, is the first private sector energy oil management company of Bangladesh. Thiscompany was formed with the goal of managing the furnace oil requirements of the country’semerging private sector power generation companies. Leveraging on the expertise of a majorintegrated oil company El Paso International USA, USCOL actively participates in sourcing, tradingand supplying energy oil in Bangladesh. The principal client of USCOL is Khulna Power CompanyLtd., which requires furnace oil to fire its generators. USCOL also actively markets its expertise toother barge mounted power plants operational in Bangladesh, to other power producers whorequire oil-based fuel for power generation.Summit Alliance Port Ltd.Located on both sides of the Beach road which is 7 km away from the multipurpose berths of theChittagong port, Summit Alliance Port is currently spread over an area of 17 acres. The port has a40,000 sft warehouse capable of handling CFS stuffing upto 1,000 TEUs monthly and ICD withhandling capacity of about 4,500 TEUs for storage of empty containers at any time.SUMCYNETSUMCYNET is an innovative Web Design and Software Development company. The company iscomposed of team of talented, experienced professionals, inspired by life, to generate the bestquality work. The excellence of work supported by the company is reflected in the client'ssatisfaction. With extended experience and comprehensive knowledge, Sumcynet believes to have afull understanding of its client's requirements and how to attend to them in the best way possiblewithin their specific time frame.The customers are presented with top of the range, user-friendly, striking and interactive updatedwebsite. The focus is to make sure that the client’s business is SEEN! The web designs/pages are100% originals and are designed to the highest standards. The company ensures that clients receivepersonalized care round the clock. Everything at Sumcynet Web Design is done in-house. Thecompany strives to create professional website for businesses at affordable price.UNITED ENTERPRISES & CO. LTD – UNITED GROUP OF BANGLADESHUnited Group has grown into one of the leading business houses in Bangladesh since its inception in1978. United Group focuses in providing value added services and fostering business includingprovision of total solutions to an increasingly developing economy of Bangladesh. United Group’sfundamental strength is its commitment and enthusiasm to provide an excellent service forcustomers. Since the beginning of the last decade the objectives of the group has been toparticipate and take up investment opportunities in selected key infrastructure sectors and enablesit to meet the challenges of the new century. From its inception the group’s focus has been toinvest in key infrastructure areas. The key sectors where the group is currently engaged are powergeneration, civil & hydro engineering, real estate developments, land port services on a build, ownand operate basis, international university, multi specialty hospital, shared banking ATM network,textile mills, polymer industries, heavy construction equipments division, passenger lift &escalators, turnkey solutions etc. The key sector in which it is engaged includes:• Manufacturing• Energy& Power generation• Broadcasting and communications• Port & Maritime transportation• Textile mills• Real Estate and Constriction• Healthcare and Hospital• Education18

United Enterprises & Company LimitedUnited Enterprises & Co. Ltd. was established in mid-July 1978. The company expanded its areas ofbusiness covering power generation, sub-stations, broadcasting and telecommunications, maritimetransportation and freights and the turnkey solutions and system management. United Enterprisesparticipated in various nation-building tasks of the GOB.NOVO Healthcare & Pharma Ltd.NOVO Healthcare & Pharma Ltd. started its journey in 2004 and has since gone on to become one ofthe most trusted brands by doctors across the various fields of medical practice. Keeping in linewith the norm at United Group, NOVO is also a pioneering company among the other key players inthe field of pharmaceutics. With its cutting edge technology, NOVO has been successfullymanufacturing bulk drugs (RTF Pellets) since its inception. As a matter of fact, it is the firstcompany in Bangladesh which has been approved by the Drugs Authority (DA) for producing suchbulk pellets. Through rigorous research and development and thorough dedication, they arecurrently manufacturing very specialized pellets of PPIs, Hematinics, etc. As a matter of fact, asignificant quantity of this is presently being used by a large number of local pharmaceuticalcompanies on a daily basis. This alone is a testament to how the company has heralded a new erain the Bangladesh Pharmaceutical sector with its ever-evolving portfolio of powerful and precisiontunedpharmaceutical products that help people to live healthier lives.NOVO's concern for quality is reflected in every aspect of its products – from raw materials topackaging materials. Utilizing quality ingredients in our manufacturing processes, fully equippedquality control laboratories and state of the art production plants, the firm has been organized withmodern sophisticated technology that is continuously upgraded and standardized to meet thehighest level of international standards. In fact we are one of the few companies in Bangladesh whohave received the World Health Organization (WHO) certification for Current Good ManufacturingPractices from the Drug Directorate. In the analytical and the micro biological laboratories; young,energetic and skilled professionals are working with a great sense of responsibility to ensure qualityof all the products that leave through the factory gates. Along with various commonly acceptabledosage forms like tablets, capsules, liquid, cream & ointment (LCO) as well as Powder forSuspension (PFS), a wide range of life saving antibiotics and other pharmaceutics are predominantin NOVO's product line.United Hospital LtdUnited Hospital Ltd was born out of a vision to provide a complete and one-stop healthcare solutionto the people of Bangladesh. Opening its doors in August 2006 and situated besides the picturesqueGulshan Lake, this hospital is one of the largest private sector healthcare facilities in Bangladesh.With a capacity to house over 450 patients and established across a total covered area of over400,000 sft, the hospital has 11 state of the art operation theatres to cater to the needs of ourvaried patient base.Departments of cardiology, gynaecology, orthopaedic and paediatrics of United Hospital are staffedby the most esteemed doctors in their respective fields. As an example, a glimpse at our cardiologydepartment would reveal that till date we have conducted over 2300 open heart surgeries and over8300 angiograms and angioplasty operations. That’s over 12 heart related surgeries per day alonesince our inception. With its technology and expertise, and with the support of very friendly staff,United Hospital strives each day to be the number one healthcare provider, not only withinBangladesh but within the Asia-Pacific region.Malancha Holdings LtdIn January 2007 Malancha Holdings Ltd. was born out of the necessity for uninterrupted, qualitypower supply to the industries housed within the Export Processing Zones (EPZ) of Bangladesh.Currently operating a 35 megawatt unit in Dhaka EPZ and a 44 megawatt unit in Chittagong EPZ,this company allows its clients to concentrate only on their core business rather than worrying19

about their energy requirements. The total project cost of the plants stand at Tk. 3750 million andis powered by the latest Wartsila gas engines with the ability to produce 8.73 megawatts ofelectricity each. High voltage 33/11 KV substations comprising of two 16/25 MVA, 11/33 KV powertransformers along with required length of 11 KV distribution lines have been built by MHL undereach of the two project sites. Thus MHL has constructed multidisciplinary infrastructures like powergeneration, high voltage transmissions and distribution and high/low pressure gas pipelines for theproject. In effect, this makes us the only true independent power generation and distributioncompany in all senses of the term. It is a model that we plan to replicate across all the EPZs of thecountry. On top of this unique achievement, MHL has been regularly providing its surplus energy tothe Rural Electrification Board (REB) of Bangladesh, thus lighting up thousands of homes across thenation. We can only hope that one day our approach to power generation will make our country ashining beacon within the Asian region.Comilla Spinning Mills Ltd.In a country where the textiles industry is one of the major contributors to the GDP and indeed oneof the largest earners of foreign exchange, Comilla Spinning Mills Ltd. has managed to make itsmark as a maker of high quality cotton, polyester and mixed yarns. Established in 1996, the factoryis nestled in the heart of Burichong, Comilla, spread over 13 acres of land, with 1100 full-timededicated workers managing and operating the plant around the clock. With 18,000 spindlesinitially, it was projected to go under a progressive expansion program and methodicaldevelopment through scientific research, design and creative plan of operation. As it stands now,the plant has almost 50,000 functioning spindles being complimented by other high-end Europeanmachineries producing roughly 14 tons of yarn a day. A fun fact – that is almost enough high qualityyarn to cover over a 1000 kilometres a day. However, we have no plans of stopping now. In the nearfuture, we hope to increase this capacity to almost 70,000 spindles.United International UniversityProper education solidifies the backbone of a nation – the youth who are destined to lead thecountry into the future. In 2003, United Group ventured into this noble professional sector byuniting together some of the finest academic minds in the nation under the banner of UnitedInternational University.With an excellent library, well equipped laboratories, proper classrooms and student recreationalfacilities, it is an ideal place to excel in learning. It was surprising that even after a decade ofoperations; similar educational institutions were yet to achieve the same. UIU believes that only byproviding the right environment could the desired results it achieved. Having such a campus wasthus an absolute necessity.Even now the faculty is engaged in designing new disciplines that are relevant for the Bangladesheconomic context. They would of course include Accounting, Textile Engineering, Pharmacologyand Nursing departments, to name a few. With plans of opening a new major campus to evergrowingstudent base and faculty, steadily but surely it plans on becoming the largest privateuniversity in the country within the next few years.Neptune Land Development Ltd.Neptune Land Development Ltd. began its commercial operation as a premium real estate companyin 2003 with United City being its flagship project. Imagine a scenic landscape where all the beautythat nature has to provide resides in perfect harmony with the excellence of Man’s creativity in thefield of architecture. Imagine wide open fields echoing with children’s laughter, a lake besidewhich to sit and while an evening away, and the absolute tranquility of suburbia. It will be the mostbeautiful setting within one of the largest metropolitan cities in the world. Located a stone’s throwdistance away from the US Embassy in Baridhara, it can simply be described as a piece of heaven inDhaka, where families can start their lives anew, secure in their knowledge that they reside in oneof the finest of localities in the capital.With over 300 acres currently under development in United City and 650 plots already handed overto a most excellent clientele, the main goal of NLDL is to become the premier and most trusted20

developer of real estate projects in the nation. To back up the claim, it only sells land that isabsolutely undisputed and owned by the company. This project has been developed according tofull compliance with RAJUK guidelines, thus becoming one of the only such real estate ventures tobe fully approved by this government body.United Property Solutions Ltd.Over the years United Group has profitably ventured into various segments of the real estateindustry. It is currently involved in the construction and development of residential plots andhouses as well as commercial properties, which include some of the best known buildings of thecity today. Notable examples would includes, the United Hospital, United House and the UnitedInternational University buildings. While these projects have been completed under severaldifferent company banners, the Group has decided to go by its namesake and bring all thesedifferent projects under one roof. Thus, United Property Solutions Ltd. was born.Providing total real-estate involvement from designing to construction and finally to management,this company is dedicated to be a comprehensive one-stop solution for people interested to investin us, thus further simplifying things for them.Hafez Zamirudding Fisheries Ltd.In early 2009, United Group literally began treading new waters with Hafez Zamiruddin FisheriesLimited and their fleet of fishing trawlers. With ample capacity upwards of 140 tons, these vesselshave been assembled locally in their entirety, not only saving valuable foreign currency for thecountry but boosting the blossoming ship building industry.The maiden voyage of the ships saw them venturing into the ever grand Bay of Bengal, known forher abundant wealth of marine life. With nets and gears designed for white fishing, as opposed toshrimp fishing, they can remain out at sea for a month at a time returning only with their holdsfilled to the brim with some of the best fish that the Bay has to offer. And why not – we plan totake this company to export markets where such products are much sought after and buyers arequite often willing to pay a premium for quality.United Makkah Madina Travel & Assistance Co. Ltd.United Makkah Madina Travel & Assistance Co. Ltd. embarked upon its mission to be a facilitatorand guide for the hajjis during this holy duty. Recognized as one of the few registered travelagencies authorized to deal with all Hajj and Umrah matters, this company has been organizingsuch trips for nearly a decade now. By being fair and honest in its dealings and a strong adherenceto the Quran and Sunnah it have, by the Grace of the Almighty, become a market leader in thisprofession. A testament of this lies in the fact that almost all of its dedicated clients have chosenon referrals they get from pilgrims who have honored the company in the past by choosing to travelwith the company.United Polymers Ltd.Plastic is one of the core materials needed for many companies - from soda manufacturers topharmaceutical companies but there was a great lacking in quality plastic botling and other plasticmaterials Thus United Polymers Ltd. was born as a value-based manufacturing unit focused oninnovating, manufacturing, and marketing of polyethylene (PET) products, as well ascomprehensive liquefied material handling systems for the consumer and industrial bottles. As apioneer in this sector, we introduced this product to many businesses since our inception, who justhappen to be our dedicated customers even to this day. With effort and our culture of innovation,we have developed a full set of PET bottle products of high quality, which has been laudedespecially by the many pharmaceutical industries today.21

United Land Port Teknaf Ltd.United Land Port Teknaf Ltd is situated on 27 acres of land on the banks of the Naaf River at thesouthernmost point of Bangladesh; this is a port of transit for goods between our country andMyanmar. Winning a tender in 2006 from Bangladesh Land Port Authority has enabled to controloperations and management of the port while also signing Concession Agreement and Land LeaseAgreement with the same. Since then it has undergone both infrastructural and civil developmentof the area, including earth filling, boundary wall construction, making pontoons, warehouses,approach roads, a passenger jetty, cargo jetty and a rest house among other things. Throughsignificant ongoing investments, ULPTL plans to become a fully comprehensive port unit, providinga one-stop solution for exporters, importers and the government alike.22

(4) Distribution procedure of products or services:KPCL purchases Heavy Fuel Oil from Kuo Oil Pte Ltd. Singapore and generates electricity as its soleproduct and then sells to BPDB in bulk for electricity transmission through the national grid tosouth-western region of Bangladesh.(5) Competitive Condition of the Business:As power sector is a capital-intensive industry, huge investment will be required for generationcapacity addition. Public sector is not in a position to secure this huge investment for powergeneration. currently, at about 170 kWh per capita of energy consumption, Bangladesh ranks amongthe lowest countries in the world in terms of electricity consumption per capita. Its distributionnetworks currently serve only an estimated 43% of the total population of more than 150 million.The severe shortage of electricity supply is due in part to BPDB’s inadequate generation capacity,weak transmission and distribution systems, and operational difficulties at its existing power plants.In addition to the overall demand-supply imbalance, the power sector in Bangladesh is also affectedby a regional imbalance 85% of the country’s generating capacity is located in the eastern zone,where natural gas and associated infrastructure is available. The western zone, where the Plant islocated, has mostly smaller and less efficient power plants running on liquid fuel. The western zonepeak demand is about 1100 MW while its regional generating capacity is only about 600 MW.According to the Power Cell, the Bangladesh Power Development Board generated 3400 MW of thecountry’s 5245 MW of total commercial electricity, or about 64% of the total installed capacity.Over the past several years although the demand of power and gas grew in geometric progression,yet the power sector did not grow as per requirement and gas sector failed to explore its resourcesand developed its reserve. Since natural gas dominates the power sector in Bangladesh, 95% ofelectricity comes from conventional thermal power (primarily natural gas) and the remaining 5%through hydroelectric power. In January 2006, Bangladesh’s first coal-fired power plant begancommercial production at the 250-MW Barapukuria facility in Parbotipur.The installed generation capacity was about 5269 MW (as on June 2007) from a meager 88 MW in1960. Electricity generation grew at about 7% p. a. during last fifteen (15) years compared withaverage annual GDP growth rate of about 5.5%. Notwithstanding the progress made to date,Bangladesh's per capita electricity generation of 165 kWh p.a. is still among the lowest in theworld. About 43% of the population has access to electricity, which is also low compared to manydeveloping countries. This implies that there is scope for significant growth in power sector. Giventhe huge investment requirement for power development in the country, Bangladesh would belooking forward to various sources of finance. The Government has already opened the powersector for private investment and "The Private Sector Power Generation Policy" has beenformulated in 1996. The table bellow depicts power sector at a glance.GenerationInstalled Capacity(a) BPDB(b) IPP & Mixed Sector TotalTotalMaximum Demand ServedTotal3,872 MW1,397 MW5,269 MW3,785 MWNet Energy Generation23,267 MkWhTransmissionTransmission Line230 kV 1,467 Ckt km132 kV 5,578 Ckt kmTotal7,044 Ckt kmCapacity of Grid S/S230/132 kV 5,175 MVA132/33 kV 7,219 MVA23

DistributionDistribution Line2,71,142 km(33 kV, 11 kV & 0.4 kV)Total no. of Consumers10.42 MillionTotal no. of Agricultural Consumers 2 Lac 26 ThousandTotal no. of Village Electrified 50,360Access to Electricity 43%Per Capita Generation165 kWhSystem Loss (T&D) 19.30%Source: www.powercell.gov.bd (visited September 01, 2009)Currently, the GOB has no plans to have additional interconnection systems between the east andwest regions since it prefer to transport gas to the western region in order to build gas-fired plantsrather than transferring electricity. Natural gas availability in the western region is also likely tospur further socio-economic developments in the region.supplier of electricity of BPDB.Bangladesh Power Development Board:BPDB is responsible for generation anddistribution of electricity. Its distributionjurisdiction covers mainly urban areasexcept Metropolitan City of Dhaka. Thereare a number of Independent PowerProducers (IPP) who generate and sellpower to BPDB. BPDB's retail sale throughown distribution accounts for about 32%of total retail sales. KPCL is the leadingPower Grid Company of Bangladesh: PGCB, established under the Company's Act, 1994 is asubsidiary of BPDB. PGCB is responsible for operation of the grid network of 230kV and 132kVsystem. It is fully responsible for high voltage transmission as well as distribution.Dhaka Power Distribution Company (formerly Dhaka Electric Supply Authority): DPDC (formerlyDESA) is responsible for distribution of electricity in a part metropolitan Dhaka and a few adjacentareas. It purchases power from BPDB at 132 kV. DPDC's retail sale accounts for about 21% of totalsales.Dhaka Electric Supply Company Limited: DESCO, established under Companies' Act of 1994 isresponsible for distribution of electricity in Mirpur and Gulshan area of the Metropolitan City ofDhaka. DESCO's retail sale accounts for 9% of total national sales.Rural Electrification Board: REB is responsible for distribution of electricity in rural areas througha system of co-operatives known as Palli Biddyut Samities. It mainly purchases power from BPDBand DESA at 33 kV; it also purchases from IPPs to a small extent. BPDB's retail sale accounts forabout 38% of total retail national sales. Sixty seven (67) PBS's are operating at present in ruralareas.Ashuganj Power Company: Ashuganj Power Company is a generation subsidiary of BPDB created in2002. The installed generation capacity of APC is 728 MW comprising steam, combined cycle andgas turbine generating units. The gross energy generation is about 25% of total energy generation inpublic sector.West Zone Power Distribution Company: WZPDC is a distribution subsidiary of BPDB. WDPDC wascreated under Companies act 1994 to handle distributions in the South West part of the country.EA & CEI: The office of the Electrical Advisor and Chief Electrical Inspector has been establishedunder section 36 of the Electricity Act 1910. EA & CEI office performs the functions as specified inthe Electricity Act, Electricity Rule, Cinematograph Act to control and ensure safety of lives andproperties in electricity sector.24

(6) Sources and availability of raw materials and the names of the principal suppliers:The Khulna plant consists of two Wärtsilä floating baseload plants named Tiger I and Tiger IIIdesigned for continuous operation and intended for electricity production. Wärtsilä is also providingoperational and maintenance services for the Khulna plant during the duration of BPDB's powerpurchase agreement. The contract includes all aspects of operations and maintenance, which fixedthe long-term operations and maintenance costs for BPDB, and absorbed a good portion of theoperating risk as well enabling BPDB to concentrate on other aspects of their power business.The plant has 110 MW Heavy Fuel Oil fired Diesel engines with Dual fuel capability plant atgoalpara, Khalishpur, Khulna Wärtsilä provides 19 18V32LN Diesel Engines each of 6.5 MW capacitiesare installed on two power Berges. The Barges are permanently moored in manmade lagoonspecially created for the purpose and continuously generates electricity to the National Grid.The project has been in operation since October 1998, with heavy fuel oil as the primary fuel. Itwill use natural gas as it becomes available in the future. The Company is now the only IPP inprivate sector Company which is operated by heavy fuel oil. KPCL was entered into a 15 years FuelSupply Agreement with United Summit Coastal Oil Limited for sourcing, procurement and deliveryof Heavy Fuel Oil (HFO) to the plant. KPCL’s annual requirement of HFO is about 180000 Metric Tonat 80% dispatch. HFO is being procured from Kuo Oil PTE Limited, Singapore, one of the major oilsuppliers in Asia and transported to Chittagong in 17000 MT parcels. The HFO is stored atChittagong and transported to Khulna by Tanker Barges.(7) Sources of power, gas and water:Water: The Company uses close circuit cooling system for its generators and the cooling waterrequirement is very minimal which is supplied from bore well through demineralization plant.Power: The power requirement is met from company’s own generation; however any disruption ismet through supply from BPDB and is required for auxiliary use only.(8) Name of the customer who purchase 10% and more of the company’s products:Power generated by KPCL is sold in bulk to Bangladesh Power Development Board (BPDB) pursuantto the term of 15 years Power Purchase Agreement. BPDB has obligated to purchase the entireelectrical output generated by the Plant pursuant to a 15-year PPA. The revenues are based on atwo-part tariff structure, and are designed to cover fixed and variable costs including debt service,operations and maintenance expenses, fuel costs and a return to investors.BPDB has committed to a minimum take or pay requirement at 50%dispatch factor on a monthlybasis. BPDB’s payment obligations are supported by a letter of credit for two months minimumrevenues. BPDB’s payment obligations are also guaranteed by the Government of Bangladeshpursuant to an Implementation Agreement Revenues are based on a two-part tariff structure - aFuel Tariff (FT) Component, on a pass-through basis, and Other monthly Tariff (OMT) Component tocover all other fixed and variable costs, adjusted for foreign exchange variations.(9) Description of contract with suppliers and customer:• Implementation AgreementThe IA between KPCL and the GoB states that all the company’s transaction related to the projectthat require foreign exchange, including debt servicing and repatriation of earnings, will beinitiated through bank accounts in Bangladesh, however, any payments in foreign exchange toforeign parties may be paid directly through bank accounts of KPCL located outside Bangladesh.The company shall make available to the GoB the statements and accounts reflecting all suchpayments.The GoB ensures that the Bangladesh Bank gives KPCL and its contractors, consents for operatingFCY bank accounts inside Bangladesh (including, without limitation, the payment of all FCYreceived under the Financing Agreements or otherwise by the Company into such accounts and25

withdrawals there from). The GoB shall ensure that the Bangladesh Bank gives the Companypermission to maintain bank accounts outside Bangladesh, and transfer any funds from its accountsin Bangladesh to its accounts maintained outside Bangladesh as are necessary to implement andcarry out the project.GoB through the IA provides sovereign guarantee with regard to payments, hence possiblymitigating risk of any non-payments.• Power Purchase Agreement (“PPA”) with BPDBBPDB has agreed to purchase the entire electrical output generated by the Plant pursuant to a 15-year PPA. The revenues are based on a two-part tariff structure, and are designed to cover fixedand variable costs including debt service, operations and maintenance expenses, fuel costs and areturn to investors. The PPA commits BPDB to a minimum take-or-pay requirement of 50% dispatchfactor on a monthly basis. BPDB’s obligations under the PPA are guaranteed by the GOB pursuant toan Implementation Agreement (“IA”). Term - 15 years, from commercial operations BPDB commitment to a minimum purchase equivalent to 50% plant factor on a monthly basis Two-part tariff structureo Fuel Tariff (“FT”), with full cost pass through;o Other Monthly Tariff (“OMT), 99% of which is US$ indexed; Allows KPCL to source its own fuel supply Tariff invoices payable within 45 days of the delivery of invoice Payment Security back-up in the form of Letter of Credit covering two months of MinimumTariff Payments (and a Govt. of Bangladesh Guarantee) The Minimum Tariff Payment obligations continue through political Force Majeure Events Compensation Amount on Termination to cover 65% of the NPV of the Minimum Tariff Payment for the remaining term of the PPA, plus consequent termination paymentliability to KPCL in respect of the O&M Agreement and the Fuel Supply Agreement, plus taxes.• O&M Agreement with Wärtsilä, Finland‣ Term - 15 years‣ Operator guarantees an 85% availability rate. The Operator will pay the Company apenalty of US$ 15,000 for each percentage below the 85% availability rate to a maximum of13%.‣ The Company may terminate the O&M contract for convenience and without cause upon90 days of notice and six months fixed O&M fees• Fuel Supply Agreement with United Summit Coastal Oil Limited‣ The FSA is co-terminus with the PPA and can also be terminated upon conversion of Plantto natural gas based Plant.‣ Fuel price based on MOPS indexation and other costs as per the PPA provisions.(10) Description of any material patents, trademarks, licenses or royalty agreements:The company has not entered into any such agreement.(11) Number of total and full time employees:Number of full time employees KPCL Head Office is 10 people as on 31 December 2009 and in itspower plant has 113 employees of Wärtsilä Bangladesh Ltd., O&M Contractor, thus the total numberof employees of KPCL is 123.26

(12) Production capacity and current utilization:Currently, the power barge Tiger I and Tiger III consist of 19 Wärtsilä diesel engines capable ofproducing 114MW of electricity. Each barge is 91.5 meter long and 24 meter wide. The floatingtigers generate electricity for supply to the national grid.KPCL’s total installed gross generation capacity is 123.5 MW (19 Engine x 6.5 MW), and current netgeneration capacity is 114 MW. But KPCL has total licensed capacity of 110 MW. In 2009, its averagemonthly utilized capacity is 87.21% which is 12% more than that of 2008.The operator of KPCL Wärtsilä Bangladesh Ltd. has earned the unique distinction of receiving bothISO 9002 for quality management system (QMS), ISO 14001 certification for excellence inenvironment management system and OHSAS 18001 for occupational health and safety standard.D. DESCRIPTION OF THE PROPERTY(1) Location of the power plant and other property and condition of such property:Corporate office of the company is situated at Summit Centre (5 th Floor), 18 Karwan Bazar C/A,Dhaka-1215 and the power plant consists of 19 (Nineteen) 6.5 MW generating sets that are installedon Two Power Barges are situated at Goalpara, Khalishpur, Khulna. Such property is in goodoperating condition.(2) Ownership of property:Other than land, which is a leased property, the ownership of all the assets as per audited accountsfor the year ended 31 Dec, 2009, described below are in the name of the Company.ParticularsAmount in TakaPower plant 3,303,599,925.00Vehicles 3,038,494.00Building and construction 188,150.00Furniture and fixtures 47,400.00Office equipment 259,330.00Office renovation 33.00Total Written Down Value 3,307,133,332.00All the machineries imported were in brand new condition.(3) Lien on property:1. The company itself owns the entire fixed assets except the lease land.2. The Plant & machinery and other assets of the company are mortgaged against the workingcapital loan to the following banks:a) BRAC Bank Limitedb) Citibank NAc) Pubali Bank Limitedd) Shahjalal Islami Bank Limitede) Standard Bank LimitedThe leasehold land is approximately 4.7 Acres of land having border on the north by Bhoirab River,on the east Goalpara Power Grid Station of Bangladesh Power Development Board (BPDB), on thewest petroleum terminal of Padma Oil Co. The existing power plants are situated on the leaseholdland. Details of leasehold lands are as follows: Plant Address: Goalpara, Khalishpur, Khulna Owner of the land: Padma Oil Co. Ltd. Lessor: BPDB27

Rent payable: Taka 15.84 per square feet. Changes in Rent: Rent payment can be adjusted by 20% in each five years of the contract(4) Expiration date of Leasehold PropertyThe term of indenture is 17 years, from January 1, 1998 to January 1, 2015E.PLAN OF OPERATION AND DISCUSSION OF FINANCIAL CONDITION:(1) Internal and External Sources of cash:Sources of CashDEC 31, 2009 DEC 31, 2008InternalOrdinary shares 2,085,930,000.00 2,085,930,000.00Redeemable cumulative class 'A' preference 1,100,000,000.00 1,100,000,000.00sharesRetained earnings 668,492,911.00 294,437,827.00Total 3,854,422,911.00 3,480,367,827.00ExternalTerm Loan - net of current portion - 74,892,180.00(2) Commitment for capital expenditure:KPCL doesn’t have any commitment made for future capital expenditure as of 31 December 2009except of an Alternator for which procurement order was being initiated amounting to Euro 287,745but no shipment is being made.(3) Material change from period to period as per audited accounts:Particulars 2009Taka2008Taka2007Taka2006Taka2005TakaOperating revenues 6,393,267,345 8,160,423,118 5,698,208,430 6,311,059,931 4,243,767,556Operating expenses (5,718,431,301) (7,664,817,721) (5,154,663,159) (5,762,523,349) (3,714,256,610)General and(64,078,271) (61,504,226) (101,434,974) (92,377,904) (94,587,722)administrative expensesOther income 91,481,290 3,500,496 9,828,156 5,036,401 4,427,264Exchange gain/(loss) 2,174,414 8,784,292 5,427,197 (7,593,746) (5,897,306)Finance income 9,155,909 4,048,472 8,797,510 3,282,064 2,386,713Financial charges (17,483,802) (177,911,217) (156,986,251) (200,693,799) (195,604,754)Net profit for the year 696,085,584 272,523,214 309,176,909 256,189,598 240,235,141The material changes from period to period have been occurred due the change in Tariff in Effectand change of power generation.(4) Seasonal aspect:In general, there is no seasonal impact on the business because of serious dearth of electricity in allseasons. But in previous years winter season results lower demand for electricity than summer.(5) Known trends, events or uncertainties:Force majeure such as political unrest, hartal and natural calamities are generally known events thatmay affect the company business.28

(6) Changes in the assets used to pay off any liability:Cash disbursement of Tk. 13,894,196 was made during the accounting period ended 31 Dec, 2009 toreimburse portion of the term loan.(7) Loan taken from the holding/subsidiary company or loans given to those companies:KPCL did neither take any loan from nor give loan to any company for the last five years.(8) Future contractual liabilities:The company has no future contractual liabilities that may have impact on the company’s financialfundamentals.(9) Estimated future capital expenditure:The management of KPCL is currently in negotiation with BPDP for expansion of its existing plant foran additional capacity of 110 MW which is expected to be in operation by the end of year 2010.Other then above, there is no plan for capital expenditure in near future under caption ‘materialcommitment for capital expenditure’(10) VAT, income tax, customs duty or other tax liability:a) VATVAT is not applicable for the company for sale of electricity.b) Income taxAs per the Statutory Regulatory Order (SRO) 1999, SRO No. 114/99, the company is exempted fromincome tax for a period of 15 years from the date of commercial operation.c) Custom duty or other liabilityThe Company is exempted to import plant and machinery during construction and all other spareparts up to 10% of the plant & machinery cost without payment of customs duties. Duties and taxesare payable for other supplies as per provision of the Private Sector Power Generation Policy ofBangladesh.(11) Sources from which VAT, income tax, customs duty or other tax liabilities are to be paid:The payments of duties and taxes on spare part import, if payable, are to be made in the ordinarycourse of business.(12) Lease commitment:The company has signed lease agreement with BPDB for land usage for 17 years starting January 1, 1998, andthe lease commitment as above is being liquidated through repayment of monthly lease rental.(13) Lease Details:The company is obligated under non-cancelable lease for use of land leased out by BPDB that arerenewable on a periodic basis at the option of both lessor and lessee. During the period, rentalexpenses under non-cancelable operating leases aggregated Tk.3,355,293 The future minimumlease payments in respect of operating leases as at 31 Dec 2009 are as follows:31 Dec-09 31-Dec-08 31-Dec-07Amount due: Taka Taka TakaNot later than one year 3,242,955 3,242,955 3,242,955Later than one yearbut not later than five years 14,268,998 13,620,407 12,971,820Later than five years - 3,891,545 7,783,09029

(14) Personnel related schemes to make provision in future years:The Company has training schemes for human resource development and the following retirementbenefits for its employees:1. Provident FundThe Company operates a recognized Contributory Provident Fund for its permanent employees. Thefund is administered by a Board of Trustees and is funded by 10% contributions equally from theemployees and the company. The fund is managed separately from the company’s assets.2. GratuityThe Company also maintains non-funded Gratuity Scheme for confirmed employees of the company.(15) Break down of issue expensesThe breakdown of issue expenses related to direct listing is as under:Sl. Particulars Basis of calculation Amount1 Issue Management fee At actual 1,200,000.002 Underwriting Commission At actual NIL3 Application fees DSE & CSE At actual 20,000.004 Listing Fees DSE & CSE At actual 4,000,000.005 Annual Listing fees DSE & CSE At actual 200,000.006 CDBL Fees At actual 608,500.007 Registrar to the Issue Fees At actual 500,000.008 Printing and publication Estimated or At actual 2,000,000.00(16) Revaluation of Asset:KPCL didn’t revalue its assets.(17) Last five years’ transactions between the issuer company and its subsidiary/holdingcompany:No transactions have been made between the parties.(18) Auditors' certificate on allotment of shares to shareholders including promoters orsponsor shareholders for any consideration otherwise than for cashWe certify that as per the share register and other relevant records maintained by Khulna PowerCompany Ltd., no shares have been allotted to promoters or sponsor shareholders for anyconsideration otherwise than for cash.Sd/-Rahman Rahman Huq30

(19) Material information having impact on the affair of the company:DECLARATION REGARDING SUPPRESSION OF MATERIAL INFORMATIONThis is to declare that to the best of our knowledge and belief no information, facts, circumstance,that are disclosable has not been suppressed that can change the terms and conditions under whichthe offer has been made to the public.Sd/-Md. Hasan Mahmood RajaManaging DirectorF. DIRECTORS AND OFFICERSName, Age and Position of all Directors:Name of The Directors Position AgeMr. Muhammed Aziz Khan Chairman 55Mr. Hasan Mahmood Raja Managing Director 52Mr. Muhammad Farid Khan Director 49Mrs. Anjuman Aziz Khan Director 54Mr. Latif Khan Director 51Ms. Ayesha Aziz Khan Director 28Ms. Adeeba Aziz Khan Director 26Mr. Jafer Ummeed Khan Director 53Mr. Ahmed Ismail Hossain Director 53Mr. Khandaker Moinul Ahsan Shamim Director 52Mr. Akhter Mahmud Rana Director 49Mr. Faridur Rahman Khan Director 54Mr. Abul Kalam Azad Director 54Mr. Moinuddin Hasan Rashid Director 27Date of first becoming Director and date of expiry of current term:Name of The Directors Date of First becoming directors Date of Expiry of CurrentTermsMr. Muhammed Aziz Khan 20-10-1997 ContinuingMr. Muhammad Farid Khan 19-07-2009 ContinuingMrs. Anjuman Aziz Khan 19-07-2009 ContinuingMr. Latif Khan 29-04-2008 ContinuingMs. Ayesha Aziz Khan 29-04-2008 ContinuingMr. Jafer Ummeed Khan 19-07-2009 ContinuingMs. Adeeba Aziz Khan 19-07-2009 ContinuingMr. Hasan Mahmood Raja 20-10-1997 ContinuingMr. Ahmed Ismail Hossain 29-04-2008 ContinuingMr. Khandaker Moinul Ahsan29-04-2008 ContinuingShamimMr. Akhter Mahmud Rana 19-07-2009 ContinuingMr. Faridur Rahman Khan 19-07-2009 ContinuingMr. Abul Kalam Azad 19-07-2009 ContinuingMr. Moinuddin Hasan Rashid 19-07-2009 Continuing31

Involvement of Directors with Listed Company in terms of Dividend & Category:Name of The DirectorMr. Muhammed Aziz KhanName of Listed Companywhere Directors are involvedSummit Power LimitedSummit Alliance PortOcean Containers LimitedPositionChairmanChairmanChairmanMr. Muhammad Farid Khan Summit Power Limited DirectorMrs. Anjuman Aziz KhanMr. Latif KhanMs. Ayesha Aziz KhanMs. Adeeba Aziz KhanSummit Power LimitedSummit Alliance Port LimitedOcean Containers LimitedSummit Power LimitedSummit Alliance Port LimitedOcean Containers LimitedSummit Power LimitedSummit Alliance Port LimitedOcean Containers LimitedSummit Alliance Port LimitedOcean Containers LimitedDirectorDirectorDirectorVice ChairmanDirectorDirectorDirectorDirectorDirectorDirectorDirectorMr. Jafer Ummeed Khan Summit Power Limited Executive DirectorListing Categoryin DSE/CSEAANAAANAANAANANAInvolvement of Directors with another Company:Summit GroupName of The Director and associated CompaniesPositionMr. Muhammed Aziz KhanSummit Industrial & Merchantile Corporation Pvt. Ltd.United Summit Coastal Oil Ltd.Summit Shipping Ltd.Cosmopolitan Traders (pvt) Ltd.Summit Equities LimitedKhulna Power Company Ltd.Ocean Container Ltd.Summit Alliance Port Ltd.Summit Power LimitedAlliance Leasing and Finance Co. Ltd.Summit Electricity LimitedSummit Euro Refinery Ltd.Summit Purbanchol Power Co. Ltd.Summit Uttaranchal Power Co. Ltd.Summit Holdings LimitedSummit Investment LimitedSummit communication LtdMr. Muhammad Farid KhanSummit CorporationsSummit Industrial & Mercantile Corporation Pvt. Ltd.Cosmopolitan Traders (Pvt.) Ltd.Ocean Container Ltd.Summit Shipping Ltd.Summit Power LimitedAlliance Leasing and Finance Co. Ltd.Summit Holdings LimitedSummit Electricity LimitedSummit Euro Refinery Ltd.Summit Purbanchol Power Co. Ltd.Summit Uttaranchal Power Co. Ltd.Khulna Power Company Ltd.Summit Communications LimitedSummit Investment Ltd.Chairman & Managing DirectorChairmanChairmanChairmanChairmanChairmanChairmanChairmanChairmanDirectorChairmanChairmanChairmanChairmanChairmanChairmanChairmanDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirector32

Mrs. Anjuman Aziz KhanSummit Power LimitedCosmopolitan Traders (Pvt.) Ltd.Summit Equities LimitedSummit Alliance Port Ltd.Summit Shipping Ltd.Summit Electricity LimitedSummit Euro Refinery Ltd.Summit Industrial & Mercantile Corporation Pvt. Ltd.Summit Purbanchol Power Co. Ltd.Summit Uttaranchal Power Co. Ltd.Khulna Power Company Ltd.Summit Holdings LimitedAlliance Terminal LimitedMr. Latif KhanSummit Industrial & Mercantile Corporation Pvt. Ltd.Cosmopolitan Traders (Pvt.) Ltd.Summit Shipping Ltd.Syenergey ServicesSummit Purbanchol Power Co. Ltd.Summit Uttaranchal Power Co. Ltd.Khulna Power Company Ltd.Summit Power LimitedSummit Alliance Port Ltd.Ocean Container Ltd.Alliance Terminal LimitedSumcynet LimitedSummit Communications LimitedSummit Holdings LimitedMs. Ayesha Aziz KhanSummit Equities LimitedSummit Industrial & Mercantile Corporation Pvt. Ltd.Cosmopolitan Traders (pvt) Ltd.Summit Shipping Ltd.Khulna Power Company Ltd.Summit Power LimitedOcean Container Ltd.Summit Alliance Port Ltd.Ms. Adeeba Aziz KhanSummit Industrial & Mercantile Corporation Pvt. Ltd.Summit Alliance Port Ltd.Alliance Terminal LimitedOcean Container Ltd.Summit Communications LimitedSummit Holdings LimitedKhulna Power Company Ltd.Mr. Jafer Ummeed KhanSummit Industrial & Merchantile Corporation Pvt. Ltd.Khulna Power Company Ltd.Summit Power LimitedSummit communication LtdSummit Holdings LtdCosmopolitan traders (pvt) LtdSummit Shipping LtdManaging DirectorDirectorManaging DirectorChair PersonDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorManaging DirectorDirectorDirectorDirectorDirectorDirectorVice ChairmanDirectorDirectorDirectorChairmanDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorManaging Director33

United GroupName of The Director and associated CompaniesMr. Hasan Mahmood RajaUnited Enterprises & Co. Ltd.United International UniversityMalancha Holdings Ltd.Khulna Power Company Ltd.United Makkah Madina Travel & Associate Co. Ltd.United Hospital Ltd.Neptune Commercial Ltd.Comilla Spinning Mills Ltd.United Management & Trading Services Ltd.United Polymers Ltd.United Rotospin Ltd.Neptune Land Development Ltd.United Land Port Teknaf Ltd.Neptune Properties Ltd.Novo Healthcare And Pharma Ltd.Hafez Zamiruddin Fisheries Ltd.Gulshan Properties Ltd.Mr. Ahmed Ismail HossainUnited Enterprises & Co. Ltd.United International UniversityMalancha Holdings Ltd.Khulna Power Company Ltd.United Makkah Madina Travel & Associate Co. Ltd.United Hospital Ltd.Neptune Commercial Ltd.Comilla Spinning Mills Ltd.United Management & Trading Services Ltd.United Polymers Ltd.United Rotospin Ltd.Neptune Land Development Ltd.United Land Port Teknaf Ltd.Neptune Properties Ltd.Novo Healthcare And Pharma Ltd.Hafez Zamiruddin Fisheries Ltd.Gulshan Properties Ltd.Chicken King International (BD) Ltd.KMC Global Food Ltd.Bari Studio Ltd.Sight and LightBM Cine Lab ServicesMr. Khandaker Moinul Ahsan ShamimUnited Enterprises & Co. Ltd.United International UniversityKhulna Power Company Ltd.United Makkah Madina Travel & Associate Co. Ltd.United Hospital Ltd.Neptune Commercial Ltd.Comilla Spinning Mills Ltd.United Management & Trading Services Ltd.United Polymers Ltd.United Rotospin Ltd.Neptune Land Development Ltd.United Land Port Teknaf Ltd.Neptune Properties Ltd.Novo Healthcare And Pharma Ltd.Hafez Zamiruddin Fisheries Ltd.Gulshan Properties Ltd.Mr. Akhter Mahmud RanaUnited Enterprises & Co. Ltd.United International UniversityMalancha Holdings Ltd.PositionChairman & Managing DirectorChairman & Board of GovernorsChairman & Managing DirectorManaging DirectorChairmanChairmanChairmanDirectorDirectorChairmanChairmanChairmanChairmanDirectorChairmanChairmanChairmanDirectorMember, Board of GovernorsDirectorDirectorDirectorVice ChairmanDirectorManaging DirectorDirectorDirectorManaging DirectorDirectorDirectorDirectorManaging DirectorDirectorDirectorChairmanChairmanDirectorDirectorDirectorDirectorMember, Board of GovernorsDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorManaging DirectorDirectorDirectorMember, Board of GovernorsDirector34

Khulna Power Company Ltd.United Makkah Madina Travel & Associate Co. Ltd.United Hospital Ltd.Neptune Commercial Ltd.Comilla Spinning Mills Ltd.United Management & Trading Services Ltd.United Polymers Ltd.United Rotospin Ltd.Neptune Land Development Ltd.United Land Port Teknaf Ltd.Neptune Properties Ltd.Novo Healthcare And Pharma Ltd.Hafez Zamiruddin Fisheries Ltd.Gulshan Properties Ltd.Mr. Faridur Rahman KhanUnited International UniversityMalancha Holdings Ltd.Khulna Power Company Ltd.United Hospital Ltd.Neptune Commercial Ltd.Comilla Spinning Mills Ltd.United Management & Trading Services Ltd.United Polymers Ltd.United Rotospin Ltd.Neptune Land Development Ltd.United Land Port Teknaf Ltd.Neptune Properties Ltd.Novo Healthcare And Pharma Ltd.Hafez Zamiruddin Fisheries Ltd.Gulshan Properties Ltd.Mr. Abul Kalam AzadUnited International UniversityMalancha Holdings Ltd.Khulna Power Company Ltd.United Hospital Ltd.Neptune Commercial Ltd.Comilla Spinning Mills Ltd.United Polymers Ltd.Neptune Properties Ltd.United Rotospin Ltd.Neptune Land Development Ltd.United Land Port Teknaf Ltd.Novo Healthcare And Pharma Ltd.Hafez Zamiruddin Fisheries Ltd.Gulshan Properties Ltd.Mr. Moinuddin Hasan RashidUnited Enterprises & Co. Ltd.United International UniversityMalancha Holdings Ltd.Khulna Power Company Ltd.United Makkah Madina Travel & Associate Co. Ltd.United Land Port Teknaf Ltd.DirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorMember, Board of GovernorsDirectorDirectorManaging DirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorManaging DirectorsDirectorDirectorDirectorMember, Board of GovernorsDirectorDirectorDirectorDirectorDirectorDirectorDirectorDirectorManaging DirectorManaging DirectorDirectorDirectorDirectorDirectorMember, Board of GovernorsDirectorDirectorDirectorDirectorFamily relationship between the directors and officers:Name of the Director/officerMrs. Anjuman Aziz KhanMr. Latif KhanMr. Md. Farid KhanMs. Ayesha Aziz KhanMs. Adeeba Aziz KhanMr. Jafer Ummeed KhanMr. Akhter Mahmud RanaRelationshipWife of Muhammed Aziz Khan, ChairmanBrother of Muhammed Aziz Khan, ChairmanBrother of Muhammed Aziz Khan, ChairmanDaughter of Muhammed Aziz Khan, ChairmanDaughter of Muhammed Aziz Khan, ChairmanBrother of Muhammed Aziz Khan, ChairmanBrother of Mr. Hasan Mahmood Raja, Managing Director35

Mr. Moinuddin Hasan RashidMr. Md. Abdur Rahim,Project DirectorSon of Mr. Hasan Mahmood Raja, Managing DirectorUncle of Mr. Hasan Mahmood Raja, Managing DirectorShort biography of the directors and officers:Mr. Muhammed Aziz Khan, ChairmanMr. Muhammed Aziz Khan, a renowned and pioneering leading business personality in power sectorof Bangladesh. After graduation Mr. Khan did his MBA in 1980 from the Institute of BusinessAdministration (IBA), University of Dhaka. Mr. Khan has established himself as a dynamic and proactiveentrepreneur who has built Summit Group-recognized as the largest infrastructure Industrialorganization of Bangladesh. He is also the Chairman of Khulna Power Co. Ltd., country's firstIndependent Power Producer (IPP). Mr. Khan has helped to formulate the Private Sector PowerGeneration Policy of Bangladesh. He has 36 years of business experience, setting up country's firstInland Container Depot (ICD)-"Ocean Container Ltd", First Tanks Terminal- "Summit United TanksTerminal", now known as "South Eastern Tanks Terminal". Mr. Khan was the Founder President ofBangladesh Energy Companies Association (BECA), which is formed to represent and to promote theinterests of private sector business organizations engaged in the energy sector.Mr. Khan has set up "Siraj Khaleda Trust"- a social wing of Summit Group, which is setting up 200beds for medical services on charitable basis in Dhaka Cantonment. He enthusiastically takes part &contributes to social activities such as to help to acid burn and drug victims to mention a fewamongst host of other activities.Mr. Muhammad Farid Khan, DirectorMr. Md. Farid Khan was born in 1960. Mr. Khan is a business graduate from Dhaka University. He isinvolved in business since 1980. He started his business career with trading in plastic compound,fertilizer and other commodities. He was an integral part of the team that pioneered export ofmolasses and fertilizer from Bangladesh. Mr. Farid Khan has proved to be an entrepreneur withspecial skills in the development of new projects. He was solely instrumental in setting up LiquefiedPetroleum Gas (LPG) project and Tanks Terminal in Mongla.Mrs. Anjuman Aziz Khan, DirectorMrs. Anjuman Aziz Khan, wife of Mr. Muhammed Aziz Khan has 22 years of business experience inSummit. Mrs. Khan is a member of Siraj Khaleda Trust- a social wing of Summit Group, which issetting up 200 beds for medical services on charitable basis in Dhaka Cantonment. Sheenthusiastically takes part & contributes to social activities such as "Assistance of Blind Children"and "women's entrepreneurship development".Mr. Latif Khan, DirectorMr. Latif Khan was born on 28 December 1958 in Dhaka. He pursued BA in Public Administration atDhaka University, and subsequently left for higher studies to the U.S. in 1981. There, he worked forover 15 years in the financial sector. He was a stockbroker and a financial analyst at PrudentialInsurance of America where he received numerous sales achievement awards. He also worked as aFinancial Officer at Wells Fargo Bank in California. He returned to Bangladesh in 1997 and thereofjoined Summit Group as the Managing Director of Summit Shipping Limited. Mr. Khan hasestablished himself as a sound and dynamic businessman of the country.Ms. Ayesha Aziz Khan, DirectorBorn in 1981, Ms. Ayesha Aziz Khan has completed her graduation in Economics and Business fromthe University College of London in 2002 and Masters in Business Administration from Columbia36

University, New York, USA. Presently, Ms. Khan is also holding the position of Director in severalcompanies of Summit Group.Ms. Adeeba Aziz Khan, DirectorMs. Adeeba Aziz Khann was born on June 14, 1983. She has successfully completed her BarVocational Cource fro Inns of Court School of Law, UK on 2005. From July 2006 she worked with Dr.Kamal Hossain & Associates, Bangladesh as Pupil, after that she involved herself with Drew &Nepier LLC, Singapore as an International Lawyer. Ms. Khan is holding the position of Director inSeveral Companies.Mr. Jafer Ummeed Khan, DirectorMr. Jafer Ummeed Khan was born on 10 th May 1957. After completeing his studies in the UnitedKingdom, he joined Summit Group in 1987. He spearheaded the development and expansion ofSummit Group, particularly of Summit Industrial and Mercantile Corporation (Pvt.) Limited and lateron Summit Power Limited. Because of his contribution in the power sector, Mr. Jafer Ummeed Khanwas also unanimously elected as the Vice President of Bangladesh Energy Companies Association,which post Mr. Khan is holding till date.Mr. Hasan Mahmood Raja, Managing DirectorBorn in 1957, Mr. Hasan Mahmood Raja has completed Bachelor of Commerce. He was associatedwith different companies of United Group since 1978. He is the Chairman and Managing Director ofUnited Enterprises & Co. Ltd., Malancha Holding Limited and Khulna Power Company Limited andmany more as well as the Chairman, Board of Governors (BoG) of United International University.He has extensively traveled in USA, UK, Australia, Canada, Finland, Switzerland, Germany,Malaysia, Singapore, China, India, and so on. He is also a member of Dhaka Club and Savar GolfClub.Mr. Ahmed Ismail Hossain, DirectorBorn in 1956, Mr. Ahmed Ismail Hossain has completed BSS and MSS, International Relations,University of Dhaka. He is the Vice Chairman of United Hospital and Managing Director of ComillaSpinning Mills Limited, United Rotospin Ltd. And Novo Healthcare and Pharma Ltd. He is also aMember, Board of Governors (BoG) of United International University. He has extensively traveledin USA, UK, Australia, South Korea, Canada, Finland, Spain, Italy, Switzerland, Germany, Malaysia,UAE, Singapore, China, India, and so on. He is also a member of Dhaka Club and Savar Golf Club.Mr. Khandaker Moinul Ahsan Shamim, DirectorBorn in 1957, Mr. Khandaker Moinul Ahsan Shamim has completed Bachelor of Commerce. He is theManaging Director of Hafez Zamiruddin Fisheries Ltd. and Director of United Enterprises Ltd.,United Polymer Ltd., Neptune Commercial Ltd., United Hospital Limited etc. He is also a Member,Board of Governors (BoG) of United International University. He has extensively traveled in USA,UK, Australia, Netherlands, Canada, Finland, Spain, Italy, Switzerland, Germany, Japan, SouthKorea, Malaysia, UAE, Singapore, China, India, and so on. He is also a member of Dhaka Club andSavar Golf Club.Mr. Akhter Mahmud Rana, DirectorBorn in 1960, Mr. Akhter Mahmud Rana has completed ‘A’ Level. Director of United EnterprisesLtd., United Polymer Ltd., Neptune Commercial Ltd., Hafez Zamiruddin Fisheries Ltd., GulshanProperties Ltd., United Hospital Limited. He is also a Member, Board of Governors (BoG) of UnitedInternational University. He has extensively traveled in USA, UK, Australia, Canada, Saudi Arabia,Hong Kong, Germany, Malaysia, India, Singapore, China, Thailand and so on. He is a member SavarGolf Club.37

Mr. Faridur Rahman Khan, DirectorBorn in 1955, Mr. Faridur Rahman Khan has completed Bachelor of Science. He is the ManagingDirector of United Hospital and Managing Director of Neptune Properties Ltd. He is also Director ofUnited Polymer Ltd., Malancha Holding Ltd., United Land Port Teknaf Ltd., Neptune CommercialLtd., Hafez Zamiruddin Fisheries Ltd., Gulshan Properties Ltd. He is also a Member, Board ofGovernors (BoG) of United International University. He has extensively traveled in Australia,Finland, Netherlands, Soudi Arabia, Germany, Malaysia, India, Singapore, Pakistan, Thailand and soon.Mr. Abul Kalam Azad, DirectorBorn in 1955, Mr. Abul Kalam Azad has completed Bachelor of Science. He is the Managing Directorof Neptune Land Development Ltd. and United Land Port Teknaf Ltd. he is also director of UnitedPolymer Ltd., United Hospital, Malancha Holding Ltd., United Land Port Teknaf Ltd., NeptuneCommercial Ltd., Hafez Zamiruddin Fisheries Ltd., Gulshan Properties Ltd. He is also a Member,Board of Governors (BoG) of United International University. He has extensively traveled in USA,UK, UAE, Franch, Canada, Australia, Japan, Soudi Arabia, Malaysia, India, Singapore, Pakistan,Thailand and so on.Mr. Moinuddin Hasan Rashid, DirectorBorn in 1982, Mr. Moinuddin Hasan Rashid has completed B. Sc. Engineer (Electrical & Electronics,London, UK. He is Director of United Enterprises Ltd. Polymer Ltd., United Hospital, MalanchaHolding Ltd., United Land Port Teknaf Ltd., Neptune Commercial Ltd., Hafez Zamiruddin FisheriesLtd., Gulshan Properties Ltd. He is also a Member, Board of Governors (BoG) of United InternationalUniversity. He has extensively traveled in USA, UK, UAE, France, Canada, Australia, Japan, SaudiArabia, Malaysia, India, Singapore, Pakistan, Thailand and so on.Ownership List of shareholders who owns 5% or more than 5% share of the Company:Name of the Shareholder Entity Number of Share %1. Summit Industrial & Mercantile Corporation (Pvt.) Ltd. 104,261,500 49.9832%2. United Enterprises and Company Limited 104,261,500 49.9832%CIB status:Neither the company nor any of its sponsors or directors or associates is defaulter with any bank interms of the CIB Report of the Bangladesh Bank.Name and qualifications of the Senior Officers:Sl. Name EducationalQualifications1 Md. Abdur RahimB. Sc inMarine EngineeringExperience2 M. Aminur Rahman FCA; M. Com 22 yearsMr. Md. Abdur Rahim, Project DirectorDesignation34 years Project DirectorFinancial Controller &Company SecretaryMr. Md. Abdur Rahim was born on 01 January 1947. He obtained B. Sc in Marine Engineering fromthe Merchant Marine University College of Rijeka, Yugoslavia in 1968. He worked on board variousvessels of DDG “Hansa” Lines of West Germany upto 1975. Afterwards, he worked in BangladeshSteel & Engineering Corporation in various capacities from 1976 to 1993 starting as Deputy ChiefEngineer. He was the General Manager of Khulna Shipyard Ltd from 1982 to 1987 and the ManagingDirector of Dockyard & Engineering Works Ltd. Narayangonj from 1987 to 1993. He served ondeputation as Technical Director in Bangladesh Shipping Corporation and Bangladesh Inland WaterTransport Corporation from 1993 to 1997. Thereafter, then he joined in Khulna Power CompanyLtd. in 1997 as a Project Director and he was actively involved in formation of the company andwas pivotal to timely implementation of the project.38

Mr. Md. Aminur Rahman, FCA, Financial Controller & Company SecretaryMr. Md. Aminur Rahman was born on 01 January 1959. He is a Chartered Accountant, qualified fromthe Institute of Chartered Accountants of Bangladesh (ICAB). He also obtained his Master degreewith honors in Accounting from Dhaka University. He is having more than 22 years of serviceexperience in the field of accounts, finance and company secretarial matters in variousmultinational companies like Rhone Poulenc, Duncan Brothers Ltd and Oxfam, including more than10 years of service in Khulna Power Company Ltd. as Financial Controller & Company Secretary. Hehas attended in various training courses and seminars in home and abroad.G. INVOLVEMENT OF THE DIRECTORS AND OFFICERS IN CERTAIN LEGALPROCEEDINGSNo officer or director of the Company was involved in any of the following types of legal proceedingsin the last ten years:1. Any bankruptcy petition filed by or against any company of which any officer or director ornominee of the Company filing the Information Document was a director, officer or partner at thetime of the bankruptcy;2. Any conviction of an officer, director or nominee in the criminal proceedings or any criminalproceedings pending against him;3. Any order, judgement or decree of any Court of competent jurisdiction against officer, directoror nominee permanently or temporarily enjoying, barring, suspending or otherwise limiting theinvolvement of any officer or director or nominee in any type of business, securities or bankingactivities.4. Any order of the Securities and Exchange Commission or other regulatory authority or foreignfinancial regulatory authority suspending or otherwise limiting the involvement of any officer ordirector or nominees in any type of business, securities or banking activities.H. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS WITH RELATED PARTIESThe Company has no proposed transaction nor had any transaction during the last 2(two) years withfollowing related parties -a. Any director or executive officer of the Companyb. Any nominee for director or officer, andc. Any person owning 5% or more of the outstanding share capital of the companyd. Any member of the immediate family (including spouse, parents, children, brothers, sisters andin-laws) of any of the above personse. Any transaction or arrangement entered into by the company or its subsidiary for a person who iscurrently a director or in any way connected with a director of either the issuer company or any ofits subsidiaries or sister concerns, or who was a director or connected in any way with a director atany time during the last three years prior to the publication of the Information Document - exceptrelated party disclosures.Loan status:The Company did not take or give any loan from any Director or any person connected with anyDirector nor did any Director or any person connected with any Director.39

I. EXECUTIVE COMPENSATIONRemuneration paid to top executives during January to December 2009 is given below, whichincludes only two personnel paid by KPCL:Sl. Name DesignationTotal Compensation(Jan - Dec 2009)1 Md. Abdur Rahim Project Director 5,030,703.002 M. Aminur Rahman Financial Controller & Company Secretary 4,455,960.00N.B. Plant Operation and maintenance has been outsourced from Wartsila under Operation &Maintenance Agreement. Wartsila has employed 113 employees and their remuneration is paid byWartsila from the O&M Fees received from KPCL. The Fee includes a fixed fee per month rangingfrom US$ 162,167 to US$ 201,583 depending on the plant load factor.The company did not pay any amount to any director as the company has no policy regarding this.There is no contract with any director or officer for the payment of future compensation.Aggregate amount of2009Taka2008TakaSalary and allowances 13,226,172 17,822,640Pay increase intentionExcept annual increment and allowances, there is no plan for substantial pay increase to its officersand directors.J. OPTION GRANTED TO OFFICER, DIRECTORS AND EMPLOYEESThe company did not grant any option for issue of shares to any officer, director and otheremployees of the company or to any other person outside the country.K. TRANSACTION WITH PROMOTERS BENEFIT FROM THE COMPANYPromoters did not receive anything of value directly or indirectly from the company in the last fiveyears.Promoters’ asset To CompanyNo assets were acquired or are to be acquired from any of the promoters.40

L. TANGIBLE ASSETS PER SHAREAs on December 31, 2009, the Net Tangible Asset Value per share stands at Tk. 18.53 Thecalculation of net assets value per share is given below:2009Taka2008TakaAssetsProperty, plant and equipment, net 3,307,133,332 3,463,283,276Total non-current assets 3,307,133,332 3,463,283,276Inventories 981,640,270 762,728,652Accounts receivable 387,940,605 885,777,668Other receivables 12,497,004 8,008,915Advances, deposits and prepayments 1,548,516 1,493,673Cash and cash equivalents 701,135,588 100,899,376Total current assets 2,084,761,983 1,758,908,284Accounts payable 1,486,104,691 1,314,033,048Working capital loan - 284,000,000Term loan - current maturity portion - 30,883,364Dividends payable - -Preference stock dividends payable - -Accrued expenses and others 40,476,518 13,470,889Payable for interest and other financialcharges- 14,335,472Total current liabilities 1,526,581,209 1,656,722,773Net current asset 558,180,774 102,185,511Net assets employed 3,865,314,106 3,565,468,787No. of Shares 208,593,000 208,593,000Tangible Asset Value per Share 18.53 17.0941

M. OWNERSHIP OF COMPANY’S SECURITIES:Ownership List of shareholders who owns 5% or more than 5% share of the Company:Name of the Shareholder Entity Number of Share %1. Summit Industrial & Mercantile Corporation (Pvt.) Ltd. 104,261,500 49.9832%2. United Enterprises & Company Limited 104,261,500 49.9832%The Shareholding Position of ordinary shares by the Owner of the CompanyName of shareholders% OfShareholdingsTotal Shares(No)FaceValue(Taka)Total value(Taka)Summit Industrial & MercantileCorporation (Pvt) Ltd. (incorporation in 49.98% 104,261,500 10 1,042,615,000Bangladesh)United Enterprises & Company Ltd.(incorporated in Bangladesh)49.98% 104,261,500 10 1,042,615,000Muhammed Aziz Khan 0.0024% 5,000 10 50,000Anjuman Aziz Khan 0.0024% 5,000 10 50,000Latif Khan 0.0024% 5,000 10 50,000Muhammad Farid Khan 0.0024% 5,000 10 50,000Jafer Ummeed Khan 0.0024% 5,000 10 50,000Ayesha Aziz Khan 0.0024% 5,000 10 50,000Adeeba Aziz Khan 0.0024% 5,000 10 50,000Hasan Mahmood Raja 0.0024% 5,000 10 50,000Ahmed Ismail Hossain 0.0024% 5,000 10 50,000K.M. Ahsan Shamim 0.0024% 5,000 10 50,000Akhter Mahmud Rana 0.0024% 5,000 10 50,000Faridur Rahman Khan 0.0024% 5,000 10 50,000Abul Kalam Azad 0.0024% 5,000 10 50,000Moinuddin Hasan Rashid 0.0024% 5,000 10 50,000Total 100% 208,593,000 2,085,930,000As resolved in the Board of Directors meeting of KPCL and also as per resolution taken in the EGM ofKPCL, 25% of the existing paid-up capital (i.e. 5,21,48,250 shares) to be sold to the generalpublic/institutions at Market Price.The existing shareholders shall offer for sell 25% (twenty five percent) of the shareholdings in theCompany within 30 (thirty) trading days from the date of commencing the normal trading, i.e.,after the price of the listed share is discovered and fixed following the book building method asprescribed by SEC through Securities and Exchange Commission (Public Issue) Rules, 2006, to theextent those are applicable or relevant in these respect.42

N. DESCRIPTION OF SECURITIES OUTSTANDING OR BEING OFFEREDDividend, voting and pre-emption rights of the shares outstanding or being offered:The share capital of the company is divided into ordinary shares carrying equal rights to vote andreceive dividend in terms of the relevant provisions of the Companies Act, 1994 and the Articles ofAssociation of the company.Shareholders shall have the usual voting right in person or by proxy in connection with, amongothers, selection of Directors & Auditors and other usual agenda of General Meeting – Ordinary orExtra Ordinary. On a show of hand every shareholder present and every duly authorizedrepresentative of a shareholder present at a General Meeting shall have one vote and on a pollevery shareholder present in person or by proxy shall have one vote for every share held byhim/her.In case of any additional issue of shares for raising further capital the existing shareholders shall beentitled to Right Issue of shares of in terms of the guidelines issued by the SEC from time to time.Conversion and liquidation rights of any preferred stock outstanding or being offered:If the company at any time issues convertible preference shares or Debenture or Bond with theconsent of SEC, such holders of securities shall be entitled to convert such securities into ordinaryshares if it is so determined by the company.Subject to the provisions of the Companies Act, 1994, Articles of Association of the Company andother relevant Rules in force, the shares, if any, of the company are freely transferable, thecompany shall not charge any fee for registering transfer of shares. No transfer shall be made tofirms, minors or persons of unsound mental health.Limitations on the Payment of dividends to common or preferred stockholders:a) The profit of the company, subject to any special right relating thereto created or authorized tobe created by the Memorandum of Association subject to the provision of the Articles ofAssociation, shall be divisible among the members in proportion to the capital paid up on the sharesheld by them respectively.b) No longer dividend shall be declared than is recommended by the Directors, but the Company inits General Meeting may declare a smaller dividend. The declaration of Directors as to the amountof net profit of the company shall be conclusive.c) No dividend shall be payable except out of profits of the company or any other undistributedprofits. Dividends shall not carry interest as against the Company.d) The Directors may, from time to time, pay the members such interim dividend as in theirjudgments the financial position of the company may justify.e) A transfer of shares shall not pass the right to any dividend declared thereon before theregistration of transfer.Other material rights of common or preferred stockholders:The Shareholder shall have the right to receive all periodical reports and statements, audited aswell as un-audited, published by the company from time to time. The Directors shall present thefinancial statements as required under the Law and International Accounting Standards. FinancialStatements will be prepared in accordance with International Accounting Standards, consistentlyapplied throughout the subsequent periods and present with the objective of providing maximum43

disclosure as per law and International Accounting Standard to the shareholders regarding theFinancial and operational position of the company.In case of any declaration of stock dividend by issue of bonus shares, all shareholders shall beentitled to it in proportion to their shareholdings on the date of book closure for the purpose.The shareholders’ holding not less than 10% of the issued/fully paid up capital of the company shallhave the right to requisition Extra-ordinary General Meeting of the Company as provided underSection 84 of the Companies Act, 1994.O. DEBT SECURITIES:Terms and conditions of debt securities that the company may have issued or to be issued:The company does not have any plan to issue Bond or any other debt securities.Principal amount, maturity date, interest rate and other features of all debt securities:Not applicable for KPCL due to the reasons stated above.All other material provisions giving or limiting the rights of the holders of debt:Not applicable for KPCL due to the reasons stated above.Trustees designated by the indenture for outstanding debt or for debt being offered:Not applicable for KPCL due to the reasons stated above.Preference ShareThe company issued 1,100,000 redeemable cumulative class 'A' preference shares to the aboveshareholders on 14 May 2008. These shares, under ordinary circumstances, are redeemable in fiveannual equal installments of 220,000 shares starting from 14 May 2010, the second anniversary ofthe issue date.Name of shareholdersNumber ofshares31 Dec 2009 31 Dec 2009 31 Dec 2008Face value Total value Total valueTakaTakaTakaThe City Bank Limited 600,000 1,000 600,000,000 600,000,000Pubali Bank Limited 200,000 1,000 200,000,000 200,000,000One Bank Limited 200,000 1,000 200,000,000 200,000,000Trust Bank Limited 100,000 1,000 100,000,000 100,000,0001,100,000 1,100,000,000 1,100,000,00044

Corporate directoryHead OfficeSummit Centre (5 th Floor)18, Karwan Bazar C/A,Dhaka 1215Phone: [+8802] 9132437-8; 8125142; 8126665Fax-[+8802] 9125682Power PlantsGoalpara, KhalishpurKhulnaAuditorsRahman Rahman HuqChartered Accountants9 Mohakhali C/A, DhakaPhone: [+8802] 9886450-2Fax-[+8802] 9886449E-mail-rrh@citechco.netLegal AdviserDr. Kamal Hossain & Associates,Chamber Building, 122-124 Motijheel C/A, Dhaka-1000Principal BankerCitibank NA.23, Motijheel C/A, Dhaka-1000, Bangladesh.Manager to the issueAAA Consultants & Financial Advisers Ltd.Amin Court, 4 th Floor (Suite # 404)31 Bir Uttam Shahid Ashfaqueus Samad Road(Previous 62-63) Motijheel C/A, Dhaka-1000Phone: +8802 9559602, +8802 9567726 Fax: +8802 955833045

CREDIT RATING REPORTONKHULNA POWER COMPANY LTD.REPORT: RR/287/09Address:CRISLNakshi Homes(4 th Floor),6/1A, Segunbagicha,Dhaka-1000Tel: 7173700-1Fax: 88-02-9565783Email:crisl@bdonline.comThis is a credit rating report as per the provisions of the Credit Rating Companies Rules 1996. The Long Term and ShortTerm Ratings of the company are valid for one year and six months respectively. After the above periods, these ratingwill not carry any validity unless the company goes for rating surveillance.Long TermShort TermEntity Rating AA ST-1OutlookStableDate of Rating 16 September, 2009Analysts:Akram H Sibleesiblee@crislbd.orgSuman K Kundusuman@crislbd.orgEntity Rating:Long Term: AAShort Term: ST-1Outlook: StableRating based onfinancials of1H 2009KHULNA POWERCOMPANY LTD.PRINCIPALACTIVITYElectricityGenerationINCORPORATEDON15 October, 1997BOARDCHAIRPERSONMr. Muhammed AzizKhanMANAGINGDIRECTORMr. Hasan MahmoodRajaEQUITYTk. 2,495.86 millionPage 1 of 151.0 RATIONALECRISL has assigned “AA” (pronounced as double A ) rating in the Long Term and “ST-1” ratingin the Short Term to Khulna Power Company Ltd. (hereinafter referred “KPCL”) based onfinancials and other relevant quantitative and qualitative information. The above ratings havebeen done on the basis of its good fundamentals such as sound equity based capitalstructure, sound debt repayment background, high quality plant, satisfactory profitability,government guarantee against power purchase, insignificant market risk on demand,government supportive policies for power sector etc. However, the ratings are constrained tosome extent by full dependency on O&M operator’s performance, low return compared to highcapital intensiveness, dependency on imported raw materials, tariff rate fixed by governmentetc.Entities rated in this category are adjudged to be of high quality, offer higher safety and havehigh credit quality. This level of rating indicates a corporate entity with sound credit profileand without significant problems. Risk factors are modest and may vary slightly from time totime because of economic conditions. The short term rating indicates highest certainly oftimely payment. Short-term liquidity including internal fund generation is very strong andaccess to alternative sources of fund is outstanding. Safety is almost risk free likeGovernment short-term obligations.KPCL has been operating with comfortable financial profile including good profitability andsustained stability in revenue. Structured Power Purchase Agreement (PPA) with BangladeshPower Development Board (BPDB) ensures payment for at least 50% deemed generation.Moreover, pass-through nature of its fuel costs under the tariff guidelines resulting a low fuelprice risk for KPCL. Chronic power deficits in the country, growing demand for power in theeconomy and KPCL’s long term power purchase agreement with government depicts low offtakerisk for the producer. KPCL has consistently achieved better operational performanceover the years i.e. plant factor 89.27% in 1H of 2009, 74.05% in 2008, 74.66% in 2007 and79.44% in 2006. In view of better operating efficiency the revenue of the company reached toTk. 2,993.70 million in 1H of FY2009 (6 months operation), which was Tk. 8,160.42 million inFY2008 and Tk. 5,698.21 million in FY2007. With the favour of stable oil prices in theinternational market and low financial expenses, net profit reached to Tk. 437.32 million in 1Hof FY2009 against Tk. 272.52 million in FY2008 and Tk. 309.18 million in FY2007. The soundequity base (74% contribution in total capital employed) with low financial leverage made itscapital structure stronger.KPCL is yet to develop core competency and is presently fully depends on O&M operator’sperformance. However, ‘Summit’ and ‘United’ (shareholders of KPCL) has good exposures torun different power plants having more than 200 MW capacity under own management. Highfuel prices put pressure on profitability as the company can realize about 90% of the fuel costfrom BPDB.CRISL also viewed the company with “Stable” outlook and believes that KPCL will be able tomaintain its good fundamentals in FY2009 also.

CREDIT RATING REPORTONKHULNA POWER COMPANY LTD.2.0 CORPORATE PROFILE110 MWIndependent PowerProducer99.97% sharesowned by Summitand United group2.1 The GenesisKhulna Power Company Ltd. (KPCL) is an Independent Power Producer (IPP) established in1997 under the Government initiatives for private power projects. By considering that gasburning large land based power project requires relatively long preparation and constructionperiod, this barge-mounted power plant was set up to alleviate the severe power crisis as afaster track solution on short term basis. Through a public bidding process the consortium ofWartsila NSD Power Development (Asia) Ltd., Summit Industrial & Mercantile Corporation(Pvt.) Ltd. and United Enterprises & Co. Ltd. was awarded to establish this power plant inKhulna. Two principal evaluation criteria of government were: early commissioning i.e. within10 months of executing the Power Purchase Agreement (PPA) and the ImplementationAgreement (IA) and dual fuel capability. Liquid fuel fired with capacity of 110 Megawatts(MW), KPCL is selling electricity to Bangladesh Power Development Board (BPDB) under PPAbetween the company and BPDB. The plant started supply of electricity to the national gridfrom 13 October, 1998. Initially the company was started as private limited company andlater in FY2009 converted into public limited company. The corporate office is located atSummit Centre, 5th Floor, 18 Karwan Bazar C/A, Dhaka-1215. The company has planned togo public through direct listing during 2009.2.2 Ownership StructureAt present Summit Industrial & Mercantile Corporation (Pvt.) Ltd. (Summit) and UnitedEnterprises & Co. Ltd. (United) equally own 99.9664% of 2,085,930 ‘Class A & B’ ordinaryshares. Rest 0.0336% i.e. 700 ordinary shares were transferred in favor of 14 individuals at50 numbers of ‘Class-A’ shares each. Out of these shares, Summit and United each hold 3‘Class-B’ ordinary shares, which get different treatment in respect of dividend paymentcompared to ‘Class-A’ shares. However, the existing shareholders of the company on 19 July,2009, in an Extraordinary General Meeting (EGM) passed and resolved that the existingcategory of Ordinary ‘Class A’ and ‘Class B’ shares shall be reclassified as ordinary shares. Atthe inception, El Paso Khulna Power ApS (incorporated in Denmark) were holding 73.90%,Wartsila Development & Financial Services (Asia) Ltd. (incorporated in Cayman Island)6.10%, Summit and United 10% each. Later in FY2008, EL Paso and in June, 2009 Wartsilasold their holdings equally to Summit and United. El Paso determined share transfer packagethrough a competitive bid and Summit and United as existing shareholder got the first priorityto take the package. Other than ordinary shares, KPCL has issued 1,100,000 preferenceshares of Tk. 1000 each on May 2008 to four private commercial banks. These preferenceshares are cumulative and redeemable in five annual installments of 220,000 shares startingfrom 14 May 2010, the second anniversary of the issue date.3.0 SHAREHOLDERS’ GROUP PROFILEPage 2 of 153.1 Summit GroupSummit Group is one of the leading investment and industrial business houses in Bangladesh.With the inception of a small thermo-plastic moulding compound trading company “SanguineTraders” in 1972, Mr. Muhammed Aziz Khan started his business career in a specializedbusiness sector. Under his direct leadership Summit Group has become a top tier businessestablishment within a short period of time and now owns more than 10 companies. Out ofthe above companies, only Summit Power Limited and Summit Alliance Port Ltd. are publiclylisted with both the bourses of the country. The major sectors of the Group investment coverpower generation, tanks terminal, shipping, real estate, construction, civil & hydroengineering, container depots, trading etc. The sponsors of Summit Group are targeting theniche sectors of the country and abroad. This has led to the establishment of a barge mountedpower plant in Bangladesh namely Khulna Power Company Ltd., Liquefied Petroleum Gas(LPG) plant in gas starved area at Mongla, Bagerhat, Container Freight Station in Chittagongetc. The Group is keen to invest in power sector, which has been opened to privateinvestment in Bangladesh. At the end of 2008, the asset base of the group stood at Tk.21,571.87 million against Tk. 5,720.43 million outside liabilities. Share capital of the groupstood at Tk. 5,807.26 million and net profit during the last period reached to Tk. 2,949.53million.

CREDIT RATING REPORTONKHULNA POWER COMPANY LTD.3.2 United GroupThe United Group is a known name in the business arena of the country. The Group started itsbusiness career in 1978; with its Flagship company United Enterprises and Co. Ltd. During thelast almost three decades of operation, the Group has expanded its business in varioussectors of the national economy such as Power Generation, Broadcasting and Communication,Civil and Hydro Engineering, Real Estate Development, Land port Services, Hospital andhealth care, Textiles, Polymer industries, Education etc.Over the years, the Group has completed several large and unique projects that testify itsstrength and capability in project management. Such projects include the 110 MW bargemounted power plant in Khulna; 60 km Coastal Embankment Rehabilitation Project financedby the World Bank; three 11 MW power plants in Ashulia, Narshingdi and Comilla; 450 bedState -Of-The-Art hospital; Runway Overlay Project at Zia International Airport; E-cash ATMCard Networking System; land port management services at Teknaf (ongoing) and others. Atend of 2008, the asset base of the group stood at Tk. 16,395.35 million against Tk. 10,482.16million liabilities. Net worth of the group stood at Tk. 5,913.18 million and net profit for thelast period reached to Tk. 343.58 million.4.0 PROJECT/PLANT DETAILSPlant located at nearKhulna cityGuaranteedpayment for 50% ofdeemed generationPage 3 of 154.1 Plant Location & Production FacilitiesThe plant is located near the city of Khulna. The riverbank project site provides easy access tofuel shipments by river and is located next to an existing electrical substation andtransmission line. The plant consists of two barge-mounted facilities housing of a total 19Wartsila diesel engine generators of 6.5 MW capacities. Generators are featured with low NOxand dual fuel capability. Nine engines-generators are mounted on one barge and ten on theother. The barges, shipped as deck cargo on a submersible dry tow ship, are moored in aclosed basin. Each barge is approximately 91 meters long and 24 meters wide. The plant’sshore side auxiliary facilities include two Heavy Furnace Oil (HFO) storage tanks (7,500 cubicmeters each) and pumps to transfer heavy fuel oil to a buffer tank on either barge.4.2 Main Features of PPAConsidering the BPDB as the single buyer, the Power Purchase Agreement between BPDB andKPCL plays a very important role. The PPA inter alia includes the following importantprovisions:a) The term of the contract is for 15 years from the date of commercial operations;b) BPDB is committed to a minimum guaranteed payment equivalent to 50% plantfactor on a monthly basis;c) Two part monthly tariff structure: Fuel Tariff (FT); with full cost pass through andOther Monthly Tariff (OMT), 99% of which is US$ indexed;d) Allows KPCL to source its own fuel supply;e) Tariff invoices payable within 45 days of the delivery of invoices;f) Payment security back-up in the form of Letter of Credit covering two monthsminimum tariff payments;g) The minimum tariff payment obligations continue through political and Force MajeureEvents;h) Compensation amount on termination to cover 65% of the NPV of the minimum tariffpayment for the remaining term of the PPA, plus consequent termination paymentliability to KPCL in respect of the O&M agreement and Fuel Supply Agreement, plustaxes;i) KPCL is required to pay liquidated damages for lower output capacity and shortsupply of energy;j) BPDB would pay liquidity damages to KPCL in the event of failure by the GOB to meetany of; its obligations provided under the Implementation Agreement (IA).4.3 Tariff StructureThe PPA contains a two-part tariff: fuel tariff (“FT”) and other monthly tariff (“OMT”). The FTreflects the pass-through nature of fuel expenses to the extent that the plant operates at thespecified heat rate. Under the tariff structure, the fuel cost is calculated in terms of volumerather than energy content (i.e. $/liter versus $/BTU), since HFO is sold by volume or mass.

CREDIT RATING REPORTONKHULNA POWER COMPANY LTD.Two part tariff i.e.Fuel Tariff & OtherMonthly TariffOMTs were quoted for 15 years at 50%, 60%, 70%, and 80% plant factors, and together withFT, account for the payment to the Company for electricity produced on a per Kwh basis. Atplant factors above 80%, the OMT used will be the same as that quoted for an 80% plantfactor.5.0 INDUSTRY OVERVIEWThe Ministry of Power, Energy, and Mineral Resources (MEMR) monitors the overall powersector of the country through the Power Division and Power Cell. Generation and distributionactivities have been opened to foreign and private sector, although both the sectors remaindominated by state-owned entities. Given the poor state-run electricity infrastructure, thegovernment issued the "Private Sector Power Generation Policy of Bangladesh" in 1996 andbegan to invited proposals from Independent Power Producers (IPPs) in the private sector inorder to ease the country’s electricity supply shortage. In response, several IPPs were set upafter 1996. The Private Sector Power Generation Policy of 1996 (Amended a few clause inSeptember 11, 2001) offers attractive incentive packages to IPPs including exemption fromincome tax for 15 years. However, the private power producers are still in hesitation due tothe tariff policy regarding gas supply and power sale etc. Recent move of the Government toincrease the tariff rate of gas supply is a major concern to the private power producers. Sideby side with the large IPP projects, the Government also adopted a policy of "Small PowerGeneration Policy," which encourages development of small local generation projects of up to10-MW in capacity in underserved areas. The country has an active rural electrificationprogram, which is supported by the ADB’s Power Sector Development Program (PSDP)initiated in 2003.Since natural gas dominates our power sector in Bangladesh, 95% of electricity comes fromconventional thermal power (primarily natural gas) and the remaining 5 percent throughhydroelectric power. In January 2006, Bangladesh’s first coal-fired power plant begancommercial production at the 250-MW Barapukuria facility in Parbotipur.According to Power Cell, the Bangladesh Power Development Board (BPDB) generated 3400MW of the country’s 5245 MW of total commercial electricity, or about 64% percent of thetotal installed capacity. Over the last several years although the demand of power and gasgrew in geometric progression, yet the power sector did not grow as per requirement and gassector failed to explore its resources and developed its reserve. In the last one and half year’snatural gas production, transmission and supply situation has deteriorated. PDB viewed that,for gas supply shortage alone, it failed to generate about 850MW and for maintenance andoverhauling of plants another 323 MW power could not be generated.Per capita Electricity in Bangladesh is one of the lowest in the world, at about 169.69 kilowatthours(kwh) in 2006. At present only 42.09% percent of the population has access toelectricity, primarily in the more developed eastern zone of the country. Since much of thecountry is disconnected from the national electricity grid, noncommercial sources of energysuch as biomass are estimated to represent more than half of Bangladesh’s energyconsumption.6.0 CORPORATE GOVERNANCE14- Member BoardPage 4 of 156.1 Board of DirectorsThe Board of KPCL consists of fourteen directors. Mr. Muhammed Aziz Khan, nominated fromSummit, is the Chairman of the company. Mr. Aziz Khan is a renowned and pioneer businesspersonality in private power sector of Bangladesh. After completion of MBA from Institute ofBusiness Administration of Dhaka University in 1980, he sponsored the Summit Group. He isalso the chairman of Summit Power Limited; the first company in the private sector to gopublic. Mr. Hasan Mahmood Raja nominated from United acts as Managing Director of thecompany. The Board members have sound exposures in the operation and technical aspect ofthe business, since they are involved in diversified business for a long.

CREDIT RATING REPORTONKHULNA POWER COMPANY LTD.The Board formulated strategic objectives and policies for the company, provides leadership inimplementing those objectives as well as supervises management of the company’s affairs.Under the supervision of the Board, Managing Director looks after the overall operationalactivities as per the delegation of power and in accordance with the Memorandum and Articlesof Association.Small managementteamOperationoutsourced formWartsilla6.2 Corporate Management and Human ResourcesAs the core operation of KPCL is completely outsourced from ‘Operation & Maintenanceoperator’ i.e. Wartsila, the supplier of the engines, the corporate management team andhuman resource size of the company is very small. The corporate management team isheaded by Mr. Hasan Mahmood Raja, the Managing Director of the company. Mr. Raja was theleading sponsor of the United Group. He is also Chairman and Managing Director of United.Managing Director is aided by Mr. Md. Abdur Rahim, the Project Director and Mr. Md. AminurRahman FCA, Financial Controller and Company Secretary. Mr. Abdur Rahim, a marineengineer having about 40 years experiences in steel, shipping, dockyard and power sector.Mr. Aminur Rahman, a professional accountant having 22 year of service experience in thefield of accounts, finance and company secretarial matters in multinational companies. Totalhuman resource stood at 10, who are mainly for support services. The company formulatedstructured ‘Employment Policy’ stating the benefits and privileges entitled by the employees.6.3 Business StrategyAs mentioned earlier, KPCL an independent power producer operates under a 15-year PPAwith BPDB. A guarantee agreement between the company and Ministry of Energy and MineralResources (MEMR) also ensures the company regarding the payment obligations of the BPDBin the event of a breach, default or non-performance of BPDB under the PPA. Operation &Maintenance is totally outsourced from Wartsilla, the engine supplier and previous shareholderof the company. Fuel is independently sourced from Singapore by KPCL and cost of fuelpassed through to the BPDB.Though the tenure of existing PPA expires on 2013, under the present electricity situation it ishighly probable that government will extend the agreement for the next tenure. After theexpiry O&M agreement in 2013, KPCL thinks to take over the O&M under own management.The existing personnel of the operator can be retained by KPCL. Moreover, Summit and Unitedgroup have been operating different power plants having about 200 MW capacity under ownmanagement.7.0 RISK MANAGEMENTPlant is adequatelyprotectedPage 5 of 157.1 Plant Protection and Risk MitigationWartsila, the plant Operator has taken adequate protection measures to protect the plant. Ithas established 42 fire hydrant points covering the key areas, 28 CO 2 flooding fixedinstallation for T1 & T3 (for control room, switchgear room and HFO separator room). Thereare also about 200 hand-held fire extinguishers which include foam, powder and CO 2 types.The Khulna power plant has been identified as a Key Point Installation (KPI) by thegovernment of Bangladesh. Hence services of the Bangladesh Rifles, Army and privatesecurity can be utilized. The Operator also established an Emergency Response Plan, whichaddress all types of emergency that may arise in the plant. KPCL is currently insured all riskspackages including machinery breakdown, increased cost of replacement payable, businessinterruption, marine and non marine liabilities, sabotage and terrorism.7.2 Operating and Maintenance RiskKPCL has signed a 15-year O&M agreement with Wartsila, a leading supplier of flexible powerplants worldwide. The operator is responsible for the activities necessary to operate the plantexcept fuel purchase. It will determine the needed spare parts and supplies and will provideall services necessary to obtain the parts and supplies. It will also employ and be responsiblefor all operating personnel. The O&M costs include a fixed fee usually of US$ 144,000 permonth prorated for partial months; however, it may extend to US$ 179,000 for any month incertain circumstances. The operator shall invoice at variable cost of US$ 5.05 per MWh during

CREDIT RATING REPORTONKHULNA POWER COMPANY LTD.Low MaintenanceRiskNo counter partyrisk due to hugepower shortageMinimum ForeignExchange RiskExposes fuel priceescalation riskLow supplies riskthe months when capacity factor is below 30% or above 60% and US$ 4.6 per MWh whencapacity factor is between 30% and 60%. Variable cost will be subject to annual adjustmentin certain circumstances. KPCL is responsible for unplanned maintenance in excess ofUS$100,000 per event and extraordinary expenses for additional work. The operatorguarantees an annual availability rate for the plant at 85%. For each percentage below up toa maximum of 13% the operator will pay KPCL US$15,000 and vice versa.7.3 Counter Party RiskBangladesh Power Development Board (BPDB) is the only purchaser of electricity from theKPCL. According to the agreement BPDB will pay all the net electricity output delivered to thegrid system from the plant with commitment to a minimum purchase equivalent to 50% plantfactor on a monthly basis. As additional, payment security is backed by Letter of Creditcovering two months of minimum tariff payments (and a Government of BangladeshGuarantee). Tariff invoice is payable within 45 days of the delivery of invoice. In last 12months, the company received payment on an average 10 days ahead of due date. There hasbeen no dispute with BPDB regarding meter readings or invoice amounts. At present KPCLdoes not seem counter party risk, because the country faces huge power shortage.7.4 Foreign Exchange RiskKPCL faces minimum foreign exchange risk. Presently there is no foreign currencydenominated loan amount. The company receives revenue almost fully in US dollars. The PPAprovides exchange rate protection with the pass-through fuel cost and 99% of OMT (OtherMonthly Tariff) indexed to the exchange rate as applicable on the date of credit equivalent USdollars in the company’s account.7.5 Fuel Price Escalation RiskThe pass through of the fuel cost under the PPA is limited to the fuel cost if the plant wasrunning at the heat rate as specified in the PPA. As the plant may not be running at thatspecified rate due to variation in fuel quality, the extra fuel cost will not be passed throughand there is a risk that earnings will be affected by extra cost especially in the period ofhigher fuel prices in the international market However, the OMT portion of the tariff generatessufficient revenues till present period to absorb the price escalation risk.7.6 Supplies RiskKPCL has formal Fuel Supply Agreement (FSA) with United Summit Coastal Oil Ltd. (USCOL),a sister concern of Summit and United for only inland carrier. KPCL imports fuel on its ownaccount i,e. full responsibility bestowed on KPCL. KUO Oil (Singapore) PTE LTD, a foreigncompany, commercially agreed to render the offshore services (such as procurement, freight,FOB cost differential risk, inspection, supervision of loading). USCOL acts only onshore(Bangladesh) in connection with the portion of services of unloading, storage, transportationand delivery to the discharge port. KPCL faces low supply risk as it can import fuel from anycommercially viable supplier and MOPS (Mean of Platts Singapore) indexed fuel costs passthrough to BPDB.8.0 BUSINESS PERFORMANCEBetter OperationalPerformancePage 6 of 15IndicatorsLicensed Capacity (MWh) [110]Energy Generation (MWh)Net Energy Output (MWh)Plant Factor (%)Economic Efficiency (TK/MWh)Operational Efficiency (%)* 6 Months operation (January – June)*1H 2009 2008 2007 2006477,840 963,600 963,600 963,600416,707 705,384 730,987 776,653410,301 693,544 718,985 764,22289.27 74.05 74.66 79.446,267.70 10,866.16 7,051.65 7,419.6887.21 73.20 75.86 80.60KPCL has dispatched 693,544 MWh of energy to national grid during FY2008 against 718,985MWh of energy in FY2007 whereas licensed capacity was 963,600 MWh in both of the periods.

CREDIT RATING REPORTONKHULNA POWER COMPANY LTD.During first half of FY2009, net energy dispatched was 410,301 MWh against 477,840 MWh ofinstalled capacity. The plant factor stood at 89.27% in 1H of FY2009 and 74.05% in FY2008against 74.66% in FY2007. In terms of Economic Efficiency (production cost to energy output)the company has improved its performance over last period. Cost per MWh of Tk. 6,267.70 in1H of FY2009 was lower than Tk. 10,866.16 in FY2008 and Tk. 7,051.65 in FY2007. Volatilityof oil price in international market was the prime reason of volatility in ratio of economicefficiency over the periods. Operational Efficiency (energy output to potential output at 100%capacity) also improved in 1H of FY2009 at 87.21% from 73.20% in FY2008 and 75.86% inFY2007.9.0 FINANCIAL PERFORMANCE9.1 ProfitabilityIndicators *1H 09 2008 2007 2006 2005Sound profitablecompanyReturn on Average Assets (ROAA)% 17.52 4.76 4.78 4.01 4.30Return on Average Equity (ROAE)% 35.87 9.58 9.81 8.88 8.80Return on Average Capital Employed % 24.44 6.99 7.30 6.00 5.55Gross Profit Margin% 12.76 6.07 9.54 8.69 12.48Operating Profit Margin% 11.70 5.32 7.76 7.23 10.25Net Profit Margin% 14.61 3.34 5.43 4.06 5.66Earning Per Share(Tk.1000) 352 88 141 110 102* First Half growth of FY2009 has been annualizedKPCL is a highly profitable company and the profitability indicators were stable over the lastfew years. The company enjoys exemption from tax on income for 15 years from the date ofits commercial operation. Net profit stood at Tk. 437.51 million during 1H of FY2009 againstTk. 272.52 million in FY2008 and Tk. 309.18 million in FY2007. The profitability is highlyinfluenced by the fuel tariff, which is volatile in the international market. According to PPA,PDB reimburses the fuel cost as per specified quantity of fuel per MW electricity generated.However, due to different configuration of engines than specified in PPA, the burn rate of fuelper MW is higher. Consequently KPCL can realize about 90% of fuel cost from BPDB and rest10% put pressure on profitability, which were more acute during 2008 (Tk. 44,644 per MT)and 2007 (Tk. 26,996 per MT) when fuel price was sky high than 1H of FY2009 (Tk. 23,733per MT). Other than influence of fuel price, net profit of 1H, FY2009 substantially increasedfrom irregular income from EL Paso’s (a previous equity partner) term loan waiver (Tk. 91.48million) and reduced financial expenses.While analyzing profitability, Return on Average Asset (ROAA) has substantially increased to17.52% (annualized) at end of 1H of FY2009 from 4.76% at YE2008 and 4.78% at YE2007.By nature power generation industry is very capital intensive; moreover, significant tradedebtors and huge raw materials inventory induced to reduce the return on assets. Due to fallin net profit by 11.80% and 4.25% increase in equity reduced Return on Average Equity(ROAE) to 9.58% at YE2008 from 9.81% at YE2007. Though total amount of capital employeddecreased, the Return on Average Capital Employed (ROACE) declined further to 6.99% atYE2008 from 7.30% at YE2007. However, at end of 1H of FY2009, both annualized ROAE andROACE increased substantially to 35.87% and 25.16% respectively. The Earning Per Share(EPS) of Tk. 1000 stood at Tk. 352 (annualized) at end of 1H of FY2009 against Tk. 88 atYE2008.Page 7 of 15

CREDIT RATING REPORTONKHULNA POWER COMPANY LTD.9.2 Cost EfficiencyImproved costefficiencyIndicators *1H 09 2008 2007 2006 2005Cost to Revenue Ratio (%) 87.24 93.93 90.46 91.31 87.52Administrative Exp to Revenue Ratio % 1.05 0.75 1.78 1.46 2.23Finance Cost to Revenue Ratio % 0.21 2.13 2.60 3.13 4.55* First Half growth of FY2009 has been annualizedThe cost efficiency (cost of goods sold to sales revenue) was improved in 1H of FY2009though the ratio was very high in the last several years. It stood at 87.24% in 1H2009 against93.93% in FY2008 and 90.46% in FY2007. As mentioned earlier, high oil prices and freightcharges in international market caused to high cost to revenue ratio. KPCL imports furnace oilfrom Singapore. C&F of fuel is calculated as the five day (immediately and after 2 days of dateof bill of lading) rolling average of MOPS (Mean of Platts Singapore). Contribution of rawmaterials cost to cost of goods sold increased 90.56% in FY2008 from 85.26% in FY2007;however, it was 84.86% in 1H of FY2009. It revealed that the price of heavy furnace oildecrease by 46.84% in 1H of FY2009 than FY2008, however, it was 65.37% higher in FY2008than FY2007.Finance cost to revenue decreased to 0.21% in 1H of FY2009 against 2.13% in FY2008 and2.60% in FY2007. Early payment of IFC term loan and preference share’s dividend, whichcharged against retained earnings induced to improve the finance cost to revenue ratio in 1Hof FY2009. Administrative expense to revenue ratio stood at 1.05% in 1H of FY2009 against0.75% in FY2008 and 1.78% in FY2007.10.0 CAPITAL STRUCTURE AND LEVERAGEIndicators *1H 09 2008 2007 2006 2005Leverage Ratio (X) 0.92 1.19 0.88 1.24 1.18Internal Capital Generation (%) 17.52 11.45 9.35 8.54 8.68Net Asset Value Per Share (Tk. 1000) 1196.52 1141.15 1585.79 1437.57 1327.18* First Half growth of FY2009 has been annualizedEquity basedcompanyKPCL is a sound equity based company with good contribution from long term loan in thecapital structure. At end of 1H of FY2009, the capital structure revealed that almost 74% ofthe net capital employed Tk. 3386.39 million was financed by equity i.e. Tk. 2,495.85 million.The equity pie is composed of 83.58% paid up capital and 16.42% retained earnings. Thecumulative preference shares are redeemable in five annual installments starting from 14May, 2010 at the second anniversary of the date of issue. By considering its nature, thesepreference shares are long term liability. The internal capital generation was good and stoodat 17.62% at end of 1H of FY2009 against 11.45% at YE2008. Other than Tk.113.44 millionpreference dividend, Tk. 208.59 million and Tk. 1200 million paid for FY2008 and FY2007respectively as cash dividend. Against the above equity structure, outside liabilities stood atTk. 2,264.58 million representing the leverage ratio 0.91 times as on 30 June 2009 against1.19 times at YE2008. The leverage ratio consists 0.36 as long term gearing and 0.56 as shortterm gearing. Net asset value per TK. 1000 share increased to Tk. 1196.52 at end of 1H ofFY2009 against Tk. 1141.15 at YE2008.11.0 LIQUIDITY AND FUND FLOW ANALYSISPage 8 of 15Indicators *1H 09 2008 2007 2006 2005Current Ratio (X) 0.99 1.06 1.30 1.15 1.13Quick Ratio (X) 0.83 0.60 0.82 1.00 0.90Cash Conversion Cycle 19 8 4 18 44* First Half growth of FY2009 has been annualized

CREDIT RATING REPORTONKHULNA POWER COMPANY LTD.Small cashconversion cycleKPCL is basically an import based (considering volume of raw materials) company requiringsignificant inventory (heavy furnace oil). Due to comparatively shorter receivable collectionperiod and lengthy repayment of payables, liquidity position of the company always remainsat modest level. It is reflected by its liquidity ratio which stood at 0.99 times, 1.06 times and1.30 times at end of 1H of FY2009, FY2008 and FY2007 respectively. As per agreement, KPCLhas to keep 11,000 MT furnace oil in country for on an average 30 days production. Supplier’spayment can be delayed upto 90 days as per L/C terms. The credit sales/receivables backedby PPA realizable within 45 days induced to reduce average cash conversion cycle to 20-25days. On the over, the liquidity cycle depends on as early as realization of receivables fromBPDB.Analysis of the fund flow reveals that the company generated sufficient funds internally toservice its debt burden and other liabilities also. In FY2008, the company generated cash flowfrom operation of Tk 546.87 million (1.11 times of debt coverage) and free operating cashflow of Tk 546.45 million (1.10 times of debt coverage).12.0 FINANCIAL FLEXIBILITY AND SOLVENCYIndicators *1H 09 2008 2007 2006 2005Debt Service Coverage Ratio (X) 14.53 1.26 1.44 1.31 1.35Interest Coverage Ratio (X) 87.22 3.55 4.54 3.38 3.33* First Half growth of FY2009 has been annualizedSound debt servicingcapacityDue to sound equity and legal backings, KPCL enjoys good financial flexibility to raise fundsfrom different sources. With sound creditability, it enjoys a large credit limit from differentbanks (BRAC Bank, Citibank NA, Pubali Bank, Shahjalal Islami Bank and Standard Bank).Presently, KPCL enjoys funded limit of Tk. 1,109 million and non-funded limit of Tk. 2,440million as on 30 June, 2009. However, out of the above limit, the outstanding funded bankloan liability was Tk. 293.70 (i.e. 26.48% utilization of the limit) and non funded liability wasTk. 316.87 million (i.e. 13% utilization of limit) as on 30 June, 2009.While analyzing creditworthiness of the company, it revealed that with the company has beenutilizing the revolving credit limits duly. Initially the company made agreement with IFC for$51.968 million for project loan. However, due to some compliance fulfillment by KPCL, IFCdelayed to disburse the loan. Consequently, the then two foreign sponsors i.e. El Paso andWartsilla provided the amount as ‘Bridge Loan’ in the proportion of 85% and 15%respectively. Later in August, 1999 IFC disbursed $22.539 million and in October, 2002$21.539 million. Foreign two sponsors’ loan was partially replaced by IFC loan and remainingamount of foreign sponsors’ loan treated as term loan. The above term loans were beingrepaid in semi-annual installments for a term of 9 years effective from 15 December 2002.The remaining balance of IFC loan of Tk. 1,120.58 million had fully re-paid earlier in FY2008from the proceeds of redeemable cumulative preference share of TK. 1,100 million. Thebalance i.e. Tk. 91.98 million of El Paso loan was waived by El Paso under share transfer dealwith Summit and United. Remaining balance of Wartsilla’s loan was fully repaid in March,2009.The cash generation of the company was good to serve the interest obligation against therevolving loan. Debt service coverage ratio stood at 14.53 times in 1H of FY 2009 against1.26 times in FY2008. In term of interest coverage ratio, the earnings against the fixed costburden was commendable to 87.22 times in 1H of FY2009 against 3.55 times in FY2008 dueto no long term loan except preference shares in FY2009. However, by consideringredeemable preferred share as liability, the interest coverage ratio (including preferreddividend as fixed charge) stood at 4 times in 1H of FY2009.Page 9 of 15

CREDIT RATING REPORTONKHULNA POWER COMPANY LTD.13.0 OBSERVATION SUMMARYRating Comforts• Sound equity base• Sound debt repayment background• High quality plant• Satisfactory profitability• Government guarantee againstminimum power purchase• No market risk regarding demand• Government supportive policiesBusiness Opportunities:• Government Incentives• Increasing demand for electricityRating Concerns:• Fully dependent on O&Moperator’s performance• Low return compared to highcapital intensiveness• Dependency mainly on importedraw materials• Tariff rate fixed by governmentBusiness Challenges:• Volatility of oil prices ininternational market• Dependency on foreigntechnology14.0 CONCLUSIONThe power sector of Bangladesh has been passing through a critical stage due to manyreasons including shortage of production compared to demand. According to PBD, the demandof electricity reached to 5500 MW, whereas daily power generation stayed between 3300 MWto 3400 MW, the same was also produced in 2004-05. This wide gap between generation anddemand is not solely for no new production but also lack of consistent expansion oftransmission and distribution channels. Consequently, per capita electricity generation orcoverage of population under electricity not achieved as per Power Sector Master Plan (PSMP).Moreover acute shortage of natural gas makes volatile the power generation. Overall, thepower sector of Bangladesh falls in a disaster. KPCL as a power generation company runssuccessfully since its commercial operation. The profitability, solvency and efficiency of thecompany improved over the periods. Good exposures of the entrepreneurs in power sectorand government supportive policy help to maintain company’s present stability.END OF THE REPORT[Information used herein is obtained from sources believed to be accurate and reliable. However, CRISLdoes not guarantee the accuracy, adequacy or completeness of any information and is not responsible forany errors or omissions or for the results obtained from the use of such information. Rating is an opinion oncredit quality only and is not a recommendation to buy or sell any securities. All rights of this report arereserved by CRISL. Contents may be used by news media and researchers with due acknowledgement.]Page 10 of 15

CREDIT RATING REPORTONKHULNA POWER COMPANY LTD.15.0 CORPORATE INFORMATIONDate of Incorporation : 15 October, 1997Commencement of Operation: 13 October, 1998Board of Directors Mr. Muhammed Aziz Khan ChairmanMr. Hasan Mahmood RajaManaging DirectorMr. K.M. Ahsan ShamimDirectorMr. Latif KhanDirectorMr. Ahmed Ismail HossainDirectorMs. Ayesha Aziz KhanDirectorMrs. Anjuman Aziz KhanDirectorMr. Akhter Mahmud RanaDirectorMr. Muhammad Farid KhanDirectorMr. Faridur Rahman KhanDirectorMs. Adeeba Aziz KhanDirectorMr. Abul Kalam AzadDirectorMr. Jafer Ummeed KhanDirectorMr. Moinuddin Hasan RashidDirectorAuditorRahman Rahman HuqChartered AccountantsKey Management Mr. Hasan Mahmood Raja Managing DirectorMr. Md. Abdur RahimMr. Md. Aminur Rahman FCAProject DirectorFinancial Controller &Company SecretaryCapital History:YearAuthorizedCapital(M.Tk)Issued, Subscribed andPaid-up Capital (M. Tk.)Rate ofIncreaseSource ofPaid-up Capital2004 2085.93 2,085.93 - Cash2005 2085.93 2,085.93 - Do2006 2085.93 2,085.93 - Do2007 2085.93 2,085.93 - Do2008 3,000.00 2,085.93 Do30 June,20093,000.00 2,085.93 - DoPage 11 of 15

CREDIT RATING REPORTONKHULNA POWER COMPANY LTD.16.0 FinancialsBalance Sheet (As on 31 December)(Amount in Million Taka)1H 2009 2008 2007 2006 2005Non-Current Assets: --- ---Property, Plant & Equipment 3,398.42 3,463.28 3,635.51 3,858.49 3,729.64Other Non-Current Assets - - - - 342.99Total Non-Current Assets 3,398.42 3,463.28 3,635.51 3,858.49 4,072.62Current Assets: --- --- --- --- ---Inventories 221.00 762.73 945.90 386.03 401.57Trade Debtors 1,036.18 885.78 726.93 1,882.55 1,425.00Adv. Deposits & Prepayments 89.38 1.49 88.21 147.00 46.32Other Current Assets 8.01 8.01 48.18 27.11 15.19Cash & Bank Balances 7.45 100.90 771.65 429.41 75.33Total Current Assets 1,362.02 1,758.91 2,580.87 2,872.11 1,963.41Current Liabilities: --- --- --- --- ---Short Term Loan 293.70 284.00 - - 250.01Long Term Loan-CP 220.00 30.88 316.65 318.71 312.94Trade Creditors 620.44 1,314.03 1,395.33 1,981.70 1,079.77Accrued Expenses & others 31.31 27.81 13.60 5.51 71.41Proposed Dividend 208.59 - - - -Other ST Liabilities - - 259.73 181.61 21.20Total Current Liabilities 1,374.04 1,656.72 1,985.31 2,487.52 1,735.34Net Current Assets (12.02) 102.19 595.56 384.58 228.07Net Assets 3,386.39 3,565.47 4,231.07 4,243.07 4,300.69Non-Current Liabilities: --- --- --- --- ---Long Term Loan/Preference880.00 1,174.89 911.56 1,236.20 1,526.77ShareDeferred Liabilities 10.54 10.21 11.66 8.21 5.53Other Non-Current Liabilities - - - - -Total Non-Current Liabilities 890.54 1,185.10 923.22 1,244.41 1,532.30Shareholders' Equity: --- --- --- --- ---Share Capital 2,085.93 2,085.93 2,085.93 2,085.93 2,085.93Other Reserve - - - - 240.24Retained Earnings 409.92 294.44 1,221.91 912.74 442.23Total Shareholder's Equity 2,495.85 2,380.37 3,307.84 2,998.67 2,768.40Total Equity and LT Liabilities 3,386.39 3,565.47 4,231.07 4,243.07 4,300.69Total Assets 4,760.44 5,222.19 6,216.38 6,730.60 6,036.03Note: Above Financial statements are rearranged for analysis purposePage 12 of 15

CREDIT RATING REPORTONKHULNA POWER COMPANY LTD.B. Income Statement (for the year ended 31 December)(Amount in Million Taka)1H 2009 2008 2007 2006 2005Sales Revenue 2,993.70 8,160.42 5,698.21 6,311.06 4,243.77COGS Excluding Depreciation 2,517.66 7,495.62 4,941.29 5,550.89 3,506.76Depreciation-Mfg 94.13 169.20 213.38 211.64 207.49Cost of Good Sold 2,611.79 7,664.82 5,154.66 5,762.52 3,714.26Gross Profit 381.91 495.61 543.55 548.54 529.51Salary & Allowances 5.28 17.82 20.44 18.66 17.22Depreciation-Administrative 0.81 1.71 1.79 1.35 2.23Other Administrative Expenses 25.25 41.97 79.21 72.39 75.41Profit from Operation 350.57 434.10 442.11 456.16 434.92Other Income 91.48 3.5 9.83 5.04 4.43Financial Cost 6.18 173.86 148.19 197.41 193.22Non Operating Income 1.64 8.78 5.43 - -Non-Operating Exp. - - - 7.59 5.90Profit Before Tax 437.51 272.52 309.18 256.19 240.24Income Tax - - - - -Profit After Tax 437.51 272.52 309.18 256.19 240.24Note: Above Financial statements are rearranged for analysis purposePage 13 of 15

CREDIT RATING REPORTONKHULNA POWER COMPANY LTD.CRISL RATING SCALES AND DEFINITIONSLONG-TERM RATINGS OF CORPORATERATINGAAATriple A(HighestSafety)AA+, AA,AA-(Double A)(High Safety)A+, A, A-Single A(AdequateSafety)BBB+, BBB,BBB-Triple B(ModerateSafety)BB+, BB,BB-Double B(InadequateSafety)B+, B, B-Single B(Risky)CCC+,CCC,CCC-Triple C(Vulnerable)CC+,CC, CC-Double C(HighVulnerable)C+,C,C-(ExtremelySpeculative)D(Default)Investment GradeDEFINITIONEntities rated in this category are adjudged to be of best quality, offer highestsafety and have highest credit quality. Risk factors are negligible and riskfree, nearest to risk free Government bonds and securities. Changingeconomic circumstances are unlikely to have any serious impact on thiscategory of companies.Entities rated in this category are adjudged to be of high quality, offer highersafety and have high credit quality. This level of rating indicates a corporateentity with a sound credit profile and without significant problems. Risks aremodest and may vary slightly from time to time because of economicconditions.Entities rated in this category are adjudged to offer adequate safety for timelyrepayment of financial obligations. This level of rating indicates a corporateentity with an adequate credit profile. Risk factors are more variable andgreater in periods of economic stress than those rated in the highercategories.Entities rated in this category are adjudged to offer moderate degree ofsafety for timely repayment of financial obligations. This level of ratingindicates that a company is under-performing in some areas. Risk factors aremore variable in periods of economic stress than those rated in the highercategories. These entities are however considered to have the capability toovercome the above-mentioned limitations.Speculative GradeEntities rated in this category are adjudged to lack key protection factors,which results in an inadequate safety. This level of rating indicates a companyas below investment grade but deemed likely to meet obligations when due.Overall quality may move up or down frequently within this category.Entities rated in this category are adjudged to be with high risk. Timelyrepayment of financial obligations is impaired by serious problems which theentity is faced with. Whilst an entity rated in this category might be currentlymeeting obligations in time through creating external liabilities.Entities rated in this category are adjudged to be vulnerable and might fail tomeet its repayments frequently or it may currently meeting obligations intime through creating external liabilities. Continuance of this would dependupon favorable economic conditions or on some degree of external support.Entities rated in this category are adjudged to be very highly vulnerable.Entities might not have required financial flexibility to continue meetingobligations; however, continuance of timely repayment is subject to externalsupport.Entities rated in this category are adjudged to be with extremely speculativein timely repayment of financial obligations. This level of rating indicatesentities with very serious problems and unless external support is provided,they would be unable to meet financial obligations.Default GradeEntities rated in this category are adjudged to be either already in default orexpected to be in default.Page 14 of 15Note: For long-term ratings, CRISL assigns + (Positive) sign to indicate that the issue is ranked atthe upper-end of its generic rating category and - (Minus) sign to indicate that the issue is ranked atthe bottom end of its generic rating category. Long-term ratings without any sign denote mid-levelsof each group.

CREDIT RATING REPORTONKHULNA POWER COMPANY LTD.SHORT-TERM RATINGS OF CORPORATEST-1ST-2ST-3ST-4ST-5ST-6Highest GradeHighest certainty of timely payment. Short-term liquidity including internal fundgeneration is very strong and access to alternative sources of funds is outstanding.Safety is almost like risk free Government short-term obligations.High GradeHigh certainty of timely payment. Liquidity factors are strong and supported by goodfundamental protection factors. Risk factors are very small.Good GradeGood certainty of timely payment. Liquidity factors and company fundamentals aresound. Although ongoing funding needs may enlarge total financing requirements,access to capital markets is good. Risk factors are small.Moderate GradeModerate liquidity and other protection factors qualify an entity to be in investmentgrade. Risk factors are larger and subject to more variation.Speculative GradeSpeculative investment characteristics. Liquidity is not sufficient to ensuredischarging debt obligations. Operating factors and market access may be subject toa high degree of variation.DefaultEntity is in default or is likely to default in discharging its short-term obligations.Market access for liquidity and external support is uncertain.Page 15 of 15

Auditors’ Report to the Shareholders ofKhulna Power Company Ltd.We have audited the accompanying balance sheet of Khulna Power Company Ltd. as at 31December 2009 and the related profit and loss account, statement of changes in equity andcash flow statement for the year then ended and a summary of significant accountingpolicies and other explanatory notes. The preparation of these financial statements is theresponsibility of the company’s management. Our responsibility is to express anindependent opinion on these financial statements based on our audit.We conducted our audit in accordance with Bangladesh Standards on Auditing (BSA). Thosestandards require that we plan and perform the audit to obtain reasonable assurancewhether the financial statements are free of material misstatement. An audit includesexamining, on a test basis, evidence supporting the amounts and disclosures in the financialstatements. An audit also includes assessing the accounting principles used and significantestimates made by management, as well as evaluating the overall financial statementpresentation. We believe that our audit provides a reasonable basis for our opinion.In our opinion, the financial statements prepared in accordance with Bangladesh AccountingStandards (BAS) and Bangladesh Financial Reporting Standards (BFRS), give a true and fairview of the state of the company’s affairs as at 31 December 2009 and of the results of itsoperations and its cash flows for the year then ended and comply with the Companies Act1994, the Securities and Exchange Rules 1987 and other applicable laws and regulations.We also report that:a)b)we have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit and made dueverification thereof;in our opinion, proper books of account as required by law have been kept by thecompany so far as it appeared from our examination of these books;c)the company’s balance sheet and profit and loss account dealt with by this report arein agreement with the books of account; andd)the expenditures incurred were for the purposes of the company's business.Dhaka, 20 February 2010Sd/-Rahman Rahman HuqChartered Accountants

Khulna Power Company Ltd.Balance Sheetas at 31 December 20092009 2008Notes Taka TakaAssetsProperty, plant and equipment (net) 4 3,307,133,332 3,463,283,276Total non-current assets 3,307,133,332 3,463,283,276Inventories 5 981,640,270 762,728,652Accounts receivable 6 387,940,605 885,777,668Other receivables 7 12,497,004 8,008,915Advances, deposits and prepayments 8 1,548,516 1,493,673Cash and cash equivalents 9 701,135,588 100,899,376Total current assets 2,084,761,983 1,758,908,284Accounts payable 10 1,486,104,691 1,314,033,048Working capital loan 11 - 284,000,000Term loan - current portion 12 - 30,883,364Accrued expenses and others 13 40,476,518 13,470,889Payable for interest and other financial charges - 14,335,472Total current liabilities 1,526,581,209 1,656,722,773Net current asset 558,180,774 102,185,511Net assets employed 3,865,314,106 3,565,468,787Shareholders' equityOrdinary shares 14 2,085,930,000 2,085,924,000Redeemable cumulative class 'A' preference shares 14 1,100,000,000 1,100,000,000Retained earnings 668,492,911 294,437,8273,854,422,911 3,480,361,827Non-current liabilitiesTerm loan - net of current portion 12 - 74,892,180Deferred liability for gratuity and earned leave 15 10,891,195 10,208,780Total non-current liabilities 10,891,195 85,100,960Total equity and long term liabilities 3,865,314,106 3,565,462,787The annexed notes 1 to 31 form an integral part of these financial statements.As per our report of same date.Dhaka, 20 February 2010Sd/-Sd/-Sd/-Managing Director Director Company SecretarySd/-Rahman Rahman Huq

Khulna Power Company Ltd.Profit and Loss Accountfor the year ended 31 December 2009Notes 2009 2008TakaTakaOperating revenues 16 6,393,267,345 8,160,423,118Operating expenses 17 (5,718,431,301) (7,664,817,721)Gross profit 674,836,044 495,605,397General and administrative expenses 18 (64,078,271) (61,504,226)Other income 19 91,481,290 3,500,496Exchange gain 2,174,414 8,784,292Result from operating activities 704,413,477 446,385,959Finance income 9,155,909 4,048,472Finance expenses 20 (17,483,802) (177,911,217)Net financial expenses (8,327,893) (173,862,745)Net profit for the year 696,085,584 272,523,214Earning per share (EPS) 21 2.79 0.97The annexed notes 1 to 31 form an integral part of these financial statements.Sd/-Company SecretarySd/-DirectorSd/-Rahman Rahman HuqChartered AccountantsAs per our report of same date.Dhaka, 20 February 2010Sd/-Managing Director

Khulna Power Company Ltd.Statement of Changes in Equityfor the year ended 31 December 2009Redeemablecumulativeclass 'A'Ordinary preference RetainedParticulars shares shares earnings TotalTaka Taka Taka TakaBalance as at 1 January 2008 2,085,930,000 - 1,221,914,613 3,307,844,613Issued during the year - 1,100,000,000 - 1,100,000,000Dividend paid for the year 2007 - - (1,200,000,000) (1,200,000,000)Net profit for the year - - 272,523,214 272,523,214Balance as at 31 December 2008 2,085,930,000 1,100,000,000 294,437,827 3,480,367,827Preference stock dividend paid - - (113,437,500) (113,437,500)Dividend paid for the year 2008 - - (208,593,000) (208,593,000)Net profit for the year - - 696,085,584 696,085,584Balance as at 31 December 2009 2,085,930,000 1,100,000,000 668,492,911 3,854,422,911

Khulna Power Company Ltd.Cash Flow Statementfor the year ended 31 December 2009A. Cash flow from operating activities:2009 2008TakaTakaCollection from BPDB 6,891,104,408 8,001,571,584Cash paid to suppliers and employees (5,897,972,092) (7,317,656,592)Cash generated from operations 993,132,316 683,914,992Finance income received 9,155,909 4,048,472Interest and other financial charges paid (31,783,792) (141,096,988)Net cash provided by operating activities 970,504,433 546,866,476B. Cash flow from investing activities:Acquisition of property, plant and equipment (34,343,525) (413,003)Sale proceeds of property, plant and equipment - 1,303,534Dividend received from offshore overnight investment - 2,408,996Net cash provided by investing activities (34,343,525) 3,299,527C. Cash flow from financing activities:Term loan (13,894,196) (2,304,588)IFC loans ('A' & 'B') - (1,118,611,237)Redeemable cumulative class 'A' preference shares - 1,100,000,000Preference stock dividend paid (113,437,500) -Dividend paid (208,593,000) (1,200,000,000)Net cash used in financing activities (335,924,696) (1,220,915,825)D. Net cash inflow/(outflow) for the year (A+B+C) 600,236,212 (670,749,822)E. Opening cash and cash equivalents 100,899,376 771,649,198F. Closing cash and cash equivalents 701,135,588 100,899,376

Khulna Power Company Ltd.Notes to the Financial Statementsas at and for the year ended 31 December 20091. Reporting entity1.1 Company profileKhulna Power Company Ltd. (“the company”) was incorporated in Bangladesh on 15October 1997 as a private limited company under the Companies Act 1994. The companyhas converted into public limited company on 19 July 2009 .The plant came into operationon 13 October 1998. The address of the company’s registered office is Summit Centre, 5thfloor, 18 Karwan Bazar C/A, Dhaka-1215, Bangladesh. The original authorised capital ofthe company was Tk. 2,085,930,000 divided into 2,085,930 ordinary shares of Tk. 1,000each. On 8 January 2007 the authorised capital was increased to Tk. 5,000,000,000 dividedinto 3,000,000 ordinary shares of Tk. 1,000 each and 2,000,000 preference shares of Tk.1,000 each. Out of 2,000,000 preference shares, 1,100,000 were issued and fully paid up.Further, on 19 July 2009, at an extra ordinary general meeting (EGM), the existingshareholders of the company passed and resolved that the existing category of ordinaryclass A and class B shares shall be reclassified as ordinary shares. It was also decided thatthe face value of each ordinary shares be fixed at TK. 10 each instead of TK. 1, 000 each.1.2 Nature of businessThe principal activity of the company is to set up a nominally rated 110 MW liquid fuelfired,convertible to dual fuel-fired (liquid gas), barge mounted power plant in Khulna,Bangladesh for generation of electricity, to sell generated power to any legal entity andto acquire fuel required for such power generation from home and abroad. Since inceptionthe company is supplying electricity to the national grid of Bangladesh through selling thesame to Bangladesh Power Development Board (BPDB) under Power Purchase Agreement(PPA) between the company and BPDB.2. Basis of preparation2.1 Statement of complianceThe financial statements have been prepared in accordance with Bangladesh AccountingStandards (BAS) and Bangladesh Financial Reporting Standards (BFRS), the Companies Act1994 and the Securities and Exchange Rules 1987.

2.2 Basis of measurementThe financial statements have been prepared on the historical cost basis. Exceptions areproperty, plant and equipment where foreign exchange gain or loss arising from foreigncurrency debts taken to finance the assets is adjusted against the value of the assets asper Companies Act 1994 .2.3 Functional and presentational currencyThe financial statements (except notes 22 and 23, where the currency mentioned as USDfor presentation purpose) are prepared in Bangladesh Taka (Taka/Tk/BDT), which is thecompany's functional currency and have been rounded off to the nearest integer.2.4 Use of estimates and judgementsThe preparation of financial statements in conformity with BAS and BFRS requiresmanagement to make judgements, estimates and assumptions that affect the applicationof accounting policies and the reported amounts of assets, liabilities, income andexpenses. Actual results may differ from these estimates.Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions toaccounting estimates are recognised in the period in which the estimates are revised andin any future periods affected.In particular, information about significant areas of estimation uncertainty and criticaljudgements in applying accounting policies that have the most significant effect on theamounts recognised in the financial statements is included in the following notes:Note 4 - depreciationNote 5 - inventory valuationNote 13 - accrued expenses and othersNote 15 - deferred liability for gratuity and earned leave2.5Reporting periodThe financial period of the Company covers one year from 1 January to 31 December.3. Significant accounting policiesThe accounting policies set out below have been applied consistently to all periodspresented in these financial statements.

3.1 Property, plant and equipment3.1.1 Recognition and measurementItems of property, plant and equipment (PPE) are measured at cost less accumulateddepreciation and accumulated impairment losses, if any. Cost includes expenditures thatare directly attributable to the acquisition of the assets. Adjustment of power plant duringthe year is the adjustment for foreign exchange loss or gain as stated in note 3.1.2.3.1.2 Capitalisation of foreign exchange gain or lossForeign exchange difference arising from project debts foreign currency is adjustedagainst the value of the assets financed by such debt, in accordance with the Schedule XIPart I of the Companies Act 1994. BAS 21, The Effects of Changes in Foreign ExchangeRates , however requires that such exchange gains/losses be recognised asincome/expense in the relevant period. The difference arising from capitalisation offoreign exchange gain in accordance with the requirements of the Companies Act 1994 is,however, not considered material by management.3.1.3 Subsequent costsThe cost of replacing an item of property, plant and equipment is recognised in thecarrying amount of the item if it is probable that the future economic benefits embodiedwithin the part will flow to the company and its cost can be measured reliably. Thecarrying amount of the replaced part is derecognised. The costs of the day to day servicingof property, plant and equipment are recognised in the profit or loss as incurred.3.1.4 Maintenance activitiesThe company incurs maintenance costs for all of its major items of property, plant andequipment. Repair and maintenance costs are charged as expenses when incurred.3.1.5 DepreciationDepreciation on power plant has been charged considering 30 years of useful life andresidual value at 15%. Addition during the year is depreciated for full year irrespective ofdate of purchase, while no depreciation is charged in the year of disposal.The estimated useful lives of assets are as follows:Power plantVehiclesBuilding and constructionFurniture and fixturesOffice equipmentOffice renovation30 years4 years10 years5 years5 years5 years

3.1.6 Retirements and disposalsAn asset is derecognised on disposal or when no future economic benefits are expectedfrom its use, whichever comes earlier. Gains or losses arising from the retirement ordisposal of an item of property, plant and equipment are determined by comparing theproceeds from disposal with the carrying amount of the same, and are recognised netwithin 'other income' in the profit and loss account.3.2 InventoriesInventories are measured at cost. The fuel tariff calculation formula as per PPA betweenthe company and BPDB assures recovery of cost. The cost of inventories is based on thefirst in first out principle, and includes expenditure incurred in acquiring the inventoriesand other costs incurred in bringing them to their existing location and condition. Wheninventories are used, the carrying amount of those inventories is recognised in the periodin which the related revenue is recognised.3.3 Cash and cash equivalentsCash and cash equivalents comprise cash in hand and cash at bank.3.4 Trade receivables and bad debtsTrade receivables are recognised at cost which is the fair value of the consideration givenfor them.Provision for debts doubtful of recovery, if any, are made at the discretion of management.3.5 ProvisionsA provision is recognised on the balance sheet date if, as a result of past events, thecompany has a present legal or constructive obligation that can be estimated reliably, andit is probable that an outflow of economic benefits will be required to settle theobligation.

3.6 ImpairmentThe carrying amounts of the assets, other than inventories, are reviewed at each reportingdate to determine whether there is any indication of impairment. If any such indicationexists, then the assets' recoverable amount is estimated. No such indication of impairmenthas been raised to date.3.7 RevenueRevenue is recognised in the profit and loss account upon supply of electricity to BPDB,quantum of which is determined by survey of meter reading.3.8 Foreign currency transactionsBAS 21, The Effect of Changes in Foreign Exchange Rates, requires balances resultingfrom transactions denominated in a foreign currency to be converted into Taka at the rateprevailing on the date of the transaction. All monetary assets and liabilities at balancesheet date, denominated in foreign currencies, are to be retranslated at the exchangerates prevailing on balance sheet date.Foreign exchange difference arising from all foreign currency transactions, except for theproject debts, are charged or credited to profit and loss account. Foreign exchangedifference arising from project debts is adjusted against the value of the assets financedby such debt, as provided in the Schedule XI Part I of the Companies Act 1994, whichrequires all exchange differences arising from foreign currency borrowings for property,plant and equipment to be added or deducted from the value of the assets which werefinanced by such borrowings.3.9 LeaseLease payments under operating lease are recognised as expenses in profit and lossaccount on a straight line basis over the lease term. The lessor reserves the right to revisethe rent after each period of five years and can increase the rent by a maximum of twentypercent for five years.3.10 Finance income and expensesFinance income comprises interest income on funds invested. Interest income isrecognised on accrual basis.Finance expenses comprise interest expense on borrowings and other finance relatedcosts. All borrowing costs are recognised in the profit and loss account when they accrueusing the nominal interest rate stated in related loan agreements.

3.11 Borrowing costBorrowing costs are recognised as expenses in the period in which they are incurred unlesscapitalisation of such is allowed as an alternative under Bangladesh Accounting Standard23 Borrowing Costs .3.12 Provision for taxNo provision for tax has been made in the accounts as the company is entitled to taxexemption for a period of 15 years with effect from commencement of commercialproduction, vide SRO no. 114-Law/99 dated 26 May 1999 issued by Government ofBangladesh, under private sector power generation policy.3.13 Deferred taxAs there is considerable uncertainty with regard to the taxation of such companies afterthe expiry of the tax exemption period, management feels it is not possible to make areasonable estimate of deferred tax assets/liabilities at this stage.3.14 Employee benefit schemesA defined benefit plan is a post-employment benefit plan other than a definedcontribution plan. The company operates an unfunded gratuity scheme, which is a definedbenefit scheme, a provision in respect of which is made periodically covering allpermanent employees by applying period of employment to latest basic salary. Althoughno valuation was done to quantify actuarial liabilities as per Bangladesh AccountingStandard 19 Employee Benefits for the year ended 31 December 2009, such valuation foronly 9 employees is not likely to yield a result significantly different from the currentprovision.The company maintains a provident fund for all local employees, recognised by theNational Board of Revenue, Bangladesh. This is a defined contribution scheme as perBangladesh Accounting Standard 19 Employee Benefits.The company has also a policy of earned leave encashment. Under this policy, anemployee is allowed twenty one days earned leave for each completed twelve months ofcontinuous service with a maximum accumulation of one hundred and five days.

3.15 Earnings per shareThe company presents basic earnings per share (EPS) data for ordinary shares.3.15.1 Basic earning per shareBasic EPS is calculated by dividing the net profit or loss for the year attributable toordinary shareholders by the number of ordinary shares outstanding during the year.3.16 Cash flow statementCash flow statement has been presented under direct method.3.17 New standards not yet adoptedBangladesh Accounting Standards 8 “Accounting policies: Changes in Accounting estimatesand Errors” para 30 requires that an entity makes certain disclosures when it does notapply a new BAS/BFRS that has been issued but is not yet effective.The Institute of Chartered Accountants of Bangladesh (ICAB) had made the followingstandards effective for accounting periods beginning on or after 1 January 2010.(a)(b)(c)BAS 32: Financial Instruments PresentationBAS 39: Financial Instruments: Recognition and MeasurementBFRS 7: Financial Instruments: DisclosuresCurrently the company presents its redeemable cumulative class ‘A’ preference shares asan equity instrument and dividend paid on such preference shares has shown in Statementof Changes in Equity. However after adoption of above standards, redeemable cumulativepreference class ‘A’ shares will be treated as liability. Dividends paid under sucharrangements will be accounted for as interest and charged to Profit and Loss Account.

4. Property, plant and equipmentCostDepreciationCarryingamountParticulars Balance as at Addition Disposal Adjustment Balance as at Balance as at Charge Disposal Adjustment Balance as at as at1 January during during during 31 December 1 January for during during 31 December 31 December2009 the year* the year the year** 2009 Rate 2009 the year the year the year** 2009 2009Taka Taka Taka Taka Taka % Taka Taka Taka Taka Taka TakaPower plant 5,133,347,383 30,956,118 - (27,552,938) 5,136,750,563 3.33 1,672,340,952 188,000,895 - (27,191,209) 1,833,150,638 3,303,599,925Vehicles 2,000,000 3,384,657 - - 5,384,657 25.00 1,000,000 1,346,163 - - 2,346,163 3,038,494Building andconstruction 9,428,606 - - 9,428,606 10.00 8,629,939 610,517 - - 9,240,456 188,150Furnitureand fixtures 1,073,758 - - - 1,073,758 20.00 1,007,770 18,588 - - 1,026,358 47,400Office equipment 5,976,712 2,750 (380,000) - 5,599,462 20.00 5,564,555 155,577 - (380,000) 5,340,132 259,330Office renovation 1,299,590 - - - 1,299,590 20.00 1,299,557 - - - 1,299,557 33Total 2009 5,153,126,049 34,343,525 (380,000) (27,552,938) 5,159,536,636 1,689,842,773 190,131,740 - (27,571,209) 1,852,403,304 3,307,133,332Total 2008 5,157,634,464 413,003 (3,405,030) (1,516,388) 5,153,126,049 1,522,124,292 170,984,409 (3,192,996) (72,932) 1,689,842,773 3,463,283,276*Addition of power plant is the cost of newly installed Alternator by replacing the old one.**Adjustment arises from foreign exchange gain/loss during the year ended 31 December 2009 on conversion of foreign currency loans taken to finance the power plant (see note 3.1). This also includes adjustment for Alternator.Total depreciation has been allocated in the financial statements as follows:2009 2008TakaTakaDepreciation charged during the year 190,131,740 170,984,409Add: Adjustments made during the year (38,329) (72,932)190,093,411 170,911,477Allocation of depreciationOperating expenses (power plant part after considering adjustment) 187,962,566 169,199,460General and administrative expenses (other than power plant) 2,130,845 1,712,017190,093,411 170,911,477

5. InventoriesBalance as at 1 January 2009 Addition during the year Consumption during the year Balance as at 31 December 2009Particulars Quantity Amount Quantity Amount Quantity Amount Quantity Amount(MT) (Taka) (MT) (Taka) (MT) (Taka) (MT) (Taka)Heavy furnace oil (HFO) 26,284.21 662,741,360 173,630.59 5,143,280,116 177,353.48 4,923,655,550 22,561.32 882,365,926Light furnace oil (LFO) 110,790 4,229,292 27,000 1,155,570 50,100 1,868,518 87,690.00 3,516,344Spare parts for plant maintenance 95,758,000 - - 95,758,000Total 2009 762,728,652 5,144,435,686 4,925,524,068 981,640,270Total 2008 945,904,103 6,931,467,893 7,114,643,344 762,728,6525.1 Spare parts inventory was acquired under a provision of the Engineering, Procurement and Construction (EPC) contract. The provision called for thecontractor to provide with safety spares on historical cost basis of USD 2,000,000 (prevailing rate was 1 USD= BDT 47.88). In addition to above safety spares,the operator maintains usual maintenance spares at their cost against variable fees paid to them.

6. Accounts receivable2009 2008TakaTakaOther monthly tariff 108,415,448 225,528,311Fuel tariff 279,525,157 660,249,357387,940,605 885,777,6687. Other receivablesBPDB (agreed charges paid to BIWTA) 12,497,004 8,008,91512,497,004 8,008,9158. Advances, deposits and prepaymentsAdvances:Car/motor cycle loan 114,375 433,542Bank guarantee for spare parts - 840,000Padma/Jamuna Oil for HFO supply 634,530 -Dr. Kamal Hossain & Associates 400,000 -Other advances 209,224 69,1621,358,129 1,342,704Deposits:Bangladesh Telephone & Telegraph Board 16,000 16,000Grameenphone Ltd. 89,006 89,006Others 28,500 24,500133,506 129,506Prepayments:General insurance premium (fire, fidelity, health, motor e 56,881 21,46356,881 21,4631,548,516 1,493,673

9. Cash and cash equivalents2009 2008TakaTakaCash in hand 99,943 183,422Cash at bank:Current account:Citibank, NA (Operating account # 129039 -Taka) 3,706,884 13,050,702Citibank, NA (Operating account # 129024 -Taka) 6,081 667,821Citibank, NA (Operating account -US Dollar) 79,727,542 85,434,867AB Bank Ltd. - 414Bank Asia Ltd. 825 1,900BRAC Bank Ltd. 18,969 307,313Pubali Bank Ltd. 27,533 75,032Shahjalal Islami Bank Ltd. 1,014 1,029,742Standard Bank Ltd. 45,519 46,714Standard Chartered Bank 87,957 97,518Prime Bank Ltd. 2,781 3,93183,625,105 100,715,954STD account:BRAC Bank Ltd. 617,400,135 -Dutch Bangla Bank Ltd. 4,400 -One Bank Ltd. 441 -The City Bank Ltd. 463 -Trust bank Ltd. 5,101 -617,410,540 -701,035,645 100,715,954701,135,588 100,899,37610. Accounts payableKuo Oil (S) Pte Ltd. - Handling commission 114,263,650 22,106,313Kuo Oil (S) Pte Ltd. - Fuel cost 1,100,823,552 794,770,553USCOL - Fuel carrying and storage 130,116,675 314,419,260Wartsila-operation and maintenance - (O&M) 140,900,814 182,736,9221,486,104,691 1,314,033,048

11. Working capital loan2009 2008TakaTakaBRAC Bank Ltd. - 200,000,000Shahjalal Islami Bank Ltd. - 84,000,000- 284,000,000Collateral includes registered mortgages of vessels “TIGER I” and “TIGER II”, a registered letter ofhypothecation by way of first priority fixed charge over plant, machinery and equipment, and aregistered letter of hypothecation by way of first priority floating charge over all fixed and floatingassets of the company.12. Term loanTerm loans:El Paso Power Khulna Holding Ltd. - 91,878,000Wartsila Development & Financial Services (Asia) Ltd. - 13,897,544- 105,775,544Term loan from El Paso Power Khulna Holding Ltd. has been waived and considered as otherincome (net of exchange differences). See note 19.1 for more details.13. Accrued expenses and othersElectricity, gas and water 75,078 85,000Legal, audit and other professional fees 620,000 881,000Office rent and service charges 131,075 109,240Lease rent payable-BPDB 3,167,709 3,541,814Telephone, fax and e-mail 88,239 80,000Employee expenses 3,098,149 1,307,757Provision for withholding tax/VAT for O & M fees,16,806,155 6,429,070professional fees and othersWartsila - river intake dredging 140,000 150,000Falcon Securities Ltd - plant security 215,469 216,251Employees' provident fund 96,460 101,875Board meeting fees - 212,500Kuo Oil (S) Pte Ltd. - Demurrage - Fuel (13.1) 15,458,537 -Others 579,647 356,38240,476,518 13,470,889

13.1Demurrage is claimed by Kue Oil(s) Pte Ltd. on behalf of shipping company due to unusual delay inunloading of Heavy Furnace Oil (HFO) at Chittagong Port in May 2009.14. Share capitalAuthorised:2009 2008TakaTaka3,000,000 ordinary shares of Tk 1,000 each - 3,000,000,000300,000,000 ordinary shares of Tk 10 each 3,000,000,000 -2,000,000 preference shares of Tk 1,000 each 2,000,000,000 2,000,000,0005,000,000,000 5,000,000,000Issued and paid-up:2,085,924 ordinary Class A shares of Tk 1,000 each - 2,085,924,0006 ordinary Class B shares of Tk 1,000 each - 6,000208,593,000 ordinary shares of Tk 10 each 2,085,930,000 -1,100,000 redeemable cumulative class 'A' preference shares -of Tk 1,000 each 1,100,000,000 1,100,000,0003,185,930,000 3,185,930,000For split off details see note 14.1.The company issued 1,100,000 redeemable cumulative class 'A' preference shares in favour of TheCity Bank Ltd. (600,000 shares), Pubali Bank Limited (200,000 shares), One Bank Limited (200,000)shares) and Trust Bank Limited (100,000 shares) on 14 May 2008. These shares, under ordinarycircumstances, are redeemable at par value in five annual equal instalments from 14 May 2010,the second anniversary of the issue date. Annual dividend on these preference shares is payable atthe rate 8.25% (net of withholding tax).

14.1 The shareholding position of ordinary shares2009 2008Face Class A Class B Total FaceName of shareholders % of Shares value Total value % of shares shares shares value Total valueshareholding (No.) (Taka) (Taka) shareholding (No.) (No.) (No.) (Taka) (Taka)1. Summit Industrial & Mercantile 49.9832% 104,261,500 10 1,042,615,000 46.95% 979,341 2 979,343 1,000 979,343,000Corporation (Pvt.) Ltd.(incorporated in Bangladesh)2. United Enterprises & Company Ltd. 49.9832% 104,261,500 10 1,042,615,000 46.95% 979,341 2 979,343 1,000 979,343,000(incorporated in Bangladesh)3. Muhammed Aziz Khan 0.0024% 5,000 10 50,000 - - - - - -4. Anjuman Aziz Khan 0.0024% 5,000 10 50,000 - - - - - -5. Latif Khan 0.0024% 5,000 10 50,000 - - - - - -6. Muhammad Farid Khan 0.0024% 5,000 10 50,000 - - - - - -7. Jafer Ummeed Khan 0.0024% 5,000 10 50,000 - - - - - -8. Ayesha Aziz Khan 0.0024% 5,000 10 50,000 - - - - - -9. Adeeba Aziz Khan 0.0024% 5,000 10 50,000 - - - - - -10. Hasan Mahmood Raja 0.0024% 5,000 10 50,000 - - - - - -11. Ahmed Ismail Hossain 0.0024% 5,000 10 50,000 - - - - - -12. K.M. Ahsan Shamim 0.0024% 5,000 10 50,000 - - - - - -13. Akhter Mahmud Rana 0.0024% 5,000 10 50,000 - - - - - -14. Faridur Rahman Khan 0.0024% 5,000 10 50,000 - - - - - -15. Abul Kalam Azad 0.0024% 5,000 10 50,000 - - - - - -16. Moinuddin Hasan Rashid 0.0024% 5,000 10 50,000 - - - - - -17. Wartsila Development & - - - - 6.10% 127,242 2 127,244 1,000 127,244,000Financial Services (Asia) Ltd.(incorporated in Cayman Islands)100.00% 208,593,000 2,085,930,000 100.00% 2,085,924 6 2,085,930 2,085,930,000On 21 June 2009, the entire shares (Class A and Class B) of Wartsila Development & Financial Services (Asia) Ltd. has been transferred equally to Summit Industrial

& Mercantile Corporation (Pvt.) Ltd. (Summit) and United Enterprises & Company Ltd. (United). As a result, the shareholding position of Summit and United wasincreased to 50.00 percent from 46.95 percent each. Further on 22 June 2009, Summit and United each have transferred 350 shares (total 700 shares) in favour ofabove 14 individuals, each getting 50 Class A ordinary shares.The existing shareholders of the company on 19 July 2009, in an Extraordinary General Meeting (EGM) passed and resolved that the existing category of OrdinaryClass A and Class B shares shall be reclassified as ordinary shares. It was also decided that the face value of each ordinary shares shall be fixed at Tk.10 eachinstead of existing Tk. 1,000 each. Accordingly, Clause V of the Memorandum of Association and Article 6 of the Articles of Association of the company has beenchanged.14.2 The shareholding position of redeemable cumulative class 'A' preference sharesAs at 31 Dec 2009 2008Name of shareholders Number of Nominal value Total value Total valueshares Taka Taka TakaThe City Bank Limited 600,000 1,000 600,000,000 600,000,000Pubali Bank Limited 200,000 1,000 200,000,000 200,000,000One Bank Limited 200,000 1,000 200,000,000 200,000,000Trust Bank Limited 100,000 1,000 100,000,000 100,000,0001,100,000 1,100,000,000 1,100,000,000

15. Deferred liability for gratuity and earned leave2009 2008Gratuity Earned leave Total TotalTaka Taka Taka TakaOpening balance 7,051,344 3,157,436 10,208,780 11,663,278Add: Provision made duringthe year 828,153 62,462 890,615 1,789,1427,879,497 3,219,898 11,099,395 13,452,420Less: Payment made duringthe year 145,200 63,000 208,200 3,243,640Closing balance 7,734,297 3,156,898 10,891,195 10,208,78016. Operating revenues2009 2008TakaTakaOperating revenues comprise other monthly tariff and fuel tariff invoiced to BPDB:Other monthly tariff 1,982,771,320 1,766,492,389Fuel tariff 4,410,496,025 6,393,930,7296,393,267,345 8,160,423,11816.1Other monthly tariff is the price component of all other costs including profit per KW of energysupplied at the delivery point excluding fuel.16.2The price component of fuel tariff is comprised of the cost of fuel per KW of energy generated which isreimbursable from BPDB after making some adjustments as per agreement.17. Operating expensesConsumption of Heavy Furnace Oil (HFO) and related expenses* 4,968,204,906 6,941,000,084Consumption of Light Furnace Oil (LFO) 1,868,518 1,080,640Fuel storage charges 11,054,211 11,685,465Operation and maintenance cost to operator 496,387,941 455,870,479Security service - Plant 2,609,210 2,613,768Duty on spare parts 50,343,948 82,731,051Repair and maintenance -Plant - 636,774Depreciation of power plant 187,962,567 169,199,4605,718,431,301 7,664,817,721*The above expenses arise after considering various fuel related expenses and adjustments which arenot relevant with HFO inventory. That is why, the actual consumption shown in HFO inventory (note no.5) is not directly matchable with the above mentioned expenses.

18. General and administrative expenses2009 2008TakaTakaSalary and allowances 13,226,172 17,822,640Employer's contribution to P.F. 554,400 734,558Gratuity provision 828,153 1,334,844Earned leave provision 62,462 454,298Leave fare assistance 243,400 354,777Office rent and maintenance 2,120,177 1,786,363Telephone, fax and e-mail 391,012 681,340Advertisement, publicity, press and seminar 81,480 56,150Entertainment expenses 121,610 266,627Bank charges and commission 214,373 999,156Printing, postage and stationery 86,799 252,858Travel and conveyance 507,736 2,395,429Vehicles fuel and maintenance 124,582 503,612Newspaper, books and periodicals 20,939 19,182Social goodwill 636,712 26,685Business promotion, subscription, gift and donation 683,634 216,865Enlistment and annual licence fee - BERC 500,000 1,050,500Uniform and liveries 18,200 16,920Insurance premium 32,466,173 41,396,459Lease rent - BPDB (18.1) 3,355,293 7,271,213Directors' fees and board meeting expenses 152,186 336,566Audit fee 375,000 375,000Legal, tax and other professional fees 2,393,626 12,191,528Survey, testing and inspection fees 376,322 459,162Company matter expenses 938,000 697,200Performance bond/bank guarantee charges - (33,356,039)Environmental compliance expenses 864,371 998,124Computer consumable and maintenance 275,143 100,907Expenses of MD and Directors - 2,960River intake dredging 130,000 150,000Depreciation - Other property, plant and equipment 2,130,845 1,712,017Miscellaneous and incidental expenses 199,471 196,32564,078,271 61,504,22618.1 Operating leasesThe company is obligated under non-cancellable lease for use of land leased out by BPDB that arerenewable on a periodic basis at the option of both lessor and lessee. During the year, rental expensesunder non-cancellable operating leases aggregated Tk. 3,355,293 (2008: Tk. 3,355,293).The future minimum lease payments in respect of operating leases as at 31 December 2009 are asfollows:Amount due:Not later than one year 3,242,955 3,242,955Later than one year but not later than five years 14,268,998 13,620,407Later than five years - 3,891,545

19. Other income2009 2008TakaTakaDividend income - 2,408,996Gain on sale of property, plant and equipment - 1,091,500Income from El Paso's term loan waiver (Note 19.1) 91,481,290 -91,481,290 3,500,49619.1El Paso Power Khulna Holding Ltd., a company incorporated in the Cayman Islands, has issued a letterto the Managing Director of Khulna Power Company Ltd. on 25 May 2009 stating that the amount due toit by KPCL (equivalent USD 1,322,365.89) has been waived .The Company thus considered it as otherincome. EL Paso Power Khulna Holdings Ltd. ceased to exist with effect from 30 September 2009.20. Finance expensesInterest on:Term loan provided by El Paso Power Khulna Holding Ltd. (9,714,483) 9,307,891Term loan provided by Wartsila Development andFinancial Services (Asia) Ltd. 224,919 1,504,713"A" loan provided by International Finance Corporation (IFC) - 10,788,249"B" loan provided by International Finance Corporation (IFC) - 9,564,996Working capital facility -Taka 24,213,366 7,459,695Preference share money deposit - 33,375,000Others:Front end fee - IFC A loan - 3,951,376Front end fee - IFC B loan - 5,267,060Arrangement and success fee - IFC B loan - 5,267,060CAP agreement fee - IFC B loan - 12,323,496Arrangement fee - working capital (club financing) - 25,415,000Prepayment charge - IFC A loan - 45,276,707Prepayment charge - IFC B loan - 2,887,449Trust agent fee - Citibank, N.A. - 4,347,800Escrow agency fees - Citibank, N.A. 1,174,725Annual agency fee - Security & Facility Agent (preference shares) 2,760,000 -17,483,802 177,911,217

21. Earnings per share (EPS)2009 2008Basic earnings per share Taka TakaThe computation of EPS is given below:a) Profit attributable to the ordinary shareholders 582,648,084 201,624,776b) Number of ordinary shares outstanding 208,593,000 208,593,000c) Earnings per share (EPS) 2.79 0.97Diluted earnings per shareNo diluted earnings per share is required to be calculated for the year as there was no scope fordilution during the year under review.22. Remittance of foreign currencyPurpose of payment Name of the recipient 2009 2008USDUSDTrust agent fee Citibank, NA, New York - 40,000Cash margin for import of spare Wartsila Finland OY 748,392 2,208,275parts on behalf of WartsilaFinland OYInsurance premium CODAN Marine, Finland 462,081 -Ltd, SingaporeInsurance premium JLT Risk Solutions Asia Pte - 597,077Ltd, SingaporeOperation and maintenance Wartsila Finland OY - 260,688expensePurchase of fuel (HFO) Coastal Fuji Oil, Singapore - 13,145,224Purchase of fuel (HFO) Kuo Oil (s) Pte Ltd. 7,396,659 10,083,199Legal service/Barge registration Quijano & Associates 15,503 590Consultancy services RW Beck International Ltd. - 635Legal service Chadbourne & Parke LLP 7,599 11,714Consultancy Fee Envirotech East Pvt Ltd. 6,100 6,052Passive analysis (air) MAXXAM Analytics Inc. 3,872 7,611Loan repayment with interest Wartsila Development and 214,172 45,199Financial Services (Asia) Ltd.Loan repayment with interest IFC, Washington DC - 1,407,130

Purpose of payment Name of the recipient 2009 2008USDUSDBank charge Citibank, N A - 712Bank Charges Elpaso Energy International - 1,000Legal service fee Thompson Hine LLP - 3,000Legal service fee Fullbright & Jaworski, LLP - 149,021Legal service fee Franco & Franco - 1,500LC add confirmation charges BRAC Bank Ltd. - 33,928LC add confirmation charges Standard Bank Ltd. - 34,398LC add confirmation charges Pubali Bank Ltd. - 10,940Dividend payment Wartsila Dev. & Fin. Service - 949,292Deferred interest for fuel L/C Citibank, N A 9,226 -23. Receipts of foreign currencyNature of receipt Name of party 2009 2008USDUSDOther monthly tariff (99%) BPDB 8,922,913 20,102,51524. Value of imports calculated on CIF basis2009 2008TakaTakaHeavy furnace oil (fuel) 3,874,798,895 5,351,606,441

25. Related party transactionsNature ofName of party Relationship transactions Transaction value (Taka)2009 2008United Summit Coastal Oil Subsidiary of Fuel carrying, storage 292,401,937 502,435,583Ltd. shareholder and temporary loanEl Paso Power Khulna Subsidiary of Payable for interest - 9,342,620Holding Ltd.parent companySummit Industrial & Shareholder Temporary loan, office 84,306,222 946,708,429Mercantile Corporationrent and dividend paid(Pvt) Ltd.Summit Corporation Subsidiary of Service charge for other 747,330 622,908shareholder office facilitiesWartsila Development & Shareholder Repayment of loan, 14,118,362 80,960,331Financial Services (Asia) Ltd.payment of interest anddividend paidCoastal Fuji Oil Subsidiary of Fuel cost and handling - 648,738,314parent company commissionSummit Shipping Ltd. Subsidiary of Temporary loan - 38,225,000shareholderUnited Enterprises & Shareholder Temporary loan and 83,437,200 977,709,244Company Ltd.dividend paidKey management Board of Directors Directors fees 82,000 190,000personnelKey employees Salary, allowances and 7,980,663 12,699,150long term benefitsBonus 1,506,000 2,322,000Key management personnel includes managing director, project director and financial controller. However,the managing director did not receive any salary during the year under review.26. CapacityLicensed Installed Plant factor Energy Energycapacity capacity (% on licensed generated soldPeriod (MWh) (MWh) capacity) (MWh) (MWh)January to December 2009 110 114 Average 83.55 792,887 780,178Maximum 102.00January to December 2008 110 114 Average 73.00 705,384 693,544Maximum 94.50

27. Salary and allowancesYear wise break up of salary and allowances of the employees of the company for the since inception are asfollows:YearAmount (Taka)1998 (13 Oct to 31 Dec) 973,1471999 5,517,1802000 6,217,1832001 6,198,7052002 7,127,0442003 10,839,2992004 12,275,2092005 17,220,0592006 18,660,0042007 20,438,7582008 17,822,6402009 13,226,17228. Commitment for capital expenditureThere is no other commitment for capital expenditure as of 31 December 2009 for the company except of an'Alternator' for which procurement order was being initiated by the company amounting to Euro 287,745 but noshipment is being made by the seller.29. Contingent liabilityThere is no contingent liability as of 31 December 2009 for the company.30. Post balance sheet event30.1The company has applied to Dhaka Stock Exchange and Chittagong Stock Exchange for the purpose of directlisting under the Direct Listing Regulations 2006 and the matter is in the process of approval.30.2There is no material event that has occurred after the balance sheet date to the date of issue of thesefinancial statements, which could affect the figures stated in the financial statements.31. General31.1During the year the company had nine permanent employees and their individual remuneration rate was notless than Tk 36,000 per annum (2008: ten permanent employees).31.2 Previous year's figures have been rearranged, wherever considered necessary, to conform to current year'spresentation.

Khulna Power Company LtdProjected Income Statement for the year ended 31 December2009 2010 2011 2012 2013 2014Taka Taka Taka Taka Taka TakaRevenueFuel Tariff 4,410,304,818 7,980,019,317 13,817,350,187 14,272,563,416 14,659,976,586 15,100,287,579OMT Tariff 1,982,771,320 2,775,869,075 4,649,962,505 4,803,011,181 4,933,299,290 5,081,357,739Total Revenue 6,393,076,138 10,755,888,392 18,467,312,692 19,075,574,597 19,593,275,876 20,181,645,317Fuel expense 4,979,552,938 8,577,539,929 14,445,141,275 14,920,922,283 15,326,404,432 15,786,522,644Gross Margin 1,413,523,200 2,178,348,463 4,022,171,417 4,154,652,314 4,266,871,444 4,395,122,673Operating ExpensesOperations and maintenance 496,387,941 704,627,345 1,009,786,516 1,055,908,154 1,098,742,466 1,146,270,553Other Operating expenses 57,372,293 34,888,874 39,371,774 40,437,738 41,538,738 42,675,846General & Administrative Expenses 22,880,851 33,043,718 38,631,482 40,949,563 43,466,125 46,199,543Operating insurance 32,466,173 34,247,500 51,984,100 53,543,700 55,150,200 56,804,700Depreciation and amortization 190,006,089 209,543,848 325,444,900 325,448,488 325,452,172 325,455,976Total other operating expenses 799,113,347 1,016,351,285 1,465,218,773 1,516,287,644 1,564,349,700 1,617,406,618Operating income (loss) 614,409,853 1,161,997,178 2,556,952,645 2,638,364,670 2,702,521,744 2,777,716,056Other (income) and expenseInterest expenses & other financial charges 17,483,802 268,869,793 807,479,962 793,136,251 735,197,794 677,315,726Interest & Other (income) (101,411,971) (5,611,875) (9,829,728) (9,996,828) (10,168,956) (10,346,172)Exchange loss/(gain) (2,174,414) 5,901,251 8,713,148 8,824,556 8,939,300 9,057,452Net profit before income tax 700,512,436 892,838,009 1,750,589,263 1,846,400,692 1,968,553,606 2,101,689,050Income tax - - - - - -Net profit after income tax 700,512,436 892,838,009 1,750,589,263 1,846,400,692 1,968,553,606 2,101,689,050Accumulated Profit brought forward 85,844,827 255,733,763 287,393,982 1,032,618,555 1,617,661,809 2,269,121,927Accumulated Profit before Preferred Dividend 786,357,263 1,148,571,772 2,037,983,245 2,879,019,247 3,586,215,415 4,370,810,977Dividend on 10.3125% Preference Shares 113,437,500 113,437,500 90,750,000 68,062,500 68,062,500 68,062,500Accumulated Profit after Preferred Dividend 672,919,763 1,035,134,272 1,947,233,245 2,810,956,747 3,518,152,915 4,302,748,477Redemption of 10.3125% Preference Share - 220,000,000 220,000,000 220,000,000 220,000,000 220,000,000Proposed Dividend -Equity Shareholders' 417,186,000 527,740,290 694,614,690 973,294,938 1,029,030,988 1,170,200,472Accumulated Profit carried forward 255,733,763 287,393,982 1,032,618,555 1,617,661,809 2,269,121,927 2,912,548,005Earnings per share 2.81 3.40 7.17 7.31 7.39 7.82Note: Redemption of preference shares shall effective from May 2010.

Khulna Power Company Ltd.Projected Balance Sheet12/31/09 12/31/10 12/31/11 12/31/12 12/31/13 12/31/14Taka Taka Taka Taka Taka TakaCurrent Assets:Cash 701,992,195 196,461,548 402,935,465 1,149,249,334 1,940,687,588 2,721,068,571Accounts Receivable 387,749,398 2,411,582,694 2,483,995,560 2,558,584,496 2,635,416,454 2,689,886,558Other Receivable 12,497,004 9,000,000 9,000,000 9,000,000 9,000,000 9,000,000Fuel inventory 885,884,269 540,750,000 556,972,500 573,682,500 590,895,000 608,625,000Consumables Inventory 95,758,000 95,758,000 95,758,000 95,758,000 95,758,000 95,758,000Advances, Deposits & Prepaids 1,393,292 2,500,000 2,500,000 2,500,000 2,500,000 2,500,000Total Current Assets 2,085,274,158 3,256,052,242 3,551,161,525 4,388,774,330 5,274,257,042 6,126,838,129Fixed Assets:Property, Plant and Equipment 5,159,691,860 10,385,499,860 10,387,727,750 10,390,022,480 10,392,386,060 10,394,820,560Less: Accumulated Depreciation (1,852,315,982) (2,061,859,830) (2,387,304,730) (2,712,753,218) (2,712,753,218) (2,712,753,218)Net Fixed Assets 3,307,375,878 8,323,640,030 8,000,423,020 7,677,269,262 7,679,632,842 7,682,067,342Total Assets 5,392,650,036 11,579,692,272 11,551,584,545 12,066,043,592 12,953,889,884 13,808,905,471Current Liabilities:Current portion of long term debt - - 504,700,000 504,700,000 504,700,000 504,700,000Accounts Payable 1,533,800,273 2,297,800,000 1,336,734,000 1,376,838,000 1,418,148,000 1,460,700,000Interest Payable & other financial charges - 25,235,000 25,235,000 22,711,500 22,711,500 22,711,500Total Current Liabilities 1,533,800,273 2,323,035,000 1,866,669,000 1,904,249,500 1,945,559,500 1,988,111,500Long-Term Liabilities:Term Loan - 5,047,000,000 4,542,300,000 4,037,600,000 4,037,600,000 4,037,600,000Total Long-Term Liabilities - 5,047,000,000 4,542,300,000 4,037,600,000 4,037,600,000 4,037,600,000Stockholders' Equity/Preference Share:Common Stock 2,085,930,000 2,294,523,000 2,315,382,300 2,433,237,345 2,572,577,469 2,600,445,49410.3125% Redeemable Preference Shares 1,100,000,000 880,000,000 660,000,000 440,000,000 220,000,000 -Capital Redemption Reserve A/C - 220,000,000 440,000,000 660,000,000 880,000,000 1,100,000,000Dividend (Incl. TDS) -Equity Shareholders' 417,186,000 527,740,290 694,614,690 973,294,938 1,029,030,988 1,170,200,472Retained Earnings 255,733,763 287,393,982 1,032,618,555 1,617,661,809 2,269,121,927 2,912,548,005Total Stockholders' Equity/Pref Sha 3,858,849,763 4,209,657,272 5,142,615,545 6,124,194,092 6,970,730,384 7,783,193,971Total Liabilities & Stockholders' Equity/Pref Share 5,392,650,036 11,579,692,272 11,551,584,545 12,066,043,592 12,953,889,884 13,808,905,471Net asset value per share 13.23 14.51 19.36 23.36 26.24 29.93

Additional disclosure by the management as requested by DSEKhulna Power Company Ltd. (“KPCL”) shall continue its operation on expiry of the current PowerPurchase Agreement (“PPA”) with Bangladesh Power Development (“BPDB”) for the reasons:-1.1 That Article 2.3 of the PPA has the clear provision for extension of duration of the PPA.1.2 That KPCL plant is the most reliable plant in the BPDB grid, available for 363 days of theyear and with its 19 generating units, it is the most flexible and capable to meet BPDB’sever varying load demand.1.3 That the plant operates on Furnace Oil, for dwindling natural gas production in the country,the operation of the KPCL plant shall be continued for the years to come. The Governmentpolicy on utilization of energy has already been shifted to use of liquid fuel for generationof electricity, accordingly the future power plants are being built based on liquid fueloperation.1.4 That KPCL plant is the least cost plant operated on liquid fuel.1.5 That the existing shortage in generation capacity of the country shall continue to existmuch beyond the year 2013, when the tenure of the current PPA expires.1.6 That for the reasons stated above the Government of Bangladesh is actively consideringexpansion the KPCL plant capacity by another 100 MW, its apparent that the extension ofthe current PPA would be natural viable option for BPDB to minimize overall generationshortfall.Additional disclosure by the management as requested by CSE1. El Paso Corporation (“El Paso”) was the sponsor shareholder of Khulna Power Company Ltd. (“KPCL”) andprovided Term Loan amounting to USD 44.17 million during the implementation of the project. The loanwas being repaid on 18 semi-annual installments. In the year 2008, before the full repayment of termloan, El Paso, as a part of its corporate business strategy, decided to withdraw from the power sector ofthis region. Accordingly disposed of their shareholding in KPCL to other existing sponsor shareholders, i.eSummit Industrial & Mercantile Corporation (Pvt) Ltd. and United Enterprises & Co. Ltd. The outstandingbalance of Term Loan amounting to USD 1.322 million (Equivalent BDT 91.48 million) was waived as beinga part of total purchase consideration package.2. As mentioned above, as a part of their corporate business strategy, El Paso had withdrawn theirinvestment from the power sector of this region. Apart from Bangladesh, they had also sold out theirpower establishment in India, Pakistan, China, Phillipine and Korea. El Paso’s earnings from the powersegment comparing to their credit exposure, country risk and other financial involvement wasinsignificant. Moreover, El Paso wanted to focus on their core business i.e, Gas exploration and pipelinenetwork. Therefore, their main object was to get rid of their power investment in this region. Under theMembers’ Agreement, El Paso was obligated to dispose their share holding in KPCL to the other interestedexisting shareholders. Accordingly, El Paso had offered their shareholding to Summit and United. Underthe Members Agreement, El Paso was obligated to shoulder about USD 40 million exposure required for theoperation of the project. Therefore, in order to get rid of those obligations, El Paso had disposed of theirshare under special consideration.As per the Members Agreement, Wartsila was also required to provide corporate guarantee and otherundertakings required for the working capital facilities and operation of the project. Wartsila was notinterested to take all these huge exposure for their small shareholdings, rather wanted to focus on theirO&M operation business and other business prospect with Summit and United and therefore offered theirshareholding to the existing shareholders under special consideration.93

Name and Address of the shareholder of Summit Industrial and Mercantile Corporation (Pvt) Ltd andUnited Enterprise & Co. Ltd.United Enterprises & Company Ltd.Sl # Name Address% ofShareholding1 Hasan Mahmood Raja House # 10, Road # 55 Gulshan -2, Dhaka-1212 16.47%Khandaker Moinul Ahsan2 ShamimHouse # 10, Road # 55 Gulshan -2, Dhaka-121217.28%3 Ahmed Ismail Hossain House # 10, Road # 55 Gulshan -2, Dhaka-1212 17.28%4 Akhter Mahmud Rana House # 1/C, Road # 35 Gulshan -2, Dhaka-1212 17.28%5 Hafeza Mahmood House # 10, Road # 55 Gulshan -2, Dhaka-1212 1.61%6 Shirin Ahmed House # 10, Road # 55 Gulshan -2, Dhaka-1212 0.80%7 Khaleda Ahsan House # 10, Road # 55 Gulshan -2, Dhaka-1212 0.80%8 Nasrin Mahmud House # 10, Road # 55 Gulshan -2, Dhaka-1212 0.80%9 Moinuddin Hasan Rashid House # 10, Road # 55 Gulshan -2, Dhaka-1212 18.08%10 Faridur Rahman Khan House # 10, Road # 55 Gulshan -2, Dhaka-1212 5.02%11 Abul Kalam Azad House # 10, Road # 55 Gulshan -2, Dhaka-1212 5.02%100%Summit Industrial & Mercantile Corporation (Pvt) Ltd.Sl # Name Address% ofShareholding1. Muhammed Aziz Khan 14/A Shaheed Sarani Road Dhaka Cantonment, Dhaka 16.01%2. Anjuman Aziz Khan 14/A Shaheed Sarani Road Dhaka Cantonment, Dhaka 2.36%3. Mohammad Farid Khan House # 68, Road # 7 Dhaka Cantonment, Dhaka 5.12%4. Ayesha Aziz Khan 14/A Shaheed Sarani Road Dhaka Cantonment, Dhaka 15.81%5. Adeeba Aziz Khan 14/A Shaheed Sarani Road Dhaka Cantonment, Dhaka 15.81%6. Azeeza Aziz Khan 14/A Shaheed Sarani Road Dhaka Cantonment, Dhaka 15.81%7. Sanadina Khan House # 5, Road # 32 Sector-7, Uttara, Dhaka 2.83%8. Salman Khan House # 5, Road # 32 Sector-7, Uttara, Dhaka 2.83%9. Jafer Ummeed Khan House # 5, Road # 32 Sector-7, Uttara, Dhaka 3.78%10. Transnational Electricity Inc 11, Collyer Quay # 14-01 The Arcade, Singapore-049317 4.97%11. Latif Khan House # 51, Road # 28 Gulshan, Dhaka 5.02%12. Mohammad Faisal Karim Khan House # 68, Road # 7 Dhaka Cantonment, Dhaka 2.71%13. Fadiah Khaleda Khan House # 68, Road # 7 Dhaka Cantonment, Dhaka 1.81%14. Farhan Karim Khan House # 68, Road # 7 Dhaka Cantonment, Dhaka 2.71%15. Farhana Khaleda Khan House # 68, Road # 7 Dhaka Cantonment, Dhaka 1.81%16. Cosmopolitan Traders (Pvt) Ltd. Summit Centre (11th Floor) 18 Kawran Bazar, Dhaka 0.50%17. Azharul Hoque, FCA Flat # N/4, Road # 4 House # 22, Dhanmondi, Dhaka 0.10%Total: 100%94

CSE’s observation for Direct listing of Khulna Power Company Limited1) The terms and conditions of El Paso’s term loan waiver resulting in an income of Tk. 91,481,290(equivalent to USD 1,322,365.89) should be mentioned in the Information Document (ID). (ref. page # 83)2) The per share price / consideration value at which the shares of El Paso (73.9%) and Wartsila (6.1%) inKhulna Power Company Ltd. have been acquired by Summit Industrial and Mercantile Corporation (Pvt)Ltd. and United Enterprises & Co. Ltd should be disclosed in ID. (ref. page # 13)3) The names and addresses of shareholders of Summit Industrial and Mercantile Corporation (Pvt.) Ltd. andUnited Enterprises & Co. Ltd. along with their holding positions in the share capital in these respectivecompanies and also their interest in other listed companies as sponsors/directors, if any, should beprovided in ID.4) In justifying the indicative price the company has considered the following quantitative factors:i) Earning Based Value Per Share (EBVPS) based on the last financial statement ended on December 31, 2009with an average market P/E of 30.ii)Earning Based Value Per Share (EBVPS) based on projected financial statements for the years endedDecember 31, 2010 to 2014 with the same P/E.It would have been more rational if EBVPS could be calculated also on weighted average basis considering thefinancial statements for immediately preceding five years.iii) The company has considered market value of some companies which are not similar as per the nature oftheir businesses. Only the market value of Summit Power Limited should be considered as similar share,the six months average price of which is Tk. 129.46 as mentioned in the ID.5) The indicative price which has been determined by the company is seemed to be high in consideration ofthe observations in serial (4) mentioned above. However, the company has given some qualitativejustifications in favor of their indicative price.6) As per the indicative price mentioned in the information document the P/E stands at 58.06 which isunusually high. As per SEC’s Directive, the investors are not presently allowed to use the security, havingP/E in excess of 50, as marginable securities and enjoy credit facility to purchase it under the MarginRules, 1999. This is presumably because the equity security with P/E exceeding 50 is too risky.7) In order to have a full range of justification on the indicative price, other quantitative factors such asPrice /Book Value (P/BV) multiple, Dividend Discount Model etc. should also be provided for the interestof the investors.8) The Net Asset Value (NAV) per share on the basis of discounted cash flow considering the discount factorshould also be provided under the Projected Balance Sheet. (ref. page # 88)9) The risk on non-continuation of “Operation and Management Agreement” by “Wartsila” along with themanagement perceptions should be included in the risk factors as a separate point.10) In page# 84 in serial 21.(a). detail calculation to arrive at the attributable profit (from net profit) to theordinary shareholders amounting Tk 582.65 mil should be provided in ID.11) The designated bank account (Escrow Account) number for collecting bid money from the bidders shouldbe mentioned in ID.12) Information on “non-operating history” should be mentioned in Risk Factors.13) The latest development of the expansion plan with BPDB which was mentioned in the draft informationdocument should be furnished. (ref. page # 11)14) “Break down of issue expenses” to be furnished in detail with figures (ref. page # 30).15) No. of shares to be offloaded by each of the shareholders should be furnished.16) Remuneration paid to top 10 executives should be furnished. (ref. page # 39)17) Aggregate amount of remuneration paid to all officers in the last accounting year should be furnished.95

18) Ratios in the information document should be furnished under the respective heads like liquidity ratios,operating ratios, profitability ratios and solvency ratios. (ref. page # 83)19) The shares of the company which are intended to offload should be dematerialized as per relevant rulesand regulations prior to commencement of trading.20) The words “exchange does” in the 3 rd line of the statement in the cover page of the ID should be replacedby the words “exchanges do”.21) The web site addresses of CSE and DSE should be mentioned under the head of “Availability of InformationDocument”.22) The words “The company shall offload” under the head of A. 1. (page # 1) should be replaced by thewords “The existing shareholders of the company shall offload”.23) In page # 2, the content should not include future direction under the head “Declaration about Listing ofShares with the stock exchange(s)”.24) The words “which has been hosted at DSE & CSE Trading System” mentioned in serial # 2. (vi) (page # 2)should be omitted.25) In serial # 3 (page # 3), the reference no. of rule should be mentioned as “8.B.(16)(4)( c)” in place of“16(4)( c)”. Moreover, the words “five” and “three” in the first line should be consistent with the relevantinformation in the table.26) In page # 31 in serial # F, the title of Anjuman Aziz Khan should be mentioned as “Mrs” in place of “Mr”.27) In page # 39 in serial # 1 of point G, the word “prospectus” should be replaced by the word “informationdocument” and the words “or within 2 (two) years prior to that time” should be removed.28) Information regarding any loan either taken or given from or to any director or any person connected withthe director, any interest and facility enjoyed by a director is pecuniary or non-pecuniary etc. should beprovided under the head of “ certain relationships and related transactions with related parties”. (ref.page #39)29) In serial # “d” of point H, the words “brothers & sisters” should also be included with the informationprovided in the bracket. (ref. page # 39)KPCL Management’s perception regarding aforementioned observation of CSEAll the relevant above mentioned observation are accommodated in the relevant sectionsof the Information Document (ID).96