RIGHTS SHARE OFFER DOCUMENT

Date: November 25, 2010

Rights Offer of 1,866,240 Ordinary Shares of Tk.100 each at an issue price of
Tk.300 each including a premium of Tk.200 per share totaling
Tk.559,872,000.00offered on the basis of 1:1, 1 (one) rights share for 1 (one)
shares held on record date.
Record Date for Entitlement of Rights Offer
December 26, 2010

SUBSCRIPTION
Opens on : January 25,2011
Closes on : February 22,2011
(Within banking hours, both days inclusive)

MANAGER TO THE ISSUE

Uttara Finance and Investments

Limited
JBC Tower (6th Floor), 10 Dilkusha C/A., Dhaka-1000, Bangladesh
Phone : 9568207 (Hunting), Fax : 880-2-9552461
E-mail : info@uttarafinance.com Web: www. uttarafinance.biz

ADVISER TO THE ISSUE

Amin Court, 4th Floor (Suit # 404), 31,Bir Uttam Shahid Ashfaqueus Samad Road
Phone: +88029559602, +88029567726, Fax: 880-2-9558330
Web-site:www.aaawebbd.com, E-mail: info@aaawebbd.com

CREDIT RATING STATUS

Surveillance Rating -2008 : A
Outlook
: Stable
Date of Declaration
: March 31, 2010

RATING ASSIGNED BY

Credit Rating Information and Services

Limited(CRISL)

FULLY UNDERWRITTEN BY
Standard bank Limited
Metropolitan Chamber Building (3rd floor) 122-124. Motijheel C/A. Dhaka-1000

Swadesh Investment
Management Ltd.
House#35, Road#1/A, Banani,Dhaka-1213.

Fidelity Assets & Securities Co. Ltd

Suvastu Imam Square (4th floor), 65, Gulshan Avenue
Dhaka-1212

Eastern Insurance Company Limited

44, Dilkusha commercial Area, Dhaka-1000
PABX: 9563033-34, 9564246-48.Fax: 88-02-9569735
E-mail: eicl@dhaka.net,Website: www.easterninsurancebd.com

As per provision of the Depository Act, 1999 and regulation made thereunder, rights share shall
only be issued in dematerialized condition. An applicant must apply for allotment of rights
shares mentioning his/her Beneficiary Owner (BO) Account number in the application form.

Definition and Elaboration of the abbreviated words and

technical terms used in the Rights Share Offer Document

AAA
Allotment
BB
Commission
Companies Act

: AAA Consultants & Financial Advisers Limited

: Allotment of Share
: Bangladesh Bank
: Securities and Exchange Commission
: Companies Act, 1994 (Act. No. XVIII of 1994)

CSE

: Chittagong Stock Exchange Limited

DSE

: Dhaka Stock Exchange Limited

EICL

: Eastern Insurance Company Limited

Issue

: Rights Issue

Issue Manager
Issuer Company
NAV
Offering Price
Registered
Office
RI
Rights Issue
Rule

: Uttara Finance and Investments Limited

: Eastern Insurance Company Limited
: Net Assets Value
: Price of the Securities of Eastern Insurance Company
Limited
: Head Office of the Company
: Rights Issue
: Securities and Exchange Commission(Rights
Issue)Rules,2006

RJSC

: Registrar of Joint Stock Companies & Firms

SEC

: Securities and Exchange Commission

Securities

: Shares of Eastern Insurance Company Limited

Securities
Market

: The Share Market of Bangladesh

Sponsor

: The Sponsor Shareholders of Eastern Insurance Company

Limited

Stockholder

: Shareholder

Subscription

: Application Money

UFIL

: Uttara Finance and Investments Limited

TABLE OF CONTENTS
SL
NO

PARTICULARS

PAGE
NUMBER

1.

The Rights Offer

2.

Risk Factors

3.

Business Operation

4.

Utilization of IPO Fund

5.

Purpose of the Rights Issue

6.

Highlights of the Company

7.

Board of Directors & Management

8.

Corporate Information

9.

Bankers to the Issue of Rights Share

10. Justification of the Issue Price of Rights Shares

Io
11. Projected Financial Statement

1
1-3

7-8
9
10
11-13
14 -17

12. Implementation Schedule

18

13. Length of time the Company has carried on business

14. Quantity of shares held by Sponsor Directors and
Shareholders
15. Beneficial owners holding shares 5% or above

18
19
19

16. Classified information & Underwriters

19-20

17. Terms and Conditions of the Rights Issue

21-22

18. Material Contracts

19. Declaration by the Issue Manager (Form-A), Underwriters
(Form-B),
Auditors (Form-C), Director (Form-D),
20. Auditors Report in pursuance of Section-135(1) under Para24(1) of part-II of the Third Schedule of the Companies Act,
1994
21. Auditors Report to the Shareholders, Audited financial
22. Accounts
Credit Rating Reports
23. Letter of offer for Rights Issue to the Shareholders
24. Form of Acceptance and Application for Shares, Form-A
25. Form of Renunciation, Form-B
26. Application by Renouncee (s), Form-C

23
24-27
28-31
32-54
55-69
70
71-72
73
74

EASTERN INSURANCE COMPANY LIMITED

44, Dilkusha commercial Area, Dhaka-1000
PABX: 9563033-34, 9564246-48.Fax: 88-02-9569735,
E-mail: eicl@dhaka.net,Website: www.easterninsurancebd.com

RIGHTS ISSUE OF SHARES

26 December, 2010
Dear Shareholder(s)
We are pleased to inform you that the shareholders of the Company in the Extra
Ordinary General Meeting (EGM) held on 07 th July, 2010 approved to issue Rights
Share 1,866,240 Ordinary Share of Tk.100 each at an issue price of Tk.300 each
including a premium of Tk.200.00 totaling Tk.559, 872,000.00 offered on the basis of
1(one) new shares for every 1 (one) shares held on record date. The purpose of
issuance of Rights Shares is to strengthen capital base of the Company and adaptation
with capital structure of Insurance Act 2010.
Due to satisfactory activities and services, the Company has earned Net Profit (before
tax) Tk.19,179,771.00 on 30th April, 2010. This success has been achieved due to
strong support from our customers and efficient direction of the Board of Directors as
well as patronization and active participation of all our valued shareholders.
To maintain further growth and increase the capital base of our Company, we hope you
would come forward with your full support and assistance to make the offer a success.
A self-explanatory Rights Share Offer Document prepared in the light of the Securities
and Exchange Commission (Rights Issue) Rules, 2006 of the Securities and Exchange
Commission is enclosed herewith for your kind information and evaluation.
On behalf of the Board of Directors
Sd/Mohammad Haroon Patwary
Managing Director

THE RIGHTS OFFER

The Company
Eastern Insurance Company Limited is a first generation general insurance company in
Bangladesh. The company is a public listed Company which incorporated as a Public Limited
Company under the Companies Act 1994 on July 10, 1985. In 1993 company raised capital
through IPO and now company conducts its business operations according to Securities and
Exchange Rules 1996, the Insurance Act, 2010 . Under the supervision of regulatory bodies
the company established itself as one of the leading general insurance company of the
country. In 30th April 2010 Company earned Net Profit (before tax) of Tk. 19,179,771 and
EPS: 11. Over the last twenty five years of operation, it established a brand image as a
prominent general insurance company of the country through product diversification and
superior service quality.

The Rights Issue

The Board of Directors of the Company in its 169 th Board meeting held on April 28,2010
recommended for declaration of stock dividend 20% for the year ended 31st December
2009 totaling Tk.31,104,000on the paid up capital Tk. 155,520,000 simultaneously decided
to raise paid up capital through issuance of Rights Share of 1,866,240 Ordinary Shares of
Tk.100.00 each at an issue price at Tk.300.00 each including a premium of Tk.200.00 per
share at a ratio of 1:1 (1(one) rights share for 1 (one) existing share held on record date) on
the basis of paid up capital of Tk.186,624,000 after crediting bonus share as approved in the
24th AGM held on 7th July 2010.

Issue Price
In the Extra Ordinary General Meeting (EGM) held on 7th July 2010 honorable shareholders
approved Rights Offer of 1,866,240 Ordinary Shares of Tk.100.00 each at an issue price of
Tk.300.00 each including a premium of Tk.200.00 per share totaling Tk.559,872,000 offered
on the basis of 1 (one) rights share for 1 (one) existing share held.

RISK FACTORS AND MANAGEMENTS PLAN FOR REDUCTION OF SUCH

RISKS:
Any investment always associates with some internal/ external risk factors and
among the factors some can be averted, other are beyond control. The
management of Eastern Insurance Company Limited considers some risk factors
involving their business which are described as under:

Interest rate risks:

Volatility of money market, which ultimate influences the interest rate structure of fund. The
Income from fixed & other deposits may fall with the reduction of Interest rate of

commercial bank as per current trend.

Management perception:
The Management of the Company is always aware of interest rate. If the interest rate
increases, the cost of credit fund will increase as well as income from fixed & other deposits
also be increased. On the other hand, if the interest rate decreases the Company will go for
the alternative investment such as investment in shares and debentures instead of investing
in FDR & NIB.

Exchange rate risks:

Devaluation of local currency against major international currencies i.e. USD, GBP
and Euro may affect companys marine insurance business.
Management perception:
Devaluation of local currency not only effected EICL but also total industry will be
affected.
Besides generally devaluation of local currency against international
currencies increases premium income that will ultimately extend Net profit of the
Company.

Industry risks:
I. Liberalization of permission to set up more insurance companies by the
Government
Liberalization of permission to set up more insurance companies by government
may result in severe competition amongst insurers resulting in reduction of
premium income and profitability of the company.
Management perception:
As per Insurance Act 2010 every general insurance companys paid up capital must
be 40 crore in which 50% will be sponsors capital and 50% open for general people.
So it will not so easy to come new company and established in this industry. Besides
insurance business largely depends on faith and reputation which already achieved
EICL by more than twenty four years successful operations. Now EICL is a reputed
brand in insurance sector. Moreover EICL continuously try to develop product
diversification according to changeable market and demand which increase revenue
as well as customer satisfaction.
II. Natural calamities
The coverage of natural calamities like cyclone, flood by insurance may severely weaken the
financial strength of the company by accruing heavy claims on its own retained account.

Management perception:
The estimated losses arising from natural calamities are covered by higher rates of premium
and reinsurance coverage for such losses. Management has taken into consideration
statistical assessment of occurrence of natural calamities in setting its rates of premium and
reinsurance risks. Moreover, most of our trained portfolios (Fire including flood, cyclone
risks) are protected under Catastrophic Excess of Loss Treaty with Shadharan Bima
Corporation. Besides company always maintain a reserve for exceptional losses as per
paragraph 6(2) of the 4th schedule of Income Tax Ordinance 1984 for meeting unexpected
future claims.

Market & Technology related-risks:

To be competitive in the market, insurance companies need to develop new products and
offer excellent clientele services and also to expand the market by bringing more and more
items under the purview of insurance otherwise the competitors may capture the existing
companys business share.

Management perception:
Insurance business is increasing globally. New items are coming under the cover of various
insurance as days pass by; the market is expanding as people are realizing the importance

of insurance. EICL provides excellent services and plan to introduce new products giving
importance on Research and Development (R&D) considering market & technology related
risks.

Potential or existing government regulations:

Government policy change in respect of rates of premium, underwriting commission, agents
commission, reinsurance commission, interest on deposits etc. may affect income and profitability of
the Company.

Management perception:
The government is not expected to change policies relating to insurance requirement for the
interest of economy, as when insurance business is affected industrialization, trade and
commerce of the country will be also affected. Moreover, considering the Insurance Act 2010
and regulations the company is raising its capital through issuing rights share to existing
shareholders which also strengthen companys financial structure as well as earned more
revenue by smooth operation of business.

Potential changes in global or national policies:

Any structural change in the international insurance business adversely affecting

reinsurance operations may have negative impact on the profitability of the Company.

Management perception:
The history of insurance/re-insurance business for over two hundred years proves that any
major structural change affecting our reinsurance business is unimaginable. Any such event
would create a global destabilization that the major economies must not cause to happen .

History of non-operation, if any:

Is there any History of non-operation of Eastern Insurance Company Limited?

Management perception:
Eastern Insurance Company Limited is one of the private general insurance companies in
Bangladesh which established in 1985 and already passed several successful years of
business operation and the company does not have any history of non-operation of
business.

Operational risks:
Any Political and social unrest/unstable situation may affect smooth operation of the
business resulting in drastic fall to the value of its investment.

Management perception:
Political unrest may reduce the premium income of the Company for a short span of time.
The shortfall can be overcome by increased income in subsequent period.

Business Operation:
The Company operates its business through a net work 24 Branches all over the country.
These branches can directly underwrite all classes of business under guidance and
supervision of Head Office. In addition there is a special booth at Head Office to meet any
emergency requirement of any client or to take care of any special or exceptional risk
coverage as may require by any client.
The business operation of the branches are monitored and controlled by Head Office through
Underwriting Department. While claims are directly handled by Claims Department of Head
Office as a centralized process and practiced all over the world.
The Company is authorized to transact all classes of Insurance business with un-restricted
limits having a very wide range of re-insurance coverage from state owned Sadharan Bima
Corporation (SBC). Currently the Company provides the following risk coverage at a very
competitive premium rates within the tariff provisions in force.
Fire and allied risk of Flood, Cyclone, Earthquake, RSD, Malicious damage, Electrical
short circuit and Burglary etc.
Marine Hull, Marine Cargo, Rail, Truck, Lorry Risk etc.
All classes of Motor Insurance including Act liability.
Engineering Risks, such as Contractor All risk, Erection All Risks, CPM, Machinery
Break Down and Deterioration of stocks etc.
Aviation (Hull), Passenger, Crew and 3rd Party liability.
Misc. Insurance, Public liability, 3rd Party liability, Personal Accident, Workman
Compensation, Cash in Transit, Cash in safe, Cash in counter, Fidelity guarantee and
plate glass Insurance.
Besides the Company has the expertise to develop any other non-traditional coverage as
and when required by any client.

Re-Insurance Arrangement :
The Company has an extensive Re-Insurance Treaty arrangement with SBC. Re-Insurer
provides technical assistance in assessing risks, developing rates and fixing up terms and
conditions in case of non-tariff business. In case of any big loss Re-insurers support the
Company by cash payment for prompt settlement of claim.

Business Diversification :
The Company have also diversified its business with a view to ensure participation in other
field of national economy besides insurance business. It has become a member of
Chittagong Stock Exchange in the year 1996 and also invested a substantial amount of its
fund in land and share market. It is also a sponsor shareholder of National Housing Co. Ltd. It
has a plan for a both long and short term investment in other sectors of business and
industry.

DATE OF OPENING AND CLOSING OF SUBSCRIPTION LISTS

Subscription opens for the rights share offer on Opens on : January 25,2011
and subscription closes for the rights share offer on Closes on : February

22,2011
.

UTILIZATION OF IPO FUND

Eastern Insurance Company Limited went for public issue in the year 1993 by issuing

3,00,000 Ordinary Shares of Tk.100.00 each totaling Tk.30,000,000.00 with the

objective to strengthen the capital base and business expansion. The Company has
fully utilized the entire fund thus raised by investing in FDR and Capital market
which has already been reflected in the audited accounts of the subsequent years of
public issue.

AGM of the Company held in last five years as per following table:
Year

Date of AGM held

2005
2006
2007
2008
2009

7August,2006
5 July,2007
24 June,2008
29 June,2009
7 July,2010

Dividend declared
20%
20%
20%
20%
20%

Stock
Stock
Stock
Stock
Stock

PURPOSE OF THE RIGHTS ISSUE

Eastern Insurance Company Limited is one of the first generation General Insurance
Company in the private sector of Bangladesh, which provides diversified general insurance
services. The company is presently operating with a paid up capital of Tk.155.52 million
against authorized capital of Tk.1000 million. With the declaration of stock dividend for the
year 2009 in the AGM dated 07.07.2010 this paid up capital will be increased to Tk.186.62
million.
As per insurance Act, 2010 (schedule-1) paid up capital of General Insurance Company
should be raised up to Tk.400.00 million. Further more to enhance financial strength and to
expand our activities we would like to increase our paid up capital to Tk.373.24 million as
already approved in the EGM dated 07.07.2010.
Accordingly, Eastern Insurance Company Limited is going for rights issue of 1,866,240
ordinary shares of Tk.100 each at an issue price of Tk.300.00 each including a premium of
Tk.200.00 per share totaling Tk.559,872,000.00. The additional paid up capital and premium
will be deposited with scheduled bank and investment to be made in capital market as
guided by the Insurance Act, 2010 to enhance net worth of the company for the benefit of
shareholders.

HIGHLIGHTS OF THE COMPANY

1. The Company was incorporated on 7h June, 1986 as a Public Limited Company.
2. The Company commenced its business on July 1986 and has already completed
24 (twenty four ) years of successful operation.
3. The Company went for public issue in the year 1993 by issuing 3,00,000
Ordinary Shares of Tk.100.00 each totaling Tk.30,000,000.
4. The Company was listed with the Dhaka Stock Exchange Limited on March 18,
1994 and Chittagong Stock Exchange Limited on the year November 12, 1996 .
5. The authorized capital of the Company is Tk.1000 million and paid up capital is
Tk.186,624,000 after crediting 20% bonus share.
6. The Company has a network of 24 branches all over the country.
7. Total equity structure of the Company as on 30 April 2010 is shown below :(Amounts in BDT)

Shareholders Equity

30.04.20

10
Share Capital

31.12.2
009
155,520,000
155,520,000
52,050,796

52,619,230

294,372,587

294,372,587

142,827,341

126,094,549

644,770,724

628,606,366

Balance of fund
Revaluation reserve
Reserve or contingency Account
Total Shareholders Equity

Additional Information
(Source DSE monthly review)

Particulars

Price

a)

Market Price per Share as on 30 June, 2010

b)

Market Price per Share as on 31 May, 2010

c)

Market Price per Share as on 29 April, 2010

d)

Market Price per Share as on 31 March ,2010

e)

Market
Price
February,2010

f)

per

Share

as

on

28

Market Price per Share as on 31 January, 2010

Tk
.
Tk
.
Tk
.
Tk
.
Tk
.
Tk
.

834.80
937.80
1,003.75
858.25
829.25
889.25

BOARD OF DIRECTORS
SL
N
o

Name of
Directors

Age
(Year
s)

Educational
Qualificatio
n

Position

Occupati
on

Address

1.

Mujibur Rahman

51

B.A

Chairman

Business

2.

Mohammad Ahsan

54

B.Sc.
Engineer

Vice
Chairman

Business

Director

Business

Director

Business

Director

Business

Director

Business

Director

Business

Director

Business

House # 10, Road # 13,

Block # k, Baridhara Model
Town, Dhaka
12/13, Motijheel C/A,
Dhaka.
Road # 87, House # 13,
Gulshan-2, Dhaka.
936/3, Sk. Mujib Road,
Dewanhat, Chittagong.
C/o. M/s. Rahim Steel Mills
Co. (Pvt.) Ltd. 29/10, K.M.
Das Lane, Tikatoli, Dhaka.
269, Dewanhat,
Chittagong.
Road # 87, House # 13,
Gulshan-2, Dhaka.
New DOHS, 157,
Mohakhali, Dhaka.

Director

Business

Alhaj Mansion, 82,

Motijheel, Dhaka.

4.

Major (Retd) Abdul

Mannan
Matiur Rahman

5.

Mohammed Mohsin

53

M.S.M.E.

6.

Syed Deedarul Alam

65

B.Sc.

7.

Umme Kulsum
Mannan

46

M.A.

3.

68

B.Sc.

53

B.com

8.

Durand Mehdadur
Rahman

40

International
Business
Administratio
n

9.

Khaled Salahuddin
Ahmed

50

MBA (USA)

10
.

Haji Abdur Rahim

82

B.A.

44

B.Sc

Director

38

M.A.

Director

Business

Abdul Kader
Mohammad
Mohiuddin

40

B.Com.

Director

Business

Zakia Rahman

48

B.com

Director

Business

Rais Uddin

39

B.A.

Director

Business

16
.

Kazi Imdad Hossain

65

B.Sc

Director

Business

17
.

Syed Abdullah
Humayun Ahmed

63

11
.
12
.
13
.
14
.
15
.

18
.
19
.

Rawnak Karim
Rokeya Ferdous

Miah Mohammad
Murshid
Mohammad
Murshed Hossain

Director

Business
Business

Director

Business

71

B.Sc. Auto
Mobile
Engineer (L)
B.A. Hons.
M.A.

Independe
nt Director

Business

67

M.A.

Independe
nt Director

Business

C/o. M/s. Rahim Steel Mills

Co. (Pvt.) Ltd. 29/10, K.M.
Das Lane, Tikatoli, Dhaka.
79/1, Water Works Road,
Posta, Dhaka.
C/o. Sunman Sweaters Ltd.
CDA Building # 2, 2nd floor,
Ctittagong
Alpha Textiles Ltd. CDA
Building # 2, 2nd floor,
Ctittagong
41, Goaltoli lane,
EnayetBazar,Chittagong.
Road # 87, House # 13,
Gulshan-2, Dhaka.
C/o. Uttara Apparels Ltd.
Uttara Center, 102, Shahid
Tajuddin Ahmed Sarani (1517th Floor) Tejgaon,
Uttara Properties Ltd.
20,21 &22 Majid Sarani,
Sonadanga, KDA, Khulna.
House # 56, Road # 8,
Sector #3, Uttara Model
Town, Dhaka.
House # 105, Road # 7,
Sector # 4, Uttara Model
Town, Dhaka.

MANAGEMENT COMMITTEE
SL
N
o

Name of
Officials

Position

Education
al
Qualificati
on

1.

Mohammad
Haroon
Patwary

Managing
Director

M.Com

2.

Md. Habib
Jamal, FCA

3.

A.K.M.
Mustafizur
Rahman

4.

ExecutiveVice
President &
Company
Secretary

Name of
Department

Address
House #8/3, Block#C,
Lalmatia
Mohammadpur, Dhaka
Falcon, 38, New
Elephant Road, Dhaka1205

Chartered
Accountant

Board & Share

Dy. Executive
Vice President

B.Com

Underwriting &
Claims

Khairul Alam

Vice President

B.Com

Administration &
Establishment

Setaras dream
Flat36/d, (5th floor),
1/11, Pallabi, Dhaka
64/A,R.K. Mission Road,
Dhaka

5.

Arifur
Rahman

Dy. Vice
president

M.Com

Finance &
Accounts

Flat#8/B,R.P Tower, zoo

Road, Mirpur-2 Dhaka.

6.

Hosne Ara

Dy. Vice
President

M.A

Underwriting
Department

7.

P. K.
Chakraborty

Dy. Vice
President

M.Sc

Re-Insurance
Department

8.

Swarup
Kumar Saha

Dy. Vice
President

M.Com

Internal Audit

House#11,Road #4,Old
DOHS,Cantonment,Dha
ka
Block#C,
Road#1,House#
9,Banasree, Rampura,
Dhaka
62/10, Purana paltan
lane, Dhaka

CORPORATE INFORMATION
REGISTERED OFFICE:

44, Dilkusha commercial Area, Dhaka-1000

Date of Incorporation
Commencement Certificate of Business

:
:

June7,1986
July 7,1986

Listing with Dhaka Stock Exchange Limited

March 18, 1994

Listing with Chittagong Stock Exchange

Limited
Authorized Capital

: November12, 1996
:

1,000 Million

Paid-up-Capital**

186.62Million

Net Profit before tax on April 30, 2010

19.17 Million

Number of Employees

556

Number of Branches

24

** After crediting 20% bonus for the year ended 31 st December 2009.
AUDITOR
HODA VASI CHOWDHURY & CO
Chartered Accountants
BTMC Bhaban (7-9 Karwan Bazar C/A,Dhaka-1215

BANKERS
Islami Bank Bangladesh Limited
Prime Bank Limited
Premier Bank Limited
One Bank Limited
REGISTERED OFFIICE
44, Dilkusha commercial Area, Dhaka-1000

BANKERS TO THE ISSUE FOR RIGHTS SHARE OF

EASTERN INSURANCE COMPANY LIMITED

Investment Corporation of Bangladesh (ICB)

1.
2.
3.
4.
5.
6.
7.
8.

Head Office, Dhaka

Chittagong Br. Chittagong
Rajshahi Br., Rajshahi
Khulna Br., Khulna
Barisal Br., Barisal.
Sylhet Br., Sylhet
Bogra Br., Bogra
Local Office, Dhaka

Standard Bank Limited

1.
2.
1. 3.
2. 4.
3. 5.
4. 6.
5. 7.
6. 8.
7. 9.
8. 10.
9. 11.
10.12.
11.13.
12.14.
15.

Principal Br., Dhaka

Foreign Exchange Br., Dhaka
Topkhana Road Br. Dhaka
Imamgonj Br., Dhaka
Gulshan Br., Dhaka
Dhanmondi Br., Dhaka
Mirpur Br., Dhaka
Uttara Br., Dhaka
Panthapath Br., Dhaka
Narayangonj Br. Narayangonj
Jubilee Road Br., Chittagong
Agrabad Br., Chittagong
Khatungonj Br., Chittagong
Sylhet Br., Sylhet
Khulna Br, Khulna

JUSTIFICATION OF THE ISSUE PRICE OF RIGHTS SHARES:

The rights issue price of Tk. 300.00 each (including a premium of Tk.200 per share)
is justified as per the guidelines of the Securities and Exchange Commission as
detailed below:

1. Equity based Value per share (NAV):

As on April 30, 2010, the Net Assets Value per share stands at Tk. 415 , The
calculation of net assets value per share is given below:

Particulars

Net
Amount

Amount

Investment

240,945,686

Interest, Dividends and Rent Outstanding

Advances, Deposits and Prepayments

6,090,155
37,970,548

Cash in hand and cash at Bank

245,090,276
Amount due from other persons or bodies carrying on
insurance business
35,046,708
Fixed Assets (at cost less depreciation )
Deferred tax assets

23,1174,502
2,404

Stock of printing, stationery and stamps

Total Tangible Assets (A)
Deposit Premium
Liabilities and Provisions
Amount due to other persons or bodies carrying on
insurance business
Sundry Creditors
Provision for Gratuity
Tax provision
Total Liabilities (B)
Net Tangible Assets (A-B)
Number of shares (C)
Tangible Asset Per Share (A-B)/C

936,188
797,256,467
32,138,556
18,527,637
55,874,314
17,913,182
6,936,036
21,096,018
152,485,743
664,770,724
1,555,200
414.59

NB: The Company declare 20% stock dividend for the year ended 31st December 2009 and
approved by the shareholders in the 24 th AGM held on the July 07, 2010 and credited to the
respective BO account. After issuance of 20% bonus shares total number of shares stands
1,866,240 and total shareholders equity Tk. 675,874,724and the net asset value per shares
stands at Tk.345.

The Net Assets Value (NAV) is also equivalent to the shareholders' equity
as follows:

Particulars
Share Capital
Balance of fund

Amount
155,520,000
52,050,796

Revaluation reserve

294,372,587

Reserve or contingency Account

142,827,341

Total Shareholders Equity

644,770,724

No. of Shares of Taka 100.00 each

1,555,200

Book Value per share of Taka 100.00 each

414.59

2. Earning Based Value per Share:

Net Profit After
Tax

Period

Earning Per Share

in BDT

Lac in BDT

2005
2006
2007
2008
2009
Average

242.39
210.28
291.78
323.39
452.45
304.06

32.32
23.36
27.02
25.00
29.08
27.36

The weighted average net profit after tax for the last 5 (five) years stands at
Tk.304.06 lac and the weighted average EPS stands at Tk. 27.36. The Price Earning
Multiple (PE) at issue price of Tk.300 each (including a premium of Tk.200.00 per
share) stands at PE 10.96 as opposed to the present PE 37.43 at market price of
Tk. 900 per share on July 15, 2010 as per DSE record.
If we consider the share price of the Company on the basis of price earnings
multiple of 37.43the earning based value of shares of the Company stands at Tk.
410.23 a price much higher than the price offered for rights shares.

3. Average Market Price:

Market price per share at the last trading day of preceding six months is given in
the following table that remained far above the offer price of Tk.300.00 each
(including a premium of Tk. 200.00 per share). Price data is collected from Monthly
Review, Dhaka Stock Exchange Limited:

Market
Market
Market
Market
Market
Market

Price
Price
Price
Price
Price
Price

per
per
per
per
per
per

(Source DSE monthly review)

STOCK PRICE IN TAKA
Share as on 30 June, 2010
Tk.
834.80
Share as on 31 May, 2010
Tk.
937.80
Share as on 29 April, 2010
Tk.
1,003.75
Share as on 31 March ,2010
Tk.
858.25
Share as on 28 February,2010 Tk.
829.25
Share as on 31 January, 2010
Tk.
889.25

Average six months price

Tk.

892.18

From the above analysis, it appears that the offered price of Tk.300.00 each
(including a premium of Tk.200.00 per share) by the Company is quite justified and
reasonable and also familiar and attractive to the Shareholders.

4. Projected Equity Based Value/ Book Value per Share:

Period

December 31, 2010

December 31, 2011

Equity Based Value Per Share

(Amount in Tk.)
337.25
352.00

December 31, 2012

361.38
350.21

Average

5. Projected Earnings Based Value Per Share:

Period

Projected Earning Per Share

(Amount in Tk.)

December 31, 2010

December 31, 2011
December 31, 2012
Average EPS

17
27
26
23.33

The weighted average EPS for next 3 years stands at Tk. 16.81. If we consider the
share price of the Company on the basis of price earning multiple of 12.87 the
earning based value of per share of the Company stands at Tk. 255.69.
From the foregoing as summed up below the determination of the offer price
Tk.300.00 each is quite justified.
Justification of offering price under different
methods
1.
2.
3.
4.
5.

Equity based Value per share (on historical cost)

Earning Based Value per Share
Average Market Price
Projected Equity Based Value/ Book Value Per Share
Projected Earnings Based Value Per Share

Average

BDT
414.59
410.23
892.18
350.21
255.69
464.58

From the above analysis, it appear that the ordinary share of Tk.100.00 is being
offered at Tk.300.00 each (including a premium of Tk.200.00 per share) by the
Company is quite justified and reasonable and also familiar and attractive to the
Shareholders.

IMPLEMENTATION SCHEDULE [Rule-8(k)]

The additional paid up capital will be deposited with scheduled bank as guided by
the Insurance Act 2010 and the share premium will be invested in different business
to enhance net worth of the company for the benefit of shareholders .The entire
process will be completed immediately after receiving allotment of rights share
subscription.
QUANTITY OF SHARES HELD BY EACH DIRECTOR ON THE DATE OF THE RIGHTS
SHARE OFFER DOCUMENT [Rule-8(l)]

SL
No
.
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.

Name of Directors
Mujibur Rahman

14.
15.
16.
17.

Mohammad Ahsan
Major (Retd) Abdul Mannan
Matiur Rahman
Mohammed Mohsin
Syed Deedarul Alam
Umme Kulsum Mannan
Durand Mehdadur Rahman
Khaled Salahuddin Ahmed
Haji Abdur Rahim
Rawnak Karim
Rokeya Ferdous
Abdul Kader Mohammad
Mohiuddin
Zakia Rahman
Rais Uddin
Kazi Imdad Hossain
Syed Abdullah Humayun Ahmed

18.

Miah Mohammad Murshid

19.

Mohammad Murshed Hossain

13.

Position
Chairman

Number
of
Shares
Held
24,468

Percentag
e
1.57%

Vice Chairman
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director
Director

103,680
103,680
75,168
32,400
38,880
51,840
104,509
25,920
32,400
69,562
54,432

6.67%
6.67%
4.83%
2.08%
2.50%
3.33%
6.72%
1.67%
2.08%
4.47%
3.50%

45,463

2.92%

Director
Director
Director
Director
Independent
Director
Independent
Director

2,383
28,512
42,715
5,961

0.15%
1.83%
2.75%
0.38%

Nil

Nil

Nil

Nil

LENGTH OF TIME DURING WHICH THE ISSUER HAS CARRIED ON BUSINESS [Rule8(j)]

Eastern Insurance Company Limited is a public company categorized in private

sector incorporated under the Companies Act, 1994 as a public company limited by
shares on 7 June 1986 and engage in general insurance business as per Insurance
Act 1938. The Company already completed twenty four (24) successful years from
the date of commercial operation. Now Eastern Insurance Company Limited is one
of the established general insurance company of Bangladesh.

SUMMARY OF SHARE HOLDING POSITION

SL No.
1.
2.
3.

Name of Directors
Sponsors &Directors
Institutions
General Public
Total

Shares
holding

Percentage

918,904
402,641
233,855
1,555,400

59.08%
25.89%
15.03%
100%

BENEFICIAL OWNERS HOLDING SHARES 5% OR ABOVE [Rule-8(l)]

There is no shareholder holding 5% or above shares.
Sl.
No

Name of the Directors

1.

Mohammad Ahsan

2.
3.

Major (Retd) Abdul Mannan

Durand Mehdadur Rahman

Position
Vice
Chairman
Director
Director

Numbers of
shares

% of
Shareholdin
gs

103,680

6.67%

103,680
104,509

6.67%
6.72%

PUBLIC LISTED COMPANY UNDER COMMON MANAGEMENT

As per [Rule-8(n)] of the Securities and Exchange Commission (Rights Issue) Rules2006, there are no Director in public listed company under the common
management of the company.

CLASSIFIED INFORMATION & UNDERWRITERS [Rule-8(o)]

Uttara Finance and Investments Limited
Manager to the
JBC Tower (6th Floor), 10 Dilkusha C.A., Dhaka-1000, Bangladesh .
Issue
Advisers to the
Issue

Auditor

AAA Consultants & Financial Advisers Limited

Amin Court, 4th Floor (Suit # 404),
31,Bir Uttam Shahid Ashfaqueus Samad Road
(Previous 62-63, Motijheel C/A), Dhaka-1000
Hoda Vasi Chowdhury & Co., Chartered Accountants
BTMC Bhaban (8th Level) 7-9, Karwan Bazar C/A, Dhaka
1215.

Investment Corporation of Bangladesh (ICB)

Bankers to the Issue

8,DIT Aveue (12-15 Floor) Dhaka -1000

Standard Bank Limited

Metropolitan Chamber Building (3rd Floor) 122-124 Motijheel C/A

,Dhaka-1000

Standard Bank Limited

Metropolitan Chamber Building (3rd floor) 122-124.Motijheel C/A. Dhaka-1000

Underwriters

Swadesh Investment Management Co. Ltd

House# 35, Road# 1/A, Banani,Dhaka-1213

Fidelity Assets & Securities Co. Ltd

Suvastu Imam Square (4th floor), 65, Gulshan Avenue Dhaka-1212

Eastern Insurance Company Limited is going to offer rights share of 1,866,240

Ordinary Shares of Tk.100.00 each issuing at Tk.300.00 each (including premium of
Tk.200.00 each) share, totaling Tk.559,872,000. As per Securities and Exchange
Commissions guideline the issuer of a listed security making rights issue shall
appoint one or more underwriters licensed under wmwKDwiwUR I GP Kwgkb
(gvPU evsKvi I cvUdvwjI gvbRvi) wewagvjv, 1996 to fully underwrite
the rights issue on a firm commitment basis. Underwriting commission will be

@0.10% on the underwritten amount and there will no additional commission for
take-up unsubscribe portion of shares if any.

UNDERWRITERS OBLIGATION
If and to the extent that the shares offered to the existing shareholders by the
Rights Share Offer Document authorized hereunder shall not have been subscribed
and paid for in cash in full by the closing date, the Company shall within 10 (ten)
days of the closure of subscription call upon the underwriters (for full unsubscribe
amount) in writing with a copy of said writing to the Securities and Exchange
Commission, to subscribe for shares not subscribed by the closing date and to pay
for in cash in full, inclusive of any premium if applicable, for such unsubscribed
shares within 15 (fifteen) days after being called upon to do so. If payment is
made by Cheque/Bank Draft by the underwriter it will be deemed that the
underwriter has not fulfilled his obligation towards his commitment under this
Agreement, until such time as the Cheque/Bank Draft has been encashed and the
Companys account has been credited. In any case, within 7 (seven) days after the
expiry of the aforesaid 15 (fifteen) days, the Company shall send proof of
subscription and payment by the underwriters, to the Commission.

SL.
No.

Name of Underwriter

1.

Standard Bank Limited

2.

Fidelity Assets & Securities Co. Ltd

3.

Swadesh Investment Management Co.

Ltd
Total

Number
of
Shares

Underwriting
Amount in
BDT

700,000

210,000,000

1,000,000

300,000,000

166,240
1,866,24
0

49,872,000

559,872,000

DIRECTORS' TAKE-UP IN THE RIGHTS OFFER [Rule-8(q)

Directors are expected to exercise in full their portion of Rights Offer.
Sl.
No.

Name of Directors

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15
16
17
18
19

Mujibur Rahman
Mohammad Ahsan
Major (Retd) Abdul Mannan
Matiur Rahman
Mohammed Mohsin
Syed Deedarul Alam
Umme Kulsum Mannan
Durand Mehdadur Rahman
Khaled Salahuddin Ahmed
Haji Abdur Rahim
Rawnak Karim
Rokeya Ferdous
Abdul Kader Mohammad Mohiuddin
Zakia Rahman
Rais Uddin
Kazi Imdad Hossain
Syed Abdullah Humayun Ahmed
Miah Mohammad Murshid
Mohammad Murshed Hossain

Number of
Shares
Held
24,468
103,680
103,680
75,168
32,400
38,880
51,840
104,509
25,920
32,400
69,562
54,432
45,463
2,383
28,512
42,715
5,961
Nil
Nil

Renounce
from
entitlement
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil
Nil

TERMS AND CONDITIONS OF THE RIGHTS ISSUE

Basis of the Offer
The Company records its share register of members on December 26, 2010 for
determining the shareholders who are eligible to receive this offer of shares on
rights basis. The ordinary shares are now being offered on a rights basis to the
shareholders holding shares on the book closure in the ratio of 1:1 i.e. 1 (one) rights
shares for 1 (one) existing shares held.

Entitlement
As a shareholder of the Company on the record date on December 26, 2010,the
shareholders are entitled to this Rights Offer. Only the holder(s) of a minimum of
one fully paid ordinary share is entitled to receive the Rights Offer.

Acceptance of the Offer

A shareholder may accept and apply for the shares hereby offered, wholly or in part
by filling in Application - Form A and submitting the same along with the application
money to the Bankers to the Issue on or before the Closing Date of the Offer.

Renunciation
A shareholder may renounce all or part of the shares he/she is entitled to in favour
of any other person(s) other than an infant or person of unsound mind. He/she can
renounce his/her rights/entitlement of shares by signing Renunciation Form-B.
Renouncee(s) shall fill in Form-C appropriately.

General
All applications should be made on the printed form provided by the Company in
this Rights Share Offer Documents only and should be completed in all respects.
Applications, which are not completed in all respects or are made otherwise than as
herein provided or are not accompanied by the proper application amount of
deposit, are liable to be rejected and the application money received in respect
thereof shall be refunded.
All communications in connection with the application for the Rights Share should
be addressed to the Company quoting the registered folio number/BO ID number in
the form.

Condition of Subscription

One Rights shares of Tk.300.00 each including a premium of Tk.200.00 per share is
offered against 1 (one) existing share held by existing Shareholder(s) whose
name(s) appeared in the Company's Share Register at the record date as on

December 26, 2010.

.

Payment of Share Price

Payments for the full value of Shares applied for shall be made with designated
branches of Bankers to the issue by Cash/Pay Order/Demand Draft payable to
"Eastern Insurance Company Limited" and crossed. The Pay Order/Demand Draft for
payment of share price must be drawn on a bank in the same town to which the
application form has been submitted. It is to be noted that all transaction above
TK.1.00(One) lac must be affected through demand draft/ crossed cheque/pay
orders.

SUBSCRIPTION
Opens on : January 25, 2011
Closes on : February 22, 2011
(Within banking hours, both days
inclusive)
Any change or extension regarding subscription period will be notified through
national dailies.

Lock-In On Rights Share

The rights share of directors and other shareholders holding 5% or more shares
shall be subject to lock-in for a period of three years from the date of closure of the
rights share subscription. In the event of renunciation of rights share by aforesaid
persons, the renounced shares shall also be subject to lock-in for the same period.

Others
The application not properly filled in shall be treated as cancelled and deposited
money will be refunded. For any reason, no profit/compensation will be paid on the
refunded amount.

The offer will be deemed to have been declined if completed Application Form-A
with necessary payments have not been received by February 22, 2011or by
such later date as may be notified through national dailies to that effect.

MATERIAL CONTRACTS

Bankers to the Issue

Investment Corporation of Bangladesh (ICB), Standard Bank Limited is the Bankers
to the Issue who will collect the subscription money of the Rights Offer. Commission
@ 0.10% of the amount collected will be paid to the Bankers to the issue for their
services to be rendered by them. The Rights Issue subscription money collected
from the shareholders by the Bankers to the Issue will be remitted to the Southeast
Bank Limited, Corporate Branch Dhaka. STD Account: 0031-13100000741.

Underwriters
There are three (03) underwriters have underwritten the full amount of Rights Offer
of EICL as shown in the classified information part of ROD. Each underwriter will be
paid underwriting commission @ 0.10 % of the underwritten amount.
Simultaneously, with the calling upon an underwriter to subscribe or procure
subscriber and pay for any number of shares, the company will pay no additional
commission to that underwriter on the nominal value of shares required to be
subscribed by them.

Manager to the Issue

Uttara Finance and Investment Limited is appointed as Manager to the Issue of the
Right Issue of the Company. Accordingly, a tripartite agreement was made among
the Issue Manager, the Advisor and the Company. The Issue management fee at
0.60% on total issue .The Company will pay 60% of total issue management fee for
issue management service to the UFIL

Advisers to the Issue

AAA Consultants & Financial Advisers Limited is appointed as Advisor to the Issue of
the Right Issue of the Company. Accordingly, an tripartite agreement was made
among the Issue Manager, the Adviser and the Company. The Issue management
fee at 0.60% on total issue. The Company will pay 40% of total issue management
fee for Advisory service to the AAA.
Agreement to the Vendors:
The company is a general insurance company. There is no specific agreement with
the vendors or other seller.

ACQUISITION OF PROPERTY, PLANT AND EQUIPMENT

The company has no plant equipment. The Company acquired the 18 decimal
Commercial land located at 65/1 DIT extension Road Dhaka. After revaluation the
value of land is Tk. 226,875,000.00

FORM A
[Rule 5 and rule 8(t)]

Declaration (due diligence certificate) about responsibility of the Issue

Manager In respect of the rights share offer document of Eastern

Insurance Company Limited

This rights share offer document has been reviewed by us and we confirm after due
examination that the rights share offer document constitutes full and fair
disclosures about the rights issue and the issuer and complies with the
requirements of the Securities and Exchange Commission (Rights Issue) Rules,
2006; and that the issue price is justified under the provisions of the Securities and
Exchange Commission (Rights Issue) Rules, 2006.

For Uttara Finance and Investments Limited

Place: Dhaka
Shamsul Arefin)
MANAGING DIRECTOR

Sd/(S. M.

FORM-B
[Rule 6 and rule 8(t)]

Declaration (due diligence certificate) about responsibility of the

Underwriter(s) in respect of the rights share offer document of Eastern
Insurance Company Limited

This rights share offer document has been reviewed by us and we confirm after due
examination that the issue price is justified under the provisions of the Securities
and Exchange Commission (Rights Issue) Rules, 2006, and also that we shall
subscribe for the under-subscribed rights shares within fifteen days of calling
thereof by the issuer. The issuer shall call upon us for such subscription within ten
days of closure of the subscription lists for the rights issue.

Place: Dhaka
For
Fidelity Assets & Securities Co. Limited.
Swadesh Investment Management Limited.
Standard Bank Limited
Sd/-

ng Director(s)/CEO(s)

Managi

FORM-D
[Rule 8(t)]

Due diligence certificate by the Directors about their personal

Responsibility in respect of the rights share offer document
This rights share offer document has been prepared, seen, reviewed and approved by us and
we collectively and individually accept full responsibility for the accuracy of the information
given in the rights share offer document, relevant documents and financial statements
submitted to the Commission and others concerned under the Securities and Exchange
Commission (Rights Issue) Rules, 2006.
We confirm, after making all reasonable enquiries, that all conditions concerning this rights
issue and rights share offer document have been met. We further confirm that we have not
concealed any information or statement which might have any bearing on the information
already made.
In case of any default or failure on our part, civil, criminal or administrative action may be
taken against us.

Sd/Mujibur Rahaman
Chairman

Sd/Azmal Hossain
Vice Chairman

Sd/Major (retd) A. Mannan

Director

Sd/Matiur Rahman
Director

Sd/Mohammed Mohsin
Director

Sd/Syed Deedarul Alam

Director
Sd/Khaled Salahuddin Ahmed
Director

Sd/Umme Kulsum Mannan

Director

Sd/Durand Mehdadur Rahman

Director

Sd/Haji Abdur Rahim

Director

Sd/Rawnak Karim
Director

Sd/Abdul Kader Mohammad

Mohiuddin
Director

Sd/Zakia Rahman
Director

Sd/Kazi Imdad Hossain

Director
Sd/Mohammad Murshed
Hossain
Independent Director

Sd/Syed Abdullah Humayun Ahmed

Director
Sd/Mohammad Haroon Patwary
Managing Director

Sd/Rokeya Ferdous
Director
Sd/Rais Uddin
Director
Sd/Miah Mohammad Murshid
Independent Director