KPCL Fundamental

KHULNA POWER COMPANY LIMITED
Disclaimer:
The contents of this presentation are entirely based on disclosures made by the
Company. Therefore, DSE does not assume any responsibility on the authenticity of
the facts and figures presented thereof.
(If there is any contrary information please communicate with DSE through
e-mail: listing@dsebd.org)
Brief Overview of the Company:

1.Date of Incorporation
: 15th October, 1997
2.Date of Commencement of Business : October, 1998.

3.Authorized Capital
: TK. 5,000 mn.
4.Paid up Capital
: Tk.2,085.93 mn. (As on 15.06.09)
5.Business
: To own and operate barge mounted power

plants in Khulna and supply electricity to
the national grid of Bangladesh.
6. Offloading of 5,21,48,250 Ordinary shares of Tk. 10.00 each.

7. Issue Manager
: AAA Consultants & Financial Advisers

Limited.
8. Auditor
: Rahman Rahman Huq
Khulna Power Company Ltd. (KPCL)

At a glance
Information about the Company
Background
In 1997 the Bangladesh Power Development Board (BPDB) was faced with the
challenge to ease a critically short power supply in the South Western Zone of
Bangladesh. The electrical demand had been consistently higher than available
capacity, and generation costs in the area had been very high due to the low
efficiency of existing equipment and the heavy use of expensive, low-availability fuel.
In October 1997, BPDB signed a Power Purchase Agreement with Khulna Power
Company Ltd. for a 110 MW floating base load power plant at Khulna, to help ease
the electricity shortage.
Description
Khulna Power Company Ltd. is a public limited company which was incorporated as a
private limited 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 bargemounted power plant that commenced operation in October 1998 under a 15 year
PPA from the government (expiry 2013). When established, KPCL shareholders were
Coastal Power Company (later Coastal was merged with El Paso Corporation, USA)
through its direct wholly-owned subsidiary El Paso Power Khulna Power Aps., Summit
Industrial & Mercantile Corporation (Pvt.) Ltd. (Bangladesh), United Enterprises Co.
Ltd. (Bangladesh) and Wrtsil WDFS (Asia). Now only local shareholders hold 100%
ownership of the company. KPCL project was initially financed by the IFC and the
sponsors equity with a debt-to-equity ratio of 54:46. The total initial project cost
was USD 96.07 million
The principal activity of KPCL is to own and operate barge mounted power plants in
Khulna and supply electricity to the national grid of Bangladesh. The plant came into
operation in October 1998. Nine engines generators are mounted on one barge and
ten on the other. The barges, shipped as deck cargo on a submersible dry tow ship,
are moored in a closed basin. Each barge is approximately 91 meters long and 24
meters wide. These two barge-mounted plants were connected to the national grid.
The plant consumes about 600 MT of Heavy Fuel Oil daily to generate 110 MW power
by the 19 generators on the two barges located in Khalishpur, Khulna.
The project was one of the first IPPs implemented under the then new Government
of Bangladesh guidelines for private power projects. As Bangladesh has enjoyed
steady growth in recent years, the infrastructure to supply electricity to the economy
has not kept pace with this growth. Reliability of electricity supply, which has been a
growing problem over the years, has now reached crisis proportions. Peak demand is
about 5500-6000 MW, whereas available generation is about 4200-4500 MW. The
demand supply imbalance has now become a major bottleneck to economic growth.
The Khulna 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 the overall reliability of the country's power supply. The
facility displaced the generating capacity of the older, less efficient, and high-cost
plants in the region. The plant conformed to all applicable environmental standards.
The plant has already changed the economy of the adjacent region directly and
positively. It has provided employment to over 110 people from the surrounding
areas and many of the jobs are technical and managerial in nature. Significant
numbers of jobs have been created at the fuel terminal, barges, restaurants,
transportation services, and other ancillary businesses created to serve the needs of
the plant. New industrial and commercial establishments have been opened to take
advantage of the stable and reliable power, and existing establishments do not
require back-up generators. In addition, the plant has contributed significant funds
toward social causes in the region.
The plant is managed by the O&M operator Wrtsil, a globally recognized power
plant manufacturer and operator. A team of skilled technical people are engaged in
the operations of the plant. The operational process has been developed by an
expert team. For any technical assistance, the equipment suppliers extend their
support, this is backed by other consultants support as and when needed.
Management team is professional and has a successful track record and possesses
requisite expertise to run the operations.
KPCL financials is audited by Rahman Rahman Huq, a member of KPMG. The
company has shown stable performance with steady sales as in any typical utility
companies. The company has received a power tariff of BDT 7.30/kWh during the
January June 2009 period, whereas it received a tariff of BDT 10.51/kWh during
the January June 2008 period. The differences between the period was due to tariff
slabs variation of cost of fuel and foreign currency rate.
This is an environmental review category B project. Environmental and social issues
associated with the project include: site selection and land use, site contamination
from past activities, air emissions and noise from construction and plant operation,
liquid effluents, liquid and solid waste disposal, oil transportation safety and spill
potential, social impacts, fire prevention and emergency response, employee health
and safety programs, and impact management and monitoring. KPCL has prepared
an environmental assessment for the project to address these issues and
demonstrate that the proposed project will comply with applicable governmental and
World Bank requirements. The proposed site for the project was identified by BPDB
in their RFP for the project. The project is located on an uninhabited, vacant property
owned by PADMA, the state oil company. No resettlement of residents or economic
displacement was required.
Expansion plan
During establishment of the company, the project concept envisaged expansion. KPCL
is now discussing the next expansion plan of the company with BPDB, which the
management wants to finalize within one year.
The experience gathered by the management during the implementation of initial 110
MW project will be applied for formulating new strategy in tariff determination and
operation of the future projects. Accordingly management took the strategy of
negotiating with BPDB for the revised Power Purchase Agreement (PPA) and other
project documents for easy operation, maintenance and better return of the
expansion project. Accordingly the BPDB and KPCL have been considering the
agreements to expand the capacity of its Berge Mounted Power Plant to land based
power plant. With the area of its leasehold property, KPCL wants to install additional
100 MW capacities with power generating engines. The strategy is to generate and
produce more electricity by using fewer engines. The expansion plan will be for 22
years effective from Commercial Operation Date.
DIRECTORS AND OFFICERS

Name and Position of all Directors:
Name of The Directors
Mr. Muhammed Aziz Khan
Mr. Hasan Mahmood Raja
Mr. Muhammed Farid Khan
Mr. Anjuman Aziz Khan
Mr. Md. Latif Khan
Ms. Ayesha Aziz Khan
Mr. Jafer Ummeed Khan
Mr. Ahmed Ismail Hossain
Mr. Khandaker Moinul Ahsan Shamim
Mr. Akhter Mahmud Rana
Mr. Faridur Rahman Khan
Mr. Abul Kalam Azad
Mr. Moinuddin Hasan
Rashid
Position
Chairman
Managing Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Involvement of Directors with Listed Company in terms of Dividend & Category:

Name of The
Director
Mr. Muhammed Aziz
Khan
Mr. Muhammed Farid
Khan
Mr. Anjuman Aziz
Khan
Mr. Md. Latif Khan
Name
of
Listed
Company
where Directors are
involved
Summit Power Limited
Chairman
Director

Summit Alliance Port
Limited
Managing
Director
Chair Person
Director
Position
Listing Category
in DSE/CSE
A
A
A
A

Ms. Adeeba Aziz Khan
Mr.
Jafer
Khan
Ummeed
Summit
Limited
Summit
Summit
Limited
Summit
Limited
Summit
Alliance Port
Power Limited
Alliance Port
Director
Alliance Port
Director
Power Limited
Executive
Director
Involvement of Directors with another Company:

Summit Group
Name of The Director and associated
Companies
Mr. Muhammed Aziz Khan
Position
Summit
Industrial
&
Merchantile
Chairman & Managing
Corporation Pvt. Ltd.
Director
United Summit Coastal Oil Ltd.
Chairman
Summit Shipping Ltd.
Chairman
Summit Properties & Construction Co.
Director
(pvt.) Ltd.
Cosmopolitan Traders (pvt) Ltd.
Chairman
Summit Equities Limited
Chairman
Khulna Power Company Ltd.
Chairman
Ocean Container Ltd.
Chairman
Summit Pipeco Ltd.
Chairman
Baridhara Properties Ltd.
Chairman
Summit Alliance Port Ltd.
Chairman
Chairman
Alliance Leasing and Finance Co. Ltd.
Director
Summit Electricity Limited
Chairman
Summit Euro Refinery Ltd.
Chairman
Summit Purbanchol Power Co. Ltd.
Chairman
Summit Uttaranchal Power Co. Ltd.
Chairman
Summit Holdings Limited
Chairman
Summit Investment Limited
Chairman
Mr. Muhammed Farid Khan
Summit Corporations
Summit Industrial & Mercantile Corporation
Pvt. Ltd.
Summit Pipeco Ltd.
Cosmopolitan Traders (Pvt.) Ltd.
Director
Director
Director
Director
Summit Properties & Construction Co. (Pvt.)

Ltd.
Alliance Leasing and Finance Co. Ltd.
Summit Communications Limited
Summit Investment Ltd.
Director
Director
Director
Director
Vice Chairman
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Mr. Anjuman Aziz Khan

Summit Properties & Construction Co. (Pvt.)
Ltd.
Summit Pipeco Ltd.
Pvt. Ltd.
Alliance Terminal Limited
Mr. Md. Latif Khan
Managing Director
Director

Pvt. Ltd.
Syenergey Services
Managing Director
Director
Shareholder
Director
Director
Director
Chair Person
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director

Sumcynet Limited
Pvt. Ltd.
Summit Surma Petroleum Co. Ltd.
Cosmopolitan Traders (pvt) Ltd.
Pvt. Ltd.
Summit Industrial & Merchantile
Corporation Pvt. Ltd.
Director
Director
Chairman
Director
Director
Shareholder
Director
Director
Director
Director
Director
Director
Shareholder
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Executive Director
United Group
Name of The Director and associated
Position
Companies
Mr. Hasan Mahmood Raja
United Enterprises & Co. Ltd.
Chairman & Managing
Director
United International University
Chairman & Board of
Governors
Malancha Holdings Ltd.
Chairman & Managing
Director
Managing Director
United Makkah Madina Travel & Associate Co.
Chairman
Ltd.
United Hospital Ltd.
Chairman
Neptune Commercial Ltd.
Chairman
Comilla Spinning Mills Ltd.
Director
United Management & Trading Services Ltd.
Director
United Polymers Ltd.

Chairman
United Rotospin Ltd.
Chairman
Neptune Land Development Ltd.
Chairman
United Land Port Teknaf Ltd.
Chairman
Neptune Properties Ltd.
Director
Novo Healthcare And Pharma Ltd.
Chairman
Hafez Zamiruddin Fisheries Ltd.
Chairman
Gulshan Properties Ltd.
Chairman
Mr. Ahmed Ismail Hossain
Director
Member, Board of
Governors
Director
Director
Director
Ltd.
Vice Chairman
Director
Managing Director
Director
Director
Managing Director
Director
Director
Director
Managing Director
Director
Director
Chicken King International (BD) Ltd.
Chairman
KMC Global Food Ltd.
Chairman
Bari Studio Ltd.
Director
Sight and Light
Director
BM Cine Lab Services
Director
Mr. Khandaker Moinul Ahsan Shamim
Director
Member, Board of
Governors
Director
Director
Ltd.
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director

Managing Director
Director
Director
Member, Board of
Governors
Director
Director
Director

Ltd.
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Mr. Faridur Rahman Khan
Member, Board of
Governors
Director
Director
Managing Director
Director
Director
Director
Director
Director
Director
Director
Managing Directors
Director
Director
Director
Mr. Abul Kalam Azad
Member, Board of
Governors
Director
Director
Director
Director
Director
Director
Director
Director

Managing Director
Managing Director
Director
Director
Director
Mr. Moinuddin Hasan Rashid
Director
Member, Board of
Governors
Director
Director
Director
Ltd.
Director
Family relationship between the directors and officers:
Name of the
Director/officer
Mrs. Anjuman Aziz Khan
Mr. Md. Latif Khan
Mr. Md. Farid Khan
Mr.
Moinuddin
Hasan
Rashid
Mr. Md. Abdur Rahim,
Project Director
Relationship
Wife of Muhammed Aziz Khan, Chairman
Brother of Muhammed Aziz Khan, Chairman
Daughter of Muhammed Aziz Khan, Chairman
Daughter of Muhammed Aziz Khan, Chairman
Brother of Mr. Hasan Mahmood Raja, Managing
Director
Son of Mr. Hasan Mahmood Raja, Managing
Director
Uncle of Mr. Hasan Mahmood Raja, Managing
Director
Ownership
The ownership structure of KPCL is as follows:
Summit Industrial and Mercantile Corporation (Pvt.) Ltd.
Others
49.9832%
49.9832%
0.0336%
Principal Product or Service of the Company:

KPCL is engaged in business of generation of electricity and sells the same in bulk to
BPDB through its national transmission grid and BPDB distributes the energy in the
south-western region of Bangladesh.
Ownership Pattern
KPCL is now fully owned by the local entrepreneur group, namely Summit
Industrial and Mercantile Corporation (Pvt.) Ltd. and United Enterprises & Co. Ltd.
However, the Khulna Power Project was originally developed by a consortium led by
Wrtsil Corporation (Wrtsil) with which BPDB signed a Power Purchase
Agreement (PPA). Wrtsil is a leading manufacturer of medium speed diesel
engines and had successfully developed similar power projects at several locations
worldwide.
Coastal Power Company, a wholly owned subsidiary of The Coastal Corporation
(Coastal), joined the consortium in August 1998. Thereafter, Coastal and El Paso
Energy Corporation merged in January 2001 to form El Paso Corporation (El Paso).
El Paso is one of the worlds largest and most diversified natural gas exploration and
pipeline companies with an enterprise value in excess of $50 billion. As the major
equity holder in KPCL with 73.9% interest, El Paso was responsible for the
management of the Plant up to April, 2008.
The local Directors are Summit Industrial and Mercantile Corporation (Pvt.) Ltd.
(Summit) and United Enterprises & Co. Ltd. (United). Summit is an investment
group with significant holdings in liquid fuel storage terminals. It is also an investor
in six Rural Electrification Board (BPDB) small power projects, gas pipeline
construction on a build-transfer basis, liquid fuel shipping, and real estate
construction. United has ownership in Bangladeshs largest private liquid product
bulk storage terminal, real estates, and one of the largest Hospitals and a private
University. It has implemented several BPDB small power projects, and has worked
very closely with Summit. Summit and United have contributed a combined 20% of
the Projects equity.
The sponsors have invested total equity capital of US$ 44 million, with 73.9%
ownership by El Paso Energy; 10% by Summit Industrial and Mercantile Corporation
(Pvt.) Ltd.; 10% by United Enterprises & Co. Ltd.; and 6.1% by Wrtsil.
But changes were made in the Ownership Structure as El Paso Corporation, as part
of its global repositioning strategy, offered its stake of 73.9% in KPCL for sale.
Reportedly CDC Globeleq has principally agreed to purchase El Paso's interests in
Asia on a portfolio basis (Bangladesh, Indonesia, Pakistan, Philippines). However, for
sale of shares in the company per terms of the shareholders' agreement allows
existing shareholders first right of refusal and therefore local shareholders Summit
Industrial & Mercantile Corporation (Pvt.) Ltd. and United Enterprises & Co. Ltd. have
expressed interest to purchase El Paso's 73.9% stake in KPCL, at the offered price of
CDC Globeleq. Consequently, Summit and United jointly acquired El Paso
shareholding and later Wrtsils share was also acquired by Summit and United.
Performance at a Glance:
BDT in million
30.06.09
31.12.04 31.12.05 31.12.06 31.12.07 31.12.08 (6 Months
Ended)
Operating Revenue 2774.54
4243.76
6311.05
5698.2
8160.42
2993.70
Growth
52.95%
48.71%
-9.71%
43.21%
N/A
Operating Expense 2157.36
3714.26
5762.52
5154.66
7664.82
2611.79
Growth
72.17%
55.15% -10.55% 48.70%
N/A
Gross Profit
617.18
529.50
548.53
543.54
495.60
381.91
Growth
-14.21%
3.59%
-0.91%
-8.82%
N/A
Other Income
1.32
4.43
5.04
9.83
3.50
91.48
Particulars
Growth
Financial Charges
Growth
Net Profit for the
year
Growth
Retained Earnings
Growth
EPS (As reported by
the company) For
Class
A
Share
considering
face
value of TK. 1,000
per share
Growth
EPS
(Restated
considering paid up
shares as on 19-072009
and
face
value of TK 10 per
share)
Growth
185.08
234.97%
195.60
5.69%
13.76%
200.69
2.60%
95.14%
156.99
-21.78%
-64.38%
177.91
13.33%
N/A
7.13
N/A
341.81
240.23
256.18
309.17
272.52
437.51
602.84
-29.72%
682.46
6.64%
912.73
20.68%
1221.91
-11.85%
294.43
N/A
409.92
13.21%
33.74%
33.87%
-75.90%
N/A
151.58
102.06
110.47
141.27
87.62
175.90
-32.67%
8.24%
27.88%
-38.68%
N/A
1.51
1.02
1.10
1.41
0.87
1.75
-32.45%
7.84%
28.18%
-38.30%
N/A
BDT in million
30.06.09
31.12.04 31.12.05 31.12.06 31.12.07 31.12.08 (6 Months
Ended)
Shareholders Equity 2688.78
2768.40
2998.67
3307.84
3480.37
3595.85
Ordinary Shares
20,85,930 20,85,930 20,85,930 20,85,930 20,85,930 20,85,930
Ordinary Shares as
on 19.07.2009
208,593,000
Total Assets
5134.64
6036.03
6730.60
6216.38
5222.19
4760.44
Particulars
ROE
ROA
12.71%
6.66%
8.68%
3.98%
8.54%
3.81%
9.35%
4.97%
11.45%
5.22%
17.53%
9.19%
Net Profit Margin

Gross Profit Margin
Asset Utilization
Equity Multiplier
Total Debt to Total
Asset
Total Debt to Total
Capital
Interest Expense
EBIT
Time
Interest
Earned Ratio
Current Ratio
12.32%
22.24%
54.04%
1.91
5.66%
12.48%
70.31%
2.18
4.06%
8.69%
93.77%
2.24
5.43%
9.54%
91.66%
1.88
3.34%
6.07%
156.26%
1.50
14.61%
12.76%
62.89%
1.32
32.42%
25.39%
18.49%
14.85%
1.63%
0.22%
38.24%
185.08
526.89
35.63%
195.60
435.83
29.33%
200.69
456.87
21.82%
156.99
466.15
2.39%
177.91
450.43
0.29%
7.13
444.64
2.85
1.35
2.23
1.13
2.28
1.15
2.97
1.30
2.53
1.06
62.36
1.18
0.95
0.90
1.00
0.82
0.60
0.99
4300.69
20.62
4243.07
20.34
4231.07
20.28
3565.47
17.09
3606.39
17.22
0.88
0.75
0.59
0.05
N/A
Quick Ratio
Net Asset Value

4353.63
Net Asset Value Per 20.87
Share
Debt Equity Ratio
0.93
TANGIBLE ASSETS PER SHARE

As on June 30, 2009, the Net Tangible Asset Value per share stands at Tk. 497.27. The
calculation of net assets value per share is given below:
Particulars
As at 30 Jun 2009
Taka in million
2008
Taka in million
Assets
Property, plant and equipment, net
3,398.42
3,463.28
Total non-current assets
3,398.42
3,463.28
221.00
762.73
1,036.18
885.78
Other receivables
8.01
8.01
Advances, deposits and prepayments
89.38
1.49
Cash and cash equivalents
7.45
100.90
1,362.02
1,758.91
620.44
1,314.03
293.70
284.00
30.88
-
Inventories
Accounts receivable
Total current assets

Accounts payable
Working capital loan
Term loan - current maturity portion
Dividends payable
208.59
Preference stock dividends payable

Accrued expenses and others
Payable for interest and
financial charges
Total current liabilities
14.18
31.49
13.47
14.34
1,168.41
1,656.72
193.61
102.19
other
Net current asset

Net assets employed
No. of Shares
Tangible Asset Value per Share
3,592.03
3,565.47
208,593,000
208,593,000
17.22
17.09
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 (5th Floor), 18

Karwan Bazar C/A, Dhaka-1215 and the power plant consists of 19 (Nineteen)
6.5 MW generating sets that are installed on Two Power Barges are situated at
Goalpara, Khalishpur, Khulna. Such property is in good operating condition.
(2) Ownership of property:
Other than land, which is a leased property, the ownership of all the assets as
per audited accounts for the year ended 30 June 2009, described below are in
the name of the Company.
Particulars
Amount in mn Taka
Power plant
Vehicles
Building and construction
Furniture and fixtures
Office equipment
Office renovation
Total Written Down Value
(6-month period ended 30 Jun'09)
3,396.95
0.75
0.33
0.06
0.33
0.000033
3,398.42
All 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 working capital loan to the following banks:
a) BRAC Bank Limited
b) Citibank NA
c) Pubali Bank Limited
d) Shahjalal Islami Bank Limited
e) Standard Bank Limited
The 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 the west petroleum terminal of Padma Oil
Co. The existing power plants are situated on the leasehold land. Details of
leasehold lands are as follows:
Plant Address: Goalpara, Khalishpur, Khulna

Owner of the land: Padma Oil Co. Ltd.
Lessor: BPDB
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
Changes in the assets used to pay off any liability:
Cash disbursement of Tk. 13.89 mn was made during the accounting period
ended 30th June 2009 to reimburse portion of the term loan.
Estimated future capital expenditure:
The management of KPCL is planning the next expansion program, when the
current contract will be expired, for additional 100 MW with the Government of
Bangladesh. But there is no plan capital expenditure in near future other than
stated under caption material commitment for capital expenditure.
However, in the draft information document, page no: 25 under the head of
material commitment for capital expenditure. The company as reported as
follows:
KPCL doesnt have any commitment made for future capital expenditure.
Lease Details:
The company is obligated under non-cancelable lease for use of land leased out
by BPDB that are renewable on a periodic basis at the option of both lessor and
lessee. During the period, rental expenses under non-cancelable operating
leases aggregated Tk. 1.68 mn (Jan-Jun 2008: Tk. 1.86 mn). The future
minimum lease payments in respect of operating leases as at 30 June 2009 are
as follows:
30-Jun-09
31-Dec-08
31-Dec-07
Amount due:
Taka
Taka
Taka
Not later than one year
3.24
3.24
3.24
Later than one year

but not later than five years
Later than five years
13.94
13.30
12.97
1.95
5.84
7.78
Particulars
OWNERSHIP OF COMPANYS SECURITIES:

Ownership List of shareholders who owns 5% or more than 5% share of the Company:
Name of the Shareholder Entity

1. Summit Industrial & Mercantile Corporation (Pvt.)
Ltd.
2. United Enterprise & Company Limited
Numbers of
Share
10,42,612
%
49.9832%
10,42,612
49.9832%
The shareholding position of ordinary shares (As at 30 Jun 2009)
Name of shareholders
Summit
Industrial
&
Mercantile
Corporation (Pvt.) Ltd.
(Incorporated in
Bangladesh)
United
Enterprises
&
Company
Ltd. (incorporated in
Bangladesh)
Muhammed Aziz Khan
Anjuman Aziz Khan
Latif Khan
Muhammad Farid Khan
Jafer Ummeed Khan
Ayesha Aziz Khan
Adeeba Aziz Khan
Hasan Mahmood Raja
Ahmed Ismail Hossain
K.M. Ahsan Shamim
Akhter Mahmud Rana
Faridur Rahman Khan
Abul Kalam Azad
Moinuddin Hasan Rashid
Total
Shares
Face
Value
Total value
(No.)
1,042,615
(Taka)
1,000
(Taka)
1,042,615,000
49.9832%
(No.)
1,042,612
Class
B
Shares
(No.)
3
49.9832%
1,042,612
1,042,615
1,000
1,042,615,000
0.0024%
0.0024%
0.0024%
0.0024%
0.0024%
0.0024%
0.0024%
0.0024%
0.0024%
0.0024%
0.0024%
0.0024%
0.0024%
0.0024%
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
50
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
1,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
50,000
% Of
Shareholding
Class A
Shares
On 12 June 2009, the entire shares (Class A and Class B) of Wartsila Development &
Financial Services (Asia) Ltd. have 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 was increased to
50.00 percent from 46.95 percent each. Further on 22 June 2009, Summit and United
each have transferred 350 shares in favor of above 14 individuals at fifty numbers of ClassA shares each.
Details of Preference Shares

The company issued 1,100,000 redeemable cumulative class 'A' preference
shares to the above shareholders on 14 May 2008. These shares, under
ordinary circumstances, are redeemable in five annual equal installments of
220,000 shares starting from 14 May 2010, the second anniversary of the issue
date.
Name of shareholders
The City Bank Limited
Pubali Bank Limited
One Bank Limited
Trust Bank Limited
Number of
Shares
600,000
200,000
200,000
100,000
1,100,000
As at 30 Jun 2009
Face value
Taka
1,000
1,000
1,000
1,000
Total value
Taka mn
2008
Total value
Taka mn
600.00
200.00
200.00
100.00
1,100.00
600.00
200.00
200.00
100.00
1,100.00
RISK FACTORS AND MANAGEMENT PERCEPTION ABOUT RISK:

As with all investments, investors should be aware that there are some risks
associated with an investment in the Company. The investors should carefully
consider the following risks in addition to the information contained in the prospectus
for evaluating the offer and taking decision whether to invest in shares of the
company.
a) Interest Rate Risk:
Interest/financial charges are paid against any kind of borrowed fund/ preference
shares. Instability in 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 the profitability.
Management Perception: Currently, KPCL has working capital debt obligation from
several banks and preference shares, which are comprised with fixed financial
charges. But the Company has solid revenue source and is highly profitable. The rate
for the financial charges are fixed so, KPCL doesnt have such risk.
b) Exchange Rate Risk:
KPCL imports mostly fuel against payment of foreign currency. Unfavorable volatility
or currency fluctuation may affect the profitability of the company.
Management Perception: KPCL is fully aware of the risk related to currency fluctuation
but practically doesnt possess any foreign exchange risk as 99% of the Other
Monthly Tariff (OMT)is convertible and fuel is being imported through L/C and the
exchange rate Sonali Bank Ltd. is acceptable to BPDB under pass through payment
process. Moreover, KPCL executes favorable and competitive 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 that reason organizations engaged in generating electricity cant provide all
required amount of electricity. Power companies mainly supply electricity to national
power distributors to supply electricity.
Management Perception: KPCL supplies electricity to BPDB in the south-western region
of Bangladesh and its a dedicated power plant with a guaranteed payment from
BPDB and GoB under the PPA. So, possibilities of entering new power companies
wouldnt create any industry risk for the company.
d) Market and technology related Risk:
Technology is related to generation, transmission, distribution, quantity measuring
and maintaining of required electricity generation.
Management Perception: The Company is operated by the plant manufacturer,
Wrtsil, the leading power plant manufacturer and plant operator in the world.
Wrtsil is technologically advanced 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 by government, that is policies related to electricity price fixation, demand &
supply and distribution is fully under the control of Government. So, government
policies in this regard may impact business operation of KPCL.
Management Perception: The Power Purchase Agreement with BPDB safeguards
KPCL from any changes in government regulation. The PPA agreement is valid for 15
years till 2013 and can be extended upon the consent of both parties. Moreover, in
case of PPA termination, KPCL will get compensation under the agreement from
BPDB or GoB. Additionally, the huge shortage of power in the 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 the economy in general. Moreover, Natural disasters like
Cyclone, Tide, and Earthquake may hamper normal performance of power
generation.
Management Perception: The risk due to changes in global or national policies is
beyond control for any company. Yet the company is well prepared for adoption of
policies and preventive measures as and when required to reduce the risk. The
routine & proper maintenance of the distribution network undertaken by BPDB
reduces major disruption due to natural calamities. But severe natural calamities,
which sometimes are unpredictable and unforeseen, have the potential to disrupt
normal operations of KPCL. But with prudent rehabilitation schemes and the very
effective 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. But electricity service being considered a daily necessity & in
consideration of its use by all irrespective 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 extreme cases. 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 from the date of commercial operation i.e. till 13th October 2013.
Management Perception: On the backdrop of development need for the economy,
power generation is one of the priority sectors of the government. With the existing
deficit in power generation capacity, the government is expected to continue with the
same policy level support for the sector. Dispute with any one operator may lead to
adverse repercussions throughout the industry. As such, no major dispute with the
government is envisaged. There is a provision in the PPA for enhancement of the
project life. BPDB and KPCL have been considering to expand the capacity of the
Berge Mounted Power Plant utilizing the area of its leasehold property, KPCL wants to
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 fuel efficiency.
Risk associated with single party exposure:
The BPDB is the single buyer who purchases total electricity generated by the
Company. The Companys ability to service its both existing and future financial
obligations rest on the BPDBs ability to meet the tariff payments under the PPA.
Management Perception: KPCL is out of the single party risk exposure as it is
guaranteed by BPDB for the payment in case the plant runs lower than 50%.
Moreover, L/C issued by BPDB for two months minimum guaranteed payment.
Therefore, the Implementation Agreement signed by the Government through
Ministry of Power, Energy and Mineral Resources is considered to be Government
guarantee to protect the Company from single party risk exposure.
Risk associated with tariff of electricity:
The BPDB is the single buyer who purchases total electricity generated by the
Company. In these circumstances usually it is the buyer who may determine the
tariff value of the electricity generated by the Company.
Management Perception: In this case no risk is associated as BPDB and the Company
have pre-determined and contracted the terms and condition regarding the tariff of
electricity, expressed under two slabs Other Monthly Tariff (OMT) and Fuel Tariff
(FT) where OMT is based on delivered MWh and FT is pass through. Tariff for each
year is adjusted and indexed from time to time in accordance with the PPA and the
said Reference Tariff is used to calculate the Tariff in Effect for any 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 of supplies of the fuel to the power plants will hamper the generation of
electricity, the only product of the Company.
Management Perception: Kuo Oil Pte Ltd. Singapore has been supplying any Fuel Oil
(HFO) to the Company through United Summit Coastal Oil Limited and the risk of
price fluctuation in the global oil market is automatically done by the very FT
structure which is based on fuel cost as a pass through item. Moreover, KPCL can
source HFO from other sources of 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. Any disruption in supply flow of spares parts will put an adverse
impact on power generation.
Management Perception: Under the Operations & Maintenance Contract with Wartsila,
the Company has signed a Spare Parts Support Agreement (SPSA). Wrtsil also
maintains sufficient spares parts inventory for smooth operation of KPCL plants. In
addition, KPCL maintains safety spare 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 with BPDB or failure to comply with certain rules and regulations, BPDB may
stop making payments to KPCL resulting into non-payment to its lenders.
Management Perception: KPCL is getting the payment regularly from BPDB.
Sometimes, there are delays in payment but that is mainly due to administrative
reasons. Till date, no payment has been defaulted. As per the PPA with BPDB, there
is a penalty clause and BPDB needs to ensure minimum guaranteed payment
supported by Letter of Credit. .
Additionally, GoB through the Implementation Agreement provides sovereign
guarantee with regard to payments, hence possibly mitigating risk of any nonpayments.
Risk associated with systems failure and sabotage:
System failure may take place resulting into damages for KPCL. Moreover, internal
conflict among the workers and engineers may also disrupt operation.
Management Perception: There is an agreement with the O & M Contractor and
equipment supplier to provide maintenance and equipment support. Additionally, any
equipment and mechanical support will be provided for in case the plant needs to be
converted from a fuel based to a gas based plant. In addition, the company has
prudent insurance coverage with CODAN Marine, which covers all risks package
including Machinery Breakdown, Business Interruption, Third Party Liability,
Sabotage and Terrorism.
h) Force Majeure:
Force Majeure events are circumstances in which a delay in the performance of any
obligation under the PPA is beyond the reasonable control, and occurs without the
faults or negligence, of the parties concerned.
Management Perception: If the Company is affected by a Force Majeure event after

commencement of commercial operation, the BPDB will only pay capacity
components and energy components to the Company, to the extent that the unit is
available. However, financial loss due to unavailability of the plant after a Force
Majeure event will be mitigated by the Companys insurance policy. If BPDB is
affected by a Force Majeure event after commercial operation, it will pay the
Company its debt servicing costs less insurance proceeds and / or any available
capacity component and energy component received by the company during the
Force Majeure period. In case of Political Force Majeure event or change in law, the
BPDB will pay the Company, to the extent that the unit is available and the
Government of Bangladesh will pay required amount to cover the capacity
component up to 50%.
i)
Risk associated with environmental pollution:
KPCL plant operation may cause air and water pollution, which may affect the
ecological balance and living condition and health of the people around the plant.
Management Perception: The Operations and Maintenance (O&M) contractor of KPCL plant,
Wrtsil Bangladesh Ltd, Khulna Plant (WBD-KP) is responsible for environmental
management of the project.
Plant operation is certified by Bureau Veritas (BV) on:
Quality Management System (QMS) with ISO 9001 - 2008

Environmental Management System (EMS) with ISO 9001 - 2004
Occupational Health and Safety Administration System (OHSAS) 18001 - 2007
The EMS Manual covers all the elements that are required to be monitored for
compliance of ISO 14001 and local Department of Environmental Guidelines. Under
the EMS, ambient air quality by passive sampling method continuously, basin water
quality and sanitary discharge tested on monthly basis and ambient noise level is
measured on monthly basis, and is monitored for compliance. Quarterly reports,
compiling all the test and measurement results are submitted to Department of
Environment (DOE). Exhaust gas emission is monitored by stack testing annually,
and elaborate reports are submitted to DOE every year. For each and every fuel oil
delivery and handling, containment boom is used to minimize the risk of accidental
spillage and pollution. At regular intervals, independent auditors or Bureau Veritas
carry out surveillance audit to assess the compliance with the EMS of ISO 140012007 but so far no non-conformity noted. Similarly, DOE officials inspect regularly
and monitor environmental performance of the plant and till date no non-conformity
reported. Overall, plant operation does not pose any hazard to the environment of
the plant area and its surroundings.

KPCL Fundamental

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KPCL Fundamental

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KHULNA POWER COMPANY LIMITED

Brief Overview of the Company:

: 15th October, 1997

2.Date of Commencement of Business : October, 1998.

: TK. 5,000 mn.

: Tk.2,085.93 mn. (As on 15.06.09)

: To own and operate barge mounted power

6. Offloading of 5,21,48,250 Ordinary shares of Tk. 10.00 each.

: AAA Consultants & Financial Advisers

: Rahman Rahman Huq

Khulna Power Company Ltd. (KPCL)

DIRECTORS AND OFFICERS

Involvement of Directors with Listed Company in terms of Dividend & Category:

Summit Power Limited

Summit Power Limited

Ms. Ayesha Aziz Khan

Involvement of Directors with another Company:

Summit Properties & Construction Co. (Pvt.)

Mr. Anjuman Aziz Khan

Summit Industrial & Mercantile Corporation

Ocean Container Ltd.

United Polymers Ltd.

Hafez Zamiruddin Fisheries Ltd.

Malancha Holdings Ltd.

Neptune Land Development Ltd.

Principal Product or Service of the Company:

Net Profit Margin

Net Asset Value

TANGIBLE ASSETS PER SHARE

Total non-current assets

Advances, deposits and prepayments

Cash and cash equivalents

Total current assets

Preference stock dividends payable

Net current asset

DESCRIPTION OF THE PROPERTY

Corporate office of the company is situated at Summit Centre (5th Floor), 18

All the machineries imported were in brand new condition.

Plant Address: Goalpara, Khalishpur, Khulna

Changes in the assets used to pay off any liability:

Not later than one year

Later than one year

OWNERSHIP OF COMPANYS SECURITIES:

Name of the Shareholder Entity

The shareholding position of ordinary shares (As at 30 Jun 2009)

Details of Preference Shares

RISK FACTORS AND MANAGEMENT PERCEPTION ABOUT RISK:

Potential changes in the global or national policies, natural calamities etc:

The performance of the company may be affected due to unavoidable circumstances

Management Perception: If the Company is affected by a Force Majeure event after

Risk associated with environmental pollution:

Quality Management System (QMS) with ISO 9001 - 2008

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