PAKISTAN STOCK EXCHANGE LIMITED Stock Exchange Building, Stock Exchange Road, Karachi UAN: Seeking Public Comments on

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1 PSX PAKISTAN STOCK EXCHANGE LIMITED Stock Exchange Building, Stock Exchange Road, Karachi UAN: Seeking Public Comments on Draft Prospectus of Matco Foods Limited It is hereby informed to all concerned that Matco Foods Limited has applied for Listing on the Exchange and has submitted the draft Prospectus for issue of shares to High Net-worth Individuals / Institutional Investors through Book Building followed by issue of shares of the Company to the General Public / Retail Investors. The draft Prospectus of the Company is hereby placed on the Website of the Exchange under caption "Public Comments on Draft Prospectus of Matco Foods Limited" for seeking public comments as required under Section 3 (11) of the Public Offering Regulations, 2017 and the Regulation No. 5,2.2 (ac) of Listing of Companies and Securities Regulations of PSX. It is requested to submit written comments on the draft Prospectus, if any, either in hard form or through at comments.draftprospectuspsx.com.pk addressed to the undersigned latest by rvember 8, ut'ai4imad Ghufran eputy General Manager - Operations Copy to: 1. The Executive Director (PRDD), SMD, SECP NIC Building, Jinnah Avenue, Blue Area, Islamabad. 2. The Director (Cl), Public Offering & Regulated Persons Department, SECP 3. The Chief Executive Officer, PSX 4. The Chief Executive Officer, CDC 5. The Chief Executive Officer, NCCPL 6. Acting Chief Regulatory Officer PSX 7. All Head of Departments - PSX 8. PSX Notice Board & Website 9. Matco Foods Limited 10. Arif Habib Limited 11. MCB Bank Limited

2 HR ADVICE FOR INVESTORS INVESTORS ARE STRONGLY ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THIS PROSPECTUS, ESPECIALLY THE RISK FACTORS GIVEN AT PARA 4.11 BEFORE MAKING ANY INVESTMENT DECISION. SUBMISSION OF FALSE AND FICTITOUS APPLICATIONS IS PROHIBITED AND SUCH APPLICATIONS MONEY MAY BE FORFEITED UNDER SECTION 87(8) OF THE SECURITIES ACT, 2015 (THE SECURITIES ACT). ADVICE FOR INSTITUTIONAL INVESTORS AND HIGH NET WORTH INDIVIDUAL INVESTORS UNDER REGULATION 10(2)(V) OF THE PUBLIC OFFERING REGULATIONS, 2017 (THE PO REGULATIONS), A SINGLE INVESTOR CANNOT SUBMIT MORE THAN ONE BIDDING APPLICATION, EXCEPT IN THE CASE OF UPWARD REVISION OF BID. IF AN INVESTOR SUBMITS MORE THAN ONE BIDDING APPLICATION THEN ALL SUCH APPLICATIONS SHALL BE SUBJECT TO REJECTION. SUBMISSIONS OF CONSOLIDATED BIDS IS PROHIBITED UNDER REGULATION 10(2)(iv) OF THE PO REGULATIONS. A BID APPLICATION WHICH IS BENEFICIALLY OWNED (FULLY OR PARTIALLY) BY PERSONS OTHER THAN THE ONE NAMED THEREIN SHALL BE DEEMED TO BE A CONSOLIDATED BID. PLEASE NOTE THAT AS PER THE PO REGULATIONS, A SUPPLEMENT TO THE PROSPECTUS SHALL BE PUBLISHED WITHIN THREE WORKING DAYS OF THE CLOSING OF THE BIDDING PERIOD WHICH SHALL CONTAIN INFORMATION RELATING TO THE STRIKE PRICE, OFFER PRICE, COMMITMENT BY THE SUCCESFUL BIDDERS FOR SUBSCRIBING THE UNDERSUBSCRIBED RETAIL PORTION AS THE ISSUE IS BEING MADE THROUGH HUNDRED PERCENT BOOK BUILDING WITH ALLOCATION TO RETAIL INVESTORS, CATEGORY WISE BREAKUP OF THE SUCCESSFUL BIDDERS ALONG WITH NUMBER OF SHARES ALLOTTED TO EACH CATEGORY, DATES OF PUBLIC SUBSCRIPTION AND SUCH OTHER INFORMATION AS SPECIFIED BY THE COMMISSION. MATCO FOODS LIMITED PROSPECTUS This Issue consists of 29,143,032 ordinary shares (25% of the post issued paid up capital of Matco Foods Limited) of face value of PKR 10 each. The Issue is being made through the Book Building process at a Floor Price of PKR 26/- per share (including a premium of PKR 16/- per share). The bidders shall be allowed to place bids for one hundred percent (100%) of the issue size and the strike price shall be the price at which the hundred percent (100%) of the issue is subscribed. However, the successful bidders shall be provisionally allotted only seventy-five percent (75%) of the issue size i.e. 21,857,032 and the remaining twenty five percent (25%) i.e. 7,286,000 shall be offered to the retail investors. In case retail portion of the Issue remains unsubscribed, the unsubscribed shares will be allotted to the successful bidders on pro rata basis and in case the retail portion of the Issue is oversubscribed, the portion allocated to book building investors at strike price shall be allotted to the retail investors in the manner given in para (Justification of premium is given under Valuation Section in paragraph 2.1) As per PSX s Listing of Companies and Securities Regulations, the Draft Prospectus was placed on PSX s website for seeking public comments for seven (7) working days starting from DD/MM/2017 to DD/MM/2017. The comments received have been duly incorporated / responded by the Consultant to the Issue. REGISTRATION OF ELIGIBLE BIDDERS: The registration of eligible bidders will commence at 9:00 am on DD/MM/2017and will close at 3:00 pm on DD/MM/2017 (during weekdays only) BIDDING PERIOD DATES: From DD/MM/2017 to DD/MM/2017 (From: 9:00 am to 5:00 pm) DATE OF PUBLIC SUBSCRIPTION: From DD/MM/2017 to DD/MM/2017 (From: 9:00 am to 5:00 pm) (both days inclusive) CONSULTANT TO THE ISSUE BOOK RUNNER Banker to the Book Building portion of the Issue: MCB Bank Limited Bankers for the Retail portion of the Issue: MCB Bank Limited Habib Bank Limited Allied Bank Limited Faysal Bank Limited Askari Bank Limited Habib Metropolitan Summit Bank Limited Al-Baraka Bank Limited United Bank Limited Bank Alfalah Limited Soneri Bank Limited Bank Limited *In order to facilitate investors, United Bank Limited ( UBL ), Summit Bank Limited ( SMBL ) and Bank Alfalah Limited ( BAFL ) are offering electronic submission of application (e-ipo) to their account holders. UBL account holders can use UBL Net Banking to submit their application via link SMBL account holders can use SMBL Net Banking to submit their application via link BAFL account holders can use BAFL Net Banking to submit their applications via link Furthermore, please note that online applications can be submitted 24 hours a day during the subscription period which will close at midnight on DD/MM/2017. The Central Depository Company of Pakistan ( CDC ) has developed a Centralized e-ipo System ( CES ) through which applications for subscription of securities offered through IPOs can be made electronically. CES has been made available in this IPO which can be accessed through the web link Payment of subscription money can be made through 1LINK s member banks available for CES, list of which is available on above website. For making application though CES, investors must be registered with CES. Registration with CES is free of cost and a self-registration process by filling the CES registration form, which is available 24/7 all around the year. Investors who have valid Computerized National Identity Card (CNIC), bank account with any of the commercial bank, address, mobile phone number and CDS Account (Investor Account or sub Account) may register themselves with CES. Investors who do not have CDS account may visit for information and details. For further guidance and queries regarding CES and opening of CDS account, investors may contact CDC at phone Number: (CDCPL) and info@cdcpak.com. CES would be connected to different entities (1Link, banks etc.) for payment of the subscription money. For further details on CES, please refer para of this Prospectus BOOK BUILDING PORTION WILL BE UNDERWRITTEN BY For investor education please visit Jama Punji is an investor education initiative of the Securities & Exchange Commission of Pakistan Date of Publication of this Prospectus: DD/MM/2017 Prospectus, Registration, Bidding and Subscription Forms can be downloaded from the following websites: For further queries, you may contact Matco Foods Limited: Muhammad Jawed Ismail; Phone: ; jawed.ismail@matcofoods.com Arif Habib Limited: Ammad Tahir; Phone: ; ammad.tahir@arifhabibltd.com MCB Bank Limited: Muhammad Bilal Mustafa; Phone: , mbilal.mustafa@mcb.com.pk

3 UNDERTAKING BY THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER September 05, 2017 WE, KHALID GHORI, THE CHIEF EXECUTIVE OFFICER AND MUHAMMAD JAWED ISMAIL, THE CHIEF FINANCIAL OFFICER OF MATCO FOODS LIMITED CERTIFY THAT: 1. THIS PROSPECTUS CONTAINS ALL INFORMATION WITH REGARD TO THE ISSUER AND THE ISSUE, WHICH IS MATERIAL IN THE CONTEXT OF THE ISSUE AND NOTHING HAS BEEN CONCEALED IN THIS RESPECT; 2. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS TRUE AND CORRECT TO THE BEST OF OUR KNOWLEDGE AND BELIEF; 3. THE OPINIONS AND INTENTIONS EXPRESSED THEREIN ARE HONESTLY HELD 4. THERE ARE NO OTHER FACTS, THE OMISSION OF WHICH MAKES THIS PROSPECTUS AS A WHOLE OR ANY PART THEREOF MISLEADING; AND 5. ALL REQUIREMENTS OF THE SECURITIES ACT, 2015 ANDTHE PUBLIC OFFERING REGULATIONS, 2017 RELATING TO APPROVAL AND DISCLOSURES HAVE BEEN FULFILLED. 6. NO CHARGES, FEE, EXPENSES, PAYMENTS ETC. HAVE BEEN COMMITTED TO BE PAID TO ANY PERSON IN RELATION TO THIS PUBLIC OFFERING EXCEPT FOR THOSE AS DISCLOSED IN PART 3 OF THE PROSPECTUS. For and behalf of Matco Foods Limited -Sd- Khalid Ghori Chief Executive Officer -Sd- Muhammad Jawed Ismail Chief Financial Officer Page 1 of 136

4 Note: This Supplement shall be published within 3 working days of the close of Bidding Period in at least all those newspapers in which the Prospectus of Matco Foods Limited is published. SUPPLEMENT TO THE PROSPECTUS This Supplement is being published pursuant to The Public Offering Regulations, 2017 and in continuation of the Prospectus of Matco Foods Limited earlier published on DD/MM/2017 FLOOR PRICE: PKR 26/- PER SHARE STRIKE PRICE: PKR XX/- PER SHARE ISSUE PRICE: PKR XX/- PER SHARE Matco Foods Limited Note: Since this Issue is being made through 100% book building with 25% allocation to retail investors, therefore, underwriting of the retail portion is not needed. In case the issue remains unsubscribed, the unsubscribed shares shall be allotted to the successful bidders on pro rata basis. The successful bidders have already given undertakings to subscribe such unsubscribed shares on pro rata basis. Category wise Breakup of Successful Bidders S. No Category No. of Bidders No. of shares provisionally allocated 1 Commercial Banks 2 Development financial institutions 3 Mutual Funds 4 Insurance Companies 5 Investment Banks 6 Employees Provident / Pension Funds 7 Leasing Companies 8 Modarabas 9 Securities Brokers 10 Foreign Institutional Investors 11 Any other Institutional Investors Institutional Investor 12 Individual Investors: Foreign Investors Local Individual Investors TOTAL Page 2 of 136

5 Glossary of Technical Terms ACT Securities Act, 2015 AHL Arif Habib Limited BR Book Runner BVPS Book Value Per Share CAGR Compound Annualized Growth Rate CDA Central Depository Act, 1997 CDC / CDCPL Central Depository Company of Pakistan Limited CDC Regulations Central Depository Company of Pakistan Limited Regulations CDS Central Depository System CNIC Computerized National Identity Card COI Certificate of Incorporation Collection Bank (Book Building) MCB Bank Limited Companies Act Companies Act, 2017 Commission / SECP Securities and Exchange Commission of Pakistan CRO Company Registration Office CVT Capital Value Tax EPC Engineering, Procurement and Construction EPS Earnings Per Share FBR Federal Board of Revenue FED Federal Excise Duty GDP Gross Domestic Product GOP Government of Pakistan IFC International Finance Corporation ITO Income Tax Ordinance, 2001 Mn Million MT Metric Ton NICOP National Identity Card for Overseas Pakistani NOC No Objection Certificate PKR or Rs. Pakistan Rupee(s) PSX / Exchange Pakistan Stock Exchange Limited RECP Rice Export Corporation of Pakistan SCRA Special Convertible Rupee Account SST Sindh Sales Tax UIN Unique Identification Number WHT Withholding Tax Page 3 of 136

6 DEFINITIONS Act Securities Act, Application Money Banker(s) to the Book Building In case of bidding for shares out of the Book Building portion, the total amount of money payable by a successful Bidder which is equivalent to the product of the Strike Price and the number of shares to be allotted. Any bank(s) with whom an account is opened and maintained by the Issuer for keeping the bid amount. MCB Bank Limited has been appointed as Banker to the Book Building. Bid Bid Amount Bid Collection Center Bid Price Bid Revision An indication to make an offer during the Bidding Period by a Bidder to subscribe to the Ordinary Shares of Matco Foods Limited at a price at or above the floor price, including upward revisions thereto. An Eligible Investor shall not make a bid with price variation of more than 10% of the prevailing indicative strike price. Please refer to paragraph for details. The amount equals to the product of the number of shares Bid for and the Bid price. Designated offices of the Book Runner, specified branches of any of the Scheduled Bank and offices of any other institutions specified by the Commission where bids are received and processed. For this Issue, addresses of the Bid Collection Centers are provided in paragraph of this Prospectus. The price at which bid is made for a specified number of shares. The Eligible Investors can revise their bids upward subject to the provision of regulation 10(2)(iii) of the PO Regulations. The bids can be revised with a price variation of not more than 10% from the prevailing indicative Strike Price in compliance with regulation 10(2)(iii) of the PO Regulations. As per regulation 10(2)(vi) of the PO Regulations, the bidder shall not make downward revision or withdraw their bids. Bidder Bidding Form Bidding Period An Eligible Investor who makes bids for shares in the Book Building process. The form prepared by the Issuer for the purpose of making bids. The period during which bids for subscription of shares are received. Page 4 of 136

7 The Bidding Period shall be of two days, from DD/MM/2017 to DD/MM/2017 both days inclusive (daily from 9:00 a.m. to 5:00 p.m.). Book Building Book Building Account Book Building Portion Book Runner A process undertaken to elicit demand for shares Issued through which bids are collected from the Bidders and a book is built which depicts demand for the shares at different price levels. An account opened by the Issuer with the Collection Bank(s). The Bidder will pay the Margin Money / Bid Amount through demand draft, pay order or online transfer in favor of this account as per the instructions given in paragraph of this Prospectus and the balance of the Application Money, if any, shall be paid through this account after successful allocation of shares under Book Building. The part of the total Issue allocated for subscription through the Book Building. A securities broker or a scheduled bank who holds a valid license from the Commission to act as an Underwriter and has been appointed as Book Runner by the Issuer. MCB Bank Limited has been appointed as Book Runner for this Issue. Book Building System Centralized E-IPO System (CES) An online electronic system operated by the Designated Institution for conducting Book Building. In order to facilitate investors, the Central Depository Company of Pakistan ( CDC ) has developed a Centralized e-ipo System ( CES ) through which applications for subscription of securities offered to the general public can be made electronically. CES has been made available in this Initial Public Offering (IPO) and can be accessed through the web link Payment of subscription money can be made through 1LINK s member banks available for CES, list of which is available on above website. For making application though CES, investors must be registered with CES. Registration with CES is free of cost and can be done under a selfregistration process by filling the CES registration form, which is available 24/7 all around the year. Investors who have valid Computerized National Identity Card (CNIC), bank account with any of the commercial bank, address, mobile phone number and CDS Account (Investor account or sub account) may registered themselves with CES. Investors who do not have CDS account may visit for information and details. Page 5 of 136

8 For further guidance and queries regarding CES and opening of CDS account, investors may contact CDC at phone number: (CDCPL) and Collection Banks MCB Bank Limited is the collection bank for the Book Building portion. - For this purpose, the Issuer, has opened account with MCB Bank Limited titled Matco Foods Book Building, Number: [ ] at its [ ]. The Collection Bank shall keep and maintain the bid money in the said account. Once the Strike Price is determined and lists of successful bidders and successful applicants / allottees are finalized and shares are credited to the successful bidders and applicants, the Consultant to the Issue, after obtaining NOC from PSX, may request in writing to the Collection Bank for transfer of the money of successful and accepted applications to the Issuer s account(s). Company Company s Legal Advisor Commission Consolidated Bids Consultant to the Issue Matco Foods Limited (the Company ) or ( MFL ) or ( Matco Foods ) or ( Matco ). Mohammad Javaid Akhter Advocate Office No.13, Bambino Chambers Garden Road. Karachi Securities & Exchange Commission of Pakistan ( SECP ). Consolidated Bid means a Bid which is fully or partially beneficially owned by persons other than the one named therein. Any person licensed by the Commission to act as a Consultant to the Issue. Arif Habib Limited has been appointed as Consultant to the Issue by the Issuer for this issue. Designated Institution Includes securities exchange, central depository or clearing house approved by the Commission to provide a system for conducting Book Building. PSX will act as the Designated Institution for this Issue. Dutch Auction Method e-ipo The method through which Strike Price is determined by arranging all the Bids in descending order based on bid prices along with the number of shares and the cumulative number of shares bid for at each Bid Price level. The Strike Price is determined by lowering the bid price to the extent that the total number of shares offered under the Book Building Portion are subscribed. e-ipo is submission of application for subscription of securities electronically through internet, Automated Teller Machines (ATM) and mobile phones. In order to facilitate the public during IPOs, SECP has Page 6 of 136

9 introduced the concept of e-ipo. The following two systems are available for e-ipos: (i) Centralized e-ipo System (CES): In order to facilitate investors, the Central Depository Company of Pakistan ( CDC ) has developed a Centralized e-ipo System ( CES ) through which applications for subscription of securities offered to the general public can be made electronically. CES has been made available in this Initial Public Offering (IPO) and can be accessed through the web link Payment of subscription money can be made through 1LINK s member banks available for CES, list of which is available on above website. For making application though CES, investors must be registered with CES. Registration with CES is free of cost and can be done under a selfregistration process by filling the CES registration form, which is available 24/7 all around the year. Investors who have valid Computerized National Identity Card (CNIC), bank account with any of the commercial bank, address, mobile phone number and CDS Account (Investor account or sub account) may register themselves with CES. Investors who do not have CDS account may visit for information and details. For further guidance and queries regarding CES and opening of CDS account, investors may contact CDC at phone number: (CDCPL) and info@cdcpak.com Investors who are registered with CES can submit their applications through the web link 24 hours a day during the subscription period which will close at midnight on DD/MM/2017. (ii) e-ipo facilities by Bankers to the Issue: Currently, United Bank Limited (UBL), Summit Bank Limited (SMBL) and Bank Alfalah Limited (BAFL) are providing e-ipo facilities to their respective accountholders. UBL account holders can use UBL Net Banking to submit their application via link SMBL account holders can use SMBL Net Banking to submit their application via link and BAFL account holders can use BAFL Net Banking to submit their application via link: Eligible Investor Floor Price An Individual and Institutional Investor whose Bid Amount is not less than the minimum bid size of PKR 1,000,000 (One Million Rupees only). The minimum price per share set by the Issuer in consultation with Consultant to an Issue. For this Issue, Floor Price is PKR 26/- per share. Page 7 of 136

10 General Public All Individual and Institutional Investors including both Pakistani (residents & non-residents) and foreign investors. Initial Public Offer (IPO) Institutional Investors Initial Public Offering or IPO means first time offer for sale of securities of a company or body corporate to the general public. Any of the following entities: A financial institution; A company as defined in the Companies Act; An insurance company established under the Insurance Ordinance, 2000; A securities broker A fund established as Collective Investment Scheme under the Non- Banking Finance Companies and Notified Entities Regulations, 2008; A fund established as Voluntary Pension Scheme under the Voluntary Pension System Rules, 2005; A private fund established under Private Fund Regulations, 2015; Any employee s fund established for benefits of employees; Any other fund established under any special enactment; and Any other entity as specified by the Commission. Issue Issue of 29,143,032 Ordinary Shares of the Face Value of PKR 10.00/- each representing 25% of the Post IPO Paid Up Capital of the Company. Book Building Portion of the Issue comprises of 21,857,032 Ordinary Shares (being 75% of the total Issue) at a Floor Price of PKR 26/- per share (including a premium of PKR 16/- per share). Retail Portion of the Issue comprises 7,286,000 Ordinary Shares (being 25% of the total Issue) at the Issue Price. Issue Price The price at which Ordinary Shares of the Company are issued to the General Public. In this Issue, the Issue Price will be the Strike Price. Issuer Key Employees Limit Bid Limit Price Matco Foods Limited (the Company ) or ( MFL ) or ( Matco Foods ) or ( Matco ). Chief Executive Officer, Directors, Chief Financial Officer and Company Secretary of the Company. The bid at a Limit Price. The maximum price a prospective Bidder is willing to pay for a share under the Book Building Page 8 of 136

11 Listing Committee Margin Money Listing Committee, shall mean a committee of PSX comprising of at least seven members including at least three external members for review and approval of the prospectus and the listing application. The partial or total amount, as the case may be, paid by a bidder at the time of registering as an Eligible Investor. The Book Runner shall collect full amount of the bid money as Margin Money in respect of bids placed by an individual investor and not less than twenty five percent (25%) of the bid money as Margin Money in respect of bids placed by institutional investors. Minimum Bid Size The Bid amount equal to One Million Rupees (PKR 1,000,000/-). Ordinary Shares Prospectus Registration Form Ordinary Shares of Matco having face value of PKR 10.00/- each. Prospectus means any document described or issued as a prospectus and includes any document, notice, circular, material, advertisement, offer for sale document, publication or other invitation offering to the public (or any section of the public) or inviting offers from the public for the subscription or purchase of any securities of a company. The form which is to be submitted by the Eligible Investors for registration to participate in the Book Building process. The registration period shall commence at least three days before the start of the Bidding Period from DD/MM/2017 to DD/MM/2017from 9:00 am to 5:00 pm (during working days) and shall remain open till 3:00 pm on the last day of the Bidding Period. PO Regulations The Public Offering Regulations, 2017 Related Employees Securities Regulations Sponsor Related Employees mean such employees of the Issuer, the Book Runner, the Underwriters, and the Consultants to the Issue, who are involved in the Issue. Please refer to paragraph for further details. Chapter 5 of the Rule Book of the Pakistan Stock Exchange Limited, titled Listing of Companies and Securities Regulation. A person who has contributed initial capital in the issuing company or has the right to appoint majority of the directors on the board of the Company directly or indirectly; A person who replaces the person referred above; and A person or group of persons who has control of the Company whether directly or indirectly. Page 9 of 136

12 Step Bid Strike Price Step Bid means a series of limit bids at increasing prices. In case of a step bid the amount of each step will not be less than Rupees One Million (PKR 1,000,000/-). The price per ordinary share of the Issue determined / discovered on the basis of Book Building process in the manner provided in the PO Regulations, at which the shares are Issued to the successful bidders. The Strike Price will be disseminated after conclusion of Book Building through publication of Supplement to the Prospectus in at least all those newspapers in which the Prospectus was published and also posted on the websites of the PSX, Consultant to the Issue, Book Runner and the Company. Supplement to the Prospectus The Supplement to the Prospectus shall be published within three (3) working days of the closing of the Bidding Period at least in all those newspapers in which the Prospectus was earlier published and disseminated through the PSX where shares of the Company are to be listed. System Transaction Legal Counsel An online electronic system operated by the Designated Institution for conducting Book Building. In this IPO, the System is being provided by PSX. HaidermotaBNR D-79, Block No. 5, K.D.A Scheme No. 05, Karachi, Pakistan Interpretation: ANY CAPITALIZED TERM CONTAINED IN THIS PROSPECTUS, WHICH IS IDENTICAL TO A CAPITALIZED TERM DEFINED HEREIN, SHALL, UNLESS THE CONTEXT EXPRESSLY INDICATES OR REQUIRES OTHERWISE AND TO THE EXTENT AS MAY BE APPLICABLE GIVEN THE CONTEXT, HAVE THE SAME MEANING AS THE CAPITALIZED / DEFINED TERM PROVIDED HEREIN. Page 10 of 136

13 Table of Contents 1 APPROVALS AND LISTING ON THE STOCK EXCHANGE VALUATION, BOOK BUILDING PROCEDURE AND SHARE CAPITAL UNDERWRITING, COMMISSIONS, BROKERAGE AND OTHER EXPENSES OVERVIEW, HISTORY AND PROSPECTS FINANCIAL INFORMATION MANAGEMENT MISCELLANEOUS INFORMATION APPLICATION AND ALLOTMENT INSTRUCTIONS INSTRUCTIONS FOR REGISTRATION AND BIDDING REGISTRATION FORM DUPLICATE REGISTRATION FORM BIDDING FORM ADDITIONAL PAYMENT FORM BID REVISION FORM SIGNATORIES TO THE PROSPECTUS MEMORANDUM OF ASSOCIATION APPLICATION FORM Page 11 of 136

14 1 APPROVALS AND LISTING ON THE STOCK EXCHANGE 1.1 APPROVAL OF THE SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN Approval of the Securities & Exchange Commission of Pakistan (the "Commission" or the "SECP") under Section 87(2) of the Securities Act, 2015 (the Securities Act ) read with Section 88(1) thereof has been obtained by Matco Foods Limited (the Company or MATCO ) for the issue, circulation and publication of this offering document (hereinafter referred to as the Prospectus ) vide their letter No. [ ] dated DD/MM/2017. DISCLAIMER: IT MUST BE DISTINCTLY UNDERSTOOD THAT IN GIVING THIS APPROVAL, SECP DOES NOT TAKE ANY RESPONSIBILITY FOR THE FINANCIAL SOUNDNESS OF THE COMPANY AND ANY OF ITS SCHEMES STATED HEREIN OR FOR THE CORRECTNESS OF ANY OF THE STATEMENTS MADE OR OPINIONS EXPRESSED WITH REGARD TO THEM BY THE COMPANY IN THIS PROSPECTUS. SECP HAS NOT EVALUATED QUALITY OF THE ISSUE AND ITS APPROVAL FOR ISSUE, CIRCULATION AND PUBLICATION OF THE PROSPECTUS SHOULD NOT BE CONSTRUED AS ANY COMMITMENT OF THE SAME. THE PUBLIC / INVESTORS SHOULD CONDUCT THEIR OWN INDEPENDENT DUE DILIGENCE AND ANALYSIS REGARDING THE QUALITY OF THE ISSUE BEFORE BIDDING / SUBSCRIBING. SECP NEITHER TAKES RESPONSIBILITY FOR CORRECTNESS OF THE CONTENTS OF THIS PROSPECTUS NOR THE ABILITY OF THE COMPANY TO FULFILL ITS OBLIGATIONS THEREUNDER. 1.2 APPROVAL OF PROSPECTUS BY PSX The Prospectus of the Company has been approved by PSX vide letter No. [ ] dated DD/MM/2017in accordance with the requirements of the Regulations and its regulations for Listing of Companies and Securities. DISCLAIMER: PSX HAS NOT EVALUATED THE QUALITY OF THE ISSUE AND ITS APPROVAL SHOULD NOT BE CONSTRUED AS ANY COMMITMENT OF THE SAME. THE PUBLIC / INVESTORS SHOULD CONDUCT THEIR OWN INDEPENDENT INVESTIGATION AND ANALYSIS REGARDING THE QUALITY OF THE ISSUE BEFORE SUBSCRIBING / BIDDING. THE PUBLICATION OF THIS DOCUMENT DOES NOT REPRESENT SOLICITATION BY PSX. THE CONTENTS OF THIS DOCUMENT DOES NOT CONSTITUTE AN INVITATION TO INVEST IN SHARES OR SUBSCRIBE FOR ANY SECURITIES OR OTHER FINANCIAL INSTRUMENT BY PSX, NOR SHOULD IT OR ANY PART OF IT FORM THE BASIS OF, OR BE RELIED UPON IN ANY CONNECTION WITH ANY CONTRACT OR COMMITMENT WHATSOEVER OF PSX. IT IS CLARIFIED THAT INFORMATION IN THIS PROSPECTUS SHOULD NOT BE CONSTRUED AS ADVICE ON ANY PARTICULAR MATTER BY PSX AND MUST NOT BE TREATED AS A SUBSTITUTE FOR SPECIFIC ADVICE. PSX DISCLAIMS ANY LIABILITY WHATSOEVER FOR ANY LOSS ARISING FROM OR IN RELIANCE UPON THIS DOCUMENT TO ANYONE, ARISING FROM ANY REASON, INCLUDING, BUT NOT LIMITED TO, INACCURACIES, INCOMPLETENESS AND / OR MISTAKES, FOR DECISIONS AND /OR ACTIONS TAKEN, BASED ON THIS DOCUMENT. PSX NEITHER TAKES RESPONSIBILITY FOR THE CORRECTNESS OF CONTENTS OF THIS DOCUMENT NOR THE ABILITY OF THE COMPANY TO FULFILL ITS OBLIGATIONS THEREUNDER. ADVICE FROM A SUITABLY QUALIFIED PROFESSIONAL SHOULD ALWAYS BE SOUGHT BY INVESTORS IN RELATION TO ANY PARTICULAR INVESTMENT. Page 12 of 136

15 1.3 LISTING AT PSX Application has been made to PSX for permission to deal in and for quotation of the shares of the Company. If for any reason the application for formal listing is not accepted by PSX or approval for formal listing is not granted by PSX before the expiration of twenty-one days from the date of closing of the subscription period / list or such longer period not exceeding forty-two days as may, within the said twenty-one days, be notified to the applicants for permission by the securities exchange, the Issuer undertakes that a notice to that effect will immediately be published in the press and will refund Application Money to the applicants without surcharge as required under the provisions of Section 69 of the Companies Act. If any such money is not repaid within eight (08) days after the Company becomes liable to repay it, the Directors of the Company shall be jointly and severally liable to repay that money from the expiration of the eight day together with surcharge at the rate of two per cent (2.0%) for every month or part thereof from the expiration of the eight day and, in addition, shall be liable to a penalty of level 3 on the standard scale in accordance with the provisions of sub-section (2) of Section 69 of the Companies Act. As required under sub-section (3) of Section 69 of the Companies Act, the Application Money including the Bid Money, in case of book building, shall be deposited and kept in a separate bank account in a scheduled bank so long as the company may become liable to repay it under sub-section (2) of Section 69 of the Companies Act; and, if default is made in complying with the said sub-section (3), the Company and every officer of the company who authorizes or permits the default shall be liable to a penalty of level 2 on the standard scale. Page 13 of 136

16 1.4 CERTIFICATE BY CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER OF THE ISSUER September 05, 2017 The Chief Executive Pakistan Stock Exchange Limited Stock Exchange Building Stock Exchange Road Karachi We, being the Chief Executive Officer and Chief Financial Officer of Matco Foods Limited (the Issuer ) accept absolute responsibility for the disclosures made in this Prospectus. We hereby certify that the Prospectus contains all necessary information with regard to the Issuer and the Issue and constitutes full, true and plain disclosures of all material facts relating to the shares being offered through this Prospectus and that nothing has been concealed. The information contained in this Prospectus is true and correct to the best of our knowledge and the opinions and intentions expressed herein are honestly held. There are no other facts, the omission of which makes this Prospectus as a whole or any part thereof misleading. For and behalf of Matco Foods Limited -Sd- Khalid Ghori Chief Executive Officer -Sd- Muhammad Jawed Ismail Chief Financial Officer Page 14 of 136

17 2 VALUATION, BOOK BUILDING PROCEDURE AND SHARE CAPITAL 2.1 VALUATION SECTION The Ordinary shares of Matco are being issued at Floor Price of PKR 26/- per share which is at a premium of PKR 16/- per Ordinary share to the face value of PKR per Ordinary share. The Consultant to the Issue has reviewed the business performance of the Company and in their opinion the Floor Price of PK 26 per share is justified based on: Successful Operational History Matco, founded in 1964 by Syed Sarfaraz Ali Ghori, was incorporated in 1990 as a private limited company. In the early days, the Company supplied rice processing plants and machinery to Government of Pakistan and later, in 1967, it set up its first rice processing plant. In 1990, the Company set up Pakistan s first fully automated, modern rice processing plant supplied by Satake Corporation of Japan. In 1999, first container of Matco s own brand Falak was shipped. Since then Matco is continuing to grow from strength to strength at the top end of rice processing industry, the Company undertook backward integration by setting up a state of the art rice paddy drying, husking plant in Sadhoke District near Gujranwala in 2010 to eliminate wastage and paddy drying losses. A graph on the summary of operational history of Matco is shown below: Financial Performance Since FY 2013, Matco net profit grew at compounded annual growth rate ( CAGR ) of 19.7% while the sales of the Company remain stable during the same period. The growth in the bottom line of the Company is owing to its innovation, market development, extensive distribution reach and expanding product portfolio. 9,000 7,500 6,000 4,500 3,000 1,500 - PKR (MN) 8,160 6,289 6,089 5,578 6, PKR (MN) Sales Gross Profit EBITDA Net Profit During FY 2016, Matco s volumetric growth in basmati exports outperformed the industry. However, with falling international rice prices, the Company exhibited a lower revenue base. As a result, margins of the Company reduced coupled with higher inventory carrying cost. On the back of the recovery in international rice prices, the Company reported significant improvement in bottom line in FY 2017, and the management of the Company expects this trend to continue for the coming years. Page 15 of 136

18 Matco is an export oriented Company, with the exports representing more than 90% of the total sales volume. Contribution of export sales of Basmati and IRRI rice in the topline of Company is around 80%. Apart from export sales, the Company drives significant portion of its revenue from sale of by-products which includes rice bran, husk, broken rice and color sorter rice Rice Sales Volume % 95% % MT ( 000") Total Sales Volume Export Sales Volume Local Sales Volume Export as % of Total Sales (RHS) 100% 75% 50% 25% 0% Revenue Proportion 16% 16% 16% 20% 23% 4% 4% 4% 3.0% 12% 80% 80% 80% 78.0% 85% Rice Export Sales Rice Local Sales By-product Sales Largest Rice Export Company in Pakistan Matco is leading agri business in South Asia with over 50 years of experience in the rice industry and a global portfolio of more than 150 customers. The Company is one of the largest rice exporter from Pakistan and its flagship brand Falak Basmati Rice is available in more than 40 countries worldwide and its private label brands being exported to over 60 countries worldwide Product Qualities With over 50 years of experience in the rice industry, Matco guarantees traceable, sustainable premium quality rice that adhere to international standards. Matco holds international accreditation from the Council Union for USDA Organic and EU Organic certification. Recently, the Company has also commenced production of organic rice glucose and organic rice protein products. Matco holds numerous international certifications some of which are listed below: 1. ISO 9001: HACCP (Hazard Analysis and Critical Control Point) 3. BRC (British Retail Consortium) 4. ISO (Environmental Management System) 5. OHSAS (Occupational Health and Safety Management System) 6. KEBS (Diamond Mark Certified from Kenya Bureau of Standards) Strong Management With many decades of experience in the rice industry, Matco s senior management is trailblazer in modernizing the industry. From introducing the never done before rice processing methods to the country, to achieving many first milestones for the whole industry, the Company s leadership is in the prime driving seat to propel the industry and the Company itself forward. Page 16 of 136

19 2.1.6 Investment and Diversification The Company always strived and determined for future business growth through investment and diversification. Recently, Matco has diversified its operations within domain specialized products i.e. Rice Glucose and Rice Protein with plant capacity of 10,000 MT per annum of rice glucose and 1,000 MT of Rice Protein per annum. Project is complete and commercial production has started from October 02, In order to diversify its business operations, Matco also sources following products and pack in its own Falak brand: 1. Pink Salt 2. Iodized Salt 3. Vermicelli 4. Rice Bran Oil Matco is also the sole distributor of Signature Snacks for Pakistan. Signature Snacks is a leading manufacturer based in Dubai, which produces premium quality biscuits, wafers, crackers and baked chips Justification Based on our review, the Consultant to the Issue is of the opinion that the historical performance of the Company, the sponsor s profile, quality of management and their business distribution network indicate sustainability of business performance in the future. The Company is offering a Price-to-Earnings ( PE ) multiple of 8.5x at Floor Price of PKR 26/- per Ordinary Share based on the Company s earnings for FY This PE offers a substantial discount of 54% to average P/E multiple of Peer group companies of 18.3x. Company Market Price 1 (PKR) Market Cap (PKR "mn") LTM Revenue 2 (PKR "mn") LTM PAT 3 (PKR "mn") Equity 4 (PKR mn ) P/E P/B ROA ROE Rafhan Maize Products Limited 7,081 65,428 25,597 4,253 11, x 5.5x 27% 36% National Foods Limited ,558 15,514 1,008 3, x 10.2x 13% 32% Ismail Industries Limited ,045 23,580 1,182 6, x 2.9x 5% 19% Shezan International Limited 421 3,365 7, , x 1.6x 10% 15% Habib ADM Limited , x 1.1x 1% 1% Mean x 5.0x Median x 4.2x Matco Foods Limited ,273 6, , x 0.7x 3% 9% Note: There is no local listed company operating in rice industry. Therefore, we have considered the companies operating in the similar domain i.e. food sector as a peer group of Matco Foods Limited. 1 Last 30 days average Market price from September 28 th, 2017 to October 27 th, 2017 are used 2 Last Twelve Month Revenue is used as at September 30 th, Last twelve months Profit after Tax is used as at September 30 th, Book Value as at September 30 th 2017, is used except for National Foods Limited for whom Book Value as at June 30, 2017 is used 5 Mean P/E and P/B are calculated excluding Habib ADM an outlier 6 Median P/E and P/B are calculated excluding Habib ADM an outlier 7 Market Cap is calculated at floor price of PKR 26 using current outstanding shares of the Company Page 17 of 136

20 2.2 BOOK BUILDING PROCEDURE Brief Structure The Present Issue The Issue comprises 29,143,032 Ordinary Shares of face value of PKR 10.00/- each which constitutes 25% of the Post IPO paid up capital of the Company. The Issue is being made through the Book Building process at a Floor Price of PKR 26/- per Ordinary Share (including a premium of PKR 16/- per Ordinary Share). The bidders shall be allowed to place bids for one hundred percent (100%) of the issue size and the Strike Price shall be the price at which one hundred percent (100%) of the issue size is subscribed. However, the successful bidders would be allotted only seventy-five percent (75%) of the issue size i.e. 21,857,032 and the remaining twenty-five percent (25%) i.e. 7,286,000 would be offered to the retail investors. The bidders shall give an undertaking along with the application that they would subscribe to the unsubscribed shares, if any, by the retail investors and their remaining bid money would remain deposited/ blocked till allotment of unsubscribed shares of the retail portion, if any, to them on pro-rata basis. In case the retail portion is fully subscribed, the bid money shall be unblocked within one (1) working day or refunded within three (3) working days from the date of confirmation of shares subscribed in the general public portion. Within 3 working days from the close of the Bidding Period, a Supplement to the Prospectus will be published in at least all those newspapers in which the Prospectus is published. The Supplement will contain information related to the Strike Price, the Issue Price and category wise break-up of the successful bidders. Format of the Supplement is given on page 2 of this Prospectus Types of Bids and Procedure for making a Bid Book Building is a process whereby investors bid for a specific number of shares at various prices. The Issuer set a Floor Price, which is the minimum / lowest price a Bidder can bid at. An order book of bids is maintained by the Book Runner, which is then used to determine the Strike Price through the Dutch Auction Method. Under the Dutch Auction Method, the Strike Price is determined by lowering the Bid Price to the extent that the total number of shares issued through the Book Building process are subscribed. A bid by a Bidder can be a Limit Bid, or a Step Bid, each of which are explained below: Limit Bid: Limit bid is at the Limit Price, which is the maximum price a Bidder is willing to pay for a specified number of shares. In such a case, a Bidder explicitly states a price at which he / she / it is willing to subscribe to a specific number of shares. For instance, a Bidder may bid for 2 million shares at PKR per share, based on which the total Application Money would amount to PKR 52 million. In this case the Bid Amount will be also PKR 52 million. Since the Bidder has placed a Limit Bid of PKR per share, this indicates that he / she / it is willing to subscribe the shares at a price up to PKR per share. Step Bid: A series of Limit Bids at increasing prices. The amount of any individual step shall not be less than PKR. 1,000,000. Under this bidding strategy, Bidders place a number of Limit Bids at different increasing price levels. A Bidder may, for instance, make a bid for 1.0 million shares at PKR per share, 0.5 million shares at PKR per share and 0.5 million shares at PKR per share. Therefore, in essence the Bidder has placed one Step Bid comprising of three Limit Bids at increasing prices. The Bid amount will be PKR 55 million. In case of individual Bidder, the Margin Money will be 100% i.e. PKR 55 million whereas in case of Bidders being Institutional Investor the Margin Money shall be 25% of the Bid amount i.e. PKR million. Page 18 of 136

21 Restrictions: (i) AN ELIGIBLE INVESTOR SHALL NOT: (a) (b) (c) (d) (e) (f) (g) BID BELOW THE FLOOR PRICE; MAKE A BID FOR MORE THAN 10% OF THE SHARES ALLOCATED UNDER THE BOOK BUILDING PORTION; MAKE A BID WITH A PRICE VARIATION OF MORE THAN 10% OF THE PREVAILING INDICATIVE STRIKE PRICE AS PER REGULATION 10(2)(iii) OF THE PO REGULATIONS; PLACE CONSOLIDATED BID. A BID APPLICATION WHICH IS FULLY OR PARTIALLY BENEFICIALLY OWNED BY PERSONS OTHER THAN THE ONES NAMED THEREIN IS TO BE CONSIDERED AS A CONSOLIDATED BID; MAKE MORE THAN ONE BID SEVERALLY OR JOINTLY, HOWEVER, A BID CAN BE REVISED UPWARDS TILL 5.00 PM ON THE LAST DAY OF THE BIDDING PERIOD; RIVISE BID DOWNWARD; AND WITHDRAW BID. (ii) (iii) (iv) RELATED EMPLOYEES OF THE ISSUER, CONSULTANT TO THE ISSUE AND THE BOOK RUNNER SHALL NOT PARTICIPATE IN THE BIDDING PROCESS. NO PERSON SHALL TAKE PART IN THE BOOK BUILDING PROCESS, DIRECTLY OR INDIRECTLY SEVERALLY OR JOINTLY IN ANY MANNER OR ENGAGE IN ANY ACT OR PRACTICE WHICH CREATE A FALSE AND MISLEADING APPEARANCE OF ACTIVE BIDDING FOR RAISING OR DEPRESSING STRIKE PRICE IN THE BOOK BUILDING PROCESS. ASSOCIATES OF THE ISSUER AS DISCLOSED IN THE PROSPECTUS SHALL NOT IN AGGREGATE MAKE BIDS FOR SHARES IN EXCESS OF FIVE PER CENT OF THE BOOK BUILDING PORTION. (v) AS PER REGULATION 7(9) OF THE PO REGULATIONS, THE ASSOCIATES OF THE CONSULTANT TO THE ISSUE AND THE BOOK RUNNER SHALL NOT IN AGGREGATE MAKE BIDS FOR SHARES IN EXCESS OF TWO (2%) PERCENT OF THE BOOK BUILDING PORTION. LIST OF ASSOCIATED COMPANIES AND UNDERTAKINGS OF THE ISSUER, NAMES OF RELATED EMPLOYEES OF THE ISSUER, CONSULTANT TO THE ISSUE AND BOOK RUNNER ARE PROVIDED IN SECTION Once the Bidding Period has lapsed and the book has been built, the, Strike Price shall be determined on the basis of Dutch Auction Method. Successful Bidders shall be intimated, within one (1) day of the closing of the Bidding Period, about the Strike Price and the number of shares provisionally allotted to each of them. The bid money of bidders who have undertaken to subscribe the unsubscribed retail portion shall remain deposited or blocked till allotment of unsubscribed retail portion, if any, to them on pro-rata basis. Upon intimation by the Book Runner of the final allocation, successful institutional bidders shall deposit their balance margin money within (3) days of such intimation. Where a successful Bidder defaults in payment of shares allotted to him / her / it, the Margin Money deposited by such Bidder shall be forfeited to the Book Runner. As per regulation 9(16) of the PO Regulations, the successful bidders shall be issued shares only after the end of the public subscription, in the form of book-entry to be credited in their respective CDS accounts (Investors Account or Sub-Account). All the bidders shall, therefore, provide number of their CDS accounts in the bid application. The Bidders are encouraged to fill-in the part of the Bidding Form under the heading, Dividend Mandate to enable the Company to directly credit their cash dividend, if any, in their respective Bank Accounts. Page 19 of 136

22 2.2.3 Mechanism for Determination of Strike Price 1. At the close of the bidding period, the Strike Price shall be determined on the basis of Dutch Auction Method by the System. Under this methodology, the Strike Price is determined by lowering the price to the extent that the total number of shares issued is subscribed. 2. The Order Book shall display the bid prices in a tabular form in descending order along with the number of shares bid for and the cumulative number of shares at each price level. 3. In case all the bids made above the Strike Price are accommodated and shares are still available for allotment, such available shares will be allotted against the bids made at the Strike Price strictly on time priority basis. The mechanism for determination of the Strike Price can be understood by the following illustration: 1. Number of shares being Issued through the Book Building: 29,143,032 Ordinary Shares 2. Floor Price: PKR 26 per Ordinary Share 3. Bidding Period: From DD/MM/2017 to DD/MM/ Bidding Time: 9:00am 5:00pm 5. Bidding Revision Time (Upward Revision only): 9:00am 5:00pm on all days Bidder Price Cumulative Number Quantity (PKR/share) of shares Category of Order Institution A ,800,000 2,800,000 Limit Price Institution B ,600,000 5,400,000 Limit Price HNWI A ,800,000 8,200,000 Step Bid Institution C ,600,000 10,800,000 Limit Price Institution D ,700,000 13,500,000 Limit Price HNWI B ,800,000 16,300,000 Limit Price HNWI A ,900,000 19,200,000 Step Bid Institution E ,700,000 21,900,000 Limit Price HNWI C ,600,000 24,500,000 Limit Price Institution F ,000,000 26,500,000 Step Bid Institution E ,000,000 27,500,000 Limit Price HNWI D ,000,000 27,500,000 Step Bid HNWI E ,000,000 29,500,000 Limit Price Institution F ,800,000 32,300,000 Step Bid HNWI D ,900,000 35,200,000 Step Bid HNWI F ,400,000 37,600,000 Limit Price Strike Price determine through Dutch Auction Method Bid has been revised upwards and placed at PKR 31.0 Total shares subscribed Page 20 of 136

23 On the basis of the figures provided in the above illustration, according to the Dutch Auction Method, the Strike Price would be set at PKR 28.0 per share to sell the required quantity of 29,143,032 ordinary shares. At PKR 35.0 per share, investors are willing to buy 2,800,000 shares. Since 26,343,032 shares are still available, therefore the price will be set lower. At PKR 34.5 per share, investors are willing to buy 2,600,000 shares. Since 23,743,032 shares are still available, therefore the price will be set lower. At PKR 34.0 per share, investors are willing to buy 2,800,000 shares. Since 20,943,032 shares are still available, therefore the price will be set lower. At PKR 33.5 per share, investors are willing to buy 2,600,000 shares. Since 18,343,032 shares are still available, therefore the price will be set lower. At PKR 32.0 per share, investors are willing to buy 2,700,000 shares. Since 15,643,032 shares are still available, therefore the price will be set lower. At PKR 31.8 per share, investors are willing to buy 2,800,000 shares. Since 12,843,032 shares are still available, therefore the price will be set lower. At PKR 31.5 per share, investors are willing to buy 2,900,000 shares. Since 9,943,032 shares are still available, therefore the price will be set lower. At PKR 31.0 per share, investors are willing to buy 2,700,000 shares. Since 7,243,032 shares are still available, therefore the price will be set lower. At PKR 30.5 per share, investors are willing to buy 2,600,000 shares. Since 4,643,032 shares are still available, therefore the price will be set lower. At PKR 30.0 per share, investors are willing to buy 2,000,000 shares. Since 2,643,032 shares are still available, therefore the price will be set lower. At PKR 29.0 per share, investors are willing to buy 1,000,000 shares. Since 1,643,032 shares are still available, therefore the price will be set lower. At PKR 28.0 per share, investors are willing to buy 2,000,000 shares. Since after bidding for 2,000,000 shares at PKR 28.0 per share, no shares will be available therefore the Strike Price will be set at PKR 28.0 per share for the entire lot of 29,143,032 shares. The bidders who have placed bids at prices above the Strike Price (which in this illustration is PKR 28 per share), will become entitled for allotment of shares at the Strike Price and the differential would be refunded. Investors who have bid below PKR 28 per share do not qualify for allotment and their money would be refunded. Only 75% of the total shares offered through book building shall provisionally be allocated to the successful bidders. The bidders shall give an undertaking along with the application that they would subscribe to the unsubscribed shares, if any, by the retail investors and their remaining bid money would remain deposited/ blocked till allotment of unsubscribed shares by the retail investors, if any, to them on pro-rata basis. In case the retail portion is fully subscribed, the bid money shall be unblocked within one (1) working day or refunded within three (3) working days from the date of confirmation of shares subscribed in the general public portion Timeframe for intimation to the successful bidders and Mechanism for payment of the balance amount by the successful bidders Successful bidders shall be intimated, within one (1) day of the closing of the bidding period, the Strike Price and the number of shares provisionally allotted to each of them. Upon intimation by the Book Runner of the final allocation, successful institutional bidders shall deposit their balance margin money within (3) days of such Page 21 of 136

24 intimation. Where a successful Bidder defaults in payment of shares allotted to it, the Margin Money deposited by such Bidder shall be forfeited to the Book Runner Consultant to the Issue Arif Habib Limited ( AHL ) has been appointed by the Issuer as Consultant to this Issue Interest of Consultant to the Issue and Book Runner other than their Role as Consultant to the Issue and Book Runner The Consultant to the Issue and Book Runner are deemed to be interested to the extent of fees payable to them by the Issuer for the services of Consultant and Book Runner to the Issue. The Consultant and Book Runner have no other interest in any property or profits of the Company Book Runner MCB Bank Limited ( MCB ) has been appointed by the Issuer as the Book Runner to this Issue. Roles and Responsibilities of the Book Runner The Book Runner shall be responsible to: 1. Ensure that necessary infrastructure and electronic system is available to accept bids and to conduct the whole Book Building process in a fair, efficient and transparent manner; 2. Ensure blocking, where required, of bid and margin money of the Bidders in their respective accounts; 3. The Book Runner must be financially capable for honoring its commitments arising out of defaults by their investors, if any; 4. Use the software provided by the Designated Institution for the Book Building on such terms and conditions as may be agreed through an agreement in writing; 5. Ensure that the software used for Book Building is based on Dutch Auction Method for display of the order book in descending order and determination of the strike price; 6. Ensure that the bidders can access to the System and can revise their bids electronically using the user ID and the password; 7. Ensure that it has obtained list and Unique Identification Numbers ( UINs ) of the associates of the Issuer and the Consultant to the Issue; 8. Ensure that names and UINs of all the persons are entered and capped in a manner as prescribed in the PO Regulations before commencement of the Bidding Period; 9. Ensure that no bid or bids exceeding five per cent (5%), in aggregate, is or are made by the associated companies and associated undertakings of the Issuer; 10. Ensure that it has blocked all UINs and names of all related employees for participation in the bidding; 11. Enter into an underwriting agreement with the Issuer with respect to underwriting of the Book Building portion for covering the default risk; 12. At least establish bid collection centers in Islamabad, all the provincial capitals, Azad Kashmir and Gilgit/ Baltistan; 13. Maintain record of all the bids received; and 14. Ensure that all the Bids received in the Bid Collection Centers are entered into the Book Building System within the prescribed time. Bid Collection Centers Page 22 of 136

25 The Book Runner has established bid collection centers at the following addresses: Contact Officer: Direct No.: Mobile No.: PABX No.: Fax No.: Postal Address: Contact Officer: Mobile No.: Direct No.: Postal Address: Contact Officer: PABX No.: Direct: Fax No: Postal Address: Contact Officer: Mobile No.: Direct: Postal Address: Lahore Islamabad Azad Kashmir Karachi Quetta Peshawar Gilgit / Baltistan Roles and Responsibilities of the Designated Institution PSX being provider of the Book Building System (Designated Institution), shall ensure that Book Building System shall smoothly perform following functions: 1. Record name, UIN, National Tax Number (NTN), postal and addresses; land line and cell numbers, bank account number and branch address; and Investor Account Number or Sub-Account Number of the bidder with participant account number; 2. Provide a mechanism for registration of the bidders at least three days before commencement of the bidding period till 03:00 p.m. on the last day of the Bidding Period and require the investors to provide at least such information as mentioned above; 3. Generate bidders Internet Protocol (IPs) address and keep record of all IP addresses from where the bids are placed; 4. Record the number of shares bid for, the Bid Price, type of the bid i.e. Limit Bid or Step Bid, date and time of the entry of the bid; 5. Display the bids revised upward, and date and time of upward revision; 6. Not accept the bids placed at a Bid Price that is below the Floor Price; 7. Display live the total number of shares offered for sale, the Floor Price, total number of bids received, total number of shares bid for, indicative Strike Price and Bidding Range; Page 23 of 136

26 8. Build an order book showing demand for the shares at various price levels in a descending order along with the accumulated number of shares bid for and percentage of total shares offered under the Book Building Portion; 9. Discover the strike price at the close of the Bidding Period; 10. Generate alerts for the Bidders via Short Message Service (SMS) through cell phones and s upon entry of the bid, at the time of upward revision of the bid, and upon discovery of the strike price; and 11. Ensure that system must provide the bidders the option to upward revise their bids online or through the Book Runner during the period permitted under the PO Regulations. PSX shall ensure that: Identity of the bidder is not displayed; and No bid is entered into the System after closing of the Bidding Period Roles and Responsibilities of the Issuer The Issuer shall ensure that: 1. the Issuer, its sponsors, promoters, substantial shareholders, directors and associates shall have no over dues or defaults, irrespective of the amount, appearing in the report obtained from the credit information bureau; 2. the Issuer or its directors, sponsors or substantial shareholders should not have held the office of the directors, or have not been sponsors or substantial shareholders in any company, I. which had been declared defaulter by the securities exchange or futures exchange; or II. whose TRE certificate has been cancelled or forfeited by the securities exchange; or III. which has been de-listed by the securities exchange due to non-compliance of its regulations. 3. The Consultant to the Issue, Book Runner, Underwriter, Balloter and Share Registrar and Banker to an Issue, where required, are appointed through separate agreements in writing. 4. It has submitted through its Consultant to the Issue, an application along with draft prospectus for listing of its securities to the securities exchange Opening and Closing of the Registration Period The Registration period shall be for Five (5) working days i.e. DD/MM/2017 to DD/MM/2017 from 9:00 AM to 5:00 PM and from 9:00 AM to 3:00 PM on DD/MM/2017. DD/MM/2017 DD/MM/2017 DD/MM/2017 DD/MM/2017 DD/MM/2017 REGISTRATION PERIOD 9:00am to 5:00pm 9:00am to 5:00pm 9:00am to 5:00pm 9:00am to 5:00pm 9:00am to 3:00pm Opening and Closing of the Bidding Period The Bidding Period shall be for Two (2) working days i.e. DD/MM/2017 and DD/MM/2017. The bidding will commence at 09:00 am and shall close at 05:00 pm on both days. Page 24 of 136

27 BIDDING PROCESS STARTS ON BIDDING PROCESS ENDS ON DD/MM/2017 (9:00 AM to 5:00 PM) DD/MM/2017 (9:00 AM to 5:00 PM) Eligibility to Participate in Bidding Eligible Investors who can place their bids in the Book Building process include local and foreign Individual and Institutional Investors whose Bid Amount is not less than PKR 1,000,000/- (Rupees One Million only) Information for Bidders 1. The Prospectus for Issue of Shares has been approved by PSX and SECP. 2. The Prospectus, Registration Forms, the Bidding Forms and Bid Revision Forms can be obtained from the Registered Office of Matco Foods Limited, MCB Bank Limited and AHL and the designated Bid Collection Centers. Prospectus, Registration Forms, Bidding Forms and Bid Revision Forms can also be downloaded from the following websites of the Consultant to the Issue, Book Runner and the Company:, Eligible Investors who are interested in subscribing to the Ordinary Shares should approach the Book Runner at the addresses provided in paragraph for registration for submitting their Bids. 4. THE REGISTRATION FORMS SHOULD BE SUBMITTED ON THE PRESCRIBED FORMAT AT THE ADDRESSES PROVIDED IN PARAGRAPH FOR DETAILS ON THE PROCEDURE OF REGISTRATION PLEASE REFER TO PARAGRAPH THE BIDS SHOULD BE SUBMITTED ON THE PRESCRIBED BIDDING FORM IN PERSON, THROUGH FAX NUMBERS GIVEN IN PARAGRAPH OR THROUGH THE ONLINE SYSTEM USING THE USER ID AND PASSWORD ISSUED AT THE TIME OF REGISTERATION OF ELIGIBLE INVESTOR. 6. REGISTERED INVESTORS CAN PLACE AND REVISE THEIR BIDS UPWARDS BY ACCESSING THE PSX ONLINE PORTAL FOR BOOK BUILDING BY USING THE USER ID AND PASSWORD COMMUNICATED TO THEM VIA BY PSX. 7. EACH ELIGIBLE INVESTOR SHALL ONLY SUBMIT A SINGLE PAY ORDER, DEMAND DRAFT OR EVIDENCE OF ONLINE TRANSFER OF MONEY ALONG WITH THE REGISTRATION FORM. IT MAY ALSO BE NOTED THAT ONLY A SINGLE PAY ORDER, DEMAND DRAFT OR EVIDENCE OF ONLINE TRANSFER OF MONEY SHALL BE ACCEPTED BY THE BOOK RUNNER ALONG WITH EACH ADDITIONAL PAYMENT FORM. 8. ELIGIBLE INVESTORS WHO ARE ACCOUNT HOLDERS OF MCB (BANKER TO THE BOOK BUILDING PORTION OF THE ISSUE) CAN USE THE ONLINE TRANSFER FACILITY PROVIDED BY MCB TO DEPOSIT THEIR BID MONEY TO THE BOOK BUILDING ACCOUNT OPENED AT MCB Bidders Registration form and Procedure for Registration 1. A standardized Registration Form has been prescribed by the Issuer for registration of Bidders. The Registration Form shall be submitted, duly filled in, at the Bid Collection Centers in person on addresses given in paragraph on the standard Registration Form. The Registration Form shall be serially numbered at the bid collection centers and date and time stamped at the time of collection of the same from the Bidders. 2. Upon completion and submission of the Registration Form, the Bidders are deemed to have authorized the Issuer to make necessary changes in the Prospectus as would be required for finalizing and publishing the Page 25 of 136

28 Supplement to the Prospectus in the newspapers in which Prospectus was published and filing the Supplement with the PSX and the SECP, without prior or subsequent notice of such changes to the Bidders. 3. The registration procedure under the Book Building process is outlined below: The Registration period shall be for Five (5) working days i.e. DD/MM/2017 to DD/MM/2017 from 9:00 AM to 5:00 PM (during working days) and from 9:00 AM to 3:00 PM on DD/MM/2017. The Registration Form shall be issued in duplicate signed by the Bidder and countersigned by the Book Runner, with the first copy for the Book Runner and the second copy for the Bidder. The Registration Form shall be duly filled in and signed in duplicate and shall be submitted at the Bid Collection Centers in person, through representative or through fax on addresses and numbers given in paragraph Upon registration of the bidders in the System, PSX shall assign and communicate the User ID and Password to the Bidders via on the address provided by them in the Registration Form. The Book Runner may reject any bid for reasons to be recorded in writing provided the reason of rejection is disclosed to such bidder. Decision of the Book Runners shall not be challengeable by the Bidder or its associates. Bid Amount / Margin Money shall be deposited along with the Registration Form through demand draft, pay order or online transfer. In case of Online Transfer, the Bidders are requested to submit a bank receipt evidencing transfer of the bid money into the Issuer s designated bank account. Please note that cash must not be deposited either directly or through online transfer in the Issuer s designated bank account. The pay order shall be made in favor of Matco Foods Limited Book Building. For online transfer the payment shall be made into account no, [ ] being maintained in MCB Bank Limited [ ]. The Account Title for the Book Building shall be IPO of Matco Foods Limited Book Building Account. Please note that online transfer facility shall only be allowed to the account holders of MCB Bank Limited. o Please note that third party instruments will not be accepted for Margin Money. In case of intra city payment instruments, the bidders shall ensure that the payment instruments are made Payable at any Branch. Intra city payment instruments that are not made Payable at any Branch will not be accepted. The Book Runners shall collect an amount of 100% of the Application Money as Margin Money in respect of bids placed by Individual Investors. The Book Runners shall collect an amount of not less than 25% of the Application Money as Margin Money in respect of bids placed by Institutional Investors. The Bidder shall provide a valid address in the Registration Form so that the relevant ID and password can be ed to them upon registration. The Bidders can use the User ID and Password to independently place and upward revise their bids online. The successful Bidders shall be issued shares only in the form of book-entry to be credited in their respective CDS accounts. All the bidders shall, therefore, provide their CDS account numbers in the bid application and Registration form Procedure for Bidding 1. A standardized Bidding Form has been prescribed by the Issuer. 2. Registered Investors can submit their bids in person or through representatives at the Bid Collection Centers during the bidding dates or can place their bids online at using the user ID and Password received by them over upon registration with the Book Runner. Page 26 of 136

29 3. The bidding procedure under the Book Building process is outlined below: Bids can be placed either at the Limit Price or as a Step Bid. The minimum size of a Limit Bid by an Eligible Investor shall not be less than PKR 1,000,000/- (Rupees One Million) and in case of a Step Bid, the amount of any step shall also not be less than PKR 1,000,000/- (Rupees One Million). The investors may place their bids through any of the Bid Collection Centers established pursuant to the requirements of sub-regulation 10 of regulation 8 of the PO Regulations. Please see para for addresses and contact detail of persons at the Bid Collection Centers. The persons at the Bid Collection Centers shall vet the bid applications and accept only such bid applications that are duly filled in and supported by pay order, demand draft or a bank receipt evidencing transfer of the bid money into the Issuer designated bank account. On receipt of bid application in accordance with PO Regulations, the Book Runner shall enter Bid into the System and issue to the Bidder an electronic receipt bearing name of the Book Runner, name of the bidding center, date and time. The bidding shall commence from 09:00 a.m. and close at 05:00 p.m. on all days of the Bidding Period. The bids shall be collected and entered into the system by the Book-Runner till 05:00 p.m. on the last day of the bidding period. The Bidders shall have the right; o to revise their bids upwards any time either manually through the Bid Collection Centers or electronically through direct access to the system till 05:00 p.m. on the last day of the Bidding Period. The Bidders shall NOT make any downward revision or withdraw their bids as per Regulation 10(2)(vi) of the Regulations. The Book Runner shall collect full amount of the Bid Amount as Margin Money in respect of bids placed by the individual investors and not less than twenty five percent (25%) of the Bid Amount as Margin Money in respect of bids placed by the Institutional Investors. Payment of Margin Money shall be accepted only through demand draft, pay order or online transfer and third party payment instruments shall not be accepted. The Book Runner may on its own discretion accept a bid without Margin Money, provided the Book Building Portion is fully underwritten at least at the Floor Price by the Book Runner. The Book Runner may reject any bid for reasons to be recorded in writing provided the reason of rejection is disclosed to such bidder. The decision of the Book Runner shall not be challengeable by the Bidder or its associates. PSX shall, through the system, display live throughout the bidding period an order book in descending order showing demand for shares at various prices and the accumulated number of shares bid for along with percentage of the total shares issued (the Order Book ). The Order Book should also show the bids revised upward. The Order Book shall be accessible through websites of PSX. At the close of the Bidding Period, the Strike Price shall be determined on the basis of the Dutch Auction Method. Once the Strike Price is determined, all those Bidders whose bids are found successful shall become entitled for allotment of shares. The Bidders who have made bids at prices above the Strike Price shall be allotted shares at the Strike Price and the differential shall be refunded. In case all the bids made above the Strike Price are accommodated and shares are still available for allotment, such available shares will be allotted against the bids made at the Strike Price strictly on time Page 27 of 136

30 priority basis as per clause 7(xix)(b) of the First Schedule of the PO Regulations. The procedure for allotment of shares to successful Bidders is mentioned in para of the Prospectus. The Bidders who have made bids below the Strike Price shall not qualify for allotment of any Ordinary Shares and the Book Runner shall intimate their respective banks for unblocking, where required, their Bid Money within one (1) working day of the close of the bidding period; and in case of refund, the refunds to such bidders shall be made within three (3) working days from the close of the bidding period. Successful bidders shall be intimated, within one (1) day of the closing of the bidding period, the Strike Price and the number of shares provisionally allotted to each of them. The successful bidders shall be intimated by the Book Runner of their final allocation after subscription of the retail portion of the Issue. In case the retail portion of the Issue is not fully subscribed, the unsubscribed shares shall be allotted to the successful bidders on prorate basis. In case the retail portion of the Issue is oversubscribed, the portion allocated to book building investors at strike price shall be allotted to the retail investors in the manner given in para Upon intimation by the Book Runner of final allocation, successful institutional bidders shall deposit their balance margin within (3) days of such intimation. Where a successful Bidder defaults in payment of shares allotted to it, the Margin Money deposited by such Bidder shall be forfeited to the Book Runner. Final allotment of shares out of the Book Building Portion shall be made after receipt of full subscription money from the successful Bidders; however, shares to such Bidders shall be credited at the time of credit of shares out of the retail portion. The successful Bidders shall be issued shares only in Book Entry Form to be credited in their respective CDS accounts. All the bidders shall, therefore, provide their CDC account numbers in the Registration Form. The Designated Institution shall continue to display on its website, the data pertaining to the Book Building and determination of the Strike Price for a period of at least three working days after closure of the Bidding Period. The Book-Runner shall ensure that subscription money received against the bids accepted shall not be released to the Issuer by the Banker to the Book Building Portion until: o o credit of all shares allotted to retail investors; and issuance of NOC by the PSX Payment for Book Building Portion The Issuer has opened one bank account for collection of applications money related to book building portion. The Bidders shall draw a demand draft, pay order favoring Matco Foods Limited Book Building or online transfer of the bid money into the Book Building account no. [ ] maintained at MCB Bank Limited and submit the demand draft, pay order or bank receipt at the designated Bid Collection Centers either in person or through facsimile along with a duly filled in Registration Form. For online transfer the payment shall be made into the Account [ ] being maintained at MCB Bank Limited [ ] with the Account Title Matco Foods Limited Book Building. Please note that online transfer facility shall only be allowed for MCB Bank Limited customers. CASH MUST NOT BE SUBMITTED WITH THE BIDDING FORM/REGISTRATION FORM AT THE BID COLLECTION CENTER NOR DEPOSITED DIRECTLY OR VIA ONLINE TRANSFER IN THE ISSUER S DEISGNATED BANK ACCOUNTS. BID AMOUNT MUST BE PAID THROUGH PAY ORDER, BANK DRAFT OR ONLINE TRANSFER DRAWN / TRANSFER IN FAVOR OF IPO OF MATCO FOODS LIMITED BOOK BUILDING ACCOUNT IN A MANNER ACCEPTABLE TO THE BOOK RUNNER. Please note that third party payment instruments will not be accepted. Page 28 of 136

31 The Collection Banks shall keep and maintain the bid money in the said account. Once the shares allocated under the retail portion have been credited, the Consultant to the Issue, after obtaining NOC from PSX, may request in writing to the collection banks for transfer of the money of successful and accepted applications to the Issuer s account(s). Payment Procedure: The payment procedures for a Limit Bid or a Step Bid are explained below: PAYMENT FOR LIMIT BID If investors are placing their bids as a Limit Bid then they shall deposit the Margin Money based on the number of shares they are bidding for at their stated bid price. For instance, if an investor is applying for 2 million shares at a price of PKR per share, then the total Application Money would amount to PKR 52 million. In such a case, (i) Individual Investor shall deposit PKR 52 million in the Book Building account as the bid amount which is 100% of PKR 52 million; and (ii) Institutional Investor shall deposit at least PKR 13 million in the Book Building account as the Margin Money which is 25% of PKR 13 million. PAYMENT FOR STEP BID If an investor is placing a Step Bid which is a series of Limit Bids at increasing prices, then he/she/it shall deposit the Margin Money / bid money based on the total number of shares he/she/it is bidding for at his/her/its stated bid prices. For instance, if the investor bids for 1.0 million shares at PKR per share, 0.50 million shares at PKR per share and 0.50 million shares at PKR per share, then in essence the investor has placed one Step Bid comprising three limit bids at increasing prices. The Application Money would amount to PKR 55 million, which is the sum of the products of the number of shares bid for and the bid price of each limit bid. In such a case, (i) Individual Investors shall deposit PKR 55 million in the Book Building Account as Margin Money which is 100% of PKR 55 million and (ii) Institutional Investors shall deposit at least PKR million in the Book Building Account as Margin Money which is 25% of PKR 55 million Payment by Foreign Investors Companies are permitted under paragraph 6 (with specific reference to sub para (B) (I)) of Chapter 20 of the State Bank of Pakistan s ( SBP ) Foreign Exchange Manual (the Manual ) to issue shares on repatriation basis to nonresidents who are covered under paragraph 6 (A) of Chapter 20 of the Manual, i.e. (I) A Pakistan national resident outside Pakistan, (II) A person who holds dual nationality including Pakistan nationality, whether living in or outside Pakistan, (III) A foreign national, whether living in or outside Pakistan and (IV) A firm (including a partnership) or trust or mutual fund registered and functioning outside Pakistan, excluding entities owned or controlled by a foreign government, provided the issue price, is paid in foreign exchange through normal banking channel by remittance from abroad or out of foreign currency account maintained by the subscriber/purchaser in Pakistan. Non-residents who wish to bid for the subscription of shares being offered via book building can remit the subscription money through an Authorized Dealer directly to the book building accounts opened by the Company as given in para of this Prospectus, however, those non-residents who wish to subscribe shares out of the general public portion may contact any of the bankers to the issue (retail portion) for taking instructions regarding payment of subscription money against shares offered to general public / retail investors. List of bankers to the issue for retail portion is available on page 1 and para 7.3 of this Prospectus. The shares issued to non-resident shareholders shall be intimated by the Company to the designated Authorized Dealer, along with the documents prescribed in the Manual within 30 days of issue. Non-residents who are covered under paragraph 6 (A) of Chapter 20 of the Manual do not require SBP s approval to invest in the shares being issued in terms of this Prospectus. Furthermore, under paragraph 7 (vii) of Chapter 20 of the Manual the Authorized Dealer shall allow repatriation of dividends, net of applicable taxes and proceeds on Page 29 of 136

32 sale of listed shares (i.e. divestment proceeds) not exceeding the market value less brokerage/commission on provision of prescribed documents. Payments made by non-residents shall be supported by proof of receipt of foreign currency through normal banking channels. Such proof shall be submitted along with the Application by the non-residents Procedure for Rejection of Bids In terms of regulation 9(7) of the PO Regulations, the Book Runner may reject any Bid placed by a Bidder for reasons to be recorded in writing provided the reason of rejection is disclosed to such Bidder. Decision of the Book Runner shall not be challengeable by the Bidder or any of its associates Time frame for upward revision of Bids by the Bidders The registered investors may revise their Bids upwards any time either manually through the Bid Collection Centers or electronically through direct access to the system till 05:00 p.m. on the last day of the Bidding Period. An investor will not be allowed to place or revise a bid with a price variation of more than 10% of the prevailing indicative strike price. NO WITHDRAWL OF BID OR DOWNWARD REVISION IS ALLOWED Procedure for Withdrawal of Issue 1. In accordance with regulation 8(16) of the PO Regulations, in case the Issuer does not receive bids for the number of shares allocated under the Book Building Portion at the Floor Price, the Issue shall be cancelled and the same shall be immediately intimated to the Commission and PSX and the Margin Money shall be refunded to the bidders immediately but not later than three (3) working days of the closing of the Bidding Period. 2. In accordance with regulation 8(17) of the PO Regulation, the Book Building process will be considered as cancelled if the total number of bids received is less than forty (40) Basis of Allotment of Shares Bidders shall be allowed to place bids for one hundred percent (100%) of the Issue size and the Strike Price shall be the price at which one hundred percent (100%) of the Issue is subscribed via the Dutch Auction Method. Once the Strike Price is determined, all those Bidders whose bids have been found successful shall be provisionally allotted 75% of the Issue size i.e. 21,857,032 Ordinary Shares. In order to be a successful Bidder in the Book Building process, the bid price would either be higher than the strike price or at the strike price. For allocation of shares via Book Building, priority shall be given to the bids placed at the highest price. The bidders, who have made bids at prices above the Strike Price, will be provisionally allocated 75% of the shares successfully bid for, at the Strike Price. The differential between the bid price and Strike Price, would be refunded based on the total number of shares bid for. Bidders who had placed Bids at the Strike Price will be provisionally allotted seventy-five (75%) of the shares successfully bid for, at the Strike Price, strictly on time priority basis. Bids made below the Strike Price shall not qualify for allotment of shares and their Margin Money will be refunded. The final allotment of shares to the successful bidders of the Book Building process would be determined after the determination of the extent of under subscription or over subscription of the remaining twenty-five (25%) offered to the retail investors at the Strike Price. In the event the retail portion is undersubscribed, the unsubscribed portion would be allotted to the successful bidders in the Book Building process, on a pro-rata basis. Any excess funds after subscription of the unsubscribed portion would be refunded to the bidders. Page 30 of 136

33 As per the regulation 7(3) of the PO Regulations, in case retail portion of the offer size is oversubscribed, the portion allocated to book building investors at strike price shall be allotted to the retail investors in the manner given below: # Times retail portion oversubscribed 1 10 to 20 times 10% 2 21 to 30 times 15% 3 31 times or more 30% Percentage of the offer size to be allotted to retail investors out of book building portion on proportionate basis Final allotment of shares out of the Book Building portion shall be made after subscription of the retail portion and receipt of full subscription money from the successful Bidders; however, shares to such Bidders shall be issued simultaneously with issuance of shares to retail investors, in the form of book-entry to be credited in their respective accounts. All the Bidders shall, therefore, provide number of their respective CDS accounts in the Bid application as required under regulation 9(16) of the PO Regulations Refund of Margin Money The bidders who have made bids below the Strike Price shall not qualify for allotment of securities and the book runner shall intimate their respective banks for unblocking, where required, their Bid Money within one (1) working day of the close of the bidding period as required under regulation 9(13) of the PO Regulations; and in case of refund, the refunds to such bidders shall be made within three (3) working days from the close of the bidding period. The bid money of bidders who have undertaken to subscribe the unsubscribed retail portion shall remain deposited or blocked till allotment of unsubscribed retail portion, if any, to them on pro-rata basis Publication of Supplement to the Prospectus In accordance with the regulation 11(1) of the PO Regulations within three (3) working days of the closing of the Bidding Period, the Supplement to the Prospectus shall be published at least in all those newspapers in which the Prospectus was earlier published and also disseminated through PSX. The Supplement to the Prospectus would contain information relating to the Strike Price, the Issue Price and Category-wise breakup of the successful bidders along with the number of shares provisionally allocated to them. Format of the Supplement is given on page 2 of this Prospectus. Public subscription for the shares shall be held at any date(s) within thirty days (30) of the publication of the Prospectus but not earlier than seven (7) days of such publication Ten Percent (10%) Price Variation An investor will not be allowed to place or upward revise a bid with a price variation of more than ten percent (10%) of the prevailing Indicative Strike Price subject to floor price i.e. Bid Price must not be below the Floor Price. Please note that the Indicative Strike Price may not be constant and may keep on changing during the bidding period. Therefore, the 10% range will also change with the Indicative Strike Price. For Example, if the floor price is PKR 26.0 per share and Indicative Strike Price at any given point in time during the bidding period is PKR 26.0 per share, registered bidders may place or revise their bids from PKR 26.0 per share to PKR 28.6 per share. If at any given point in time during the bidding period, the Indicative Strike Price changes from Page 31 of 136

34 PKR 26.0 per share to PKR 28.0 per share, the registered bidders may place or upward revise their bids from PKR 28.0 per share to PKR 30.8 per share. Please note that the 10% range on the lower side cannot go below the floor price. The price range of 10% applicable at any given point in time during the bidding period will also be displayed on the bid screen available at the website of PSX Restriction on Downward revision or withdrawal of Bids by the Bidder The Bidders shall not make downward revision or withdraw their bids as restricted under regulation (10)(2)(vi) of the PO Regulations Associated Companies and Undertakings of the Issuer Associated Company / Trust S. No Name of Company / Undertakings Status CUIN NTN 1. Matco Engineering (Pvt) Limited Associate K Ghori Trust Trust Subsidiaries S. No Name of Company / Undertakings Status CUIN NTN 1. JKT General Trading FZE LLC Subsidiary N/A 2. Matco Marketing (Pvt) Limited Subsidiary Note: As required under regulation 7(8) of the PO Regulations, the Associated Companies and Associated Undertakings of the Issuer shall not in aggregate make bids for shares in excess of 5% of the Book Building Portion. Related Employees of the Company (Matco Foods Limited) S. No Name Designation 1. Mr. Jawed Ali Ghori Chairman 2. Mr. Khalid Ghori Chief Executive Officer 3. Mr. Tariq Ghori Director Marketing & Exports 4. Mr. Faizan Ghori Director Finance 5. Mr. Naeem Ur Rehman Akhoond Non-Executive/Independent Director 6. Mr. Syed Kamran Rashid Non-Executive Director/Independent Director 7. Mr. Iftikhaar Soomro Non-Executive Director/Independent Director 8. Mr. Muhammad Jawed Ismail Chief Financial Officer 9. Mr. Syed Abid Moiz Company Secretary Related employees of the Consultant to the Issue (Arif Habib Limited) S. No Name Designation 1 Mr. Shahid Ali Habib Chief Executive Officer 2 Mr. Syed Kashif ul Hassan Shah MD, Investment Banking 3. Mr. Ahmed Rajani Vice President, Investment Banking 4. Mr. Syed Saquib Ali Vice President, Investment Banking 5. Mr. Dabeer Hasan Sr. Associate, Investment Banking 6. Mr. Ammad Tahir Sr. Associate, Investment Banking Page 32 of 136

35 7. Mr. Nayhan Ahmed Mohajir Sr. Associate, Investment Banking 8. Mr. Abdul Qadir Associate, Investment Banking 9. Mr. Yasir Abbas Senior Analyst, Investment Banking 10. Mr. Omair Talib Marghoob Analyst, Investment Banking 11. Mr. Tanveer Ahmad Analyst, Investment Banking 12. Umme Sahar Ahmad Analyst, Investment Banking Related employees of the Book Runner (MCB Bank Limited) S. No Name Designation 1 Ms. Amna Hasan Business Head Corporate South & Head of Investment Banking 2 Mr. Jawad Taj Department Head - Project Finance, Advisory & Syndications, Investment Banking 3 Syed Umair Alam Zaidi Manager 4 Mr. Muzammil Shahid Bhatti Manager 5 Mr. Talha Ameer Khan Senior Associate 6 Mr. Muhammad Ali Assistant Relationship Manager 7 Mr. Muhammad Arsal Analyst 8 Mr. Muhammad Bilal Mustafa Analyst 9 Ms. Mahwish Ebrahim Analyst 10 Mr. Muhammad Ashraf Administration Officer 11 Mr. Sarwar Din Sr. Assistant Note: 1. As per regulation 7(9) of the PO Regulations the associates of the Consultant to the Issue and the Book Runner shall not in aggregate make bids for shares in excess of two (2) percent of the Book Building portion. 2. As required under regulation 20(10) of the PO Regulations, Related Employees of the Issuer, the Consultant to the Issue and the Book Runner shall not participate in the bidding for shares. Page 33 of 136

36 Statement by the Issuer September 05, 2017 The Chief Executive Pakistan Stock Exchange Limited Stock Exchange Building Stock Exchange Road Karachi On behalf of Matco Foods Limited ( MATCO or the Company ), we hereby confirm that all material information as required under the Securities Act, 2015, the Public Offering Regulations, 2017 and the Listing of Companies and Securities Regulations of the Pakistan Stock Exchange Limited has been disclosed in the Prospectus and that whatever is stated in Prospectus and the supporting documents is true and correct to the best of our knowledge and belief and that nothing has been concealed. For and on behalf of Matco Foods Limited -Sd- Khalid Ghori Chief Executive Officer -Sd- Muhammad Jawed Ismail Chief Financial Officer Page 34 of 136

37 Statement by Consultant to the Issue October 30, 2017 The Chief Executive Pakistan Stock Exchange Limited Stock Exchange Building Stock Exchange Road Karachi Being mandated as the Consultant to this Initial Public Offering of Matco Foods Limited through the Book Building process, We hereby confirm that all material information as required under the Securities Act, 2015, the Public Offering Regulations, 2017 and the Listing of Companies and Securities Regulations of the Pakistan Stock Exchange Limited has been disclosed in this Prospectus and that whatever is stated in Prospectus and in the supporting documents is true and correct to the best of our knowledge and belief and that nothing has been concealed. For and behalf of Arif Habib Limited -Sd- Mr. Ahmed Rajani Vice President, Investment Banking Page 35 of 136

38 Statement by the Book Runner September 05, 2017 The Chief Executive Pakistan Stock Exchange Limited Stock Exchange Building Stock Exchange Road Karachi Being mandated as the Book Runner to this Initial Public Offering of Matco Foods Limited through the Book Building process, We confirm that all material information as required under the Securities Act, 2015, the Public Offering Regulations, 2017 and the Listing of Companies and Securities Regulations of the Pakistan Stock Exchange Limited has been disclosed in this Prospectus and that whatever is stated in Prospectus and in the supporting documents is true and correct to the best of our knowledge and belief and that nothing has been concealed. For and on behalf of MCB Bank Limited -Sd- Ms. Amna Hasan Executive Vice President Head - Investment Banking & Business Head Corporate (South) Page 36 of 136

39 2.3 SHARE CAPITAL AND RELATED MATTERS Share Capital No. of Shares Shareholder Face Value (PKR) Premium (PKR) Total Value (PKR) 200,000,000 AUTHORIZED CAPITAL Ordinary shares of PKR 10/- each 2,000,000,000-2,000,000,000 ISSUED, SUBSCRIBED AND PAID-UP CAPITAL OF THE COMPANY 21,197,213 Issued for Cash: Ordinary shares of PKR 10/- each 211,972, ,310, ,282,973 Issued for Consideration 6,002,950 Other than Cash*: Ordinary 60,029,500-60,029,500 Shares of PKR 10/- each 60,228,931 Issued as Bonus Shares: Ordinary Shares of PKR 10/- 602,289, ,289,310 each 87,429,094 Total 874,290, ,310,843 1,215,601,783 THE ISSUED, SUBSCRIBED & PAID-UP CAPITAL OF MATCO FOODS LIMITEDS HELD AS FOLLOWS: Shares held by Sponsors / Directors of the Company 22,661,925 Mr. Jawed Ali Ghori 226,619, ,619, ,500 Mrs. Naheed Jawed 4,275,000-4,275, ,997 Mr. Faizan Ali Ghori 2,249,970-2,249,970 22,886,925 Mr. Khalid Sarfaraz Ghori 228,869, ,869, ,500 Mrs. Nuzhat Khalid 4,275,000-4,275,000 22,909,425 Dr. Tariq Ghori 229,094, ,094, ,000 Mrs. Sadaf Tariq 4,050,000-4,050,000 Shares held by Non-Executive Directors of the Company 1 Mr. Naeem Ur Rehman - Akhoond Mr. Syed Kamran Rasheed Mr. Iftikhaar Soomro Shares held by Others 17,485,819 International Finance Corporation (IFC) 174,858, ,310, ,169,033 87,429,094 Sub-Total 874,290, ,310,843 1,215,601,783 Present Issue of Ordinary Shares Allocations to Institutions / 21,857,032 Individual Investors through Book Building process at a 218,570,320 [X] [X] Strike Price 7,286,000 General Public Portion 72,860,000 [X] [X] 29,143,032 Total Present Issue 291,430,420 [X] [X] 116,572,136 Grand Total (Post-IPO) Paid-up Capital 1,165,721,260 [X] [X] Page 37 of 136

40 * On April 30, 2008 the Company entered into an agreement to takeover the running business of Matco Marketing Company (the Firm ), a sole proprietorship firm against the issuance of shares. The Firm s capital account as per the audit conducted by M/S Rafiq & Co, Chartered Accountant was PKR 60,029,499 accordingly 600,295 shares of par value PKR 100 were issued to Mr. Tariq Ghori in lieu of this takeover in accordance with the regulation 8 of Companies (Issue of Capita) Rules, The auditors M/S Rafiq & Co, Chartered Accountant also filed the Form 3 for issuance of shares with the SECP vide their letter dated June 28, 2008 confirming the same. Z. Lakhani & Co. Chartered Accountants in its certificate dated June 17, 2008 has confirmed compliance of rule 8 of the Companies (Issue of Capital) Rule, 1996 for issue of shares for consideration otherwise than cash In January 2010, the Company changed the par value of its shares to PKR 10 and the said number of shares increased to 6,002, As per regulation 5(1) of the PO Regulations, the sponsors of the Issuer shall retain their entire shareholding in the Company for a period of not less than twelve months from the last date for public subscription; 2. As per regulation 5(2) of the PO Regulations, the sponsors of the Issuer shall retain not less than twenty five percent of the paid up capital of the Company for not less than three financial years from the last date for the public subscription; 3. As per regulation 5(3) of the PO Regulations, the shares of the sponsors mentioned at (1) and (2) above shall be kept unencumbered in a blocked account with central depository; 4. Subject to compliance with sub-regulations (1) and (2) of regulation 5 of the PO Regulations, and with the prior approval of the securities exchange, the sponsors of the Issuer may sell their shareholding through block-sale to any other person who shall be deemed sponsor for the purposes of the PO Regulations Opening and Closing of the Subscription List The subscription list will open at the commencement of banking hours on DD/MM/2017 and will close on DD/MM/2017 at the close of banking hours. Please note that online applications can be submitted 24 hours during the subscription period which will close at 12:00 midnight on DD/MM/ e-ipo e-ipo is submission of application for subscription of securities electronically through internet, Automated Teller Machines (ATM) and mobile phones. In order to facilitate the public during IPOs, SECP has introduced the concept of e-ipo. The following two systems are available for e-ipos: Centralized e-ipo System (CES): In order to facilitate investors, the Central Depository Company of Pakistan ( CDC ) has developed a Centralized e- IPO System ( CES ) through which applications for subscription of securities offered to the general public can be made electronically. CES has been made available in this Initial Public Offering (IPO) and can be accessed through the web link Payment of subscription money can be made through 1LINK s member banks available for CES, list of which is available on above website. For making application though CES, investors must be registered with CES. Registration with CES is free of cost and can be done under a self-registration process by filling the CES registration form, which is available 24/7 all around the year. Page 38 of 136

41 Investors who have valid Computerized National Identity Card (CNIC), bank account with any of the commercial bank, address, mobile phone number and CDS Account (Investor account or sub account) may registered themselves with CES. Investors who do not have CDS account may visit for information and details. For further guidance and queries regarding CES and opening of CDS account, investors may contact CDC at phone number: (CDCPL) and Investors who are registered with CES can submit their applications through the web link 24 hours a day during the subscription period which will close at midnight on DD/MM/2017. E-IPO facilities by Bankers to the Issue: Currently, United Bank Limited (UBL), Summit Bank Limited (SMBL) and Bank Alfalah (BAFL) are providing e-ipo facilities to their respective accountholders. UBL account holders can use UBL Net Banking to submit their application via link SMBL account holders can use SMBL Net Banking to submit their application via link And BAFL account holders can use BAFL Net Banking to submit their application via link: Benefits of e-ipo: E-IPO has the following benefits: i. It enables the investors to make application for subscription of shares through the internet without going to the bank, and waiting in long queues. ii. iii. iv. It is efficient and simultaneously facilitative for both the Issuer and the investors. It is available for use 24 hours during the subscription period. If you are registered with CES or accountholder of a bank providing e-ipo facility, you may get SMS for new IPOs. v. By applying through CES you can also track your application status Eligibility of Investors for Investment in this Issue Eligible investors include: i. Pakistani citizens resident in or outside Pakistan or persons holding dual nationalities including a Pakistani Nationality; ii. iii. iv. Foreign nationals whether living in or outside Pakistan; Companies, bodies corporate or other legal entities incorporated or established in or outside Pakistan (to the extent permitted by their respective constitutive documents and existing regulations, as the case may be); Mutual Funds, Provident / Pension / Gratuity Funds / Trusts (subject to the terms of their respective Trust Deeds and existing regulations); and v. Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan Facilities available to Non-Resident Pakistani and Foreign Investors Page 39 of 136

42 Companies are permitted under paragraph 6 (with specific reference to sub para (B) (I)) of Chapter 20 of the State Bank of Pakistan s ( SBP ) Foreign Exchange Manual (the Manual ) to issue shares on repatriation basis to nonresidents who are covered under paragraph 6 (A) of Chapter 20 of the Manual, i.e. (I) A Pakistan national resident outside Pakistan, (II) A person who holds dual nationality including Pakistan nationality, whether living in or outside Pakistan, (III) A foreign national, whether living in or outside Pakistan and (IV) A firm (including a partnership) or trust or mutual fund registered and functioning outside Pakistan, excluding entities owned or controlled by a foreign government, provided the issue price, is paid in foreign exchange through normal banking channel by remittance from abroad or out of foreign currency account maintained by the subscriber/purchaser in Pakistan. Non-residents who wish to bid for the subscription of shares being offered via book building can remit the subscription money through an Authorized Dealer directly to the book building accounts opened by the Company as given in section of this Prospectus, however, those non-residents who wish to subscribe shares out of the general public portion may contact any of the bankers to the issue (retail portion) for taking instructions regarding payment of subscription money against shares offered to general public /retail investors. List of bankers to the issue for retail portion is available on page 1 and para 7.3 of this Prospectus. The shares issued to non-resident shareholders shall be intimated by the Company to the designated Authorized Dealer, along with the documents prescribed in the Manual within 30 days of issue. Non-residents who are covered under paragraph 6 (A) of Chapter 20 of the Manual do not require SBP s approval to invest in the shares being issued in terms of this Prospectus. Furthermore, under paragraph 7 (vii) of Chapter 20 of the Manual the Authorized Dealer shall allow repatriation of dividends, net of applicable taxes and proceeds on sale of listed shares (i.e. divestment proceeds) not exceeding the market value less brokerage/commission on provision of prescribed documents. Payments made by non-residents shall be supported by proof of receipt of foreign currency through normal banking channels. Such proof shall be submitted along with the application by the non-residents Minimum amount of Application and Basis for Allotment of Shares Out of the General Public Portion of the Issue The basis and conditions of allotment to the general public shall be as follows: 1. Application for shares must be made for 500 shares or in multiples of 500 shares only. Applications which are neither for 500 shares nor for multiples of 500 shares shall be rejected. 2. The minimum amount of application for subscription of 500 shares is the Issue Price x 500 shares. Any cost incurred in issue of shares as part of the Issue shall be borne by Issuer. 3. Application for shares below the minimum amount shall not be entertained. 4. SUBMISSION OF FALSE AND FICTITIOUS APPLICATIONS IS PROHIBITED AND SUCH APPLICATIONS MONEY MAY BE FORFEITED UNDER SECTION 87(8) OF THE SECURITIES ACT, If the shares issued to the general public are sufficient to accommodate all applications, all applications shall be accommodated. 6. In case retail portion of the Issue, remains unsubscribed, the unsubscribed shares shall be allotted to successful bidders at the strike price on pro-rata basis. 7. Incase retail portion of the Issue is oversubscribed, the portion allocated to Book Building investors at strike price shall be allotted to the retail investors in the form and manner provided in para If the shares applied for by the general public are in excess of the shares being issued to them, the distribution shall be made by computer balloting, in the presence of the representative(s) of PSX in the following manner: If all applications for 500 shares can be accommodated, then all such applications shall be accommodated first. If all applications for 500 shares cannot be accommodated, then balloting will be conducted among applications for 500 shares only. Page 40 of 136

43 If all applications for 500 shares have been accommodated and shares are still available for allotment, then all applications for 1,000 shares shall be accommodated. If all applications for 1,000 shares cannot be accommodated, then balloting will be conducted among applications for 1,000 shares only. If all applications for 500 shares and 1,000 shares have been accommodated and shares are still available for allotment, then all applications for 1,500 shares shall be accommodated. If all applications for 1,500 shares cannot be accommodated, then balloting will be conducted among applications for 1,500 shares only. If all applications for 500 shares, 1,000 shares and 1,500 shares have been accommodated and shares are still available for allotment, then all applications for 2,000 shares shall be accommodated. If all applications for 2,000 shares cannot be accommodated, then balloting will be conducted among applications for 2,000 shares only. After the allotment in the above mentioned manner, the balance shares, if any, shall be allotted in the following manner: o If the remaining shares are sufficient to accommodate each application for over 2,000 shares, then 2,000 shares shall be allotted to each applicant and remaining shares shall be allotted on pro-rata basis. o If the remaining shares are not sufficient to accommodate all the remaining applications for over 2,000 shares, then balloting shall be conducted for allocation of 2,000 shares to each successful applicant. 9. If the Issue is over-subscribed in terms of amount only, then allotment of shares shall be made in the following manner: First preference will be given to the applicants who applied for 500 shares; Next preference will be given to the applicants who applied for 1,000 shares; Next preference will be given to the applicants who applied for 1,500 shares; Next preference will be given to the applicants who applied for 2,000 shares; and then After allotment of the above, the balance shares, if any, shall be allotted on pro rata basis to the applicants who applied for more than 2,000 shares. 10. Allotment of shares will be subject to scrutiny of applications for subscription of shares. 11. Applications, which do not meet the above requirements, or applications which are incomplete, will be rejected Refund/Unblocking of Subscription Money to Unsuccessful Applicants As per the regulation 11(4) of the PO Regulations, within 10 days of the close of public subscription period, the Shares shall be allotted and issued against the accepted and successful applications and the subscription money of the unsuccessful applicants shall be unblocked/ refunded. As per sub-section (2) of Section 68 of the Companies Act, if refund as required under Sub-section (1) of Section 68 of the Companies Act is not made within the time specified therein, the directors of the company shall be jointly and severally liable to repay that money with surcharge at the rate of two percent (2%) for every month or part thereof from the expiration of the fifteenth day and, in addition, shall be liable to a penalty of level 3 on the standard scale as defined in Section 479 of the Companies Act. Provided that the directors of the Issuer shall not be liable if it proves that the default in making the refund was not on their own account and was not due to any misconduct or negligence on their part Issue and Credit of Shares Page 41 of 136

44 Within ten (10) days of the close of public subscription period, the shares shall be allotted/credited against the accepted and successful applications and the subscription money of the unsuccessful applicants shall be unblocked/refunded, as required under regulation 11(4) of the PO Regulations. Shares will be issued only in the book-entry form. Therefore, the applicants must provide their CDS account Number in the Applicant Form. The Company shall credit shares, within ten (10) days of the closing of public subscription, in the respective CDS accounts of the successful applicants. If the Company defaults in complying with the above requirements, it shall pay the PSX a penalty of PKR 5,000 per day for every day during which the default continues. The PSX may also notify the fact of such default and the name of the Company by notice and also by publication in its ready-board quotation of the Stock Exchange. The name of the Company will also be notified to the TRE Certificate Holders of the PSX and placed on the web site of the PSX Transfer of Shares The shares shall be transferred in accordance with the provisions of Section 74 of the Companies Act read with Section 75 thereof and the Central Depositories Act, 1997 and the CDCPL Regulations Shares Issued in Preceding Years S. No No. of Shares Share Date of Issuance Consideration Total Shares Share Capital (PKR) Issued Price / Allotment ,000 April , Cash 60,000 6,000,000 September , Cash 200,000 20,000,000 June , Cash 232,000 23,200,000 June , Cash 382,000 38,200,000 February , Cash 559,000 55,900,000 June , Cash 829,000 82,900,000 June , Cash 929,000 92,900,000 April , Cash 954,000 95,400,000 April ,295* 100 Other than Cash 1,554, ,429,500 June Change in par value from PKR 100/share to 15,542,950** 155,429,500 January 2010 PKR 10/share 12 31,085, Bonus 46,628, ,288,500 May ,657, Cash 58,286, ,860,630 June ,143, Bonus 87,429, ,290,940 June * On April 30, 2008 the Company entered into an agreement to takeover the running business of Matco Marketing Company (the Firm ), a sole proprietorship firm against the issuance of shares. The Firm s capital account as per the audit conducted by M/S Rafiq & Co, Chartered Accountant was PKR 60,029,499 accordingly 600,295 shares of par value PKR 100 were issued to Mr. Tariq Ghori in lieu of this takeover in accordance with the regulation 8 of Companies (Issue of Capital) Rules, The auditors M/S Rafiq & Co, Chartered Accountant also filed the Form 3 for issuance of shares with the SECP vide their letter dated June 28, 2008 confirming the same. ** Increase in number of shares from 1,554,295 to 15,542,950 was due to change in par value of shares from Rs.100/share to Rs.10/share Page 42 of 136

45 Other than the above-mentioned shares, there has been no issuance of shares since the incorporation of the Company Principal Purpose of the Issue Matco Foods Limited intends to issue 29,143,032 shares at a floor price of PKR 26 per share to raise PKR 757,718,832 through this IPO at the Floor Price. The purpose of this issue and utilization of proceeds are given below: Purpose of the Issue Fund Allocated Share of Allocation Expansion of Rice Glucose Project PKR 758 million 100% IPO Proceeds PKR 758 million 100% Expansion Plan Matco has recently diversified its operation within domain specialized products i.e. Rice Glucose and Rice Protein Phase I with plant capacity of 10,000 MT per annum of rice glucose and 1,000 MT of Rice Protein per annum. New plant and machinery for the project was supplied by Beijing Meckey Engineering Company of China. Phase I of the Project has been successfully completed and commercial production of Rice Glucose and Rice Protein has started on October 02, Matco has also started selling rice glucose in local market to various end users in confectionary industry. The Company has sold 7.5 tons of rice glucose up to October 10, 2017 to M/S Crest Enterprises, a distributor of rice glucose. The Company is also in process of obtaining ISO, food safety and other necessary certifications required for export of its rice glucose and rice protein products. According to study conducted by the Management/Sponsor of the Company domestic market size of rice glucose is around 60,000 MT to 65,000 MT. Details of Project Matco plans to further expand Rice Glucose / Syrup and Rice Protein production capacity by installing an additional unit of capacity 20,000 MT, which will take the total production capacity to 30,000 MT per annum post completion. The Company will utilize the IPO proceeds for expansion of its production facilities. The production process of rice glucose is vertically integrated to Matco s existing business operations and uses broken rice which is by-product in rice production. Therefore, the broken rice requirement would be met internally. Rice Glucose is used in the pharmaceutical, confectionary and baby food industry while Rice Protein is used in dietary supplement, nutrition and animal feed industry. More value-added products such as high maltose glucose and dry glucose maltodextrin (2,000 MT per annum) can also be made with spray drying plant. Products have very good potential in local and export markets Project Cost and Utilization of Proceeds The project is expected to cost approximately PKR 758 million and is expected to be operational by FY Matco will utilize following sources of financing for the expansion of its Rice Glucose / Syrup and Rice Protein plant. Utilization of Funds Sources of Funds Total Estimate Cost (PKR Million) Proceeds from Initial Public Offering 758 Total 758 Project Cost Matco has already acquired 10 acre land of the project in Port Qasim Industrial Area and have complete technical human resources for start and completion of the project within given time lines Page 43 of 136

46 Expansion of Rice Glucose/Syrup and Rice Syrup Plant Description PKR (Million) Rice to Rice Glucose Production Line (60 MT/Day) 150 Maltodextrin Spray Dryer (5T MT/D) 34 4 Silos (3,000 MT storage each) 55 Power (K-Electric Prime) 20 Power (Generator) 25 Boiler (Steam) 20 RO Plant (Water) 40 Cooling Tower/Air Compressor/Water Treat Plant 12 Civil Works 185 Silos Civil Works 40 Under Ground Water Tank / water connection 90 Import duties & taxes 32 Freight & Forwarding charges 3 Miscellaneous & Contingencies / Others 52 Total Cost 758 Break Down of Machinery No. Description Specification Material Qty. 100 Steeping section Unit power KW Total power KW Remarks 101 Raw rice pit 10m3 Civil 102 Bulk elevator 6t/h, 4m CS Vibration sieve 6t/h CS Stone remover 105 Bulk elevator 6t/h, 12m CS Screw conveyor D250 SS Bulk elevator 6t/h, 12m 108 Steeping tank 12m3 SS304 4 Site making 109 Pin mill feed screw conveyor L250x6m SS Pin mill feed tank 0.785m3 SS304 1 Site making 111 Pin mill MKPM-690 SS/CS Dreg wash water tank 6.35m3 SS304 1 Site making 113 Dreg wash water pump Q=12m3/h H=20m SS Rice slurry tank 1.7m3 SS304 1 Underground 115 Agitator 51rpm SS Rice slurry pump Q=15m3/h H=20m SS Rice slurry tank 1.7m3 SS304 1 Site making 118 Agitator 51rpm SS Rice slurry tank 1.7m3 SS304 1 Site making 120 Agitator 51rpm SS Page 44 of 136

47 121 Na2CO3 blending tank 1.7m3 SS304 1 Site making 122 Agitator 51rpm SS Na2CO3 recycle pump Q=3m3/h H=20m SS Na2CO3 storage tank 50L PP 1 By buyer 125 Dosing pump 0-2.2L/h PP Enzyme tank 51L PE 1 By buyer 127 Enzyme dosing pump 0-2.2L/h PE Liquefaction section 201 Storage tank with Agitator 12m3 SS304 1 Site making 202 Agitator 51rpm SS st jet cooker feeding Q=12.5m3/h SS pump H=65m 204 1st jet cooker Q=7.5m3/h SS st retention tank 0.47m3 SS304 1 Site making 206 1st Liquefaction coil pipe 207 1st flash cooling tank 0.8m3 SS304 1 Site making 208 2nd jet cooker feeding Q=12.5m3/h SS pump H=65m 209 2nd jet cooker Q=7.5m3/h SS nd retention tank 0.47m3 SS304 1 Site making 211 2nd Liquefaction coil pipe 212 2nd flash cooling tank 0.8m3 SS304 1 Site making 213 2nd enzyme dosing 0-1.0L/h SS pump 214 Discharge pump Q=12m3/h H=32m SS Column liquefiers Φ600 SS304 6 Site making 216 Buffer tank 3.18m3 SS304 1 Site making 217 Discharge pump Q=12m3/h SS H=40m 300 Dreg separation and drying 301 Filter press MKFP PP/CS Filtrate tank 4.24m3 SS304 1 Site making 303 Discharge pump Q=12m3/h SS H=20m 304 Plate heat exchanger F=15m2 SS Dreg washing tank 4.24m3 SS Site making 306 Agitator 51rpm SS Wet dreg pump Q=12m3/h SS H=40m 308 Filter press MKFP PP/CS Diluted syrup tank 4.24m3 SS304 1 Site making Page 45 of 136

48 310 Discharge pump Q=12m3/h SS H=40m 311 Dreg screw conveyor Φ SS/CS Bundle dryer 150m2 SS/CS Dreg screw conveyor Φ SS/CS Saccharification section 401 PH adjusting tank 0.5m3 SS304 1 Site making 402 Agitator n=51r/min SS Discharge pump Q=15m3/h H=20m SS Saccharification tank 22.15m3 SS304 8 Site making 405 Agitator n=51r/min SS Saccharification recycle Q=30m3/h SS pump H=32m 407 Saccharification Q=15m3/h SS discharge H=20m 408 Killing enzyme jet cooker Q=30m3/h SS CIP washing tank 11.4m3 SS304 1 Site making 410 CIP pump Q=15m3/h H=20m SS Enzyme tank 30L PP 1 By buyer 412 Dosing pump 0-2.2L/h PP Dilute acid tank Φ PP 1 By buyer 414 Dilute acid pump 5m3/h PP HCL adding tank 50L PP 1 By buyer 416 HCL dosing pump 0-1.0L/h PP Decoloring section 501 1st decoloring tank 11.4m3 SS304 1 Site making 502 Agitator 51rpm, SS st decoloring pump Q=12m3/h SS H=40m 504 Filter press MKFP PP/CS nd decoloring tank 11.4m3 SS304 1 Site making 506 Agitator 51rpm SS nd decoloring pump Q=12m3/h SS H=40m 508 Filter press MKFP PP/CS Inspection filter Q=6m3/h SS304/P 2 F=0.5m2 510 AC making tank 2.3m3 SS304 1 Site making 511 Agitator n=51r/min SS AC pump Q=3m3/h H=32m SS Waste AC collecting tank 2.65m3 SS304 1 Site making 514 Agitator 51rpm SS Page 46 of 136

49 515 Waste AC pump Q=3m3/h SS H=20m 600 Ion exchanging section 601 Syrup tank before IE 12m3 SS304 1 Site making 602 IE feeding pump Q=12m3/h SS H=32m 603 Heat exchanger before F=10m2 SS304 1 IE 604 Inspection filter Q=6m3/h SS304/P 2 F=0.5m2 605 Cation IE Φ1300x5000 CS/Rub Anion IE Φ1400x5000 CS/Rub Sweet water tank 12m3 SS304 1 Site making 608 Sweet water pump Q=7.5m3/h H=20m SS Water recycle tank 30m3 SS304 1 Site making 610 Water recycle pump Q=30m3/h H=32m 700 Concentration section SS Syrup tank before EV 12m3 SS304 1 Site making 702 Agitator 51rpm SS Feeding pump Q=12m3/h SS H=32m 704 Inspection filter Q=6m3/h SS/PP 2 F=0.5m2 705 Falling film evaporator 5000kg/h SS Buffer tank 1.35m3 SS304 1 Site making 707 Syrup discharge pump Q=8m3/h SS H=20m 800 Utility 801 Hot process water tank 30m3 SS304 2 Site making 802 Discharge pump Q=25m3/h H=50m SS Sealing water tank 3.5m3 SS304 1 Site making 804 Discharge pump Q=5m3/h H=22m SS R.O. water storage tank 30m3 SS304 1 Site making 806 Discharge pump Q=25m3/h H=32m SS CIP water tank 4m3 SS304 1 Site making 808 Discharge pump Q=8m3/h H=20m SS Waste water tank 60m3 FRP 2 By buyer 810 Discharge pump Q=25m3/h H=50m 811 HCL pump Q=8m3/h H=20m 4F/CS F/CS Page 47 of 136

50 812 HCL tank 11m3 FRP 1 By buyer 813 HCL pump Q=8m3/h H=32m 4F/CS Diluted HCL tank 11m3 FRP 1 By buyer 815 Diluted HCL pump Q=25m3/h 4F/CS H=50m 816 NaOH pump Q=8m3/h H=20m 4F/CS NaOH tank 11m3 FRP 1 By buyer 818 NaOH pump Q=8m3/h H=32m 4F/CS Diluted NaOH tank 11m3 FRP 1 By buyer 820 Diluted NaOH pump Q=25m3/h 4F/CS H=50m 821 HCL Mixer Q=8m3/h FRP NaOH Mixer Q=8m3/h FRP Cooling tower 250m3/h 8 FRP By buyer 824 Evaporator cooling 100m³/h H=32m CS supply 825 Public cooling pump 100m³/h H=32m CS Cooling water pool m Cement Steam cylinder Φ MnR Others 901 Pipe, valve and fittings 902 Electric cabinet and cable for workshop 903 Semi-automatic control and instrument Implementation Schedule The Company is already in discussions with Engineering, Procurement and Construction ( EPC ) Contractors and is in the process of evaluating their credentials and proposals prior to shortlisting them for final negotiations on the EPC Contract. Furthermore, the Company has also engaged civil contractors for the proposed work at the site and the contract will be executed post finalization of the EPC Contract. Key milestones and activity completion are as follows: S. No Project Milestones Expected Timeline 1 Initial negotiations with mechanical and civil contractors Started 2 Final negotiations with contractors December, Final contract signing and opening of local LC* January, Mechanical and civil starting and to be completed January - November, Plant installation starting and to be completed April - November, Plant operation to be started November, First Export shipment to customers December, 2018 *This is an indicative timeline and the final contracts will only be signed after the completion of the IPO. All other timeline thereafter from 4 to 7 above will be dependent on the completion of IPO and contract signing. Page 48 of 136

51 Given below is the status of the expansion project: S. No Particulars Start Completion Status 1 Land 4Q2017 4Q2017 Has been Procured 2 Rice to Rice Glucose Production Line (60 MT/D) 1Q2018 4Q2018 Under negotiation 3 Maltodextrin Spray Dryer (5T MT/D) 1Q2018 4Q2018 Under negotiation 4 4 Silos (3,000 MT storage each) 1Q2018 4Q2018 Under negotiation 5 Power (K-Electric Prime) 2Q2018 4Q2018 to be order 6 Power (Generator) 2Q2018 4Q2018 to be order 7 Boiler (Steam) 2Q2018 4Q2018 to be order 8 RO Plant (Water) 2Q2018 4Q2018 to be order 9 Cooling Tower/Air Compres./Treat Plant 2Q2018 4Q2018 to be order 10 Building Civil Works 1Q2018 4Q2018 Survey completed 11 Silos Civil Works 1Q2018 4Q2018 to be order 12 Under Ground Water Tank Civil Works 2Q2018 4Q2018 to be order 13 Import duties & taxes 2Q2018 4Q2018 Upon machine delivery 14 Freight & Forwarding charges 4Q2018 4Q2018 Upon machine delivery 15 Miscellaneous & Contingencies 4Q2018 4Q2018 Upon machine delivery Matco undertakes that the proceeds raised from the IPO to the extent of expansion cost of PKR 758 million will be deposited in a special purpose account. The Company shall utilize the proceeds deposited in the special purpose account in accordance with the expansion plan mentioned in the Prospectus and in line with the implementation schedule. Any excess funds received above the Floor Price can be utilized as per the following priorities, considering the quantum of excess subscription amount: 1. Increased working capital requirements 2. Any other activity related to the Company s ongoing operations, as deemed necessary by the Board of Directors Matco will submit progress report duly certified by auditor to PSX and SECP on implementation of the project on quarterly basis till commencement of the commercial production or operations of the project Interest of Shareholders None of the holders of the Issued shares of the Company have any special or other interest in the property or profits of the Company other than as holders of the Ordinary shares in the capital of the Company Dividend Policy The Company intends to follow a consistent profit distribution policy for its members, subject to profitability, availability of adequate cash flow, Board s recommendation and shareholder s approval, where required The rights in respect of capital and dividends attached to each share are and will be the same. The Company in its general meeting may declare dividends but no dividend shall exceed the amount recommended by the Directors. Dividend, if declared in the general meeting, shall be paid according to the provisions of the Companies Act. Page 49 of 136

52 The Directors may from time to time declare interim dividends as appear to the Directors to be justified by the profits of the Company. No dividend shall be paid otherwise than out of the profits of the Company for the year or any other undistributed profits. No unpaid dividend shall bear interest or mark-up against the Company. The dividends shall be paid within the period laid down in the Companies Act. Those applicants who intend that their cash dividend, if any, is directly credited in their Bank Account, must fill-in the relevant part of the Subscription Form under heading, Dividend Mandate Option. The Company has issued dividends in FY 2010, FY 2014, FY 2015, FY 2016 and FY Particulars FY2010 FY2014 FY2015 FY2016 FY2017 Bonus Shares (PKR) 310,859, ,430, Dividend (PKR) - 62,500,000 8,555,659 5,000,000 7,200,000 Dividend per share (PKR) * In FY2014, FY2015, FY 2016 and FY2017 local directors and sponsors waived their right of dividend and dividend was paid to IFC only. Covenants / Restriction on Payment of Dividends: It is stated that there is no restriction on Matco by any financial institution and regulatory authority on distribution and capitalization of profits Eligibility for Dividend The ordinary shares issued shall rank pari-passu with the existing shares in all matters of the Company, including the right to such bonus or right issues, and dividend as may be declared by the Company subsequent to the date of issue of such shares Deduction of Zakat Income distribution will be subject to deduction of Zakat at source, pursuant to the provisions of Zakat and Ushr Ordinance, 1980 (XVIII of 1980) as may be applicable from time to time except where the said ordinance does not apply to any shareholder or where such shareholder is otherwise exempt or has claimed exemption from payment / deduction of Zakat in terms of and as provided in that ordinance Capital Gains Tax Capital gains derived from the sale of listed securities are taxable in the following manner under section 37A of Income Tax Ordinance, 2001: Category Tax Year Less than twelve months Tax Rate FY 2017 Holding Period of Securities Twelve months or more but less than twenty four months Twenty four months or more but acquired on or after 1 st July, 2012 Before 1 st July, 2012 Filer % 15.00% 15.00% 0% Non Filer % 20.00% 20.00% 0% Page 50 of 136

53 Withholding Tax on Dividends Dividend distribution to shareholders will be subject to withholding tax under section 150 of the Income Tax Ordinance, 2001 as specified in Part III Division I of the First Schedule of the said ordinance or any time to time amendments therein. In terms of the provision of Section 8 of the said ordinance, said deduction at source, shall be deemed to be full and final liability in respect of such profits in case of individuals only. The following are the rates: For filers of Income Tax Returns: 15.00% For non-filers of Income Tax Return: 20.00% Tax on Bonus Shares As per section 236M of the Income Tax Ordinance 2001, tax at the rate of 5.00% of the value of bonus shares determined on the basis of the day end ex-price be collected by the Company issuing the bonus shares, which will be the final tax liability on such income of the shareholder Income Tax The income of the Company is subject to Income Tax under the Income Tax Ordinance, Deferred Taxation Matco has not accounted for any deferred taxation in the past Sales Tax General Sales Tax is applicable as per Sales Tax Act, 1990 on supplies and services. Sales tax on services as per Punjab Sales Tax on Services Act, 2012 by Punjab Revenue Authority. Sales tax on services as per Sindh Sales Tax on Services Act, 2011 by Sindh Revenue Board Sales Tax on Sale / Purchase of Shares Under the Constitution of Pakistan and Articles 49 of the 7 th NFC Award, the Government of Sindh, Government of Punjab, Government of Khyber Pakhtunkhwa and Government of Baluchistan have promulgated the Sindh Sales Tax on Services Act, 2011, Punjab Sales Tax on Services Act, 2012, Khyber Pakhtunkhwa Sales Tax on services through Khyber Pakhtunkhwa Finance Act, 2013 and the Baluchistan Sales Tax on services Act, 2015 respectively. The Sindh Revenue Board, the Punjab Revenue Authority, and the Khyber Pakhtunkhwa Revenue Authority and the Baluchistan Revenue Authority administer and regulate the levy and collection of the Sindh Sales Tax ( SST ), Punjab Sales Tax ( PST ), Khyber Pakhtunkhwa Sales Tax ( KST ) and Baluchistan Sales Tax ( BST ) respectively on the taxable services provided or rendered in Sindh, Punjab, Khyber Pakhtunkhwa or Baluchistan provinces respectively. The value of taxable services for the purpose of levy of sales tax is the gross commission charged from clients in respect of purchase or sale of shares in a Stock Exchange. The above mentioned Acts levy a sales tax on Brokerage at the rate of 13% in Sindh, 16% in Punjab and in Baluchistan and in Khyber Pakhtunkhwa the rate is 15%. Sales tax charged under the aforementioned Acts is withheld at source under statutory requirements Capital Value Tax ( CVT ) on Purchase of Shares Page 51 of 136

54 Pursuant to amendments made in the Finance Act, 1989 through Finance (Amendments) Ordinance, 2012 promulgated on April 24, 2012, 0.01% Capital Value Tax is applicable on the purchase value of shares Tax Credit for Investment in IPO Under Section 62 of the Income Tax Ordinance, 2001, a resident person other than a Company, shall be entitled to a tax credit, as mentioned in the said section, for a tax year in respect of the cost of acquiring in the year, new shares offered to the public by a public company listed on a stock exchange in Pakistan, provided the resident person is the original allottee of the shares or the shares are acquired from the Privatization Commission of Pakistan. As per section 62(3)(b) of the Income Tax Ordinance, 2001, the time limit for holding shares has been designated as 24 months to avail tax credit Tax Credit for Enlistment In accordance with under Section 65C of the Income Tax Ordinance, 2001, upon enlistment a tax credit at 20% of the tax payable shall be allowed for the tax year in which a Company is listed on PSX and also extended for the following three tax years of enlistment through Finance Bill Provided that the tax credit for the last two years shall be ten (10%) percent of the tax payable. Page 52 of 136

55 3 UNDERWRITING, COMMISSIONS, BROKERAGE AND OTHER EXPENSES 3.1 UNDERWRITING Book Building Portion MCB Bank has been mandated as the Book Runner to the Issue. The Book Runner shall underwrite 29,143,032 Ordinary shares subscribed through the book building representing 100% of the Issue as required under Regulation 7(6) of the PO Regulations, with the limitations in effect that the Book Runner shall only underwrite the default portion of the Book Building, if any, at the Strike Price determined through the Book Building process. General Public Portion The General Public Portion of the Issue of 7,286,000 Ordinary Shares (25%) shall not be underwritten in terms of Regulation 7(4) of the PO Regulations. 3.2 OPINION OF DIRECTORS REGARDING RESOURCES OF THE UNDERWRITERS In the opinion of the Directors, the resources of the Book Runner are sufficient to discharge its underwriting commitments / obligations. 3.3 BUY BACK / REPURCHASE AGREEMENT THE UNDERWRITERS HAVE NOT ENTERED INTO ANY BUY BACK / RE-PURCHASE AGREEMENT WITH THE COMPANY OR ANY OTHER PERSON IN RESPECT OF THIS ISSUE OF SHARES. ALSO, NEITHER THE COMPANY NOR ANY OF ITS ASSOCIATES HAVE ENTERED INTO ANY BUY BACK / RE-PURCHASE AGREEMENT WITH THE UNDERWRITER OR THEIR ASSOCIATES. THE COMPANY AND ITS ASSOCIATES SHALL NOT BUY BACK / RE-PURCHASE SHARES FROM THE UNDERWRITER AND THEIR ASSOCIATES. 3.4 COMMISSION OF THE BANKERS TO THE ISSUE Commission at the rate of 0.5% (inclusive of all taxes) of the amount collected on allotment in respect of successful applicants will be paid by the Company to the Bankers to the Issue for services to be rendered by them in connection with the general public offering. 3.5 FEES AND EXPENSES FOR CENTRALIZED E- IPO SYSTEM ( CES ) Commission on application received through CES will be paid to CDC which shall not be more than 0.8% of the amount of the successful applications. CDC will share, the fee with other participants of CES at a ratio agreed amongst them. 3.6 BROKERAGE For this Issue, brokerage shall be paid to the TRE Certificate Holders of PSX at the rate of 1.00% of the value of shares (including premium, if any) on successful applications for Book Building and General Public Portion. No brokerage shall be payable in respect of shares taken up by the Successful Bidders pursuant to undersubscription of retail portion of the Issue. Page 53 of 136

56 3.7 ESTIMATED EXPENSES OF THE ISSUE Expenses to the Issue are estimated not to exceed PKR 41,510,770/-. The break-up of these preliminary expenses is given below: Particulars Rate Expense Consultant to the Issue Fee % 10,911,151 Book Runner Fee % 5,682,891 Commission to Banker for Book Building 0.20% 1,515,438 Commission to Bankers for General Public % 947,180 e-ipo Facility Charges 800,000 Bankers to the Issue Out of Pocket 500,000 TREC Holders' Commission 1 1.0% 7,577,188 PSX Initial Listing Fees 1,165,721 PSX Annual Listing Fees 400,772 PSX Services Fee 50,000 PSX Book Building Software charges 500,000 Transfer Agent and Balloting Agent 300,000 Marketing & Printing Expenses 6,000,000 CDC - Fresh Issue Fees % 1,212,350 CDC - Annual Listing Fees 200,000 SECP IPO Application Processing Fee 791,430 SECP Supervisory Fee 156,649 Legal Advisory 1,800,000 Miscellaneous Expenses 1,000,000 Total 41,510,770 1 Represent the maximum amount that is expected to be paid based on the Floor Price of PKR 26/- per share Page 54 of 136

57 4 OVERVIEW, HISTORY AND PROSPECTS 4.1 COMPANY HISTORY & OVERVIEW Matco Foods Limited ( the Company or MATCO ), founded by Syed Sarfaraz Ali Ghori in 1964, was initially a supplier of Rice husking and polishing plants, grain dryers, grain handling, seed cleaning and grading plants to various companies and the Government of Pakistan ( GoP ). Being one of the pioneers in the industry, MATCO along with the Rice Export Corporation of Pakistan ( RECP ) set up some of the earliest rice processing plants in Pakistan at Pirpi, Sindh and in Dhaunkal, Punjab. In 1967, the Company set up its first own rice processing plant in Larkana, Sindh. As per GoP s policies, the private companies were prohibited to export rice by themselves. Therefore, the RECP, GOP s export monopoly, used to purchase rice from the Private Sector and export it. In 1989, when rice export from the Private Sector was allowed for the first time, Matco established a state of the art rice processing plant in Karachi. Since then, Matco has established itself as one of the largest Basmati rice exporter from Pakistan and one of the largest rice exporters overall of Pakistan with a compounded annual growth rate (CAGR) of 20% for sales over the last 10 years. The management has over 50 years of rice milling and industry experience with a strong record of accomplishment. The Company s current rice processing facilities are spread over 1,000,000 sq. feet at four separate locations in Karachi and one in Sadhoke District Punjab. It has a total annual processing capacity of around 134,700 Metric Tons, which is broken into eight different production lines. In 2017, Matco has established another production plant in Karachi for the manufacture of Rice Glucose and Rice Protein from broken rice generated in the current rice processing operations Key Milestones Years 1964 Events Muhammad Ali Trading Company ( M.A Trading) established by Mr. Syed Sarfaraz Ali Ghori to supply Rice husking and polishing plants, grain dryers, grain handling, seed cleaning and grading plants to various Companies and Government of Pakistan 1967 The Company sets up its first rice processing plant in Larkana, Sindh 1970 Change of the name of the Company from Muhammad Ali Trading Company to Matco The Company was incorporated as a private limited company and sets up country s first fully automated modern rice processing plant supplied by Satake Corporation of Japan The Company implements quality control parameters adopted from Satake Corporation at its first plant in Karachi 1999 First container of Company s own brand Falak was shipped Company s second rice processing plant Matco II was constructed in Site II industrial area Karachi Company installs nine (9) color sorters in various production lines including two of the latest Series Z4 by Sortex (Buhler) Germany 2004 Matco launched Falak brand in Pakistan 2008 The Company successfully added fourth processing line in its existing facilities in Site II, Karachi 2010 Matco commissioned Sadhoke Paddy plant (Phase 1) in Punjab, Pakistan 2011 The Company added 3 more silos and 2 dryers to its Sadhoke Paddy plant Page 55 of 136

58 & JCR VIS upgraded rating to A- investment grade International Finance Corporation ( IFC ), a World Bank Group Company, invested PKR 457mn in exchange for a 20% stake in the Company Established backward integration unit from husking to export finished goods at G-205 Site II Karachi The Company established 100% owned subsidiary JKT General Trading in Sharjah Airport Free Zone, UAE with the permission of State Bank of Pakistan Rice Flour line was also added in Karachi unit Company s name changed to Matco Foods (Pvt) Limited to cater to cater to expanding scope from rice products to other food products Matco Foods launches Falak Rice bran Oil First shipment of Organic brown rice was delivered to European Union ( EU ) Falak Himalayan Pink Salt was launched by the Company Falak Iodized Salt was launched Rice Glucose Project Phase I started Commencement of Operations of 10,000 MT per annum Rice Glucose Plant. Acquisition of assets of M. Iqbal Rice Mills in Sadhoke. 4.2 PATTERN OF SHAREHOLDING The major shareholding of the company is owned by Ghori Family. Major shareholders of the Company include Dr. Tariq Ghori 26.2%, Mr. Khalid Sarfaraz Ghori 26.2% and Mr. Jawed Ali Ghori 25.9% of the total Paid up capital. A summary of shareholding pattern according to different categories of shareholders is given below: Description Number of shares Face Value Percentage holding Total Paid Up Capital Shares held by Directors / Sponsors of the Company 69,943, ,432,750 80% Shares held by Other Shareholders 17,485, ,858,190 20% 4.3 SOURCES OF REVENUE AND COST DRIVERS OF THE COMPANY Revenue Drivers Revenue is generated through recurring export and local sales of its brand Falak Basmati Rice and private label Basmati and IRRI rice processed and packed as per customers specifications. Revenue will also be generated through sale of Rice Glucose which is manufactured by using broken rice. Sales is made through various distributive channels in more than 65 countries around the globe. In Pakistan, the Falak brand is available at about 4,000 shops of major cities and gradually gaining further distribution strength. Main revenue drivers are sales volume, international prices of Basmati rice and IRRI rice, and FX rate. Apart from export sales, a significant portion of the Company s revenue is driven from sales of by-products which include rice bran, husk, broken rice, rice flour and color sorter rice. Snacks, bran oil and salt contributed 0.05%, 0.02% and 0.16% respectively to overall revenues of the Company in FY The proportion of revenue derived by the Company from various products over the past two years is provided below: Page 56 of 136

59 As at 30 th June Sales Breakup (In PKR Million) 2016 % 2017 % Rice Basmati Export 3, % 3, % Rice IRRI Export % % Export Sales 4, % 4, % By Products 1, % 1, % Local Basmati % % Rice Bran Oil 2 0.0% 3 0.0% Salt - 0.0% 1 0.0% Snacks 3 0.1% % Local Sales 1, % 2, % Total Sales 5,578 6,135 Sales of Rice Glucose are not incorporated since the new Rice Glucose Plant commenced its commercial operations after 30 th June, 2017 Cost Drivers Main cost drivers are domestic paddy / raw rice prices, utilities, wages and logistics. Company has incurred major capital expenditures for paddy storage, drying and processing as well set up a Rice Glucose plant. Depreciation from capital expenditure is also a major cost driver. Basmati rice is aged and matured before exporting, and the carrying cost of inventory which includes financial charges on short term loans, insurance, and warehousing costs are also a major cost driver. Direct taxes, provincial sales tax levies and delays in sales tax refunds are also another major cost element. Competitors Landscape Rice industry of Pakistan is highly fragmented, therefore, any public data with respect to market share is not available. Matco faces a direct competition from the following brands in the local rice market: Guard Rice National Basmati Rice Reem Super Basmati Rice Mughal Rice 4.4 PERFORMANCE OF SUBSIDIARIES AND OTHER GROUP COMPANIES Performance of Subsidiaries JKT General Trading (FZE) Sharjah Airport Free Zone JKT General Trading ( JKT ) is 100% owned subsidiary of Matco Foods. In October 2013, Matco set up JKT General Trading (FZE), in Sharjah Airport International Free Zone authority in the emirate of Sharjah, UAE. Matco Has invested US$ 225,000 in JKT. The principal activities of the Company are commercial-general trading, export and import. This has allowed Matco Foods to expand its boundaries and increase its presence in important GCC markets like UAE, Oman and Kingdom of Saudi Arabia. Highlights of financial performance of the company are as follows: JKT Trading Company FZE Amounts in PKR As at 30th June Revenue 50,822, ,783, ,741,416 Gross Profit ,091,964 14,337,603 Operating Profit (2,380,500) 7,970,778 8,403,486 Profit after Taxation (2,422,491) 7,752,084 8,183,879 Page 57 of 136

60 Total Assets 53,940,365 37,376,307 60,715,529 Total Liabilities 35,451,006 10,926,416 25,983,940 Total Equity 18,489,360 26,449,891 34,731,589 Matco Marketing (Pvt) Ltd Matco Marketing (Pvt.) Ltd is involved in the business of wholesalers, indenting agents and manufacturer s representative, sale representative either on commission and profit sharing basis, Import, Export, Locally distributed and sale of all kind of Rice, Cereals and related commodities. Matco Marketing was incorporated on June 16, 2016 with authorized and proposed paid-up capital of PKR 10,000,000 and PKR 7,500,000 respectively. However, no business activity has been carried out by the Company since its incorporation Performance of Group Companies Matco Engineering Company (Pvt) Ltd MATCO Engineering Company was formed as a private limited company in The scope of the business was therefore enlarged to deal in plants and machinery of all sorts for rice milling and processing along with oil rigs and production equipment for oil well drilling, water supply pumps and ductile iron pipes, PVC pipes and accessories, power generators, radio and broad-casting equipment, radio telecommunication, microwave system and SCADA system. Various multinationals appointed MATCO Engineering as their local agent in Pakistan. For telecommunication projects, Company has been working as local agent in Pakistan with the collaboration of M/s. Moseley Associates Inc. USA as principal since Matco Engineering Company (Private) Limited Amounts in PKR As at 30th June Revenue 3,506,365 20,334,949 4,288,121 Cost of Sales 1,962,915 2,344,794 4,013,521 Gross Profit 1,543,450 17,990, ,600 Profit/(Loss) before taxation 423,025 15,990,888 (1,397,528) Profit/(Loss) after taxation 300,302 14,974,141 (1,680,342) EPS 40 1,997 (224) Total Assets 5,351,598 9,012,406 7,386,900 Total Liabilities 20,000 40,000 94,836 Total Equity 5,331,598 8,972,406 7,292, PLANT AND EQUIPMENT Matco Foods strives to be the most technologically advanced rice processing firms in Pakistan. The Company operates five rice processing and milling plants, which include vertically integrated paddy drying, storage, husking, processing and packaging facilities in Sadhoke, Punjab and Karachi, Sindh. Company s investment in plant and equipment exceeds US$ 30 million. Karachi Plant In 1990, Matco set up Pakistan s first fully automated, modern rice processing plant, supplied by the Satake Corporation of Japan. Presently, Company s rice processing facilities are spread over 500,000 sq.ft at four separate locations (Matco I, Matco II, Matco G-205 and Matco Small Packaging) in port city of Karachi, with its production comprising of 6 different production lines. The Company has also installed 10 color sorters on its various production Page 58 of 136

61 lines, including 2 of the latest Series Z4 by Sortex (Buhler) and 2 by Satake. An infrared Color Sorter has also been installed for detecting minute traces of glass and plastic in the rice. Total rice processing capacity of Matco Food s Karachi plant is 94,290 MT per annum which represents approx. 70% of total rice processing capacity of the company. The Company has also installed 2 automated small packing facilities for packing smaller rice bags. Another small packing production area is built on a new area of 30,000 sq.ft. on Super Highway Industrial Area Karachi. Sadhoke Plant Matco has installed another state of art rice husking/parboiling plant on 15 acres of land in Gujranwala, the world renowned rice cultivating district of the country, popularly known as the Basmati Bowl of Pakistan. With the collaboration of the latest Japanese, Italian, British, American and Indian technologies, this facility includes modern paddy dryers, rice parboiling unit and 6 silos that monitor humidity, temperature and moisture of the rice paddy. The Company is also exploring the possibility of generating the most cost-efficient electricity, using steam generated from rice husk for its own captive use. The Company envisions to make this facility the single largest rice husking and parboiling plant in Pakistan. The hallmark of this plant is the world class efficiency which focuses on preventing 10%-15% grain loss that occurs due to post harvest losses, and the energy losses that are prevalent across many industries. Processing capacity, storage, drying and parboiling capacities of Sadhoke plans are provided below: S. No Description Capacity 1 Rice processing 40,410 MT per annum 2 Rice storage 32,000 MT 3 Paddy drying capacity 25 MT/hr 4 Parboiling capacity 100 MT/day 5 Milling capacity 20 MT/hr (2 lines) In July 2017, Matco acquired assets of Iqbal Rice Mills, a proprietorship, which was established in 2012 by Ch. Muhammad Iqbal for consideration of PKR 75,000,000. The facility is located at GT Road, Mouza Sadhoki, Tehsil Kamoki, District Gujranwala with land area of 27 Kanals, 13 Marlas and 32 Sq.fts. Assets acquired by the Company included land, building, constructions, fittings, fixtures, utility connections and installed machinery in running condition along with all rights of ownership. Machineries include husker, paddy cleaner, bran rotary, elevator, Page 59 of 136

62 conveyors, separator, length grader, bins, dryers, compressors, transformers etc. Mill input paddy capacity is 5 metric ton/hour and necessary technical resources already arranged for its efficient operation from this new paddy season. The present market value of the property acquired as valued by M/S K.G. Traders (Pvt.) Ltd on June 22, 2017 was PKR 80,977,500. The acquired property is directly adjacent to Matco s Sadhoke plant and will give operational efficiency to existing operations of Sadhoke Plant. Rice Glucose / Syrup and Rice Protein Plant Matco has recently diversified its operation within domain specialized products i.e. Rice Glucose and Rice Protein with plant capacity of 10,000 MT per annum of rice glucose and 1,000 MT of Rice Protein per annum. New plant and machinery for the project was supplied by Beijing Meckey Engineering Company of China. Project is complete and commercial production of Rice Glucose and Rice Protein has started on October 02, The production process of rice glucose is vertically integrated to Matco s existing business operations and uses broken rice which is by-product in rice production. Therefore, the broken rice requirement would be met internally. Rice Glucose is used in the pharmaceutical, confectionary and baby food industry while Rice Protein is used in dietary supplement, nutrition and animal feed industry. More value added products such as high maltose glucose and dry glucose maltodextrin can also be made with spray drying plant. Products have very good potential in local and export markets. Matco has also started selling rice glucose in local market to various end users in confectionary industry. The company has sold 7.5 tons of rice glucose to M/S Crest Enterprises a distributor of rice glucose. The Company is also in process of obtaining ISO, food safety and other necessary certifications required for export of its rice glucose and rice protein products and expects to get all the necessary certifications. 4.6 PRODUCTS Matco s main strength and focus is on Basmati rice. Basmati rice only grows in Pakistan and India and is considered the most premium variety of rice in the world. Matco also sells some Long Grain Non-Basmati Rice (IRRI varieties). Matco manufactures and processes the following products: S. No Products S. No Products 1 Brown Basmati Rice 9 White Rice Flour 2 White Basmati Rice 10 Gram Flour (Besan) Page 60 of 136

63 3 Parboiled (Sella) Basmati Rice 11 Organic Brown Basmati Rice 4 Steam Basmati Rice 12 Organic White Basmati Rice 5 Brown Long Grain (IRRI) Rice 13 Organic Brown Long Grain Rice 6 White Long Grain Rice 14 Organic White Long Grain Rice 7 Parboiled Long Grain Rice 15 Organic 100% Broken Brown Rice 8 100% Broken Rice 16 Organic 100% Broken White Rice Additional Products Manufactured: S. No Product S. No Product 1 Rice Bran Powder 5 Pink Salt 2 Rice Glucose 6 Iodized Salt 3 Rice Protein 7 Vermicelli 4 Jasmine Rice 8 Rice Bran Oil Brands In branded category, Matco has three Brand Ranges: Falak Matco launched Falak rice in 1999 with a vision to make it premiere rice brand in Pakistan preferred and consumed by all globally. Falak presence is prominent in more than 40 countries through an extensive network of distributors. Falak brand is available across the globe, in the Middle East, Europe, Asia, Africa, North America and Australia. Falak Range includes: S. No Product S. No Product 1 Falak Basmati Rice 5 Falak Extreme 2 Falak Extreme Basmati Rice 6 Falak Brown Basmati Rice 3 Falak Aromatique 7 Falak Organic Brown Basmati Rice 4 Falak Organic Basmati Rice Amber Amber Range (Sold in those markets where Falak distributor already exists but there is space on the retail shelf or market segment is different for Amber distributor): Page 61 of 136

64 S. No Product S. No Product 1 Amber Premium Basmati Rice 5 Amber Brown Basmati Rice 2 Amber Extra Long Grain Basmati Rice 6 Amber Organic Brown Basmati Rice 3 Amber Golden Sella (Parboiled) Basmati Rice 7 Amber Daily Basmati Rice 4 Amber Super Basmati Rice Bahar Bahar Range (Sold in those markets where Falak and Amber distributor exists brand positioning of Bahar is competitive category of rice): S. No Product 1 Bahar Premium Basmati Rice 2 Bahar Extra Long Grain Basmati Rice 3 Bahar Parboiled (Sella) Basmati Rice 4 Bahar Brown Basmati Rice Private Labelling Matco also undertakes private labelling for its customers across the globe. It currently exports various private labels to over 60 countries including Australia, New Zealand, USA, UK, Canada, Egypt, Europe, Lebanon, Morocco, Mauritius, Oman, Qatar, Bahrain, UAE, Sri Lanka, Saudi Arabia and many others. Rice varieties available in private labels are: Super Basmati 1121 Steam Super Basmati Brown 1121 White Super Basmati Parboiled (Sella) 1121 Parboiled (Sella) Super Fine IRRI 9 Pure Basmati IRRI 6 Pure Basmati Parboiled (Sella) PK 385 Page 62 of 136

65 Blended PK Distributor of Signature Snacks Matco Foods is also the sole distributor of Signature Snacks for Pakistan. Signature Snacks is a leading manufacturer based in Dubai, which produced quality biscuits, wafer, crackers, and baked chips. 4.7 GLOBAL PRESENCE Matco Foods is one of the Pakistan s leading rice exporting company with exports to over 60 countries around the world. The Company s Falak brand is prominent in more than 40 countries through an extensive network of more than 65 distributors internationally. The Company provides premium quality basmati and non-basmati rice worldwide and have more than 150 corporate clients. Page 63 of 136

66 4.8 MAJOR CUSTOMERS Following are some of the key customers of the Company: Customers Country M Tons Value (USD) % of Total Sales Rice Growers Limited T/A Sunrice Australia 7, $5,194, % Riviana Foods Pty Ltd Australia 6, $4,997, % Herba Rice Mills Spain 5, $3,052, % East West Foods (Pvt) Ltd Sri Lanka 2, $2,178, % Comilla Jahra Foodstuff Co. W.L.L Bahrain 1, $890, % Ostindo International Pty Ltd Australia 1, $962, % Unikai United Arab Emirates 1, $1,273, % Alam Super Market Llc United Arab Emirates 1, $872, % Fineway International Trad. Llc United Arab Emirates 1, $860, % Euricom Spa Italy 1, $870, % 4.9 STRONG CREDIT RATING The Company s long-term Entity rating is A- and short-term rating is A2 as awarded by JCR-VIS Credit Rating Company limited in April Historical rating is provided in the following table: Dissemination Time Long term Short term Outlook April, 2017 A- A-2 Stable December, 2015 A- A-2 Stable December, 2014 A- A-2 Stable June, 2012 A- A-2 Stable May, 2011 BBB+ A-3 Stable April, 2010 BBB A-3 Positive 4.10 INDUSTRY OVERVIEW Pakistan s economy continued its fiscal consolidation with a strong GDP growth of 5.28% in FY 2017, highest in the last 10 years. Agriculture sector is vital component of Pakistan s economy, the sector contributed 19.53% in GDP of the country. Agriculture sector of Pakistan is source of livelihood of almost 42.3% of the country s total labor force. During FY 2017, performance of the agriculture sector remained up to mark, the sector witnesses a growth of 3.46% compared to last years meager growth of 0.27%. Agriculture mix of Pakistan is heavily based on important crops like wheat, rice, sugar cane, maize and cotton which accounts for 23.85% of value added in overall agriculture sector of Pakistan. Rice is a staple food for around half of the world s population and has the third highest world-wide production as an agricultural commodity. Rice production and consumption is concentrated in the Asia region with China, India, Thailand, Vietnam, Pakistan and Indonesia being among the largest producers and consumers of rice. Unlike other countries, rice industry in Pakistan functions on market oriented principles. Government intervention and assistance in the sector has been limited. Price levels are determined by demand and supply forces. Page 64 of 136

67 In Pakistan, rice is primarily cultivated in the alluvial plains of Punjab and Sindh both these provinces significantly contribute to rice production that is locally consumed and traded internationally. Two main varieties of rice exported by Pakistan are Basmati and IRRI. Rice sector in Pakistan contributes to export earnings, domestic employment, rural development and poverty reduction. Falling just below cotton and textiles, rice is the third biggest source of export earnings for Pakistan. According to statistics issued by Economic Survey of Pakistan ( ) rice contributes around 0.6 percent to GDP of Pakistan accounts for 3.0 percent in the value addition of the agriculture sector. Rice accounts for 3.0% in value added in agriculture and 0.6% of GDP. During FY , rice crop was sown on an area of 2,724,000 hectares a decrease of 0.6% over the last year cultivated area of 2,793,000 hectares. Rice production for FY 2017 was 6,849,000 tons increase of 0.7% compared to last year total production of 6,801,000 tons. Area Cultivated ("000" Hectares) Rice Production ("000" Tons) 3,000 2,400 1,800 1, ,789 2,891 2,739 2,724 2,309 FY 2013 FY 2014 FY 2015 FY 2016 FY ,000 6,000 4,000 2,000-6,798 7,003 6,801 6,849 5,536 FY 2013 FY 2014 FY 2015 FY 2016 FY 2017 Pakistan is the sixth largest producer 9 of the rice in the world. World rice production was recorded at million MT in FY 2016 while Paksitan s rice production was 6.8 million MT. China produced the largest volume of rice amounting million MT. Apart from production, Pakistan is also the fourth largest rice exporting country in the world. As of FY 2016, Pakistan s rice exports were around 4.2 million MT. Leading Rice Producers (Million MT) Country Wise Rice Export (Million MT) USA Pakistan Brazil Thailand Indonesia India China Others Uruguay Cambodia Burma United States Pakistan Vietnam Thailand India Source: United States Department of Agriculture Source: Economic Survey of Pakistan United States Department of Agriculture Foreign Agriculture Service 10 Page 65 of 136

68 4.11 RISK FACTORS Sector Risk Sector risk is the risk that macroeconomic conditions deteriorate and rice industry as a whole suffers. Risk associated with the sectors includes: Water Shortage Risk The recent water shortage, due to dams being built by India, may hamper crop growth thereby affecting the supply of raw materials to the Company. Commodity Price Risk Commodity price risk is the threat that the change in price in the price of production input will adversely impact the Company. Matco Foods is exposed to change in prices of raw rice and any adverse movement in raw rice prices may affect the profitability of the Company Operational Risk The risk that the Company may face difficulties or malfunctions that may significantly affect the operations of the Company. Operation risk includes risk such as technological obsolescence. Technological Obsolescence Rice Processing is a technologically intensive Industry with much being dependent upon the machinery deployed. The value addition to rice is a result of the mechanized processes which improve the quality of finished rice to meet International food standards and also reduce losses due to wastage. Since the value chain comprises of a lot of processes, the efficiency levels and input costs are significantly affected by and is dependent on the technology used. Matco Foods requires that the technological up gradation be carried out on consistent basis in order to compete with regional as well as international players. The technological risk associated with the Company might come from using obsolete machinery which may not be viable to provide support for consistent growth. It will need to maintain investment in expanding, modernizing and upgrading its machinery and keep pace with advancements in technology in order to remain competitive in the future. A failure to do so may result in lower quality and efficiency relative to the industry, leading to diminishing sales and market share Legal Risk Risk that unanticipated changes in regulatory policies and procedures could have an adverse impact on the Company. Some of the legal risk that may affect the Company and entire sector includes following: Tax Policy Risk The government is promoting export oriented companies by taxing them at a lower rate; instead of the 30% corporate tax rate, they are taxed at 1% of their sales. However, in case the Tax Policy is changed then it will affect the profitability of the company. Trade Restriction Risk Earlier, the rice processing facilities were not allowed to export rice by themselves. They had to sell their products to the government, which was the sole exporter of rice. However in the 1990 s the policies changed and the rice processing facilities were allowed to export rice by themselves. Trade Corporation of Pakistan (TCP) however has recently started to purchase rice from the Rice processing facilities, which can be seen as a threat to the major rice exporters of the country. They are however not particularly active, thereby pose a minimal risk to the Company s operations. Page 66 of 136

69 Import Restriction Risk Matco being a major exporter of rice is exposed to risk that rice importing countries might impose ban on import of Pakistani rice Foreign Exchange Risk Matco Foods being a major exporter of rice is susceptible to variation in the forex rates. Any fluctuations and uncertainty in foreign exchange markets might affect profitability and exports of the company which can potentially hamper operational and financial planning Credit Risk The company provides LC at Sight facility or Usance, varying from 30 days to 90 days to its customers. 80% export sales is Advance + Balance CAD (Cash against Document) basis and 20% sales is on DA terms for USA and UAE market. Local sales are 80% on cash basis and 20% on credit basis to customers such as Hyper star and Metro. Default by such parties would negatively affect the Company s financial standing Risk of Delay in Commencement of Rice Glucose Syrup Plant Rice Glucose Syrup Plant Phase-II by January, 2019, though there may be a risk of delay due to technical issues during construction of the plant or installation of the machinery Economic Slowdown Risk Global economic slowdown coupled with deteriorating local macroeconomics may hamper growth for MATCO Increased Competition Risk The Company may fail to retain and grow its client base due to increased competition, both locally and internationally Interest Rate Risk The Company has entered into various types of long term and short term loans / financing in order to finance its projects and meet working capital requirement. Any unforeseen increase in interest rates will increase the cost of borrowing for the Company and may adversely affect its profitability Capital Market Risk After being listed on the securities exchange, the price of the Company s shares will be determined by market behavior, wider macroeconomic events and the Company s performance. Hence, the value of shares will fluctuate based on movements in the securities market Under-Subscription Risk The issue of shares of Matco Foods may get under-subscribed due to lack of interest on part of the investors. In such a case, Book Building process shall be considered as cancelled if the Company does not receive bids for the number of shares allocated under the Book Building Portion and the bid money submitted by the investors shall be refunded accordingly. Note: IT IS STATED THAT ALL MATERIAL RISK FACTORS HAVE BEEN DISCLOSED AND THAT NOTHING HAS BEEN INTENTIONALLY CONCEALED IN THIS RESPECT. Page 67 of 136

70 5 FINANCIAL INFORMATION 5.1 AUDITORS REPORT UNDER CLAUSE 1 OF SECTION 2 OF THE FIRST SCHEDULE TO THE PUBLIC OFFERING REGULATIONS, 2017 FOR THE PURPOSE OF INCLUSION IN THE PROSPECTUS OF MATCO FOODS LIMITED UNCONSOLIDATED Page 68 of 136

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93 5.6 AUDITORS NOTE ON THE CONSOLIDATION OF ACCOUNT The Company did not consolidate the accounts of its subsidiary Matco Marketing (Private) Limited as the subsidiary had no capital as at June 30, The Company s auditors M/S Grant Thornton Anjum Rahman Chartered Accountant vide their letter dated October 12, 2017 gave the following opinion on non consolidation: As at June 30, 2017 Matco Foods Limited did not had any basis to consolidate Matco Marketing (Private) Limited in its Consolidated Financial Statements since it had not issued any paid-up capital. Page 91 of 136

94 5.7 SUMMARY OF FINANCIAL HIGHLIGHTS OF MATCO FOODS LIMITED UNCONSOLIDATED ACCOUNTS Amount in PKR Million as at June 30 th Income Statement Revenue 6,289 8,160 6,089 5,578 6,134 Cost of Goods Sold (5,441) (7,279) (5,194) (4,939) (5,169) Gross Profit EBITDA Depreciation and Amortization Other Income/(Expense) Financial Charges (245) (333) (294) (204) (212) Exchange gain - net (2) Provision for worker's welfare fund (5) (7) (5) (5) (3) Provision for worker's profit participation fund (13) Profit/(Loss) before Taxation Taxation (65) (77) (62) (34) (73) Profit/(Loss) after Taxation Balance Sheet Non-Current Assets 1,359 2,000 1,928 1,830 2,176 Current Assets 4,485 5,408 5,520 5,077 6,059 Total Assets 5,844 7,408 7,448 6,907 8,235 Equity 1,969 2,099 2,236 2,286 2,571 Surplus on revaluation of fixed assets Total Equity 2,237 2,930 3,018 2,885 3,143 Long-Term Debt Liabilities against assets subject to finance lease Accrued markup Current Portion of Long-Term Financing Current Portion of Liabilities against assets subject to finance lease Short-Term Borrowings 2,840 3,294 3,487 3,197 3,887 Non-Current Liabilities Current Liabilities 3,410 4,250 4,191 3,707 4,593 Net Debt 2,958 3,515 3,666 3,375 4,267 Stock-in-trade 3,370 4,690 4,830 4,506 5,240 Trade debts Trade and other payables Cash Flow Statement Cash Flow from Operating Activities (719) (320) (68) 362 (409) Cash Flow from Investing Activities (172) (176) (86) (38) (460) Cash Flow from Financing Activities (353) 891 Net increase in cash and cash equivalents (516) (66) 17 (28) 22 Page 92 of 136

95 Cash and cash equivalents at the beginning of the year Net Cash Balance Capex (188) (166) (92) (43) (474) Growth Sales Growth (%) - 30% -25% -8% 10% EBITDA Growth (%) - -3% 17% -44% 86% Profit after Taxation Growth (%) - 35% -45% -96% 6769% Margins Gross Margin (%) 13% 11% 15% 11% 16% EBITDA Margin (%) 9% 6% 10% 6% 10% Profit after Taxation Margin (%) 2% 2% 2% 0% 4% Profit before Taxation Margin (%) 3% 3% 3% 1% 6% Earnings Ratios Earnings per Share - Basic Break-up value per share without revaluation surplus Break-up value per share with revaluation surplus Return on Equity (%) 6% 6% 3% 0% 9% Return on Assets (%) 2% 2% 1% 0% 3% Balance Sheet Ratios Fixed Asset Turnover (x) 4.63x 4.08x 3.16x 3.05x 2.82x Asset Turnover (x) 1.08x 1.10x 0.82x 0.81x 0.74x Capex to Total Assets (%) 3% 2% 1% 1% 6% Current Ratio (x) 1.32x 1.27x 1.32x 1.37x 1.32x Inventory Turnover (days) Receivables Turnover (days) Payables Turnover (days) Leverage Ratios Net Debt to EBITDA (x) 5.49x 6.70x 5.97x 9.77x 6.65x Total Debt to Equity (x) 1.40x 1.23x 1.25x 1.20x 1.39x EBITDA/Interest (x) 2.20x 1.58x 2.09x 1.69x 3.02x (EBITDA - Capex) (EBITDA - Capex)/Interest (x) 1.43x 1.08x 1.77x 1.48x 0.79x Number of Shares Outstanding Capacity Total Rice Processing Capacity 96, , , , ,700 Total Rice Processed 99,507 98,433 78,801 98,614 95,655 Capacity Utilization 103% 84% 60% 73% 71% 11 Earnings per share and Book value per share are restated for FY 2013 based on post bonus shares of 87,429,094 Page 93 of 136

96 5.8 SUMMARY OF FINANCIAL HIGHLIGHTS OF MATCO FOODS LIMITED (CONSOLIDATED ACCOUNTS) (Amounts in PKR millions) Income Statement As at and for the year ended June 30th Revenue 8,160 6,089 5,601 6,158 Cost of Goods Sold (7,279) (5,194) (4,949) (5,179) Gross Profit EBITDA Depreciation and Amortization Financial Charges (333) (294) (204) (212) Other Income/(Expense) Exchange gain - net Provision for worker's welfare fund (7) (5) (5) (3) Provision for worker's profit participation fund (13) Profit/(Loss) before Taxation Taxation (77) (62) (34) (73) Profit/(Loss) after Taxation Balance Sheet Non-Current Assets 1,977 1,905 1,807 2,152 Current Assets 5,428 5,539 5,112 6,118 Total Assets 7,405 7,444 6,919 8,270 Equity 2,095 2,231 2,289 2,583 Surplus on revaluation of fixed assets Total Equity 2,926 3,013 2,888 3,154 Long-Term Debt Liabilities against assets subject to finance lease Accrued markup Current Portion of Long-Term Financing Current Portion of Liabilities against assets subject to finance lease Short-Term Borrowings 3,294 3,487 3,197 3,908 Non-Current Liabilities Current Liabilities 4,250 4,191 3,716 4,617 Net Debt 3,493 3,645 3,358 4,284 Stock-in-trade 4,690 4,830 4,506 5,240 Trade debts Trade and other payables Cash Flow Statement Cash Flow from Operating Activities (320) (69) 357 (444) Cash Flow from Investing Activities (153) (86) (38) (460) Cash Flow from Financing Activities (353) 912 Effects of exchange rate changes on value of foreign operation (1) 1 1 (0) Page 94 of 136

97 Net increase in cash and cash equivalents (44) 17 (33) 9 Cash and cash equivalents at the beginning of the year Net cash balance Capex (166) (92) (43) (474) Growth Sales Growth (%) Na -25% -8% 10% EBITDA Growth (%) Na 17% -42% 84% Profit after Taxation Growth (%) Na -46% -88% 2275% Margins Gross Margin (%) 11% 15% 12% 16% EBITDA Margin (%) 6% 10% 6% 11% Profit after Taxation Margin (%) 2% 2% 0% 5% Profit before Taxation Margin (%) 3% 3% 1% 6% Earnings Ratios Earnings per Share - Basic Break-up Value per Share including Revaluation Break-up Value per Share excluding Revaluation Return on Equity (%) 6% 3% 0% 9% Return on Assets (%) 2% 1% 0% 3% Balance Sheet Ratios Fixed Asset Turnover (x) 4.13x 3.20x 3.10x 2.86x Asset Turnover (x) 1.10x 0.82x 0.81x 0.74x Capex to Total Assets (%) 2% 1% 1% 6% Current Ratio (x) 1.28x 1.32x 1.38x 1.33x Inventory Turnover (days) Receivables Turnover (days) Payables Turnover (days) Leverage Ratios Net Debt to EBITDA (x) 6.69x 5.96x 9.51x 6.60x Total Debt to Equity (x) 1.24x 1.26x 1.20x 1.39x EBITDA/Interest (x) 1.57x 2.08x 1.73x 3.06x (EBITDA - Capex) (EBITDA - Capex)/Interest (x) 1.07x 1.77x 1.52x 0.83x Number of Shares Outstanding Page 95 of 136

98 5.9 FINANCIAL ANALYSIS OF PEER GROUP LISTED COMPANIES Company Market Price 12 (PKR) Market Cap (PKR "mn") LTM Revenue 13 (PKR "mn") LTM PAT 14 (PKR "mn") Equity 15 (PKR mn ) P/E P/B ROA ROE Rafhan Maize Products Limited 7,081 65,428 25,597 4,253 11, x 5.5x 27% 36% National Foods Limited ,558 15,514 1,008 3, x 10.2x 13% 32% Ismail Industries Limited ,045 23,580 1,182 6, x 2.9x 5% 19% Shezan International Limited 421 3,365 7, , x 1.6x 10% 15% Habib ADM Limited , x 1.1x 1% 1% Mean x 5.0x Median x 4.2x Matco Foods Limited ,273 6, , x 0.7x 3% 9% Note: There is no local listed company operating in rice industry. Therefore, we have considered the companies operating in the similar domain i.e. food sector as a peer group of Matco Foods Limited. 12 Last 30 days average Market price from September 28 th, 2017 to October 27 th, 2017 are used 13 Last Twelve Month Revenue is used as at September 30 th, Last twelve months Profit after Tax is used as at September 30 th, Book Value as at September 30 th 2017, is used except for National Foods Limited for whom Book Value as at June 30, 2017 is used 16 Mean P/E and P/B are calculated excluding Habib ADM an outlier 17 Median P/E and P/B are calculated excluding Habib ADM an outlier 18 Market Cap is calculated at floor price of PKR 26 using current outstanding shares of the Company Page 96 of 136

99 6 MANAGEMENT 6.1 BOARD OF DIRECTORS OF THE COMPANY S. No. Name Address Designation CNIC 1 Mr. Jawed Ali Ghori House No. 123/2, Khayaban-e- Ghazi, Phase 6, DHA, Karachi Chairman Partnership/Directorships in Other Companies Matco Engineering (Pvt.) Ltd Matco Marketing (Pvt.) Ltd JKT General Trading FZE Mr. Khalid Ghori Mr. Tariq Ghori Mr. Faizan Ghori Mr. Naeem Ur Rehman Akhoond Mr. Syed Kamran Rashid Mr. Iftikhaar Soomro* House No. 125/1, Khayaban-e- Ghazi, Phase 6, DHA, Karachi House No. 123/1, Khayaban-e- Ghazi, Phase 6, DHA, Karachi House No. 123/2, Khayaban-e- Ghazi, Phase 6, DHA, Karachi House No. 184, A, SMCHS, Karachi House No. GF-2 Block-73, Sea View Township, Defence, Phase 5, Extension, DHA, Karachi House No. A/1, Block 7, KDA Scheme, Clifton, Karachi Chief Executive Officer Executive Director Executive Director Non-Executive /Independent Director Non-Executive / Independent Director Non-Executive / Independent Director Matco Engineering (Pvt.) Ltd Matco Marketing (Pvt.) Ltd JKT General Trading FZE Matco Engineering (Pvt.) Ltd Matco Marketing (Pvt.) Ltd JKT General Trading FZE Matco Marketing (Pvt.) Ltd JKT General Trading FZE Wyeth Pakistan Limited Sind Fine Textile Mills Limited *Mr. Iftikhar Soomro has been serving on the Board of Directors of M/S Sind Fine Textile Limited from 1966 as a sponsor director till date. M/S Sind Fine Textile Limited was listed on the Exchange in 1968 and was placed on Defaulter s segment of the Exchange on January 03, 2007 on account of failure to induct shares of the company into Central Depository System ( CDS ) of Central Depository Company of Pakistan Limited ( CDC ). Subsequently, the default was rectified on August 20, 2013 and the company was shifted to the normal trading counter of the Exchange and simultaneously trading in its shares commenced on August 21, M/S Sindh Fine Textile Limited was thereafter delisted by the Exchange with effect from May 25, subsequent to the buyback of shares by the sponsor under Voluntary Delisting Regulation. Mr. Iftikhar Soomro had also served on Board of Directors of M/s Bela Engineers Limited, a listed company on Exchange from 1983 to Bela Engineers Limited on account of default of PSX regulations relating to nonholding of Annual General Meeting, non-payment of annual listing fee and failure to induct shares of the company 19 Delisting dated as appearing on the website of PSX: Page 97 of 136

100 into Central Depository System ( CDS ) of Central Depository Company of Pakistan Limited was placed on Defaulter Segment of Exchange on July 16, 2001 and trading in its shares was subsequently suspended. The company was later delisted after having gone into liquidation with effect from March 26, Mr. Soomro was not the sponsor or controlling director of the Company but was elected on its Board representing the minority interest with nominal shareholding. 6.2 UNDERTAKING BY THE COMPANY AND ITS SPONSORS The Company and its sponsors undertake: 1. That neither Issuer nor its directors, sponsors or substantial shareholders have been holding the office of the directors, or have been sponsors or substantial shareholders in any company: (i) which had been declared defaulter by the securities exchange or futures exchange; or (ii) whose TRE Certificate has been cancelled or forfeited by the Exchange, PMEX or any other registered stock exchange of Pakistan that existed prior to integration of stock exchanges pursuant to Integration Order number 01/2016 dated January 11, 2016 issued by the Commission due to noncompliance of any applicable rules, regulations, notices, procedures, guidelines etc. which has been de-listed by the securities exchange due to non-compliance of its regulations. (iii) was de-listed by the Exchange due to its non-compliance of any applicable provision of PSX Regulation. 2. That none of the Sponsors, Major Shareholders, Directors or Management of the Company as well as the Company itself or its Associated Company / Entity have been found guilty of being engaged in any fraudulent activity. The Company have made full disclosure regarding any / or all cases in relation to involvement of the person named above in any alleged fraudulent activity i.e., pending before any Court of Law / Regulatory Body / Investigation Agency in or outside of the Country. 6.3 OVERDUE LOANS There are no overdue loans (local or foreign currency) on the Company, its directors and its sponsors. The Company, its CEO, its directors and its sponsors, under the oath, undertakes that they have no overdue payment to any financial institutions 6.4 PROFILES OF DIRECTORS Mr. Jawed Ali Ghori Chairman Jawed Ali Ghori completed his Diploma in Associate Engineering in 1968 and a BSc. in Economics and Political Science from University of Karachi in After graduation, he joined the family business and completed several government and semi-government projects that were awarded to Matco Engineering. A few of the notable projects were the Greater Hyderabad Water Project (1981), the Faisalabad Development Authority Water Project (1984), the Chitral Water Project (1989), OGDC and Attock Oil Projects and numerous telecommunication and SCADA Projects for both Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL). Jawed Ali Ghori's rice related projects include the supply of four rice plants to Rice Export Corporation of Pakistan at Pipri, Sindh in In 1985, he supplied and commissioned an automatic parboil rice plant of 10 MT/hour capacity on turn - key basis for P.N.P Rice Mills at Dhaunkal, Punjab. In further developments to the Dhaunkal project, Jawed Ali Ghori supplied and installed six color sorters for the parboil plant in When the private sector Basmati export in Pakistan was allowed, Jawed Ali Ghori conceptualized the idea of establishing a modern rice processing plant that would add sophistication to the existing rice processing standards. This marked the birth of Matco Rice Processing in As the Managing Director of Matco Foods, he has nearly 50 years of experience in rice processing, establishment of rice industries and worldwide rice exports. He has travelled extensively across the globe buying rice related machinery from many countries including china, Germany, Great Britain, India, Japan, Korea, Thailand and USA. He has served as Chairman of REAP and Chairman Federal B Industrial Area Association. Page 98 of 136

101 6.4.2 Mr. Khalid Ghori Chief Executive Officer Khalid Ghori graduated from University of Karachi in 1981 and pursued an article ship from ICAP (Institute of Chartered Accountants of Pakistan) Karachi between 1981 and However, rapid growth in the business required his immediate presence at Dhaunkal turnkey projects in 1984, which involved the complete testing and operation of a parboil rice plant. Between 1986 and 1989, he was in charge of Jawed Rice Mills in Larkana. In 1990, when Matco Rice Processing was being set up in Karachi, Khalid Ghori contributed to the project from the drawing board stage to the final fabrication, installation and operations. In 1995, Khalid Ghori initiated setting up Matco until 2 for providing additional capacity, using in-house design and system engineering capabilities, consisting of Japanese, Thai and Chinese machinery. Working closely with growers and suppliers from the rice growing belt in Punjab, he established a unique Rice Cultivating Monitoring Program and opened a research and control office for Matco in Lahore to improve crop quality. With experience of over 30 years in the purchase and processing of rice, Khalid Ghori is rightly dubbed the guru of rice buyers in Pakistan. He utilizes his vast experience in assessing the qualities of agri-products and pays special attention to the entire procurement and production process. Khalid Ghori has established a wide network of farmers who are linked to Matco s rice paddy supply chain, allowing them to get better prices for their produce by avoiding the middlemen. His insights into crop survey and harvest are aimed to help farmers and Matco to achieve procurement targets Mr. Dr. Tariq Ghori Executive Director (Marketing & Exports) As the head of marketing and sales, Dr. Tariq Ghori has a vast experience in developing new markets for Matco Food s products and appointing distributors in strategic locations. He has been instrumental in the brand development and positioning of Falak Basmati Rice in over 35 countries. He is a regular participant in renowned world food fairs such as SIAL France, ANUGA Germany, Gulfoods Dubai, amongst many other food fair. He also has experience in managing the company s finances and its relationship with lending institutions and project finance institutes. Dr. Tariq Ghori is a graduate of Cadet College Petaro, where he demonstrated exceptional leadership skills as the College Junior Under Officer and a final year gold medalist. After graduating from Dow Medical College, Pakistan s premier medical institution, he made the decision to join the family business and went on to build his business knowledge by attending California State University, Long Beach. Dr. Tariq Ghori is a founding member of the Rice Exporters Association of Pakistan (REAP) and has served as a member of REAP s Managing Committee as well as being the president of the Pakistan Basmati Rice Promotion Committee of REAP Mr. Faizan Ghori Executive Director (Finance) Faizan Ali Ghori joined Matco Foods in 2006 with the overall responsibility of Accounts and Finance Departments and the company's liaison with Financial Institutions. He spearheaded the company s backwards integration paddy project at Sadhoke, district Gujranwala and attracted the first foreign direct investment by the IFC (World Bank Group) in the agriculture sector of Pakistan through its investment in Matco. Prior to Matco Foods he worked with Bank of America in London, where he was an Analyst within the Corporate Finance and Mergers & Acquisitions Investment Banking Division, covering the European Energy & Power Sector. Faizan Ghori is also a CFA charter holder. He graduated with honors (Cum Laude) from New York University's Leonard N. Stern School of Business, completing his Bachelor of Science degree with a double major in Finance and Accounting. Faizan Ghori has also completed his Master of Science degree in Finance and Accounting with honors (Merit) from The London School of Economics and Political Sciences. He is a certified director accredited by Risk Metrics Group USA having completed the Director Education programmed conducted by the Pakistan Institute of Corporate Governance Mr. Naeem Ur Rehman Akhoond Non-Executive Director/Independent Director Mr. Naeem ur Rehman Akhoond is an elected Director. An Electrical graduate from the University of Engineering & Technology, Lahore commonly referred to as UET and has served Sui Southern Gas Company Limited (SSGC), the largest integrated gas undertaking and a major energy sector company, for a period of over 35 years. Page 99 of 136

102 He initiated the state of the art Telecommunication and SCADA systems in SSGC to contribute to the safety of high pressure transmission pipelines, facilitating the gas control operation by ensuring effective management. The SCADA system is specifically his pride when he embarked on the mission to use this technology as a strategic asset to address the need for reliable, centralize control and monitoring on the gas transmission network. He was also responsible towards the launch of Technical Advisory Service (TAS) in SSGC that was initiated with the motive of addressing the urgent need to conserve Natural Gas and introduce energy efficient systems. TAS also played a crucial role in providing energy inputs to cater energy growth in the country. Mr. Akhoond is registered as a Professional Engineer with the Pakistan Engineering Council (PEC) of which today he is a respected member. He is also fellow of the Institution of Engineers Pakistan (IEP). He was twice elected as the Member Executive Committee of Pakistan Engineering Council. He was appointed as a Syndicate member of NED University of Engineering & Technology Karachi, and member Technical Board of Higher Education by the Chancellor and Governor of Sindh. He has completed the Director Certification program from Pakistan Institute of Corporate Governance (PICG) Mr. Syed Kamran Rashid Non Executive Director/Independent Director Mr. Syed Kamran Rashid is an elected Director in this Company. He is a graduate of the University of Karachi. He joined EFU General Insurance Company Limited in 1989 as Business Development Officer. He has served in different capacities and locations in EFU and at present he is Executive Director of the Central Division Karachi of the said Company Mr. Iftikhaar Soomro Non-Executive Director/Independent Director Mr. Soomro is an industrialist, social worker, philanthropist, politician, honorary consul general and agriculturist. He did B.A. honours in Economics from Karachi University. He had also remained as Minister for Industries and Agriculture for Sindh. He is past president of All Pakistan Textiles Manufacturers Association (APTMA). He is the founder and ex- president of Shikarpur Chamber of Commerce and Industry. Currently, Mr. Soomro is the Chief Executive & Director of Sind Fine Textile Mills, Beebul Rice Mills (Pvt) Ltd and HMB Mills (Pvt) Ltd. He is Chairman and Trustee of HMB Trust. He is a trustee of Karachi Grammar School, is the member of Governing Body of I.B.A. Sukkur, Shikarpur Public School and NASRA Public School. 6.5 PROFILES OF KEY MANAGEMENT Mr. Azher Baig Senior General Manager Mr. Baig is a senior mechanical and manufacturing engineer with over 30 years of work experience in the field. He has been part of the Matco team since He is overall responsible for Matco's production at existing five production sites and the upcoming rice glucose plant Mr. Baig is an important member of the team for plant design, fabrication and sourcing for new projects and BMR of existing sites. His previous work experience includes employment at Pakistan Tobacco Company Limited, Gillette Pakistan Limited, and Hypermagnetic Industries (Pvt) Limited. Mr. Baig completed his B.S Mechanical Engineering from University of New Orleans, USA and his M.E. Manufacturing Engineering from NED University of Engineering & Technology, Karachi. Mr. Baig is a member of the Pakistan Engineering Council and an Associate Member of the American Society of Mechanical Engineers. Mr. Baig is also trained and qualified with regards to all company ISO, BRC, WQA, HACCP, and FDA certifications. Page 100 of 136

103 6.5.2 Mr. Muhammad Jawed Ismail Chief Financial Officer Muhammad Jawed is an experienced Chartered Accountant having multiple qualifications and more than 20 years of diversified industrial and geographical experience. Completed CA Article ship with D.T.T.I. and passed CA in Besides core expertise in finance, accounts and audit having certifications in Microsoft AX ERP Modules and Supply Chain Management. Also attended various professional skills development courses organized by IBA and various professional bodies. He has worked with leading private and public limited companies in IT, Retail, Logistics and Manufacturing sectors mainly Zultec (Pvt) Limited and Lucky Cement Limited. Also visited U.A.E, Saudi Arabia and Africa for audit and tax assignments of group of companies. He is overall responsible for accounts, finance, tax and other allied matters. He is also responsible for review and implementation of financial controls and cost cutting parameters wherever required Mr. Shamweel Ahmed Head of Export Sales Mr. Shamweel has to his credit around 25 years of work experience in the field of Sales & Marketing. He started his career with Upjohn Pakistan as District Sales Manager in1991. He has worked in various export companies including, Pakistan Rice Complex, Noble Impex Rice, Al Minal Rice & Hasan Ali Rice. Since 2005 he has been associated with Matco Foods as Marketing Manager (Exports) and after seen excellent performance management has promoted him as Sr. Manager Marketing in Management has promoted him as DGM Exports in He holds M.Phil 1 st Div. degree from University of Karachi Mr. Akhtarul Haque Senior Manager Finance Mr. Akhtar Ul Haque is an Associate member of Institute of Cost & Management Accountants of Pakistan (ACMA) and experience of over 30 years in Textile and Foods industry. He has been part of Matco for the last 20 years and holds senior level management position. He is also supervising corporate matters of the company Mr. M. Najam-ul-Arfeen General Manager Brand Sales Mr. Najam Arfeen has to his credit around 30 years of work experience in the field of Sales. He started his career with Dawn Bread as Sales Officer in 1995 after one year he joined Reckitt Benckiser where his career progressed to Area Sales Manager. He joined Matco in 2003 as Sales Manager (South). In 2008 Mr. Najam became National Sales Manager in Matco. He briefly joined Engro Corp as NSM for rice division in In 2015 he rejoined Matco as GM Brand Sales for exports. Mr. Najam-ul-Arfeen holds M.A Degree in Economics from Sindh University Mr. Syed Abid Moiz Deputy General Manager Accounts Syed Abid Moiz is Fellow member of Pakistan Institute of Public Finance Accountants (PIPFA) and CA( Finalist) from Institute of Chartered Accountants of Pakistan as well as ACCA (Finalist).He completed his Article ship training from M. Yousuf Adil Saleem & Co (A member firm of Deloitte ). He has experience of over 17 years in Accounts and Finance. Previously he served as Chief Accountant in Siddiqsons Denim Mills Limited. He is a part of Matco since Mr. M Nasir Afridi National Sales Manager S&D Page 101 of 136

104 Mr. M Nasir Afridi has to his credit around 14 years of work experience in the field of Sales. He started his career with Shield Corporation as Sales Representative after three years of consisting performance he got her 1 st promotion as Key Account Executive. He spent one year and then joined Fine Foods as Sales Officer. His career progressed through diverse functions in Sales & Distribution. In 2007 he moved to P&G as T.S.O (key account). He joined Mega Lion as Sales officer then gradually promoted Field Manager 2008, then got promoted as SDM in In 2012 he joined Matco as Key Account Manager. Since 2016, Nasir has been associated with Matco Foods as National Sales Manager. Mr. Nasir holds MBA Degree in Sales & Marketing, from Bahria University Ms. Falak Ghori Manager Brand Export/ Digital Marketing Falak Ghori currently looks after international branding for Matco Foods leading brands as well as all digital marketing content. She is a graduate from the London School of Economics with a BSc in Management and the London College of Fashion with a MA in International Fashion Marketing and a Digital Marketing Certificate from the New York University s (NYU) SPS. She has previously worked at Engro Eximp as an agri-commodity analyst and has internship experience in Citibank, British Petroleum, Juicy Couture, BMA Funds & Acumen Fund Ms. Ameera Ghori Brand Manager Local Ameera Ghori looks after the sales and branding of Matco s local brands in Pakistan. She is also responsible for launching the New Products Division within the company and has successfully launched Falak Rice Bran Oil and Falak Pink Salt in both international and domestic markets. She started her career in Matco Foods after graduating from King s College London with a BSc in Management (Honors), and an MSc in Management with Specialty in Marketing (Merit) from Cass Business School, City University London. Her previous work experiences include internships at Ernst & Young, London and Citibank, Karachi Ms. Wajeeha Khan Deputy Manager HR & Admin Ms. Wajeeha has to her credit 10 years of work experience in the field of Human Resource. Ms. Wajeeha holds an MBA Degree in HR, from Muhammad Ali Jinnah University. She started her career with Callmate Telips Telecom as HR Assistant after one year of consisting performance she got her 1 st promotion as HR Officer. Since March 2016 associated with Matco and responsible to develop and implement HR & Administration related Policies at all units. Her career progressed through diverse functions in HR & Administration and she has previously worked with Akber Ali & Sons, Karachi Tools Dies & Moulds Centre and Mehran Spice & Food Industries Mr. Tariq Iqbal Head of Internal Audit Mr. Tariq Iqbal is an experienced audit professional and qualified member of the Institute of Chartered Accountants of Pakistan. He has about 10 years of professional and industrial experience out of which four years in FMCG industry. Earlier associated with a leading audit firm M/S Grant Thornton Anjum Asim Shahid Rehman, Chartered Accountants in audit, advisory & assurance division. He has worked with Abbas Sugar Mills Limited as Head of Internal Audit where in addition to accounts and financials he was also responsible for compliance of corporate governance and operational audits. He was directly reporting to Audit Committee and Board of Directors. Mr. Tariq is a very good team player with goal oriented approach having expertise in financials audit, operational audit, risk assessment, risk analysis, process analysis, and development of internal control system and reengineering of policies and procedures Mr. Mudassir Saleem Senior Manager Costing & Budgeting Mr. Mudassir Saleem is Fellow member of Institute of Cost and Management Accountants of Pakistan. He is also a Certified Supply- Chain Professional (CSCP) form APICS-USA and Master of Economics from University of Karachi. Page 102 of 136

105 He has total experience of 17 years in finance/accounts and costing/budgeting of different industries like textile & FMCG. Previously he has served in Afroze Tetxtile Industries, Al-Abid Silk Mills Ltd and Lakson Group of Companies on managerial post. He is now associated with Matco Foods since Feb Mr. Muhammad Shahbaz Senior Manager Accounts, Sadhoke Mr. Shahbaz has 12 years of work experience in the field of Accounts & Finance. He started his career with Technical Education & Vocational Authority as Accounts Officer in Since 2010 he has been associated with Matco Foods as Assistant Manager Account. He was promoted to Manager Accounts in Recently he got promotion as Sr. Manager Accounts. He holds B.Com degree and C.A Inter qualified Mr. Abu Ubaida Siddiqui Deputy Manager Accounts Mr. Ubaida Siddiqui has to his credit around 14 Years of work experience in the field of Accounts and Finance. He started his career with Jahangir Siddiqui & Co. as Junior Finance Officer in 2003 after 3 years he promoted to Senior Finance Officer after 5 years he joined Habib Oil Mills (Pvt.) Ltd. in 2009 where his career progressed to Assistant Manager Accounts after 5.5 years he joined Bays International (Pvt.) Ltd. in 2014 as an Assistant Manager Accounts. Since 2016, Mr. Ubaida Siddiqui has been associated with Matco Foods as Deputy Manager Accounts. Mr. Ubaida Siddiqui holds MBA Degree in Banking & Finance nowadays he also doing CMA from Institute Cost Management Accountant of Pakistan (ICMAP). 6.6 DIVIDEND PAYOUT BY THE GROUP COMPANIES No dividend was paid by JKT General Trading (FZE), Matco Engineering (Pvt) Ltd and Matco Marketing (Pvt) Ltd. 6.7 NUMBER OF DIRECTORS Pursuant to Section 154 of the Companies Act, 2017 a listed Company shall not have less than seven (7) directors. At present, the Board consists of 7 directors, including the Chief Executive Officer. 6.8 QUALIFICATION OF DIRECTORS No person shall be appointed as a Director of the Company who is ineligible to be appointed as Director on any one or more of the grounds enumerated in Section 153 of the Companies Act or any other law for the time being in force. 6.9 REMUNERATION OF THE DIRECTORS As per the article 21 of articles of association of the Company, the Directors of the Company shall be entitled to such remuneration as the Board of Directors may from time to time determine 6.10 BENEFITS TO PROMOTERS AND OFFICERS No benefit has been given or is intended to be given by the Company to the promoters and officers of the Company other than remuneration for services rendered by them as full-time executives of the Company INTEREST OF DIRECTORS All directors of Matco may be deemed to be interested to the extent of their shareholding in the Company and fees payable to them (if any), for attending meetings of the Board or a committee thereof as well as to the extent of Page 103 of 136

106 other remuneration and reimbursement of expenses payable to them, if any under the articles of association, and to the extent of remuneration paid to them, if any for services rendered as an officer or employee of the Company. All directors may also be deemed to be interested to the extent of any dividend payable to them and other distributions in respect of their shareholdings noted above. Following directors are holding ordinary shares of the Company: Name of Shareholder Designation No. of Shares held Value of Shares held Mr. Jawed Ali Ghori Chairman 22,661, ,619,250 Mr. Khalid Sarfaraz Ghori Chief Executive Officer 22,886, ,869,250 Mr. Tariq Ghori Director 22,909, ,094,250 Mr. Faizan Ghori Director 224,997 2,249,970 Mr. Naeem ur Rehman Non-Executive 1 10 /Independent Director Mr. Syed Kamran Non-Executive 1 10 /Independent Director Mr. Iftikhaar Soomro Non-Executive /Independent Director INTEREST OF CHIEF EXECUTIVE OFFICER The CEO of the Company is paid salary on monthly basis INTEREST OF DIRECTORS IN PROPERTY ACQUIRED BY THE COMPANY None of the Directors of the Company had or has any interest in any property acquired by the Company or proposed to be acquired by the Company ELECTION OF DIRECTORS The Directors of the Company are elected for a term of three years in accordance with the procedure laid down in section 159 of the Companies Act. The Directors shall comply with the provisions of Sections 154 to 159 and Sections 161 and 167 relating to the election of Directors and matters ancillary thereto. Subject to the provisions of the Companies Act, the Company may from time to time increase or decrease the number of Directors. Any casual vacancy occurring on the Board of Directors may be filled up by the Directors, but the person so appointed shall be subject to retirement at the same time as if he / she had become a Director on the day on which the Director in whose place he / she is chosen was last elected as Director. The Company may remove a Director in accordance with the provisions of the Companies Act. The present Directors of the Company were elected on October 31 st, 2015 for a period of three years. The next election has to be held within 3 years and it is expected to be held in October The Company, has undertaken that the composition of board of Directors of Matco Foods Limited will be brought in line with the Code of Corporate Governance of PSX Rule Book by 30 th March, VOTING RIGHTS Every member shall be entitled to be present and to speak and vote in any General Meeting and shall, when present in person or represented by an agent duly authorized under a power of attorney or in case of a company, by its Page 104 of 136

107 representatives duly authorized under Section 138 of the Companies Act have one vote on a show of hands and shall, on a poll when present in person or represented by an agent duly authorized under a power of attorney or, in the case of company by a representative duly authorized under Section 138 of the Companies Act or by proxy have one vote in respect of each shares held. Members may exercise voting rights at general meetings through electronic means if the Company receives the requisite demand for poll in accordance with the applicable laws. Votes may be given either personally or by proxy or, in case of a company, by a representative duly authorized as aforesaid under the Provisions of Section 138 of the Companies Act INTERNAL AUDIT The Board of Directors has set up an effective internal audit function managed by suitable qualified and experienced personnel who are conversant with the policies and procedures of the Company and are involved in the internal audit function on a full-time basis. The audit committee comprises of the following members: 1. Mr. Naeem ur Rehman Akhoond Chairman 2. Mr. Syed Kamran Rasheed 3. Mr. Iftikhar Soomro 6.17 HUMAN RESOURCE AND REMUNERATION COMMITTEE The Board of Directors has set up an effective Human Resources function managed by suitable and qualified personnel who are conversant with the policies & procedures of the Company and are involved in Human Resources function on a full-time basis. The human resource and remuneration committee comprises of the following members: 1. Mr. Syed Kamran Rasheed Chairman 2. Mr. Jawed Ghori 3. Mr. Tariq Ghori 6.18 BORROWING POWERS OF DIRECTORS Subject to the provision of the Companies Act, 2017 and Article 26 of the Article of Association of the Company, the Directors may from time to time, borrow any sum of money for and on behalf of the Company from other persons, companies or banks or they may themselves advance money to the Company on such terms and conditions as may be approved by the Directors 6.19 POWERS OF DIRECTORS The Directors shall have all the power to run and manage the Company as per the Article of Association subject to any restriction under the Companies Act 6.20 ASSOCIATE LISTED COMPANIES Matco Foods has no associated listed company under the same management CORPORATE GOVERNANCE The Company shall comply with all the rules and regulations applicable to the Company with regards to the Code of Corporate Governance of Listed Companies. Furthermore, the Company will also ensure that at least half of the Page 105 of 136

108 Board of Directors will have fulfilled the requirement of the director s training by June 2018 as required under the PSX regulations. The Company shall also encourage representation of minority shareholders on the board of directors INVESTMENT IN SUBSIDIARY JKT General Trading (FZE) Matco Foods Limited has an investment of US$ 225,000 in JKT General Trading (FZE), the shareholding of Matco Foods Limited in JKT General Trading (FZE) is 100%. In October 2013, Matco set up JKT General Trading (FZE), in Sharjah Airport International Free Zone authority in the Emirate of Sharjah. The principal activities of JKT are commercial-general trading, export and import. This has allowed Matco Foods to expand its boundaries and increase its presence in important GCC markets like UAE, Oman and Kingdom of Saudi Arabia. Matco Marketing (Pvt) Ltd Matco Marketing (Pvt.) Ltd is involved in the business of wholesalers, indenting agents and manufacturer s representative, sale representative either on commission and profit sharing basis, Import, Export, Locally distributed and sale of all kind of Rice, Cereals and related commodities. Matco Marketing was incorporated on June 16, 2016 with authorized and proposed paid-up capital of PKR 10,000,000 and PKR 7,500,000 respectively. However, no business activity has been carried out by the Company since its incorporation REVALUATION OF FIXED ASSETS The Company s property plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any, except for freehold land which is stated at cost. The Company has carried out revaluation of its land, building and plant and machinery. Revaluation was carried out by MYK Associates and KG trader (Private) Limited on March 31, Revaluation surplus as at June, 2017 is PKR 571,665, CAPITALIZATION OF RESERVES The Company has capitalized its reserves in the following years: Year Bonus Shares ,288, ,430,310 Page 106 of 136

109 7 MISCELLANEOUS INFORMATION 7.1 REGISTERED OFFICE / CORPORATE OFFICE Matco Foods Limited, L-24/1, Block 21, F.B. Industrial Area, Karachi, Pakistan Phone: & Website: contact@matcofoods.com 7.2 BANKER TO THE ISSUE FOR BOOK BUILDING MCB Bank Limited 7.3 BANKERS TO THE ISSUE FOR GENERAL PORTION MCB Bank Limited Habib Bank Limited Allied Bank Limited Faysal Bank Limited Askari Bank Limited Summit Bank Limited Al-Baraka Bank Limited United Bank Limited Bank Alfalah Limited Habib Metropolitan Bank Limited Soneri Bank Limited 7.4 BID COLLECTION CENTERS Contact Officer: Direct No.: Mobile No.: PABX No.: Fax No.: Postal Address: Contact Officer: Mobile No.: Direct No.: Postal Address: Contact Officer: PABX No.: Direct: Lahore Islamabad Karachi Quetta Peshawar Page 107 of 136

110 Fax No: Postal Address: Contact Officer: Mobile No.: Direct: Postal Address: Azad Kashmir Gilgit / Baltistan 7.5 BANKERS AND FINANCIAL INSTITUTIONS TO THE COMPANY 1. Askari Bank Limited 2. Allied Bank Limited 3. Bank Alfalah Limited 4. Faysal Bank Limited 5. Habib Metropolitan Bank Limited 6. Habib Bank Limited 7. MCB Bank Limited 8. National Bank of Pakistan 9. NIB Bank Limited 10. Standard Chartered Bank 11. United Bank Limited 12. Pak Oman Investment Company Limited 7.6 AUDITORS OF THE COMPANY Grant Thornton Anjum Rahman Grant Thornton Anjum Rahman (GTAR) 1 st and 3 rd Floor, Modern Motors House Beaumont Road Karachi, Pakistan 7.7 LEGAL ADVISOR OF THE COMPANY Mr. Javed Akhter Advocate Office No. 13, Bambino Chambers, Garden Road Karachi 7.8 TRANSACTION LEGAL COUNSEL HaidermotaBNR Barristers at Law & Corporate Counsellors D-79, Block 5, Clifton, Karachi 75600, Pakistan 7.9 CONSULTANT TO THE ISSUE Arif Habib Limited Arif Habib Center 23, MT Khan Road, Karachi Page 108 of 136

111 Tel: Fax: Website: BOOK RUNNER MCB Bank Limited MCB Tower, 16 th Floor I.I Chundrigar Road, Karachi Pakistan 7.11 COMPUTER BALLOTER & SHARES REGISTRAR THK Associates (Pvt.) Ltd 1 st Floor, 40-C, Block-6, P.E.C.H.S Karachi Tel: Web: MATERIAL CONTRACTS & DOCUMENTS OF MATCO FOODS LIMITED Details of Short-Term Financing Facilities Bank MCB Bank Limited (MCB) United Bank Limited (UBL) Askari Bank Ltd. (AKBL) National Bank of Pakistan (NBP) Habib Metropolitan Bank Ltd NIB Bank Ltd. Allied Bank Limited (ABL) Allied Bank Limited (ABL) Facility Export refinance - (secured) / Foreign bills purchased/negotiat ed FAPC I - (Secured)/ Foreign bills purchased/negotiat ed Export refinance - (secured) Export refinance - (secured) Export refinance (secured)/ Foreign bills purchased/negotiat ed Export refinance (secured) Export refinance Finance against foreign export bill Limit (PKR) Mark up Commission Date Sanctioned / Renewal Expiry / Review Date 330 Million SBP rate + 1.0% Mar-2017 Jan Million SBP rate + 1.0% May-2017 Nov Million 400 Million 300 Million 250 Million 250 Million 30 Million SBP Rate % SBP Rate % SBP Rate + 1.0% SBP Rate % SBP Rate % 6 month KIBOR % Apr-2017 Jun-2017 Apr-2017 Feb-2017 May-2017 May-2017 Mar-2018 Mar-2018 Mar-2018 Nov-2017 Jan-2018 Jan-2018 Page 109 of 136

112 Faysal Bank Ltd. Export refinance 550 Million Standard Chartered Bank Habib Bank Ltd.(HBL) Bank Al Falah Ltd. Export refinance Export refinance/foreign bills purchased/negotiat ed Export refinance 250 Million 370 Million 300 Million SBP Rate % 6 month KIBOR + 1% SBP Rate + 1.0% SBP Rate % Jun-2017 Jun-2017 Jun-2017 Mar-2017 Dec-2017 Jan-2018 Feb-2018 Dec Details of Long-term Financing Facilities Bank MCB Bank Limited Pak Oman Investment Company Limited Pak Oman Investment Company Limited United Bank Limited United Bank Limited Facility LTFF/DF/FFSAP LTFF LTFF Non-Interest Demand Finance ( NIDF ) NIDF-II/LTFF Limit (PKR) 250 Million Million 60 Million 70 Million 50 Million Mark up Commission LTFF: SBP Rate + 1% DF: 6 month KINOR +1% FFSAP: SBP Rate % 3 month KIBOR + 2% SBP Refinance Rate under LTFF Scheme + 1% 6 month KIBOR + 2% NIDF: 6 month KIBOR + 2% LTFF: SBP Rate + 2.5% Date Sanctioned LTFF/DF: Apr FFSAP: Oct Apr-2015 Jun-2016 Jun-2013 Aug-2014 Expiry / Review Date Apr-2026 May-2020 Jun-2023 Jun-2018 Aug Details of Other Financing Facilities Bank Facility Limit (PKR) Mark up Commission Date Sanctioned Expiry / Review Date Askari Bank Limited Guarantees 23 Million 0.2% + FED 20/Apr/ /Mar/2018 United Bank Limited Guarantees 50 Million 0.25% / quarter 19/May/ /Nov/2017 MCB Bank Limited Guarantees 10 Million Ruling Rate (RR)* 24/Mar/ /Jan/2018 Page 110 of 136

113 *Ruling Rate: Rate charged as per latest Schedule of Bank Charges ( SOBC ) Details of Related Party Agreements Title of Agreement Party to the Agreement Date Particular Rent Agreement Mrs. Nuzhat Khalid Ghori From 1-May-17 To 31-Mar-18 Related Party Rent Agreement Miss. Ameera Khalid Ghori From 1-May-17 To 31-Mar-18 Related Party Rent Agreement Mrs. Sadaf Tariq From 1-May-17 To 31-Mar-18 Related Party Rent Agreement Mrs. Faryal Murtaza From 1-May-17 To 31-Mar-18 Related Party Rent Agreement Miss. Falak From 1-May-17 To 31-Mar-18 Related Party Rent Agreement Mr. Faizan Ali Ghori From 1-May-17 To 31-Mar-18 Related Party Rent Agreement Mr. Jawed Ali Ghori From 1-May-17 To 31-Mar-18 Related Party 7.13 INSPECTION OF DOCUMENTS AND CONTRACTS Copies of the Memorandum and Articles of Association, the Audited Financial Statements, the Auditor s Certificates, Information Memorandum and copies of the agreements referred to in this Prospectus may be inspected during usual business hours on any working day at the registered office of the Company from the date of publication of this Prospectus until the closing of the subscription list LEGAL PROCEEDINGS I. This civil suit No of 2009 for possession and injunction has been filed by the Company for the possession of land; it was dispossessed by the defendants, to restore it and a permanent injunction to restrain the defendants from alienating or transferring the land. This suit was filed on December 11, 2009 and as per last proceeding dated August 22, 2011 the case is adjourned. II. III. IV. Suit No of 2015 Syed Alay Sadqain Naqvi versus Province of Sindh and others: the plaintiff filed this suite against the company and four other for declaration, possession, damages, mesne profit and injunction before the Senior Civil Judge, District Court (West) at Karachi. The plaintiff claims to be the lawful owner of a piece of land measuring 10 acres, which also includes the land which is the subject matter of suite No of 2009 above. The Plaintiff has sought declaration as to its ownership and occupation of the Subject Land. The Company contends that the suit is barred by res judicata as the Plaintiff s earlier suits raising the same dispute was dismissed. The matter is still at the stage of hearing of applications. The Company s legal counsel on this matter believes that it is premature to opine any outcome of this hearing. However, the management and the sponsors of the Company are of the opinion that they have sound legal defense and is not likely to suffer losses on account of proceeding in this suit. The Petition No. 3358/2011 was filed by the Company against Federal Board of Revenue (FBR) and others, whereby, the chargeability of the customs duty against import of storage silos has been challenged. It is pertinent to point out that the said import was exempt from duties and taxes vide SRO No. 575(I) Now through SRO dated October 23, 2012, the said silos have been added as clarificatory being exempt. The said chargeability of Customs Duty has been challenged of the intervening period before Islamabad High Court, Islamabad through Writ Petition No. 3358/11 and 1823/13. Company has filed intra court appeal ICA no. 84/2015 and 85/2015 both are pending in Honorable Islamabad High court, notice are issued. The Counsel hopes these cases will be decided in favor of Matco Foods (Private) Limited. The management of the Company on the basis of the Counsel s opinion is confident that the Company is not likely to suffer any losses on account of the said petition. This suit was filed on February 18, 2015 and no proceeding till date. In prior years Sindh Government imposed infrastructure 0.85% of import value on all imports into Pakistan. A large number of importers including the Company challenged the matter in the Honorable High Page 111 of 136

114 Court of Sindh. Honorable High Court of Sindh has issued an interim order allowing release of imported goods on 50% payment and 50% bank guarantee. The litigation is pending adjudication. This suit was filed on June 10, 2013 and no proceeding till date MEMORANDUM OF ASSOCIATION The Memorandum of Association, inter alia, contains the objects for which the Company was incorporated and the business which the Company is authorized to undertake. A copy of the Memorandum of Association is annexed to this Prospectus and with every issue of the Prospectus except the one that is released in newspapers as advertisement FINANCIAL YEAR OF THE COMPANY The financial year of the Company commences on 1 st July and ends on 30 th June each year. Page 112 of 136

115 8 APPLICATION AND ALLOTMENT INSTRUCTIONS 8.1 ELIGIBLE INVESTORS INCLUDE: 1. Pakistani citizens resident in or outside Pakistan or Persons holding dual nationalities including a Pakistani nationality; 2. Foreign Nationals whether living in or outside Pakistan 3. Companies, bodies corporate or other legal entities incorporated or established in or outside Pakistan (to the extent permitted by their constitutive documents and existing regulations, as the case may be); 4. Mutual Funds, Provident / Pension / Gratuity Funds / Trusts, (subject to the terms of the Trust Deed and existing regulations); and 5. Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan. 8.2 APPLICATION MUST BE MADE ON THE COMMISSION S APPROVED APPLICATION FORM OR A LEGIBLE PHOTOCOPY THEREOF ON A PAPER OF A4 SIZE WEIGHING AT LEAST 62 GM 8.3 COPIES OF THE PROSPECTUS Copies of this Prospectus and Applications Forms can be obtained from the Trading Right Entitlement Certificate holders of PSX, the Bankers to the Issue and their branches, Consultant to the Issue & Book Runner and the registered office of the Company. The Prospectus and the Application Form can also be downloaded from the following websites: and The applicants are required to complete the relevant sections of the application in order to get shares in scrip-less form. In accordance with the provisions of the Central Depositories Act, 1997 and the CDCPL Regulations, credit of such shares is allowed ONLY in the applicant s own CDC account. 8.4 NAMES(S) AND ADDRESS (ES) MUST BE WRITTEN IN FULL BLOCK LETTERS, IN ENGLISH AND SHOULD NOT BE ABBREVIATED 8.5 ALL APPLICATIONS MUST BEAR THE NAME AND SIGNATURE CORRESPONDING WITH THE ONE RECORDED WITH THE APPLICANT S BANKER. IN CASE OF DIFFERENCE OF SIGNATURE WITH THE BANK AND COMPUTERIZED NATIONAL IDENTITY CARD (CNIC) OR THE NATIONAL IDENTITY CARD FOR OVERSEAS PAKISTANI (NICOP) OR PASSPORT, BOTH THE SIGNATURES SHOULD BE AFFIXED ON THE APPLICATION FORM. 8.6 APPLICATIONS MADE BY INDIVIDUAL INVESTORS 1. In case of individual investors, a photocopy of CNIC (in case of Resident Pakistanis) / NICOP or Passport (in case of Non-Resident Pakistanis) as the case may be, should be enclosed and the number of CNIC / NICOP / Passport should be written against the name of the applicant. 2. Original CNIC / NICOP / Passport, along with a photocopy, must be produced for verification to the Banker to the Issue and the applicant s banker (if different from the Banker to the Issue) at the time of presenting the application. The photocopy will, after verification, be retained by the bank branch along with the application. 8.7 APPLICATIONS MADE BY INSTITUTIONAL INVESTORS 1. Applications made by companies, corporate bodies, mutual funds, provident / pension / gratuity funds / trusts and other legal entities must be accompanied by a photocopy of their Memorandum and Articles of Association Page 113 of 136

116 or equivalent instrument / document. Where applications are made by virtue of Power of Attorney, the same should also be submitted along with the application. 2. Photocopies of the documents mentioned in 8.7 (i) must be produced for verification to the Banker to the Issue and the applicant s banker (if different from the Banker to the Issue) at the time of presenting the application. The copies, will after verification, be retained by the bank branch along with the application. 8.8 ADDITIONAL INSTRUCTIONS FOR INVESTORS 1. Only one application will be accepted against each account, however, in case of joint account, one application may be submitted in the name of each joint account holder. 2. Joint application in the name of more than two persons will not be accepted. In case of joint application each applicant must sign the application, form and submit copies of their CNICs / NICOP / Passport. The share will be credited to the CDS account mentioned on the face of the form and where any amount is refundable, in whole or in part, the same will be refunded by cheque or other means by post, or through the bank where the application was submitted, to the person named first on the application form, without interest, profit or return. Please note that joint application will be considered as a single application for the purpose of allotment of shares. 3. Subscription money must be paid by check drawn on applicant s own bank account or pay order / bank draft payable to one of the Bankers to the Issue IPO of Matco Foods Limited and crossed A/C PAYEE ONLY. 4. For the applications made through pay order / bank draft, it would be permissible for a Banker to the Issue to deduct the bank charges while making refund of subscription money to unsuccessful applicants through pay order / bank draft individually for each application. 5. The applicant should have at least one bank account with any of the commercial banks. The applicants not having a bank account at all (non-account holders) are not allowed to submit application for subscription of shares. 6. Applications are not to be made by minors and / or persons of unsound mind. 7. Applicants should ensure that the bank branch, to which the application is submitted, completes the relevant portion of the Application Form. 8. Applicants should retain the bottom portion of their Application Forms as provisional acknowledgement of submission of their applications. This should not be construed as an acceptance of the application or a guarantee that the applicant will be allotted the number of shares for which the application has been made. 9. Making of any false statements in the application or willfully embodying incorrect information therein shall make the application fictitious and the applicant or the bank shall be liable for legal action. 10. Bankers to the Issue are prohibited to recover any charges from the subscribers for collecting subscription applications. Hence, the applicants are advised not to pay any extra charges to the Bankers to the Issue. 11. It would be permissible for a Banker to the Issue to refund subscription money to unsuccessful applicants having an account in its bank by crediting such account instead of remitting the same by cheque, pay order or bank draft. Applicants should, therefore, not fail to give their bank account numbers. 12. Submission of false and fictitious applications is prohibited and such applications money may be forfeited under section 87(8) of the Securities Act, ADDITIONAL INSTRUCTIONS FOR FOREIGN / NON-RESIDENT INVESTORS 1. In case of foreign investors who are not individuals, applications must be accompanied with a letter on applicant's letterhead stating the legal status of the applicant, place of incorporation and operations and line of business. A copy of Memorandum of Association or an equivalent document should also be enclosed, if available. Where applications are made by virtue of Power of Attorney, the same must be lodged with the Page 114 of 136

117 application. Copies of these documents can be attested by the bank manager in the country of applicant's residence. 2. Foreign / Non- resident investors should follow payment instructions given in Section of this Prospectus BASIS OF ALLOTMENT The basis and conditions of transfer of shares to the General Public shall be as follows: 1. The minimum value of application will be calculated as Issue Price x 500 shares. Application for amount below the minimum value shall not be entertained. 2. Application for shares must be made for 500 shares or in multiple of 500 shares only. Applications which are neither for 500 shares nor for multiples of 500 shares shall be rejected. 3. Allotment / Transfer of shares to successful applicants shall be made in accordance with the allotment criteria / instructions disclosed in the Prospectus. 4. Allotment of shares shall be subject to scrutiny of applications in accordance with the criteria disclosed in the Prospectus and / or the instructions by the Securities & Exchange Commission of Pakistan. 5. Applications, which do not meet the above requirements, or applications which are incomplete will be rejected. The applicants are, therefore, required to fill in all data fields in the Application Form. 6. The Company will credit the respective CDS accounts of the successful applicants LIST OF BANKERS TO THE ISSUE Code Name of Bank 01 MCB Bank Limited 02 Habib Bank Limited 03 Allied Bank Limited 04 Faysal Bank Limited 05 Askari Bank Limited 06 Summit Bank Limited 07 Al-Baraka Bank Limited 08 United Bank Limited 09 Bank Alfalah Limited 10 Habib Metropolitan Bank Limited 11 Soneri Bank Limited 8.12 CODE OF OCCUPATION OF INVESTORS / APPLICANTS Code Occupation 01 Business 02 Business Executive 03 Service 04 Housewife 05 Household 06 Professional 07 Student 08 Agriculturist 09 Industrialist 10 Other Page 115 of 136

118 8.13 NATIONALITY CODE Code Name of Country 001 U.S.A 002 U.K 003 U.A.E 004 K.S.A 005 Oman 006 Bangladesh 007 China 008 Bahrain 009 Other 8.14 E-IPO FACILITIES In order to facilitate the investors, the Issuer has arranged provision of e-ipo facility through United Bank Limited ( UBL ), Summit Bank Limited ( SMBL ) and Bank Alfalah Limited ( BAFL ) that are among the Bankers to the Issue. The accountholders of UBL can use UBL net-banking to submit their applications online via link: The accountholders of SMBL can use SMBL net-banking to submit their applications online via link: The accountholders of BAFL can use BAFL net-banking to submit their applications online via link: The accountholders of UBL, SMBL and BAFL can submit their applications through these links 24 hours a day during the subscription period which will close at 12:00 midnight on DD/MM/2017. The Central Depository Company of Pakistan Limited (CDC) has developed an e-ipo system through which applications for subscription of shares can be submitted electronically through the internet. Investors are strongly encouraged to visit the link to learn more about CDC e-ipo facility. Further, detailed process for subscribing through Centralized e-ipo and payment instructions can be accessed via link In case any issue is encountered during or after the IPO subscription, investors can contact CDC call center at or at info@cdcpak.com during business hours. Page 116 of 136

119 9 INSTRUCTIONS FOR REGISTRATION AND BIDDING REGISTRATION PERIOD OPENS FROM DD/MM/2017 TO DD/MM/2017 BETWEEN 9:00 AM TO 5:00 PM AND BETWEEN 9:00 AM TO 3:00 PM ON DD/MM/2017 BIDDING PERIOD OPENS FROM DD/MM/2017 TO DD/MM/2017 BETWEEN 9:00 AM TO 5:00 PM INTIAL PUBLIC OFFER OF ORDINARY SHARES OF MATCO FOODS LIMITED ( MATCO OR THE COMPANY ) THROUGH BOOK BUILDING PROCESS AT THE FLOOR PRICE OF PKR 26/- PER SHARE The Present Offer comprises of 29,143,042 Ordinary Shares (25% of the post issued paid up capital of the Company with Face Value of PKR 10.00/- each). The bidders shall be allowed to place bids for hundred percent (100%) of the Issue size and the Strike Price shall be the price at which the hundred percent (100%) of the Issue is subscribed. However, the successful bidders shall be allotted and issued only seventy-five percent (75%) of the Issue size i.e. 21,857,032 and the remaining twenty five percent (25%) i.e. 7,286,000 shall be issued to the retail investors. Instructions for Registration and Bidding 1. Only registered investors will be eligible to participate in the bidding process. 2. Investors are required to fill in the Registration Form and submit the complete Registration Form along with Margin Money at the Bid Collection Centers during the Registration Period. 3. For deposit of Margin Money only Pay Orders, Demand Drafts or a bank receipt evidencing Online Transfers in the designated bank account shall be accepted during the Bidding Period. Each eligible investor shall only submit a single pay order, demand draft or evidence of online transfer of money along with the Registration Form. It may also be noted that only a single pay order, demand draft or evidence of online transfer of money shall be accepted by the Book Runner along with each Additional Payment Form. 4. Once the investor is registered in the System, the investor will receive Username and Password via an automatically generated through the System software. 5. Investors can directly place their bids online during the Bidding Period by using the Username and Password provided to them via or submit the Bidding Form at the bid collection centers in person. 6. On entry of bid in the System, the investors will receive an confirmation of their bid via the System software. 7. Investors can upward revise their bids online. Please visit to access online portal. Online access will be available for upward bid revisions during the Bidding Period from 9:00 am to 5:00 pm. An investor shall not be allowed to place or upward revise a bid with a price variation of more than 10% of the prevailing Indicative Strike Price. NO DOWNWARD REVISION OR WITDRAWAL OF BID SHALL BE ALLOWED. Please Note: 1. Fill in all the particulars of the form accurately in BLOCK LETTERS. 2. For deposit of margin money, only Pay Orders, Demand Draft will be accepted or online transfer facility (pay order or demand draft may be deposited at any branch of MCB Bank Limited and evidence to be submitted to the Book Runner) into the respective Book Building account of the Issuer, A/C No. [ ], titled Matco Foods Limited Book Building, maintained at MCB Bank Limited, [ ]. 3. Kindly provide a copy of CNIC or Passport (in case of Individual Investors) or NTN Certificate / Certificate of Incorporation (in case of Institutional Investor) along with the Registration Form. 4. Applicants are requested to provide accurate contact details. Please provide accurate landline number(s), mobile number(s), fax number(s), UIN(s), NTN number and address (es). 5. Bidders are requested to provide two copies of the bidding instrument at the time of bid submission. 6. The National Taxation Number ( NTN ) of Matco Foods Limited is This NTN shall be required by applicants for making their respective pay orders. 7. The Bidder is required to duly fill Additional Payment Form for depositing additional funds for enhancement of deposit amount. 8. All payments are to be made in favor of Matco Foods Limited Book Building at any of the following bidding centers: Karachi Page 117 of 136

120 Contact Officer: Direct No.: Mobile No.: PABX No.: Fax No.: Postal Address: Contact Officer: Mobile No.: Direct No.: Postal Address: Contact Officer: PABX No.: Direct: Fax No: Postal Address: Contact Officer: Mobile No.: Direct: Postal Address: Lahore Islamabad Azad Kashmir Quetta Peshawar Gilgit / Baltistan 9. CASH SHOULD NOT BE SUBMITTED WITH REGISTRATION FORM AT THE BID COLLECTION CENTER. 10. THE BID SHOULD BE SUBMITTED ON THE PRESCRIBED BIDDING FORM ALONG WITH THE REGISTRATION FORM IN PERSON OR THROUGH FAX AT THE NUMBERS MENTIONED IN NOTE 8 ABOVE. REGISTERED INVESTORS CAN ALSO PLACE THEIR BIDS DIRECTLY VIA THE ONLINE PORTAL BY VISITING Bids can be placed at Limit Price or Step Bid. a) Payment for Limit Price: If investors are placing their bids through Limit Price then they shall deposit the Margin Money based on the number of shares they are bidding for at their stated bid price. For instance, a Bidder may bid for 2 million shares at PKR per share, then total Application Money would amount to PKR 60 million. The Bid Amount will be PKR 60 million. Since the Bidder has placed a Limit Bid of PKR per share, this indicates that he / she / it is willing to subscribe the shares at a price up to PKR per share. b) Payment for Step Bid: If investors are placing their bids through Step Bid which is a series of limit bid at increasing prices then they shall deposit the Margin Money / Bid Amount based on the total number of shares they are bidding for at their stated bid price. The aggregate amount of step bid shall not be less than PKR 1,000,000/- and the amount of any step shall also not be less than PKR 1,000,000/-. Under this bidding strategy, Bidders place a number of Limit Bids at different increasing price levels. The Bidders may, for instance, make a bid for 0.5 million shares at PKR per share, 1 million shares at PKR per share and 0.5 million shares at PKR per share then in essence the investor has placed one Step Bid comprising of three Limit Page 118 of 136

121 Bids at increasing prices. The bid amount will be PKR 98 million. In case of Individual Investor, the Margin Money will be 100% i.e. PKR 64 million whereas in case of Institutional Investor the Margin Money shall be 25% of the bid amount i.e. PKR 16.0 million. 12. The applicant, if Individual Investor, shall submit amount of 100% of the application money as Bid / Margin Money whereas Institutional Investors shall submit not less than 25% of the application money. 13. Book Runner shall not accept or register any new Bidders after 3:00pm during the last day of Bidding Period. 14. The Bidder can view the color of the book, i.e. bid price and number of shares against each bid price online anytime during the Bidding Period at the following websites: Successful Bidders shall be intimated, within one (1) day of the closing of the Bidding Period, the Strike Price and the number of shares provisionally allotted to each of them. 16. Upon intimation by the Book Runner of final allocation, successful institutional bidders shall deposit their balance margin money within three (3) days of such intimation, if required, as consideration against allotment of shares. 17. Where a successful Bidder defaults in payment of shares allotted to him, the Margin Money deposited by such Bidder shall be forfeited to the Book Runner. 18. Final allotment of shares out of the Book Building portion shall be made after receipt of full subscription money from the successful bidders; however, shares to such bidders shall be issued only after the end of the public subscription, in the form of book-entry to be credited in their respective accounts. All the bidders shall, therefore, provide number of their accounts. 19. The bidders who have made bids below the Strike Price shall not qualify for allotment of securities and the book runner shall intimate their respective banks for unblocking their Bid Money within one (1) working day of the close of the bidding period and the refunds to such bidders shall be made within three (3) working days from the close of the bidding period. 20. The bid money of bidders who have undertaken to subscribe the unsubscribed retail portion shall remain deposited or blocked till allotment of unsubscribed retail portion, if any, to them on pro-rata basis. Page 119 of 136

122 10 REGISTRATION FORM Page 120 of 136

123 11 DUPLICATE REGISTRATION FORM Page 121 of 136

124 12 BIDDING FORM Page 122 of 136

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126 13 ADDITIONAL PAYMENT FORM Page 124 of 136

127 14 BID REVISION FORM Page 125 of 136

128 15 SIGNATORIES TO THE PROSPECTUS -sd- Khalid Sarfaraz Ghori Chief Executive Officer -sd- Jawed Ali Ghori Chairman -sd- Dr. Tariq Ghori Director -sd- Faizan Ali Ghori Director -sd- Naeem Ur Rehman Akhoond Director -sd- Syed Kamran Rasheed Director -sd- Iftikhar Soomro Director SIGNED BY THE ABOVE IN PRESENCE OF WITNESSES: Witness 1: Witness 2: -sd- Muhammad Jawed Ismail Date: DD/MM/2017 -sd- Mohammad Latif Qureshi Page 126 of 136

129 16 MEMORANDUM OF ASSOCIATION Page 127 of 136

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136 17 APPLICATION FORM Page 134 of 136