Annual Report 2019

ANNUAL REPORT 2019 1
LEGACY OF INSPIRING GENERATIONS
2020: Celebrating 20 glorious years of

inspiring generations
Since 2000, RAK Ceramics (Bangladesh) has been
inspiring generation over generation to transform their
lives and lifestyles through ceramics specialism by
virtue of offering an wide range of top-notch ceramics
products, including tiles and sanitary-ware.
RAK Ceramics (Bangladesh) was founded on the
premise of serving national demand through essential
interior infrastructure products and has grown through
the years with support of our valued stakeholders.
In celebrating the year 2020 as our glorious 20 years
journey, we look back at having created a rich legacy
of inspiring our customers to embrace a modern and
convenient lifestyle through our products and services.
We have inspired our peer ecosystem to adopt the
best practices and also excellence in operational
standards. We have inspired our people to dedicate
themselves to the cause of serving our customers with
dedication, passion and responsibility. We have inspired
our suppliers and business partners to enhance their
capacities and grow their businesses. And we have
fostered a robust value-creation platform that has
benefitted our shareholders through increased wealth
creation.
Indeed, we are inspired by our progress and success
over the past 20 years and with a legacy, will ensure
that going into our next 20 years and beyond, we will
continue to make a meaningful impact across the
crescent of our influence in Bangladesh and beyond.
2 RAK CERAMICS (BANGLADESH) LIMITED
CONTENTS
01 RAK LEADERSHIP
1. Corporate information 04
2. Company profile 05
3. Vision and Mission 09
4. Core values and code of conduct 10
5. Investment case 11
6. Chairman’s statement 14
7. Directors’ profile 16
8. Awards & Recognitions 20
9. Industry outlook and possible future developments in the industry 22
10. Management discussion and analysis 24
02 RAK PERFORMANCE
1. Perfomance at a glance 28
2. Operational highlights 31
3. General overview of performance 2019 32
4. Segment wise performance 37
5. Year over Year Performance and how we measure our progress 38
6. Value-added statement, economic value-added, market value-added
41
statement
03 RAK INTEGRATED REPORTING

1. About the Integrated report 46
2. Accelerating value based growth 48
3. How do we business 50
4. How we creat value using six capitals 52
5. Our strategy 57
6. Policy on communication with shareholders and other stakeholders 60
7. Risk Management and control 62
8. Our obligation to environment and society towards UN SDGs 66
9. Corporate social responsibilities 69
04 RAK GOVERNENCE
1. Directors’ report of RAK Ceramics (Bangladesh) Limited 72
2. Audit committee report 79
3. Nomination and remuneration committee report 82
4. Corporate governance report 85
5. Corporate governance compliance certificate 89
6. Corporate governance compliance status 90
7. BAPLC certificate 2019 100
05 RAK FINANCIALS
1. Declaration of MD and CFO regarding financial statements 102
2. Independent auditors’ report and audited consolidated financial statements
103
RAK Ceramics (Bangladesh) Limited
3. Independent auditors’ report and audited financial statements RAK
153
Ceramics (Bangladesh) Limited
4. Directors’ report, Independent auditors’ report and audited financial
200
statements of RAK Power Pvt. Ltd
5. Directors’ report, Independent auditors’ report and audited financial
237
statements of RAK Security and Services (Pvt.) Ltd
6. Statement pursuant to section 186(1)(e) of the Companies Act, 1994 263
7. Notice of the 21 Annual General Meeting
st
267
CORPORATE INFORMATION
Board of Directors Nomination and Remuneration Committee
Chairperson Chairperson
Abdallah Massaad Wassim Moukahhal
Managing Director Members

SAK Ekramuzzaman Pramod Kumar Chand
Faheemul Huq, Barrister-at-Law
Director
Pramod Kumar Chand Member Secretary
Muhammad Shahidul Islam FCS
Independent Directors
Wassim Moukahhal Statutory Auditor
Faheemul Huq, Barrister-at-Law ACNABIN, Chartered Accountants (an independent
member of BAKER TILLY INTERNATIONAL)
Chief Financial Officer BDBL Bhaban, Level-13
12, Kazi Nazrul Islam Avenue
Sadhan Kumar Dey Dhaka 1215
Company Secretary Principal Bankers

Muhammad Shahidul Islam FCS HSBC
Standard Chartered Bank
Commercial Bank of Ceylon
Audit Committee Dutch-Bangla Bank
Chairperson Legal Advisor

Faheemul Huq, Barrister-at-Law Margub Kabir, Barrister-at-Law
Members Registered Office

Wassim Moukahhal RAK Tower (7th, 8th & 9th floor)
1/A Jasimuddin Avenue
Pramod Kumar Chand Sector-3, Uttara Model Town
Dhaka 1230
Member Secretary Phone: +88 (02) 58957393, 58952303
Fax: +88 (02) 58957096
Muhammad Shahidul Islam FCS
Factory
Head of Internal Audit and Compliance
Dhanua, Sreepur, Gazipur, Bangladesh
Mohammad Samsul Arefin
Websites
www.rakcerambd.com
www.rakceramics.com
COMPANY PROFILE
Room for imagination Quality standards

At RAK Ceramics , we help to create icons, we help to Bureau Veritas Certifications verify in every year the
build marvels, and our products feature in the most implementation of RAK Ceramics’ quality management
of the iconic buildings around the country. We are system and certified the company, in compliance with
known for our wide product range and our ability to the requirements of ISO 9001:2015 with the scope
produce bespoke ranges for both small and large scale covering the design, development, production, sales
projects, enabling our clients to bring their ideas to and marketing of ceramics and porcelain floor and wall
life. We respect, we inspire, we improve, we deliver for tiles and vitreous china sanitary-wares, including ABS
today and tomorrow, no matter the ambition, no matter resin toilet seats and covers.
the challenge, at RAK Ceramics we take care of all the
details irrespective of large or small project.
Sustainability
Our passion and expertise combined with careful We play our role for a better environment and society –
attention to detail enables us to provide our customers today and for the future
a wide range of integrated ceramics solutions, allowing
them the freedom to be creative and plenty of room for Sustainability in every sphere of business is one of the
imagination. main elements of RAK Ceramics’ mission statement.
The company is committed to practicing environmental
stewardship throughout its manufacturing chain – from
Our business
product design and efficient operations processes – to
RAK Ceramics is one of the largest ceramics’ brands in playing an active role in building a better community
the world. Specialising in ceramic and gres porcelain by enhancing the surrounding environment. The
wall and floor tiles and sanitary-ware, Our Annual organisation’s activities improve energy efficiency,
production capacity is 10.32 million square metre of reduce pollution, enhance biodiversity and improve
tiles and 1.45 million pieces of sanitary-ware at our the quality of life for both people in the communities
plants in Bangladesh. Across our operations, we employ it operates in and for its workforce. The sanitary-ware
approximately 2,000 staff. division is committed to developing eco-friendly
products with a particular focus on water saving
RAK Ceramics (Bangladesh) is also the country’s leading
(33% saved in water consumption using the latest
manufacturer and distributor of high-end interior
flush systems in water closets). It recycles natural
building products. The Company’s wide range of
raw materials to help conserve natural resources and
branded products are made available to all potential
adopts clean development mechanism (CDM) projects
and emerging markets of the country through a unified
to reduce carbon emissions during the manufacturing
customer sales team and an integrated supply chain
process.
network that leverages the Company’s scale. We
target the highest profitability, underpinned by a cost-
conscious culture, as well as environmental, social and Innovation
governance (ESG) principles to drive a shared value RAK Ceramics is a pioneer in introducing hi-tech
creation. innovations that are a breakthrough in the industry. A
As an institution with industry leading production wide range of technologies are used at the Company’s
capacities that support nation-wide product demand state-of-the-art plants, including digital printing
and after-sales service, we possess leading positions technology, slim, double charge, scratch-free and other
in our categories and our brands are well-entrenched advanced technologies, such as granitech, technoslate,
with consumers in Bangladesh, as illustrated by our twin press, dry glaze and waterjet, to name a few.
percentage share of market.
Our portfolio minimal wastages, while incorporating costs that are

comparable to the lowest in the industry.
The biggest factor that ensures the strongest
differentiation for RAK Ceramics (Bangladesh) is its The Company emerged as the first in Bangladesh’s
wide product portfolio comprising ceramics and gres ceramics industry to be awarded the prestigious ISO
porcellanato (porcelain/fully vitrified) tiles, bathroom 9001: 2008 certification by the UKAS accredited
sets and all types of sanitary-ware. The Company has internationally-recognized certification agency, BVQI,
over 2,700 models active in the ceramic and porcelain in May 2006. The Company takes its environmental
tiles business, and regularly introduces new designs responsibility seriously, pledging a commitment to
that are closely aligned with evolving consumer trends. protect and preserve the environment. This intent is
The Company’s tiles range in sizes from 7.5 x 20 cm up testified in its ISO 14001:2004 certification. Furthermore,
to 80 x 80 cm, straddling the full chain of tiles products the Company also complies with ISO 13006:2012 (E),
in Bangladesh. the latest international standard for ceramic tiles, locally
known as BDS ISO 13006:2012.
The Company has over 43 models of sanitary-ware that
provides customers with a deep choice. In sanitary- The Company’s sanitary-ware complies with the quality
ware, various models are produced in wash basins criteria detailed under BDS 1162:2012. Both tiles and
(wall mounted as well as pedestal) and water closets. sanitary-ware products are BSTI-approved.
Besides, the product mix is oriented mostly towards
The ownership of RAK Ceramics (Bangladesh)
value-added products. This, paired with other structural
represents 72.08% by sponsors and remaining 27.92%
advantages has ensured sustainable margins with a
by general public, including institutional investors, as on
shrunken payback cycle.
December 31, 2019.
The Company has initiated the export of its products
With an annual turnover of BDT 6,463.86 million in
though production is mostly consumed in the local
2019, within a short span of 20 years, RAK Ceramics
markets.
(Bangladesh) has firmly established itself as one of the
leading manufacturer of high quality ceramic wall and
Our credentials floor tiles and sanitaryware products in Bangladesh.
We use the cutting edge technology across our
operations that ensures excellent product finish and
BRANDED SERIES
Random Designs
GRES PORCELLANATO FLOOR TILES
Single Piece
OUR PRESENCE
Dealer Location
Sales Office
Display Center
Factory
Head office
OUR VISION
Our vision is to be the world’s leading ceramics lifestyle solutions provider.
OUR MISSION
Our mission is to foster an internal culture that remains committed to our vision of
becoming the world’s leading ceramics lifestyle solutions provider. We will achieve
this by utilising our rich experience, our wide product range, our innovative approach
and our continuing emphasis to deliver quality. We will focus on building a world-
class organisation. We have applied our expertise in some of the most iconic and
innovative projects, and we aim to continue to push the boundaries in new and
exciting projects as we move forward.
CORE VALUES AND CODE OF CONDUCT
We have embedded our values across the business to conduct known as (guiding principals) for all employees
ensure that our people act consistently and take the and the Chairperson of the Board and other Board
right decisions aligned with our broader philosophies. members of the Company ensures the implementation
As a corporate citizen, RAK Ceramics has an established of the highest ethical standards in all of the Company’s
policy adhere to communication and dissemination business dealings. Our code of conduct guides us for
of information as required under applicable laws in a our daily business interactions, reflecting our standard
fair, diligent and transparent manner. This policy of the of proper behavior and our corporate values. The code
Company is to develop and foster fair, sustainable and clearly conveys to each of us the manner in which we
mutually beneficial relationship with its customers on achieve our business. Our priorities for 2020 and beyond
an arm’s length basis. are to continue embedding appropriate procedures and
controls for responsibly and prudently managing the
Our code of conduct and ethical standards addresses supply chain and other third-party risks to support our
ethical conduct in our work environment, business growth strategy for new products and markets.
practices and relationship with external stakeholders.
RAK Ceramics (Bangladesh) sets out the code of
Responsibility
OUR GUIDING Discretion
We deliver what we
promise to our
PRINCIPLES We comply with
all applicable
customers, business legal require-
partners and ments
shareholders
Efficiency
Accountability We are passionate
We take ownership and to deliver quality
accountability for our standards and
individual and team offerings across our
performance business operations.
Integrity Impartiality
We act with respect We value honesty,
and integrity at all transparency and
the times integrity in what
we do
WE MAKE A DIFFERENCE THROUGH
OUR OUR OUR OUR OUR OUR

PEOPLE PARTNERS PRODUCTS INNOVATION POLICIES OFFERINGS
OUR INVESTMENT CASE
RAK Ceramics (Bangladesh) is the country’s largest ceramics manufacturer and has set
high operational standard through years of focused investments and development of
unparalleled operational expertise.
MARKET LEADERSHIP PORTFOLIO

20 years of rich experience, market-leading positions, Wide and diversified portfolio of brands
significant scale and modern operations
• Primary point of reference for consumer purchases
• We are the undisputed leader in all major markets across evolving from the unorganised sector
the country.
• Dependable brands with very high brand recall
• Significant barriers to entry
FOCUS ON MARGIN ENHANCEMENT

ENDURING RELATIONSHIPS
Emphasis will support us in expanding profitability
Depth and breadth of customer relationships
• Strong efficiency and cost containment initiatives
• Status as a large customer for our primary and core
• Process simplification underway to enhance long-term
suppliers
decision-making
• Supporting the growth and development of all
participants in the ceramics industry
ROBUST FINANCIALS
RESILIENCE Strong cash flows and sound balance sheet
Resilient core business that is characterised by product,

• Cash from operations at BDT 1,585.22 mn (2019)
geographic and customer diversification • Net debt-equity ratio of 0.01, supporting balance sheet
strength (2019)
• Offering strong price and value propositions to our
customers and consumers
• Not overtly reliant on consumer credit

GROWTH FOCUS
DISTRIBUTION NETWORK Focus on continually reinforcing market position
Extensive and expansive distribution network covering • Large addressable market with ceramics tiles industry
Bangladesh demand estimated to be rising significantly.
• Dense geographical footprint underpinning strong • Diversified product portfolio, robust consumer strategies
consumer accessibility and cost-efficient operations remain our enduring
growth drivers
• Scalable and flexible network, helping optimise costs
and maximising throughput
CHAIRMAN‘S STATEMENT
Dear Stakeholders,
I am pleased to present the annual report of RAK Ceramics
(Bangladesh) for the year 2019, a year of significant change and
considerable operational progress. I am also pleased to report
that we have responded well those challenges and delivered The year 2020 marks
a resilient performance with both tiles and sanitaryware our 20 years of
segment. Year 2019 has been an important milestone of 20 progress and success
years’ legacy of inspiring generation, though we have been the
pioneer on ceramics industry revolution in our country for all
in Bangladesh and
those years but it was always you behind our success. Thank during this period,
you very much. we have created a
While looking back our root, infrastructure industry is a unique legacy of
strategic core industry for growth and development of inspiring generations,
any nations and has a multiplier impact on the economy while also reinforcing
and society. Bangladesh is growing steadily with ambitious our foundations for
development goal with distinctive advantage of a young and
achieving better
aspirational population which promising limitless opportunity
for us and your company is well positioned to capture those outcomes in future.
opportunities.
Last year I expressed our deep rooted ceramics capability
with four pillars, Customer centricity, Supply chain alignment,
Consumer segmentation and Capability to respond future;
which we were strengthening those pillar round the year
remain focused on delivering continuous improvement.
Cash generation was excellent and we prudently manage
our balance sheet. We made further excellent progress on
formulating and executing our strategy and we continue to
focus on developing our business.
This year we have set four strategic objectives
1. Optimize return through growth and dividend.
2. Focused strategic segment.
3. Leadership in ceramics technology
4. Industry leadership in cost efficiency.
Our goal has enabled us to evolve, from to outperform. We remain focused on

a ceramics manufacturer into a pioneer maximizing revenue growth, improved gross
lifestyle brand. RAK Ceramics (Bangladesh) margin, effective cost control and strong
is implementing immediate and urgent steps cash flow.
to ensure sustainable growth with some
of the longer-term remediation efforts to
address culture and tone at the top. The In conclusion, I would like to thank the Board
management is confident that the Company members of RAK Ceramics (Bangladesh)
will continue to deliver improving operational and all employees, business partners and
and financial performance as a result of shareholders for their dedication, faith and
ongoing transformation. The values we are support to the continued success of the
driving across the business underpin the way company. The Board and management
we work and help us to achieve our vision to are committed to ensure the Company’s
be a trusted partner and deliver the product trajectory of business growth, financial
to our customers. returns and sustained value creation is
restored appropriately.
The Board expects to make further good
progress in the year ahead, even though
we are weathering various local and Thank you for sharing this journey with us.
global challenges, we expect to continue
Abdallah Massaad
Chairman
DIRECTORS’ PROFILE
Mr. Massaad formally joined RAK Ceramics in 2006 as

Deputy CEO, responsible for operations management,
strategy development, implementation and RAK
Ceramics’ global interests. He supported the Chairman
and CEO with strategic planning and expansion initiatives
enabling the company to reach the milestone of 1 billion
square metres of global sales since it began. He was also
responsible for implementing Corporate Governance
regulations and overseeing the strategic refocusing of
the business portfolio.
June 2014 marked a transformational point for RAK

Ceramics under Mr. Massaad’s leadership, when Samena
Capital acquired 30.6% of the business and implemented
a “Value Creation Plan” aimed at unlocking value for
shareholders. As part of the Value Creation Plan, RAK
Ceramics started a re-focused strategy which aims
to streamline global businesses and identify its most
profitable operations.
In 2015, Mr. Massaad won the International Business

Stevie® Award for ‘Executive of the Year (Manufacturing)’.
The efforts of Mr. Massaad as a visionary CEO were also
Abdallah Massaad further recognized when he was awarded ‘Industry CEO
Chairman of the Year’ at the CEO Middle East Annual Awards 2015.
In 2016 and 2018, Mr. Massaad was shortlisted as a Top
100 CEO as part of Mediaquest’s Top CEO Awards in the
GCC. In 2017, Mr. Massaad was shortlisted as one of the
Mr. Abdallah Massaad, Chairman of the Company, is also
Top 100 Smartest People in the United Arab Emirates
a member of the Board of Directors of RAK Power Pvt.
by Arabian Business, and he was also honoured as one
Ltd. and RAK Security and Services (Pvt.) Ltd., subsidiary
companies of RAK Ceramics (Bangladesh) Limited. of the top 100 Most Sustainable CEOs by the World
Sustainability Congress.
Mr. Massaad has led RAK Ceramics PJSC as Group Chief
Executive Officer since June 2012. Having over 26 years of experience from field sales to
sales management, to product marketing, Mr. Massaad
He is also a representative on the board and management has highly developed business leadership skills in national
of several subsidiaries of RAK Ceramics. He is extremely and international markets. Prior to joining RAK Ceramics,
knowledgeable in the fields of ceramics and industrial Mr. Massaad was the General Manager of International
manufacturing, and is instrumental in helping companies Ceramics Company SARL (ICC) Lebanon.
engage in the forward and backward integration of the
ceramics supply chain. Mr. Massaad holds post graduate qualifications in
Management ‘DEA in Business Administration’ (1998)
His tenure with RAK Ceramics began in 2004, when and an undergraduate degree “Maitrise in Business
Mr. Massaad was invited as a Marketing Consultant to Administration – Marketing” from USEK (Université Saint-
assist the CEO office, and upgrade the branding and Esprit de Kaslik), Lebanon. He is fluent in Arabic, French
positioning of the company in preparation for future and English and also speaks basic German.
sales and marketing challenges arising from ambitious
expansion plans.
SAK Ekramuzzaman PRAMOD KUMAR CHAND

Managing Director Director
Mr. SAK Ekramuzzaman, Managing Director of the Mr. Pramod Kumar Chand is the Group Chief Financial
Company is one of the local investors having equity Officer of RAK Ceramics PJSC, Director of RAK Power
partnership with RAK Ceramics (Bangladesh) Limited. Pvt. Ltd. and RAK Security and Services (Pvt.) Ltd.,
Besides managing diversified business interests of RAK which are subsidiaries of this Company. He is also a
Group, he is involved in a number of other business member of the Audit Committee and the Nomination
interests in Bangladesh. and Remuneration Committee of RAK Ceramics
(Bangladesh) Limited.
Mr. Ekramuzzaman is also the member of the Board
of Directors of RAK Power Pvt. Ltd. and RAK Security Mr. Pramod has a wide experience in dealing with
and Services (Pvt.) Ltd., subsidiaries of RAK Ceramics corporate finance matters including treasury, working
(Bangladesh) Limited. capital financing, project finance, venture capital,
debt & equity capital market instruments, fund raising
Mr. Ekramuzzaman has been conferred as CIP Industry
processes and general management.
2017 by the Government of Bangladesh in recognition
of his outstanding contribution for industrialization and Mr. Pramod’s professional credentials span over 3
in the economy of Bangladesh. decades of post qualification experience with blue chip
employers including Birla Corporation Ltd., and OCL
India Ltd. in India, and Rak Investment Authority in UAE.
Mr. Pramod is a Member of the Institute of Chartered

Accountants of India (ICAI) and has been a rank holder
and winner of A F Ferguson award.
WASSIM MOUKAHHAL FAHEEMUL HUQ, BARRISTER-AT-LAW

Independent Director Independent Director
Mr. Wassim Moukahhal is an Independent Director of Mr. Faheemul Huq, Barristerat- Law, is the Independent
RAK Ceramics (Bangladesh) Limited and its subsidiary Director of the Company and also the Independent Director
companies. He is the Chairperson of the Nomination of subsidiary companies of RAK Ceramics (Bangladesh)
and Remuneration Committee and also a member of Limited. He is the Chairman of the Audit Committee and
the Audit Committee of RAK Ceramics (Bangladesh) also the member of the Nomination and Remuneration
Limited. He also serves as a Member of the Board Committee of RAK Ceramics (Bangladesh) Limited.
of Directors and the Executive Committee for RAK Mr. Huq completed his LL.B. (Hon’s) from the University of
Ceramics PJSC and as a Member of the Board of Dhaka and the University of Wolverhampton, UK, PGDL, Bar
Directors of RAK Porcelain. Vocational Course, Lincoln’s Inn, UK, Barristerat- Law and
was called to the Bar from Hon’ble Society of Lincoln’s Inn,
Mr. Moukahhal has more than 15 years of experience in UK. He is enrolled in the Appellate Division of the Supreme
private equity investments and is currently a Managing Court of Bangladesh. Mr. Huq is one of the senior Advocate
Director of Samena Capital Investments Limited in in the Supreme Court of Bangladesh with more than 20
Dubai, focusing on investments within the MENA years of experience in Bangladesh. Mr. Huq is a Member
region. He is also a member of the Board of Directors of of the Bangladesh Supreme Court Bar Association and the
Anghami and a member of the Investment Committee Dhaka Bar Association, Bangladesh.
of the Samena Special Situations Funds.
Mr. Huq is involved in many social activities such as the
Mr. Moukahhal previously worked at EFG-Hermes in Chairman of Fazlur Rahman Foundation and Farida Huq
Dubai where he was a Vice President in the Private Foundation, Life Member of Diabetic Association of
Bangladesh, Member of Patient Welfare Committee of
Equity and Infrastructure investments team. Prior to
Diabetic Association of Bangladesh, Member of Legal
EFG, he worked in the Private Equity Group for The
Affairs Committee of Diabetic Association of Bangladesh
National Investor (TNI) in the UAE.
and Member of Managing Committee of Dr. Farida Huq
Mr. Moukahhal holds an MBA from the Wharton School Memorial Ibrahim General Hospital, Kaliakair, Gazipur. He is
at the University of Pennsylvania and a Bachelor’s also Life Member of the Dhaka Club Limited and the Banani
degree in Economics & Finance from McGill University. Club Limited.
AWARDS & RECOGNITIONS
Silver Award
6th ICSB National Award- 2018

Manufacturing Companies Category
3rd Position
ICMAB Best Corporate Award 2018

Miscellaneous Manufacturing Category
Certificate of Merit
19th ICAB Award – 2018 Manufacturing Sector

INDUSTRY OUTLOOK AND POSSIBLE

FUTURE DEVELOPMENTS IN THE INDUSTRY
The ceramic tiles market is expected to grow with a of the advancements in digital printing technology,
CAGR of 7% in the period from 2020-2025 while the in order to provide ceramic tiles with a wide range of
industry experienced a sustainable growth @ 1.5% in design aesthetics. The ceramics tiles market accounts
tiles consumption (volume) over the last five years. for about 80% of the non-resilient flooring market.
Increasing construction spending is the key factor in However, governmental regulations pertaining to the
driving the ceramic tiles market globally. China, Japan, carbon emissions in the production of ceramic tiles
and India construction business are experiencing hamper the market growth. Ceramic tiles are widely
robust growth owing to the growth in the Asia-Pacific applicable in residential and commercial buildings,
and global market. Rising disposable income and high owing to their durability and crack resistant nature.
population, along with other factors are positively Moreover, the protective coatings on ceramic tiles offer
influencing the construction sector, which in turn, is high water resistance, stain protection, and cleanup for
driving the ceramic tiles market. Vendors make use the tile surface.
WORLD TILE CONSUMPTION BY GEOGRAPHICAL AREA - values in mn Sqm
% on 2018 world
Geographical Area 2014 2015 2016 2017 2018 consumption CAGR
EU 867 910 970 1,021 1,034 8% 4.5%
Other Europe 543 532 527 565 556 4% 0.6%
North America 462 507 547 569 565 4% 5.2%
South America 1,285 1,279 1,180 1,160 1,168 9% -2.4%
Asia 8,135 8,184 8,841 8,983 8,511 66% 1.1%
Africa 792 816 858 920 930 7% 4.1%
Oceania 48 52 56 53 54 0.42% 3.0%
TOTAL 12,132 12,280 12,979 13,271 12,818 100% 1.4%
CERAMIC TILE CONSUMPTION BY GEOGRAPHICAL AREA 2018 - % shares
1%
8% EU
7%
4%
Other Europe
5%
North America
66%
9% South America
Asia
Africa
Oceania
BANGLADESH CERAMIC INDUSTRY
Bangladesh ceramic industry has experienced 200 pc currently about 63 tiles, sanitaryware and tableware
growth in production over last five years. This growth manufacturer are enlisted into business of which 26 are
momentum is expected to sustain for a considerable actively in tiles operation. Investment in this sector by
period of time. The industry is also positioned to local as well as foreign investors already extended BDT
expand rapidly in the global market with its high quality 50 billion. At present, total yearly production capacity of
products, low labour costs and creative entrepreneurs. ceramic tiles stood at 120 mn Sqm which is expected to
With the latest trade ban imposed by USA on China, ‘an rapidly expand over a 3-5 years’ span. Sanitary ware has
import destination for tiles’ has turn its entrepreneur got already 7.5 mn pc’s installed capacity which is yet to
towards Bangladesh for heavy capital investment in grow further at the same pace of tiles.
ceramic industry for their own suitability. In Bangladesh
BANGLADESH: KEY INDICATORS - Values in millions of sq.m
2014 2015 2016 2017 2018 CAGR

Production 48 65 85 100 119 25%
Import 8 9 11 11 8 0%
Consumption 56 74 96 111 127 23%
BANGLADESH: KEY INDICATORS - mn (Sqm)
140
127
120 111
119
100 96
100
80 74 85
60 56
65
40 48
20 11 11
8 9 8
-
2014 2015 2016 2017 2018
PRODUCTION IMPORT CONSUMPTION

MANAGEMENT DISCUSSION AND ANALYSIS
Business and financial overview Accounting policies and estimation in the

RAK Ceramics (Bangladesh) is the country’s largest
preparation of financial statements and changes
and most respected tiles and sanitary-ware brand. thereon
The Company has anchored this position based on its Accounting policies and estimation for the preparation
market-leading capacities, world-class manufacturing of the Company’s financial statements and changes
assets, high production utilisation levels, optimised there on are disclosed in “Note no. 3 of the “consolidated
cost structures, vibrant sales and distribution network, financial statements” on page 114 of this annual report.
superior post-sales support and robust customer
engagement programs.
Comparative analysis of financial performance
An overview of the Company’s consolidated financial and position of the Company
operations is given below.
The detail of comparative analysis of the financial
performance and position of the Company’s
operational results is discussed in the “General review
of performance 2019” on page 32 of this annual report.
Financial performance
Comparative financial data of preceding five years are given below: (Amount in BDT mn)
Particulars 2019 2018* 2017 2016 2015

Sales 6,463.86 6,331.08 6,956.19 5,661.41 5059.30
Gross profit 1,907.74 2,013.40 2,704.97 2,409.36 2,162.41
Net profit after tax 754.03 890.63 1,018.01 915.25 1,094.34
Earnings per share (absolute BDT) 1.76 2.08 (Restated) 2.62 (Restated) 2.35 (Restated) 2.81 (Restated)
Net operating cash flow 1,585.22 567.62 1,835.93 1,103.14 920.24
Net asset value (NAV) 7,354.61 6,992.97 6,456.04 6,111.73 6,038.59
Net asset value per share 17.18 17.97 18.25 18.14 17.93
*2018 and 2019 complying IFRS-15
Financial performance vis-à-vis industry peers

Listed ceramics companies in Bangladesh comprise the following:
Year of Year of
Sl. Market
Name Product Category listing on listing on Year end
No. Category
DSE CSE
01 RAK Ceramics (Bangladesh) Limited Tiles and sanitary ware A 2010 2010 December 31st
02 Fu-Wang Ceramic Industry Limited Tiles Z 1998 1998 June 30th
03 Monno Ceramic Industries Limited Tableware A 1883 1995 June 30th
04 Shinepukur Ceramics Limited Tableware Z 2008 2008 June 30th
05 Standard Ceramic Industries Ltd. Tableware B 1996 1996 June 30th

Financial scenario of ceramics companies in Bangladesh:

(Amount in BDT mn)
For the year ended
For the year ended 30 June 2019
31 December 2019
Fu-Wang Monno
RAK Ceramics Shinepukur
Ceramic Ceramic Standard Ceramic
Particulars (Bangladesh) Ceramics
Industry Industries Industries Ltd.
Limited Limited
Limited Limited
Sales 6,463.86 595.17 1,071.08 1,533.12 323.85
Gross profit 1,907.74 225.74 199.50 340.42 68.25
Net profit/Loss after tax 754.03 80.78 72.65 62.71 10.05
Net asset value 7,354.61 1,519.53 2,152.45 4,267.93 105.78
NOCF per share (absolute BDT) 3.70 0.38 3.35 0.41 1.45
Net asset value per share (absolute BDT) 17.18 11.15 65.90 29.04 16.37
Earnings per share (absolute BDT) 1.76 0.59 2.22 0.43 1.56
Global economic scenario other complementary industries, such as transportation,

energy, heavy engineering and construction. Growth in
According to the International Monetary Fund, global the region is expected to rise to 5.5% in 2020, assuming a
economic growth for the year 2019 has been revised modest rebound in domestic demand and as economic
downwards from 3.4% to 3.3%. The downward revision activity benefits from policy accommodation in India
primarily reflects negative surprises to economic activity and Sri Lanka and improved business confidence and
in a few emerging market economies but improved support from infrastructure investments in Afghanistan,
momentum for emerging market and developing Bangladesh and Pakistan.
economies is projected to continue into 2020. As a
major contributor, China, is expecting to experience
4% reduction in growth rate. This is attributable to Bangladesh economic scenario
continued trade tension among global powers, tighter The economic growth of Bangladesh remained strong
financial conditions and higher commodity prices. in FY 2018-19, surging by 8%, with industry growing by
With protective trade measures taken by the US a much faster 11%.
administration and the UK exiting the EU, even growth
in the emerging and developing economies (including The Asian Development Bank indicates that Bangladesh
India) may not be able to keep pace with global GDP is the fastest-growing economy in the Asia-Pacific
growth trends. region. Considering the government’s ambitious goals
of achieving double-digit economic growth, measures
are being taken to better facilitate ease of doing
Asian economic scenario
business, along with the development of several mega
The outlook for South Asia remains broadly positive, projects, economic processing zones and incentives
despite of domestic headwinds in some of the for facilitating foreign investment, macroeconomic
economies. Although the first-round adverse impact factors that could possibly stimulate growth further
from the global trade tension is partly moderated by the look bright. The country is also investing in a variety of
region’s limited integration in global value chains, risks modernisation projects. At a time when many countries
from the recent escalation of US-China trade tension are looking inwards and closing their doors, Bangladesh
and regional geopolitical challenges have increased. is open for business.
Infrastructure development plays a fundamental role is This year, Bangladesh is on track to post record high
not only driving economic growth, but also accelerating annual GDP growth of 8.1%, up from 7.9% in 2018.
Risks and concerns Company and we are well positioned to capitalize on

the opportunities and deliver strong growth.
Details of risks and concerns facing the Company
are discussed in detail in the “Risk management and
control” on page 62 of this annual report.
We remain committed to the strategic goals and
will continue to focus on improving the operational
Future plan performance to ensure a sustaining enterprise.
Infrastructure industry is a strategic lever for growth and
development of the nations and has a multiplier impact
on the economy and greater society. Bangladesh
has the unique advantage of a young and motivated
population and highest economic growth, which (SAK Ekramuzzaman)
would drive sustainable demand for industries such
as ours. While the short-term global macroeconomic Managing Director
and geopolitical situation may continue to pitch some February 04, 2020
challenges, the future holds many opportunities for our
PERFORMANCE AT A GLANCE
Challenging year with Decisive

resilient financial and management actions
significant operational taken to strengthen
performance industry-leading
market positions
Greater stabilisation Expansion steadied

achieved at our fourth at our sanitary-ware
tiles manufacturing plant
plant
Revenue up by 2.1 Operating profit

percent to BDT of BDT 1,091.82
6,463.85 mn mn (2018: BDT
1,285.82 mn)
Earnings per share of 15 percent

BDT 1.76 (2018: BDT cash dividend
2.08) recommended for
2019
Continued to Reinforced human

strengthen our resource training and
governance skills development
structures and
practices
7.68 mn SQM: Tiles Consolidated turnover:

produced BDT 6,463.86 mn
8.04 mn. SQM: Tiles Profit after tax: 754.03 mn

delivered
1,421,260 pcs: Sanitary- EBIDTA: BDT 1,512.46 mn

ware produced
1,421,526 pcs: Sanitary- Operating cash flow

ware delivered growth: 1.8x
Tiles revenue increased Free cash flow increased

by 4.75% due to growth by 2.9x due to stringent
in the average sales price control over working
and increase in volumes by capital use across our
4.68%. operations.
Sanitary-ware revenue Short-term debt declined

moderated by 3.86% due by 71.2% due to improved
to price war in the market cash flow.
and increased competition
from low-end products.
Gross margin declined Net operating cash flow

by 2.3% due to lower per share increased to
revenues from sanitary- BDT 3.70 per share (2018:
ware division. BDT 1.46 per share)
OPERATIONAL HIGHLIGHTS
Significant operational Visible improvement

and resilient financial in working capital due
improvement as to close monitoring of
transformation process operational current assets
maturing and delivering and current liabilities.
results.
Strengthened mid- Continuous improvement

management team and on management information
the ensuing enhanced system (MIS) helping
capability has created a the business to create
future-ready business. competitive advantages over
the long-term.
Substantial improvements
in operational efficiencies
delivering significant
cost reduction across the
operations.
GENERAL OVERVIEW OF PERFORMANCE 2019
• A sustainable delivery of operational and capital

efficiencies to enhance Return on Capital
Employed (ROCE)
At RAK Ceramics (Bangladesh), • Continuously improving on our cost competitive
we are focused on delivering position
growth through innovation. Our • Managing the balance sheet prudently by means
of our financial risk management strategy; and
fundamental objectives are to
improve profitability and deliver • Prudent and disciplined resource allocation. The
two key principal objectives in the capital allocation
long-term sustainable value to framework are to strengthen the balance sheet
and to focus on value-based resource allocation
our shareholders, while taking
into account the interests of all Revenue and gross margin
stakeholders. The business experienced lower gross margin with
2.10% higher revenues to BDT 6,463.86 mn in 2019
Overview 2019 (2018: BDT 6,331.08 mn), reflecting competitive market
conditions and the decision to focus on volumes over
In 2019, RAK Ceramics achieved satisfactory progress pricing and profitability through scale. Prior period
with operational transformation initiatives delivering revenue has been restated, complying with IFRS 15,
improved operational and financial performance, which has been briefed on changes in accounting
compared to industry peers. The Company delivered policy.
mostly similar financial performance as the previous
year, with a slight increase in revenues 2.10% and gross The Company’s revenue from ceramic tile division
profit declining by 5.25% due to adhering group policy increased by 5.8% due to introduction of value-added
on IAS-2 for providing slow moving inventory and loss products, whereas sanitaryware division’s revenues
of material due to natural calamity (cyclone) during the decreased by 4.6% due to price war, The Company is
month of February 2019, representing a one-off event. accelerating its strategy to increase profit by improving
This performance reflects a combination of higher pricing discipline and reducing its exposure to low
revenues coupled with tighter control over operating margin business.
costs.
RAK is in the process of shaping the flooring industry by Return on capital employed
maintaining its leadership position in specific segments, Post tax return on capital employed (ROCE) is one
such as institutional sectors, builders in urban sectors, of the Company’s primary performance metrics
individual house builders, medium and small housing and is calculated as operating profit less tax, divided
developers in rural areas. by average net assets plus average net debt. The
RAK remains focused on delivering on our continuous Company continues to maintain ROCE at acceptable
improvement objectives, and prudently manage our limit 14.20% as at 31 December 2019 (2018: 17.31%).
balance sheet and cash flows. Operational working capital fell to 8.1% of sales (2018:
8.9%), particularly helped by actions to reduce levels of
inventory, down by BDT 220 mn at the year end to BDT
Our financial objectives 2,785.63 mn (2018: 3,005.62 mn).
Our drive towards growing shareholder value
sustainably is guided by our continuous focus on our
financial objectives:
Cash flow and leverage year restatements to previously recorded numbers, as

announced in the Company’s 2018 Financial Report, it
The Company generated BDT 1,887.13 mn of net cash has no impact on the results announced in this Report.
from operating activities (2018: BDT 855.39mn) during
the year by enhancing payment terms with supplier and
ensuring stringent credit controls with customers. The Ways to achieve operational efficiency
combination of increased operational cash flow and lower Operational efficiency is a key strength of RAK Ceramics.
spending on capital asset and reduced net debt enabled Over the period, we have designed and implemented
the Company to improve significant net cash flow to several process improvement initiatives which help
BDT 1,499.31 mn (2018 BDT: 829.80 mn). The Company us upgrade many operational key performance
continues to target a further improvement in the future. indicators to benchmark levels. Our continuous focus
on operational efficiency helps to achieve leadership
Changes in accounting policy in cost competitiveness, which enables protecting
business profitability through resilient performance.
IFRS 16 is a new standard relating to accounting for leases
which is effective for accounting periods beginning Operational efficiency through reducing operating
on or after 1 January 2019. The standard eliminates the costs – During the year 2019, the business has
classification of leases as either operating leases or finance taken all-around cost control through cutting down
leases for lessees and introduces a single lease accounting discretionary costs, eliminating duplicate spending
model where the lessee is required to recognize assets processes, sourcing directly from manufacturer/s and
and liabilities for all leases unless the lease term is 12 enhancing the level of finance control.
months or less, or the underlying asset is of low value. The
Operational efficiency through reducing working capital
Company has adopted the standard using the modified
– Apart from reducing operating cost, working capital
retrospective approach, which means that it has no
in use has reduced by BDT 220 mn. The Management
impact on the results announced in this Report.
has revised the inventory management control process
IFRS 15 establishes a comprehensive framework for during the year, implementing more stringent controls
determining whether, how much and when revenue on sourcing to minimize the lower levels of working
is recognized. It replaces existing revenue recognition capital in use.
guidance, including IAS 18 Revenue, IAS 11 Construction
Customer Value optimization through targeted pricing
Contracts and IFRIC 13 Customer Loyalty Programmes.
and unit profitability – This was achieved out of value-
IFRS 15 is effective for annual reporting periods beginning
added innovative products like double charge, scratch
on or after 1 January 2018, with early adoption permitted.
free, industrial tiles, water-efficient closets, etc., during
Company adopted IFRS 15 resulting representation of
the year. Incentivized dealer and increase dealer
Revenue after netting off all discounts, commission,
network protected market leadership which enabled
incentives and promotional bonus.
secured turnover growth over the last year.
Prior period restatement

Value creation and allocation summary
The Company has reviewed certain accounting
In support of our purpose and through effective and
policies and judgements to comply certain compulsory
disciplined efforts in managing the six capitals and our
standard for fair presentation of financials. This
continued commitment to stakeholders, value delivered
resulted in a number of areas like revenue, gross profit,
during the year reinforces our approach of aiming to be
marketing and selling expenses, being restated by prior
a credible stakeholder partner.
Value Creation
[Gross Turnover: BDT 9,370.52mn] – [Purchase of Material and
Service BDT 3,771.20mn] + [Other Income BDT 79.08mn ] =
[Value Created: BDT 5,678.40mn]
Value delivered RAK Ceramics

Direct Tax, VAT and others paid to the Government 48.12%
Particulars Y-19 Y-18 Change %
Reinvested in group 21.10%
Revenue 6,408.00 6,269.20 (restated) 2.21
Wages and benefits paid 16.72%
Dividend paid 13.70% Revenues increased by 2.21% to BDT 6,408.00 mn in
Provided to loan capital 0.36% 2019 from BDT 6,269.20 mn in 2018 (restated).
Financial perfomance Particulars Y-19 Y-18 Change %
Amount in BDT mn PAT 793.65 883.18 (10.14)
Profit after tax decreased by 10.14% to BDT 793.65 mn

in 2019 from BDT 883.18 mn in 2018.
Sales 6,463.86 6,331.08 (restated) 2.10
Sales increased by 2.10% to BDT 6,463.86 mn from BDT RAK Power

6,331.08mn (restated) in 2018 mainly due to increase of
sales of tiles division. Particulars Y-19 Y-18 Change %
Revenue 352.40 392.09 (10.12)

Gross Profit 1,907.74 2,013.39 (restated) (5.25)
Gross profit decreased by 5.25% to BDT 1,907.74 mn Particulars Y-19 Y-18 Change %
from BDT 2,013.39 mn (restated) in 2018, mainly due to
PAT 50.67 86.45 (41.39)
significant increase major input material natural gas and
other associated raw material input. Profit after tax decreased by 41.39% to BDT 50.67 mn in
2019 from BDT 86.45 mn in 2018, with decrease in sales
to the extent of 10.12% to BDT 352.40 mn in 2019 from
PAT 754.03 890.62 (15.34) BDT 392.09 mn in 2018.
Profit after tax decreased by 15.34% to BDT 754.03 mn RAK Security and Sevices
from BDT 890.62 mn in 2018., mainly due to lower gross
profit and spending money on brand and marketing Particulars Y-19 Y-18 Change %
including inflationary impact on other selling, general
and administration overhead. Revenue 107.56 159.35 (32.50)
EBITDA 1,512.46 1,691.92 (10.61) Particulars Y-19 Y-18 Change %
EBITDA decreased by 10.61% to BDT 1,512.46 mn from BDT PAT (1.22) 2.56 (147.66)
1,691.92 mn in 2018, because decreased of profit after tax.
Business incurred loss to BDT 1.22 mn due to decrease
Particulars Y-19 Y-18 Change % in sales to BDT 107.56 mn (BDT 159.35 in 2018)
EPS (Absolute BDT) 1.76 2.08 (restated) (15.38)
Operating profit
EPS decreased by 15.38% to BDT 1.76 from BDT 2.08
per share in 2018 (restated), mainly due to lower profit Particulars Y-19 Y-18 Change %
after tax and increased number of shares due to offer
stock dividend in 2018. Operating profit 1,091.82 1,285.82 (15.09)
Revenue mix:
The ceramics business accounted for a significant share Net operating profit decreased by 15.09% to BDT
of the Company’s revenues; other businesses (power and 1,091.82 mn in 2019 from BDT 1,285.82 mn (restated)
security) made contributions to the consolidated topline. in 2018.
Operating expenses The Company’s operating expenses (operating,

marketing and administrative) increased by 5.98% to
BDT 5,412.62 mn in 2019 from BDT 5,107.32 mn in
Operating expenses 5,412.62 5,107.32 5.98 2018 in tandem with operational volume and country
inflation. Operating cost as a proportion of sales
increased by 3.07% in 2019 against 2018.
Operating cost matrix

2019 2018 Increase/
Particulars
Amount (BDT mn) Proportion of sales (%) Amount (BDT mn) Proportion of sales (%) (Decrease)(%)
Cost of goods sold 4,556.11 70.49 4,317.69 68.20 5.52
Marketing expenses 456.00 7.05 411.36 6.50 10.85
Administrative expenses 400.51 6.20 378.27 5.97 5.88
Administrative expenses by BDT 5.11 mn in 2019. Bank charges decrease to BDT

2.56 mn in 2019 from BDT 4.29 mn in 2018.
Administrative 400.51 378.27 (restated) 5.88 Analysis of the balance sheet shareholders’ fund
expenses
Administrative expenses increased by 5.88% to BDT
400.51 mn from BDT 378.27 mn was in 2018 mainly Share capital 4,279.69 3,890.62 10.00
due to annual inflation and increase other associated Share premium 1,473.65 1,473.65 -
overheades.
Retained earnings 1,601.28 1,628.69 (1.68)
Shareholders' fund 7,354.61 6,992.97 5.17
Marketing expenses
Shareholders’ fund increased by 5.17% to BDT 7,354.61
Particulars Y-19 Y-18 Change % mn in 2019, up from BDT 6,992.97 mn in 2018.
Marketing 456.00 411.36 (restated) 10.85
expenses Non-current assets
Marketing expenses increased by 10.85% to BDT 456.00 Fixed assets additions

mn from BDT 411.36 mn (restated) was in 2018 mainly
During the year 2019, the total additions to the fixed
due to increase in branding and business promotion
assets, including subsidiary companies, was BDT 229.66
expenses.
mn. The major additions to the fixed assets were Purchase
of Plant & machinery, building, mobile plant etc.
Financial expenses
Capital work-in-progress
Capital work-in-progress also includes construction
Financial expenses 27.32 39.39 (30.64) work for factory staff residential building, plant and
machinery etc.
Interest expenses against loan decreased by BDT 21.52
mn and Interest expenses against lease liability increased
Current assets The Company has a policy of maintaining adequate

inventory of key inputs to ensure uninterrupted
Inventory operations as most of the materials sourced globally.
Particulars Y-19 Y-18 Change % Trade and other receivables
Finished goods 701.96 872.17 (19.52) Particulars Y-19 Y-18 Change %
Raw materials 798.91 839.61 (4.85)
Trade receivables 813.48 805.88 0.94
Stores and
consumables 951.86 1,011.84 (5.93) Other receivables 46.48 65.91 (29.48)
spares Trade and other receivables 859.96 871.79 (1.36%)
Work-in-process 104.69 105.32 (0.60)
These largely comprise of trade receivables where in
Goods-in-transit 228.21 176.67 29.17 average receivables cycle is maintain as per company’s
Total Inventory 2,785.63 3,005.62 (7.32) creadit pollicy.
Asset composition
2019 2018 Increase/
Particulars
Amount (BDT mn) Proportion of assets (%) Amount (BDT mn) Proportion of assets (%) (Decrease)(%)
Non-Current assets 3,913.70 30.67 4,031.50 33.08 (2.92)
Current assets 8,846.16 69.33 8,155.35 66.92 8.47
Total 12,759.86 100.00 12,186.85 100 4.70
Cash and bank balance Current liabilities
Particulars Y-19 Y-18 Change % Particulars Y-19 Y-18 Change %

Cash in hand 3.63 5.27 (31.12) Current liabilities 5,187.17 4,907.75 5.69
Cash at bank 1,495.68 824.54 81.40
Current liabilities increase by 5.69% to BDT 5,187.17 mn
Total 1,499.31 829.81 80.68
in 2019 from BDT 4,907.75 mn in 2018, mainly due to
Cash and bank balances include cash in hand of BDT better negotiation on payment terms.
3.63 mn, balances in bank accounts of BDT 704.17 mn
and fixed deposits of BDT 791.51 mn. Liquid balances of Analysis of cash flows
cash and bank are necessary for the smooth functioning
of the business. Cash flow from operating activities
Equity and liabilities Operating cash flow increased by 179.27% to BDT

1,585.22 mn from BDT 567.62 mn in 2018 mainly due to
Capital and reserves controlled inventory stock and stringent creadit policy
in place.
The equity capital comprised 4,279,687,010 ordinary
shares of BDT 10 each. The market value of the share is Cash flow from investing activities
BDT 28.70 (as on 31 December 2019, DSE) resulting in a
market capitalization of BDT 12.28 bn. Net cash used in investing activities decreased by 9.92%
to BDT 190.24 mn in 2019 from BDT 211.18 mn in 2018
Non-current borrowings due to less outflow of cash for acquisition of Property.
There is no non-current borrowings in this year. Cash flow from financing activities
Net cash used in financing activities reduced by 20.26%
Current borrowings to BDT 725.28 mn in 2019 from BDT 909.55 mn in 2018
Current borrowings include current portion of long due to less repayment of term loan by 67.45% to BDT
term foreign currency loan of BDT 89.23 mn. 88.20 mn in 2019 from BDT 270.96 mn in 2018.
SEGMENT WISE PERFORMANCE
A. RAK Ceramics (Bangladesh) Limited B. RAK Power Pvt. Ltd.

Installed capacity: 13 MW
i) TILES
Highlights 2019
Installed capacity: 10.32 mn sqm. annually
The power plant capacity was available in excess of 90%
Highlights 2019 of installed capacity during the year 2019. Significant
Capacity utilization was 74% at our tiles plant in 2019 portion of generated power has primarily transmitted
to meet the requirements of the parent company, RAK
Production of 2019 was 7.68 mn sqm; 10.38% lower Ceramics (Bangladesh) Limited.
then previous year.
Road map in 2020 C. RAK Security and Services (Pvt.) Ltd
Explore new markets, especially those of the neighboring The Company is in the business of providing Security
countries. and other services to group companies as well as non-
group customers.
Focus on process efficiency and robust cost control.
Highlights 2019
II) SANITARYWARE The Company reported revenue of BDT 107.56 mn

in 2019, against BDT 159.34 mn in 2018. The decline
Installed capacity: 1.45 mn pcs. annually.
was primarily due to income from labour services
Highlights 2019 moderating by 32.50%, as compared to 2018. The
Company’s net profit after tax stood at BDT (1.22) mn,
Our Sanitaryware capacity was 98% utilized. against BDT 2.56 mn in 2018.
Production of 2019 was 1.42 mn pcs. 4.33% lower then Road map 2020
previous year.
To explore and expand customer base in the country by
Road map in 2020 leveraging its attained skills and experience.
Continued focus on production and sale of premium
products.
Explore new markets, especially those of the neighboring
countries.
Segment Reporting 2019 (Amount in BDT mn)
Particulars RAK Ceramics RAK Power RAK Security Adjustment Entity Total
Sales 6,408.00 352.40 107.56 (404.10) 6,463.86
Gross Profit 1,799.93 82.75 16.36 8.7 1,907.74
Profit before Tax 1,059.30 75.40 (1.22) (89.08) 1,044.40
Profit after Tax 793.65 50.67 (1.22) (89.07) 754.03
YoY PERFORMANCE – HOW

WE MEASURE OUR PROGRESS
Definition - Earnings per share (EPS) is calculated as the Definition – Market price of stock over the period.
company’s profit divided by the outstanding number of Market price of stock multiplied by number of ordinary
ordinary shares. This is the primary determinant to value shares determine market capitalization or value of the
the share price. company.
Performance Performance
EPS - RESTATED STOCK PERFORMANCE
2.56 66.90
2.38 59.90 61.90
2.08 2.14
1.76
39.00
28.70
2019 2018 2017 2016 2015 2019 2018 2017 2016 2015
Observation – Dhaka Stock Exchange recorded

Observation – EPS has reduced by 0.42 paisa over
negative index return 17.3% last year among the Asian
2018, primarily because of reduced net profit and
countries, due to various macroeconomic factors
increased number of shares due to offer stock dividend
which has had a reciprocal impact on our stock price.
in 2018.
Definition - The net asset value (NAV) per share Definition - Dividend yield is the financial ratio that
represents the net value of an entity per share and is measures the quantum of cash dividends paid out to
calculated as the equity divided by number of total shareholders relative to the market value per share.
outstanding shares.
Performance
Performance
DIVIDEND YIELD
NAV PER SHARE
5.2
17.97 18.25 18.14 17.93
17.18
3.23 3.74
2.5
1.67
2019 2018 2017 2016 2015

2019 2018 2017 2016 2015 Observation – Dividend yield has increased significantly,
Observation – Net value of asset per share has reduced as the company has recommended cash dividend
by 0.79 primarily due to increase of number of shares which is subject to approval at the AGM.
for declaring bonus shares in 2018.
Definition - The return on shareholders’ equity ratio Definition – The gross profit margin is the ratio of gross
shows how much money is returned to the owners as a profit expressed as percentage over to turnover/sales.
percentage of the money they have invested or retained Gross margin ratio only considers the cost of goods sold
in the company. in its calculation because it measures the profitability of
selling inventory.
RETURN ON SHAREHOLDERS FUND GROSS PROFIT MARGIN %
18.12 42.55 42.74

39.90
15.77 14.98
12.74 29.51 31.80
10.25
2019 2018 2017 2016 2015 2019 2018 2017 2016 2015
Observation – Number of ordinary shares has been Observation – Gross profit margin percentage has
increasing over the last three years and insignificant decreased due to impact of IFRS 15 adoption and
increment of profit after tax has caused lower index. adverse impact of loss of material due to natural
calamity (cyclone).
Definition – The Price Earnings Ratio (P/E Ratio) is the Definition – Earnings before depreciation, interest, tax
ratio for valuing a company that measures its current and amortization is a measure of a company’s overall
share price relative to its earnings per-share. financial performance. EBITDA margins provide investors
a snapshot of short-term operational efficiency.
Performance
Performance
PE RATIO
EBITDA (%)
22.76
20.80 20.58 34.73
16.29 17.04 30.27
26.72 27.25
23.40
2019 2018 2017 2016 2015

2019 2018 2017 2016 2015
Observation - Dhaka Stock Exchange recorded
negative index return 17.3% last year among the Asian Observation – Due to lower down gross margin as
countries, due to various macroeconomic factors explained earlier causing falling down all other margin
which has had a reciprocal impact on our stock price. parameter, even though company reduce the cost of
interest and tax.
Definition – Current ratio that measures a company’s Definition – Market capitalization is the aggregate
ability to pay short-term obligations like debt, payable market value of a company in terms of BDT. it is
or those due within one year. This is computed current computed based on the current market price (CMP) of
asset over current liability. its shares and the total number of outstanding shares.
CURRENT RATIO MARKET CAPITALIZATION
1.71 22,535
1.66 1.59 1.63 1.60 21,186 20,851
15,173
12,283
2019 2018 2017 2016 2015 2019 2018 2017 2016 2015
Observation – Company performing well year over Observation - Dhaka Stock Exchange, recorded
year while monitoring current asset like cash, negative index return as mentioned in PE ratio
receivables, inventory and current liability payable observation, which causing lower market price of share.
within a year like short term loan, payable etc. Market volatility, concerns to the waning investors’
confidence, which has also an impact on RAK market
price of share.
Definition – Debt to Equity Ratio (D/E) is calculated by Definition – Return on Capital Employed (ROCE)
dividing a company’s total liabilities by its shareholder measures how efficiently a company can generate
equity. It is a measure of what extent a company is profits from its capital employed by comparing net
financing its operations through debt versus equity funds operating profit to capital employed.
DEBT EQUITY RATIO RETURN ON CAPITAL EMPLOYED (%)
0.20 22.91
0.19 20.84 19.81
17.31
0.14
14.02
0.06
0.01
2019 2018 2017 2016 2015 2019 2018 2017 2016 2015
Observation – Company managing debt very well and Observation - Due to lower gross margins as explained
sustainably maintaining optimum leverage. earlier caused a decline in all other margin parameters,
including return on capital employed.
VALUE ADDED STATEMENT
2019 2018
Particulars Amount in BDT % Amount in BDT %
Revenue 9,370,529,566 9,267,871,479

Other income 79,082,208 104,074,247
Less: Payments to suppliers for materials and services 3,771,203,013 3,770,591,133
Value-added 5,678,408,761 100% 5,601,354,593 100%
Distribution of value-added
To the Government: Income tax, duties and value-added tax 2,732,444,417 48.12% 2,610,563,558 46.61%
To the suppliers of capital
Dividends to shareholders 778,124,906 13.70% 707,386,291 12.63%
To employees
Wages, salaries, bonus, commissions, pensions and other benefits 949,390,122 16.72% 927,962,020 16.57%
To providers of finance
Interest and bank charges on borrowings 20,449,121 0.36% 38,583,463 0.69%
Retained for reinvestment and future growth
Depreciation 443,974,986 7.82% 426,234,498 7.61%
Retained profit 754,025,209 13.28% 890,624,763 15.90%
Total 5,678,408,761 100.00% 5,601,354,593 100.00%
13.28% 15.90%
48.12% 46.61%
7.82%
7.61%
0.36%
0.69%
2019 2018
16.72% 16.57%
13.70% 12.63%
To the Government : Income tax, To the Government : Income tax,

duties and value-added tax duties and value-added tax
Dividends to shareholders Dividends to shareholders
Wages, salaries, bonus, commissions, Wages, salaries, bonus, commissions,
pensions and other benefits pensions and other benefits
Interest and bank charges on borrowings Interest and bank charges on borrowings
Depreciation Depreciation
Retained profit Retained profit
VALUE ADDED YEAR OVER YEAR PAY TO SHAREHOLDERS – DIVIDEND
778.12
5,678
5,601 707.39
2019 2018 2019 2018
PAY TO GOVERNMENT – TAXES PAY TO BUSINESS - REINVESTED
2,732.44
443.97
2,610.56
426.23
2019 2018 2019 2018
PAY TO EMPLYOEES – WAGES PAY TO FINANCERS – LOAN CAPITAL
949.39 20,450
927.96 38,583
2019 2018 2019 2018

ECONOMIC VALUE-ADDED
Amount in BDT
Particulars 2019 2018

Net operating profit after tax (NOPAT) 801,436,113 950,521,692
Total capital employed 7,354,611,900 7,279,106,371
Cost of capital (in %) 11% 11%
Cost of capital (COC) 790,899,501 800,701,701
EVA = NOPAT - COC 10,536,613 149,819,991
MARKET VALUE-ADDED STATEMENT

Particulars 2019 2018 2017
Market value of shares outstanding 12,283 15,173 21,186
Book value of shares outstanding 7,355 6,993 6,456
Market value-added 4,928 8,180 14,730
21,186
15,173 14,730
12,283
8,180
7,355 6,993
6,456
4,928
2019 2018 2017
MARKET VALUE OF SHARES OUTSTANDING BOOK VALUE OF SHARES OUTSTANDING MARKET VALUE-ADDED
CONTRIBUTION TO NATIONAL EXCHEQUER
Serial Amount in
Particulars
No. BDT
1 Corporate income tax 284,231,871
Withholding tax and VAT

2 from suppliers and service 234,654,085
providers
3 VAT 1,231,499,984
4 Supplementary duty 720,710,431
5 Other duties/taxes 174,202,712
Total 2,732,444,417
ABOUT THE INTEGRATED REPORT

Overview ethical standards and compliance. We are committed to
effective governance across the business and, over the
RAK Ceramics (Bangladesh) presents its 2019 integrated past year have strengthened our governance practices
annual report to appraise shareholders of operational, to be able to improve our stewardship.
financial and governance developments, and to outline
the challenges encountered in a tough year for the group. Our integrated annual report is focused primarily on our
shareholders, the primary providers of our financial capital,
Our Directors believe that good governance is the and the wider investor community. We also recognise
foundation for sustainable value creation, with the that several other stakeholder groups are important to
Company’s reporting being anchored on the broader us and influence our ability to create value, including our
governance principles of accountability, transparency, employees, customers, suppliers and regulators.
INTEGRATED REPORT TO OUR PRIMARY STAKEHOLDERS
Reporting Boundary for the Integrated Report

(Risk, Opportunity and Outcome)
Financial Reporting - Entity
(Control and significant influence)
RAK CERAMICS (BANGLADESH) LTD
RAK Power Pvt Ltd RAK Security and Services Pvt Ltd
Employees Customers Suppliers Business Communities Others

Partners
Reporting principles (Bangladesh) and two of its subsidiaries, for the financial
year 1 January 2019 to 31December 2019.
The Financial and statutory data presented in
compliance with the requirements of the Companies
Act 1994, Bangladesh Securities and Exchange Reporting period
Commission and International Financial Reporting The information and analysis is reported for the period
Standards. This report has been prepared complying 1st January 2019 to 31st December 2019. For key
with the framework of the International Integrated performance indicators, comparisons and analysis for
Reporting Council, published in 2013, and discloses the last three to five years have been incorporated in the
performance comparing key performance indicators report to provide complete information for association
applicable to RAK Ceramics. Our sustainability report is and reference for the readers.
prepared as per GRI Sustainability Reporting.
Reporting scope and boundary Materiality of disclosure

The integrated annual report covers the financial The principle of materiality continues to be applied in
and non-financial performance of RAK Ceramics determining the content and disclosure in the integrated
annual report. This covers internal or external issues that assessment framework. We apply a triple assurance
we believe could have a material impact on the Company’s model to enhance the assurance obtained from the
ability to create value. This report excludes the disclosure management, internal audit cell and external assurance
of price sensitive information or any other details that providers, while promoting a strong ethical work
could compromise the Company’s competitive position. environment to ensure the highest level of compliance.
Internal control process is monitored and evaluated
under the direction of internal audit, while external audit
Assurance
cover key controls accounting matters in the course of
The content of the integrated annual report 2019 has their audit. The Board and Audit Committee assessed
been reviewed by the management. The Company’s the effectiveness of internal controls mechanism for
independent auditor, ACNABIN, Chartered Accountants (an the year ended 31st December 2019 as satisfactory.
independent member of BAKER TILLY INTERNATIONAL)
has provided assurance on the annual financial statements
Management responsibility
and corporate governance certification by the M/s Jasmin
& Associates, Chartered Secretaries. All material and significant disclosure reported are
aligned with the applicable disclosure requirements as
per Companies Act 1994, and Bangladesh Securities and
Disclaimer
Exchange guidelines and notification issued time to time.
Shareholders will note that the integrated annual report To enhance governance inaccuracy, risk management
includes forward-looking statements which relate to and controls, the contents of this Report have been
the possible future financial position and results of reviewed by the senior executives of the Company.
the company’s operations. These are not statements
of fact but rather statements by the management
Availability of the annual report
based on current estimates and expectations of future
performance. No assurance can be provided on these The Annual Report of the Company is sent to all
forward-looking statements, and shareholders are shareholders through email in due course of time whose
advised to exercise caution in this regard. email address is available with us as per CDBL record on
record date and copy of the same is also made available
on the website of the Company: http://www.rakcerambd
Internal control and governance
com. In case of non-receipt of the Annual Report sent
The Board, in association with the Audit Committee, through email, shareholders are welcome to collect the
monitors and evaluates RAK’s internal control and risk same from the Registered Office of the Company.
REGULATORS
BOARD
MANAGEMENT CONTROL
(Policy, Rules, Regulations,)
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ACCELERATING VALUE-BASED GROWTH

At RAK Ceramics, Our primery objact to be the lowest To achieve these objectives, RAK Ceramics has
comparative cost-efficient producers of ceramics also identified a set of core capabilities, or strategic
tiles in the industry. To respond to challenges, enablers, which support the attainment of our strategic
such as improving productivity, maintaining cost objectives. We refined our strategy to drive sustainable
competitiveness and being innovative in a fast- value creation, sharpened our focus to leverage our
changing and challenging business environment, RAK core strengths, while embedding increased discipline in
Ceramics needs to strengthen its market leadership how we allocate resources. Our value-based strategy
through defined a set of strategic objectives. is anchored on leveraging our competitive strengths in
the ceramics industry.
VALUE-BASED STRATEGY TO DELIVER SUSTAINABLE GROWTH
Optimize return Through

Growth and dividend (RS001) Focused Strategic Segment (RS002)
Ceramics Tiles and Sanitary ware industry Operate in chosen value added market
are sensitive to business cycle. it is segment like institutional, builders &
essential to build a portfolio of products Developers on urban sector and individual
and services that can provide protection home builders in rural sector.
of our revenues and profitability.
RAK STRATEGIC
OBJECTIVES (RSO)
Industry leadership in
Leadership in ceramics
Cost efficiency (RS004)
Technology (RS003)
Maximize scale of Operation for
Technology, Product and Process
benefiting Economize of Scale and aspire
Innovation to deliver innovative value
to set industry standard on operational
added product and service
efficiency
Delivering value through controllable Leveraging technology (RSE02)

factors (RSE01)
Drive Innovation | Scale through
Sustainable Operations | Cost technology optimisation | Integrated value
Optimization | Volume Growth chain
RAK STRATEGIC
ENABLERS
(RSE)
Robust business foundation (RSE03) Design, innovation and agility (RSE04)
Optimum working capital | Improved cash Creativity on designs | Agility | Employer of

flow | Managing optimal capital structures choice
Translated to:
Stakeholder value creation | Competitive dividend payout | Consistent improved cash flow |
Strong stakeholder relationships | Loyal channel partners | Employee bondings
HOW WE DO BUSINESS
We manage an integrated value chain process from creating superior value

to capture value through lifestyle products. Each product we produce is
crafted to cater to those who appreciate the finer things in life. Though out
this process we identify opportunity, risk, material issue that can impact
delivering value to sustainable enterprise.
OUR VISION USING SIX CAPITAL OUR VALUES

Financial Responsibility
Our vision is to be Manufactured Accountability
the world’s leading Intellectual Integrity
ceramics lifestyle Human Impartiality
solutions provider. Social and relationship Efficiency
Natural Discretion
RAK CERAMICS TILES - RAK Ceramics is a pioneer in introducing hi-tech innovations

that are a breakthrough in the industry. A wide range of technologies are used at the
Strategy company’s plant including digital printing technology, double charge, roll feed and
other advanced technologies such as granitech, technoslate, twin press, dry glaze and
RS 001 waterjet to name but a few.
Deliver value by optimizing and leveraging designed tiles that suits lifestyle.
RS002 Focusing growth in value added larger tiles in differentiated market.
Explore, develop and procure raw materials worldwide.
RS003 Continuously improve value chain performance
RS004
SANITARYWARES - RAK Ceramics product development has created a very wide range
of products with carefully niched details and quality design to suit international tastes,
incorporating the latest rimless technology. RAK Ceramics sanitary ware range has the
perfect solution for bathroom, whatever customer have imagined. Our exquisite range of
sanitartywares completes the lifestyle offering to millions of our customers across the
country.
Deliver value by optimizing and leveraging designed sanitaryware that suits changing
lifestyle.
Focusing growth in value added water efficient closet at differentiated market.
Explore, develop and procure raw materials worldwide.
Continuously improve value chain performance
What differentiated us
• Our highly skilled people with technical and • Strong brand recall in Bangladesh
operational capabilities
• Customer’s first choice
• Strong customer relationships
• Effective and efficient dealer’s network
• Our ability to manage complex integrated value
chains and production facilities
Delivery options
Multiple delivery
locations
On time in full delivery
Specialist delivery
Site delivery
Self-pickup option
Post-sales support Product information

Stressed-free returns Technical data with
Selected customer credit rich content
Tax compliant billing Website support
Mock-up support
WHAT WE
SERVE TO OUR
CUSTOMER
Display center services Bidding and tendering
Dedicated sales consultant Value engineering
Plenty of stock on display Project-specific tendering
Signature collection On-site consultancy
Room visualiser
Sales channels
Customised solutions Inside - sales consultant
Customised HD printing Outside - field sales support
Customised size
Dedicated call center
HOW WE CREAT VALUE USING SIX CAPITALS
KEY INPUT VALUE CREATION
SIX CAPITALS OUR VISION OUR STRATEGIC
Financial capital - We do allocate resources respecting Our vision is to be • Optimize Return

financial discipline for delivering our strategic outcome. The
traditional yardstick of performance, this capital includes the world’s leading through Growth
funds obtained through financing or generated by means of and Dividend
productivity such as we use cash generated by our operations ceramics lifestyle (RSO01)
and investments, as well as short term debt to operate our
business and fund growth
solutions provider.
• Focused Strategic
Segment (RSO02)
Manufacturing capital – This encompasses physical
infrastructure or technology pertaining to this, such as
equipment and tools. We have invested manufacturing capital
as plant and equipment, land and building, to convert natural
clay into lifestyle building product and operate consistently.
Intellectual capital - This accounts for the intangibles TILES PRODUCTION PROCESS
associated with brand and reputation, in addition to patents,
Processed raw material
copyrights, organizational systems and related procedures.

Òur proprietary or latest technologies, licences, procedures
and protocols support RAK’s competitive advantage. Our focus
on innovation and design reinforces our drive for operational
efficiency and resource optimisation, while adhering to the
Standard Operating. Raw Milling Pressing
Outbound logistic
Inbound logistic
Materials Spray driyng
Customer
Human capital - To grow and operate consistently, we
require skills, knowhow, innovative & experience personnel.
We focus on being an inclusive organisation, building and
retaining critical skills and promoting work culture to ensures Firing Glazing Drying
safety and overall well-being of our employees.
Natural clay
Social and relationship capital - To create a supporting

environment for operations and investment, we integrate the
needs of our stakeholders into our business and we deliver on
our commitments. We actively engage stakeholders building Polishing Packing Glaze
preparation
long-term, transparent and trust-based relationships to
achieve our value based growth strategy.
Natural capital – We require natural clay, sand, gas, air, CREATE ASSESS
water, land and energy to convert clay into a lifestyle flooring. Products to capture Impact on our material
We strive for excellence in resource efficiency to mitigate our
opportunities matters
environment footprint.
RISK MANAGEMENT GOVERNANCE CODE REGULATORS

PROCESS OUTPUT OUTCOME
OBJECTIVES OUR VALUES TURNOVER

6,463.85 mn
• Leadership • Responsibility
in Ceramics
• Accountability
Technology Profit before tax
(RSO03) • Integrity BDT 1,044.40mn
• Industry • Impartiality
leadership in
• Efficiency
Cost Efficiency
• Discretion TILES Market
(RSO04)
7.68 MILLION capitalization
SQUARE MITER
BDT 12,283 mn.
• RED BODY AND
SANITARY WARE PRODUCTION PROCESS WHITE BODY
CERAMICS TILES
Processed raw material
• GRES WHITE Value added

BODY TILES
BDT 5,678 mn.
• PORCELAIN TILES
Clay,Quartz Milling Casting
Outbound logistic
Inbound logistic
and Feldspar to Slip

Customer
To employees
949.39mn
Glaze spraying Repair green Drying
body
Natural clay
SANITARY WARE
1.42 MILLION PIECES To government
• RIMLESS WCS 2,723.45mn
Firing Sorting Packing
• WATER CLOSET
• WASHBASINS
• ACCESSORIES
EVALUATE ALLOCATE To investor
Impact on our Resources to optimize 778.12mn
strategic objectives value based growth
ENGAGED EMPLOYEES SAFE WORKPLACE

PERFORMANCE OF SIX CAPITALS

FINANCIAL CAPITAL
KEY INPUTS VALUE CREATION (OUTCOME) OUTLOOK
2019 2019 2018
Company focusing both
1 Net Worth 7,355 1. Turnover 6,434.86 6,331.08 on increaseing net worth
2 Market Capitalization 12,283 2. EBITDA Margin %age 23.40% 26.72% and market capitalization
3 Finance Income 33 3. Net Debt to Equity 0.01% 6.00% for the investors.
4 Short Term Debt 89 4. Cash Generated 1,585.22 567.62
MANUFACTURING CAPITAL
2019 2018 Company planning to
2019 increase more value
(BDT. mn) (BDT. mn)
creastion using existing
1 Property plant and
3683.73 Capital Expenditure 729.52 307.84 asset, alternatively incrase
equipment
capacity utilization.
2 Asset under work in progress 177.64 Capex Work in progress 177.64 127.78
Optimum balance of
3 Tiles Capacity 10.32mn SQM Dep.and Amortization 450.17 431.70
Financial Leverage
4 Sanitaryware Capacity 1.45 mn pcs Impairment of Asset 10.20 -
INTELLECTUAL CAPITAL
1 Singnificant number of trade Company introduced new design and new Company integrate design and
Mark Filed category of tiles and sanitary ware continiously. innovation in its DNA to offer best life
2 Diversified leadership team Company has over 2700 active model in tiles style products. Company is offering
category and 41 models in sanitary ware category. new design every quarters to make
3 Innovative design team our product competitive
HUMAN CAPITAL
2019 2018 We are emphasizing and encouraging
1 Efficient and productive young Wages & Benefits 949.39 927.96 employee Training and development
work force hours year over year. We integrate
2 Diversified leadership team driving Number of Employees 1570.00 1,870.00 succession plan for critical position
culture of growth on roll on our HR management system.
3 Low turnover on senior/middle Company planning to inagurate
management team staff residential building soon to
support better and safe living of our
employees.
NATURAL CAPITAL
1 Globally sourced natural resources We impact negatively on natural
Company has installed crusing plant for re-use
2 Government supplyed natural Gas capital by using non-renewable
or better use of rejected products through re-
3 Optimum usage of water resources wherever possible and
cycle process. Water Effluent Treatment plant
through our emission and wastes,
significantly adding value over the environment
4 Captive source of energy which we are trying our best to
impact and recycle of water resources.
minimize.
SOCIAL AND RELATIONSHIP CAPITAL

1 Pan Bangladesh basis 150+ dealers Tax Paid to the Government BDT: 2732.44mn We support stakeholder
2 Dedicated customer relationship of in 2019 ( BDT: 2610.56 in 2018). Company has engagement throughout the
15 member team organized customer engagement program 3 year to influence our relationship
times in 2019 ( 2 times in 2018) and employee and social awarness. We boost
3 Supplier base more than 2500+ engagement program 14 times in 2019 ( 1 manufactured, financial and
4 Spend on Social cause 1.1mn times in 2018). intellectual capital.
SIGNIFICANT EXTERNAL ENVIRONMENT CHALLENGES IN 2019
• Extreme volatile forex currency in Bangladesh: In 2018 USD vs BDT rate was 82.94 which has depreciated in 2019
to 85.05.
• Intensifying competition in ceramics tiles and sanitary industry: At present 42 tiles and sanitary ware factory are
in operating in Bangladesh
• Controlled supply and significant price increase of natural gas; The primary energy input of ceramics industry
experience in a significant price increased (37.89) during the year.
• Crude oil also experiencing inflationary pressure due to various geopolitical global issue. The Price of Crude oil
has increased by 34.46% over year (sourcing macrotrend.com)
EXTERNAL ENVIRONMENT SCANNING PROCESS
The external market environment continues

to have an impact on our capability to build COMMUNICATE
EXTERNAL REVISED
stakeholder value. We identify the risks ENVIRONMENT FORECAST
WITH
and opportunities that could potentially SR. MANAGEMENT
disrupt the industry. Materiality assessment
provides further insights to the changing
needs of all stakeholders. A challenging
ANALYSIZING SUSTAINED
operating environment persisted in 2019, SET RESPONSE
RISK BEYOND INVESTOR
with forex market volatility and other STRATEGY
OUR CONTROL VALUE
operational challenges impacting our
operation.
STRATEGIC
MATERIALITY
IMPACT
ASSESSMENT
ANALYSIS
STRATEGIC PLANNING PROCESS both opportunities and risks, as identified while scanning
external environment. We also identify the risks and
As part of our strategic planning process, we carefully opportunities that could potentially disrupt the industry.
analyze external environment for market dynamics, Our strategy keeps us focused, setting a visible direction
structural shift of industry, disruption potentiality and and create sustainable growth, enhanced shareholder
understand how these factors will impact our ceramics returns and enduring value for all our stakeholders over
business. In developing our strategy, we considered the short- and long-term.
STRATEGIC PLANNING PROCESS
VISION MISSION CORE VALUES
MATERIAL ISSUE <IR>

& CRITICAL TASK RISK AND OPPORTUNITIES <IR>
STRATEGY FORMULATION
STRATEGIC OBJECTIVES
RESOURCES AND ENVIRONMENT
STRATEGIC ENABLERS COMPETITION, LEGAL, POLITICAL,
INTERNAL STRENGTH
AND WEEKNESS TECHNOLOGY, MARKET, CUSTOMERS
STRATEGY EXECUTION
MID TERM (3 YEARS)
AND LONG TERM (5 YEARS)
EVALUATION &
MONITORING
FINANCIAL CUSTOMER LEARNING AND GROWTH INTERNAL BUSINESS PROCESS

Objectives Measures Targets Initiatives Objectives Measures Targets Initiatives ‘’To achieve Objectives Measures Targets Initiatives ‘’To satisfy our Objectives Measures Targets Initiatives
‘’To succeed ‘’To achieve
our vision, how shareholders
financially, how our vision, how
will we sustain and customers,
should we should we
our ability to what business
appear to our appear to our
change and processes must
shareholders?” shareholders?”
improve ?” we excel at?”
OUR STRATEGY
Optimize return through

growth and dividend (RS001) Focused strategic segment (RS002)
Ceramics Tiles and Sanitary ware industry operate in chosen value added market
are sensitive to business cycle. it is segment like institutional, builders &
essential to build a portfolio of products Developers on urban sector and individual
and services that can provide protection home builders in rural sector.
of our revenues and profitability.
RAK
STRATEGIC
OBJECTIVES
Industry leadership in
Leadership in ceramics (RSO) cost efficiency (RS004)
technology (RS003)
Maximize scale of Operation for
Technology, Product and Process
benefiting Economize of Scale and aspire
Innovation to deliver innovative value
to set industry standard on operational
added product and service
efficiency
RS001 Optimize return through growth RS003 Leadership in ceramics technology

and dividend
Focus area:
Focus Area: Pioneer in ceramics tiles technology.
Pioneer in sanitaryware technology
Expansion of production capacity for value-added Protect business from disruption
products
Market penetration out of the capital city of Dhaka Key measures
Agility on technology deployment
Key measures Reduce cost of production
Production capacity on tiles (in SQM) Introduce value added product per quarter
Production capacity of sanitaryware (in pieces)
Goal
Market share (%)
New models added during the year. Maintain leadership position in ceramics technology in
Bangladesh
Goal
Maximise utilization of available capacity RS004 Industry leadership in cost efficiency
RS002 Focused strategic segment Focus area:
Continue improve value chain performance to reduce cost
Focus area:
Introduce value-added products every quarter Source material directly from mines owner or
manufacturers
Create new demand across new sectors
Bring down cost using technology and manufacturing capital
Key measures Bring down energy costs
Revenue and profitability from value added products
Key measures
Revenue and profitability from strategic segment
Reduction of gas utilization per square meter.
Goal Increase/improve top grade production compare to
Focused strategic segment for differentiation. previous year
Goal
Enhancement cost efficiency
STAKEHOLDERS’ RELATIONSHIP
Key issues with our stakeholder. Balancing jigsaw

ding
rs - Fun
Investo
a p it a l
g C
Investors • Consistent returns
ustainin
RAK - S eturn
ed
improv
ity
er - Qual
Custom able
d u c ts at afford
Pro
price
Customers • Quality products with affordable pricing Reven
u e
RAK -
d
- Goo
unity
Comm te citizen
ra
p ted Corpo
Community • To be good corporate citizen RAK - U
ninterru
business &
ment a
Govern r - Provide
to te
and Regula rt to opera
Taxes ll sup p o
RAK - artner for
Government & Regulator • Comply with rules and regulations
p
being ment
p
develo Skill,
yees - nd
Emplo ncy a
p e te
Com
tivity
produc
s&
Employees • Comparative wages and growth opportunities Wage
RAK - pment
lo
Deve .
usiness
Other B f goods
vi d e r o
Pro
ice
and serv
Other Business Partners • Trust-based relationships Produ
ction
RAK -
How we engage with our stakeholders and respond to their expectations
• Transparent communication | Annual General

Investors Meetings | Stock Exchange update
• Customer care team | Quarterly dealers meet |

Customers
Participate in trade shows
• Community procurement | Safe environment |

Community Local employment preferance
Government • Comply with regulations | Participate in

government-promoted programs | Governance
• Employee engagement programs | Industry-

Employees
leading wages | Growth opportunity
• Transparent communiction | Impartial

Other Business Partners opportunity | Respect policies and practices
MATERIAL ISSUES • Impact on six capital – Financial Capital,

Manufacturing Capital, Intellectual Capital.
Our material issues are those issues which could have
relevant on our business or have an impact on delivering • Response plan - Driving continuous improvement
strategic value. We identified and consider potential initiatives to strengthen our cost position and
material issues while formulating strategy those have improve our innovative offerings for differentiation.
impact on short term or long term growth. Cost efficiency and Innovation is the key driver for
sustaining growth.
We use the similar process while we use control and
management of risk. • Operating under volatile macro-economic
environment – We operate under significant force
• Identify – We identify material issue which could have
of macroeconomic volatility which is growing
short term or long term impact though our monthly
day by day. Oil prices, foreign exchange rates and
management meeting, quarterly executive committee
meeting and statutory each quarter end board meeting stringent regulatory policy continue differentiator
while we assessing internally. We also explore potential on translating strategy in outcome. In addition, we
material issue while we meet with our other stake are sourcing more than 80% of basis input globally
holders like customer engagement program. with positive correlation of adverse macro-
economic factors.
MEASURE MONITOR
& REPORT
Identify materiality that Manage carefully based on
could bottleneck to materiality profile
delivery strategic outcome Choosing the material issue Monitor materiality issue &
measuring short term and Report to senior
long term impact managment
IDENTIFY MANAGE
• Measure – We measure based on severity and likelihood • Strategic objective impact - RSO01 and RSO04
matrix and how it could impact on shareholder’s key
issue and expectation. When measure specific materiality • Impact on six capital – Financial Capital,
exposure we consider the effect of that issue on the Manufacturing Capital, Intellectual Capital, Social
overall strategy of the company. and Relationship Capital
• Manage – After measuring we decide on which material • Response plan – While cost efficiency and
issue to eliminate or minimize, and how much of its core innovation is the key driver for sustaining growth
risks to retain to mitigate based on materiality profile. however improved relationship with supplier
• Monitor – Implement responses review, monitor in order and regulator minimize the impact or increase
to ensure that materiality levels remain at an optimal shareholder’s return. Improved resource allocation
level. initiative shall improve return.
• Report – Articulate the senior management team on Sustaining profit – Our strategic choice is value based
regular interval to monthly management meeting, growth. Even though we are sharpening our cost
executive meeting and board meeting. efficiency, strategic sourcing and focused on defined
segment initiatives sustaining profit over the long run
Material issue which could have impact for is important differentiator on delivering strategic value.
deriving value • Strategic objective impact - RSO03, RSO02 and
Growth under continued increasing competitive RSO4
industry: Availability of capital, increasing GDP and • Impact on six capital – Financial Capital,
increasing captive consumption due to vertical Manufacturing Capital, Social & Relationship
integration attracting firms in the ceramics industry Capital.
strengthening competition quiet often causing powerful
negative impact on business growth Response plan – Focused defined segment, cost
efficiency, process innovation, product offerings and
• Strategic objective impact - RSO01 and RSO04 skilled manpower helps sustaining long-term profit.
POLICY ON COMMUNICATION WITH

SHAREHOLDERS AND OTHER STAKEHOLDERS
For managing successful, productive and engaging relationships with

shareholders, it is imperative to reinforce the importance of maintaining
transparency and accountability.
Through the Company Secretary, the Board ensures and other reports in due course for meeting the best
that shareholders of the Company are treated interests of shareholders.
justly and that their rights are firmly protected. The
Company Secretary is the major link of communication
Corporate website
between shareholders and the Board of Directors of
the Company, delivering high-quality services to its Regular and material communication is ensured by the
valued shareholders, aligned with the well-defined Company to meet the best interests of shareholders.
rights of shareholders, as expressed in the applicable Exhibition of best practices is further made by providing
laws and the Articles of Association of the Company. comprehensive information on the Company’s website,
Shareholders are informed of all major developments assuring investor trust and confidence in the Company.
and changes in business through communication in a The Company’s website acts as the right channel in
routine manner, catering to their requirements for all case of retrieval of any publication. Further, the website
material disclosures to facilitate and support informed is also a comprehensive reference of RAK Ceramics
decisions. (Bangladesh) management, vision and mission, value
statement, investor relations, sales network, products,
promotions and events. All information regarding
Ensuring shareholder participation at the AGM
financial statements, patterns of shareholding,
Ensuring full participation of shareholders at the AGM corporate benefits, notices, price sensitive information,
is one of the primary objectives of the management of code of conduct, dividend, refund warrant, etc., are
RAK Ceramics (Bangladesh). Towards this extent, the disclosed in the ‘Investors’ sub-menu of the website.
Company delivers the Annual Report at least 14 days
Furthermore, the Company also publishes regulatory
prior to the AGM date. Regarding the AGM date, time
information from time to time on its website as a matter
and venue, the information is communicated well in
of transparency in information disclosure for the benefit
advance to shareholders. At the AGM, the Company’s
of all shareholders and stakeholders.
management receives shareholders’ valuable opinions
and makes every effort to implement these for the
improvement of the Company. Grievance redress
RAK Ceramics (Bangladesh) strongly believes in
Communication to shareholders and maintaining smooth and cooperative relationships with
stakeholders all stakeholders. We pursue a proactive and high-quality
shareholders’ redressal policy to handle all grievances
The Company endeavours to actively liaison with all
and complaints in an effective, fair and expeditious
shareholders as well as ensures that all stakeholders
manner. Any query received from investors is treated
are informed about the Company’s activities and
efficiently, fairly and with courtesy, keeping with the
achievements on a regular basis. The Company
overall objective of dealing with it in a timely and
discloses quarterly and annual financial performance
transparent manner.
Investor complaint redress at RAK Ceramics shareholders through communication for the
(Bangladesh) collection of dividend warrants which have been
returned from the BEFTN system, or by informing
• Any investor may lodge their complaint relating to them of the delivery status by courier service
their investment in the Company through a formal
letter sent to the share department’s official’s • We also manage requests for updation of e-Tin
email address or by phone call to the Company number in the BO account, if cash dividend is
Secretary declared
• The share department official shall review investor • We also handle requests for updation of bank
complaint/s on a weekly basis account details in the BO account while sending
dividend through the BEFTN system
• A designated person of the Company looks after
investor grievances on a daily basis • We review instances of non-receipt of Annual
Report and the declared dividend
• Some of the ways by which we address
more common issues include engaging with • We consider all matters related to shareholders of
the Company efficiently and with urgency
RISK MANAGEMENT AND CONTROL
At RAK Ceramics (Bangladesh), mitigating risk is key to the delivery of

long-term sustainable improvement in shareholders’ value. All risks and
mitigation measures are aligned with the Company’s strategic objectives.
Risk management approach The Company always put effort forward to mitigate
the exposure to all forms of strategic, financial, market
The Company establishes the culture of effective and operational risks, both external and internal. The
risk management, and is responsible for maintaining effectiveness of key mitigating controls is continually
appropriate systems and controls. It also sets the risk monitored and also subject to audit assessments. The
appetite and determines the policies and procedures effectiveness and impact of key controls are evaluated
that are put in place to mitigate exposure to risks. and this is used to determine the intensity of each risk.
Risk mitigation and controlling process Risk appetite

There is a formal ongoing process to identify, assess, The Company is prepared to accept a certain level of
and analyze the risks incorporating them into the risk risk to remain competitive. However, it continues to
register for further specifying and control the intensity embrace a conservative and prudent approach to risk
of risks and those of a potentially significant nature are management and mitigation. Some of the key risks
included in our risk documentation practices facing the business and their accompanying mitigation/
control measures is described hereunder:
Risk log
Link to
strategic
SL Risk theme Potential impact Mitigating factor objectives
1 Macroeconomic and Bangladesh is a The Company closely monitors trends and lead indicators RSO01
political risks country that is with a view to gain an understanding of where the markets RSO03
prone to the socio- are headed. The Company is quick to identify and capitalize
The Company is dependent economic risks that on sales opportunities. With housing and infrastructure at
on the economic are typically faced the heart of Bangladesh’s transformation into a middle-
activity levels in its end by fast-developing income nation, we believe that a close association
markets. Accordingly, it is countries. This with these sectors will enable us to reap the benefits of
susceptible to economic could lead to lower sustainable demand over the years to come.
downturn, the impact of activity levels which
Government policy and could reduce sales
any political and economic and production
uncertainty. volumes. This could
have an adverse
effect on the
Company’s financial
results.
Link to
strategic
2 Customer attrition risks Any possible loss • The Company is continuously engaged with brand RSO01
of key customer and new product development and quality and
Our sales are oriented to mandates can customer service improvements across its value
meet the demands of both impact our chain.
retail as well as institutional credibility, while
customers. Our inability to also having an • The Company maintains a national network that
meet their demands can adverse effect on makes customer access quick and seamless.
lead to customer attrition. our financials.
3 Cost and availability of raw Increased raw • The Company focuses on strengthening its supplier RSO04
materials material resource relationships and generally enters into long-term
costs could reduce contracts that enable effective cost inflation
The Company is margins. Also, it mitigation.
susceptible to significant might be difficult
increases in the price of to pass-on the • The Company’s sales pricing policy is linked to its
raw materials (which are increased costs to purchasing policies that ensure margin protection on
also imported), utilities, customers, which the one hand, while also enabling consumer price
fuel and transportation and can have an impact protection on the other.
haulage charges. on the cost base • The Company also possesses strong relationships
and subsequently with its logistics partners that help mitigate
on profitability. transportation and haulage risks and costs.=
4 Competitor activity risks Increased • The Company has unique propositions anchored RSO01
competition could on design, affordability and after sales service that RSO02
The Company has a reduce volumes differentiate RAK brands.
number of existing and margins on
competitors who compete manufactured • The Company places high emphasis on quality,
on range, price, quality products. Also, service, reliability and ethical standards that
and service. Furthermore, it could intensify differentiate us from competitor products.
potential new low-cost
competitors may be
challenges in • The Company has a continuing focus on refreshing
our efforts in the shelf through ongoing engagement with new
attracted into the market sustainable brand
through increased demand product development.
building.
for products.
5 Interest rate risks In case the • RAK Ceramics (Bangladesh) operates with low RSO01
demand of capital dependence on external borrowings. The Company RSO04
Interest rate risk is the grows further to possesses strong retained earnings of Taka 1,601.27
risk that a company may accommodate mn, cash and bank balances of Taka 1499.31 mn and
face due to unfavorable business need, it a low debt-equity ratio of 0.01, as on 31 December
movements in interest could impact the 2019, showcasing our ability to raise low cost debt for
rates. Unfavorable interest Company’s ability prospective needs. Moreover, a strong balance sheet
rate movements caused to raise cost- and high quality ratings also enable us to raise funds,
by volatile money markets, effective funds. when and if required, at competitive rates.
adverse policy and
regulations
Link to
strategic
6 Currency risks Unfavorable • It is the Company’s policy to enter into safe forward RSO03
currency contracts sanctioned as per the Central Bank’s forex RSO04
Exchange rate risk is fluctuations could policy towards cushioning itself against adverse
relevant for RAK Ceramics impact profitability. foreign currency movements risks.
(Bangladesh) since a large Importantly, the parent Company possesses a
proportion of our raw database of over 2,500 global suppliers engaged
material requirements with it for more than 18 years. RAK Ceramics
are invoiced in foreign (Bangladesh) leverages its parent Company’s monthly
currency. global resource planning exercise, which takes care
of resource procurement schedules and currency
fluctuation escalations.
7 Regulatory risks Abrupt regulatory • The Bangladeshi economy, led by the incumbent RSO02
changes could government, has been socio-economically stable RSO04
The Company operates affect the over the past few years. Besides, the government
under the Companies Act, Company’s holds the democratic mandate of ensuring
1994 and other related business and holistic and sustainable growth and, towards
regulations that include operations. this extent, has created a favorable environment
Income Tax Ordinance with structurally robust policies. This has ensured
1984, Income Tax Rules regulatory predictability leading to a secure business
1984, Value Added Tax environment.
(VAT) Act 2012 and Value
Added Tax (VAT) Rules
2016.
8 Technological risks Any development • RAK Ceramics (Bangladesh) is a subsidiary of RAK RSO03
of new and more Ceramics PJSC, UAE. This ownership enables the
Technology plays a vital cost-effective Company to enjoy access to the latest technology
role in the existence of technology may incorporated in its manufacturing facilities. The
any industrial concern, cause technological Company has adopted the world class SACMI
ensuring superior obsolescence, technology that ensures high-quality, cost-effective
customer service and leading to negative output for the production of tiles and sanitary ware.
minimizing costs across operational The Company has also invested in a full-fledged R&D
the production and efficiency. team to facilitate the absorption of new technology
operations value chain. with optimal investments. The Company also has
The Company’s production access to international / multinational companies
facilities are based on for supplying appropriate technology and technical
the currently available managerial support for the establishment of new
technology. projects. Moreover, with foreign affiliation with RAK
Ceramics PJSC, UAE for technical know-how and
assistance, the Company is expected to always
remain ahead of the other producers in the local
market, which ultimately reduces the technology
related risks impacting the Company.
9 Management risks: Turnover of • The Company places top priority on developing RSO01
key managerial its human resources. The Company offers well- RSO02
personnel, designed compensation package to its employees to RSO03
executives and encourage professionalism, stimulate collaboration RSO04
officers may have and team work and promote innovation, reinforced
an adverse impact with high ethical standards. Moreover, the employees
on the business, enjoy benefits of Contributory Provident Fund,
operating results Gratuity Scheme and Group Life Insurance, Workers
and future growth. Profit Participation Fund and Welfare Fund that
enables our workforce to remain committed, loyal,
engaged and motivated.
OUR OBLIGATION TO ENVIRONMENT

AND SOCIETY TOWARDS UN SDGS
Overview burning equipment, such as generators, kilns, spray

dryers and horizontal and vertical dryers, among others,
At RAK Ceramics (Bangladesh), our higher purpose as a are fine-tuned by highly experienced and competent
Company is to make better homes and better working personnel. Furthermore, waste heat from the tunnel
spaces a reality for everyone, everywhere, and our kiln is used in the pre-dryer section in the sanitary-ware
corporate social responsibility (CSR) is at the core of plant with a view to re-use energy.
this endeavour.
The Company operates modern effluent treatment
We are delighted to report that we have continued to plants (ETPs) to recycle and re-use waste water
achieve progress through our CSR activities in 2019, generated from the factories. Moreover, RAK
making progress in all strategic pillars and staying true Ceramics’ employees are provided extensive training
to our commitment of improving the quality of people’s on water conservation to raise awareness and reduce
lives around our beneficiary communities and pursuing unnecessary wastage of water.
the growth of our businesses through responsible and
sustainable innovation.
Water conservation
Green environmental practices Our operations take cognisance of a holistic water
management program that is consistent with the
RAK Ceramics (Bangladesh) embraces its role in Company’s strategy for ensuring sustainable water
responsible environmental stewardship. We are consumption and use. We consider several water
committed to practice environmental sustainability management options that can be divided into various
throughout our value chain, including product design, groups, thus making it possible to pinpoint reduction
sourcing, operations and supply chain. The Company possibilities accurately:
is committed to fulfill an active role in building a better
Bangladesh by taking responsibility of the surrounding • Monitoring: Water consumption is regularly
environment with focus and dedication. Towards this measured and checked to prevent unnecessary
extent, our manufacturing assets and facilities embrace use. We also analyse trends to swiftly detect major
the following green practices and are equipped with: leaks and repair damages as soon as possible.
• High-efficiency burners • Optimisation: We ensure that through engaging in
regular preventive maintenance of equipment and
• Mezzanine shelving system installed in the central other devices, water is used judiciously without
store warehouse any wastage.
• Modern water consumption systems that help • Natural resource conservation and pollution
regulate water use control: In our focus on minimising the depletion
• Facilities enabling re-cycling and re-use of in- of natural minerals, RAK Ceramics (Bangladesh)
process waste water has developed strong expertise in combining as
many as 5-9 types of natural minerals coming from
• Awareness around water conservation several countries around the world to minimise
• Solid waste management practices damage to the external environment.
• Natural resource conservation and pollution

Indoor air quality and its effect on office interiors
control equipment
RAK Ceramics (Bangladesh) promotes building fit-
outs that ensure a healthier indoor environment and
Green production facilities
productive, healthy and high-energy workplaces, which
Our production facilities are equipped with high- also have a less negative impact on the environment.
efficiency burners that are utilised in all heaters to Besides, we focus on conserving natural resources by
reduce energy consumption. The efficiency of fuel embracing environment-friendly processes and practices.
Solid waste management and their ability to work effectively with our customers
and across the supply chain is a crucial differentiator
We implement comprehensive programs to minimise for the Company. In addition to enhancing the quality
the disposal of waste material into the environment by of the solutions we develop, building and sustaining
adopting continuous improvement in waste segregation strong relationships help us improve our services and
and recycling programs, which include: drive operational efficiency.
• Segregating hazardous and non-hazardous waste
• Controlling litter and unpleasant odors In our ongoing commitment to pursue high quality
• Conducting routine inspections of waste storage development, our leadership is supportive to enable us
areas to attract and retain the best quality talent with attributes
that we require to operate our business profitably and
• Identification and segregation of waste through sustainably.
the use of garbage bins that are classified as:
Furthering our commitment to treating our employees
Green garbage bins ensuring the proper collection well and managing their expectations better, we have
and disposal of residual waste, leftover food,
offered the following benefits/facilities:
paper, cartons, floor sweepings and other waste
that has no commercial value
Blue garbage bins that enable the collection of • Life insurance coverage: All employees are
metals, machine parts and other such accessories adequately covered by a comprehensive life
Black garbage bins that provide for contaminated insurance policy to protect against any future
items, expired chemicals and infectious waste hazards.
(such as from clinics)
• Provident fund and gratuity scheme: The
Company maintains a recognised Contributory
Energy-efficient systems Provident Fund and an approved Gratuity scheme
RAK Ceramics (Bangladesh) emphasises on the for all its employees.
procurement and installation of energy-efficient • Workers’ profit participation fund: The Company
systems that contribute to preserving the environment maintains a Workers’ Profit Participation Fund
and protecting our reputation as a socially-committed (WPPF), as per the Bangladesh Labour Act, 2006.
and responsible organisation.
• Employee welfare fund: Financial assistance is
provided to employee and their immediate family
Ventilated facade system members for medical and educational purposes
Normal ventilation systems are used in our plants that is from the Employee Welfare Fund maintained by
suitable for local environmental conditions and helps in the Company.
the conservation of energy.
Our focus on creating a happier workplace
Environmental governance and compliance We recognise that our Company will succeed and grow
Key environmental issues are reviewed by our well- only if we attract and retain the highest quality talent.
represented sustainability group. A specially-instituted We engage talented employees dedicated to serve our
forum also assesses key topics and shares industry best customers and responsibly embracing our Company’s
practices across the Group. We are currently developing mission and values.
an innovative approach in responsible procurement,
The health and safety of our people and everyone who
and intend to diversify our sourcing basket that will not
come under the ambit of our activities is fundamental
only help us control quality and costs, but also enable us
to our business and is a source of our uncompromising
to identify and work with responsible and ecologically-
stance on the security and welfare of our stakeholder
aware suppliers.
ecosystem.
Our people are at the heart of our business

At the heart of our human resource strategy is the
recognition that the skills and potential of our people
Our products and their impact on the Our impact on the UN SDGs
environment In September 2015, 193 UN member-states adopted
RAK Ceramics is a founding member of the Emirates the 2030 Agenda for Sustainable Development and its
Green Building Council that supports the development Sustainable Development Goals (SDGs) as the primary
of sustainable buildings in the UAE. As part of its framework to shift the world in the direction of a more
commitment to focus on ‘green building’ products, it prosperous, equitable and sustainable future.
has launched several exciting and innovative products
The SDGs are a set of cross-linked goals and a blueprint
that contribute to creating a greener and cleaner
to achieve a better and more sustainable future for
environment. The UAE Ministry of Environment
today and for future generations.
and Water (MOEW) has awarded the Company the
prestigious ‘Environmental Performance Certificate’ These SDGs are highly relevant in today’s times. They
(EPC) in recognition of its successful efforts to address the acute challenges we face – from climate
comply with environmental protection standards crisis, abuse of women’s rights, mounting pressures on
and regulations. The Company is proud of its many the environment, unliveable cities, mass-scale poverty
performance material products, which provide excellent and deprivation, and more. Throughout the SDG
quality and value and actively support our customers in adoption process, it was emphasised that businesses
responsibly reducing their environmental footprint. would have to play a pivotal role in delivering on the
objectives of the 17 goals by 2030. These goals are:
At RAK Ceramics (Bangladesh), our social and • Decent work and economic growth : SDG 8
environmental initiatives influence the following UN • Sustainable cities and communities : SDG 11
SDGs (United Nations’ Sustainable Development Goals):
• Responsible consumption and production : SDG 12
• Clean water and sanitation : SDG 6 • Climate action : SDG 13
• Affordable and clean energy : SDG 7 • Life on land : SDG 15
CORPORATE SOCIAL RESPONSIBILITIES
Every business has social impact on the life of employees, customers and
suppliers, their families and communities. This is why at RAK Ceramics
(Bangladesh) we decided to embrace a new social purpose around two
cornerstones: safety as care and a renewed commitment to sustainability. We
believe that caring for each other is what will drive us to further improve our
performance and we believe that renewing our commitment to people’s health
and wellbeing, environment, responsible sourcing and local communities is
the way to make our growth sustainable in the long term.
RAK Ceramics (Bangladesh)’s, approach to social management of the Company’s CSR initiatives in a way
responsibility is embedded in the Company’s culture that secures business sustainability, as well as creates
and focuses on creating sustainable value for our and sustains a positive impact on the reputation of
stakeholders, especially those at the bottom of the the Company. The CSR Committee is authorised by
economic pyramid. Towards this extent, corporate the Board of Directors to evaluate activities within the
social responsibility is at the heart of RAK Ceramics’ business with respect to CSR.
business values and we recognize that many of our
stakeholders, from site neighbours and employees RAK Ceramics (Bangladesh) actively promotes and
through to our customers and investors, have rising engages in the concept of social contribution that
expectations out of our corporate responsibility helps strengthen communities and contribute to the
commitment and performance. The Company’s CSR enrichment of the grassroots of the society, both at
emphasis is embedded into the culture of the Company, the individual level and consolidated as a group. The
not only enabling the enhancement of business Company is cognizant of its responsibility towards
sustainability, but also ensuring commitment to long- social welfare and contributed an amount of BDT 1.10
term stakeholder value creation.
mn during the year 2019, encompassing donations to
RAK Ceramics (Bangladesh) has a corporate social medical treatment, foster education, social and cultural
responsibility (CSR) committee to ensure better activities of the country.
DIRECTORS’ REPORT
Dear Shareholders,
Assalamu Alaikum
The Board of Directors of RAK Ceramics (Bangladesh) Limited is pleased to

present this Directors’ Report, along with the audited financial statements
of the Company for the year ended 31 December 2019, and the Auditors’
Report thereon, for your valued consideration, approval and adoption.
Principle activities in the industry. Detail about segment-wise or product-

RAK Ceramics (Bangladesh) Limited is the country’s wise performance is discussed in the ‘Segment wise
largest and leading tiles and sanitary ware brand. The performance’ on page 37 of this annual report.
Company is engaged in the manufacture and sale of
ceramic tiles, bathroom sets and sanitaryware products.
Financial results
Over two decades journey, the Company has created
industry-leading designs and patterns for wall and floor The Company reported consolidated sales of BDT
tiles, borders and corners, etc. Many of RAK Ceramic’s
6,463.86 mn in 2019, against BDT 6,331.08 mn reported
models come in modular designs which offer ample
choice to our customers. in 2018. Consolidated gross profit of BDT 1,907.74 mn
in 2019 against BDT 2,013.39 mn reported in 2018.
Consolidated net profit of BDT 754.03 mn in 2019
Industry outlook and possible future developments
stood against BDT 890.63 mn achieved in 2018. Details
Detail about industry outlook and possible future
of operational results of the Company are discussed in
developments in the industry are discussed in the ‘Industry
outlook and possible future developments in the industry’ the ‘General review of performance 2019’ on page 32 of
on page 22 and ‘Management discussion and analysis’ on this annual report.
page 24 of this annual report.
Appropriations of profit and key operating and
Segment-wise performance financial data of preceding five years
RAK Ceramics (Bangladesh) operates with an annual
The Directors are pleased to report the financial results
standard production capacity of 10.32 mn sqm of tiles
and 1.45 mn pieces of sanitaryware with over 41 active for the year 2019 and recommend the following
designs, ensuring the widest range of products available appropriations:
(Amount in BDT mn) Variance between quarterly and annual financial

statements
There are no significant variances in the financial results
Profit before tax * 1,044.40 1,225.93
between quarterly and annual financial statements.
Less: Provision for tax 290.38 335.30
Profit after tax * 754.03 890.63

Material change or change in the nature of business
Add: Un-appropriated profit During the year under review, there are no material
1,628.69 1,445.45 changes in the nature of business of the Company or
brought forward
its subsidiaries.
Less: Prior year adjustment (leases) 3.32 -
Profit available for distribution 2,379.40 2,336.08 Risk and concerns
Less: Appropriation of dividend 778.12 707.39 Risk assessment and mitigation is an integral part of the
Company. The Company has appropriate and effective risk
Un-appropriated profit C/F 1,601.28 1,628.69 management systems which carries out risk identification,
assessment and ensures that risk mitigation plans are in
place. The Board of Directors regularly monitor, assess
Profit after tax is exclusive of non-controlling interest. and identify potential risks and threats to profitability and
Key operating and financial data of the preceding five sustainable growth. Detail of risks and concerns, including
years is given in ‘Annexure-1 ’ on page 76 of this annual internal and external risk factors is discussed in the ‘Risk
report. management and control’ on page 62 in this annual
report.
Reserve and surplus

Auditors
In 2019, retained earnings of the Company stood at
BDT 1,601.28 mn, against BDT 1,628.69 mn in 2018. ACNABIN, Chartered Accountants (an independent
member of BAKER TILLY INTERNATIONAL), shall retire
at the 21st Annual General Meeting (AGM) and, being
Dividend eligible, offer themselves for re-appointment.
The Board of Directors is pleased to recommend The Board also recommends their re-appointment for
dividend @ 15% in cash of the paid up capital of the the year 2020. Remuneration of the auditor will be fixed
Company, representing an amount of BDT 641,953,051 by the shareholders at this AGM.
for the year ended December 31, 2019. The Company
paid dividend @10% in cash and @10% in stock of the The statutory auditors of the Company has given
paid up capital of the Company for the year 2018. No reports on the financial statements of the Company for
bonus shares or stock dividend has been declared as the year ended 31 December 2019, which forms part of
interim dividend. the annual report. There is no qualification, reservation,
adverse remark, comments, observations or disclaimer
given by the statutory auditors in their reports.
Contribution to national exchequer
RAK Ceramics (Bangladesh) is committed to timely Parent and subsidiary companies
disbursement of its direct and indirect tax obligations.
During the year 2019, the Company including its RAK Ceramics PJSC, UAE (the Company) is the parent
subsidiaries contributed a total sum of BDT 2,732.44 mn company of RAK Ceramics (Bangladesh). It is one of
to the national exchequer. Detail of the contribution to the largest ceramics’ brands in the world specializing
national exchequer during the year is discussed in the in ceramic and gres porcelain wall and floor tiles and
‘Contribution to national exchequer’ on page 44 of this sanitaryware. It has an annual production capacity of
annual report. 110 mn sqm of tiles and 5 mn pcs of sanitaryware at
16 state-of-the-art plants located all over the world,
including Bangladesh.
Extraordinary gain or loss
The Company serves clients in more than 150 countries
There was no extraordinary activities during the year through its network of operational hubs in Europe, the
2019 affecting any extraordinary gain or loss. Middle East and North Africa, Asia, North and South
America and Australia. It is listed on the Abu Dhabi assets, the prevention and detection of frauds and errors,
Securities Exchange in the United Arab Emirates and, as compliance with applicable legislations, the accuracy and
a Group, it has an annual turnover of around US$1 billion. completeness of the accounting records and the timely
preparation of reliable financial information. The Company
RAK Ceramics (Bangladesh) has two subsidiaries; RAK
has also established an internal audit and compliance
Power Pvt. Ltd and RAK Security and Services (Pvt) Ltd,
department that functions under an independent head
which are fully owned subsidiaries of the Company. The
of internal audit and compliance to ensure that internal
principal activities and status of these subsidiaries are
control and compliances are in place.
separately disclosed in the ‘Segment wise performance’
on page 37 of this annual report.
Board of directors
Related party transactions The Board of Directors of the Company comprises five
members including two Independent Directors. Names
The detail of related parties with whom transactions
and profiles, including the nature of expertise in specific
have taken place and their relationship as identified and
functional areas of the directors of the Company are
certified by the management is disclosed in the ‘Related
shown in the ‘Directors’ profile’ on page 16 of this
party disclosures under IAS-24’ on page 148 of this annual
annual report.
report.
Appointment/reappointment of directors
Corporate social responsibility
In accordance with the Article 93, 94 and 95 of the Articles
The Company understands its responsibility towards of Association of the Company, Mr. Abdallah Massaad will
social welfare and contributed an amount of BDT retire from office as Director by rotation at the 21st Annual
1.10 mn during the year under review. Detail of the General Meeting and, being eligible, offers himself for re-
company’s CSR activities during the year is discussed in election in accordance with the terms of Article 96 of the
the ‘Corporate social responsibilities’ on page 69 of this Articles of Association of the Company.
annual report.
Remuneration of directors including
Human resources and staff welfare independent directors
RAK Ceramics (Bangladesh) accords the highest priority The Company did not pay any remuneration to any
to its human resource and staff welfare. The Company Director, including Independent Directors, except
believe that employees are integral to its success. The board meeting attendance fee and 3% of profit before
Company committed to ensures a safe and healthy tax to the Managing Director.
working environment for its employees. The Company
currently has 1,570 full-time employees on its rolls
Code of conduct
and offers well-designed compensation packages for
employees to encourage professionalism, develop In compliance with the conditions of corporate
talents, enhance leadership capabilities and maximize the governance code, the Board has laid down a code of
potential of human resources with high ethical standards. conduct for the Chairman of the Board and other Board
members of the Company and annual compliance of the
Notably, the employees of the Company enjoy benefits code is recorded accordingly.
of contributory provident fund, gratuity scheme and
group life insurance, etc. Furthermore, the Company
also established “Workers Profit Participation Fund and Board of directors’ meeting and attendance
Welfare Fund”. In year 2019, the Company contributed The Board of Directors of the Company met seven times
5% of its profit before tax towards the Workers’ Profit during the year under review. The number of Board
Participation and Welfare Fund, amounting to BDT meetings held and the attendance of each Director
52.96 mn. during the year 2019 is disclosed in ‘Annexure-2’ on
page 77 of this annual report.
Internal control
The Board has the ultimate responsibility of establishing Pattern of shareholding
effective systems of internal control. The Company has In accordance with the conditions of corporate governance,
policies and procedures in place for ensuring proper and the shareholding pattern of the Company is disclosed in
efficient conduct of its business, the safeguarding of its ‘Annexure-3’ on page 78 of this annual report.
Directors’ statement on financial reporting Ceramics (Bangladesh) is committed to comply with

all the requirements of corporate governance code
The Directors, in accordance with the corporate 2018 of the Bangladesh Securities and Exchange
governance code 2018 of the Bangladesh Securities Commission. Detail about corporate governance is
and Exchange Commission dated June 03, 2018, discussed in the ‘Corporate governance report’ on page
confirm the following to the best of their knowledge: 85 of this annual report.
a. The financial statements prepared by the
management of the Company present fairly its Reporting and compliance of corporate
state of affairs, the results of its operations, cash governance
flows and changes in equity.
The Company has complied with the conditions of the
b. Proper books of account of the issuer company corporate governance code 2018 of the Bangladesh
have been maintained. Securities and Exchange Commission dated June
c. Appropriate accounting policies have been 03, 2018. Detail status of compliance on corporate
consistently applied in the preparation of the financial governance along with the corporate governance
statements and that the accounting estimates are compliance certificate has been included on page 89
based on reasonable and prudent judgment. of this annual report.
d. International Accounting Standards (IAS) or

International Financial Reporting Standards (IFRS), Membership with BAPLC
as applicable in Bangladesh, have been followed in RAK Ceramics (Bangladesh) has membership with the
the preparation of the financial statements, and any Bangladesh Association of Publicly Listed Companies
departure therefrom has been adequately disclosed. (BAPLC). A certificate of BAPLC membership has been
included on page 100 of this annual report.
e. The system of internal control is sound in design and
has been effectively implemented and monitored.
Post balance sheet events
f. The minority shareholders have been protected
from abusive actions by, or in the interest of, There are no material events which have occurred after
controlling shareholders acting either directly or the balance sheet/reporting date, the nondisclosure of
indirectly and have effective means of redress. which could affect the ability of users of these financial
statements to make an appropriate evaluation.
g. There is no significant doubt upon the issuer
company’s ability to continue as a going concern.
Appreciation
Management discussion and analysis The Board would like to take this opportunity to
thank the Government authorities, shareholders,
In accordance with the condition of corporate investors, bankers and employees for their continuous
governance code, ‘Management discussion and commitment, cooperation, confidence and support in
analysis‘ has been duly signed by the Managing Director achieving the Company’s objectives.
of the Company and is included on page 24 of this
annual report. For and on behalf of the Board of Directors,
Declaration by MD and CFO

In accordance with the conditions of corporate
governance code, a declaration on financial statements
for the year ended December 31, 2019 duly signed by
the MD and CFO is included on page 102 of this annual
report.
Corporate governance (Abdallah Massaad)

To ensure the spirit of corporate governance with Chairman
accountability for inspiring confidence of investors, February 04, 2020
regulators, financers and other stakeholders, RAK
ANNEXURE - 1
Key operating and financial data of preceding five years

Amount in BDT
Particulars 2019 2018 2017 2016 2015
Sales 6,463,857,312 6,331,083,301 6,956,185,329 5,661,411,578 5,059,300,403
Cost of sales 4,556,112,666 4,317,689,669 4,251,220,093 3,252,054,966 2,896,889,441
Gross profit 1,907,744,646 2,013,393,632 2,704,965,236 2,409,356,612 2,162,410,962
Administration expenses 459,102,484 440,788,957 445,551,419 416,460,612 886,856,902
Marketing and selling expenses 455,996,281 411,359,546 778,347,786 706,362,135 688,070,995
Net profit before financial expenses 992,645,881 1,161,245,129 1,481,066,031 1,286,533,865 587,483,065
Financial expense 27,323,676 39,394,022 101,024,936 40,014,661 18,935,684
Other income* 79,082,208 104,074,247 34,558,774 24,139,245 910,848,168
Net profit before taxation 1,044,404,413 1,225,925,354 1,414,599,869 1,270,658,449 1,479,395,549
Income tax expenses 290,378,957 335,300,169 396,587,747 355,403,678 385,055,782
Non-controlling interest 247 422 423 472 487
Net profit after taxation 754,025,209 890,624,763 1,018,011,699 915,254,299 1,094,339,280
*Other income includes interest income, dividend income, rental Income and profit on sale of fixed assets.
* Sales figure of 2018 and 2019 reduced primarily due to net-off commission, incentive and bonus, as per IFRS-15.
ANNEXURE - 2
Statement of BoD meeting and attendance
Number of
meetings held Number of
Name of Director Position while as a member meetings attended
Abdallah Massaad
Chairman 07 7
(Nominee of RAK Ceramics PJSC, UAE)
SAK Ekramuzzaman Managing Director 07 5
Pramod Kumar Chand
Director 07 7
Faheemul Huq
Independent Director 07 2
Barrister-at-Law
Wassim Moukahhal Independent Director 07 7
ANNEXURE - 3
The pattern of shareholding as on 31 December 2019
a) Parent/Subsidiary companies and other related parties
Name Status/Position No. of shares held

RAK Ceramics Co. PJSC, UAE Parent Company 291,586,431
b) Directors/CFO/CS/HIAC and their spouses and minor children

Abdallah Massaad Chairman 16
SAK Ekramuzzaman Managing Director 16,895,824
Pramod Kumar Chand Director Nil
Faheemul Huq, Barrister-at-Law Independent Director 104,061
Wassim Moukahhal Independent Director Nil
Sadhan Kumar Dey Chief Financial Officer Nil
Muhammad Shahidul Islam Company Secretary Nil
Mohammad Samsul Arefin Head of Internal Audit and Compliance Nil
c) Shareholding status of the top-5 salaried employees, other than CFO, CS & HIAC

J. Reza VP-SCM and Admin Nil
Rajib Kumar Saha GM-PMO Nil
Mizanur Rahman GM Sales Nil
Mohammed Shamsuddin AGM VAT & TAX Nil
Md. Azimul Hossain IT Business Lead Manager Nil
d) Shareholders holding 10% or more voting interest in the company

RAK Ceramics PJSC, UAE Parent Company 291,586,431
AUDIT COMMITTEE REPORT
The Audit Committee is a sub-committee of the Board of Directors. The

Committee assists the Board in ensuring that the financial statements
reflect a true, fair and accurate view of the state of affairs of the Company,
and also in ensuring robust monitoring systems and internal controls
within the business.
Terms of reference of oversight responsibilities of the Board with special

emphasis on ensuring compliance with all applicable
The terms of reference of the Audit Committee have legislations and regulations, the core responsibilities of
been determined by the Board, as per the Corporate the Audit Committee, among others, are as follows:
Governance Code 2018 (CG Code 2018) of the
Bangladesh Securities and Exchange Commission, (a) Oversee the financial reporting process;
dated June 03, 2018.
(b) Monitor the choice of accounting policies and
principles;
Composition
(c) Monitor internal audit and compliance processes
In accordance with the CG Code 2018, the Audit to ensure that it is adequately resourced, including
Committee comprises three members, which include approval of the internal audit and compliance plan and
two Independent Directors. The Chairman of the review of the internal audit and compliance report;
Committee is an Independent Director. The Company
Secretary is the member secretary of the Committee. (d) Oversee hiring and performance of external
The current members of the Audit Committee include: auditors;
• Faheemul Huq, Chairman (e) Hold meetings with external/statutory auditors for
review of the annual financial statements before
• Wassim Moukahhal, Member submission to the Board for approval or adoption;
• Pramod Kumar Chand, Member (f) Review, along with the management, the annual
• Muhammad Shahidul Islam, Member Secretary financial statements before submission to the
Board for approval;
All members of the Committee have strong business
acumen, robust insights and are knowledgeable (g) Review, along with the management, the quarterly
individuals with uncompromising integrity, and are able and half-yearly financial statements before
to ensure compliance with financial, regulatory and submission to the Board for approval;
corporate laws that support meaningful contribution to (h) Review the adequacy of the internal audit function;
the business as well.
(i) Review the Management’s Discussion and Analysis
before disclosing it in the annual report;
Roles and responsibilities
(j) Review statements of all related party transactions
The roles and responsibilities of the Audit Committee submitted by the management;
are clearly defined in the Audit Committee Charter. The
Audit Committee shall assist the Board in fulfilling its (k) Review management letters or letters of internal
oversight responsibilities. To recognise the importance control weakness issued by statutory auditors;
(l) Oversee the determination of audit fees based to be held every quarter, in which the Committee
on the scope and magnitude, level of expertise reviewed issues relating to business operations,
and time required for effective audit, while also compliance and finance and accounts, among
evaluating the performance of external auditors; others. The Managing Director, Chief Financial Officer
and and Head of Internal Audit and Compliance (HIAC)
were permanent invitees to the meeting. Relevant
(m) Perform other activities related to the Audit
departmental heads and other members of the
Committee Charter, as requested by the Board of
management also attended the meetings, as required.
Directors.
The proceedings of the meetings are properly recorded
in minutes and regularly reported to the Board of
Committee meetings and attendance Directors. The number of Audit Committee meetings
held, and the attendance by each member during the
During 2019, the Committee held 04 (four) meetings,
year 2019 comprise the following:
complying with the requirement of at least one meeting
Name of Numberof meetings Number

Position
Director held as a member of meetings attended
Faheemul Huq Independent Director and Chairperson of 04 02

Barrister-at-Law the Committee
Wassim Moukahhal Independent Director and Member of the 04 04

Committee
Pramod Kumar Chand (Nominee Director and Member of the Committee 04 04

of RAK Ceramics PJSC, UAE)
Muhammad Shahidul Islam Company Secretary and Member 04 04

Secretary of the Committee
Internal control and risk management process Committee’s report summary

The system of internal control covers financial, The Committee has the following opinions regarding
operational and compliance controls and risk corporate and financial affairs of the Company:
management procedures. The importance of risk
management and internal controls includes the
• Reviewed the quarterly, half-yearly and yearly
financial statements of the company, and
establishment of an appropriate control environment
recommended to the board for adoption and
and framework, as well as reviewing its adequacy,
approval
integrity and competence.
The risk management process at RAK Ceramics
• Reviewed the internal audit process and
effectiveness of internal audit
(Bangladesh) comprises the alignment of resources to
ensure the attainment of strategy and business plans, • Reviewed the findings of internal audit team and
including the exploitation of available opportunities its corrective actions
that meet the risk appetite criteria set by the Board. Risk
profiles inherent to existing activities are furthermore • Reviewed if adequate internal control systems are
maintained within the approved risk tolerance levels, in place to detect, correct and prevent fraud and
thereby optimising risk-return parameters, laying the errors on a timely basis
foundations for sustainable growth and consistent • Reviewed if laws and regulations relating to
value creation for shareholders and other stakeholders. business and internal policies, procedures and
guidelines have been complied with
• Reviewed if financial statements for the year ended Quarterly financial statements
December 31, 2019 contained full disclosures
and if these were prepared in accordance with As per the CG Code 2018, the Audit Committee
Bangladesh Financial Reporting Standards reviewed quarterly financial statements of the Company
(BFRS), as adopted by the Institute of Chartered and its subsidiaries, and found that these statements
Accountants of Bangladesh (ICAB) reflected a true and fair view of the state of affairs of
the companies.
• Appropriate management information systems
(MIS) are in place to facilitate the decision-making
Annual financial statements
process
The Committee has tabled the annual financial
• Existing risk management procedures are effective statements for approval by the Board. The Board has
to capture and mitigate risk subsequently approved the financial statements, which
• The state of compliance with corporate will be opened for discussion at the forthcoming Annual
governance code and other regulations, as per General Meeting.
the requirements of the Bangladesh Securities and
Exchange Commission, were ensured Appreciation
The Audit Committee expresses its sincere thanks to
Statutory auditor the members of the Board, the management and the
The Audit Committee is satisfied through its own statutory and internal auditors for their support and
process of review that the statutory auditor of the assistance in enabling it to carry out its duties and
Company is independent, as defined by the related responsibilities effectively.
act. The Audit Committee of the Board recommended
the re-appointment of ACNABIN, Chartered
Accountants (an independent member of BAKER TILLY
INTERNATIONAL), as the statutory auditors of the
Company for the year 2020.
Internal audit
Internal Audit is regarded as one of the four pillars of
corporate governance. Internal audit is conducted under (Wassim Moukahhal)
the supervision of Mr. Mohammad Samsul Arefin, Head
Member
of Internal Audit and Compliance (HIAC), in accordance
Audit Committee
with the approved roles and responsibilities of HIAC and
February 04, 2020
corporate governance code/best practices.
Financial management
The financial management/activities of the Company
are supervised by Mr. Sadhan Kumar Dey, Chief Financial
Officer of the Company. The Audit Committee is
satisfied that Mr. Sadhan Kumar Dey has the appropriate
expertise and knowledge to fulfill his role efficiently.
NOMINATION AND REMUNERATION

COMMITTEE REPORT
The Board of Directors of RAK Ceramics (Bangladesh) has duly constituted

a Nomination and Remuneration Committee (NRC) as a sub-committee of
the Board. The NRC assists the Board in formulating the nomination criteria
or policy for determining qualifications, positive attributes, experiences and
independence of Directors and other top-level executives. The NRC fulfills a
guiding role to the management to identify the Company’s needs for human
resources at different levels and to determine their selection, transfer or
replacement and promotion criteria.
Terms of reference (1) NRC shall be independent and responsible or

accountable to the Board and to shareholders
The terms of reference of the NRC have been determined
by the Board, as per the Corporate Governance Code (2) NRC shall oversee, among others, the following matters
2018 (CG Code 2018) of Bangladesh Securities and and make a report with recommendations to the Board:
Exchange Commission, dated June 03, 2018.
(a) Formulating the criteria for determining
qualifications, positive attributes and independence
Composition of a Director, and recommending a policy to the
In accordance with CG Code 2018, the NRC of RAK Board relating to the remuneration of Directors and
Ceramics (Bangladesh) comprises three members, top-level executives, considering the following:
which include two Independent Directors. The (i) The level and composition of remuneration
Chairperson of the Committee is an Independent is reasonable and sufficient to attract, retain
Director of the Company. The Company Secretary is and motivate suitable Directors to steward the
the Member Secretary of the Committee. The current company successfully;
members of the NRC are as follows:
(ii) The alignment of remuneration to performance
• Wassim Moukahhal, Chairperson is clear and meets appropriate performance
• Barrister Faheemul Huq, Member benchmarks;
• Pramod Kumar Chand, Member (iii) Remuneration to Directors and top-level

executives involves a balance between fixed
• Muhammad Shahidul Islam, Member Secretary and incentive pay, reflecting short and long-
term performance objectives appropriate to the
working of the company and its goals;
Roles and responsibilities
The roles and responsibilities of the NRC are clearly (b) Devising a policy on the Board’s diversity, taking
defined in the terms of reference (ToR). The prime into consideration age, gender, experience,
responsibilities of the NRC, among others, are as follows: ethnicity, educational background and nationality;
(c) Identifying persons who are qualified to become shall be reasonable and sufficient to attract, retain
Directors and who may be appointed in top-level and motivate suitable individuals. The relationship of
executive positions, in accordance with the criteria remuneration to performance should be clear and
laid down, and recommend their appointment should encourage meeting of appropriate performance
and removal to the Board; benchmarks. The remuneration should also involve a
(d) Formulating the criteria for evaluation of balance between fixed and incentive/performance-
performance of Independent Directors of the Board; related pay, reflecting achievement of short and
long-term performance objectives appropriate to the
(e) Identifying the Company’s needs for employees
working of the Company and meeting its goals.
at different levels and determine their selection,
transfer or replacement and promotion criteria;
Evaluation criteria
(f) Developing, recommending and reviewing
annually the Company’s human resources and The Committee shall carry out evaluation of
training policies; and performance of every Director. The Committee shall
identify the evaluation criteria which will evaluate
(g) Developing a succession plan for the Board and for
Directors based on their knowledge to perform the
top-level executives, and regularly reviewing the
plan. role, time and level of participation, performance of
duties, level of oversight and professional conduct and
independence. The appointment/re-appointment/
Nomination policy continuation of Directors on the Board shall be subject
The NRC shall identify and ascertain the integrity, to the outcome of the annual evaluation process. The
qualification, expertise and experience of the person Committee shall evaluate performance of top-level
for appointment as Director in terms of the diversity executives on the basis of individual KPIs. Decisions
policy of the Board, and recommend to the Board pertaining to promotion/continuation of top-level
his/her appointment. For the appointment of top- executives shall be subject to the outcome of the annual
level executives, a person should possess adequate evaluation process based on appropriate performance
qualifications, expertise and experience for the position
benchmarks.
he/she is considered for appointment. Further, for
administrative convenience, the appointment of top-
level executives, the Managing Director is authorised to Committee meetings and attendance
identify and appoint a suitable person for such a position.
During the year 2019, the NRC held one meeting,
However, if need be, the Managing Director may consult
the Committee/Board for further directions/guidance. complying with the requirement of at least one meeting
to be held during the year. The proceedings of the
meeting was recorded in proper minutes and reported
Remuneration policy to the Board of Directors. The number of NRC meetings
The level and composition of remuneration to be paid held and the attendance by each member during the
to Directors, top-level executives and other employees year 2019 is given below:
Number of meetings held Number of

Name of Director Position
while as a member meetings attended
Wassim Moukahhal Independent Director and 01 01

Chairperson of the Committee
Faheemul Huq, Barrister-at-Law Independent Director and Member 01 Nil

of the Committee
Pramod Kumar Chand Director and Member of the 01 01

(Nominee of RAK Ceramics PJSC, UAE) Committee
Muhammad Shahidul Islam Company Secretary and Member 01 01

Secretary of the Committee
Activities of NRC Appreciation

The NRC carried out the following activities during the The NRC expresses their sincere thanks to the members
year 2019: of the Board and the management of the Company for
their outstanding support and co-operation extended
• Reviewed issues related to the formulation of
in helping discharge its duties and responsibilities
the nomination criteria or policy for determining
effectively.
qualifications, positive attributes, experiences
and independence of Directors and top-level
executives.
• Reviewed the performance of top-level executives
on the basis of individual KPIs.
• Reviewed the criteria for evaluation of performance
of Independent Directors and the Board.
(Wassim Moukahhal)
• Reviewed the Company’s need for employees at
different levels and determined their selection, Chairperson
transfer or replacement and promotion criteria. Nomination and Remuneration Committee
February 04, 2020
• Reviewed human resources and training policies.
CORPORATE GOVERNANCE REPORT
At RAK Ceramics (Bangladesh), we believe that it is imperative for us to

manage our business operations in the most fair and transparent manner,
under the governance and stewardship of our values. For us, corporate
governance represents an ethical business process aimed at enhancing
our organisation’s reputation, goodwill and sustainability. We believe that
our good governance processes provide transparency with regards to
corporate policies and strategies, while enabling us to refine our decision-
making process. This further strengthens internal control systems and helps
in building positive relationships with all our stakeholders.
The Board of Directors of the Company are responsible corporate governance in order to bring forth objectivity
and committed to embracing sound principles of and transparency in the overall decision-making
corporate governance. Our governance framework process, thus enhancing the quality of our decisions.
ensures that we make timely disclosures and share The Board of Directors is an effective intermediary
detailed and timely information with respect to our between shareholders and the management. Directors
financials and our performance, as well as disclosures are elected or appointed by shareholders at the Annual
related to our leadership and governance. We believe in General Meeting and they are accountable to our
transparency and commit ourselves to adhere to good shareholders.
corporate governance practices at all times.
Enabling us to reinforce our governance standards, we Composition of the board
have adopted a few core principles that include the In compliance with the corporate governance code
following: 2018 of the Bangladesh Securities and Exchange
• Appropriate composition of the Board; Commission (BSEC), the Board of Directors of RAK
Ceramics (Bangladesh) comprises five members,
• Timely disclosure of material and financial including two Independent Directors. The Company
information to the Board, regulators, shareholders has a Non-Executive Chairman and a Managing Director
and other stakeholders; (separate roles).
• Robust systems and processes to ensure
strong internal controls, financial controls and Board procedure
compliance with laws, rules and regulations; and
The Board embraces the practice of planning in
• Proper business conduct by the Board, committees, advance in matters requiring discussions and decisions
top management and employees. by the Board. The Board is appraised by means of a
presentation on production, sales, marketing, finance
major business segments and other operations of the
Board of directors
Company, among other matters, as per their demands
RAK Ceramics (Bangladesh) firmly believes that an active, and requirements. The Managing Director along with
well-informed and independent Board is necessary the Company Secretary, finalises the agenda papers for
to ensure alignment with the highest standards of Board meetings, in consultation with concerned teams/
stakeholders. The minutes of the proceedings of each independent, responsible and accountable to the Board
Board meeting are maintained in terms of statutory and to shareholders. The NRC shall:
provisions.
a) Report and offer recommendations to the Board
of Directors
Committees of the board
b) Disclose the nomination and remuneration policy
In accordance with the requirements of Corporate and the evaluation criteria and its activities to
Governance Code 2018 of the BSEC, RAK Ceramics shareholders
(Bangladesh) has an Audit Committee and a
Nomination and Remuneration Committee (NRC) as The details about the NRC, including terms of reference,
sub-committees of the Board of Directors. composition, responsibilities, meetings, nomination and
remuneration policy, evaluation criteria and activities,
are disclosed in this annual report in the “Nomination
Audit committee and Remuneration Committee (NRC) Report”, signed by
The Audit Committee is a sub-committee of the Board the Chairperson of the Committee.
and assists the Board in ensuring the promulgation of
strong monitoring systems across the business. The Chairman of the board and managing director
Committee comprises three members, which include
two Independent Directors. The Chairman of the The position of the Chairman of the Board and the
Committee is an Independent Director of the Company. Managing Director of RAK Ceramics (Bangladesh) is
The Company Secretary is the Member Secretary of the filled by different individuals. The Board of Directors has
Committee. clearly defined the respective roles and responsibilities
of the Chairman and the Managing Director, in addition
The Audit Committee is responsible to the Board, and to their roles and responsibilities, as per the Articles
the duties and responsibilities of the Committee are of Association of the Company. However, in addition,
clearly set forth in writing by the Board in the Audit Mr. Imtiaz Hussain was the Chief Executive Officer of
Committee Charter. The Audit Committee reports to the Company and has resigned voluntarily from the
the: position.
a) Board of Directors
Chief financial officer
b) Relevant regulatory authorities
Sadhan Kumar Dey is the Chief Financial Officer of RAK
c) Shareholders and general investors
Ceramics (Bangladesh). He is a qualified finance and
Details about the Audit Committee, including terms management professional from the Chartered Institute
of reference, composition, responsibilities, meetings, of Management Accountant – UK and the Institute of
reporting and activities carried out by the Committee, Certified Management Accountant – Australia. He is
are disclosed in this annual report in the “Audit alumni of Harbard Business School,USA. He possesses
Committee Report”, signed by the Member of the more than 20 years of industrial experience, focused on
Committee. serving construction companies in the manufacturing
sectors. As CFO, he is responsible for the finance and
accounting activities of the Company. The Board of
Nomination and remuneration committee (NRC) Directors has clearly defined the roles, responsibilities
The NRC is a sub-committee of the Board and assists the and duties of the CFO.
Board in the formulation of the nomination criteria or
policy for determining qualifications, positive attributes, Company secretary
experiences and independence of directors and top-
level executives, as well as a policy for the formal Muhammad Shahidul Islam is the Company Secretary
processes of considering remuneration of directors and of RAK Ceramics (Bangladesh) and has been appointed
top-level executives. by the Board of Directors of the Company. He is a
qualified Chartered Secretary and a fellow member of
The NRC of RAK Ceramics (Bangladesh) comprises three the Institute of Chartered Secretaries of Bangladesh
members, which include two Independent Directors. (ICSB). His professional career spans over 15 years in
The Chairperson of the Committee is an Independent the realm of Company Secretariat, Corporate Affairs,
Director of the Company. The Company Secretary is Compliances, Initial Public Offer (IPO), Legal, Capital
the Member Secretary of the Committee. The NRC is Market Operations and Internal Audit covering the
manufacturing and insurance sectors. The Board of RAK Ceramics (Bangladesh) Limited, nor they have
Directors has clearly defined the roles, responsibilities any directorship/shares of RAK Ceramics (Bangladesh)
and duties of the Company Secretary. Limited during the tenure of the audit assignment.
Head of Internal audit and compliance Internal audit and control

Mohammad Samsul Arefin is the Head of Internal Audit RAK Ceramics (Bangladesh) considers internal audit
and Compliance of RAK Ceramics (Bangladesh). He is and compliance as one of the most important tools
a qualified Cost and Management Accountant and is a for ensuring alignment with best governance practices.
fellow member of the Institute of Cost and Management Hence, the Company has an independent internal
Accountants of Bangladesh (ICMAB). He is also a audit and compliance department under the control
Chartered Global Management Accountant (CGMA), of the Audit Committee of the Board. Internal audit
qualified from CIMA, UK. He is responsible for internal at RAK Ceramics (Bangladesh) assists the Company in
control and compliance of the Company. The Board of accomplishing its objectives by bringing a systematic
Directors has clearly defined the roles, responsibilities and disciplined approach to evaluate and improve the
and duties of the Head of Internal Audit and Compliance. effectiveness of the organisation’s risk management
capabilities, controls and governance processes. It also
Statutory auditors helps the Audit Committee of the Board of Directors to
perform their responsibilities efficiently and effectively.
Statutory auditors are appointed by the shareholders at the
Annual General Meeting and also fix their remuneration
thereof. ACNABIN, Chartered Accountants (an Subsidiary company
independent member of BAKER TILLY INTERNATIONAL), RAK Ceramics (Bangladesh) has two subsidiary
was the statutory auditor of the Company for the year companies and, in compliance with the Corporate
2019. They conduct systematic examination of the Governance Code 2018 of the BSEC, the Company
books and records of the Company and ascertain, ensured the following across its subsidiaries:
verify and report upon the facts regarding the financial
results of the Company. To ensure the highest levels of • Provisions relating to the composition of the Board
compliance with corporate governance, the Company of subsidiary companies, including Independent
did not engage its statutory auditors to perform the Directors, have been complied with.
following services:
• Independent Director of the company is also a
(i) Appraisal or valuation services or fairness opinions; Director in subsidiary companies.
• Affairs of subsidiary companies have been
(ii) Financial information systems design and reviewed at the Board meeting of the Company.
implementation;
• Minutes of the Board meeting of subsidiary
(iii) Book-keeping or other services related to the companies have been placed for review at the
accounting records or financial statements; Board meeting of the Company.
(iv) Broker-dealer services; • Financial statements of subsidiary companies have

been reviewed by the Audit Committee of the
(v) Actuarial services; Company.
(vi) Internal audit services or special audit services;

Code of conduct
(vii) Any service that the Audit Committee determines; The Board of Directors of RAK Ceramics (Bangladesh)
has laid down a comprehensive code of conduct for the
(viii) Audit or certification services on compliance of Chairperson of the Board, other Board members and
corporate governance; and Chief Executive Officer of the Company, and annual
compliance to the code is recorded.
(ix) Any other service that creates conflict of interest.
As an organisation of repute, our values encompass
M/s. ACNABIN declares that none of the partners or integrity, self-determination and valuing our human
employees or any family members of any partners or resources. Our parent company has specified the
employees of M/s. ACNABIN has taken any loan from corporate values for the Company and has also
stipulated a code of conduct for employees, ensuring of conditions of corporate governance code of the
that the latter maintains the highest integrity, promotes Company is provided on page 89 in this annual report.
fair and accurate disclosures and ensures financial
reporting and compliance with all the relevant laws and
Conclusion
ethical principles.
RAK Ceramics (Bangladesh) ensured the highest standards
in good corporate governance and also rigorous adherence
Compliances
to the requirements of the ethical code of conduct
RAK Ceramics (Bangladesh) is committed to comply through close and consistent monitoring. Through the
with all the requirements of the corporate governance code of ethics, all levels of staff have been educated and
code, as required by the Bangladesh Securities and encouraged to report through whistle-blowing when they
Exchange Commission. The certificate on compliance suspect any wrongdoing by employees.
CORPORATE GOVERNANCE
COMPLIANCE CERTIFICATE
Report to the Shareholders of RAK Ceramics (Bangladesh) Limited on

Compliance of the Corporate Governance Code
n
We have examined the Compliance status to the Corporate Governance Code by RAK Ceramics
(Bangladesh) Limited for the year ended on December 31, 2019. This Code relates to the Notification
No. BSEC/CMRRCD/2006-158/207/Admin/80 dated 3 June 2018 of the Bangladesh Securities and
Exchange Commission.
Such compliance with the Corporate Governance Code is the responsibility of the Company. Our
examination was limited to the procedures and implementation thereof as adopted by the Management
in ensuring compliance to the conditions of the Corporate Governance Code.
This is a scrutiny and verification and an independent audit on compliance of the conditions of the
Corporate Governance Code as well as the provisions of relevant Bangladesh Secretarial Standards (BSS)
as adopted by the Institute of Chartered Secretaries of Bangladesh (ICSB) in so far as those standards are
not inconsistent with any condition of this Corporate Governance Code.
We state that we have obtained all the information and explanations, which we have required, and after
due scrutiny and Verification thereof, we report that, in our opinion:
(a) The Company has complied with the conditions of the Corporate Governance Code as stipulated
in the above mentioned Corporate Governance Code issued by the Commission;
(b) The Company has complied with the provisions of the relevant Bangladesh Secretarial Standards
(BSS) as adopted by the Institute of Chartered Secretaries of Bangladesh (ICSB) as required by
this Code;
(c) Proper books and records have been kept by the company as required under the Companies
Act, 1994, the securities laws and other relevant laws; and
(d) The Governance of the company is highly satisfactory.
For: Jasmin & Associates
……………………………
Place : Dhaka Jasmin Akter, FCS

Dated : February 04, 2020 Chief Executive
Annexure-C

For the year ended 31st December 2019
Status of Compliance with the Corporate Governance Code

As per Condition No. 1 (5)(xxvii)
Status of compliance with the conditions imposed by the Commission’s Notification

No. SEC/CMRRCD/2006-158/207/Admin/80, dated 3 June 2018, issued under section
2CC of the Securities and Exchange Ordinance 1969:
(Report under Condition No. 9)
Compliance Status
Condition
No. Title Remarks
Not
Complied
Complied
1 BOARD OF DIRECTORS:
1(1) Board’s Size

The number of the Board members of the Company shall not be less than 5
√
(five) and more than 20 (twenty).
1(2) Independent Directors
At least one-fifth (1/5) of the total number of directors in the Company’s
Board shall be Independent Directors; any fraction shall be considered to the
1(2)(a) √
next integer or whole number for calculating the number of independent
director(s);
Who either do not hold any share/s in the Company or hold less than one
1(2)(b)(i) √
(1%) shares of the total paid-up shares of the Company;
Who is not a sponsor of the Company or is not connected with any of the
Company’s sponsor/s or director/s or nominated director/s or shareholder/s
of the Company or any of its associates, sister concerns, subsidiaries and
1(2)(b)(ii) parents or holding entities who hold one percent (1%) or more shares of the √
total paid-up shares of the Company on the basis of family relationship and
his or her family members also shall not hold the above-mentioned shares in
the company:
Who has not been an executive of the company in the immediate 2 (two)
1(2)(b)(iii) √
preceding financial years;
Director of
Who does not have any other relationship, whether pecuniary or otherwise,
1(2)(b)(iv) √ subsidiary
with the Company or its subsidiary/associated companies;
Companies
Who is not a member or TREC (Trading Right Entitlement Certificate) holder,
1(2)(b)(v) √
director or officer of any stock exchange;
Who is not a shareholder, director, except independent director, or officer of
√
1(2)(b)(vi) any member or TREC holder of any stock exchange or an intermediary of the
capital market;
Who is not a partner or an executive or was not a partner or an executive

during the preceding 3 (three) years of the concerned Company’s statutory
1(2)(b)(vii ) √
audit firm or audit firm engaged in internal audit services or audit firm
conducting special audit or professional certifying compliance to this code;
Who shall not be an independent director in more than 5 (five) listed
1(2)(b)(viii) √
companies;
Who has not been convicted by a court of competent jurisdiction as a
1(2)(b)(ix) defaulter in payment of any loan or any advance to a bank or a non-bank √
financial institution (NBFI); and
1(2)(b)(x) Who has not been convicted for a criminal offence involving moral turpitude. √
The independent director(s) shall be appointed by the Board of Directors and
1(2)(c) √
approved by the shareholders in the Annual General Meeting (AGM).
The post of independent director(s) cannot remain vacant for more than 90
1(2)(d) √
(ninety) days.
The tenure of office of an independent director shall be for a period of 3
1(2) (e ) √
(three) years, which may be extended for 1 (one) tenure only.
1(3) Qualification of independent director (ID)
Independent director shall be a knowledgeable individual with integrity who
is able to ensure compliance with financial, regulatory and corporate laws,
1(3)(a) √
regulatory requirements and can make meaningful contributions to the
business;
Business leader who is or was a promoter or director of an unlisted company
having a minimum paid-up capital of Tk. 100.00 million or any listed company
1(3)(b)(i) √
or a member of any national or international chamber of commerce or
business association; or
Corporate leader who is or was a top-level executive not lower than Chief
Executive Officer or Managing Director or Deputy Managing Director or Chief
Financial Officer or Head of Finance or Accounts or Company Secretary
1(3)(b)(ii) √
or Head of Internal Audit and Compliance or Head of Legal Service or a
candidate with equivalent position of an unlisted company having a minimum
paid-up capital of Tk. 100.00 million of a listed company; or
Former official of government or statutory or autonomous or regulatory body
in the position not below 5th grade on the national pay scale, who has at least
1(3)(b)(iii) √
educational background of bachelor's degree in economics or commerce or
business or law; or
University teacher who has educational background in economics or
1(3)(b)(iv) √
commerce or business studies or law; or
Professional who is or was an advocate practicing at least in the High
Court Division of Bangladesh's Supreme Court or a Chartered Accountant
1(3)(b)(v) or Cost and Management Accountant or Chartered Financial Analyst or √
Chartered Certified Accountant or Certified Public Accountant or Chartered
Management Accountant or Chartered Secretary or equivalent qualification;
The independent director shall have at least 10 (ten) years of experiences in
1(3) (c ) √
any field mentioned in clause (b);
In special cases, the above qualifications or experiences may be relaxed, No such
1 (3)(d)
subject to prior approval of the Commission. matter
Duality of chairperson of the Board of Directors and Managing Director of
1(4)
Chief Executive Officer
The positions of the Chairperson of the Board and the Managing Director
1(4) (a ) (MD) and/or Chief Executive Officer (CEO) of the company shall be filled by √
different individuals;
The Managing Director (MD) and/or Chief Executive Officer (CEO) of a listed
1(4)(b) √
company shall not hold the same position in another listed company;
The Chairperson of the Board shall be elected from among the non-executive
1(4) ( c ) √
directors of the company;
The Board shall clearly define respective roles and responsibilities of the
1 (4)(d) √
Chairperson and the Managing Director and/or Chief Executive Officer;
In the absence of the Chairperson of the Board, the remaining members may
elect one among themselves from non-executive directors as Chairperson
1 (4) (e ) √
for that particular Board’s meeting; the reason of absence of the regular
Chairperson shall be duly recorded in the minutes.
1(5) The Director's Report to Shareholders
1(5)(i) An industry outlook and possible future developments in the industry; √
1(5)(ii) The Segment-wise or product-wise performance; √

Risks and concerns, including internal and external risk factors, threat to
1(5)(iii) √
sustainability and negative impact on environment, if any;
A discussion on the cost of goods sold, gross profit margin and net profit
1(5)(iv) √
margin, where applicable;
A discussion on continuity of any extra-ordinary activities and their No such
1(5) (v)
implication (gain or loss); matter
A detailed discussion on related party transactions, along with a statement
1(5) (vi) showing amount, nature of related party, nature of transactions and basis of √
transactions of all related party transactions;
A statement of utilisation of proceeds raised through public issues, rights No such
1(5)(vii)
issues and/or any other instruments; matter
An explanation on the financial results if they deteriorate after the company
No such
1(5)(viii) goes for initial public offering (IPO), repeat public offering (RPO), rights share
matter
offer, direct listing, etc.;
An explanation on any significant variance that occurs between quarterly No such
1(5)(ix)
financial performances and annual financial statements; matter
A statement of remuneration paid to directors, including independent
1(5)(x) √
directors;
A statement that the financial statements prepared by the management of the
1(5)(xi) issuer company present fairly its state of affairs, the result of its operations, √
cash flows and changes in equity;
A statement that proper books of accounts of the issuer Company have been
1(5)(xii) √
maintained;
A statement that appropriate accounting policies have been consistently
1(5)(xiii) applied in preparation of financial statements and that the accounting √
estimates are based on reasonable and prudent judgment;
A statement that International Accounting Standards (IAS) or International
Financial Reporting Standards (IFRS), as applicable in Bangladesh, have been
1(5)(xiv) √
followed in the preparation of the financial statements, and any departure
therefrom has been adequately disclosed;
A statement that the system of internal control is sound in design and has
1(5)(xv) √
been effectively implemented and monitored;
A statement that minority shareholders have been protected from abusive
1(5)(xvi) actions by, or in the interest of, controlling shareholders acting either directly √
or indirectly and have effective means of redress;
A statement that there are no significant doubts upon the issuer company’s
ability to continue as a going concern. If the issuer company is not No such
1(5)(xvii)
considered to be a going concern, the fact along with reasons thereof should matter
be disclosed;
An explanation that significant deviations from the last year’s operating results
No such
1(5)(xviii) of the issuer company shall be highlighted and the reasons thereof should be
matter
explained;
Key operating and financial data of at least preceding 5 (five) years shall be
1(5)(xix) √
summarised;
An explanation on the reasons if the issuer company has not declared No such
1(5)(xx)
dividend (cash or stock) for the year; matter
Board’s statement to the effect that no bonus shares or stock dividend has
1(5)(xxi) √
been or shall be declared as interim dividend;
The total number of Board meetings held during the year and attendance by
1(5)(xxii) √
each director;
1(5)(xxiii) Parent or subsidiary or associated companies and other related parties
√
(a) (name-wise details);
Directors, Chief Executive Officer, Company Secretary, Chief Financial Officer,
1(5)(xxiii
Head of Internal Audit and Compliance and their spouses and minor children √
(b)
(name-wise details);
1(5)(xxiii)
Executives; √
(c)
1(5)(xxiii) Shareholders holding ten percent (10%) or more voting interest in the
√
(d) company (name wise details).
1(5)(xxiv)
A brief resume of the director; √
(a)
1(5)(xxiv)
Nature of his/her expertise in specific functional areas; √
(b)
1(5)(xxiv) Name of companies in which the person also holds the directorship and the
√
(c) membership of committees of the board;
1(5)(xxv) Accounting policies and estimation for preparation of financial statements;
√
(a)
Changes in accounting policies and estimations, if any, clearly describing the
1(5)(xxv) effect on financial performance or results and financial position, as well as
√
(b) cash flows in absolute figures for such changes;
Comparative analysis (including effects of inflation) of financial performance

1(5)(xxv)
or results and financial position, as well as cash flows for current financial year √
(c)
with immediate preceding five years explaining reasons thereof;
1(5)(xxv) Compare such financial performance or results and financial position as well
√
(d) as cash flows with the peer industry scenario;
1(5)(xxv) Briefly explain the financial and economic scenario of the country and the
√
(e) globe;
Risks and concern issues related to the financial statements, explaining such
1(5)(xxv)(f) √
risks and concern mitigation plan of the company; and
Future plan or projection or forecast for the company’s operation,
1(5)(xxv)
performance and financial position, with justification thereof, i.e., actual √
(g)
position shall be explained to the shareholders in the next AGM;
Declaration or certification by the CEO and the CFO to the Board, as required
1(5)(xxvi) √
under condition No. 3(3) shall be disclosed as per Annexure-A; and
The report as well as certificate regarding compliance of conditions of this

1(5)(xxvii) Code as required under condition No. 9 shall be disclosed as per Annexure-B √
and Annexure-C.
Meetings of the Board of Directors: The company shall conduct its Board
meetings and record the minutes of the meetings as well as keep required
books and records in line with the provisions of the relevant Bangladesh
1(6) √
Secretarial Standards (BSS), as adopted by the Institute of Chartered
Secretaries of Bangladesh (ICSB) in so far as those standards are not
inconsistent with any condition of this code.
Code of Conduct for the Chairperson, other Board members and Chief
1(7)
Executive Officer
The Board shall lay down a code of conduct, based on the recommendation
of the Nomination and Remuneration Committee (NRC) at condition No. 6
1(7)(a) √
for the Chairperson of the Board, other board members and Chief Executive
Officer of the company;
The code of conduct, as determined by the NRC, shall be posted on the
website of the company, including, among others, prudent conduct and
1(7)(b) behavior; confidentiality; conflict of interest; compliance with laws, rules and √
regulations; prohibition of insider trading; relationship with the environment,
employees, customers and suppliers; and independency.
2 Governance of Board of Directors of Subsidiary Company
Provisions relating to the composition of the Board of the holding company
2(a) shall be made applicable to the composition of the Board of the subsidiary √
company;
At least 1 (one) independent director on the Board of the holding company
2(b) √
shall be a director on the Board of the subsidiary company;
The minutes of the Board meeting of the subsidiary company shall be placed
2(c ) √
for review at the following Board meeting of the holding company;
The minutes of the respective Board meeting of the holding company shall
2(d) √
state that they have reviewed the affairs of the subsidiary company also;
The Audit Committee of the holding company shall also review the financial
2(e ) √
statements, in particular the investments made by the subsidiary company.
Managing Director (MD) or Chief Executive Officer (CEO), Chief Financial
3 Officer (CFO), Head of Internal Audit and Compliance (HIAC) and Company
Secretary (CS)
3(1) Appointment
The Board shall appoint a Managing Director (MD) or Chief Executive Officer
3(1)(a) (CEO), a Company Secretary (CS), a Chief Financial Officer (CFO) and a Head √
of Internal Audit and Compliance (HIAC);
The positions of the Managing Director (MD) or Chief Executive Officer (CEO),
3(1)(b) Company Secretary (CS), Chief Financial Officer (CFO) and Head of Internal √
Audit and Compliance (HIAC) shall be filled by different individuals;
The MD or CEO, CS, CFO and HIAC of a listed company shall not hold any
3(1)(c) √
executive position in any other company at the same time;
The Board shall clearly define respective roles, responsibilities and duties of
3(1)(d) √
the CFO, the HIAC and the CS;
The MD or CEO, CS, CFO and HIAC shall not be removed from their position
3(1)(e) without approval of the Board, as well as immediate dissemination to the √
Commission and stock exchange(s).
Requirement to attend Board of Directors’ meetings

The MD or CEO, CS, CFO and HIAC of the company shall attend the meetings
3(2) of the Board, provided that the CS, CFO and/or the HIAC shall not attend √
such part of a meeting of the Board which involves consideration of an
agenda item relating to their personal matters.
Duties of Managing Director (MD) or Chief Executive Officer (CEO) and
3(3)
Chief Financial Officer (CFO)
The MD or CEO and CFO shall certify to the Board that they have reviewed
3(3)(a) the financial statements for the year and that to the best of their knowledge
and belief:
These statements do not contain any materially untrue statement or omit any
3(3)(a)(i) √
material fact or contain statements that might be misleading; and
These statements together present a true and fair view of the company’s
3(3)(a)(ii) affairs and are in compliance with existing accounting standards and √
applicable laws.
The MD or CEO and CFO shall also certify that there are, to the best of
knowledge and belief, no transactions entered into by the company during
3(3)(b) √
the year which are fraudulent, illegal or in violation of the code of conduct for
the company’s Board or its members;
The certification of the MD or CEO and CFO shall be disclosed in the Annual
3(3) ( c ) √
Report.
Board of Directors’ Committee:- For ensuring good governance in the
4
company, the Board shall have at least the following sub-committees:
4 (i) Audit Committee; and √
4(ii) Nomination and Remuneration Committee √
5 AUDIT COMMITTEE:
5(1) Responsibility to the Board of Directors

The Company shall have an Audit Committee as a sub-committee of the
5(1)(a) √
Board of Directors;
The Audit Committee shall assist the Board of Directors in ensuring that the
5(1)(b) financial statements reflect a true and fair view of the state of affairs of the √
Company and in ensuring a good monitoring system within the business;
The Audit Committee shall be responsible to the Board of Directors. The
5(1) (c ) √
duties of the Audit Committee shall be clearly set forth in writing.
5(2) Constitution of the Audit Committee
5(2)(a) The Audit Committee shall be composed of at least 3 (three) members; √

The Board of Directors shall appoint members of the Audit Committee
5(2)(b) who shall be directors of the Company and shall include at least 1 (one) √
Independent Director;
All members of the Audit Committee should be 'financially literate' and at
5(2) (c ) least 1 (one) member shall have accounting or related financial management √
background and 10 (ten) years of such experience;
When the term of service of any Committee member expires or there is any
circumstance causing any Committee member to be unable to hold office
before expiration of the term of service, thus making the number of the
Committee members to be lower than the prescribed number of 3 (three)
5(2)(d) √
persons, the Board shall appoint the new Committee member to fill up
the vacancy immediately or not later than 1 (one) month from the date of
vacancy in the Committee to ensure continuity of the performance of work
of the Audit Committee;
5(2)( e) The company secretary shall act as the secretary of the Committee; √
The quorum of the Audit Committee meeting shall not constitute without
5(2)(f) √
independent director.
5(3) Chairman of the Audit Committee
The Board of Directors shall select 1 (one) member of the Audit Committee to
5(3)(a) √
be Chairman of the Audit Committee, who shall be an independent director;
In the absence of the Chairperson of the Audit Committee, the remaining
members may elect one of themselves as Chairperson for that particular
5(3)(b) meeting, in that case there shall be no problem of constituting a quorum as √
required under condition No. 5(4)(b) and the reason of absence of the regular
Chairperson shall be duly recorded in the minutes.
Chairperson of the Audit Committee shall remain present in the Annual
5(3) (c ) √
General Meeting (AGM):
5(4) Meeting of the Audit Committee
The Audit Committee shall conduct at least its four meetings in a financial
5(4)(a) √
year;
The quorum of the meeting of the Audit Committee shall be constituted in
presence of either two members or two-third of the members of the Audit
5(4)(b) √
Committee, whichever is higher, where presence of an independent director
is a must.
Role of Audit Committee
5(5)
The Audit Committee shall :
5(5)(a) Oversee the financial reporting process; √
5(5)(b) monitor choice of accounting policies and principles; √

Monitor Internal Audit and Compliance process to ensure that it is adequately
5(5) (c ) resourced, including approval of the Internal Audit and Compliance Plan and √
review of the Internal Audit and Compliance Report;
5(5)(d) Oversee hiring and performance of external auditors; √
Hold meeting with the external or statutory auditors for review of the annual
5 (5) (e ) √
financial statements before submission to the Board for approval or adoption;
Review along with the management, the annual financial statements before
5(5) (f ) √
submission to the board for approval;
Review along with the management, the quarterly and half yearly financial
(5)(5) (g) √
statements before submission to the Board for approval;
5(5) (h) Review the adequacy of internal audit function; √
Review the Management’s Discussion and Analysis before disclosing in the
5(5) (i) √
Annual Report;
Review statement of all related party transactions submitted by the
5(5) (j) √
management;
Review Management Letters or Letter of Internal Control weakness
5(5) (k) √
issued by statutory auditors;
Oversee the determination of audit fees based on scope and magnitude, level
5(5) (l) of expertise deployed and time required for effective audit and evaluate the √
performance of external auditors; and
Oversee whether the proceeds raised through Initial Public Offering (IPO) or
Repeat Public Offering (RPO) or Rights Share Offer have been utilized as per No such
5(5) (m)
the purposes stated in relevant offer document matter
or prospectus approved by the Commission.
5(6) Reporting of the Audit Committee
5(6)(a) Reporting to the Board of Directors
5(6)(a)(i) The Audit Committee shall report on its activities to the Board. √
No such
5(6)(a)(ii)(a) Report on conflicts of interests;
matter
Suspected or presumed fraud or irregularity or material defect identified in No such
5(6)(a)(ii)(b)
the internal audit and compliance process or in the financial statements; matter
Suspected infringement of laws, regulatory compliances including securities No such
5(6)(a)(ii)(c)
related laws, rules and regulations; and matter
Any other matter which the Audit Committee deems necessary shall be No such
5(6)(a)(ii)(d)
disclosed to the Board immediately; matter
Reporting to the Authorities: If the Audit Committee has reported to
the Board about anything which has material impact on the financial
condition and results of operation and has discussed with the Board and the
management that any rectification is necessary and if the Audit Committee No such
5(6)(b)
finds that such rectification has been unreasonably ignored, the Audit matter
Committee shall report such finding to the Commission, upon reporting of
such matters to the Board for three times or completion of a period of 6 (six)
months from the date of first reporting to the Board, whichever is earlier.
Reporting to the Shareholders and General Investors: Report on activities
carried out by the Audit Committee, including any report made to the Board
5(7) under condition No. 5(6)(a)(ii) above during the year, shall be signed by the √
Chairperson of the Audit Committee and disclosed in the annual report of the
issuer company.
6 Nomination and Remuneration Committee (NRC):
6(1) Responsibility to the Board of Directors

The company shall have a Nomination and Remuneration Committee (NRC)
6(1)(a) √
as a sub-committee of the Board;
The NRC shall assist the Board in formulation of the nomination criteria
or policy for determining qualifications, positive attributes, experiences
6(1)(b) and independence of directors and top-level executive as well as a policy √
for formal process of considering remuneration of directors, top-level
executives;
The Terms of Reference (ToR) of the NRC shall be clearly set forth in writing
6(1)( c ) √
covering the areas stated at the condition No. 6(5)(b).
6 (2) Constitution of the NRC
The Committee shall comprise of at least three members including an
6(2)(a) √
independent director;
6(2)(b) All members of the Committee shall be non-executive directors; √
6(2) (c) Members of the Committee shall be nominated and appointed by the Board; √
The Board shall have authority to remove and appoint any member of the
6(2) (d) √
Committee;
In case of death, resignation, disqualification, or removal of any member of
the Committee or in any other cases of vacancies, the board shall fill the
6(2)(e ) √
vacancy within 180 (one hundred eighty) days of occurring such vacancy in
the Committee;
The Chairperson of the Committee may appoint or co-opt any external

expert and/or member(s) of staff to the Committee as advisor who shall be
6(2)(f) non-voting member, if the Chairperson feels that advice or suggestion from √
such external expert and/or member(s) of staff shall be required or valuable
for the Committee;
6(2)(g) The company secretary shall act as the secretary of the Committee; √
The quorum of the NRC meeting shall not constitute without attendance of
6(2)(h) √
at least an independent director;
No member of the NRC shall receive, either directly or indirectly, any
6(2)(i) remuneration for any advisory or consultancy role or otherwise, other than √
Director’s fees or honorarium from the company.
6(3) Chairperson of the NRC
The Board shall select 1 (one) member of the NRC to be Chairperson of the
6(3)(a) √
Committee, who shall be an independent director;
In the absence of the Chairperson of the NRC, the remaining members may
elect one among themselves as Chairperson for that particular meeting, the
6(3)(b) √
reason of absence of the regular Chairperson shall be duly recorded in the
minutes;
The Chairperson of the NRC shall attend the annual general meeting (AGM) to
6(3)(c) √
answer the queries of the shareholders:
6(4) Meeting of the NRC
6(4)(a) The NRC shall conduct at least one meeting in a financial year; √
The Chairperson of the NRC may convene any emergency meeting upon
6(4)(b) √
request by any member of the NRC;
The quorum of the meeting of the NRC shall be constituted in presence
of either two members or two third of the members of the Committee,
6(4)(c) √
whichever is higher, where presence of an independent director is must as
required under condition No. 6(2)(h);
The proceedings of each meeting of the NRC shall duly be recorded in the
6(4 ) ( d) √
minutes and such minutes shall be confirmed in the next meeting of the NRC.
6(5) Role of the NRC
NRC shall be independent and responsible or accountable to the Board and
6(5) (a ) √
to the shareholders;
The level and composition of remuneration is reasonable and sufficient
6(5)(b)(i) to attract, retain and motivate suitable directors to run the company
√
(a) successfully;
6(5)(b)(i) The relationship of remuneration to performance is clear and meets

√
(b) appropriate performance benchmarks; and
Remuneration to directors, top level executive involves a balance between
6(5)(b)(i)
fixed and incentive pay reflecting short and long-term performance √
(c )
objectives appropriate to the working of the company and its goals;
Devising a policy on Board’s diversity taking into consideration age, gender,
6(5)(b)(ii) √
experience, ethnicity, educational background and nationality;
Identifying persons who are qualified to become directors and who may be
6(5)(b)(iii) appointed in top level executive position in accordance with the criteria laid √
down, and recommend their appointment and removal to the Board;
Formulating the criteria for evaluation of performance of independent
6(5)(b)(iv) √
directors and the Board;
Identifying the company’s needs for employees at different levels and

6(5)(b)(v) √
determine their selection, transfer or replacement and promotion criteria; and
Developing, recommending and reviewing annually the company’s human
6(5)(b)(vi) √
resources and training policies;
The company shall disclose the nomination and remuneration policy and
6(5)( c ) the evaluation criteria and activities of NRC during the year at a glance in its √
annual report.
7 External or Statutory Auditors.
The issuer company shall not engage its external or statutory auditors to
7(1)
perform the following services of the company, namely:
7(1)(i) Appraisal or valuation services or fairness opinions; √
7(1)(ii) Financial information systems design and implementation; √

Book-keeping or other services related to the accounting records or financial
7(1)(iii) √
statements;
7(1)(iv) Broker-dealer services; √
7(1)(v) Actuarial services; √
7(1)(vi) Internal audit services or special audit services √
7(1)(vii) Any service that the Audit Committee determines; √

Audit or certification services on compliance of corporate governance as
7(1)(viii) √
required under condition No. 9(1); and
7(1)(ix) Any other service that creates conflict of interest. √
No partner or employees of the external audit firms shall possess any share of
the company they audit at least during the tenure of their audit assignment
7(2) √
of that company; his or her family members also shall not hold any shares in
the said company:
Representative of external or statutory auditors shall remain present in the
7(3) Shareholders’ Meeting (Annual General Meeting or Extraordinary General √
Meeting) to answer the queries of the shareholders.
8 Maintaining a website by the Company:
The company shall have an official website linked with the website of the
8(1) √
stock exchange.
8(2) The company shall keep the website functional from the date of listing. √
The company shall make available the detailed disclosures on its website as
8(3) √
required under the listing regulations of the concerned stock exchange(s).
9 Reporting and Compliance of Corporate Governance.-
The company shall obtain a certificate from a practicing Professional
Accountant or Secretary (Chartered Accountant or Cost and Management
Accountant or Chartered Secretary) other than its statutory auditors or
9(1) √
audit firm on yearly basis regarding compliance of conditions of Corporate
Governance Code of the Commission and shall such certificate shall be
disclosed in the Annual Report.
The professional who will provide the certificate on compliance of this
9(2) Corporate Governance Code shall be appointed by the shareholders in the √
annual general meeting.
The directors of the company shall state, in accordance with the Annexure-C
9(3) attached, in the directors’ report whether the company has complied with √
these conditions or not.
BAPLC CERTIFICATE 2019

DECLARATION OF MD AND CFO

REGARDING FINANCIAL STATEMENTS
Date: February 04, 2020
The Board of Directors
Subject: Declaration on Financial Statements for the year ended 31 December 2019
Dear Sir,
Pursuant to the condition No. 1 (5)(xxvi), imposed vide the Commission’s Notification No. BSEC/CMRRCD/2006-158/207/
Admin/80 dated 3 June 2018 under section 2CC of the Securities and Exchange Ordinance 1969, we hereby declare that:
(1) The audited standalone and consolidated financial statements of RAK Ceramics (Bangladesh) Limited for the year
ended 31 December 2019 have been prepared in compliance with International Accounting Standards (IAS) or
International Financial Reporting Standards (IFRS), as applicable in Bangladesh, and any departure therefrom has
been adequately disclosed;
(2) The estimates and judgements related to the financial statements were made on a prudent and reasonable basis
in order for the financial statements to reveal a true and fair view;
(3) The form and substance of transactions and the Company’s state of affairs have been reasonably and fairly
presented in its financial statements;
(4) To ensure the above, the Company has taken proper and adequate care in installing a system of internal control
and maintenance of accounting records;
(5) Our internal auditors have conducted periodic audits to provide reasonable assurance that the established
policies and procedures of the Company were consistently followed; and
(6) The management’s use of the going concern basis of accounting in preparing the financial statements is
appropriate, and there exists no material uncertainty related to events or conditions that may cast significant
doubt on the Company’s ability to continue as going concern.
In this regard, we also certify that:
(i) We have reviewed the audited standalone and consolidated financial statements for the year ended 31 December
2019 and to the best of our knowledge and belief:
(a) These statements do not contain any materially untrue statement or omit any material fact or contain
statements that might be misleading; and
(b) These statements collectively present a true and fair view of the Company’s affairs and are in compliance
with existing accounting standards and applicable laws.
(ii) There are, to the best of our knowledge and belief, no transactions entered into by the Company during the
period, which are fraudulent, illegal or in violation of the code of conduct of the Company’s Board of Directors
or its members.
Sincerely yours,
(SAK Ekramuzzaman) (Sadhan Kumar Dey)

Managing Director Chief Financial Officer
INDEPENDENT AUDITORS’ REPORT

AND AUDITED CONSOLIDATED
FINANCIAL STATEMENTS
as at and for the year ended
31 December 2019
INDEPENDENT AUDITOR’S REPORT

To the Shareholders of RAK Ceramics (Bangladesh) Limited
Opinion those standards are further described in the Auditors’

Responsibilities for the Audit of the Consolidated Financial
We have audited the consolidated financial statements of Statements section of our report. We are independent
RAK Ceramics (Bangladesh) Limited and its subsidiaries of the Group in accordance with the International Ethics
(“the Group”), which comprise the consolidated Standards Board for Accountants’ Code of Ethics for
statement of financial position as at 31 December 2019, Professional Accountants (IESBA Code), and we have
and the consolidated statement of profit or loss and fulfilled our other ethical responsibilities in accordance
other comprehensive income, consolidated statement with the IESBA Code. We believe that the audit evidence
of changes in equity and consolidated statement of we have obtained is sufficient and appropriate to provide
cash flows for the year then ended, and notes to the a basis for our opinion.
consolidated financial statements, including a summary
of significant accounting policies.
Key Audit Matters
In our opinion, the accompanying consolidated
financial statements give true and fair view, in all material Key Audit Matters are those matters that, in our
respects, of the consolidated financial position of the professional judgement, were of most significance in
Group as at 31 December 2019, and of its consolidated our audit of the consolidated financial statements of
financial performance and its consolidated cash flows the current period and include the most significant
for the year then ended in accordance with International assessed risk of material misstatement (whether or
Financial Reporting Standards (IFRSs) as explained in not due to fraud) identified by the auditors, including
note 02-03. those which had the significant effect on the overall
audit strategy, allocation of resources in the audit and
directing the efforts of the engagement team. These
Basis for Opinion matters were addressed in the context of our audit of
We conducted our audit in accordance with International the consolidated financial statements as a whole, and in
Standards on Auditing (ISAs). Our responsibilities under forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Key Audit Matters How our audit addressed the Key Audit Matters
Recognition of rights of use assets and lease liabilities for lease rental arrangements
Refer note no 3.14.3, 6 and 20 to the consolidated financial statements

The Group recognized rights of lease assets (ROUA) and We assessed the Group’s key internal controls in
lease liabilities arising from the lease rental agreements for identification of lease, recognition and measurement of
its display centers, accommodation floors and warehouse. ROUA and lease liability, and related key assumptions. We
The recognition is made for the first time in current year’s performed following procedures for our assessment:
consolidated financial statements as it adopted IFRS 16 • Read the contracts for lease rental arrangements,
(Leases) in its consolidated financial statements for the first especially the terms and conditions related to
time. However, that would not require a restatement of the payments, lease incentives, any indirect costs,
comparative period information because the Group elected dismantling and restoration, option to extend the
modified retrospective approach.
lease or not to terminate the lease.
The lease liability is measured at the present value of
the lease payments that are not paid at that date. For
• Checked the lease amortization schedule and
depreciation schedule for each of the leases.
calculation of the lease liability, the management applies its
judgment in determination of lease term, where certainty • Checked the appropriateness of management’s
of exercising the option to extend or the option not to assumptions, especially in determining the certainty
terminate the lease is considered. of exercising option to extend or terminate lease and
The incremental borrowing rate is used as discounting rate the discounting rate applied to calculate lease liability.
in calculation of lease liability.
Revenue recognition
Refer note no 3.14.2 and 24
The Group provides various benefits to its dealers, including Our audit procedures involved following activities:
discount, commissions, incentives and bonus.
• Reading the contracts with the dealers and other
Considering the variability of the said benefits, effective circulars and announcements for terms and
from the current year, the management presented them conditions related to discount, commissions,
as deduction from revenue in contrast to previous years’ incentives and bonus;
presentation as marketing and selling expense. Prior year’s
comparative figures are also restated in this regard.
• Recalculate the amount of discount, commissions,
incentives and bonus;
The management applies its judgment in determining
whether there is valid expectation among the dealers arising
• Checking the past trend of allowing discount,
commissions, incentives and bonus.
from the Group’s customary business practices for any
further benefits in excess of the figures provisioned for.
Provision for slow moving and obsolete inventories

Refer note no 3.9 and 9 to the consolidated financial statements
The inventories of the Group are carried at lower of cost We obtained assurance over relevance and appropriateness
and net realizable value. The management applies judgment of management’s assumptions applied in calculating the
in determining the appropriate provisions for obsolete stock provision for slow moving and obsolete inventories by:
based upon a detailed analysis of old and slow-moving
inventory.
• evaluating the design and implementation of key
inventory controls operating across the Company;
• attending stock counting and reconciling the
count results to the inventory listings to test the
completeness of data;
• checking the ageing analysis of inventories and
appropriateness of management’s determination
of probability of obsolescence for each group of
inventory ageing;
• reviewing the historical accuracy of inventory
provisioning, and the level of inventory write-offs
during the year.
Credit risk and impairment on trade receivables
Refer note no 3.14.1, 10, 27.1 and 35.1 (b) to the consolidated financial statements
Remarkable amount of the trade receivables of the Group Our audit procedures included testing the Group’s credit
is attributable to a single customer, which is also a related control procedures and judgment on determining the
party (as disclosed in note no #36 to the consolidated provisions for expected credit losses. The audit procedures
financial statements) to the Group. Being related party, involved following activities:
there may be unpalatable behavior putting reliability at risk.
• testing, on a sample basis, receivable balances and
Significant amount of judgment is to be applied to comparing it with our results from the external
determine the risk of default over the expected life of confirmations;
trade receivables, which may have material impact over
the figures of trade receivable. As a result, there is risk of
• inspecting the arrangements, securities documents,
credibility assessments and correspondences with
error in determining the allowance for impairment for trade
parties concerned to assess the recoverability of
receivables.
significant long outstanding receivables;
• reviewing the calculations of the allowance for
impairment of trade receivables based on the
judgments applied by the management.
Review of tax and regulatory matters

Refer note no 23 and 40 to the consolidated financial statements
The Group has several pending corporate tax assessments We obtained an understanding, evaluated the design
and legal proceedings with the government revenue and tested the operational effectiveness of the Group’s
authorities related to claims for tax, VAT and customs key controls over the legal provision and contingencies
duty. The pending cases expose the Group to significant recognition process. To get more insights we performed
litigation and similar risks arising from disputes and following procedures:
regulatory proceedings. Such matters are subject to many
uncertainties and the outcome may not be appropriate to
• enquired into those charged with governance to obtain
their view on the status of all significant litigation and
predict.
regulatory matters;
These uncertainties inherently affect the amount and timing
of potential outflows with respect to the tax provisions and
• enquired the Group’s internal legal counsel for all
significant litigation and regulatory matters and
contingent liabilities.
studied internal notes and reports. We also enquired
As a listed entity, the Group also has to maintain formal confirmations from external counsel on these
compliance with the requirements of the Bangladesh matters;
Securities and Exchange Commission.
• assessed the methodologies on which the provision
amounts are based, recalculated the provisions,
and tested the completeness and accuracy of the
underlying information;
• assessed the Group’s provisions and contingent
liabilities disclosure.
We have reviewed the controls related to Corporate
Governance compliance and reporting compliance as
per Bangladesh Securities and Exchange Commission
guidelines.
Responsibilities of Management and management either intends to liquidate the Group or

to cease operations, or has no realistic alternative but
Those Charged with Governance for to do so.
the Consolidated Financial Statements
Those charged with governance are responsible for
and Internal Controls overseeing the Group’s financial reporting process.
Management is responsible for the preparation and fair
presentation of the consolidated financial statements in
accordance with IFRSs as explained in note 02-03, and Other Information
for such internal control as management determines Management is responsible for the other information.
is necessary to enable the preparation of consolidated The other information comprises the Directors’
financial statements that are free from material Report, which we could not obtain prior to the date
misstatement, whether due to fraud or error. The of this auditors’ report and the Annual Report, which
Bangladesh Securities and Exchange Commission is expected to be made available to us after that date.
rules and regulations together with other applicable
regulations require the Management to ensure effective Our opinion on the consolidated financial statements
internal audit, internal control and risk management does not cover the other information and will not
functions of the Group. express any form of assurance conclusion thereon.
In preparing the consolidated financial statements, In connection with our audit of the consolidated
management is responsible for assessing the Group’s financial statements, our responsibility is to read the
ability to continue as a going concern, disclosing, other information identified above and, in doing so,
as applicable, matters related to going concern and consider whether the other information is materially
using the going concern basis of accounting unless inconsistent with the consolidated financial statements
or our knowledge obtained in the audit, or otherwise
appears to be materially misstated. accounting estimates and related disclosures

made by management.
If, based on the work we have performed on the other
information that we obtained prior to the date of this • Conclude on the appropriateness of management’s
auditors’ report, we conclude that there is a material use of the going concern basis of accounting and,
misstatement of this other information, we are required based on the audit evidence obtained, whether
to report that fact. We have nothing to report in this a material uncertainty exists related to events or
regard. conditions that may cast significant doubt on the
Group’s ability to continue as a going concern. If we
When we read the Annual Report, if we conclude that
conclude that a material uncertainty exists, we are
there is a material misstatement therein, we are required
required to draw attention in our auditor’s report to
to communicate the matter to those charged with
the related disclosures in the consolidated financial
governance and take appropriate actions in accordance
statements or, if such disclosures are inadequate,
with ISAs.
to modify our opinion. Our conclusions are based
on the audit evidence obtained up to the date
Auditor’s Responsibilities for the Audit of of our auditor’s report. However, future events
or conditions may cause the Group to cease to
the Consolidated Financial Statements continue as a going concern.
Our objectives are to obtain reasonable assurance
about whether the consolidated financial statements as
• Evaluate the overall presentation, structure and
content of the consolidated financial statements,
a whole are free from material misstatement, whether
including the disclosures, and whether the
due to fraud or error, and to issue an auditor’s report that
consolidated financial statements represent the
includes our opinion. Reasonable assurance is a high
underlying transactions and events in a manner
level of assurance, but is not a guarantee that an audit
that achieves fair presentation.
conducted in accordance with ISAs will always detect a
material misstatement when it exists. Misstatements can • Obtain sufficient and appropriate audit evidence
arise from fraud or error and are considered material if, regarding the financial information of the entities
individually or in the aggregate, they could reasonably or business activities within the Group to express an
be expected to influence the economic decisions of opinion on the consolidated financial statements.
users taken on the basis of these consolidated financial We are responsible for the direction, supervision
statements. and performance of the audit. We remain solely
responsible for our audit opinion.
As part of an audit in accordance with ISAs, we exercise
professional judgement and maintain professional We also provide those charged with governance
skepticism throughout the audit. We also: with a statement that we have complied with relevant
ethical requirements regarding independence, and to
• Identify and assess the risks of material
communicate with them all relationships and other
misstatement of the consolidated financial
matters that may reasonably be thought to bear on our
statements, whether due to fraud or error, design
independence, and where applicable, related safeguards.
and perform audit procedures responsive to those
risks, and obtain audit evidence that is sufficient From the matters communicated with those charged
and appropriate to provide a basis for our opinion. with governance, we determine those matters
The risk of not detecting a material misstatement that were of most significance in the audit of the
resulting from fraud is higher than for one resulting consolidated financial statements of the current period
from error, as fraud may involve collusion, forgery, and are therefore the Key Audit Matters as reported in
intentional omissions, misrepresentations, or the the respective section of the report above. We describe
override of internal control. these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter
• Obtain an understanding of internal control relevant
or when, in extremely rare circumstances, we determine
to the audit in order to design audit procedures
that a matter should not be communicated in our report
that are appropriate in the circumstances.
because the adverse consequences of doing so would
• Evaluate the appropriateness of accounting reasonably be expected to outweigh the public interest
policies used and the reasonableness of benefits of such communication.
Report on other Legal and Regulatory far as it appeared from our examination of these
Requirements books;
In accordance with the Companies Act 1994 and the c) the consolidated statement of financial position
Securities and Exchange Rules 1987, we also report the and consolidated statement of profit or loss and
following: other comprehensive income dealt with by the
report are in agreement with the books of account
a) we have obtained all the information and and returns; and
explanations which to the best of our knowledge and
belief were necessary for the purposes of our audit and d) the expenditure incurred was for the purposes of
made due verification thereof; the Group’s business.
b) in our opinion, proper books of account as

required by law have been kept by the Group so
ACNABIN
Dated, 04 February 2020 Chartered Accountants
RAK Ceramics (Bangladesh) Ltd.
CONSOLIDATED STATEMENT
OF FINANCIAL POSITION
as at 31 December 2019
2019 2018
Notes Taka Taka
Assets
Property, plant and equipment 4 3,002,294,289 3,200,651,808
Investment property 5 681,433,369 691,149,776
Right of use assets 6 45,836,335 -
Intangible assets 7 6,495,047 11,916,384
Capital work-in-progress 8 177,641,997 127,781,532
Total non-current assets 3,913,701,037 4,031,499,500
Inventories 9 2,785,630,242 3,005,616,081
Trade and other receivables 10 859,960,257 871,791,127
Advances, deposits and prepayments 11 267,192,251 322,820,432
Advance income tax 12 3,434,063,275 3,125,317,011
Cash and cash equivalents 13 1,499,310,101 829,807,227
Total current assets 8,846,156,126 8,155,351,878
Total assets 12,759,857,163 12,186,851,378
Equity
Share capital 14 4,279,687,010 3,890,624,560
Share premium 15 1,473,647,979 1,473,647,979
Retained earnings 16 1,601,275,518 1,628,694,442
Equity attributable to equity holders of the company 7,354,610,507 6,992,966,981
Non-controlling interests 1,393 1,546
Total equity 7,354,611,900 6,992,968,527
Liabilities
Borrowings 19 - 88,203,349
Deferred tax liability 17 191,893,149 197,934,495
Lease liability 20 29,374,867 -
Total non-current liabilities 221,268,016 286,137,844
Borrowings 19 89,232,918 309,652,416
Trade and other payables 21 691,725,531 528,659,578
Accrued expenses 22 558,665,634 531,601,160
Provision for income tax 23 3,834,252,156 3,537,831,853
Total current liabilities 5,183,977,246 4,907,745,007
Total liabilities 5,405,245,263 5,193,882,851
Total equity and liabilities 12,759,857,163 12,186,851,378
The accompanying notes are an integral part of these financial statements
Managing Director Director Company Secretary

As per our report of same date
ACNABIN
CONSOLIDATED PROFIT OR LOSS

AND OTHER COMPREHENSIVE INCOME
for the year ended 31 December 2019
2019 2018
Notes Taka Taka
Sales 24 6,463,857,312 6,331,083,301

Cost of sales 25 (4,556,112,666) (4,317,689,669)
Gross profit 1,907,744,646 2,013,393,632
Other income 26 46,204,060 65,663,417
Administrative expenses 27 (400,512,718) (378,274,211)
Impairment loss on trade receivable 27.1 (5,624,637) (3,601,431)
Marketing and selling expenses 28 (455,996,281) (411,359,546)
(815,929,576) (727,571,771)
Profit from operating activities 1,091,815,070 1,285,821,861
Finance income 29 32,878,148 38,410,830
Finance expenses 30 (27,323,676) (39,394,022)
Net finance income 5,554,472 (983,192)
Profit before contribution to worker's
profit participation and welfare fund 1,097,369,542 1,284,838,669
Contribution to worker's profit participation and welfare fund 31 (52,965,129) (58,913,315)
Profit before income tax 1,044,404,413 1,225,925,354
Income tax expense
Current tax 32 (296,420,303) (316,179,434)
Deferred tax 17 6,041,346 (19,120,735)
(290,378,957) (335,300,169)
Profit for the year 754,025,456 890,625,185
Other comprehensive income - -
Total comprehensive income for the year 754,025,456 890,625,185
Profit attributable to:
Equity holders of the company 754,025,209 890,624,763
Non-controlling interests 247 422
Profit after tax for the year 754,025,456 890,625,185
Basic earnings per share (Par value TK 10) 38 1.76 2.08

ACNABIN
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Attributable to owners of the Company
Share capital Share Premium Retained Non-controlling

Total Taka Total equity Taka
Taka Taka earnings Taka interests Taka
Balance as at 01 January 2018 3,536,931,410 1,473,647,979 1,445,455,970 6,456,035,359 1,524 6,456,036,883
Total comprehensive income for 2018

Profit/(loss) for the year - - 890,624,763 890,624,763 422 890,625,185
Cash dividend (2017) - - (353,693,141) (353,693,141) (400) (353,693,541)

Stock dividend (2017) 353,693,150 - (353,693,150) - - -
Balance as at 31 December 2018 3,890,624,560 1,473,647,979 1,628,694,442 6,992,966,981 1,546 6,992,968,527
Balance as at 01 January 2019 3,890,624,560 1,473,647,979 1,628,694,442 6,992,966,981 1,546 6,992,968,527
Prior year adjustment (Leases) (3,319,226) (3,319,226) - (3,319,226)

Profit/(loss) for the year - - 754,025,209 754,025,209 247 754,025,456
Transactions with the shareholders:

Cash dividend (2018) - - (389,062,456) (389,062,456) (400) (389,062,856)
Stock dividend (2018) 389,062,450 - (389,062,450) - - -
Balance as at 31 December 2019 4,279,687,010 1,473,647,979 1,601,275,518 7,354,610,507 1,393 7,354,611,900
ANNUAL REPORT 2019

111
CONSOLIDATED STATEMENT OF CASH FLOWS

2019 2018
Taka Taka
Cash receipts from customers 6,450,716,308 6,026,277,449

Cash payments to suppliers and employees (4,563,582,744) (5,170,880,115)
Cash generated from operating activities 1,887,133,564 855,397,334
Interest received from bank deposit 6,832,490 5,915,987
Income tax paid (note - 12) (308,746,264) (293,693,008)
Net cash (used in)/from operating activities (note-39.1) 1,585,219,790 567,620,313
Cash flows from investing activities
Acquisition of property, plant and equipment (279,524,603) (307,844,206)
Sale of property, plant and equipment 179,500 145,690
Disposal proceeds of associate - 74,025,000
Interest received from FDR 20,857,636 29,837,100
Income from rental 12,045,000 4,605,000
Intangible assets (771,526) (11,950,323)
Insurance claim received 56,976,731 -
Dividend received 200 200
Net cash (used in)/from investing activities (190,237,062) (211,181,539)
Cash flows from financing activities
Finance charges (18,947,425) (48,091,939)
Avail/(repayment) of term loan (88,203,349) (270,959,943)
Avail/(repayment) of short-term loan (220,419,498) (238,509,621)
Payment of lease liability (10,730,542) -
Dividend paid (386,966,131) (351,973,215)
Unclaimed share application refund (8,160) (19,200)
Adjustment related with non-controlling interest (400) (400)
Net cash (used in)/from financing activities (725,275,505) (909,554,318)
Effect of exchange rate changes in cash and cash equivalents (204,349) 563,565
Net increase/(decrease) in cash and cash equivalents 669,502,874 (552,551,979)
Cash and cash equivalents as at 01 January 829,807,227 1,382,359,206
Cash and cash equivalents as at 31 December (Note 13) 1,499,310,101 829,807,227

NOTES TO THE CONSOLIDATED

as at and for the year ended 31 December 2019
1. Reporting entity
RAK Ceramics (Bangladesh) Limited (the Company), formerly RAK Ceramics (Bangladesh) Pvt. Limited, a UAE-Bangladesh
joint venture company, was incorporated in Bangladesh on 26 November 1998 as a private company limited by shares under
the Companies Act 1994. The Company was later converted from a private limited into a public limited on 10 June 2008
after observance of required formalities as per laws. The name of the Company was thereafter changed to RAK Ceramics
(Bangladesh) Ltd. as per certificate issued by the Registrar of Joint Stock Companies dated 11 February 2009. The address of
the Company’s registered office is RAK Tower, Plot # 1/A, Jasimuddin Avenue, Sector # 3, Uttara, Dhaka 1230. The company
got listed with Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) on 13 June 2010.
1.1 Nature of business
The Company is engaged in manufacturing and marketing of ceramics tiles, wash room sets and all types of sanitary ware.
It has started its commercial production on 12 November 2000. The commercial production of its new sanitary ware plant,
expansion unit of ceramics facilities, tiles and sanitary plant was started on 10 January 2004, 1 July 2004,1 September 2007,
1 April 2015 and 17th May 2016 respectively.
1.2 Description of subsidiaries
RAK Power Pvt. Ltd.
RAK Power Pvt. Ltd. has been incorporated in Bangladesh under the Companies Act 1994 on 30 June 2005 as a private
company limited by shares with an authorized capital of Taka 1,000,000,000 divided into 10,000,000 ordinary shares of Taka
100 each. The paid up capital stands at Taka 205,000,000 at the end of reporting year. The Company has gone into operation
from 1 May 2009. The registered office of the Company is at RAK Tower (8th floor), Jashimuddin Avenue, Plot # 1/A, Sectoe
# 03, Uttara Model Town, Dhaka - 1230. The Power Plant is located at Village : Dhanua, P.S: Sreepur, District: Gazipur. 57%
shares of RAK Power Pvt. Ltd. is held by RAK Ceramics (Bangladesh) Limited.
The Board of Directors of RAK Ceramics (Bangladesh) Limited in its meeting held on July 26, 2015 have decided to further increase
the shareholding in RAK Power Pvt. Ltd. from 57% to 99.99% through purchase of 881,495 number of ordinary shares of BDT
100 each in consideration of BDT 255 per share totaling to BDT 224,781,225 only from all the other shareholders of RAK Power
Pvt. Ltd. subject to approval by the shareholders and concerned authorities for the interest of the business of the Company. The
shareholders of RAK Ceramics (Bangladesh) Limited have approved the same in the EGM dated September 20, 2015.The effect of
acquisition has been taken place as approved in Board of Directors meeting of RAK Power (Pvt.) Ltd on 20 October 2015
RAK Security and Services (Pvt.) Limited
RAK Security and Services (Pvt.) Ltd. has been incorporated in Bangladesh under the Companies Act 1994 on 21 December
2006 as a private company limited by shares with an authorized capital of Taka 100,000,000 divided into 1,000,000 ordinary
shares of Taka 100 each. The paid up capital stands at Taka 1,000,000 at the end of reporting year. The Company has gone
into operation from 1 May 2007. The registered office of the Company is at RAK Tower (8th floor), Plot # 1/A, Jasimuddin
Avenue, Sector # 03, Uttara Model Town, Dhaka-1230. 35% shares of RAK Security and Services (Pvt.) Ltd is held by RAK
Ceramics (Bangladesh) Limited.
The Board of Directors of RAK Ceramics (Bangladesh) Limited in its meeting held on July 26, 2015 have decided to further
increase the shareholding in RAK Security & Services (Pvt.) Ltd. from 35% to 99.00% through purchase of 6,500 number of
ordinary shares of BDT 100 each in consideration of BDT 2,875 per share totaling to BDT 18,687,500 only from all the other
shareholders of RAK Security & Services (Pvt.) Ltd. subject to approval by the shareholders and concerned authorities for the
interest of the business of the Company. The shareholders of RAK Ceramics (Bangladesh) Limited have approved the same in
the EGM dated September 20, 2015. The effect of acquisition has been taken place as approved in Board of Directors meeting
of RAK Security and Services (Pvt.) Ltd on 20 October 2015.
2. Basis of preparation
2.1 Statement of compliance
These financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS), the
Companies Act 1994 and the Securities and Exchange Rules 1987.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The title and format of these financial statements follow the requirements of IFRS which are to some extent different from
the requirement of the Companies Act 1994. However, such differences are not material and in the view of management IFRS
titles and format give better presentation to the shareholders.
Authorisation for issue
These financial statements have been authorised for issue by the Board of Directors of the Company on 04 February 2020.
2.2 Basis of measurement
These financial statements have been prepared on historical cost basis except for inventories which are measured at lower
of cost and net realisable value.
2.3 Functional and presentational currency
These financial statements are presented in Bangladesh Taka (Taka/Tk/BDT), which is the functional currency and
presentation currency of the Company. The figures of financial statements have been rounded off to the nearest Taka.
2.4 Use of estimates and judgements
The preparation of these financial statements in conformity with IFRS requires management to make judgements, estimates
and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and
expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the year in which the estimates are revised and in any future years affected.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies
that have the most significant effect on the amount recognised in the financial statements are stated in the following notes:
Note 4 Property, plant & equipment

Note 5 Investment property
Note 6 Right of use assets
Note 17 Deferred tax liability
Note 18 Employees benefit payable
Note 20 Lease liability
Note 23 Provision for income tax
Note 27.1 Impairment loss on trade receivable
2.5 Reporting period
The financial period of the Company covers one year from 1 January to 31 December 2019 and is followed consistently.
2.6 Going concern
The Company has adequate resources to continue in operation for foreseeable future and hence, the financial statements
have been prepared on going concern basis. As per management assessment there are no material uncertainties related to
events or conditions which may cast significant doubt upon the Company's ability to continue as a going concern.
3 Significant accounting policies
The accounting policies set out below, which comply with IFRS, have been applied consistently to all years presented in these
consolidated financial statements, and have been applied consistently by Group entities.
3.1 Basis of consolidation
“These consolidated financial statements comprise the consolidated financial position and the consolidated results of
operations of the Company and its subsidiaries (collectively referred to as “the Group”) on a line by line basis together with
the Group’s share in the net assets of its equity- accounted investees.

IFRS-10 ""Consolidated Financial Statements"" introduces a new control model that focuses on whether the group has power
over an investee, exposure or rights to variable returns from its involvement with the investee and ability to use its power to
affect those returns. An investor has power over an investee when the investor has existing rights that gives it the current
ability to direct the relevant activities that significantly affect the investee’s returns. Power arises from rights. An investor
is exposed, or has rights, to variable returns from its involvement with the investee when the investor’s returns from its
involvement have the potential to vary as a result of the investee’s performance. An investor controls an investee if the
investor not only has the power over the investee and exposure or rights to variable returns from its involvement with the
investee, but also has the ability to use its power to affect the investor’s return from its involvement with the investee."
Subsidiaries
Subsidiaries are enterprises controlled by the Group. Control exists when the Group has the power to govern the financial and
operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that are
presently exercisable are taken into account. The results of operations and total assets and liabilities of subsidiary companies
are included in the consolidated financial statements on a line-by-line basis and the interest of minority shareholders, if any,
in the results and net assets of subsidiaries is stated separately. The financial statement of subsidiaries are included in the
consolidated financial statements of the Group from the date that control commences until the date that control ceases. Any
gains or losses on increase/decrease in non-controlling interest in subsidiaries without a change in control, is recognised as
a component of equity.
Loss of control
Upon the loss of control, the Group derecognises the assets and liabilities of the subsidiary, any non-controlling interest
and other components of equity related to the subsidiary. Any surplus or deficit arising on the loss of control is recognised
in profit or loss. If the Group retains any interest in the previous subsidiary, then such interest is measured at fair value at the
date that control is lost. Subsequently it is accounted for as an equity-accounted investee or as an available-for-sale financial
asset depending on the level of influence retained.
Transactions eliminated on consolidation
Intra-group balances and transactions, and any unrealised income and expenses arising from intra-group transactions,
are eliminated in preparing the consolidated financial statements. Unrealised gains arising from transactions with equity-
accounted investees are eliminated against the investment to the extent of the Group's interest in the investee. Unrealised
losses are eliminated in the same way as unrealised gains, but only to the extent that there is no evidence of impairment.
3.2 Financial assets
a) Trade & other receivables
Trade & other receivables are financial assets with fixed or determinable payments that are not quoted in an active market.
Such assets are recognised initially at fair value plus any directly attributable transaction costs. Subsequent to initial recognition
trade & other receivables are measured at amortised cost using the effective interest method, less any impairment provision.
b) Cash and cash equivalents
Cash and cash equivalents comprise cash in hand, cash at bank including short notice deposits and fixed deposits having
maturity of three months or less that are subject to an insignificant risk of changes in their fair value, and are used by the
Group in the management of its short-term commitments.
3.3 Financial liabilities
a) Trade & other payables
Trade & other payables are recognised initially at fair value less any directly attributable transaction costs. Subsequent to initial
recognition, trade & other payables are measured at amortised cost using the effective interest method.
b) Borrowings
Interest-bearing borrowings include short term bank loan. Interest-bearing borrowings are recognised initially at fair value
less any directly attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at
amortised cost using the effective interest method.

3.4 Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinary shares are recognised as a
deduction from equity, net of any tax effects. Paid up share capital represents total amount contributed by the shareholders and
bonus shares issued by the Company to the ordinary shareholders. Holders of ordinary shares are entitled to receive dividends
as declared from time to time and are entitled to vote at shareholders' meetings. In the event of a winding up of the Company,
ordinary shareholders rank after all other shareholders and creditors and are fully entitled to any residual proceeds of liquidation.
3.5 Property, plant and equipment
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, if any.
Cost includes expenditures that are directly attributable to the acquisition of the property, plant and equipment. Maintenance,
renewals and betterments that enhance the economic useful life of the property, plant and equipment or that improve the
capacity, quality or reduce substantially the operating cost or administration expenses are capitalised by adding it to the
related property, plant and equipment. Ongoing repairs and maintenance is expensed as incurred.
An asset is derecognised on disposal or when no future economic benefits are expected from its use and subsequent
disposal. Gain or loss arising from the retirement or disposal of an asset is determined as the difference between the net
disposal proceeds and the carrying amount of the asset and is recognised as gain or loss from disposal of asset under other
income in the statement of profit or loss and other comprehensive income.
3.5.1 Depreciation on property, plant and equipment
Items of property, plant and equipment are depreciated on a straight-line basis in profit or loss over the estimated useful
lives of each component. Capital-work-in-progress and land are not depreciated. Depreciation on addition to fixed assets is
charged when it is available for use and charging of depreciation on property, plant and equipment ceases at the earliest of
the date the assets is classified held for sale in accordance with IFRS 5 and the date that assets is derecognised.
Rates of depreciation on various classes of property, plant and equipment are as under:
Category of property, plant and equipment Rate (%)
Factory building 5-20

General building 5
Head Office building 5
Plant and machinery 5-10
Mobile plant 10
Electrical installation 10-20
Gas pipeline 10-20
Furniture, fixture and equipment 10
Office equipment 10-20
Communication equipment 10-20
Tools and appliances 10-20
Vehicles 10-20
Fire fighting equipment 20
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate. Land
is not depreciated as it deemed to have an indefinite life.
3.6 Investment property
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under construction
for such purposes). Investment properties are measured at cost less accumulated depreciation and impairment losses, if any.
Cost includes expenditures that are directly attributable to the acquisition of the investment property. Maintenance, renewals
and betterments that enhances the economic useful life of the investment property or that improve the capacity, quality or
reduce subsequently the operation cost or administration expenses and capitalized by adding it to the related investment
property. Ongoing repairs and maintenance is expensed as incurred.

An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from
use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the
property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in
statement of profit or loss and other comprehensive income the period in which the property is derecognised.
3.6.1 Depreciation on investment property
Depreciation charged on the basis of straight line method. Depreciation continues to be charged on each item of investment
property until written value of such fixed asset is reduced to Taka one. Depreciation on addition to fixed assets is charged
when it is available for use and charging of depreciation on property, plant, equipment & investment property ceases at the
earliest of the date the assets is classified held for sale in accordance with IFRS 5 and the date that aasets is derecognised.
Rates of depreciation on various classes of investment property are as under:
Building 5
Land is not depreciated as it deemed to have an infinite life.

3.7 Capital work-in-progress
Capital work in progress is stated at cost less impairment, if any, until the construction is completed. Upon completion
of construction, the cost of such assets together with the cost directly attributable to construction, including capitalised
borrowing costs are transferred to the respective class of asset. No depreciation is charged on capital work in progress.
3.8 Intangible assets
Intangible assets that are acquired by the Group (such as designs and trade marks for manufacture of ceramic tiles and sanitary
ware have finite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses, if any.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset to
which it relates.
Intangible assets are amortised on a straight-line basis in profit or loss over their estimated useful lives of 2 to 3 years from
the date that they are available for use.
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
3.9 Inventories
Inventories are measured at the lower of cost and net realisable value. The cost of inventories is based on the weighted
average cost principle, and includes expenditure incurred in acquiring the inventories, production or conversion costs, and
other costs incurred in bringing them to their existing location and condition. In the case of manufactured inventories and
work in progress, cost includes an appropriate share of production overheads based on normal operating capacity. Raw
materials in transit are valued at cost.
Net realisable value (NRV) is the estimated selling price in the ordinary course of business, less estimated cost of completion
and any estimated costs necessary to make the sale.
3.10 Impairment
Non-derivative financial assets
Non derivative financial assets are assessed at each reporting date to determine the loss allowance for lifetime expected
credit losses, if the credit risk on that financial instrument has increased significantly since initial recognition. When there is
no significant increase in credit risk on the financial instruments since initial recognition, the expected credit losses for next
12 months is measured as loss allowance on that financial instrument.
Non-financial assets
The carrying amount of the non-financial assets, other than inventories are reviewed at each reporting date to determine
whether there is any indication of impairment. If any such indication exists then the assets' recoverable amounts are estimated.
For intangible assets that have indefinite lives, recoverable amount is estimated at each reporting date. An impairment loss is
recognised if the carrying amount of an asset or its cash generating unit (CGU) exceeds its estimated recoverable amount.

Calculation of recoverable amount

The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value in use,
the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the current market
assessment of the time value of money and risk specific to the asset. For an asset that does not generate significantly independent
cash inflows, the recoverable amount is determined for the cash generating unit (CGU) to which the asset belongs.
Recognition of impairment
Impairment losses are recognised in profit or loss. Impairment losses in respect of CGUs are allocated first to reduced the
carrying amount of any goodwill allocated to the CGU and then to reduce the carrying amount of other assets in the CGU
on a pro-rata basis.
Reversal of impairment
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the extent
that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of depreciation
or amortisation, if no impairment loss had been recognised.
3.11 Employee benefit schemes
The Company maintains both defined contribution plan and defined benefit plan for its eligible permanent employees. The
eligibility is determined according to the terms and conditions set forth in the respective deeds.
Defined contribution plan (Provident fund)
Defined contribution plan is a post employment benefit plan under which the Company provides benefits to one or more
employees. The recognised Employees Provident Fund is considered as defined contribution plan as it meets the recognition
criteria specified for this purpose. All permanent employees contribute 10 percent of their basic salary to the provident
fund and the Company also makes equal contribution to the fund. These are administered by the Board of Trustees. The
contributions are invested separately from the company's assets.
Contribution to defined contribution plan is recognised as an expense when an employee has rendered services to the
Company. The legal and constructive obligation is limited to the amount it agrees to contribute to the fund.
Defined benefit plan (Gratuity)
A defined benefit plan is a post-employment benefit plan other than a defined contribution plan. The Company’s net
obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future benefit
that employees have earned in return for their service in the current and prior periods.
Permanent employees are entitled to gratuity on the basis of his latest basic salary for a completed year of service or for
service for a period of more than six months, salary of minimum 30 days, or salary of 45 days for a continuous service for
more than ten years, it shall be in addition to any payment of compensation or payment of any wage or allowance in lieu
of notice due to termination of services of a worker on different grounds. The expected cost of this benefit is included in
respective annual statement of profit or loss and other comprehensive income over the period of employment.
3.12 Workers' Profit Participation Fund and Welfare Fund (WPPF)
The Company provides 5% of its net profit before tax after charging such expense as WPPF in accordance with "The
Bangladesh Labour Act 2006 amended in 2018".
3.13 Provisions
Provisions are recognised on the reporting date if, as a result of past events, the Company has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle
the obligation.
3.14 Standards, amendmends and interpretations
A number of new standards and amendments to standards are effective for annual periods beginning after 1 January
2018/2019 with earlier application permitted. The group does not plan to adopt these standards early. The new standards
which may be relevant to the group are set out below.
3.14.1 IFRS 9 Financial Instruments
IFRS 9 Financial Instruments sets out requirements for recognising and measuring financial assets, financial liabilities and
some contracts to buy or sell non-financial items including a new expected credit loss model for calculating impairment
of financial assets, and new general hedge accounting requirements. This standard replaces IAS 39 Financial Instruments:
Recognition and Measurement. The final version of IFRS 9 is effective for annual periods beginning on or after 1 January
2018, with early application permitted.

i. Classification – financial assets

IFRS 9 contains a new classification and measurement approach for financial assets that reflects the business model in which
assets are managed and their cash flow characteristics. IFRS 9 contains three principal classification categories for financial
assets: measured at amortised cost, fair value through other comprehensive income (FVOCI) and fair value through profit or
loss (FVTPL). The standard eliminates the existing IAS 39 categories of held to maturity, loans and receivables and available
for sale.
ii. Impairment
IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with a forward-looking ‘expected credit loss’ (ECL) model. This will require
considerable judgement about how changes in economic factors affect ECLs, which will be determined on a probability-
weighted basis. The new impairment model will apply to financial assets measured at amortised cost or FVOCI, except for
investments in equity instruments, and to contract assets.
Under IFRS 9, loss allowances will be measured on either of the following bases:
· 12-months ECLs: these are ECLs which result from possible default events within the 12 months after the reporting date; and
· 12-Lifetime ECLs: these are ECLs which result from all possible default events over the expected life of a financial instrument.
Lifetime ECL measurement applies if the credit risk of a financial asset at the reporting date has increased significantly since
initial recognition and 12-month ECL measurement applies if it has not. An entity may determine that a financial asset’s credit
risk has not increased significantly if the asset has low credit risk at the reporting date. However, lifetime ECL measurement
always applies for trade receivables and contract assets without a significant financing component; the group has a choice
to also apply this policy for trade receivables and contract assets with a significant financing component.
The estimated ECL will be calculated based on actual credit loss experience. The group will perform the calculation of ECL
rates separately for different types of customers including related parties.
Actual credit losses will be adjusted to reflect differences between economic conditions during the period over which the
historical data will be collected, prevalent conditions and the Group’s view of economic conditions over the expected lives
of the receivables and related party balances.
iii. Hedging
IFRS 9 incorporates new hedge accounting rules which intend to align hedge accounting with a group’s risk management
objectives and strategy and to apply a more qualitative and forward looking approach to assessing hedge effectiveness. In
accordance with IFRS 9, the group has an accounting policy choice to defer the adoption of IFRS 9 hedge accounting and to
continue with IAS 39 hedge accounting.
The group will avail of the exemption allowing it not to restate comparative information for prior periods with respect to
classification and measurement (including impairment) changes. Impact of IFRS 9 shown in note no. 35.1 (b).
3.14.2 IFRS 15 Revenue from Contracts with Customers
IFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognized.
It replaces existing revenue recognition guidance, including IAS 18 Revenue, IAS 11 Construction Contracts and IFRIC 13
Customer Loyalty Programmes. IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018, with
early adoption permitted.
i. Sales of goods
Under IFRS 15, revenue will be recognised when a customer obtains control of the goods.
Revenue will be recognised for the contracts to the extent that it is probable that a significant reversal in the amount of
cumulative revenue recognised will not occur. As a consequence, for those contracts for which the group is unable to
make a reasonable estimate of return, revenue is expected to be recognised sooner than when the return period lapses or a
reasonable estimate can be made.
Based on the group’s assessment, the timing of revenue recognition from sale of goods are broadly similar. Therefore, the group
does not expect the application of IFRS 15 to result in significant differences in the timing of revenue recognition for these sales.

ii. Rendering of services

Under IFRS 15, the total consideration in the service contracts will be allocated to all services based on their stand-alone
selling prices. The stand-alone selling prices will be determined based on the list prices at which the group sells the services
in separate transactions.
Based on the group’s assessment, the fair value and the stand-alone selling prices of the services are broadly similar.
Therefore, the group does not expect the application of IFRS 15 to result in significant differences in the timing of revenue
recognition for these services.
iii. Construction contracts
Contract revenue currently includes the initial amount agreed in the contract plus any variations in contract work, claims
and incentive payments, to the extent that it is probable that they will result in revenue and can be measured reliably. When
a claim or variation is recognised, the measure of contract progress or contract price is revised and the cumulative contract
position is reassessed at each reporting date.
3.14.3 IFRS 16 Leases
IFRS 16, published in January 2016 replaces the previous guidance in IAS 17 Leases. Under this revised guidance, leases will be
brought onto companies’ balance sheets, increasing the visibility of their assets and liabilities. It further removes the classification
of leases as either operating leases or finance leases treating all leases as finance leases from the perspective of the lessee, thereby
eliminating the requirement for a lease classification test. The revised guidance has an increased focus on who controls the asset
and may change which contracts are leases. IFRS 16 is effective for annual periods beginning on or after 1 January 2019.
General impact of application of IFRS 16 Leases
In the current year, the group, for the first time, has applied IFRS 16 Leases (as issued by the IASB in January 2016) in its
effective date.
IFRS 16 introduces new or amended requirements with respect to lease accounting. It introduces significant changes to
the lessee accounting by removing the distinction between operating and finance leases and requiring the recognition of a
right-of-use asset and a lease liability at the lease commencement for all leases, except for short-term leases and leases of
low value assets. In contrast to lessee accounting, the requirements for lessor accounting have remained largely unchanged.
Details of these new requirements are described in Notes to the financial statements. The impact of the adoption of IFRS 16
on the Group’s financial statements is described below.
The date of initial application of IFRS 16 for the group is 1 January 2019
The group has applied IFRS 16 using the modified retrospective approach, without restatement of the comparative information.
Impact of the new definition of a lease
The change in definition of a lease mainly relates to the concept of control. IFRS 16 determines whether a contract contains
a lease on the basis of whether the customer has the right to control the use of an identified asset for a period of time in
exchange for consideration.
The group applies the definition of a lease and related guidance set out in IFRS 16 to all lease contracts entered into or
modified on or after 1 January 2019 (whether it is a lessor or a lessee in the lease contract). In preparation for the first-time
application of IFRS 16, the group has carried out an implementation project.
Impact on Lessee Accounting
Former operating leases
IFRS 16 changes how the group accounts for leases previously classified as operating leases under IAS 17, which were off-
balance-sheet.
Applying IFRS 16, for all leases (except as noted below), the Group:
Recognizes right-of-use assets and lease liabilities in the statement of financial position, initially measured at the present
value of future lease payments;
Recognizes depreciation of right-of-use assets and interest on lease liabilities in the statement of profit or loss; and separates
the total amount of cash paid presented within financing activities in the statement of cash flows.
Under IFRS 16, right-of-use assets are tested for impairment in accordance with IAS 36 Impairment of Assets. This replaces
the previous requirement to recognize a provision for onerous lease contracts.

For short-term leases (lease term of 12 months or less) and leases of low-value assets (such as personal computers and office
furniture), the group has opted to recognize a lease expense on a straight-line basis as permitted by IFRS 16. This expense is
presented within rent expenses in the statement of profit or loss.
Former finance leases
The main difference between IFRS 16 and IAS 17 with respect to assets formerly held under a finance lease is the measurement
of residual value guarantees provided by a lessee to a lessor. IFRS 16 requires that the group recognizes as part of its lease
liability only the amount expected to be payable under a residual value guarantee, rather than the maximum amount
guaranteed as required by IAS 17. This change did not have a material effect on the group’s financial statements.
Impact on Lessor Accounting
IFRS 16 does not change substantially how a lessor accounts for leases. Under IFRS 16, a lessor continues to classify leases as
either finance leases or operating leases and account for those two types of leases differently. However, IFRS 16 has changed
and expanded the disclosures required, in particular regarding how a lessor manages the risks arising from its residual interest
in the leased assets.
As required by IFRS 9, an allowance for expected credit loss has been recognized on the finance lease receivables.
3.15 Finance income and expenses
Finance income comprises interest income on fixed deposits, Short Notice Deposit (SND) and amounts due from related
parties. Interest income is recognized in profit or loss as it accrues, using the effective interest rate method.
Finance costs comprises interest expense on overdraft, LTR, term loan, short term borrowings and finance lease. All finance
expenses are recognised in the statement of comprehensive income.
Borrowing costs that are not directly attributable to the acquisition, construction or production of a qualifying asset are
recognised in profit or loss using the effective interest method.
Foreign currency gains and losses on financial assets and financial liabilities are reported on a net basis as either finance
income or finance cost depending on whether foreign currency movements are in a net gain or net loss position.
3.16 Foreign currency
Transactions in foreign currencies are translated to Taka at the foreign exchange rates prevailing on the date of transaction.
All monetary assets and liabilities denominated in foreign currencies at reporting date are translated to Taka at the rates
of exchange prevailing on that date. Resulting exchange differences arising on the settlement of monetary items or on
translating monetary items at the end of the reporting period are recognised in the statement of profit or loss and other
comprehensive income as per International Accounting Standard IAS-21 "The Effects of Changes in Foreign Exchange Rates".
3.17 Taxation
Income tax expenses represents current tax and deferred tax. Income tax expense is recognised in the statement of profit
or loss and other comprehensive income except to the extent that it relates to items recognised directly in equity, in which
case it is recognised in equity.
Current tax:
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantially enacted
at the reporting date, and any adjustment to tax payable in respect of previous year. Provisions for corporate income tax is
made following the rate applicable for companies as per Finance Act 2019.
Deferred tax:
Deferred tax has been recognised in accordance with International Accounting Standard (IAS) 12. Deferred tax is provided
using the liability method for temporary differences between the carrying amount of assets and liabilities for financial
reporting purposes and the amount used for taxation purpose. Deferred tax is determined at the effective income tax rate
prevailing at the reporting date.
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to the extent that
it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are reviewed
at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

3.18 Earning per share

The Company presents basic and diluted (when dilution is applicable) earnings per share (EPS) for its ordinary shares. Basic
EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company with the weighted
average number of ordinary shares outstanding during the year, adjusted for the effect of change in number of shares for
bonus issue. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted
average number of ordinary shares outstanding, for the effects of all dilutive potential ordinary shares. However, dilution
of EPS is not applicable for these financial statements as there was no dilutive potential ordinary shares during the relevant
years.
3.19 Determination and presentation of operating segment
Details of product-wise segment reporting as required by IFRS-8 operating segments is followed.
3.20 Contingencies
Contingent liability
Contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.
Contingent liability should not be recognised in the financial statements, but may require disclosure. A provision should be
recognised in the year in which the recognition criteria of provision have been met.
Contingent asset
Contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the occurrence
or non-occurrence of one or more uncertain future events not wholly within the control of the entity.
A contingent asset must not be recognised. Only when the realisation of the related economic benefits is virtually certain should
recognition take place provided that it can be measured reliably because, at that point, the asset is no longer contingent.
3.21 Statement of cash flows
Statement of cash flows is prepared under direct method in accordance with International Accounting Standard IAS-7
"Statement of cash flows" as required by the Securities and Exchange Rules 1987.
3.22 New standards adopted
The following new standard is effective for annual years beginning from 1 January 2018/2019 and have been applied in
preparing these financial statements.
IFRS 9 Financial Instruments.
IFRS 15 Revenue from contract with customers.
IFRS 16 Leases
3.23 Events after the reporting period
Events after the reporting period that provide additional information about the Company's position at the reporting date are
reflected in the financial statements. Material events after the reporting period that are not adjusting events are disclosed by
way of note.
3.24 Comparatives and reclassification
Comparative information have been disclosed in respect of 2018 for all numerical information in the financial statements and
also the narrative and descriptive information when it is relevant for understanding of the current year's financial statements.
To facilitate comparison, certain relevant balances pertaining to the previous year have been rearranged/reclassified
whenever considered necessary to confirm to current year's presentation.
4 Property, plant and equipment
2019 Amounts in Taka
COST DEPRECIATION
Sale/ Net book
Particulars Addition Balance Charged Adjustment Balance value as at
Balance as at disposal Balance as at Rate
during the as at during the during the as at 31 Dec 2019
01 Jan 2019 during the 31 Dec 2019 (%)
year 01 Jan 2019 year year 31 Dec 2019
year
Land 338,570,507 - - 338,570,507 - - - - 338,570,507
Factory building 999,375,345 38,657,783 - 1,038,033,128 5-20 382,353,134 52,280,276 - 434,633,410 603,399,718
Office building 204,836,622 8,784,691 (12,757,294) 200,864,019 5 111,325,399 10,936,085 (2,553,122) 119,708,362 81,155,657
Plant and machinery 5,387,988,133 157,640,006 - 5,545,628,139 5-10 3,452,988,485 305,368,735 - 3,758,357,220 1,787,270,919
Mobile plant 135,573,374 6,728,522 - 142,301,896 10 99,008,863 4,623,588 - 103,632,451 38,669,445
Electrical installation 242,630,147 - - 242,630,147 10-20 193,187,791 7,675,319 - 200,863,110 41,767,037
Gas pipeline 77,047,294 2,391,051 - 79,438,345 10-20 52,329,342 3,922,021 - 56,251,363 23,186,982
Furniture and fixtures 40,827,059 3,742,359 - 44,569,418 10 27,704,762 2,418,307 - 30,123,069 14,446,349
Office equipment 113,918,875 5,908,723 - 119,827,598 10-20 74,241,892 18,826,666 - 93,068,558 26,759,040
Communication
14,768,857 3,336,425 - 18,105,282 10-20 8,599,956 2,040,145 - 10,640,101 7,465,181
equipment
Tools and appliances 19,113,047 64,050 - 19,177,097 10-20 10,304,624 1,714,744 - 12,019,368 7,157,729
Vehicles 89,762,354 1,594,836 (294,728) 91,062,462 10-20 51,715,558 7,077,035 (175,856) 58,616,737 32,445,725
Fire fighting
3,631,012 - - 3,631,012 20 3,631,012 - - 3,631,012 -
equipments
Total 7,668,042,626 228,848,446 (13,052,022) 7,883,839,050 4,467,390,818 416,882,921 (2,728,978) 4,881,544,761 3,002,294,289
ANNUAL REPORT 2019

123
124
RAK CERAMICS (BANGLADESH) LIMITED

COST DEPRECIATION
Sale/ Net book
Particulars Addition Balance Charged Adjustment Balance value as at
Balance as at disposal Balance as at Rate
during the as at during the during the as at 31 Dec 2018
01 Jan 2018 during the 31 Dec 2018 (%)
year 01 Jan 2018 year year 31 Dec 2018
year
Land 336,575,507 1,995,000 - 338,570,507 - - - - 338,570,507
Factory building 932,964,883 66,410,462 - 999,375,345 5-20 333,451,642 48,901,492 - 382,353,134 617,022,211
Office building 203,113,529 1,723,093 - 204,836,622 5 101,236,417 10,088,982 - 111,325,399 93,511,223
Plant and machinery 5,268,607,207 119,380,926 - 5,387,988,133 5-10 3,149,903,876 303,084,609 - 3,452,988,485 1,934,999,648
Mobile plant 122,434,617 13,138,757 - 135,573,374 10 90,904,362 8,104,501 - 99,008,863 36,564,511
Electrical installation 241,464,647 1,165,500 - 242,630,147 10-20 183,208,804 9,978,987 - 193,187,791 49,442,356
Gas pipeline 77,047,294 - - 77,047,294 10-20 48,717,653 3,611,689 - 52,329,342 24,717,952
Furniture and fixtures 37,026,750 3,982,583 (182,274) 40,827,059 10 25,855,408 2,023,987 (174,633) 27,704,762 13,122,297
Office equipment 110,835,457 3,083,418 - 113,918,875 10-20 55,298,970 18,942,922 - 74,241,892 39,676,983
Communication
12,231,404 2,537,453 - 14,768,857 10-20 6,853,414 1,746,542 - 8,599,956 6,168,901
equipment
Tools and appliances 17,669,297 1,443,750 - 19,113,047 10-20 8,355,786 1,948,838 - 10,304,624 8,808,423
Vehicles 83,352,902 6,617,452 (208,000) 89,762,354 10-20 44,596,878 7,269,848 (151,168) 51,715,558 38,046,796
Fire fighting
3,631,012 - - 3,631,012 20 3,631,012 - - 3,631,012 -
equipments
Total 7,446,954,506 221,478,394 (390,274) 7,668,042,626 4,052,014,222 415,702,397 (325,801) 4,467,390,818 3,200,651,808
5 Investment property
COST DEPRECIATION
Net book
Sale/ value as
Particulars Addition Charged Adjustment
Balance as at disposal Balance as at Balance as at Balance as at at 31 Dec
during the Rate during the during the
01 Jan 2019 during the 31 Dec 2019 01 Jan 2019 31 Dec 2019 2019
year year year
year
Land1 500,571,750 - - 500,571,750 - - - - 500,571,750
Office building2 210,636,382 815,692 - 211,452,074 5% 20,058,356 10,532,101 - 30,590,455 180,861,619
Total 711,208,132 815,692 - 712,023,824 20,058,356 10,532,101 - 30,590,455 681,433,369
COST DEPRECIATION
Sale/ Net book
Particulars Addition Charged Adjustment value as at
Balance as at disposal Balance as at Balance as at Balance as at
during the Rate during the during the 31 Dec 2018
01 Jan 2018 during the 31 Dec 2018 01 Jan 2018 31 Dec 2018
year year year
year
Land1 500,571,750 - - 500,571,750 - - - - 500,571,750
Office building2 210,636,382 - - 210,636,382 5% 9,526,255 10,532,101 - 20,058,356 190,578,026
Total 711,208,132 - - 711,208,132 9,526,255 10,532,101 - 20,058,356 691,149,776
1 The land 10 khata is situated besides the RAK Tower was acquired in March 2012. The same was classified as Property, plant & equipment till 31st Dec 2016.
ANNUAL REPORT 2019

However, presently the asset is under operating lease considering undetermined future use. Hence in the current financial statements, the same is reclassified
as an item of “Investment Property” as defined under IAS 40.
The said property are stated at cost as per IAS 16 due to alternate reliable sources of measurement being unavailable.
2 The property, being an Apartment on 10th floor, RAK Tower, was acquired in the month of February 2017 from M/s Julphar Bangladesh. ( Erstwhile RAK
Pharmaceuticals Pvt. Ltd) and godown office building is situated at above mentioned land. This property is too under operating lease culminating in
undetermined future use. Hence the same is classified under “Investment Property” under IAS 40.
125
The fair values of the property has been adopted at the transaction value considering that the munnicipal valuation of the property has fairly remained
unchanged, the company has adopted the transaction value as the fair value of the property.
2019 2018
Taka Taka
5.1 Depreciation charged on the basis of the purpose of use
Cost of sales (Note 25) 377,142,595 377,083,481

Administrative expenses (Note 5.2) 44,810,746 44,714,209
Marketing & selling expenses (Note 28) 5,461,681 4,436,808
427,415,022 426,234,498
5.2 Administrative expenses
Depreciation on property, plant & equipment (Note 27) 34,278,645 34,182,108
Depreciation on investment property (Note 27) 10,532,101 10,532,101
44,810,746 44,714,209
5.3 Disposal of property, plant and equipment
2019
Receipt
Accumulated Profit/(loss)
Particulars Original cost Book value against sales/
depreciation on disposal
insurance
Taka Taka Taka Taka Taka
Motor Bike 294,728 175,856 118,873 179,500 60,627
Total 294,728 175,856 118,873 179,500 60,627
2018
Receipt
Accumulated Profit/(loss)
Particulars Original cost Book value against sales/
depreciation on disposal
insurance
Furniture & fixture 182,274 174,633 7,641 11,550 3,909
Motor Bike 208,000 151,168 56,832 134,140 77,308
Total 390,274 325,801 64,473 145,690 81,217
6 Right of use assets

COST
Net book
Particulars Addition Sale/ dispos- Balance Charged Adjustment Balance value as at
Balance as at Balance as at
during the al during the as at during the during the as at 31 Dec 2019
01 Jan 2019 31 Dec 2019
year year 01 Jan 2019 year year 31 Dec 2019
Display center 76,028,968 - (28,391,487) 47,637,481 22,705,295 8,433,056 - 31,138,351 16,499,130

Accomodation Building 2,644,593 655,543 - 3,300,136 353,312 1,458,868 - 1,812,180 1,487,956
Warehouse - 32,707,529 - 32,707,529 - 5,723,818 - 5,723,818 26,983,711
Office Building 3,776,889 - - 3,776,889 1,967,130 944,222 - 2,911,352 865,537
Total 82,450,450 33,363,072 (28,391,487) 87,422,036 25,025,737 16,559,964 - 41,585,701 45,836,335
Allocation of Depreciation
Administrative expenses (Note:27) 2,403,090

Marketing & Selling expenses (Note:28) 14,156,874
16,559,964
6.1 Gain on retirement of Right of use assets
ANNUAL REPORT 2019

Particulars Lease liability Right of use assets Gain
Display center 30,048,249 28,391,487 1,656,762
1. Company rented four display center's situated in Dhaka, Chittagong and Sylhet.
2. Accomodation Buildings rented for the use of transit employees.
3. Company has taken a warehouse at pubail to store the finished goods to distribute in nearby area promptly.
127
4. Office Buildings rented for the use of official work.
2019 2018
Taka Taka
7 Intangible assets
Balance as at 1 January 11,916,384 5,429,027
Add: Addition during the year 771,526 11,950,323
12,687,910 17,379,350
Less: Amortisation during the year (Note-27) 6,192,863 5,462,966
Balance as at 31 December 6,495,047 11,916,384
The above amount represents cost of various licenses as well software which are being amortised over 2-3 years from the
date of their expenses.
8 Capital Work-in-Progress
Add: Addition during the year 261,225,698 259,518,324
389,007,230 300,934,043
Less: Transfer to property, plant & equipment and investment Property
211,365,233 173,152,511
(note 8.1)
8.1 Items transferred from capital work in progress to property, plant & equipment
Factory building 38,326,033 52,019,988
Plant & machinery 139,907,809 112,846,905
Mobile plant - 7,826,143
Communication equipment - 345,362
Others 33,131,391 114,113
211,365,233 173,152,511
9 Inventories
Raw materials 818,594,596 839,612,529
Less : Provision for slow moving & obsolete inventories 19,685,939 -
798,908,657 839,612,529
Stores and consumables spares and packing 951,862,906 1,043,685,123
Less: Write off for stores, consumables and packing during the year - 31,843,008
951,862,906 1,011,842,115
Finished goods (net of net realizable value adjustment) 719,463,284 872,171,284
701,957,743 872,171,284
Work-in-process 104,694,796 105,323,515
Goods-in-transit 228,206,140 176,666,638
2,785,630,242 3,005,616,081
10 Trade and other receivables
Trade receivables (Note 10.1) 813,475,817 805,880,110

813,475,817 805,880,110
Receivable against insurance claim 38,287,131 56,976,730

Accrued interest (Note 10.2) 8,197,308 3,009,287
Accrued rental income - 5,925,000
859,960,257 871,791,127
2019 2018
Taka Taka
10.1 Trade receivables

Receivables from local sales 816,128,848 809,481,541
Receivables from export sales 6,573,037 -
822,701,885 809,481,541
Less: Provision of impairment loss on trade receivable:
Unrelated parties 2,640,080 348,092
Related parties 6,585,988 3,253,339
813,475,817 805,880,110
10.2 Accrued interest

Interest accrued on FDR 8,197,308 3,009,287
8,197,308 3,009,287
11 Advance, deposit and prepayments

Advances:
Employees 3,000 175,500
Purchase of land and others 5,729,371 7,185,449
Suppliers against materials and services 78,360,866 94,233,766
84,093,237 101,594,715
Security and other deposits:
Titas gas 65,658,900 55,772,000
Mymensingh Palli Bidyut Samity-2 1,955,000 1,955,000
VAT and Supplementary duty (Note-11.1) 1,833,190 46,576,861
Deposited with income tax authority 68,128,195 50,628,195
Deposited with VAT authority 6,726,946 6,726,946
Display center and others 3,757,500 -
Other deposits 1,494,626 1,499,853
149,554,357 163,158,855
Prepayments:
Showroom, warehouse and office rent
Insurance and others 33,544,657 45,612,243
33,544,657 58,066,862
267,192,251 322,820,432
11.1 Supplementary duty & VAT

Balance as at 1 January 216,803 43,078,066
Add: Treasury deposit for SD & VAT purpose 1,616,388 1,393,216,802
Rebate of input VAT - 418,046,905
1,833,190 1,854,341,774
1,833,190 1,854,341,774
Less: SD & VAT on sales - 1,805,059,097
Other payable - 2,705,815
- 1,807,764,912
The above amount represents only RAK Security and Services Pvt. Ltd.
12 Advance Income Tax

Balance as at 1 January 3,125,317,011 2,831,624,003
Add: Paid during the year 308,746,264 299,845,698
Less: Adjusted during the year - 6,152,690
Balance as at 31 December (Note - 12.1) 3,434,063,275 3,125,317,011
2019 2018
Taka Taka
12.1 Payment for the year

Income year
Year 2019 235,349,636 -
Year 2018 314,338,282 240,941,655
Year 2017 344,518,556 344,518,556
Year 2016 291,375,845 291,375,845
Year 2015 187,267,285 187,267,285
Year 2014 291,694,002 291,694,002
Year 2013 389,651,054 389,651,054
Year 2012 334,263,453 334,263,453
Year 2011 328,701,317 328,701,317
Year 2010 265,532,626 265,532,626
Year 2009 218,091,876 218,091,876
Year 2008 85,378,847 85,378,847
Year 2007 124,813,161 124,813,161
Year 2006 23,087,333 23,087,333
3,434,063,275 3,125,317,011
13 Cash and cash equivalents
Cash in hand 3,628,454 5,267,464
Cash at banks
HSBC (current account -001-013432-011, 107580-011, 096015-011,
20,555,049 44,563,430
096007-011 BDT)
Standard Chartered Bank (current account - 01-6162940-01, 01-
180,849,061 27,557,487
3767272-01 - BDT)
Brac Bank Ltd. (current account - 1530201731248001 - BDT) 39,046,938 7,022,039
Citibank N.A. (current account - G0100001200262018 - BDT) 161,889 167,340
Dutch Bangla Bank Ltd. (current account -117-110-12733,117-110-
2,600,632 1,519,425
4311,117.110.23474 BDT)
HSBC (ERQ account - 001-013432-047 - USD) - 15,969,457
Standard Chartered Bank (ERQ - 42-6162940-01 - USD) 11,995,287 713,861
Standard Chartered Bank (Margin money account) 15,827,195 3,834,947
Dutch Bangla Bank (Margin money account) 246,006 -
United Commercial Bank (SND account - 0831301000000164 BDT) 27,528,317 9,233,763
Eastern Bank Ltd. (SND account - 1131350237146 - BDT) 96,642,480 48,550,824
Eastern Bank Ltd. (SND account - 1131350237393 WH - BDT) 4,980 -
EXIM Bank (SND account - 01513100031877 - BDT) 510,116 493,820
Standard Chartered Bank (SND account - 02-3767272-01 - BDT) 52,842 53,650
Dutch Bangla Bank Ltd. (SND account - 117-120-589, 117-120-330,117-
100,382,750 117,790,656
120.2550 - BDT)
Dutch Bangla Bank Ltd. (SND account - 117-120-376 (WH)- BDT) 128,657 -
BRAC Bank (SND - 1513101731248001 - BDT) 362,785 360,789
Prime Bank Ltd. (SND - 12531010022563 - BDT) 27,898,730 5,741,297
Dhaka Bank Ltd (SND - 102.150.274- BDT)) 24,223,605 39,444,913
Commercial Bank of Ceylon (CD-2817000776 - BDT.) 22,154 9,811
Dhaka Bank Ltd (CD - 204100000019318- BDT) 234,064 599,154
Commercial Bank of Ceylon (SND-2817000777 - BDT.) 52,176,242 65,731,073
Meghna Bank Ltd. (SND 1112-13500000004 - BDT) 52,844,531 30,234,529
Midland Bank Ltd. (SND 0006-1070000015 - BDT) 608,850 11,420,033
654,903,160 431,012,298
2019 2018
Taka Taka
IPO bank account

Citibank N.A. (RAK-IPO Central Account - G010001200262022 - BDT) 2,431,487 2,437,422
Citibank N.A. (RAK-IPO-NRB Subscription - G0100001200262042 - USD) 3,919,501 3,916,999
Citibank N.A. (RAK-IPO-NRB Subscription - G0100001200262026 - EURO) 153,606 153,455
Citibank N.A. (RAK-IPO-NRB Subscription - G0100001200262034 - GBP) 126,599 126,440
6,631,193 6,634,316
Dividend bank account
BRAC Bank (Current - 1510201731248001 - BDT) - 2010 2,610,821 2,614,781
SCB (Current - 02-6162940-02- BDT) - 2012 3,873,556 3,858,070
SCB (Current - 02-6162940-03- BDT) - 2013 16,882,899 16,816,804
SCB (Current - 02-6162940-04- BDT) - 2014 5,006,270 4,986,605
SCB (Current - 02-6162940-05- BDT) - 2015 3,847,241 3,832,380
SCB (Current - 02-6162940-06- BDT) - 2016 4,307,616 4,326,361
SCB (Current - 02-6162940-07- BDT) - 2017 1,715,963 1,790,467
SCB (Current - 02-6162940-08- BDT) - 2018 2,199,822 -
42,640,389 40,425,980
Investment in Fixed Deposit Receipt (FDR)
HSBC 11,906,325 11,866,589
SCB 762,080 762,080
Dutch Bangla Bank Ltd. 28,838,500 28,838,500
Eastern Bank Ltd. 250,000,000 150,000,000
Dhaka Bank Ltd. 500,000,000 150,000,000
Meghna Bank Ltd. - 5,000,000
791,506,905 346,467,169
Total 1,499,310,101 829,807,227
14 Share Capital
Authorised :
600,000,000 ordinary shares of Taka 10/- each 6,000,000,000 6,000,000,000
Issued, subscribed, called and paid up :

427,968,701 ordinary shares of Taka 10/- each 4,279,687,010 3,890,624,560
2019 2018
Percentage of shareholdings :
% Taka % Taka
RAK Ceramics PJSC, UAE 68.13 2,915,864,310 68.13 2,650,785,740
S.A.K. Ekramuzzaman 3.95 168,958,240 3.95 153,598,410
HH Sheikh Saud Bin Saqr Al Qassimi 0.00 340 0.00 310
Sheikh Omer Bin Saqr Al Qassimi 0.00 340 0.00 310
Sheikh Ahmad Bin Humaid al Qassimi 0.00 340 0.00 310
Hamad Abdulla Al Muttawa 0.00 160 0.00 150
Dr. Khater Massaad 0.00 160 0.00 150
Abdallah Massaad 0.00 160 0.00 150
Manoj Uttamrao Ahire 0.00 160 0.00 150
General Public 27.92 1,194,862,800 27.92 1,086,238,880
100.00 4,279,687,010 100.00 3,890,624,560
The company was incorporated on 26th of November 1998 with paid up capital of BDT 1,000 and subsequently has issued ordinary
shares including bonus shares in several dates i.e. 30 September 2000, 30 October 2005, 15 June 2009, 28 July 2009, 31 January
2010, 24 May 2010, 20 March 2011, 15 April 2012, 10 April 2013, 02 April 2014, 29 March 2017, 18 April 2018 and 09 April 2019.
Classification of shareholders by holding
Number of shareholders Number of shares

Shareholder’s range
2019 2018 2019 2018
01-499 shares 20,366 22,333 4,995,826 5,070,691
500 to 5,000 shares 8,198 8,992 13,460,461 14,323,202
5001 to 10,000 shares 1,031 1,018 7,277,910 7,132,096
10,001 to 20,000 shares 527 521 7,320,397 7,268,499
20,001 to 30,000 shares 167 152 4,076,759 3,787,490
30,001 to 40,000 shares 70 73 2,404,839 2,520,150
40,001 to 50,000 shares 48 48 2,143,014 2,169,779
50,001 to 100,000 shares 106 93 7,222,580 6,487,948
100,001 to 1,000,000 shares 100 92 25,398,876 24,171,658
1,000,001 to 1,000,000,000 Shares 15 13 353,668,039 316,130,943
30,628 33,335 427,968,701 389,062,456
15 Share premium
On 31 January, 2010, company issued 10,000,000 ordinary shares in favor of institutional shareholder and employees per
share BDT. 40 (include BDT. 30 as premium). On 24 May, 2010 Company again issued 34,510,000 ordinary shares through
IPO per share BDT. 48 (include BDT. 38 as premium). Details reconciliation shown below:
2019 2018
No. of shares Share premium (per share)
Taka Taka
10,000,000 30 300,000,000 300,000,000
34,510,000 38 1,311,380,000 1,311,380,000
1,611,380,000 1,611,380,000
137,732,021 137,732,021
1,473,647,979 1,473,647,979
16 Reserve and surplus
Balance as on 1 January 1,628,694,442 1,445,455,970

Less : Adjustment for prior year (Leases) (3,319,226) -
Add : Profit during the year 754,025,209 890,624,763
2,379,400,424 2,336,080,733
Less: Dividend declared during the year (778,124,906) (707,386,291)
Balance as on 31 December 1,601,275,518 1,628,694,442
Detail movement for reserve and surplus shown under statement of changes in equity.
17 Deferred tax liabilities

Less : Deferred tax (income)/expenses (6,041,346) 19,120,735
Carrying amount Taxable/

on the date of (deductible)
statement of temporary
financial position Tax base difference
Taka Taka Taka
As at 31 December 2019
Property, plant and equipment (Excluding land and others) 2,769,055,533 1,978,873,851 790,181,682
Trade receivable 791,627,927 800,414,926 (8,786,999)
Inventory 2,716,061,804 2,763,754,793 (47,692,989)
Net taxable temporary difference 733,701,694
Deferred tax liability (applying applicable tax rate for

individual company) 191,893,149
Property, plant and equipment (Excluding land and others) 2,965,075,192 2,206,204,829 758,870,363
Deferred tax liability (applying applicable tax rate for

individual company) 197,934,495
18 Employees benefits payable
2019
Provident fund Gratuity fund Total
Taka Taka Taka
Balance as at 1 January - - -
Add: Provision made during the year 61,044,474 32,792,338 93,836,812
61,044,474 32,792,338 93,836,812
Less: Payments made to fund during the year 61,044,474 32,792,338 93,836,812
Balance as at 31 December - - -
Provision and payment includes BDT. 1,946,890 for the year 2019 as employee contribution paid to employee leaving
company before being eligible for provident fund and employer’s contribution reversed.
2018
Taka Taka Taka
61,860,370 33,220,831 95,081,200
Provision and payment includes BDT. 516,106 for the year 2018 as employee contribution paid to employee leaving
company before being eligible for provident fund and employer’s contribution reversed.
2019 2018
Taka Taka
19 Borrowings
Non-current:
Term loan 89,232,918 362,201,591
Current portion of term loan (89,232,918) (273,998,242)
- 88,203,349
Current:
Bank overdrafts - 35,654,174
Current portion of term loan 89,232,918 273,998,242
89,232,918 309,652,416
19.1 Borrowings by maturity
At 31 December 2019 < 1 year 1-2 years 2-5 years Total
Term loan 89,232,918 - - 89,232,918

89,232,918 - - 89,232,918
At 31 December 2018 < 1 year 1-2 years 2-5 years Total
Bank overdrafts 35,654,174 - - 35,654,174

Term loan 273,998,242 88,203,349 - 362,201,591
309,652,416 88,203,349 - 397,855,765
19.2 Facilitievs details

Name of Security -
Bank Limit Utilisation Maturity Repayment Security - STL
facilities LTL
SCB Overdraft 50,000,000 - Revolving From 1) Letter of
180/360 days company’s comfort,
Short term loan 378,000,000 - own source
from B/L date 2) Hypothecation
HSBC Overdraft 30,000,000 Revolving over plant &
From 1) Land,
180/360 days machinery on
Short term loan 550,000,000 - company’s parri - passu basis 2) Plant
from B/L date own source with other lenders. and
Long term loan 1,366,872,000 89,232,918 5 years machinery
Dutch 3) Hypothecation
Overdraft 25,000,000 - Revolving From of the
Bangla Bank over stock & book
company’s expansion
Ltd. 180/360 days debts on a parri -
Short term loan 90,000,000 - own source plant.
from B/L date passu basis with
Commercial Overdraft other lenders.
25,000,000 - Revolving From
Bank of company's 4) Demand
Ceylon 180/360 days
Short term loan 300,000,000 - own source promissory note.
from B/L date
2019 2018
Taka Taka
20 Lease liability
Non-current:
Lease liability 39,475,875 -
Less : Current portion of lease liability 10,101,008 -
29,374,867 -
Current:
Current portion of lease liability 10,101,008 -
Particulars Balance as on Addition/ Payment Interest Decrease Balance as on

01 January, (deletion) expenses in lease 31 December
2019 liability 2019
Display center 46,374,623 (30,048,249) 7,049,344 2,306,778 4,742,566 11,583,808
Accomodation Building 2,319,576 655,543 1,602,312 185,750 1,416,562 1,558,557
Warehouse - 28,907,529 6,050,262 2,473,372 3,576,890 25,330,639
Office Building 1,997,395 - 1,140,000 145,477 994,523 1,002,871
50,691,594 (485,177) 15,841,918 5,111,376 10,730,542 39,475,875
2019 2018
Taka Taka
21 Trade and other payables
Trade payables
Payable to local suppliers 92,068,742 109,881,660
Payable to foreign suppliers 334,034,758 265,572,347
Payable to service provider 31,996,004 20,171,194
Payable to C & F agent 18,884,970 11,187,712
476,984,474 406,812,913
Other payables
Tax deducted at source 20,422,540 18,295,834
VAT deducted at source 7,771,816 6,765,578
VAT and Supplementary duty payable (Note-21.1) 103,722,054 -
Dividend Payable 41,670,516 39,574,191
Unclaimed share application 20,810,756 20,818,916
Advance from cutomer against sales 14,403,615 10,893,079
Security deposit payable 3,470,342 1,658,392
Payable to employees 1,202,084 658,229
Provisional liabilities - material & services 1,267,333 23,182,446
214,741,056 121,846,665
691,725,531 528,659,578
2019 2018
Taka Taka
21.1 VAT and Supplementary duty (SD) payable
VAT and Supplementary duty on sales 1,855,334,444 -

Payable - SD & VAT 107,215,433 -
Other payable 3,336,899 -
1,965,886,776 -
Less: Balance as at 1 January 46,360,059 -
Treasury deposit for SD & VAT purpose 1,276,905,762 -
Rebate of input VAT 538,898,901 -
1,862,164,722 -
Balance as at 31 December 103,722,054 -
Due to introduction of new SD & VAT Act, SD & VAT now require to deposit within 15 days of next month instead of
advance. Therefore instead of advance it is now shown as payable.
22 Accrued expenses
Power and gas 41,446,942 33,809,781

Staff cost 128,303,482 101,868,611
Audit fees 1,525,000 1,543,750
Professional charges 463,000 451,750
Interest on loans 1,554,585 52,889
Telephone 239,907 240,867
Provision for freight 1,114,737 6,236,754
Managing Director's remuneration (Note 22.1) 35,910,357 39,943,228
Worker's profit participation and welfare fund (Note 22.2) 52,965,129 58,913,315
Royalty and technical know-how fees (Note 22.3) 287,408,635 284,211,437
Others 7,733,860 4,328,778
558,665,634 531,601,160
22.1 Managing Director's remuneration

Add: Provision made during the year 35,910,357 39,943,228
75,853,585 85,668,405
Less: Paid to Managing Director during the year 39,943,228 45,725,177
22.2 Worker's profit participation and welfare fund

Add: Contribution made to the fund during the year 52,965,129 58,913,315
111,878,444 126,354,579
Less: Payment made from the fund during the year 58,913,315 67,441,264
2019 2018
Taka Taka
22.3 Provision for royalty and technical know-how fees

368,955,643 286,113,724
Less: Payment made during the year 81,547,008 1,902,287
23 Provision for income Tax

Add: Provision made for the year 296,420,303 316,179,434
3,834,252,156 3,543,984,544
Less: Provision release during the year - 6,152,691
Balance as at 31 December (Note 23.1) 3,834,252,156 3,537,831,853
23.1 Provision for income Tax
Income year
Year 2019 296,420,303 -
Year 2018 316,355,666 316,355,666
Year 2017 346,089,883 346,089,883
Year 2016 302,798,649 302,798,649
Year 2015 323,397,728 323,397,728
Year 2014 377,885,822 377,885,822
Year 2013 362,336,361 362,336,361
Year 2012 339,211,366 339,211,366
Year 2011 326,685,215 326,685,215
Year 2010 348,965,691 348,965,691
Year 2009 266,823,984 266,823,984
Year 2008 147,117,914 147,117,914
Year 2007 80,163,573 80,163,573
3,834,252,156 3,537,831,853
24 Sales
Gross sales from Ceramics product 8,869,234,727 8,692,532,056
Gross sales from Power generation 379,906,242 392,089,748
Gross sales from Security service 121,388,597 183,249,674
9,370,529,566 9,267,871,478
Less: Elimination 404,110,423 489,551,833
Supplementary Duty 670,842,773 674,107,884
VAT 1,201,656,333 1,157,559,196
Discount 47,695,679 115,868,831
Commission, incentive and bonus 582,367,046 499,700,433
Net sales 6,463,857,312 6,331,083,301
2019 2018
Taka Taka
25 Cost of sales
Materials consumed:
Opening inventory as at 1 January 839,612,529 655,088,511
Add: Purchase during the year 2,239,349,844 2,681,307,156
3,078,962,373 3,336,395,667
Less: Closing inventory as at 31 December 818,594,596 839,612,529
2,260,367,777 2,496,783,138
Manufacturing overhead:
Direct labour (note 25.1) 595,504,852 588,450,015
Direct expenses:
Power and gas 234,312,245 220,935,411
Repairs and indirect materials (note 25.2) 716,398,223 810,642,376
Rental charges - 922,886
Depreciation on property, plant & equipment (note 5.1) 377,142,595 377,083,481
Royalty and technical know-how/assistance fees 84,744,206 94,261,305
Other production overhead (Note 25.3) 46,178,500 97,271,900
Provision for slow moving & obsolete inventories (note 9) 37,191,480 -
Movement in stock 204,272,788 (368,660,843)
4,556,112,666 4,317,689,669
25.1 Direct labour

Salary & wages 366,268,122 345,718,759
Overtime 35,996,638 44,323,368
Bonus 68,754,469 48,979,076
Incentive 20,000 780,984
Temporary labour wages 67,609,061 96,441,332
Staff uniform expenses 1,548,395 1,630,344
Gratuity 22,559,693 23,045,568
Employer's contribution to provident fund 19,860,877 20,679,049
Leave encashment 9,387,856 4,109,877
Group life insurance 2,547,186 2,312,256
Compensation 952,555 429,402
595,504,852 588,450,015
25.2 Repairs and indirect materials
Stores, spares, repair & maintenance 366,435,809 416,473,740

Packing expenses 349,962,414 394,168,636
716,398,223 810,642,376
2019 2018
Taka Taka
25.3 Other production overhead

Hotel fare and tour expenses 3,675,774 5,163,985
Demurrage 2,384,244 14,254,258
Insurance 27,331,071 20,378,368
Hiring charges and transportation 6,163,396 17,116,989
Write off for stores, consumables and packing - 31,843,008
Other expenses 6,624,015 8,515,292
46,178,500 97,271,900
26 Other income
Dividend income 200 200

Miscellaneous income 79,340 145,270
Rental income 6,120,000 8,460,000
Profit on sale of fixed assets (note- 5.3) 60,627 81,217
Gain on retirement of right of use assets (note-6.1) 1,656,762 -
Insurance claim 38,287,131 56,976,730
46,204,060 65,663,417
27 Administrative expenses
Staff cost (note-27.2) 198,668,844 188,186,072

Annual General Meeting expenses 5,091,981 16,239,911
Telephone and postage 5,879,843 3,937,359
Office repair and maintenance (note 27.3) 11,602,345 8,695,888
Registration and renewal 899,311 1,906,411
Security and guard expenses 12,963,951 12,125,487
Electricity, gas and water 8,735,395 7,754,536
Depreciation on property, plant & equipment (note - 5.2) 34,278,645 34,182,108
Depreciation on investment property (note - 5.2) 10,532,101 10,532,101
Depreciation on right of use assets (note-6) 2,403,090 -
Amortisation 6,192,863 5,462,966
Legal and professional fees 9,962,298 6,933,955
Vehicle repair and maintenance 14,449,905 11,332,073
Rent, rate and tax 4,320,400 7,416,946
Loss on retirement of fixed assets 10,204,172 -
IT expenses 5,284,353 4,231,184
General Servicing 10,615,266 8,893,019
Donation 1,102,500 4,053,037
Managing Director's remuneration (note-27.4) 35,910,357 39,943,228
Technical consultancy & others 11,415,098 6,447,930
400,512,718 378,274,211
Rent,rates and taxes includes rent expenses for short term lease for BDT. 1,455,560 and related government levis wherever
applicable. Details of the short term lease is shown in note 34 . No low value item exists at the reporting period.
2019 2018
Taka Taka
27.1 Impairment loss on trade receivable

5,624,637 3,601,431
New classification of financial assets shown in note 35.1(b) Impairment loss allowance has not been considered on other
receivables and bank balances because business is confident to recover the full amount from the party.
27.2 Staff cost
Salary & wages 138,394,082 136,802,633
Overtime 30,166 -
Bonus 24,022,478 20,121,783
Incentive - 335,979
Gratuity 7,586,413 7,856,289
Group life insurance 801,988 763,146
Canteen and conveyance
9,270,590 8,100,268
expenses
Staff uniform expenses 770,127 914,819
Travelling expenses 1,571,722 2,628,231
Compensation 129,002 -
Medical expenses 1,262,481 1,094,402
Accommodation expenses 1,703,857 117,878
Other employee benefit 413,468 210,960
198,668,844 188,186,072
27.3 Office repair & maintenance

Repairs office equipment 756,985 104,211
Office maintenance 10,845,360 8,591,677
11,602,345 8,695,888

Provision made during the year 35,910,357 39,943,228
35,910,357 39,943,228
Managing Director’s remuneration represents provision made 3% of net profit before tax of RAK Ceramics (Bangladesh) Ltd.
2019 2018
Taka Taka
28 Marketing & selling expenses
Staff cost (note-28.1) 66,340,939 52,750,302

Advertisement 33,829,109 8,800,695
Freight and transportation 265,406,265 271,435,892
Compensation 11,826,912 16,068,593
Business promotion 37,446,893 31,095,739
Depreciation on property, plant & equipment 5,461,681 4,436,808
Showroom, office & house rent 5,047,545 18,562,018
Sample expenses 9,936,512 3,999,199
Travel, entertainment and others 6,543,551 4,210,300
455,996,281 411,359,546
Showroom, office and house rent includes rent expenses for short term lease for BDT. 1,234,000 and related government
levis wherever applicable. Details of the short term lease is shown in note no 34. No low value item exists at the reporting
period.
28.1 Staff cost

Salary & wages 44,191,989 37,341,109
Bonus 9,086,827 4,115,614
Incentive 173,977 1,131,016
Gratuity 2,646,232 2,318,974
Leave Encashment 1,649,726 445,054
Conveyance & food expenses 5,758,730 4,829,060
66,340,939 52,750,302
28.2 Salary & wages under staff cost (note no. 25.1, 27.2 & 28.1) includes employee conttribution to provident fund for BDT.
19,860,877, BDT. 7,301,369 & BDT. 2,386,546.
29 Finance income
Interest on bank account (SND) 6,832,490 5,915,987

Interest on fixed deposits 26,045,658 28,068,332
Un-winding gain - 4,426,511
32,878,148 38,410,830
2019 2018
Taka Taka
30 Finance expenses
Interest expenses against loan 12,774,595 34,297,301
Interest expenses against lease liability 5,111,376 -
Foreign exchange loss/(gain) 6,874,554 810,559
Bank charges 2,563,151 4,286,162
27,323,676 39,394,022
31 Contribution to worker's profit participation and welfare fund
Provision made during the year 52,965,129 58,913,315

52,965,129 58,913,315
32 Current tax
Current year 296,420,303 316,179,434

296,420,303 316,179,434
33 Reconciliation of effective tax rate
2019 2018
Taka Taka
Profit before tax % 1,044,404,413 % 1,225,925,354
Current tax expenses 28.38% 296,420,303 25.79% 316,179,434
Deferred tax expenses -0.58% (6,041,346) 1.56% 19,120,735
Total tax expenses 27.80% 290,378,957 27.35% 335,300,169
Expected income tax using applicable tax rate

27.63% 288,576,854 27.36% 335,394,915
for individual company
Tax on non-deductible expenses 0.80% 7,843,448 -1.60% (19,215,481)
Effective current tax 28.38% 296,420,303 25.79% 316,179,434
Effective deferred tax -0.58% (6,041,346) 1.56% 19,120,735
27.80% 290,378,957 27.35% 335,300,169
34 Short term lease expenses

Nature of the lease Lease term Allocation Rent Payment
Rented accomodation <1 year Marketing 1,234,000
Rented accomodation <1 year Admin 1,455,560
2,689,560
35 Financial risk management
The management has overall responsibility for the establishment and oversight of the Company’s risk management
framework. The Company’s risk management policies are established to identify and analyse the risks faced by the Company,
to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies, procedures
and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company has
exposure to the following risks from its use of financial instruments.
• Credit risk
• Liquidity risk
• Market risk

35.1 Credit risk
Credit risk is the risk of financial loss to the Company if a client or counterparty to a financial instrument fails to meet its
contractual obligations, and arises principally from the Company’s trade receivables and other receivables.
Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. In monitoring
credit risk, debtors are grouped according to their risk profile, i.e. their legal status, financial condition etc. Trade & other
receivable are mainly related to receivables from dealers, receivables from export sales, claim receivables, accrued interest
and other receivables. The Company’s exposure to credit risk on accounts receivables is mainly influenced by the individual
payment characteristics of customers.
The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the statement of
financial position.
a) Exposure to credit risk

carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the
reporting date was:
USD USD Amounts in Taka

As at 31 Dec As at 31 Dec As at 31 Dec As at 31 Dec
2019 2018 2019 2018
Trade receivables
Customer-Local - - 806,902,780 805,880,110
Customer-Export 78,297 - 6,573,037 -
78,297 - 813,475,817 805,880,110
Other receivables

Accrued Interest 8,197,308 3,009,287
46,484,439 65,911,017
Cash equivalents 1,495,681,647 824,539,763
b) Impact of IFRS 9
The following table and the accompanying notes below explain the original measurement categories under IAS 39 and the
new measurement categories under IFRS 9 for each class of the financial assets as at 31 December 2019.
Original New Original carrying New carrying Impairment
Financial assets Note classification classification amount under amount under loss (Refer
under IAS 39 under IFRS 9 IAS 39 IFRS 9 note 10.1)
Trade receivable- Loan &
10.1 Amortized cost 327,655,223 325,015,143 2,640,080
unrelated receivable
Trade receivable- Loan &
10.1 Amortized cost 495,046,661 488,460,673 6,585,988
related receivable
Cash & cash Loan &
13 Amortized cost 1,495,681,647 1,495,681,647 -
equivalent receivable
i The above table provides information ECLs till date. Impairment provision till Dec 2018 was Tk. 3,601,431 and provision
made during the year is Tk. 5,624,637.
ii Trade receivables that were classified as loans and receivables under IAS 39 are now classified at amortised cost.
Impairment over these receivables was recognised in the current year on transition to IFRS 9.
iii Cash and cash equivalents that were classified as loans and receivables under IAS 39 are now classified at amortised
cost. Impairment over these cash & cash equivalent was recognised in the current year on transition to IFRS 9.

Ageing of receivables
c)
i. The ageing of trade receivables as at 31 Dec was:
Amounts in Taka
As at 31 Dec 2019 As at 31 Dec 2018
Not past due 751,147,263 745,648,990
0-90 days past due 32,705,826 16,912,926
91-180 days past due 18,869,623 21,642,349
181-365 days past due 3,437,613 12,917,992
over 365 days past due 7,315,492 8,757,853
813,475,817 805,880,110
35.2 Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities
when become due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to
the Company’s reputation.
The Company ensures that it has sufficient cash and cash equivalents to meet expected operational expenses, including
financial obligations through preparation of the cash flow forecast, prepared based on timeline of payment of the financial
obligation and accordingly arrange for sufficient liquidity/fund to make the expected payment within due date. Moreover, the
Company seeks to maintain short term lines of credit with scheduled commercial banks to ensure payment of obligations in
the event that there is insufficient cash to make the required payment. The requirement is determined in advance through
cash flows projections and credit lines facilities with banks are negotiated accordingly.
The following are the contractual maturities of financial liabilities of the Company:
As at 31 Dec 2019
Carrying Contractual Within 12 More than 12
amount cash flows months or less months
Taka Taka Taka Taka
Trade and other payables 691,725,531 691,725,531 691,725,531 -
Term loan (foreign) 89,232,918 89,232,918 89,232,918 -
780,958,449 780,958,449 780,958,449 -
As at 31 Dec 2018
Contractual Within 12 More than 12
Carrying amount
cash flows months or less months
Taka Taka Taka Taka
Bank overdraft 35,654,174 35,654,174 35,654,174 -
Term loan 362,201,591 362,201,591 273,998,242 88,203,349
926,515,343 926,515,343 838,311,994 88,203,349
35.3 Market risk

Market risk is the risk that changes in market prices such as foreign exchange rates and interest rates will affect the Company’s
income or the value of its holding of financial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimising the return.

a) Currency risk
The Company is exposed to currency risk on certain revenues and purchase of raw material, spare parts, accessories
and capital item. Majority of the company’s foreign currency purchase are denominated in USD and EURO. All the export
proceeds are receipt in USD, 50% of export proceeds are crediting to export retention quota account and rest of the 50% are
converted to Taka and crediting to company’s current account.
i) Exposure to currency risk
The Company’s exposure to foreign currency risk was as follows based on notional amounts (in Taka):

AED GBP USD EURO AED GBP USD EURO
Foreign currency denom-
inated assets
Receivable from
- - 78,297 - - - - -
customers-Export
Cash at bank - - 141,204 - - - 198,729 -
- - 219,501 - - - 198,729 -

Foreign currency denomi-

nated liabilities
Trade payables - 132,189 2,201,698 1,373,117 26,250 164,612 2,246,077 631,228
Term loan - - 1,050,417 - - - 4,314,492 -
Royalty & Technical Fees - - 3,383,268 - - - 3,385,485 -
- 132,189 6,635,383 1,373,117 26,250 164,612 9,946,054 631,228
Net exposure - (132,189) (6,415,882) (1,373,117) (26,250) (164,612) (9,747,325) (631,228)
The Company has foreign exchange loss of Tk 6,874,554 during the year ended 31 December 2019 (31 December 2018:
Exchange loss Tk 810,559).
The following significant exchange rates have been applied:
Exchange rate as at (Average)

31 Dec 2019 31 Dec 2018
Taka Taka
AED 23.0627 22.7911

GBP 111.3664 106.2826
USD 84.4500 83.4500
EURO 95.0948 95.5444
ii) Foreign exchange rate sensitivity analysis for foreign currency expenditures
A strengthening or weakening of the Taka, as indicated below, against the AED, GBP, USD, EURO at 31 December would
have increased/(decreased) profit or loss by the amounts shown below.


Profit or (loss) Profit or (loss)
Strengthening Weakening Strengthening Weakening
Taka Taka Taka Taka
At 31 December
AED (3 percent movement) - - (812) 765
GBP (3 percent movement) (4,088) 3,850 (5,091) 4,795
USD (3 percent movement) (198,429) 186,870 (301,464) 283,903
EURO (3 percent movement) (42,468) 39,994 (19,523) 18,385
b) Interest rate risk
Interest rate risk is the risk that arises due to changes in interest rates on borrowings. The Company is not significantly exposed
to fluctuation in interest rates as company has not entered into any type of derivative instrument in order to hedge interest
rate risk as at the reporting date.
Profile
At the reporting date, the interest rate profile of the Company’s interest bearing financial instruments was:
Carrying amount
As at 31 Dec As at 31 Dec
2019 2018
Taka Taka
Fixed rate instruments
Financial assets
Investment in FDR 791,506,905 346,467,169
Cash at banks 704,174,743 478,072,594
Financial liabilities
Term loan (Foreign) 89,232,918 362,201,591
Bank overdraft - 35,654,174
Fair value of financial assets and liabilities of the Company together with carrying amount shown in the statement of
financial position are as follows:


Carrying Carrying
Fair value Fair value
amount amount
Taka Taka Taka Taka
Financial assets
Held to maturity assets
Investment in FDR 791,506,905 791,506,905 346,467,169 346,467,169
Loans and receivables

Trade receivables 813,475,817 813,475,817 805,880,110 805,880,110
Other receivables 46,484,439 46,484,439 65,911,017 65,911,017
Cash equivalents 1,495,681,647 1,495,681,647 824,539,763 824,539,763
Liabilities carried at amortised costs
Term loan 89,232,918 89,232,918 362,201,591 362,201,591
Bank overdraft - - 35,654,174 35,654,174
Trade and other payables 691,725,531 691,725,531 528,659,578 528,659,578
Interest rates used for determining amortised cost

The interest rates used to discount estimated cash flows, when applicable were as follows:
31 Dec 2019 31 Dec 2018
Investment in FDR (local currency/BDT) 1.95%-10.50% 1.95%-8.50%

Bank overdraft (local currency/BDT) 8.00%-10.25% 8%-10.00%
Short term bank loan (local currency/BDT) 9.50%-10.00% 8%-10.00%
Short term bank loan (foreign currency/USD) Libor+2.75% Libor+(2.75%-2.85%)
Long term bank loan (foreign currency/USD) Libor+3% Libor+3%
36 Related party disclosures under IAS-24
148
List of related parties with whom transactions have taken place and their relationship as identified and certified by management: Amounts in Taka

Security/ Bad Purchase of Outstanding
Sale of goods/ Outstanding Dividend
Name of related party Relationship Gurantee debts Period goods/ receivables/ Remuneration
services payable income
status Status services Advance
RAK Power Pvt. Ltd Subsidiary Unsecured Nil Current year 350,456,021 11,064,211 - 69,096,649 - 81,999,600
Previous year 392,089,748 6,152,571 - 98,658,782 - 81,999,600
RAK Security & Services Pvt. Ltd Subsidiary Unsecured Nil Current year 52,160,129 - - 6,400,853 - 4,950,000
Previous year 95,939,059 - - 19,908,164 - 3,960,000
RAK Ceramics - PJSC, UAE Parent Unsecured Nil Current year 22,466,247 - - 24,122,508 - -
Previous year 29,055,626 - - 25,144,693 - -
Ceramin FZ LLC Fellow subsidiary Secured Nil Current year 392,749,682 - - 81,573,238 - -
Previous year 509,397,456 - - 83,236,425 - -
Julphar Pharmaceuticals Ltd. Other related party Unsecured Nil Current year - 2,520,000 - - - -
Previous year - 4,860,000 3,645,000 - - -
RAK Paints Pvt. Ltd. Other related party Unsecured Nil Current year 419,421 3,600,000 5,144 - - -
Previous year 1,796,925 3,600,000 2,280,000 - - -
Kea Printing & Packaging
Other related party Unsecured Nil Current year 68,191,789 - - 10,047,843 - -
Industries
Previous year 76,073,703 - - 12,706,166 - -
Palli Properties Pte. Ltd Other related party Unsecured Nil Current year 14,711,593 - - 722,088 - -
Previous year 18,684,918 - - 865,356 - -
Sky Bird Travel Agents Pvt. Ltd. Other related party Unsecured Nil Current year 353,672 - - - - -
Previous year 2,401,433 - - 24,544 - -
Green Planet Communications Other related party Unsecured Nil Current year 379,457 - - - - -
Previous year 9,584,482 - - 48,720 - -
Global Business Associates Ltd. Other related party Unsecured Nil Current year 780,380 - - 17,595 - -
Previous year 717,674 - - - - -
Pelikan Plastic & Packing Pvt.
Other related party Unsecured Nil Current year 39,045,942 - - 5,772,579 - -
Ltd.
Previous year 118,354,894 - - 8,046,142 - -
Secured by
Mohammed Trading Other related party Guaranted Nil Current year - 2,384,669,868 494,919,371 - - -
Cheque
Previous year - 2,277,534,117 520,382,927 - - -
Key Management
S.A.K. Ekramuzzaman Unsecured Nil Current year 2,563,008 - - 35,910,357 35,910,357 -
Personnel
Previous year 2,193,288 - - 39,943,228 -
39,943,228
Key Management
Imtiaz Hussain Unsecured Nil Current year - - - - 10,367,732 -
Personnel
Previous year - - - 1,123,305 10,793,225 -

36.1 Paid to Directors
During the year, provision was made as MD’s remuneration for Taka. 35,910,357.
During the year, Board meeting fees of Taka 150,000 was paid to the board members for attending the Board meetings.
37 Segment reporting
The company has three reportable segments which offer different products and services and are managed separately
because they require different technology and marketing strategies. The following summary describes the operations of
each segment:
Ceramics & Sanitary Ware: Engages in manufacturing and marketing of ceramics tiles, bathroom sets and all types
of sanitary ware.
Power: Set-up power utilities and operate power-generating plants, transmission system and distribution system
and to sell the generated electric power to any legal entity.
Security and services : Engages in providing security guard, cleaning services, verification services,termite and pest
control services and set up manpower technical training.
Business Segments
2019 Ceramic & Security and Inter
Power Entity total
sanitary ware Services segment
Revenue - external customers 6,408,004,827 1,946,067 53,906,419 - 6,463,857,312

Revenue - inter segment - 350,456,021 53,654,402 (404,110,423) -
Total segment revenue 6,408,004,827 352,402,088 107,560,821 (404,110,423) 6,463,857,312
Cost of sales- external customer (4,205,457,932) (259,456,704) (91,198,028) - (4,556,112,666)

Cost of sales- inter segment (402,616,150) (10,191,442) - 412,807,592 -
Total segment cost of sales (4,608,074,082) (269,648,146) (91,198,028) 412,807,592 (4,556,112,666)
Gross profit 1,799,930,745 82,753,942 16,362,793 - 1,907,744,646
Other income 40,004,520 79,340 - - 40,083,860

Dividend income 86,949,600 50,000 200 (86,999,600) 200
Rental income 17,184,211 - - (11,064,211) 6,120,000
Financial income 30,596,482 2,146,781 134,885 - 32,878,148
Financial expenses (27,060,159) (437,197) (116,834) 290,514 (27,323,676)
Depreciation (412,290,356) (14,806,996) (317,670) - (427,415,022)
Other operating expenses (476,012,461) 5,614,794 (17,286,076) - (487,683,743)
Segment profit before tax 1,059,302,582 75,400,664 (1,222,702) - 1,044,404,413
Income tax expense (269,804,714) (26,615,589) - - (296,420,303)
Deferred tax 4,152,154 1,889,192 - - 6,041,346
Non -Controlling interest - 247 (0.06) - 247
Profit for the year 754,025,209
Business Segments
2018 Ceramic & Security and Inter
Power Entity total
sanitary ware Services segment
Revenue - external customers 6,269,197,881 - 61,885,420 - 6,331,083,301

Revenue - inter segment - 392,089,748 97,462,085 (489,551,833) -
Total segment revenue 6,269,197,881 392,089,748 159,347,505 (489,551,833) 6,331,083,301
Cost of sales- external customer (3,931,403,155) (249,137,217) (137,149,296) - (4,317,689,669)

Cost of sales- inter segment (488,028,807) (7,675,597) - 495,704,404 -
Total segment cost of sales (4,419,431,962) (256,812,814) (137,149,296) 495,704,404 (4,317,689,669)
Gross profit 1,849,765,919 135,276,934 22,198,209 - 2,013,393,632
Other income 57,054,039 149,179 - 57,203,218

Dividend income 85,959,600 40,000 200 (85,999,600) 200
Rental income 14,612,571 - - (6,152,571) 8,460,000
Unwinding gain on receivable
- - - 4,426,511
(Note - 29)
Financial income 32,051,045 1,847,140 86,135 - 33,984,319
Financial expenses (37,086,831) (2,276,634) (30,557) - (39,394,021)
Depreciation (407,803,840) (17,871,387) (559,270) - (426,234,497)
Other operating expenses (416,286,194) 8,632,156 (18,259,970) - (425,914,008)
Segment profit before tax 1,178,266,309 125,797,388 3,434,746 - 1,225,925,354
Income tax expense (273,027,981) (42,125,554) (1,025,899) - (316,179,434)
Deferred tax (22,057,495) 2,783,086 153,674 - (19,120,735)
Non -Controlling interest - 422 0.13 - 422
Profit for the year 890,624,763
2019 2018
Taka Taka
38 Earnings per share (EPS)
Calculation of earnings per share (EPS) is as under:

Earnings attributable to the ordinary shareholders
Profit attributable to equity holders of the Company 754,025,209 890,624,763
No. of ordinary equity shares 427,968,701 427,968,701
Weighted average no. of equity shares outstanding (Note 38.1) 427,968,701 427,968,701
Earnings per share (EPS) for the year 1.76 2.08
Diluted earnings per share for the year 1.76 2.08
Net assets value per share 17.18 17.97
Net operating cash flow per share 3.70 1.33

2019 2018
Taka Taka
38.1 Weighted average number of ordinary shares

The weighted average number of ordinary shares outstanding during the year is the number of ordinary shares outstanding
at the beginning of the year, adjusted by the number of ordinary shares issued during the year multiplied by a time-weighting
factor. The time-weighting factor is the number of days that the shares are outstanding as a proportion of the total number of
days in the year. The weighted average number of shares is calculated by assuming that the shares have always been in issue.
This means that they have been issued at the start of the year presented as the comparative figures.
Outstanding shares 389,062,456 389,062,456
Effect of issue of bonus shares for the year 2018 38,906,245 38,906,245
427,968,701 427,968,701
38.2 Diluted earning per share
No diluted earnings per share is required to be calculated for the year as there was no scope for dilution during these
years.
38.3 Reason of deviation of earnings per share:
The expenditure increased due to normal increase is salary & wages and also incremental amounts in respect of dealers
performance incentives, inventory provisioning based on ageing analysis.
39 Reason of deviation of net operating cash flow per share:
The company registered improvement in cash inflows from customers as well as better credit term with suppliers in the
year as compared to previous year.
2018 2017
39.1 Reconciliation of operating cash flow:
Cash flows from operating activities
Profit before taxation 1,044,404,413 1,225,925,354

Adjustment for:
Depreciation 443,974,986 426,234,497
Amortization 6,192,863 5,462,966
Loss on assets retirement 10,204,172 -
Advance rent adjustment (13,852,346) -
Tax adjustment - (6,152,691)
Foreign exchange loss 6,874,554 810,559
Finance expenses 20,449,121 38,583,462
Finance income (32,878,148) (38,410,830)
Other income (46,124,720) (65,518,148)
1,439,244,896 1,586,935,170
Increase/decrease in trade and other receivables (7,595,707) (304,951,125)
Increase/decrease in inventories 219,985,839 (471,912,815)
Increase/decrease in trade and other payables 235,498,541 45,326,102
Income tax paid (308,746,264) (293,693,008)
Net cash (used in)/from operating activities 1,585,219,790 567,620,313
40 Contingent liabilities
There are contingent liabilities on account of unresolved disputed corporate tax assessments and VAT claims by the
authority aggregating to Tk 888,227,095 (31 Dec 2018: Tk 992,574,842). Considering the merits of the cases, it has not
been deemed necessary to make provisions for all such disputed claims.
There is also contingent liability in respect of outstanding letters of credit of Tk 228,072,306 (31 Dec 2018: Tk
307,987,625) and letter of guarantee of Tk 100,575,768 (31 Dec 2018: Tk 115,134,048).
41 Events after the reporting period
41.1 Declaration of dividend and date of Annual General Meeting (AGM)
The Board of Directors of RAK Ceramics (Bangladesh) Limited, in its meeting held in February 04, 2020,
has unanimously recommended cash dividend @ 15% of the paid up capital of the company for the year
ended 31 December 2019 equivalent to BDT. 641,953,052 to be distributed as cash dividends among share
holders, which is more then 30% of the current year profit. The dividends is subject to final approval by the
shareholders at the forthcoming 31 March 2020 Annual General Meeting of the Company.
INDEPENDENT AUDITORS’
REPORT AND AUDITED FINANCIAL
STATEMENTS
as at and for the year ended
31 December 2019
Independent Auditor’s Report
TO THE SHAREHOLDERS OF RAK

CERAMICS (BANGLADESH) LIMITED
Opinion section of our report. We are independent of the

Company in accordance with the International Ethics
We have audited the financial statements of RAK Standards Board for Accountants’ Code of Ethics for
Ceramics (Bangladesh) Limited (“the Company”), which Professional Accountants (IESBA Code), and we have
comprise the statement of financial position as at 31 fulfilled our other ethical responsibilities in accordance
December 2019, and the statement of profit or loss and with the IESBA Code. We believe that the audit evidence
other comprehensive income, statement of changes in we have obtained is sufficient and appropriate to
equity and statement of cash flows for the year then provide a basis for our opinion.
ended, and notes to the financial statements, including
a summary of significant accounting policies.
Key Audit Matters
In our opinion, the accompanying financial statements
give true and fair view, in all material respects, of the Key Audit Matters are those matters that, in our
financial position of the Company as at 31 December professional judgement, were of most significance
2019, and of its financial performance and its cash in our audit of the financial statements of the current
flows for the year then ended in accordance with period and include the most significant assessed risk
International Financial Reporting Standards (IFRSs) as of material misstatement (whether or not due to fraud)
explained in note 02-03. identified by the auditors, including those which had the
significant effect on the overall audit strategy, allocation
of resources in the audit and directing the efforts of the
Basis for Opinion engagement team. These matters were addressed in
We conducted our audit in accordance with International the context of our audit of the financial statements as a
Standards on Auditing (ISAs). Our responsibilities under whole, and in forming our opinion thereon, and we do
those standards are further described in the Auditors’ not provide a separate opinion on these matters.
Responsibilities for the Audit of the Financial Statements
Recognition of rights of use assets and lease liabilities for lease rental arrangements
Refer note no 3.15.3, 6 and 21 to the financial statements
The Company recognized rights of use assets (ROUA) and We assessed the Company’s key internal controls in
lease liabilities arising from the lease rental arrangements for identification of lease, recognition and measurement of ROUA
its display centers, accommodation floors and warehouse. and lease liability, and related key assumptions. We performed
following procedures for our assessment :
The recognition is made for the first time in current year’s
financial statements as it adopted IFRS 16 (Leases) in its • Read the contracts for lease rental arrangements,
financial statements for the first time. However, that would not especially the terms and conditions related to
require a restatement of the comparative period information payments, lease incentives, any indirect costs,
because Company elected modified retrospective approach. dismantling and restoration, option to extend the lease
or not to terminate the lease.
The lease liability is measured at the present value of the
lease payments that are not paid at that date. For calculation • Checked the lease amortization schedule and
of the lease liability, the management applies its judgment in depreciation schedule for each of the leases.
determination of lease term, where certainty of exercising
the option to extend or the option not to terminate the lease • Checked the appropriateness of management’s
is considered. assumptions, especially in determining the certainty of
exercising option to extend or terminate lease and the
The incremental borrowing rate is used as discounting rate discounting rate applied to calculate lease liability.
in calculation of lease liability.
Revenue recognition
Refer note no 3.15.2 and 25
The Company provides various benefits to its dealers, Our audit procedures involved following activities:
including discount, commissions, incentives and bonus.
• Reading the contracts with the dealers and other circulars
Considering the variability of the said benefits, effective and announcements for terms and conditions related
from the current year, the management presented them to discount, commissions, incentives and bonus;
as deduction from revenue in contrast to previous years’
presentation as marketing and selling expense. Prior year’s • Recalculating the amount of discount, commissions,
comparative figures are also restated in this regard. incentives and bonus;
The management applies its judgment in determining • Checking the past trend of allowing discount,
whether there is valid expectation among the dealers arising commissions, incentives and bonus.
from the Company’s customary business practices for any
further benefits in excess of the figures provisioned for.
Provision for slow moving and obsolete inventories

Refer note no 3.9 and 10 to the financial statements
The inventories of the Company are carried at lower of cost We obtained assurance over relevance and appropriateness
and net realizable value. The management applies judgment of management’s assumptions applied in calculating the
in determining the appropriate provisions for obsolete stock provision for slow moving and obsolete inventories by:
based upon a detailed analysis of old and slow-moving
inventory. • evaluating the design and implementation of key
inventory controls operating across the Company;
• attending stock counting and reconciling the count
results to the inventory listings to test the completeness
of data;
• checking the ageing analysis of inventories and
appropriateness of management’s determination
of probability of obsolescence for each group of
inventory ageing;
• reviewing the historical accuracy of inventory
provisioning, and the level of inventory write-offs
during the year.
Credit risk and impairment on trade receivables

Refer note no 3.15.1, 11, 28.1 and 37.1 (b) to the financial statements
Remarkable amount of the trade receivables of the Our audit procedures included testing the Company’s
Company is attributable to a single customer, which is also credit control procedures and judgment on determining the
a related party (as disclosed in note no #38 to the financial provisions for expected credit losses. The audit procedures
statements) to the Company. Being related party, there may involved following activities:
be unpalatable behavior putting reliability at risk.
• testing, on a sample basis, receivable balances and
comparing it with our results from the external
confirmations;
Significant amount of judgment is to be applied to determine
the risk of default over the expected life of trade receivables, • inspecting the arrangements, securities documents,
which may have material impact over the figures of trade credibility assessments and correspondences with
receivable. As a result, there is risk of error in determining the parties concerned to assess the recoverability of
allowance for impairment for trade receivables. significant long outstanding receivables;
• reviewing the calculations of the allowance for
impairment of trade receivables based on the
judgments applied by the management.
Review of tax and regulatory matters
Refer note no 24 and 42 to the financial statements
Company has several pending corporate tax assessments and We obtained an understanding, evaluated the design
legal proceedings with the government revenue authorities and tested the operational effectiveness of the
related to claims for tax, VAT and customs duty. The pending Company’s key controls over the legal provision
cases expose the Company to significant litigation and similar
risks arising from disputes and regulatory proceedings. Such
and contingencies recognition process. To get more
matters are subject to many uncertainties and the outcome insights we performed following procedures:
may not be appropriate to predict. • enquired into those charged with governance to obtain
their view on the status of all significant litigation and
regulatory matters;
These uncertainties inherently affect the amount and timing • enquired the Company’s internal legal counsel for
of potential outflows with respect to the tax provisions and all significant litigation and regulatory matters and
contingent liabilities. studied internal notes and reports. We also enquired
formal confirmations from external counsel on these
matters;
As a listed entity, the Company also has to maintain • assessed the methodologies on which the provision
compliance with the requirements of the Bangladesh amounts are based, recalculated the provisions,
Securities and Exchange Commission. and tested the completeness and accuracy of the
underlying information;
• assessed the Company’s provisions and contingent
liabilities disclosure.
We have reviewed the controls related to Corporate
Governance compliance and reporting compliance as
per Bangladesh Securities and Exchange Commission
guidelines.
Responsibilities of Management and Other Information

Those Charged with Governance Management is responsible for the other information.
for Financial Statements and Internal The other information comprises the Directors’
Report, which we could not obtain prior to the date
Controls of this auditors’ report and the Annual Report, which
Management is responsible for the preparation and fair is expected to be made available to us after that date.
presentation of the financial statements in accordance
Our opinion on the financial statements does not cover
with IFRSs as explained in note 02-03, and for such
the other information and will not express any form of
internal control as management determines is necessary
assurance conclusion thereon.
to enable the preparation of financial statements that
are free from material misstatement, whether due to In connection with our audit of the financial statements,
fraud or error. The Bangladesh Securities and Exchange our responsibility is to read the other information
Commission rules and regulations together with other identified above and, in doing so, consider whether the
applicable regulations require the Management to other information is materially inconsistent with the
ensure effective internal audit, internal control and risk financial statements or our knowledge obtained in the
management functions of the Company. audit, or otherwise appears to be materially misstated.
In preparing the financial statements, management If, based on the work we have performed on the other
is responsible for assessing the Company’s ability to information that we obtained prior to the date of this
continue as a going concern, disclosing, as applicable, auditors’ report, we conclude that there is a material
matters related to going concern and using the going misstatement of this other information, we are required to
concern basis of accounting unless management report that fact. We have nothing to report in this regard.
either intends to liquidate the Company or to cease
operations, or has no realistic alternative but to do so. When we read the Annual Report, if we conclude that
there is a material misstatement therein, we are required to
Those charged with governance are responsible for communicate the matter to those charged with governance
overseeing the Company’s financial reporting process. and take appropriate actions in accordance with ISAs.
Auditor’s Responsibilities for the Audit of the • Obtain sufficient and appropriate audit evidence regarding
Financial Statements the financial information of the entities or business
activities within the Company to express an opinion
Our objectives are to obtain reasonable assurance about on the financial statements. We are responsible for the
whether the financial statements as a whole are free from direction, supervision and performance of the audit. We
material misstatement, whether due to fraud or error, and to remain solely responsible for our audit opinion.
issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee We also provide those charged with governance with a statement
that an audit conducted in accordance with ISAs will always that we have complied with relevant ethical requirements
detect a material misstatement when it exists. Misstatements regarding independence, and to communicate with them all
can arise from fraud or error and are considered material if, relationships and other matters that may reasonably be thought
individually or in the aggregate, they could reasonably be to bear on our independence, and where applicable, related
expected to influence the economic decisions of users taken safeguards.
on the basis of these financial statements. From the matters communicated with those charged with
As part of an audit in accordance with ISAs, we exercise governance, we determine those matters that were of most
professional judgement and maintain professional skepticism significance in the audit of the financial statements of the
throughout the audit. We also: current period and are therefore the Key Audit Matters as
reported in the respective section of the report above. We
• Identify and assess the risks of material misstatement of describe these matters in our auditors’ report unless law or
the financial statements, whether due to fraud or error, regulation precludes public disclosure about the matter or
design and perform audit procedures responsive to those when, in extremely rare circumstances, we determine that a
risks, and obtain audit evidence that is sufficient and matter should not be communicated in our report because
appropriate to provide a basis for our opinion. The risk the adverse consequences of doing so would reasonably be
of not detecting a material misstatement resulting from expected to outweigh the public interest benefits of such
fraud is higher than for one resulting from error, as fraud communication.
may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
Report on other Legal and Regulatory
• Obtain an understanding of internal control relevant to Requirements
the audit in order to design audit procedures that are
appropriate in the circumstances. In accordance with the Companies Act 1994 and the
Securities and Exchange Rules 1987, we also report the
• Evaluate the appropriateness of accounting policies used
following:
and the reasonableness of accounting estimates and
related disclosures made by management. a) we have obtained all the information and
• Conclude on the appropriateness of management’s use of explanations which to the best of our knowledge
the going concern basis of accounting and, based on the and belief were necessary for the purposes of our
audit evidence obtained, whether a material uncertainty audit and made due verification thereof;
exists related to events or conditions that may cast
significant doubt on the Company’s ability to continue b) in our opinion, proper books of account as
as a going concern. If we conclude that a material required by law have been kept by the Company
uncertainty exists, we are required to draw attention in our so far as it appeared from our examination of
auditor’s report to the related disclosures in the financial these books;
statements or, if such disclosures are inadequate, to
modify our opinion. Our conclusions are based on the c) the statement of financial position and statement
audit evidence obtained up to the date of our auditor’s of profit or loss and other comprehensive income
report. However, future events or conditions may cause dealt with by the report are in agreement with the
the Company to cease to continue as a going concern. books of account and returns; and
• Evaluate the overall presentation, structure and content d) the expenditure incurred was for the purposes of
of the financial statements, including the disclosures, the Company’s business.
and whether the financial statements represent the
underlying transactions and events in a manner that
achieves fair presentation.
ACNABIN
STATEMENT OF FINANCIAL POSITION

2019 2018
Note Taka Taka
Assets
Property, plant and equipment 4 2,857,158,157 3,043,473,716
Investment property 5 681,433,368 691,149,776
Right of use assets 6 44,970,798 -
Intangible assets 7 6,495,047 11,916,384
Capital work in progress 8 177,641,997 127,781,532
Investment in subsidiaries 9 360,379,950 360,379,950
Total non-current assets 4,128,079,317 4,234,701,358
Inventories 10 2,716,061,804 2,935,341,706

Advance income tax 13 3,106,581,019 2,841,236,116
Cash and cash equivalents 14 1,427,796,668 764,167,746
Total current assets 8,324,846,748 7,682,136,649
Total assets 12,452,926,065 11,916,838,007
Equity
Share capital 15 4,279,687,010 3,890,624,560
Share premium 16 1,473,647,979 1,473,647,979
Retained earnings 17 1,636,929,820 1,624,536,295
Total equity 7,390,264,809 6,988,808,834
Liabilities
Borrowings 20 - 88,203,349
Borrowings 20 89,232,918 309,652,416

Provision for income tax 24 3,496,891,493 3,227,086,779
Total current liabilities 4,871,414,465 4,673,801,746
Total liabilities 5,062,661,256 4,928,029,173
Total equity and liabilities 12,452,926,065 11,916,838,007
The accompanying notes are an integral part of these financial statements.

ACNABIN
Dated, 04 February 2020
Chartered Accountants
STATEMENT OF PROFIT OR LOSS AND

OTHER COMPREHENSIVE INCOME
2019 2018
Note Taka Taka
Sales 25 6,408,004,827 6,269,197,882
Cost of sales 26 (4,608,074,082) (4,419,431,962)
Gross profit 1,799,930,745 1,849,765,920
Other income 27 144,138,331 157,626,209
Impairment loss on trade receivable 28.1 (5,624,637) (3,162,362)
Marketing and selling expenses 29 (452,510,987) (408,205,302)
(691,199,357) (607,550,510)
Profit from operating activities 1,108,731,388 1,242,215,410
Finance income 30 30,596,482 32,051,044

Finance expenses 31 (27,060,159) (37,086,830)
Net finance income 3,536,323 (5,035,786)
Profit before contribution to workers’
Profit participation and welfare fund and income tax 1,112,267,711 1,237,179,624
Contribution to workers' profit participation and welfare
(52,965,129) (58,913,315)
fund
Profit before income tax 1,059,302,582 1,178,266,309
Income tax expense:
Current tax 32 (269,804,714) (273,027,981)
Deferred tax 18 4,152,154 (22,057,495)
(265,652,560) (295,085,476)
Other comprehensive income for the year - -

Basic earnings per share (par value Tk 10) 40 1.85 2.06

ACNABIN
STATEMENT OF CHANGES IN EQUITY

Share Share Retained

Total
capital premium earnings
Taka Taka Taka Taka
Balance as at 1 January 2018 3,536,931,410 1,473,647,979 1,448,741,753 6,459,321,142

Profit for the years - - 883,180,833 883,180,833
Other comprehensive income - - - -
Transactions with the shareholders

Cash dividend (2017) - - (353,693,141) (353,693,141)
Stock dividend (2017) 353,693,150 - (353,693,150) -
Balance as at 31 December 2018 3,890,624,560 1,473,647,979 1,624,536,295 6,988,808,834
Balance as at 1 January 2019 3,890,624,560 1,473,647,979 1,624,536,295 6,988,808,834
Prior year adjustment (leases) - - (3,131,591) (3,131,591)

Profit for the year - - 793,650,022 793,650,022
Other comprehensive income - - - -

Cash dividend (2018) - - (389,062,456) (389,062,456)
Stock dividend (2018) 389,062,450 - (389,062,450) -
Balance as at 31 December 2019 4,279,687,010 1,473,647,979 1,636,929,820 7,390,264,809

STATEMENT OF CASH FLOWS

2019 2018
Taka Taka

Cash receipts from customers 6,397,938,990 5,980,444,811
Cash payments to suppliers and employees (4,660,207,012) (5,244,233,236)
Income tax paid (note 13) (265,344,903) (266,232,589)
Net cash (used in)/from operating activities (note 41.1) 1,478,291,997 475,084,086
Acquisition of property, plant and equipment (276,441,901) (307,400,340)
Sale of property, plant and equipment 179,500 134,140
Disposal proceeds of associate - 74,025,000
Interest received from FDR 19,500,669 28,745,724
Income from rental 23,109,211 10,757,571
Intangible assets (771,526) (11,950,323)
Insurance claim received 56,976,731 -
Dividend received 86,949,600 85,959,600
Net cash (used in)/from investing activities (90,497,716) (119,728,628)
Finance charges (18,627,853) (45,604,563)
Avail/ (repayment) of short term borrowings (220,419,498) (238,509,621)
Avail/ (repayment) of long term borrowings (88,203,349) (270,959,943)
Payment of lease liability (9,736,019) -
Dividend paid (386,966,131) (351,973,215)
Unclaimed share application fund (8,160) (19,200)
Effect of exchange rate changes in cash and cash equivalents (204,349) 563,565
Cash and cash equivalents as at 01 January 764,167,746 1,315,315,265
Cash and cash equivalents as at 31 December (Note 14) 1,427,796,668 764,167,746

NOTES TO THE FINANCIAL STATEMENTS

1. Reporting entity
RAK Ceramics (Bangladesh) Ltd (the Company), formerly RAK Ceramics (Bangladesh) Pvt. Limited, a UAE-Bangladesh joint
venture company, was incorporated in Bangladesh on 26 November 1998 as a private company limited by shares under
the Companies Act 1994. The Company was later converted from a private limited into a public limited on 10 June 2008
after observance of required formalities as per laws. The name of the Company was thereafter changed to RAK Ceramics
(Bangladesh) Ltd. as per certificate issued by the Registrar of Joint Stock Companies dated 11 February 2009. The address of
the Company’s registered office is RAK Tower, Plot # 1/A, Jasimuddin Avenue, Sector # 3, Uttara, Dhaka 1230. The company
got listed with Dhaka Stock Exchange (DSE) and Chittagong Stock Exchange (CSE) on 13 June 2010.
The Company is engaged in manufacturing and marketing of ceramics tiles, wash room sets and all types of sanitary
ware. It has started its commercial production on 12 November 2000. The commercial production of its new sanitary
ware plant, expansion unit of ceramics facilities, tiles and sanitary plant was started on 10 January 2004, 1 July 2004, 1
September 2007, 1 April 2015 and 17th May 2016 respectively.
the requirement of the Companies Act 1994. However, such differences are not material and in the view of management
IFRS titles and format give better presentation to the shareholders.
These financial statements have been prepared on historical cost basis except for inventories which are measured at
lower of cost and net realisable value.
and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income
and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised
in the period in which the estimates are revised and in any future periods affected.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting
policies that have the most significant effect on the amount recognised in the financial statements are stated in the
following notes:
Note 5 Investment Property
Note 6 Right of use assets
Note 28.1 Impairment of loss of trade receivable.


The financial period of the Company covers one year from 1 January to 31 Dec 2019 and is followed consistently.
2.6 Going concern
have been prepared on going concern basis. As per management assessment there are no material uncertainties related
to events or conditions which may cast significant doubt upon the Company's ability to continue as a going concern.
3. Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these financial statements,
and have been applied consistently.
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, if
any. Cost includes expenditures that are directly attributable to the acquisition of the property, plant and equipment.
Maintenance, renewals and betterments that enhance the economic useful life of the property, plant and equipment or
that improve the capacity, quality or reduce substantially the operating cost or administration expenses are capitalised by
adding it to the related property, plant and equipment. Ongoing repairs and maintenance is expensed as incurred.
disposal proceeds and the carrying amount of the asset and is recognised as gain or loss from disposal of asset under
other income in the statement of profit or loss and other comprehensive income.
3.2 Depreciation on property, plant and equipment
Depreciation charged on the basis of straight line method. Depreciation continues to be charged on each item of
property, plant, equipment & investment property until written down value of such fixed asset is reduced to Taka one.
Depreciation on addition to fixed assets is charged when it is available for use and charging of depreciation on property,
plant, equipment & investment property ceases at the earliest of the date the assets is classified held for sale in accordance
with IFRS 5 and the date that aasets is derecognised.
Rates of depreciation on various classes of property, plant, equipment & investment property are as under:
Building 5
Plant and machinery 10
Mobile plant 10
Electrical installation 10
Gas pipeline 10
Furniture, fixture and equipment 10
Office equipment 10-20
Communication equipment 10-20
Tools and appliances 10
Vehicles 10

3.3 Investment property
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under
construction for such purposes). Investment properties are measured at cost less accumulated depreciation and
impairment losses, if any. Cost includes expenditures that are directly attributable to the acquisition of the investment
property. Maintenance, renewals and betterments that enhances the economic useful life of the investment property or
that improve the capacity, quality or reduce subsequently the operation cost or administration expenses and capitalized
by adding it to the related investment property. Ongoing repairs and maintenance is expensed as incurred.

An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from
use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the
property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included
in statement of profit or loss and other comprehensive income the period in which the property is derecognised.
3.4 Depreciation on investment property
investment property until written value of such fixed asset is reduced to Taka one. Depreciation on addition to fixed assets
is charged when it is available for use and charging of depreciation on investment property ceases at the earliest of the
date the assets is classified held for sale in accordance with IFRS 5 and the date that assets is derecognised.
Rates of depreciation on various classes of investment property are as under:
Building 5
3.5 Intangible assets

Expenditure to acquire designs and trade marks for manufacture of ceramic tiles and sanitary ware as well as computer software is
capitalised. This is being amortised equally within a period of two to three years depending upon the tenure of accrual of benefits.
Subsequent expenditure is capitalised only when it increases the future economic benefits embodied in the specific asset
to which it relates.
Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
3.6 Capital work-in-progress

Capital work-in-progress represents the cost incurred for acquisition and/or construction of items of property, plant and
equipment that are not ready for use. Capital work-in-progress is recorded at cost to the extent of expenditure incurred
at the date of Statement of Financial Position. The amount of capital work-in-progress is transferred to appropriate asset
category and depreciated when the asset is completed and commissioned.

a) Investment in subsidiaries
Investment in subsidiaries are recognised initially at cost plus any directly attributable transaction costs. Subsequent to
initial recognition, investment in subsidiaries are measured at cost less impairment loss, if any.
b) Loans to subsidiaries & associate companies

Loans to subsidiaries & associate companies are recognised initially at fair value. Subsequent to initial recognition, these
are measured at amortised cost using the effective interest method.
c) Trade & other receivables
Trade & other receivables are recognised initially at fair value. Subsequent to initial recognition, trade & other receivables
are measured at amortised cost using the effective interest method, less any bad impairment provision.
d) Cash and cash equivalents
maturity of three months or less which are available for use by the Company without any restriction. Bank overdraft that
are repayable on demand and form an integral part of the Company's cash management are included as a component of
cash and cash equivalents for the purpose only of the statement of cash flows.
3.8 Financial liabilities

Trade & other payables are recognised initially at fair value. Subsequent to initial recognition, trade payables are stated at

b) Borrowings
Interest-bearing borrowings include short term bank loan. Interest-bearing borrowings are recognised initially at fair value
less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised
cost using the effective interest method.
3.9 Inventories
Inventories on hand are valued at the lower of cost and net realisable value. For raw materials and consumable spare parts
cost is determined on a weighted average cost basis. Work-in-process is stated at cost to complete of respective product.
Cost comprises cost of raw materials, wages and other overheads up to the stage of completion. Finished products are
stated at lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of
business less the estimated costs necessary to make the sale. Raw materials in transit are valued at cost.
3.10 Impairment
Non-derivative financial assets
Non derivative financial assets are assessed at each reporting date to determine the loss allowance for lifetime expected
credit losses, if the credit risk on that financial instrument has increased significantly since initial recognition. When there
is no significant increase in credit risk on the financial instrument since initial recognition, the expected credit losses for
next 12 months is measured as loss allowance on that financial instrument.
Non-financial assets
The carrying amount of the non-financial assets are reviewed at each reporting date to determine whether there is any
indication of impairment. If any such indication exists then the assets' recoverable amounts are estimated. For intangible
assets that have indefinite lives, recoverable amount is estimated at each reporting date. An impairment loss is recognised
if the carrying amount of an asset exceeds its estimated recoverable amount.
Calculation of recoverable amount

The recoverable amount of an asset is the greater of its value in use and its fair value less costs to sell. In assessing value
in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects the
current market assessment of the time value of money and risk specific to the asset. For an asset that does not generate
significantly independent cash inflows, the recoverable amount is determined for the cash generating unit (CGU) to which
the asset belongs.
Recognition of impairment
Impairment losses are recognised in profit or loss. Impairment losses in respect of CGUs are allocated first to reduce the
carrying amount of any goodwill allocated to the CGU and then to reduce the carrying amount of other assets in the CGU
on a pro-rata basis.
Reversal of impairment
An impairment loss in respect of goodwill is not reversed. For other assets, an impairment loss is reversed only to the
extent that the asset's carrying amount does not exceed the carrying amount that would have been determined, net of
depreciation or amortisation, if no impairment loss had been recognised.
3.11 Share capital
Ordinary shares are classified as equity. Incremental costs attributable to the issue of ordinary shares are recognised
as a deduction from equity, net of any tax affects. Paid up share capital represents total amount contributed by the
shareholders and bonus shares issued by the Company to the ordinary shareholders. Holders of ordinary shares are
entitled to receive dividends as declared from time to time and are entitled to vote at shareholders' meetings. In the event
of a winding up of the Company, ordinary shareholders rank after all other shareholders and creditors and are fully entitled
to any residual proceeds of liquidation.
The Company maintains both defined contribution plan and defined benefit plan for its eligible permanent employees.
The eligibility is determined according to the terms and conditions set forth in the respective deeds.

Defined contribution plan (provident fund)

Defined contribution plan is a post employment benefit plan under which the Company provides benefits to one or
more employees. The recognised Employees Provident Fund is considered as defined contribution plan as it meets the
recognition criteria specified for this purpose. All permanent employees contribute 10 percent of their basic salary to the
provident fund and the Company also makes equal contribution to the fund. These are administered by the Board of
Trustees. The contributions are invested separately from the company’s assets.
Defined benefit plan (gratuity fund)
obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future
benefit that employees have earned in return for their service in the current and prior periods.
Details of emplyees benefit schemes have been provided in note no. 19.
3.13 Workers' Profit Participation and Welfare Fund
The Company provides 5% of its net profit before tax after charging such expense as Workers' Profit Paticipation and
Welfare Fund in accordance with "The Bangladesh Labour Act 2006 amended in 2018".
3.14 Provisions
Provisions are recognised on the reporting date if, as a result of past events, the Company has a present legal or
constructive obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be
required to settle the obligation.
A number of new standards and amendments to standards are effective for annual periods beginning after 1 January
2018/2019 with earlier application permitted. The company does not plan to adopt these standards early. The new
standards which may be relevant to the company are set out below.
IFRS 9 contains a new classification and measurement approach for financial assets that reflects the business model in
which assets are managed and their cash flow characteristics. IFRS 9 contains three principal classification categories
for financial assets: measured at amortised cost, fair value through other comprehensive income (FVOCI) and fair value
through profit or loss (FVTPL). The standard eliminates the existing IAS 39 categories of held to maturity, loans and
receivables and available for sale.
ii. Impairment
IFRS 9 replaces the ‘incurred loss’ model in IAS 39 with a forward-looking ‘expected credit loss’ (ECL) model. This will
require considerable judgement about how changes in economic factors affect ECLs, which will be determined on a
probability-weighted basis. The new impairment model will apply to financial assets measured at amortised cost or
FVOCI, except for investments in equity instruments, and to contract assets.

• 12-months ECLs: these are ECLs which result from possible default events within the 12 months after the reporting date;
and
• Lifetime ECLs: these are ECLs which result from all possible default events over the expected life of a financial
instrument.
Lifetime ECL measurement applies if the credit risk of a financial asset at the reporting date has increased significantly
since initial recognition and 12-month ECL measurement applies if it has not. An entity may determine that a financial
asset’s credit risk has not increased significantly if the asset has low credit risk at the reporting date. However, lifetime
ECL measurement always applies for trade receivables and contract assets without a significant financing component;
the company has a choice to also apply this policy for trade receivables and contract assets with a significant financing
component.
The estimated ECL will be calculated based on actual credit loss experience. The company will perform the calculation of
ECL rates separately for different types of customers including related parties.
historical data will be collected, prevalent conditions and the company’s view of economic conditions over the expected
lives of the receivables and related party balances.
ii. Hedging
IFRS 9 incorporates new hedge accounting rules which intend to align hedge accounting with a company’s risk
management objectives and strategy and to apply a more qualitative and forward looking approach to assessing hedge
effectiveness. In accordance with IFRS 9, the company has an accounting policy choice to defer the adoption of IFRS 9
hedge accounting and to continue with IAS 39 hedge accounting.
The company will avail of the exemption allowing it not to restate comparative information for prior periods with respect
to classification and measurement (including impairment) changes. Impact of IFRS 9 shown in note no 37.1 (b).
Customer Loyalty Programmes. IFRS 15 is effective for annual reporting periods beginning on or after 1 January 2018,
with early adoption permitted.
i. Sales of goods
cumulative revenue recognised will not occur. As a consequence, for those contracts for which the company is unable to
make a reasonable estimate of return, revenue is expected to be recognised sooner than when the return period lapses
or a reasonable estimate can be made.
Based on the company’s assessment, the timing of revenue recognition from sale of goods are broadly similar. Therefore, the
company does not expect the application of IFRS 15 to result in significant differences in the timing of revenue recognition for
these sales.
selling prices. The stand-alone selling prices will be determined based on the list prices at which the company sells the
services in separate transactions.
Based on the company’s assessment, the fair value and the stand-alone selling prices of the services are broadly similar.
Therefore, the company does not expect the application of IFRS 15 to result in significant differences in the timing of
revenue recognition for these services.
and incentive payments, to the extent that it is probable that they will result in revenue and can be measured reliably.
When a claim or variation is recognised, the measure of contract progress or contract price is revised and the cumulative
contract position is reassessed at each reporting date.


IFRS 16, published in January 2016 replaces the previous guidance in IAS 17 Leases. Under this revised guidance, leases will be brought
onto companies’ balance sheets, increasing the visibility of their assets and liabilities. It further removes the classification of leases as
either operating leases or finance leases treating all leases as finance leases from the perspective of the lessee, thereby eliminating the
requirement for a lease classification test. The revised guidance has an increased focus on who controls the asset and may change
which contracts are leases. IFRS 16 is effective for annual periods beginning on or after 1 January 2019.
In the current year, the company, for the first time, has applied IFRS 16 Leases (as issued by the IASB in January 2016) in
its effective date.
the lessee accounting by removing the distinction between operating and finance leases and requiring the recognition
of a right-of-use asset and a lease liability at the lease commencement for all leases, except for short-term leases and
leases of low value assets. In contrast to lessee accounting, the requirements for lessor accounting have remained largely
unchanged. Details of these new requirements are described in notes to the financial statements. The impact of the
adoption of IFRS 16 on the company’s financial statements is described below.
The date of initial application of IFRS 16 for the company is 1 January 2019
The Group has applied IFRS 16 using the modified retrospective approach, without restatement of the comparative
information
The change in definition of a lease mainly relates to the concept of control. IFRS 16 determines whether a contract
contains a lease on the basis of whether the customer has the right to control the use of an identified asset for a period
of time in exchange for consideration.
The company applies the definition of a lease and related guidance set out in IFRS 16 to all lease contracts entered into or
application of IFRS 16, the company has carried out an implementation project.
IFRS 16 changes how the comany accounts for leases previously classified as operating leases under IAS 17, which were
off-balance-sheet.
Applying IFRS 16, for all leases (except as noted below), the company:
Recognizes depreciation of right-of-use assets and interest on lease liabilities in the statement of profit or loss; and
separates the total amount of cash paid (presented within financing activities) in the statement of cash flows.
For short-term leases (lease term of 12 months or less) and leases of low-value assets (such as personal computers and
office furniture), the Group has opted to recognize a lease expense on a straight-line basis as permitted by IFRS 16. This
expense is presented within rent expenses in the statement of profit or loss.
of residual value guarantees provided by a lessee to a lessor. IFRS 16 requires that the company recognizes as part of its
lease liability only the amount expected to be payable under a residual value guarantee, rather than the maximum amount
guaranteed as required by IAS 17. This change did not have a material effect on the company’s financial statements.

IFRS 16 does not change substantially how a lessor accounts for leases. Under IFRS 16, a lessor continues to classify leases
as either finance leases or operating leases and account for those two types of leases differently. However, IFRS 16 has
changed and expanded the disclosures required, in particular regarding how a lessor manages the risks arising from its
residual interest in the leased assets.


Finance income comprises interest income on funds invested in FDR and Short Notice Deposit (SND) accounts. Interest
income is recognised on accrual basis.
Finance expense comprises interest expense on overdraft, LTR, term loan, short term borrowings and finance lease. All
finance expenses are recognised in the statement of profit or loss and other comprehensive income.
3.17 Taxation
Current tax:
at the reporting date, and any adjustment to tax payable in respect of previous year. Provisions for corporate income tax
is made following the rate applicable for a publicly-traded company of the same industry. The tax rate 25% is used for the
reporting period 2019 as per Finance Act 2019.
Deferred tax:
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to the extent
that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit
will be realised.
comprehensive income as per International Accounting Standard (IAS) 21 "The Effects of Changes in Foreign Exchange
Rates".

average number of ordinary shares outstanding during the period, adjusted for the effect of change in number of shares
for bonus issue. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the
weighted average number of ordinary shares outstanding, for the effects of all dilutive potential ordinary shares. However,
dilution of EPS is not applicable for these financial statements as there was no dilutive potential ordinary shares during the
relevant years.
3.20 Contingencies
3.20.1 Contingent liability
Contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by
the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.
Contingent liability should not be recognised in the financial statements, but may require disclosure. A provision should
be recognised in the period in which the recognition criteria of provision have been met.
3.20.2 Contingent asset
Contingent asset is a possible asset that arises from past events and whose existence will be confirmed only by the
occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.

A contingent asset must not be recognised. Only when the realisation of the related economic benefits is virtually certain
should recognition take place provided that it can be measured reliably because, at that point, the asset is no longer
contingent.
Statement of cash flows is prepared under direct method in accordance with International Accounting Standard (IAS)-7
3.22 Duty drawback
Duty drawback paid on imported material for export sale is adjusted against VAT payable on domestic sale.
The following new standards are effective for annual periods begining from 1 January 2018/2019 and have been applied
in preparing these financial statements.
IFRS 9 Financial Instruments
IFRS 15 Revenue from contracts with customers
IFRS 16 Leases
Events after the reporting period that provide additional information about the Company's position at the reporting date
are reflected in the financial statements. Material events after the reporting period that are not adjusting events are
disclosed by way of note.
Comparative information have been disclosed in respect of 2018 for all numerical information in the financial statements
and also the narrative and descriptive information when it is relevant for understanding of the current year's financial
statements.
To facilitate comparison, certain relevant balances pertaining to the previous year have been rearranged/reclassified
whenever considered necessary to confirm to current year's presentation.
4 Property, Plant and equipment

2019 Amount in Taka
COST DEPRECIATION
Net book
Addition Sale/disposal Charged Adjustment
Particulars Balance as at Balance as at Balance as at Balance as at value as at
during the during the Rate during the during the
01 Jan 2019 31 Dec 2019 01 Jan 2019 31 Dec 2019 31 Dec 2019
year year year year
Land 319,680,040 - - 319,680,040 - - - - 319,680,040
Factory building 979,802,214 38,657,783 - 1,018,459,997 5% 363,141,065 52,204,676 - 415,345,742 603,114,256
Office building 204,836,622 8,784,691 (12,757,294) 200,864,019 5% 111,325,400 10,936,085 (2,553,122) 119,708,363 81,155,655
Plant and machinery 5,119,372,534 157,640,006 - 5,277,012,539 10% 3,318,680,685 291,937,956 - 3,610,618,640 1,666,393,899
Mobile plant 101,976,217 6,728,522 - 108,704,737 10% 65,530,875 4,587,861 - 70,118,736 38,586,002
Electrical installation 216,807,511 - - 216,807,511 10% 168,451,438 7,107,621 - 175,559,060 41,248,451
Gas pipeline 59,347,562 - - 59,347,562 10% 34,795,610 3,395,726 - 38,191,334 21,156,227
Furniture and fixtures 37,908,982 3,734,359 - 41,643,341 10% 25,843,131 2,257,187 - 28,100,318 13,543,023
Office equipment 110,886,803 5,225,073 - 116,111,876 10-20% 72,296,842 18,599,775 - 90,896,617 25,215,258
Communication equipment 14,644,071 3,336,425 - 17,980,495 10-20% 8,475,172 2,040,145 - 10,515,318 7,465,178
Tools and appliances 18,982,348 64,050 - 19,046,398 10% 10,178,508 1,713,444 - 11,891,952 7,154,446
Vehicles 85,072,098 1,594,836 (294,728) 86,372,205 10% 47,124,560 6,977,782 (175,856) 53,926,486 32,445,719
ANNUAL REPORT 2019

Total 7,269,317,002 225,765,744 (13,052,023) 7,482,030,723 4,225,843,286 401,758,257 (2,728,978) 4,624,872,567 2,857,158,157
171
172

2018 Amount in Taka
COST DEPRECIATION
Net book
Addition Sale/disposal Charged Adjustment
Particulars Balance as at Balance as at Balance as at Balance as at value as at
during the during the Rate during the during the
01 Jan 2018 31 Dec 2018 01 Jan 2018 31 Dec 2018 31 Dec 2018
year year year year
Land 317,685,040 1,995,000 - 319,680,040 - - - - 319,680,040
Factory building 913,769,752 66,032,462 - 979,802,214 5% 314,256,512 48,884,553 - 363,141,065 616,661,149
Office building 203,113,529 1,723,093 - 204,836,622 5% 101,236,418 10,088,982 - 111,325,400 93,511,222
Plant and machinery 4,999,991,608 119,380,926 - 5,119,372,534 10% 3,029,026,856 289,653,829 - 3,318,680,685 1,800,691,849
Mobile plant 88,837,460 13,138,757 - 101,976,217 10% 60,786,086 4,744,789 - 65,530,875 36,445,342
Electrical installation 215,642,011 1,165,500 - 216,807,511 10% 159,040,149 9,411,289 - 168,451,438 48,356,073
Gas pipeline 59,347,562 - - 59,347,562 10% 31,351,066 3,444,544 - 34,795,610 24,551,952
Furniture and fixtures 33,926,399 3,982,583 - 37,908,982 10% 24,119,611 1,723,520 - 25,843,131 12,065,851
Office equipment 107,869,251 3,017,552 - 110,886,803 10-20% 53,594,518 18,702,324 - 72,296,842 38,589,961
Communication
12,106,618 2,537,453 - 14,644,071 10-20% 6,741,103 1,734,069 - 8,475,172 6,168,899
equipment
Tools and appliances 17,538,598 1,443,750 - 18,982,348 10% 8,230,970 1,947,538 - 10,178,508 8,803,840
Vehicles 78,662,646 6,617,452 (208,000) 85,072,098 10% 40,339,425 6,936,303 (151,168) 47,124,560 37,947,538
Total 7,048,490,474 221,034,528 (208,000) 7,269,317,002 3,828,722,714 397,271,740 (151,168) 4,225,843,286 3,043,473,716
5 Investment property
2019 Amount in Taka
COST DEPRECIATION
2019
Net book
Particulars Addition Sale/disposal Charged Adjustment value as at
Balance as at Balance as at Balance as at Balance as at
during the during the Rate during the during the 31 Dec 2019
01 Jan 2019 31 Dec 2019 01 Jan 2019 31 Dec 2019
year year year year
Land1 500,571,750 - - 500,571,750 - - - - 500,571,750
Office building 2
210,636,382 815,692 - 211,452,074 5% 20,058,356 10,532,101 - 30,590,456 180,861,618
Total 711,208,132 815,692 - 712,023,824 20,058,356 10,532,101 - 30,590,456 681,433,368
2018 Amount in Taka
COST DEPRECIATION
Net book
during the during the Rate during the during the 31 Dec 201
01 Jan 2018 31 Dec 2018 01 Jan 2018 31 Dec 2018
year year year year
Land1 500,571,750 - - 500,571,750 - - - - 500,571,750

Office building 2
210,636,382 - - 210,636,382 5% 9,526,255 10,532,101 - 20,058,356 190,578,026
Total 711,208,132 - - 711,208,132 9,526,255 10,532,101 - 20,058,356 691,149,776
1 The land 10 khata is situated besides the RAK Tower was acquired in March 2012. The same was classified as Property, plant & equipment till 31st
ANNUAL REPORT 2019

Dec 2016. However, presently the asset is under operating lease considering undetermined future use. Hence in the current financial statements,
the same is reclassified as an item of “Investment Property” as defined under IAS 40.
The said property are stated at cost as per IAS 40 due to alternate reliable sources of measurement being unavailable.
2 The property, being an Apartment on 10th floor, RAK Tower, was acquired in the month of February 2017 from M/s Julphar Bangladesh.
(Erstwhile RAK Pharmaceuticals Pvt. Ltd) and godown office building situated at above mentioned land. This property is too under operating
lease culminating in undetermined future use. Hence the same is classified under “Investment Property” under IAS 40.
The fair values of the property has been adopted at the transaction value considering that the munnicipal valuation of the property has fairly
173
remained unchanged, the company has adopted the transaction value as the fair value of the property.
2019 2018
Taka Taka
Cost of sales (Note 26) 362,506,495 359,541,207

Administrative expenses (Note 5.2) 44,322,181 43,825,825
Marketing & selling expenses (Note 29) 5,461,681 4,436,808
412,290,358 407,803,840
5.2 Administrative expenses
Depreciation on property, plant & equipment (Note 28) 33,790,081 33,293,725
Depreciation on investment property (Note 28) 10,532,101 10,532,101
44,322,181 43,825,825
2019
Accumulated Receipts against Profit/(loss)

Particulars Original cost Book value
depreciation insurance claim/sale on disposal
Motor Bike 294,728 175,856 118,873 179,500 60,627
Total 294,728 175,856 118,873 179,500 60,627
2018
Accumulated Receipts against Profit/(loss)

Particulars Original cost Book value
depreciation insurance claim/sale on disposal
Motor Bike 208,000 151,168 56,832 134,140 77,308
Total 208,000 151,168 56,832 134,140 77,308
2019
Amounts in Taka
COST DEPRECIATION
Net book
during the during the during the during the 31 Dec 2019
01 Jan 2019 31 Dec 2019 31 Dec 2019 31 Dec 2019
year year year year
Display center 76,028,968 - (28,391,487) 47,637,481 22,705,295 8,433,056 - 31,138,351 16,499,130

Accomodation Building 2,644,593 655,543 - 3,300,136 353,312 1,458,868 - 1,812,180 1,487,956
Warehouse - 32,707,529 - 32,707,529 - 5,723,818 - 5,723,818 26,983,711
Total 78,673,561 33,363,072 (28,391,487) 83,645,147 23,058,607 15,615,742 - 38,674,349 44,970,798
Allocation of Depreciation
Administrative expenses (Note:28) 1,458,868

Marketing & selling expenses (Note:29) 14,156,874
15,615,742
6.1 Gain on retirement of Right of use assets
Particulars Lease liability Right of use assets Gain

Display center 30,048,249 28,391,487 1,656,762
ANNUAL REPORT 2019

1. Company rented four display center's situated in Dhaka, Chittagong and Sylhet.
2. Accomodation Buildings rented for the use of transit employees.
3. Company has taken a warehouse at pubail to store the finished goods to distribute in nearby area promptly.
175
2019 2018
Taka Taka
7 Intangible assets
Add: Addition during the year 771,526 11,950,323
12,687,910 17,379,350
Less: Amortized during the year (Note-28) 6,192,863 5,462,966
Less: Adjustment during the year - -
The above amount represents cost of various licenses as well software which are being amortised over 2-3 years from
the date of their expenses.
8 Capital Work-in-Progress
Add: Addition during the year 261,225,698 259,518,324
389,007,230 300,934,043
Less: Transfer to property, plant & equipment and investment property
during the year (Note-8.1) 211,365,233 173,152,511
8.1 Items transferred from capital work in progress to property, plant & equipment and investment property
Factory building 38,326,033 52,019,988
Plant and machinery 139,907,809 112,846,905
Mobile Plant - 7,826,143
Communication equipment - 345,362
Others 33,131,391 114,113
211,365,233 173,152,511
9 Investment in subsidiaries (Note-9.1)
RAK Power Pvt. Ltd 341,629,950 341,629,950
RAK Security & Services Pvt. Ltd 18,750,000 18,750,000
360,379,950 360,379,950
9.1 Details of investments in subsidiaries
Investment/ Investment/
Name of subsidiaries Nature of business % of holding
Taka Taka
RAK Power Pvt. Ltd Electricity generation 99.99 341,629,950 341,629,950
RAK Security & Services Pvt. Ltd Security services provider 99.00 18,750,000 18,750,000
10 Inventories
Raw materials 818,594,596 839,612,529
798,908,657 839,612,529
Stores, consumables spares and packing 882,294,468 973,410,748
Less: Write off for stores, consumables and packing - 31,843,008
882,294,468 941,567,740
Finished goods (net of net realizable value adjustment) 719,463,284 872,171,284
701,957,743 872,171,284
Work-in-process 104,694,796 105,323,515
Goods-in-transit 228,206,140 176,666,638
2,716,061,804 2,935,341,706
Trade receivables (Note-11.1) 791,627,927 781,562,088
Accrued interest (Note-11.2) 8,029,303 2,838,414
837,944,361 847,302,232
2019 2018
Taka Taka
11.1 Trade receivables

Receivable from dealers 793,841,889 784,724,450
Receivable from export sales 6,573,037 -
800,414,926 784,724,450
791,627,927 781,562,088
11.2 Accrued interest
Interest accrued on FDR 8,029,303 2,838,414
8,029,303 2,838,414
12 Advance, deposit and prepayments
Advances:
Purchase of land and others 5,729,371 7,185,449
Suppliers against materials and services 78,134,866 93,763,096
83,864,237 100,948,545
Security and other deposits:
Titas gas 38,569,450 28,682,550
Mymensingh Palli Bidyut Samity-2 1,955,000 1,955,000
VAT and Supplementary duty (Note-12.1) - 46,341,073
Deposited with income tax authority 68,128,195 50,628,195
Deposited with VAT authority 6,726,946 6,726,946
Display center and others 3,472,500 -
Other deposits 1,494,626 1,499,853
120,346,717 135,833,617
Prepayments:
Showroom, warehouse and office rent - 12,341,619
Insurance and others 32,251,942 44,965,068
32,251,942 57,306,687
236,462,896 294,088,849
12.1 VAT and supplementary duty (SD)
Balance as at 1 January - 43,059,080
Add: Treasury deposit for SD & VAT purpose - 1,393,000,000
Rebate of input VAT - 418,046,905
- 1,854,105,985
Less: SD & VAT on sales - 1,805,059,097
Other payable - 2,705,815
- 1,807,764,912
Balance as at 31 December - 46,341,073
advance. Therefore instead of advance it is now shown as payable in note no. 22.1
Balance as at 31 December (Note -13.1) 3,106,581,019 2,841,236,116
2019 2018
Taka Taka
13.1 Year wise closing balance

Income year
Year 2019 215,167,478
Year 2018 270,464,119 220,286,694
Year 2017 295,460,648 295,460,648
Year 2016 242,216,508 242,216,508
Year 2015 138,288,579 138,288,579
Year 2014 253,701,667 253,701,667
Year 2013 352,440,807 352,440,807
Year 2012 301,027,378 301,027,378
Year 2011 322,755,413 322,755,413
Year 2010 263,692,205 263,692,205
Year 2009 218,086,876 218,086,876
Year 2008 85,378,847 85,378,847
Year 2007 124,813,161 124,813,161
Year 2006 (Unadjusted balance) 23,087,333 23,087,333
3,106,581,019 2,841,236,116
Cash in hand 3,318,879 4,738,666
Cash at banks
HSBC (current account - 001-013432-011 - BDT) 19,762,353 43,906,323
Standard Chartered Bank (current account - 01-6162940-01 - BDT) 180,535,362 26,594,643
Brac Bank (current account - 1530301731248001 - BDT) 39,046,938 7,022,039
Citibank N.A. (current account - G010000200262018 - BDT) 161,889 167,340
Dutch Bangla Bank Ltd. (current account - 117 - 110 - 12733 - BDT) 2,000 -
HSBC (ERQ account - 001-013432-047 - USD) - 15,969,457
Standard Chartered Bank (ERQ - 42-6162940-01 - USD) 11,995,287 713,861
Standard Chartered Bank (Margin Money account) 12,507,995 515,747
DBBL (Margin Money account) 246,006 -
UCB (SND account - 0831301000000164 BDT) 27,528,317 9,233,763
EBL (SND account - 1131350237146 - BDT) 96,642,480 48,550,824
EBL (SND account - 1131350237393 (WH) - BDT) 4,980 -
DBL (SND - 102.150.274- BDT)) 24,223,605 39,444,913
EXIM Bank (SND account - 01513100031877 - BDT) 510,116 493,820
Dutch Bangla Bank Ltd. (SND account - 117-120-589 - BDT) 68,605,781 102,678,556
Dutch Bangla Bank Ltd. (SND account - 117-120-376 (WH)- BDT) 128,657 -
BRAC Bank (STD - 1513101731248001 - BDT) 362,785 360,789
Prime Bank Ltd. (SND - 12531010022563 - BDT) 27,898,730 5,741,297
Commercial Bank of Ceylon (CD - 1817000776 - BDT) 22,154 9,811
Commercial Bank of Ceylon (SND - 2817000777 - BDT) 52,176,242 65,731,073
Meghna Bank Ltd. (SND 1112-13500000004 - BDT) 52,844,530 30,234,528
615,206,207 397,368,784
IPO bank account

Citibank N.A. (RAK-IPO Central Account - G010001200262022 - BDT) 2,431,487 2,437,422
Citibank N.A. (RAK-IPO-NRB Subscription - G010000200262042 - USD) 3,919,501 3,916,999
Citibank N.A. (RAK-IPO-NRB Subscription - G010000200262026 - EURO) 153,606 153,455
Citibank N.A. (RAK-IPO-NRB Subscription - G010000200262034 - GBP) 126,599 126,440
6,631,193 6,634,316
Dividend bank account
2019 2018
Taka Taka

SCB (Current - 02-6162940-02 - BDT) - 2012 3,873,556 3,858,070
SCB (Current - 02-6162940-03 - BDT) - 2013 16,882,899 16,816,804
SCB (Current - 02-6162940-04 - BDT) - 2014 5,006,270 4,986,605
SCB (Current - 02-6162940-05 - BDT) - 2015 3,847,241 3,832,380
SCB (Current - 02-6162940-06 - BDT) - 2016 4,307,616 4,326,361
SCB (Current - 02-6162940-07 - BDT) - 2017 1,715,963 1,790,467
SCB (Current - 02-6162940-08 - BDT) - 2018 2,199,822 -
42,640,389 40,425,980

HSBC 10,000,000 10,000,000
Eastern Bank Ltd. 250,000,000 150,000,000
Dhaka Bank Ltd. 500,000,000 150,000,000
Meghna Bank Ltd. - 5,000,000
760,000,000 315,000,000
1,427,796,668 764,167,746
15 Share Capital
Authorised :
600,000,000 ordinary shares of Tk 10 each 6,000,000,000 6,000,000,000
Issued, subscribed, called and paid up

2019 2018
Percentage of shareholdings :
% Taka % Taka
RAK Ceramics PJSC, UAE 68.13 2,915,864,310 68.13 2,650,785,740
SAK Ekramuzzaman 3.95 168,958,240 3.95 153,598,410
HH Sheikh Saud Bin Saqr Al Qassimi 0.00 340 0.00 310
Sheikh Omer Bin Saqr Al Qassimi 0.00 340 0.00 310
Sheikh Ahmad Bin Humaid al Qassimi 0.00 340 0.00 310
Hamad Abdulla Al Muttawa 0.00 160 0.00 150
Dr. Khater Massaad 0.00 160 0.00 150
Abdallah Massaad 0.00 160 0.00 150
Manoj Uttamrao Ahire 0.00 160 0.00 150
General Public 27.92 1,194,862,800 27.92 1,086,238,880
100.00 4,279,687,010 100.00 3,890,624,560
The company was incorporated on 26th of November 1998 with paid up capital of BDT 1,000 and subsequently has
issued ordinary shares including bonus shares in several dates i.e. 30 September 2000, 30 October 2005, 15 June 2009,
28 July 2009, 31 January 2010, 24 May 2010, 20 March 2011, 15 April 2012, 10 April 2013, 02 April 2014, 29 March 2017,
18 April 2018 and 09 April 2019.
Classification of shareholders by range:

2019 2018 2019 2018
Less than 500 shares 20,366 22,333 4,995,826 5,070,691
501 to 5,000 shares 8,198 8,992 13,460,461 14,323,202
5001 to 10,000 shares 1,031 1,018 7,277,910 7,132,096
10,001 to 20,000 shares 527 521 7,320,397 7,268,499
20,001 to 30,000 shares 167 152 4,076,759 3,787,490
30,001 to 40,000 shares 70 73 2,404,839 2,520,150
40,001 to 50,000 shares 48 48 2,143,014 2,169,779
50,001 to 100,000 shares 106 93 7,222,580 6,487,948
100,001 to 1,000,000 shares 100 92 25,398,876 24,171,658
Over 1,000,000 shares 15 13 353,668,039 316,130,943
30,628 33,335 427,968,701 389,062,456
16 Share premium
On 31 January, 2010, company issued 10,000,000 ordinary shares in favor of institutional shareholder and employees
per share BDT 40 (include BDT 30 as premium). On 24 May, 2010 Company again issued 34,510,000 ordinary shares
through IPO per share BDT 48 (include BDT 38 as premium). Details reconciliation shown below:
2019 2018
No. of shares Share premium (per share)
Taka Taka
10,000,000 30 300,000,000 300,000,000
34,510,000 38 1,311,380,000 1,311,380,000
1,611,380,000 1,611,380,000
Less; Share issue expenses 137,732,021 137,732,021
1,473,647,979 1,473,647,979
17 Reserve and surplus
Balance as on 01 January 1,624,536,295 1,448,741,753
Less: Adjustment for prior year (Leases) (3,131,591) -
2,415,054,726 2,331,922,586
Balance as at 31 December 1,636,929,820 1,624,536,295
Deferred tax (income) / expenses (4,152,154) 22,057,495
Carrying amount Taxable/

on the date of (deductible)
Tax base
statement of temporary
financial position difference
Taka Taka Taka
Property, plant and equipment (Excluding land and 2,644,036,865 1,940,069,180 703,967,685
others)
Inventory 2,716,061,804 2,763,754,793 (47,692,989)
Deferred tax liability (applying tax rate 25.00%) 161,871,924
Property, plant and equipment (Excluding land and 2,828,293,093 2,161,034,418 667,258,675
others)

2019
Taka Taka Taka
55,735,470 29,250,807 84,986,277
2018
Taka Taka Taka
56,783,902 29,464,099 86,248,001
2019 2018
Taka Taka
20 Borrowings
Non-current:
Term loan -HSBC 89,232,918 362,201,591
Less current portion of long term loan -HSBC (89,232,918) (273,998,242)
- 88,203,349
Current:
Overdraft - DBBL - 35,654,174
Current portion of long term loan - HSBC 89,232,918 273,998,242
89,232,918 309,652,416
20.1 Borrowings by maturity

At 31 December 2019 < 1 year 1-2 years Total
Term loan 89,232,918 - 89,232,918

89,232,918 - 89,232,918
At 31 December 2018 < 1 year 1-2 years Total
Overdrafts 35,654,174 - 35,654,174

Term loan 273,998,242 88,203,349 362,201,591
309,652,416 88,203,349 397,855,765
The company enjoys off-shore financing from HSBC, SCB & CBC on its outstanding import bills as deferred payment
bills under letter of credits.
20.2 Facilities details (Funded)
Security -
Bank Name of facilities Limit Utilisation Maturity Repayment Security - STL
LTL
Overdraft 50,000,000 - Revolving From
SCB 180/360 days company’s 1) Letter of
Short term loan 350,000,000 - own source
from B/L date comfort,
2) Hypothecation
Overdraft 25,000,000 Revolving over plant &
From 1) Land,
HSBC 180/360 days company’s machinery on
Short term loan 540,000,000 - 2) Plant
from B/L date own source parri - passu basis
and
Long term loan 1,366,872,000 89,232,918 5 years with other lenders.
machinery
3) Hypothecation
of the
Overdraft 25,000,000 - Revolving From over stock & book
Dutch Bangla expansion
company’s debts on a parri -
Bank Ltd. 180/360 days plant.
Short term loan 90,000,000 - own source passu basis with
from B/L date
other lenders.
Overdraft 25,000,000 - Revolving From 4) Demand
Commercial promissory note.
180/360 days company's
Bank of Ceylon Short term loan 300,000,000 -
from B/L date own source
2019 2018
Taka Taka
21 Lease liability
Non-current:
Lease liability 38,473,003 -
Less : Current portion of lease liability 9,098,137 -
29,374,867
Current:
Current portion of lease liability 9,098,137 -
Liability schedule
Balance as on Balance as on
Addition/ Interest Decrease in
Particulars 01 January Payment 31 December
(deletion) expenses lease liability
2019 2019
Display center 46,374,623 (30,048,249) 7,049,344 2,306,778 4,742,566 11,583,808
Accomodation 2,319,576 655,543 1,602,312 185,750 1,416,562 1,558,557
Building
Warehouse - 28,907,529 6,050,262 2,473,372 3,576,890 25,330,639
48,694,199 (485,177) 14,701,918 4,965,900 9,736,019 38,473,003
2019 2018
Taka Taka
Trade payables
Payable to local suppliers 91,474,988 106,553,005
Payable to foreign suppliers 334,034,758 265,572,347
Payable to C & F agent and freight forwarder 18,884,970 11,187,712
547,100,157 515,952,796
Other payables
Tax deducted at source 19,471,170 17,370,004
VAT and Supplementary duty payable (Note-22.1) 101,875,164 -
Dividend Payable 41,670,516 39,574,191
Unclaimed share application 20,810,756 20,818,916
Advance from customer against sales 13,451,556 10,172,837
Provisional liabilities - material & services 1,267,333 23,182,446
Payable to employees 1,202,084 658,229
Security deposit payable 1,617,592 1,617,592
206,913,930 118,876,200
754,014,087 634,828,996
2019 2018
Taka Taka
22.1 VAT and Supplementary duty (SD) payable
VAT and Supplementary duty on sales 1,827,830,290 -

Payable - SD & VAT 107,215,433 -
Other payable 3,336,899 -
1,938,382,622 -
Less: Balance as at 1 January 46,341,073 -
Treasury deposit for SD & VAT purpose 1,267,336,620 -
Rebate of input VAT 522,829,766 -
1,836,507,459 -
Balance as at 31 December 101,875,164
advance. Therefore instead of advance it is now shown as payable.
23 Accrued expenses
Power and gas 22,761,878 19,663,377

Staff cost 117,084,602 91,178,688
Audit fees 1,400,000 1,400,000
Taxation matter 400,000 400,000
Interest on loan 1,554,585 52,889
Telephone 232,907 233,867
Provision for labour bill 1,345,000 -
Provision for freight 1,114,737 6,236,754
Managing Director's remuneration (Note-23.1) 35,910,357 39,943,228
Workers profit participation and welfare fund (Note-23.2) 52,965,129 58,913,315
Royalty and technical know-how fee (Note-23.3) 287,408,635 284,211,437
522,177,830 502,233,555

Add: Payable to Managing Director during the year 35,910,357 39,943,228
75,853,585 85,668,405
Less: Paid to Managing Director during the year 39,943,228 45,725,177
23.2 Workers’ profit participation and welfare fund

Add: Contribution made to the fund during the year 52,965,129 58,913,315
111,878,444 126,354,579
Less: Payment made from the fund during the year 58,913,315 67,441,264
2019 2018
Taka Taka
23.3 Royalty and technical know-how fees

368,955,643 286,113,724
Less: Payment made during the year 81,547,008 1,902,287
24 Provision for income Tax

Add: Provision made during year 269,804,714 273,027,981
Balance as at 31 December (note 24.1) 3,496,891,493 3,227,086,779
Income year
Year 2019 269,804,714 -
Year 2018 273,027,981 273,027,981
Year 2017 297,112,555 297,112,555
Year 2016 253,189,745 253,189,745
Year 2015 274,419,022 274,419,022
Year 2014 339,893,487 339,893,487
Year 2013 318,166,647 318,166,647
Year 2012 305,056,869 305,056,869
Year 2011 323,149,311 323,149,311
Year 2010 348,965,691 348,965,691
Year 2009 266,823,984 266,823,984
Year 2008 147,117,914 147,117,914
Year 2007 80,163,573 80,163,573
3,496,891,493 3,227,086,779
25 Sales
2019 2018
Unit Quantity Amount Quantity Amount
in million Taka in million Taka
Local
Tiles Sft 86.22 6,178,147,485 82.25 5,874,735,827
Decor/Border Pcs 0.37 39,660,138 0.51 54,752,001
Sanitary ware Pcs 1.43 2,636,589,379 1.48 2,741,024,672
8,854,397,002 8,670,512,500
Less: Supplementary Duty 670,842,773 674,107,884
8,183,554,229 7,996,404,616
Less: VAT 1,160,324,403 1,133,657,027
7,023,229,826 6,862,747,589
Export
Tiles Sft 0.33 14,837,726 0.42 20,558,519
Sanitary ware - 0.000135 1,461,038
7,038,067,552 6,884,767,146
Less: Discount 47,695,679 115,868,831
Less: Commission, incentive and 582,367,046 499,700,433
bonus (note - 25.1)
6,408,004,827 6,269,197,882
25.1 Commission, incentive and bonus
Dealer's commission 129,982,592 125,736,792

Breakage commission 140,036,687 140,725,943
Incentive and bonus 312,347,767 233,237,698
582,367,046 499,700,433
2019 2018
Taka Taka
26 Cost of sales
Materials consumed:
Opening inventory as on 01 January 839,612,529 655,088,511
Add:Purchase during the year 2,093,277,302 2,548,824,346
Less:Closing inventory as on 31 December 818,594,596 839,612,529
2,114,295,235 2,364,300,328
Factory overhead:
Direct labour (note-26.1) 548,032,235 539,316,207
Direct expenses:
Power and gas 579,941,454 605,993,780
Repairs and indirect materials (note-26.2) 636,845,559 730,309,319
Moulds and punches
Depreciation 362,506,495 359,541,207
Royalty and technical know-how fees 84,744,206 94,261,305
Other production overhead (note-26.3) 40,244,630 94,370,659
Provision for slow moving & obsolete inventories (note 10) 37,191,480 -
Movement in stock 204,272,788 (368,660,843)
4,608,074,082 4,419,431,962
2019 2018
Taka Taka
26.1 Direct labour

Salary & wages 341,738,057 321,317,050
Overtime 23,864,555 31,392,567
Bonus 64,460,325 44,514,618
Incentive - 506,527
Temporary labour wages 67,609,061 96,441,332
Gratuity 19,705,388 19,955,924
Employers contribution to provident fund 18,346,773 18,924,468
Group life insurance 2,153,681 1,911,903
Compensation 952,555 429,402
548,032,235 539,316,207
26.2 Repairs and indirect materials
Stores, spares, repair & maintanance 286,883,145 336,140,683

Packing expenses 349,962,414 394,168,636
636,845,559 730,309,319

Hotel fare and tour expenses 3,675,774 5,163,985
Demurrage 2,384,244 14,254,258
Insurance 25,508,575 19,506,303
Write off for stores, consumables and packing - 31,843,008
Hiring charges and transportation 6,163,396 17,116,989
Other expenses 2,512,641 6,486,116
40,244,630 94,370,659
27 Other income
Dividend income 86,949,600 85,959,600

Rental income 17,184,211 14,612,571
Profit on sale of fixed assets (note - 5.3) 60,627 77,308
Gain on retirement of right of use assets (note 6.1) 1,656,762 -
Insurance claim 38,287,131 56,976,730
144,138,331 157,626,209
2019 2018
Taka Taka
Staff cost (note-28.2) 182,280,806 171,582,695

Annunal General Meeting expenses 5,062,006 16,232,436
Office repair and maintenance (note-28.3) 10,515,542 7,896,251
Registration and renewal 782,400 1,778,930
Security and guard expenses 12,835,911 11,997,447
Depreciation on property, plant & equipment (note - 5.2) 33,790,081 33,293,725
Depreciation on investment property (note - 5.2) 10,532,101 10,532,101
Amortization 6,192,863 5,462,966
Legal and professional fees 9,731,184 6,320,055
Vehicle repair and maintenance 13,449,291 10,569,005
Rent rate and tax 2,772,959 4,536,578
Loss on retirement of fixed assets 10,204,172 -
IT expenses 5,284,353 4,231,184
General Servicing 10,615,266 8,893,019
Donation 1,102,500 4,053,037
Others 11,181,972 6,228,463
Managing Director's remuneration (note-28.4) 35,910,357 39,943,228
377,202,064 353,809,055
Rent,rates and taxes includes rent expenses for short term lease for BDT. 156,000 and related government levis wherever
applicable. Details of the short term lease is shown in note no 35. No low value item exists at the reporting period.
5,624,637 3,162,362
New classification of financial assets shown in note 37.1(b). Impairment loss allowance has not been considered on other
receivables and bank balances because business is confident to recover the full amount from the party.
28.2 Staff cost
Salary & wages 126,494,586 125,584,546
Overtime 30,166 -
Bonus 22,725,164 18,415,868
Incentive - 258,649
Gratuity 6,990,369 7,275,781
Canteen and conveyance expenses 8,457,825 6,856,371
2019 2018
Taka Taka

Travelling expenses 1,503,762 2,506,204
Medical expenses 1,262,481 1,094,402
Accommodation expenses 1,703,857 117,878
182,280,806 171,582,695
28.3 Office repair & maintenance

Repairs office equipment 756,985 104,211
Office maintenance 9,758,557 7,792,040
10,515,542 7,896,251
28.4 This represents provision made @ 3% of net profit before tax.
29 Marketing & selling expenses
Staff cost (note-29.1) 64,753,904 51,261,487

Advertisement 33,829,109 8,800,695
Freight and transportation 265,406,265 271,435,892
Compensation 11,826,912 16,068,593
Business promotion 36,410,305 30,262,071
Depreciation on property, plant & equipment 5,461,681 4,436,808
Showroom, office & house rent 5,047,545 18,562,018
Sample expenses 9,936,512 3,999,199
Travel, entertainment and others 5,681,880 3,378,539
452,510,987 408,205,302
Showroom, office and house rent includes rent expenses for short term lease for BDT. 1,234,000 and related government levis
wherever applicable. Details of the short term lease is shown in note no 35. No low value item exists at the reporting period.
29.1 Staff cost

Salary & wages 42,928,822 36,175,609
Bonus 8,927,627 3,949,114
Incentive 173,977 1,131,016
Gratuity 2,555,050 2,232,394
Leave encashment 1,649,726 445,054
Conveyance and food expenses 5,758,730 4,829,060
64,753,904 51,261,487
2019 2018
Taka Taka
29.2 Salary & wages under staff cost (note no. 26.1, 28.2 & 29.1) includes employee contribution to provident fund for
BDT.18,346,773, BDT. 6,830,379 & BDT. 2,314,906.
30 Finance income
Interest on bank account (SND) 5,904,922 5,105,100

Interest on Fixed deposits 24,691,560 26,945,944
30,596,482 32,051,044
31 Finance expenses
Interest expenses against Loan 12,772,822 34,292,199

Interest expenses against lease liability 4,965,900 -
Bank charges 2,390,828 1,803,887
Foreign exchange loss/(gain) 6,930,609 990,744
27,060,159 37,086,830
32 Income tax expenses
Current year 269,804,714 273,027,981

269,804,714 273,027,981
2019 2018
% Taka % Taka
Profit before tax 1,059,302,582 1,178,266,309
Deferred tax expenses -0.39% (4,152,154) 1.87% 22,057,495
Expected income tax using applicable tax rate 25.00% 264,825,645 25.00% 294,566,577
Effective deferred tax -0.39% (4,152,154) 1.87% 22,057,495
25.08% 265,652,560 25.04% 295,085,476
2019 2018
Taka Taka
34 Transaction in foreign currency
CIF value of import:

Raw materials 1,552,832,480 1,880,891,907
Spare parts 230,672,877 282,898,577
Capital machinery 133,001,302 79,174,533
Expenditure:
Royalty, consultancy & training fees 61,160,256 1,428,155
Dividend 251,824,645 228,935,404
2,229,491,560 2,473,328,576
Earning
FOB value of exports 14,837,726 22,019,557
14,837,726 22,019,557
35 Short term lease expenses

Nature of the lease Lease term Allocation Rent Payment
Nature of the lease <1 year Marketing 1,234,000
Rented accomodation <1 year Admin 156,000
Rented accomodation 1,390,000
Quantitative details of opening stock, purchase/production, consumption/sales and closing stock of raw materials
36
and finished goods
Quantity in million
Description Unit Opening stock Purchase / Production Sale / Consumption Closing stock
Quantity Quantity Quantity Quantity
Raw materials KG
Current year 110.13 246.56 232.21 124.47
Previous year 122.10 240.84 252.81 110.13
Finished goods
Tiles: Sft
Ceramics/granite
Current year 21.82 82.66 86.55 17.93
Previous year 12.26 92.24 82.68 21.82
Decor/border Pcs
Current year 0.14 0.35 0.37 0.12
Previous year 0.16 0.49 0.51 0.14
Sanitaryware:
Sanitary items Pcs
Current year 0.13 1.42 1.42 0.13
Previous year 0.12 1.49 1.48 0.13
36.1 Production capacity and actual production are given below:

2019
Installed Capacity (million) Utilisation during Over/ (Under)

Production Unit % of Utilisation
Annual the year (million) Utilisation (million)
Tiles Sft 111.04 82.66 74% (28.38)
Sanitary ware Pcs 1.45 1.42 98% (0.03)
2018
Installed Capacity (million)
Utilisation during Over/(Under)
Production Unit Annual the year (million) % of Utilisation Utilisation (million)
Tiles Sft 111.04 92.24 83% (18.80)

Sanitary ware Pcs 1.45 1.49 102% 0.04
The management has overall responsibility for the establishment and oversight of the Company's risk management
framework. The Company's risk management policies are established to identify and analyse the risks faced by the
Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management
policies, procedures and systems are reviewed regularly to reflect changes in market conditions and the Company's
activities. The Company has exposure to the following risks from its use of financial instruments.
• Credit risk
• Liquidity risk
• Market risk
37.1 Credit risk

contractual obligations, and arises principally from the Company's trade receivables and other receivables.
credit risk, debtors are grouped according to their risk profile, i.e. their legal status, financial condition etc. Accounts
receivable are mainly related to local receivables. The Company's exposure to credit risk on accounts receivables is
mainly influenced by the individual payment characteristics of local customers. The Company has established receivable
department to minimise credit risk involving collection of local receivables.
financial position.
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to credit risk
at the reporting date was:
USD Amounts in Taka

As at 31 Dec As at 31 Dec As at 31 Dec
As at 31 Dec 2019
2019 2018 2018
Trade receivables
Customer-Local - - 785,054,890 781,562,088
Customer-Export 78,297 - 6,573,037 -
78,297 - 791,627,927 781,562,088
USD Amounts in Taka

As at 31 Dec As at 31 Dec As at 31 Dec
As at 31 Dec 2019
2019 2018 2018
Other receivables
Accrued Interest 8,029,303 2,838,414
46,316,434 65,740,144
Cash equivalents 1,424,477,789 759,429,080
b) Impact of IFRS 9
The following table and the accompanying notes below explain the original measurement categories under IAS 39 and
the new measurement categories under IFRS 9 for each class of the financial assets as at 31 December 2019.
Original New Original carrying New carrying Impairment

Financial assets Note classification classification amount under amount under loss (Refer
under IAS 39 under IFRS 9 IAS 39 IFRS 9 note-11.1)
Loan &
Trade receivable-unrelated 11.1 Amortized cost 305,495,555 303,167,254 2,328,301
receivable
Loan &
Trade receivable-related 11.1 Amortized cost 494,919,371 488,460,673 6,458,698
receivable
Loan &
Cash & cash equivalent 14 Amortized cost 1,424,477,789 1,424,477,789 -
receivable
i The above table provides information ECLs till date. Impairment provision till Dec 2018 was Tk. 3,162,362 and provision
made during the year is Tk. 5,624,637.
ii Trade receivables that were classified as loans and receivables under IAS 39 are now classified at amortised cost.
Impairment over these receivables was recognised in the current year on transition to IFRS 9.
iii Cash and cash equivalents that were classified as loans and receivables under IAS 39 are now classified at amortised
cost. Impairment over these cash & cash equivalent was recognised in the current year on transition to IFRS 9.
c) Ageing of receivables
The aging of trade receivables as at 31 December was:
Amount in Taka
2019 2018
Not past due 744,018,786 739,002,736
0-90 days past due 25,698,995 10,052,893
91-180 days past due 14,272,937 15,954,932
181-365 days past due 2,834,611 8,326,591
over 365 days past due 4,802,598 8,224,936
791,627,927 781,562,088
37.2 Liquidity risk
when become due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage
to the Company’s reputation.
financial obligations through preparation of the cash flow forecast, prepared based on timeline of payment of the
financial obligation and accordingly arrange for sufficient liquidity/fund to make the expected payment within due
date. Moreover, the Company seeks to maintain short term lines of credit with scheduled commercial banks to ensure
payment of obligations in the event that there is insufficient cash to make the required payment. The requirement is
determined in advance through cash flows projections and credit lines facilities with banks are negotiated accordingly.
As at 31 Dec 2019
Carrying Contractual Within 12 months More than 12
amount cash flows or less months
Taka Taka Taka Taka
Long term borrowing (foreign) 89,232,918 89,232,918 89,232,918 -
843,247,005 843,247,005 843,247,005 -
As at 31 Dec 2018
Carrying Contractual Within 12 months More than 12
amount cash flows or less months
Taka Taka Taka Taka
Overdrafts 35,654,174 35,654,174 35,654,174 -
Long term borrowing 362,201,591 362,201,591 273,998,242 88,203,349
1,032,684,761 1,032,684,761 944,481,412 88,203,349
37.3 Market risk
Market risk is the risk that changes in market prices such as foreign exchange rates and interest rates will affect the
Company’s income or the value of its holding of financial instruments. The objective of market risk management is to
manage and control market risk exposures within acceptable parameters, while optimising the return.
a) Currency risk
The Company is exposed to currency risk on certain revenues and purchase of raw material, spare parts, accessories
and capital item. Majority of the company’s foreign currency purchase are denominated in USD and EURO. All the export
proceeds are receipt in USD, 50% of export proceeds are crediting to export retention quota account and rest of the 50%
are converted to Taka and crediting to company’s current account.
The Company's exposure to foreign currency risk was as follows based on notional amounts (in Taka):

Foreign currency
denominated assets
Receivable from
- - 78,297 - - - - -
customers-Export
Cash at bank - - 141,204 - - - 198,729 -
- - 219,501 - - - 198,729 -

Foreign currency
denominated liabilities
Trade and other payables - 132,189 2,201,698 1,373,117 26,250 164,612 2,246,077 604,904
Long term borrowings
- - 1,050,417 - - - 4,314,492 -
(foreign)
Royalty & Technical Fees - - 3,383,268 - - - 3,385,485 -
- 132,189 6,635,383 1,373,117 26,250 164,612 9,946,053 604,904
Net exposure - (132,189) (6,415,882) (1,373,117) (26,250) (164,612) (9,747,325) (604,904)
The Company has foreign exchange loss of Tk 6,930,609 during the year ended 31 Dec 2019 (31 Dec 2018: Exchange
loss Tk 990,744).
Exchange rate (Average)

2019 2018
AED 23.0627 22.7911

GBP 111.3664 106.2826
USD 84.4500 83.4500
EURO 95.0948 95.5444
A strengthening or weakening of the Taka, as indicated below, against the AED, GBP, USD, EURO at 31 Dec would have
increased/(decreased) profit or loss by the amounts shown below.

At 31 December
AED (3 percent movement) - - (812) 765
GBP (3 percent movement) (4,088) 3,850 (5,091) 4,795
USD (3 percent movement) (198,429) 186,870 (301,464) 283,903
EURO (3 percent movement) (42,468) 39,994 (18,708) 17,619
Interest rate risk is the risk that arises due to changes in interest rates on borrowings. The Company is not significantly exposed
to fluctuation in interest rates as company has not entered into any type of derivative instrument in order to hedge interest
rate risk as at the reporting date.
Profile
At the reporting date, the interest rate profile of the Company’s interest bearing financial instruments was:
Carrying amount
Amount in Taka
2019 2018
Financial assets
Cash at banks 664,477,789 444,429,080
Overdrafts - 35,654,174
Long term borrowing 89,232,918 362,201,591
Amount in Taka Amount in Taka
Carrying Carrying
amount amount
Financial assets

Other receivables 46,316,434 46,316,434 65,740,144 65,740,144
Cash equivalents 1,424,477,789 1,424,477,789 759,429,080 759,429,080
Overdrafts - - 35,654,174 35,654,174
Long term borrowing (foreign) 89,232,918 89,232,918 362,201,591 362,201,591
Accounting classification and fair values as at 31 December 2019 in respect of the separate financial statements does
not vary significantly from the consolidated one.
2019 2018
Investment in FDR (local currency/BDT) 3.50%-10.50% 2.80%-8.50%
Bank overdraft (local currency/BDT) 8%-10.50% 8%-10%
Short term bank loan (local currency/BDT) 9.50%-10% 8%-10%
Short term bank loan (foreign currency/USD) Libor+2.75% Libor+(2.75%-2.85%)
Long term bank loan (foreign currency/USD) Libor+3% Libor+3%
List of related parties with whom transactions have taken place and their relationship as identified and certified by management:
Amount in Taka
Security/ Bad Purchase of
Gurantee debts goods/ Sale of goods/ Outstanding Outstanding Dividend
Name of related party Relationship status Status Period services services receivables payable Remuneration income
Current year 350,456,021 11,064,211 - 69,096,649 - 81,999,600

RAK Power Pvt. Ltd Subsidiary Unsecured Nil
Previous year 392,089,748 6,152,571 - 98,658,782 - 81,999,600
RAK Security & Current year 52,160,129 - - 6,400,853 - 4,950,000
Subsidiary Unsecured Nil
Services Pvt. Ltd Previous year 95,939,059 - - 19,908,164 - 3,960,000
RAK Ceramics -PJSC, Current year 22,466,247 - - 24,122,508 - -
Parent Unsecured Nil
UAE Previous year 29,055,626 - - 25,144,693 - -
Current year 392,749,682 - - 81,573,238 - -
Ceramin FZ LLC Fellow subsidiary Secured Nil
Previous year 509,397,456 - - 83,236,425 - -
Julphar Current year - 2,520,000 - - - -
Other related party Unsecured Nil
Pharmaceuticals Ltd. Previous year - 4,860,000 3,645,000 - - -
Current year 419,421 3,600,000 5,144 - - -
RAK Paints Pvt. Ltd. Other related party Unsecured Nil
Previous year 1,796,925 3,600,000 2,280,000 - - -
Kea Printing & Current year 68,191,789 - - 10,047,843 - -
Packaging Industries Previous year 76,073,703 - - 12,706,166 - -
Palli Properties Pte. Current year 14,711,593 - - 722,088 - -
Ltd Previous year 18,684,918 - - 865,356 - -
Sky Bird Travel Current year 353,672 - - - - -
Agents Pvt. Ltd. Previous year 2,401,433 - - 24,544 - -
Green Planet Current year 379,457 - - - - -
Communications Previous year 9,584,482 - - 48,720 - -
Global Business Current year 780,380 - - 17,595 - -
Associates Ltd. Previous year 717,674 - - - - -
Pelikan Plastic & Current year 39,045,942 - - 5,772,579 - -
Packing Pvt. Ltd. Previous year 118,354,894 - - 8,046,142 - -
Secured by Current year - 2,384,669,868 494,919,371 - - -
Mohammed Trading Other related party Guaranted Nil
ANNUAL REPORT 2019

Previous year - 2,277,534,117 520,382,927 - - -
Cheque
Key Management Current year 2,563,008 - - 35,910,357 35,910,357 -

S.A.K. Ekramuzzaman Unsecured Nil
Personnel Previous year 2,193,288 - - 39,943,228 39,943,228 -
Key Management Current year - - - - 10,367,732 -

Imtiaz Hussain Unsecured Nil
Personnel Previous year - - - 1,123,305 10,793,225 -
197
39 Number of employees
The number of employees engaged for the period who received total remuneration of Taka 60,000 and above per
annum at reporting date was as follows.
2019 2018
Number of employees 1,582 1,866
None of receiving below Taka 5,000 per month.
40 Earnings per share (EPS) 2019 2018
Taka Taka
Weighted average no. of equity shares outstanding (Note 40.1) 427,968,701 427,968,701
Earnings per share (EPS) for the year 1.85 2.06
Diluted earnings per share for the year 1.85 2.06
days in the year.
2019 2018
Outstanding shares 389,062,456 389,062,456
Effect of issue of bonus shares for the year 2018 38,906,245 38,906,245
427,968,701 427,968,701
years.
The expenditure increased due to normal increase is salary & wages and also incremental amounts in respect of dealers
performance incentives, inventory provisioning based on ageing analysis.
41 Reason of deviation of net operating cash flow per share:
The company registered improvement in cash inflows from customers as well as better credit term with suppliers in the
year as compared to previous year.
2019 2018
Taka Taka
41.1 Reconciliation of operating cash flow:

Profit before taxation 1,059,302,582 1,178,266,309

Adjustment for:
Depreciation 427,906,099 407,803,841
Amortization 6,192,863 5,462,966
Loss on assets retirement 10,204,172 -
Advance rent adjustment (13,852,346) -
Foreign exchange loss 6,930,609 990,744
Finance expenses 20,129,550 36,096,086
Finance income (30,596,482) (32,051,044)
Other income (144,138,331) (157,626,209)
1,342,078,716 1,438,942,694
Increase/decrease in trade and other receivable (10,065,839) (288,753,071)
Increase/decrease in inventories 219,279,902 (467,414,003)
Increase/decrease in trade and other payables 186,439,196 53,435,957
Income tax paid (265,344,903) (266,232,589)
Net cash (used in)/from operating activities 1,478,291,997 475,084,086
There are contingent liabilities on account of unresolved disputed corporate tax assessments, VAT claims and customs
duty by the authority aggregating to Tk 888,227,095 (31 Dec 2018: Tk 992,574,842. Considering the merits of the cases, it
has not been deemed necessary to make provisions for all such disputed claims.
There is also contingent liability in respect of outstanding letters of credit of Tk 228,072,306 (31 Dec 2018: Tk 307,987,626)
and letter of guarantee of Tk 77,720,974 (31 Dec 2018: Tk 57,453,148).
43. Events after the reporting period
The Board of Directors of RAK Ceramics (Bangladesh) Limited, in its meeting held in February 04, 2020,
has unanimously recommended cash dividend @ 15% of the paid up capital of the company for the year
ended 31 December 2019 equivalent to BDT. 641,953,052 to be distributed as cash dividends among share
holders, which is more then 30% of the current year profit. The dividends is subject to final approval by the
shareholders at the forthcoming 31 March 2020 Annual General Meeting of the Company.
DIRECTORS’ REPORT OF RAK POWER PVT. LTD
Dear Shareholders,
The Board of Directors of RAK Power Pvt. Ltd are pleased to present to you
15th Annual Report on the business and operations of your Company along
with the audited Financial Statements of Account for the year ended 31st
December 2019 for your consideration, approval and adoption.
Principal activities registration with BREB for selling power to fetch

additional revenue.
The core objective of the Company is to set-up
power generating plants and operate transmission
& distribution system to sell the generated electric Operating results
power to parent company, authorized legal entity and/ The operating results of the Company for the year
or designated franchisee including group companies ended 2019 are as follows:
within geographical boundary of the Bangladesh.
The Company, during its decade old existence, has
constantly evolved to stay relevant to meet the needs (Amount in BDT mn)
of customers and contribute to the Group. It remains
focused on building sustainable value to all our
stakeholders while upholding the RAK values. Sales 352.40 392.09
Gross Profit 82.75 135.28
Performance of Power Generation Net Profit After Tax 50.67 86.45

Earnings Per Share (Absolute BDT) 24.72 42.17
The power plant capacity was available in excess of 90%
of installed capacity during the year 2019. Significant Net Operating Cash Flow Per Share
44.39 46.83
(NOCFPS)
portion of generated power has primarily transmitted
to meet the requirements of the parent company, RAK Net Asset Value (NAV) 282.05 316.21
Ceramics (Bangladesh) Limited. Prior to 2018 available Net Asset Value per share (Absolute
137.59 154.25
capacity of the plant was 9.5 MW out of installed capacity BDT)
10MW. To support additional power requirement after
expansion 4th Tiles plant and increased capacity of the
existing Sanitary plant of RAK Ceramics (Bangladesh)
Ltd, RAK-Power installed additional 1MW Caterpillar Dividend
Generating plant in 2015 and 3MW MWM Generators The Board of Directors of the Company is pleased to
in 2016. Until 2016 business was selling additional recommend cash dividend @ 20 % of the paid-up capital
power to BREB & up to 2017 to Julphar Bangladesh of the Company for the year 2019. While recommending
Ltd however, the same arrangement was discontinued the dividend, the Board of Directors has considered the
for uninterrupted supply to parent company. Since operational performance, business results, assets as at
November 2019 business started selling additional that date and working capital requirements for potential
power to Julphar Bangladesh Ltd and review re- future expansions. The Company paid cash dividend @
40% of paid-up capital for the year 2018. on record their sincere appreciation to Government
authorities, shareholders, investors, bankers and
employees for their continuous commitment,
Auditors
cooperation, confidence and support in enabling the
ACNABIN, Chartered Accountants (an independent Company to attain its objectives.
member of BAKER TILLY INTERNATIONAL), shall retire
For and on behalf of the Board of Directors,
at the 15th Annual General Meeting and, being eligible,
offer themselves for re-appointment. The Board has
also recommended their re-appointment for the year
2020. Remuneration of the Auditor will be fixed by the
shareholders at the 15th Annual General Meeting.
Post Balance Sheet events

There are no material events or developments that
have occurred after the Balance Sheet/reporting date,
the non-disclosure of which could affect the ability
of the users of these financial statements to make an
appropriate evaluation.
(Abdallah Massaad)
Appreciation Chairman
The Board would like to take this opportunity to place February 04, 2020
RAK Power Pvt. Ltd.
AUDITORS’ REPORT AND

RAK Power Pvt. Ltd.
Independent Auditor’s Report
TO THE SHAREHOLDERS OF RAK POWER PVT. LTD.
Opinion to enable the preparation of financial statements that

are free from material misstatement, whether due to
We have audited the accompanying financial statements fraud or error.
of RAK Power Pvt. Ltd. which comprise the statement
of financial position as at 31 December 2019, the In preparing the financial statements, management
statement of profit or loss and other comprehensive is responsible for assessing the Company’s ability to
income, statement of changes in equity and statement continue as a going concern, disclosing, as applicable,
of cash flows for the year then ended, and notes to the matters related to going concern and using the going
financial statements, including a summary of significant concern basis of accounting unless management either
accounting policies. intends to liquidate the Company or to cease operations
or has no realistic alternative but to do so.
give true and fair view, in all material respects, of the Those charged with governance are responsible for
financial position of the Company as at 31 December overseeing the Company’s financial reporting process.
2019, and of its financial performance and its cash
flows for the year then ended in accordance with
International Financial Reporting Standards (IFRSs) as
Other Information
explained in note 02-03. Management is responsible for the other information.
The other information comprises the Directors’ Report,
which we could not obtain prior to the date of this
Basis for Opinion auditors’ report, which is expected to be made available
We conducted our audit in accordance with International to us after that date.
Standards on Auditing (ISAs). Our responsibilities under
Our opinion on the financial statements does not cover
those standards are further described in the Auditors’
the other information and will not express any form of
Responsibilities for the Audit of the Financial Statements
assurance conclusion thereon.
section of our report. We are independent of the
Company in accordance with the International Ethics In connection with our audit of the financial statements,
Standards Board for Accountants’ Code of Ethics for our responsibility is to read the other information
Professional Accountants (IESBA Code), and we have identified above and, in doing so, consider whether the
fulfilled our other ethical responsibilities in accordance other information is materially inconsistent with the
with the IESBA Code. We believe that the audit evidence financial statements or our knowledge obtained in the
we have obtained is sufficient and appropriate to audit, or otherwise appears to be materially misstated.
provide a basis for our opinion.
If based on the work we have performed on the other
information that we obtained prior to the date of this
Responsibilities of Management and auditors’ report, we conclude that there is a material
Those Charged with Governance for misstatement of this other information, we are required
to report that fact. We have nothing to report in this
the Financial Statements and Internal regard.
Controls
When we read the Director’s Report, if we conclude
Management is responsible for the preparation and fair that there is a material misstatement therein, we are
presentation of the financial statements in accordance required to communicate the matter to those charged
with IFRSs as explained in note 02-03, and for such with governance and take appropriate actions in
internal control as management determines is necessary accordance with ISAs.
Auditor’s Responsibilities for the Audit statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based
of the Financial Statements on the audit evidence obtained up to the date of
Our objectives are to obtain reasonable assurance our auditor’s report. However, future events or
about whether the financial statements as a whole conditions may cause the Company to cease to
are free from material misstatement, whether due continue as a going concern.
to fraud or error and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high
• Evaluate the overall presentation, structure, and
content of the financial statements, including the
level of assurance but is not a guarantee that an audit
disclosures, and whether the financial statements
conducted in accordance with ISAs will always detect a
represent the underlying transactions and events
material misstatement when it exists. Misstatements can
in a manner that achieves fair presentation.
arise from fraud or error and are considered material if,
individually or in the aggregate, they could reasonably • Obtain sufficient and appropriate audit evidence
be expected to influence the economic decisions of regarding the financial information of the entities
users taken on the basis of these financial statements. or business activities within the company to
express an opinion on the financial statements.
We are responsible for the direction, supervision,
professional judgment and maintain professional
and performance of the audit. We remain solely
skepticism throughout the audit. We also:
responsible for our audit opinion.
• Identify and assess the risks of material
We also provide those charged with governance with
misstatement of the financial statements, whether
a statement that we have complied with relevant
due to fraud or error, design and perform audit
procedures responsive to those risks, and obtain
communicate with them all relationships and other
audit evidence that is sufficient and appropriate
matters that may reasonably be thought to bear on
to provide a basis for our opinion. The risk of not
our independence, and where applicable, related
detecting a material misstatement resulting from
safeguards.
fraud is higher than for one resulting from error,
as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of Report on other Legal and Regulatory
internal control.
Requirements
• Obtain an understanding of internal control relevant
In accordance with the Companies Act 1994, we also
to the audit in order to design audit procedures
report the following:
that are appropriate in the circumstances.
a) we have obtained all the information and
• Evaluate the appropriateness of accounting
explanations which to the best of our knowledge
policies used and the reasonableness of
and belief were necessary for the purposes of our
accounting estimates and related disclosures
audit and made due verification thereof;
made by management.
b) in our opinion, proper books of account as
• Conclude on the appropriateness of management’s
required by law have been kept by the Company
use of the going concern basis of accounting and,
so far as it appeared from our examination of
based on the audit evidence obtained, whether
these books;
a material uncertainty exists related to events or
conditions that may cast significant doubt on the c) the statement of financial position and statement
Company’s ability to continue as a going concern. of profit or loss and other comprehensive income
If we conclude that a material uncertainty exists, dealt with by the report are in agreement with the
we are required to draw attention in our auditor’s books of account and returns.
report to the related disclosures in the financial
ACNABIN
04 February 2020 Chartered Accountants
RAK Power Pvt. Ltd.

31 Dec 2019 31 Dec 2018

Note Taka Taka
Assets
Property, plant and equipment 4 136,312,668 148,068,460
Right of use asset 5 2,833,258 -
Investment 6 287,500 287,500
Total non-current assets 139,433,426 148,355,960
Inventories 7 69,568,437 70,274,367

Advance income tax 10 308,327,274 266,386,881
Cash and cash equivalents 11 58,970,986 63,146,812
Total current assets 536,674,180 526,300,294
Total assets 676,107,606 674,656,254
Equity
Share capital 12 205,000,000 205,000,000
Retained earnings 13 77,052,355 111,216,108
Total equity 282,052,355 316,216,108
Liabilities

Lease Liability 16 3,575,688 -

Provision for income tax 19 320,439,697 293,824,108
Total current liabilities 363,880,352 326,376,055
Total liabilities 394,055,251 358,440,146
Total equity and liabilities 676,107,606 674,656,254

ACNABIN
RAK Power Pvt. Ltd.

31 Dec 2019 31 Dec 2018

Note Taka Taka
Sales 20 352,402,088 392,089,748
Cost of sales 21 (269,648,146) (256,812,814)
Gross profit 82,753,942 135,276,934
Other income 22 129,340 189,179

(9,062,862) (9,050,053)
Profit from operating activities 73,691,080 126,226,881
Finance income 24 2,202,836 2,027,325

Finance expenses 25 (493,252) (2,456,819)
Net finance income 1,709,584 (429,494)
Profit before income tax 75,400,664 125,797,387
Income tax expense:
Current tax 26 (26,615,589) (42,125,554)
Deferred tax 14 1,889,191 2,783,087
(24,726,398) (39,342,467)

Basic earnings per share (par value Tk 100) 32 24.72 42.17

ACNABIN
RAK Power Pvt. Ltd.

Share Retained
Total
capital earnings
Taka Taka Taka
Balance as at 1 January 2018 205,000,000 106,761,188 311,761,188

Profit for the year - 86,454,920 86,454,920

Cash dividend (2017) - (82,000,000) (82,000,000)
Balance as at 31 December 2018 205,000,000 111,216,108 316,216,108

Prior year adjustment (leases) (2,838,019) (2,838,019)

Cash dividend (2018) - (82,000,000) (82,000,000)
Balance as at 31 December 2019 - 77,052,355 282,052,355

RAK Power Pvt. Ltd.

31 Dec 2019 31 Dec 2018

Taka Taka
Cash receipts from customers 379,805,584 388,473,151

Cash payments to suppliers and employees (247,656,201) (263,978,452)
Cash generated from operating activities 132,149,383 124,494,699
Interest received from bank deposit 792,683 724,752

Income tax paid (41,940,393) (29,212,716)
Net cash (used in)/from operating activities 90,739,827 96,006,735
Acquisition of property, plant and equipment (3,051,201) (443,866)

Sale of property, plant and equipment - 7,642
Interest received from Bank Deposits 1,359,834 1,091,375
Dividend received 50,000 40,000
Net cash (used in)/from investing activities (1,641,367) 695,151

Finance charges (147,610) (2,456,820)
Payment of Lease Liability (11,388,522) -
Dividend paid (82,000,000) (82,000,000)
Net increase/(decrease) in cash and cash equivalents (4,175,826) 12,245,066
Cash and cash equivalents as at 1 January 63,146,812 50,901,746
Cash and cash equivalents as at 31 December (Note 11) 58,970,986 63,146,812

RAK Power Pvt. Ltd.

as at and for the period ended 31 December 2019
1. Reporting entity
“RAK Power Pvt. Ltd. has been incorporated in Bangladesh under the Companies Act 1994 on 30 June 2005 as a private
company limited by shares with an authorized capital of BDT 1,000,000,000 divided into 10,000,000 ordinary shares of
BDT 100 each. The paid up capital stands at BDT 205,000,000 as on 31 December 2019. The company has gone into
commercial operation from 01 May 2009.
The registered office of the company is at RAK Tower (8th floor), Jashimuddin Avenue, Plot # 1/A, Sector # 3, Uttara Model
Town, Dhaka-1230. The Power Plant is located at Vill : Dhanua, P.S: Sreepur,Dist : Gazipur.”
The main objects of the company is to set-up power utilities, own and operate power-generating plants, transmission
system and distribution system and to sell the generated electric power to any legal entity or any designated franchise
area within Bangladesh, and generate electricity based on different available types of fuels such as gaseous, liquid and
solid fuels, hydro potential and any other natural resources such as solar, wind, tidal and waste materials.
the requirement of the Companies Act 1994. However, such differences are not material and in the view of management
IFRS titles and format give better presentation to the shareholders.
These financial statements have been prepared on historical cost basis except for inventories which are measured at lower
of cost and net realisable value.
and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income
and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the
period in which the estimates are revised and in any future periods affected.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting
policies that have the most significant effect on the amount recognised in the financial statements are stated in the
following notes:

Note 5 Right of use asset


The financial period of the Company covers one year from 1 January to 31 December and is followed consistently.
2.6 Going concern
have been prepared on going concern basis. As per management assessment there are no material uncertainties related
to events or conditions which may cast significant doubt upon the Company’s ability to continue as a going concern.
3. Significant accounting policies
The accounting policies set out below have been applied consistently to all periods presented in these financial statements
and have been applied consistently.
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses, if
any. Cost includes expenditures that are directly attributable to the acquisition of the property, plant and equipment.
Maintenance, renewals and betterments that enhance the economic useful life of the property, plant and equipment or
that improve the capacity, quality or reduce substantially the operating cost or administration expenses are capitalised by
adding it to the related property, plant and equipment. Ongoing repairs and maintenance is expensed as incurred.
disposal proceeds and the carrying amount of the asset and is recognised as gain or loss from disposal of asset under
other income in the statement of profit or loss and other comprehensive income.
3.2 Depreciation on property, plant, equipment and investment property
with IFRS 5 and the date that aasets is derecognised.
Rates of depreciation on various classes of property, plant, equipment & investment property are as under:
Factory building 20
Plant and machinery:
Main Genset 5
Auxiliary equipments 10
Electrical installation 20
Gas pipeline 20
Furniture and fixtures 10
Office equipment 20
Communication equipment 10
Tools and appliances 20
Fire fighting equipments 20
Vehicles 20
a) Investment ( in share)
Investment in subsidiaries are recognised initially at cost plus any directly attributable transaction costs. Subsequent to
initial recognition, investment in subsidiaries are measured at cost less impairment loss, if any.
b) Trade & other receivables

Trade & other receivables are recognised initially at fair value. Subsequent to initial recognition, trade & other receivables
are measured at amortised cost using the effective interest method, less any bad debts provision.
c) Cash and cash equivalents
maturity of three months or less which are available for use by the Company without any restriction. Bank overdraft that
are repayable on demand and form an integral part of the Company’s cash management are included as a component of
cash and cash equivalents for the purpose only of the statement of cash flows.
3.3.1 Financial liabilities
The Company recognises a financial liability in its statement of financial position when the entity becomes a party to the
contractual provisions of the instrument. The Company derecognises a financial liability when its contractual obligations
are discharged, cancelled or expired. Non-derivative financial liabilities comprise trade & other payables, and interest
bearing borrowings.
Trade & other payables are recognised initially at fair value. Subsequent to initial recognition, trade payables are stated at
3.4 Inventories
Inventories on hand are valued at the lower of cost and net realisable value. For raw materials and consumable spare parts
cost is determined on a weighted average cost basis. Work-in-process is stated at cost to complete of respective product.
Cost comprises cost of raw materials, wages and other overheads up to the stage of completion. Finished products are
stated at lower of cost and net realisable value. Net realisable value is the estimated selling price in the ordinary course of
business less the estimated costs necessary to make the sale. Raw materials in transit are valued at cost.
The Company maintains both defined contribution plan and defined benefit plan for its eligible permanent employees.
Defined contribution plan (provident fund)
Defined contribution plan is a post employment benefit plan under which the Company provides benefits to one or
more employees. The recognised Employees Provident Fund is considered as defined contribution plan as it meets the
recognition criteria specified for this purpose. All permanent employees contribute 10 percent of their basic salary to the
provident fund and the Company also makes equal contribution to the fund. These are administered by the Board of
Trustees. The contributions are invested separately from the company’s assets.
Defined benefit plan (gratuity fund)
obligation in respect of defined benefit plans is calculated separately for each plan by estimating the amount of future
benefit that employees have earned in return for their service in the current and prior periods.
Details of employees benefit schemes have been provided in note no. 15.
Workers’ Profit Participation and Welfare Fund
As per Bangladesh Labour Act 2006 as amended in 2018, The Workers Profit Participation Fund is yet to be introduced.


Finance income comprises interest income on funds invested in FDR and Short Notice Deposit (SND) accounts. Interest
income is recognised on accrual basis.
Finance expense comprises interest expense only on overdraft. All finance expenses are recognised in the statement of
profit or loss and other comprehensive income.
3.7 Taxation
Current tax:
at the reporting date, and any adjustment to tax payable in respect of previous year. Provisions for corporate income tax
is made following the rate applicable for a private limited company of the same industry. The tax rate 35% is used for the
reporting period 2019 as per Finance Act 2019. 10% rebate on payable tax is calculated upto the profit of 30 June 2019 as
per SRO 185-Ain/Aikor/2014 dated 01/07/2014.
Deferred tax:
A deferred tax asset is recognised for unused tax losses, tax credits and deductible temporary differences to the extent
that it is probable that future taxable profits will be available against which they can be utilised. Deferred tax assets are
reviewed at each reporting date and are reduced to the extent that it is no longer probable that the related tax benefit will
be realised.
comprehensive income as per International Accounting Standard (IAS) 21 "The Effects of Changes in Foreign Exchange
Rates".

average number of ordinary shares outstanding during the period, adjusted for the effect of change in number of shares
for bonus issue. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the
weighted average number of ordinary shares outstanding, for the effects of all dilutive potential ordinary shares. However,
dilution of EPS is not applicable for these financial statements as there was no dilutive potential ordinary shares during
the relevant years.
3.10 Contingencies
3.10.1 Contingent liability
Contingent liability is a possible obligation that arises from past events and whose existence will be confirmed only by
the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the entity.
Contingent liability should not be recognised in the financial statements, but may require disclosure. A provision should
be recognised in the period in which the recognition criteria of provision have been met.


Statement of cash flows is prepared under direct method in accordance with International Accounting Standard IAS-7
3.12 Provisions
Provisions are recognised on the reporting date if, as a result of past events, the Company has a present legal or constructive
obligation that can be estimated reliably, and it is probable that an outflow of economic benefits will be required to settle
the obligation.
A number of new standards and amendments to standards are effective for annual periods beginning after 1 January 2018
with earlier application permitted. The company does not plan to adopt these standards early. The new standards which may
be relevant to the company are set out below.
ii. Impairment
require considerable judgement about how changes in economic factors affect ECLs, which will be determined on a
probability-weighted basis. The new impairment model will apply to financial assets measured at amortised cost or FVOCI,
except for investments in equity instruments, and to contract assets.
• 12-months ECLs: these are ECLs which result from possible default events within the 12 months after the reporting date; and
• Lifetime ECLs: these are ECLs which result from all possible default events over the expected life of a financial instrument.
initial recognition and 12-months ECL measurement applies if it has not. An entity may determine that a financial asset’s credit
always applies for trade receivables and contract assets without a significant financing component; the company has a choice
iii. Hedging

The company will avail the exemption allowing it not to restate comparative information for prior periods with respect to
classification and measurement (including impairment) changes. Impact of IFRS 9 shown in note no 29.1 (b).
The company analysed its financial assets and decided not to provide for impairment because the company is confident
enough to recover its financial assets.
i. Sales of goods
cumulative revenue recognised will not occur. As a consequence, for those contracts for which the company is unable to
Based on the company’s assessment, the timing of revenue recognition from sale of goods are broadly similar. Therefore,
the company does not expect the application of IFRS 15 to result in significant differences in the timing of revenue
recognition for these sales.
selling prices. The stand-alone selling prices will be determined based on the list prices at which the company sells the
Based on the company’s assessment, the fair value and the stand-alone selling prices of the services are broadly similar.
Therefore, the company does not expect the application of IFRS 15 to result in significant differences in the timing of
revenue recognition for these services.
and incentive payments, to the extent that it is probable that they will result in revenue and can be measured reliably.
When a claim or variation is recognised, the measure of contract progress or contract price is revised and the cumulative
contract position is reassessed at each reporting date.
Under IFRS 15, claims and variations will be included in the contract accounting when they are approved.
The company does not expect the application of IFRS 9 and IFRS 15 to have a significant impact on its consolidated
financial statements. The actual impacts of adopting these standards at 1 January 2018 may change because:
these standards will require the company to revise its accounting policies and internal controls and these changes are not
yet complete;
the company is also refining and finalizing its model for expected credit loss calculations; and the new accounting policies,
assumptions, judgement and estimation techniques employed are subject to change until the company finalizes its first
consolidated financial statements that includes the date of initial application.
IFRS 16, published in January 2016 replaces the previous guidance in IAS 17 Leases. Under this revised guidance, leases
will be brought onto companies’ balance sheets, increasing the visibility of their assets and liabilities. It further removes the
classification of leases as either operating leases or finance leases treating all leases as finance leases from the perspective
of the lessee, thereby eliminating the requirement for a lease classification test. The revised guidance has an increased
focus on who controls the asset and may change which contracts are leases. IFRS 16 is effective for annual periods
beginning on or after 1 January 2019.


In the current year, the Company, for the first time, has applied IFRS 16 Leases (as issued by the IASB in January 2016) in
its effective date.
adoption of IFRS 16 on the Company’s financial statements is described below.
The date of initial application of IFRS 16 for the Company is 1 January 2019
The Company has applied IFRS 16 using the modified retrospective approach, without restatement of the comparative
information
IFRS 16 changes how the comany accounts for leases previously classified as operating leases under IAS 17, which were
off-balance-sheet.
Applying IFRS 16, for all leases (except as noted below), the Company.
office furniture), the Company has opted to recognize a lease expense on a straight-line basis as permitted by IFRS 16. This
expense is presented within rent expenses in the statement of profit or loss.
The main difference between IFRS 16 and IAS 17 with respect to assets formerly held under a finance lease is the
measurement of residual value guarantees provided by a lessee to a lessor. IFRS 16 requires that the Group/company
recognizes as part of its lease liability only the amount expected to be payable under a residual value guarantee, rather
than the maximum amount guaranteed as required by IAS 17. This change did not have a material effect on the Group’s/
company’s financial statements.


The following new standards are effective for annual periods begining from 1 January 2019 and have been applied in
preparing these financial statements.
IFRS 16 Leases
Events after the reporting period that provide additional information about the Company’s position at the reporting
date are reflected in the financial statements. Material events after the reporting period that are not adjusting events are
disclosed by way of note.
Comparative information have been disclosed in respect of 2019 for all numerical information in the financial statements
and also the narrative and descriptive information when it is relevant for understanding of the current period’s financial
statements.
To facilitate comparison, certain relevant balances pertaining to the previous period have been rearranged/reclassified
whenever considered necessary to confirm to current period’s presentation.
4 Property, Plant and equipment
31-Dec-19
COST DEPRECIATION
Net book
Balance value
Sale/ Balance
Particulars Balance as Addition as at Charged Adjustment Balance as at as at 31
disposal as at
at 01 Jan during 31 Rate during the during the 31 December December
during 01 Jan
2019 the year December year year 2019 2019
the year 2019
2019
Land 11,294,000 - - 11,294,000 0% - - - - 11,294,000
Factory building 19,573,131 - - 19,573,131 20% 19,212,069 75,600 - 19,287,669 285,462
Plant and machinery
Main Genset 268,615,599 - - 268,615,599 5% 13,430,779 - 147,738,579 120,877,020

134,307,800
Auxiliary equipments 33,597,157 - - 33,597,157 10% 33,477,988 35,727 - 33,513,715 83,442
Electrical installation 25,822,636 - - 25,822,636 20% 24,736,353 567,698 - 25,304,051 518,585
Gas pipeline 17,699,732 - 20,090,783 20% 17,533,731 526,295 - 18,060,026 2,030,757

2,391,051
Furniture and fixtures 2,002,698 - - 2,002,698 10% 1,424,569 84,556 - 1,509,125 493,573
Office equipment 1,195,071 660,150 - 1,855,221 20% 1,039,058 86,338 - 1,125,396 729,825
Communication equipment 124,786 - - 124,786 10% 124,785 - - 124,785 1
Tools and appliances 4,445 - - 4,445 20% 4,444 - - 4,444 1
ANNUAL REPORT 2019

Fire fighting equipments 3,631,012 - - 3,631,012 20% 3,631,011 - - 3,631,011 1
Vehicles 2,300,531 - 2,300,531 20% 2,300,530 - - 2,300,530 1
Total 385,860,798 3,051,201 - 388,911,999 237,792,338 14,806,993 - 252,599,331 136,312,668
217
218

31-Dec-18
COST DEPRECIATION
Net book
Sale/ Balance as value as at
Particulars Balance Addition Balance as at Charged Adjustment Balance as at
disposal at 31 31 Decem-
as at during Rate 01 January during the during the 31 December
during December ber 2018
01 Jan 2018 the year 2018 year year 2018
the year 2018
Land 11,294,000 - - 11,294,000 0% - - - - 11,294,000
Factory building 19,195,131 378,000 - 19,573,131 20% 19,195,130 16,939 - 19,212,069 361,062
Plant and machinery - - - -
Main Genset 268,615,599 - - 268,615,599 5% 120,877,020 13,430,780 - 134,307,800 134,307,799
Auxiliary equipments 33,597,157 - - 33,597,157 10% 30,118,276 3,359,712 - 33,477,988 119,169
Electrical installation 25,822,636 - - 25,822,636 20% 24,168,655 567,698 - 24,736,353 1,086,283
Gas pipeline 17,699,732 - - 17,699,732 20% 17,366,586 167,145 - 17,533,731 166,001
Furniture and fixtures 2,184,972 - 182,274 2,002,698 10% 1,380,701 218,501 174,633 1,424,569 578,129
Office equipment 1,129,205 65,866 - 1,195,071 20% 940,919 98,139 - 1,039,058 156,013
Communication equipment 124,786 - - 124,786 10% 112,312 12,473 - 124,785 1
Tools and appliances 4,445 - - 4,445 20% 4,444 - - 4,444 1
Fire fighting equipments 3,631,012 - - 3,631,012 20% 3,631,011 - - 3,631,011 1
Vehicles 2,300,531 - - 2,300,531 20% 2,300,530 - 2,300,530 1
Total 385,599,206 443,866 182,274 385,860,798 220,095,584 17,871,387 174,633 237,792,338 148,068,460
31 Dec 2019 31 Dec 2018

Taka Taka
Cost of sales 14,636,099 17,542,274

Administrative expenses 170,894 329,113
14,806,993 17,871,387
2019
Accumulated Receipts Profit /(loss) on
Original cost Book value
Particulars depreciation against Sale disposal
No Disposal - - - -
Total - - - - -
2018
Accumulated Receipts Profit /(loss) on
Original cost Book value
Particulars depreciation against Sale disposal
Air Conditioner 182,274 174,633 7,641 11,550 3,909
Total 182,274 174,633 7,641 11,550 3,909
220

31 Dec 2019
COST DEPRECIATION
Net book
Sale/ Balance value as at
Addition Adjust-
Particulars Balance disposal as at Balance as at Charged Balance as at 31
during ment
as at during 31 01 January during the 31 December December
the during
01 Jan 2019 the December 2019 period 2019 2019
period the year
period 2019
Plant and machinery 27,200,020 - - 27,200,020 16,105,275 8,589,480 - 24,694,755 2,505,265
Office Building 1,431,242 - - 1,431,242 745,438 357,811 - 1,103,249 327,993
Total 28,631,262 - - 28,631,262 16,850,713 8,947,291 - 25,798,004 2,833,258
1 Office Building agreement starts from December 1, 2016 and effective for 4 years.
2 Plant and Machinery agreement starts from April 1 2015 and effective for 5 years.
31 Dec 2019 31 Dec 2018

Taka Taka
6 Investment
Investment in associates
Investment to RAK Security & Services Pvt. Ltd 287,500 287,500

287,500 287,500
287,500 287,500
7 Inventories
Stores, spares and consumables 69,568,437 70,274,367

69,568,437 70,274,367
Trade receivable
Receivable from Sales 71,334,626 98,658,782

71,334,626 98,658,782
Other receivable
Interest accrued on FDR 168,005 170,873

168,005 170,873
71,502,631 98,829,655
9 Advance, deposits and prepayments
Suppliers against VAT Software 225,000 -

225,000 -
Security and other deposit:
Titas gas transmission & distribution co. ltd. 27,089,450 27,089,450
VAT and Supplementary duty (Note-9.1) - 18,986
27,089,450 27,108,436
Prepayments:
Security deposit 113,000 113,000
Insurance and others 877,402 441,143
990,402 554,143
28,304,852 27,662,579
9.1 Value Added Tax (VAT)
Balance as at 1 January - 18,986

- 18,986
Add: Input VAT Credit & Cash deposit - -
- 18,986
Less:VAT on sales - -
- -
Balance as at 31 December - 18,986
Due to introduction of new VAT & SD Act 2012 and VAT & SD rules 2016 now require to deposit related VAT and SD payable
within 15 days of next month instead of advance. Therefore instead advance it is now showing as payable in note no. 17.1
31 Dec 2019 31 Dec 2018

Taka Taka

308,327,274 266,386,881
308,327,274 266,386,881
10.1 Yearwise Advance income tax
Income year
Year 2019 18,721,191 -

Year 2018 41,898,983 18,679,781
Year 2017 41,290,654 41,290,654
Year 2016 44,944,216 44,944,216
Year 2015 45,242,248 45,242,248
Year 2014 37,992,335 37,992,335
Year 2013 37,210,247 37,210,247
Year 2012 33,236,075 33,236,075
Year 2011 5,945,904 5,945,904
Year 2010 1,840,421 1,840,421
Year 2009 5,000 5,000
308,327,274 266,386,881
Cash in hand 92,843 152,859

92,843 152,859
Cash at banks 792,696 657,107

HSBC (current account - 001-107580-011 - BDT) 313,699 962,844
Standard Chartered Bank (CD - 01-3767272-01 - BDT) 901,655 1,850
Dutch Bangla Bank Ltd. (CD 117 - 110 - 23474 - BDT) 52,842 53,650
Standard Chartered Bank (SND -02-3767272-01 - BDT) 3,319,200 3,319,200
Standard Chartered Bank (Margin Money account) 21,382,296 15,112,100
Dutch Bangla Bank Ltd. (SND account - 117-120-2550 - BDT) 608,850 11,420,033
MidLand Bank (SND Account 0006-1070000015 - BDT) 27,371,238 31,526,784
HSBC 1,906,325 1,866,589
Standard Chartered Bank. 762,080 762,080
Dutch Bangla Bank Ltd. 28,838,500 28,838,500
31,506,905 31,467,169
58,970,986 63,146,812
31 Dec 2019 31 Dec 2018

Taka Taka
12 Share Capital
Authorised
Issued, subscribed, called and paid up

2,050,000 ordinary shares of Tk 100 each 205,000,000 205,000,000
Percentage of shareholding:
2019 2018
% Taka % Taka
RAK Ceramics (Bangladesh) Limited. 99.9996 204,999,000 99.9996 204,999,000

RAK Security and Services (Pvt.) Ltd. 0.0002 500 0.0002 500
Engr. Md. Maqsudul Karim 0.0002 500 0.0002 500
100.00 205,000,000 100.00 205,000,000
Classification of shareholders by range:

2019 2018 2019 2018
Less than 500 shares 2 2 10 10

Over 500 shares 1 1 2,049,990 2,049,990
3 3 2,050,000 2,050,000
31 Dec 2019 31 Dec 2018

Taka Taka
13 Reserve and Surplus
Balance as on 01 January 111,216,108 106,761,188

Prior year adjustment (leases) (2,838,019) -
Balance as on 31 December 77,052,355 111,216,108

Deferred tax (income) / expenses (1,889,192) (2,783,086)
Taxable/
Carrying amount on
(deductible)
the date of statement of Tax base
temporary
financial position
difference
Taka Taka Taka
Property, plant and equipment (Excluding land and others) 125,018,668 38,804,671 86,213,997
Property, plant and equipment (Excluding land and
136,782,099 45,170,411 91,611,688
others)
31 Dec 2019
Provident Fund Gratuity Fund Total

Taka Taka Taka
Add: Provision made during the year 1,115,592 684,291 1,799,883
1,115,592 684,291 1,799,883
Less: Payments made to fund during the year 1,115,592 684,291 1,799,883
31 Dec 2018
Taka Taka Taka
Add: Provision made during the year 1,053,720 657,801 1,711,521
1,053,720 657,801 1,711,521
Less: Payments made to fund during the year 1,053,720 657,801 1,711,521
31 Dec 2019 31 Dec 2018

Taka Taka
16 Lease Liability
Non- Current 3,575,688 -

Lease Liability 3,575,688 -
Less: Current portion of Lease liability - -
Current
Current portion of Lease liability 3,575,688 -
Liability Schedule
Closing
Balance as "Decrease
Interest Balance as
Particular on 1 January Addition Payment in lease
expenses on 31 Dec
2019 liability"
2019
Plant and Machinery 13,861,660 - 10,956,522 290,514 10,666,008 3,195,652
Office Building 756,908 - 432,000 55,128 376,872 380,036
14,618,568 - 11,388,522 345,642 11,042,880 3,575,688
31 Dec 2019 31 Dec 2018

Taka Taka
Trade payables
Payable to local suppliers 593,754 3,328,655

5,538,071 9,603,933
Other payables
Tax deducted at source 891,370 852,830

VAT payable (Note 17.1) 1,846,891 -
Security deposit payable 1,800,000 -
6,753,221 2,132,454
12,291,292 11,736,387
17.1 VAT payable
VAT on sales 27,504,154 -

27,504,154 -
Less: Balance as at 1 January 18,986 -
Treasury depposit for VAT purpose 9,569,142 -
Input VAT credit 16,069,135 -
25,657,263 -
Balance as at 31 December 1,846,891 -
18 Accrued expenses
Power and gas 18,673,764 14,132,304

Staff cost 4,904,905 5,201,622
Audit fees 70,000 80,500
Taxation Matter 38,000 23,000
Operation and maaintenence 3,880,006 1,371,134
Telephone & Others 7,000 7,000
27,573,675 20,815,560
31 Dec 2019 31 Dec 2018

Taka Taka
19 Provision for income tax

Add: Provision made for current year 26,615,589 42,125,554
Balance as at 31 Dec (note 19.1) 320,439,697 293,824,108
Income year
Current year
Year 2019 26,615,589 -
Year 2018 42,125,554 42,125,554
Year 2017 41,210,074 41,210,074
Year 2016 45,393,782 45,393,782
Year 2015 45,242,248 45,242,248
Year 2014 37,992,335 37,992,335
Year 2013 44,169,714 44,169,714
Year 2012 33,236,076 33,236,076
Year 2011 3,535,904 3,535,904
Year 2010 913,421 913,421
Year 2009 5,000 5,000
320,439,697 293,824,108
20 Sales
31-Dec-19 31-Dec-18
Quantity Amount 2019 Amount
in million
in million kwh Taka Taka
kwh
Electricity 51.64 379,906,242 53.68 392,089,748
Less: VAT (@15% from 01 July 2019) 27,504,154 -
352,402,088 392,089,748
20.1 Quantitative details of opening stock, purchase/production, consumption/sales and closing

stock of raw materials and finished goods
Quantity in million
Opening Purchase / Sale / Con-
Closing stock
stock Production sumption
Description Unit
Quantity Quantity Quantity Quantity
Raw materials (natural gas) cubic meter

Current year - 13.55 13.55 -
Previous year - 12.81 12.81 -
Finished goods Electricity kwh

Current year - 51.64 51.64 -
Previous year - 53.68 53.68 -
20.2 Production capacity and actual production are given below:
31-Dec-19
Installed Capacity Utilisation Over/(Under)
during the year during the Utilisation
Production Unit (million) year (million) % of Utilisation (million)
Electricity kwh 82.02 51.64 63% (30.38)
31-Dec-18
Installed Capacity Utilisation Over/(Under)
during the year during the Utilisation
Production Unit (million) year (million) % of Utilisation (million)
Electricity kwh 59.96 53.68 90% (6.28)
31 Dec 2019 31 Dec 2018

Taka Taka
21 Cost of electricity generation
Consumption of natural gas 146,072,541 132,482,810
Factory overhead:
Direct labour (note-21.1) 9,951,481 9,723,591

Direct expenses:
Lubricating Oil 4,826,812 7,031,379
Repair & indirect materials (note-21.2) 79,552,663 80,333,057
Rental for caterpillar Gensets - 7,075,457
Depreciation on property, plant and equipment (Note-4) 14,636,099 17,542,274
Depreciation on right of use assets (Note-5) 8,589,480 -
Other production expenses (note 21.3) 6,019,070 2,624,246
269,648,146 256,812,814
21.1 Direct labour

Salary & wages 7,654,087 7,072,716
Bonus 778,260 1,188,625
Incentive 20,000 274,457
Gratuity 561,229 527,689
Employers contribution to provident fund 457,608 423,360
Leave Encashment 186,016 187,461
Special Allowances 221,500 -
9,951,481 9,723,591
31 Dec 2019 31 Dec 2018

Taka Taka
21.2 Repair and indirect materials
Operation & Maintanance 69,187,644 64,725,881

Spare Parts Cat genset 9,383,452 14,861,710
Water & Chemicals 955,567 675,016
Diesel 26,000 70,450
79,552,663 80,333,057
Security & Services 1,670,363 1,511,624

Insurance 1,822,496 872,065
Rates & taxes 1,767,320 -
Other expenses 758,891 240,558
6,019,070 2,624,246
22 Other income
Dividend income 50,000 40,000

Misc. Income 79,340 145,270
Profit on sale of fixed assets - 3,909
129,340 189,179
Staff cost (note-23.1) 6,942,090 7,318,453

Telephone and postage 138,236 147,090
Office repair and maintenance 270,733 33,637
Registration and renewal 116,911 127,481
Security and guard expenses 128,040 128,040
Electricity, gas and water 161,983 140,746
Depreciation on property, plant and equipment (Note-4) 170,894 329,115
Depreciation on right of use assets (Note-5) 357,811 -
Legal and professional fees 145,389 115,000
Vehicle repair and maintenance 597,159 356,037
Rent rate and tax 86,810 518,400
Meeting Expenses 29,975 7,475
Others 46,171 17,758
9,192,202 9,239,232
23.1 Staff cost
Salary & wages 5,291,958 5,159,904

Bonus 473,303 737,582
Incentive - 77,330
31 Dec 2019 31 Dec 2018

Taka Taka
Gratuity 123,062 130,112

Employers contribution to provident fund 100,188 103,500
Leave encashment 46,356 42,379
Staff welfare expenses 17,899 9,688
Other employee benefit 413,468 210,960
Travelling expenses 67,960 122,027
Special Allowances 72,500 -
Fooding expenses 318,954 712,317
6,942,090 7,318,453
24 Finance income
Interest on bank account (SND) 792,683 724,752

Interest on FDR 1,354,098 1,122,388
Exchange gain 56,055 180,185
2,202,836 2,027,325
25 Finance expenses
Interest expenses 1,772 5,101

Interest on Lease Liability 345,642 -
Bank charges 145,838 2,451,718
493,252 2,456,819
26 Income tax expenses
31-Dec-19
31-Dec-18
Jan 1 to Jun 30 Jul 1 to Dec 31 Total
Sales 169,041,064 183,361,024 352,402,088 392,089,748
Cost of sales (119,740,012) (149,908,134) (269,648,146) (256,812,814)
Gross profit 49,301,052 33,452,890 82,753,942 135,276,934
Other income 50,000 79,340 129,340 189,179
Administrative expenses (4,793,240) (4,398,962) (9,192,202) (9,239,232)
Profit from operating activities 44,557,812 29,133,268 73,691,080 126,226,881
Finance income 1,161,843 1,040,993 2,202,836 2,027,325
Finance expenses (1,221,997) 728,745 (493,252) (2,456,819)
Profit before income tax 44,497,658 30,903,006 75,400,664 125,797,387
Income tax expense 14,882,961 11,732,628 26,615,589 (42,125,554)
Rebate 10% income tax (Vide SRO 185-Ain/Aikor/2014 dated 01/07/2014) is calculated upto 30 June 2019. Effectiveness
of the SRO is over from 1 July 2019, so, tax calculation is separately shown from January 1 to June 30 & from July 1 to
December 31.
31-Dec-19 31-Dec-18
% Taka % Taka
Profit before tax 75,400,664 125,797,387
Deferred tax expenses -2.51% (1,889,191) -2.21% (2,783,087)
Expected income tax using applicable tax rate 31.50% 23,751,209 35.00% 44,029,085
Effective deferred tax -2.51% (1,889,191) -2.21% (2,783,087)
32.79% 24,726,398 31.27% 39,342,467
28 Transaction in foreign currency

31 Dec 2019 31 Dec 2018
Taka Taka
CIF value of import:

Spare parts 9,511,997 38,134,412
9,511,997 38,134,412

The management has overall responsibility for the establishment and oversight of the Company's risk management
framework. The Company's risk management policies are established to identify and analyse the risks faced by the
policies, procedures and systems are reviewed regularly to reflect changes in market conditions and the Company's
• Credit risk
• Liquidity risk
• Market risk
29.1 Credit risk

contractual obligations, and arises principally from the Company's trade receivables and other receivables.
receivable are mainly related to local receivables. The Company's exposure to credit risk on accounts receivables is
financial position.

Amount in USD Amounts in Taka

As at 31 December As at 31 December
2019 2018 2019 2018
Trade receivables
Customer-Local - - 71,334,626 98,658,782
- - 71,334,626 98,658,782
Other receivables
Accrued Interest - - 168,005 170,873

Other Receivable - -
- - 168,005 170,873
- -
Cash equivalents - - 58,878,143 62,993,953
b) Impact of IFRS 9
Original classi- Original carrying New carrying
New classifica-
Financial assets Note fication under amount under amount under Impairment
tion under IFRS 9
IAS 39 IAS 39 IFRS 9
Trade & other receivable- Loan &
8 Amortized cost 168,005 168,005 -
unrelated receivable
Trade & other receivable- Loan &
8 Amortized cost 71,334,626 71,334,626 -
related receivable
Loan &
Cash & cash equivalent 11 Amortized cost 58,970,986 58,970,986 -
receivable
i Trade and other receivables and due from related parties that were classified as loans and receivables under IAS 39 are now
classified at amortised cost. Impairment over these receivables was recognised in the current period on transition to IFRS 9.
ii Cash and cash equivalents that were classified as loans and receivables under IAS 39 are now classified at amortised cost.
Impairment over these cash & cash equivalent was recognised in the current period on transition to IFRS 9.
c) Ageing of receivables
Amounts in Taka
As at 31 December
2019 2018
Not past due 71,502,631 98,829,655
29.2 Liquidity risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's
when become due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage
to the Company's reputation.
obligation and accordingly arrange for sufficient liquidity/fund to make the expected payment within due date. Moreover,
the Company seeks to maintain short term lines of credit with scheduled commercial banks to ensure payment of
obligations in the event that there is insufficient cash to make the required payment. The requirement is determined in
advance through cash flows projections and credit lines facilities with banks are negotiated accordingly.

Carrying Contractual Within 12 More than 12
amount cash flows months or less months
Taka Taka Taka Taka
- - -
12,291,292 12,291,292 12,291,292 -
Contractual Within 12 More than 12
Carrying amount
cash flows months or less months
Taka Taka Taka Taka
11,736,387 11,736,387 11,736,387 88,203,349
29.3 Market risk
Market risk is the risk that changes in market prices such as foreign exchange rates and interest rates will affect the
Company’s income or the value of its holding of financial instruments. The objective of market risk management is to
manage and control market risk exposures within acceptable parameters, while optimising the return.
a) Currency risk
The Company is exposed to currency risk on certain purchase of spare parts. Majority of the company’s foreign currency
purchase are denominated in EURO.
The Company’s exposure to foreign currency risk was as follows based on notional amounts (in Taka):
As at 31 December 2019 As at 31 December 2018

USD EURO USD EURO
Foreign currency denominated assets - - - -
Receivable from customers-Export - - - -
Cash at bank - - - -
- - - -

USD EURO USD EURO
Foreign currency denominated liabilities

Trade payables 26,158 - 26,324
Short term bank loan - - - -
- 26,158 - 26,324
Net exposure - (26,158) - (26,324)
The Company has foreign exchange loss or (gain) Tk (56,055/-)


Exchange rate
As at 31 December
31 Dec 2019 31 Dec 2018
US Dollar 84.9500 82.9950
A strengthening or weakening of the Taka, as indicated below, against the USD and EUR at 31 December 2019 would have
increased/(decreased) profit or loss by the amounts shown below.

At 31 December
EURO (3 percent movement) 76,097 (71,664) 77,787 (73,256)
Interest rate risk is the risk that arises due to changes in interest rates on borrowings. The Company is not significantly
exposed to fluctuation in interest rates as it has neither floating interest rate bearing financial liabilities nor entered into any
type of derivative instrument in order to hedge interest rate risk as at the reporting date.
Profile
At the reporting date, the interest rate profile of the Company's interest bearing financial instruments was:
Carrying amount
Amount in Taka
As at As at
31 December 31 December
2019 2018

Financial assets
Cash at banks 27,371,238 31,526,784

Amount in Taka Amount in Taka

Carrying Carrying
amount amount
Financial assets
Assets carried at fair value through profit or loss - - - -

Other receivables 168,005 168,005 170,873 170,873
Cash equivalents 58,878,143 58,878,143 62,993,953 62,993,953
Available for sales financial assets

Accounting classification and fair value as at 31 December 2019 in respect of the separate financial statements does not
vary significantly from the consolidated one.
As at 31 December
2019 2018
Investment in FDR 1.95%-4.50% 1.95%-4.00%
Short term bank loan (local currency) - 13.50%
Interest on Overdraft 8%-10.25% 8%-10%
List of related parties with whom transactions have taken place and their relationship as identified and certified by management:
Amounts in Taka
Security/ Bad Purchase of Divi- Security /

Name of related Sale of goods/ Outstanding Outstanding Remunera- Dividend
Relationship Gurantee debts Year goods/ dend Gurantee
party services receivables payable tion income
status Status services Income status
RAK Ceramics Current 11,064,211 350,456,021 69,096,649 - -

Parent 81,999,600
(Bangladesh) Unsecured Nil Agreement
Compny
Limited Previous 6,152,571 392,089,748 98,658,782 - -
81,999,600
RAK Security Current 1,494,273 - - 156,253 - 200 50,000 -

Fellow
& Services Pvt. Unsecured Nil
Subsidiary
Ltd Previous 1,523,026 - - 176,870 - 200 40,000 -
Julphar Current - 1,946,067 2,237,977 - - - - 1,800,000

Bangladesh Ltd. Other related Partial
Nil
party Secured
Previous - - - - - - - -
Key Current - - - - 4,042,237 200 - -

Md. Maqsudul
Management Unsecured Nil
Karim
Personnel Previous - - - - 3,995,792 200 - -
Key Current - - - - 5,500 - - -

S.A.K.
Management Unsecured Nil
Ekramuzzaman
Personnel Previous - - - - 2,000 - - -
ANNUAL REPORT 2019

During the year, Board meeting fees of Taka 29,975
235

31 Number of employees
The number of employees engaged for the year who received total remuneration of Taka 60,000 and above per annum
at reporting date was as follows.
2019 2018
Person Person
Number of employees 18 19
32 Earnings per share (EPS)
2019 2018
Taka Taka

Earnings attributable to the ordinary shareholders Profit for the year 50,674,266 86,454,920
Weighted average no. of equity shares outstanding 2,050,000 2,050,000
Earnings per share (EPS) for the period 24.72 42.17
Diluted earnings per share for the period 24.72 42.17

Gas & other cost increase, power tariff decrease is main reason for deviation of earning per share.
32.2 Reason of deviation of net operating cash flow per share:
Power tariff reduction is the reason for decrease in net operating cash flow per share.
There is contingent liability in respect of letter of guarantee of Tk 22,854,794/-
34.1
The Board of Directors of RAK Power Pvt. Ltd. in its meeting held on 04 February 2020, has unanimously recommended
cash dividend @20% of the paid up capital of the company for the year ended 31 December 2019 equivalent to BDT
41,000,000 to be distributed as cash dividends among shareholders, which is more then 30% of the current year profit.
These dividends is subject to final approval by the shareholders at the forthcoming 31 March 2020 Annual General
Meeting of the Company.
DIRECTORS’ REPORT OF RAK

SECURITY AND SERVICES (PVT.) LTD
Dear shareholders,
The Board of Directors of RAK Security and Services (Pvt.) Ltd is pleased to
present this Directors’ Report, along with the audited financial statements
of the Company for the year ended 31 December 2019, and the Auditors’
Report thereon, for your valued consideration, approval and adoption.
Principal activities (Amount in BDT mn)
The principal activities of the Company comprises the Particulars 2019 2018
business of security guarding and facilities management
Sales 107.56 159.34
that include cleaning services, termite, pest control
and fumigation services, fire security services and Gross profit 16.36 22.20
setting-up manpower technical training establishments
for developing skilled workers for various fields Net profit after tax (1.22) 2.56
of construction and other public works. We also Earnings Per Share (Absolute BDT) (122.27) 256.25
provide pre-employment background verification
and immigration and visa documentation verification Net Operating Cash Flow Per
1,581.55 (961.92)
services, among others. Share (NOCFPS)
Net Asset Value (NAV) 36.99 43.32
Review of business Net Asset Value per share
3,698.58 4,332.50
(Absolute BDT)
The Company reported revenue of BDT 107.56 mn
in 2019, against BDT 159.34 mn in 2018. The decline
was primarily due to income from labour services
Dividend
moderating by 32.50%, as compared to 2018. The The Board of Directors of the Company is pleased
Company’s net profit after tax stood at BDT (1.22) mn, to recommend cash dividend @ 500% of the paid
against BDT 2.56 mn in 2018. up capital of the Company for the year 2019. While
recommending the dividend, the Board of Directors
Operating results has considered the operational performance, business
results, assets as at that date and working capital
The operating results of the Company for the year requirements for the future. The Company paid cash
ended 2019 are as follows: dividend @ 500% of paid-up capital for the year 2018.
Auditors authorities, shareholders, investors, bankers and

employees for their continuous commitment,
ACNABIN, Chartered Accountants (an independent cooperation, confidence and support in enabling the
member of BAKER TILLY INTERNATIONAL), shall retire Company to attain its objectives.
at the 13th Annual General Meeting and, being eligible,
have offered themselves for reappointment. The Board For and on behalf of the Board of Directors,
also recommended their re-appointment for the year
2020. Remuneration of the Auditor will be fixed by the
shareholders at the 13th Annual General Meeting.
Post Balance Sheet events

There are no material events or developments that
have occurred after the balance sheet/reporting date,
the non-disclosure of which could affect the ability
of the users of these financial statements to make an
appropriate evaluation.
Appreciation (Abdallah Massaad)

The Board would like to take this opportunity to place Chairman
on record their sincere appreciation to the Government
February 04, 2020
RAK Security and Services (Pvt) Limited
AUDITORS’ REPORT AND

STATEMENT OF FINANCIAL
RAK Security and Services (Pvt) Ltd.
INDEPENDENT AUDITOR’S REPORT

TO THE SHAREHOLDERS OF RAK
SECURITY AND SERVICES (PVT) LTD
Opinion control as management determines is necessary to

enable the preparation of financial statements that are
free from material misstatement, whether due to fraud
We have audited the accompanying financial
or error.
statements of RAK Security and Services (Pvt) Ltd which
comprise the statement of financial position as at 31 In preparing the financial statements, management
December 2019, and the statement of profit or loss and is responsible for assessing the Company’s ability to
other comprehensive income, statement of changes in continue as a going concern, disclosing, as applicable,
equity and statement of cash flows for the year then matters related to going concern and using the going
ended, and notes to the financial statements, including concern basis of accounting unless management either
a summary of significant accounting policies. intends to liquidate the Company or to cease operations
or has no realistic alternative but to do so.
give true and fair view, in all material respects, of the Those charged with governance are responsible for
financial position of the Company as at 31 December overseeing the Company’s financial reporting process.
2019, and of its financial performance and its cash
flows for the year then ended in accordance with Other Information
International Financial Reporting Standards (IFRSs) as
explained in note 03. Management is responsible for the other information.
The other information comprises the Directors’ Report,
Basis for Opinion which we could not obtain prior to the date of this
auditors’ report, which is expected to be made available
We conducted our audit in accordance with International to us after that date.
Standards on Auditing (ISAs). Our responsibilities under
those standards are further described in the Auditors’ Our opinion on the financial statements does not cover
Responsibilities for the Audit of the Financial Statements the other information and will not express any form of
section of our report. We are independent of the assurance conclusion thereon.
company in accordance with the International Ethics In connection with our audit of the financial statements,
Standards Board for Accountants’ Code of Ethics for our responsibility is to read the other information
Professional Accountants (IESBA Code), and we have identified above and, in doing so, consider whether the
fulfilled our other ethical responsibilities in accordance other information is materially inconsistent with the
with the IESBA Code. We believe that the audit evidence financial statements or our knowledge obtained in the
we have obtained is sufficient and appropriate to audit, or otherwise appears to be materially misstated.
provide a basis for our opinion.
If based on the work we have performed on the other
Responsibilities of Management and information that we obtained prior to the date of this
Those Charged with Governance for auditors’ report, we conclude that there is a material
misstatement of this other information, we are required
the Financial Statements and Internal to report that fact. We have nothing to report in this
Controls regard.
Management is responsible for the preparation and fair When we read the Directors’ Report, if we conclude
presentation of the financial statements in accordance that there is a material misstatement therein, we are
with IFRSs as explained in note 03, and for such internal required to communicate the matter to those charged
with governance and take appropriate actions in disclosures are inadequate, to modify our opinion. Our
accordance with ISAs. conclusions are based on the audit evidence obtained
up to the date of our auditor’s report. However, future
Auditor’s Responsibilities for the Audit events or conditions may cause the Company to cease
to continue as a going concern.
of the Financial Statements
• Evaluate the overall presentation, structure, and content
Our objectives are to obtain reasonable assurance of the financial statements, including the disclosures,
about whether the financial statements as a whole and whether the financial statements represent the
are free from material misstatement, whether due underlying transactions and events in a manner that
to fraud or error and to issue an auditor’s report that achieves fair presentation.
includes our opinion. Reasonable assurance is a high • Obtain sufficient and appropriate audit evidence
level of assurance but is not a guarantee that an audit regarding the financial information of the entities or
conducted in accordance with ISAs will always detect a business activities within the company to express an
material misstatement when it exists. Misstatements can opinion on the financial statements. We are responsible
arise from fraud or error and are considered material if, for the direction, supervision, and performance of
individually or in the aggregate, they could reasonably the audit. We remain solely responsible for our audit
be expected to influence the economic decisions of opinion.
users taken on the basis of these financial statements.
We also provide those charged with governance with
professional judgment and maintain professional skepticism
throughout the audit. We also:
a statement that we have complied with relevant
• Identify and assess the risks of material misstatement of communicate with them all relationships and other
the financial statements, whether due to fraud or error, matters that may reasonably be thought to bear on
design and perform audit procedures responsive to our independence, and where applicable, related
those risks, and obtain audit evidence that is sufficient
safeguards.
and appropriate to provide a basis for our opinion. The
risk of not detecting a material misstatement resulting
from fraud is higher than for one resulting from error,
Report on other Legal and Regulatory
as fraud may involve collusion, forgery, intentional Requirements
omissions, misrepresentations, or the override of
internal control. In accordance with the Companies Act 1994, we also
report the following:
• Obtain an understanding of internal control relevant to
the audit in order to design audit procedures that are a) we have obtained all the information and
appropriate in the circumstances. explanations which to the best of our knowledge
and belief were necessary for the purposes of our
• Evaluate the appropriateness of accounting policies used
audit and made due verification thereof;
and the reasonableness of accounting estimates and
related disclosures made by management. b) in our opinion, proper books of account as
• Conclude on the appropriateness of management’s use required by law have been kept by the Company
of the going concern basis of accounting and, based so far as it appeared from our examination of
on the audit evidence obtained, whether a material these books;
uncertainty exists related to events or conditions
that may cast significant doubt on the Company’s c) the statement of financial position and statement
ability to continue as a going concern. If we conclude of profit or loss and other comprehensive income
that a material uncertainty exists, we are required to dealt with by the report are in agreement with the
draw attention in our auditor’s report to the related books of account and returns.
disclosures in the financial statements or, if such
ACNABIN

31 Dec 2019 31 Dec 2018

Notes Taka Taka
Assets
Property, plant and equipment 4 3,536,216 3,822,386
Right of use assets 5 537,544 -
Investment 6 1,275 1,275
Deferred tax asset 7 153,674 153,674
Total non-current assets 4,228,709 3,977,335
Trade receivables 8 26,167,019 44,403,057

Advance, deposit and prepayment 9 2,424,503 1,069,004
Advance income tax 10 19,154,981 17,694,014
Cash & bank balances 11 12,542,447 2,492,668
Total current assets 60,288,950 65,658,743
Total assets 64,517,659 69,636,078
Equity
Share capital 12 1,000,000 1,000,000
Retained earning 35,985,823 42,325,057
Total equity 36,985,823 43,325,057
Liabilities
Trade & other payables 13 1,073,906 838,011
Lease liability 14 622,836 -
Provision for expenses 15 8,914,129 8,552,045
Provision for income tax 16 16,920,965 16,920,965
Total current liabilities 27,531,836 26,311,021
Total equity and liabilities 64,517,659 69,636,078

Dated, 04 February 2020 ACNABIN


31 Dec 2019 31 Dec 2018

Notes Taka Taka
Sales 18 107,560,821 159,347,505

Cost of service 19 (91,198,028) (137,149,296)
Gross profit 16,362,793 22,198,209
Other income 20 200 200

Impairment loss on trade receivable 21.1 - (439,069)
Marketing expenses 22 (3,485,294) (3,154,245)
(17,603,546) (18,819,040)
Profit from operating activities (1,240,753) 3,379,169
Finance income 23 134,885 86,135

Finance expenses 24 (116,834) (30,557)
18,051 55,578
Profit before income tax (1,222,702) 3,434,747
Income tax 25 - (1,025,899)
Deferred tax 7 - 153,674
Profit for the year (1,222,702) 2,562,521
Total comprehensive income for the year (1,222,702) 2,562,521
Basic earnings per share (par value Tk 100) (122.27) 256.25

Dated, 04 February 2020 ACNABIN


Share Capital Retained earnings Total
Taka Taka Taka

Other comprehensive income - - -
Transaction with the shareholders
Cash dividend (2017) - (4,000,000) (4,000,000)

Adjustment for lease liability (116,531) (116,531)
Profit for the year - (1,222,702) (1,222,702)
Other comprehensive income
Transaction with the shareholders

Cash dividend (2018) - (5,000,000) (5,000,000)


31 Dec 2019 31 Dec 2018
Taka Taka
Cash flow from operating activities

Cash received from customer and others 125,796,859 152,645,791
Cash paid to suppliers and employees (108,655,212) (157,950,701)
Cash generated from operating activities 17,141,647 (5,304,910)
Interest received from Bank 134,885 86,135

Payment of corporate income tax (1,460,967) (4,400,395)
Net cash (used in)/from operatingting activities 15,815,565 (9,619,170)
Cash flow from investing activities

Acquisition of fixed assets (31,500) -
Dividend received 200 200
Net cash (used in)/from investing activities (31,300) 200
Cash flow from financing activities

Finance Charge (26,485) (30,557)
Payment of lease liability (708,000) -
Dividend Payment (5,000,000) (4,000,000)
Cash and cash equivalents as at 01 January 2,492,668 16,142,195
Cash and cash equivalents as at 31 December 12,542,447 2,492,668


As at and for the year ended 31 December 2019
1. Introduction
RAK Security and Services (Pvt) Ltd. is a Private Company Limited by shares incorporated in Bangladesh on 21 December
2006 under the Companies Act XVIII of 1994.The registered office of the company is situated at RAK Tower (8th Floor),
Plot No. 1/A, Jasimuddin Avenue, Sector No. 03, Uttara, Dhaka 1230.
2. Nature of Business
The main objects of the company is to carry on the business of security guarding, cleaning services, termite and pest
control services, fumigation services and setting up manpower technical training establishments for creation of skilled
workers in various fields of construction and public works. Pre-employment back ground verification and immigration &
Visa documents verification services, fire safety services etc.
2.1 Authorization for issue

The Company has also complied with The Income Tax Ordinance 1984, The Income Tax Rules 1984, The Value Added
Tax and Supplementary duty Act 2012, The Value Added Tax and Supplementary duty Rules 2016 and Bangladesh Labor
Law 2006 as amended in 2018.
3. Significant Accounting Policies
3.1 Accounting Convention and Basis

The financial statements have been prepared on a going concern concept under historical cost convention in accordance
with Generally Accepted Accounting Principles as laid down in the International Accounting Standards (IASs)/ International
Financial Reporting Standards (IFRSs), applicable to the company.
The disclosures of information have been made in accordance with the requirements of the above mentioned standards
and in compliance with Companies Act 1994 and the statement of financial position and statement of profit or loss and
other comprehensive income have been prepared according to IAS-1 (Presentation of Financial Statements) based on
accrual basis and other applicable laws and regulations.
3.2 Other Regulatory Compliances

The company has also complied with The Income Tax Ordiance 1984, The Income Tax Rules 1984, The Value Added Tax
and Supplenentary duty Act 2012, The Value Added Tax and Supplenentary duty Rules 2016 and Bangladesh Labour Law
2006 as amemted in 2018
3.3 Integral Components of the Financial Statements
The financial statements of the Company include the following components:-
a. Statement of Financial Position as at 31 December 2019.

b. Statement of Profit or Loss and Other Comprehensive Income for the year ended 31 December 2019.
c. Statement of Changes in Equity for the year ended 31 December 2019.
d. Statement of Cash Flows for the year ended 31 December 2019.
e. Notes, Comprising a Summary of Significant Accounting Policies and Other Explanatory Information.
3.4 Property, Plant & Equipments (PPE)
with IFRS 5 and the date that assets is derecognised.

As at and for the year ended 31 December 2019
Rates of depreciation on various classes of property, plant and equipment are as under:
Category Rate
Furniture & fixtures 10%
Tools & appliances 20%
Vehicles 20%
Office Equipments 10%
Depreciation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.
Land is not depreciated as it is deemed to have an indefinite life.
3.5 Advances, Deposits & Prepayments
Advances are initially measured at cost. After initial recognition, advances are carried at cost less deductions, adjustments
or charges to other account heads.
Deposits are measured at payment value.
Pre-payments are initially measured at cost. After initial recognition, pre-payments are carried at cost less charges to
Statement of Profit or Loss and other Comprehensive Income.
3.6 Cash and Cash Equivalents
Cash and cash equivalents include cash in hand and cash at bank which are available for use by the Company without any
restriction. There is an insignificant risk of changes in value of these current assets.
3.7 Employees' Benefit Schemes
The Company Maintains both defined contribution plan and defined benefit plan for its eligible permanent employees.
Defined Contribution Plan (Provident Fund)
Define contribution plan is a post employment benefit plan under which the Company provides benefits to one or
more employees. The recognised Employee Provident Fund is considered as defined contribution plan as it meets the
recognition criteria specified for this purpose. All permanent employees contribute 10 percent of their basic salary to
the provident fund and the Company also makes equal contribution to the fund. These are administered by the Board of
trustees. The contributions are invested separately from the Company’s assets.
Contribution to defined contribution plan is recognised as an expense when as employee has rendered services to the
Company. The legal and constructive obligation is limited to the amount its agrees to contribute to the fund.
Defined Benefit Plan (Gratuity Fund)
obligation in respect of defined benefit plants is calculated separately for each plan by estimating the amount of future
benefit that employees have earned in return for their service in the current and prior years.
service for a year of more than six months, salary of minimum 30 days, or salary of 45 days for a continuous service for
respective annual statement of profit or loss and other comprehensive income over the year of employment.
3.8 IFRS 9 Financial Instruments


ii. Impairment
require considerable judgment about how changes in economic factors affect ECLs, which will be determined on a
probability-weighted basis. The new impairment model will apply to financial assets measured at amortised cost or
FVOCI, except for investments in equity instruments, and to contract assets.
• 12-month ECLs: these are ECLs which result from possible default events within the 12 months after the reporting
date; and
• Lifetime ECLs: these are ECLs which result from all possible default events over the expected life of a financial
instrument.
ii. Impairment
initial recognition and 12-month ECL measurement applies if it has not. An entity may determine that a financial asset’s credit
always applies for trade receivables and contract assets without a significant financing component; the company has a choice
Actual credit losses will be adjusted to reflect differences between economic conditions during the year over which the
ii. Hedging
The company will avail of the exemption allowing it not to restate comparative information for prior years with respect to
classification and measurement (including impairment) changes. Impact of IFRS 9 shown in note no 27.1 (b).
3.9 IFRS 15 Revenue from Contracts with Customers
i. Sales of goods
cumulative revenue recognised will not occur. As a consequence, for those contracts for which the Group is unable to

Based on the Group’s assessment, the timing of revenue recognition from sale of goods are broadly similar. Therefore, the
Group does not expect the application of IFRS 15 to result in significant differences in the timing of revenue recognition
for these sales.
ii.Rendering of services
selling prices. The stand-alone selling prices will be determined based on the list prices at which the Group sells the
Based on the Group’s assessment, the fair value and the stand-alone selling prices of the services are broadly similar.
Therefore, the Group does not expect the application of IFRS 15 to result in significant differences in the timing of revenue
recognition for these services.
3.10 IFRS 16 Leases
IFRS 16, published in January 2016 replaces the previous guidance in IAS 17 Leases. Under this revised guidance, leases
will be brought onto companies’ balance sheets, increasing the visibility of their assets and liabilities. It further removes the
classification of leases as either operating leases or finance leases treating all leases as finance leases from the perspective
of the lessee, thereby eliminating the requirement for a lease classification test. The revised guidance has an increased
focus on who controls the asset and may change which contracts are leases. IFRS 16 is effective for annual periods
beginning on or after 1 January 2019.
In the current year, the company, for the first time, has applied IFRS 16 Leases (as issued by the IAS in January 2016) in its
effective date.
adoption of IFRS 16 on the company’s financial statements is described below.
The date of initial application of IFRS 16 for the company is 1 January 2019
The Group has applied IFRS 16 using the modified retrospective approach, without restatement of the comparative information

IFRS 16 changes how the company accounts for leases previously classified as operating leases under IAS 17, which were
off-balance-sheet.
Applying IFRS 16, for all leases (except as noted below), The company

office furniture), the Company has opted to recognize a lease expense on a straight-line basis as permitted by IFRS 16.
This expense is presented within rent expenses in the statement of profit or loss.

of residual value guarantees provided by a lessee to a lessor. IFRS 16 requires that the company recognizes as part of its
lease liability only the amount expected to be payable under a residual value guarantee, rather than the maximum amount
guaranteed as required by IAS 17. This change did not have a material effect on the Company’s financial statements.
3.11 Provision for taxation
“Corporate tax“
Corporate tax provision at the rate of @35% is made for the Current year.
Deferred tax
There is no such timing difference between Profit as per Income Tax ordinance and accounting profit as per financial
statements, hence no Deferred Tax liabilities/Assets calculated as per IAS-12 for the year ended 31 December 2019.
3.12 Earnings per share (EPS)

The Company calculates Earning per Share (EPS) in accordance with IAS 33: Earning per Share, which has been shown on the
face of Statement of Profit or Loss and Other Comprehensive Income, and the computation of EPS is stated in related note.

The following new standards are effective for annual periods beginning from 1 January 2018/2019 and have been applied
in preparing these financial statements.

IFRS 16 Leases
3.14 General
3.14.1 Figures in these notes and annexed financial statements have been rounded off to the nearest Taka.
Previous year’s figures have been regrouped and/or rearranged wherever considered necessary for the purpose of current
3.14.2
year’s presentation.
4. Property, plant and equipment
31 Dec 2019 Amount in Taka
COST DEPRECIATION
Sale/ Balance Net book
Balance Addition disposal Balance as at Charged Adjustment as at value as at
as at during the during the 31 Decem- Balance as at during the during the 31 Decem- 31 Decem-
Particulars 01 Jan 2019 year year ber 2019 Rate 01 Jan 2019 year year ber 2019 ber 2019
Land 2,309,220 - - 2,309,220 - - - - - 2,309,220
Furniture &
915,379 8,000 - 923,379 10% 437,061 76,564 - 513,625 409,754
fixtures
Office
1,837,000 23,500 - 1,860,500 10% 905,991 140,553 - 1,046,544 813,956
equipments
Tools &
126,255 - - 126,255 20% 121,672 1,300 - 122,972 3,283
appliances
Vehicles 2,389,725 - - 2,389,725 20% 2,290,469 99,253 - 2,389,722 3
Total 7,577,579 31,500 - 7,609,079 3,755,193 317,670 - 4,072,863 3,536,216

COST DEPRECIATION
Sale/
Balance Addition disposal Charged Adjustment Balance as Net book
as at during the during the Balance as at Balance as at during the during the at 31 Dec value as at
Particulars 01 Jan 2018 year year 31 Dec 2019 Rate 01 Jan 2018 year year 2018 31 Dec 2018
Land 2,309,220 - - 2,309,220 - - - - - 2,309,220
ANNUAL REPORT 2019

Furniture &
915,379 - - 915,379 10% 355,095 81,966 - 437,061 478,318
fixtures
Office
1,837,000 - - 1,837,000 10% 763,532 142,459 - 905,991 931,009
equipments
Tools &
126,255 - - 126,255 20% 120,372 1,300 - 121,672 4,583
appliances
Vehicles 2,389,725 - - 2,389,725 20% 1,956,924 333,545 - 2,290,469 99,256
251
Total 7,577,579 - - 7,577,579 3,195,923 559,270 - 3,755,193 3,822,386
252

COST DEPRECIATION
Net book
Sale/ Balance
Particulars Balance Addition Charged Adjustment Balance as at value as at 31
disposal as at 31 ‘Balance as at December
as at during during the during the 31 December
during December 01 Jan 2019 2019
01 Jan 2019 the year year year 2019
the year 2019
Office Building 2,345,647 - - 2,345,647 1,221,691 586,412 - 1,808,103 537,544
Total 2,345,647 - - 2,345,647 1,221,691 586,412 - 1,808,103 537,544
Office building agreement starts from December 01, 2016 and effective for 4 years.
31 DEC 2019 31 DEC 2018

Taka Taka
6. Investment
Investment in RAK Power Pvt. Ltd. 1,275 1,275
1,275 1,275
7. Deferred tax asset
Balance as at 1 January
Deferred tax income 153,674 153,674
Balance as at 31 December 153,674 153,674
Carrying amount on Taxable/

the date of statement of Tax base (deductible)
financial position temporary difference
Taka Taka Taka
Trade receivables 44,403,057 44,842,126 (439,069)
(439,069)
Deferred tax asset (applying tax rate 35.00%) (153,674)

8. Trade Receivables
Trade receivables 26,606,088 44,842,126
26,606,088 44,842,126
Unrelated parties 311,779 311,779
Related parties 127,290 127,290
26,167,019 44,403,057
9. Advance, deposit and prepayment
Advance to employee 3,000 175,500

Advance to suppliers 1,000 470,670
Security Deposit 172,000 -
VAT Deposit 1,833,190 216,802
Insurance and Others 415,313 206,032
2,424,503 1,069,004
10. Advance income tax

Add. Paid during the year 1,460,967 4,400,394
19,154,981 23,846,704
Less: Assessment completed during the year - 6,152,690
31 DEC 2019 31 DEC 2018

Taka Taka

Year - 2019 1,386,968 -
Year - 2018 1,975,180 1,975,180
Year - 2017 7,767,254 7,767,254
Year - 2016 4,215,121 4,215,121
Year - 2015 3,736,458 3,736,458
Advance Tax Appeal 74,000 -
19,154,981 17,694,014
11. Cash and bank balances
Cash in hand 216,733 375,939
Cash at banks
DBBL (current account 117.110.4311) 1,696,977 1,517,575
DBBL (SND account 117.120.311) 10,394,673 -
Dhaka Bank Ltd. (current account 204.100.19318) 234,064 599,154
12,542,447 2,492,668
12. Share capital
Authorized capital:
1,000,000 Ordinary shares of Tk. 100 each 100,000,000 100,000,000
Issued, subscribed, called and paid up capital:

10,000 Ordinary shares of Tk. 100 each 1,000,000 1,000,000
Particulars of share-holdings are as follows:
Name of shareholders: No. of shares Value per share

RAK Ceramics
9,900 100 990,000 990,000
(Bangladesh) Ltd.
RAK Power Pvt. Ltd 100 100 10,000 10,000
Total 10,000 1,000,000 1,000,000
13. Trade and other payables
Other Payables
Advance from customers 952,059 720,242
Payable to employee 52,750 40,800
Tax deducted at source 60,000 73,000
VAT deducted at source 9,097 3,969
1,073,906 838,011
14. Lease Liability
Non- Current
Lease Liability 622,836 -
Less: Current portion of lease liability 622,836 -
- -
Current
Current portion of lease liability 622,836 -
Liability Schedule
Balance as Closing
Interest Decrease in
Particulars on Jan 01, Addition Payment Balance as on
Expenses lease liability
2019 Dec 31, 2019
Office Building 12,40,487 - 7,08,000 90,349 6,17,651 6,22,836
Total 12,40,487 - 7,08,000 90,349 6,17,651 6,22,836
31 DEC 2019 31 DEC 2018

Taka Taka
15. Provision for expenses
Satff cost 63,13,975 54,88,301

Audit fees 55,000 63,250
Legal and professional charges 25,000 28,750
Utilities bill 11,300 14,100
Temporary labour 25,08,854 29,57,644
89,14,129 85,52,045
16. Provision for income tax
Add. Provision made during the year - 10,25,899
1,69,20,965 2,30,73,656
Less: Assessment completed during the year - 61,52,691
Balance as at 31 December 1,69,20,965 1,69,20,965
Year 2015 37,36,458 37,36,458
Year 2016 42,15,122 42,15,122
Year 2017 77,67,254 77,67,254
Year 2018 12,02,131 12,02,131
Year 2019 - -
1,69,20,965 1,69,20,965
Since Company incurred Loss, tax provision has not been made during the period.
17. Employees' benefit payable
2019
Taka Taka Taka
41,93,412 28,57,240 70,50,652
Less: Payment made during the year 41,93,412 28,57,240 70,50,652
Provision and payment includes BDT. 597,768 as employee contibution paid to employee leaving company before being
eligible for provident fund and employer’s contribution reversed.
2018
Taka Taka Taka
40,22,748 30,98,931 71,21,679
Less: Payment made during the year 40,22,748 30,98,931 71,21,679
Provision and payment includes BDT. 516,106 as employee contibution paid to employee leaving company before being
eligible for provident fund and employer’s contribution reversed.
31 DEC 2019 31 DEC 2018
Taka Taka
18. Sales
Gross receipts from services 12,13,88,597 18,32,49,674

Less: Value added tax (VAT) 1,38,27,776 2,39,02,169
10,75,60,821 15,93,47,505
19. Direct expenses
Direct Wages (Note-19.1) 8,65,45,908 13,21,70,814

Security Training expenses (Note-19.2) 2,04,233 2,53,875
Other direct expenses (Note-19.3) 13,46,972 16,30,344
Verification expenses (Note-19.4) 31,00,915 30,94,263
9,11,98,028 13,71,49,296
19.1 Direct Wages
Salary and Wages 6,72,27,645 11,17,19,934

Overtime 1,21,32,083 1,29,30,801
Bonus 35,15,884 32,75,833
Gratuity 22,93,076 25,61,955
Group Life Insurance 3,20,724 3,51,070
8,65,45,908 13,21,70,814
19.2 Security training expenses
Staff welfare 2,01,423 2,43,250

Conveyance 2,810 10,625
2,04,233 2,53,875
19.3 Other direct expenses
Uniform expenses 13,46,972 16,30,344

13,46,972 16,30,344
19.4 Verification expenses
Staff Cost 16,45,536 15,66,249

Special Service Allowance 14,35,700 15,04,895
Mobile Bill 19,679 23,119
31,00,915 30,94,263
31 DEC 2019 31 DEC 2018

Taka Taka
20. Other income
Dividend income 200 200

200 200
21. Administrative expenses
Staff Cost (21.2) 94,45,948 92,84,924
Rent, rates and taxes 14,60,631 23,61,968
Repair and maintenance 8,16,070 7,66,000
Depreciation 3,17,670 5,59,270
Depreciation on right of use assets 5,86,412 -
Vehicle repair & maintenance 4,03,455 4,07,030
Legal and professional fees 85,725 4,98,900
Other expenses 1,86,955 2,01,709
1,41,18,452 1,52,25,926
Rent, rates and taxes includes rent expenses for short term lease for BDT. 1,299,560 and related government levis wherever
applicable. Details of the short term lease is shown in note no 26. No low value item exists at the reporting period.
Unrelated parties - 3,11,779

Related parties - 1,27,290
- 4,39,069
New classification of financial assets shown in note 27.1(b). Impairment loss allowance has not been considered on bank
balance because business is confident to recover the full amount from the bank.
21.2 Staff Cost
Salary 65,35,038 60,58,183
Bonus 8,24,011 9,68,333
Staff welfare 7,43,778 8,93,631
Gratuity 4,72,982 4,50,396
Conveyance 4,93,811 5,31,580
Group Life Insurance 5,526 28,741
94,45,948 92,84,924
22. Marketing expenses
Staff Cost (22.1) 15,87,035 14,88,815

Travelling expenses 37,575 -
Conveyance 8,14,882 8,20,221
Telephone and Telex Expenses 9,214 9,756
Promotional expenses 10,36,588 8,35,453
34,85,294 31,54,245
31 DEC 2019 31 DEC 2018

Taka Taka
22.1 Staff Cost
Salary 12,63,167 11,65,500

Bonus 1,59,200 1,66,500
Employer's contribution to provident fund 71,640 68,040
Gratuity fund 91,182 86,580
Group Life Insurance 1,846 2,195
15,87,035 14,88,815
23. Finance income
Interest on bank account (SND) 1,34,885 86,135

1,34,885 86,135
24. Financial expenses
Interest expenses against lease liability 90,349 -

Bank charges 26,485 30,557
1,16,834 30,557
25. Income tax
Current year - 1,202,131

Prior year adjustment - (176,232)
- 1,025,899
26. Short-term lease expenses
Nature of the lease lease term Allocation Rent payment
Rented accommodation <1 year Admin 12,99,560

12,99,560

The management has overall responsibility for the establishment and oversight of the Company’s risk management
framework. The Company’s risk management policies are established to identify and analyse the risks faced by the
policies, procedures and systems are reviewed regularly to reflect changes in market conditions and the Company’s
• Credit risk
• Liquidity risk
27.1 Credit risk

contractual obligations, and arises principally from the Company’s trade receivables and other receivables.
receivable are mainly related to local receivables. The Company’s exposure to credit risk on accounts receivables is
financial position.


USD Amount in Taka
As at Dec 31 As at Dec 31 As at Dec 31 As at Dec 31
2019 2018 2019 2018
Trade receivables
Customer-Local - - 2,61,67,019 4,44,03,057
Customer-Export - - - -
- - 2,61,67,019 4,44,03,057
- - - -
Cash equivalents - - 1,25,42,447 24,92,668
b) Impact of IFRS 9
New Original New

Original classification classification carrying carrying
Financial assets Note Impairment
under IAS 39 under amount under amount
IFRS 9 IAS 39 under IFRS 9
Trade & other
8 Loan & receivable Amortized cost 1,99,16,791 1,94,77,722 4,39,069
receivable-unrelated
Cash & cash equivalent 11 Loan & receivable Amortized cost 1,25,42,447 1,25,42,447
i Trade and other receivables and due from related parties that were classified as loans and receivables under IAS
39 are now classified at amortised cost. Impairment over these receivables was recognised in the current period
on transition to IFRS 9.
ii Cash and cash equivalents that were classified as loans and receivables under IAS 39 are now classified at
amortised cost. Impairment over these cash & cash equivalent was recognised in the current period on
transition to IFRS 9.
iii Since trade receivable aging has improved, no provision is required during the period as developed policy of the
Company as per IFRS 9.
Amount in Taka
As at Dec 31 As at Dec 31
2019 2018
c) Aging of receivables
The aging of trade receivables:

Current (not due) 89,50,458 2,67,31,290
Overdue by 0 - 90 days 95,35,042 68,60,033
Overdue by 91 - 180 days 47,20,387 56,87,417
Overdue by 180 - 365 days 8,02,728 45,91,401
More than 365 days 25,97,473 4,89,423

27.2 Liquidity risk

when become due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to
the Company’s reputation.
obligation and accordingly arrange for sufficient liquidity/fund to make the expected payment within due date. Moreover,
the Company seeks to maintain short term lines of credit with scheduled commercial banks to ensure payment of
obligations in the event that there is insufficient cash to make the required payment. The requirement is determined in
advance through cash flows projections and credit lines facilities with banks are negotiated accordingly.
As at December 31, 2019
Contractual Within 12 months More than 12

Carrying amount
cash flows or less months
Taka Taka Taka Taka

10,73,906 10,73,906 10,73,906 -
As at December 31, 2018
Contractual Within 12 months More than 12

Carrying amount
cash flows or less months
Taka Taka Taka Taka

8,38,011 8,38,011 8,38,011 -
28. Related party disclosure under IAS-24

List of related parties with whom transaction have taken place and their relationship as identified and certified by management:
Amounts in Taka
Security/
Bad debts Purchase / Sales of goods Outstanding Dividend
Name of related party Relationship Guarantee Period
Status Service / Services Receivables income
status
RAK Ceramics (Bangladesh) Current Year - 5,21,60,129 65,36,365 -

Parent Company Unsecured Nil
Limited Previous Year - 9,71,01,693 2,11,25,978 -
Current Year - 14,94,273 1,63,536 200
RAK Power Pvt. Ltd. Fellow Subsidiary Unsecured Nil
Previous Year - 15,23,026 1,76,870 200
Current Year - 10,75,506 1,17,516 -
M/s. Ekramuzzaman Other related party Unsecured Nil
Previous Year - 10,33,559 99,112 -
Current Year - 16,58,568 2,93,374 -
Mohammed Trading Other related party Unsecured Nil
Previous Year - 17,41,778 2,33,643 -
Current Year - 18,19,444 4,89,878 -
Julphar Bangladesh Ltd. Other related party Unsecured Nil
Previous Year - 21,29,440 4,34,166 -
Current Year - 64,67,577 29,57,865 -
RAK Paints Pvt. Limited Other related Party Unsecured Nil
Previous Year - 65,26,166 44,46,948 -
Current Year - 19,92,941 14,69,000 -
RAK Consumer Products Ltd. Other related Party Unsecured Nil
Previous Year - 17,06,992 23,28,994 -
Rakeen Development Pvt. Current Year - 69,97,737 40,50,134 -
Limited Previous Year - 39,03,579 17,81,065 -
Current Year - 7,13,807 4,25,058 -
Star Ceramics Pvt. Limited Other related party Unsecured Nil
Previous Year - 45,35,788 8,71,634 -
ANNUAL REPORT 2019

Current Year - 3,25,089 28,62,456 -
Star Porcelain Pvt. Ltd. Other related party Unsecured Nil
Previous Year - 29,30,746 43,42,524 -
Current Year - 9,88,098 90,982 -
Kea Printing and Packaging Ind. Other related party Unsecured Nil
Previous Year - 9,88,507 3,78,602 -
261
During the period, Board meeting fees of Taka 4,000 was paid to the board members for attending the Board meetings.

29. Number of employees

The number of employees engaged for the period who received total remuneration of Taka 60,000 and above per annum
at reporting date was as follows;
2019 2018
Number of employees 357 356

30. Earnings per share (EPS)
Profit for the period (12,22,702) 25,62,521
No. of ordinary equity shares 10,000 10,000
Weighted average no. of equity shares outstanding (Note 12) 10,000 10,000
Earnings per share (EPS) for the year (122.27) 256.25
Diluted earnings per share for the year (122.27) 256.25
Net assets value per share 3,698.58 4,332.51
Net operating cash flow per share 1,581.56 (961.92)
days in the year.
Outstanding shares 10,000 10,000
10,000 10,000
years.
Though there was decrease in the revenue of the company as compared to previous year and the normal increase of
general expenses, which resulted in a reduction of net profit for the year.
30.4 Reason of deviation of net operating cash flow per share:
The company registered improvement in cash inflows from customers due to enhanced control on customer credit as
well as decrease in advance tax deposits as a resultant of lower income in the period as compared to same period previous
year.

The Board of Directors of RAK Security and Services (Pvt) Ltd. , in its meeting held in February 04, 2020, has unanimously
recommended cash dividend @ 500% of the paid up capital of the company for the year ended 31 December 2019
equivalent to BDT. 5,000,000 to be distributed as cash dividend among shareholders. The dividend is subject to final
approval by the shareholders at the forthcoming 31 March 2020 Annual General Meeting of the Company.
STATEMENT PURSUANT TO SECTION 186(1)(E) OF

THE COMPANIES ACT 1994
R.A.K. Security and Services

Name of the subsidiary RAK Power Pvt. Ltd. (Pvt.) Ltd.
RAK Ceramics RAK Ceramics

Name of the holding company
(Bangladesh) Limited (Bangladesh) Limited
2,049,990 ordinary shares of 9,900 ordinary shares of
Holding Company’s interest
Tk.100 each fully paid up Tk.100 each fully paid up
Extent of holding 99.99% 99.00%
The ‘financial year’ of the subsidiary company ended on December 31, 2019 December 31, 2018
Net aggregate amount of the subsidiary company’s profits/

BDT. 506.25 BDT. 12.00
(losses) dealt with in the holding company’s accounts
For the subsidiary’s aforesaid financial year BDT. 82.00 BDT. 5.00
For the previous financial years since it became subsidiary BDT. 424.25 BDT. 7.00
Net aggregate amount of the subsidiary company’s profits/

BDT. 119.00 Nil
(losses) not dealt with in the holding company's accounts
For the subsidiary’s aforesaid financial year BDT. Nil Nil
For the previous financial years since it became subsidiary BDT. 119.00 Nil
Changes, if any, in the holding company’s interest in the

subsidiary between the end of the financial year of the No such changes No such changes
subsidiary and that of the holding company
Material changes, if any, between the end of the financial
No material changes No material changes
year of the subsidiary and that of the holding company
GLOSSARY
• Accounts payable - Accounts payable represents • Cash basis of accounting- A method of accounting
incurred expenses the company expects to pay within where only actual cash inflows and cash outflows are
one year. It is recorded as part of current liabilities on the recorded, i.e. when payment is received or made. This
balance sheet. method is used when preparing the cash flow statement.
• Accounts receivable - Accounts receivable represents • Cash flow statement- A financial statement that records
uncollected revenues the company expects to receive a company’s actual cash inflows and cash outflows
within one year. It is recorded as part of current assets over a defined period of time. It includes three sections:
on the balance sheet. operating cash flow, investing cash flow, and financing
cash flow.
• Accrual accounting system - Under this system,
revenues are recorded when earned and expenses are • Contingent liabilities- A potential liability dependent on
recorded when incurred. Therefore, earned revenues uncertain future events which are beyond the control of
may include sales on credit for which you have yet to the company.
receive cash and expenses may include bills that you
have not yet paid. This method is used when preparing • Contributed capital- Money invested in a company by
the income statement and balance sheet. its owners/shareholders. Reported as part of owners’
equity on the balance sheet.
• Accumulated depreciation- The cumulative depreciation
of an asset to the date of the current financial year. • Corporate social responsibility report- A report on
how the company manages its business processes to
• Accumulated profits- The amount of past years profit produce an overall positive impact
not paid in dividends. Sometimes referred to as retained
profit. In contrast, losses from previous years not • Cost of goods sold- Also known as Cost of Sales, this
absorbed by past years profit are accumulated losses. represents all the expenses directly related to the making
and storing of a company’s goods, such as raw materials,
• Annual report- A report published yearly by all publicly- warehousing, and direct labor costs. Doesn’t exist for
held companies that details the financial condition of service companies.
the company and includes the balance sheet, income
statement, cash flow statement, and other relevant • Cost of sales- Also known as Cost of Goods Sold, this
information. represents all the expenses directly related to the making
and storing of a company’s goods, such as raw materials,
• Asset revaluation- The application of an accounting warehousing, and direct labor costs. Doesn’t exist for
policy choice, whereby the monetary measure of the service companies.
asset is the amount for which it could be exchanged
between knowledgeable, willing parties in an arms- • Current assets- Assets the company plans to convert to
length transaction. cash, sell, or use during the coming year, including cash,
accounts receivable, and inventory on hand.
• Assets - The value of everything a company uses to
conduct business, such as cash, equipment, land, • Current assets- Cash and cash equivalents and assets
inventories, office equipment, and money owed to the which are expected to be turned into cash in the next year.
company by customers and clients.
• Current liabilities - Amounts which the company is
• Assets Items of value which the company can trade or obliged to pay to others in the next year.
use in its business.
• Depreciation - A method used to account for the
• Balance sheet- A financial statement that gives a diminishing value of an asset over the time it is used and
snapshot of a company’s financial situation at a particular to match profit with the expenses it took to generate
point in time and lists its different assets, liabilities, and that profit. Registered as a non-cash expense.
owners’ equity.
• Direct method- A method of arriving at net operating • Income tax- Tax levied by the government for income
cash flow by adjusting each item on the income and part of the expenses deducted from revenues when
statement from the accrual basis of accounting to the arriving at net income on the income statement.
cash basis of accounting.
• Indirect method- A method of arriving at net operating
• DSE listing rules - Listing rules govern the admission cash flow by adjusting the net income on the income
of companies to the official list of listed companies, statement for non-cash revenues and expenses. Also
quotation of their shares, suspension of those shares called the reconciliation method.
from quotation and removal of companies from the
official list. The listing rules also govern disclosure and • Interest expense- Represents all interest paid by the
some aspects of a listed company’s conduct. company for loans it incurred and is part of the expenses
deducted from revenues in the process of arriving at net
• EBIT (Earnings before interest and taxes)- Amount income on the income statement.
calculated by subtracting cost of goods sold and
operating expenses from revenue on the income • Investing cash flow- Cash used for investing in long-
statement. Also called operating earnings. term assets, such as equipment or equity securities, and
cash received from the sale of such investments. The
• Emphasis of matter -A paragraph included in the auditor’s second part of calculating net cash flow on the cash
report that refers to a matter appropriately presented flow statement.
or disclosed in the financial report that, in the auditor’s
judgement, is of such importance that it is fundamental
• Investor relations- The section on a company’s website
to users’ understanding of the financial report.
under which you can find the company’s financial
statements.
• Employee benefits - Represent benefits offered to
employees of the company and can include short-term
(e.g. salaries and wages), long-term (e.g. long service
• Key management personnel Persons having authority and
responsibility for planning, directing and controlling the
leave), post-employment benefits (retirement benefits)
activities of the entity, directly or indirectly, including any
and termination benefits.
director (whether executive or otherwise) of that company.
• Equity - Total assets less total liabilities; includes share

• Liabilities - Debts a company owes to its creditors
capital, reserves and accumulated profit Expenses, the
and lenders. Liabilities Amounts which the company is
costs of deriving revenue.
obliged to pay to others.
• Expenses - Different costs, such as cost of goods sold,

• Liquidity - The case with which assets and liabilities may
operating expenses, and interest expense, incurred
be converted into cash.
during the normal operation of a business.
• Financing cash flow- Cash received or paid from

• Listed company- A company which is publicly listed on
borrowing money or paying back investors, creditors, a securities exchange like the Dhaka Stock Exchange.
and shareholders. The third part of calculating net cash
flow on the cash flow statement. • Long-term liabilities- The flip side of fixed assets, this
represents money the company needs to pay back in
• Fixed assets- Assets that the company does not plan to one or more years. It includes long-term bank loans,
turn into cash within one year or that would take longer mortgages, and bonds.
than one year to convert, including property, plants,
machinery, and patents. • Modified opinion - The auditor may issue a modified
opinion, being a qualified opinion, an adverse opinion or
• Gross profit- An item included on the income statement a disclaimer of opinion.
of production companies, calculated by deducting cost
of goods sold from revenues/sales generated from those • Net loss- The bottom line of the income statement. The
goods. It is used as a rough estimate of the company’s negative profit (loss) left after all expenses have been
profitability. deducted from revenues. If expenses are smaller than
revenues than we will refer to it as net profit.
• Income statement- A financial statement that specifies
the financial results of a business over a defined period • Net profit- The bottom line of the income statement.
of time and lists the revenue, expenses, and net income The profit left after all expenses have been deducted
of the business. Also referred to as the profit-and-loss from revenues. If expenses are larger than revenues,
statement, or P&L statement. then we refer to it as net loss.
• Operating cash flow- The first section of the cash • Reporting period - The period that the financial
flow statement, which includes cash generated by and statements cover. This will typically be one year (e.g. the
required for the daily operations of a business. year ended 31st December 20XX) but can be shorter or
longer in certain circumstances.
• Operating earnings- earnings left after subtracting
the cost of goods sold and operating expenses from a • Reserves surpluses arising from (for example)
company’s revenues on the income statement. Also revaluations of certain assets.
called EBIT (Earnings Before Interest and Taxes).
• Retained earnings- Money reinvested into the company
• Operating expenses- All costs incurred in operating the after all dividends are paid. Reported as part of owners’
business that are not directly related to the production equity on the balance sheet.
and storage of a company’s goods. They include
administrative salaries, research and development • Revenue earnings arising in the ordinary activities of
expenses, rents, and marketing costs. These cost are the company. Fees from the rendering of services are
included in the expense section of the income statement. examples of revenue, as is revenue from the sale of
goods.
• Owners’ equity- Owners’ equity equals all assets minus
all liabilities and represents the part of the company • Revenues- Money generated by the company by selling
owned by its shareholders. It generally includes its products or services to customers, before deducting
contributed capital and retained earnings. any expenses. It includes only revenues associated
with the company’s main operations and is sometimes
• P&L statement - A financial statement that specifies the referred to as sales.
financial results of a business over a defined period of
time and lists the revenue, expenses, and net income of • SEC- Securities and Exchange Commission, a Bangladesh
the business. Also referred to as the income statement or Governmental agency established by the Act to enforce
the profit-and-loss statement. all federal securities laws and protect investors from
fraud in the securities markets.
• Profit margin- An indicator of profitability. It is calculated
by dividing the company’s net income by its revenue • Share option - A contract that gives the holder of the
for the same period. The higher the margin the more option the right, but not the obligation, to subscribe to
profitable a company is. the company’s shares at a fixed or determinable price for
a specified period of time.
• Profit Surplus of revenues and other income over expenses.
• Share-based payment arrangement - An arrangement
• Profit-and-loss statement- A financial statement that between the company and another party (including an
specifies the financial results of a business over a defined employee) that entitles the other party, on satisfying
period of time and lists the revenue, expenses, and net any conditions specific to the arrangement, to shares or
income of the business. Also referred to as the income share options of the company, or cash or other assets of
statement or the P&L statement. the company that are based on the price of those shares
or share options.
• Remuneration of directors or executives will typically
include all or some of cash salary, shares or share • Sustainability report- A report that provides information
options, superannuation, annual and long service leave. about the company’s performance towards the goal of
sustainable development.
NOTICE OF THE 21ST ANNUAL GENERAL MEETING
Notice is hereby given that the 21st Annual General Meeting of RAK Ceramics
(Bangladesh) Limited will be held on Tuesday, March 31, 2020 at 10.00 a.m.
at Golf Garden, Army golf club, Dhaka cantonment, Dhaka-1206 to transact
the following businesses:
AGENDA
1. To receive, consider and adopt the Audited Financial Statements of the Company for the year ended 31 December
2019, together with the reports of the Auditor and the Directors.
2. To declare dividend for the year ended 31 December 2019.
3. To elect/re-elect Director(s) of the Company.
4. To appoint the Statutory Auditors of the Company for the year 2020 and fix their remuneration.
5. To appoint the Chartered Secretary in Practice (Compliance Auditors) of the Company for the year 2020 for
compliance certification on corporate governance and fix their remuneration.
6. To approve of entering into contract for supply of goods and materials with Mohammed Trading amounting to
1% (one percent) or above of the revenue for the immediately preceding financial year.
Dhaka, Bangladesh By order of the Board of Directors

Date: March 15, 2020
Sd/-
(Muhammad Shahidul Islam FCS)
Company Secretary
Notes:
1. The shareholders whose name appeared in the Share Register of the Company, or in the Depository Register on
the ‘Record Date’ (i.e. February 25, 2020), will be entitled to attend the 21st AGM and receive the dividend.
2. The Board unanimously recommended dividend @ 15% in cash of the paid-up capital of the Company for the
year 2019.
3. Shareholders may please note that pursuant to Corporate Governance Code, 2018 of the BSEC dated June 03,
2018, M/s. Jasmin & Associates, Chartered Secretaries & Corporate Affairs Consultants, has been recommended
by the Board of Directors to be appointed as Compliance Auditors of the Company for the year 2020 for
compliance certification on corporate governance subject to approval of the shareholders.
4. In order to comply with the BSEC notification No. BSEC/CMRRCD/2009-193/2/Admin/103 dated 05 February
2020, the Board of Directors has recommended to enter into contract for supply of goods and materials with
Mohammed Trading amounting to 1% (one percent) or above of the revenue for the immediately preceding
financial year subject to approval of the shareholders.
5. A shareholder entitled to attend and vote at the AGM may appoint a proxy to attend and vote in his/her behalf
(such a proxy shall be a shareholder of the Company). The Proxy Form, duly filled and stamped, must be deposited
at the Registered Office of the Company not later than 48 hours before the time fixed for the meeting.
6. Admission to the meeting will be strictly on production of the Attendance Slip.
7. Shareholders are requested to submit to the Registered Office of the Company on or before March 29, 2020,
their written option to receive dividend in the form enclosed with the Annual Report. If the shareholder fails
to submit such option within the stipulated time, the dividend will be paid-off as deemed appropriate by the
Company.
8. In case of non-receipt of the Annual Report of the Company sent through email, shareholders may collect the
same from the Registered Office of the Company, on or before March 29, 2020.
9. Brokerage houses/DPs are requested to provide the statement along with detail of their margin loan holders
on or before March 29, 2020, who are entitled to receive cash dividend of the Company for the year ended
December 31, 2019. The statement should include shareholder’s name, BO ID number, client-wise shareholding
position, gross dividend receivable, applicable tax rate, net dividend receivable, bank account number, routing
number, contact person, etc.
Shareholders may please note that no food or gift or other benefits in cash or kind shall be given at the
Annual General Meeting.
RAK Tower (7th, 8th & 9th floors), 1/A Jasimuddin Avenue, Sector-3, Uttara Model Town, Dhaka-1230
Proxy Form
I/We ..........................................................................................................................................................................................................................
..................................................................................................................................................................of...............................................................
.................................................................... being a shareholder of RAK Ceramics (Bangladesh) Limited, do hereby appoint
Mr/Ms..............................................................................................................of................................................................................................
as my/our proxy to attend and vote on my/our behalf at the 21st Annual General Meeting of the Company
to be held on Tuesday, March 31, 2020 at 10.00 a.m. at Golf Garden, Army golf club, Dhaka cantonment,
Dhaka-1206 and at any adjournment thereof.
As witness my/our hand this ............................................ day of .........................................2020
Revenue
..................................... Stamp ................................................
(Signature of Proxy) Taka 20/- (Signature of Shareholder)
BO ID No. BO ID No.
Notes:
1. A shareholder entitled to attend and vote in the AGM may appoint a Proxy to attend and vote on his/her behalf.
2. The Proxy Form, duly filed and stamped, must be deposited at the Registered Office of the Company not later than 48 hours
before the time fixed for the meeting.
3. Signature of the shareholder must be in accordance with the specimen signature recorded with the Company.
4. As per Articles of Association of the Company, no person shall act as a Proxy unless he himself is a shareholder of the Company.
................................................................... ................................................
(Authorized signature) (Signature verified)

Attendance Slip
I/We do hereby record my/our attendance at the 21st Annual General Meeting of the Company to be held
on Tuesday, March 31, 2020 at 10.00 a.m. at Golf Garden, Army golf club, Dhaka cantonment, Dhaka-1206,
Bangladesh.
Name of the Shareholder (s)/Proxy: ..........................................................................................................................................................
BO ID No. of Shareholder:
BO ID No. of Proxy:
No. of shares held by Shareholder: ....................................................................... ..............................................................

No. of shares held by Proxy holder: ...................................................................... Signature of Shareholder(s)/Proxy
Note: Please present this Attendance Slip at the registration counter on or before 10:00 am on the AGM date.
Option for Receiving Dividend
I/We ........................................................................................................................................................................................................................
................................................................................................of..............................................................................................................................
...................................................................................................................................................................................................................................
being a shareholder of RAK Ceramics (Bangladesh) Limited, do hereby exercise my/our option to receive
dividend in the following manner [please tick (√) in the applicable box]:
□ a) In the form of dividend warrant

□ b) Through online transfer to my/our bank account recorded with the Company
Information of the Shareholder(s):
BO ID No.
...............................................
Mobile number: ...................................... (Signature Verified by)
......................................................................
..........................................................
Signature of the Shareholder(s) Authorized Signatory of the Company
Notes:
1. The form, duly completed, must be deposited at the Registered Office of the Company on or before
March 29, 2020.
2. Signature of the shareholder(s) must be in accordance with the specimen signature recorded with the
Company.
3. Number of shares, bank account details and address shall be considered final as provided by CDBL on
record date, i.e. February 25, 2020.
4. Applicable service charge, if any, shall be borne by the shareholder(s) in case of payment of dividend
through online transfer to the shareholder(s) bank account, as per BSEC notification.

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ANNUAL REPORT 2019 1

ANNUAL REPORT 2019 1

LEGACY OF INSPIRING GENERATIONS

2020: Celebrating 20 glorious years of

03 RAK INTEGRATED REPORTING

Managing Director Members

Company Secretary Principal Bankers

Chairperson Legal Advisor

Members Registered Office

Room for imagination Quality standards

Our portfolio minimal wastages, while incorporating costs that are

CORE VALUES AND CODE OF CONDUCT

WE MAKE A DIFFERENCE THROUGH

OUR OUR OUR OUR OUR OUR

OUR INVESTMENT CASE

MARKET LEADERSHIP PORTFOLIO

FOCUS ON MARGIN ENHANCEMENT

RESILIENCE Strong cash flows and sound balance sheet

Resilient core business that is characterised by product,

• Not overtly reliant on consumer credit

Our goal has enabled us to evolve, from to outperform. We remain focused on

Mr. Massaad formally joined RAK Ceramics in 2006 as

June 2014 marked a transformational point for RAK

In 2015, Mr. Massaad won the International Business

SAK Ekramuzzaman PRAMOD KUMAR CHAND

Mr. Pramod is a Member of the Institute of Chartered

WASSIM MOUKAHHAL FAHEEMUL HUQ, BARRISTER-AT-LAW

AWARDS & RECOGNITIONS

6th ICSB National Award- 2018

ICMAB Best Corporate Award 2018

19th ICAB Award – 2018 Manufacturing Sector

INDUSTRY OUTLOOK AND POSSIBLE

WORLD TILE CONSUMPTION BY GEOGRAPHICAL AREA - values in mn Sqm

CERAMIC TILE CONSUMPTION BY GEOGRAPHICAL AREA 2018 - % shares

BANGLADESH CERAMIC INDUSTRY

BANGLADESH: KEY INDICATORS - Values in millions of sq.m

2014 2015 2016 2017 2018 CAGR

BANGLADESH: KEY INDICATORS - mn (Sqm)

PRODUCTION IMPORT CONSUMPTION

MANAGEMENT DISCUSSION AND ANALYSIS

Business and financial overview Accounting policies and estimation in the

Particulars 2019 2018* 2017 2016 2015

*2018 and 2019 complying IFRS-15

Financial performance vis-à-vis industry peers

02 Fu-Wang Ceramic Industry Limited Tiles Z 1998 1998 June 30th

03 Monno Ceramic Industries Limited Tableware A 1883 1995 June 30th

04 Shinepukur Ceramics Limited Tableware Z 2008 2008 June 30th

05 Standard Ceramic Industries Ltd. Tableware B 1996 1996 June 30th

Financial scenario of ceramics companies in Bangladesh:

Gross profit 1,907.74 225.74 199.50 340.42 68.25

Net profit/Loss after tax 754.03 80.78 72.65 62.71 10.05

Net asset value 7,354.61 1,519.53 2,152.45 4,267.93 105.78

Global economic scenario other complementary industries, such as transportation,

Risks and concerns Company and we are well positioned to capitalize on

Challenging year with Decisive

Greater stabilisation Expansion steadied

Revenue up by 2.1 Operating profit

Earnings per share of 15 percent

Continued to Reinforced human

7.68 mn SQM: Tiles Consolidated turnover: