CASE STUDY

Total marks: 100 Time allowed: 4:30 hours

Instructions:

1. Check that your question paper contains all the exhibits as mentioned in page 3. The consecutive page
numbering may be found under the base line at the foot of each page.

2. Use the answer script provided by the Institute. Write your name, roll no., registration no. and name of the
subject on the upper portion of the cover page of the answer script.

3. Candidates are asked not to write any particulars of identification in any other place of the answer script
and additional pages if taken.

4. Questions must be answered in English.

5. The answer should be referenced to the relevant workings.

6. Answer script and additional page(s) taken to write answer, used or unused, must not be removed or taken
away from the Examination Hall.

Page 1 of 17
Requirements & Marks Allocation:
You are Sarwar Zaman, a Senior Manager at Shahima Shohana Shumi & Co., Chartered Accountants. The partner
of the firm, Ms. Shahima Jabin FCA has been appointed as a Business Advisor of the Obokash Ltd. She has received
an assignment e-mail from Mr. Salman Khan, Managing Director (Exhibit-1) of the Obokash Ltd. Ms. Shahima
Jabin FCA has asked you, Sarwar Zaman, to prepare a report covering all the requirements stated in the e-mail of
Mr. Salman Khan.
Requirements:
You are required to prepare a draft report to your principal Ms. Shahima Jabin FCA. Your report should comprise
the following elements:
 An executive summary
 Your responses to the detailed requirements (a), (b) and (c) set out in Exhibit-1.
 State clearly any assumptions that you make.
Of the total marks allocated, 10% are included for the relevant discussions of ethical issues within your answer to
the requirements.
Marks Allocation:
All of the marks in the Case Study are awarded for the demonstration of professional skills, allocated broadly as follows:
Requirements Professional Skills Total
Assimilating Structuring Applying Conclusions and Integrative &
and using Problems and Judgment making multidisciplinary
information solutions recommendations skills
Executive Summary 3 3 4 3 2 15
Requirement (a) 5 9 8 6 2 30
Requirement (b) (i) 5 7 6 5 2 25
(ii) 4 3 4 2 2 15
Requirement (c) 3 3 3 4 2 15
Total 20 25 25 20 10 100

In planning your report, you should be aware that not attempting one of the requirements, including an executive
summary, will have a significantly detrimental effect on your chances of success. In addition, as indicated above,
all skills areas will be assessed under each element of your report.

You should be clear that marks are awarded for demonstrating your professional skills, not for reproducing facts
from the case. In order to be successful, you will need to:
 Demonstrate your knowledge of the case material and make use of your analysis.
 Carryout relevant analysis of the problems and structure your proposed solutions.
 Apply your judgment on the basis of the analysis that you have carried out
 Draw conclusions from your analysis and judgment, and develop them into practical commercial
recommendations.
 Ethical issues may cover the following topic-
- Lack of professional independence or objectivity
- Conflict of interest among stakeholders
- Doubtful accounting or commercial practice or market competition or Market proximity
- Inappropriate pressure to achieve a reported result.
- Compliance of local laws and regulations
 Integrative & multidisciplinary skills may cover the following areas-
- Depletion and wastage of natural resources and its impact on environment and climate change.
- Impact on pollution, on the public health and productivity and on the national health budget.
- Social impacts, e.g. social unrest for allowing use of alcohol, bar, etc.
- Economic impacts, e.g. on employment generation and improvement in connectivity using ICT.

Page 2 of 17
 LIST OF EXHIBITS

Exhibit Description Page

reference
1 E-mail from Mr. Salman Khan, Managing Director of Obokash Ltd. to
Ms. Shahima Jabin FCA, Partner in Shahima Shohana Shumi & Co. &
Co., Chartered Accountants dated 10 November 2020. [EXHIBIT-1] 4-6
2 Summarized Financial Statements of the Obokash Ltd. [EXHIBIT-2] 7-8

3 A Brief notes on Obokash Ltd. and Tourism Industry in Bangladesh

[EXHIBIT-3] 9-10
4 Accounting and Tax issues [EXHIBIT-4] 11

5 Operational issues. [EXHIBIT-5] 12

6 Business acquisition and financing options [EXHIBIT-6] 13-14

7 Acquisition of K&Q Tourism Company Ltd. [EXHIBIT-7] 15-16

8 News Paper Cuttings on the current state of tourism industry in

Bangladesh [EXHIBIT-8] 17

Page 3 of 17
 EXHIBIT – 1
E-MAIL
From : Mr. Salman Khan, Managing Director
To : Ms. Shahima Jabin FCA, Partner
Subject : Evaluation of business expansion proposal and investment viability based on past
performances & future prospects of the company and associated issues.
Date : 10 November 2020
_________________________________________________________________________________________
Dear Ms. Shahima Jabin,
I am pleased to inform you that the Board of Obokash Ltd. appointed you as its advisor on business development and
expansion projects. Your areas of works will be: initial public offering (IPO) of shares, Issuance of Bond, evaluating
investment options, Risk Management, Governance, Due Diligence, Restructuring, etc. You will also be required as
an advisor to carryout negotiation on behalf of the company with the Government agencies including Bangladesh
Bank, Bangladesh Securities and Exchange Commissions, DSE, CSE, BIDA, etc. on the above areas of works.
Your remuneration will be Tk. 15,00,000 for evaluation of the Obokash Ltd.and due diligence of Business
expansion & for providing related services for obtaining Obokash Ltd.’s IPO approval at highest possible premium
or issuing Subordinated bond, as the case may be and Tk. 400,000 per month for next 2 years will be given for
providing the advisory services for business efficiency and strategic decisions.

As agreed, please find the extracts of financial statements of the Obokash Ltd. for the year ended 30 June 2019
(Exhibit 2). Besides the issues mentioned below, please take into consideration the relevant information provided
in Exhibits 3 to 8 for your analysis and to draw your conclusion and recommendations for the requirements stated:

Shareholders and key management issue

I am the Managing Director and Chairman of the Board of Directors of Obokash Ltd. The board of the company is
currently composed of five directors and two non-executive directors. The two non-executive directors are close
friends of me who had no relevant work experience but they are mechanical engineer. There have been several
board meetings held without the non-executive directors. This situation is largely due to believe by the directors
that non-executive directors are really not needed since they do not play any important role on the board.
The authorized share capital of The Obokash Ltd. is Tk. 5000 million, the par share value is Tk. 10. The paid up
capital is Tk. 2000 million. The shareholding position as on 30 June 2019 is as follows:
Name of Shareholders Ownership % Mrs. Nasima Momim 10%
Mr. Salman Khan 30% Mr. Tazrian Khan 7.5%
Mr. Amir Khan 25% Mr. Shariful Islam 7.5%
Mr. Tapas Momim 20% Total 100%
Our trips:
Our trips are carefully mastered to combine the cultural and natural riches with comfort, safety, luxury and
adventure to create trips that will have our guests talking for a long time. We have four key components; discovery,
value, pace, and choice.
External Audit and auditors of the company
PQR & Co. Chartered Accountants has been audited the company for last 2 years. The statutory audit of The
Obokash Ltd. for the year ended on 30 June 2020 was signed off by the auditor on 22 September 2020 with an
unqualified opinion. The accounts were approved in the Board meeting dated 20 September 2020 and placed in the
Annual General Meeting (AGM) dated 30 October 2020. The existing auditor is eligible to reappoint for the year
2019-20 and they express their willingness to be the auditor of the company which was approved in the AGM dated
30 October 2020 at the existing fees. Accordingly, the auditors submitted necessary papers to RJSC on time.
However, the Company now wants to change the auditor, ABC & Co. Chartered Accountants being ABC & Co.
has fame in handling IPO Prospectus and preparing financial statements required to pass through IPO application.
ABC & Co. has good connection with the Issue Manager who obtained premium approval.

Page 4 of 17
Business Strategy
The board of directors of The Obokash Ltd. decided to acquire K&Q Tourism Company Ltd. who are one of the
best negotiator with the international tour operators as well as with best ticket and hotel booking counters. If the
Board of Obokash Ltd. is successful in acquiring K&Q Tourism Company Ltd.’s business, they might be leading
Hotel, Motel and tour Planner Company in Bangladesh. Bangladeshi and international travellers, tourists can keep
trust on the Obokash Ltd. The Board is expecting synergy effect which will impact on the value of the shareholders.
The travel industry is a highly competitive industry with everyone competing to become the best travel company
in Bangladesh. In order to secure our position as a leader in this industry and also to become the best tour operator
agency in Bangladesh, Obokash is keen on focusing in four strategic areas, namely:
 Keeping the Company financially and economically healthy at all times.
 Presenting high quality service to customers that translate to customer loyalty resulting in repetition of
orders and referrals that create new and bigger opportunities.
 Maintaining a high-performing team that consistently displays competence in customer orientation and
driving for results with the highest regard for professional ethics and doing all of the above at the lowest
cost in the industry.
Growth strategies
The management of Obokash Ltd. believed that they need to think ahead and develop a strategy for taking the
company forward and growing the business. There seem to be a number of different options for growth, and they
want The Obokash Ltd. to be at the forefront of developments in the tourism industry. The strategic options they
have discussed are set out briefly below:
Increase the number of tours each year. In FY 2018-19 the company ran one hundred twelve tours. It might be
able to increase this number in near future, although there is probably a limit to the number of tours that can be
sold to customers in the north-east of the USA and Asian countries. There would be a need to recruit more tour
guides and look for the customers beyond the north-east of the USA.
Develop new bespoke high-end luxury tours, tailored to the specific requirements of individuals, couples or small
families, where customers are accommodated in top quality hotels and have their own tour guides and private cars.
These bespoke tours should sell for at least twice the price per person that the company charges for its existing tours.
Develop a range of themed tours. Currently, the company’s tours have an itinerary that combines different types
of activity, such as visits to local festivals and events, visits to UNESCO heritage sites linked to the country’s
history, adventure tours to rain forests and game parks, and recreational days at beach resorts. The company could
develop tours that deal exclusively with just one type of activity.
Seek strategic tie-ups with other businesses in the tourism industry in Bangladesh, such as hotels and festival
event organisers, so that they actively market each other’s services and products to their customers.
Merger/acquisition. The company might consider a merger with one or more other tour companies. The directors of
The Obokash Ltd. think that if they would be unable to raise enough finance for an acquisition of suitable size, so any
growth by way of business combination would have to be in the form of a merger, involving a share-for-share exchange.
Company performance
The directors are pleased with the progress that the company has made since it was established. Although Covid
19 pandemic outbreak affected the tour package sales and hotel and motel operations negatively, the
Directors strongly believe that the Company has encouraging future prospects. The Company’s business is still at
an early stage of development, and the directors understand that the company needs to sustain or improve the
quality and efficiency of its operations and the skills of its employees. It cannot stand still and so needs to innovate,
and it must find new ways of attracting customers so that its business continues to grow. Until now, the directors
have not made formal plans or budgets for the business, but they think that the company is reaching a stage where
greater formality is required in the process of setting business targets and monitoring performance.

Page 5 of 17
Environmental and Safety policy

Environmental protection is now a key aspect of corporate social responsibility. The company recently
implemented an environmental and safety policy, which is monitored through an audit system, in an effort to ensure
that its policies are being executed. It is the aim of the company to have operational standards which match with
the best industry’s standard. Training of management, staff and specialist auditors is seen as a priority within the
organization’s environmental and safety policy. This has become a major concern for the company, because of
customer anxiety about the safety of the drinks and foods. The company does not prepare sustainability reporting
and integrated reporting.

Corporate Social Responsibility

The Obokash Ltd. has adopted a Social Responsibility (CSR) Policy, which acts as a guide towards planning and
executing the company’s CSR activities. The Obokash Ltd. runs extensive volunteering works for the improvement
of the under privileged people of the country. Under this program, the company arrange health awareness seminar,
fire awareness seminar etc. In 2018-2019 the company did the following:
 The company has paid a donation of Tk. 1.50 million to a NGO who works for HIV where one of the
directors of The Obokash Ltd.is a trustee.
 The company contributed Tk. 0.20 million each year to the Health Program at Char Area of a district from
which one of the Directors hails from, for the free treatment of the poor people in this locality.
 The Obokash Ltd. supported the medical expenses amounting Tk 2 million for treatment of under
privileged and poor people in the country in FY 2019-20. Although the company is under cost pressure but
it has decided to continue this for next 3 years.
 The Obokash Ltd. recently has agreed to provide financing support to 2 poor and brilliant students studying
hospitality and tourism in university @ Tk 10,000 per student for two years.

You are advised to –

(a) Prepare a draft report, including an executive summary, evaluating the performances of The Obokash Ltd.
and advising the viability of the business expansion through acquisition of K&Q Tourism Company Ltd.
suggesting the best alternative to finance the said plan.
(b) (i) Critically comment on the strategic planning of the business and evaluate the strengths, weaknesses,
opportunities and threats (SWOT) of Obokash Ltd. and based on the SWOT, recommend to the Board
with justification the acquisition of K&Q Tourism Company Ltd. by Obokash Ltd.
(ii) You are also requested to advise the Board of the The Obokash Ltd. regarding appointment of ABC & Co.
Chartered Accountant subsequent to the AGM at the same fees of the existing auditor for the year 2020-21.
(c) Assess the economic and social impact of Obokash Ltd. and evaluate the ethical issues with regard to the
proposed acquisition and doing business in Bangladesh.

I look forward to receiving your draft report on or before 05 December 2020.

Yours sincerely,

Salman Khan
Managing Director

Page 6 of 17
 EXHIBIT- 2
THE OBOKASH LTD.
Statement of Financial position
As at 30 June 2019
Figures are in Taka
30-Jun-20 30-Jun-19 30-Jun-18 30-Jun-17 30-Jun-16 30-Jun-15
Assets
Non-current assets
Property, plant and equipment 1,252,999,980 1,417,420,792 1,603,417,185 1,813,820,345 2,051,434,537 1,536,139,468
Capital work in profiress 446,570,281 446,570,281 446,570,281 446,570,281 171,696,893 -
Intangible assets 1,309,830 1,309,830 1,309,830 1,309,830 1,309,830 106,723
Investments 776,381,635 664,990,280 404,007,593 89,663,716 82,464,043 -
Total non-current assets 2,477,261,726 2,530,291,183 2,455,304,889 2,351,364,172 2,306,905,303 1,536,246,191
Current assets
Inventories 35,045,053 28,045,053 33,045,053 31,045,053 16,814,138 -
Accounts receivable 41,517,934 45,517,934 145,517,934 45,517,934 28,516,945 -
Advances, deposits and prepayments
226,741,457 217,741,457 117,741,457 217,741,457 183,006,803 6,803
(including advance income tax paid)
Cash and cash equivalents 64,720,034 32,144,890 17,123,214 17,022,320 39,248,350 463,747,006
Total current assets 368,024,478 323,449,334 313,427,658 311,326,764 267,586,236 463,753,809
Total assets 2,845,286,204 2,853,740,517 2,768,732,547 2,662,690,936 2,574,491,539 2,000,000,000
Equity and Liabilities
Equity
Share capital (200,000,000 shares of Tk 10) 2,000,000,000 2,000,000,000 2,000,000,000 2,000,000,000 2,000,000,000 2,000,000,000
Retained earnings 15,163,371 55,506,407 32,274,589 9,353,675 5,548,071 -
Revaluation surplus 468,860,532 468,860,532 468,860,532 468,860,532 468,860,532 -
Total equity 2,484,023,903 2,524,366,939 2,501,135,121 2,478,214,207 2,474,408,603 2,000,000,000
Liabilities
Non-current liabilities
Deferred tax liabilities 55,857,794 51,259,405 42,405,669 33,359,855 19,337,254 -
Total non-current liabilities 55,857,794 51,259,405 42,405,669 33,359,855 19,337,254 -
Current liabilities
Accounts payable 243,267 543,267 743,267 943,267 791,552
Dividend payable 100,000,000 100,000,000 100,000,000 80,000,000 50,000,000
Provision for income tax 170,967,700 147,975,755 103,707,075 58,478,005 24,961,775 -
Provision for WPPF and Welfare Fund 34,193,540 29,595,151 20,741,415 11,695,602 4,992,355 -
Total current liabilities 305,404,507 278,114,173 225,191,757 151,116,874 80,745,682 -
Total liabilities 361,262,301 329,373,578 267,597,426 184,476,729 100,082,936 -
Total equity and liabilities 2,845,286,204 2,853,740,517 2,768,732,547 2,662,690,936 2,574,491,539 2,000,000,000
Net Asset Value Per Share 12.42 12.62 12.51 12.39 12.37 10.00

Page 7 of 17
 EXHIBIT- 2

THE OBOKASH LTD.

Statement of Profit or Loss and Other Comprehensive income
For the year ended 30 June 2019

Figures are in Taka

30-Jun-20 30-Jun-19 30-Jun-18 30-Jun-17 30-Jun-16
Revenue (including investment income) 343,642,115 453,607,592 481,098,961 458,189,487 170,807,733
Cost of sales (171,966,088) (193,182,370) (217,246,948) (244,132,085) (2,014,380)
Gross profit 171,676,027 260,425,222 263,852,014 214,057,402 168,793,353
Administrative expenses (61,459,631) (60,851,119) (60,248,633) (59,652,112) (54,204,699)
Selling and distribution expense (14,913,145) (14,896,065) (14,879,319) (14,862,902) (9,749,199)
Operating Profit 95,303,252 184,678,038 188,724,062 139,542,388 104,839,455
Finance costs - - - - -
Non-operating income/(loss) 1,262,918 1,250,414 1,238,034 1,225,776 -
Profit before tax and WPPF and Welfare Fund 96,566,170 185,928,452 189,962,095 140,768,164 104,839,455
Contribution to WppF and WelfareFund (4,598,389) (8,853,736) (9,045,814) (6,703,246) (4,992,355)
Profit before tax 91,967,781 177,074,716 180,916,281 134,064,918 99,847,100
Income tax expenses:
Current tax
Current year @ 25% (22,991,945) (44,268,679) (45,229,070) (33,516,230) (24,961,775)
Previous year's short provision (4,720,483) (720,483) (3,720,483) (2,720,483) -
Deferred tax (4,598,389) (8,853,736) (9,045,814) (14,022,601) (19,337,254)
Net profit after tax for the year 59,656,964 123,231,818 122,920,914 83,805,604 55,548,071
Other comprehensive income
Items that will never be reclassified to profit or loss - - - - -
Items that are or may be reclassified to profit or loss - - - - -
Total other comprehenslve income - - - - -
Total comprehensive income 59,656,964 123,231,818 122,920,914 83,805,604 55,548,071
Earnings Per Share (Basic) 0.30 0.62 0.61 0.42 0.28

Note: 1
Cost of sales:
Direct cost 7,545,276 7,185,977 6,843,788 6,517,893 2,014,380
Depreciation 164,420,812 185,996,393 210,403,160 237,614,192 -
171,966,088 193,182,370 217,246,948 244,132,085 2,014,380

Note: 2
Dividend rate 5% 5% 5% 4% 2.5%
Net profit for the year 59,656,964 123,231,818 122,920,914 83,805,604 55,548,071
Dividend (100,000,000) (100,000,000) (100,000,000) (80,000,000) (50,000,000)
Current profit after dividend (40,343,036) 23,231,818 22,920,914 3,805,604 5,548,071
Retained earnings brought forward 55,506,407 32,274,589 9,353,675 5,548,071 -
Retained earnings carried forward 15,163,371 55,506,407 32,274,589 9,353,675 5,548,071

Page 8 of 17
 EXHIBIT- 3
A Brief notes on Obokash Ltd. and Tourism Industry in Bangladesh
Introduction
Amir Khan and Salman Khan met in 2015 when they were both students at a university in the United States. They
both had ambitions to succeed in business back in their home country, Bangladesh. They shared common interest in
Bengali history and culture, and saw commercial opportunities in setting up a business in the tourism industry. At that
time, tourism was a growing but under-developed industry. Amir and Salman agreed that if they could establish a
small and successful tourism business, there would be opportunities for rapid growth within just a few years.
On returning to Bangladesh, they established a company, The Obokash Ltd., with money from family backers and
some private means. The company’s business was to organise small tour groups of tourists from the United States
and the middle-eastern countries. They had dedicated tour guides taking the groups on planned itineraries lasting
about four weeks. Initially, Amir and Salman acted as tour guides themselves, now that the company has grown,
neither Amir nor Salman act as tour guides themselves, and together they handle all the administrative and financial
affairs of the company, with the help of an assistant, from their office in Dhaka.
Early growth of Obokash Ltd.
The tourism industry in Bangladesh suffered from a skills shortage, and the Obokash Ltd. proved a success initially
because Amir and Salman were both talented individuals, with a strong motivation to succeed, extensive knowledge
of Bangladesh and its tourist attractions, and an ability to communicate easily with their US customers. The
company gained a strong reputation in parts of the US for efficient tour organisation, but also exhilarating and life-
enhancing tours.
As the company grew, it recruited a small number of full-time tour guides, using contacts in US universities to
identify and attract Bangladeshi who were studying there and were attracted by the prospects of working in the
tourist industry in Bangladesh, and for a company where the prospects of career development seemed strong. In
recruiting new guides, the company looked for individuals with strong motivation, an interest in Bangladesh and
its history, culture and resources, and an ability to communicate well with both foreigners and the local folks.
The tourism industry in Bangladesh
Bangladesh, in 2018, earned about US$3 billion for the national economy, attracting about 7.5 million international
tourists from around the world and employing almost 700,000 people. However, the industry is fragmented, with
many small companies operating hotels, travel services, tours, catering for tourists, and so on. Visitors range from
tourists looking for low-price holidays or short breaks to wealthier tourists taking longer holidays and visitors to
business conferences. The government is helping to support growth in tourism by funding infrastructure projects
and other initiatives. However, Bangladeshi’s tourist industry is still under-developed compared to other countries
in Asia. Factors that appear to be holding back growth are a shortage of individuals with suitable skills, and
insufficient branding and marketing of Bangladesh as an attractive tourist location to other countries. Tourists also
often complain about the lack of comfort on tour buses that take them between their hotels and sightseeing locations.
Social and Economic Aspects of tourism in Bangladesh
Tourism industry is directly related to the environment. The quality of the environment, both natural and man-made, is
essential to tourism. However, the relationship of tourism with the environment is complex. It involves many activities
that can have adverse environmental effects. Many of these impacts are linked with the construction of general
infrastructure such as roads and airports, and of tourism facilities, including resorts, hotels, restaurants, shops, golf
courses and marinas. The negative impacts of tourism development can gradually destroy environmental resources on
which it depends. On the other hand, tourism has the potential to create beneficial effects on the environment by
contributing to environmental protection and conservation. It is a way to raise awareness of environmental values and
it can serve as a tool to finance protection of natural areas and increase their economic importance.
Non-Executive Directors:
Although there is no requirement for the company to appoint non-executive directors, Amir thinks that more
diversity of membership would benefit the board and the company’s leadership. He thinks that it might be a good
idea to appoint a non-executive director to assist them with strategy formulation. Salman disagrees, and thinks that
if there is any benefit to be gained by increasing the size of the board, the new appointment should be an executive
director, chosen from among the company’s tour guides. In this way, the owners would be demonstrating their
commitment to promoting the careers of the individuals they recruit for their business.

Page 9 of 17
Decision-making
The directors are reluctant to delegate authority to their employees. Each tour has a strict budget, and most spending
is controlled from head office, for example spending on hotels, transport, entry to tourist sites and insurance. Tour
guides are given a small budget for each tour for discretionary spending. Problems and concerns of customers
during their tour are dealt with initially by the tour guide, but are referred to head office if they cannot be resolved
easily. Even so, the directors are keen to encourage their participation in decision-making, and to this end they hold
six-monthly meetings with staff. These meetings are used to discuss issues that have arisen in the business, matters
that concern staff, and ideas that the directors have for the future of the business. Amir and Salman think that these
meetings are constructive and useful. The meetings help them to monitor feelings and concerns among employees,
and give employees an opportunity to contribute their ideas about how the company should be run and what it
should be doing.
Sustainability
During their period of study in the USA, Amir and Salman met and shared ideas with many individuals who were
concerned about climate change, pollution of the earth and its atmosphere, and protection for wildlife. As a result
of these influences, both directors have a strong sense of business ethics and sustainability. They believe that their
company should demonstrate the attractions of Bangladesh to foreign visitors, but should operate their business
without causing unnecessary environmental damage. They strongly support efforts by the government to protect
rain forests and game parks, and for the protection of wildlife in game parks. In spite of these views, they want to
increase the numbers of international tourists visiting Bangladesh, even though they recognise that an expanding tourism
industry might have adverse consequences for the country’s environment.
Personal security and customer protection
International visitors to Bangladesh sometimes express their concerns about personal security and the risk of being
attacked and robbed. Tourists are often the target for criminals operating around tourist locations, with crimes such
as muggings, bag snatching, petty theft and pickpocketing, particularly in markets and tourist sites, and on beaches.
Tour guides are instructed to warn the tourists in their group about the dangers, and to remain vigilant for possible
problems. Customers are also advised to take out suitable insurance before starting their holiday. It is generally
recognised that Bangladesh is a safer country for tourists than some other countries in Asia.
Standards of customer service
The company has produced a code of conduct for its employees. As well as addressing the matter of personal
security and crime, the code also deals with standards of service to the company’s customers. There have been
occasional incidents in the past when standards of service have been poor; in particular, tour guides have sometimes
left their group on their own, waiting for the local guide to turn up. There have also been complaints about tour
guides ignoring customer requests for assistance, or forgetting to do something that they were supposed to do for
their group. There have been some indications recently that this problem is getting worse.
Financial issues
When the company was established, it was financed entirely by equity capital. As the business grew and made profits
in some years, a proportion of the profits were retained in the business to finance further growth. There have been no
loss for the Company’s since it’s started and the Directors recommended and paid dividend since FY 2015-16. Some
thought was given a few years ago to buying two tour buses for the company, but the buses would not be used
sufficiently to justify their cost, and the cost of employing the drivers. The company needs a relatively large amount
of working capital. This is because when a tour is organised, The Obokash Ltd. is required to make down-payments
to airlines, hotels and other suppliers a long time in advance of the tour. Customers who book tours are required to
pay a deposit, but the deposit money is not sufficient to cover the company’s growing recurring expenses.
The company prices its tours in US dollars. Its expenses are mainly in US dollars (e.g. payments to airlines) and
partly in Taka (for example, payments to hotels). Its short-term borrowings are in Taka. Occasionally, tour groups
visit parts of Bangladesh where most businesses do not accept credit card payments. Customers also sometimes
want to buy Taka for personal expenditure, but have difficulty in finding a reliable foreign currency bureau or bank
which can arrange currency transactions. The Obokash Ltd. directors would like to make it more convenient for
customers to make payments in Taka or buy Taka, but they are not sure what can be done.

Page 10 of 17
 EXHIBIT– 4
E-MAIL

From : Mr. Salman Khan, Managing Director

To : Ms. Shahima Jabin FCA, Partner
Subject : Accounting and Tax issues
Date : 10 November 2020
_________________________________________________________________________________________

(a) The Obokash Ltd. purchased a wide range of food items from Mahin Ltd. and selling them to tourist at
hotel and motel. Atiq is the CEO of Mahin Ltd. and brother in Law of Mr. Salman Khan. Atiq owns 40%
of Mahin’s equity shares:
i) Mahin is the largest supplier to the Obokash Ltd. Account for 25% of direct cost are supplied by Mahin
Ltd. The Obokash Ltd. has just completed negotiations with Mahin Ltd. for a special 5% discount on
its supplies.
ii) During the accounting period, Atiq purchased a property from The Obokash Ltd. for Tk. 2 million.
Salman Khan had previously declared the property surplus to its requirements. The book value as on
30 June 2020 of the property is Tk.3 million.

(b) The Obokash Ltd. had 20 katha land in Bandarban which was purchased in 2015 at Tk. 10 million. The
company Managing Director gave the power of attorney on 30 June 2020 to a Developer Company SMC
Ltd. who will construct 12 storied building at 50% ownership ratio. Company keeps a single floor at value
Tk. 10 million and rest floors will be sold out personally to the relatives of the directors. No movement
was made in the Balance sheet of the company. No discussion was made in the last AGM held on 28
October 2020. Fair market price of each floor is Tk. 3.0 crore.

(c) Taxation: The Company does not deduct any Tax and/or VAT from suppliers, from salaries of employees
and when paying the dividend. Also the Company did not submit any withholding tax return for deduction.
Deputy Commissioner of Taxes (DCT) disallowed expenses and assessed taxes as follows:

i) Reasons for disallowances AY 2017-18 AY 2018-19 AY 2019-20

ii) Excess perquisites/ not deducting taxes and Tk 7,000,000 Tk 6,000,000 Tk 5,000,000
submission of withholding tax returns
iii) Excess expenditure over limit on account of Tk 2,000,000 Tk 1,500,000 Tk 1,000,000
entertainment and foreign travelling
iv) DCT disallowed 50% of the claimed Promotional
expenses (claimed amount was 2% of revenue)
v) Other expenses disallowed Tk 850,000 Tk 750,000 Tk 500,000
vi) Company charged depreciation following rates and declining method of 3rd schedule of ITO 1984.
vii) No depreciation was allowed by DCT on revalued amount, although the same was charged in accounts.

The Company submitted appeal against the assessment orders but did not get any remission from
Commissioner Appeal and Income Tax Tribunal for AY 2017-18 and AY 2018-19 which are now pending
in High Court. The disputed tax amount are @ 25% on the above disallowances. Assessment order for AY
2019-20 is pending with Commissioner Appeal. Similar situation may arise for income year 2019-20 also
Return of which is under preparation. The Company strongly believed no additional provision for such
disallowances were/are required because it’s lawyer has advocated strongly in the High Court in its favour.
Company did not make any provision for gratuity as such no addition was made by DCT. Estimated gratuity
obligations to employees on 30 June 2020 will be Tk 20 million.

Page 11 of 17
 EXHIBIT -5
EMAIL

Dated : 10 November 2020

From : Director Operations
To : Ms. Ms. Shahima Jabin FCA
Copy to : Mr. Salman Khan
Subject : Operational Issues
_________________________________________________________________________________________

Change of auditor:
You have been informed that the Company wants to replace the existing auditor by appointing ABC & Co.
Chartered Accountants who is expert in income tax also. ABC & Co. is in view that Company does not require to
provide for deferred tax because there is no temporary difference between accounting and taxation bases. Therefore,
Company wants to write back the deferred tax provisions so far made before going for public issue. Also the
existing auditor, PQR & Co. Chartered Accountants was pressurizing the Board for capitalization of the Capital
Works In Progress (CWIP) during the FY 2019-20 because there was no movement in this account for last three
years. The Board apprehends that the existing auditor will not agree to sign the audited accounts if the company do
not follow their advice next year, in which case depreciation charge will go up and profit of the Company will go
down. Existing auditor was also not agreeing with the Company’s plan for giving the flat without any consideration
to the relatives of the Directors which will be constructed by a developer on the Company’s land in Bandarban.

Shortage of talent
The company has so far been very careful in its selection of guides to lead its tour groups. Guides are well-educated,
communicate well with other people and enjoy the tourism industry. However, many of them are also ambitious.
If they think that The Obokash Ltd. is unable to offer them an attractive career, they are likely to move elsewhere
in time, and possibly set up their own businesses. Already two experienced tour guides have left the company to
seek a career elsewhere. Amir and Salman think that if they are to retain as well as attract the top talent available,
they will need to offer long-term incentives to their best guides. Incentives should encourage them not only to stay
with the company, but also to contribute innovative ideas about how the company should develop.

Seasonal Impacts
The sales also affects during summer while it dropped around 10-15 percent in winter. During rush time, company
subcontracts some line of products wherein The Obokash Ltd. could not able to maintain quality at its desired level.

Impact of COVID-19 and expected recovery:

Revenue declined in FY 2018-19 marginally because of war in Syria and Yemen and coming lesser tourist from
middle east and also from USA because of slow down of economy there. However, COVID-19 virus which spread
to Europe and USA in February 2020 has affected the airline travelling and tourist movement severally which
resulted lower revenue income in FY 2019-20. Although the situation is slowly improving from July 2020 but the
second wave of the virus may affect the industry in FY 2020-21 also by declining the revenue to at least 50% of
FY 2019-20. Therefore, FY 2019-20 may result negative result. However, Company strongly believes that from
FY 2021-22 there will be a turned around and will come back to FY 2018-19 level and thereafter will grow at least
5% per annum even without the execution of the acquisition. The cost and expenses of the existing business, except
depreciation for FY 2020-21, will be controlled and reduced by 25% from FY 2019-20 and will reduce @ 10% in
FY 2021-22 over FY 2019-20 and thereafter will go up @ 5% on previous year.

Obokash Ltd has a team of specialists work with full dedication and great passion, discipline, and knowledge to
achieve the expected recovery from the loss of COVID-19.

Page 12 of 17
 EXHIBIT- 6
EMAIL

Dated : 10 November 2020

From : Salman Khan, Managing Director
To : Mrs. Shahima Jabin FCA
Subject : Business acquisition and financing options
_____________________________________________________________________________
Acquisition:
The Board of Obokash Ltd. Has decided to purchase of K&Q Tourism Company Ltd. and price would be fixed as
per valuation. The Company expects synergy benefits from this acquisition not only because of the common
shareholder of the two companies but also due to cost savings and increase in revenue earnings of the amalgamated
company. The acquisition of K&Q will generate 10% additional revenue earnings over the regular revenue earnings
of Obokash Ltd. for an additional cost of sales of 50% of the incremental revenue for 15 years. 50% of the additional
income is expected to generate from the Hotel Marriot project near the Chimbuk Hills in Bandarban of the K&Q
Company which was delayed in implementation because of opposition of local people. With the experience of
handling of the similar situation in Sreemangal, the Board of Obokash Ltd. is confident to overcome the opposition
and complete the project within 1-year time.

Financing Options
The Company since its inception has remained 100% equity based and therefore did not incur any finance cost.
However, the Company’s existing auditor was advocating for incorporation of debt in its capital structure either
issuing debenture/ bond or by taking loan from bank to reduce its cost of capital by taking tax benefit on interest.
The Board of Directors is ‘open’ in this regard and will accept any of the following financing options, cost of which
is favorable to Company.
Scheme 1: Initial Public Offer (IPO) of shares: The company expects to raise fund through IPO in 2021 at
50% premium. The company is more experienced now and the Board is expecting premium of
50% subject to share valuation either by fixed price method or book building method and approval
of Bangladesh Securities & Exchange Commission (BSEC).

IPO offer price BDT 15 (including 50% premium)

Number of shares to be offered 200,000,000 Ordinary shares
Face value of each share BDT 10 per share
Purpose of raising fund Proceeds from initial public offering (IPO) will be used for
acquisition of K&Q Tourism Company Ltd and to
meet working capital needs of the Company .
Date of implementation Within 12 months from receiving the IPO fund.
Scheme 2: Issue of Subordinate Bond: The management of Obokash Ltd. consulted the investment plan with
the existing investment banker, underwriters, leasing companies for financing through bond issue.
They argued that BSEC is now encouraging to issue bond instead of 100% equity financing and
bond will be cheaper and longer repayment period. They have indicated they can raise the required
fund with coupon rate of 8% to be paid half-yearly in 15 years without any moratorium period.
However, if the Company face liquidity constraints it may withhold repayment of two installments
with interest at coupon+1%. The Company prefers to consider the default consequences for the
decision making.
Scheme 3: Bank Loan: The management consulted with the existing bankers and consultants to get bank loan
for Tk. 30 crore at the interest rate of 9 percent per annum. However, repayment of bank loan has
to be made in equal yearly instalment in 10 years. However, 5% delinquent charge over 9% will
have to be paid on the overdue installments, if there is any. The Company thinks it will be more
appropriate to consider the delayed payment in calculation in view of its liquidity constraints.

Page 13 of 17
Market risk and expected return
Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a
whole. Beta is used in the capital asset pricing model (CAPM), a model that calculates the expected rate of return
of an asset based on its beta and expected market returns. The average risk free rate of return is 6%. The expected
beta (β) for Obokash Ltd. is 1.25. The average expected market return from the investments in similar securities
(comprising of dividend and capital gain yield) is 10% per annum. (Source: DSE Market review September 30,
2020). Present value factors of Tk. 1 for 17 years as follows:

Rate Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 12 Year 13 Year 14 Year 15 Year 16 Year 17
5% 0.952 0.907 0.864 0.823 0.784 0.746 0.711 0.677 0.645 0.614 0.585 0.557 0.530 0.505 0.481 0.458 0.436
6% 0.943 0.890 0.840 0.792 0.747 0.705 0.665 0.627 0.592 0.558 0.527 0.497 0.469 0.442 0.417 0.394 0.371
7% 0.935 0.873 0.816 0.763 0.713 0.666 0.623 0.582 0.544 0.508 0.475 0.444 0.415 0.388 0.362 0.339 0.317
8% 0.926 0.857 0.794 0.735 0.681 0.630 0.583 0.540 0.500 0.463 0.429 0.397 0.368 0.340 0.315 0.292 0.270
9% 0.917 0.842 0.772 0.708 0.650 0.596 0.547 0.502 0.460 0.422 0.388 0.356 0.326 0.299 0.275 0.252 0.231
10% 0.909 0.826 0.751 0.683 0.621 0.564 0.513 0.467 0.424 0.386 0.350 0.319 0.290 0.263 0.239 0.218 0.198
11% 0.901 0.812 0.731 0.659 0.593 0.535 0.482 0.434 0.391 0.352 0.317 0.286 0.258 0.232 0.209 0.188 0.170
12% 0.893 0.797 0.712 0.636 0.567 0.507 0.452 0.404 0.361 0.322 0.287 0.257 0.229 0.205 0.183 0.163 0.146
13% 0.885 0.783 0.693 0.613 0.543 0.480 0.425 0.376 0.333 0.295 0.261 0.231 0.204 0.181 0.160 0.141 0.125
14% 0.877 0.769 0.675 0.592 0.519 0.456 0.400 0.351 0.308 0.270 0.237 0.208 0.182 0.160 0.140 0.123 0.108
15% 0.870 0.756 0.658 0.572 0.497 0.432 0.376 0.327 0.284 0.247 0.215 0.187 0.163 0.141 0.123 0.107 0.093
16% 0.862 0.743 0.641 0.552 0.476 0.410 0.354 0.305 0.263 0.227 0.195 0.168 0.145 0.125 0.108 0.093 0.080
17% 0.855 0.731 0.624 0.534 0.456 0.390 0.333 0.285 0.243 0.208 0.178 0.152 0.130 0.111 0.095 0.081 0.069

The market capitalization of all securities listed in DSE Ltd. as on September, 2020 was Tk. 2,831,170 million and
market P/E Ratio is 16.94 where other sector’s Market Capitalization was Tk. 361,971 million and sector’s Price
earnings (P/E) ratio was 9.18. Other similar stock’s market price and EPS in DSE were as follows:

Sl. Company Face Value NAV(Taka) Market Price EPS for the
No. (Taka) Oct 30, 2020 (Apr –Oct 2020: year ending
6-Month Average) 30 June 2020
(Taka)
a B c D e F
1 Bangladesh Services Ltd. 10 17.28 34.00 2.60
2 Unique Hotels & resorts 10 13.25 75.93 2.82
3 United Airlines 10 15.85 18.71 3.31
4 Pennsylvania Resorts Ltd. 10 21.25 15.87 2.85
5 ENA Truism Industries 10 11.15 35.32 1.55

Capital Market Scenario 2020

Nine companies have collected new equity of BDT 4 billion from the capital market in FY 2019-2020, which was
lower than BDT 5.3 billion collected by 11 companies in FY2018-19. BDT 1 billion collected through private
placements and the rest amount was collected through public.

Page 14 of 17
 EXHIBIT- 7
Acquisition of K&Q Tourism Company Ltd.
K&Q Tourism Company Ltd. (K&Q) is a long established unlisted company in tourism sector which traded
profitably until a few years ago. Following the expiration of exclusive patent rights, the performance of the
company declined dramatically over the month. Moreover, Covid 19 pandemic outbreak affected the sales of tours
and motels & cottages. During last twelve months, the company’s cash flow problems have steadily increased. The
overdraft facility at present stands at Tk. 180,000,000 and carries a second charge on the company’s freehold
property.
Shahima Shohana Shumi & Co., Chartered Accountants is the auditor of K&Q Tourism Company Ltd. for many
year who is also the auditor of the Obokash Ltd. The managing partner of the audit firm has strong ties with the
Board Chairman of the auditee organizations. AB Bank is concerned about the loan outstanding balance to K&Q
wherein the customer is adversely classified for last 12 months. On July 20, 2020 AB Bank received the following
statement of financial position from K&Q:
K&Q Tourism Company Ltd.
Statement of financial position as at 30 June, 2020
Non-Current Assets Tk.’000 Tk.’000
Freehold property at cost 80,000
Plant (carrying amount) 688,000
Total Non-Current Assets 768,000
Current assets
Inventories 268,000
Receivables 104,000
Total Current assets 372,000
Total Assets 1,140,000
Equity
Issued share capital (Tk. 10 each) 200,000
Reserves 92,000
Total Shareholders’ Equity 292,000
Non-current liabilities
10% loan notes (secured on freehold property) 200,000
Current liabilities
Bank overdraft 180,000
Sundry payables 468,000
Total Current liabilities 648,000
Total Shareholders Equity and Liabilities 1,140,000

The Board of K&Q has scheduled a meeting wherein company’s business strategy and financial structure
will be discussed. The above statement of financial position will be presented at the meeting for the sake
of discussion along with following information and offer for taking over by the Obokash Ltd:

(a) Realisable value of the assets and liabilities:

The freehold property would realise Tk. 260,000,000 immediately. However, the value of freehold property
would realise Tk. 500,000,000 had not the current pandemic situation were there. The value of the plant
and machinery would realise Tk. 384,000,000, the inventory Tk. 160,000,000 and the receivables would
be collected in full. Preferential payables, included in the statement of financial position figure for sundry
payables, amounted to Tk. 208,000,000 has to be settled in full and 50% of the remaining sundry payables
will be waived if the creditors are paid in cash immediately. But the bank is reluctant to lend any more to
the Company.

Page 15 of 17
(b) Takeover Offer by The Obokash Ltd.
The shareholders of the Obokash Ltd. are holding 55% of the shares of Obokash Ltd. as follows:

Name of Shareholders of Obokash Ltd. Ownership % Shareholders of K&Q Ltd. Ownership %

Mr. Salman Khan 30% Mr. Hossain Akbar 45%
Mr. Amir Khan 25% Mr. Amir Khan 20%
Mr. Tapas Momim 20% Mr. Salman Khan 20%
Mrs. Nasima Momim 10% Mrs. Nasima Momim 5%
Mr. Tazrian Khan 7.5% Mr. Tazrian Momim 5%
Mr. Shariful Islam 7.5% Mr. Tazrian Khan 5%
Total 100% Total 100%

The Obokash Ltd. submitted an amalgamation scheme to the Honorable High Court including an offer to
transfer all freehold land and tangible assets to The Obokash Ltd. They appointed a high profile Barrister
to negotiate where necessary to win the case at any cost. Under the terms of the offer, AB Bank would
receive 80% of the balance due, but repayment would not be made until exactly one year from the date of
the full settlement to the creditors’ of the company. No further interest would be considered to accrue on
the balance due to AB Bank during the twelve month period. Mr. Hossain Akber prefers to receive cash
against his shareholdings because he is reluctant to subscribe the IPO shares of the Obokash Ltd. at
premium. Other shareholders expect 50% in cash and remaining 50% in shares of Obokash Ltd at IPO rate.

(c) Extra cost for employees:

K&Q employs 3,000 people directly. If the amalgamation is executed they will be paid off with four months
full salary amounting Tk. 80,000,000 which has not been provided for in the account also K&Q did not
provide any gratuity provision which would be payable immediately upon termination amounting Tk.
240,000,000. The Obokash Ltd. may not retain them.

(d) ICT:
The Obokash Ltd. has better ICT infrastructure and connectivity. It has both strong market and employee
team to increase business.

(e) Market reputation and experience of handling of local people opposition:

The Obokash Ltd. has better market reputation for its policy for corporate social responsibility and safety
measures for protecting environment. The Obokash Ltd. has handled opposition of local inhabitants by
offering employment in the project and also by giving facilities to headman and other influential people.

Assume, for convenience, that any adopted proposal would be implemented immediately with payments
received immediately unless otherwise stated. Ignore expenses of realisation and liquidation.

Page 16 of 17
 EXHIBIT- 8
News Paper Cuttings on the current state of tourism industry in Bangladesh

The Bangladesh Tourism Board (BTB) will formulate and implement tourism related projects on a priority basis.
Development, conservation, construction and renovation of tourist destinations should be done on priority basis.
Necessary steps need to be taken immediately to widen all the narrow roads associated with the tourist destinations.
The local administration should work to preserve all the tourist attractions -- including historical and archeological
antiquities and memorials of the great Liberation War -- located in different parts of the country. Local
administration should take action to protect important places and installations from damage and land grabbers.
Strict action must be taken against those who damage historical installations and tourist attractions.

Mentioning that a significant number of the tourists visiting Bangladesh are from neighboring countries, concerned
ministry said measures will be taken in consultation with the Ministry of Home Affairs to make the process easier
for tourist visas for citizens of neighboring India, Nepal and Bhutan in a bid to attract tourists from those countries.

With people staying at home for a long time because of Covid-19, holidaymakers will throng the country's tourist
destinations once the pandemic is over. We must be prepared for that time. The local administration has to ensure
that the tourists get proper and suitable environment at all the tourist destinations. On the other hand Tourist spots,
hotels, motels and resorts in Bandarban will be opened on a limited scale for tourists from tomorrow, after a five-
month closure due to the Covid-19 pandemic. After around five months, tourism and relevant businesses of
Bandarban hill district will be allowed to open soon while maintaining the health guidelines strictly.

BTB have prepared guidelines and health directives in line with the government's instructions to ensure the safety
of tourists. Action will be taken if anyone violates the instructions.

Nepalese travelers make their holidays at the world’s longest sea beach at Cox’s Bazar as Bangladesh’s coastline
is the closest beach for the tourists of that landlocked country. Nepalese High Commission in Bangladesh observed
the cultural similarity and tourism will work as catalyst in further deepening the bilateral relations between the two
South Asian nations. Government is working to upgrade the Cox’s Bazar and Saidpur airports as international
standard to make those as regional aviation hub.

Honorable Prime Minister stressed the need for taking prompt measures to make Islamic tourism as a global
business brand considering its huge potential since it witnesses 8.3 percent annual growth. The value of Islamic
tourism market will increase to $243 billion by 2021 with an annual 8.3 percent growth. So, all-out efforts and
roadmap aims at promoting Islamic tourism as a global business brand is urgently required. The prime minister has
also proposed allocating a separate tourist spot for the OIC member states in Cox’s Bazar.
***
The Daily Star recently reported that local people of Bandarban were opposing establishing the Hotel Marriot Near
the Chimbuk Hills by K&Q Tourism Company Ltd. The people in the locality apprehend that setting of such hotel
will destroy not only the eco-system but also damage their culture and ultimately may uproot them from there. 100
eminent citizens of the country also voiced in their favour. However, the Deputy Commissioner of Bandarban, who
signed the authorization on behalf of the Government for setting up such luxurious hotel there, defended the
Government such decision for promoting the tourism industry in the country as well as development of the remote
areas. None was available for comment from the K&Q Tourism Company Ltd., the newspaper reported.

---- xxxxx ----

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