matco foods limited prospectus - · pdf filemcb bank limited habib bank limited allied bank...

MATCO FOODS LIMITED PROSPECTUS

This Issue consists of 29,143,000 ordinary shares (25% of the post issued paid up capital of Matco Foods Limited) of face value of PKR 10 each. The Issue is being made through the Book Building process at a Floor Price of PKR 26/- per share (including premium of PKR 16/- per share). The bidders shall be allowed to place bids for one hundred percent (100%) of the issue size and the strike price shall be the price at which the hundred percent (100%) of the issue is

subscribed. However, the successful bidders shall be provisionally allotted only seventy-five percent (75%) of the issue size i.e. 21,857,000 and the remaining twenty five percent (25%) i.e. 7,286,000 shall be offered to the retail investors. In case retail portion of the Issue remains unsubscribed, the unsubscribed shares

will be allotted to the successful bidders on pro rata basis in the manner given in para 2.2.21.

(Justification of premium is given under “Valuation Section” in paragraph 2.1) As per PSX’s Listing of Companies and Securities Regulations, the Draft Prospectus was placed on PSX’s website for seeking public comments for seven (7) working

days starting from October 31, 2017 to November 08, 2017. The comments received have been duly incorporated / responded by the Consultant to the Issue.

REGISTRATION OF ELIGIBLE BIDDERS: The registration of eligible bidders will commence at 9:00 am on January 18, 2018 and will close at 3:00 pm on January 24, 2018 (during weekdays only)

BIDDING PERIOD DATES: From January 23, 2018 to January 24, 2018 (From: 9:00 am to 5:00 pm)

DATE OF PUBLIC SUBSCRIPTION: From January 29, 2018 to January 30, 2018 (From: 9:00 am to 5:00 pm) (both days inclusive)

CONSULTANT TO THE ISSUE BOOK RUNNER

Banker to the Book Building portion of the Issue: MCB Bank Limited

Bankers for the Retail portion of the Issue:

MCB Bank Limited Habib Bank Limited Allied Bank Limited Faysal Bank Limited Askari Bank Limited Habib Metropolitan Bank Limited

*Summit Bank Limited Al-Baraka Bank Limited *United Bank Limited *Bank Alfalah Limited Soneri Bank Limited JS Bank Limited

*In order to facilitate investors, United Bank Limited (“UBL”), Summit Bank Limited (“SMBL”) and Bank Alfalah Limited (“BAFL”) are offering facility of electronic submission of application (e-IPO) to their account holders. UBL account holders can use UBL Net Banking to submit their application via link http://www.ubldirect.com/corporate/ebank. SMBL account holders can use SMBL Net Banking to submit their application via link https://ib.summitbank.com.pk. BAFL account holders can use BAFL Net Banking to submit their applications via link https://ib.bankalfalah.com.pk. Furthermore, please note that online applications can be submitted 24 hours a day during the subscription period which will close at midnight on January 30, 2018. The Central Depository Company of Pakistan (“CDC”) in collaboration with 1 Link (G) Limited (1 Link) has developed a Centralized e-IPO System (“CES”) through which applications for subscription of securities offered through IPOs can be made electronically. CES has been made available in this IPO which can be accessed through the web link www.cdceipo.com. Payment of subscription money can be made through 1Link’s member banks available for CES, list of which is available on above web link.

For making application though CES, investors must be registered with CES. Registration with CES is free of cost and a self-registration process by filling the CES registration form, which is available 24/7 all around the year.

Investors who have valid Computerized National Identity Card (CNIC), bank account with any of the commercial bank, email address, mobile phone number and CDS Account (Investor Account or sub Account) may register themselves with CES.

Investors who do not have CDS account may visit www.cdcpakistan.com for information and details. For further guidance and queries regarding CES and opening of CDS account, investors may contact CDC at phone Number: 0800 – 23275 (CDCPL) and e-mail: [email protected]. CES is connected to a number of banks 1 Link for payment of the subscription money. For further details on CES, please refer para 2.3.3 of this Prospectus or contact Mr. Moheel Ali Khan at Phone 021-34326030 and email: [email protected].

BOOK BUILDING PORTION WILL BE UNDERWRITTEN BY

For investor education please visit www.jamapunji.pk and read the IPO Investor Guide placed at web link https://www.secp.gov.pk/document/initial-public-offering-ipo-a-concise-guide-for-investors/?wpdmdl=29584 Jama Punji is an investor education initiative of SECP

Date of Publication of this Prospectus: December 31, 2017 Prospectus, Registration, Bidding and Subscription Forms can be downloaded from the following websites:

http://www.matcofoods.com/ , http://www.arifhabibltd.com and www.mcb.com.pk For further queries, you may contact

Matco Foods Limited: Muhammad Jawed Ismail; Phone: +92 302 8291772; E-mail: [email protected]

Arif Habib Limited: Ammad Tahir; Phone: +92 21 3243 3542; E-mail: [email protected]

MCB Bank Limited: Muhammad Bilal Mustafa; Phone: +92 331 130 6154, Email: [email protected]

ADVICE FOR INVESTORS

INVESTORS ARE STRONGLY ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THIS PROSPECTUS, ESPECIALLY THE RISK FACTORS

GIVEN AT PARA 4.11 BEFORE MAKING ANY INVESTMENT DECISION. SUBMISSION OF FALSE AND FICTITOUS APPLICATIONS IS PROHIBITED AND SUCH APPLICATIONS’ MONEY MAY BE FORFEITED UNDER SECTION 87(8) OF THE

SECURITIES ACT, 2015 (THE SECURITIES ACT).

ADVICE FOR INSTITUTIONAL INVESTORS AND HIGH NET WORTH INDIVIDUAL INVESTORS UNDER REGULATION 10(2)(v) OF THE PUBLIC OFFERING REGULATIONS, 2017 (THE PO REGULATIONS), A SINGLE INVESTOR CANNOT SUBMIT MORE THAN ONE

BIDDING APPLICATION, EXCEPT IN THE CASE OF UPWARD REVISION OF BID. IF AN INVESTOR SUBMITS MORE THAN ONE BIDDING APPLICATION THEN ALL

SUCH APPLICATIONS SHALL BE SUBJECT TO REJECTION. SUBMISSIONS OF CONSOLIDATED BIDS IS PROHIBITED UNDER REGULATION 10(2)(iv) OF THE PO REGULATIONS. A BID APPLICATION WHICH IS BENEFICIALLY

OWNED (FULLY OR PARTIALLY) BY PERSONS OTHER THAN THE ONE NAMED THEREIN SHALL BE DEEMED TO BE A CONSOLIDATED BID. PLEASE NOTE THAT AS PER THE PO REGULATIONS, A SUPPLEMENT TO THE PROSPECTUS SHALL BE PUBLISHED WITHIN THREE WORKING DAYS OF THE CLOSING

OF THE BIDDING PERIOD WHICH SHALL CONTAIN INFORMATION RELATING TO THE STRIKE PRICE, OFFER PRICE, COMMITMENT BY THE SUCCESFUL BIDDERS

FOR SUBSCRIBING THE UNDERSUBSCRIBED RETAIL PORTION OF THE ISSUE AS THE ISSUE IS BEING MADE THROUGH HUNDRED PERCENT BOOK BUILDING WITH

ALLOCATION TO RETAIL INVESTORS, CATEGORY WISE BREAKUP OF THE SUCCESSFUL BIDDERS ALONG WITH NUMBER OF SHARES ALLOTTED TO EACH

CATEGORY, DATES OF PUBLIC SUBSCRIPTION AND SUCH OTHER INFORMATION AS SPECIFIED BY THE COMMISSION.

http://www.ubldirect.com/corporate/ebank

https://ib.bankalfalah.com.pk/

http://www.cdceipo.com/

http://www.cdcpakistan.com/

mailto:[email protected]

http://www.jamapunji.pk/

http://www.matcofoods.com/

http://www.arifhabibltd.com/

http://www.mcb.com.pk/




Prospectus | Matco Foods Limited

1

UNDERTAKING BY THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

September 05, 2017

WE, KHALID GHORI, THE CHIEF EXECUTIVE OFFICER AND MUHAMMAD JAWED ISMAIL, THE CHIEF FINANCIAL OFFICER OF MATCO FOODS LIMITED CERTIFY THAT:

1. THIS PROSPECTUS CONTAINS ALL INFORMATION WITH REGARD TO THE ISSUER AND THE ISSUE, WHICH IS MATERIAL IN THE CONTEXT OF THE ISSUE AND NOTHING HAS BEEN CONCEALED IN THIS RESPECT;

2. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS TRUE AND CORRECT TO THE BEST OF OUR KNOWLEDGE AND BELIEF;

3. THE OPINIONS AND INTENTIONS EXPRESSED THEREIN ARE HONESTLY HELD;

4. THERE ARE NO OTHER FACTS, THE OMISSION OF WHICH MAKES THIS PROSPECTUS AS A WHOLE OR ANY PART THEREOF MISLEADING; AND

5. ALL REQUIREMENTS OF THE SECURITIES ACT, 2015 ANDTHE PUBLIC OFFERING REGULATIONS, 2017 RELATING TO APPROVAL AND DISCLOSURES HAVE BEEN FULFILLED.

6. NO CHARGES, FEE, EXPENSES, PAYMENTS ETC. HAVE BEEN COMMITTED TO BE PAID TO ANY PERSON IN RELATION TO THIS PUBLIC OFFERING EXCEPT FOR THOSE AS DISCLOSED IN PART 3 OF THE PROSPECTUS.

For and behalf of Matco Foods Limited

-Sd- ___________________________ Khalid Ghori Chief Executive Officer

-Sd- ___________________________ Muhammad Jawed Ismail Chief Financial Officer


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SUPPLEMENT TO THE PROSPECTUS

Note: This Supplement shall be published within 3 working days of the close of Bidding Period in at least all those newspapers in

which the Prospectus of Matco Foods Limited is published.

This Supplement is being published pursuant to The Public Offering Regulations, 2017 and in continuation of the Prospectus of

Matco Foods Limited earlier published on December 31, 2017

Matco Foods Limited

FLOOR PRICE: PKR 26/- PER SHARE STRIKE PRICE: PKR XX/- PER SHARE ISSUE PRICE: PKR XX/- PER SHARE

Note: Since this Issue is being made through 100% book building with 25% allocation to retail investors, therefore, underwriting

of the retail portion is not needed. In case the retail portion of the issue remains unsubscribed, such unsubscribed shares

shall be allotted to the successful bidders on pro rata basis. The successful bidders have already given undertakings to

subscribe such unsubscribed shares on pro rata basis.

Category wise Breakup of Successful Bidders

S.

No Category No. of Bidders No. of shares provisionally allocated

%age

1 Commercial Banks ● ●

2 Development financial

institutions ● ●

3 Mutual Funds ● ●

4 Insurance Companies ● ●

5 Investment Banks ● ●

6 Employees’ Provident /

Pension Funds ● ●

7 Leasing Companies ● ●

8 Modarabas ● ●

9 Securities Brokers ● ●

10 Foreign Institutional Investors ● ●

11 Any other Institutional

Investors ● ●

Institutional Investor ● ●

12 Individual Investors: ● ●

Foreign Investors ● ●

Local ● ●

Individual Investors ● ●

TOTAL


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Glossary of Technical Terms

ACT Securities Act, 2015

AHL Arif Habib Limited

BR Book Runner

BVPS Book Value Per Share

CAGR Compound Annualized Growth Rate

CDA Central Depository Act, 1997

CDC / CDCPL Central Depository Company of Pakistan Limited

CDC Regulations Central Depository Company of Pakistan Limited Regulations

CDS Central Depository System

CNIC Computerized National Identity Card

COI Certificate of Incorporation

Collection Bank (Book Building) MCB Bank Limited

Companies Act Companies Act, 2017

Commission / SECP Securities and Exchange Commission of Pakistan

CRO Company Registration Office

CVT Capital Value Tax

EPC Engineering, Procurement and Construction

EPS Earnings Per Share

FBR Federal Board of Revenue

FED Federal Excise Duty

GDP Gross Domestic Product

GOP Government of Pakistan

IFC International Finance Corporation

ITO Income Tax Ordinance, 2001

LC Usance

LC Usance is letter of credit payable at predetermined time after the

presentation of confirming documents, with the period varying from 30

days to 90 days

Mn Million

MT Metric Ton

NICOP National Identity Card for Overseas Pakistani

NOC No Objection Certificate

PKR or Rs. Pakistan Rupee(s)

PSX / Exchange Pakistan Stock Exchange Limited

REAP Rice Export Association of Pakistan

RECP Rice Export Corporation of Pakistan

SCADA Supervisory Control And Data Acquisition

SCRA Special Convertible Rupee Account

SST Sindh Sales Tax


4

TCP Trade Corporation of Pakistan

UIN Unique Identification Number

WHT Withholding Tax


5

DEFINITIONS

Application Money 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.

Banker(s) to the Book Building Any bank(s) with whom an account is opened and maintained by the

Issuer for keeping the bid amount.

MCB Bank Limited has been appointed as Banker to the Book Building.

Bid An indication to make an offer during the Bidding Period by a Bidder to

subscribe to the Ordinary Shares of Matco Foods Limited at a price at or

above the floor price, including upward revisions thereto. An Eligible

Investor shall not make a bid with price variation of more than 10% of

the prevailing indicative strike price. Please refer to paragraph 2.2.24

for details.

Bid Amount The amount equals to the product of the number of shares Bid for and

the Bid price.

Bid Collection Center Designated offices of the Book Runner, specified branches of any of the

Scheduled Bank and offices of any other institutions specified by the

Commission where bids are received and processed. For this Issue,

addresses of the Bid Collection Centers are provided in paragraph 2.2.7

of this Prospectus.

Bid Price The price at which bid is made for a specified number of shares.

Bid Revision The Eligible Investors can revise their bids upward subject to the

provision of regulation 10(2)(iii) of the PO Regulations. The bids can be

revised with a price variation of not more than 10% from the prevailing

indicative Strike Price in compliance with regulation 10(2)(iii) of the PO

Regulations.

As per regulation 10(2)(vi) of the PO Regulations, the bidder shall not

make downward revision or withdraw their bids.

Bidder An Eligible Investor who makes bid for shares in the Book Building

process.

Bidding Form The form prepared by the Issuer for the purpose of making bids.

Bidding Period

The period during which bids for subscription of shares are received.

The Bidding Period shall be of two days, from January 23, 2018 to

January 24, 2018 both days inclusive (daily from 9:00 a.m. to 5:00 p.m.).


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Book Building

A process undertaken to elicit demand for offered shares, through

which bids are collected from the Bidders and a book is built which

depicts demand for the shares at different price levels.

Book Building Account

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 2.2.16 of this Prospectus and the balance of the

Application Money, if any, shall be paid through this account after

successful allocation of shares under Book Building.

Book Building Portion The part of the total Issue allocated for subscription through the Book

Building.

Book Runner A securities broker or a scheduled bank that holds a valid license from

the Commission to act as an Underwriter and has been appointed as

Book Runner by the Issuer.

MCB Bank Limited has been appointed as Book Runner for this Issue.

Book Building System An online electronic system operated by the Designated Institution for

conducting Book Building.

Collection Banks MCB Bank Limited is the collection bank for the Book Building portion.-

For this purpose, the Issuer, has opened account with MCB Bank Limited

titled “Matco Foods Limited - Book Building”, Number:

0961347731011027 at its Global Transaction Banking Branch. The

Collection Bank shall keep and maintain the bid money in the said

account. Once the Strike Price is determined and lists of successful

bidders and successful applicants / allottees are finalized and shares are

credited to the successful bidders and applicants, the Consultant to the

Issue, after obtaining NOC from PSX, may request in writing to the

Collection Bank for transfer of the money of successful and accepted

applications to the Issuer’s account(s).

Company or the Issuer Matco Foods Limited (the “Company”) or (“MFL”) or (“Matco Foods”) or

(“Matco”).

Company’s Legal Advisor Mohammad Javaid Akhter – Advocate Office No.13, Bambino Chambers Garden Road. Karachi

Consolidated Bids Consolidated Bid means a Bid which is fully or partially beneficially

owned by persons other than the one named therein.


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Designated Institution Includes securities exchange, central depository or clearing house

approved by the Commission to provide a system for conducting Book

Building.

PSX will act as the Designated Institution for this Issue.

Dutch Auction Method The method through which Strike Price is determined by arranging all

the Bids in descending order based on bid prices along with the number

of shares and the cumulative number of shares bid for at each Bid Price

level. The Strike Price is determined by lowering the bid price to the

extent that the total number of shares offered under the Book Building

Portion are subscribed.

e-IPO e-IPO is submission of application for subscription of securities electronically through internet, Automated Teller Machines (ATM) and mobile phones. In order to facilitate the public during IPOs, SECP has introduced the concept of e-IPO. The following two systems are available for e-IPOs: (i) Centralized e-IPO System (CES): In order to facilitate investors, the Central Depository Company of Pakistan (“CDC”) in collaboration with 1Link (G) Limited (1Link) has developed a Centralized e-IPO System (“CES”) through which applications for subscription of securities offered to the general public can be made electronically. CES has been made available in this Initial Public Offering (IPO) and can be accessed through the web link www.cdceipo.com. Payment of subscription money can be made through 1LINK’s member banks available for CES, list of which is available on above website. For making application though CES, investors must be registered with CES. Registration with CES is free of cost and can be done under a self-registration process by filling the CES registration form, which is available 24/7 all around the year. Investors who have valid Computerized National Identity Card (CNIC), bank account with any of the commercial bank, email address, mobile phone number and CDS Account (Investor account or sub account) can registered themselves with CES. Investors who do not have CDS account can visit www.cdcpakistan.com for information regarding opening CDS account. For further guidance and queries regarding CES and opening of CDS account, investors may contact CDC at phone number: 0800 – 23275 (CDCPL) and e-mail: [email protected] or Mr. Moheel Ali Khan at Phone 021-34326030 and email: [email protected].






8

Investors who are registered with CES can submit their applications through the web link www.cdceipo.com 24 hours a day during the subscription period which will close at midnight on January 30, 2018.

(ii) e-IPO facilities by Bankers to the Issue: Currently, United Bank Limited (UBL), Summit Bank Limited (SMBL) and Bank Alfalah Limited (BAFL) are providing e-IPO facilities to their respective accountholders. UBL account holders can use UBL Net Banking to submit their application via link http://www.ubldirect.com/corporate/ebank. SMBL account holders can use SMBL Net Banking to submit their application via link https://ib.summitbank.com.pk. and

BAFL account holders can use BAFL Net Banking to submit their

application via link: https://ib.bankalfalah.com.pk

Eligible Investor An Individual and Institutional Investor whose Bid Amount is not less

than the minimum bid size of PKR 1,000,000 (One Million Rupees only).

Floor Price The minimum price per share set by the Issuer in consultation with

Consultant to the Issue. For this Issue, Floor Price is PKR 26/- per share.

General Public

All Individual and Institutional Investors including both Pakistani

(residents & non-residents) and foreign investors.

Initial Public Offer (IPO) Initial Public Offering or IPO means first time offer for sale of securities

of a company or body corporate to the general public.

Institutional Investors Any of the following entities:

A financial institution; A company as defined in the Companies Act; An insurance company established under the Insurance Ordinance,

2000; A securities broker A fund established as Collective Investment Scheme under the Non-

Banking Finance Companies and Notified Entities Regulations, 2008;

A fund established as Voluntary Pension Scheme under the Voluntary Pension System Rules, 2005;

A private fund established under Private Fund Regulations, 2015; Any employee’s fund established for benefits of employees; Any other fund established under any special enactment; and

Any other entity as specified by the Commission.



https://ib.summitbank.com.pk/



9

Issue Issue of 29,143,000 Ordinary Shares of the Face Value of PKR 10.00/- each representing 25% of the Post IPO Paid Up Capital of the Company.

Book Building Portion of the Issue comprises of 21,857,000 Ordinary Shares (being 75% of the total Issue) at a Floor Price of PKR 26/- per share (including a premium of PKR 16/- per share).

Retail Portion of the Issue comprises 7,286,000 Ordinary Shares (being 25% of the total Issue) at the Issue Price.

Issue Price

The price at which Ordinary Shares of the Company are issued to the General Public. In this Issue, the Issue Price will be the Strike Price.

Key Employees Chief Executive Officer, Directors, Chief Financial Officer and Company

Secretary of the Company.

Consultant to the Issue Any person licensed by the Commission to act as a Consultant to the

Issue and appointed by the Issuer.

Arif Habib Limited has been appointed as Consultant to the Issue by the

Issuer for this issue.

Limit Bid The bid at a Limit Price.

Limit Price The maximum price a prospective Bidder is willing to pay for a share

under the Book Building

Listing Committee Listing Committee, shall mean a committee of PSX constituted for

review and approval of the prospectus and the listing application.

Margin Money The partial or total amount, as the case may be, paid by a bidder at the

time of registration with the Book Runner. The Book Runner shall collect

full amount of the bid money as Margin Money in respect of bids placed

by an individual investor and not less than twenty five percent (25%) of

the bid money as Margin Money in respect of bids placed by

institutional investors.

Minimum Bid Size The Bid amount equal to One Million Rupees (PKR 1,000,000/-).

Ordinary Shares Ordinary Shares of Matco having face value of PKR 10.00/- each.

Registration Form The form which is to be submitted by the Eligible Investors for

registration to participate in the Book Building process. The registration

period shall commence at least three days before the start of the

Bidding Period from January 18, 2018 to January 24, 2018 from 9:00 am


10

to 5:00 pm (during working days) and shall remain open till 3:00 pm on

the last day of the Bidding Period.

PO Regulations The Public Offering Regulations, 2017

Related Employees Related Employees mean such employees of the Issuer, the Book

Runner, the Underwriters, and the Consultant to the Issue, who are

involved in the Issue. Please refer to paragraph 2.2.26 for further

details.

Securities Regulations Chapter 5 of the Rule Book of the Pakistan Stock Exchange Limited, titled

‘Listing of Companies and Securities Regulation’.

Step Bid Step Bid means a series of limit bids at increasing prices. In case of a step

bid the amount of each step will not be less than Rupees One Million

(PKR 1,000,000/-).

Strike Price

The price per ordinary share of the Issue determined / discovered on

the basis of Book Building process in the manner provided in the PO

Regulations, at which the shares are Issued to the successful bidders.

The Strike Price will be disseminated after conclusion of Book Building

through publication of Supplement to the Prospectus in at least all those

newspapers in which the Prospectus was published and also posted on

the websites of PSX, the Consultant to the Issue, the Book Runner and

the Company.

Supplement to the Prospectus The Supplement to the Prospectus means the Supplement given on

page 2, which shall be published within three (3) working days of the

closing of the Bidding Period at least in all those newspapers in which

the Prospectus was earlier published and disseminated through PSX

where shares of the Company are to be listed.

System An online electronic system operated by the Designated Institution for

conducting Book Building. In this IPO, the System is being provided by

PSX.

Transaction Legal Counsel HaidermotaBNR D-79, Block No. 5, K.D.A Scheme No. 05, Karachi, Pakistan

Interpretation:

ANY CAPITALIZED TERM CONTAINED IN THIS PROSPECTUS, WHICH IS IDENTICAL TO A CAPITALIZED TERM DEFINED HEREIN, SHALL, UNLESS THE CONTEXT EXPRESSLY INDICATES OR REQUIRES OTHERWISE AND TO THE EXTENT AS MAY BE APPLICABLE GIVEN THE CONTEXT, HAVE THE SAME MEANING AS THE CAPITALIZED / DEFINED TERM PROVIDED HEREIN.


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Table of Contents

1 APPROVALS AND LISTING ON THE STOCK EXCHANGE ...................................................................... 12

2 VALUATION, BOOK BUILDING PROCEDURE AND SHARE CAPITAL .................................................... 15

3 UNDERWRITING, COMMISSIONS, BROKERAGE AND OTHER EXPENSES ........................................... 54

4 OVERVIEW, HISTORY AND PROSPECTS ............................................................................................. 56

5 FINANCIAL INFORMATION ................................................................................................................ 70

6 MANAGEMENT .................................................................................................................................. 99

7 MISCELLANEOUS INFORMATION .................................................................................................... 109

8 APPLICATION AND ALLOTMENT INSTRUCTIONS ............................................................................. 116

9 INSTRUCTIONS FOR REGISTRATION AND BIDDING ......................................................................... 120

10 REGISTRATION FORM ...................................................................................................................... 123

11 DUPLICATE REGISTRATION FORM ................................................................................................... 124

12 BIDDING FORM ................................................................................................................................ 125

13 ADDITIONAL PAYMENT FORM ........................................................................................................ 127

14 BID REVISION FORM ........................................................................................................................ 128

15 SIGNATORIES TO THE PROSPECTUS ................................................................................................ 129

16 MEMORANDUM OF ASSOCIATION ................................................................................................. 130

17 APPLICATION FORM ........................................................................................................................ 137


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1 APPROVALS AND LISTING ON THE STOCK EXCHANGE

1.1 APPROVAL OF THE SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN Approval of the Securities & Exchange Commission of Pakistan under Section 87(2) of the Securities Act, 2015 read with Section 88(1) thereof has been obtained by Matco Foods Limited for the issue, circulation and publication of this Prospectus vide their letter No. SMD/CIW/SA-88/13/2017 dated December 20, 2017. DISCLAIMER:

IT MUST BE DISTINCTLY UNDERSTOOD THAT IN GIVING THIS APPROVAL, SECP DOES NOT TAKE ANY RESPONSIBILITY FOR THE FINANCIAL SOUNDNESS OF THE COMPANY AND ANY OF ITS SCHEMES STATED HEREIN OR FOR THE CORRECTNESS OF ANY OF THE STATEMENTS MADE OR OPINIONS EXPRESSED WITH REGARD TO THEM BY THE COMPANY IN THIS PROSPECTUS. SECP HAS NOT EVALUATED QUALITY OF THE ISSUE AND ITS APPROVAL FOR ISSUE, CIRCULATION AND PUBLICATION OF THE PROSPECTUS SHOULD NOT BE CONSTRUED AS ANY COMMITMENT OF THE SAME. THE PUBLIC / INVESTORS SHOULD CONDUCT THEIR OWN INDEPENDENT DUE DILIGENCE AND ANALYSIS REGARDING THE QUALITY OF THE ISSUE BEFORE BIDDING / SUBSCRIBING. SECP NEITHER TAKES RESPONSIBILITY FOR CORRECTNESS OF THE CONTENTS OF THIS PROSPECTUS NOR THE ABILITY OF THE COMPANY TO FULFILL ITS OBLIGATIONS THEREUNDER.

1.2 APPROVAL OF PROSPECTUS BY PSX The Prospectus of the Company has been approved by PSX vide letter No. PSX/GEN-7775 dated November 22, 2017 in accordance with the requirements of the Securities Regulations.

DISCLAIMER:

PSX HAS NOT EVALUATED THE QUALITY OF THE ISSUE AND ITS APPROVAL SHOULD NOT BE CONSTRUED AS ANY COMMITMENT OF THE SAME. THE PUBLIC / INVESTORS SHOULD CONDUCT THEIR OWN INDEPENDENT INVESTIGATION AND ANALYSIS REGARDING THE QUALITY OF THE ISSUE BEFORE SUBSCRIBING / BIDDING.

THE PUBLICATION OF THIS DOCUMENT DOES NOT REPRESENT SOLICITATION BY PSX.

THE CONTENTS OF THIS DOCUMENT DOES NOT CONSTITUTE AN INVITATION TO INVEST IN SHARES OR SUBSCRIBE FOR ANY SECURITIES OR OTHER FINANCIAL INSTRUMENT BY PSX, NOR SHOULD IT OR ANY PART OF IT FORM THE BASIS OF, OR BE RELIED UPON IN ANY CONNECTION WITH ANY CONTRACT OR COMMITMENT WHATSOEVER OF PSX.

IT IS CLARIFIED THAT INFORMATION IN THIS PROSPECTUS SHOULD NOT BE CONSTRUED AS ADVICE ON ANY PARTICULAR MATTER BY PSX AND MUST NOT BE TREATED AS A SUBSTITUTE FOR SPECIFIC ADVICE.

PSX DISCLAIMS ANY LIABILITY WHATSOEVER FOR ANY LOSS ARISING FROM OR IN RELIANCE UPON THIS DOCUMENT TO ANYONE, ARISING FROM ANY REASON, INCLUDING, BUT NOT LIMITED TO, INACCURACIES, INCOMPLETENESS AND / OR MISTAKES, FOR DECISIONS AND /OR ACTIONS TAKEN, BASED ON THIS DOCUMENT.

PSX NEITHER TAKES RESPONSIBILITY FOR THE CORRECTNESS OF CONTENTS OF THIS DOCUMENT NOR THE ABILITY OF THE COMPANY TO FULFILL ITS OBLIGATIONS THEREUNDER.

ADVICE FROM A SUITABLY QUALIFIED PROFESSIONAL SHOULD ALWAYS BE SOUGHT BY INVESTORS IN RELATION TO ANY PARTICULAR INVESTMENT.


13

1.3 LISTING AT PSX Application has been made to PSX for permission to deal in and for quotation of the shares of the Company.

If for any reason the application for formal listing is not accepted by PSX or approval for formal listing is not granted by PSX before the expiration of twenty-one days from the date of closing of the subscription period / list or such longer period not exceeding forty-two days as may, within the said twenty-one days, be notified to the applicants for permission by the securities exchange, the Issuer undertakes that a notice to that effect will immediately be published in the press and will refund Application Money to the applicants without surcharge as required under the provisions of Section 69 of the Companies Act.

If any such money is not repaid within eight (08) days after the Company becomes liable to repay it, the Directors of the Company shall be jointly and severally liable to repay that money from the expiration of the eight day together with surcharge at the rate of two per cent (2.0%) for every month or part thereof from the expiration of the eight day and, in addition, shall be liable to a penalty of level 3 on the standard scale in accordance with the provisions of sub-section (2) of Section 69 of the Companies Act.

As required under sub-section (3) of Section 69 of the Companies Act, the Application Money including the Bid Money, shall be deposited and kept in a separate bank account in a scheduled bank so long as the company may become liable to repay it under sub-section (2) of Section 69 of the Companies Act; and, if default is made in complying with the said sub-section (3), the Company and every officer of the company who authorizes or permits the default shall be liable to a penalty of level 2 on the standard scale.


14

1.4 CERTIFICATE BY CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER OF THE ISSUER

September 05, 2017

The Chief Executive

Pakistan Stock Exchange Limited

Stock Exchange Building

Stock Exchange Road

Karachi

We, being the Chief Executive Officer and Chief Financial Officer of Matco Foods Limited (the “Issuer”) accept absolute responsibility for the disclosures made in this Prospectus. We hereby certify that the Prospectus contains all necessary information with regard to the Issuer and the Issue and constitutes full, true and plain disclosures of all material facts relating to the shares being offered through this Prospectus and that nothing has been concealed.

The information contained in this Prospectus is true and correct to the best of our knowledge and belief, and the opinions and intentions expressed herein are honestly held.

There are no other facts, the omission of which makes this Prospectus as a whole or any part thereof misleading.

For and behalf of Matco Foods Limited

-Sd- ___________________________ Khalid Ghori Chief Executive Officer

-Sd- ___________________________ Muhammad Jawed Ismail Chief Financial Officer


15

2 VALUATION, BOOK BUILDING PROCEDURE AND SHARE CAPITAL

2.1 VALUATION SECTION The Ordinary shares of Matco are being issued at Floor Price of PKR 26/- per share which is at a premium of PKR 16/- per Ordinary share to the face value of PKR 10.00 per Ordinary share. The Consultant to the Issue has reviewed the business performance of the Company and in their opinion the Floor Price of PK 26 per share is justified based on:

2.1.1 Successful Operational History Matco, founded in 1964 by Syed Sarfaraz Ali Ghori, was incorporated in 1990 as a private limited company. In the early days, the Company supplied rice processing plants and machinery to Government of Pakistan and later, in 1967, it set up its first rice processing plant. In 1990, the Company set up Pakistan’s first fully automated, modern rice processing plant supplied by Satake Corporation of Japan. In 1999, first container of Matco’s own brand Falak was shipped.

Since then Matco is continuing to grow from strength to strength at the top end of rice processing industry, the Company undertook backward integration by setting up a state of the art rice paddy drying, husking plant in Sadhoke District near Gujranwala in 2010 to eliminate wastage and paddy drying losses.

A graph on the summary of operational history of Matco is shown below:

2.1.2 Financial Performance Since FY 2013, Matco net profit grew at compounded annual growth rate (“CAGR”) of 19.7% while the sales of the Company remain stable during the same period. The growth in the bottom line of the Company is owing to its innovation, market development, extensive distribution reach and expanding product portfolio.

During FY 2016, Matco’s volumetric growth in basmati exports outperformed the industry. However, with falling international rice prices, the Company exhibited a lower revenue base. As a result, margins of the Company reduced coupled with higher inventory carrying cost. On the back of the recovery in international rice prices, the Company reported significant improvement in bottom line in FY 2017, and the management of the Company expects this trend to continue for the coming years.

6,289

8,160

6,089 5,578

6,134

849 881 895 634 965

-

1,500

3,000

4,500

6,000

7,500

9,000

2013 2014 2015 2016 2017

Sales Gross Profit

539 524614

345

641

131177

984

269

0

200

400

600

800

2013 2014 2015 2016 2017

EBITDA Net Profit

PKR (MN) PKR (MN)


16

Matco is an export oriented Company, with the exports representing more than 90% of the total sales volume. Contribution of export sales of Basmati and IRRI rice in the topline of Company is around 80%. Apart from export sales, the Company drives significant portion of its revenue from sale of by-products which includes rice bran, husk, broken rice and color sorter rice.

The above figure shows that Company’s revenue from by-products is gradually increasing.

2.1.3 Largest Rice Export Company in Pakistan Matco is leading agri business in South Asia with over 50 years of experience in the rice industry and a global portfolio of more than 150 customers. The Company is one of the largest rice exporter from Pakistan and its flagship brand “Falak Basmati Rice” is available in more than 40 countries worldwide and its private label brands being exported to over 60 countries worldwide.

2.1.4 Product Qualities With over 50 years of experience in the rice industry, Matco guarantees traceable, sustainable premium quality rice that adhere to international standards. Matco holds international accreditation from the Council Union for USDA Organic and EU Organic certification. Recently, the Company has also commenced production of organic rice glucose and organic rice protein products.

Matco holds numerous international certifications some of which are listed below:

1. ISO 9001:2001 2. HACCP (Hazard Analysis and Critical Control Point) 3. BRC (British Retail Consortium) 4. ISO 14001 (Environmental Management System) 5. OHSAS 18001 (Occupational Health and Safety Management System) 6. KEBS (Diamond Mark Certified from Kenya Bureau of Standards)

2.1.5 Strong Management With many decades of experience in the rice industry, Matco’s senior management is trailblazer in modernizing the industry. From introducing the never done before rice processing methods to the country, to achieving many first milestones for the whole industry, the Company’s leadership is in the prime driving seat to propel the industry and the Company itself forward.

68 60

51

61 59

65

58

50

60 55

2 3 2 1 4

90%

95%

100%

-

25

50

75

2013 2014 2015 2016 2017

Rice Sales Volume

Total Sales Volume Export Sales Volume

Local Sales Volume Export as % of Total Sales (RHS)

MT (“000")

)

80% 80% 80% 78.0%65%

4% 4% 4% 3.0%12%

16% 16% 16% 20% 23%

0%

25%

50%

75%

100%

2013 2014 2015 2016 2017

Revenue Proportion

Rice Export Sales Rice Local Sales By-product Sales


17

2.1.6 Investment and Diversification The Company always strived and determined for future business growth through investment and diversification. Recently, Matco has diversified its operations within domain specialized products i.e. Rice Glucose and Rice Protein with plant capacity of 10,000 MT per annum of rice glucose and 1,000 MT of Rice Protein per annum. Project is complete and commercial production has started from October 02, 2017.

In order to diversify its business operations, Matco also sources following products and pack in its own Falak brand:

1. Pink Salt 2. Iodized Salt 3. Vermicelli 4. Rice Bran Oil

Matco is also the sole distributor of Signature Snacks for Pakistan. Signature Snacks is a leading manufacturer based in Dubai, which produces premium quality biscuits, wafers, crackers and baked chips.

2.1.7 Justification Based on our review, the Consultant to the Issue is of the opinion that the historical performance of the Company, the sponsor’s profile, quality of management and their business distribution network indicate sustainability of business performance in the future.

Matco is an export oriented company with a global portfolio of more than 150 customers and a geographical reach across 60+ countries worldwide. The Company is undertaking expansion of its recently established Rice Glucose and Rice Protein plant and intends to export its rice glucose products because of high margins in the international market where the average price of rice glucose is the range of USD 1200 per MT compared to domestic selling price of between PKR 65,000 to PKR 70,000 per MT. The shares of the Company are being issued at a Floor price of PKR 26 per share while the Book value per share of the Company as at June 30, 2017 is PKR 29.4.


18

2.2 BOOK BUILDING PROCEDURE

2.2.1 Brief Structure

The Present Issue The Issue comprises 29,143,000 Ordinary Shares of face value of PKR 10.00/- each which constitutes 25% of the Post IPO paid up capital of the Company.

The Issue is being made through the Book Building process at a Floor Price of PKR 26/- per Ordinary Share (including a premium of PKR 16/- per Ordinary Share). The bidders shall be allowed to place bids for one hundred percent (100%) of the issue size and the Strike Price shall be the price at which one hundred percent (100%) of the issue size is subscribed. However, the successful bidders would be allotted only seventy-five percent (75%) of the issue size i.e. 21,857,000 and the remaining twenty-five percent (25%) i.e. 7,286,000 would be offered to the retail investors.

The bidders shall give an undertaking along with the application that they would subscribe to the unsubscribed shares, if any, of the retail portion and their remaining bid money would remain deposited/ blocked till allotment of unsubscribed shares of the retail portion, if any, to them on pro-rata basis. In case the retail portion is fully subscribed, the bid money shall be unblocked within one (1) working day or refunded within three (3) working days from the date of confirmation of shares subscribed in the general public portion.

Within 3 working days from the close of the Bidding Period, a Supplement to the Prospectus will be published in at least all those newspapers in which the Prospectus is published. The Supplement will contain information related to the Strike Price, the Issue Price and category wise break-up of the successful bidders. Format of the Supplement is given on page 2 of this Prospectus.

2.2.2 Types of Bids and Procedure for making a Bid Book Building is a process whereby investors bid for a specific number of shares at various prices. The Issuer set a Floor Price, which is the minimum / lowest price a Bidder can bid at. An order book of bids is maintained by the Book Runner, which is then used to determine the Strike Price through the “Dutch Auction Method”.

Under the Dutch Auction Method, the Strike Price is determined by lowering the Bid Price to the extent that the total number of shares issued through the Book Building process are subscribed.

A bid by a Bidder can be a “Limit Bid”, or a “Step Bid”, each of which are explained below:

Limit Bid: Limit bid is at the Limit Price, which is the maximum price a Bidder is willing to pay for a specified number of shares.

In such a case, a Bidder explicitly states a price at which he / she / it is willing to subscribe to a specific number of shares. For instance, a Bidder may bid for 2 million shares at PKR 28.00 per share, based on which the total Application Money would amount to PKR 56 million. In this case the Bid Amount will be also PKR 56 million. Since the Bidder has placed a Limit Bid at PKR 28.00 per share, this indicates that he / she / it is willing to subscribe the shares at a price up to PKR 28.00 per share.

Step Bid: A series of Limit Bids at increasing prices. The amount of any individual step shall not be less than PKR. 1,000,000.

Under this bidding strategy, Bidders place a number of Limit Bids at different increasing price levels. A Bidder may, for instance, make a bid for 1.0 million shares at PKR 26.00 per share, 0.7 million shares at PKR 27.00 per share and 0.5 million shares at PKR 28.00 per share. Therefore, in essence the Bidder has placed one Step Bid comprising of three Limit Bids at increasing prices. The Bid amount will be PKR 58.9 million. In case of individual Bidder, the Margin Money will be 100% i.e. PKR 58.9 million whereas in case of Institutional Bidders the Margin Money shall be 25% of the Bid amount i.e. PKR 14.725 million.


19

Restrictions: (i) AN ELIGIBLE INVESTOR SHALL NOT:

(a) BID BELOW THE FLOOR PRICE; (b) MAKE A BID FOR MORE THAN 10% OF THE SHARES ALLOCATED UNDER THE BOOK BUILDING

PORTION; (c) MAKE A BID WITH A PRICE VARIATION OF MORE THAN 10% OF THE PREVAILING INDICATIVE

STRIKE PRICE AS PER REGULATION 10(2)(iii) OF THE PO REGULATIONS; (d) PLACE CONSOLIDATED BID. A BID APPLICATION WHICH IS FULLY OR PARTIALLY BENEFICIALLY

OWNED BY PERSONS OTHER THAN THE ONES NAMED THEREIN IS TO BE CONSIDERED AS A CONSOLIDATED BID;

(e) MAKE MORE THAN ONE BID SEVERALLY OR JOINTLY, HOWEVER, A BID CAN BE REVISED UPWARDS TILL 5.00 PM ON THE LAST DAY OF THE BIDDING PERIOD;

(f) RIVISE BID DOWNWARD; AND (g) WITHDRAW BID.

(ii) RELATED EMPLOYEES OF THE ISSUER, CONSULTANT TO THE ISSUE AND THE BOOK RUNNER SHALL NOT PARTICIPATE IN THE BIDDING PROCESS.

(iii) NO PERSON SHALL TAKE PART IN THE BOOK BUILDING PROCESS, DIRECTLY OR INDIRECTLY SEVERALLY

OR JOINTLY IN ANY MANNER OR ENGAGE IN ANY ACT OR PRACTICE WHICH CREATE A FALSE AND MISLEADING APPEARANCE OF ACTIVE BIDDING FOR RAISING OR DEPRESSING STRIKE PRICE IN THE BOOK BUILDING PROCESS.

(iv) ASSOCIATES OF THE ISSUER AS DISCLOSED IN THE PROSPECTUS SHALL NOT IN AGGREGATE MAKE BIDS FOR SHARES IN EXCESS OF FIVE PER CENT OF THE BOOK BUILDING PORTION.

(v) AS PER REGULATION 7(9) OF THE PO REGULATIONS, THE ASSOCIATES OF THE CONSULTANT TO THE ISSUE AND THE BOOK RUNNER SHALL NOT IN AGGREGATE MAKE BIDS FOR SHARES IN EXCESS OF TWO (2%) PERCENT OF THE BOOK BUILDING PORTION.

LIST OF ASSOCIATED COMPANIES AND UNDERTAKINGS OF THE ISSUER, NAMES OF RELATED EMPLOYEES OF THE ISSUER, CONSULTANT TO THE ISSUE AND BOOK RUNNER ARE PROVIDED IN SECTION 2.2.26.

Once the Bidding Period has lapsed and the Bidding Book has been built, the Strike Price shall be determined on the basis of Dutch Auction Method.

Successful Bidders shall be intimated, within one (1) day of the closing of the Bidding Period, about the Strike Price and the number of shares provisionally allotted to each of them. The bid money of bidders who have undertaken to subscribe the unsubscribed retail portion shall remain deposited or blocked till allotment of unsubscribed retail portion, if any, to them on pro-rata basis. Upon intimation by the Book Runner of the final allocation, successful institutional bidders shall deposit their balance margin money within (3) days of such intimation. Where a successful Bidder defaults in payment of shares allotted to it, the Margin Money deposited by such Bidder shall be forfeited to the Book Runner.

As per regulation 9(16) of the PO Regulations, the successful bidders shall be issued shares at the time of issuance of shares to the retail investors. Shares to successful bidders shall be issued only in the form of book-entry through credit in their respective CDS accounts (Investors Account or Sub-Account). All the bidders shall, therefore, provide number of their CDS accounts in the bid application.

The Bidders must fill-in the part of the Bidding Form under the heading, “Dividend Mandate” to enable the Company to directly credit their cash dividend, if any, in their respective International Bank Account Number (IBAN).


20

2.2.3 Mechanism for Determination of Strike Price

1. At the close of the bidding period, the Strike Price shall be determined on the basis of Dutch Auction Method by the System. Under this methodology, the Strike Price is determined by lowering the price to the extent that the total number of shares offered is subscribed.

2. The Order Book shall display the bid prices in a tabular form in descending order along with the number of shares bid for and the cumulative number of shares at each price level.

The mechanism for determination of the Strike Price can be understood by the following illustration:

1. Number of shares being Issued through the Book Building: 29,143,000 Ordinary Shares 2. Floor Price: PKR 26 per Ordinary Share 3. Bidding Period: From January 23, 2018 to January 24, 2018 4. Bidding Time: 9:00am – 5:00pm 5. Bidding Revision Time (Upward Revision only): 9:00am – 5:00pm on all days

Bidder Price (PKR/share) Quantity Cumulative Number

of shares Category of Order

Institution A 35.0 2,800,000 2,800,000 Limit Price Institution B 34.5 2,600,000 5,400,000 Limit Price HNWI A 34.0 2,800,000 8,200,000 Step Bid Institution C 33.5 2,600,000 10,800,000 Limit Price Institution D 32.0 2,700,000 13,500,000 Limit Price HNWI B 31.8 2,800,000 16,300,000 Limit Price HNWI A 31.5 2,900,000 19,200,000 Step Bid Institution E 31.0 1,000,000 20,200,000 Limit Price HNWI C 30.5 2,600,000 22,800,000 Limit Price Institution F 30.0 2,000,000 24,800,000 Step Bid Institution E 29.5 1,000,000 27,500,000 Limit Price HNWI D 29.0 1,000,000 25,800,000 Step Bid HNWI E 28.0 2,000,000 27,800,000 Limit Price

Institution F 27.8 2,800,000 30,600,000 Step Bid HNWI D 27.5 2,900,000 35,200,000 Step Bid HNWI F 27.0 2,400,000 37,600,000 Limit Price

Strike Price determine

through Dutch Auction

Method

Bid has been revised

upwards and placed at

PKR 31.0

Total shares

subscribed


21

On the basis of the figures provided in the above illustration, according to the Dutch Auction Method, the Strike

Price would be set at PKR 27.8 per share to sell the required quantity of 29,143,000 ordinary shares.

At PKR 35.0 per share, investors are willing to buy 2,800,000 shares. Since 26,343,000 shares are still available, therefore the price will be set lower.












At PKR 27.8 per share, investors are willing to buy 2,000,000 shares. Since after bidding for 2,000,000 shares at PKR 27.8 per share, no shares will be available, therefore, the Strike Price will be set at PKR 27.8 per share for the entire lot of 29,143,000 shares.

The bidders who have placed bids at prices above the Strike Price (which in this illustration is PKR 27.8 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 27.8 per share do not qualify for allotment and their money would be refunded.

Only 75% of the total shares offered through book building shall provisionally be allotted to the successful bidders.

The bidders shall give an undertaking along with the Bid Application that they would subscribe to the unsubscribed

shares, if any, by the retail investors and their remaining bid money would remain deposited/ blocked till allotment

of unsubscribed shares by the retail investors, if any, to them on pro-rata basis. In case the retail portion is fully

subscribed, the bid money shall be unblocked within one (1) working day or refunded within three (3) working days

from the date of confirmation of shares subscribed in the public portion.

2.2.4 Timeframe for intimation to the successful bidders and Mechanism for payment of the balance amount by the successful bidders

Successful bidders shall be intimated, within one (1) day of the closing of the bidding period, the Strike Price and the number of shares provisionally allotted to each of them. Upon intimation by the Book Runner of the final


22

allocation, successful institutional bidders shall deposit their balance margin money within (3) days of such intimation. Where a successful Bidder defaults in payment of shares allotted to it, the Margin Money deposited by such Bidder shall be forfeited to the Book Runner.

2.2.5 Consultant to the Issue Arif Habib Limited (“AHL”) has been appointed by the Issuer as Consultant to the Issue to this Issue.

2.2.6 Interest of Consultant to the Issue and Book Runner other than their Role as Consultant to the Issue and Book Runner

The Consultant to the Issue and Book Runner are deemed to be interested to the extent of fees payable to them by the Issuer for the services of Consultant to the Issue and Book Runner to the Issue. The Consultant to the Issue and Book Runner have no other interest in any property or profits of the Company.

2.2.7 Book Runner MCB Bank Limited (“MCB”) has been appointed by the Issuer as the Book Runner to this Issue. Roles and Responsibilities of the Book Runner

The Book Runner shall be responsible to:

1. Ensure that necessary infrastructure and electronic system is available to accept bids and to conduct the

whole Book Building process in a fair, efficient and transparent manner;

2. Ensure blocking, where required, of bid and margin money of the Bidders in their respective accounts;

3. The Book Runner must be financially capable for honoring its commitments arising out of defaults by their

investors, if any;

4. Use the software provided by the Designated Institution i.e. PSX in this Issue for the Book Building on such

terms and conditions as may be agreed through an agreement in writing;

5. Ensure that the software used for Book Building is based on Dutch Auction Method for display of the order

book in descending order and determination of the strike price;

6. Ensure that the bidders can access to the System and can revise their bids (upward only) electronically using

the user ID and the password;

7. Ensure that it has obtained list and Unique Identification Numbers (“UINs”) of the associates of the Issuer

and the Consultant to the Issue;

8. Ensure that names and UINs of all the persons are entered and capped in a manner as prescribed in the PO

Regulations before commencement of the Bidding Period;

9. Ensure that no bid or bids exceeding five per cent (5%), in aggregate, is or are made by the associated

companies and associated undertakings of the Issuer;

10. Ensure that it has blocked all UINs and names of all related employees for participation in the bidding;

11. Enter into an underwriting agreement with the Issuer with respect to underwriting of the Book Building

portion for covering the default risk;

12. Establish bid collection centers, at least, in Islamabad, all the provincial capitals, Azad Kashmir and Gilgit/

Baltistan;

13. Maintain record of all the bids received; and

14. Ensure that all the Bids received in the Bid Collection Centers are entered into the Book Building System

within the prescribed time.


23

Bid Collection Centers

The Book Runner has established bid collection centers at the following addresses:

Karachi

Contact Officer: Muhammad Bilal Mustafa Muhammad Farhan Khan

Direct No.: +92 21 3264 2008 +92 21 3264 5034, +92 21 3263 3070

Mobile No.: +92 331 1306154 +92 300 2284227

Fax No.: +92 21 3227 0105 +92 21 3263 3075

Email: [email protected] [email protected], [email protected]

Postal Address: Mezzanine Floor, MCB Tower, MCB Bank Limited, I.I Chundrigar Road, Karachi

1st Floor, Shaheen Complex, M.R. Kayani Road Karachi

Lahore Quetta

Contact Officer: Ali Raza Waqar Ali

Mobile No.: +92 334 4275 812 +92 333 7937 887

Direct No.: +92 42 3636 1269, 3637 2691 +92 81 2823 487

Fax: +92 42 3636 2949 +92 81 2822 203

Email: [email protected] [email protected]

Postal Address: MCB Bank Limited, Stock Exchange, 19 Khayban-e-Aiwan-e-Iqbal, Lahore

MCB Bank Limited, Shahra-e-Iqbal, Quetta

Islamabad Peshawar

Contact Officer: Abu Bakar Syed Maqsood Shah

Direct: +92 51 2894 041 +92 91 5279 769

Fax No: +92 51 2894 045 +92 91 5279 427


Postal Address: MCB Bank Limited, office No.1, Ground + Mezzanine Floor, Islamabad Stock Exchange Tower, Blue Rea Islamabad

MCB Bank Limited, Saddar Road, Peshawar Cantt

Azad Kashmir Gilgit/Baltistan

Contact Officer: Hameedullah Liaqat Ali

Direct: +92 582 7443 145 +92 5811 457 860

Fax No: +92 582 7442 287 +92 5811 457 860


Postal Address: MCB Bank Limited, Iqbal Road, Mirpur, Azad Kashmir

MCB Bank Limited, National Market, Gilgit

2.2.8 Roles and Responsibilities of the Designated Institution PSX being provider of the Book Building System (Designated Institution), shall ensure that Book Building System shall smoothly perform following functions: 1. Record name, UIN, National Tax Number (NTN), postal and email addresses; land line and cell numbers, bank

account number and branch address; and Investor Account Number or Sub-Account Number of the bidder

with participant account number;

2. Provide a mechanism for registration of the bidders at least three days before commencement of the bidding

period till 03:00 p.m. on the last day of the Bidding Period and require the investors to provide at least such

information as mentioned above;

3. Generate bidders’ Internet Protocol (IPs) address and keep record of all IP addresses from where the bids are

placed;








24

4. Record the number of shares bid for, the Bid Price, type of the bid i.e. Limit Bid or Step Bid, date and time of

the entry of the bid;

5. Display the bids revised upward, and date and time of upward revision;

6. Not accept the bids placed at a Bid Price that is below the Floor Price;

7. Display live the total number of shares offered for sale, the Floor Price, total number of bids received, total

number of shares bid for, indicative Strike Price and Bidding Range;

8. Build an order book showing demand for the shares at various price levels in a descending order along with

the accumulated number of shares bid for and percentage of total shares offered under the Book Building

Portion;

9. Discover the strike price at the close of the Bidding Period;

10. Generate alerts for the Bidders via Short Message Service (SMS) through cell phones and emails upon entry

of the bid, at the time of upward revision of the bid, and upon discovery of the strike price; and

11. Ensure that system must provide the bidders the option to upward revise their bids online or through the Book Runner during the period permitted under the PO Regulations.

PSX shall ensure that:

─ Identity of the bidder is not displayed; and

─ No bid is entered into the System after closing of the Bidding Period.

2.2.9 Roles and Responsibilities of the Issuer The Issuer shall ensure that: 1. the Issuer, its sponsors, promoters, substantial shareholders, directors and associates shall have no over dues

or defaults, irrespective of the amount, appearing in the report obtained from the credit information bureau;

2. the Issuer or its directors, sponsors or substantial shareholders should not have held the office of the directors, or have not been sponsors or substantial shareholders in any company,

I. which had been declared defaulter by the securities exchange or futures exchange; or

II. whose TRE certificate has been cancelled or forfeited by the securities exchange; or

III. which has been de-listed by the securities exchange due to non-compliance of its regulations.

3. The Consultant to the Issue, Book Runner, Underwriter, Balloter and Share Registrar and Banker to an Issue, where required, are appointed through separate agreements in writing.

4. It has submitted through its Consultant to the Issue, an application along with draft prospectus for listing of its securities to the securities exchange.

2.2.10 Opening and Closing of the Registration Period The Registration period shall be for Five (5) working days i.e. January 18, 2018 to January 23, 2018 from 9:00 AM to 5:00 PM and from 9:00 AM to 3:00 PM on January 24, 2018.

REGISTRATION PERIOD

January 18, 2018 9:00am to 5:00pm

January 19, 2018 9:00am to 5:00pm

January 22, 2018 9:00am to 5:00pm

January 23, 2018 9:00am to 5:00pm

January 24, 2018 9:00am to 3:00pm


25

2.2.11 Opening and Closing of the Bidding Period The Bidding Period shall be for Two (2) working days i.e. January 23, 2018 and January 24, 2018. The bidding will commence at 09:00 am and shall close at 05:00 pm on both days.

BIDDING PROCESS STARTS ON January 23, 2018 (9:00 AM to 5:00 PM)

BIDDING PROCESS ENDS ON January 24, 2018 (9:00 AM to 5:00 PM)

2.2.12 Eligibility to Participate in Bidding

Eligible Investors who can place their bids in the Book Building process include local and foreign Individual and Institutional Investors whose Bid Amount is not less than PKR 1,000,000/- (Rupees One Million only).

2.2.13 Information for Bidders

1. The Prospectus for Issue of Shares has been approved by PSX and SECP.

2. The Prospectus, Registration Forms, the Bidding Forms and Bid Revision Forms can be obtained from the Registered Office of Matco Foods Limited, MCB Bank Limited (the Book Runner) and AHL (the Consultant to the Issue) and the designated Bid Collection Centers. Prospectus, Registration Forms, Bidding Forms and Bid Revision Forms can also be downloaded from the following websites of the Consultant to the Issue, Book Runner and the Company: http://www.arifhabibltd.com, https://www.mcb.com.pk http://www.matcofoods.com/

3. Eligible Investors who are interested in subscribing to the Ordinary Shares should approach the Book Runner at the addresses provided in paragraph 2.2.7 for registration for submitting their Bids.

4. THE REGISTRATION FORMS SHOULD BE SUBMITTED ON THE PRESCRIBED FORMAT AT THE ADDRESSES PROVIDED IN PARAGRAPH 2.2.7. FOR DETAILS ON THE PROCEDURE OF REGISTRATION PLEASE REFER TO PARAGRAPH 2.2.14.

5. THE BIDS SHOULD BE SUBMITTED ON THE PRESCRIBED BIDDING FORM IN PERSON, THROUGH FAX NUMBERS GIVEN IN PARAGRAPH 2.2.7 OR THROUGH THE ONLINE SYSTEM USING THE USER ID AND PASSWORD ISSUED AT THE TIME OF REGISTERATION OF ELIGIBLE INVESTOR.

6. REGISTERED INVESTORS CAN PLACE AND REVISE THEIR BIDS UPWARDS BY ACCESSING THE PSX ONLINE PORTAL FOR BOOK BUILDING BY USING THE USER ID AND PASSWORD COMMUNICATED TO THEM VIA EMAIL BY PSX.

7. EACH ELIGIBLE INVESTOR SHALL ONLY SUBMIT A SINGLE PAY ORDER, DEMAND DRAFT OR EVIDENCE OF ONLINE TRANSFER OF MONEY ALONG WITH THE REGISTRATION FORM. IT MAY ALSO BE NOTED THAT ONLY A SINGLE PAY ORDER, DEMAND DRAFT OR EVIDENCE OF ONLINE TRANSFER OF MONEY SHALL BE ACCEPTED BY THE BOOK RUNNER ALONG WITH EACH ADDITIONAL PAYMENT FORM.

8. ELIGIBLE INVESTORS WHO ARE ACCOUNT HOLDERS OF MCB (BANKER TO THE BOOK BUILDING PORTION OF THE ISSUE) CAN USE THE ONLINE TRANSFER FACILITY PROVIDED BY MCB TO DEPOSIT THEIR BID MONEY TO THE BOOK BUILDING ACCOUNT OPENED AT MCB

2.2.14 Bidders Registration form and Procedure for Registration

1. A standardized Registration Form has been prescribed by the Issuer for registration of Bidders. The Registration Form, duly filled in, shall be submitted at the Bid Collection Centers in person on addresses given in paragraph 2.2.7. The Registration Form shall be serially numbered at the bid collection centers and date and time stamped at the time of collection of the same from the Bidders.


https://www.mcb.com.pk/



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2. Upon completion and submission of the Registration Form, the Bidders are deemed to have authorized the Issuer to make necessary changes in the Prospectus as would be required for finalizing and publishing the Supplement to the Prospectus in the newspapers in which Prospectus was published and filing the Supplement with the PSX and the SECP, without prior or subsequent notice of such changes to the Bidders.

3. The registration procedure under the Book Building process is outlined below:

─ The Registration period shall be for Five (5) working days i.e. January 18, 2018 to January 23, 2018 from 9:00 AM to 5:00 PM (during working days) and from 9:00 AM to 3:00 PM on January 24, 2018.

─ The Registration Form shall be issued in duplicate signed by the Bidder and countersigned by the Book Runner, with the first copy for the Book Runner and the second copy for the Bidder.

─ The Registration Form shall be duly filled in and signed in duplicate and shall be submitted at the Bid Collection Centers in person, through representative or through fax on addresses and numbers given in paragraph 2.2.7

─ Upon registration of the bidders in the System, PSX shall assign and communicate the User ID and Password to the Bidders via email on the email address provided by them in the Registration Form.

─ The Book Runner may reject any bid for reasons to be recorded in writing provided the reason of rejection is disclosed to such bidder. Decision of the Book Runners shall not be challengeable by the Bidder or its associates.

─ Bid Amount / Margin Money shall be deposited along with the Registration Form through demand draft, pay order or online transfer through Bidder’s bank account only. In case of Online Transfer, the Bidders are requested to submit a bank receipt evidencing transfer of the bid money into the Issuer’s designated bank account. Please note that cash must not be deposited either directly or through online transfer in the Issuer’s designated bank account.

─ The pay order shall be made in favor of “Matco Foods Limited – Book Building”. For online transfer the payment shall be made into account no, 0961347731011027 being maintained in MCB Bank Limited – Global Transaction Banking Branch. The Account Title for the Book Building shall be “Matco Foods Limited – Book Building”. Please note that online transfer facility shall only be allowed to the account holders of MCB Bank Limited.

─ Please note that third party instruments will not be accepted for Margin Money.

o In case of intra city payment instruments, the bidders shall ensure that the payment instruments are made “Payable at any Branch”. Intra city payment instruments that are not made “Payable at any Branch” will not be accepted.

─ The Book Runners shall collect an amount of 100% of the Application Money as Margin Money in respect of bids placed by Individual Investors.

─ The Book Runners shall collect an amount of not less than 25% of the Application Money as Margin Money in respect of bids placed by Institutional Investors.

─ The Bidder shall provide a valid email address in the Registration Form so that the relevant ID and password can be emailed to them upon registration.

─ The Bidders can use the User ID and Password to independently place and upward revise their bids online.

─ The successful Bidders shall be issued shares only in the form of book-entry to be credited in their respective CDS accounts. All the bidders shall, therefore, provide their CDS account numbers in the bid application and Registration form.


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2.2.15 Procedure for Bidding 1. A standardized Bidding Form has been prescribed by the Issuer.

2. Registered Investors can submit their bids in person or through representatives at the Bid Collection Centers during the bidding dates or can place their bids online at https://bkb.psx.com.pk using the user ID and Password received by them over email upon registration with the Book Runner.

3. The bidding procedure under the Book Building process is outlined below:

─ Bids can be placed either at the “Limit Price” or as a “Step Bid”. The minimum size of a Limit Bid by an Eligible Investor shall not be less than PKR 1,000,000/- (Rupees One Million) and in case of a Step Bid, the amount of any step shall also not be less than PKR 1,000,000/- (Rupees One Million).

─ The investors may place their bids through any of the Bid Collection Centers established pursuant to the requirements of sub-regulation 10 of regulation 8 of the PO Regulations. Please see para 2.2.7 for addresses and contact detail of persons at the Bid Collection Centers.

─ The persons at the Bid Collection Centers shall vet the bid applications and accept only such bid applications that are duly filled in and supported by pay order, demand draft or a bank receipt evidencing transfer of the bid money into the Issuer designated bank account.

─ On receipt of bid application in accordance with PO Regulations, the Book Runner shall enter Bid into the System and issue to the Bidder an electronic receipt bearing name of the Book Runner, name of the bidding center, date and time.

─ The bidding shall commence from 09:00 a.m. and close at 05:00 p.m. on all days of the Bidding Period. The bids shall be collected and entered into the system by the Book-Runner till 05:00 p.m. on the last day of the bidding period.

─ The Bidders shall have the right;

o to revise their bids upwards any time either manually through the Bid Collection Centers or electronically through direct access to the system till 05:00 p.m. on the last day of the Bidding Period.

─ The Bidders shall NOT make any downward revision or withdraw their bids as per Regulation 10(2)(vi) of the Regulations.

─ The Book Runner shall collect full amount of the Bid Amount as Margin Money in respect of bids placed by the individual investors and not less than twenty five percent (25%) of the Bid Amount as Margin Money in respect of bids placed by the Institutional Investors.

─ Payment of Margin Money shall be accepted only through demand draft, pay order or online transfer and third party payment instruments shall not be accepted.

─ The Book Runner may on its own discretion accept a bid without Margin Money, provided the Book Building Portion is fully underwritten at least at the Floor Price by the Book Runner.

─ The Book Runner may reject any bid for reasons to be recorded in writing provided the reason of rejection is disclosed to such bidder. The decision of the Book Runner shall not be challengeable by the Bidder or its associates.

─ PSX shall, through the system, display live throughout the bidding period an order book in descending order showing demand for shares at various prices and the accumulated number of shares bid for along with percentage of the total shares issued (the “Order Book”). The Order Book should also show the bids revised upward. The Order Book shall be accessible through websites of PSX.

─ At the close of the Bidding Period, the Strike Price shall be determined on the basis of the Dutch Auction Method.

https://bkb.psx.com.pk/


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─ Once the Strike Price is determined, all those Bidders whose bids are found successful shall become entitled for allotment of shares.

─ The Bidders who have made bids at prices above the Strike Price shall be allotted shares at the Strike Price and the differential shall be refunded.

─ In case all the bids made above the Strike Price are accommodated and shares are still available for allotment, such available shares will be allotted against the bids made at the Strike Price strictly on time priority basis as per clause 7(xix)(b) of the First Schedule of the PO Regulations. The procedure for allotment of shares to successful Bidders is mentioned in para 2.2.21 of the Prospectus.

─ The Bidders who have made bids below the Strike Price shall not qualify for allotment of any Ordinary Shares and the Book Runner shall intimate their respective banks for unblocking, where required, their Bid Money within one (1) working day of the close of the bidding period; and in case of refund, the refunds to such bidders shall be made within three (3) working days from the close of the bidding period.

─ Successful bidders shall be intimated, within one (1) day of the closing of the bidding period, the Strike Price and the number of shares provisionally allotted to each of them. The successful bidders shall be intimated by the Book Runner of their final allocation after subscription of the retail portion of the Issue.

─ In case the retail portion of the Issue is not fully subscribed, the unsubscribed shares shall be allotted to the successful bidders on prorate basis.

─ Upon intimation by the Book Runner of final allocation, successful institutional bidders shall deposit their balance margin money within (3) days of such intimation. Where a successful Bidder defaults in payment of shares allotted to it, the Margin Money deposited by such Bidder shall be forfeited to the Book Runner.

─ Final allotment of shares out of the Book Building Portion shall be made after receipt of full subscription money from the successful Bidders; however, shares to such Bidders shall be credited at the time of credit of shares out of the retail portion.

─ The successful Bidders shall be issued shares only in Book Entry Form to be credited in their respective CDS accounts. All the bidders shall, therefore, provide their CDC account numbers in the Registration Form.

─ The Designated Institution shall continue to display on its website, the data pertaining to the Book Building and determination of the Strike Price for a period of at least three working days after closure of the Bidding Period.

─ The Book-Runner shall ensure that subscription money received against the bids accepted shall not be released to the Issuer by the Banker to the Book Building Portion until:

o credit of all shares allotted to retail investors; and

o issuance of NOC by the PSX.

2.2.16 Payment for Book Building Portion The Issuer has opened one bank account for collection of applications’ money related to book building portion. The Bidders shall draw a demand draft, pay order favoring “Matco Foods Limited – Book Building” or online transfer of the bid money into the Book Building account no. 0961347731011027 maintained at MCB Bank Limited Global Transaction Banking Branch and submit the demand draft, pay order or bank receipt at the designated Bid Collection Centers either in person or through facsimile along with a duly filled in Registration Form.

For online transfer the payment shall be made into the Account 0961347731011027 being maintained at MCB Bank Limited Global Transaction Banking Branch with the Account Title “Matco Foods Limited – Book Building”. Please note that online transfer facility shall only be allowed for MCB Bank Limited customers.


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CASH MUST NOT BE SUBMITTED WITH THE BIDDING FORM/REGISTRATION FORM AT THE BID COLLECTION CENTER NOR DEPOSITED DIRECTLY OR VIA ONLINE TRANSFER THROUGH BIDDER’S BANK ACCOUNT ONLY IN THE ISSUER’S DEISGNATED BANK ACCOUNTS. BID AMOUNT MUST BE PAID THROUGH PAY ORDER, BANK DRAFT OR ONLINE TRANSFER THROUGH BIDDER’S BANK ACCOUNT ONLYS DRAWN / TRANSFER IN FAVOR OF “IPO OF MATCO FOODS LIMITED – BOOK BUILDING ACCOUNT” IN A MANNER ACCEPTABLE TO THE BOOK RUNNER.

Please note that third party payment instruments will not be accepted.

The Collection Banks shall keep and maintain the bid money in the said account. Once the shares allocated under the retail portion have been credited, the Consultant to the Issue, after obtaining NOC from PSX, may request in writing to the collection banks for transfer of the money of successful and accepted applications to the Issuer’s account(s).

Payment Procedure:

The payment procedures for a Limit Bid or a Step Bid are explained below:

PAYMENT FOR LIMIT BID

If investors are placing their bids as a Limit Bid then they shall deposit the Margin Money based on the number of shares they are bidding for at their stated bid price.

For instance, if an investor is applying for 2 million shares at a price of PKR 26.00 per share, then the total Application Money would amount to PKR 52 million. In such a case, (i) Individual Investor shall deposit PKR 52 million in the Book Building account as the bid amount which is 100% of PKR 52 million; and (ii) Institutional Investor shall deposit at least PKR 13 million in the Book Building account as the Margin Money which is 25% of PKR 13 million.

PAYMENT FOR STEP BID

If an investor is placing a Step Bid which is a series of Limit Bids at increasing prices, then he/she/it shall deposit the Margin Money / bid money based on the total number of shares he/she/it is bidding for at his/her/its stated bid prices.

For instance, if the investor bids for 1.0 million shares at PKR 26.00 per share, 0.50 million shares at PKR 28.00 per share and 0.50 million shares at PKR 30.00 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 55 million, which is the sum of the products of the number of shares bid for and the bid price of each limit bid. In such a case, (i) Individual Investors shall deposit PKR 55 million in the Book Building Account as Margin Money which is 100% of PKR 55 million and (ii) Institutional Investors shall deposit at least PKR 13.75 million in the Book Building Account as Margin Money which is 25% of PKR 55 million.

2.2.17 Payment by Foreign Investors Companies are permitted under paragraph 6 (with specific reference to sub para (B) (I)) of Chapter 20 of the State Bank of Pakistan’s (“SBP”) Foreign Exchange Manual (the “Manual”) to issue shares on repatriation basis to non-residents who are covered under paragraph 6 (A) of Chapter 20 of the Manual, i.e. (I) A Pakistan national resident outside Pakistan, (II) A person who holds dual nationality including Pakistan nationality, whether living in or outside Pakistan, (III) A foreign national, whether living in or outside Pakistan and (IV) A firm (including a partnership) or trust or mutual fund registered and functioning outside Pakistan, excluding entities owned or controlled by a foreign government, provided the issue price, is paid in foreign exchange through normal banking channel by remittance from abroad or out of foreign currency account maintained by the subscriber/purchaser in Pakistan. Non-residents who wish to bid for the subscription of shares being offered via book building can remit the subscription money through an Authorized Dealer directly to the book building accounts opened by the Company as given in para 2.2.16 of this Prospectus, however, those non-residents who wish to subscribe shares out of the general public portion may contact any of the bankers to the issue (retail portion) for taking instructions regarding payment of subscription money against shares offered to general public / retail investors. List of bankers to the issue for retail portion is available on page 1 and para 7.3 of this Prospectus.


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The shares issued to non-resident shareholders shall be intimated by the Company to the designated Authorized Dealer, along with the documents prescribed in the Manual within 30 days of issue.

Non-residents who are covered under paragraph 6 (A) of Chapter 20 of the Manual do not require SBP’s approval to invest in the shares being issued in terms of this Prospectus. Furthermore, under paragraph 7 (vii) of Chapter 20 of the Manual the Authorized Dealer shall allow repatriation of dividends, net of applicable taxes and proceeds on sale of listed shares (i.e. divestment proceeds) not exceeding the market value less brokerage/commission on provision of prescribed documents.

Payments made by non-residents shall be supported by proof of receipt of foreign currency through normal banking channels. Such proof shall be submitted along with the Application by the non-residents.

2.2.18 Procedure for Rejection of Bids In terms of regulation 9(7) of the PO Regulations, the Book Runner may reject any Bid placed by a Bidder for reasons to be recorded in writing provided the reason of rejection is disclosed to such Bidder. Decision of the Book Runner shall not be challengeable by the Bidder or any of its associates.

2.2.19 Time frame for upward revision of Bids by the Bidders The registered investors may revise their Bids upwards any time either manually through the Bid Collection Centers or electronically through direct access to the system till 05:00 p.m. on the last day of the Bidding Period. An investor will not be allowed to place or revise a bid with a price variation of more than 10% of the prevailing indicative strike price. NO WITHDRAWL OF BID OR DOWNWARD REVISION IS ALLOWED.

2.2.20 Procedure for Withdrawal of Issue 1. In accordance with regulation 8(16) of the PO Regulations, in case the Issuer does not receive bids for the entire

number of 29,143,000 shares at the Floor Price, the Issue shall be cancelled and the same shall be immediately intimated to the Commission and PSX and the Margin Money shall be refunded to the bidders immediately but not later than three (3) working days of the closing of the Bidding Period.

2. In accordance with regulation 8(17) of the PO Regulation, the Book Building process will be considered as cancelled if the total number of bids received is less than forty (40).

2.2.21 Basis of Allotment of Shares Bidders shall be allowed to place bids for one hundred percent (100%) of the Issue size and the Strike Price shall be the price at which one hundred percent (100%) of the Issue is subscribed via the Dutch Auction Method.

Once the Strike Price is determined, all those Bidders whose bids have been found successful shall be provisionally allotted 75% of the Issue size i.e. 21,857,000 Ordinary Shares.

In order to be a successful Bidder in the Book Building process, the bid price would either be higher than the strike price or at the strike price.

For allocation of shares via Book Building, priority shall be given to the bids placed at the highest price. The bidders, who have made bids at prices above the Strike Price, will be provisionally allocated 75% of the shares bid for, at the Strike Price. The differential between the bid price and Strike Price, would be refunded based on the total number of shares bid for.

Bidders who had placed Bids at the Strike Price will be provisionally allotted seventy-five (75%) of the shares bid for, at the Strike Price, strictly on time priority basis.

Bids made below the Strike Price shall not qualify for allotment of shares and their Margin Money will be refunded.


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The final allotment of shares to the successful bidders would be determined after subscription of the retail portion of the Issue.

In the event the retail portion is undersubscribed, the unsubscribed shares would be allotted to the successful bidders, on a pro-rata basis. Excess funds, if any, after subscription of the unsubscribed shares would be refunded to the bidders.

Final allotment of shares out of the Book Building portion shall be made after subscription of the retail portion and receipt of full subscription money from the successful Bidders; however, shares to such Bidders shall be issued simultaneously with issuance of shares to retail investors, in the form of book-entry to be credited in their respective CDS accounts. All the Bidders shall, therefore, provide number of their respective CDS accounts in the Bid application as required under regulation 9(16) of the PO Regulations.

2.2.22 Refund of Margin Money The bidders who have made bids below the Strike Price shall not qualify for allotment of securities and the book runner shall intimate their respective banks for unblocking, where required, their Bid Money within one (1) working day of the close of the bidding period as required under regulation 9(13) of the PO Regulations; and in case of refund, the refunds to such bidders shall be made within three (3) working days from the close of the bidding period. The bid money of the successful bidders shall remain deposited or blocked till allotment of unsubscribed retail portion, if any, to them on pro-rata basis.

2.2.23 Publication of Supplement to the Prospectus In accordance with the regulation 11(1) of the PO Regulations within three (3) working days of the closing of the Bidding Period, the Supplement to the Prospectus shall be published at least in all those newspapers in which the Prospectus was earlier published and also disseminated through PSX. The Supplement to the Prospectus would contain information relating to the Strike Price, the Issue Price and Category-wise breakup of the successful bidders along with the number of shares provisionally allocated to them. Format of the Supplement is given on page 2 of this Prospectus. Public subscription for the shares shall be held at any date(s) within thirty days (30) of the publication of the Prospectus but not earlier than seven (7) days of such publication.

2.2.24 Ten Percent (10%) Price Variation An investor will not be allowed to place or upward revise a bid with a price variation of more than ten percent (10%) of the prevailing Indicative Strike Price subject to floor price i.e. Bid Price must not be below the Floor Price. Please note that the Indicative Strike Price may not be constant and may keep on changing during the bidding period. Therefore, the 10% range will also change with the Indicative Strike Price.

For Example, if the floor price is PKR 26.0 per share and Indicative Strike Price at any given point in time during the bidding period is PKR 26.0 per share, registered bidders may place or revise their bids from PKR 26.0 per share to PKR 28.6 per share. If at any given point in time during the bidding period, the Indicative Strike Price changes from PKR 26.0 per share to PKR 28.0 per share, the registered bidders may place or upward revise their bids from PKR 28.0 per share to PKR 30.8 per share.

Please note that the 10% range on the lower side cannot go below the floor price. The price range of 10% applicable at any given point in time during the bidding period will also be displayed on the bid screen available at the website of PSX.


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2.2.25 Restriction on Downward revision or withdrawal of Bids by the Bidder The Bidders shall not make downward revision or withdraw their bids as restricted under regulation (10)(2)(vi) of the PO Regulations.

2.2.26 Associated Companies and Undertakings of the Issuer

Associated Company / Trust

S. No Name of Company / Undertakings Status CUIN NTN

1. Matco Engineering (Pvt) Limited Associate K-1974 1019787-7

2. Ghori Trust Trust 1470 3132040-6

Subsidiaries

S. No Name of Company / Undertakings Status CUIN NTN

1. JKT General Trading FZE LLC Subsidiary 12689 N/A

2. Matco Marketing (Pvt) Limited Subsidiary 0100238 7606466-8

Note: As required under regulation 7(8) of the PO Regulations, the Associated Companies and Associated Undertakings of the Issuer shall not in aggregate make bids for shares in excess of 5% of the Book Building Portion.

Related Employees of the Company (Matco Foods Limited)

S. No Name Designation

1. Mr. Jawed Ali Ghori Chairman

2. Mr. Khalid Ghori Chief Executive Officer

3. Mr. Tariq Ghori Director Marketing & Exports

4. Mr. Faizan Ghori Director Finance

5. Mr. Naeem Ur Rehman Akhoond Non-Executive/Independent Director

6. Mr. Syed Kamran Rashid Non-Executive Director/Independent Director

7. Mr. Muhammad Jawed Ismail Chief Financial Officer

8. Mr. Syed Abid Moiz Company Secretary

Related employees of the Consultant to the Issue (Arif Habib Limited)


1 Mr. Shahid Ali Habib Chief Executive Officer

2. Mr. Ahmed Rajani Vice President, Investment Banking

3. Mr. Syed Saquib Ali Vice President, Investment Banking

4. Mr. Dabeer Hasan Sr. Associate, Investment Banking

5. Mr. Ammad Tahir Sr. Associate, Investment Banking

6. Mr. Nayhan Ahmed Mohajir Sr. Associate, Investment Banking

7. Mr. Syed Ali Ahmed Sr. Associate, Investment Banking

8. Mr. Abdul Qadir Associate, Investment Banking

9. Mr. Yasir Abbas Senior Analyst, Investment Banking

10. Mr. Omair Talib Marghoob Analyst, Investment Banking

11. Mr. Tanveer Ahmad Analyst, Investment Banking

12. Umme Sahar Ahmad Analyst, Investment Banking

Related employees of the Book Runner (MCB Bank Limited)


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1 Ms. Amna Hasan Business Head Corporate South & Head of Investment Banking

2 Mr. Jawad Taj Department Head - Project Finance, Advisory & Syndications, Investment Banking

3 Syed Umair Alam Zaidi Manager

4 Mr. Muzammil Shahid Bhatti Manager

5 Mr. Talha Ameer Khan Senior Associate

6 Mr. Muhammad Ali Assistant Relationship Manager

7 Mr. Muhammad Arsal Analyst

8 Mr. Muhammad Bilal Mustafa Analyst

9 Ms. Mahwish Ebrahim Analyst

10 Mr. Muhammad Ashraf Administration Officer

11 Mr. Sarwar Din Sr. Assistant

Note:

1. As per regulation 7(9) of the PO Regulations the associates of the Consultant to the Issue and the Book Runner shall not in aggregate make bids for shares in excess of two (2) percent of the Book Building portion.

2. As required under regulation 20(10) of the PO Regulations, Related Employees of the Issuer, the Consultant to the Issue and the Book Runner shall not participate in the bidding for shares.


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2.2.27 Statement by the Issuer

September 05, 2017

The Chief Executive Pakistan Stock Exchange Limited Stock Exchange Building Stock Exchange Road Karachi On behalf of Matco Foods Limited (“MATCO” or the “Company”), we hereby confirm that all material information as required under the Securities Act, 2015, the Public Offering Regulations, 2017 and the Listing of Companies and Securities Regulations of the Pakistan Stock Exchange Limited has been disclosed in the Prospectus and that whatever is stated in Prospectus and the supporting documents is true and correct to the best of our knowledge and belief and that nothing has been concealed.

For and on behalf of Matco Foods Limited

-Sd- __________________ Khalid Ghori Chief Executive Officer

-Sd- __________________ Muhammad Jawed Ismail Chief Financial Officer


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2.2.28 Statement by Consultant to the Issue

October 30, 2017

The Chief Executive Pakistan Stock Exchange Limited Stock Exchange Building Stock Exchange Road Karachi

Being mandated as the Consultant to the Issue to this Initial Public Offering of Matco Foods Limited through the Book Building process, we hereby confirm that all material information as required under the Securities Act, 2015, the Public Offering Regulations, 2017 and the Listing of Companies and Securities Regulations of the Pakistan Stock Exchange Limited has been disclosed in this Prospectus and that whatever is stated in Prospectus and in the supporting documents is true and correct to the best of our knowledge and belief and that nothing has been concealed.

For and behalf of Arif Habib Limited

-Sd- __________________ Mr. Ahmed Rajani Vice President, Investment Banking


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2.2.29 Statement by the Book Runner

September 05, 2017

The Chief Executive Pakistan Stock Exchange Limited Stock Exchange Building Stock Exchange Road Karachi Being mandated as the Book Runner to this Initial Public Offering of Matco Foods Limited through the Book Building process, we confirm that all material information as required under the Securities Act, 2015, the Public Offering Regulations, 2017 and the Listing of Companies and Securities Regulations of the Pakistan Stock Exchange Limited has been disclosed in this Prospectus and that whatever is stated in Prospectus and in the supporting documents is true and correct to the best of our knowledge and belief and that nothing has been concealed.

For and on behalf of MCB Bank Limited

-Sd- __________________ Ms. Amna Hasan Executive Vice President Head - Investment Banking & Business Head – Corporate (South)


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2.3 SHARE CAPITAL AND RELATED MATTERS

2.3.1 Share Capital

No. of Shares Shareholder Face Value (PKR)

Premium (PKR)

Total Value (PKR)

200,000,000 AUTHORIZED CAPITAL Ordinary shares of PKR 10/- each

2,000,000,000 - 2,000,000,000

ISSUED, SUBSCRIBED AND PAID-UP CAPITAL OF THE COMPANY

21,197,213 Issued for Cash: Ordinary shares of PKR 10/- each

211,972,130 341,310,843 553,282,973

6,002,950

Issued for Consideration Other than Cash*: Ordinary Shares of PKR 10/- each

60,029,500 - 60,029,500

60,228,931 Issued as Bonus Shares: Ordinary Shares of PKR 10/- each

602,289,310 - 602,289,310

87,429,094 Total 874,290,940 341,310,843 1,215,601,783

THE ISSUED, SUBSCRIBED & PAID-UP CAPITAL OF MATCO FOODS LIMITEDS HELD AS FOLLOWS:

Shares held by Sponsors / Directors of the Company

22,661,925 Mr. Jawed Ali Ghori 226,619,250 - 226,619,250 427,500 Mrs. Naheed Jawed 4,275,000 - 4,275,000 224,998 Mr. Faizan Ali Ghori 2,249,980 - 2,249,980

22,886,925 Mr. Khalid Sarfaraz Ghori 228,869,250 - 228,869,250 427,500 Mrs. Nuzhat Khalid 4,275,000 - 4,275,000

22,909,425 Dr. Tariq Ghori 229,094,250 - 229,094,250 405,000 Mrs. Sadaf Tariq 4,050,000 - 4,050,000

Shares held by Non-Executive Directors of the Company

1 Mr. Naeem Ur Rehman Akhoond 10

- 10

1 Mr. Syed Kamran Rasheed 10 - 10 Shares held by Others

17,485,819 International Finance Corporation (IFC)

174,858,190 341,310,843 516,169,033

87,429,094 Sub-Total 874,290,940 341,310,843 1,215,601,783

Present Issue of Ordinary Shares

21,857,000

Allocations to Institutions / Individual Investors through Book Building process at a Strike Price

218,570,000 [X] [X]

7,286,000 General Public Portion 72,860,000 [X] [X]

29,143,000 Total Present Issue 291,430,000 [X] [X]

116,572,094 Grand Total (Post-IPO) Paid-up Capital

1,165,720,940 [X] [X]

* On April 30, 2008 the Company entered into an agreement to takeover the running business of Matco Marketing Company (the “Firm”), a sole proprietorship firm against the issuance of shares. The Firm’s capital account as per


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the audit conducted by M/S Rafiq & Co, Chartered Accountant was PKR 60,029,499 accordingly 600,295 shares of par value PKR 100 were issued to Mr. Tariq Ghori in lieu of this takeover in accordance with the regulation 8 of Companies (Issue of Capita) Rules, 1996. The auditors M/S Rafiq & Co, Chartered Accountant also filed the Form 3 for issuance of shares with the SECP vide their letter dated June 28, 2008 confirming the same.

Z. Lakhani & Co. Chartered Accountants in its certificate dated June 17, 2008 has confirmed compliance of rule 8 of the Companies (Issue of Capital) Rule, 1996 for issue of shares for consideration otherwise than cash

In January 2010, the Company changed the par value of its shares to PKR 10 and the said number of shares increased to 6,002,950. 1. As per regulation 5(1) of the PO Regulations, the sponsors of the Issuer shall retain their entire shareholding in

the Company for a period of not less than twelve months from the last date for public subscription;

2. As per regulation 5(2) of the PO Regulations, the sponsors of the Issuer shall retain not less than twenty five percent of the paid up capital of the Company for not less than three financial years from the last date for the public subscription;

3. As per regulation 5(3) of the PO Regulations, the shares of the sponsors mentioned at (1) and (2) above shall be kept unencumbered in a blocked account with central depository;

4. Subject to compliance with sub-regulations (1) and (2) of regulation 5 of the PO Regulations, and with the prior approval of the securities exchange, the sponsors of the Issuer may sell their shareholding through block-sale to any other person who shall be deemed sponsor for the purposes of the PO Regulations.

2.3.2 Opening and Closing of the Subscription List

The subscription list will open at the commencement of banking hours on January 29, 2018 and will close on January 30, 2018 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 January 30, 2018.

2.3.3 e-IPO e-IPO is submission of application for subscription of securities electronically through internet, Automated Teller Machines (ATM) and mobile phones. In order to facilitate the public during IPOs, SECP has introduced the concept of e-IPO. The following two systems are available for e-IPOs: (i) Centralized e-IPO System (CES): In order to facilitate investors, the Central Depository Company of Pakistan (“CDC”) in collaboration with 1Link (G) Limited (1Link) has developed a Centralized e-IPO System (“CES”) through which applications for subscription of securities offered to the general public can be made electronically. CES has been made available in this Initial Public Offering (IPO) and can be accessed through the web link www.cdceipo.com. Payment of subscription money can be made through 1LINK’s member banks available for CES, list of which is available on above website. For making application though CES, investors must be registered with CES. Registration with CES is free of cost and can be done under a self-registration process by filling the CES registration form, which is available 24/7 all around the year. Investors who have valid Computerized National Identity Card (CNIC), bank account with any of the commercial bank, email address, mobile phone number and CDS Account (Investor account or sub account) can registered themselves with CES. Investors who do not have CDS account can visit www.cdcpakistan.com for information regarding opening CDS account.




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For further guidance and queries regarding CES and opening of CDS account, investors may contact CDC at phone number: 0800 – 23275 (CDCPL) and e-mail: [email protected] or Mr. Moheel Ali Khan at Phone 021-34326030 and email: [email protected].

Investors who are registered with CES can submit their applications through the web link www.cdceipo.com 24 hours a day during the subscription period which will close at midnight on January 30, 2018.

(ii) e-IPO facilities by Bankers to the Issue: Currently, United Bank Limited (UBL), Summit Bank Limited (SMBL) and Bank Alfalah Limited (BAFL) are providing e-IPO facilities to their respective accountholders. UBL account holders can use UBL Net Banking to submit their application via link http://www.ubldirect.com/corporate/ebank. SMBL account holders can use SMBL Net Banking to submit their application via link https://ib.summitbank.com.pk. and

BAFL account holders can use BAFL Net Banking to submit their application via link: https://ib.bankalfalah.com.pk

2.3.4 Benefits of e-IPO: E-IPO has the following benefits: i. It enables the investors to make application for subscription of shares through internet without going to the

bank, and waiting in long queues.

ii. It is efficient and simultaneously facilitative for both the Issuers and the investors.

iii. It is available for use 24 hours during the subscription period.

iv. If you are registered with CES or accountholder of a bank providing e-IPO facility, you may get SMS for new IPOs.

v. By applying through CES you can also track your application status.

2.3.5 Eligibility of Investors for Investment in this Issue Eligible investors include: i. Pakistani citizens resident in or outside Pakistan or persons holding dual nationalities including a Pakistani

Nationality;

ii. Foreign nationals whether living in or outside Pakistan;

iii. 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);

iv. Mutual Funds, Provident / Pension / Gratuity Funds / Trusts (subject to the terms of their respective Trust Deeds and existing regulations); and

v. Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan.

2.3.6 Facilities available to Non-Resident Pakistani and Foreign Investors Companies are permitted under paragraph 6 (with specific reference to sub para (B) (I)) of Chapter 20 of the State Bank of Pakistan’s (“SBP”) Foreign Exchange Manual (the “Manual”) to issue shares on repatriation basis to non-residents who are covered under paragraph 6 (A) of Chapter 20 of the Manual, i.e. (I) A Pakistan national resident outside Pakistan, (II) A person who holds dual nationality including Pakistan nationality, whether living in or outside Pakistan, (III) A foreign national, whether living in or outside Pakistan and (IV) A firm (including a partnership) or








40

trust or mutual fund registered and functioning outside Pakistan, excluding entities owned or controlled by a foreign government, provided the issue price, is paid in foreign exchange through normal banking channel by remittance from abroad or out of foreign currency account maintained by the subscriber/purchaser in Pakistan. Non-residents who wish to bid for the subscription of shares being offered via book building can remit the subscription money through an Authorized Dealer directly to the book building accounts opened by the Company as given in section 2.2.16 of this Prospectus, however, those non-residents who wish to subscribe shares out of the general public portion may contact any of the bankers to the issue (retail portion) for taking instructions regarding payment of subscription money against shares offered to general public /retail investors. List of bankers to the issue for retail portion is available on page 1 and para 7.3 of this Prospectus.

The shares issued to non-resident shareholders shall be intimated by the Company to the designated Authorized Dealer, along with the documents prescribed in the Manual within 30 days of issue.

Non-residents who are covered under paragraph 6 (A) of Chapter 20 of the Manual do not require SBP’s approval to invest in the shares being issued in terms of this Prospectus. Furthermore, under paragraph 7 (vii) of Chapter 20 of the Manual the Authorized Dealer shall allow repatriation of dividends, net of applicable taxes and proceeds on sale of listed shares (i.e. divestment proceeds) not exceeding the market value less brokerage/commission on provision of prescribed documents.

Payments made by non-residents shall be supported by proof of receipt of foreign currency through normal banking channels. Such proof shall be submitted along with the application by the non-residents.

2.3.7 Minimum amount of Application and Basis for Allotment of Shares Out of the General Public Portion of the Issue

The basis and conditions of allotment to the general public shall be as follows:

1. Application for shares must be made for 500 shares or in multiples of 500 shares only. Applications which are neither for 500 shares nor for multiples of 500 shares shall be rejected.

2. The minimum amount of application for subscription of 500 shares is the Issue Price x 500 shares. Any cost incurred in issue of shares as part of the Issue shall be borne by Issuer.

3. Application for shares below the minimum amount shall not be entertained.

4. SUBMISSION OF FALSE AND FICTITIOUS APPLICATIONS IS PROHIBITED AND SUCH APPLICATIONS’ MONEY MAY BE FORFEITED UNDER SECTION 87(8) OF THE SECURITIES ACT, 2015.

5. If the shares issued to the general public are sufficient to accommodate all applications, all applications shall be accommodated.

6. In case retail portion of the Issue, remains unsubscribed, the unsubscribed shares shall be allotted to successful bidders at the strike price on pro-rata basis.

7. 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 representative(s) of PSX in the following manner:

─ If all applications for 500 shares can be accommodated, then all such applications shall be accommodated first. If all applications for 500 shares cannot be accommodated, then balloting will be conducted among applications for 500 shares only.

─ If all applications for 500 shares have been accommodated and shares are still available for allotment, then all applications for 1,000 shares shall be accommodated. If all applications for 1,000 shares cannot be accommodated, then balloting will be conducted among applications for 1,000 shares only.

─ If all applications for 500 shares and 1,000 shares have been accommodated and shares are still available for allotment, then all applications for 1,500 shares shall be accommodated. If all applications for 1,500 shares cannot be accommodated, then balloting will be conducted among applications for 1,500 shares only.


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─ If all applications for 500 shares, 1,000 shares and 1,500 shares have been accommodated and shares are still available for allotment, then all applications for 2,000 shares shall be accommodated. If all applications for 2,000 shares cannot be accommodated, then balloting will be conducted among applications for 2,000 shares only.

─ After the allotment in the above mentioned manner, the balance shares, if any, shall be allotted in the following manner:

o If the remaining shares are sufficient to accommodate each application for over 2,000 shares, then 2,000 shares shall be allotted to each applicant and remaining shares shall be allotted on pro-rata basis.

o If the remaining shares are not sufficient to accommodate all the remaining applications for over 2,000 shares, then balloting shall be conducted for allocation of 2,000 shares to each successful applicant.

8. If the Issue is over-subscribed in terms of amount only, then allotment of shares shall be made in the following manner:

─ First preference will be given to the applicants who applied for 500 shares;

─ Next preference will be given to the applicants who applied for 1,000 shares;

─ Next preference will be given to the applicants who applied for 1,500 shares;

─ Next preference will be given to the applicants who applied for 2,000 shares; and then

─ After allotment of the above, the balance shares, if any, shall be allotted on pro rata basis to the applicants who applied for more than 2,000 shares.

9. Allotment of shares will be subject to scrutiny of applications for subscription of shares.

10. Applications, which do not meet the above requirements, or applications which are incomplete, will be rejected.

2.3.8 Refund/Unblocking of Subscription Money to Unsuccessful Applicants As per the regulation 11(4) of the PO Regulations, within 10 days of the close of public subscription period, the Shares shall be allotted and issued against the accepted and successful applications and the subscription money of the unsuccessful applicants shall be unblocked/ refunded.

As per sub-section (2) of Section 68 of the Companies Act, if refund as required under Sub-section (1) of Section 68 of the Companies Act is not made within the time specified therein, the directors of the company shall be jointly and severally liable to repay that money with surcharge at the rate of two percent (2%) for every month or part thereof from the expiration of the fifteenth day and, in addition, shall be liable to a penalty of level 3 on the standard scale as defined in Section 479 of the Companies Act. Provided that the directors of the Issuer shall not be liable if it proves that the default in making the refund was not on their own account and was not due to any misconduct or negligence on their part.

2.3.9 Issue and Credit of Shares Within ten (10) days of the close of public subscription period, the shares shall be allotted and credited against the accepted and successful applications and the subscription money of the unsuccessful applicants shall be unblocked/refunded, as required under regulation 11(4) of the PO Regulations.

Shares will be issued only in the book-entry form. Therefore, the applicants must provide their CDS account Number in the Shares Subscription Form.

If the Company defaults in complying with the above requirements, it shall pay the PSX a penalty of PKR 5,000 per day for every day during which the default continues. The PSX may also notify the fact of such default and the name of the Company by notice and also by publication in its ready-board quotation of the Stock Exchange.


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The name of the Company will also be notified to the TRE Certificate Holders of the PSX and placed on the web site of the PSX.

2.3.10 Transfer of Shares The shares shall be transferred in accordance with the provisions of Section 74 of the Companies Act read with Section 75 thereof and the Central Depositories Act, 1997 and the CDCPL Regulations.

2.3.11 Shares Issued in Preceding Years

S. No No. of Shares Issued

Face Value

Issue Price Consideration Total Shares

Share Capital (PKR)

Date of Issuance / Allotment

1 500 100 100 500 50,000 April - 1990

2 59,500 100 100

Cash 60,000 6,000,000 September

1991

3 140,000 100 100 Cash 200,000 20,000,000 June - 1993

4 32,000 100 100 Cash 232,000 23,200,000 June - 1999

5 150,000 100 100 Cash 382,000 38,200,000 February - 2003

6 177,000 100 100 Cash 559,000 55,900,000 June – 2003

7 270,000 100 100 Cash 829,000 82,900,000 June - 2005

8 100,000 100 100 Cash 929,000 92,900,000 April - 2007

9 25,000 100 100 Cash 954,000 95,400,000 April - 2008

10 600,295* 100 100 Other than

Cash 1,554,295 155,429,500 June - 2008

11 - -

Change in par

value from

PKR 100/share

to PKR

10/share

15,542,950** 155,429,500 January – 2010

12 31,085,900 10 10 Bonus 46,628,850 466,288,500 May - 2010

13 11,657,213 10 10 Cash 58,286,063 582,860,630 June - 2012

14 29,143,031 10 10 Bonus 87,429,094 874,290,940 June - 2014

* On April 30, 2008 the Company entered into an agreement to takeover the running business of Matco Marketing Company (the “Firm”), a sole proprietorship firm against the issuance of shares. The Firm’s capital account as per the audit conducted by M/S Rafiq & Co, Chartered Accountant was PKR 60,029,499 accordingly 600,295 shares of par value PKR 100 were issued to Mr. Tariq Ghori in lieu of this takeover in accordance with the regulation 8 of Companies (Issue of Capital) Rules, 1996. The auditors M/S Rafiq & Co, Chartered Accountant also filed the Form 3 for issuance of shares with the SECP vide their letter dated June 28, 2008 confirming the same.

** Increase in number of shares from 1,554,295 to 15,542,950 was due to change in par value of shares from Rs.100/share to Rs.10/share

Other than the above-mentioned shares, there has been no issuance of shares since the incorporation of the Company.

2.3.12 Principal Purpose of the Issue Matco Foods Limited intends to issue 29,143,000 shares at a floor price of PKR 26 per share to raise PKR 757,718,000 through this IPO at the Floor Price. The purpose of this issue and utilization of proceeds are given below:


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Purpose of the Issue Fund Allocated Share of Allocation

Expansion of Rice Glucose Project PKR 758,000,000 100%

IPO Proceeds PKR 757,718,000 99.96% Internal Cash PKR 282,000 0.04%

Any excess funds received above the Floor Price will be utilized as per the following priorities, considering the quantum of excess subscription amount:

1. Repayment of existing loans of the Company 2. Any activity related to the Company’s ongoing operations, as deemed necessary by the Board of

Directors of the Company For break of cost please refer to para 2.3.13. Expansion Plan Matco has recently diversified its operation within domain specialized products i.e. Rice Glucose and Rice Protein Phase I with plant capacity of 10,000 MT per annum of rice glucose and 1,000 MT of Rice Protein per annum. New plant and machinery for the project was supplied by Beijing Meckey Engineering Company of China. Phase I of the Project has been successfully completed and commercial production of Rice Glucose and Rice Protein has started on October 02, 2017. Matco has also started selling rice glucose in local market to various end users in confectionary industry. The Company has sold 7.5 tons of rice glucose up to October 10, 2017 to M/S Crest Enterprises, a distributor of rice glucose. The Rice processed by Matco is primarily exported outside Pakistan to a portfolio of more than 150 customers and across 60+ countries worldwide. The Company further intends to export its rice glucose products abroad as well owing to higher prices in the international market resulting in higher margins for the Company. The Company is also in process of obtaining ISO, food safety and other necessary certifications required for export of its rice glucose and rice protein products. According to study conducted by the Management/Sponsor of the Company domestic market size of rice glucose is around 60,000 MT to 65,000 MT. Details of Project Matco plans to further expand Rice Glucose / Syrup and Rice Protein production capacity by installing an additional unit of capacity 20,000 MT of Rice Glucose and 2,000 MT of Rice Protein, which will take the total production capacity of Rice Glucose and Rice Protein to 30,000 MT and 3,000 MT per annum respectively post completion. The Company will utilize the IPO proceeds for expansion of its production facilities. The production process of rice glucose is vertically integrated to Matco’s existing business operations and uses broken rice which is by-product in rice processing. Therefore, the broken rice requirement would be met internally. Rice Glucose is used in the pharmaceutical, confectionary and baby food industry while Rice Protein is used in dietary supplement, nutrition and animal feed industry. More value-added products such as high maltose glucose and dry glucose maltodextrin (2,000 MT per annum) can also be made with spray drying plant. Products have very good potential in local and export markets. In Pakistan, M/S Habib ADM Limited is engaged in the production and selling of Rice Glucose and Rice Protein catering primarily to the domestic market. An another private limited company is also engaged in production of sizeable quantity of Rice Glucose and Rice Protein which it exports mostly to USA, UK, Australia and Canada. Target Market for Rice Glucose1

1 This information has been extracted from the following sources:

1. The Company undertook a detailed study as part of the MBA project for the students of Lahore University of Management Sciences. The results of that study has formed the basis for information on domestic, regional and global industry


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Domestic Industry The domestic target market for Rice Glucose comprises of pharmaceutical companies, biscuits manufacturers and

confectionary companies. The annual consumption of rice glucose for the aforementioned industries is as follows:

Companies Annual Consumption of Rice Glucose (MT)

Pharmaceutical Companies ~15,000 – 20,000

Biscuits Companies ~25,000 – 30,000

Confectionary Companies ~20,000 – 25,000

Total ~60,000 – 65,000

As highlighted above, the domestic market size of Rice Glucose/Syrup and Protein stands at ~60,000 to 65,000 MT2 per annum. This market size is expected to register a growth in coming years as demand for end products using rice glucose and protein i.e. pharmaceutical products, biscuits and confectionary products will increase owing to growing population dynamics of Pakistan. According to Pakistan Bureau of Statistics, Pakistan population has registered an average growth rate of 2.4% in the period 1998-2017 and currently stands at 207.7 million with demographics skewed towards younger people.

At present, there are over 1,000 pharmaceutical, biscuits and confectionary companies in Pakistan using Rice Glucose as their raw material which will be target market of Matco. The bargaining power of these customers is low as there is only one company M/s Habib ADM actively engaged in manufacturing and selling of Rice Glucose/Syrup and Protein. Matco is aggressively executing its marketing strategy to identify its potential customers in local industry and negotiations are underway with some of them. Some of the key customers identified till date are as follows:

Pharmaceuticals Biscuits Confectionary

Abbott Laboratories Pakistan Limited English Biscuits Manufacturers (Pvt.) Ltd Ismail Industries Limited

Zafa Pharmaceuticals Laboratories (Pvt.) Limited

Continental Biscuits Limited Asian Foods Industries Limited

Pfizer Pakistan Limited

Global Industry:

Internationally, the trend is also shifting towards increased demand for rice glucose and protein as a healthy

alternative to corn based products. According to Company sources, global demand for Rice Glucose stands at ~1

million MT of Rice Glucose with major export market comprising of USA, Europe, Middle East and Australia.

Pakistan’s share in export market stands only at 2.4% i.e. ~24,000 MT. Currently, China and India are catering to

the export market with fifty (50) companies from China and thirty (30) companies from India exporting to western

market. From Pakistan, ~90% of the exports are catered by a private limited company with exports to USA, UK,

Canada, Australia and other destinations. The prices at which Rice Glucose is exported from Pakistan over the past

three years are provided below:

Price USD/MT 2015 2016 2017

Rice Glucose 1,078 1,320 1,211

The Company is already in the process of identifying global customers based on export trade from Pakistan, China and India and attendance in trade fairs. The following is a list of major players/importers identified by the Company and the Company may purse these players for potential export purposes:

2 This information has been extracted from the following sources:

1. The Company undertook a detailed study as part of the MBA project for the students of Lahore University of Management Sciences. The results of that study has formed the basis for information on domestic, regional and global industry


45

H Plus Limited, United Kingdom Eurodune Rohstoffe Gmbh, Germany Mazzoleni Prodotti Zootechnici, Italy Specialty Ingredients Incorporated, USA Harke Pharma GmBH Pureharvest, Australia Additive Solutions Pty Limited, Australia Suzanne’s Specialty Inc., USA API-EKO SP.ZO.O., Poland TOV INTERNATIONAL, Korea Agri Food Ingredients, Australia LES INDUSTRIES BERNARD ET FILS LTEE, Canada

The rivalry within Pakistan industry is very low as only M/s Habib ADM concentrates on local market and a private

limited company concentrates on export market. Threat of new entrants is also minimal as there are high barriers

to entry due to heavy investment in technology, fixed assets and limited awareness in trade circles of rice glucose

usage and growth in the ingredients business.

2.3.13 Project Cost and Utilization of Proceeds The project is expected to cost approximately PKR 758 million and is expected to be operational by FY 2019. Matco will utilize following sources of financing for the expansion of its Rice Glucose / Syrup and Rice Protein plant.

Utilization of Funds

Sources of Funds Total Estimate Cost (PKR)

Proceeds from Initial Public Offering 757,718,000

Internal Cash 282,000

Total 758,000,000

Project Cost Matco has already acquired 10 acre land of the project in Port Qasim Industrial Area and have complete technical human resources for start and completion of the project within given time lines

Expansion of Rice Glucose/Syrup and Rice Syrup Plant

Description PKR (Million)

Rice to Rice Glucose Production Line (60 MT/Day) 150,000,000

Maltodextrin Spray Dryer (5T MT/D) 34,000,000

4 Silos (3,000 MT storage each) 55,000,000

Power (K-Electric Prime) 20,000,000

Power (Generator) 25,000,000

Boiler (Steam) 20,000,000

RO Plant (Water) 40,000,000

Cooling Tower/Air Compressor/Water Treat Plant 12,000,000

Civil Works 185,000,000

Silos Civil Works 40,000,000

Under Ground Water Tank / water connection 90,000,000

Import duties & taxes 32,000,000

Freight & Forwarding charges 3,000,000

Miscellaneous & Contingencies / Others 52,000,000

Total Cost 758,000,000


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Break Down of Machinery

No. Description Specification Material Qty. Unit

power KW

Total power

KW Remarks

100 Steeping section

101 Raw rice pit 10m3 Civil

102 Bulk elevator 6t/h, 4m CS 1 3 3

103 Vibration sieve 6t/h CS 1 3 3

104 Stone remover

105 Bulk elevator 6t/h, 12m CS 1 4 4

106 Screw conveyor D250 SS304 1

107 Bulk elevator 6t/h, 12m

108 Steeping tank 12m3 SS304 4 Site making

109 Pin mill feed screw conveyor

L250x6m SS304 1 3 3

110 Pin mill feed tank 0.785m3 SS304 1 Site making

111 Pin mill MKPM-690 SS/CS 2 56.1 112.2

112 Dreg wash water tank 6.35m3 SS304 1 Site making

113 Dreg wash water pump Q=12m3/h H=20m

SS304 1 3 3

114 Rice slurry tank 1.7m3 SS304 1 Underground

115 Agitator 51rpm SS304 1 1.5 1.5

116 Rice slurry pump Q=15m3/h H=20m

SS304 1 3 3

117 Rice slurry tank 1.7m3 SS304 1 Site making

118 Agitator 51rpm SS304 1 1.5 1.5

119 Rice slurry tank 1.7m3 SS304 1 Site making

120 Agitator 51rpm SS304 1 1.5 1.5

121 Na2CO3 blending tank 1.7m3 SS304 1 Site making

122 Agitator 51rpm SS304 1 1.5 1.5

123 Na2CO3 recycle pump Q=3m3/h H=20m

SS304 1 2.2 2.2

124 Na2CO3 storage tank 50L PP 1 By buyer

125 Dosing pump 0-2.2L/h PP 1 0.22 0.22

126 Enzyme tank 51L PE 1 By buyer

127 Enzyme dosing pump 0-2.2L/h PE 1 0.22 0.22

200 Liquefaction section

201 Storage tank with Agitator

12m3 SS304 1 Site making

202 Agitator 51rpm SS304 1 2.2 2.2

203 1st jet cooker feeding pump

Q=12.5m3/h H=65m

SS304 1 11 11

204 1st jet cooker Q=7.5m3/h SS304 1

205 1st retention tank 0.47m3 SS304 1 Site making


47

206 1st Liquefaction coil pipe

207 1st flash cooling tank 0.8m3 SS304 1 Site making

208 2nd jet cooker feeding pump

Q=12.5m3/h H=65m

SS304 1 11 11

209 2nd jet cooker Q=7.5m3/h SS304 1

210 2nd retention tank 0.47m3 SS304 1 Site making

211 2nd Liquefaction coil pipe

212 2nd flash cooling tank 0.8m3 SS304 1 Site making

213 2nd enzyme dosing pump

0-1.0L/h SS304 1 0.15 0.15

214 Discharge pump Q=12m3/h H=32m

SS304 1 3 3

215 Column liquefiers Φ600× SS304 6 Site making

216 Buffer tank 3.18m3 SS304 1 Site making


SS304 1 4 4

300 Dreg separation and drying

301 Filter press MKFP900-150 PP/CS 3 3 9

302 Filtrate tank 4.24m3 SS304 1 Site making


SS304 1 3 3

304 Plate heat exchanger F=15m2 SS304 1

305 Dreg washing tank 4.24m3 SS304 2 3 6 Site making

306 Agitator 51rpm SS304 2

307 Wet dreg pump Q=12m3/h H=40m

SS304 1 4 4


309 Diluted syrup tank 4.24m3 SS304 1 Site making


SS304 1 4 4

311 Dreg screw conveyor Φ250×6000 SS/CS 1 2.2 2.2

312 Bundle dryer 150m2 SS/CS 1 15 15

313 Dreg screw conveyor Φ250×6000 SS/CS 1 2.2 2.2

400 Saccharification section

401 PH adjusting tank 0.5m3 SS304 1 Site making

402 Agitator n=51r/min SS304 1


SS304 1 4 4

404 Saccharification tank 22.15m3 SS304 8 Site making

405 Agitator n=51r/min SS304 8 3 24

406 Saccharification recycle pump

Q=30m3/h H=32m

SS304 1 5.5 5.5

407 Saccharification discharge

Q=15m3/h H=20m

SS304 1 4 4


48

408 Killing enzyme jet cooker

Q=30m3/h SS304 1

409 CIP washing tank 11.4m3 SS304 1 Site making

410 CIP pump Q=15m3/h H=20m

SS304 1 4 4

411 Enzyme tank 30L PP 1 By buyer

412 Dosing pump 0-2.2L/h PP 1 0.22 0.22

413 Dilute acid tank Φ PP 1 By buyer

414 Dilute acid pump 5m3/h PP 1 2.2 2.2

415 HCL adding tank 50L PP 1 By buyer

416 HCL dosing pump 0-1.0L/h PP 1 0.22 0.22

500 Decoloring section

501 1st decoloring tank 11.4m3 SS304 1 Site making

502 Agitator 51rpm, SS304 1 2.2 2.2

503 1st decoloring pump Q=12m3/h H=40m

SS304 1 3 3


505 2nd decoloring tank 11.4m3 SS304 1 Site making

506 Agitator 51rpm SS304 1 2.2 2.2

507 2nd decoloring pump Q=12m3/h H=40m

SS304 1 4 4

508 Filter press MKFP800-30 PP/CS 2 2.2 4.4

509 Inspection filter Q=6m3/h F=0.5m2

SS304/P 2

510 AC making tank 2.3m3 SS304 1 Site making

511 Agitator n=51r/min SS304 1 1.5 1.5

512 AC pump Q=3m3/h H=32m

SS304 1 2.2 2.2

513 Waste AC collecting tank 2.65m3 SS304 1 Site making

514 Agitator 51rpm SS304 1 2.2 2.2

515 Waste AC pump Q=3m3/h H=20m

SS304 1 2.2 2.2

600 Ion exchanging section

601 Syrup tank before IE 12m3 SS304 1 Site making

602 IE feeding pump Q=12m3/h H=32m

SS304 1 3 3

603 Heat exchanger before IE

F=10m2 SS304 1


SS304/P 2

605 Cation IE Φ1300x5000 CS/Rub 4

606 Anion IE Φ1400x5000 CS/Rub 4

607 Sweet water tank 12m3 SS304 1 Site making

608 Sweet water pump Q=7.5m3/h H=20m

SS304 1 3 3

609 Water recycle tank 30m3 SS304 1 Site making


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610 Water recycle pump Q=30m3/h H=32m

SS304 1

700 Concentration section

701 Syrup tank before EV 12m3 SS304 1 Site making

702 Agitator 51rpm SS304 1 2.2 2.2

703 Feeding pump Q=12m3/h H=32m

SS304 1 4 4


SS/PP 2

705 Falling film evaporator 5000kg/h SS304 1 24.3 24.3

706 Buffer tank 1.35m3 SS304 1 Site making

707 Syrup discharge pump Q=8m3/h H=20m

SS304 1 3 3

800 Utility

801 Hot process water tank 30m3 SS304 2 Site making


SS304 2 5.5 11

803 Sealing water tank 3.5m3 SS304 1 Site making


SS304 1 2.2 2.2

805 R.O. water storage tank 30m3 SS304 1 Site making


SS304 1 5.5 5.5

807 CIP water tank 4m3 SS304 1 Site making


SS304 1 2.2 2.2

809 Waste water tank 60m3 FRP 2 By buyer


4F/CS 2 5.5 11

811 HCL pump Q=8m3/h H=20m

4F/CS 1 2.2 2.2

812 HCL tank 11m3 FRP 1 By buyer

813 HCL pump Q=8m3/h H=32m

4F/CS 1 3 3

814 Diluted HCL tank 11m3 FRP 1 By buyer

815 Diluted HCL pump Q=25m3/h H=50m

4F/CS 1 5.5 5.5

816 NaOH pump Q=8m3/h H=20m

4F/CS 1 2.2 2.2

817 NaOH tank 11m3 FRP 1 By buyer

818 NaOH pump Q=8m3/h H=32m

4F/CS 1 3 3

819 Diluted NaOH tank 11m3 FRP 1 By buyer

820 Diluted NaOH pump Q=25m3/h H=50m

4F/CS 1 5.5 5.5

821 HCL Mixer Q=8m3/h FRP 1


50

822 NaOH Mixer Q=8m3/h FRP 1

823 Cooling tower 250m3/h 8℃ FRP 1 5.5 5.5 By buyer

824 Evaporator cooling supply

100m³/h H=32m CS 1 22 22

825 Public cooling pump 100m³/h H=32m CS 1 22 22

826 Cooling water pool0 100m³/h H=32m CS 1 22 22

827 Steam cylinder Φ600×3000 16MnR 1

900 Others

901 Pipe, valve and fittings

902 Electric cabinet and cable for workshop

903 Semi-automatic control and instrument

Implementation Schedule The Company is already in discussions with Engineering, Procurement and Construction (“EPC”) Contractors and is in the process of evaluating their credentials and proposals prior to shortlisting them for final negotiations on the EPC Contract. Furthermore, the Company has also engaged civil contractors for the proposed work at the site and the contract will be executed post finalization of the EPC Contract. Key milestones and activity completion are as follows:

S. No Project Milestones Expected Timeline

1 Initial negotiations with mechanical and civil contractors Started

2 Final negotiations with contractors January, 2018

3 Final contract signing and opening of local LC* February, 2018

4 Mechanical and civil starting and to be completed February - December, 2018

5 Plant installation starting and to be completed May - December, 2018

6 Plant operation to be started December, 2018

7 First Export shipment to customers January, 2019

*This is an indicative timeline and the final contracts will only be signed after the completion of the IPO. All other timeline thereafter from 4 to 7 above will be dependent on the completion of IPO and contract signing. Given below is the status of the expansion project:

S. No Particulars Start Completion Status

1 Land 4Q2017 4Q2017 Has been Procured

2 Rice to Rice Glucose Production Line (60 MT/D) 1Q2018 4Q2018 Under negotiation

3 Maltodextrin Spray Dryer (5T MT/D) 1Q2018 4Q2018 Under negotiation

4 4 Silos (3,000 MT storage each) 1Q2018 4Q2018 Under negotiation

5 Power (K-Electric Prime) 2Q2018 4Q2018 to be order

6 Power (Generator) 2Q2018 4Q2018 to be order

7 Boiler (Steam) 2Q2018 4Q2018 to be order

8 RO Plant (Water) 2Q2018 4Q2018 to be order

9 Cooling Tower/Air Compres./Treat Plant 2Q2018 4Q2018 to be order

10 Building Civil Works 1Q2018 4Q2018 Survey completed

11 Silos Civil Works 1Q2018 4Q2018 to be order


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12 Under Ground Water Tank Civil Works 2Q2018 4Q2018 to be order

13 Import duties & taxes 2Q2018 4Q2018 Upon machine delivery

14 Freight & Forwarding charges 4Q2018 4Q2018 Upon machine delivery

15 Miscellaneous & Contingencies 4Q2018 4Q2018 Upon machine delivery

Matco undertakes that the proceeds raised from the IPO to the extent of expansion cost of PKR 758 million will be deposited in a special purpose account. The Company shall utilize the proceeds deposited in the special purpose account in accordance with the expansion plan mentioned in the Prospectus and in line with the implementation schedule. Matco will submit progress report duly certified by auditor to PSX and SECP on implementation of the project on quarterly basis till commencement of the commercial production or operations of the project.

2.3.14 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. The shareholders who are also the Directors of the Company have interest in receiving remuneration for their role as Directors.

2.3.15 Dividend Policy The Company intends to follow a consistent profit distribution policy for its members, subject to profitability, availability of adequate cash flow, Board of Directors of the Company’s recommendation and shareholder’s approval, where required

The rights in respect of capital and dividends attached to each share are and will be the same. The Company in its general meeting may declare dividends but no dividend shall exceed the amount recommended by the Board of Directors of the Company. Dividend, if declared in the general meeting, shall be paid according to the provisions of the Companies Act.

The Board of Directors of the Company may from time to time declare interim dividends as appear to it 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 and in the manner laid down in the Companies Act.

Under Section 242 of the Companies Act, any dividend payable in cash by a listed company, shall only be paid through electronic mode directly into the bank account designated by the entitled shareholder.

To enable the Company to directly credit the cash dividend, if any, in the Bank Accounts of the shareholder, the applicants must fill-in relevant part of the Shares Subscription Form under the heading, "Dividend Mandate".

The Company has issued dividends in FY 2010, FY 2014, FY 2015, FY 2016 and FY 2017.

Particulars FY2010 FY2014 FY2015 FY2016 FY2017

Bonus (PKR) 310,859,000 291,430,310 - - -

Dividend (PKR) - 62,500,000 8,555,659 5,000,000 7,200,000

Dividend per share (PKR) - 1.07 0.48 0.29 0.41

* In FY2014, FY2015, FY 2016 and FY2017 local directors and sponsors waived of their right of dividend and dividend was paid to IFC only. Covenants / Restriction on Payment of Dividends:

In terms of clause 2.07 the Shareholders Agreement (the “SHA”) dated February 15, 2012 signed between the Company and IFC , the Company and each of its subsidiaries shall seek a written consent from IFC prior to declaring


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or paying any cash dividend in excess of twenty five (25%) of the distributable profits of the Company (including any applicable reserves). However, according to clause 5.01 of the SHA the abovementioned restriction on payment of dividend, shall terminate and be off no further force or effect upon listing of the Company on the Securities Exchange. It is hence stated that from the date of listing there would be no restriction on Matco by any financial institution, shareholder, stakeholder and/or any regulatory authority on distribution and capitalization of profits.

2.3.16 Eligibility for Dividend The ordinary shares being offered through this prospectus 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.

2.3.17 Deduction of Zakat Income distribution will be subject to deduction of Zakat at source, pursuant to the provisions of Zakat and Ushr Ordinance, 1980 (XVIII of 1980) as may be applicable from time to time except where the said ordinance does not apply to any shareholder or where such shareholder is otherwise exempt or has claimed exemption from payment / deduction of Zakat in terms of and as provided in that ordinance.

2.3.18 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:

Tax Rate FY 2018

Holding Period of Securities

Category Tax Year Less than

twelve months

Twelve months or more but less than twenty four

months

Twenty four months or more but acquired on or

after 1st July, 2013

Before 1st July, 2013

Filer FY 2018 15.00% 15.00% 15.00% 0%

Non – Filer FY 2018 20.00% 20.00% 20.00% 0%

2.3.19 Withholding Tax on Dividends Dividend distribution to shareholders will be subject to withholding tax under section 150 of the Income Tax Ordinance, 2001 as specified in Part III Division I of the First Schedule of the said ordinance or any time to time amendments therein. In terms of the provision of Section 8 of the said ordinance, said deduction at source, shall be deemed to be full and final liability in respect of such profits in case of persons. The following are the rates: For filers of Income Tax Returns: 15.00%

For non-filers of Income Tax Return: 20.00%

2.3.20 Tax on Bonus Shares As per section 236M of the Income Tax Ordinance 2001, tax at the rate of 5.00% of the value of “bonus shares” determined on the basis of the day end ex-price be collected by the Company issuing the “bonus shares”, which will be the final tax liability on such income of the shareholder.


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2.3.21 Income Tax

The income of the Company is subject to Income Tax under the Income Tax Ordinance, 2001.

2.3.22 Deferred Taxation

Matco has not accounted for any deferred taxation in the past.

2.3.23 Sales Tax

General Sales Tax is applicable as per Sales Tax Act, 1990 on supplies and services. Sales tax on services as per Punjab Sales Tax on Services Act, 2012 by Punjab Revenue Authority. Sales tax on services as per Sindh Sales Tax on Services Act, 2011 by Sindh Revenue Board.

2.3.24 Sales Tax on Sale / Purchase of Shares

Under the Constitution of Pakistan and Articles 49 of the 7th NFC Award, the Government of Sindh, Government of Punjab, Government of Khyber Pakhtunkhwa and Government of Baluchistan have promulgated the Sindh Sales Tax on Services Act, 2011, Punjab Sales Tax on Services Act, 2012, Khyber Pakhtunkhwa Sales Tax on services through Khyber Pakhtunkhwa Finance Act, 2013 and the Baluchistan Sales Tax on services Act, 2015 respectively. The Sindh Revenue Board, the Punjab Revenue Authority, and the Khyber Pakhtunkhwa Revenue Authority and the Baluchistan Revenue Authority administer and regulate the levy and collection of the Sindh Sales Tax (“SST”), Punjab Sales Tax (“PST”), Khyber Pakhtunkhwa Sales Tax (“KST”) and Baluchistan Sales Tax (“BST”) respectively on the taxable services provided or rendered in Sindh, Punjab, Khyber Pakhtunkhwa or Baluchistan provinces respectively.

The value of taxable services for the purpose of levy of sales tax is the gross commission charged from clients in respect of purchase or sale of shares in a Stock Exchange. The above mentioned Acts levy a sales tax on Brokerage at the rate of 13% in Sindh, 16% in Punjab, 15% in Baluchistan and15% in Khyber Pakhtunkhwa. Sales tax charged under the aforementioned Acts is withheld at source under statutory requirements.

2.3.25 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 is applicable on the purchase value of shares.

2.3.26 Tax Credit for Investment in IPO

Under Section 62 of the Income Tax Ordinance, 2001, a resident person other than a Company, shall be entitled to a tax credit, as mentioned in the said section, for a tax year in respect of the cost of acquiring in the year, new shares offered to the public by a public company listed on a stock exchange in Pakistan, provided the resident person is the original allottee of the shares or the shares are acquired from the Privatization Commission of Pakistan.

As per section 62(3)(b) of the Income Tax Ordinance, 2001, the time limit for holding shares has been designated as 24 months to avail tax credit.

2.3.27 Tax Credit for Enlistment

Under Section 65C of the Income Tax Ordinance, 2001, upon enlistment a tax credit at 20% of the tax payable shall be allowed for the tax year in which a Company is listed on PSX and also extended for the following three tax years of enlistment through Finance Bill 2017. Provided that the tax credit for the last two years shall be ten (10%) percent of the tax payable.


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3 UNDERWRITING, COMMISSIONS, BROKERAGE AND OTHER EXPENSES

3.1 UNDERWRITING Book Building Portion

MCB Bank Limited has been mandated as the Book Runner to the Issue. The Book Runner shall underwrite 29,143,000 Ordinary shares being offered through the book building representing 100% of the Issue size as required under regulation 7(6) of the PO Regulations, with the limitations in effect that the Book Runner shall only underwrite the default portion of the Book Building, if any, at the Strike Price determined through the Book Building process.

General Public Portion

The General Public Portion of the Issue of 7,286,000 Ordinary Shares (25%) shall not be underwritten in terms of Regulation 7(4) of the PO Regulations.

3.2 OPINION OF DIRECTORS REGARDING RESOURCES OF THE UNDERWRITERS In the opinion of the Directors, the resources of the Book Runner are sufficient to discharge its underwriting commitments / obligations.

3.3 BUY BACK / REPURCHASE AGREEMENT THE UNDERWRITERS HAVE NOT ENTERED INTO ANY BUY BACK / RE-PURCHASE AGREEMENT WITH THE COMPANY OR ANY OTHER PERSON IN RESPECT OF THIS ISSUE OF SHARES.

ALSO, NEITHER THE COMPANY NOR ANY OF ITS ASSOCIATES HAVE ENTERED INTO ANY BUY BACK / RE-PURCHASE AGREEMENT WITH THE UNDERWRITER OR THEIR ASSOCIATES. THE COMPANY AND ITS ASSOCIATES SHALL NOT BUY BACK / RE-PURCHASE SHARES FROM THE UNDERWRITER AND THEIR ASSOCIATES.

3.4 COMMISSION OF THE BANKERS TO THE ISSUE Commission at the rate of 0.5% (inclusive of all taxes) of the amount collected on allotment in respect of successful applicants will be paid by the Company to the Bankers to the Issue for services to be rendered by them in connection with the general public offering.

3.5 FEES AND EXPENSES FOR CENTRALIZED E- IPO SYSTEM (“CES”) Commission on application received through CES will be paid to CDC which shall not be more than 0.8% of the amount of the successful applications. CDC will share, the fee with other participants of CES at a ratio agreed amongst them.

3.6 BROKERAGE For this Issue, brokerage shall be paid to the TRE Certificate Holders of PSX at the rate of 1.00% of the value of shares (including premium, if any) on successful applications for Book Building and General Public Portion. No brokerage shall be payable in respect of shares taken up by the Successful Bidders pursuant to undersubscription of retail portion of the Issue.


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3.7 ESTIMATED EXPENSES OF THE ISSUE Expenses to the Issue are estimated not to exceed PKR 41,510,741/-. The break-up of these preliminary expenses is given below:

Particulars Rate Expense

Consultant to the Issue Fee1 1.44% 10,911,139

Book Runner Fee1 0.75% 5,682,885

Commission to Banker for Book Building 0.20% 1,515,436

Commission to Bankers for General Public1 0.50% 947,180

e-IPO Facility Charges 800,000

Bankers to the Issue – Out of Pocket 500,000

TREC Holders' Commission1 1.0% 7,577,180

PSX Initial Listing Fees 1,165,721

PSX Annual Listing Fees 400,772

PSX Services Fee 50,000

PSX Book Building Software charges 500,000

Transfer Agent and Balloting Agent 300,000

Marketing & Printing Expenses 6,000,000

CDC - Fresh Issue Fees1 0.16% 1,212,349

CDC - Annual Listing Fees 200,000

SECP IPO Application Processing Fee 791,430

SECP Supervisory Fee 156,649

Legal Advisory 1,800,000

Miscellaneous Expenses 1,000,000

Total 41,510,741

__________________________

1 Represent the maximum amount that is expected to be paid based on the Floor Price of PKR 26/- per share


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4 OVERVIEW, HISTORY AND PROSPECTS

4.1 COMPANY HISTORY & OVERVIEW Matco Foods Limited (“the Company” or “MATCO”), founded by Syed Sarfaraz Ali Ghori in 1964, was initially a

supplier of Rice husking and polishing plants, grain dryers, grain handling, seed cleaning and grading plants to

various companies and the Government of Pakistan (“GoP”). Being one of the pioneers in the industry, MATCO

along with the Rice Export Corporation of Pakistan (“RECP”) set up some of the earliest rice processing plants in

Pakistan at Pirpi, Sindh and in Dhaunkal, Punjab.

In 1967, the Company set up its first own rice processing plant in Larkana, Sindh. As per GoP’s policies, the private

companies were prohibited to export rice by themselves. Therefore, the RECP, GOP’s export monopoly, used to

purchase rice from the Private Sector and export it. In 1989, when rice export by the Private Sector was allowed for

the first time, Matco established a state of the art rice processing plant in Karachi.

Since then, Matco has established itself as one of the largest Basmati rice exporter from Pakistan and “one of the

largest” rice exporters overall of Pakistan with a compounded annual growth rate (CAGR) of 20% for sales over the

last 10 years. The management has over 50 years of rice milling and industry experience with a strong record of

accomplishment.

The Company’s current rice processing facilities are spread over 1,000,000 sq. feet at four separate locations in Karachi and one in Sadhoke, District Gujranwala, Punjab. It has a total annual processing capacity of around 134,700 Metric Tons, which is broken into eight different production lines. In 2017, Matco has established another production plant in Karachi for the manufacture of Rice Glucose and Rice Protein from broken rice emerged in the rice processing operations.

4.1.1 Key Milestones

Years Events

1964 Muhammad Ali Trading Company (“M.A Trading) established by Syed Sarfaraz Ali Ghori to supply Rice husking and polishing plants, grain dryers, grain handling, seed cleaning and grading plants to various companies and Government of Pakistan

1967 The Company sets up its first rice processing plant in Larkana, Sindh

1970 Change of the name of the Company from Muhammad Ali Trading Company to Matco

1990 The Company was incorporated as a private limited company and sets up country’s first fully automated modern rice processing plant supplied by Satake Corporation of Japan

1995 The Company implements quality control parameters adopted from Satake Corporation at its first plant in Karachi

1999 First container of Company’s own brand Falak was shipped

2000 Company’s second rice processing plant Matco II was erected/installed in Site II industrial area Karachi

2002

Company installs nine (9) color sorters in various production lines including two of the latest Series Z4 by Sortex (Buhler) Germany. Color sorting machines are integrated with high end optics with precision electronic that combines embedded system with digital image technique perfectly. Color Sorters are used for separating unwanted contamination and foreign material from processed rice based on their color and type.

2004 Matco launched Falak brand in Pakistan


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2008 The Company successfully added fourth processing line in its existing facilities in Site II, Karachi

2010 Matco commissioned Sadhoke Paddy plant (Phase 1) in District Gujranwala, Punjab, Pakistan

2011 The Company added 3 more silos and 2 dryers to its Sadhoke Paddy plant

2012

JCR VIS upgraded rating to A- investment grade

International Finance Corporation (“IFC”), a World Bank Group Company, invested PKR 457,882,973 in exchange for 11,657,213 ordinary shares (20% stake) in the Company translating into a price of Rs.39.27 per share.

2013 & 2014

Established backward integration unit from husking to export finished goods at G-205 Site II Karachi

The Company established 100% owned subsidiary JKT General Trading in Sharjah Airport Free Zone, UAE with the permission of State Bank of Pakistan

Rice Flour line was also added in Karachi unit

2015

Company’s name changed from Matco Rice Processing Private Limited to Matco Foods (Pvt) Limited to cater to expanding scope from rice products to other food products

Matco Foods launches Falak Rice bran Oil

First shipment of Organic brown rice was delivered to European Union (“EU”)

2016

Falak Himalayan Pink Salt was launched by the Company

Falak Iodized Salt was launched

Rice Glucose Project Phase I started

2017 Commencement of Operations of 10,000 MT per annum Rice Glucose Plant.

Acquisition of assets of M. Iqbal Rice Mills in Sadhoke.

4.2 PATTERN OF SHAREHOLDING The major shareholding of the Company is owned by Ghori Family. Major shareholders of the Company include Dr. Tariq Ghori 26.2%, Mr. Khalid Sarfaraz Ghori 26.2% and Mr. Jawed Ali Ghori 25.9% of the total Paid up capital. A summary of shareholding pattern according to different categories of shareholders is given below:

Description Number of shares Face Value % Holding

Total Paid Up Capital

Shares held by Directors / Sponsors of the Company

69,943,275 699,432,750 80%

Shares held by IFC and Other Shareholders 17,485,819 174,858,190 20%

4.3 SOURCES OF REVENUE AND COST DRIVERS OF THE COMPANY

Revenue Drivers Revenue is generated through recurring export and local sales of its brand “Falak” Basmati Rice and private label Basmati and IRRI rice processed and packed as per customers’ specifications. Revenue will also be generated through sale of Rice Glucose which is manufactured by using broken rice. Sales is made through various distributive channels in more than 65 countries around the globe. In Pakistan, the “Falak” brand is available at about 4,000 shops of major cities and gradually gaining further distribution strength. Main revenue drivers are sales volume, international prices of Basmati rice and IRRI rice, and FX rate.


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Apart from export sales, a significant portion of the Company’s revenue is driven from sales of by-products which include rice bran, husk, broken rice, rice flour and color sorter rice. Snacks, bran oil and salt contributed 0.05%, 0.02% and 0.16% respectively to overall revenues of the Company in FY 2017. The proportion of revenue derived by the Company from various products over the past two years is provided below:

As at 30th June

Sales Breakup (In PKR Million) 2016 % 2017 %

Rice Basmati Export 3,849 69.0% 3,749 61.1%

Rice IRRI Export 502 9.0% 285 4.6%

Export Sales 4,351 78.0% 4,034 65.8%

By Products 1,086 19.5% 1,375 22.4%

Local Basmati 136 2.4% 712 11.6%

Rice Bran Oil 2 0.0% 3 0.0%

Salt - 0.0% 1 0.0%

Snacks 3 0.1% 10 0.2%

Local Sales 1,227 22.0% 2,101 34.2%

Total Sales 5,578 100.0% 6,135 100.0%

Sales of Rice Glucose are not incorporated since the new Rice Glucose Plant commenced its commercial operations after 30th June, 2017

Cost Drivers Main cost drivers are domestic paddy / raw rice prices, utilities, wages and logistics. Company has incurred major capital expenditures for paddy storage, drying and processing as well set up a Rice Glucose plant. Depreciation of capital expenditure is also a major cost driver. Basmati rice is aged and matured before exporting, and the carrying cost of inventory which includes financial charges on short term loans, insurance, and warehousing costs are also a major cost driver. Direct taxes, provincial sales tax levies and delays in sales tax refunds are also another major cost element.

Competitors Landscape Rice industry of Pakistan is highly fragmented, therefore, any public data with respect to market share is not

available. Matco faces a direct competition from the following brands in the local rice market:

Guard Rice

National Basmati Rice

Reem Super Basmati Rice

Mughal Rice

4.4 PERFORMANCE OF SUBSIDIARIES AND OTHER GROUP COMPANIES

4.4.1 Performance of Subsidiaries

JKT General Trading (FZE) – Sharjah Airport Free Zone JKT General Trading (“JKT”) is 100% owned subsidiary of Matco Foods. In October 2013, Matco set up JKT General Trading (FZE), in Sharjah Airport International Free Zone authority in the emirate of Sharjah, UAE. Matco Has invested US$ 225,000 in JKT. The principal activities of the Company are commercial-general trading, export and import. This has allowed Matco Foods to expand its boundaries and increase its presence in important GCC markets like UAE, Oman and Kingdom of Saudi Arabia. Highlights of financial performance of the company are as follows:


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JKT Trading Company FZE Amounts in PKR As at 30th June 2015 2016 2017 Revenue 50,822,786 134,783,418 112,741,416

Gross Profit 136 13,091,964 14,337,603

Operating Profit (2,380,500) 7,970,778 8,403,486

Profit after Taxation (2,422,491) 7,752,084 8,183,879

Total Assets 53,940,365 37,376,307 60,715,529

Total Liabilities 35,451,006 10,926,416 25,983,940

Total Equity 18,489,360 26,449,891 34,731,589

Matco Marketing (Pvt.) Ltd Matco Marketing (Pvt.) Ltd is involved in the business of wholesalers, indenting agents and manufacturer’s representative, sale representative either on commission or profit sharing basis, Import, Export, Locally distributed and sale of all kind of Rice, Cereals and related commodities.

Matco Marketing was incorporated on June 16, 2016 with authorized and proposed paid-up capital of PKR 10,000,000 and PKR 7,500,000 respectively. However, no business activity has been carried out by the Company since its incorporation.

4.4.2 Performance of Group Companies

Matco Engineering Company (Pvt.) Ltd MATCO Engineering Company was formed as a private limited company in 1969. The scope of the business was therefore enlarged to deal in plants and machinery of all sorts for rice milling and processing along with oil rigs and production equipment for oil well drilling, water supply pumps and ductile iron pipes, PVC pipes and accessories, power generators, radio and broad-casting equipment, radio telecommunication, microwave system and SCADA system. Various multinationals appointed MATCO Engineering as their local agent in Pakistan. For telecommunication projects, Company has been working as local agent in Pakistan with the collaboration of M/s. Moseley Associates Inc. USA as principal since 1987.

Matco Engineering Company (Private) Limited Amounts in PKR As at 30th June 2014 2015 2016 Revenue 3,506,365 20,334,949 4,288,121

Cost of Sales 1,962,915 2,344,794 4,013,521

Gross Profit 1,543,450 17,990,155 274,600

Profit/(Loss) before taxation 423,025 15,990,888 (1,397,528)

Profit/(Loss) after taxation 300,302 14,974,141 (1,680,342)

EPS 40 1,997 (224)

Total Assets 5,351,598 9,012,406 7,386,900

Total Liabilities 20,000 40,000 94,836

Total Equity 5,331,598 8,972,406 7,292,064

4.5 PLANT AND EQUIPMENT Matco Foods strives to be the most technologically advanced rice processing plant in Pakistan. The Company operates five rice processing and milling plants, which include vertically integrated paddy drying, storage, husking, processing and packaging facilities in Sadhoke, district Gujranwala, Punjab and Karachi, Sindh. Company’s investment in plant and equipment exceeds US$ 30 million.


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Karachi Plant In 1990, Matco set up Pakistan’s first fully automated, modern rice processing plant, supplied by the Satake Corporation of Japan. Presently, Company’s rice processing facilities are spread over 500,000 sq.ft at four separate locations (Matco I, Matco II, Matco G-205 and Matco Small Packaging) in port city of Karachi, with its production comprising of 6 different production lines. The Company has also installed 10 color sorters on its various production lines, including 2 of the latest Series Z4 by Sortex (Buhler) and 2 by Satake. An infrared Color Sorter has also been installed for detecting minute traces of glass and plastic in the rice. Total rice processing capacity of Matco Food’s Karachi plant is 94,290 MT per annum which represents approx. 70% of total rice processing capacity of the Company. The Company has also installed 2 automated small packing facilities for packing smaller rice bags. Another small packing production area is built on a new area of 30,000 sq.ft. on Super Highway Industrial Area Karachi.

Sadhoke, Gujranwala Plant

Matco has installed another state of art rice husking/parboiling plant on 15 acres of land in Gujranwala, the world renowned rice cultivating district of the country, popularly known as the Basmati Bowl of Pakistan. With the collaboration of the latest Japanese, Italian, British, American and Indian technologies, this facility includes modern paddy dryers, rice parboiling unit and 6 silos that monitor humidity, temperature and moisture of the rice paddy. The Company is also exploring the possibility of generating the most cost-efficient electricity, using steam generated from rice husk for its own captive use.

The Company envisions to make this facility the single largest rice husking and parboiling plant in Pakistan. The hallmark of this plant is the world class efficiency which focuses on preventing 10%-15% grain loss that occurs due to post harvest losses, and the energy losses that are prevalent across many industries. Processing capacity, storage, drying and parboiling capacities of Sadhoke plant are provided below:

S. No Description Capacity

1 Rice processing 40,410 MT per annum

2 Rice storage 32,000 MT

3 Paddy drying capacity 25 MT/hr

4 Parboiling capacity 100 MT/day

5 Milling capacity 20 MT/hr (2 lines)


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In July 2017, Matco acquired assets of Iqbal Rice Mills, a proprietorship, which was established in 2012 by Ch. Muhammad Iqbal for consideration of PKR 75,000,000. The facility is located at GT Road, Mouza Sadhoki, Tehsil Kamoki, District Gujranwala with land area of 27 Kanals, 13 Marlas and 32 Sq.fts. Assets acquired by the Company included land, building, constructions, fittings, fixtures, utility connections and installed machinery in running condition along with all rights of ownership. Machineries include husker, paddy cleaner, bran rotary, elevator, conveyors, separator, length grader, bins, dryers, compressors, transformers etc. Mill input paddy capacity is 5 metric ton/hour and necessary technical resources already arranged for its efficient operation from this new paddy season. The present market value of the property acquired as valued by M/S K.G. Traders (Pvt.) Ltd on June 22, 2017 was PKR 80,977,500. The acquired property is directly adjacent to Matco’s Sadhoke plant and will give operational efficiency to existing operations of Sadhoke Plant.

Rice Glucose / Syrup and Rice Protein Plant Matco has recently diversified its operation within domain specialized products i.e. Rice Glucose and Rice Protein with plant capacity of 10,000 MT per annum of rice glucose and 1,000 MT of Rice Protein per annum. New plant and machinery for the project was supplied by Beijing Meckey Engineering Company of China. Project is complete and commercial production of Rice Glucose and Rice Protein has started on October 02, 2017. The production process of rice glucose is vertically integrated to Matco’s existing business operations and uses broken rice which is by-product in rice production. Therefore, the broken rice requirement would be met internally.

Rice Glucose is used in the pharmaceutical, confectionary and baby food industry while Rice Protein is used in dietary supplement, nutrition and animal feed industry. More value added products such as high maltose glucose and dry glucose maltodextrin can also be made with spray drying plant. Products have very good potential in local and export markets.

Matco has also started selling rice glucose in local market to various end users in confectionary industry. The Company has sold 7.5 tons of rice glucose to M/S Crest Enterprises a distributor of rice glucose. The Company is also in process of obtaining ISO, food safety and other necessary certifications required for export of its rice glucose and rice protein products and expects to get all the necessary certifications.

4.6 PRODUCTS Matco’s main strength and focus is on Basmati rice. Basmati rice only grows in Pakistan and India and is considered the most premium variety of rice in the world. Matco also sells some Long Grain Non-Basmati Rice (IRRI varieties). Matco manufactures and processes the following products:


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S. No Products S. No Products

1 Brown Basmati Rice 9 White Rice Flour

2 White Basmati Rice 10 Gram Flour (Besan)

3 Parboiled (Sella) Basmati Rice 11 Organic Brown Basmati Rice

4 Steam Basmati Rice 12 Organic White Basmati Rice

5 Brown Long Grain (IRRI) Rice 13 Organic Brown Long Grain Rice

6 White Long Grain Rice 14 Organic White Long Grain Rice

7 Parboiled Long Grain Rice 15 Organic 100% Broken Brown Rice

8 100% Broken Rice 16 Organic 100% Broken White Rice

Additional Products Manufactured:

S. No Product S. No Product

1 Rice Bran Powder 5 Pink Salt

2 Rice Glucose 6 Iodized Salt

3 Rice Protein 7 Vermicelli

4 Jasmine Rice 8 Rice Bran Oil

4.6.1 Brands

In branded category, Matco has three Brand Ranges:

Falak Matco launched Falak rice in 1999 with a vision to make it premiere rice brand in Pakistan preferred and consumed by all globally. Falak presence is prominent in more than 40 countries through an extensive network of distributors. Falak brand is available across the globe, in the Middle East, Europe, Asia, Africa, North America and Australia. Falak Range includes:


1 Falak Basmati Rice 5 Falak Extreme

2 Falak Extreme Basmati Rice 6 Falak Brown Basmati Rice

3 Falak Aromatique 7 Falak Organic Brown Basmati Rice

4 Falak Organic Basmati Rice


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Amber

Amber Range (Sold in those markets where Falak distributor already exists but there is space on the retail shelf or market segment is different for Amber distributor):


1 Amber Premium Basmati Rice 5 Amber Brown Basmati Rice

2 Amber Extra Long Grain Basmati Rice 6 Amber Organic Brown Basmati Rice

3 Amber Golden Sella (Parboiled) Basmati Rice 7 Amber Daily Basmati Rice

4 Amber Super Basmati Rice

Bahar

Bahar Range (Sold in those markets where Falak and Amber distributor exists – brand positioning of Bahar is competitive category of rice):

S. No Product

1 Bahar Premium Basmati Rice

2 Bahar Extra Long Grain Basmati Rice

3 Bahar Parboiled (Sella) Basmati Rice

4 Bahar Brown Basmati Rice

4.6.2 Private Labelling

Matco also undertakes private labelling for its customers across the globe. It currently exports various private labels

to over 60 countries including Australia, New Zealand, USA, UK, Canada, Egypt, Europe, Lebanon, Morocco,

Mauritius, Oman, Qatar, Bahrain, UAE, Sri Lanka, Saudi Arabia and many others. Rice varieties available in private

labels are:

Super Basmati 1121 Steam

Super Basmati Brown 1121 White

Super Basmati Parboiled (Sella) 1121 Parboiled (Sella)


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Super Fine IRRI 9

Pure Basmati IRRI 6

Pure Basmati Parboiled (Sella) PK 385

Blended PK 386

4.6.3 Distributor of Signature Snacks

Matco Foods is also the sole distributor of Signature Snacks for Pakistan. Signature Snacks is a leading manufacturer based in Dubai, which produced quality biscuits, wafer, crackers, and baked chips.

4.7 GLOBAL PRESENCE

Matco Foods is one of the Pakistan’s leading rice exporting company with exports to over 60 countries around the world.

The Company’s Falak brand is prominent in more than 40 countries through an extensive network of more than 65 distributors internationally. The Company provides premium quality basmati and non-basmati rice worldwide and have more than 150 corporate clients.


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4.8 MAJOR CUSTOMERS Following are some of the key customers of the Company:

Customers Country M Tons Value (USD) % of Total Sales

Rice Growers Limited T/A Sunrice Australia 7,742.03 $5,194,752 13.1%

Riviana Foods Pty Ltd Australia 6,331.76 $4,997,612 12.6%

Herba Rice Mills Spain 5,750.00 $3,052,550 7.7%

East West Foods (Pvt) Ltd Sri Lanka 2,715.92 $2,178,684 5.5%

Comilla Jahra Foodstuff Co. W.L.L Bahrain 1,367.42 $890,885 2.2%

Ostindo International Pty Ltd Australia 1,323.00 $962,633 2.4%

Unikai United Arab Emirates 1,273.98 $1,273,009 3.2%

Alam Super Market Llc United Arab Emirates 1,195.84 $872,299 2.2%

Fineway International Trad. Llc United Arab Emirates 1,018.65 $860,453 2.2%

Euricom Spa Italy 1,000.00 $870,000 2.2%

4.9 STRONG CREDIT RATING The Company’s long-term Entity rating is A- and short-term rating is A2 as awarded by JCR-VIS Credit Rating Company limited in April 2017. Historical rating is provided in the following table:

Dissemination Time Long term Short term Outlook

April, 2017 A- A-2 Stable

December, 2015 A- A-2 Stable

December, 2014 A- A-2 Stable

June, 2012 A- A-2 Stable

May, 2011 BBB+ A-3 Stable

April, 2010 BBB A-3 Positive

4.10 INDUSTRY OVERVIEW Pakistan’s economy continued its fiscal consolidation with a strong GDP growth of 5.28% in FY 2017, highest in the last 10 years. Agriculture sector is vital component of Pakistan’s economy, the sector contributed 19.53% in GDP of the country. Agriculture sector of Pakistan is source of livelihood of almost 42.3% of the country’s total labor force. During FY 2017, performance of the agriculture sector remained up to mark, the sector witnesses a growth of 3.46% compared to last years’ meager growth of 0.27%. Agriculture mix of Pakistan is heavily based on important crops like wheat, rice, sugar cane, maize and cotton which accounts for 23.85% of value added in overall agriculture sector of Pakistan. Rice is a staple food for around half of the world’s population and has the third highest world-wide production as an agricultural commodity. Rice production and consumption is concentrated in the Asia region with China, India, Thailand, Vietnam, Pakistan and Indonesia being among the largest producers and consumers of rice. Unlike other countries, rice industry in Pakistan functions on market oriented principles. Government intervention and assistance in the sector has been limited. Price levels are determined by demand and supply forces.


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In Pakistan, rice is primarily cultivated in the alluvial plains of Punjab and Sindh both these provinces significantly contribute to rice production that is locally consumed and traded internationally. Two main varieties of rice exported by Pakistan are Basmati and IRRI. Rice sector in Pakistan contributes to export earnings, domestic employment, rural development and poverty reduction. Falling just below cotton and textiles, rice is the third biggest source of export earnings for Pakistan. According to statistics issued by Economic Survey of Pakistan (2016-17) rice contributes around 0.6 percent to GDP of Pakistan accounts for 3.0 percent in the value addition of the agriculture sector. During FY 20173, rice crop was sown on an area of 2,724,000 hectares a decrease of 0.6% over the last year cultivated area of 2,793,000 hectares. Rice production for FY 2017 was 6,849,000 tons increase of 0.7% compared to last year total production of 6,801,000 tons.

Pakistan is the sixth largest producer4 of the rice in the world. World rice production was recorded at 472.2 million MT in FY 2016 while Paksitan’s rice production was 6.8 million MT. China produced the largest volume of rice amounting 145.8 million MT. Apart from production, Pakistan is also the fourth largest rice exporting country in the world. As of FY 2016, Pakistan’s rice exports were around 4.2 million MT.

Source: United States Department of Agriculture Source: www.statista.com5

3 Economic Survey of Pakistan 2017 4 United States Department of Agriculture Foreign Agriculture Service 5 https://www.statista.com/statistics/255947/top-rice-exporting-countries-worldwide-2011/

2,3092,789 2,891 2,739 2,724

0

600

1,200

1,800

2,400

3,000

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Area Cultivated ("000" Hectares)

0.0 4.0 8.0 12.0

India

Thailand

Vietnam

Pakistan

United States

Burma

Cambodia

Uruguay

Country Wise Rice Export (Million MT)

5,536 6,798 7,003 6,801 6,849

-

2,000

4,000

6,000

8,000

FY 2013 FY 2014 FY 2015 FY 2016 FY 2017

Rice Production ("000" Tons)

149.8

145.8

104.4

36.2

15.8

8.1

6.8

6.1

0 50 100 150 200

Others

China

India

Indonesia

Thailand

Brazil

Pakistan

USA

Leading Rice Producers (Million MT)


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4.11 RISK FACTORS

4.11.1 Sector Risk

Sector risk is the risk that macroeconomic conditions deteriorate and rice industry as a whole suffers. Risk

associated with the sectors includes:

Water Shortage Risk

The recent water shortage, due to dams being built by India, may hamper crop growth thereby affecting the supply of raw materials to the Company. Commodity Price Risk Commodity price risk is the threat that the change in price in the price of production input will adversely impact the Company. Matco Foods is exposed to change in prices of raw rice and any adverse movement in raw rice prices may affect the profitability of the Company

4.11.2 Operational Risk The risk that the Company may face difficulties or malfunctions that may significantly affect the operations of the Company. Operation risk includes risk such as technological obsolescence. Technological Obsolescence Rice Processing is a technologically intensive Industry with much being dependent upon the machinery deployed. The value addition to rice is a result of the mechanized processes which improve the quality of finished rice to meet International food standards and also reduce losses due to wastage. Since the value chain comprises of a lot of processes, the efficiency levels and input costs are significantly affected by and is dependent on the technology used. The technological risk associated with the Company might come from using obsolete machinery which may not be viable to provide support for consistent growth. Matco Foods, has in the past invested, capital, time and efforts to remain abreast with the latest technology to maintain a strong-ground in the export market. The management of Matco Foods intends to continue on this strategy of technological up gradation on a consistent basis in order to compete with regional as well as international players. It intends to maintain investment in expanding, modernizing and upgrading its machinery, as and when required, and keep pace with advancements in technology in order to remain competitive in the future.

4.11.3 Legal Risk Risk that unanticipated changes in regulatory policies and procedures could have an adverse impact on the Company. Some of the legal risk that may affect the Company and entire sector includes following: Tax Policy Risk The government is promoting export oriented companies by taxing them at a lower rate; instead of the 30% corporate tax rate, they are taxed at 1% of their sales. However, in case the Tax Policy is changed then it will affect the profitability of the company. Trade Restriction Risk Earlier, the rice processing facilities were not allowed to export rice by themselves. Rice export was not allowed in by the private sector, only state owned monopoly RECP could export. After 1988 when national policy allowed for privatization of industries and banks, the same approach was followed for allowing export from the private sector. RECP which was a defunct organization was merged with the Trade Corporation of Pakistan (“TCP”)TCP. However, very recently, TCP has also started to purchase rice from the Rice processing facilities through floatation of public tenders in which the rice processing companies may participate at their own discretion. A potential threat due to


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any regulatory change requiring the companies to sell all their produced to TCP may hamper their ability to meet international demands/orders and may have an adverse effect on the Company’s demand in future as the non fulfilment of order may drive away the customer. TCP, however, is not particularly active, therefore this does not poses any major risk to the Company’s operations at the moment. International trade over last 30 years has also changed comparatively from government-to-government to business-to-business. International companies prefer dealing with private sector companies. Hence, the Company does not foresee any change in international rice trade which shall mean that the private sector would continue to remain a major players in the export market. Furthermore, the recent intervention by TCP for procurement of rice in the recent past has primarily been for donation purposes to Sri Lanka, Cuba for flood, drought and earthquake related humanitarian efforts. Lastly, REAP is also effectively engaged to lobby against any export intervention by TCP. Import Restriction Risk Matco being a major exporter of rice is exposed to risk that rice importing countries might impose ban on import of Pakistani rice.

4.11.4 Foreign Exchange Risk

Matco Foods being a major exporter of rice is susceptible to variation in the forex rates. Any fluctuations and uncertainty in foreign exchange markets might affect profitability and exports of the company which can potentially hamper operational and financial planning. Any appreciation in PKR against the USD or otherwise any stability against the fundamental to devalue may impact the Company’s export pricing. However, the Company today is focused on shifting its sales from unbranded/commoditized basis to sales under the umbrella of its brand “Falak”. This would help the Company set its own pricing based on the strength of its brand and hence allow the Company to absorb any adverse shock to exchange rate movement. The Company also has options of forward sales and borrowing of FE-25 loans for hedging of any future exchange risk.

4.11.5 Credit Risk

The Company makes export shipments against Letters of Credit either at Sight or Usance. LC Usance is letter of credit payable at predetermined time after the presentation of confirming documents, with the period varying from 30 days to 90 days. Nearly 80% of the export sales of the Company are against receipt of advance payment plus Balance Cash Against Document (“CAD”) basis. The balance 20% sales are on Deferred Acceptance (“DA”) terms for USA and UAE market. Nearly 80% of the local sales are on cash basis and the remaining 20% on credit basis to customers such as Hyper star and Metro. Default by such parties would negatively affect the Company’s financial standing.

4.11.6 Risk of Delay in Commencement of Rice Glucose Syrup Plant

Matco is undertaking expansion of its Rice Glucose / Syrup and Rice Protein plant and is expected to be completed by January 2019. However, there may be risk of delay due to delay in arrival of plant and machinery, operational and technical issues during the installation and testing of the plant and machinery.

4.11.7 Export Risk Relating to Rice Glucose and Rice Protein Business The Company intends to export its rice glucose and rice protein products internationally because of the higher prices in the international market compared to prices in the domestic market. At present there are no restriction


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or ban imposed by any target country on import of Rice Glucose and Rice Protein from Pakistan. However, in future if for any unforeseeable reasons, these importing countries impose any restriction/ban on import of Rice Glucose and/or Rice Protein from Pakistan than that would mean that the Company will have to rely on selling in the domestic market where the margins are slightly lower owing to lower prices.

4.11.8 Risk of Increase in Project Cost Certain components of plant and machinery which are to be imported are exposed to foreign exchange risk. Thus, any appreciation in foreign currencies (USD or Euro) vis-à-vis PKR would potentially increase the overall cost of the expansion project that is outlined under section 2.3.13.

4.11.9 Economic Slowdown Risk

Global economic slowdown coupled with deteriorating local macroeconomics may hamper growth for MATCO.

4.11.10 Increased Competition Risk The Company may fail to retain and grow its client base due to increased competition, both locally and internationally.

4.11.11 Interest Rate Risk

The Company has entered into various types of long term and short term loans / financing in order to finance its projects and meet working capital requirement. Any unforeseen increase in interest rates will increase the cost of borrowing for the Company and may adversely affect its profitability.

4.11.12 Capital Market Risk

After being listed on PSX, the price of the Company’s shares will be determined by market behavior, wider macroeconomic events and the Company’s performance. Hence, the value of shares will fluctuate based on movements in the securities market.

4.11.13 Under-Subscription Risk

The issue of shares of Matco Foods may get under-subscribed due to lack of interest on part of the investors. In such a case, Book Building process shall be considered as cancelled if the Company does not receive bids for the number of shares allocated under the Book Building Portion and the bid money submitted by the investors shall be refunded accordingly.

4.11.14 Risk of Non-Compliance with Regulation of SECP and PSX In the event of non-compliance with any regulatory requirements of SECP or PSX the Company may be placed on Defaulter Segment of PSX which may potentially hamper trading in the Company’s shares leading upto potential suspension in trading as well. Note: IT IS STATED THAT ALL MATERIAL RISK FACTORS HAVE BEEN DISCLOSED AND THAT NOTHING HAS BEEN

INTENTIONALLY CONCEALED IN THIS RESPECT.


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5 FINANCIAL INFORMATION

5.1 AUDITORS REPORT UNDER CLAUSE 1 OF SECTION 2 OF THE FIRST SCHEDULE TO THE PUBLIC

OFFERING REGULATIONS, 2017 FOR THE PURPOSE OF INCLUSION IN THE PROSPECTUS OF

MATCO FOODS LIMITED – UNCONSOLIDATED


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72


73


74


75


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5.2 AUDITORS REPORT UNDER CLAUSE 1 OF SECTION 2 OF THE FIRST SCHEDULE TO THE PUBLIC

OFFERING REGULATIONS, 2017 FOR THE PURPOSE OF INCLUSION IN THE PROSPECTUS OF

MATCO FOODS LIMITED – CONSOLIDATED


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79


80


81


82


83

.


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5.3 SHARE BREAK-UP VALUE CERTIFICATE – UNCONSOLIDATED


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86


87

5.4 SHARE BREAK-UP VALUE CERTIFICATE –CONSOLIDATED


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89


90

5.5 AUDITOR CERTIFICATE ON ISSUED, SUBSCRIBED, AND PAID-UP CAPITAL OF THE COMPANY


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92


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5.6 AUDITORS NOTE ON THE CONSOLIDATION OF ACCOUNT

The Company did not consolidate the accounts of its subsidiary Matco Marketing (Private) Limited as the subsidiary

had no capital as at June 30, 2017. The Company’s auditors M/S Grant Thornton Anjum Rahman Chartered

Accountant vide their letter dated October 12, 2017 gave the following opinion on non consolidation:

”As at June 30, 2017 Matco Foods Limited did not had any basis to consolidate Matco Marketing (Private) Limited

in its Consolidated Financial Statements since it had not issued any paid-up capital.”


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5.7 SUMMARY OF FINANCIAL HIGHLIGHTS OF MATCO FOODS LIMITED – UNCONSOLIDATED

ACCOUNTS

Amount in PKR Million as at June 30th 2013 2014 2015 2016 2017

Income Statement

Revenue 6,289 8,160 6,089 5,578 6,134

Cost of Goods Sold (5,441) (7,279) (5,194) (4,939) (5,169)

Gross Profit 849 881 895 639 965

EBITDA 539 524 614 345 641

Depreciation and Amortization 93 114 159 150 142

Other Income/(Expense) 2 9 2 18 37

Financial Charges (245) (333) (294) (204) (212)

Exchange gain - net (2) 174 1 33 35

Provision for worker's welfare fund (5) (7) (5) (5) (3)

Provision for worker's profit participation fund - - - - (13)

Profit/(Loss) before Taxation 196 254 160 38 342

Taxation (65) (77) (62) (34) (73)

Profit/(Loss) after Taxation 131 177 98 4 269

Balance Sheet

Non-Current Assets 1,359 2,000 1,928 1,830 2,176

Current Assets 4,485 5,408 5,520 5,077 6,059

Total Assets 5,844 7,408 7,448 6,907 8,235

Equity 1,969 2,099 2,236 2,286 2,571

Surplus on revaluation of fixed assets 269 831 782 599 572

Total Equity 2,237 2,930 3,018 2,885 3,143

Long-Term Debt 180 205 199 145 323

Liabilities against assets subject to finance lease - - 7 9 17

Accrued markup 46 46 36 50 46

Current Portion of Long-Term Financing 57 70 53 58 97

Current Portion of Liabilities against assets subject to finance lease - - 3 4 8

Short-Term Borrowings 2,840 3,294 3,487 3,197 3,887

Non-Current Liabilities 197 228 239 315 499

Current Liabilities 3,410 4,250 4,191 3,707 4,593

Net Debt 2,958 3,515 3,666 3,375 4,267

Stock-in-trade 3,370 4,690 4,830 4,506 5,240

Trade debts 575 521 482 384 542

Trade and other payables 83 364 327 195 333

Cash Flow Statement

Cash Flow from Operating Activities (719) (320) (68) 362 (409)

Cash Flow from Investing Activities (172) (176) (86) (38) (460)

Cash Flow from Financing Activities 375 430 171 (353) 891


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Net increase in cash and cash equivalents (516) (66) 17 (28) 22

Cash and cash equivalents at the beginning of the year 684 166 100 118 89

Net Cash Balance 166 100 118 89 111

Capex (188) (166) (92) (43) (474)

Growth

Sales Growth (%) - 30% -25% -8% 10%

EBITDA Growth (%) - -3% 17% -44% 86%

Profit after Taxation Growth (%) - 35% -45% -96% 6769%

Margins

Gross Margin (%) 13% 11% 15% 11% 16%

EBITDA Margin (%) 9% 6% 10% 6% 10%

Profit after Taxation Margin (%) 2% 2% 2% 0% 4%

Profit before Taxation Margin (%) 3% 3% 3% 1% 6%

Earnings Ratios

Earnings per Share - Basic6 1.5 2.0 1.1 0.0 3.1

Break-up value per share without revaluation surplus6 22.5 24.0 25.6 26.1 29.4

Break-up value per share with revaluation surplus6 25.6 33.5 34.5 33.0 36.0

Return on Equity (%) 6% 6% 3% 0% 9%

Return on Assets (%) 2% 2% 1% 0% 3%

Balance Sheet Ratios

Fixed Asset Turnover (x) 4.63x 4.08x 3.16x 3.05x 2.82x

Asset Turnover (x) 1.08x 1.10x 0.82x 0.81x 0.74x

Capex to Total Assets (%) 3% 2% 1% 1% 6%

Current Ratio (x) 1.32x 1.27x 1.32x 1.37x 1.32x

Inventory Turnover (days) 226 235 339 333 370

Receivables Turnover (days) 33 23 29 25 32

Payables Turnover (days) 6 18 23 14 23

Leverage Ratios

Net Debt to EBITDA (x) 5.49x 6.70x 5.97x 9.77x 6.65x

Total Debt to Equity (x) 1.40x 1.23x 1.25x 1.20x 1.39x

EBITDA/Interest (x) 2.20x 1.58x 2.09x 1.69x 3.02x

(EBITDA - Capex) 351 358 522 302 167

(EBITDA - Capex)/Interest (x) 1.43x 1.08x 1.77x 1.48x 0.79x

Number of Shares Outstanding 58.28 87.43 87.43 87.43 87.43

Capacity

Total Rice Processing Capacity 96,900 117,150 130,650 134,700 134,700

Total Rice Processed 99,507 98,433 78,801 98,614 95,655

Capacity Utilization 103% 84% 60% 73% 71%

6 Earnings per share and Book value per share are restated for FY 2013 based on post bonus shares of 87,429,094


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5.8 SUMMARY OF FINANCIAL HIGHLIGHTS OF MATCO FOODS LIMITED (CONSOLIDATED ACCOUNTS)

(Amounts in PKR millions) As at and for the year ended June 30th

2014 2015 2016 2017

Income Statement

Revenue 8,160 6,089 5,601 6,158

Cost of Goods Sold (7,279) (5,194) (4,949) (5,179)

Gross Profit 881 895 652 980

EBITDA 522 612 353 649

Depreciation and Amortization 114 159 149 142

Financial Charges (333) (294) (204) (212)

Other Income/(Expense) 9 2 18 37

Exchange gain - net 174 1 33 35

Provision for worker's welfare fund (7) (5) (5) (3)

Provision for worker's profit participation fund - - - (13)

Profit/(Loss) before Taxation 252 157 46 350

Taxation (77) (62) (34) (73)

Profit/(Loss) after Taxation 175 95 12 277

Balance Sheet

Non-Current Assets 1,977 1,905 1,807 2,152

Current Assets 5,428 5,539 5,112 6,118

Total Assets 7,405 7,444 6,919 8,270

Equity 2,095 2,231 2,289 2,583

Surplus on revaluation of fixed assets 831 782 599 572

Total Equity 2,926 3,013 2,888 3,154

Long-Term Debt 205 199 145 323

Liabilities against assets subject to finance lease - 7 9 17

Accrued markup 46 36 50 46

Current Portion of Long-Term Financing 70 53 58 97

Current Portion of Liabilities against assets subject to finance lease - 3 4 8

Short-Term Borrowings 3,294 3,487 3,197 3,908

Non-Current Liabilities 228 239 315 499

Current Liabilities 4,250 4,191 3,716 4,617

Net Debt 3,493 3,645 3,358 4,284

Stock-in-trade 4,690 4,830 4,506 5,240

Trade debts 521 479 400 593

Trade and other payables 364 327 206 335

Cash Flow Statement

Cash Flow from Operating Activities (320) (69) 357 (444)

Cash Flow from Investing Activities (153) (86) (38) (460)

Cash Flow from Financing Activities 430 171 (353) 912


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Effects of exchange rate changes on value of foreign operation (1) 1 1 (0)

Net increase in cash and cash equivalents (44) 17 (33) 9

Cash and cash equivalents at the beginning of the year 166 122 140 106

Net cash balance 122 140 106 115

Capex (166) (92) (43) (474)

Growth

Sales Growth (%) Na -25% -8% 10%

EBITDA Growth (%) Na 17% -42% 84%

Profit after Taxation Growth (%) Na -46% -88% 2275%

Margins

Gross Margin (%) 11% 15% 12% 16%

EBITDA Margin (%) 6% 10% 6% 11%

Profit after Taxation Margin (%) 2% 2% 0% 5%

Profit before Taxation Margin (%) 3% 3% 1% 6%

Earnings Ratios

Earnings per Share - Basic 2.00 1.09 0.13 3.17

Break-up Value per Share including Revaluation 33.5 34.5 33.0 36.1

Break-up Value per Share excluding Revaluation 23.9 25.5 26.2 29.5

Return on Equity (%) 6% 3% 0% 9%

Return on Assets (%) 2% 1% 0% 3%

Balance Sheet Ratios

Fixed Asset Turnover (x) 4.13x 3.20x 3.10x 2.86x

Asset Turnover (x) 1.10x 0.82x 0.81x 0.74x

Capex to Total Assets (%) 2% 1% 1% 6%

Current Ratio (x) 1.28x 1.32x 1.38x 1.33x

Inventory Turnover (days) 235 339 332 369

Receivables Turnover (days) 23 29 26 35

Payables Turnover (days) 18 23 15 24

Leverage Ratios

Net Debt to EBITDA (x) 6.69x 5.96x 9.51x 6.60x

Total Debt to Equity (x) 1.24x 1.26x 1.20x 1.39x

EBITDA/Interest (x) 1.57x 2.08x 1.73x 3.06x

(EBITDA - Capex) 356 519 310 175

(EBITDA - Capex)/Interest (x) 1.07x 1.77x 1.52x 0.83x

Number of Shares Outstanding 87.43 87.43 87.43 87.43


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5.9 NOTE ON HISTORICAL FINANCIAL PERFORMANCE

The Company generates a significant portion of its revenue through recurring export and local sales of its brand

“Falak” basmati rice and IRRI rice. Export of rice contributes more than 70% to total revenues of the Company,

therefore, international rice prices and demand-supply dynamics of rice play an important role in the Company’s

profitability

Prior to the start of 2015, international rice prices saw a sharp decline which impacted the profitability and margins

of rice related companies. The price of rice declined in the international market from USD 1,330 per MT to USD 845

per MT in 2015, a drop of ~36%, which significantly affected the revenues and profitability of rice processing

companies.

Source: UN EP & IRRI

During the same period, the sales of the Company declined by 25% from PKR 8,160 million to PKR 6,089 million.

Decline in revenue of Matco was attributed to global decline in rice prices. On account of lower rice prices and

declining margins, the Company processed only 78,801 MT of Basmati and IRRI rice, a decline of 20% compared to

98,433 MT processed in FY 2014. In order to avoid losses because of the declining margins, the Company catered

only to its long term customers. Subsequently, the Company resumed its normal processing from FY 2016 onwards.

Furthermore, the paddy (raw rice) procured at higher price in the start of the FY 2015 were processed and sold at

a lower price FY 2016 resulting in lower margins and profitability in FY 2016.

However, from late 2016 onwards international rice prices started to depict an increasing trend which has

continued its momentum to date. Currently, rice prices are around USD 1,129 MT. The upward trend in

international rice prices resulted in significant improvement in the Company’s margins and profitability during FY

2017.

500

800

1100

1400

1700

Jan-13 Jan-14 Jan-15 Jan-16 Jan-17

Pri

ce: U

SD/M

T

International Rice Prices


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6 MANAGEMENT

6.1 BOARD OF DIRECTORS OF THE COMPANY

S. No. Name Address Designation CNIC Partnership/Directorships in Other Companies

1 Mr. Jawed Ali Ghori

House No. 123/2,

Khayaban-e-

Ghazi, Phase 6,

DHA, Karachi

Chairman 42201-4033078-7

Matco Engineering (Pvt.) Ltd

Matco Marketing (Pvt.) Ltd

JKT General Trading FZE

2 Mr. Khalid Ghori

House No. 125/1, Khayaban-e-Ghazi, Phase 6, DHA, Karachi

Chief Executive Officer

42201-7734497-1




3 Mr. Tariq Ghori


Executive Director

42201-7579858-5




4 Mr. Faizan Ghori


Executive Director

42201-3388707-9 Matco Marketing (Pvt.) Ltd


5

Mr. Naeem Ur Rehman Akhoond

House No. 184, A, SMCHS, Karachi

Non-Executive /Independent Director

42301-3252930-1

6 Mr. Syed Kamran Rashid

House No. GF-2 Block-73, Sea View Township, Defence, Phase 5, Extension, DHA, Karachi

Non-Executive / Independent Director

42201-0723908-1

Note: One of the Director of Matco Foods resigned from the Board of Directors of the Company effective from December 26, 2017. The casual vacancy on the Board of Directors of Matco as a consequence of this resignation shall be filled by the Company within a period of ninety (90) days from the date of resignation as per section 155(3) of the Companies Act, 2017.

6.2 UNDERTAKING BY THE COMPANY AND ITS SPONSORS The Company and its sponsors undertake: 1. That neither Issuer nor its directors, sponsors or substantial shareholders have been holding the office of the

directors, or have been sponsors or substantial shareholders in any company:

(i) which had been declared defaulter by the securities exchange or futures exchange; or

(ii) whose TRE Certificate has been cancelled or forfeited by the Exchange, PMEX or any other registered

stock exchange of Pakistan that existed prior to integration of stock exchanges pursuant to Integration

Order number 01/2016 dated January 11, 2016 issued by the Commission due to noncompliance of any

applicable rules, regulations, notices, procedures, guidelines etc. which has been de-listed by the

securities exchange due to non-compliance of its regulations.

(iii) was de-listed by the Exchange due to its non-compliance of any applicable provision of PSX Regulation.


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2. That none of the Sponsors, Major Shareholders, Directors or Management of the Company as well as the Company itself or its Associated Company / Entity have been found guilty of being engaged in any fraudulent activity. The Company have made full disclosure regarding any / or all cases in relation to involvement of the person named above in any alleged fraudulent activity i.e., pending before any Court of Law / Regulatory Body / Investigation Agency in or outside of the Country.

6.3 OVERDUE LOANS There are no overdue loans (local or foreign currency) on the Company, its directors and its sponsors. The Company, its CEO, its directors and its sponsors, under the oath, undertakes that they have no overdue payment to any financial institutions

6.4 PROFILES OF DIRECTORS

6.4.1 Mr. Jawed Ali Ghori – Chairman

Jawed Ali Ghori completed his Diploma in Associate Engineering in 1968 and a BSc. in Economics and Political Science from University of Karachi in 1971. After graduation, he joined the family business and completed several government and semi-government projects that were awarded to Matco Engineering. A few of the notable projects were the Greater Hyderabad Water Project (1981), the Faisalabad Development Authority Water Project (1984), the Chitral Water Project (1989), OGDC and Attock Oil Projects and numerous telecommunication and SCADA Projects for both Sui Southern Gas Company (SSGC) and Sui Northern Gas Pipelines Limited (SNGPL). Jawed Ali Ghori's rice related projects include the supply of four rice plants to Rice Export Corporation of Pakistan at Pipri, Sindh in 1978. In 1985, he supplied and commissioned an automatic parboil rice plant of 10 MT/hour capacity on turn - key basis for P.N.P Rice Mills at Dhaunkal, District Gujranwala, Punjab. In further developments to the Dhaunkal project, Jawed Ali Ghori supplied and installed six color sorters for the parboil plant in 1988. When the private sector Basmati export in Pakistan was allowed, Jawed Ali Ghori conceptualized the idea of establishing a modern rice processing plant that would add sophistication to the existing rice processing standards. This marked the birth of Matco Rice Processing in 1990. As the Managing Director of Matco Foods, he has nearly 50 years of experience in rice processing, establishment of rice industries and worldwide rice exports. He has travelled extensively across the globe buying rice related machinery from many countries including china, Germany, Great Britain, India, Japan, Korea, Thailand and USA. He has served as Chairman of REAP and Chairman Federal B Industrial Area Association.

6.4.2 Mr. Khalid Ghori – Chief Executive Officer Khalid Ghori graduated from University of Karachi in 1981 and pursued an article ship from ICAP (Institute of Chartered Accountants of Pakistan) Karachi between 1981 and 1984. However, rapid growth in the business required his immediate presence at Dhaunkal, District Gujranwala, turnkey projects in 1984, which involved the complete testing and operation of a parboil rice plant. Between 1986 and 1989, he was in charge of Jawed Rice Mills in Larkana. In 1990, when Matco Rice Processing was being set up in Karachi, Khalid Ghori contributed to the project from the drawing board stage to the final fabrication, installation and operations. In 1995, Khalid Ghori initiated setting up Matco until 2 for providing additional capacity, using in-house design and system engineering capabilities, consisting of Japanese, Thai and Chinese machinery. Working closely with growers and suppliers from the rice growing belt in Punjab, he established a unique Rice Cultivating Monitoring Program and opened a research and control office for Matco in Lahore to improve crop quality. With experience of over 30 years in the purchase and processing of rice, Khalid Ghori is rightly dubbed the “guru of rice buyers in Pakistan.” He utilizes his vast experience in assessing the qualities of agri-products and pays special attention to the entire procurement and production process. Khalid Ghori has established a wide network of farmers who are linked to Matco’s rice paddy supply chain, allowing them to get better prices for their produce by avoiding the middlemen. His insights into crop survey and harvest are aimed to help farmers and Matco to achieve procurement targets.


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6.4.3 Dr. Tariq Ghori – Executive Director (Marketing & Exports) As the head of marketing and sales, Dr. Tariq Ghori has a vast experience in developing new markets for Matco Food’s products and appointing distributors in strategic locations. He has been instrumental in the brand development and positioning of Falak Basmati Rice in over 35 countries. He is a regular participant in renowned world food fairs such as SIAL France, ANUGA Germany, Gulfoods Dubai, amongst many other food fair. He also has experience in managing the company’s finances and its relationship with lending institutions and project finance institutes. Dr. Tariq Ghori is a graduate of Cadet College Petaro, where he demonstrated exceptional leadership skills as the College Junior Under Officer and a final year gold medalist. After graduating from Dow Medical College, Pakistan’s premier medical institution, he made the decision to join the family business and went on to build his business knowledge by attending California State University, Long Beach. Dr. Tariq Ghori is a founding member of the Rice Exporters’ Association of Pakistan (REAP) and has served as a member of REAP’s Managing Committee as well as being the president of the Pakistan Basmati Rice Promotion Committee of REAP.

6.4.4 Mr. Faizan Ghori – Executive Director (Finance) Faizan Ali Ghori joined Matco Foods in 2006 with the overall responsibility of Accounts and Finance Departments and the company's liaison with Financial Institutions. He spearheaded the company’s backwards integration paddy project at Sadhoke, district Gujranwala and attracted the first foreign direct investment by the IFC (World Bank Group) in the agriculture sector of Pakistan through its investment in Matco. Prior to Matco Foods he worked with Bank of America in London, where he was an Analyst within the Corporate Finance and Mergers & Acquisitions Investment Banking Division, covering the European Energy & Power Sector. Faizan Ghori is also a CFA charter holder. He graduated with honors (Cum Laude) from New York University's Leonard N. Stern School of Business, completing his Bachelor of Science degree with a double major in Finance and Accounting. Faizan Ghori has also completed his Master of Science degree in Finance and Accounting with honors (Merit) from The London School of Economics and Political Sciences. He is a certified director accredited by Risk Metrics Group USA having completed the Director Education programmed conducted by the Pakistan Institute of Corporate Governance.

6.4.5 Mr. Naeem Ur Rehman Akhoond – Non-Executive Director/Independent Director Mr. Naeem ur Rehman Akhoond is an elected Director. An Electrical graduate from the University of Engineering & Technology, Lahore commonly referred to as UET and has served Sui Southern Gas Company Limited (SSGC), the largest integrated gas undertaking and a major energy sector company, for a period of over 35 years. He initiated the state of the art Telecommunication and SCADA systems in SSGC to contribute to the safety of high pressure transmission pipelines, facilitating the gas control operation by ensuring effective management. The SCADA system is specifically his pride when he embarked on the mission to use this technology as a strategic asset to address the need for reliable, centralize control and monitoring on the gas transmission network. He was also responsible towards the launch of Technical Advisory Service (TAS) in SSGC that was initiated with the motive of addressing the urgent need to conserve Natural Gas and introduce energy efficient systems. TAS also played a crucial role in providing energy inputs to cater energy growth in the country. Mr. Akhoond is registered as a Professional Engineer with the Pakistan Engineering Council (PEC) of which today he is a respected member. He is also fellow of the Institution of Engineers Pakistan (IEP). He was twice elected as the Member Executive Committee of Pakistan Engineering Council. He was appointed as a Syndicate member of NED University of Engineering & Technology Karachi, and member Technical Board of Higher Education by the Chancellor and Governor of Sindh. He has completed the Director Certification program from Pakistan Institute of Corporate Governance (PICG).


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6.4.6 Syed Kamran Rashid – Non Executive Director/Independent Director Mr. Syed Kamran Rashid is an elected Director in this Company. He is a graduate of the University of Karachi. He joined EFU General Insurance Company Limited in 1989 as Business Development Officer. He has served in different capacities and locations in EFU and at present he is Executive Director of the Central Division Karachi of the said Company.

6.5 PROFILES OF KEY MANAGEMENT

6.5.1 Mr. Azher Baig – Senior General Manager Mr. Baig is a senior mechanical and manufacturing engineer with over 30 years of work experience in the field. He has been part of the Matco team since 1996. He is overall responsible for Matco's production at existing five production sites and the upcoming rice glucose plant Mr. Baig is an important member of the team for plant design, fabrication and sourcing for new projects and BMR of existing sites. His previous work experience includes employment at Pakistan Tobacco Company Limited, Gillette Pakistan Limited, and Hypermagnetic Industries (Pvt.) Limited. Mr. Baig completed his B.S Mechanical Engineering from University of New Orleans, USA and his M.E. Manufacturing Engineering from NED University of Engineering & Technology, Karachi. Mr. Baig is a member of the Pakistan Engineering Council and an Associate Member of the American Society of Mechanical Engineers. Mr. Baig is also trained and qualified with regards to all company ISO, BRC, WQA, HACCP, and FDA certifications.

6.5.2 Mr. Muhammad Jawed Ismail – Chief Financial Officer Muhammad Jawed is an experienced Chartered Accountant having multiple qualifications and more than 20 years of diversified industrial and geographical experience. Completed CA Article ship with D.T.T.I. and passed CA in 2007. Besides core expertise in finance, accounts and audit having certifications in Microsoft AX ERP Modules and Supply Chain Management. Also attended various professional skills development courses organized by IBA and various professional bodies. He has worked with leading private and public limited companies in IT, Retail, Logistics and Manufacturing sectors mainly Zultec (Pvt.) Limited and Lucky Cement Limited. Also visited U.A.E, Saudi Arabia and Africa for audit and tax assignments of group of companies. He is overall responsible for accounts, finance, tax and other allied matters. He is also responsible for review and implementation of financial controls and cost cutting parameters wherever required.

6.5.3 Mr. Shamweel Ahmed – Head of Export Sales Mr. Shamweel has to his credit around 25 years of work experience in the field of Sales & Marketing. He started his career with Upjohn Pakistan as District Sales Manager in1991. He has worked in various export companies including, Pakistan Rice Complex, Noble Impex Rice, Al Minal Rice & Hasan Ali Rice. Since 2005 he has been associated with Matco Foods as Marketing Manager (Exports) and after seen excellent performance management has promoted him as Sr. Manager Marketing in 2011. Management has promoted him as DGM Exports in 2014. He holds M.Phil 1st Div. degree from University of Karachi

6.5.4 Mr. Akhtarul Haque – Senior Manager Finance


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Mr. Akhtar Ul Haque is an Associate member of Institute of Cost & Management Accountants of Pakistan (ACMA) and experience of over 30 years in Textile and Foods industry. He has been part of Matco for the last 20 years and holds senior level management position. He is also supervising corporate matters of the company

6.5.5 Mr. M. Najam-ul-Arfeen – General Manager Brand Sales Mr. Najam Arfeen has to his credit around 30 years of work experience in the field of Sales. He started his career with Dawn Bread as Sales Officer in 1995 after one year he joined Reckitt Benckiser where his career progressed to Area Sales Manager. He joined Matco in 2003 as Sales Manager (South). In 2008 Mr. Najam became National Sales Manager in Matco. He briefly joined Engro Corp as NSM for rice division in 2013. In 2015 he rejoined Matco as GM Brand Sales for exports. Mr. Najam-ul-Arfeen holds M.A Degree in Economics from Sindh University.

6.5.6 Syed Abid Moiz – Deputy General Manager Accounts Syed Abid Moiz is Fellow member of Pakistan Institute of Public Finance Accountants (PIPFA) and CA( Finalist) from Institute of Chartered Accountants of Pakistan as well as ACCA (Finalist).He completed his Article ship training from M. Yousuf Adil Saleem & Co (A member firm of Deloitte ). He has experience of over 17 years in Accounts and Finance. Previously he served as Chief Accountant in Siddiqsons Denim Mills Limited. He is a part of Matco since 2006.

6.5.7 Mr. M Nasir Afridi – National Sales Manager S&D Mr. M Nasir Afridi has to his credit around 14 years of work experience in the field of Sales. He started his career with Shield Corporation as Sales Representative after three years of consisting performance he got her 1st promotion as Key Account Executive. He spent one year and then joined Fine Foods as Sales Officer. His career progressed through diverse functions in Sales & Distribution. In 2007 he moved to P&G as T.S.O (key account). He joined Mega Lion as Sales officer then gradually promoted Field Manager 2008, then got promoted as SDM in 2011. In 2012 he joined Matco as Key Account Manager. Since 2016, Nasir has been associated with Matco Foods as National Sales Manager. Mr. Nasir holds MBA Degree in Sales & Marketing, from Bahria University.

6.5.8 Ms. Falak Ghori – Manager Brand Export/ Digital Marketing Falak Ghori currently looks after international branding for Matco Foods leading brands as well as all digital marketing content. She is a graduate from the London School of Economics with a BSc in Management and the London College of Fashion with an MA in International Fashion Marketing and a Digital Marketing Certificate from the New York University’s (NYU) SPS. She has previously worked at Engro Eximp as an agri-commodity analyst and has internship experience in Citibank, British Petroleum, Juicy Couture, BMA Funds & Acumen Fund.

6.5.9 Ms. Ameera Ghori – Brand Manager– Local Ameera Ghori looks after the sales and branding of Matco’s local brands in Pakistan. She is also responsible for launching the New Products Division within the company and has successfully launched Falak Rice Bran Oil and Falak Pink Salt in both international and domestic markets. She started her career in Matco Foods after graduating from King’s College London with a BSc in Management (Honors), and an MSc in Management with Specialty in Marketing (Merit) from Cass Business School, City University London. Her previous work experiences include internships at Ernst & Young, London and Citibank, Karachi.

6.5.10 Ms. Wajeeha Khan – Deputy Manager HR & Admin Ms. Wajeeha has to her credit 10 years of work experience in the field of Human Resource. Ms. Wajeeha holds an MBA Degree in HR, from Muhammad Ali Jinnah University. She started her career with Callmate Telips Telecom as


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HR Assistant after one year of consisting performance she got her 1st promotion as HR Officer. Since March 2016 associated with Matco and responsible to develop and implement HR & Administration related Policies at all units. Her career progressed through diverse functions in HR & Administration and she has previously worked with Akber Ali & Sons, Karachi Tools Dies & Moulds Centre and Mehran Spice & Food Industries.

6.5.11 Mr. Tariq Iqbal – Head of Internal Audit Mr. Tariq Iqbal is an experienced audit professional and qualified member of the Institute of Chartered Accountants of Pakistan. He has about 10 years’ of professional and industrial experience out of which four years in FMCG industry. Earlier associated with a leading audit firm M/S Grant Thornton Anjum Asim Shahid Rehman, Chartered Accountants in audit, advisory & assurance division. He has worked with Abbas Sugar Mills Limited as Head of Internal Audit where in addition to accounts and financials he was also responsible for compliance of corporate governance and operational audits. He was directly reporting to Audit Committee and Board of Directors of Abbas Sugar Mills Limited. Mr. Tariq is a very good team player with goal oriented approach having expertise in financials audit, operational audit, risk assessment, risk analysis, process analysis, and development of internal control system and re-engineering of policies and procedures.

6.5.12 Mr. Mudassir Saleem – Senior Manager Costing & Budgeting Mr. Mudassir Saleem is Fellow member of Institute of Cost and Management Accountants of Pakistan. He is also a Certified Supply- Chain Professional (CSCP) form APICS-USA and Master of Economics from University of Karachi. He has total experience of 17 years in finance/accounts and costing/budgeting of different industries like textile & FMCG. Previously he has served in Afroze Tetxtile Industries, Al-Abid Silk Mills Ltd and Lakson Group of Companies on managerial post. He is now associated with Matco Foods since Feb-2013.

6.5.13 Mr. Muhammad Shahbaz – Senior Manager Accounts, Sadhoke Mr. Shahbaz has 12 years of work experience in the field of Accounts & Finance. He started his career with Technical Education & Vocational Authority as Accounts Officer in 2005. Since 2010 he has been associated with Matco Foods as Assistant Manager Account. He was promoted to Manager Accounts in 2012. Recently he got promotion as Sr. Manager Accounts. He holds B.Com degree and C.A Inter qualified.

6.5.14 Mr. Abu Ubaida Siddiqui – Deputy Manager Accounts Mr. Ubaida Siddiqui has to his credit around 14 Years of work experience in the field of Accounts and Finance. He started his career with Jahangir Siddiqui & Co. as Junior Finance Officer in 2003 after 3 years he promoted to Senior Finance Officer after 5 years he joined Habib Oil Mills (Pvt.) Ltd. in 2009 where his career progressed to Assistant Manager Accounts after 5.5 years he joined Bays International (Pvt.) Ltd. in 2014 as an Assistant Manager Accounts. Since 2016, Mr. Ubaida Siddiqui has been associated with Matco Foods as Deputy Manager Accounts. Mr. Ubaida Siddiqui holds MBA Degree in Banking & Finance nowadays he also doing CMA from Institute Cost Management Accountant of Pakistan (ICMAP).

6.6 DIVIDEND PAYOUT BY THE GROUP COMPANIES No dividend was paid by JKT General Trading (FZE), Matco Engineering (Pvt.) Ltd and Matco Marketing (Pvt.) Ltd.

6.7 NUMBER OF DIRECTORS


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Pursuant to Section 154 of the Companies Act, 2017 a listed Company shall not have less than seven (7) directors. At present, the Board consists of 6 directors, including the Chief Executive Officer.

6.8 QUALIFICATION OF DIRECTORS No person shall be appointed as a Director of the Company who is ineligible to be appointed as Director on any one or more of the grounds enumerated in Section 153 of the Companies Act or any other law for the time being in force.

6.9 REMUNERATION OF THE DIRECTORS As per the article 21 of articles of association of the Company, the Directors of the Company shall be entitled to such remuneration as the Board of Directors of the Company may from time to time determine

6.10 BENEFITS TO PROMOTERS AND OFFICERS No benefit has been given or is intended to be given by the Company to the promoters and officers of the Company other than remuneration for services rendered by them as full-time executives of the Company.

6.11 INTEREST OF DIRECTORS All directors of Matco may be deemed to be interested to the extent of their shareholding in the Company and fees payable to them (if any), for attending meetings of the Board of Directors of the Company or a committee thereof as well as to the extent of other remuneration and reimbursement of expenses payable to them, if any under the articles of association, and to the extent of remuneration paid to them, if any for services rendered as an officer or employee of the Company.

All directors may also be deemed to be interested to the extent of any dividend payable to them and other distributions in respect of their shareholdings noted above.

Following directors are holding ordinary shares of the Company:

Name of Shareholder Designation No. of Shares held Value of Shares held

Mr. Jawed Ali Ghori Chairman 22,661,925 226,619,250

Mr. Khalid Sarfaraz Ghori Chief Executive Officer 22,886,925 228,869,250

Mr. Tariq Ghori Director 22,909,425 229,094,250

Mr. Faizan Ghori Director 224,998 2,249,980

Mr. Naeem ur Rehman Non-Executive /Independent Director

1 10

Syed Kamran Rashid Non-Executive /Independent Director

1 10

6.12 INTEREST OF CHIEF EXECUTIVE OFFICER The CEO of the Company is paid salary on monthly basis.

6.13 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.


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6.14 ELECTION OF DIRECTORS The Directors of the Company are elected for a term of three years in accordance with the procedure laid down in section 159 of the Companies Act.

The Directors shall comply with the provisions of Sections 154 to 159 and Sections 161 and 167 relating to the election of Directors and matters ancillary thereto.

Subject to the provisions of the Companies Act, the Company may from time to time increase or decrease the number of Directors.

Any casual vacancy occurring on the Board of Directors may be filled up by the Directors, but the person so appointed shall be subject to retirement at the same time as if he / she had become a Director on the day on which the Director in whose place he / she is chosen was last elected as Director. The Company may remove a Director in accordance with the provisions of the Companies Act.

The present Directors of the Company were elected on October 31st, 2015 for a period of three years. The next election has to be held within 3 years and it is expected to be held in October 2018.

The Company, has undertaken that the composition of board of Directors of Matco Foods Limited will be brought in line with the Code of Corporate Governance of PSX Rule Book by 30th March, 2018.

6.15 VOTING RIGHTS Every member shall be entitled to be present and to speak and vote in any General Meeting and shall, when present in person or represented by an agent duly authorized under a power of attorney or in case of a company, by its representatives duly authorized under Section 138 of the Companies Act have one vote on a show of hands and shall, on a poll when present in person or represented by an agent duly authorized under a power of attorney or, in the case of company by a representative duly authorized under Section 138 of the Companies Act or by proxy have one vote in respect of each shares held.

Members may exercise voting rights at general meetings through electronic means if the Company receives the requisite demand for poll in accordance with the applicable laws.

Votes may be given either personally or by proxy or, in case of a company, by a representative duly authorized as aforesaid under the Provisions of Section 138 of the Companies Act.

6.16 INTERNAL AUDIT The Board of Directors of the Company has set up an effective internal audit function managed by suitable qualified and experienced personnel who are conversant with the policies and procedures of the Company and are involved in the internal audit function on a full-time basis.

The audit committee comprises of the following members:

1. Mr. Naeem ur Rehman Akhoond – Chairman 2. Syed Kamran Rasheed

6.17 HUMAN RESOURCE AND REMUNERATION COMMITTEE The Board of Directors of the Company has set up an effective Human Resources function managed by suitable and qualified personnel who are conversant with the policies & procedures of the Company and are involved in Human Resources function on a full-time basis.

The human resource and remuneration committee comprises of the following members:

1. Syed Kamran Rasheed – Chairman


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2. Mr. Jawed Ghori 3. Mr. Tariq Ghori

6.18 BORROWING POWERS OF DIRECTORS Subject to the provision of the Companies Act, 2017 and Article 26 of the Article of Association of the Company, the Directors may from time to time, borrow any sum of money for and on behalf of the Company from other persons, companies or banks or they may themselves advance money to the Company on such terms and conditions as may be approved by the Directors

6.19 POWERS OF DIRECTORS The Directors shall have all the power to run and manage the Company as per the Article of Association subject to any restriction under the Companies Act

6.20 ASSOCIATE LISTED COMPANIES Matco Foods has no associated listed company under the same management.

6.21 ASSOCIATE UNLISTED COMPANIES Matco Engineering Company (Pvt) Ltd MATCO Engineering Company was formed as a private limited company in 1969. The scope of the business was therefore enlarged to deal in plants and machinery of all sorts for rice milling and processing along with oil rigs and production equipment for oil well drilling, water supply pumps and ductile iron pipes, PVC pipes and accessories, power generators, radio and broad-casting equipment, radio telecommunication, microwave system and SCADA system. Various multinationals appointed MATCO Engineering as their local agent in Pakistan. For telecommunication projects, Company has been working as local agent in Pakistan with the collaboration of M/s. Moseley Associates Inc. USA as principal since 1987.

6.22 CORPORATE GOVERNANCE The Company shall comply with all the rules and regulations applicable to the Company with regards to the Code of Corporate Governance of Listed Companies. Furthermore, the Company will also ensure that at least half of the Board of Directors of the Company will have fulfilled the requirement of the director’s training by June 2018 as required under the PSX regulations. The Company shall also encourage representation of minority shareholders on its board of directors.

6.23 INVESTMENT IN SUBSIDIARY JKT General Trading (FZE) Matco Foods Limited has an investment of US$ 225,000 in JKT General Trading (FZE), the shareholding of Matco Foods Limited in JKT General Trading (FZE) is 100%. In October 2013, Matco set up JKT General Trading (FZE), in Sharjah Airport International Free Zone authority in the Emirate of Sharjah. The principal activities of JKT are commercial-general trading, export and import. This has allowed Matco Foods to expand its boundaries and increase its presence in important GCC markets like UAE, Oman and Kingdom of Saudi Arabia.


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Matco Marketing (Pvt.) Ltd Matco Marketing (Pvt.) Ltd is involved in the business of wholesalers, indenting agents and manufacturer’s representative, sale representative either on commission and profit sharing basis, Import, Export, Locally distributed and sale of all kind of Rice, Cereals and related commodities. Matco Marketing was incorporated on June 16, 2016 with authorized and proposed paid-up capital of PKR 10,000,000 and PKR 7,500,000 respectively. However, no business activity has been carried out by the Company since its incorporation.

6.24 REVALUATION OF FIXED ASSETS The Company’s property plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses, if any, except for freehold land which is stated at cost. The Company has carried out revaluation of its land, building and plant and machinery. Revaluation was carried out by MYK Associates and KG trader (Private) Limited on March 31, 2014. Revaluation surplus as at June, 2017 is PKR 571,665,218

6.25 CAPITALIZATION OF RESERVES The Company has capitalized its reserves in the following years:

Year Bonus (PKR)

2010 466,288,500

2014 291,430,310


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7 MISCELLANEOUS INFORMATION

7.1 REGISTERED OFFICE / CORPORATE OFFICE

Matco Foods Limited, L-24/1, Block 21, F.B. Industrial Area, Karachi, Pakistan 75950 Phone: +92 21 3631 5099 & +92 21 3631 1649 Website: http://www.matcofoods.com/ Email: [email protected]

7.2 BANKER TO THE ISSUE FOR BOOK BUILDING MCB Bank Limited

7.3 BANKERS TO THE ISSUE FOR RETAIL PORTION OF THE ISSUE MCB Bank Limited Habib Bank Limited [also integrated with the Centralized e-IPO System (CES)] Allied Bank Limited Faysal Bank Limited [also integrated with the Centralized e-IPO System (CES)] Askari Bank Limited [also integrated with the Centralized e-IPO System (CES)] Summit Bank Limited (also providing e-IPO facility) Al-Baraka Bank Limited United Bank Limited (also providing e-IPO facility) Bank Alfalah Limited (also providing e-IPO facility) Habib Metropolitan Bank Limited Soneri Bank Limited JS Bank Limited [also integrated with the Centralized e-IPO System (CES)]

7.4 BID COLLECTION CENTERS

Karachi


Direct No.: +92 21 3264 2008 +92 21 3264 5034, +92 21 3263 3070

Mobile No.: +92 331 1306154 +92 300 2284227

Fax No.: +92 21 3227 0105 +92 21 3263 3075




Lahore Quetta


Mobile No.: +92 334 4275 812 +92 333 7937 887

Direct No.: +92 42 3636 1269, 3637 2691 +92 81 2823 487

Fax: +92 42 3636 2949 +92 81 2822 203


Postal Address: MCB Bank Limited, Stock Exchange, Lahore MCB Bank Limited, Shahra-e-Iqbal, Quetta






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Islamabad Peshawar


Direct: +92 51 2894 041 +92 91 5279 769

Fax No: +92 51 2894 045 +92 91 5279 427






Direct: +92 582 7443 145 +92 5811 457 860

Fax No: +92 582 7442 287 +92 5811 457 860


Postal Address: Iqbal Road, Mirpur, Azad Kashmir MCB Bank Limited, National Market, Gilgit

7.5 BANKERS AND FINANCIAL INSTITUTIONS TO THE COMPANY

1. Askari Bank Limited

2. Allied Bank Limited

3. Bank Alfalah Limited

4. Faysal Bank Limited

5. Habib Metropolitan Bank Limited

6. Habib Bank Limited

7. MCB Bank Limited

8. National Bank of Pakistan

9. NIB Bank Limited

10. Standard Chartered Bank

11. United Bank Limited

12. Pak Oman Investment Company Limited

7.6 AUDITORS OF THE COMPANY

Grant Thornton Anjum Rahman Grant Thornton Anjum Rahman (GTAR) 1st and 3rd Floor, Modern Motors House Beaumont Road Karachi, Pakistan

7.7 LEGAL ADVISOR OF THE COMPANY

Mr. Javed Akhter Advocate Office No. 13, Bambino Chambers, Garden Road Karachi

7.8 TRANSACTION LEGAL COUNSEL

HaidermotaBNR Barristers at Law & Corporate Counsellors D-79, Block 5, Clifton, Karachi 75600, Pakistan





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7.9 CONSULTANT TO THE ISSUE

Arif Habib Limited Arif Habib Center 23, MT Khan Road, Karachi Tel: 021-3243 3542 Fax: 021-3242 9653 Email: [email protected] Website: www.arifhabibltd.com

7.10 BOOK RUNNER MCB Bank Limited 19th Floor, MCB Tower, I.I Chundrigar Road, Karachi Pakistan

7.11 COMPUTER BALLOTER & SHARES REGISTRAR THK Associates (Pvt.) Ltd 1st Floor, 40-C, Block-6, P.E.C.H.S Karachi Tel: +92 21 111 000322 Web: www.thk.com.pk

7.12 MATERIAL CONTRACTS & DOCUMENTS OF MATCO FOODS LIMITED

7.12.1 Details of Short-Term Financing Facilities

Bank Facility Limit (PKR)

Mark up Commission

Date Sanctioned /

Renewal

Expiry / Review Date

MCB Bank Limited (MCB)

Export refinance - (secured) / Foreign bills purchased / negotiated

330 Million SBP rate + 1.0% Mar-2017 Jan-2018

United Bank Limited (UBL)

FAPC I - (Secured)/ Foreign bills purchased / negotiated

500 Million SBP rate + 1.0% Nov-2017 Nov-2018

Askari Bank Ltd. (AKBL)

Export refinance - (secured)

488 Million SBP Rate + 0.75%

Apr-2017 Mar-2018

National Bank of Pakistan (NBP)

Export refinance - (secured)


Jun-2017 Mar-2018

Habib Metropolitan Bank Ltd

Export refinance (secured)/ Foreign bills purchased/negotiated


Apr-2017 Mar-2018

Allied Bank Limited (ABL)

Export refinance 250 Million SBP Rate + 0.75%

May-2017 Jan-2018



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Allied Bank Limited (ABL)

Finance against foreign export bill

30 Million 6 month KIBOR + 0.75%

May-2017 Jan-2018

Faysal Bank Ltd. Export refinance 550 Million SBP Rate + 0.75%

Jun-2017 Dec-2017

Standard Chartered Bank

Export refinance 250 Million 6 month KIBOR + 1%

Jun-2017 Jan-2018

Habib Bank Ltd.(HBL)

Export refinance/Foreign bills purchased/negotiated


Jun-2017 Feb-2018

Bank Al Falah Ltd.

Export refinance 300 Million SBP Rate + 0.75%

Mar-2017 Dec-2017

Total 3,768 Million

7.12.2 Details of Long-term Financing Facilities

Bank Facility Limit (PKR)

Mark up Commission

Date Sanctioned

Expiry / Review Date

MCB Bank Limited

LTFF/DF/FFSAP 250 Million

LTFF: SBP Rate + 1% DF: 6 month KINOR +1% FFSAP: SBP Rate + 1.25%

LTFF/DF: Apr-2016

FFSAP: Oct-2016

Apr-2026

Pak Oman Investment Company Limited

LTFF 84.26 Million 3 month KIBOR + 2%

Apr-2015 May-2020

Pak Oman Investment Company Limited

LTFF 60 Million

SBP Refinance Rate under LTFF Scheme + 1%

Jun-2016 Jun-2023

United Bank Limited

Non-Interest Demand Finance (“NIDF”)

70 Million 6 month KIBOR + 2%

Jun-2013 Jun-2018

United Bank Limited

NIDF-II/LTFF 50 Million

NIDF: 6 month KIBOR + 2% LTFF: SBP Rate + 2.5%

Aug-2014 Aug-2019

Total 514.26 Million

7.12.3 Details of Other Financing Facilities

Bank Facility Limit (PKR) Mark up

Commission Date

Sanctioned Expiry / Review

Date

Askari Bank Limited Guarantees 23 Million 0.2% + FED 20/Apr/2017 31/Mar/2018

United Bank Limited Guarantees 50 Million 0.25% / quarter 19/May/2017 30/Nov/2017


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MCB Bank Limited Guarantees 10 Million Ruling Rate (RR)* 24/Mar/2017 31/Jan/2018

Total 83 Million

*Ruling Rate: Rate charged as per latest Schedule of Bank Charges (“SOBC”)

7.12.4 Details of Related Party Agreements

Title of Agreement

Nature Party to the Agreement

Date Area Sq.ft Rental

Amount (PKR)*

Rent Agreement

Warehouse Rental

Mrs. Nuzhat Khalid Ghori

From 1-May-17 To

31-Mar-18 15,481

1,803,550

Rent Agreement

Warehouse Rental

Miss. Ameera Khalid Ghori

From 1-May-17 To

31-Mar-18 15,481

1,803,550

Rent Agreement

Warehouse Rental Mrs. Sadaf Tariq

From 1-May-17 To

31-Mar-18 15,020

1,735,800

Rent Agreement

Warehouse Rental

Mrs. Faryal Murtaza

From 1-May-17 To

31-Mar-18 14,740

1,844,800

Rent Agreement

Warehouse Rental Miss. Falak

From 1-May-17 To

31-Mar-18 16,478

1,941,066

Rent Agreement

Warehouse Rental

Mr. Faizan Ali Ghori

From 1-May-17 To

31-Mar-18 2,100

782,460

Rent Agreement

Warehouse Rental

Mr. Jawed Ali Ghori

From 1-May-17 To

31-Mar-18 2,100

586,872

*Rental Amount is for FY 2017

7.12.5 Put Option Agreement between the Sponsor of Matco Foods and IFC The sponsors of the Company namely Mr. Jawed Ali Ghori, Mr. Khalid Sarfaraz Ghori and Mr. Tariq Ghori (together hereinafter referred to as the “Grantors”) entered into a Put Option Agreement (“POA”) with IFC on February 15, 2012. As per the terms of POA, the Grantors have agreed to purchase from IFC upon exercise of this Put Option all or part of the put shares (as specified by IFC in their relevant Put Notice) at a put price that is higher of (i) a Price to Earnings Multiple of 6.5x determined based on the average audited Net Income of the three most recent financial years, adjusted for any dividends received by IFC till date; or (ii) a Price to Earnings Multiple of 6.5x determined based on the audited Net Income of the most recent financial year adjusted for any dividend received by IFC till date. This Put Option is exercisable during the Put period starting from January 01, 2016 and ending on December 31, 2020 provided further that a liquidity event has not occurred. A liquidity event is elaborated as an event of a Listing or Offering or a Bona Fide Trade Sale Offer from a reputable third party has occurred which would yield for IFC the higher of:

1. an IRR of twenty percent (20%) on IFC’s aggregate capital investment adjusted for any dividend received

by the IFC

2. Equivalent of the Put Price


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It is pertinent to note that the above agreement is between the sponsor shareholders identified above and the IFC. The Company has no obligation under the terms of this agreement. However, the Company was a Guarantor to this agreement till the time it was a private limited company, upon its conversion to a public limited company it ceased to be a Guarantor for the POA in terms of the Guarantee agreement signed on February 15, 2012.

7.13 INSPECTION OF DOCUMENTS AND CONTRACTS Copies of the Memorandum and Articles of Association, the Audited Financial Statements, the Auditor’s Certificates, Information Memorandum and copies of the agreements referred to in this Prospectus may be inspected during usual business hours on any working day at the registered office of the Company from the date of publication of this Prospectus until the closing of the subscription list.

7.14 LEGAL PROCEEDINGS I. This civil suit No. 1635 of 2009 for possession and injunction has been filed by the Company for the

possession of 3 acres of land belonging to the Company bearing No. G-205, SITE SHW, Phase II, SHW, Survey Sheet No. 35P/1-35L/13 situated along Super Highway, Karachi; it was dispossessed by the defendants, to restore it and a permanent injunction to restrain the defendants from alienating or transferring the land. The Company has also filed a stay application seeking to restrain the Defendants from alienating, transferring, possessing or encumbering the land. The application was granted vide interim order dated November 19, 2009, which is operating to date. This suit was filed on December 11, 2009 and as per last proceeding dated August 22, 2011 the case is adjourned.

II. Suit No. 2141 of 2015 Syed Alay Sadqain Naqvi versus Province of Sindh and others: the plaintiff filed this suite against the Company and four other for declaration, possession, damages, mesne profit and injunction before the Senior Civil Judge, District Court (West) at Karachi against land at G-205, SITE II, Superhighway, Karachi. The plaintiff claims to be the lawful owner of a piece of land measuring 10 acres, which also includes the land which is the subject matter of suite No. 1635 of 2009 above. The Plaintiff has sought declaration as to its ownership and occupation of the Subject Land. The Company contends that the suit is barred by res judicata as the Plaintiff’s earlier suits raising the same dispute was dismissed. The matter is still at the stage of hearing of applications. The Company’s legal counsel on this matter believes that it is premature to opine any outcome of this hearing. However, the management and the sponsors of the Company are of the opinion that they have sound legal defense and is not likely to suffer losses on account of proceeding in this suit.

III. The Petition No. 3358/2011 was filed by the Company against Federal Board of Revenue (FBR) and others,

whereby, the chargeability of the customs duty against import of storage silos has been challenged. It is pertinent to point out that the said import was exempt from duties and taxes vide SRO No. 575(I) 2006. Now through SRO dated October 23, 2012, the said silos have been added as clarificatory being exempt. The said chargeability of Customs Duty has been challenged of the intervening period before Islamabad High Court, Islamabad through Writ Petition No. 3358/11 and 1823/13. Company has filed intra court appeal ICA no. 84/2015 and 85/2015 both are pending in Honorable Islamabad High court, notice are issued. The Counsel hopes these cases will be decided in favor of Matco Foods (Private) Limited. Recovery amount against the above petition filed by the Company is PKR 7.192 Million. The management of the Company on the basis of the Counsel’s opinion is confident that the Company is not likely to suffer any losses on account of the said petition. This suit was filed on February 18, 2015 and no proceeding till date.

IV. In prior years Sindh Government imposed infrastructure cess @ 0.85% of import value on all imports into

Pakistan. A large number of importers including the Company challenged the matter in the Honorable High Court of Sindh. Honorable High Court of Sindh has issued an interim order allowing release of imported goods on 50% payment and 50% bank guarantee. The litigation is pending adjudication. This suit was filed on June 10, 2013 and no proceeding till date.


115

7.15 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.

7.16 FINANCIAL YEAR OF THE COMPANY The financial year of the Company commences on 1st July and ends on 30th June each year.


116

8 APPLICATION AND ALLOTMENT INSTRUCTIONS

8.1 ELIGIBLE INVESTORS INCLUDE: 1. Pakistani citizens resident in or outside Pakistan or Persons holding dual nationalities including a Pakistani

nationality; 2. Foreign Nationals whether living in or outside Pakistan 3. Companies, bodies corporate or other legal entities incorporated or established in or outside Pakistan (to the

extent permitted by their constitutive documents and existing regulations, as the case may be); 4. Mutual Funds, Provident / Pension / Gratuity Funds / Trusts, (subject to the terms of the Trust Deed and

existing regulations); and 5. Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan.

8.2 APPLICATION MUST BE MADE ON THE COMMISSION’S APPROVED APPLICATION FORM OR A

LEGIBLE PHOTOCOPY THEREOF ON A PAPER OF A4 SIZE WEIGHING AT LEAST 62 GM

8.3 COPIES OF THE PROSPECTUS Copies of this Prospectus and Applications Forms can be obtained from the Trading Right Entitlement Certificate holders of PSX, the Bankers to the Issue and their branches, Consultant to the Issue& Book Runner and the registered office of the Company. The Prospectus and the Application Form can also be downloaded from the following websites:

http://www.arifhabibltd.com/ , https://www.mcb.com.pk/ and http://www.matcofoods.com/

The applicants are required to complete the relevant sections of the application in order to get shares in scrip-less form. In accordance with the provisions of the Central Depositories Act, 1997 and the CDCPL Regulations, credit of such shares is allowed ONLY in the applicant’s own CDC account.

8.4 NAMES(S) AND ADDRESS (ES) MUST BE WRITTEN IN FULL BLOCK LETTERS, IN ENGLISH AND

SHOULD NOT BE ABBREVIATED

8.5 ALL APPLICATIONS MUST BEAR THE NAME AND SIGNATURE CORRESPONDING WITH THE ONE

RECORDED WITH THE APPLICANT’S BANKER. IN CASE OF DIFFERENCE OF SIGNATURE WITH THE

BANK AND COMPUTERIZED NATIONAL IDENTITY CARD (CNIC) OR THE NATIONAL IDENTITY CARD

FOR OVERSEAS PAKISTANI (NICOP) OR PASSPORT, BOTH THE SIGNATURES SHOULD BE AFFIXED

ON THE APPLICATION FORM.

8.6 APPLICATIONS MADE BY INDIVIDUAL INVESTORS 1. In case of individual investors, a photocopy of CNIC (in case of Resident Pakistanis) / NICOP or Passport (in case

of Non-Resident Pakistanis) as the case may be, should be enclosed and the number of CNIC / NICOP / Passport should be written against the name of the applicant.

2. Original CNIC / NICOP / Passport, along with a photocopy, must be produced for verification to the Banker to the Issue and the applicant’s banker (if different from the Banker to the Issue) at the time of presenting the application. The photocopy will, after verification, be retained by the bank branch along with the application.

8.7 APPLICATIONS MADE BY INSTITUTIONAL INVESTORS 1. Applications made by companies, corporate bodies, mutual funds, provident / pension / gratuity funds / trusts

and other legal entities must be accompanied by a photocopy of their Memorandum and Articles of Association


https://www.mcb.com.pk/




117

or equivalent instrument / document. Where applications are made by virtue of Power of Attorney, the same should also be submitted along with the application.

2. Photocopies of the documents mentioned in 8.7 (i) must be produced for verification to the Banker to the Issue and the applicant’s banker (if different from the Banker to the Issue) at the time of presenting the application. The copies, will after verification, be retained by the bank branch along with the application.

8.8 ADDITIONAL INSTRUCTIONS FOR INVESTORS 1. Only one application will be accepted against each account, however, in case of joint account, one application

may be submitted in the name of each joint account holder.

2. Joint application in the name of more than two persons will not be accepted. In case of joint application each applicant must sign the application, form and submit copies of their CNICs / NICOP / Passport. The share will be credited to the CDS account mentioned on the face of the form and where any amount is refundable, in whole or in part, the same will be refunded by cheque or other means by post, or through the bank where the application was submitted, to the person named first on the application form, without interest, profit or return. Please note that joint application will be considered as a single application for the purpose of allotment of shares.

3. Subscription money must be paid by check drawn on applicant’s own bank account or pay order / bank draft payable to one of the Bankers to the Issue “Matco Foods Limited - IPO” and crossed “A/C PAYEE ONLY”.

4. For the applications made through pay order / bank draft, it would be permissible for a Banker to the Issue to deduct the bank charges while making refund of subscription money to unsuccessful applicants through pay order / bank draft individually for each application.

5. The applicant should have at least one bank account with any of the commercial banks. The applicants not having a bank account at all (non-account holders) are not allowed to submit application for subscription of shares.

6. Under Section 242 of the Companies Act, any dividend payable in cash by a listed company, shall only be paid through electronic mode directly into the bank account designated by the entitled shareholder.

7. To enable the Company to directly credit the cash dividend, if any, in the Bank Accounts of the shareholder, the applicants must fill-in relevant part of the Shares Subscription Form under the heading, "Dividend Mandate".

8. Shares will be issued only in the book-entry form. Therefore, the applicants must provide their CDS account Number in the Shares Subscription Form.

9. Applications are not to be made by minors and / or persons of unsound mind.

10. Applicants should ensure that the bank branch, to which the application is submitted, completes the relevant portion of the Application Form.

11. Applicants should retain the bottom portion of their Application Forms as provisional acknowledgement of submission of their applications. This should not be construed as an acceptance of the application or a guarantee that the applicant will be allotted the number of shares for which the application has been made.

12. 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.

13. 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.


118

14. 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.

15. Submission of false and fictitious applications is prohibited and such applications’ money may be forfeited under section 87(8) of the Securities Act, 2015.

8.9 ADDITIONAL INSTRUCTIONS FOR FOREIGN / NON-RESIDENT INVESTORS 1. In case of foreign investors who are not individuals, applications must be accompanied with a letter on

applicant's letterhead stating the legal status of the applicant, place of incorporation and operations and line of business. A copy of Memorandum of Association or an equivalent document should also be enclosed, if available. Where applications are made by virtue of Power of Attorney, the same must be lodged with the application. Copies of these documents can be attested by the bank manager in the country of applicant's residence.

2. Foreign / Non- resident investors should follow payment instructions given in Section 2.2.17 of this Prospectus.

8.10 BASIS OF ALLOTMENT The basis and conditions of transfer of shares to the General Public shall be as follows: 1. The minimum value of application will be calculated as Issue Price x 500 shares. Application for amount below

the minimum value shall not be entertained.

2. Application for shares must be made for 500 shares or in multiple of 500 shares only. Applications which are neither for 500 shares nor for multiples of 500 shares shall be rejected.

3. Allotment / Transfer of shares to successful applicants shall be made in accordance with the allotment criteria / instructions disclosed in the Prospectus.

4. Allotment of shares shall be subject to scrutiny of applications in accordance with the criteria disclosed in the Prospectus and / or the instructions by the Securities & Exchange Commission of Pakistan.

5. Applications, which do not meet the above requirements, or applications which are incomplete will be rejected. The applicants are, therefore, required to fill in all data fields in the Application Form.

6. The Company will credit the respective CDS accounts of the successful applicants.

8.11 LIST OF BANKERS TO THE ISSUE

Code Name of Bank

01 MCB Bank Limited

02 Habib Bank Limited [also integrated with the Centralized e-IPO System (CES)]

03 Allied Bank Limited

04 Faysal Bank Limited [also integrated with the Centralized e-IPO System (CES)]

05 Askari Bank Limited [also integrated with the Centralized e-IPO System (CES)]

06 Summit Bank Limited (also providing e-IPO facility)

07 Al-Baraka Bank Limited

08 United Bank Limited (also providing e-IPO facility)

09 Bank Alfalah Limited (also providing e-IPO facility)

10 Habib Metropolitan Bank Limited

11 Soneri Bank Limited

12 JS Bank Limited [also integrated with the Centralized e-IPO System (CES)]

8.12 CODE OF OCCUPATION OF INVESTORS / APPLICANTS


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Code Occupation

01 Business

02 Business Executive

03 Service

04 Housewife

05 Household

06 Professional

07 Student

08 Agriculturist

09 Industrialist

10 Other

8.13 NATIONALITY CODE

Code Name of Country

001 U.S.A

002 U.K

003 U.A.E

004 K.S.A

005 Oman

006 Bangladesh

007 China

008 Bahrain

009 Other

8.14 E-IPO FACILITIES

In order to facilitate the investors, the Issuer has arranged provision of e-IPO facility through United Bank Limited (“UBL”), Summit Bank Limited (“SMBL”) and Bank Alfalah Limited (“BAFL”) that are among the Bankers to the Issue.

The accountholders of UBL can use UBL net-banking to submit their applications online via link:


The accountholders of SMBL can use SMBL net-banking to submit their applications online via link:

https://ib.summitbank.com.pk

The accountholders of BAFL can use BAFL net-banking to submit their applications online via link:

https://ib.bankalfalah.com.pk

The accountholders of UBL, SMBL and BAFL can submit their applications through these links 24 hours a day during the subscription period which will close at 12:00 midnight on January 30, 2018.

The Central Depository Company of Pakistan Limited (CDC) has developed an e-IPO system through which applications for subscription of shares can be submitted electronically through the internet. Investors are strongly encouraged to visit the link https://www.cdceipo.com to learn more about CDC e-IPO facility. Further, detailed process for subscribing through Centralized e-IPO and payment instructions can be accessed via link https://eipo.cdcaccess.com.pk/public/why_invest.xhtml.

In case any issue is encountered during or after the IPO subscription, investors can contact CDC call center at 0800-23275 or email at [email protected] during business hours. For further details on CES, please refer para 2.3.3 of the Prospectus or contact Mr. Moheel Ali Khan at Phone 021-34326030 and email: [email protected].




https://www.cdceipo.com/

https://eipo.cdcaccess.com.pk/public/why_invest.xhtml




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9 INSTRUCTIONS FOR REGISTRATION AND BIDDING

REGISTRATION PERIOD OPENS FROM JANUARY 18, 2018 TO JANUARY 23, 2018 BETWEEN 9:00 AM TO 5:00 PM AND BETWEEN 9:00 AM TO 3:00 PM ON JANUARY 24, 2018

BIDDING PERIOD OPENS FROM JANUARY 23, 2018 TO JANUARY 24, 2018 BETWEEN 9:00 AM TO 5:00 PM

INTIAL PUBLIC OFFER OF ORDINARY SHARES OF MATCO FOODS LIMITED (“MATCO” OR THE “COMPANY”)

THROUGH BOOK BUILDING PROCESS AT THE FLOOR PRICE OF PKR 26/- PER SHARE

The Present Offer comprises of 29,143,000 Ordinary Shares (25% of the post issued paid up capital of the Company with Face

Value of PKR 10.00/- each).

The bidders shall be allowed to place bids for hundred percent (100%) of the Issue size and the Strike Price shall be the price at

which the hundred percent (100%) of the Issue is subscribed. However, the successful bidders shall be allotted and issued only

seventy-five percent (75%) of the Issue size i.e. 21,857,000 and the remaining twenty five percent (25%) i.e. 7,286,000 shall be

issued to the retail investors.

Instructions for Registration and Bidding

1. Only registered investors will be eligible to participate in the bidding process. 2. Investors are required to fill in the Registration Form and submit the complete Registration Form along with Margin

Money at the Bid Collection Centers during the Registration Period. 3. For deposit of Margin Money only Pay Orders, Demand Drafts or a bank receipt evidencing Online Transfers in the

designated bank account shall be accepted during the Bidding Period. Each eligible investor shall only submit a single pay order, demand draft or evidence of online transfer of money along with the Registration Form. It may also be noted that only a single pay order, demand draft or evidence of online transfer of money shall be accepted by the Book Runner along with each Additional Payment Form.

4. Once the investor is registered in the System, the investor will receive Username and Password via an automatically generated e-mail through the System software.

5. Investors can directly place their bids online during the Bidding Period by using the Username and Password provided to them via e-mail or submit the Bidding Form at the bid collection centers in person.

6. On entry of bid in the System, the investors will receive an e-mail confirmation of their bid via the System software. 7. Investors can upward revise their bids online. Please visit www.bkb.psx.com.pk to access online portal. Online access

will be available for upward bid revisions during the Bidding Period from 9:00 am to 5:00 pm. An investor shall not be allowed to place or upward revise a bid with a price variation of more than 10% of the prevailing Indicative Strike Price. NO DOWNWARD REVISION OR WITDRAWAL OF BID SHALL BE ALLOWED.

Please Note:

1. Fill in all the particulars of the form accurately in BLOCK LETTERS. 2. For deposit of margin money, only Pay Orders, Demand Draft will be accepted or online transfer facility (pay order or

demand draft may be deposited at any branch of MCB Bank Limited and evidence to be submitted to the Book Runner) into the respective Book Building account of the Issuer, A/C No. 0961347731011027, titled “Matco Foods Limited – Book Building”, maintained at MCB Bank Limited Global Transaction Banking Branch.

3. Kindly provide a copy of CNIC or Passport (in case of Individual Investors) or NTN Certificate / Certificate of Incorporation (in case of Institutional Investor) along with the Registration Form.

4. Applicants are requested to provide accurate contact details. Please provide accurate landline number(s), mobile number(s), fax number(s), UIN(s), NTN number and e-mail address (es).

5. Bidders are requested to provide two copies of the bidding instrument at the time of bid submission.

6. The National Taxation Number (“NTN”) of Matco Foods Limited is 0711108-8. This NTN shall be required by applicants

for making their respective pay orders. 7. The Bidder is required to duly fill Additional Payment Form for depositing additional funds for enhancement of deposit

amount. 8. All payments are to be made in favor of “Matco Foods Limited – Book Building” at any of the following bidding centers:

http://www.bkb.psx.com.pk/


121

Karachi


Direct No.: +92 21 3264 2008 +92 21 3264 5034, +92 21 3263 3070

Mobile No.: +92 331 1306154 +92 300 2284227

Fax No.: +92 21 3227 0105 +92 21 3263 3075




Lahore Quetta


Mobile No.: +92 334 4275 812 +92 333 7937 887

Direct No.: +92 42 3636 1269, 3637 2691 +92 81 2823 487

Fax: +92 42 3636 2949 +92 81 2822 203


Postal Address: MCB Bank Limited, Stock Exchange, Lahore MCB Bank Limited, Shahra-e-Iqbal, Quetta

Islamabad Peshawar


Direct: +92 51 2894 041 +92 91 5279 769

Fax No: +92 51 2894 045 +92 91 5279 427






Direct: +92 582 7443 145 +92 5811 457 860

Fax No: +92 582 7442 287 +92 5811 457 860


Postal Address: Iqbal Road, Mirpur, Azad Kashmir MCB Bank Limited, National Market, Gilgit

9. CASH SHOULD NOT BE SUBMITTED WITH REGISTRATION FORM AT THE BID COLLECTION CENTER.

10. THE BID SHOULD BE SUBMITTED ON THE PRESCRIBED BIDDING FORM ALONG WITH THE REGISTRATION FORM IN PERSON OR THROUGH FAX AT THE NUMBERS MENTIONED IN NOTE 8 ABOVE. REGISTERED INVESTORS CAN ALSO PLACE THEIR BIDS DIRECTLY VIA THE ONLINE PORTAL BY VISITING WWW.BKB.PSX.COM.PK.

11. Bids can be placed at “Limit Price” or “Step Bid”.

a) Payment for Limit Price: If investors are placing their bids through “Limit Price” then they shall deposit the Margin Money based on the number

of shares they are bidding for at their stated bid price.

For instance, a Bidder may bid for 2 million shares at PKR 30.00 per share, then total Application Money would amount

to PKR 60 million. The Bid Amount will be PKR 60 million. Since the Bidder has placed a Limit Bid of PKR 30.00 per

share, this indicates that he / she / it is willing to subscribe the shares at a price up to PKR 30.00 per share.

b) Payment for Step Bid: If investors are placing their bids through “Step Bid” which is a series of limit bid at increasing prices then they shall

deposit the Margin Money / Bid Amount based on the total number of shares they are bidding for at their stated bid

price. The aggregate amount of step bid shall not be less than PKR 1,000,000/- and the amount of any step shall also

not be less than PKR 1,000,000/-.







http://www.bkb.psx.com/


122

Under this bidding strategy, Bidders place a number of Limit Bids at different increasing price levels. The Bidders may,

for instance, make a bid for 0.5 million shares at PKR 30.00 per share, 1 million shares at PKR 32.00 per share and 0.5

million shares at PKR 34.00 per share then in essence the investor has placed one Step Bid comprising of three Limit

Bids at increasing prices. The bid amount will be PKR 98 million. In case of Individual Investor, the Margin Money will

be 100% i.e. PKR 64 million whereas in case of Institutional Investor the Margin Money shall be 25% of the bid amount

i.e. PKR 16.0 million.

12. The applicant, if Individual Investor, shall submit amount of 100% of the application money as Bid / Margin Money whereas Institutional Investors shall submit not less than 25% of the application money.

13. Book Runner shall not accept or register any new Bidders after 3:00pm during the last day of Bidding Period.

14. The Bidder can view the color of the book, i.e. bid price and number of shares against each bid price online anytime during the Bidding Period at the following websites: www.psx.com.pk

15. Successful Bidders shall be intimated, within one (1) day of the closing of the Bidding Period, the Strike Price and the number of shares provisionally allotted to each of them.

16. Upon intimation by the Book Runner of final allocation, successful institutional bidders shall deposit their balance margin money within three (3) days of such intimation, if required, as consideration against allotment of shares.

17. Where a successful Bidder defaults in payment of shares allotted to him, the Margin Money deposited by such Bidder shall be forfeited to the Book Runner.

18. Final allotment of shares out of the Book Building portion shall be made after receipt of full subscription money from the successful bidders; however, shares to such bidders shall be issued only after the end of the public subscription, in the form of book-entry to be credited in their respective accounts. All the bidders shall, therefore, provide number of their accounts.

19. The bidders who have made bids below the Strike Price shall not qualify for allotment of securities and the book runner shall intimate their respective banks for unblocking their Bid Money within one (1) working day of the close of the bidding period and the refunds to such bidders shall be made within three (3) working days from the close of the bidding period.

20. The bid money of bidders who have undertaken to subscribe the unsubscribed retail portion shall remain deposited or blocked till allotment of unsubscribed retail portion, if any, to them on pro-rata basis.

http://www.psx.com.pk/


123

10 REGISTRATION FORM


124

11 DUPLICATE REGISTRATION FORM


125

12 BIDDING FORM


126


127

13 ADDITIONAL PAYMENT FORM


128

14 BID REVISION FORM


129

15 SIGNATORIES TO THE PROSPECTUS

-sd- -sd- ____________________ ____________________ Khalid Sarfaraz Ghori Chief Executive Officer

Jawed Ali Ghori Chairman

-sd- -sd- ____________________ ____________________ Dr. Tariq Ghori Director

Faizan Ali Ghori Director

-sd- -sd- ____________________ ____________________ Naeem Ur Rehman Akhoond Director

Syed Kamran Rasheed Director

SIGNED BY THE ABOVE IN PRESENCE OF WITNESSES:

Witness 1: Witness 2:

-sd- -sd- ____________________ ____________________ Muhammad Jawed Ismail 42201-1786071-5

Mohammad Latif Qureshi 42201-3651134-5

Date: December 26, 2017


130

16 MEMORANDUM OF ASSOCIATION


131


132


133


134


135


136


137

17 APPLICATION FORM


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