Information Document - Dhaka Stock Exchange

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