ISSUE MANAGER

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

ISSUE MANAGER

SUBSCRIPTION Opens on: October 19, 2011 Closes on: November 13, 2011

(within banking hours)

RECORD DATE October 03, 2011

MANAGER TO THE ISSUE BRAC EPL Investments Limited

Head Office: WW Tower (Level 9) 68 Motijheel C/A, Dhaka-1000 Tel: 880-2-9514731-40, Fax: 880-2-7116418

UNDERWRITTEN BY

LAFARGE SURMA CEMENT LIMITED Registered Office

Suvastu Imam Square, 3rd Floor, 65, Gulshan Avenue Gulshan, Dhaka-1212, Bangladesh

Tel: (880-2) 8812026, Fax: (880-2) 8825413, 8815167 Web: www.lafarge-bd.com

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

Bangladesh Mutual Securities Ltd.

Shareef Mansion, 56-57, Motijheel C/A Dhaka 1000

EXIM Islami Investment Ltd.

Printers Building (5th Floor) 5 Rajuk Avenue, Dhaka -1000 Green Delta LR Financial Services Ltd.

Hadi Mansion (6th Floor) 2, Dilkusha C/A, Dhaka-1000 Prime Finance & Investment Ltd.

63 Dilkusha, Dhaka 1000 Royal Green Capital Market Ltd.

Shah Ali Tower (2nd Floor) 33, Kawran Bazar Tejgaon, Dhaka 1215

SBL Capital Management Ltd.

Metropolitan Chamber Building (Ground Floor), 122-124 Motijheel C/A,

Dhaka 1000

Southeast Bank Capital Services Ltd.

52-53 Dilkusha C/A, Dhaka 1000 Bay Leasing & Investment Ltd.

Printers Building (7th Floor) 5 Rajuk Avenue, Dhaka 1000

Jamuna Bank Ltd.

Chini Shilpa Bhaban 3 Dilkusha C/A, Dhaka 1000

GSP Finance Company (Bangladesh) Ltd.

1/C, Paribagh, Mymenshing Road, Ramna, Dhaka 1000

Janata Capital and Investment Ltd.

57, Purana Paltan (1st floor), Dhaka 1000 Union Capital Ltd.

Noor Tower (5th Floor), 73 Sonargaon Road, Dhaka 1205

Trust Bank Investment Ltd.

Peoples Insurance Bhaban 36 Dilkusha C/A, Dhaka 1000 ICB Capital Management Ltd.

BSB Bhaban, 8, DIT Avenue (14th Floor), Dhaka 1000 Race Portfolio and Issue

Management Ltd.

Al-Razi Complex (3rd floor) 166-167, Shaheed Syed Nazrul Islam

Sarani, Dhaka-1000

Right Issue of Shares 4

The Rights Share Offer 5

Company Overview 5

Background of Sponsors 5

Subsidiary Companies 5

Capital Structure 6

The Rights Offer 6

Issue Price 6

Products & Production Capacity 7 Production Capacity & Utilization 7

SUPERCRETE Production Process 8

Logistics & Distribution 8

Length of Time during which the Issuer has been

Carrying on Business 9

Risk Factors and Management Plans for Mitigation of

such Risks 9

General Investment Risks 9

Industry Risks 9

Company Risks 10

Regulatory Risks 13

Date of Opening and Closing of Subscription Lists 13

Purposes of the Rights Issue 14

Justification of Offering Price 14

Auditors’ Report to the Shareholders on Consolidated

Financial Statements 15

Consolidated Balance Sheet 17

Consolidated Income Statement 18

Consolidated Cash Flow Statement 19 Notes of the Consolidated Financial Statements 21 Summarized Consolidated Financial Statements of Last 5 Years

Balance Sheet 63

Consolidated Income Statement 64

Cash Flow Statement 65

Implementation Schedule 70

Utilization of IPO Fund 70

AGM Related Information of the Company 70

CIB Information 70

Board of Directors 70

Management of the Company 71

Name of Public Listed Companies under Common

Management 73

Quantity of Shares held by Each Director and Person who Hold 5% or more Paid up Share Capital of Lafarge Surma Cement on the Date of the Rights Share Offer Document

Shareholding Position 73

Directors’ Take up in the Rights Offer 74

Underwriter 75

Banker to the Issue 76

Terms and Conditions of the Rights Offer

Basis of the Offer 77

Entitlement 77

Acceptance of the Offer 77

Renunciation 77

Underwriters’ Obligation 77

General 77

Condition of Subscription 77

Payment of Share Price 77

Lock-In on Rights Share 78

Others 78

Material Agreements

Issue Management Agreement 78

Underwriting Agreement 78

Bankers’ to the Issue Agreement 78 Vendors’ Agreement, Contract for Acquisition of Property, Plant & Equipment 78 Form A: Declaration about Responsibility of the Issue

Manager 79

Form B: Declaration about Responsibility of the

Underwriter(s) 80

Form D: Due Diligence Certificate by the Directors 81 Application Form A: Form of Acceptance and

Application for Shares 82

Renunciation Form B: Form of Renunciation 83

Renunciation Form C: Application by Renouncee(s) 83

Rights Share Offer Document

RIGHTS ISSUE OF SHARES

Date: September 8, 2011 Dear Shareholder(s)

We are pleased to inform you that the shareholders of the Company in the Extraordinary General Meeting held on June 29, 2011 decided to issue Rights Shares of 58,068,675 Ordinary Shares of Tk.100.00 per share at par value amounting Tk. 5,806,867,500 offered on the basis of 1:1 (i.e. one rights share against one existing share held). The purpose of issuance of Rights Shares is to repay the short term debts of the Company.

As you are aware, we were facing an issue of forest clearance in our subsidiary Company Lafarge Umiam Mining Private Ltd. (LUMPL) in India following which the application for forest clearance was made in the Supreme Court of India. Our limestone quarry operations were suspended in May 2007 and resumed operations from December 2007 after the Supreme Court issued an interim order in November 2007 allowing the mine to resume operations. However, in February 2010, the Supreme Court withdrew its interim order resulting in suspension of limestone mining and stoppage of clinker production in our cement plant at Chhatak, Sunamgunj. Finally, in its judgement on 6 July 2011, the Supreme Court of India was pleased to allow the application filed by LUMPL paving the way for the Company to restart its operations and obtaining the forest clearance.

Due to lack of limestone, the Company had to continue production and sale of cement with clinker imported from overseas. This had been done to retain the Company’s market share and distribution channel and also to retain its skilled employees. However, these operations entailed high cost of imported clinker and doubling of freight cost owing to the need to grind at Chhatak and dispatching cement to Dhaka. Though Lafarge Surma Cement had reduced its fixed and selling and administrative costs, continuance of operations was resulting in operating loss since the interest burden on both short and long term loans is quite significant.

As a result of the above operating losses and the need to service the interest and repayment of long term loans to the international lenders, the short term borrowing has continued to increase and has now reached at a level that it would not be possible for the Company to continue such borrowing. As of 31 March 2011, the total borrowing stands at LSC:

BDT 1,069 crore; Consolidated: BDT 1,367 crore of which the short term portion is LSC: BDT 631 crore; Consolidated: BDT 728 crore. On the other hand, the original equity of BDT 580 crore has been substantially eroded (LSC: BDT 373 crore;

Consolidated BDT 209 crore by 31 March 2011). This has resulted in a very high Debt: Equity Structure (LSC: 3;

Consolidated 6.5) at the end of March 2011 that is clearly not sustainable.

The Company, therefore, intends to utilize the proceeds of rights issue to reduce the borrowings of LSC and LUMPL. This will significantly reduce the interest cost and will also allow the Company to accelerate the payment of dividend in future.

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/-

Michael Andrew Cowell

Managing Director

THE RIGHTS SHARE OFFER

Company Overview

Lafarge Surma Cement Ltd. (LSC) was incorporated on 11 November 1997 as a private limited company in Bangladesh under the Companies Act 1994 having its registered office in Dhaka. It was converted into a public limited company on 20 January 2003. The Company was the first greenfield project in Bangladesh to be listed with the local stock exchanges.

In November 2000, the Governments of India and Bangladesh signed an agreement allowing LSC to excavate limestone - the main raw material for clinker production - from a limestone quarry at Nongtrai in Meghalaya, India, and to transport the limestone to the cement plant. Since Bangladesh does not have any commercial deposit of limestone, the agreement provides uninterrupted supply of limestone to the cement plant of LSC at Chhatak in Bangladesh through a 17 km conveyor belt from the quarry located in the state of Meghalaya in India.

This commercial venture with an investment of USD 280 million, which is one of the largest foreign investments in Bangladesh, has been financed by Lafarge of France, world leader in building materials, Cementos Molins of Spain, leading Bangladeshi business houses together with International Finance Corporation (IFC – The World Bank Group), the Asian Development Bank (ADB), German Development Bank (DEG), European Investment Bank (EIB), and the Netherlands Development Finance Company (FMO).

Background of Sponsors

Holding Company: Surma Holdings B.V.

Surma Holding B.V. was incorporated in the Netherlands, which owns 58.87% of Lafarge Surma Cement Ltd. Lafarge Group of France and Cementos Molins of Spain each owns 50% share of Surma Holding B.V.

Lafarge Group

One of the major sponsors, Lafarge Group holds world's top-ranking position in Cement, Aggregates & Concrete and Gypsum, with about 76,000 employees in 78 countries. Lafarge was founded in France in 1833. Since its inception, it has been growing steadily to take lead in the production of different kinds of construction materials and has established itself as the world leader in construction material business. In 2010, for the sixth consecutive year, Lafarge has been listed as one of the 100 most sustainable companies in the world.

Cementos Molins

Another major sponsor, Cementos Molins, based in Barcelona, Spain, is a renowned cement company founded in 1928. With over 75 years of experience in manufacturing cement, Cementos Molins has industrial operations also in Mexico, Argentina, Uruguay and Tunisia. The Company is employing more than 4,500 employees and controlling about 18 millions tons of cement capacity.

ADB, IFC & Others

Besides Lafarge and Cementos Molins as major sponsors, the equity partners are Asian Development Bank (ADB), International Finance Corporation (IFC), Islam Group and Sinha Group from Bangladesh.

Subsidiary Companies

Presently the Company has two subsidiaries in India. The main objectives of the subsidiaries are to support the holding company. A brief description of each of the subsidiaries is given below:

Lum Mawshun Minerals Private Limited (LMMPL): incorporated under the Indian Companies Act 1956 on 17 November 1994 as a private limited company with its registered office at Shillong in the State of Meghalaya, India. LSC holds 74% of the shares of LMMPL.

Lafarge Umiam Mining Private Limited (LUMPL): incorporated under the Indian Companies Act 1956 on 22 March 1999 as a private limited company with its registered office at Shillong in the State of Meghalaya, India.

LUMPL operates the limestone mining quarry in Meghalaya. LSC holds 100% of the shares of LUMPL.

Rights Share Offer Document

PRODUCTS & PRODUCTION CAPACITY

The Company produces and markets world class clinker and cement. The major raw material - limestone for clinker production - is transported to the production facility at Chatak through a 17 kilometer conveyor belt from Meghalaya, India. Besides using the clinker for its own cement production, LSC sells the clinker to the local cement manufacturers. It markets the cement in the name of SUPERCRETE.

The Company's brand SUPERCRETE is now a well established brand in the market and is widely available in any part of Bangladesh. This was only possible through launching an efficient distribution network with focus on retail distribution.

The Company has continued to expand its retail distribution network. LSC has made significant improvements in logistics by deploying a fleet of dedicated trucks and barges and has opened new terminals all over Bangladesh. These terminals are operating 24 hours to give better services to customers.

LSC is making further improvements in the distribution system to load barges/trucks during monsoon and to increase the dispatch capacity. This will further improve the demand/supply gap particularly during peak seasons and monsoons. The quality of the Company's product is now firmly established and recognized by the customers as a product with consistent quality. Lab testing equipments are calibrated regularly in its state of the art laboratory at its plant.

Production Capacity & Utilization

(In thousand metric tons (MT)) Products Annual Installed Capacity Actual Production in 2010 Capacity Utilization (%)

Grey cement 1,200 925 77%

Cement clinker 1,150 385 33%

Rights Share Offer Document

LENGTH OF TIME DURING WHICH THE ISSUER HAS BEEN CARRYING ON BUSINESS

Lafarge Surma Cement Limited has been carrying on business for over 4 years. It was incorporated in November 11, 1997 under the Companies Act, 1994 and started commercial operation in October 2006 to produce and market world class cement and clinker in Bangladesh.

RISK FACTORS AND MANAGEMENT PLANS FOR MITIGATION OF SUCH RISKS General Investment Risk

Investment in equity securities involves risk. Investors should be aware of the fact that, as residual claimants, their claim on Company’s cash flows and assets comes last. In extreme circumstances, investors may lose their entire investment.

Management perception:

Lafarge Surma Cement Limited is the only modern integrated cement producer in Bangladesh whereas all its competitors in the private sector depend on imported clinker that is ground locally to produce cement. Management is confident that it will be able to harness its above competitive advantage and generate sufficient cash flows for the equity holders to make the investment rewarding in the long run.

1. Industry Risks

1.1 Reduced duties on imported clinker or cement

In order to encourage domestic production of cement, the Bangladesh Government may further reduce duties on imported clinker (current duty on imported clinker is BDT 350 per ton with no supplementary tax). This may increase the competitiveness of the cement grinding units.

In line with the global trend, duties on imported cement may also be reduced (current duty on cement is 25% with an additional supplementary duty of 20%). This may increase the competitiveness of imported cement versus cement being produced locally.

Management perception:

The present rate of import duty on imported clinker is low and has remained at this level for more than a decade. Further lowering of duty on clinker imports may create pressure on integrated cement plants but will not be able to pose any significant threat. The reasons are: (i) even with zero duty on clinker import integrated cement plant will have lower cost of production vis-a-vis clinker grinding units (ii) an important element of imported clinker price is ocean and inland freight that an integrated plant can avoid.

Significant reduction of duty on imported cement is not envisaged since this will endanger the existence of clinker grinding units. The duty on imported cement has remained the same for quite some time. In any event, our integrated plant will remain competitive with further reduction in cement duties since our cost structure is competitive.

1.2 Competition

Grinders are aggressively adding capacity and fighting to gain market shares in a situation where there is still a gap

between grinding capacity and demand. As a result, LSC may continue to lose market share. There is also the possibility

Rights Share Offer Document

1.3 Political risks

Labor unrest, strikes, non-cooperation movement by the respective opposition parties, extortion and unforeseen outbreak of political squabbles have become a part of life. This has become a negative factor in the way of uninterrupted production by industrial units

Management Perception:

LSC is professionally managed and enjoys the recognition and support of the employees and its union as a responsible employer adequately compensating its employees and ensuring a good working environment. It also enjoys a very good relationship with the local community and local administration that allows the Company to continue with uninterrupted production and dispatch of cement.

2. Company Risks 2.1 Financial risk

The Company is highly leveraged at the end of March 2011. The total consolidated debt structure at the end of 31 March 2011 stands as follows:

Million BDT

Long Term Debt 6,388

Short Term Debt 7,277

Total 13,665

Equity (Net of Accumulated Loss) 2,094

The above position carries the following risks:

Inadequate cash flow from operations to service its debts.

High proportion of short term loans with a relatively high level of interest.

Management perception

Despite the stoppage of clinker production in the years 2007, 2010 and 2011, the Company has always serviced its debts on time by arranging short term financing. LSC also enjoys the support of the international lenders who have rescheduled the loans in 2007 and also in 2011 and the local banks who have continuously given support by arranging short term financing. During the period the clinker production was suspended, the shortfall in cash was made up through short term financing backed by sponsors’ (Financiere Lafarge and Cementos Molins) guarantees. As the recent judgement of the Supreme Court of India has paved the way for the Company to obtain forest clearance, the cash flow from operations is expected to be adequate to service its loans.

Management is planning to use the proceeds of rights issue to reduce the loans of LSC and LUMPL. After a successful rights issue, the loans will significantly reduce that will lead to reduction of interest cost by about 80 crore per annum. This will also allow the Company to accelerate the payment of dividend in the future.

2.2 Exchange rate risk

The major portion of long term debt is in foreign currency. This carries the risk of devaluation adversely affecting foreign

currency loans.

Management perception

The amount of foreign loans as on 31st December 2010 stands at 65 million USD whereas the original amount of foreign currency loans stood at 137 million USD at the start of commercial operations in the year 2006. Hence, the exposure in foreign currency has been greatly reduced. Although the Taka has devalued against the dollar during the past one year, it has been stable in the preceding four years. Though the Taka may continue to devalue, the loans are scheduled to be fully repaid by the end of 2013 and hence the foreign exchange exposure will be for a short period.

Despite the risk of foreign currency exposure on foreign loans, LSC exposure is lower compared to the grinders who are importing all their clinker, fly ash and slag in foreign currencies. Hence their operational exposure will be much higher compared to LSC.

2.3 Interest rate risk

The Company may be exposed to interest rate fluctuations. An increase in the interest rate in the money market will result in higher financial expenses of the Company. On the other hand, if the money market rate decreases, the Company will incur less financial expense resulting in higher earnings for the shareholders.

Management perception

Other than the loan from DEG that carries a fixed rate and the loan from ADB in which the Company has done a floating to fixed swap, the loans from IFC and EIB carry a floating rate that has interest rate exposure. However, the outstanding amount of loan has come down plus the fact that 6 month LIBOR is now at an all time low. The loans will be repaid by the end of next year and hence no significant exposure is envisaged.

2.4 Controlling interest

If the controlling interest of the major shareholder, Surma Holdings BV, held by Lafarge and Cementos Molins, comes down below 50%, this may cast uncertainty on the future operations of the Company.

Management perception

Surma Holdings BV, is prevented by the loan agreement with the lenders to bring its shareholding below 50%. Even after payment of the loans, the major shareholders intend to have a shareholding that allows it to have a controlling interest in the company.

2.5 Dividend

The Company will not be able to declare dividend in the foreseeable future owing to the large accumulated losses and the restrictions in the loan agreement with the lenders.

Management Perception

Under the loan agreement with the lenders, the Company is not allowed to declare dividend unless it meets three ratios (a) Current ratio must be 1.3 or more (b) Long Term Debt to Equity must be 1.5 or less and (c) Debt Service Coverage Ratio must be 1.25 or above. These restrictions will not apply after the loans have been repaid by the end of 2013. The Company will only declare dividend after its accumulated losses have been written off and the loans repaid. Repayment of debts through rights issue will lead to reduction of interest cost by about 80 crore per annum. This will also allow the Company to accelerate the payment of dividend in the future.

2.6 Decrease of share prices

Sale of a significant number of shares of the Company could adversely affect the market price of the Company's shares.

Management perception

As a listed Company, there are no restrictions on transfer of shares. However, block sale of shares will have to follow the

regulations prescribed by SEC and the stock exchanges.

Rights Share Offer Document

2.7 Human resource deficiency

Selection and retention of skilled human resources may be quite challenging as both the cement plant and the quarry are located in remote locations that may pose a challenge for the retention of employees.

Management perception:

LSC is part of two international entities and enjoys the reputation as a premier multinational company in Bangladesh. It is therefore able to attract the talents in the country with a competitive package and an enabling work environment. At the plant and the quarry, the Company has a good relationship with the community. In addition, the Company has a cordial relationship with the Union at the plant. The Company has taken steps to enhance the living conditions at both the plant and the quarry.

Although it is recognized that the forest issue in the Indian Supreme Court had led to some employee turnover, as a professionally managed company, the Company has plans in place to ensure that the vacancies are promptly filled up either through succession or through fresh recruitments.

2.8 Rising energy costs and availability

The Company is heavily reliant on supply of natural gas from Jalalabad Gas for running its kiln and power plant. This carries the following risks:

Sharp increase in gas price will adversely affect the profitability of the Company Jalalabad Gas may stop supply of gas

Gas reserves may run out and the Company may not have alternative fuel options.

Management perception:

The Company has a 20 year Gas Supply Agreement with Jalalabad Gas that will expire on 2nd January 2026. Under the terms of the contract, the Company will follow the tariff rates as fixed by the Government. Hence, there is an exposure in terms of rates. However, there is a cap of USD 2.8 per thousand standard cubic foot of specification gas.

Under the Agreement, Jalalabad Gas is contractually bound to supply the gas except in a force majeure situation or the Company has failed to pay for the gas consumed.

The Company recognizes the risk that gas reserves may run out and use of substitute fuel such as coal may expose the Company to the risk of adverse affect on costs.

2.9 Dispute with Jalalabad Gas

Under clause 4.1 of the Gas Supply Agreement with Jalalabad Gas, there is a "take or pay" clause that stipulates that the Company has to use a minimum quantity of gas. If there is a shortfall, the Company has to pay for the shortfall. Thereafter, the Company can recover the same when the subsequent consumption is higher than the minimum quantity.

Since LSC clinker production had been suspended from April 2010 till August 20011 for shortage of limestone, the

quantity of gas used was below the minimum quantity during that period. LSC filed a notice with Jalalabad Gas claiming

2.10 Environment

Despite the fact that cement plants do not have any hazardous materials, cement plants are subject to strict environmental conditions that may increase the cost of doing business and may inhibit the Company in its operations.

There is also the risk that the Company may cause damage to the environment. There is also the risk of non compliance of certain conditions that may lead to interruption of the quarry operations.

Management perception:

As a part of the Lafarge and Molins groups that have the highest standard for safety, the Company strictly complies with the environmental regulations both in India and Bangladesh. This is also reviewed by the international lenders. The Company recognizes that compliance with environmental conditions is a business continuity issue and places the utmost emphasis in respecting the environmental regulations.

2.11 Cross border trade

The Company procures the main raw material, i.e. limestone, from Meghalaya, India. Hence, any disruption in the flow of limestone due to complications in cross border trade or regulations in India is a major risk for the project. For example, LUMPL had to face the forest issue in India. In addition, local tribal or NGO activities may disrupt the operations of the quarry.

Management perception

The project is supported by exchange of letters from both Bangladesh and Indian Governments in November 2000. In addition, it enjoys the strong support of the Meghalaya Government and the local community. The Supreme Court of India, in its judgement on 6 July 2011, was pleased to allow the application filed by LUMPL paving the way for the Company to restart its operations and obtaining the forest clearance.

Management is aware of the risk that changes in regulations may disrupt the quarry operations. The Company endeavors to minimize this risk by ensuring necessary compliance with applicable regulations. Regarding the tribal or NGO activities, in order to minimize the risk, the Company maintains good relations with the local durbars.

2.12 Long Belt Conveyor

The Long Belt Conveyor is the only transportation method for bringing the limestone from the quarry in Meghalaya to the

Rights Share Offer Document

PURPOSE OF THE RIGHTS ISSUE

As the current level of debt of LSC and LUMPL is extremely high, it requires payment of significant amounts of interest that is reducing the after tax profit of the Company. The Company intends to reduce the borrowings of LSC and LUMPL to reduce the interest charges and improve the profitability of the Company.

The proceeds from the Rights offer of Lafarge Surma Cement Limited will be used to pay off the part of outstanding debts of LSC and LUMPL as follows:

Summary of Loan

Lafarge Surma Cement Ltd. As of March 31, 2011

Lender Type Outstanding Amount

in BDT

International Finance Corporation Term Loan 1,534,991,512

Asian Development Bank Term Loan 1,246,885,714

Europeon Investment Bank Term Loan 1,145,291,666

Deutsche Investitions und Entwicklungsgesellschaft mbH Term Loan 298,031,804

Standard Chartered Bank Term Loan 80,000,000

AB Bank Limited Term Loan 70,151,139

Sub-total: Term Loan 4,375,351,836

Standard Chartered Bank, Dhaka Working Capital Loan 2,346,224,453

The Hongkong and Shanghai Banking Corporation Ltd. Working Capital Loan 1,796,099,844

Citibank N.A., Dhaka Working Capital Loan 1,487,551,341

Commercial Bank of Cylon PLC Working Capital Loan 200,000,000

Uttara Bank Ltd Working Capital Loan 299,387,106

Trust Bank Limited, Dhaka Working Capital Loan 183,102,252

Sub-total: Working Capital Loan 6,312,364,995

Total Loan 10,687,716,830

Lafarge Umiam Mining Pvt. Ltd.

Lender Type Outstanding Amount in INR

Citibank N.A., Mumbai Term Loan 509,808,000

Standard Chartered Bank, Mumbai Term Loan 700,000,000 Sub-total: Term Loan 1,209,808,000

Citibank N.A., Mumbai Working Capital Loan 611,742,653

Standard Chartered Bank, Mumbai Working Capital Loan 173,971,964

Sub-total: Working Capital Loan 785,714,616

Total Loan 1,995,522,616

The Company, therefore, plans to raise BDT 5,806,867,500 through issuance of 58,068,675 rights shares of BDT 100 each at face value at the ratio of 1:1 (one rights share against one existing share).

JUSTIFICATION OF OFFERING PRICE

The Company has decided to issue the rights shares at face value i.e. Tk. 100 per share which has been approved by the

shareholders at its EGM held on June 29, 2011.

Rights Share Offer Document We also report that:

a)...we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof;

b)...in our opinion, proper books of account as required by law have been kept by the company so far as it appeared from our examination of those books;

c)...the company's consolidated balance sheet and consolidated income statement along with the annexed notes 1 to 36 dealt with by the report are in agreement with the books of account; and

d)...the expenditure incurred and payments made were for the purposes of the company's business.

Dhaka, 13 June 2011 Hoda Vasi Chowdhury & Co

Chartered Accountants

LAFARGE SURMA CEMENT LIMITED Consolidated Balance Sheet

As at 31 March 2011

31 March 2011 31 Dec 2010

Notes Taka'000 Taka'000

ASSETS

NON-CURRENT ASSETS

Property, plant and equipment 5 14,296,935 14,377,748

Intangible assets 6 1,304,428 1,219,460

Deferred income tax assets 7 26,526 -

15,627,889 15,597,208 CURRENT ASSETS

Inventories 8 1,373,985 1,146,423

Trade receivables 9 147,824 133,171

Advances, deposits & prepayments 10 954,620 861,882

Derivative instruments-assets 11 3,444 1,429

Cash and cash equivalents 12 29,684 174,691

2,509,557 2,317,596

TOTAL ASSETS 18,137,446 17,914,804

LIABILITIES

Share capital 13 5,806,868 5,806,868

Accumulated loss 14 (3,816,418) (3,174,778)

Foreign currency translation 4.3 103,250 135,946

SHAREHOLDERS' EQUITY- PARENT COMPANY 2,093,700 2,768,036

Share money deposits 15 459 443

EQUITY 2,094,159 2,768,479

NON-CURRENT LIABILITIES

Long-term debt 17.1 5,242,165 4,713,556

Deferred income tax liabilities 7 - 172,993

16 56,800 56,174

5,298,965 4,942,723 CURRENT LIABILITIES

Trade payables 18 2,008,000 1,462,654

Other payables 19 296,782 390,035

Derivative instruments-liabilities 20 15,036 18,029

Current portion of long term debt 17.2 1,146,305 2,017,604

Bank overdrafts 21 2,488,519 633,261

Short-term debt 22 4,788,429 5,680,768

Income tax payable 23 1,251 1,251

10,744,322 10,203,602

TOTAL EQUITY AND LIABILITIES 18,137,446 17,914,804

Sd/- Sd/- Sd/-

Company Secretary Director Managing Director

Auditors report to the shareholders See annexed report of date

Sd/-

Dhaka, 13 June 2011 Hoda Vasi Chowdhury & Co

Chartered Accountants

Rights Share Offer Document

LAFARGE SURMA CEMENT LIMITED Consolidated Income Statement For the period from 1 January to 31 March 2011

Jan-Mar 2011 Jan-Mar 2010

Notes Taka'000 Taka'000

REVENUE 26 1,160,512 2,177,348

Cost of sales 27 (1,357,626) (1,290,183)

GROSS (LOSS)/PROFIT (197,114) 887,165

General and administrative expenses 28 (79,007) (105,430)

Selling and distribution expenses 29 (13,182) (31,738)

Other Operating (expenses)/income 30 (130,591) 435

OPERATING (LOSS)/PROFIT (419,894) 750,432

Exchange (loss)/gain on foreign currency transactions 4.7 (141,874) 77,543

Finance costs 31 (284,408) (185,242)

Finance income 31 5,008 4,880

- (27,316)

NET (LOSS)/PROFIT BEFORE TAX (841,168) 620,297

Income tax 32 199,519 (203,286)

NET (LOSS)/PROFIT AFTER TAX (641,649) 417,011

Earnings per share (Taka) 33 (11.05) 7.18

Sd/- Sd/- Sd/-

Company Secretary Director Managing Director

Auditors report to the shareholders See annexed report of date

Sd/-

Dhaka, 13 June 2011 Hoda Vasi Chowdhury & Co

Chartered Accountants

LAFARGE SURMA CEMENT LIMITED Consolidated Cash Flow Statement For the period from 1 January to 31 March 2011

Jan-Mar 2011 Jan-Mar 2010

Notes Taka'000 Taka'000

Cash Flows From Operating Activities

Cash received from customers 1,127,885 2,356,119

Payment for cost and expenses (1,321,133) (1,231,415)

Advance income tax by deduction (32,469) (15,418)

Interest paid (279,760) (245,382)

Other receipts 471 435

(505,006) 864,339 Cash Flows From Investing Activities

Acquisition of property, plant and equipment (32,121) (80,466)

Intangible assets (45,167) (7,034)

Disposal of property, plant and equipment 9 36

(77,279) (87,464) Cash Flows From Financing Activities

Long term debt (554,661) (839,513)

Bank overdrafts 1,857,390 (502,542)

Short term debt (865,666) 652,853

437,063 (689,202)

215 3,357

(145,007) 91,030

Cash and Cash Equivalents at Beginning of the period 174,691 87,401

Cash and Cash Equivalents at End of the period 29,684 178,431

(145,007) 91,030

Sd/- Sd/- Sd/-

Company Secretary Director Managing Director

Rights Share Offer Document

LAFARGE SURMA CEMENT LIMITED

Notes to the Consolidated Financial Statements For the period from 1 January to 31 March 2011

1. Background and Introduction Formation and legal status

Lafarge Surma Cement Limited - (hereinafter referred to as "Lafarge Surma or the Company") was incorporated on 11 November 1997 as a private limited company in Bangladesh under the Companies Act 1994 having its registered office in Dhaka. The Company has subsequently been converted into a public limited company on 20 January 2003 and went for Initial Public Offering of shares in November 2003 which was fully subscribed and issued. The shares have since been listed and are being traded in Dhaka and Chittagong Stock Exchanges. Presently the Company has two subsidiaries in India. The main objectives of the subsidiaries are to support the holding company. A brief description of each of the subsidiary is given below:

Lum Mawshun Minerals Private Limited (LMMPL) - incorporated under the Indian Companies Act 1956 on 17 November 1994 as a private limited company with its registered office at Shillong in the State of Meghalaya, India.

Lafarge Umiam Mining Private Limited (LUMPL) - incorporated under the Indian Companies Act 1956 on 22 March 1999 as a private limited company with its registered office at Shillong in the State of Meghalaya, India.

2. Nature of Business

The Company has established the country's only modern, integrated and state-of-the art cement manufacturing plant at Chhatak under Sunamganj district. The company extracts and processes the basic raw materials like limestone and shale from its own quarry in Meghalaya. A 17-kilo metre cross-border belt conveyor links the quarry with the cement plant for transportation of raw materials.

Pursuant to a decision of the Hon'ble Supreme Court of India suspending the mining operations of subsidiary company namely Lafarge Umiam Mining Private Limited effective from 5 February 2010 the procurement of basic raw materials is completely stopped. However, hearings in the Supreme Court of India have been completed and the Company is expecting the verdict after the court reopens in July 2011. As such, presently the Company is engaged in manufacturing and marketing of cement through imported cement clinkers.

3. Going Concern Issue

As indicated above, the mining operations of Lafarge Umium Mining Private Limited, India, a wholly owned subsidiary of the company, are suspended by dint of an order of the Supreme Court of India since 5 February 2010. The subsidiary has been experiencing unfavorable operating results, insufficient cash generation for debt servicing and uncertainty in mining operations in the absence of favorable court order. However, the subsidiary is expected to overcome this situation as soon as a favorable court order will be received and the subsidiary continues to enjoy financial support from the group to overcome the situation. In such a scenario, the Company does not anticipate any adverse situation that may affect the going concern status of the subsidiary. Since the Company's operations and its profitability are dependent on the continuing operation of the aforesaid subsidiary, any adverse situation of the subsidiary will also influance the going concern of the Company.

If such a situation continues, the Company will look for alternative business strategy to continue its operational activity.

At the same time, in order to arrange for adequate funding to continue its operations, the company is in the final

process of restructuring the principal payment to the international lenders for a period of one year and is also exploring

options for long term financial restructuring. Further the Company is contemplating for increasing the share capital

through issuing of right shares.

Rights Share Offer Document

iii) Capital work in progress

These expenditure will be capitalized and recognized as operating assets upon completion of the acquisition process or construction, where applicable and physical possession thereof.

iv) Depreciation of property, plant and equipment

Straight line depreciation method has been followed and depreciation has been charged on all assets acquired that are put on use except land, at rates varying from 2% to 33.33%. Full month's depreciation is charged for the month of acquisition and no depreciation is charged for the month of disposal.

4.6 Recognition of intangible assets i) Software

Software costs are capitalized where it is expected to provide future enduring economic benefits. Capitalization costs include license fees & cost of implementation/system integration services which are capitalized in the year in which the relevant software is installed for use. Costs of maintenance, upgradation and enhancements are charged off as revenue expenditure unless they bring similar significant additional long term benefits.

ii) Others

Capitalization costs of leased land and quarry land include statutory fees, lump sum payment to lessor and subsequent development cost. These are shown as "intangible assets" in line with group policy.

iii) Amortization of intangible assets a) Software

Software are amortized using the straight-line method over their useful lives (Three years).

b) Others

The leased land and quarry land are amortized using the straight-line method over their amortization period calculated on the basis of different leased period. However, the quarry land are amortized over a period of maximum 30 years.

4.7 Foreign currency translation/ transaction

Transactions in foreign currency have been translated in Taka currency at the exchange rates prevailing on the dates of such transactions. Inter-company balances in foreign currency held at 31 March 2011 as well as other balances on foreign currency debts and cash holdings have been translated at rate provided by the Bangladesh Bank (Central Bank) and the resultant gain/loss has been reflected in the financial statements. These rates are as follows:

Average Rate Closing Rate

BDT/USD 71.3843 72.7350

BDT/EUR 97.6388 102.7564

BDT/GBP 114.3991 116.9252

BDT/INR 1.5766 1.6290

4.8 Employee benefit schemes

i. The Company operates an unfunded gratuity scheme, provision for which has been made in respect of all eligible employees and reflected in these accompanying financial statements.

ii. The Company also operates a recognized provident fund scheme with equal contribution by the employees and the Company.

iii. The Company recognizes a provision for Workers' Profit Participation and Welfare funds @ 5% of net profit before tax

as per Labour Act, 2006.

Rights Share Offer Document

4.9 Inventories

Inventories are stated at the lower of cost or net realizable value while packing materials and spare parts are valued at cost.

4.10 Taxation

Income tax expenses represent the sum of the tax currently payable and deferred tax.

Deferred income tax is provided for all temporary timing differences arising between the tax base of assets and liabilities and their carrying amounts in the financial statements in accordance with the provisions of IAS 12. Tax rate prevailing at the balance sheet date is used to determine deferred income tax.

No deferred income tax has been provided in the financial statements with respect to Lafarge Umiam Mining Private Limited due to the fact that Lafarge Umiam Mining Private Limited enjoys tax holiday benefits for 10 years and it is uncertain whether deferred tax asset of the Company can be adjusted in the future periods.

4.11 Revenue recognition

Sale of the products, net of value added tax and discounts, is recognized upon raising invoices to customers.

4.12 Derivatives instruments

Financial assets and liabilities in the form of derivatives instruments are recognized based on group's advice received from time to time. Contracting for derivatives and its valuations for provisioning purpose are done as per group treasury policy under the supervision of group treasury department.

4.13 General

i. Figures appearing in these financial statements have been rounded off to the nearest Bangladesh Taka.

ii. Comparative figures and account titles in the financial statements have been rearranged/reclassified where necessary

to conform with changes in presentation in the current period.

5. P rop er ty , P lan t and E quipmen t C at eg o ry o f p ro p er ty , p la n t a n d eq u ip m en t B al an ce o n 1 Ja n u ar y 20 11 A d d it io n s d u ri n g th e p er io d D is p o sa l d u ri n g th e p er io d A d ju st m en t fo r tr an sl at io n Pr ov is io n fo r t h e p er io d A d ju st m en t fo r tr an sl at io n W ri te n D ow n Va lu e as a t 3 1 M ar ch 2 01 1

A cc u m p ro v. fo r d is p o se d as se ts

Re cl as si ti ca ti o n d u ri n g th e p er io d B al an ce a t 3 1 M ar ch 2 01 1 B al an ce o n 1 Ja n u ar y 20 11 B al an ce a t 3 1 M ar ch 2 01 0 R at e Land - fr eehold Leasehold impr o vemen ts B uilding P lan t building Technic al facilities P lan t and machiner y O ther fac tor y equipmen t Vehicles C omput er equipmen t O ffic e equipmen t Fumitur e and fix tur es Capital w or k in pr ogr ess (Not e - 5.1) Total a t end of 31 M ar 2011 Total a t end of y ear 2010

563,376 367 128,074 496,175 49,730 14,916,316 51,136 132,786 85,969 65,862 55,702 188,266 16,733,759 16,457,345

212 - - - - - - - - - 3 1,905 2,120 161,648

- - - - - - - - 27 - - 199 226 1,105

- - - - - - - - 18 - - - 18 124

1,094 - 2,468 - 43 61,794 - 1,032 307 394 152 1,645 68,929 115,871

286 - 48 - - 18,169 1,415 - - 90 - (20,008) - -

564,968 367 130,590 496,175 49,773 14,996,279 52,551 133,818 86,249 66,346 55,857 171,609 16,804,582 16,733,759

- 367 13,900 49,963 7,049 2,065,294 12,530 73,958 64,199 45,849 22,902 - 2,356,011 1,784,132

- - 732 3,101 404 124,651 1,291 4,709 3,314 1,911 1,327 - 141,440 557,086

- - 266 - 12 8,736 - 656 218 267 59 - 10,214 14,917

- 367 14,898 53,064 7,465 2,198,681 13,821 79,323 67,713 48,027 24,288 - 2,507,647 2,356,011

564,968 - 115,692 443,111 42,308 12,797,598 38,730 54,495 18,536 18,319 31,569 171,609 14,296,935 14,377,748

- 20.0% 2.0% 2.5% 3.3% 3.3% 10.0% 20.0% 33.3% 20.0% 10.0% -

Figur es in Tak a'000 D epr ecia tion C ost

Rights Share Offer Document 5.1 Capital work in progress:

31 Mar 2011 31 Dec 2010 Taka'000 Taka'000

Plant building 4,064 4,064

General survey and studies 90,866 90,866

Plant and machinery 23,797 23,797

Other equipment 36,518 36,518

Other improvement works 16,364 33,021 171,609 188,266 5.2 Depreciation charge has been allocated to:

Production and maintenance overhead (Note- 27.2) 134,698 131,923 General and administrative expenses (Note- 28) 6,742 6,509 141,440 138,432

5.3 Disposal of property, plant and equipment (Figures in Taka '000)

Computers equipment 27 18 9 9 Company policy Employees of the company -

Total at end of 31 Mar 2011 226 18 208 9 Total at end of year 2010 1,105 124 981 1,917

6. Intangible Assets

31 Mar 2011 31 Dec 2010 Taka'000 Taka'000 Cost on January 1

Software 54,145 53,862

Leasehold land 21,877 20,598

Quarry land 163,630 141,248

Capital work in progress 1,059,878 75,972

1,299,530 291,680

Addition during the period

Software 27 -

Quarry land - 13,160

Capital work in progress 45,140 946,798

45,167 959,958

Software - 967

Capital work in progress - (967)

- -

Translation adjustment

Software 164 283

Leasehold land 741 1,279

Quarry land 5,546 9,222

Capital work in progress 37,297 37,108

43,748 47,892

Cost at end of the period 1,388,445 1,299,530

Category of property, plant

and equipment Cost Accumulated

Depreciation

Written down Value

Sale Proceeds

Mode of Disposal

Particulars of

Purchaser

Intangible Assets 31 Mar 2011 31 Dec 2010 Taka'000 Taka'000 Accumulated amortization on January 1

Soft ware 51,521 45,474

Leasehold land 4,342 3,125

Quarry land 24,207 17,104

80,070 65,703

Provision made during the period

Soft ware 863 5,795

Leasehold land 255 988

Quarry land 1,637 5,840

2,755 12,623

Translation adjustment

Soft ware 161 253

Leasehold land 156 228

Quarry land 875 1,263

1,192 1,744

Amortization at end of the period 84,017 80,070

Carrying amount at end of the period 1,304,428 1,219,460

7. Deferred Income Tax Assets/(Liabilities)

Deferred tax assets

Provision for gratuit y 17,931 18,136

Provision for doubtful debts 2,445 2,445

Business loss 3,254,103 3,036,719

3,274,479 3,057,300 Deferred tax liabilities

Propert y, plant and equipment (3,247,953) (3,230,293)

(3,247,953) (3,230,293) 26,526 (172,993) 8. Inventories

Raw materials ** 458,414 215,192

Spare parts 765,037 698,262

Packing materials 4,078 4,252

Other materials 63,422 61,819

Finished goods and work in process 83,034 166,898

1,373,985 1,146,423

**Raw materials inventory includes BDT 264,410 K in transit from Cementia Trading AG which has subsequently been received.

9. Trade Receivables

Trade receivables 147,824 133,171

147,824 133,171

Trade receivables are secured and considered good.

Rights Share Offer Document 10. Advances, Deposits and Prepayments

31 Mar 2011 31 Dec 2010 Taka'000 Taka'000

Offi ce and House rent 24,438 26,267

Contractors, consultants, suppliers and others (Note-10.1) 363,896 291,626

VAT current account 73,816 80,580

Income tax-deducted at source 403,298 370,829

Employees for expenses 31,033 10,875

Advance to employees for SAR plan (Note- 16) - 11,874

Security and other deposits (Note- 10.2) 4,892 5,121

Prepaid expenses 32,387 43,746

Accrued interest on bank deposits 404 597

Other receivables 20,456 20,367

954,620 861,882 Advances mentioned above are unsecured but all are considered good and as such no provision is required to be made. Advances made to employees include advance related to employee matters and for running the day to day operation cost of diff erent departments.

10.1 Advance to contractors, consultants, suppliers and others

Letter of Credit-spare parts 9,247 12,365

Letter of Credit-raw materials 70,554 68,472

Explosives 117,173 117,173

Custom duties 15,607 32,138

Others 151,315 61,478

363,896 291,626 10.2 Security and other deposits

House rental 520 520

Telecommunications 527 527

Central Depository System 500 500

Other services 3,345 3,574

4,892 5,121

11. Derivative Instruments-Assets

Derivative instruments 3,444 1,429

The Company entered into forward contracts with the commercial banks in order to manage its foreign exchange exposure due to change in exchange rates. The amount is the diff erence between market prices and prices the company would pay to settle the foreign exchange liabilities at close of the period.

12. Cash and Cash Equivalents Cash in hand

Lafarge Surma Cement Limited 201 572

Lafarge Umiam Mining Private Limited 261 216

462 788

Cash in transit

Lafarge Surma Cement Limited - 77,792

- 77,792

31 Mar 2011 31 Dec 2010 Taka'000 Taka'000 Cash at banks

Lafarge Surma Cement Limited

In current accounts 18,996 66,015

In Short Term Deposit accounts 4,148 18,859

In Short Notice Deposit account - 10

23,144 84,884

Cash at banks

Lafarge Umiam Mining Private Limited

In current accounts 1,751 747

In Term Deposit accounts 4,263 10,419

6,014 11,166

Cash at banks

Lum Mawshun Minerals Private Limited

In current account 31 30

In Securit y Deposit 33 31

64 61

29,684 174,691 13. Share Capital

a. Authorized capital

70,000,000 ordinary shares of Tk. 100 each 7,000,000 7,000,000 b. Issued, subscribed and fully paid up capital

Balance on 01 January

Fully paid up in cash 5,759,888 5,759,888

Fully paid up in other than cash 46,980 46,980

5,806,868 5,806,868 c. Composition of shareholders at 31 March 2011

Name of the shareholders Nationality or incorporated in Number of shares Holding %

Surma Holdings BV The Netherlands 34,184,935 58.87%

International Finance Corporation U S A 2,283,800 3.93%

Asian Development Bank Philippines 5,797,000 9.98%

Sinha Fashions Ltd. Bangladesh 1,755,000 3.02%

Islam Cement Limited Bangladesh 1,595,710 2.75%

Other shareholders- Bangladeshi & NRB 12,452,230 21.45%

58,068,675 100.00%

d. Classifi cation of shares by holding

Slabs by number of shares Number of shareholders Number of shares Holding %

Less than 500 9,074 1,335,024 2.30%

From 500 to 5,000 1634 2,454,552 4.23%

From 5,001 to 10,000 124 922,342 1.59%

From 10,001 to 20,000 90 1,241,639 2.14%

From 20,001 to 30,000 23 542,431 0.93%

From 30,001 to 40,000 18 610,145 1.05%

From 40,001 to 50,000 10 462,638 0.80%

From 50,001 to 100,000 15 1,065,500 1.83%

From 100,001 to 1,000,000 10 2,817,550 4.85%

Above 1,000,000 6 46,616,854 80.28%

11,004 58,068,675 100.00%

Rights Share Offer Document 14. Accumulated Loss

31 Mar 2011 31 Dec 2010 Taka'000 Taka'000

Openinig balance of the period (3,174,696) (1,536,278)

Net loss after tax during the period (641,649) (1,638,419)

(3,816,345) (3,174,697)

Minorit y loss* (73) (81)

(3,816,418) (3,174,778)

*Minority interests

Share capital 232 224

Closing balance of the period (305) (305)

(73) (81)

15. Share Money Deposits

Share money deposits in Lum Mawshun Minerals Private Limited 459 443 16. Contribution to Employee Benefits

Contribution to gratuit y scheme (Note- 4.8-i) 51,116 51,556

Provision for Stock Appreciation Rights (SAR)* 5,684 4,618 56,800 56,174

*Stock Appreciation Rights (SAR)

This is a global programme of Lafarge Group under which the employees of Lafarge Surma and its subsidiary (LUMPL) have subscribed for shares of Lafarge at the price ruling on the date of subscription after deduction of a discount on the shares. The employees have been given an interest free loan repayable over a 24 month period to fi nance the share subscription. At the end of a fi ve year vesting period, the gain, if any, on sale of shares will be given to the employees. Provision made on the account relates to the amount of discount on subscription.

17. Long Term Debt

17.1 Long portion 31 Mar 2011 31 Dec 2010

Taka'000 Taka'000

Loan drawn down from: Amount '000 Amount in Amount in

Currency Foreign Currency BDT'000 BDT'000

International Finance Corporation USD 21,104 1,534,991 1,194,396

Asian Development Bank USD 13,714 831,257 727,663

Europeon Investment Bank USD 15,746 1,145,292 899,319

Deutsche Investitions und

Ent wicklungsgesellschaft mbH EURO 1,934 - 90,443

Standard Chartered Bank BDT - 10,000 30,000

AB Bank Limited BDT - 53,114 58,960

Citibank N.A.- Mumbai USD 9,600 698,256 720,147

Standard Chartered Bank - Mumbai INR 595,000 969,255 992,628

Total 5,242,165 4,713,556

17.2 Current portion

Loan drawn down from: Amount '000 Amount in Amount in

Currency Foreign Currency BDT'000 BDT'000 International Finance Corporation USD 8,442 - 597,198

Asian Development Bank USD 6,857 415,629 485,109

Europeon Investment Bank USD 5,903 - 425,370 Deutsche Investitions und

Ent wicklungsgesellschaft mbH EURO 1,934 298,032 180,886

Standard Chartered Bank BDT - 70,000 70,000

AB Bank Limited. BDT - 17,037 21,664

Citibank N.A.- Mumbai USD 2,400 174,562 127,085

Standard Chartered Bank - Mumbai INR 105,000 171,045 110,292

Total 1,146,305 2,017,604

Details of loan agreements

Name of Lenders Type Amount Tenor Interest Rates International Finance Corporation (IFC)

Loan A Term Loan USD 35 million 7 years (i) LIBOR+2.875% till FSC* date

(ii) after period(i) above LIBOR+3.25% till 60% repaid (iii) after period(ii) above LIBOR+3.00% on outstanding

*FSC: Financial Support Completion

Loan B Term Loan USD 15 million 7 years (i) LIBOR+2.75% till FSC date

(ii) after period(i) above LIBOR+3.25% till 60% repaid (iii) after period(ii) above LIBOR+3.00% on outstanding The repayment of the loan has started from 15 January 2007 and will end on 15 July 2013

Asian Development Bank (ADB)

Term Loan USD 40 million 7 years (i) LIBOR+2.75% till FSC date

(ii) after period(i) above LIBOR+3.25% till 60% repaid (iii) after period(ii) above LIBOR+3.00% on outstanding The repayment of the loan has started from 15 September 2006 and will end on 15 March 2013

German Development Bank (DEG)

Term Loan EURO 9.28 million 6 years EURIBOR+3.25%

The repayment of the loan has started from 15 September 2006 and will end on 15 March 2012 European Investment Bank (EIB)

Term Loan USD 35 million 7 years 4.29%

The repayment of the loan has started from 15 January 2007 and will end on 15 July 2013

Due to suspension of limestone mining arising out of forest clearance issue in Lafarge Umiam Mining Private Limited, a w holly ow ned subsidiary of t he Company, t he company requested all foreign lenders (IFC, ADB, DEG and EIB) for rescheduling of two installments of loan for a period of one year. Consent in this regard has been received from all the lenders. As per revised schedule, t wo inst allment s w ill be evenly spread over t he remaining inst allment s w it hout increasing the tenor of the individual loans.

Standard Chartered Bank

Term Loan BDT 350 million 5 years

The repayment of the loan has started from 30 June 2007 and will end on 12 April 2012 AB Bank Limited

Term Loan BDT 120 million 6 years

The repayment of the loan has started from 31 December 2008 and will end on 31 March 2014 Citibank NA - Mumbai

Term Loan USD 12 million 5 years

The repayment of the loan has started from 30 June 2011 and will end on 31 March 2016 Standard Chartered Bank - Mumbai

Term Loan INR 700 million 5 years

The repayment of the loan has started from 5 September 2011 and will end on 30 May 2016

Rights Share Offer Document Security

Memorandum of Deposit of Title Deeds: Creating equitable mortgage over 191.67 acres of land situated at Sunamganj District and 1.75 acres of land situated at Narayanganj District owned by Lafarge Surma Cement Limited;

Deed of Hypothecation (on fi xed and fl oating assets): Creating hypothecation over all tangible moveable assets of both Lafarge Surma Cement Limited and Lafarge Umiam Mining Private Limited;

Security agreement: Creating charge over the contracts;

Memorandum of deposit of shares: Creating equitable mortgage over the shares owned by the Lafarge Surma Cement Limited and its subsidiary company Lafarge Umiam Mining Private Limited;

Letter of Lien and Set off : Bank account under lien of Lafarge Surma Cement Limited and Lafarge Umiam Mining Private Limited; and

Composite Security Agreement: Creating security interests over the off shore bank accounts and off shore investments.

Autonomous guarantee from Lafarge SA.

Debt covenant for dividend policy

IFC and ADB have laid down a condition for payment of dividend. The company should obtain their approval for declaration of dividend after the accumulated losses of the Company have been fully recovered.

18. Trade Payables

31 Mar 2011 31 Dec 2010 Taka'000 Taka'000

Raw materials 586,193 286,089

Packing bags 12,058 18,410

Marketing expenses 15,979 27,518

Distribution cost 137,893 84,773

Computer expenses 24,048 17,644

Audit fee 3,391 14,869

Maintenance 30,606 17,856

Administrative offi ce expenses 20,998 50,807

Royalty 2,939 1,053

Consultancy 9,680 17,572

Security 14,966 13,474

General assistance fee (Note- 18.1) 191,143 187,919

Trademark license fee (Note- 18.2) 191,143 187,919

Gas bill 412,581 289,696

Operation and maintenance bill-Power Plant 32,351 6,499

Discount on sales 11,559 -

Advances paid by customers 61,337 79,312

Others 249,135 161,244

2,008,000 1,462,654