AL SHAHEER CORPORATION LIMITED FINAL PROSPECTUS

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1 ADVICE FOR GENERAL PUBLIC INVESTORS ARE STRONGLY ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THIS PROSPECTUS, ESPECIALLY THE RISK FACTORS GIVEN AT PARA 5.5 BEFORE MAKING ANY INVESTMENT DECISION. SUBMISSION OF FALSE AND FICTITIOUS APPLICATIONS ARE PROHIBITED AND SUCH APPLICATIONS' MONEY MAY BE FOREFEITED UNDER SECTION 87(8) OF THE SECURITIES ACT, 2015 AL SHAHEER CORPORATION LIMITED FINAL PROSPECTUS THIS ISSUE CONSISTS OF 25,000,000 ORDINARY SHARES (27.31% OF THE POST ISSUE PAID UP CAPITAL OF AL SHAHEER CORPORATION LIMITED) OF FACE VALUE OF PKR 10.00/- EACH BOOK BUILDING PORTION OF THE ISSUE COMPRISES OF 18,750,000 ORDINARY SHARES (75% OF THE TOTAL ISSUE) AT A FLOOR PRICE OF PKR 43.00/- PER SHARE (INCLUDING A PREMIUM OF PKR 33.00/- PER SHARE) GENERAL PUBLIC PORTION OF THE ISSUE COMPRISES OF 6,250,000 ORDINARY SHARES (25% OF THE TOTAL ISSUE) AT AN ISSUE PRICE OF PKR 95.00/- PER SHARE (INCLUDING A PREMIUM OF PKR 85.00/- PER SHARE) BIDDING PERIOD DATE: JUNE 10, 2015 TO JUNE 11, 2015 (BOTH DAYS INCLUSIVE) FROM 9:00 A.M. TO 5:00 P.M. DATE OF PUBLIC SUBSCRIPTION: FROM JULY 27, 2015 to JULY 29, 2015 (BOTH DAYS INCLUSIVE) DURING BANKING HOURS JOINT LEAD MANAGERS, ARRANGERS & BOOK RUNNERS Askari Bank Limited Bank Alfalah Limited Dubai Islamic Bank Limited Faysal Bank Limited Habib Bank Limited Habib Metropolitan Bank Limited BANKERS TO THE ISSUE MCB Bank Limited Meezan Bank Limited Soneri Bank Limited Summit Bank Limited United Bank Limited* *In order to facilitate investors, United Bank Limited UBL is offering electronic submission of application (e-ipo) to its account holders. UBL account holders can use UBL Net Banking to submit their application via link Further, please note that online applications can be submitted 24 hours a day during the subscription period which will close at midnight on July 29, BOOK BUILDING PORTION UNDERWRITTEN BY: GENERAL PUBLIC PORTION UNDERWRITTEN BY: AKD Securities Limited & Next Capital Limited have underwritten 9,375,000 shares each calculating to a total of 18,750,000 shares. Date of Publication of this Prospectus is June 30, 2015 Final Prospectus and Subscription Form can be downloaded from the following websites i.e. and For further queries you may contact: Al Shaheer Corporation Limited Mr. Mohammad Ashraf; Phone: ; mohammad.ashraf@alshaheer.net Next Capital Limited Mr. Umer Habib; Phone: Ext: 114; umer.habib@nextadvisors.com.pk AKD Securities Limited Ms. Eliya Hamid Syed; Phone: ; eliya.hamid@akdsecurities.net

2 STATEMENT ON ISSUER S ABSOLUTE RESPONSIBILITY The Issue The Issuer having made all reasonable inquiries accepts responsibility for the disclosure made in this Prospectus and confirms that: i. This Prospectus contains all information with regards to the Issuer and the Issue, which is material in the context of the Issue and nothing has been concealed; ii. iii. iv. The information contained in the Prospectus is true and correct to the best of our knowledge and belief; The opinions and intentions expressed herein are honestly held; and There are no other facts and information, the omission of which makes this document as a whole or any part thereof misleading. For and on behalf of AL SHAHEER CORPORATION LIMITED: -Sd- KAMRAN AHMED KHALILI Chief Executive Officer -Sd- MOHAMMAD ASHRAF Company Secretary 1

3 TI FI C Final Prospectus - Al Shaheer Corporation Limited GLOSSARY OF TECHNICAL TERMS AND ABBREVIATIONS AKDS ASC CAGR CDC / CDCPL CDC Regulations CDS CNIC COI CPD CRO Collection Bank EPS FAO FPI FPCCI FSSC FTR GDP GoP HACCP HNWI AKD Securities Limited Al Shaheer Corporation Limited Compound Annual Growth Rate Central Depository Company of Pakistan Limited Central Depository Company of Pakistan Limited Regulations Central Depository System Computerized National Identity Card Certificate of Investment Containers Per Day Company Registration Office Summit Bank Limited Earnings Per Share Food & Agriculture Organization of the United Nations Foreign Portfolio Investment Federation of Pakistan Chamber of Commerce and Industry Food Safety System Certification Final Tax Regime Gross Domestic Products Government of Pakistan Hazard Analysis & Critical Control Points High Net Worth Individual IPO Initial Public Offering E ISE Islamabad Stock Exchange ISO International Organization for Standardization ITO Income Tax Ordinance, 2001 JAKIM Jabatan Kemajuan Islam Malaysia KSE Karachi Stock Exchange Limited LSE Lahore Stock Exchange NICOP National Identity Card for Overseas Pakistanis NCL Next Capital Limited NOC No Objection Certificate NTR Normal Tax Regime Ordinance The Companies Ordinance, 1984 PKR Pakistan Rupee(s) QMS RHS ROA ROE SAFDA SCRA SECP SEC Quality Management System Right Hand Side Return on Assets Return on Equity Saudi Food Authority Special Convertible Rupee Account Securities & Exchange Commission of Pakistan Socio Economic Class 2

4 SGS SST TREC UAE UIN URS USD UK Société Générale de Surveillance Sindh Sales Tax Trading Right Entitlement Certificate United Arab Emirates Unique Identification Number United Registration Service United States Dollar United Kingdom 3

5 DEFINITIONS Appendix 2 Appendix 4 Application Money Appendix 2 of Chapter 5 of the Rule Book titled "Listing of Companies and Securities Regulations" of KSE which relates to Issue / Offer of Shares through Book Building Appendix 4 of the Listing Regulation of LSE & ISE which relates to Issue / Offer of Shares through 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 AND In case of application for subscription of shares out of the general public portion, the amount of money paid along with application for subscription of shares which is equivalent to the product of the offer price and the number of shares applied for Bid Bidder Bid Amount Bid Collection Centre Bidding Form An indication to make an offer during the bidding period by a Bidder to subscribe to the Ordinary Shares of Al Shaheer Corporation Limited at a price at or above the Floor Price including all the revisions thereto Any eligible prospective investor who makes a bid pursuant to the terms of the Preliminary Prospectus and the Bidding Form The total amount of the bid which is equivalent to the product of the bid price and the number of shares bid for Pre-determined locations where applications for bidding of shares are collected by the Joint Book Runners on behalf of the Issuer including the offices of Corporate Brokerage Houses, Scheduled Banks, Development Financial Institutions and Investment Finance Companies, subject to appointment of these institutions as agents by the Book Runner through an agreement in writing for the purpose, with consent of the Issuer. For this issue, address of the Bid Collection Centers are approved at Para 2.5(b) (xv) The standardized form prepared by the Joint Book Runners on behalf of the Issuer for the purpose of making bids which will be considered as the 4

6 application for subscription of Ordinary Shares out of the book building portion Bidding Period Bidding Process Ending Date Bidding Process Starting Date Book Building Book Building Account Company / Issuer Company Legal Advisor Dutch Auction Method The period during which bids for shares of the Company will be made by Institutional Investors and HNWIs. The Bidding Period shall be of two days, i.e. June 10, 2015 to June 11, 2015 (both days inclusive) (daily from 9:00 a.m. to 5:00 p.m.) The date after which the Joint Book Runners will not accept any bid for the Book Building portion of the Issue which shall be the last date of the Bidding Period The date on which the Joint Book Runners shall start accepting bids for the Book Building portion of the Issue A mechanism of price determination through which indication of interest for subscription of shares issued by the Company is collected from Institutional Investors and HNWIs. Through this process a book is built which gives an idea of demand for the shares at different price levels. The strike price is determined based on the price at which demand for shares at the end of book building period is sufficient to raise the required amount 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 2.11 and the balance of the Application Money, if any, shall be paid through this account after successful allocation of shares under Book Building Al Shaheer Corporation Limited Ms. Fehmida Shaikh Shabbir, Suite No. 511, Regal Trade Square M.A. Jinnah Road, Karachi The method through which the strike price is determined. Under this method, all the bids are arranged in descending order along with the number of shares bid for at each price level and the cumulative number of shares bid for. The strike price is determined by lowering the price to the extent that the total shares the Issuer intends to issue through the Book Building process are subscribed 5

7 e-ipo Facility e-ipo facility is the facility through which investors can make application for subscription of shares of the Company through internet. In order to facilitate the investors, the Issuer has arranged provision of this facility through United Bank Limited who is among the Bankers to the Issue UBL's accountholders can use UBL net-banking to submit their applications online via link: Accountholders of UBL can submit their applications through the above-mentioned link 24 hours a day during the subscription period which will close at 12:00 midnight on July 29, 2015 Final Prospectus Floor Price General Public High Net Worth Individual (HNWI) Institutional Investors Issue A document containing all the information and disclosures as required under the Ordinance together with disclosure of the strike price, results of the Book Building, the date of publication of Prospectus and the date(s) for subscription of shares out of the retail portion The minimum price set by the Issuer for the issuance of shares which is PKR 43.00/- per share. A bid placed below the Floor Price will not be entertained by the Book Runner All individual and institutional investors including both Pakistani (residents & non-residents) and foreign investors Individual investor who applies or bids for shares of the value of PKR 1,000,000/- or above in the book building process Both local and foreign institutional investors Initial Public Offer of 25,000,000 Ordinary Shares representing 27.31% of the total post IPO paid-up capital of the Company having a face value of PKR 10.00/- each Book Building Portion of the Issue comprises of 18,750,000 Ordinary Shares (75% of the Total Issue) at a Floor Price of PKR 43.00/- per share (including a premium of PKR 33.00/- per share) Retail Portion of the Issue comprises of 6,250,000 Ordinary Shares (25% of the Total Issue) at a Strike Price of PKR 95.00/- per share including a premium of 85.00/- per share 6

8 Joint Book Runners Joint Lead Managers & Arrangers Limit Price Margin Money Ordinary Shares Preliminary Prospectus Step Bid AKD Securities Limited & Next Capital Limited AKD Securities Limited & Next Capital Limited The maximum price a prospective institutional investor or HNWI is willing to pay for a share under the Book Building process The partial or total amount, as the case may be, paid by a Bidder at the time of making a bid. In case of bids by the institutional investors it is 25% of the Bid Amount and in case of bids by HNWI investors it is 100% of the Bid Amount Ordinary Shares of Al Shaheer Corporation Limited having face value of PKR 10.00/- each unless otherwise specified in the context thereof The preliminary prospectus containing all the information and disclosures as required under the Ordinance and the Listing Regulations of the Karachi Stock Exchange, the Lahore Stock Exchange & Islamabad Stock Exchange approved by the Commission under section 88(1) of the Securities Act, 2015 read with Section 87(2) thereof and circulated to the Institutional Investors and HNWIs for inviting them for bidding of shares out of Book Building portion through the Book Building process A series of limit bids at increasing prices Strike Price The price of share determined / discovered on the basis of Book Building process in the manner provided in the Listing of Companies and Securities Regulations of the KSE, the Listing Regulations of LSE & ISE at which the shares are issued to the successful Bidders. The Strike Price determined through the Book Building process is PKR 95.00/- per share Interpretation: Any capitalized term contained in this Final 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. 7

9 Table of Contents Sr. Content Page No. 1 APPROVALS AND LISTING ON THE STOCK EXCHANGE 9 2 BOOK BUILDING PROCEDURE 12 3 SHARE CAPITAL AND RELATED MATTERS 31 4 UNDERWRITING, COMMISSION, BROKERAGE AND OTHER EXPENSES 47 5 HISTORY AND PROSPECTS OF THE COMPANY OVERVIEW FINANCIAL INFORMATION 58 7 MANAGEMENT OF THE COMPANY 75 8 MISCELLANEOUS INFORMATION 88 9 APPLICATION & ALLOTMENT INSTRUCTIONS BIDDING FORM OF AL SHAHEER CORPORATION LIMITED SIGNATORIES TO THE PROSPECTUS MEMORANDUM OF ASSOCIATION APPLICATION FORM 107 8

10 PART 1 1 APPROVALS AND LISTING ON THE STOCK EXCHANGE 1.1 APPROVAL OF THE SECURITIES & EXCHANGE COMMISSION OF PAKISTAN Approval of the Securities and Exchange Commission of Pakistan ( SECP or the Commission ) as required under Section 88(1) of the Securities Act, 2015 read with Section 87(2) thereof has been obtained by Al-Shaheer Corporation Limited ( ASC or the Company ) for the issue, circulation and publication of this document (hereinafter referred to as the Prospectus ). 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 REGARDS TO THEM BY THE ISSUER AND/OR THE COMPANY IN THIS PROSPECTUS. SECP HAS NOT EVALUATED QUALITY OF THE ISSUE AND ITS APPROVAL FOR ISSUE, CIRCULATION AND PUBLICATON OF THIS 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. 1.2 CLEARANCE OF THE PROSPECTUS BY THE KSE, LSE & ISE The Prospectus of the Company has been cleared by the Karachi Stock Exchange Limited ( KSE ) under regulation of the KSE Rule Book, Lahore Stock Exchange Limited ( LSE ) under clause 3.4 of Appendix 4 of the Listing Regulations of the LSE & Islamabad Stock Exchange Limited ( ISE ) under clause 3.4 of Appendix 4 of the Listing Regulations of the ISE. DISCLAIMER: KSE, LSE & ISE HAVE NOT EVALUATED THE QUALITY OF THE ISSUE, AND THEIR CLEARANCE 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. THE PUBLICATION OF THIS DOCUMENT DOES NOT REPRESENT SOLICITATION BY KSE, LSE & ISE. THE CONTENTS OF THIS PROSPECTUS DO NOT CONSTITUTE AN INVITATION BY KSE, LSE & ISE TO INVEST IN SHARES OR SUBSCRIBE FOR ANY SECURITIES OR OTHER 9

11 FINANCIAL INSTRUMENT, 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 THE EXCHANGE. IT IS CLARIFIED THAT INFORMATON IN THIS PROSPECTUS SHOULD NOT BE CONSTRUED AS ADVICE ON ANY PARTICULAR MATTER BY KSE, LSE & ISE AND MUST NOT BE TREATED AS A SUBSTITUTE FOR SPECIFIC ADVICE. KSE, LSE & ISE DISCLAIM ANY LIABILITY WHATSOEVER FOR ANY LOSS HOWSOEVER ARISING FROM OR IN RELIANCE UPON THIS DOCUMENT TO ANY ONE, ARISING FROM ANY REASON, INCLUDING, BUT NOT LIMITED TO, INACCURACIES INCOMPLETENESS AND / OR MISTAKES, FOR DECISIONS AND/OR ACTION TAKEN, BASED ON THIS DOCUMENT. KSE, LSE & ISE NEITHER TAKE RESPONSIBILITY FOR THE CORRECTNESS OF CONTENTS OF THIS PROSPECTUS NOR THE ABILITY OF THE COMPANY TO FULFILL ITS OBLIGATION THEREUNDER. ADVICE FROM A SUITABLY QUALIFIED PROFESSIONAL SHOULD ALWAYS BE SOUGHT BY INVESTORS IN RELATION TO ANY PARTICULAR INVESTMENT. 1.3 LISTING ON THE KARACHI STOCK EXCHANGE, LAHORE STOCK EXCHANGE & ISLAMABAD STOCK EXCHANGE LIMITED Application has been submitted to the KSE, LSE & ISE for permission to deal in and for quotation of the certificates of the Company. If for any reason, the application for formal listing is not accepted by the Stock Exchanges, the Company shall immediately publish a notice in the press to that effect and thereafter the issuer undertakes to refund the application money to all applicants without surcharge. However, and, if any such money is not repaid within eight 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 eighth day together with surcharge at the rate of one and a half per cent for every month or part thereof from the expiration of the eighth day and, in addition, to a fine not exceeding five thousand rupees and in the case of a continuing offence to a further fine of one hundred rupees for every day after the said eighth day on which the default continues in accordance with the provisions of Section 72(2) of the Ordinance. 10

12 1.4 CERTIFICATE BY CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER OF THE ISSUER We being the Chief Executive Officer and Chief Financial Officer of the Company certify that the Prospectus 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 provided and disclosures made in this Prospectus contain no misleading material. For and on behalf of Al Shaheer Corporation Limited -Sd- KAMRAN AHMED KHALILI Chief Executive Officer -Sd- MOHAMMAD ALI YOUSUF Chief Financial Officer 11

13 2 BOOK BUILDING PROCEDURE 2.1 BRIEF ON THE ISSUE The Present Issue PART 2 The Issuer is issuing 25,000,000 Ordinary Shares of the face value of PKR 10.00/- each which constitutes 27.31% 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 43.00/- per share (including a premium of PKR 33.00/- per share), whereby 75% of the total Issue size i.e. 18,750,000 Ordinary Shares will be issued through the Book Building process to Institutional Investors and High Net Worth Individuals ("HNWI") while the balance 25% of the total Issue size i.e. 6,250,000 Ordinary Shares will be issued to the general public through retail offer at or below the Strike Price. In case the Book Building portion is not fully subscribed and the Issuer decides to go ahead with the Issue, then the unsubscribed shares of the Book Building portion shall be made part of the General Public portion (retail portion) of the Issue and shall be underwritten at a price at which shares will be offered to the general public. 2.2 BOOK BUILDING PROCEDURE Book Building is a process whereby investors bid for a specific number of shares at various prices. The Joint Lead Managers & Book Runners with the consent of Issuer has set the Floor Price which is the lowest price an investor can bid at. An order book of bids from investors 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 price to the extent that the total number of shares that the Issuer intends to issue through the Book Building process is subscribed. A bid by a potential investor can be a "Limit Bid", or a "Step Bid", which are explained below: Limit Bid: Limit bid is at the limit price, which is the maximum price an investor is willing to pay for a specified number of shares. In such a case a Bidder is stating a price at which he / she / it is willing to subscribe to a specific number of shares. For example, a Bidder may bid for 0.50 million shares at PKR 45.00/- per share. In such a case the total application money would amount to PKR

14 million. Since the Bidder has placed a limit of PKR 45.00/- per share, this indicates that he / she / it is willing to subscribe at or below PKR 45.00/- per share. Step Bid: A series of limit bids at increasing prices. The aggregate amount of step bid shall not be less than PKR 1,000,000/- and the amount of any step shall not be less than PKR 250,000/-. When a Bidder is using the Step Bid strategy to place bids, the Bidder places a number of limit bids at different increasing price levels. For example, make a bid for 0.50 million shares at PKR 45.00/- per share, 0.45 million shares for PKR 46.00/- per share and 0.40 million shares for PKR 47.00/- per share may be placed by the Bidder. Therefore, in essence the Bidder has placed one step bid which comprises of three limit bids, at increasing prices. The total bid amount for this would be PKR million. In case of HNWI the bid amount is 100% of PKR million i.e. PKR million whereas for institutions it is 25% of PKR million i.e. PKR million A SINGLE INVESTOR SHALL NOT MAKE MORE THAN ONE BID. HOWEVER, A BID CAN BE REVISED. THE INVESTORS SHALL NOT PLACE CONSOLIDATED BIDS. A BID APPLICATION WHICH IS FULLY OR PARTIALLY BENEFICIALLY OWNED BY PERSONS OTHER THAN THE ONE NAMED THEREIN IS TO BE CONSIDERED AS A CONSOLIDATED BID. Once the bid period is over and the book has been built, the Issuer in consultation with Joint Lead Managers and Book Runners shall determine the strike price. Successful Bidders shall be intimated, within two (2) working days of the closing of the bidding period, the strike price and the number of shares provisionally allotted to each of them. The successful Institutional Bidders shall, within seven (7) working days of the closing of the bidding period, deposit the balance amount as consideration against allotment of shares. 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 under clause 8.11 of Appendix 2 of the Listing of Companies and Securities Regulations of the KSE, clause 8.10 of Appendix 4 of the Listing Regulations of the LSE and clause 8.11 of Appendix 4 of the Listing Regulations of the ISE. AS PER REGULATION 8.16 OF APPENDIX 2 OF CHAPTER 5 OF THE KSE S RULE BOOK, REGULATION 8.15 OF THE LISTING REGULATION OF THE LSE AND REGULATION 8.16 OF THE LISTING REGULATION OF THE ISE, THE SUCCESSFUL BIDDERS SHALL BE ISSUED SHARES IN THE FORM OF BOOK-ENTRY SECURITIES TO BE CREDITED IN THEIR CDS ACCOUNTS. ALL THE INSTITUTIONAL AND HNWI INVESTORS SHALL, THEREFORE, PROVIDE THEIR CDC ACCOUNT NUMBERS IN THE BID APPLICATION. 13

15 2.3 JOINT LEAD MANAGERS AND ARRANGERS AKD Securities Limited ("AKDS") and Next Capital Limited ( NCL ) have been mandated by the Issuer to act as Joint Lead Managers & Arrangers to this Issue, which is being made through the Book Building process as laid out in Appendix 2 of Chapter 5 of the KSE's Rule Book regarding the Listing of Companies and Securities Regulations and Appendix 4 of the Listing Regulations of the LSE & ISE. 2.4 JOINT BOOK RUNNERS AKD Securities Limited ("AKDS") and Next Capital Limited ( NCL ) have been jointly appointed by the Issuer as the Joint Book Runners to this Issue. 2.5 ROLE AND FUNCTIONS OF THE JOINT LEAD MANAGERS AND BOOK RUNNERS The Joint Lead Managers to the Issue shall: i. Conduct awareness campaigns through presentations, meetings, road shows etc. jointly with the Book Runners; ii. Ensure that all disclosures as required under the Ordinance and the Appendix 2 of Chapter 5 of the KSE's Rule Book regarding the Listing of Companies and Securities Regulations and Appendix 4 of the Listing Regulations of the LSE & ISE have been made; iii. Ensure that necessary infrastructure and electronic system / software is available to collect bids and to carry out the Book Building process in a fair, efficient and transparent manner; iv. Ensure that they have obtained on behalf of the Issuer, all approvals / consents / NOCs relating to the Issue; v. Publish an advertisement, approved by the Commission, in at least one Urdu and one English daily Newspaper having wide circulation in the Federal and all the provincial capitals, to invite the Institutional Investor and HNWI to participate in the bidding process; and vi. Ensure that the Preliminary Prospectus will, after approval of the Commission, be uploaded on the Book Runner's as well as on the Company's website. The Joint Book Runners to the Issue shall: i. Conduct awareness campaigns through presentations, meetings, road shows etc. jointly with the Joint Lead Managers; ii. Ensure that necessary infrastructure and electronic system / software is available to collect bids and to carry out the Book Building process in a fair, efficient and transparent manner; iii. Collect bid applications and applications' money, security / margin as the case may be, from HNWI and the Institutional Investors in the manner as mentioned in the 14

16 Appendix 2 of Chapter 5 of the KSE's Rule Book regarding Listing of Companies and Securities Regulations, Appendix 4 of the Listing Regulations of the LSE & ISE and place serial number, date and time on each bidding application at the time of collection of the same from the Bidders; iv. Vet the bidding applications; v. Build an order book showing demand for the shares at various prices levels; vi. Determine the strike price at the close of the bidding period; vii. Maintain record of the bids received for subscription of the shares; viii. Use the software for Book Building process developed by KSE, which is based on Dutch Auction Methodology for display of the order book and determination of the strike price, on the terms and conditions as may be agreed in writing between KSE and the Joint Book Runners; ix. For information of the investors, in addition to live display of the order book on the website of KSE, the same order book shall be simultaneously displayed on the websites of LSE, ISE and the Joint Book Runners through a weblink till closing of the Bidding Period; x. Ensure that each bid application contains depository account number of the Bidder, maintained with CDCPL wherein shares shall be credited in case the bid is successful; xi. Not accept multiple bids i.e. more than one bid application by the same person; xii. Enter into an Underwriting Agreement with the Issuer; xiii. Circulate copies of the Preliminary Prospectus cleared by the Exchanges and approved by the Commission along with the bidding forms to a maximum number of prospective Institutional Investors and HNWIs, but not less than 10 in each category, inviting them for participation in the bidding process; xiv. Joint Book Runners have established bid collection centers at the following addresses: Karachi Name: Mr. Umer Habib Direct: PABX: FAX: umer.habib@nextadvisors.com.pk Address: 8 th Floor, Horizon Tower, Plot # 2/6, Block III, Clifton, Karachi Website: Name: Ms. Eliya Hamid Syed Direct: PABX: Ext. 694 Fax: & eliya.hamid@akdsecurities.net Address: 6th Floor, Continental Trade Centre, Block 8, Clifton, Karachi Website: 15

17 Name: Mr. Zubair Elahi Direct: Fax: Address: Room 801, Stock Exchange Building, I.I. Chundrigar Road, Karachi Lahore Name: Mr. Zulqarnain Mahmood Khan Direct: Fax: Address: Office No. 43, A/S Zafar Ali Road, Aziz Avenue, Gulberg V, Lahore Name: Mr. Ehsan Ahmad Qureshi Direct: , & PABX: Fax: Address: Room No. 512/513, 5th Floor, Stock Exchange Building, Lahore Islamabad Name: Mr. Khalid Hussain Direct: PABX: Fax: Address: Office No. 303, ISE Tower, Jinnah Avenue, Blue Area, Islamabad xv. The Book Runners shall ensure that all the Bids received by the bid collection centers are entered into the system developed by the KSE for the purpose of Book Building. As per the criteria dated July 24, 2014 for Book Building issued by SECP, Bids received shall be entered into the KSE's Book Building system till 5:00 pm and no new bid including those received in the bid collection centers shall be entered into the system after 5:00 pm. The bid(s) received / collected shall be entered into the system immediately upon acceptance after vetting. Further, Bidders can withdraw their bids any time till 5:00 pm but after 5:00 pm withdrawal shall not be allowed. However, Bidders can revise their bids any time during the bidding period up to 05:00pm and on the last day of bidding till 07:00 pm. 2.6 OPENING AND CLOSING OF THE BIDDING PERIOD The Bidding Period shall be for two working days.i.e. June 10, 2015 to June 11, 2015 (both days inclusive). The bidding will commence at 09:00 am on June 10, 2015 and will close at 05:00 pm on June 11,

18 BIDDING PROCESS STARTS ON 9:00 AM - JUNE 10, 2015 BIDDING PROCESS ENDS ON 5:00 PM - JUNE 11, ELIGIBILITY TO PARTICIPATE IN BIDDING Eligible investors who can place their bids in the Book Building process are Institutional Investors and HNWIs. Institutional Investors include both local and foreign institutional investors HNWI are individual investors who bid for shares of value of PKR 1,000,000/- (Pak Rupees One Million Only) or above in the Book Building process 2.8 INFORMATION FOR BIDDERS i. The Preliminary Prospectus for issue of shares has been duly cleared by KSE, LSE & ISE and approved by SECP. ii. The Preliminary Prospectus and the bidding forms can be obtained from the Registered Office of Al Shaheer Corporation Limited, AKDS, NCL, and the designated Bid Collection Centers. Preliminary Prospectus and bidding forms can also be downloaded from the following websites of the Book Runners and the Company i.e. and iii. Eligible investors who are interested in subscribing to the Ordinary Shares should approach the Book Runners at the addresses provided in paragraph 2.5 for submitting their Bids. iv. THE BIDS SHOULD BE SUBMITTED ON THE PRESCRIBED BIDDING FORM IN PERSON OR THROUGH FAX NUMBERS GIVEN IN PARAGRAPH BIDDING FORM AND PROCEDURE FOR BIDDING a) Standardized Bidding Form has been prescribed by the Joint Book Runners. Bids shall be submitted at the Bid Collection Centers in person or through fax number given in paragraph 2.5 on the standard Bidding Form duly filled in and signed in duplicate. The bidding 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. b) Upon completion and submission of the Bidding form, the Bidders are deemed to have authorized the Issuer to make necessary changes in the Preliminary Prospectus as would be required for finalizing and filing the Final Prospectus with the KSE, LSE, ISE and the SECP, without prior or subsequent notice of such changes to the Bidders. 17

19 c) The bidding procedure under the Book Building process is outlined below: i. As required under clause 8.8 of Appendix 2 of Chapter 5 of the KSE's Rule Book regarding the Listing of Companies and Securities Regulations of KSE, copy of approved Preliminary Prospectus shall be circulated by the Joint Book Runners to a maximum number of Institutional Investors and HNWIs, but not less than ten in each of the two categories inviting them for participation in the bidding process. Copy of the Preliminary Prospectus will also be placed on the websites of the Company, AKDS and NCL. ii. iii. iv. An advertisement, approved by the Commission, shall be published at least in one Urdu and one English daily newspaper having wide circulation in the Federal and all the provincial capitals, inviting Institutional Investors and HNWIs for participation in the bidding. A Book Building Account shall be opened by the Issuer for collection of the bid amounts. The bid money of all the successful bids shall remain in the respective IPO accounts specifically opened for this purpose till completion of the IPO and issuance of NOC by the concerned stock exchange. The Bidding Form shall be issued in duplicate signed by the Bidder and countersigned by the Book Runner, with first copy for the Book Runner, and the second copy for the Bidder. v. Bids shall be submitted through the bid collection centers or through fax numbers given in paragraph 2.5 on the standard Bidding Form duly filled in and signed in duplicate. The addresses for the bid collection centers are given in paragraph 2.5. vi. vii. viii. ix. Bids can be placed at "limit price" or "step bid". Bid money / margin money shall be deposited through demand draft, pay order in favor of "IPO of Al Shaheer Corporation Limited - Book Building Account". For online transfer the payment shall be made into A/C # being maintained at Summit Bank Business and Finance Center Branch with the Account Title "IPO of Al Shaheer Corporation Limited - Book Building Account". Please note that online transfer facility shall only be allowed for Summit Bank Limited customers. The Joint Book Runners shall collect an amount of 100% of the application money as bid money in respect of bids placed by HNWIs. The Joint 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. 18

20 x. The Joint Book Runners may reject a bid placed by an Institutional Investor / HNWI for reasons to be recorded in writing and the reasons should be disclosed to such Bidder forthwith. Decision of the Joint Book Runners shall not be challengeable by the Bidder or its associates. xi. xii. xiii. xiv. xv. The Joint Book Runners shall not accept the bids made at a bid price lower than the Floor Price. The Issuer and Joint Book Runners shall not accept a bid which is for more than 10% of the Book Building portion except the bids by the associates of the Issuer. Bids from associated persons or other related persons or parties of the Issuer, shall not be accepted for shares in excess of five percent (5%) in aggregate of the size of the Book Building portion. To check this threshold, the Issuer shall provide to the Joint Book Runners and the Joint Book Runners shall obtain from the Issuer a list of associated persons of the Issuer before commencement of the bidding period and the Joint Book Runners shall make sure that the said list has been provided to the employee deployed at the collection centers for collection of bids and entry thereof into the system. The Bidders will receive back the duplicate form upon submission of their bids which will be proof of their bid submission. The Bidders shall not be provided with any receiving if a duly filled duplicate form is not submitted along with the bid. In case of facsimile, a copy of form with receiving will be faxed back to the Bidder. Bidders can revise and / or withdraw their bids during the Bidding Period (for details please refer to paragraphs 2.15 and 2.17). The Bidders shall provide a valid address in the bid form so that the relevant ID, password and form number can be ed to them upon placement of the bid. xvi. The Joint Book Runners shall maintain a record of the bids received / rejected / revised / withdrawn along with identities of the Bidder and evidence of the amount received. xvii. The Joint Book Runners shall ensure that all the bids received by the Bid Collection Centers are entered into the system developed by KSE for the purpose of the Book Building according to the procedure as per clause 8.6 of Appendix 2 of Chapter 5 of the KSE's Rule Book regarding the Listing of Companies and Securities Regulations of KSE and clause 8.6 of Appendix 4 of the Listing Regulations of the LSE & ISE. The system shall be capable to display live an order book, in descending order with respect to the bid price, showing the demand for shares at various prices and accumulative number of shares bid for along with percentage of the total shares offered. The order book should also show the revised bids and the bids withdrawn. 19

21 xviii. xix. xx. xxi. xxii. xxiii. At the close of the Bidding Period, the Issuer, in consultation with Joint Lead Managers and Book Runners shall determine the strike price on the basis of "Dutch Auction Method". Under Clause 8.11 of Appendix 2, where a successful Institutional Bidder defaults in payment of shares allotted, the Margin Money deposited by such Institutional Bidder shall be forfeited to the Book Runner. Successful Bidders shall be intimated, within two (2) working days of the closing of the bidding period, the strike price and the number of shares provisionally allotted to each of them. The successful Institutional Bidders shall, within seven (7) working days of the closing of the bidding period, deposit the balance amount as consideration against allotment of shares. Margin money of unsuccessful Bidders will be refunded within three (3) working days of the close of the bidding period. 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 at the time of issue of shares out of the general public portion (retail portion) of the issue to successful applicants BANK ACCOUNT FOR BOOK BUILDING AND PUBLIC PORTION The Issuer has opened two separate bank accounts for collection of applications' money, one each for the Book Building portion and the General Public portion (retail portion) of the Issue. The Bidders shall draw demand draft or pay order in favor of "IPO of Al Shaheer Corporation Limited - Book Building Account" which has been opened at Summit Bank Limited ("Collection Bank"). The Collection Bank shall keep and maintain the bid money in the said account. The bid money of the successful bids shall remain in the respective IPO accounts specifically opened for this purpose till completion of the IPO and issuance of NOC by the concerned Stock Exchange PAYMENT INTO THE BOOK BUILDING ACCOUNT The Bidders shall draw a demand draft or pay order in favor of "IPO of Al Shaheer Corporation Limited - Book Building Account" or online transfer into the respective IPO account of the Issuer A/C No maintained at Summit Bank 20

22 Limited Business and Finance Centre and submit the demand draft, pay order or evidence of online transfer at the designated bid collection center either in person or through facsimile along with a duly filled in bidding form. For online transfer the payment shall be made into A/C # being maintained at Summit Bank Limited, Business and Finance Center - Account Title: IPO of Al Shaheer Corporation Limited - Book Building Account. Please note that online transfer facility shall only be allowed for customers of Summit Bank Limited. CASH MUST NOT BE SUBMITTED WITH THE BIDDING FORM AT THE BID COLLECTION CENTERS. BID AMOUNT MUST BE PAID THROUGH PAY ORDER, BANK DRAFT OR ONLINE TRANSFER DRAWN / TRANSFER IN FAVOR OF "IPO OF AL SHAHEER CORPORATION LIMITED - BOOK BUILDING ACCOUNT" IN A MANNER ACCEPTABLE TO THE BOOK RUNNER. Since the investors can bid for shares through "Limit Price", or "Step Bid" therefore payment procedure is explained below for these methods 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, if an investor is applying for 0.50 million shares at a price of PKR 50.00/- per share, then the total application money would amount to PKR million. In such a case, (i) HNWIs shall deposit PKR million in the Book Building account as the bid amount which is 100% of PKR million; and (ii) Institutional investors shall deposit at least PKR 6.25 million in the Book Building account as the margin money which is 25% of PKR 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 0.50 million shares at PKR 50.00/- per share, 0.25 million shares at PKR 51.00/- per share and 0.15 million shares at PKR 55.00/- 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 46 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) HNWIs shall deposit PKR 46 million in the Book Building Account as bid amount which is 100% of PKR 46 million and (ii) Institutional investors shall deposit at 21

23 least approx. PKR million in the Book Building Account as margin money which is 25% of PKR 46 million PAYMENT FOR FOREIGN INVESTORS Foreign investors may subscribe using their Special Convertible Rupee Accounts (SCRA), as set out under Chapter 20 of the State Bank of Pakistan's Foreign Exchange Manual Under section 7(i) of Chapter 20, Companies issuing shares out of the new public offers on repatriable basis as permitted under sub para (B)(I) of paragraph 6 may open foreign currency collection accounts with Banks abroad or in Pakistan for receiving the subscription in foreign currency. This may also allow refunds from these accounts to unsuccessful applicants. Foreign investors do not require any regulatory approvals to invest in the shares being offered by the Company. Payment in respect of investment in the shares of the Company has to be made in foreign currency through an inward remittance or through surplus balances in SCRA. Local currency cash account(s) opened for the purpose of Foreign Portfolio Investment (FPI) is classified as SCRA. There are no restrictions on repatriation on sale (disinvestment) and dividend proceeds. Underlying client names/beneficial owners are required to be disclosed at depository level. Key documents required for Individuals are: 1. Account Opening Request 2. Passport / ID General documentation required for opening of SCRA account by Corporate are: 1. Account Opening Request 2. Board Resolution and Signatories List 3. Passport / ID of Board of Directors 4. Passport / ID of all Authorized Signatories 5. Certificate of Incorporation (COI) Equivalent / Supporting Documents: Trade Registry Certificate, Business Registration Certificate, Certificate of Commencement of Business 6. Memorandum and Articles of Association 7. Withholding Tax Registration Certificate / Certificate of Country of Domicile of Client 8. Latest Annual Report 9. List of Board of Directors 10. List of Shareholders (>10% Holdings) and Key Officers It is however pertinent to note that the procedure and requirements of each institution differs, hence it is advised to request the procedure from each relative institution. 22

24 Payments made by foreign investors shall be supported by proof of receipt of foreign currency through normal banking channels. Such a proof shall be submitted along with the application by the foreign investors REVISION OF BIDS BY THE BIDDER The Bidders shall have the right to revise their bids any time during the bidding period up to 05:00 pm and on the last day of bidding till 07:00 pm. Online revision of the bids may be allowed to the Bidders through system software. This will, however, be subject to the condition that the Bidder shall comply with the requirements of bidding as disclosed under Appendix 2 of KSE s Rule Book and any other condition or procedure disclosed in the Preliminary Prospectus REJECTION OF BIDS BY THE BOOK RUNNER In terms of clause 8.4 of Appendix 2 of the KSE s Rule Book and Appendix 4 of the Listing Regulations of the LSE & ISE, the Book Runner may reject a bid placed by an institutional investor / HNWI for reasons to be recorded in writing and the reasons should be disclosed to such Bidder forthwith. Decision of Book Runner shall not be challengeable by the Bidder or its associates WITHDRAWAL OF BIDS BY THE BIDDER A Bidder has the right to withdraw a Bid from the bidding system any time during the Bidding Period till 05:00 pm. Online withdrawal of the Bids may be allowed to the Bidders through system software. This will however be subject to the condition that the Bidder shall comply with the requirements of bidding as disclosed under Appendix 2 of the KSE s Rule Book, Appendix 4 of the Listing Regulations of the LSE & ISE, and any other condition or procedure disclosed in the Preliminary Prospectus WITHDRAWAL OF ISSUE BY THE ISSUER a) According to clause 3.10 of Appendix 2 of Chapter 5 of the KSE s Rule Book, Appendix 4 of the Listing Regulations of the LSE & ISE and the criteria dated July 24, 2014 for Book Building issued by SECP, in case the Issuer does not receive Bids at or above the Floor Price for the minimum number of shares offered, they may withdraw the Issue. The decision of withdrawal shall be taken within a period of not more than three (3) working days from the closing of Bidding Period as required under clause 3.10 of Appendix 2 of Chapter 5 of the KSE's Rule Book. However, if the Issuer decides to go ahead with the Issue then the unsubscribed shares of the Book Building portion shall be made part of the General Public portion (retail portion) and shall be offered to the General Public at the Floor Price, i.e., PKR 43.00/- per share. These shares will be underwritten as per the book building criteria of SECP. The shares subscribed under 23

25 the Book Building portion will also be offered to the applicants at the Floor Price, i.e. PKR 43.00/- per share. b) The Issuer shall withdraw the Issue if the total bids are less than fifteen c) The withdrawal shall be immediately intimated to the Commission and the Exchange(s). d) In case the Issue is withdrawn the Margin Money / Bid money will be refunded to Bidders within three (03) working days of the decision of withdrawal without any markup, interest etc MECHANISM FOR DETERMINING STRIKE PRICE a) At the close of the bidding period, the Issuer, in consultation with the Joint Book Runners shall determine the strike price on the basis of "Dutch Auction Method". Under this methodology, the strike price is determined by lowering the price to the extent that the total number of shares offered is subscribed. b) 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. c) For the purpose of allotment of shares, the limit bid(s) made at the price determined / discovered as Strike Price through the Book Building process shall be ranked equally and preference will be given to the Bidder who has made the bid earlier. d) Once the strike price is determined all those Bidders whose bids have been found successful shall become entitled for allotment of shares. The Bidders, who have made bids at prices above the strike price, will be issued shares at the strike price and the differential, if any, will be refunded. The Bidders, who have made bids below the strike price, shall not qualify for allotment of shares and their margin money shall be refunded. The mechanism for determination of the strike price can be understood by the following illustration: A. Number of shares being Offered through the Book Building: 18,750,000 Ordinary Shares B. Floor Price: PKR 43.00/- per share C. Bidding Period: June 10, 2015 to June 11, 2015 D. Bidding Time: 9:00 am - 5:00 pm E. Bid Withdrawal Time: 9:00 am - 5:00 pm 24

26 F. Bidding Revision Time: Any time during bidding period upto 5:00 pm and on the last day of bidding till 7:00 pm At PKR 52.00/- per share, investors are willing to buy only 4.00 million shares. Since million shares are still available, therefore the price will set lower. At PKR 49.00/- per share, investors are willing to buy 2.00 million shares. Since million shares are still available, therefore, the price will set lower. At PKR 48.00/- per share, investors are willing to buy 4.00 million shares. Since 8.75 million shares are still available, the price will set lower. At PKR 47.00/- per share, investors are willing to buy 4.00 million shares. Since 4.75 million shares are still available, therefore, the price will set lower. At PKR 46.00/- per share, investors are willing to buy 3.00 million shares. Since 1.75 million shares are still available, therefore, the price will set lower. At PKR 45.50/- per share, investors are willing to buy 1.00 million shares. Since 0.75 million shares are still available, therefore, the price will set lower. At PKR 45.00/- per share, investors are willing to buy 1.00 million shares. Since after bidding for 0.75 million shares at PKR 45.00/- per share no shares will be available therefore the strike price will be set at PKR 45.00/- per share for the entire lot of million shares. The Bidders who have placed bids at prices above the strike price (which in this illustration is PKR 45.00/- 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 45.00/- per share, do not qualify for allotment and their money would be refunded. 25

27 After allotment in the aforementioned manner, 0.75 million shares are still available for allotment. These shares will be allotted to Bidders who have placed bid(s) at PKR 45.00/- per share, however for the purpose of allotment of these 0.75 million shares preference will be given to the Bidder who has placed the bid earlier BASIS FOR ALLOTMENT OF SHARES Once the strike price is determined all those Bidders whose bids have been found successful shall become entitled for allotment of shares. For allocation of shares 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 allotted shares at the strike price and the differential, if any, will be refunded. The Bidders, who have made bids below the strike price, shall not qualify for allotment of shares and their margin money shall be refunded. For the purpose of allotment of shares, the bid(s) made at the price determined / discovered as Strike Price through the Book Building process shall be ranked equally and preference will be given to the Bidder who has made the bid earlier. 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 issue of shares out of the public portion (retail portion) of the issue to successful applicants REFUND OF MARGIN MONEY Investors who have bid lower than the strike price are not eligible for allotment of shares. Margin money of the unsuccessful Bidders shall be refunded within three (3) working days of the close of the bidding period as required under clause 8.12 of Appendix 2 of Chapter 5 of the KSE s Rule Book and Appendix 4 of the Listing Regulations of the LSE & ISE. The Bidders, who have made bids at prices above the strike price, will be allotted shares at the strike price and the differential will be refunded within three (3) working days of the closing of the Bidding Period UNDERWRITING After determination of the strike price the Joint Book Runners shall within two (2) working days of the closing of the bidding period enter into an Underwriting Agreement with the Issuer indicating the number of shares that the Joint Book Runners would underwrite at the strike price and the Underwriting Commission / Fee to be charged. 26

28 2.23 PUBLICATION OF FINAL PROSPECTUS The Underwriting Agreements for the public portion shall be finalized within ten (10) working days from closing of the Bidding Period. Upon finalization of the Underwriting Agreements, the Joint Lead Managers shall, within ten (10) working days from the date of closing of the Bidding Period, submit an application to the Stock Exchange for allocation of dates for publication of the Final Prospectus and subscription of shares by the general public. The Final Prospectus in full or in abridged form must be published within seventeen (17) working days of the closing of the Bidding Period in the manner as specified in Section 88(3) & (4) of Securities Act, Public subscription for the shares shall be held at any date(s) within thirty days (30) of the publication of the Final Prospectus but not earlier than seven (7) days of such publication ADDRESSES OF BID COLLECTION CENTERS Bid Collection Centers have been established at Karachi, Lahore and Islamabad to collect the bids for the Book Building portion of the issue by Al Shaheer Corporation Limited in order to provide convenient access to Bidders to participate in the bidding process. Addresses, details of contact persons and fax numbers of the Bid Collection Centers are given in paragraph

29 2.25 STATEMENT BY ISSUER March 27, 2015 The Managing Director Karachi Stock Exchange Limited Stock Exchange Building Stock Exchange Road Karachi The Managing Director Lahore Stock Exchange Limited Lahore Stock Exchange Building 19 - Khayaban-e-Aiwan-e-Iqbal Lahore The Managing Director Islamabad Stock Exchange Limited Islamabad Stock Exchange Tower 55-B Jinnah Avenue Islamabad On behalf of the Company, I confirm that all material information as required under the Companies Ordinance, 1984 and the Listing of Companies and Securities Regulations of the Karachi Stock Exchange Limited, the Listing Regulations of Lahore Stock Exchange Limited and the Listing Regulations of Islamabad 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 Al Shaheer Corporation Limited: -Sd- Kamran Ahmed Khalili Chief Executive Officer 28

30 2.26 STATEMENT BY JOINT LEAD MANAGERS & ARRANGERS March 18, 2015 The Managing Director Karachi Stock Exchange Limited Stock Exchange Building Stock Exchange Road Karachi The Managing Director Lahore Stock Exchange Limited Lahore Stock Exchange Building 19 - Khayaban-e-Aiwan-e-Iqbal Lahore The Managing Director Islamabad Stock Exchange Limited Islamabad Stock Exchange Tower 55-B Jinnah Avenue Islamabad Being mandated as Joint Lead Managers & Arrangers to this Initial Public Offering of Al Shaheer Corporation Limited through the Book Building process, we confirm that all material information as required under the Companies Ordinance, 1984 and Appendix 2 of the Listing of Companies and Securities Regulations of the Karachi Stock Exchange Limited, Listing Regulations of Lahore Stock Exchange Limited and the Listing Regulations of Islamabad 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 Next Capital Limited: -Sd- Muhammad Asif Najmee CFO & Company Secretary For and on behalf of AKD Securities Limited: -Sd- Syed Khurram Shahid SVP / Head Investment Banking 29

31 2.27 STATEMENT BY JOINT BOOK RUNNERS March 18, 2015 The Managing Director Karachi Stock Exchange Limited Stock Exchange Building Stock Exchange Road Karachi The Managing Director Lahore Stock Exchange Limited Lahore Stock Exchange Building 19 - Khayaban-e-Aiwan-e-Iqbal Lahore The Managing Director Islamabad Stock Exchange Limited Islamabad Stock Exchange Tower 55-B Jinnah Avenue Islamabad Being mandated as Book Runner to this Initial Public Offering of Al Shaheer Corporation Limited through the Book Building process, we confirm that all material information as required under the Companies Ordinance, 1984 and Appendix 2 of the Listing of Companies and Securities Regulations of the Karachi Stock Exchange Limited, the Listing Regulations of Lahore Stock Exchange Limited and the Listing Regulations of Islamabad 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 Next Capital Limited: -Sd- Muhammad Asif Najmee CFO & Company Secretary For and on behalf of AKD Securities Limited: -Sd- Syed Khurram Shahid SVP / Head Investment Banking 30

32 PART 3 3 SHARE CAPITAL AND RELATED MATTERS 3.1 SHARE CAPITAL Number of Shares Face Value (PKR) Premium (PKR) Total (PKR) AUTHORIZED CAPITAL 150,000,000 Ordinary Shares of PKR 10/-each 1,500,000,000-1,500,000,000 ISSUED, SUBSCRIBED AND PAID UP CAPITAL OF THE COMPANY 1,500 Issued for Cash: Ordinary Shares of PKR 10/- each 15,000-15,000 2,745,759 Issued for Cash: Ordinary Shares of PKR 10/- each 27,457, ,631, ,088,896 2,193,416 Issued for Cash: Ordinary Shares of PKR 10/- each 21,934, ,571, ,505,211 35,600,341 Issued for Bonus: Ordinary Shares of PKR 10/- each 356,003, ,003,410 26,000,000 Issued for Other than Cash: Ordinary Shares of PKR 10/- each * 260,000, ,000,000 66,541,016 Total 665,410, ,202, ,612,517 Number of Shares Face Value (PKR) Premium (PKR) Total (PKR) THE EXISTING SUBSCRIBED, ISSUED & PAID UP CAPITAL OF THE COMPANY IS HELD AS FOLLOWS: Directors / Sponsors 24,391,768 Kamran Ahmed Khalili 243,917,680 40,665, ,583,280 4,772,501 Naveed Godil 47,725,010-57,725,010 2,150,600 Muhammad Ali 21,506,000-21,506,000 1,554,252 Noorur Rahman Abid 15,542,520 42,805,876 58,348,396 32,869,121 Shares held by Directors/Sponsors 328,691,210 83,471, ,162,687 Sponsors 4,772,501 Shaikh Qaisar 47,725,010 47,725,010 3,673,508 Aftab Zahoor Raja 36,735,080 36,735,080 1,291,036 Rehan Mansoor Khawaja 12,910,360 12,910,360 9,737,045 Shares held by Sponsors 97,370,450 97,370,450 Directors 1,429,885 Adeeb Ahmed 14,298,850 39,380,665 53,679,515 1,075 Qaysar Alam 10,750-10,750 1,075 Rizwan Jamil 10,750-10,750 1,075 Rukhsana Asghar 10,750-10,750 1,433,110 Shares held by Directors 14,331,100 39,380,665 53,711,765 22,501,740 Other Shareholders 225,017, ,350, ,367,616 66,541,016 Total 665,410, ,202, ,612,517 * These shares were issued to various shareholders including two current directors of the Company, Mr. Kamran Ahmed Khalili (9,313,200 Ordinary Shares) and Mr. Naveed Godil (3,242,200 Ordinary Shares) during the financial year 2012 against takeover of the assets of the existing business of firms Messrs Al Shaheer Corporation and Messrs Meat One. Clause 8(iv) of the Companies (Issue of Capital) Rules, 1996 was applicable and the Company complied with all the requirements of the said provision. There has been no issue of share otherwise than in cash other than those mentioned above. 31

33 Present Issue Number of Shares Face Value (PKR) Premium (PKR) The present Issue of 25,000,000 Ordinary Shares (27.31% of the post-ipo Paid-up Capital) having par value of PKR 10.00/- each is being made as under: 18,750,000 Total PKR) Allocation to Institutions / HNWI investors through Book Building process 187,500,000 1,593,750,000 1,781,250,000 at a strike price of PKR 95/- each 6,250,000 General Public 62,500, ,250, ,750,000 25,000,000 Total Present Issue 250,000,000 2,125,000,000 2,375,000,000 91,541,016 Grand Total 915,410,160 2,425,202,357 3,340,612,517 NOTES: i. In accordance with the provision of Clause 3 (II) (i) of the Companies (Issue of Capital) Rules, 1996, the fixed capital expenditure related to poultry and meat processing shall be financed entirely by equity; ii. In accordance with the provision of Clause 3 (II) (ii) of the Companies (Issue of Capital) Rules, 1996, the expansion plan for poultry and meat processing has been appraised by a financial institution; The provision of Clause 3 (II) (iii) of the Companies (Issue of Capital) Rules, 1996 is not applicable as the Company is implementing a brownfield project and not a greenfield project; iii. In accordance with the provision of Clause 3 (II) (iv) of the Companies (Issue of Capital) Rules, 1996, the Book Building Portion will be fully underwritten by AKD Securities Limited and Next Capital Limited, while the General Public portion shall also be fully underwritten; iv. In accordance with the provision of Clause 3 (II) (v) of The Companies (Issue of Capital) Rules, 1996, the Sponsors, in aggregate, shall retain at least 25% of their shareholding in the Company for a period of five years from the date of public subscription; Consequently, the sponsors have undertaken to retain 25% shares collectively from their existing shareholding; v. As per Regulation of the Listing of Companies and Securities Regulations of KSE, Clause 6A(7) of the LSE Listing Regulations & Clause 6B (6) of the ISE Listing Regulations, Sponsors shareholding in excess of 25% shall not be saleable for a period of six months from the date of public subscription. However, the Sponsors have agreed that in order to show their commitment to the long term sustainability of the Company, Sponsor shareholding in excess of 25% will not be sold for at least one (1) year. vi. As per Regulation of the Listing of Companies and Securities Regulations of KSE, Shares held by the Shareholders other than the Sponsors & Directors of the Company shall not be saleable for a period of one (1) year from the date of public subscription; vii. In case the Book Building portion is not fully subscribed and the Issuer decides to go ahead with the Issue, the unsubscribed shares of the Book Building portion shall be made 32

34 viii. part of the General Public portion (retail portion) of the Issue and shall be underwritten at a price offered to the General Public; Quarterly progress reports related to the implementation of Poultry and Meat Processing projects shall be submitted to KSE, LSE, ISE and SECP. 3.1 A ALLOCATION OF SHARES UNDER BOOK BUILDING S.No. Category Number of shares allocated through book building %age 1 Individuals 8,967, % 2 Commercial Banks - 0.0% 3 DFIs - 0.0% 4 Leasing Companies - 0.0% 5 Mutual Funds 499, % 6 Provident/pension funds 118, % 7 Insurance Companies 150, % 8 Others 9,014, % Total 18,750, % 3.2 OPENING AND CLOSING OF SUBSCRIPTION LIST The subscription list will open at the commencement of banking hours on July 27, 2015 and will close on July 29, 2015 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 July 29, In order to facilitate the investors, the Issuer has arranged provision of e-ipo facility through United Bank Limited ("UBL") that is among the Bankers to the Issue. The accountholders of UBL can use UBL net-banking to submit their applications online via link INVESTOR ELIGIBILITY FOR PUBLIC ISSUE a. Pakistani citizens resident in or outside Pakistan or persons holding two nationalities including Pakistani Nationality; b. Foreign nationals whether living in or outside Pakistan; c. 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); d. Mutual Funds, Provident / Pension / Gratuity Funds / Trusts (subject to the terms of their respective Trust Deeds and existing regulations); and e. Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan. 33

35 3.4 FACILITIES AVAILABLE TO NON-RESIDENT PAKISTANI AND FOREIGN INVESTORS Non-resident Pakistani investors and foreign investors may subscribe for the shares being issued through this Prospectus by using their Special Convertible Rupee Account ("SCRA"). For further details please see Chapter 20 of the Foreign Exchange Manual of the State Bank of Pakistan. Under Section 7(i) of chapter 20 of the said Manual, Companies issuing shares out of new public offers on repatriable basis, as permitted under sub para (B) (I) of paragraph 6, may open foreign currency collection accounts with banks abroad or in Pakistan for receiving the subscription in foreign currency. They may also allow refunds from these accounts to unsuccessful applicants. Foreign investors do not require any regulatory approvals to invest in the shares being offered by the Company. Payment in respect of investment in the shares of the Company has to be made in foreign currency through an inward remittance or through surplus balances in SCRA. Local currency cash account(s) opened for the purpose of Foreign Portfolio Investment (FPI) is classified as SCRA. There are no restrictions on repatriation on sale (disinvestment) and dividend proceeds. Underlying client names / beneficial owners are required to be disclosed at depository level. Key documents required for Individuals are: 1. Account Opening Request 2. Passport / ID General documentation required for opening of SCRA account by Corporate are: 1. Account Opening Request 2. Board Resolution and Signatories List 3. Passport / ID of Board of Directors 4. Passport / ID of all Authorized Signatories 5. Certificate of Incorporation (COI) Equivalent / Supporting Documents: Trade Registry Certificate, Business Registration Certificate, Certificate of Commencement of Business 6. Memorandum and Articles of Association 7. Withholding Tax Registration Certificate / Certificate of Country of Domicile of Client 8. Latest Annual Report 9. List of Board of Directors 10. List of Shareholders (>10% Holdings) and Key Officers It is however pertinent to note that the procedure and requirements of each institution differs, hence it is advised to request the procedure from each relative institution. Payments made by foreign investor must be supported by proof of receipt of foreign currency through normal banking channels. Such proof must be submitted along with the application by the foreign investors 34

36 3.5 MINIMUM AMOUNT OF APPLICATION AND BASIS FOR ALLOTMENT OF SHARES OUT OF THE PUBLIC PORTION OF THE ISSUE The basis and conditions for allotment to the general public shall be as follows: a. Application for shares below the total value of PKR 47,500 (PKR 95 x 500 Shares) shall not be entertained. b. The minimum amount of application for subscription of 500 ordinary shares is PKR 47,500 (PKR 95 x 500 Shares). c. 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. d. SUBMISSION OF FALSE AND FICTITIOUS APPLICATIONS ARE PROHIBITED AND SUCH APPLICATIONS' MONEY MAY BE FOREFEITED UNDER SECTION 87(8) OF THE SECURITIES ACT, 2015 e. If the shares offered to the general public are sufficient to accommodate all applications, all applications shall be accommodated. f. If the shares applied for by the general public are in excess of the shares offered to them, the distribution shall be made by computer balloting, in the presence of the representatives of the Exchange in the following manner: i. If all applications for 500 shares can be accommodated, then all such applications shall be accommodated first. ii. iii. iv. If all applications for 500 shares cannot be accommodated then balloting will be conducted among applications for 500 shares only. 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. v. 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. 35

37 vi. vii. 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. g. After the allotment in the above mentioned manner, the balance shares, if any, shall be allotted in the following manner: i. 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 the remaining shares shall be allotted on pro-rata basis. ii. If the remaining shares are not sufficient to accommodate all the remaining applications for at least 2,000 shares, then balloting shall be conducted for allocation of 2,000 shares to each applicant. iii. If the issue is oversubscribed in terms of amount only then the allotment of shares shall be made on the following basis: 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; and Next preference will be given to the applicants who applied for 2,000 shares. iv. After allotment of the shares in the above mentioned manner, the balance shares, if any, shall be allotted on a pro-rata basis to the applicants who applied for more than 2,000 shares. v. Allotment of shares will be subject to scrutiny of the applications for subscription. vi. Applications which do not meet with the above requirements or which are incomplete will be rejected. 3.6 REFUND OF SUBSCRIPTION MONEY TO UNSUCCESSFUL APPLICANTS The Company shall take a decision within ten (10) days of the closure of subscription list as to which applications have been accepted or are successful and refund the money in cases of unaccepted or unsuccessful applications within ten (10) days of the date of such decision, as required under Section 71 of the Ordinance. 36

38 As per sub-section (2) of Section 71 of the Ordinance, if refund as required under subsection (1) of Section 71 of the Ordinance is not made within the time specified therein, the Issuer shall be severally liable to repay the money with surcharge at the rate of 1.5% for every month or part thereof from the expiration of the 15th day and, in addition, to a fine not exceeding PKR 5,000/- and in case of continuing offense to a further fine not exceeding PKR 100/- per day after the said 15th day on which the default continues. Provided that the Issuer shall not be liable if it is proved that the default in making the refund was not due to any misconduct or negligence on its part. 3.7 ISSUE AND DISPATCH OF SHARE CERTIFICATES The Company will dispatch share certificates to successful applicants through their Bankers to the Issue or by crediting the respective Central Depository System ("CDS") accounts of the successful applicants within thirty (30) days of the close of public subscription as per Listing of Companies and Securities Regulations of the KSE, LSE & ISE. Shares will be issued either in scrip-less form in the CDS of CDCPL or in the shape of physical scripts on the basis of option exercised by the successful applicants. Shares in the physical scripts shall be dispatched to the Bankers to the Issue within thirty (30) days from the date of close of subscription list, whereas scrip less shares; shall be directly credited through Book entry in the respective accounts maintained with the CDCPL. The applicants who opt for receipt of shares in scrip-less form in CDS should fill in the relevant columns of the Application Form. In order to exercise the scrip-less option, the applicant(s) should have CDS account at the time of subscription. If the Company defaults in complying with the above requirements, it shall pay the Stock Exchanges a penalty of PKR 5,000/- per day for every day during which the default continues. The name of the Company will also be notified to the TRE Certificate holders of the Stock Exchanges and placed on the web site of the Stock Exchanges. 3.8 TRANSFER OF SHARES i. PHYSICAL SHARES Under the provisions of Section 77 of the Ordinance, the Directors of the Company shall not refuse to transfer any fully paid share unless the transfer deed is, for any reason, defective or invalid or is not accompanied by the relevant share certificate. Provided that the Company shall within thirty (30) days from the date on which the instrument of transfer was lodged with it, notify the defect or invalidity to the transferee who shall, after the removal of such defect or invalidity, be entitled to re- lodge the transfer deed with the Company. 37

39 ii. TRANSFER UNDER BOOK ENTRY SYSTEM The shares maintained in the CDS in the Book entry form shall be transferred in accordance with the provisions of the Central Depositories Act, 1997 and the CDCPL Regulations. 3.9 SHARES ISSUED IN PRECEDING YEARS S.No No. of Shares Issued Par Value Premium (PKR) Per Share Consideration Total Amount including Premium(PKR) Date of Issue Cash 15, Jun ,000, Other than Cash * 260,000, Jun ,745, Cash 190,088, Dec ,193, Cash 159,505, Feb ,600, Bonus 356,003, Feb-15 Total 66,541, ,612,517 * These shares were issued to various shareholders including two existing directors of the Company Mr. Kamran Ahmed Khalili (9,313,200 ordinary shares) and Mr. Naveed Godil (3,242,200 Ordinary shares) during the financial year 2012 against takeover of the assets of the existing business of firms Messrs. Al Shaheer Corporation and Messrs. Meat One. Clause 8 (iv) of the Companies (Issue of Capital) 1996 was applicable and the Company complied with all the requirements of the said provision. There has been no issue of shares otherwise than in cash other than those mentioned above. Other than the above mentioned shares, there has been no issuance of shares since the incorporation of the Company PRINCIPAL PURPOSE OF THE ISSUE The proceeds of the IPO will be utilized for the following: Poultry Business & Meat Processing Factory Extension of Retail Network Working Capital A. Poultry Business & Meat Processing Factory Poultry is one of the largest agro based sectors of Pakistan and a major source of protein consumption in the country. It is cheap, widely available and has grown at an annual rate of 12% with a turnover of Rs. 700 billion. The Company aims to establish a fully vertically integrated poultry enterprise, from the hatchery to final production at Bedeyan road, Lahore. These will be set up along modern lines comprising an automated chicken processing plant. Once processed into various cuts, the meat will be supplied to their existing network of retail shops, distributed to modern trade as frozen meat and sent to the Company s further processing plant for value addition at Bedeyan road, Lahore. The aim is to achieve cost efficiencies that will eventually translate into improve profitability and shareholder value. The project implementation schedule is given below. Commercial production is expected in FY17. 38

40 Project Milestones Jul-15 Aug-15 Sep-15 Oct-15 Nov-15 Apr-16 Jan-17 Mar-17 Apr-17 Jun-17 Land Purchase Design & Drawing Approval for Construction Ground Breaking Purchase of Equipment Arrival of Equipment Completion of Installation Trial Production Commercial Production The Plant (storic chicken slaughter line) will be imported from the Netherlands and will be brand new. Total electrical load will be 500KVA including cold room and freezers. The Plant will have a capacity of 5,000 birds per hour. The Company has SGS Halal and Jama Mansoora Lahore Certification. The Company is also planning to establish a meat processing facility that will produce frozen, ready to cook products. These products will have a one year longer shelf life and will be distributed across the chain of retail shops and super markets throughout the country. Processed meat is a volumetric business just like fresh meat retail but with significantly higher margins. The overall cost of both projects is given below: Poultry and Meat Processing Plant Cost in PKR Land 8 5,000,000 per acre 40,000,000 Construction PKR 1,500 per sq 50,000 sq feet 75,000,000 Stork Chicken Slaughter Line (5000 birds per hour) - Already Purchased 60,000,000 Blast Freezer 50,000,000 Spiral Freezer 20,000,000 Air Chilling System 10,000,000 Cold Rooms 10,000,000 Plant Design 5,000,000 Plant Installation 15,000,000 Miscellaneous 10,000,000 Total Cost for Poultry Business 295,000,000 Total cost of Meat Processing Plant 85,000,000 Working Capital 200,000,000 Total Cost 580,000,000 B. Extension of Retail Network The Company is in the process of expanding its retail network in Karachi, Lahore and Islamabad to have a strong nationwide presence. The Company plans to open 35 retail outlets / store-within-store under the brand names of Meat One and Khaas. Retail Network Expansion Cost in PKR Furniture & Fitting, Equipment & Misc. Per Outlet A 5,728,570 No. of Outlets to be Opened B 35 Total Cost for Network Expansion A * B 200,500,000 39

41 C. Working Capital PKR million will be used to fulfill short term working capital requirements Particulars Amount (PKR) Investment in Poultry & Meat Processing Plant 580,000,000 Extension of Retail Network 200,500,000 Working Capital 294,500,000 Total 1,075,000,000 The break up of funds utilized above has been based on full subscription at the Floor Price of PKR 43 per share. Any excess funds received due to full subscription above the Floor Price will be utilized towards meeting further working capital requirements, as required over time 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 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 terms of the provisions of the Ordinance. The Directors may from time to time pay to the members such 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 Ordinance. 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 Shares Subscription Form under the heading, "Dividend Mandate Option" ELIGIBILITY FOR DIVIDEND The 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. 40

42 3.14 DEDUCTION OF ZAKAT Income Distribution will be subject to deduction of Zakat at source, as may be applicable from time to time (except where the 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: 3.16 WITHHOLDING TAX ON DIVIDENDS Tax Rate Holding Period of Securities Sr No Tax Year Less than 12 Months Dividend distribution to shareholders will be subject to withholding tax under section 150 of the Income Tax Ordinance, 2001 specified in Part 1 Division III 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: (a) For Filer of Income Tax Returns: 10.00% (b) For Non-filer of Income Tax Returns: 15.00% More than 12 months and less than 24 months More than 24 months % 10% 0% 3.17 INCOME TAX Income from local sales is taxable under Normal Tax Regime (NTR). Applicable tax rate is 33%. Income Tax on export sales is taxable at 1% under the Final Tax Regime (FTR) DEFERRED TAXATION Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of the taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that is probable that taxable profits will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilized. 41

43 As of audited accounts of 1HFY15, the Company has Deferred Tax Asset of PKR 17,774,901/ SALES TAX Local sales are exempt as per Sixth Schedule of the Sales Tax Act, All exports are taxable at zero percent SINDH SALES TAX ON SALE/PURCHASE OF SHARES Under the constitution of Pakistan and Articles 49 of the 7th NFC Award the Government of Sindh has promulgated the Sindh Sales Tax on Service Act, 2011 (Sindh Act No. XII of 2011) (the Act) which has taken effect from July The Sindh Revenue Board Constituted under the Act (Sindh Act No. XI of 2010) administers and regulates the levy and collection of the Sindh Sales Tax ("SST") on the taxable services provided or rendered in Sindh. 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 under section 41(1) of the Sindh Sales Tax Rules, 2011, dated 30th June 2011 The Second Schedule of the Act levies a sales tax on Brokerage at the rate of 15%. The sales tax is withheld as per the requirements of Sindh Sales Tax Special Procedure (Withholding) Rules, CAPITAL VALUE TAX (CVT) ON PURCHASE OF SHARES Pursuant to amendments made in the (Finance Act, 1989) through Finance (Amendments) Ordinance, 2012 promulgated on April 24, 2012, 0.01% Capital Value Tax will be 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 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 the tax credit. 42

44 3.23 TAX CREDIT FOR ENLISTMENT Under Section 65C of the Income tax Ordinance, 2001, tax credit at 15% of the tax payable shall be allowed for the tax year in which a Company is listed on a Stock Exchange in Pakistan TAX ON BONUS SHARES As per section 236M of the Income Tax Ordinance 2001, tax at the rate of 5% of the value of bonus shares determined on the basis of the day end ex-price on the first day of book closure shall be collected by the Company issuing the bonus shares, which will be the final tax liability on such income of the shareholder JUSTIFICATION FOR PREMIUM Strong Growth in Sales The Company has been able to grow value and volume sales by a 4 year CAGR of 35% and 17% respectively. This has been due to the Company s ability to increase its presence in export markets as well as locally through its branded retail network. Going forward, this strong volumetric and value growth in sales is expected to continue due to launching of new outlets in the local market and increased market share in the global meat trade by capturing market share in existing markets and entering new markets such as Egypt, Iraq and China. 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, ,443 3,103 2,799 2,186 1, ,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 - Sales (PKR Mn) Sales (CPD) - RHS Non-Cyclical Business Exports Segment Al Shaheer operates a diverse set of business segments, namely Exports, Retail, and Institutional Sales. Al Shaheer exports fresh meat to its international customers such as LULU Supermarkets, Carrefour, Fatima Supermarkets etc., based primarily in the Middle East, throughout the year and the export business, which has a 77% approx contribution to the Company s topline, has witnessed very little or no seasonal impact on the top line since the commencement of operations in Likewise, the demand for Pakistani beef 43

45 and mutton has grown 1 through the years and the Company is well positioned to capitalize on this growing demand. Likewise demand for Pakistani beef and mutton has grown by approximately 20% in 2013 and 12.5% in Retail Segment The local market does witness some cyclical trends post Eid-ul-Azha as meat buying falls due to the sacrifice meat stored with households. However, the impact on the Company s local retail business is minimal due to the introduction of Qurbani Services by our local retail brand. Qurbani Segment Qurbani service enables customers to delegate their sacrifice to Al Shaheer, and while it offers customers peace of mind in terms of quality and value for money, it also enables the Company to generate positive cash flows ahead of the regular market slow down, effectively balancing off any cyclical impacts. The Qurbani service has been very successful with more and more customers choosing to avail the services every year since its launch in The service is being provided in Karachi, Lahore and Islamabad US Dollar Hedge Particulars FY12 FY13 FY14 No of Qurbani Portions Ordered 2,648 3,339 3,830 Average Price per Portion 14,993 15,574 18,277 Revenue (PKR mn) Gross Profit (PKR mn) Gross Margin 25% 29% 33% Almost 77% of the Company s revenue is denominated in US dollar. This offers a very viable hedge against the devaluation of Pakistani Rupee vis-a-vis the US dollar, which has been an almost continuous trend for the past several years as shown below. Historically, the Rupee has devalued 8.6% against US $ per annum for the past 7 years Established Supply Chain FY08 FY09 FY10 FY11 FY12 FY13 FY14 CAGR PKR:USD % Al Shaheer has established a strong supply chain to supply both the local and export markets. For the cattle, the Company has strong ties with professional cattle buyers who visit cattle markets and buy live cattle for us through procurement arrangements. Additionally, they have their own team of dedicated cattle buyers as well. These buyers purchase cattle generally a couple of days before the animals are slaughtered for both divisions and are regularly monitored regarding their performance

46 Over the years emphasis during the past few years has been to reduce dependence on external suppliers and almost 45% of the buying activity is conducted by the Company s in-house procurement teams who are strategically stationed near various cattle markets and have access to quality cattle in large numbers. In order to ensure health and quality of the cattle, the Company employs trained procurement personnel who are experienced to identify the right vendors for quality and health checks. Slaughtering and processing of cattle is done in the Company owned slaughtering house situated Gadap Town, Karachi, Sindh. The meat is processed in various cuts, as per the customer requirements and thereafter is transported to the cargo pick up depots of major airlines such as Emirates and PIA. Agreements with Emirates and PIA allow the company to seamlessly export meat on a daily basis. LULU Supermarkets and Carrefour are two of the leading buyers in the export segment and the Company has had a long relationship with both parties for the supply of meat. For local sales, fresh meat is transported via road on a daily basis to established retail outlets of Meat One and Khaas. Currently, the retail strength is 32 outlets which will be expanded in the coming years to have stronger nationwide presence. Remains of the cattle are disposed locally via the Company s own supply chain stakeholders Experienced and Dedicated Management The Company has a team of dedicated and ambitious individuals, working with an unflinching commitment to deliver results and value to customers. They are well versed in managing the challenges of the meat business and have honed their skills and knowledge of the meat sector through the years. They have intimate knowledge of the challenges and opportunities associated with the country s meat sector and most of the executives have studied at the nation s premier business schools and have sound business acumen. Additionally, the experienced Board plays a vital role in representing the interest of the shareholders. They have extensive experience in their respective sectors and continue to invest their expertise with the Company. 45

47 Growth Initiatives Export Segment For exports, the Company is actively seeking out new markets for their products including Egypt, Iraq and China being few of such markets. A delegation from Egypt had visited Pakistan in May 2014 to inspect various abattoirs in the country and Al Shaheer was recently approved for export to Egypt. The country imported meat to the tune of 240,000 MT CWE in 2014, a bulk of which was imported buffalo meat from India. Pakistani Beef can become a viable alternative to Indian Buffalo meat for the Egyptian consumer as the former is better in terms of quality. Retail Segment In addition to the export markets, there is immense business potential in the local meat sector as well. Pakistan's goat meat consumption of 779,000 tons in ranks it among the top 3 in the world. 1.7 million tons of beef consumption in Pakistan is ranked 9th amongst beef consuming nations. In addition, 834,000 tons of poultry meat consumption puts it among the world's top 20. Although meat consumption in Pakistan is rising, it remains very low by world standards. At just 18 Kg per person per annum, it is less than half of the world average of 42 Kg per capita meat consumption reported by the FAO. To cater to this growing local demand the Company expects to retail outlets nationwide as well as partner with 3 rd party retailers to increase their presence Discount to Peer Group Based on valuation multiples of listed consumer companies in Pakistan, at a price of PKR 95/- share, the Company is at a discount to its peers. Key Financials (FY2014) EFOODS NATF NESTLE UPFL Peer Group Average ASCL Year End Dec-14 Jun-14 Dec-14 Dec-14 Jun-14 Total Equity (PKR mn) Profit for the year (PKR mn) Total Shares OS (mn Shares) * Book Value per Share Annual EPS (PKR) Closing Price (as of 23rd June'15) , , P / E (x) P / B (x) *Number of shares outstanding as at year end Jun-14 have been used for comparability. Pre-IPO shares were 66.5 million 46

48 PART 4 4 UNDERWRITING, COMMISSION, BROKERAGE AND OTHER EXPENSES 4.1 UNDERWRITING BOOK BUILDING PORTION AKD Securities Limited and Next Capital Limited have been mandated as the Joint Book Runners to the Issue. The Joint Book Runners will underwrite the Book Building portion of the Issue which comprises of 75% of the 25,000,000 Ordinary Shares within two (2) working days of the closing of the bidding period as required under Clause 5 of Appendix 2 of the Listing of Companies and Securities Regulations of KSE, Appendix 4 of the Listing Regulations of the LSE & ISE at the strike price determined through the Book Building process. In the opinion of the Directors, the resources of the Underwriters are sufficient to discharge their underwriting commitments / obligations. PUBLIC PORTION As required under Clause 6 of Appendix 2 of the Listing of Companies and Securities Regulations of KSE, Appendix 4 of the Listing Regulations of the LSE & ISE and rule 4(iii) of the Companies (Issue of Capital) Rules, 1996, the General Public portion of the Issue, 6,250,000 Ordinary Shares has been underwritten as under: Name of Underwriter Number of Shares Underwritten Amount Underwritten (PKR) Pearl Securities Ltd 3,150, ,250,000 Pak Oman Investment Company Limited 1,050,000 99,750,000 Soneri Bank Limited 1,000,000 95,000,000 Summit Bank 1,050,000 99,750,000 Total 6,250, ,750,000 If, and to the extent the Ordinary Shares underwritten are not subscribed and paid for in full by the closing date for the public subscription, the Underwriters in terms of the underwriting agreements will, within 10 working days of being called upon to do so by the Company, (i) subscribe and take up against full payment in cash or (ii) procure subscribers to subscribe and take up against full payment in cash, the shares remained unsubscribed subject to the maximum number of the shares underwritten by each of them. In opinion of the Directors, the resources of the Underwriters are sufficient to discharge their underwriting commitments. 47

49 4.2 UNDERWRITING COMMISSION BOOK BUILDING PORTION The Joint Book Runners will be paid underwriting commission at the rate of 0.25% of the Book Building portion of the Issue. PUBLIC PORTION The Underwriters will be paid an underwriting commission of 1.50% of the amount underwritten by them. In addition, a take-up commission of 1.50% shall be paid to the underwriters on the value of shares taken up by them by virtue of their respective underwriting commitments/obligations. 4.3 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 PUBLIC ISSUE. ALSO, NEITHER THE COMPANY NOR ANY OF ITS ASSOCIATES HAVE ENTERED INTO ANY BUY BACK / RE-PURCHASE AGREEMENT WITH THE UNDERWRITERS OR THEIR ASSOCIATES. THE COMPANY AND ITS ASSOCIATES SHALL NOT BUY BACK/RE-PURCHASE SHARES FROM THE UNDERWRITERS AND THEIR ASSOCIATES. 4.4 COMMISSION TO THE BANKERS OF THE ISSUE Commission at the rate of 0.50% 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 public issue, plus out-of-pocket expenses, if any. 4.5 BROKERAGE For this Issue, brokerage shall be paid to the TRE Certificate Holders of KSE, LSE and ISE at the rate of 1.00% of the value of shares (including premium if any) on successful applications of both Book Building and General Public Subscription. No brokerage shall be payable in respect of shares taken up by the Underwriters by virtue of their underwriting commitments. 48

50 4.6 ESTIMATED EXPENSE OF THE ISSUE Expenses to the issue are estimated not to exceed PKR 63,586,084/- based on Floor Price. The break-up of these preliminary expenses is given below: Expenses to the Issue Rate Amount (PKR) Underwriting Commission - Book Building* 0.25% 2,015,625 Underwriting Commission - General Public 1.50% 4,031,250 Take-up Commission - General Public 1.50% 4,031,250 Commission to Bankers to the Issue - General Public 0.50% 1,343,750 Commission to Bankers to the Issue - Book Building 2,500,000 Bankers to the Issue - Out of Pocket 285,000 TREC Holders of the Stock Exchanges 1.00% 10,750,000 Book Runners Fee 0.75% 6,046,875 Lead Management & Arrangement Fee 2.00% 21,500,000 Printing, Publication of Prospectus / Application Forms 3,000,000 KSE Listing Fee & Charges: LSE Listing Fee & Charges: ISE Listing Fee & Charges: - Initial Listing Fee 831,410 - Annual Listing Fee 441,190 - Service Charges 50,000 - Initial Listing 831,410 - Annual Listing 226,914 - Service Charges 50,000 - Initial Listing 831,410 - Annual Listing 65,000 - Service Charges 10,000 KSE Software Charges for Book Building 500,000 CDC Annual Fees for Eligible Security 150,000 CDC Fresh Issue Fee 0.16% 1,720,000 SECP Application & Processing Fees 200,000 Legal & Professional Charges 1,000,000 Balloters & Share Registrar Fees etc. 175,000 Miscellaneous Costs 1,000,000 Total 63,586,084 * These amounts represent the maximum possible costs under these heads based on Floor Price 49

51 PART 5 5 HISTORY AND PROSPECTS OF THE COMPANY OVERVIEW 5.1 COMPANY HISTORY Al Shaheer Corporation Limited is a household name in Pakistan s burgeoning formal meat industry and is the only player in the formal meat industry with its own branded retail network. The Company was Established in 2008 as a partnership and converted into a private limited company on 29 th of June 2012 with registered office at G5/5 3 rd Floor, Mansoor Tower, Block-8 Shahrah-e-Roomi, Clifton, Karachi. The Company s vision is to become a global leader in the halal food sector, the Company has grown from humble beginnings into a company that occupies a leading position as a fresh meat exporter and retailer in Pakistan. Responding to increased consumer demand for halal meat products, the Company serves a wide range of customers, both internationally and domestically. The Company exports fresh beef and mutton to some of the largest distributors in the Middle East and operates a nationwide network of meat shops, retailing fresh beef, mutton, poultry and ready to cook products of the highest quality that consumers know and trust. The Company s meat processing facility is HACCP certified, which mandates strict monitoring of each step of the food production process in order to control major food risks such as microbiological, chemical and physical contaminants. HACCP has been endorsed by leading international bodies such as the National Academy of Science and Codex Alimentarius as the best process control system available today. In addition to this, the slaughtering facility has been audited and approved for export by delegations from Saudi Arabia and UAE after they were fully satisfied with the systems and quality controls at the Company s abattoir. ASC also has a team of dedicated and trained veterinarians that are tasked with maintaining quality assurance standards at the facility. With more than 550 plus employees and US$ 45 million in annual revenue, operations are conducted in 3 business segments: Meat Exports, Meat Retail, Institutional Meat Sales and a subsidiary company recently incorporated Al Shaheer Farms (Pvt.) Limited. The Company has achieved a CAGR of 27% in the past 5 years in terms of revenue and is in the process of rapidly expanding its corporate footprint. Mission Statement To become a GLOBAL LEADER in the FOOD INDUSTRY by providing HALAL and HYGIENICALLY processed products to MANKIND. Vision Statement The Company s vision is to become a leader in the global halal meat trade. 50

52 From a family business to a national corporation, the Company stands committed to serve the needs of its customers and exceed their expectations. Key Milestones 1. The Company was established in 2008 with a vision to become a leading exporter of Halal meat from Pakistan. Started exporting to UAE. 2. Annual revenues grew at a steady pace reached at USD 5 million approx and the Company witnessed significant financial growth by The Company expanded into new markets in the Middle East by Turnover reached USD 14 Million approx. Received the ISO 9000 certification and received an award for export performance from Federation of Pakistan Chambers of Commerce & Industry (FPCCI) the same year. The Company introduced its retail meat brand, Meat One in Karachi, Pakistan. 4. The Company went on to become one of the largest meat exporters (USD 23 million out of USD 150 million of total meat exports from Pakistan) from Pakistan by Annual turnover reached USD 23 Million. The Company began exporting fresh meat to Bahrain, Kuwait and Qatar. Achieved ISO certification and received an award for best export performance for the year from FPCCI. 5. Annual turnover approached USD 29 Million by The Company was awarded Halal Food Certification from SGS Pakistan. Hosted audits for the Saudi Food Authority (SAFDA) of the abattoir in an effort to gain access to the Saudi Arabian market. 6. The Company was cleared to export to Saudi Arabia in Annual turnover increased to USD 32 million. Major meat distributors of Saudi became company s customer. 7. In 2014, the Company further penetrated into Saudi market. The annual turnover increased to USD 45 million. A new local brand, catering to the mass market segment was launched with the name of Khaas the same year. The Company expanded its retail presence and opened outlets in Lahore and Islamabad. Awards and Certifications Al Shaheer Corporation Limited has received the following awards and certifications: Certifications: Al Shaheer currently possesses municipality licenses to export meat to some of the most lucrative markets in the region, including Dubai and Saudi Arabia. ISO 9001:2008 QMS ISO 9001:22000 FSSC HACCP PS 3733:2013 JAKIM Halal Certificate 51

53 Awards: The Best Export Performance Awards in 2009, 2010, 2012 and 2013 and 2014 in the category of fresh and frozen meat from the FPCCI. The Safe Food 2009 and Safe Food 2010 award by URS, for quality and hygiene of its products and systems. The award has brought Al Shaheer in the list of quality food manufacturers like Unilever and Nestle. The Best Emerging Brand of the Year 2009 award by the Exhibitor (Pvt.) Ltd. Business Divisions and Product Overview Export / Slaughter House The export division is the primary segment of the Company, comprising 77% approx of the topline in The Company is certified to export fresh meat to some of the largest regional markets in the Middle East. For the export business segment, the Company sources local cattle and slaughters them at its state of the art abattoir. The meat carcasses are transported in specially designed refrigerated trucks from the factory to the airport and subsequently delivered to international clients via air freight as per their orders and requirements. The Company presently exports to UAE, Bahrain, Oman, Kuwait and Saudi Arabia. 4,000 3,500 3,000 2,500 2,000 1,500 1, Export Sales PKR Mn The fresh beef and mutton exports end up at some of the largest stores in the Middle East, including LULU and Carrefour in Dubai. The Company s abattoir has been inspected and approved for export by inspection teams from the UAE, Saudi Arabia and Egypt and is ISO 9001:2000, ISO 9001:22000 and HACCP certified. Apart from the existing capacity to send chilled and fresh meat via air freight to international clients, the Company added a deboning facility along with blast freezers to the abattoir. The Company can now export bone less, frozen meat via sea to major regional markets as well. The daily slaughtering capacity stands at 60 tons for beef and 80 tons for mutton, while actual capacity utilization was 24 tons for beef and 6 tons for mutton respectively in The spare capacity will be used to serve requirements of new customers. 52

54 Meat One Meat One is a chain of specialty meat shops, introduced in 2010, after Al Shaheer saw immense potential for modern and upscale butcher shops in a country where 95% of the meat is sold through the wet market or road side butchers. Meat One represents a paradigm shift in Pakistan s meat sector and seeks to fully tap into a market segment that actively seeks a hassle free and pleasant meat buying experience along with consistent quality. Meat One provides quality meat with live butchery, and offers convenience via its pre-packs while also offering marinated/ ready to cook products. Meat One is present in Karachi, Lahore and Islamabad with plans to open outlets in other parts of the country as well. Khaas Khaas was introduced in 2013 and is the Company s second retail brand aimed at the mass market. Each Khaas outlet is custom designed and like Meat One, offers a clean and pleasant meat buying experience. As a mass brand, the prices at the shop are extremely competitive and almost at par with prevailing market rates for beef, mutton and chicken. Khaas Meat stores are present in Karachi and Lahore with nationwide presence planned in the near future. Institutional Selling - B2B The Company s institutional selling division serves local clients with bulk orders at cost efficient rates. These clients range from multinational corporations and hospitals to caterers and renowned restaurants that are looking for a one stop solution for their meat procurement requirements. Notable clients include the Aga Khan University Hospital, Abbot Pharmaceuticals, Pakistan Navy, Pizza Hut and Johnny Rockets. Al Shaheer Farms Al Shaheer Farms (Private) Limited (incorporated in March 2015) will be an integral part of the Company s plan to vertically integrate its supply chain. The plan is to set up Pakistan s largest feedlot fattening farm in Thatta District, Sindh incorporating technology and best practices in farm management to raise cattle specifically for the purpose of obtaining meat. Eventually, the plan is to scale the farm and raise 8000 cattle heads every year for high quality production of beef. The livestock industry in Pakistan is very fragmented and age old. Livestock has been mostly pursued by small farmers to meet their needs of milk, meat, eggs, food security and cash income on daily basis. These farmers often bring their animals to cattle markets to sell them for cash on a need basis. Thus, these cattle markets become selling points where 53

55 professional cattle traders buy cattle and then sell them to third parties including abattoirs and local butcher markets. The biggest drawback of this fragmented model is that the animals that are brought to these markets are not reared for beef production. They do not have a lot of muscle mass and are not ideal for the beef market. Likewise, the meat yield from these animals is insufficient. To counter this, an intensive feeding operation is required that specializes in raising animals for beef production. In this model, the cattle will be brought to the farm, in this case Al Shaheer farms, through traditional means: either by a livestock trader, or purchased directly from the farmer. The cattle will be kept in the farms for a period of 90 days, where it will be fed hi-energy diet in order to increase sellable meat with in the animal and increase meat yield. The resulting animal would be beefier with better meat quality. Once the animal is fattened, also called the finished cattle, it will be sent to the Company s abattoir to be slaughtered and for subsequent sale to either the local or export markets. The farm will operate as a for-profit entity, with money made equaling to the difference in the amount of sellable meat obtained minus the cost of feed. In other words, the profit per animal will be equal to the value of the finished cattle minus the total cost. Cost includes price of the cattle, feed cost, labor, and veterinary fees, fixed charges for buildings and equipment and death loss. It is expected that with this feedlot, Al-Shaheer will be able to get meat producing animals of adequate size, required for specialized cuts and charge premium prices for its quality meat, which would enhance profitability of the Company. Employment for the local community will be created in the feedlot and additional jobs would also be created at the retail level. Simultaneously, livestock farmers in the surrounding areas will have access to a more consistent buyer offering better price (compared to open market sales) for improved breed of livestock and enabling them to increase their income. On the other hand, Al-Shaheer will also source various types of commodities, such as maize, rice polish, molasses etc. at the feedlot. These commodities will have to be procured from the local community, thereby creating a market for these products. 5.2 PRODUCTS Fresh and chilled beef (both boneless and bone in) from cattles for export and local markets Fresh and chilled Mutton and Lamb for both local and export market with export weight range of 8-12 kg in both fresh and frozen categories Camel Meat for export as per orders in both fresh and frozen categories Fresh chilled and Frozen Raw fish Range of Maintained and ready to cook meat items 54

56 5.3 EXPORT MARKET SIZE & OPPORTUNITIES Meat export from Pakistan grew by 9.5% in fiscal year , reaching a record high of USD 230 million and there is plenty of evidence to suggest that there is further room for growth. According to data from the Pakistan Bureau of Statistics, halal meat exports have grown at a compound annualized growth rate of 29.1% from USD14 million in 2003 to USD 230 million in FY The bulk of this export is red meat, especially beef. The Company would like to consolidate its position in its existing export markets and actively seek approvals to export to other regional markets, such as Malaysia, China, Egypt and Russia. 5.4 LOCAL MARKET SIZE & OPPORTUNITY The Company s local brands, Meat One and Khaas, operate in an industry that is regularly challenged by disease, poor quality standards an uncertain regulatory and tax environment and a retail market where 95% of the meat is sold through the wet market or road side butchers. Both brands represent a paradigm shift in Pakistan s meat industry as the concept of an upscale specialty meat shop is very novel relative to local standards. Traditionally, the road side butcher has held the lion s share of the local meat market. Consumers in Pakistan are becoming aware and wary of the blatant lack of hygiene and cleanliness at these road side shops and are willing to adopt an alternative. However, they have limited choice at the moment. Meat One and Khaas both seek to fully tap into this market segment, one that is actively seeking a hassle free and pleasant meat buying experience along with consistent quality. The Company s marketing efforts are geared towards SEC (Socio Economic Class) A and B. According to research, 9% of Pakistan s population falls under the SEC A segment, while 12% falls under the SEC B classification. The local market size for Meat One and Khaas can be estimated taking into account the following market size: SEC Group Total Population Per Capita Availability Market Size (Volume in Kgs) Market Size (Value) in PKR Market Size (Value) in $ A million million billion 1.1 billion B 21.5 million million billion 1.4 billion Total millions Kg million billion 2.5 billion Given the afore-mentioned market size, local brands have room for exponential revenue growth. In order to capitalize on this, the Company is actively seeking to expand into urban centers of the country, by opening additional retail shops at prominent locations

57 5.5 RISK FACTORS Supply Chain Disruption for Export Markets Potential bottlenecks can incur during transportation via air due to reduction in number of flights to the Middle East. The Company has established relationships with various airlines for their cargo capacities so that if one airline is unable to deliver the products, the product can be shifted to another airline. Also, any product which cannot be exported due to limited available air transport capacity can be directed to retail outlets for local sales Competition Competition from other players both in the export and local markets can potentially squeeze margins. In the export markets, Pakistan s close proximity to the Middle Eastern market provides it an advantage over other countries. Plus, since 50% of the agriculture GDP is contributed by livestock, Pakistan is competitive in terms of pricing and quality which allows the Company to export good products at a competitive price. In the local markets the Company is providing better quality and hygienic meat with add on services such as free home delivery. The retail outlets are also strategically located for ease of purchase for the customers. Additionally, the Company is also introducing an increased range of products including marinated meats and processed meats to enhance their brand equity and customer retention Livestock Disease Outbreak of livestock disease can negatively impact the Company s supply chain and demand for products, especially in the international markets. The Company is in the process of vertically integrating so as to have its own supply of cattle, with strict quality controls so that supply is not disrupted in the event the local cattle market is infected with a disease. Additionally, the Company is looking to increase its revenue share from local market sales, so as to reduce dependence upon the export market Trade Barriers Imposition of ban on meat exports by Pakistan government or trade barriers by countries which are primary markets for export sales. 56

58 The Company is in the process of increasing its footprint in the export markets so that it is not largely dependent on one or a few countries. Currently, Egypt is a large and growing market which the Company is looking to cater too Under Subscription Risk This is the risk that the public issue may get under-subscribed on account of lack of investor s interest. The issue is priced at PKR 43/- per share. the cut-off price of the offer will be determined by the demand for the shares in the book building process. This coupled with the strong profile of the sponsors, management profile and performance of the company, reduces the probability of under-subscription. The public issue is fully underwritten by commercial banks and other financial institutions Capital Market Risk Price of shares will depend on the stock market behavior and performance of the company. hence, price may rise or fall and result in increase or decrease in the value of the shares. Although the rise or fall in the market price is mainly driven by the market forces, however from investor s point of view, share price is driven by strong financial performance. We believe that given the company track record, it is likely to perform well in the future due to its experienced management, strong group profile and proven track record. Note: It is stated that all material risk factors have been disclosed and that nothing has been concealed in this respect. 57

59 6. FINANCIAL INFORMATION PART AUDITORS REPORT UNDER CLAUSE 28 OF SECTION 2 OF PART I OF THE SECOND SCHEDULE TO THE COMPANIES ORDINANCE, 1984 FOR THE PURPOSE OF INCLUSION IN THE PROSPECTUS OF AL SHAHEER CORPORATION LIMITED 58

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70 6.2 SHARE BREAK-UP VALUE CERTIFICATE 69

71 MANAGEMENT NOTE ON BREAK-UP VALUE OF SHARES POST-RIGHT AND BONUS ISSUE Particulars PKR Issued Subscribed and Paid up Capital 665,410,160 Unappropriated Profit 228,664,718 Shareholders Equity 894,074,878 Revaluation Surplus 228,864,968 Shareholders Equity with Revaluation Surplus 1,122,939,846 Break up value Per Share without Revaluation Surplus Break up value Per Share with Revaluation Surplus

72 6.3 AUDITORS CERTIFICATE ON ISSUED, SUBSCRIBED AND PAID-UP CAPITAL 71

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74 6.4 SUMMARY OF FINANCIAL HIGHLIGHTS AND RATIOS FOR PRECEDING YEARS Financial Highlights (Amount in PKR mn) HY Income Statement Sales - Net 2,344 3,118 4,438 2,267 Cost of Goods Sold 2,078 2,761 3,896 1,906 Gross Profit Operating Profit Finance Cost Profit Before Tax Profit After Tax Earnings Per Share* Balance Sheet Non-Current Assets ,055 1,109 Current Assets Total Assets ,863 1,948 Issued, Subscribed and Paid-up Capital Unappropriated Profit Share Premium Surplus on Revaluation of Fixed Assets Advance Against Future Issue of Capital Long Term Liabilities Current Liabilities *based on Pre-IPO shares of 66.50mn Financial Ratios HY GP Margin 11.3% 11.4% 12.2% 15.9% PBT Margin 2.7% 3.4% 2.0% 4.3% PAT Margin 2.0% 2.4% 1.6% 5.1% Book Value Per Share (PKR)* No of Shares (in mn)*** ROE ** N/A 24% 15% 26% ROA ** N/A 13% 8% 12% * based on shares outstanding in that fiscal year & without advance against shares ** 1HFY15 numbers have been annualized *** the Issued, Subscribed and Paid-up Capital for the year 2012 represents partnership capital for Association of Persons, therefore, 26mn shares have been used to facilitate comparison 73

75 6.5 MANAGEMENT ACCOUNTS OF AL-SHAHEER FARMS (PRIVATE) LIMITED AL SHAHEER FARMS (PRIVATE) LIMITED BALANCE SHEET AS AT 31 MARCH 2015 ASSETS Note ~--Rupees-- NON CURRENT ASSETS Property Plant and Equipments 4 50,294,448 Intangible assets - 50,294,448 Long term Deposit - Deffered tax Assets - TOTAL NON CURRENT ASSETS - CURRENT ASSETS Stock in Trade - Trade Debts - Loan and advances 19,456,814 Short term Prepayments - Other Receivables - Cash and bank Balances - TOTAL CURRENT ASSETS 19,456,814 TOTAL ASSETS 69,751,262 EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVE Authorised capital 10,000,000 ordinary shares of Rs. 10/- each 100,000,000 Issued, subscribed and paid-up capital 5 70,000,000 Reserves (645,263) TOTAL SHAREHOLDERS'S EQUITY 69,354,737 NON CURRENT LIABILITIES Deffered Liabilities - Long term Financing - TOTA NON CURRENT LIABILITIES - CURRENT LIABILITIES Trade and others Payable 396,525 Short Term Borrowing - 396,525 TOTAL EQUITY AND LIABILITIES 69,751,262 74

76 7 MANAGEMENT OF THE COMPANY PART BOARD OF DIRECTORS OF THE COMPANY S.No Name Designation Directorships in other Companies Mr. Kamran Ahmed Khalili House # 258, Beach Street 2 Phase-VIII, D.H.A., Karachi Mr. Muhammad Ali Flat No. 103, Amna Homes Gurumandir, Karachi Mr. Noorur Rahman Abid Dera Abbas Ali Shah, Daak Khana Bagh o Bahar, Chak No 033/B, Tehsil Khanpur, Zila Rahim Yar Khan Mr. Adeeb Ahmed 23-B, 3rd Gizri Street Phase IV, D.H.A, Karachi Mr. Qaysar Alam Flat No. 702, Block I Creek Vista, Phase 8 D.H.A, Karachi Mr. Rizwan Jamil House No. 3-A/1 Phase 1, D.H.A Karachi Ms. Rukhsana Asghar House No. 81/1, Street No. 8 Khayaban-e-Badar Phase VI, DHA, Karachi Mr. Naveed Godil 44/2, Khayaban-e-Muslim, Phase-VI, D.H.A. Karachi 7.2 OVERDUE LOANS Chief Executive Officer Director Director Director Director Director Director Director - Al Shaheer Farms (Pvt.) Limited - Converge Technologies (Pvt.) Limited - Inbox Business Technologies (Pvt.) Ltd - AllAgro Real Estate (Pvt.) Limited - Meezan Bank Limited None - AaramShop Pakistan (Private) Limited None - Fulcrum (Pvt) Limited - Universal Packaging (Pvt.) Limited - 14 th Street Pizza (Pvt.) Limited - Apex Securities (Pvt.) Limited There are no overdue loans (local or foreign) on the Company or its Directors. 7.3 DIVIDEND PAYOUT BY GROUP LISTED COMPANIES None of the group companies are listed on the stock exchanges. 75

77 7.4 INFORMATION IN RESPECT OF COMPANIES LISTED ON STOCK EXCHANGE IN WHICH DIRECTORS ARE HOLDING DIRECTORSHIP Dividend Declared Last Five Years Meezan Bank Limited 27.5% 20% 15% 10% Nil 7.5 PROFILES OF DIRECTORS Mr. Kamran Ahmed Khalili - Chief Executive Officer Mr. Kamran Ahmed Khalili holding MBA degree is the CEO and the Chairman of Al Shaheer Corporation Ltd. It was his vision to establish a halal meat processing company. Kamran Khalili took the initiative and started Al Shaheer Corporation Limited from scratch. He has played a key role in the establishment and growth of Al Shaheer Corporation Limited. Prior to Al Shaheer, Mr. Kamran was the member of Karachi Stock Exchange for around 10 years and CEO of Fortune Securities (Pvt.) Ltd. He has also worked as an Investment Banker in MCB Bank Limited. After receiving a great response from international exports, Mr. Kamran felt the need to benefit local people with export quality meat products. In accomplishment of this vision, he took the initiative to introduce a concept meat shop in the local market with the brand name Meat One and Khaas. Mr. Kamran is an MBA from Philippines. Mr. Muhammad Ali Ghulam Muhammad - Director Mr. Muhammad Ali, holding an MBA degree, is an accomplished professional and businessman having worked with distinction in both domestic and internationally reputed organizations like Citibank N.A., Smith New Court Securities London, Indosuez W. I. Carr Securities, Three Sixty Degreez LLC USA and Synergy Management Consulting LLC Dubai. Mr. Ali is the founder shareholder of Inbox Business Technologies, Converge Technologies, All Agro Real Estate and Al-Shaheer Corporation Limited. Mr. Ali has also served as Chairman of Securities and Exchange Commission of Pakistan and as Director on the Boards of Karachi Stock Exchange and Engro Chemicals. Mr. Noorrur Rahman Abid - Director Mr. Noor is a Fellow Chartered Accountant from Institute of Chartered Accountants in England and Wales. He started his career in 1976 in UK, with KPMG. He has more than 35 years of experience in the profession, across Europe, Middle East and Africa, of which last 25 years have been in various leadership roles as Audit Partner. 76

78 He joined Ernst & Young in 1979 in Jeddah, Saudi Arabia and moved to Kuwait in He was admitted to partnership in He rose to the post of Office Managing Partner in charge of the Bahrain practice in 1993 with overall responsibility for Assurance, Advisory, Tax and Transaction service lines. Mr. Noor was named the Assurance Leader for Middle East and North Africa region in Under Mr. Noor s leadership, Ernst & Young audit practice has grown from US$ 35 million in 1999, to US$ 210 million in He was also directly involved in promoting various Corporate Social Responsibility programs at Ernst & Young. He took retirement in June Mr. Noor has been involved in advising a number of clients including industrial and commercial companies, retail and investment banks, Islamic banks and sovereign wealth funds on accounting matters, guidance on controls framework and governance considerations. In this capacity, he regularly engaged and advised the board members, audit committees and senior management of clients across the region. He has had a particular focus on the Islamic banking Industry. Mr. Noor was declared the winner of the World Islamic Banking Conference 2012 Industry Leadership Award in recognition of his contribution to Islamic Banking. Mr. M. Qaysar Alam - Director Mr. Alam is the President of AaramShop Pakistan (Private) Limited, an online grocery shopping network. He is on the Boards of GS1, Al Shaheer Corporation Limited and Member Pakistan Advisory board ISCEA. He is the President of Supply Chain Association of Pakistan. Mr. Alam is a consultant, a well-known trainer and speaker at various business schools and forums. He worked for 29 years at Unilever Pakistan, and took an early retirement in June At Unilever, he served as Vice President for 8 years, responsible for Unilever s Supply Chain strategies and operations, and was on the Board of Directors, Member of Audit committees and Management Committee. He was the key architect of Unilever Pakistan s supply chain structure and processes making it forward looking, achieving efficiency in speed, service and cost. He led the team to meet company s aggressive growth plan and prepared for the future challenges by adding and training new resources with key process changes. He also led the team to implement SAP at Unilever Pakistan and Bangladesh. Mr. Alam also designed 3 regional manufacturing excellence networks while working at Unilever Asia business group at Singapore. Mr Alam is an experienced JIPM qualified TPM instructor, was part of the global network and led company s manufacturing excellence program improving Productivity, Quality and Safety. TQM is one of his core strength; he was trained by Quest Australia. He is a trained quality auditor and was involved with audits and guidance to other countries as well. 77

79 Earlier he has worked at Exxon Pakistan, ARAMCO SA and taught Petroleum engineering. He has a Masters in Chemical Technology and has also studied Nuclear Engineering. Ms. Rukhsana Asghar - Director Ms. Rukhsana is the Founder and CEO of Fulcrum Business Consulting. She is responsible for providing leadership and strategic direction for the company. For more than 30 years, Ms. Rukhsana has been at the forefront in the field of Human Resources in Pakistan and is one of the leading Human Resource professionals with core experience in senior Human Resource positions with top multinational companies (Unilever, Citibank and UBL) coupled with management consulting experience in the local corporate, multinational and public sectors. She has a number of ground-breaking HR initiatives to her credit including being the first to introduce the concept of elevating the Human Resource function to the position of equal business partner with equal responsibilities and accountability for overall business results. She is also personally responsible for introduction of third party staffing into commercial banking to help control headcount and staffing costs. She is well known in the local industry and also recognized internationally. She has a proven ability for implementation of large-scale projects pertaining to an array of Human Resources disciplines including strategic planning and implementation of best practices both locally and overseas. Ms. Rukhsana holds a BA (Hons) Degree in International Relations & a Bachelor of Law Degree from the University of Karachi. Mr. Rizwan Jamil - Director Mr. Rizwan Jamil is a Change Catalyst. He has a track record of having effectively turned around businesses under pressure to deliver sustained profitable growth. He has been instrumental in bringing about organizational and cultural changes in the companies he has worked in, improving speed & effectiveness. Passionate about teamwork, Mr. Rizwan enjoys a strong reputation of building diverse and highly effective teams that deliver. His initial schooling was at St. Patrick s and Karachi Grammar Schools. He completed his MBA in 1985 from the Institute of Business Administration, University of Karachi. 22 years with Unilever, Mr. Rizwan has gathered a rich experience of Marketing, Sales and Business Management across a large number of business categories. He was instrumental in turning around power brands like Surf and Lipton and is responsible for creating much remembered advertising campaigns for these brands and others. He led the team that pioneered Lux Style Awards in Pakistan. In his last six years at Unilever, 78

80 Mr. Rizwan was Head of the Tea Business Unit. With Unilever, he also worked in Sri Lanka for nearly 4 years. Mr. Rizwan brought his passion for brands to his current role at Lafarge Pakistan. Lafarge is a Paris based MNC, a global leader in providing innovative construction solutions. Heading Marketing, Business Strategy & Innovation, Mr. Rizwan has taken on the challenge of creating brands and bringing innovation to an otherwise commodity industry. A past Chairman of Pakistan Advertisers Society (PAS), Mr. Rizwan has been on the PAS Advertising Awards jury since its inception 4 years ago. Mr. Adeeb Ahmed - Director Mr. Adeeb has over 25 years of working experience in private equity, fund management, investment banking, corporate finance and Islamic finance. He was one of the earliest entrants in the private equity industry in the region with the last 15 years dedicated to private equity investments and fund management exclusively focused on various Islamic countries in the Middle East, North Africa, South Africa and South East Asia. Currently, he is involved in the development and establishment of the ICD Food & Agribusiness Fund - a pioneering initiative focused on the development of the food and agribusiness sector in the various Islamic countries while generating commercial returns. The fund is sponsored by the Islamic Corporation for the development of the private sector (ICD), a member of the Islamic Development Bank Group. Rabobank, the world s leading food and agribusiness focused financial institution, is the Knowledge Partner. Mr. Adeeb leads the fund s management team comprising investment professionals with extensive in regional private equity and the food sector. Earlier, Mr. Adeeb led or played key roles in the successful development, establishment and management of sizable regional private equity funds focused on the infrastructure and related sectors covering various Islamic countries. He spearheaded these funds investment and exit programs, oversaw their operations and administration and generated active returns. He has a deep understanding and practical working knowledge of all aspects of the regional private equity industry and a network of key working relationships with a number of leading public and private sectors, project partners, industry operators, investment banks and advisors operating in the region. Mr. Adeeb s earlier engagements included assignments in Islamic finance, investment banking and capital markets with ANZ Investment Bank and ABN AMRO in Bahrain and Muslim Commercial Bank bear Stearns Jahangir Siddiqui, Citibank and ANZ Grindlays Bank in Pakistan. 79

81 He has a M.Sc. in Finance & Accounting from the London School of Economics, UK and MBA from the Institute of Business Administration, Karachi. Mr. Naveed Godil - Director Mr. Naveed Godil is a director of Al Shaheer Corporation Limited. He completed his graduation in commerce from University of Karachi, Pakistan in He is currently partner at AL Waha Marble LLC. Manufacturing of Marble, Chief Executive Officer and major shareholder in Universal Packaging Company (Pvt) Limited, Director of 14th Street Pizza Company Pakistan, Pizza Delivery Food chain, Director of Al Shaheer Meat One, Distributors/Retailer of Halal Meat. CEO of Dazzle JAFCO, Retail diamond jewelry business, M/S Naft Pvt. Limited, Franchise Subway in Pakistan and Director/ Chief Operating Officer of Fourtune Securities Pvt. Limited from 2000 to PROFILE OF KEY MANAGEMENT Mr. Muhammad Ali Yousuf - Chief Financial Officer Mr. Muhammad Ali Yousuf is the Chief Financial Officer at Al Shaheer Corporation Limited. He is an Associate Chartered Accountant and brings with him more than 14 years of experience. Mr. Muhammad Ali Yousuf has served at KPMG for almost a decade on various positions within Pakistan and in the Middle East. His work consisted of conducting statutory audits, due diligence exercises and reporting on internal controls for a number of organizations. He has also worked for Pakistan Reinsurance Company, where he was responsible for its Finance & Accounts, Investments and Tax Department. His experience was further extended in KASB as Head of Corporate Planning and Company Secretary. His last assignment before Al Shaheer Corporation Limited was with Advisory in Associates as Head of Corporate Services and Finance. Mr. Muhammad Ali remained involved in developing IT department and capacity building of factory operations, export operations and supply chain functions of the Company. Mr. Mohammed Ashraf - Company Secretary Mr. Ashraf joined Al Shaheer Corporation Limited as Company Secretary. He is looks after the Company s Corporate Affairs and enlisting of the organization as Public Limited Company. Mr. Ashraf is qualified from Association of Certified Chartered Accountant (ACCA). Mr. Ashraf has professional exposure of more than 20 years as Company Secretary, CFO and Tax Advisor in different foreign & local concerns across Middle East and North Africa (MENA Region) and Pakistan. 80

82 Mr. Osama Javed Usmani - Head of Human Resources Mr. Osama Javed Usmani is the Head of Human Resource in Al Shaheer Corporation Limited. Prior to this, he worked as Group Head - Human Resource for Pak-Qatar Takaful Group, where he established Organization structure, HR policies and procedures and implemented SAP HCM. He also worked in Time Lenders, a management consultancy firm, where he got the experience of Training and Event Management, and attended a number of world renowned training programs related to Leadership, Strategic Visions, etc. Further, he bears the experience of working with local and multinational logistics solution providers, where he looked after business development and strategies. Mr. Osama completed his MBA from IBA in He is also a certified Neuro-Linguistic Programming Practitioner and Yellow belt in Six Sigma. Mr. Adnan Hussain - Assistant General Manager - Retail & Marketing Mr. Adnan is currently engaged with the company as Assistant General Manager Retail Operations & Marketing. He did his MBA in Marketing from IBA in 2002 and he was associated with Brand Brigade as COO. He brings in rich experience of working with Proctor & Gamble mostly in Sales. He has also played his part in launching of Warid Telecom. He is a seasoned sales professional with experience across industries and portfolios. Having worked in different industries, he has been instrumental in new business launches and category turnarounds from Service to FMCG, from consumer essentials to luxury brands. Mr. Shahnawaz Akber Ansari - Senior Manager - Factory Mr. Shahnawaz looks after the factory of Al Shaheer Corporation Limited. Prior to joining the Company, he has worked in various concerns in Administration, Production and Procurement, for a period accumulating to twenty years. He has been with the Company since its inception where he started his career as Procurement Manager. Mr. Adnan Budhani - Head of Operations Mr. Adnan Budhani looks after Meat One operations. In addition to this, Mr. Adnan is also involved in developing business plans, and improving company s technology infrastructure. He was also responsible for the launch of Khaas Meat. Adnan is an MBA from Lahore University of Management Sciences (LUMS) and is also a Candidate for CFA level III examination. 81

83 Prior to MBA, Adnan worked in TPS Pakistan (Pvt.) Ltd as Software consultant. He did his graduation from NUCES- FAST in faculty of Computer Science. Mr. Syed Namood Ali Qabil - Head of Institutional Sales Mr. Syed Namood Ali Qabil is heading Company s Institutional Sales Department. An IBA post graduate, he brings with him more than ten years of rich and diversified experience from different sectors including media, telecom, and FMCG. Prior to joining Al Shaheer, Mr. Namood worked with Aaj TV, Mobilink, and Habib Oil Mills, within marketing functions. In addition to this, he also has experience working for advertising and brand activation agencies like Bulls Eye and National Marketing Services, under various capacities. Mr. Shoaib Saleem - Head of IT & Systems Mr. Shoaib Saleem is currently heading IT & Systems department of the company. He holds a Masters Degree in Computer Sciences. Mr. Shoaib was previously associated with Addvantum Innovative Technologies and was deputed to Royal Saudi Air Force as Manager Project. Mr. Shoaib has almost 13 years of experience in Information Technologies & Systems in different positions. He has handled different Projects from ERP implementations to In house Software development and building Database infrastructure at CDC, KASB Bank, Ora-Tech Systems and Venus Distributors. Mr. Muhammad Merajuddin - Senior Manager - Administration Mr. Muhammad Merajuddin is currently working as Senior Manager Administration. He has been associated with the Company for more than four years in different capacities from Administration to Project Management. Mr. Merajuddin has done his Bachelors degree in Commerce from University of Karachi. Mr. Merajuddin has previously served Junaid Jamshed (Pvt.) Ltd. as National Sales Manager prior to joining Al Shaheer Corporation Ltd. He has very enriching working experience in very prominent retail brands of Pakistan in different capacities. Mr. Kamil Iqbal - Manager Operations - Khaas Meat Mr. Kamil Iqbal is working as Manager Operations for Khaas Meat and looking after 14 outlets in Karachi and 4 in Lahore. He has obtained Master s Degree from Foundation University Islamabad. 82

84 He was previously working for Metro Habib Cash & Carry Pakistan as Store Manager. Mr. Kamil has almost 11 years of experience in Food and Retail business. Before Metro, he was associated with McDonald s and Aladin Foods in different positions. 7.7 NUMBER OF DIRECTORS Pursuant to Section 174 of the Companies Ordinance, 1984 a listed Company shall not have less than seven directors. At present the Board consists of 8 Directors, including the Chief Executive Officer. 7.8 QUALIFICATION OF DIRECTORS No person shall be appointed director of the Company who is ineligible to be appointed as director on any one or more grounds enumerated in Section 187 of the Companies Ordinance, 1984 or any other law for the time being in force. 7.9 REMUNERATION OF THE DIRECTORS Pursuant to Clause 68 of the Articles of Association of the Company, unless determined by the Company in General Meeting, every Director (including an alternate Director) shall be entitled to a fixed meeting fee and reimbursement of reasonable expenses incurred in consequence of his attendance at the meeting of the Directors, or of Committees of Directors. Each Director is paid a fixed meeting fee of PKR 75,000 per meeting and directors of the Committee of Directors are paid PKR 45,000 per director per meeting. No remuneration is payable to non-executive Directors. However, Executive Directors, performing whole time duties, are paid remuneration as per the approval by the Board of Directors BENEFITS TO PROMOTERS AND OFFICERS No benefits have been paid or given during the last year or is intended to be paid or given to any promoter or to any officer of the Company other than as remuneration for services rendered as whole-time executive of the Company INTEREST OF DIRECTORS The directors may be deemed to be interested to the extent of fees payable to them for attending Board meetings. The Directors performing whole time services in the Company may also be deemed interested in the remuneration payable to them by the Company. The nominee directors have interest in the Company to the extent of representing the sponsors in the capital of the Company. 83

85 7.12 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 178 of the Ordinance. The Directors shall comply with the provisions of Sections 174 and 178 and Section 180 and 184 relating to the election of Directors and matters ancillary thereto. Subject to the provisions of the Ordinance, 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 Ordinance. The present directors were elected as given below and have been elected for a period of three (3) years VOTING RIGHTS No. Folio Name Date of Appointment Date of Retirement 1 KAMRAN AHMED KHALILI 31-Oct Oct-16 2 NAVEED GODIL 20-Feb Feb-18 3 MUHAMMAD ALI 31-Oct Oct-16 4 NOORUR RAHMAN ABID 31-Oct Oct-16 5 ADEEB AHMAD 8-Aug-14 7-Aug-17 6 QAYSAR ALAM 8-Aug-14 7-Aug-17 7 RIZWAN JAMIL 8-Aug-14 7-Aug-17 8 RUKHSANA ASGHAR 20-Feb Feb-18 At any general meeting, a resolution put to the vote of the meeting shall, unless a poll is demanded, be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands) demanded. Unless a poll is so demanded, a declaration by the chairman that resolution has, on a show of hands, been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the book of the proceedings of the Company shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of, or against, that resolution. 84

86 A poll may be demanded only in accordance with the provision of Section 167 of the Ordinance. If a poll is duly demanded, it shall be taken in accordance with the manner laid down in Section 167 of the Ordinance and the result of the poll shall be deemed to be resolution of the meeting at which the poll was demanded AUDIT COMMITTEE / CONSTITUTION OF AUDIT COMMITTEE Auditors of the Company are appointed and their duties are regulated in accordance with Section 252 to Section 260 of the Ordinance. Accordingly, the Audit Committee of the Board has been formed to comply with the Code of Corporate Governance, Which comprised of the following directors: Mr. Noorur Rahman Abid (Chairman and Non-executive Director) Mr. Qaysar Alam (Non-executive Director) Mr. Muhammad Ali (Non-executive Director) 7.16 INTERNAL AUDIT The Board of Directors has setup 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 HUMAN RESOURCE AND REMUNERATION COMMITTEE The Company has formed Human Resource and Remuneration Committee comprising of the following members: Ms. Rukhsana Asgher (Chairperson) Mr. Noorur Rahman Abid (Non-executive Director) Mr. Adeeb Ahmad (Non-executive Director) 7.18 BORROWING POWERS The Directors may from time to time at their discretion borrow and secure the payment of any sum or sums of money for the purposes of the Company and may themselves lend to the Company on security or otherwise subject to the provisions of Companies Ordinance, POWERS OF DIRECTORS The business of the Company shall be managed by the Directors, who may pay all expenses incurred in promoting and registering the Company, and may exercise all such powers of the Company as are required to be exercised subject to the Ordinance, the Articles of Association of the Company and any regulations prescribed by the Company in the General Meeting. 85

87 7.20 INVESTMENT IN SUBSIDIARIES Al Shaheer Farms (Private) Limited incorporated in Karachi on March 2, The shareholding pattern is as follows: Name of Shareholder No of Shares % Al Shaheer Corporation Limited 3,569,500 51% Kamran Ahmed Khalili 500 0% Shabbir Haider Mirza 3,430,000 49% Total 7,000, % Further details on the subsidiary have been provided in Section INVESTMENT IN ASSOCIATED COMPANIES The Company has not sponsored nor acquired any Company nor has any resolution been passed for sponsoring or acquiring any associated Company under Section 208 of the Ordinance REVALUATION OF FIXED ASSETS The Company performed revaluation of fixed assets on 30th June 2012 and 30th June 2014 through independent valuation of Iqbal Nanjee & Co. and Sadruddin Associates. As of 1HFY15 the revaluation of fixed assets, net of deferred tax amounted to PKR 228,864,968 with the revalued amounts for the fixed assets, given below. Asset Category Revaluer Iqbal Nanjee & Co Address of Revaluer , 3rd Floor, Commerce Center, Hasrat Mohani Road, Karachi Date of Revaluation 30th June 2012 Locations 5th Floor, Mansoor Tower, Plot No.G5/5, Block 8 KDA Scheme No.5 Kehkashan, Clifton, Karachi Amount as per Valuation Report 39,000,000 Amount as per Audited Accounts 39,000,000 Land 86

88 Asset Category Land Revaluer Iqbal Nanjee & Co , 3rd Floor, Commerce Center, Hasrat Mohani Road, Address of Revaluer Karachi Date of Revaluation 30th June 2012 Locations Plot No 43C and 45C at Badar Commercial Street 7-A Phase 5 Extension DHA Karachi Amount as per Valuation Report 30,000,000 Amount as per Audited Accounts 30,000,000 Asset Category Land, Building and PPE Revaluer Sadruddin Associates Address of Revaluer Suite # 1004, 10th Floor, Business and Finance Center, Opp State Bank of Pakistan I.I Chundrigar Road, Karachi Date of Revaluation 30th June 2014 Locations No. 348 Deh Shah Mureed, Tappo Songal, Gadap Town, Karachi Amount as per Valuation Report 440,259,000 Amount as per Audited Accounts * 467,647,738 * difference is due to addition in assets post valuation Asset Category Equipment, Furiniture, Vehicles and Accessories at outlets Revaluer Sadruddin Associates Address of Revaluer Suite # 1004, 10th Floor, Business and Finance Center, Opp State Bank of Pakistan I.I Chundrigar Road, Karachi Date of Revaluation 30th June 2014 Locations 9th Commercial DHA Khayaban-e-Sehar DHA, Khayaban-e- Shamsheer DHA, Boat Basin Clifton, Bahadurabad, Binori Town, Gulshan-e-Iqbal Hydri North Nazimabad, KDA Scheme & Malir Karachi Amount as per Valuation Report 131,285,000 Amount as per Audited Accounts * 155,008,664 * difference is due to addition in assets post valuation 7.23 CAPITALIZATION OF PROFIT The Company has issued 35,600,341 Ordinary shares of face value PKR 10/share as Bonus issue on 20-Feb-2015 against reserves. Other than these shares there has been no capitalization of reserves since the incorporation of ASC. 87

89 8 MISCELLANEOUS INFORMATION PART REGISTERED OFFICE / CORPORATE OFFICE Al Shaheer Corporation Limited Suite No G5/5 3rd Floor Mansoor Tower, Block 8 Shahrah-e-Roomi, Clifton Karachi 8.2 MAJOR BANKS OF THE COMPANY 1. Habib Metropolitan Bank 2. Standard Chartered Bank 3. Meezan Bank Limited 4. Askari Bank Limited 5. Dubai Islamic Bank Limited 6. Summit Bank Limited 8.3 AUDITORS OF THE COMPANY Ernst & Young Ford Rhodes Sidat Hyder Chartered Accountants Progressive Plaza, Beaumount Road P.O. Box 15541, Karachi Karachi 8.4 BANKERS TO THE ISSUE 1. Askari Bank Limited 2. Bank Alfalah Limited 3. Dubai Islamic Bank Limited 4. Faysal Bank Limited 5. Habib Bank Limited 6. Habib Metro Bank Limited 7. MCB Bank Limited 8. Meezan Bank Limited 9. Soneri Bank Limited 10. Summit Bank Limited 11. United Bank Limited 88

90 8.5 BANKER TO THE ISSUE FOR BOOK BUILDING Summit Bank Limited Arif Habib Centre 23 - M.T. Khan Road Karachi 8.6 LEGAL ADVISORS OF THE COMPANY Ms. Fehmida Shaikh Shabbir Suite No. 511, Regal Trade Square M.A. Jinnah Road Karachi Telephone: Fax: LEGAL ADVISOR TO THE ISSUE Mohsin Tayebaly & Co. Corporate Legal Consultants Barristers & Advocates. 1st Floor, Dime Centre, BC-4 Block-9, KDA Scheme-5, Clifton, Karachi Fax: JOINT LEAD MANAGERS, ARRANGERS AND BOOK RUNNERS Next Capital Limited 8th Floor, Horizon Tower, Plot No 2/6, Block - 3, Clifton, Karachi PABX: Fax: umer.habib@nextadvisors.com.pk AKD Securities Limited 602, 6th Floor, Continental Trade Centre Block - 8, Clifton, Karachi PABX: Fax: & eliya.hamid@akdsecurities.net 8.9 SHARE REGISTRAR Central Depository Company of Pakistan Limited CDC House, 99- B, Block B, S.C.H.S, Main Shahra-e-Faisal Karachi Tel: (021) muhammad_sarwar@cdcpak.com 89

91 8.10 MATERIAL CONTRACTS AND DOCUMENTS DETAILS OF SHORT TERM FINANCING FACILITIES DETAILS OF LONG TERM FINANCING FACILITIES COMPANY RELATED AGREEMENTS 90

92 8.11 PROJECT APPRAISAL REPORT S. No. Projects Financial Institutions 1 Poultry Business and Meat Processing Factory Next Advisors Limited 8.12 UNDERWRITING AGREEMENTS S. No Names of Underwriters No. of Amount Date of Shares (PKR) Agreement 1 Pearl Securities Limited 3,150, ,250, th June Pak Oman Investment Company Limited 1,050,000 99,750, rd June Soneri Bank Limited 1,000,000 95,000, th June Summit Bank Limited 1,050,000 99,750, th June DUE DILIGENCE REPORTS S.No. Names of Underwriters Date of Agreement 1 Pearl Securities Limited 17 th June Pak Oman Investment Company Limited 23 rd June Soneri Bank Limited 24 th June Summit Bank Limited 24 th June INSPECTION OF DOCUMENTS AND CONTRACTS Copies of the Memorandum and Articles of Association, Audited Financial Statements, Auditor's Certificates, Information Memorandum and copies of 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 There are no litigations or proceedings by or against the Company pending before any court of law or authority 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. 91

93 8.17 FINANCIAL YEAR OF THE COMPANY The financial year of the Company commences from 1st day of July and ends on the 30th day of June each year. 92

94 PART 9 9 APPLICATION & ALLOTMENT INSTRUCTIONS 9.1 ELIGIBLE INVESTORS INCLUDE: a) Pakistani citizens resident in or outside Pakistan or Persons holding two nationalities including Pakistani nationality; b) Foreign Nationals whether living in or outside Pakistan; c) 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); d) Mutual Funds, Provident / Pension / Gratuity Funds / Trusts (subject to the terms of the Trust Deed and existing regulations); and e) Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan. 9.2 APPLICATION MUST BE MADE ON THE COMPANY'S PRINTED FORM Copies of this Prospectus and application forms can be obtained from members of KSE, LSE & ISE, the Bankers to the issue and their Branches, the Joint Lead Managers, Arrangers & Book Runners, and the registered office of the Company. The Prospectus and the application form can also be downloaded from the following websites: & The applicants opting for script less form of shares are required to complete the relevant sections of the application. 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. In case of discrepancy between the information provided in the application form and the information already held by CDS, the Company reserves the right to issue shares in physical form Name(s) and address(es) must be written in full block letters, in English and should not be abbreviated All applications must bear the name and signature corresponding with that recorded with the applicant's banker. In case of difference of signature with the bank and Computerized National Identity Card (CNIC) or National Identity Card for Overseas Pakistanis (NICOP) or Passport both the signatures should be affixed on the application form. 93

95 9.3 APPLICATIONS MADE BY INDIVIDUAL INVESTORS i. In case of individual investors, an attested 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. Copy of these documents can be attested by any Federal / Provincial Government Gazetted Officer, Councilor, Oath Commissioner or Head Master of High School or bank manager in the country of applicant s residence. ii. Original CNIC / NICOP / Passport, along with one attested 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 attested photocopy will, after verification, be retained by the branch along with the application. 9.4 APPLICATIONS MADE BY INSTITUTIONAL INVESTORS i. Applications made by companies, corporate bodies, mutual funds, provident / pension / gratuity funds / trusts and other legal entities must be accompanied by an attested photocopy of their Memorandum and Articles of Association or equivalent instrument / document. Where applications are made by virtue of Power of Attorney, the same should also be submitted along with the application. Any Federal / Provincial Government Gazette Officer, Councilor, Bank Manager, Oath Commissioner and Head Master of High School in the country of applicant s residence can attest copies of such documents. ii. Attested photocopies of the documents mentioned in paragraph 9(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 attested copies, will after verification, be retained by the bank branch along with the application. 9.5 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. 9.6 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 attested copies of their CNICs / NICOP / Passport. The certificates will be dispatched to the person whose name appears first on the application form while in case of CDCs, it will be credited to the CDS account mentioned on the face of the form and where my 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 the application will be considered as a single application for the purpose of allotment of certificates. 94

96 9.7 Subscription money must be paid by cheque drawn on applicant s own bank account or pay order / bank draft payable to one of the Bankers to the Issue in favor of account IPO of Al Shaheer Corporation Limited and crossed A/C PAYEE ONLY. 9.8 For the application 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. 9.9 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 Applications are not to be made by minors and / or persons of unsound mind Applicants should ensure that the bank branch, to which the application is submitted, completes the relevant portion of the application form 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 certificates for which the application has been made 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 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 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 Submission of False and Fictitious applications are prohibited and such Applications Money may be forfeited under section 87(8) of the Securities Act, ADDITIONAL INSTRUCTIONS FOR FOREIGN / NON RESIDENT INVESTORS a) In case of foreign investors that are not individuals, applications must be accompanied with a letter on applicant s letterhead stating the legal status of the 95

97 applicant, place of incorporation and operations and line of business. A copy of Memorandum of Association or 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 application. Copies of these documents can be attested by the Bank Manager in the country of applicant s residence. b) Applicants may also subscribe using their Special Convertible Rupee Account ( SCRA ) as set out under the State Bank of Pakistan s Foreign Exchange Manual BASIS OF ALLOTMENT The basis and conditions of transfer of certificates to the General Public shall be as follows: a) The minimum amount of application for subscription of 500 shares is PKR 47,500/- (PKR 95 x 500 shares) Application for certificates below the total value of PKR 47,500/- shall not be entertained. b) Application of certificates must be made for 500 certificates or in multiple thereof only. Applications, which are neither 500 shares nor for multiple thereof, shall be rejected. c) Allotment/ transfer of certificates to successful applicants shall be made in accordance with the allotment criteria / instructions disclosed in the Prospectus. d) The allotment of certificates shall be subject to scrutiny of applications in accordance with the criteria disclosed in the Prospectus and / the instructions by the Securities and Exchange Commission of Pakistan. e) 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 the data fields in the Application Form. f) The Company will dispatch shares to successful applicants through their Bankers to the Issue or credit the respective CDS accounts of successful applicants (as the case may be) E-IPO Facilities In order to facilitate the investors, the Issuer has arranged provision of e-ipo facility through United Bank Limited ("UBL") that is 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 UBL can submit their applications through these links 24 hours a day during the subscription period which will close at 12:00 midnight on July 29,

98 9.20 CODE OF OCCUPATION CODE OF OCCUPATION CODE OCCUPATION CODE OCCUPATION 01 Business 02 Business Executive 03 Service 04 Housewife 05 Household 06 Professional 07 Student 08 Agriculturist 09 Industrialist 10 Others 9.21 BANKERS TO THE ISSUE CODE OF BANKERS TO THE ISSUE CODE BANKS CODE BANKS 01 Askari Bank Limited 07 MCB Bank Limited 02 Bank Alfalah Limited 08 Meezan Bank Limited 03 Dubai Islamic Bank Limited 09 Soneri Bank Limited 04 Faysal Bank Limited 10 Summit Bank Limited 05 Habib Bank Limited 11 United Bank Limited 06 Habib Metro Bank Limited 9.22 NATIONALITY CODE CODE OF OCCUPATION CODE OCCUPATION CODE OCCUPATION 001 U.S.A 006 Bangladesh 002 U.K 007 China 003 U.A.E 008 Bahrain 004 K.S.A 009 Other 005 Oman 97

99 PART BIDDING FORM OF AL SHAHEER CORPORATION LIMITED (this space has been left blank intentionally) 98

100 11 SIGNATORIES TO THE PROSPECTUS PART 11 Mr. Kamran Ahmed Khalili -Sd- Mr. Naveed Godil -Sd- Mr. Muhammad Ali -Sd- Mr. Noorur Rahman Abid -Sd- Mr. Adeeb Ahmad -Sd- Mr. Qaysar Alam -Sd- Mr. Rizwan Jamil -Sd- Mr. Rukhsana Asghar -Sd- Signed by the above in the presence of witnesses: -Sd- -Sd- Mohammad Ashraf Hammad Ahmed Chishti Designation: Company Secretary Designation: Manager Finance CNIC: CNIC: Address: A-72, Sector Z-2, Address: F2, 1/11 Malir Extension, Gulshan-e-Maymar, Karachi Karachi Date: March 25, 2015 Date: March 25,

101 PART MEMORANDUM OF ASSOCIATION 100

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108 13 APPLICATION FORM PART