It is a pleasure and privilege on the part of the Board of Directors to present herewith the Directors' Report and Auditors' Report together with the audited Financial Statements of Advanced Chemical Industries
Limited (ACI) for the first fiscal year (1 July 2016 - 30 June 2017) as the financial year of the Company ended on 30 June 2017 prepared based on the provisions of the Companies Act 1994, Finance Act 2015 and the Notifications issued time to time by Bangladesh Securities & Exchange Commission (BSEC).
Overview
ACI Group had a very successful year in 2016-2017 with revenue earnings of Taka 47,668 million registering a growth of 52%. This achievement had been a synchronized effort of our sales and marketing team supported by corporate services and factories. There was strong growth across almost all of the strategic business units leading to a robust and well rounded performance for the ACI group. Bangladesh economy grew by 7.1%, exceeding the 7.0% growth target and the 6% growth trajectory. This strong growth was mainly supported by industry and service sectors. Annual average CPI inflation continued to decline to 5.9% in June 2016, below the target of 6.2%. The declining trend in average CPI inflation is mainly driven by favorable food inflation. Export grew by 8.9%, while import by 5.5% in FY 16. Remittance, however, ended up with a negative growth of 3% during the same period. The current account surplus of
USD 3.7 billion led to an overall balance of USD 5.0 billion, building net foreign assets. Import benefited from subdued global commodity prices. Despite some initial competitiveness concerns from appreciation in REER (Real Effective Exchange Rate), exports held up well, despite weak external demand. Foreign exchange reserves reached USD 30.2 billion at the end of FY 16, around 8 months of prospective import.
Nominal Taka-USD exchange rate remained broadly stable. Lending interest rate was firm with slight upper trend. Due to the exceptional growth, ACI had to adapt to this situation by adding new manpower, increased training and productivity improvement. A substantial increase in marketing expenses and fields force strength were made in order to support the growth. The external environment was stable enough to allow us to focus on good execution of our planned business strategy. ACI took advantage of this period and invested on growth and market share gain. ACI celebrated some noteworthy achievements during
2016-2017. Our pharmaceutical business started ACI Healthcare USA Inc. with a view to develop sales and distribution capability. ACI Biotech became a separate subsidiary, further strengthening our healthcare portfolio. Consumer Brands had started high quality rice processing and sales. Mobile telephones were added to our consumer electronics business under the brand name "Stylus". Agribusiness expanded their portfolio brought in combine harvesters and reapers. Our retail chain Shwapno continued its rapid sales growth, as well as backward linkage development with farmers. Through these and many more achievements, ACI has been able to deliver high quality sustainable growth.

Subsidiary Companies
ACI Formulations Limited
ACI Salt Limited
ACI Pure Flour Limited
ACI Foods Limited
ACI Agrolink Limited
Premiaflex Plastics Limited
ACI Motors Limited
Creative Communication Limited
ACI Logistics Limited
ACI Edible Oils Limited
ACI HealthCare Limited
ACI Chemicals Limited
INFOLYTX Bangladesh Limited
ACI Biotech Limited
Joint Venture Companies
Tetly ACI (Bangladesh) Ltd.
ACI Godrej Agrovet Pvt. Ltd.
Asian Consumer Care Pvt. Ltd.
Associate Companies
Stochastic Logic Ltd.

Assets
Property, plant and equipment
Investments
Intangible assets
Non-current assets
8 7,882,028,036 6,596,603,946 6,540,146,827
9 2,068,658,731 1,902,534,456 1,858,500,465
10 703,033 985,105 322,505
9,951,389,800 8,500,123,507 8,398,969,797
Inventories
Trade receivables
Other receivables
Inter-company receivables
11 4,812,712,892 3,954,270,304 3,949,039,201
12 3,424,250,145 2,249,796,350 1,950,274,156
13 671,756,230 557,976,730 264,994,676
14 5,244,723,445 3,423,518,581 3,013,956,327
Advances, deposits and prepayments
15
Cash and cash equivalents
2,252,581,504 1,801,490,477 1,255,666,334
Current assets
Total assets
16 699,121,707 619,500,180 525,674,020
17,105,145,923 12,606,552,622 10,959,604,714
27,056,535,723 21,106,676,129 19,358,574,511
Equity
Share capital
Share premium
Reserves
Retained earnings
Total equity
Liabilities
Employee benefits
Long term bank loan
Deferred tax liabilities
Non-current liabilities
17
18
19
20
21
22
438,204,010
402,310,367
3,378,793,454
8,773,168,786
12,992,476,617
714,518,731
8,849,819
453,162,012
1,176,530,562
398,367,290
402,310,367
3,280,407,906
7,868,234,438
11,949,320,001
590,798,572
53,115,317
468,670,449
1,112,584,338
398,367,290
402,310,367
3,267,777,314
7,646,699,029
11,715,154,000
547,555,895
42,522,004
505,368,235
1,095,446,134
Bank overdraft
Loans and borrowings
Trade payables
Other payables
Inter-company payables
Current tax liabilities
Current liabilities
Total liabilities
Total equity and liabilities
23
24
25
26
27
28
536,895,307
7,271,860,274
667,713,019
1,756,008,202
1,478,731,674
1,176,320,068
12,887,528,544
14,064,059,106
27,056,535,723
1,112,583,550
2,960,437,984
589,428,656
1,668,071,770
648,506,965
1,065,742,865
8,044,771,790
9,157,356,128
21,106,676,129
622,572,152
2,824,962,899
756,742,199
1,442,310,177
118,788,291
782,598,660
6,547,974,378
7,643,420,512
19,358,574,511

Revenue
Cost of sales
29 18,305,730,559 22,508,056,043 7,941,212,395 14,566,843,648
30 (10,109,829,839) (12,685,263,589)
(4,380,426,988)
(8,304,836,601)
8,195,900,720 9,822,792,454 3,560,785,407 6,262,007,047 Gross profit
Administrative, selling and distribution expenses
Other income
31 (6,671,589,171)
32 66,324,095
(7,670,068,879)
(2,932,028,705)
181,362,534 94,094,936
(4,738,040,174)
87,267,598
Operating profit 1,590,635,644 2,334,086,109 722,851,638 1,611,234,471
Gain from sale of brands 29.2 403,900,000 2,812,902,006 292,900,000 2,520,002,006
Investment impairment provision
Net finance costs
9 (30,000,000) (50,000,000) (20,000,000) (30,000,000)
33 (202,802,570) (115,368,466) (22,382,361) (92,986,105)
Profit before contribution to WPPF
Contribution to WPPF
1,761,733,074 4,981,619,649 973,369,277 4,008,250,372
26.1 (88,086,654) (123,080,882) (48,668,464) (74,412,418)
Profit before tax
Income tax expense
Current tax
34
1,673,646,420 4,858,538,767 924,700,813 3,933,837,954
(456,540,049) (675,516,705) (283,144,205) (392,372,500)
Deferred tax income/(expense)
Profit after tax
26,440,165 (319,832,355) 38,101,185 (357,933,540)
(430,099,884)
1,243,546,536
(995,349,060)
3,863,189,707
(245,043,020)
679,657,793
(750,306,040)
3,183,531,914
Earnings per share 35
Basic earnings per share 28.38 88.23 15.51 72.72