Company analysis:

ACI was established as the subsidiary of Imperial Chemical Industries (ICI) in the then East Pakistan in
1968. After independence the company has been incorporated in Bangladesh on the 24th of January
1973 as ICI Bangladesh Manufacturers Limited and also as Public Limited Company. This Company also
obtained listing with Dhaka Stock Exchange on 28 December, 1976 and its first trading of shares took
place on 9 March, 1994. Later on 5 May, 1992, ICI plc divested 70% of its shareholding to local
management. Subsequently the company was registered in the name of Advanced Chemical Industries
Limited. Listing with Chittagong Stock Exchange was made on 22 October 1995.

Advanced Chemical Industries (ACI) Limited is one of the leading conglomerates in Bangladesh, with a
multinational heritage. The company has diversified into four major Strategic Business Units.

1. Pharmaceuticals

In 1973, the UK based multinational pharmaceutical company, ICI plc, established a subsidiary in Dhaka,
known as ICI Bangladesh Manufacturers Limited. In 1992, ICI plc divested its share to local management,
and the company was renamed Advanced Chemical Industries (ACI) Limited.

ACI formulates and markets a comprehensive range of more than 387 products covering all major
therapeutic areas, which come in tablet, capsule, powder, liquid, cream, ointment, gel, ophthalmic and
injection forms. ACI also markets world-renowned branded pharmaceutical products like Arimidex,
Casodex, Zoladex, Atarax etc. from world-class multinational companies like ASTRAZENECA, UK and UCB,
BELGIUM in Bangladesh.

ACI is actively engaged in introducing newer molecules and Novel Drug Delivery Systems (NDDS) to meet
the needs of the future.

2. Consumer Brands & Commodity Products

ACI Consumer Brands was initiated in 1995 with two major brands of the company – ACI Aerosol and
Savlon. These are two of most prestigious products which are enjoying the leadership position in the
market. The division started to take new businesses through off shore trading as well as local
manufacturing. In this process ACI Consumer Brands launched many new products and also bonded with
Joint Venture business relationships with ‘Dabur India’ and ‘Tetley UK’ and attained international
alliances with world renowned companies.

The Consumer Brands Division boasts in having an unequivocal presence in consumers' heart with the
market leading brands like ACI Aerosol, Savlon, ACI Mosquito Coil & ACI Pure Spices and Flour. With close
to 80% market share in own categories, ACI Aerosol and Savlon are the persistent performers in keeping
the household clean and free from germs and harmful insects. The ACI mosquito coil has also emerged
as a formidable opponent to both the mosquito and the competition, by providing effective and
affordable solution to the conscious people of Bangladesh.

ACI has entered in to the commodity food business with “ACI Pure” Brand. The aim is to provide purest
of the food products to Bangladeshi consumers at affordable price for which ACI has invested in very
large scale in state of the art manufacturing facilities for daily kitchen essentials like vacuum evaporated
edible Salt, Spices and Flour. The products are delighting the consumers by providing 100% dirt free,
pure and natural food ingredients which can compete against any international products.

3. Retail Chain

ACI Logistics was established with a view to cater to end consumers with best quality fruits and
vegetables, consumer goods and commodity products. ACI Logistics started with a retail chain Shwapno
which operates the largest number of outlets in the country with over 60 outlets.

4. Agribusinesses:

ACI Agribusinesses originated with a mission to develop agriculture for prosperity and has been working
towards this goal proficiently. The outcome of this venture is the business units of ACI Crop Care & Public
health, ACI Seeds, ACI Fertilizer, ACI Motors, ACI Livestock & Fisheries and Cropex.

Key product offerings and prospects of the major product line in the future

1. 'SAVLON Antiseptic’ has established a strong authority in the antiseptic category, being the market
leader in both Liquid Antiseptic and Antiseptic Cream. In the liquid antiseptic category SAVLON has
almost 74% market share and in the antiseptic cream category SAVLON has almost 79% market share.

Savlon Antiseptic has the following products under its Umbrella:

Liquid Antiseptic

In the Liquid Antiseptic category, SAVLON has 5 general SKUs of differing pack sizes: 56 ml, 112 ml, 500
ml, 1000 ml and 5000 ml. In addition there is a special SKU named ‘Hospital Concentrate (HC)’ in 5000 ml
pack size available specially designed for the hospital purposes. The small packs of 56 ml and 112 ml are
available in glass bottles, whereas the bulk packs are available in plastic containers.

Antiseptic Cream

In the Antiseptic cream category, SAVLON has 2 SKUs in 30 gm and 60 gm pack sizes. Savlon Cream
provides a 2 step solution for germ protection. It treats any wound in the skin and helps to heal the
wound quicker by speeding-up the 3 phases of wound closing- Inflammation, Tissue Formation and
Tissue Remodeling. It serves the dual purpose of soothing the skin and providing protection against
germs as well.

Antiseptic Bandage

SAVLON has Antiseptic Bandages in the first-aid category with a 100 pcs and 40 pcs box size. Savlon
Antiseptic Bandage contains Benzalkonium Chloride which has antiseptic properties catered to give
better protection to cuts and wounds. The comfortable absorbent pad won’t stick to wound and can be
removed gently. It has unique adhesive that helps plaster to stay on.

2. ACI Aerosol

ACI came up with and offered a range of insect killing products like ACI Aerosol, Mosquito Coil and
Cockroach Killer Spray.

Since its inception in 1967, ACI Aerosol has been the number one choice of consumers in Bangladesh.
The effort to ensure the highest quality has helped ACI to be THE MOST EFFECTIVE MOSQUITO KILLER.

3. ACI Cockroach Spray

ACI launched its ACI Cockroach Spray in June 2008, the first ever locally manufactured Cockroach killing
Spray with an objective of giving people relief from the menace of Cockroaches and also making the
whole process of killing Cockroaches a safer and convenient one as using powder and chalk is harmful for
health. Efficacy of the product is very high and it allows consumers to get rid of cockroaches quickly.

4. ACI Mosquito Coil

ACI Mosquito Coil is another important product of the Home Care category of ACI Consumer Brands. ACI
Mosquito Coil has different Brands based on different shape, color and fragrance and price.

ACI Mosquito coil has the following brands: ACI Hi Power, ACI Super, ACI High Booster and ACI Black
Fighter.

Because consumers’ health and well being is always a priority to ACI we have top quality active
ingredients like Metofluthrin and D-Allethrin from Sumitomo Corporation of Japan. None of our Coils
have any harmful ingredients like DDT or Endrin in it.

Among all its brands ACI Black Fighter has already captured the position of market leader in black coil
category.

5. ACI Salt
ACI brought the finest quality iodized edible salt and educated the consumers to distinguish between
ordinary salt and 100% pure salt.

Within only six months of its launch, ACI PURE Salt captured the leadership position in the market. Since
then, ACI PURE Salt is the distinctive market leader in the packed salt industry. These all were possible
due to the innovative & intriguing marketing campaigns and strong distribution. ACI Pure Salt is
processed through the most modern vacuum evaporation system which ensures 100% pure, crystal
white, properly iodized and free flowing edible salt. Its high quality food grade laminated packaging
ensures the iodine contents to remain active for longer period and at the same time protects the salt
from moisture or any impurities.

6. Savlon Antiseptic Hand Wash

Hand washing with soap is one of the most effective ways to prevent diseases. Savlon Hand Wash brings
more excitement and pleasure in regular hand washing practice of consumers by its three regular
different variants- Active, Aloe Vera and Ocean Blue and the new three herbal line variants Marigold,
Irish and Lavender Hand Wash. Savlon Hand Wash leaves consumers’ skin feeling smooth, soft and
refreshed thus ensuring ‘complete family protection’ against germs in a charming way.

As an upshot, ACI Pure Salt become No. 1 choice and won Best Brand Award in Foods and Beverage
category in 2008 and consecutively for four times in the year 2011, 2013, 2014, and 2015 in Salt
category. It has received the global recognition for its excellent packaging design through the book, "Pack
Your Life" volume 3 and also received the Occupational Health and Safety Management System
certification i.e. OHSAS 18001:2007 first time in salt industry in Bangladesh.

7. Savlon Soap

For endorsing bathing time pleasure and protection from germs, ACI Consumer Brands launched Savlon
Antiseptic Soap with 3 distinct variants- Active, Mild and Fresh with accessible in 3 different pack sizes.
Savlon Active Antiseptic Soap is intended for the individuals who drive dynamic way of life and
consistently bend towards solid insurance against germs whereas Savlon Mild is envisioned for the
individuals who are cognizant about both germ assurance and moisture level of skin. Concentrating on
key consumer need of freshness, Savlon Fresh ensures long lasting freshness with a stronger
antibacterial protection.

Over a decade, Savlon has successfully positioned itself as a trustworthy & reliable antiseptic soap that
kills maximum amounts of germs with extra care of skin. The core value carried by Savlon is “Everyday
Protection Against Germs”.
8. Savlon Freedom Sanitary Napkin

To ensure good female hygiene practice among the Bangladeshi women, ACI launched Savlon Freedom
sanitary napkin in 2008 under the Female Hygiene Category. ACI is always trusted by the consumers for
its excellent product superiority. The product superiority of Freedom sanitary napkin has further
increased the trust of the consumers.

Savlon Freedom is the international standard Sanitary Napkin manufactured through World's latest
technology.

Savlon Freedom sanitary napkin is available in the Retail Drug Outlets, General and Departmental Stores
and also the Super Markets. Strong visibility in these strategic places creates a lot of enthusiasm among
the consumers and traders. Ultimately, Freedom has a positive impact on the brand trial, sales and
growth.

9. Shwapno

With over 60 outlets, Shwapno is the largest grocery chain in Bangladesh and Best Retail Brand in the
country. Starting off with fresh produce and daily household needs, Shwapno outlets now carry
everything from apparel, home décor, electronics and much more. This includes a number of grocery
private label brands as well as the in-house fashion label Shwapno Life. Today, Shwapno operates 56
outlets across Dhaka, Chittagong, Sylhet and Comilla, with a total retail space of 310,000 square feet and
a workforce of over 2,500.

The company has been successful in reaching its position as market leader (with 45% market share) not
only because of the exceptional quality, value, convenience and service it offers customers, but because
Shwapno has been successful in developing a truly world class retail architecture and shopping
experience for the first time in the country.

Its generic strategy – whether it is a cost leadership or differentiation

They are pioneer in some of the business lines and still holds the market leading position on those
respective business lines. In those fields being pioneer they once were differentiator but currently those
product lines have become competitive so they are now cost leader on those business lines. Apart from
those business lines thier overall market psition states that they are following cost leadership strategy.
They are OPM and NPM at least say that. Conpared to their peer pharmaceutical firms their OPM and
NPM is relatively lower. And their are a lot of firms in the industry so it can be said that being cost leader
is the easiest way to survive and sustain unless you have a lot of R&D expenditure to come up with some
differentiated products.

Major risks of the business model and risk management

Competition may increase in the pharmaceutical sector due to entrant of new companies which may
ultimately reduce the market share as well as profitability of the company.
ACI’s healthcare and agro based products are based on latest technological developments and marketed
for the domestic consumers. With the shrinkage of domestic demand as well as introduction of latest
technology in products by its competitors, the company may witness reduction of sales as well as
profitability.

Moreover government has given very high priority to the development of healthcare and agricultural
sector and policies are favorable. Any adverse change by the Government in fiscal policies relating to
ACI’s business may adversely affect Company’s profitability.

Also as the Company’s product lines mainly consist of healthcare and agro based products which are
primarily based on imported raw material, international price movements affect the whole industry by
and large. The plant and machinery will be imported and costs may fluctuate owing to changes of
exchange rate

To combat those risks, Risk Management is an ongoing process in ACI where risks are identified along
with recognition of risk factors. These are continuously reviewed and evaluated to ensure the
achievement of business objectives. The Managing Director has to assure the Board on the adequacy of
Business Risk Management and Internal Control Processes.

Internal Audit provides the oversight in this regard through the Audit Committee. As such, Risk
Management and Internal Audit department regularly monitors and reviews the processes and
transactions using risk indicators to prepare detailed risk map to meet its obligations.

The Audit Committee and the Managing Director review this risk map periodically.

Its areas of competencies

As being a pharmaceutical firm with some other well reputed subsidiaries from other inustries, ACI
Limited is acutually better known as a pharmaceutical firm. So it should be their area of competency. But
is it still their major revenue generating source? Answer is a simple 'Yes'.

Figure: Turnover contribution by business units

As per the graph presented here their area of competemcy is obviously in pharmaceutical sector. Around
a half of their total contribution comes from the production in pharmaceutical sector.