ISLAMI BANK BANGLADESH LIMITED

INVESTMENT WING
CORPORATE INVESTMENT DIVISION-I
HEAD OFFICE, DHAKA.

EC Memo No.2009/ Date:10.08.2009

Sub: Proposal for enhancement of the existing working capital facilities/investment limit from
Tk.4,150.00 million (funded Tk.2,150.00 million with 100% TR + non-funded Tk.2,000.00
million) to Tk.4400.00 million (Funded Tk.2400.00 million with 100% TR + Non funded
Tk.2,000.00 million under
LC/Bills/BBLC/BBBills/Bai-As-serf/MDB/MPI/Bai-Murabaha/Bai-Salam mode in addition to
the existing HPSM (Project) investment liability of Tk.168.49 million - A/c. M/s. Zaber &
Zubair Fabrics Ltd. a client of Paltan Branch, Dhaka.

A. Background:
M/s. Zaber & Zubair Fabrics Ltd. is an allied concern of Noman Group. It is a 100% export oriented
Home Textile project situated at Pagar, Tongi, Gazipur having capacity of 335,000 Linear meter
Fabrics per day. The group has been availing investment facility since June – 1999 with satisfactory
performance.
Jb. Md. Nurul Islam (60) is the Managing Director & Chairman of Noman Group of Industries. He is
Managing Director of M/s. Zaber & Zubair Fabrics Ltd. He has 30 years practical experience in this
line of business. All the Directors of the company are from the same family.

Summary of sanction of the fresh Investment/enhancement of facilities/Investment allowed to

the Client/Group:
(Taka in million)
Approval Authority Name of the Mode of Investment Amount of Remarks
with Date concerns Investment
The Board in its 148th M/s. Zaber & Working Capital 3500.00 Renewal with
dated 11.01.2007. Zubair Fabrics enhancement
Ltd. Redemption of mortgage property of 5-concerns
Re-mortgage of land, building & machinery of M/s.
Noman Textile Mill Ltd. & M/s. Noman Spinning Mill
Ltd & M/s. Ismail Spinning Mill Ltd.
The EC in its 1273rd -Do- Waiver of clauses of sanction advice Regretted
(adj) dated 18.07.2007
The Board in its 155th -Do- Working Capital 3500.00 Renewal &
dated 25.10.2007 recasting
Permission for changes of Board of Directors & Share
Holding structure of the company.
Waiver of P & T charge for BBLCs
The Board in its 157th -Do- Working Capital 4000.00 Renewal with
(adj) dated 17.03.08 enhancement
Deletion of sanction terms regarding taking post dated
cheque.
Deletion of sanction terms regarding nomination of
directors.
The Board in its 162nd -Do- Working Capital 4150.00 Enhancement
dated 06.11.2008
The Board 163rd Do Working capital 4150.00 Renewal
Dated 25.12.2008
Lastly, the Board on 06.11.2008 enhanced working capital facilities/investment limit from
Tk.4,000.00 million (funded Tk.2,050.00 million with 100% TR + non-funded Tk.1,950.00 million)
to Tk.4,150.00 million (funded Tk.2,150.00 million with 100% TR + non-funded Tk.2,000.00
 2

million) under LC/Bills/BBLC/BBBills/Bai-As-serf/MDB/MPI/Bai-Murabaha/Bai-Salam mode- A/c.

M/s. Zaber & Zubair Fabrics Ltd.
Now the client approached the Branch for enhancement of the existing working capital
facilities/investment limit from Tk.4,150.00 million (funded Tk.2,150.00 million with 100% TR +
non-funded Tk.2,000.00 million) to Tk.4850.00 million (Funded Tk.2550.00 million with 100% TR +
Non funded Tk.2300.00 million under LC/Bills/BBLC/BBBills/Bai-As-serf/MDB/MPI/Bai-
Murabaha/Bai-Salam mode in addition to the existing HPSM (Project) investment liability of
Tk.168.49 million - A/c. M/s. Zaber & Zubair Fabrics Ltd.

01. Date of Banking with the Branch : 11.07.1999

02. Date of Availing Investment : 18.12.1999
03. Date of Original Sanction : 25.12.1999
04. Amount of original HPSM sanctioned : Tk.640.00 million
Means of finance (Taka in million)
(as per original sanction) Bank’s Client’s equity Total
investment
Amount % Amount %
640.00 64% 360.00 36% 1000.00
05. Amount of Working Capital Limit : Tk.4,150.00 million
06. Nature of Project : Home Textile project.
07. Location of Project : Pagar, Tongi (BSCIC), Gazipur.
08. Date of Last Renewal of WC Limit : 30.12.2008
09. Date of Expiry of WC Limit : 29.12.2009

C. Particulars of the client:

01. Name of the Client : M/s. Zaber and Zubair Fabrics Ltd.
02. Office Address : Globe Chamber, 104, Motijheel C/A, Dhaka.
03. Constitution of the Firm : Private Limited Company
04. Capital Structures
Authorized Capital : Tk.500.00 million (5,000,000 ordinary shares @ Tk.100 each).
Paid-up Capital : Tk.30.00 million (300,000 ordinary shares @ Tk.100 each).
05. Nature of the project : 100% export oriented Home Textile project.
06. Capacity of the project : 335,000 Linear meter Fabrics/day.
07. Particulars of the Directors/shareholders:
SL Name Father’s Name No. of Shares % Status
i. Jb. Md. Nurul Islam Late Md. Ismail 48000 16 Director
ii. Jb. ASM Rafiqul Islam Jb. Md. Nurul Islam 66000 22 MD
iii. Mrs. Sufia Khatoon, W/o. Jb. Md. Nurul 30000 10 Shareholde
Islam r
iv. 39000 13 Shareholde
Jb. Md. Abdullah Zaber Jb. Md. Nurul Islam
r
v. 39000 13 Shareholde
Jb. Md. Abdullah Zubair Jb. Md. Nurul Islam
r
vi. Mrs. Nur-E-Yasmin Fatima Jb. Md. Nurul Islam 39000 13 Shareholde
r
vii. Jb. Md. Abdullah Talha Jb. Md. Nurul Islam 39000 13 Shareholde
r
Total 100
08. Liability position of the client:
a. With IBBL: (Taka in million)
Name of the Mode Limit Outstanding Overdue Remarks
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concern Net Gross

M/s. Zaber and HPSM (Project) 307.20 88.62 168.49 --- Regular
Zubair Fabrics Ltd. Working Capital
Funded 2150.00 2126.36 2410.52 --- Regular
Non-funded 2000.00 1597.09 1597.09 --- Regular
Sub-total 4150.00 3723.45 4007.61 0
Total 4457.20 3812.07 4176.10 0
b. Liability position as per CIB report: CIB report not yet obtain.

c. Stock position of the client : Tk.2429.29 million (certified by the branch)

09. Performance of the Client:
a. HPSM (Project):
(Taka in million )
Due for Outstanding
Mode Limit Disbursement Recovered Overdue Remarks
Recovery (Gross)
HPSM
307.00 306.33 350.06 415.44 --- 168.49 Regular
(Project)
b. Working Capital:
(Taka in million)
Year Disbursement Export Import C/A Turnover Bank’s Income
2006 1276.57 1581.20 1473.29 1583.51 144.31
2007 1017.02 4237.00 3140.00 2382.06 126.58
2008 2195.97 5362.95 2195.97 3743.32 199.26
Up to June-2009 2032.04 3863.00 2240.00 2228.64 189.94
c. As per audited report as on 30.06.2008
(Taka in million)
Particulars 2005-06 2006-2007 2007-2008
Sales 4626.74 5723.99 7575.49
Cost of Goods Sold 3687.69 4886.76 6416.79
Gross Profit 939.05 837.23 1158.70
Less: Administrative & Selling Overhead 302.56 309.56 449.32
Operating Profit 636.49 527.67 709.38
Add: Other Income 0.00 127.93 214.93
Less: Financial Expenses 221.81 281.28 391.67
Net Profit 414.68 374.33 532.64

10. Asset Liability position of the project as on 30.06.2008 as per audited B/S:
(Taka in million)
Liabilities and Stock-Holder’s Equity Amount Assets and Properties Amount
Current Liabilities Current Assets
Sundry Creditors 716.12 Cash & Bank Balance 16.61
Creditor for Expenses 37.09 Sundry Debtors 17.96
Cash credit 425.09 Cash Incentive 180.99
Short Term Loan from Sister Concerns --- Bills Receivables 1615.33
Short Term Loan 2261.56 Security Deposits 73.17
Total Current Liabilities 3439.86 Stock of Spares and Others 135.49
Stock of Materials & FG 1951.02
Long Term Liability Total Current Assets (A) 3990.57
Long Term Loan from IBBL 209.90 Fixed Assets
Other Long Term Loan 1260.48 Land & Land Development 400.04
Total Liabilities 1470.38 Building & Civil Constructions 914.39
Stock-Holder’s Equity Plant and Machinery 3439.88
Paid-up-Capital 30.00 Spare, Accessories & Screens 167.63
Electrical Installation 86.66
 4

Share Money Deposit 1000.00

Gas Installation 158.52
Balance of net profit as per last year 1501.18
Deep Tube Well 17.07
Profit for current year 515.54
Office Equipments 20.50
Accumulated Dep. 1380.40
Motor Vehicle 89.30
Total Stock-Holder’s Equity 4426.72
Furniture & Fixtures 7.05
Total Liabilities & Stock-Holder’s Equity 9337.35
Others 188.74
Total Fixed Assets (B) 5346.78
Net Worth 4426.72 Total Assets and Properties 9337.35
(A+B)
Rahman Mustafiz Haque & Co., Chartered Accountants

11. Working capital requirement

a. For Existing Home Textile unit: (Taka in million)
Items Tide-up Period 100% 95% 80% 75%
(days)
Imported raw material 90 789.05 749.60 631.24 591.79
[Dyes Chemical]
Local Raw Materials 30 677.27 643.41 541.82 507.95
[Gray Fabrics]
Work in process 10 241.90 229.80 193.52 181.42
Finished goods 7 169.33 160.86 135.46 127.00
Sub-Total 1,877.55 1,783.68 1,502.04 1,408.17
Receivables (MDB/Bai-as serf) 120 2,959.62 2,811.64 2,367.70 2,219.72
Total: 4,837.18 4,595.32 3,869.74 3,627.88
Client’s equity 10% 483.72 4.60 3.87 362.79
Bank’s Investment 90% 4,353.46 4,590.72 3,865.87 3,265.10
Assumption:
Working period : 340 day/annum
Operation time : 24 Hr/day
Products : Home Textile products i.e bed sheet,bed cover,pillow cover
Production Cpacity : 338,400 Meter/day
Present Production 263,000 Meter/day
Gray Fabrics Price
[Average] : 68.58 Tk/Meter
Dyes & Chemical Cost : 27.43 Tk/Meter
Stitching Cost : 4.57 Tk/Meter
Packaging Cost : 0.11 Tk/Meter
Sales Price : 1.6 US$/meter
b. Fashion Unit: (Taka in million)
Tide-up period Capacity utilization
Inventory
(days) 100% 80% 65% 60%
Imported raw material 90 129.54 103.64 84.20 77.73
[dyes chemical]
Local Raw Materials fabrics 30 164.52 131.62 106.94 98.71
Work in process 10 69.61 55.69 45.25 41.77
Finished goods 7 48.73 38.98 31.67 29.24
Sub-Total 412.40 329.92 268.06 247.44
Receivables (MDB/Bai-as serf) 120 892.14 713.71 579.89 428.23
Total: 1,304.53 1,043.63 847.95 675.66
Client’s equity 10% 130.45 104.36 84.79 67.57
Bank’s Investment 90% 1,174.08 939.27 763.15 608.10
Assumption:
 5

Working period : 350 day/annum

Operation time : 24 Hr/day
Products : Fashion products i.e shirting shutting fabrics
Production Capacity : 49,350 Meter/day
Gray Fabrics Price [Average] : 114.30 Tk/Meter
Dyeing & Finishing Cost : 30.00 Tk/Meter
Packaging Cost : 0.17 Tk/Meter
Sales Price : 3.09 Tk/Meter
Total working capital requirement at 80% capacity utilization is (a+ b) = Tk.4809.00 million.
12. Results of IRG
Risks Score Score Obtained Score Short
a. Financial Risk 50 36 Fully cash secured Superior
b. Business Risk 18 14 85+ Good
c. Management Risk 12 12 75-84 Acceptable
d. Security Risk 10 8 65-74 Marginal
e. Relationship Risk 10 10 55-64 Special
Mention
Total 100 80 45-54 Substandard
35-44 Doubtful
Risk Grading : Acceptable <35 Bad/Loss

D. Particulars of the Investment limit:

01. Mode & Amount of Investment
(Taka in million)
Name of the Additional
Mode Existing Limit Total
Concerns Limit
HPSM (Project) 307.20 - 307.20
Working Capital -
M/S. Zaber and
2150.00 250.00 2400.00
Zubair Fabrics Funded
(100% TR) (100% TR) (100% TR)
Ltd.
Non-Funded 2000.00 -- 2,000.00
Sub-Total 4150.00 250.00 4,400.00
2307.20 4,707.20
Grand Total 250.00
(TR-2150.00) (TR-2400.00)
02. Purpose of Investment : To import/purchase raw materials for the project.
03. Period of Investment : For a period of 1-year on revolving basis.
04. Rate of return : 13.00% per annum or the rate to be determined by the Bank
from time to time.
05. Mode of disbursement : Deal to deal basis as per usual norms of the bank.
06. Mode of recovery : Deal to basis as per usual norms of the Bank.
07. Security
a) Primary
LC/Bills : Related documents.
TR : Lien on goods to be released under TR till disposal & deposit of
sale proceeds towards adjustment of the related investment
account with the Branch TR to be obtained duly executed along
with delivery order duly signed by the investment clients.
b) Cash/Goods
LC : 10% cash securities on CFR value.
MPI/Bai-Murabaha : 10% cash securities on cost price/landed cost to be subsequently
converted to goods security.
c) Collateral
Registered mortgage/creation of further charge with registered power of attorney to sell the
following properties in case of default of the client (if any):
 6

(Amount in million Taka)

Particulars FSV
831.33 Khatha Land with 9,56,861 sft* factory building under Mouza: Pagar, Tongi,
721.55
Gazipur owned by M/S. Zaber & Zubair Fabrics Ltd.
Hypothecation of existing machinery & Motor vehicles of M/S. Zaber & Zubair
2923.27
Fabrics Ltd. (WDV as on 30.06.2007 as per Balance Sheet)
Total 3644.82

d) Others
i) Personal Guarantee of all the Directors of the Project Company in his/her/their individual
capacity.
ii) Creation of charge on the present and future assets (fixed and floating) including Book-debts
of the Company in favor of the Bank with the Registrar of Joint Stock Companies & Firms,
Bangladesh against the present and future liabilities of the Company with the Bank.
iii) All charge documents shall have to be executed as per related Investment Manual(s).

e. Re-fixation of various charges as under:

Particulars of Head or Commissions/Charges as per Present Proposed rate/
Items Bank’s Circular rate/Charges Charges
Back to Back LC (sight General: For 1st qtr. 0.50% & 0.25% 0.10%
& deferred) opening subsequent qtr. 0.20% subs qtr
Commission Spe cial for RMG only: For 1st qtr. 0.20%
0.40% & subsequent qtr. 0.20%
having yearly import
performance of Tk. 200 million
and above.
Back to Back LC For 1st qtr. 0.40% & subsequent 0.40% Nil
Acceptance qtr. 0.20% or part thereof.
Commission
Import LC (sight & Sight-General: For 1st qtr. 0.50% 0.25% 0.10%
deferred) opening & subsequent qtr. 0.30% subs qtr
Commission Sight-Special: For 1st qtr. 0.40% 0.20%
- 0.25%
Deferred: Applicable for all
clients, no special rate is allowed:
For 1st qtr. 0.60% & subsequent
qtr. 0.40%
LC Margin on Import Determined as per HO 10% 5%
LC Sanction Advice
Deferred LC Acceptance Applicable for all clients, no special 0.40% 0.15%
Commission rate is allowed: For 1st qtr. 0.40% & subs qtr subs qtr 0.10%
subsequent qtr or part thereof 0.20% 0.20%
Add Confirmation Charge – 0.15% per quarter on Beneficiary’s 0.15% 0.05%
Sight LC A/C
Add Confirmation Charge – 0.20% to 0.40% on Beneficiary’s 0.20% - 0.10%
Deferred LC A/C at 180 days deferred or above 0.40%
respectively.
Commissions on Clearance To be shared equally by the LC
of Imported Consignment opening and Clearing/Port attached
(MPI & BB L/C) Branch. If opening and clearing
Branch are same full amount to be
realized by opening Branch @ 0.10% Nil
0.20% max. Tk. 20,000/ & min. Tk.
TR Handling Charge: 500/
In case where the clients directly
take delivery of shipping documents
 7

& enjoy MPI (TR)/MIB facility @

Documents endorsement
charge, payment instruction
charges & issuance of
acceptance letter charge
0.10% Max. Tk. 20,000/- & Min. Tk.
500/-
Endorsement charge: copy docs.: Tk. 2000 Nil
Nil Original documents.: Tk. 500/-
Payment instruction charges: Tk.
1000/-
Issuance of acceptance letter
charge: SWIFT Tk. 750/-, Mail Tk.
300/-

E. Recommendation of the Branch:

Considering the client’s satisfactory performance, reputation, creditworthiness, volume of business,
the SVP and Branch Incumbent has recommended the proposals for:
i. enhancement of the existing working capital facilities/investment limit from Tk.4,150.00 million
(funded Tk.2,150.00 million with 100% TR + non-funded Tk.2,000.00 million) to Tk.4850.00
million (Funded Tk.2550.00 million with 100% TR + Non funded Tk.2300.00 million under
LC/Bills/BBLC/BBBills/Bai-As-serf/MDB/MPI/Bai-Murabaha/Bai-Salam mode in addition to
the existing HPSM (Project) investment liability of Tk.168.49 million; and
ii. reduction/re-fixation of various Bank charges on foreign exchange port folio- A/c. M/s. Zaber &
Zubair Fabrics Ltd. a client of Paltan Branch, Dhaka.
F. Recommendation of the Zonal Head:
The DMD and Zonal Head, Dhaka Central Zone has recommended the proposals as recommended by
the Branch.
G. Audit Objections and Compliance there against by the Branch:
Date of Lapses/Irregularities detected by Audit Branch Compliance
Audit
05.04.2008 Insurance Policy to required amount not Branch has requested the client to provide
yet obtain. Insurance obtained Tk.775.00 the rest amount of Insurance policy for
million instead of 2200.00 million. Tk.1425.00 million.
Clean legal opinion has not yet obtained. Legal opinion has been obtained.
Moreover the branch is trying to get legal
opinion as per circular letter
No.LAW/2692 dated 17.04.2007.
CS Khatian No.5 is required for 4.235 Branch has requested the client to provide
acre land. CS Khatian No.5.
SA Khatian No. 86, 78, 163, 150, 38, 133 The branch has obtained SA Khatian No.
are required to comply with chain 86, 78, 163, 150, 38, 133 on 05.05.2008.
documents.
RS Khatian No. 152, 151, 219, 155, 260, The branch has obtained RS Khatian No.
154 are required to comply with chain 152, 151, 219, 155, 260, 154 on
documents. 05.05.2008.
Genuineness of deeds of documents not The branch will complete physical
yet verified physically by the Branch verification report regarding genuineness
Officials in respective record room, AC of the land in respective record room, AC
Land office, Tahshil Office in compliance Land office, Tahshil Office within a short
of HO instruction circular time.
No.IW/IPPD/792 dt. 02.07.2003

H. Observations of Head Office

1. M/s. Zaber & Zubair Fabrics Ltd. is an allied concern of Noman Group. It is a 100% export
oriented Home Textile project situated at Pagar, Tongi, Gazipur having capacity of 335,000
 8

Linear meter Fabrics per day. The group has been availing investment facility since June –
1999 with satisfactory performance.
2. Jb. Md. Nurul Islam aged at 60 years is the Managing Director of the company & Chairman
of Noman Group of Industries. He has 30 years practical experience in this line of business.
All the Directors of the company are from the same family.
3. Lastly, the Board on 06.11.2008 enhanced working capital facilities/investment limit from
Tk.4,000.00 million (funded Tk.2,050.00 million with 100% TR + non-funded
Tk.1,950.00 million) to Tk.4,150.00 million (funded Tk.2,150.00 million with 100% TR +
non-funded Tk.2,000.00 million) under LC/Bills/BBLC/BBBills/Bai-As-serf/MDB/MPI/Bai-
Murabaha/Bai-Salam mode in addition to HPSM (Project) liability of Tk.200.67 million -
A/c. M/s. Zaber & Zubair Fabrics Ltd.
4. Now the client approached the Branch for enhancement of the existing working capital
facilities/investment limit from Tk.4,150.00 million (funded Tk.2,150.00 million with 100%
TR + non-funded Tk.2,000.00 million) to Tk.4850.00 million (Funded Tk.2550.00 million
with 100% TR + Non funded Tk.2300.00 million under LC/Bills/BBLC/BBBills/Bai-As-
serf/MDB/MPI/Bai-Murabaha/Bai-Salam mode in addition to the existing HPSM (Project)
investment liability of Tk.181.04 million - A/c. M/s. Zaber & Zubair Fabrics Ltd.
5. CIB report of the client yet to be obtained.
6. IRG of the client is Acceptable (Score obtained - 80).
7. Sales turnover of the client is in increasing trend.
8. Working capital requirement for the factory has been assessed by inspecting officials and
found as under:

Home Textile : Tk. 3869.74 million (at 80% capacity utilization)

Fashion unit : Tk. 939.27 million (at 80% capacity utilization)
Total : Tk.4809.01 million
9. Earlier on 22.03.2008, the group was allowed LC commission @ 0.20% for first quarter & @
0.15% for subsequent quarter which is lowest in nature of facilities. Further reduction seems
to be not justified.

I. Head Office Recommendation:

Considering the recommendation of SVP & Branch Incumbent of Paltan Branch and the of DMD &
Zonal Head of Dhaka Central Zone, Dhaka we also recommend the proposal for enhancement of the
existing working capital facilities/investment limit from Tk.4,150.00 million (funded Tk.2,150.00
million with 100% TR + non-funded Tk.2,000.00 million) to Tk.4400.00 million (Funded Tk.2400.00
million with 100% TR + Non funded Tk.2,000.00 million under LC/Bills/BBLC/BBBills/Bai-As-
serf/MDB/MPI/Bai-Murabaha/Bai-Salam mode in addition to the existing HPSM (Project) investment
liability of Tk.168.49 million - A/c. M/s. Zaber & Zubair Fabrics Ltd. a client of Paltan Branch,
Dhaka.

The proposal is now placed before Executive Committee for kind consideration and if agreed, the
following resolution may be adopted:

RESOLUTION:
“Resolved that the proposal for enhancement of the existing working capital facilities/investment
limit from Tk.4,150.00 million (funded Tk.2,150.00 million with 100% TR + non-funded
Tk.2,000.00 million) to Tk.4400.00 million (Funded Tk.2400.00 million with 100% TR + Non
funded Tk.2,000.00 million under
LC/Bills/BBLC/BBBills/Bai-As-serf/MDB/MPI/Bai-Murabaha/Bai-Salam mode in addition to the
existing HPSM (Project) investment liability of Tk.168.49 million - A/c. M/s. Zaber & Zubair
Fabrics Ltd. a client of Paltan Branch, Dhaka under the terms and condition as envisaged in the
memo be and is hereby recommended to the Board for approved.”
9

(M. FARIDUDDIN AHMAM)

MANAGING DIRECTOR