amreli steel - final prospectus

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AMRELI STEELS LIMITED PROSPECTUS

THIS ISSUE CONSISTS OF 74,252,857 ORDINARY SHARES (25.00% OF THE POST ISSUE PAID UP CAPITAL OF AMRELI STEELS LIMITED) OF FACE VALUE OF PKR 10/- EACH

BOOK BUILDING PORTION OF THE ISSUE COMPRISES OF 55,502,857 ORDINARY SHARES (74.75% OF THE TOTAL ISSUE) AT A FLOOR PRICE OF PKR 24.00/- (INCLUDING A PREMIUM OF PKR 14.00/- PER SHARE)

GENERAL PUBLIC PORTION OF THE ISSUE COMPRISES OF 18,750,000 ORDINARY SHARES (25.25% OF THE TOTAL ISSUE) AT AN ISSUE PRICE OF PKR XX/- PER SHARE (INCLUDING A PREMIUM OF PKR XX/- PER SHARE)

REGISTRATION OF ELIGIBLE INVESTORS: FROM 9:00AM TO 5:00PM FROM OCTOBER 02, 2015 TO OCTOBER 07, 2015 AND FROM 9:00AM TO 3:00PM ON OCTOBER 08, 2015

BIDDING PERIOD DATES: FROM OCTOBER 07, 2015 TO OCTOBER 08, 2015 (BOTH DAYS INCLUSIVE) FROM 9:00AM TO 5:00PM

DATE OF PUBLIC SUBSCRIPTION: FROM OCTOBER 27, 2015 TO OCTOBER 29, 2015 (BOTH DAYS INCLUSIVE) DURING BANKING HOURS

BOOK RUNNER JOINT LEAD MANAGERS & ARRANGERS BANKER TO BOOK BUILDING

BANKERS TO THE ISSUE

Askari Bank Limited Faysal Bank Limited Samba Bank Limited Bank Alfalah Limited Habib Bank Limited Silk Bank Limited Bank Al Habib Limited Habib Metropolitan Bank Limited Soneri Bank Limited Dubai Islamic Bank Limited MCB Bank Limited Summit Bank Limited

United Bank Limited*

*In order to facilitate investors, United Bank Limited “UBL” is offering electronic submission of application (e-IPO) to its account holders. UBL account holders can use UBL Net Banking to submit their application via link http://www.ubldirect.com/corporate/ebank. Further, please note that online applications can be submitted 24 hours a day during the subscription period which will close at midnight on October 29, 2015.

BOOK BUILDING PORTION UNDERWRITTEN BY:

For investor education please visit www.jamapunji.pk Jama Punji is an Investor Education Initiative of the Securities & Exchange Commission of Pakistan

The date of publication of this Prospectus is September 30, 2015 Prospectus and Subscription Form can be downloaded from the following websites

i.e. www.amrelisteels.com & www.akdsecurities.net

For further queries you may contact: Amreli Steels Limited - Mr. Fazal Ahmed; Phone: +92-21-32561150; E-mail: [email protected]

AKD Securities Limited - Ms. Eliya Hamid Syed; Phone: +92-21-111-253-111 Ext: 694; E-mail: [email protected] Bank Alfalah Limited - Mr. Muhammad Zeeshan; Phone: +92-21-32422778; E-mail: [email protected]

ADVICE FOR GENERAL PUBLIC INVESTORS ARE STRONGLY ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THIS PROSPECTUS, ESPECIALLY THE

RISK FACTORS GIVEN AT PARA 5.8 BEFORE MAKING ANY INVESTMENT DECISION.

PLEASE NOTE THAT AS PER REGULATION 4(X) OF THE BOOK BUILDING REGULATIONS, 2015, A SUPPLEMENT TO THE PROSPECTUS SHALL BE PUBLISHED WITHIN FIVE DAYS OF THE CLOSING OF THE BIDDING PERIOD WHICH SHALL CONTAIN INFORMATION RELATING TO THE

STRIKE PRICE, THE OFFER PRICE, NAMES OF THE UNDERWRITERS OF THE RETAIL PORTION OF THE ISSUE, UNDERWRITING COMMISSION, CATEGORY WISE BREAKUP OF THE SUCCESSFUL BIDDERS ALONG WITH NUMBER OF SHARES PROVISIONALLY ALLOCATED TO THEM.

SUBMISSION OF FALSE AND FICTITOUS APPLICATIONS ARE PROHIBTIED AND SUCH APPLICATIONS’ MONEY MAY BE FOREFEITED UNDER SECTION 87(8) OF THE SECURITIES ACT, 2015.

ADVICE FOR INSTITUTIONAL AND INDIVIDUAL INVESTORS UNDER REGULATION 10(v) OF THE BOOK BUILDING REGULATIONS A SINGLE INVESTOR SHALL NOT SUBMIT MORE THAN ONE BIDDING APPLICATION EXCEPT IN THE CASE OF 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 ARE PROHIBITED UNDER REGULATION 10 OF THE BOOK BUILDING REGULATIONS 2015. VIOLATION OF WHICH MAY ATTRACT PENALTY UP TO PKR 10 MILLION UNDER REGULATION 27 THEREOF. 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.

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

http://www.jamapunji.pk/

http://www.amrelisteels.com/

http://www.akdsecurities.net/

mailto:[email protected]



Prospectus – Amreli Steels Limited

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SUPPLEMENT TO THE PROSPECTUS

Note: This Supplement shall be published within 5 working days of the close of Bidding Period in at least all those newspapers in which the Prospectus of Amreli Steels Limited is published.

This Supplement is being published pursuant to Regulation 4(x) of the Book Building Regulations, 2015. The Prospectus of Amreli Steels Limited earlier published on

September 30, 2015.

Amreli Steels Limited

FLOOR PRICE

STRIKE PRICE

ISSUE PRICE

Underwriters to the Retail Portion of the Issue

S. No. Names of Underwriter Number of Shares

Underwritten

Amount (PKR)

(i)

(ii)

(iii)

Total

Interest of Underwriters, in the Issue and the Issuer other than their role as Underwriters: Underwriting Commission (in %age): Take up Commission (in %age), if any:

Category-wise Breakup of Successful Bidders

S. No. Category Number of Shares Provisionally

Allocated

1 Commercial Banks

2 Individual Investors

3 Institutional Investors: Investment Banks Mutual Funds Provident / Pension Funds Modarabas Leasing Companies DFIs

4 TREC Holders

5 Foreign Institutional Investors


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GLOSSARY OF TECHNICAL TERMS

ACT Securities Act, 2015

AKDS AKD Securities Limited

AMSL Amreli Steels Limited

BAFL Bank Alfalah Limited

BR Book Runner

BVPS Book Value Per Share

CAGR Compound Annual 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 Bank Alfalah Limited

Commission / SECP Securities and Exchange Commission of Pakistan

CRO Company Registration Office

CVT Capital Value Tax

EPS Earnings Per Share

Exchange Karachi Stock Exchange Limited

FED Federal Excise Duty

FPI Foreign Portfolio Investment

GDP Gross Domestic Product

GoP Government of Pakistan

HMS Heavy Melting Steel

IPO Initial Public Offering

Issuer / Company / AMSL Amreli Steels Limited

ITO Income Tax Ordinance, 2001

KSE Karachi Stock Exchange Limited

KV Kilovolts

KWSB Karachi Water and Sewerage Board

LC Letter of Credit

LM Lead Manager

Mn Million

MPA Mega Pascal

NICOP National Identity Card for Overseas Pakistani

NOC No Objection Certificate

Ordinance Companies Ordinance, 1984

PKR or Rs. Pakistan Rupee(s)

Psig Pounds per square inch gauge

PST Punjab Sales Tax

Rebars Reinforcing Steel Bars

ROA Return on Assets


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ROE Return on Equity

SCRA Special Convertible Rupee Account

SECP / Commission Securities and Exchange Commission of Pakistan

SST Sindh Sales Tax

TDS Total Dissolved Solids

TPA Tons Per Annum

TREC Trading Right Entitlement Certificate

UIN Unique Identification Number

WHT Withholding Tax


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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 allocated

AND

In case of application for subscription of shares out of the General Public portion, the amount of money paid along with application for subscription of shares which is equivalent to the product of the Issue Price per share and the number of shares applied for

Banker to the Book Building Bank Alfalah Limited

Bid An indication to make an offer during the Bidding Period by a Bidder to subscribe to the Ordinary Shares of Amreli Steels Limited at or above the Floor Price, including all revision thereto. An Eligible Investor shall not make a bid with price variation of more than 20% of the prevailing indicative Strike Price

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

of shares Bidder The Eligible Investor who makes a Bid for shares in

the Book Building process Bid Amount The total amount of the Bid which is equivalent to the

product of the Bid Price and the number of shares bid for

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 subject to appointment of these institutions as agent by the Book Runner through an agreement in writing for the purpose, with the consent of the Issuer. For this Issue, addresses of the Bid Collection Centers are provided in paragraph 2.4 (xv) of this Prospectus.

Bid Revision The Eligible Investors can revise their bids upward and

downward but not below the Floor Price. The bids can be revised with a price variation of not more than 20% from the prevailing indicative Strike Price in compliance with Regulation 10(1)(iii) of the Book Building Regulations, 2015


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Bidding Form The form prepared by the Issuer for the purpose of

making bids in accordance with the format specified by the Commission and in line with the Regulation 20(1)(ix) of the Regulations.

Bidding Period The period during which bids for subscription of

shares are received from Eligible Investors. The Bidding period shall be of two days, from October 07, 2015 to from October 08, 2015 (daily from 9:00 am to 5:00 pm)

Book Building A process undertaken to elicit demand for shares

offered for issuance of 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 2.11 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 Book Building Book Runner AKD Securities Limited Commission Securities and Exchange Commission of Pakistan Company / Issuer Amreli Steels Limited Company Legal Advisor Mohsin Tayebaly & Co. Designated Institution Karachi Stock Exchange Limited will act as the

Designated Institution for this Issue and shall provide the System for conducting Book Building

Dutch Auction Method The method through which the Strike Price is

determined. Under this method, all the bids are arranged in descending order along with the number of shares bid for at each price level and the cumulative number of shares bid for. The Strike Price is determined by lowering the price to the extent that the total shares the Issuer intends to issue through the Book Building process are subscribed

e-IPO Facility e-IPO facility is the facility through which investors

can make application for subscription of shares of the


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Company through the internet. In order to facilitate the investors, the Issuer has arranged provision of this facility through United Bank Limited who is among the Bankers to the Issue.

UBL’s account holders can use UBL net-banking to submit their applications online via link http://www.ubldirect.com/corporate/ebank Account holders of UBL can submit their applications through the above-mentioned link 24 hours a day during the subscription period which will close at 12:00 midnight on October 29, 2015

Eligible Investors An Individual and Institutional Investor whose Bid

Amount is not less than the Minimum Bid Size of PKR 1,000,000 (Rupees One Million only)

Floor Price The minimum price set by the Issuer for the Issue of

shares which is PKR 24.00/- per share. A bid placed below the Floor Price will not be entertained by the Book Runner

General Public All Individual and Institutional Investors including

both Pakistani (residents and non-residents) and foreign investors

Institutional Investors Institutional Investors means any of the following

entities:

(i) A Banking company as defined in the Banking Companies Ordinance, 1962

(ii) A Financial Institution as referred to in Section 3A of the Banking Companies Ordinance, 1962

(iii) An Investment Finance Company as defined in the Non-Banking Companies (Establishment and Regulation) Rules, 2003

(iv) A Company as referred to in Section 503 of the Ordinance

(v) A registered broker

(vi) A Fund established under the Collective Investment Scheme under the Non-Banking Companies (Establishment and Regulation) Rules, 2003

(vii) A Trust established by a deed under the provisions of the Trust Act, 1882



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Issue Initial Public Offer of 74,252,857 Ordinary Shares representing 25.00% of the total post IPO paid-up capital of the Company having a face value of PKR 10/- each

Book Building portion of the Issue comprises of 55,502,857 Ordinary Shares (74.75% of the Total Issue) at a Floor Price of PKR 24.00/- per share (including a premium of PKR 14.00/- per share).

Retail Portion of the Issue comprises of 18,750,000

Ordinary Shares (25.25% of the Total Issue) at the Issue Price

Issue Price The price at which ordinary shares of the Company

are offered to the General Public. The Issue Price is at or below the Strike Price

Joint Lead Managers & Arrangers Bank Alfalah Limited & AKD Securities Limited Key Employees Chief Executive Officer, Directors, Chief Financial

Officer and Chief Operating Officer by whatever name called.

Limit Bid The bid for a specified number of shares at a Limit

Price Limit Price The maximum price a prospective Bidder is willing to

pay for a share under the Book Building process Margin Money The partial or total amount, as the case may be, paid

by a Bidder at the time of making a bid. The Book Runner shall collect full amount of the bid money as margin money in respect of bids placed by the Individual Investors and not less than twenty five percent (25%) of the bid money as margin money in respect if bids placed by the Institutional Investors

Minimum Bid Size One Million Rupees (PKR 1,000,000/-)

Ordinary Shares Ordinary Shares of Amreli Steels Limited having face

value of PKR 10.00/- each unless otherwise specified in the context thereof

Prospectus The Prospectus containing all the information and

disclosures as required under the Securities Act, 2015, and Book Building Regulations, 2015, approved by the Commission under Section 87(2) of the Securities Act, 2015 read with Section 88(1) thereof and circulated amongst the Eligible Investors for participation in the Book Building process


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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 three days before the start of the Bidding Period from October 02, 2015 to October 08, 2015 from 9:00 am to 5:00 pm and shall remain open till 3:00 pm on the last day of the Bidding Period

Regulations The Book Building Regulations, 2015 Related Employees Such employees of the Issuer and the Book Runner

who are directly involved in the Issue. Please refer to paragraph 2.24 for further details.

Securities Act The Securities Act, 2015 Step Bid Step Bid means a series of limit bids at increasing

prices. In case of a step bid the amount of each step bid will not be less than Rupees One Million (PKR 1,000,000/-)

Strike Price The price of share determined / discovered on the

basis of Book Building process in the manner provided in the Book Building Regulations, 2015 at which the shares are issued to the successful bidders. The Strike Price will be disseminated after conclusion of Book Building through widely circulated national newspapers and also posted on the websites of the Stock Exchange(s), Lead Managers, Book Runner and the Issuer

Supplement to the Prospectus The Supplement to the Prospectus given at page 2 of

this Prospectus. System An online electronic system operated by the

Designated Institution for conducting Book Building 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

Part Content Page No. 1. Approvals and Listing on the Stock Exchange 11 2. Book Building Procedure 14 3. Share Capital and Related Matters 33 4. Underwriting, Commissions, Brokerage and Other Expenses 48 5. Overview, History and Prospects 50 6. Financial Information 61 7. Management 72 8. Miscellaneous Information 82 9. Application and Allotment Instructions 90 10. Registration Form & Bidding Forms of Amreli Steels Limited 94 11. Signatories to the Prospectus 101 12. Memorandum of Association 102 13. Application Form of Amreli Steels Limited 108


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PART 1

1 APPROVALS AND LISTING ON THE STOCK EXCHANGE

1.1 APPROVAL OF THE SECURITIES & EXCHANGE COMMISSION OF PAKISTAN

Approval of the Securities & Exchange Commission of Pakistan (the "Commission" or the

"SECP") under Section 87(2) of the Securities Act, 2015 read with Section 88(1) of the Securities Act and Clause 4 (viii) of the Book Building Regulations, 2015 thereof has been obtained by Amreli Steels Limited (“AMSL” or the “Company”) for the issue, circulation and publication of this document (hereinafter referred to as the “Prospectus”).

DISCLAIMER: IT MUST BE DISTINCTLY UNDERSTOOD THAT IN GIVING THIS APPROVAL, THE 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.

1.2 CLEARANCE OF THE PROSPECTUS BY THE KSE

The Prospectus has been cleared by the Karachi Stock Exchange Limited (“KSE”) under regulation 5.5.7 of the KSE Rule Book.

DISCLAIMER:

KSE has not evaluated the quality of the Issue and their clearances 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 Issuer before subscribing.

The publication of this document does not represent solicitation by KSE.

The contents of this document do not constitute an invitation by KSE to invest in shares or subscribe for any securities or other financial instrument, nor should it or any part of it form the basis of, or be relied upon in any connection with any contract or commitment whatsoever of KSE.

It is clarified that information in this Prospectus should not be construed as advice on any particular matter by KSE and must not be treated as a substitute for specific advice.

KSE disclaims any liability whatsoever for any loss howsoever 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.

KSE neither takes responsibility for the correctness of contents of this document nor the ability of the Company to fulfill its obligations thereunder.


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Advice from a suitably qualified professional should always be sought by investors in relation to any particular investment.

1.3 LISTING AT KARACHI STOCK EXCHANGE LIMITED

Application has been made to the KSE for permission to deal in and for quotation of the shares of the Company. If for any reason, the applications for formal listing are not accepted by the Stock Exchange, the Company undertakes to publish immediately in the press a notice to that effect and thereafter to refund application money to the applicants without surcharge as required under the provisions of Section 72 of the Ordinance. However, and, if any such money is not repaid within eight (8) days after the Company becomes liable to repay it, the directors of the Company shall be jointly and severally liable to repay that money from the expiration of the eighth day together with surcharge at the rate of one and a half percent (1.50%) for every month or part thereof from the expiration of the eighth day and, in addition, to a fine not exceeding five thousand rupees and in the case of a continuing offence to a further fine of one hundred rupees for every day after the said eighth day on which the default continues in accordance with the provisions of Section 72(2) of the Ordinance.


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

We being the Chief Executive Officer and Chief Financial Officer of the Issuer accept absolute responsibility for the disclosures made in this Prospectus. We hereby certify that the Prospectus contains all necessary information with regard to the Issuer and the Issue and constitutes full, true and plain disclosures of all material facts relating to the shares being offered through this Prospectus and that nothing has been concealed. The information contained in this Prospectus is true and correct to the best of our knowledge and the opinions and intentions expressed herein are honestly held. There are no other facts, the omission of which makes this Prospectus as a whole or any part thereof misleading. For and behalf of Amreli Steels Limited: -Sd- -Sd- ____________________ _____________________ Abbas Akberali Fazal Ahmed Chief Executive Officer Chief Financial Officer


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PART 2

2 BOOK BUILDING PROCEDURE

2.1 BRIEF ISSUE STRUCTURE

The Present Issue The Issue comprises of 74,252,857 Ordinary shares of face value of PKR 10.00/- each which constitutes 25.00% 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 24.00/- per share (including a premium of PKR 14.00/- per share), whereby 74.75% of the total issue size i.e. 55,502,857 Ordinary shares will be issued through the Book Building process to Eligible Investors. The balance 25.25% of the total Issue size i.e. 18,750,000 Ordinary Shares will be issued to the General Public through retail offer at or below the Strike Price determined through the Book Building process. Within 5 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 of the Company is published. The Supplement will contain information related to the Strike Price, the Issue Price, names of the Underwriters for the Retail Portion, Underwriting Commission, Take-up Commission and category wise break-up of the successful bidders. Format of the Supplement is given at page 2 of this Prospectus.

2.2 BOOK BUILDING PROCEDURE

Book Building is a process whereby investors bid for a specific number of shares at various prices. The Issuer, in consultation with the Joint Lead Managers and the Book Runner has set a Floor Price which is the lowest price an investor can bid at. An Order Book of bids from investors is maintained by the Book Runner, which is then used to determine the Strike Price through the “Dutch Auction Method”. Under the Dutch Auction Method, the Strike Price is determined by lowering the Bid Price to the extent that the total number of shares offered under the Book Building process is subscribed. A bid by an Eligible Investor can be a “Limit Bid”, or a “Step Bid”, which are explained below: Limit Bid: Limit bid is at the Limit Price, which is the maximum price an investor is

willing to pay for a specified number of shares.

In such a case, a Bidder 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 2.0 million shares at PKR 26.00/- per share, then total Application Money would amount to PKR 52,000,000/-. The Bid Amount will be PKR 52,000,000/-. Since the Bidder has placed a Limit Bid of PKR 26.00/- per share, this indicates that he / she / it is willing to subscribe at or below PKR 26.00/- per share.

Step Bid: A series of Limit Bids at increasing prices. The aggregate amount of Step Bid

shall not be less than PKR 1,000,000/- and the amount of any individual step shall also not be less than PKR 1,000,000/-.


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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 2.0 million shares at PKR 26.00/- per share, 1.5 million shares at PKR 27.00/- per share and 1.0 million shares at PKR 28.00/- 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 120.50 million. In case of Individual Investor, the bid amount will be 100% i.e. PKR 120.50 million whereas in case of Institutional Investor the amount shall be 25% of the bid amount i.e. PKR 30.125 million.

AN ELIGIBLE INVESTOR SHALL NOT MAKE A BID WITH A PRICE VARIATION OF MORE THAN 20% OF THE PREVAILING INDICATIVE STRIKE PRICE. ELIGIBLE INVESTOR SHALL NOT MAKE MORE THAN ONE BID SEVERALLY OR JOINTLY. HOWEVER, A BID CAN BE REVISED TILL 5:00 PM ON LAST DAY OF THE BIDDING PERIOD. DOWNWARD REVISION OF BID PRICE SHALL NOT BE ALLOWED AFTER 4:00 PM ON THE LAST DAY OF BIDDING. FOR FURTHER DETAILS PLEASE SEE PARAGRAPH 2.10(iii)(f).

ELIGIBLE INVESTORS SHALL NOT PLACE CONSOLIDATED BIDS. 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. RELATED EMPLOYEES OF THE ISSUER AND THE BOOK RUNNER CANNOT PARTICIPATE IN THE BIDDING PROCESS.

Once the Bidding Period is over and the Book has been built, the Strike Price shall be determined on the basis of Dutch Auction Method. Successful Bidders shall be intimated, within one (1) working day of the closing of the bidding period about the Strike Price and the number of shares provisionally allotted to each of them. The successful institutional Bidders shall, within three (3) working days of the closing of the Bidding Period, deposit the balance amount as consideration against allotment of shares. Where a successful bidder defaults in payment of shares allotted to him / her / it, the Margin Money deposited by such bidder shall be forfeited to the Book Runner under Clause 21(12) of the Regulations.

AS PER REGULATION 21(14) OF THE REGULATIONS, THE SUCCESSFUL BIDDERS SHALL BE ISSUED SHARES IN THE FORM OF BOOK-ENTRY SECURITIES TO BE CREDITED IN THEIR CDS ACCOUNTS. ALL THE ELIGIBLE INVESTORS SHALL, THEREFORE, PROVIDE THEIR CDC ACCOUNT NUMBERS IN THE BID APPLICATION.

2.3 BOOK RUNNER AKD Securities Limited (“AKDS”) has been appointed by the Issuer as the Book Runner to this Issue. AKDS is registered with the Commission as Book Runner, in accordance with the Book Building Regulations, 2015.

2.4 ROLE AND FUNCTIONS OF THE BOOK RUNNER

The Book Runner to the Issue shall be responsible to: i. ensure that necessary infrastructure and electronic system is available to accept bids

and to undertake the whole Book Building in a fair, efficient and transparent manner;


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ii. the Book Runner must be financially capable for honoring its commitments arising out of defaults by their client investors, if any;

iii. collect Margin Money and subscription money from the Bidders in the manner as

mentioned in the Book Building Regulations, 2015;

iv. use the software provided by the Designated Institution for the Book Building on such terms and conditions as may be agreed through an agreement in writing;

v. ensure that the software used for Book Building is based on Dutch Auction Method for

display of the order book and determination of the strike price; vi. ensure that the bidders can access to the System and can revise their bids

electronically using the user ID and the password; vii. ensure that it has established not less than two Bid Collection Centers in the city

where the securities exchange on which the issuer is to be listed, is located and in all major cities of the country at least in the Federal Capital and all the provincial capitals;

viii. enter into an underwriting agreement with the Issuer with respect to underwriting of

the Book Building portion;

ix. maintain record of all the bids received; x. ensure that it has obtained list and Unique Identification Numbers of the associated

companies and associated undertakings of the Issuer; xi. ensure that names and Unique Identification Numbers of all the persons mentioned in

the aforementioned clause (x) are entered and capped at five percent into the System before commencement of the Bidding Period;

xii. ensure that no bid in aggregate exceeding five percent in made by the persons

referred in the above clause (x);

xiii. ensure that it has obtained names and Unique Identification Numbers of the Related employees of the Issuer and the Book Runner and that names and Unique Identification Numbers of all such employees are entered into the system and blocked for participation in the bidding;

xiv. with the consent in writing of the Issuer, may appoint sub-Book Runner pursuant to an agreement in writing which shall clearly stipulates the roles and responsibilities of the sub-Book Runner. The prime responsibility for all acts of the sub-Book Runner shall be on the Book Runner itself;

xv. the Book Runner has established Bid Collection Centers at the following addresses: Karachi

Contact: Ms. Eliya Hamid Syed Direct No.: +92-21-3536-0533 PABX No.: +92-21-111-253-111 Ext. 694 Fax No.: +92-21-3537-4291, +92-21-3537-3211 Email: [email protected] Postal Address: AKD Securities Limited



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6th Floor, Continental Trade Centre Block - 8, Clifton, Karachi

Contact: Mr. Imran Karim Direct No.: +92-21-32426652 PABX No.: +92-42-111-253-111 Fax No.: +92(21) 32426429 Email: [email protected] Postal Address: AKD Securities Limited

529, 533-534,5th Floor Stock Exchange Stock Exchange Road, Karachi

Lahore Contact: Mr. Ehsan Ahmad Qureshi Direct No.: +92-42-36280742-4 PABX No.: +92-42-111-253-111 Fax No.: +92-42-3628-0745 Email: [email protected] Postal Address: AKD Trade

Room No. 512/513, 5th Floor Lahore Stock Exchange Building, Lahore

Islamabad Contact: Mr. Khalid Hussain Direct No.: +92-51-2894325 PABX No.: +92-51-289-4321 Fax No.: +92-51-289-4323 Email: [email protected] Postal Address: AKD Trade

303, 3rd Floor, ISE Tower Jinnah Avenue, Blue Area, Islamabad

Peshawar Contact: Mr. Saqib Sajjad Direct No.: +92-91-526-0073 PABX No.: +92-91-528-7051-7, Ext.125 Fax No.: +92-91-528-7058 Email: [email protected] Postal Address: Bank Alfalah Limited

Peshawar Main Branch 6-B, Islamia Road, Peshawar Cantt

Quetta Contact: Mr. Saghir Ahmed Direct No.: +92-81-282-8210 PABX No.: +92-81-111-777-786, Ext. 122 Email: [email protected] Postal Address: Bank Alfalah Limited

Quetta Main Branch Property No. 2-13/4, M.A. Jinnah Road Quetta







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Ensure that all the Bids received by the Bid Collection Centers are entered within the prescribed time into the System for the purpose of Book Building within the prescribed time.

2.5 INTEREST OF BOOK RUNNER AND LEAD MANAGER & ARRANGER IN THE ISSUE AND THE ISSUER OTHER THAN ITS ROLE AS A BOOK RUNNER AND LEAD MANAGER & ARRANGER The Book Runner and Lead Manager & Arranger are deemed to be interested to the extent of fees payable to them by the Issuer for the services of the Book Runner and Lead Manager & Arranger to the Issue. The Book Runner and the Lead Manager & Arranger have no other interest in any property or profits of the Company.

2.6 OPENING AND CLOSING OF THE BIDDING PERIOD

The Bidding Period shall be for (2) two working days i.e. October 07, 2015 and October 08, 2015. The bidding will commence at 09:00 am and shall close at 05:00 pm on both days.

BIDDING PROCESS STARTS ON 9:00 AM October 07, 2015

BIDDING PROCESS ENDS ON 5:00 PM October 08, 2015

2.7 ELIGIBILITY TO PARTICIPATE IN BIDDING

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

2.8 INFORMATION FOR BIDDERS

a) The Prospectus for issue of shares has been duly cleared by KSE and approved by

SECP. b) The Prospectus, Registration Forms and the Bidding Forms can be obtained from the

Registered Office of Amreli Steels Limited and AKDS and the designated bid collection centers. Prospectus, Registration Forms and Bidding Forms can also be downloaded from the following websites of the Book Runner and the Company i.e. www.akdsecurities.net and www.amrelisteels.com.

c) Eligible investors who are interested in subscribing to the Ordinary shares should

approach the Book Runner at the addresses provided in paragraph 2.4 for registration and submitting their Bids.

d) THE REGISTRATION FORMS SHOULD BE SUBMITTED ON THE PRESCRIBED FORMAT

AT THE ADDRESSES PROVIDED IN PARAGRAPH 2.4. FOR DETAILS ON THE PROCEDURE OF REGISTRATION PLEASE REFER PARA 2.9.

e) THE BIDS SHOULD BE SUBMITTED ON THE PRESCRIBED BIDDING FORM IN PERSON OR THROUGH FAX NUMBERS GIVEN IN PARAGRAPH 2.4.

f) REGISTERED INVESTORS CAN PLACE, REVISE OR WITHDRAW THEIR BIDS BY ACCESSING THE DESIGNATED INSTITUTION ONLINE PORTAL FOR BOOK BUILDING BY USING THE USER ID AND PASSWORD COMMUNICACTED TO THEM VIA EMAIL BY THE DESIGNATED INSTITUTION.




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g) EACH ELIGIBLE INVESTOR SHALL ONLY SUBMIT A SINGLE PAY ORDER / DEMAND DRAFT ALONG WITH THE REGISTRATION FORM. IT MAY ALSO BE NOTED THAT ONLY A SINGLE PAY ORDER / DEMAND DRAFT SHALL BE ACCEPTED BY THE BOOK RUNNER ALONG WITH EACH ADDITIONAL PAYMENT FORM.

h) ELIGIBLE INVESTORS WHO ARE ACCOUNTHOLDERS OF BANK ALFALAH LIMITED CAN USE THE ONLINE TRANSFER FACILITY TO TRANSFER THEIR BID MONEY TO THE BOOK BUILDING ACCOUNT OPENED AT BANK ALFALAH LIMITED.

2.9 REGISTARTION FORM AND PROCEDURE FOR REGISTRATION

a) Standardized Registration Form has been prescribed by the Issuer. Registration Form

shall be submitted at the Bid Collection Centers in person on addresses given in paragraph 2.4 on the standard Registration Form duly filled in. 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.

b) 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 KSE and the SECP, without prior or subsequent notice of such changes to the bidders.

c) The registration procedure under the Book Building process is outlined below: i. The registration shall commence from October 02, 2015 between 9:00 AM to 5:00 PM

and will end on October 08, 2015 at 3:00 PM.

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

iii. The Registration Form shall be submitted through the Bid Collection Centers in person

on addresses given in paragraph 2.4 on the standard Registration Form duly filled in and signed in duplicate.

iv. Upon registration of the bidders in the System, the Designated Institution shall assign

and communicate User ID and password to the bidders via email on the email address provided by them in the Registration Form

v. 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 Runner shall not be challengeable by the bidder or its associates.

vi. Bid money / margin money shall be deposited along with the Registration Form

through demand draft, pay order and online transfer.

vii. The pay order shall be made in favor of “IPO of Amreli Steels Limited – Book Building Account”. For online transfer the payment shall be made into A/C # 0005-1004817637 being maintained in Bank Alfalah Limited Main Corporate Branch, Karachi with the Account Title “IPO of Amreli Steels Limited – Book Building Account”. Please note that online transfer facility shall only be allowed to Bank Alfalah Limited customers.


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viii. Please note that third party instruments will not be accepted for margin money. ix. The Book Runner shall collect an amount of 100% of the application money as bid

money in respect of bids placed by Individual Investors. x. The Book Runner shall collect an amount of not less than 25% of the application

money as margin money in respect of bids placed by Institutional Investors. xi. The Bidder shall provide a valid email address in the Registration Form so that the

relevant User ID and password can be emailed to them upon registration of the bid.

xii. The Bidders can use the User ID and password to directly place, revise or withdraw their bids online.

xiii. 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 CDC account numbers in the bid application and Registration form.

2.10 PROCEDURE FOR BIDDING

i. Standardized Bidding Form has been prescribed by the Issuer in accordance with the

format and content specified by the Commission.

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

iii. The bidding procedure under the Book Building process is outlined below: a) Bids can be placed at “Limit Price” or “Step Bid”. An Eligible Investor shall not place a

bid provided that the minimum size of a limit bid shall not be less than PKR 1,000,000/- (One Million Rupees) and in case of a Step Bid, the amount of any step shall also not be less than PKR 1,000,000/- (One Million Rupees).

b) In addition to the procedure provided in Regulation 13(2) of the Book Building Regulations, 2015, the investors may place their bids through any of the Bid Collection Centers;

c) 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’s designated bank account;

d) On receipt of bid application in accordance with clause (c), 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;

e) The bidding shall commence from 09:00 am and close at 05:00 pm on all days of the Bidding Period. The bids shall be collected and entered into the system by the Book-Runner till 05:00 pm on the last day of the bidding period; and

f) The registered investors shall have the right:

https://bkb.kse.com.pk/


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i. to withdraw their bids till 04:00 pm on last day of the bidding period either manually through the Bid Collection Centers or electronically through direct access to the system. No withdrawal shall be allowed after 4:00 pm on last day of the bidding period; and

ii. subject to the provision of Regulation No. 20(3)(2)(iv), to revise their bids any time either manually through the Bid Collection Centers or electronically through direct access to the system till 5:00 pm on the last day of the Bidding Period. No downward revision shall be allowed after 4:00 pm on last day of the bidding period.

g) The Book Runner shall collect full amount of the bid money as margin money in

respect of bids placed by the Individual Investors and not less than twenty five percent (25%) of the bid money as margin money in respect of bids placed by the institutional investors.

h) 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.

i) The Book Runner may on its own discretion accept bid without margin money provided Book Building Portion is fully underwritten at least at the Floor Price by the Book Runner.

j) 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 Runner shall not be challengeable by the bidder or its associates.

k) The Designated Institution 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 offered. The order book should also show the revised bids and the bids withdrawn. The order book shall be accessible through websites of the Designated Institution, Book Runner, securities exchanges, clearing house and the central depository.

l) At the close of the bidding period, Strike Price shall be determined on the basis of

Dutch Auction Method.

m) Once the Strike Price is determined all those bidders whose bids are found successful shall become entitled for allotment of shares.

n) 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.

o) The bidders who have made bids at the Strike Price shall be allotted shares in accordance with Regulation 7(2) of the Regulations. 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.

p) The bidders who have made bids below the Strike Price shall not qualify for allotment of shares and their margin money shall be refunded within five working days of the close of the bidding period.


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q) Successful bidders shall be intimated, within one working day of the closing of the bidding period, the Strike Price and the number of shares provisionally allotted to each of them. The successful institutional bidders shall, within three working days of the closing of the bidding period, deposit the balance amount as consideration against allotment of shares. Where a successful bidder defaults in payment of shares allotted to it, the margin money deposited by such bidder shall be forfeited to the Book Runner;

r) 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 and dispatch of shares out of the Retail Portion.

s) 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 CDC account numbers in the bid application.

t) 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.

RESTRICTIONS

(i) Restriction on Related Employees: Related employees are not allowed to participate in the bidding for shares. Related employees include the employees of the Issuer and the Book Runner who are directly involved in the Issue.

(ii) Restriction on Eligible Investors: An Eligible Investor shall not make:

a. bid below the floor price; b. a bid for more than 10% of the shares allocated under the Book Building

portion; c. a bid with price variation of more than 20% of the prevailing indicative Strike

Price, subject to the provision of clause (a) above; d. a consolidated bid; and / or e. more than one bid neither severally nor jointly.

(iii) In case there is any allocation or allotment of shares to investors through Pre-IPO

placement, Private placement or through any other mode during the period of six months preceding the bidding date, at a price lower than the Strike Price, such shares shall not be saleable for a period of six months from the date of closing of subscription period for Retail Portion of the Issue.

(iv) Bids from associated companies and associated undertakings of the Issuer, shall not

be accepted for shares in excess of five percent (5%), in aggregate, of the Book Building portion.

To check this threshold, the Issuer shall provide to the Book Runner and the Book Runner shall obtain from the Issuer, list of associated companies and associated undertakings of the Issuer before commencement of the Bidding Period along with their respective Unique Identification Numbers, to be entered and capped at five percent (5%) cumulatively in the Book Building system before commencement of the Bidding Period. The Book Runner shall make sure that the said list has been provided to the Designated Institution for entry and capping in the Book Building


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system and to the employees deployed at the Bid Collection Centers for collection and entry of bids thereof in the system.

(v) 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: a. credit or dispatch of all shares allocated under the Retail Portion of the issue; and b. issuance of NOC by the Stock Exchanges.

(vi) In case the bids received are sufficient to allot the total number of shares offered for

sale under the Book Building Portion, the allotment shall be made on the basis of highest bid priority that is the bid made at the highest price shall be considered first for allotment of shares.

(vii) 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.

2.11 BANK ACCOUNT FOR BOOK BUILDING AND GENERAL PUBLIC (RETAIL) PORTION

The Issuer has opened two separate bank accounts for collection of applications’ money, one each for the Book Building portion and the General Public portion (Retail Portion) of the Issue.

The Bidders shall draw demand draft or pay order in favor of “IPO of Amreli Steels Limited – Book Building Account” which has been opened at Bank Alfalah Limited (“Collection Bank”). The Collection Bank shall keep and maintain the bid money in the said account. The bid money of the successful bids shall remain in the respective IPO accounts specifically opened for this purpose till completion of the IPO and issuance of NOC by the concerned Stock Exchange(s).

2.12 PAYMENT INTO THE BOOK BUILDING ACCOUNT

The Bidders shall draw a demand draft, pay order favoring “IPO of Amreli Steels Limited – Book Building Account” or Online Transfer of the bid money into the respective IPO account of the Issuer A/C # 0005-1004817637 and submit the demand draft, pay order or bank receipt at the designated Bid Collection Center either in person or through facsimile along with a duly filled in Registration Form. For online transfer the payment shall be made into A/C # 0005-1004817637 being maintained at Bank Alfalah Limited - Main Corporate Branch, Karachi with the Account Title IPO of Amreli Steels Limited – Book Building Account. Please note that online transfer facility shall only be allowed for Bank Alfalah customers.

CASH MUST NOT BE SUBMITTED WITH THE BIDDING FORM AT THE BID COLLECTION CENTER. BID AMOUNT MUST BE PAID THROUGH PAY ORDER, BANK DRAFT OR ONLINE TRASNFER DRAWN / TRANSFER IN FAVOR OF “IPO OF AMRELI STEELS LIMITED – BOOK BUILDING ACCOUNT” IN A MANNER ACCEPTABLE TO THE BOOK RUNNER.

Since the investors can bid for shares through “limit price” or a “step bid” therefore payment procedure is explained below for all these methods:


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a) PAYMENT FOR LIMIT PRICES

If investors are placing their bids through “Limit Price” then they shall deposit the margin money based on the number of shares they are bidding for at their stated bid price.

For instance, if an investor is applying for 5 million shares at a price of PKR 24 per share, then the total application money would amount to PKR 120 million. In such a case, (i) Individual Investors shall deposit PKR 120 million in the Book Building account as the bid amount which is 100% of PKR 120 million; and (ii) Institutional Investors shall deposit at least PKR 30 million in the Book Building account as the margin money which is 25% of PKR 120 million.

b) PAYMENT FOR STEP BIDS

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 are bidding for at his / her / its stated bid prices.

For instance, if the investor bids for 0.5 million shares at PKR 25.00 per share, 0.4 million shares at PKR 26.00 per share and 0.3 million shares at PKR 27.00 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 31.00 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 31.00 million in the Book Building Account as bid amount which is 100% of PKR 31.00 million and (ii) Institutional Investors shall deposit at least PKR 7.75 million in the Book Building Account as margin money which is 25% of PKR 31.00 million.

2.13 PAYMENT BY FOREIGN INVESTORS Foreign investors may subscribe using their Special Convertible Rupee Accounts (SCRA), as set out under Chapter 20 of the State Bank of Pakistan’s Foreign Exchange Manual 2002. Under section 7(i) of Chapter 20, Companies issuing shares out of the new public offers on repatriable basis as permitted under sub para (B)(I) of paragraph 6 may open foreign currency collection accounts with Banks abroad or in Pakistan for receiving the subscription in foreign currency. This may also allow refunds from these accounts to unsuccessful applicants.

Foreign investors do not require any regulatory approvals to invest in the shares being offered by the Company. Payment in respect of investment in the shares of the Company has to be made in foreign currency through an inward remittance or through surplus balances in SCRA. Local currency cash account(s) opened for the purpose of Foreign Portfolio Investment (FPI) is classified as SCRA. There are no restrictions on repatriation on sale (disinvestment) and dividend proceeds. Underlying client names / beneficial owners are required to be disclosed at depository level. Key Documents required for individual(s) are: 1. Account opening request 2. Passport / ID General documentation required for opening of SCRA account by Corporate Bidders is: 1. Account opening request


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2. Board Resolution & Signatories list 3. Passport / ID of Board of Directors 4. Passport / ID of all authorized signatories 5. Certificate of Incorporation (COI) or equivalent documents like Trade Registry

Certificate, Business Registration Certificate, Certificate of Commencement of Business

6. Memorandum & Articles of Association 7. Withholding tax registration certificate / Certificate of country of domicile of client 8. Latest Annual Report 9. List of Board of Directors 10. List of Shareholders (greater than 10% holdings) and key officers It is however pertinent to note that the procedure and requirements of each institution differs, hence it is advised to request the procedure from each relative institution. Payments made by foreign investors shall be supported by proof of receipt of foreign currency through normal banking channels. Such a proof shall be submitted along with the application by the foreign investors.

2.14 REVISION OF BIDS BY THE BIDDER

The registered investors may revise their bids 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 20% of the prevailing indicative strike price. NO DOWNWARD REVISION SHALL BE ALLOWED AFTER 4:00 P.M. ON LAST DAY OF THE BIDDING PERIOD.

2.15 REJECTION OF BIDS BY THE BOOK RUNNER

In terms of Regulation 21 (5) of Chapter V of The Book Building Regulations, 2015, 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 Runner shall not be challengeable by the Bidder or any of its associates.

2.16 WITHDRAWAL OF BIDS BY THE BIDDER

The registered investors shall have the right to withdraw their bids till 04:00 p.m. on last day of the Bidding Period either manually through the Bid Collection Centers or electronically through direct access to the system. NO WITHDRAWAL SHALL BE ALLOWED AFTER 4:00 P.M. ON LAST DAY OF THE BIDDING PERIOD.

2.17 WITHDRAWAL OF ISSUE BY THE ISSUER

a) According to Regulation 5(6) of the Regulations, in case the Issuer does not receive bids for the number of shares allocated under the Book Building Portion, at the Floor Price, the offer shall be cancelled and the same shall be immediately intimated to the Commission, all the securities exchanges and the Designated Institution and the margin money shall be refunded to the bidders immediately but not later than two working days of the closing of the Bidding Period.

b) The Book Building process will be considered as cancelled if the total number of bids received is less than forty.


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2.18 MECHANISM FOR DETERMINATION OF STRIKE PRICE

a) At the close of the bidding period, 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.

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

c) Once the strike price is determined all those Bidders whose bids have been found successful shall become entitled for allotment of shares. The Bidders, who have made bids at prices above the strike price, will be issued shares at the strike price and the differential, if any, will be refunded. The Bidders, who have made bids below the strike price, shall not qualify for allotment of shares and their margin money shall be refunded.

d) In case the bids received are sufficient to allot the total number of shares offered for sale under the Book Building Portion, the allotment shall be made on the basis of highest bid priority that is the bid made at the highest price shall be considered first for allotment of shares.

e) In case all the bids made above the Strike Price are accommodated and shares are still available for allotment, such available shares will be allotted against the bids made at the Strike Price strictly on time priority basis.

The mechanism for determination of the strike price can be understood by the following illustration: a) Number of shares being Offered through the Book Building: 55,502,857 Ordinary Shares b) Floor Price: PKR 24.00/-per share c) Bidding Period: From October 07, 2015 to October 08, 2015 d) Bidding Time: 9:00am - 5:00pm e) Bid Withdrawal Time: 9:00am - 4:00pm f) Bidding Revision Time: 9:00am - 5:00pm

At PKR 35.00 per share, investors are willing to buy 3.50 million shares. Since 52.00 million shares are still available, therefore the price will be set lower.

BidderPrice

(PKR /Share)

Quantity

(Shares in Million)

Cumulative

Number of Shares

(Shares in million)

Category

of order

Institution A 35.00 3.50 3.50 Limit Price

Institution E 34.75 1.50 5.00 Limit Price

Institution B 34.75 3.00 6.50 Limit Price

Individual Investor A 34.50 5.00 11.50 Step Bid

Institution C 34.25 5.55 17.05 Step Bid

Institution D 34.00 3.50 20.55 Limit Price

Individual Investor B 33.75 4.50 25.05 Limit Price

Institution F 33.50 5.55 30.60 Limit Price

Institution G 33.25 4.50 35.10 Limit Price

Individual Investor C 33.00 3.50 38.60 Limit Price

Institution I 32.75 4.00 42.60 Step Bid

Institution B 32.50 3.00 45.60 Limit Price

Individual Investor D 32.25 4.00 46.60 Step Bid

Individual Investor F 32.00 5.55 52.15 Limit Price

Institution H 31.75 3.50 55.65 Step Bid

Individual Investor E 31.50 2.00 57.65 Step Bid

Individual Investor F 31.25 3.00 60.65 Limit Price

Bid Withdrawn Strike Price determined through Dutch Auction

Method

Bid has been revised and placed at PKR 34.75/share

Total Shares Subscribed


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At PKR 34.75 per share, investors are willing to buy 3.00 million shares. Since 49.00 million shares are still available, therefore the price will be set lower. At PKR 34.50 per share, investors are willing to buy 5.00 million shares. Since 44.00 million shares are still available, therefore the price will be set lower. At PKR 34.25 per share, investors are willing to buy 5.55 million shares. Since 38.45 million shares are still available, therefore the price will be set lower. At PKR 34.00 per share, investors are willing to buy 3.50 million shares. Since 34.95 million shares are still available, therefore the price will be set lower. At PKR 33.75 per share, investors are willing to buy 4.50 million shares. Since 30.45 million shares are still available, therefore the price will be set lower. At PKR 33.50 per share, investors are willing to buy 5.55 million shares. Since 24.90 million shares are still available, therefore the price will be set lower. At PKR 33.25 per share, investors are willing to buy 4.50 million shares. Since 20.40 million shares are still available, therefore the price will be set lower. At PKR 33.00 per share, investors are willing to buy 3.50 million shares. Since 16.90 million shares are still available, therefore the price will be set lower. At PKR 32.75 per share, investors are willing to buy 4.00 million shares. Since 12.90 million shares are still available, therefore the price will be set lower. At PKR 32.25 per share, investors are willing to buy 4.00 million shares. Since 8.90 million shares are still available, therefore the price will be set lower. At PKR 32.00 per share, investors are willing to buy 5.55 million shares. Since 3.35 million shares are still available, therefore the price will be set lower. At PKR 31.75 per share, investors are willing to buy 3.50 million shares. Since after bidding for 3.50 million shares at PKR 31.75 per share, no shares will be available therefore the Strike Price will be set at PKR 31.75 per share for the entire lot of 55.50 million shares. The bidders who have placed bids at prices above the Strike Price (which in this illustration is PKR 31.75/- per share), will become entitled for allotment of shares at the Strike Price and the differential amount would be refunded. Investors who have bid below PKR 31.75/- per share do not qualify for allotment and their money would be refunded. After allotment in the aforementioned manner, 3.35 million shares are still available for allotment. These shares will be allotted to Bidders who have placed bid(s) at PKR 31.75 per share, however for the purpose of allotment of these 3.35 million shares preference will be given to the Bidder who has placed the bid earlier.


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2.19 BASIS OF ALLOTMENT OF SHARES

Once the strike price is determined all those Bidders whose bids have been found successful shall become entitled for allotment of shares. For allocation of shares priority shall be given to the bids placed at the highest price. The Bidders, who have made bids at prices above the strike price, will be issued shares at the strike price and the differential, if any, will be refunded. The Bidders, who have made bids below the strike price, shall not qualify for allotment of shares and their margin money shall be refunded. For the purpose of allotment of shares, the bid(s) made at the price determined / discovered as Strike Price through the Book Building process shall be ranked equally and preference will be given to the bidder who has made the bid earlier. In case bids received at the Strike Price exceeds the number of shares allocated under the Book Building, then preference will be given to the Bidders who have made the bid earlier. Final allotment of shares out of the Book Building portion shall be made after receipt of full subscription money from the successful Bidders; however, shares to such Bidders shall be credited at the time of credit and dispatch of shares out of the public portion (Retail Portion) of the issue to successful applicants.

2.20 REFUND OF MARGIN MONEY

Investors who have bid lower than the strike price are not eligible for allotment of shares. Margin money of the unsuccessful Bidders shall be refunded within five (5) working days of the close of the bidding period as required by Regulation 21(11) of the Regulations. The Bidders, who have made bids at prices above the strike price, will be issued shares at the strike price and the differential will be refunded accordingly.

2.21 UNDERWRITING

After determination of the Strike Price the Book Runner shall within two (2) working days of the closing of the bidding period enter into an Underwriting Agreement with the Issuer indicating the number of shares that the Book Runner would underwrite at the strike price and the Underwriting Commission / Fee to be charged.

2.22 PUBLICATION OF SUPPLEMENT TO THE PROSPECTUS In accordance with the Regulation 4(x) of the Regulations within five (5) working days of the closing of the Bidding Period, Supplement to the Prospectus shall be published at least in all those newspapers in which the Prospectus was earlier published and also disseminated through securities exchange where shares are to be listed. Supplement to the Prospectus would contain information relating to the Strike Price, the Offer Price, names of the Underwriters for the Retail Portion of the Issue, Underwriting Commission, and Category-wise breakup of the successful bidders along with the number of shares provisionally allocated to them.

Public subscription for the shares shall be held at any date(s) within thirty days (30) of the publication of the Supplement to the Prospectus but not earlier than seven (7) days of such publication.


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2.23 INTEREST OF THE BOOK RUNNER

The Book Runner has no interest in the Issue and Issuer other than its role as a Book Runner to the Issue.

2.24 ASSOCIATED UNDERTAKINGS AND COMPANIES

(i) Associated Companies

S. No. Name NTN

1 Shershah Industries (Pvt.) Limited 0676464-9

2 Synergies Textra (Pvt.) Limited 2923585-5

Note: As required in Regulation 5(8) of the 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.

(ii) Related Employees

Serial Name Father’s /

Husband’s Name Designation CNIC

Related Employees of the Issuer

1 Abbas Akberali Akberali Chief Executive Officer 42301-1074677-3

2 Hadi Akberali Abbas Akberali Director Projects 42301-8303088-9

3 Fazal Ahmed Syed Ahmed Ali Chief Financial Officer 42301-4500464-7

4 Zoeb Salemwala Yousuf Ali Company Secretary 42301-0946522-7

5 Taha Umer Waqas Khalid Manager Finance 42201-2415927-1

6 Shakir Ali Bhaiji Zoaib Hussain Bhaiji Assistant Manager Taxation 42301-9681062-1

Related Employees of the Book Runner

1 Muhammad Farid Alam Muhammad Alam Chief Executive Officer 42301-1611886-9

2 Umair Aijaz Aijaz Ahmed Sheikh Executive Director 42301-4398940-3

3 Syed Khurram Shahid Syed Shahid Rehan Senior Vice President 42301-7821233-5

4 Mohammad Yasir Khan Jameel Akhtar Khan Vice President 42501-5030821-1

5 Eliya Hamid Syed Syed Hamid Umer Analyst 42201-9362282-4

6 Arsalan Nazir Nazir Hussain Analyst 42201-9833259-5

7 Jazib Sohail Sohail Ahmed Analyst 42201-7095843-9

Note: As required in Regulation 11 of the Regulations, Related Employees of the Issuer and the Book Runner shall not participate in the bidding for shares.


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2.25 STATEMENT BY ISSUER July 13, 2015

The Managing Director Karachi Stock Exchange Limited Stock Exchange Building Stock Exchange Road Karachi On behalf of the Company, I confirm that all material information as required under the Companies Ordinance, 1984, Securities Act, 2015, the Book Building Regulations, 2015 and the Listing of Companies and Securities Regulations of the Karachi 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 Amreli Steels Limited:

-Sd- __________________ Abbas Akberali Chief Executive Officer


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2.26 STATEMENT BY JOINT LEAD MANAGERS

July 13, 2015

The Managing Director Karachi Stock Exchange Limited Stock Exchange Building Stock Exchange Road Karachi

Being mandated as Joint Lead Managers & Arrangers to this Initial Public Offering of Amreli Steels Limited through the Book Building process, we confirm that all material information as required under the Companies Ordinance, 1984, the Securities Act, 2015 and the Book Building Regulations, 2015 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 For and on behalf of AKD Securities Limited: Bank Alfalah Limited:

-Sd- -Sd-

____________________ ____________________ Umair Aijaz, FCCA Imtiaz Gadar Executive Director Head of Public Markets Investment Banking & Finance


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2.27 STATEMENT BY THE BOOK RUNNER

July 13, 2015

The Managing Director Karachi Stock Exchange Limited Stock Exchange Building Stock Exchange Road Karachi

Being mandated as Book Runner to this Initial Public Offering of Amreli Steels Limited through the Book Building process, we confirm that all material information as required under the Companies Ordinance, 1984, and the Book Building Regulations, 2015 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 AKD Securities Limited:

-Sd- -Sd-

________________________ ________________________ Mohammad Yasir Khan Umair Aijaz, FCCA Vice President Executive Director Investment Banking Investment Banking & Finance


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PART 3 3 SHARE CAPITAL AND RELATED MATTERS

3.1 SHARE CAPITAL

Number of Shares

Face Value (PKR)

Premium (PKR)

Total (PKR)

AUTHORIZED CAPITAL

420,000,000 Ordinary Shares of PKR 10/- each 4,200,000,000 - 4,200,000,000

80,000,000 Cumulative Preference Shares of PKR 10/- each 800,000,000 - 800,000,000

500,000,000 Total 5,000,000,000 - 5,000,000,000

ISSUED, SUBSCRIBED AND PAID-UP CAPITAL OF THE COMPANY

Ordinary Shares of PKR 10/- each

189,631,073 Issued for Cash 1,896,310,730 - 1,896,310,730

33,127,497 Issued for Consideration other than Cash* 331,274,970 - 331,274,970

222,758,570 Total 2,227,585,700 - 2,227,585,700

Number of Shares

Face Value (PKR)

Premium (PKR)

Total (PKR)

THE EXISTING, SUBSCRIBED, ISSUED AND PAID-UP CAPITAL OF THE COMPANY IS HELD AS FOLLOWS:

Directors

91,294,723 Abbas Akberali 912,947,230 - 912,947,230

35,694,840 Shayan Akberali 356,948,400 - 356,948,400

1,746,383 Kinza Shayan 17,463,830 - 17,463,830

1,000 Mirza Qamar Beg 10,000 - 10,000

1,000 Badar Kazmi 10,000 - 10,000

1,000 Mariam Akberali 10,000 - 10,000

500 Zafar Ahmed Taji 5,000 - 5,000

128,739,446 Shares held by Directors 1,287,394,460 - 1,287,394,460

Sponsors 55,732,930 Mahvash Akberali 557,329,300 - 557,329,300

37,419,212 Hadi Akberali 374,192,120 - 374,192,120

866,982 Salsabil Abbas Akberali 8,669,820 - 8,669,820

94,019,124 Shares held by Sponsors 940,191,240 - 940,191,240

222,758,570 Total 2,227,585,700 - 2,227,585,700

Present Issue Number of

Shares Face Value

(PKR) Premium

(PKR) Total (PKR)

55,502,857

Allocation to Institutions / Individual Investors through Book Building process at a Strike Price of XX/- per share

555,028,570

[X] [X]

18,750,000 General Public

187,500,000

[X] [X]

74,252,857 Total Present Issue 742,528,570 [X] [X]

297,011,427 Grand Total (Post IPO Paid-up Capital) 2,970,114,270 [X] [X]


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*Break-up of shares issued for consideration otherwise than in cash:

S. No No. of Shares Issued Date of Issue

1 270,000 25-March-85**

2 682,497 26-Aug-86**

3 32,175,000 18-March-09***

Total 33,127,497

**These shares were issued to various shareholders of the Company against purchase of plant and machinery. These shares were issued in compliance with the prevailing regulations at the time of the issue. ***These shares were issued to various shareholders of the Company against purchase of property. The requirements of Rule 8 of the Companies (Issue of Capital) Rules, 1996 have been fully complied with in this regard. There has been no other issue of shares otherwise than in cash other than those mentioned above. Furthermore, the Company has not so far issued any shares against goodwill and other intangible assets. For further details, please refer to para 3.9. Notes:

I. As per Rule 3 (I) (iv) of the Companies (Issue of Capital) Rules, 1996, the sponsors shall at all times retain at least 25% of the capital of the Company.

II. As per Clause (a) of the Regulation 5.4.5 of the Listing of Companies and Securities Regulations of KSE, Sponsors shareholding in excess of 25% shall not be saleable for a period of six months from the date of public subscription.

III. As per Clause (b) of the Regulation 5.4.5 of the Listing of Companies and Securities Regulations of KSE, allocation of shares under Pre-IPO placement including employees of the companies / group companies etc. shall not be saleable for a period of six months from the date of public subscription.

IV. As per Regulation 10(2) of the Book Building Regulations, 2015 allocation or allotment of shares to investors through Pre-IPO Placement, Private Placement or through any other mode during the period of six months preceding the bidding date, at a price lower than the Strike Price, shall not be saleable for a period of six months from the date of closing of subscription period for Retail Portion of the Issue.

V. In case the Issuer does not receive bids for the number of shares allocated under the Book Building Portion, at the Floor Price, the offer shall be cancelled and the same shall be immediately intimated to the Commission, all the securities exchanges and the Designated Institution and the margin money shall be refunded to the bidders immediately but not later than two working days of the closing of the Bidding Period.

3.2 OPENING AND CLOSING OF THE SUBSCRIPTION LIST

The subscription list will open at the commencement of banking hours on October 27, 2015 and will close on October 29, 2015 at the close of banking hours. Please note that online applications can be submitted 24 hours during the subscription period which will close at 12:00 midnight on October 29, 2015. In order to facilitate the investors, the Issuer has arranged provision of e-IPO facility through United Bank Limited (“UBL”) that is among the Bankers to the Issue. The accountholders of UBL can use UBL net-banking to submit their applications online via link http://www.ubldirect.com/corporate/ebank.


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3.3 INVESTOR ELIGIBILITY FOR PUBLIC ISSUE Eligible investors include: a) Pakistani citizens resident in or outside Pakistan or persons holding two nationalities

including Pakistani Nationality; b) Foreign nationals whether living in or outside Pakistan; c) Companies, bodies corporate or other legal entities incorporated or established in or

outside Pakistan (to the extent permitted by their respective constitutive documents and existing regulations, as the case may be);

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

e) Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan.

3.4 FACILITIES AVAILABLE TO NON-RESIDENT PAKISTANI AND FOREIGN INVESTORS

Non-resident Pakistani investors and foreign investors may subscribe for the shares being issued through this Prospectus by using their Special Convertible Rupee Account (“SCRA”). For further details please see Chapter 20 of the Foreign Exchange Manual of the State Bank of Pakistan. Under Section 7(i) of Chapter 20 of the said Manual, Companies issuing shares out of new public offers on repatriable basis, as permitted under sub para (B) (I) of paragraph 6, may open foreign currency collection accounts with banks abroad or in Pakistan for receiving the subscription in foreign currency. They may also allow refunds from these accounts to unsuccessful applicants. Foreign investors do not require any regulatory approvals to invest in the shares being offered by the Company through this Prospectus. Payment in respect of investment in the shares of the Company has to be made in foreign currency through an inward remittance or through surplus balances in SCRA. Local currency cash account(s) opened for the purpose of Foreign Portfolio Investment (FPI) is classified as SCRA. There is no restriction of sale proceeds and dividend payouts on shares. Underlying client names / beneficial owners are required to be disclosed at depository level. Key Documents required for individual(s) are: 1) Account opening request 2) Passport / ID General documentation required for opening of SCRA account by corporate are: 1) Account opening request 2) Board Resolution & Signatories list 3) Passport / ID of Board of Directors 4) Passport / ID of all authorized signatories 5) Certificate of Incorporation (COI) or equivalent documents like Trade Registry

Certificate, Business Registration Certificate, Certificate of Commencement of Business 6) Memorandum & Articles of Association 7) Withholding tax registration certificate / Certificate of country of domicile of client 8) Latest Annual Report 9) List of Board of Directors 10) List of Shareholders (>10% holdings) and key officers


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It is however pertinent to note that the procedure and requirements of each institution differs, hence it is advised to request the procedure from each relative institution. Payments made by foreign investor must be supported by proof of receipt of foreign currency through normal banking channels. Such proof must be submitted along with the application by the foreign investors

3.5 MINIMUM AMOUNT OF APPLICATION AND BASIS FOR ALLOTMENT OF SHARES OUT OF THE PUBLIC PORTION OF THE ISSUE The basis and conditions of allotment to the General Public shall be as follows: (a) Application for shares below the total value of PKR [*] (Issue Price x 500 Shares) shall

not be entertained. (b) The minimum amount of application for subscription is of 500 ordinary shares is PKR [*]

(Issue Price x 500 Shares). (c) Application for shares must be made for 500 shares or in multiple of 500 shares only.

Applications which are neither for 500 shares nor for multiples of 500 shares shall be rejected.

(d) SUBMISSION OF FALSE AND FICTITOUS APPLICATIONS ARE PROHIBTIED AND SUCH APPLICATIONS’ MONEY MAY BE FOREFEITED UNDER SECTION 87(8) OF THE SECURITIES ACT, 2015

(e) If the shares offered to the General Public are sufficient to accommodate all applications, all applications shall be accommodated.

(f) If the shares applied for by the General Public are in excess of the shares offered to

them, the distribution shall be made by computer balloting, in the presence of the representatives of the Stock Exchanges in the following manner:

i. 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.

ii. 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.

iii. 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.

iv. 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.


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

i. If the remaining shares are sufficient to accommodate each application for over 2,000

shares, then 2,000 shares shall be allotted to each applicant and the remaining shares shall be allotted on pro-rata basis.

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

iii. If the Issue is oversubscribed in terms of amount only then the allotment of shares

shall be made on the following basis: First preference will be given to the applicants who applied for 500 shares; Next preference will be given to the applicants who applied for 1,000 shares; Next preference will be given to the applicants who applied for 1,500 shares; and Next preference will be given to the applicants who applied for 2,000 shares.

iv. After allotment of the shares in the above mentioned manner, the balance shares, if any, shall be allotted on a pro-rata basis to the applicants who applied for more than 2,000 shares.

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

vi. Applications which do not meet with the above requirements or which are incomplete

will be rejected. 3.6 REFUND OF SUBSCRIPTION MONEY TO UNSUCCESSFUL APPLICANTS

The Company shall take a decision within ten (10) days of the closure of subscription list as to which applications have been accepted or are successful and refund the money in cases of unaccepted or unsuccessful applications within ten (10) days of the date of such decision, as required under Section 71 of the Ordinance. As per sub-section (2) of Section 71 of the Ordinance, if refund as required under sub-section (1) of Section 71 of the Ordinance is not made within the time specified therein, the Issuer shall be severally liable to repay the money with surcharge at the rate of 1.5% for every month or part thereof from the expiration of the 15th day and, in addition, to a fine not exceeding PKR 5,000/- and in case of continuing offense to a further fine not exceeding PKR 100/- per day after the said 15th day on which the default continues. Provided that the Issuer shall not be liable if it proved that the default in making the refund was not due to any misconduct or negligence on its part.

3.7 ISSUE AND DISPATCH OF SHARE CERTIFICATES

The Company will dispatch share certificates to successful applicants through their Bankers to the Issue or by crediting the respective Central Depository System ("CDS") accounts of the successful applicants within thirty (30) days of the close of public subscription as per Listing of Companies and Securities Regulations of the KSE. Shares will be issued either in scrip-less form in the CDS of CDCPL or in the shape of physical scripts on the basis of option exercised by the successful applicants. Shares in the physical


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scripts shall be dispatched to the Bankers to the Issue within thirty (30) days from the date of close of subscription list, whereas scrip-less shares shall be directly credited through Book entry in the respective accounts maintained with the CDCPL. The applicants who opt for receipt of shares in scrip-less form in CDS should fill in the relevant columns of the Application Form. In order to exercise the scrip-less option, the applicant(s) should have CDS account at the time of subscription. If the Company defaults in complying with the above requirements, it shall pay the Stock Exchanges a penalty of PKR 5,000/- per day for every day during which the default continues. The name of the Company will also be notified to the TRE Certificate holders of the Stock Exchanges and placed on the web site of the Stock Exchanges.

3.8 TRANSFER OF SHARES

(a) PHYSICAL SCRIPS Under the provisions of Section 77 of the Ordinance, the Directors of the Company shall not refuse to transfer any fully paid share unless the transfer deed is, for any reason, defective or invalid or is not accompanied by the relevant share certificate. Provided that the Company shall within thirty (30) days from the date on which the instrument of transfer was lodged with it, notify the defect or invalidity to the transferee who shall, after the removal of such defect or invalidity, be entitled to re-lodge the transfer deed with the Company.

(b) TRANSFER UNDER BOOK ENTRY SYSTEM

The shares maintained in the CDS in the book entry form shall be transferred in accordance with the provisions of the Central Depositories Act, 1997 and the CDCPL Regulations.

3.9 SHARES ISSUED IN PRECEDING YEARS

S. No No. of Shares

Issued

Par Value

(PKR)

Premium

per Share

(PKR)

Total Amount

including

Premium (PKR)

Consideration Date of Issue

1 3 10 - 30 Cash 23-Dec-84

2 270,000 10 - 2,700,000 Other than in Cash* 25-March-85

3 47,500 10 - 475,000 Cash 26-Aug-86

4 682,497 10 - 6,824,970 Other than in Cash** 26-Aug-86

5 2,500,000 10 - 25,000,000 Cash 27-April-93

6 1,000,000 10 - 10,000,000 Cash 10-Dec-94

7 20,250,000 10 - 202,500,000 Cash 23-June-08

8 32,175,000 10 - 321,750,000 Other than in Cash*** 18-March-09

9 26,462,000 10 - 264,620,000 Cash 07-Nov-09

10 60,038,640 10 - 600,386,400 Cash 28-June-10

11 44,461,950 10 - 444,619,500 Cash 07-Jan-11

12 34,870,980 10 - 348,709,800 Cash 25-April-11

Total 222,758,570 2,227,585,700


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*These shares were issued upon conversion of the partnership business into a private limited company to the following shareholders:

Mrs. Mariambai Rajab Ali – 27,000 shares

Mrs. Dayem Bai Taher Ali – 18,900 shares

Mrs. Fatima Fakhruddin – 18,900 shares

Mrs. Salsabil Abbas Akberali – 40,500 shares

Mr. Zohair Taher Ali – 18,900 shares

Mr. Asghar Ali Rajab Ali – 36,000 shares

Mr. Juzar Rajab Ali – 27,000 shares

Mr. Sohail Tayeb Ali – 33,300 shares

Mr. Badruddin Akber Ali – 49,500 shares

**These shares were issued to Mrs. Salsabil Abbas Akberali against purchase of plant and machinery.

The abovementioned shares were issued in compliance with the prevailing regulations at the time of the issue.

***These shares were issued to Mr. Shayan Akberali and Mr. Shabbir Badaruddin against purchase of property. The requirements of Rule 8 of the Companies (Issue of Capital) Rules, 1996 have been fully complied with in this regard.

There has been no other issue of shares otherwise than in cash other than those mentioned above. Furthermore, the Company has not so far issued any shares against goodwill and other intangible assets. Other than the above mentioned shares, there has been no other issuance of shares since the incorporation of AMSL.

3.10 PRINCIPAL PURPOSE OF THE ISSUE

The principal purpose of the issue is to expand its manufacturing facilities by enhancing steel melting capacity from 200,000 tons per annum to 350,000 tons per annum and re-rolling mills capacity from 180,000 tons per annum to 480,000 tons per annum. Estimated costs of the expansion plan are approximately PKR 3.38bn in which IPO will conservatively generate PKR 1.78bn (74,252,857 shares * Floor Price of PKR 24.00/- per share) and balance funds, if any, required for expansion will be arranged through bank borrowings. A long-term facility for the financing of up to PKR 1.54bn has also been obtained from United Bank Limited and shall be utilized for the project to bridge the gap between IPO proceeds and the total project cost of approximately PKR 3.38bn. AMSL finds numerous benefits of installing the above mentioned plant capacity in Pakistan in order to achieve economies of scale. The new mill will deliver high quality products and achieve optimum productivity. Following are the benefits of the expansion plan:

The installation of the largest capacity rebar plant in Pakistan will give AMSL the benefits of globally competitive conversion costs and economies of scale

Productions of high quality products which will be in line with international standards

Optimum productivity and reduction of conversion costs through the following measures:

Using of long billets of higher weight will achieve high yields of up to 97% Hot link with continuous billet caster of Steel Melt Shop will reduce natural gas

consumption in reheating of billets Reduction in scale loss


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Efficiency and control to achieve high productivity and high level of automation according to international standards

Detailed break-up of the estimated project costs is mentioned below:

Estimated Cost of New Project

PKR (mn)

Development of Acquired Land 1.6

Pre Fab Shed and Civil works 340.0

Furnace 417.0

Imported Mill Equipment 2,037.0

Project Related Utilities 68.4

Quality Control 5.4

Material Handling Equipment 84.9

Electricals 204.8

Work Shops and Tools 22.2

Weighing Scale 7.7

Networking (System Software and Hardware) 6.0

Consultants Fees 17.8

Initial Spares 103.0

General Expense 50.0

Office Equipment & Furniture 10.0

Total 3,376.0

Implementation schedule consisting of all critical steps for the project is as follows:

Task Activity Completion Date

Acquisition of land Already acquired

Contract finalization with equipment supplier July 2015

Layout finalization of equipment with auxiliaries Oct 2015

Opening of LCs for the import of machineries Oct 2015

Basic calculations of mill operating parameters and equipment design

Dec 2015

Detail designing of equipment with general arrangement of drawing and loading for civil foundation and utility requirements

Apr 2016

Manufacturing of mechanical equipment Aug 2016

Civil foundations and shed erection Aug 2016

Delivery of mechanical equipment Sep 2016

Manufacturing of electrical equipment Aug 2016

Delivery of electrical equipment Sep 2016

Installation of mechanical equipment at project site Nov 2016

Installation of electrical equipment at site Nov 2016

Cold commissioning (dry run of all mechanical and electrical equipment )

Dec 2016

Hot commissioning (running of all mechanical and electrical equipment)

Apr 2017

Commercial production start May 2017


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The Company shall open the following three LCs cumulatively amounting to PKR 757.47 million within fifteen working days of the closing of the Book Building portion:

Serial Description Beneficiary LC Amount

1 Main Rolling Mill Plant & Machinery (Advance Payment)

Primetals Technologies PKR 303,406,472

2 Reheating Furnace* TENOVA / Daneili Centro Combustion PKR 404,429,598

3 Pre-fabricated Shed Structure (Advance Payment)*

Mammut Building System / Izhar Steel PKR 49,640,000

*AMSL has shortlisted two suppliers each for the Reheating Furnace and the Pre-fabricated Shed Structure and after negotiations one supplier would be finalized for each product in whose name the LC shall be opened. Note: As per the Special Condition No. 4 of SECP approval letter dated September 15, 2015, in case the aforementioned Advance Payments / LCs in aggregate amounting to PKR 757.47 million (27.54% of the total LCs amount) are not made / opened within fifteen (15) working days of the closing of the Book Building portion, the Company shall not proceed with the Retail Portion of the Issue and subscription money of the successful bidders shall be refunded within five (5) working days of the twentieth (20th) working day from the close of Book Building portion.

3.11 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.

3.12 DIVIDEND POLICY The Company has not paid out any dividends to date and have retained all previous profits for the growth of business. However, going forward the Company intends to follow a consistent profit distribution policy for its members subject to profitability, availability of adequate cash-flows and shareholders’ approval. The rights in respect of capital and dividends attached to each share are and will be the same. The Company in its general meeting may declare dividends but no dividend shall exceed the amount recommended by the Directors. Dividend, if declared in the general meeting, shall be paid according to the terms of the provisions of the Ordinance. The Directors may from time to time pay to the members such interim dividends as appear to the Directors to be justified by the profits of the Company. No dividend shall be paid otherwise than out of the profits of the Company for the year or any other undistributed profits. No unpaid dividend shall bear interest or mark-up against the Company. The dividends shall be paid within the period laid down in the Ordinance.


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3.13 ELIGIBILITY FOR DIVIDEND The shares issued shall rank pari-passu with the existing shares in all matters of the Company, including the right to such bonus or right issues, and dividend as may be declared by the Company subsequent to the date of issue of such shares.

3.14 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 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.

3.15 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

Holding Period of Securities

S. No. Tax Year Less than

twelve months

Twelve months or more but less than

twenty four months

Twenty four months or more but less than forty eight months

More than forty eighty

months

1 2016 15.00% 12.50% 7.50% 0%

3.16 WITHHOLDING TAX ON DIVIDENDS

Dividend distribution to shareholders will be subject to withholding tax under section 150 of the Income Tax Ordinance, 2001 specified in Part 1 Division III of the First Schedule of the said Ordinance or any time to time amendments therein. In terms of the provision of Section 8 of the said Ordinance, said deduction at source, shall be deemed to be full and final liability in respect of such profits in case of individuals only. The following are the rates: (a) For filer of Income Tax Returns: 12.50% (b) For non-filer of Income Tax Return: 17.50%

3.17 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 on the first day of book closure shall be collected by the Company issuing the “bonus shares”, which will be the final tax liability on such income of the shareholder.

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

3.19 DEFERRED TAXATION Deferred tax is accounted for using the balance sheet liability method in respect of all temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of the taxable profit. Deferred tax liabilities are generally recognized for all taxable temporary


43

differences and deferred tax assets are recognized to the extent that is probable that taxable profits will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilized. As at March 31, 2015 the Company had a deferred tax liability of PKR 862,824,215/-.

3.20 SALES TAX The Company is a Sales Tax registered entity and is subject to sales tax under Chapter XI of the Sales Tax Special Procedures Rules, 2007 issued under Sales Tax Act, 1990 whereby the Company is liable to pay Sales Tax at the specified rate per units of electricity consumed for the production of steel billets and M.S bars which is considered as final discharge of Sales Tax liability by the Company.

3.21 SALES TAX ON SALE / PURCHASE OF SHARES Under the constitution of Pakistan and Articles 49 of the 7th NFC Award the Government of Sindh has promulgated the Sindh Sales Tax on Service Act, 2011 (Sindh Act No. XII of 2011) (the Act) which has taken effect from July 2011. The Sindh Revenue Board Constituted under the Act (Sindh Act No. XI of 2010) administers and regulates the levy and collection of the Sindh Sales Tax (“SST”) on the taxable services provided or rendered in Sindh. The value of taxable services for the purpose of levy of sales tax is the gross commission charged from clients in respect of purchase or sale of shares in a Stock Exchange under section 41(1) of the Sindh Sales Tax Rules, 2011, dated 30th June 2011, the Second Schedule of the Act levies a sales tax on Brokerage at the rate of 14%. The sales tax is withheld as per the requirements of Sindh Sales Tax Special Procedure (Withholding) Rules, 2011.

3.22 CAPITAL VALUE TAX (CVT) ON PURCHASE OF SHARES Pursuant to amendments made in the (Finance Act, 1989) through Finance (Amendments) Ordinance, 2012 promulgated on April 24, 2012, 0.01% Capital Value Tax will be applicable on the purchase value of shares.

3.23 TAX CREDIT FOR INVESTMENT IN IPO Under Section 62 of the Income tax Ordinance, 2001, a resident person other than a Company, shall be entitled to a tax credit for a tax year in respect of the cost of acquiring in the year, new shares offered to the public by a public company listed on a stock exchange in Pakistan, provided the resident person is the original allottee of the shares or the shares are acquired from the Privatization Commission of Pakistan. As per section 62(3)(b) of the Income Tax Ordinance, 2001, the time Limit for holding shares has been designated as 24 months to avail tax credit.

3.24 TAX CREDIT FOR ENLISTMENT Under Section 65C of the Income tax Ordinance, 2001, tax credit at 20% of the tax payable

shall be allowed for the tax year in which a Company is listed on a Stock Exchange in Pakistan.


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3.25 JUSTIFICATION FOR PREMIUM Rationale for the justification of premium is set out below:

Sponsor Profile and Management Prowess AMSL benefits from a seasoned management team, who are experts in their field, have rich experience in the industry and understand the dynamics of competing in Pakistan. The management reflects a culture of leadership, empowerment and teamwork that is imprinted across the organization. With pertinent experience in the steel industry spanning over five decades, the Company sponsors ensure the Company stays ahead of competition in terms of technology and capability. Strong Brand Image AMSL has been Pakistan’s largest selling brand of steel bars for the past few decades. The Company has built iconic landmarks like Karachi and Lahore airports, Dolmen Mall (Karachi), Agha Khan Hospital (Karachi), Centaurus Shopping Mall (Islamabad), Jinnah Bridge (Karachi), MCB Tower (Karachi), Ghazi Barotha Dam, (Attock Punjab) and many others. Recommended by leading architects, consultants and engineers across Pakistan as the brand of choice, AMSL has remained dedicated to maintaining the highest standards of quality and service. The trust of their client base in the Company’s brand allows AMSL to charge a premium on its products. Underpenetrated Steel Market With a per-capita steel consumption of just 19.5kg as per Steel Year Book 2014 (one of the lowest in the world), combined with a growing middle-class population and a massive unmet housing demand, Pakistan offers a huge underpenetrated market for steel players to capitalize moving forward. Currently, housing shortage works out to be 9 million units based on the study conducted by World Bank as stated in the SBP Housing Finance Review (April – June 2014). Bridging this shortage over the next 5 years will require 50 million tons of steel. Although Pakistan is the 6th most populous nation in the world, it has one of the lowest per capita consumptions of steel. If Pakistan’s per capita consumption rises over the next 5 years to equal even the average of developing countries, Pakistan will require an additional 6 million tons of steel per annum. The structural under-penetration converging to world or regional levels will be a gradual process, but near term impetus is widely expected given the very visible infrastructure push from the government in recent time. World Bank has reported a severe infrastructure gap in Pakistan which the current government is trying to bridge. FY16 will see a record PSDP outlay of PKR 700 billion for infrastructure projects:

The China-Pakistan Economic Corridor is a massive infrastructure project for which millions of tons of steel bars will be required;

Dams are already under construction and many are in the pipeline such as Dasu Dam;

Power projects in Gawadar, Port Qasim, and Thar are also in the pipeline and will require up to 5 million tons of steel;

Transportation projects such as Karachi-Lahore motorway and Orange Line Project are also forecasted to consume large amounts of steel.


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Plant Expansion and Cost Reduction AMSL has the advantage of not being marred by the conventional bottlenecks for industrial expansion being witnessed in the last few years. The Company has 65 acres of continuous land in Dhabeji, Karachi with utility connections (132 KV dedicated grid station with uninterrupted power supply), boundary walls and roads in place. The premises are ideally located on the National Highway and only 16 km from Port Qasim. Hence AMSL has the vital pre-requisites for industrial expansion already in place, including land and committed electricity, gas and water supply, which combined with the internationally reputed suppliers and vendors, should ensure a seamless execution of the expansion projects. The Company is targeting to install the new plant in Dhabeji, Karachi that will dramatically reduce overall conversions costs to give AMSL an unparalleled competitive advantage:

1. Energy Costs: A continuous hot-link to the integrated steel melt-shop will save substantial energy cost in reheating – one of the major cost inputs of any rebar mill. New generation melting furnaces will further reduce electric consumption, making AMSL one of the most efficient steel melters in the country.

2. Reduction in Wastage: Optimum productivity and latest reheating technology will allow the Company to achieve a high yield on production of rebars from billets, meeting the world standards for yield today.

These cost and productivity advantages will be unmatched by any of AMSL’s competitors and will ultimately translate into a very healthy bottom line for the Company. Established Distribution Channels AMSL is a leading supplier to the housing, commercial and mega infrastructure sectors. The Company manufactured over 170,000 tons of rebars in FY15 – the highest in the history of Pakistan. This allows the Company to have a wide range of sizes / grades available at all times and provide timely deliveries. As the largest selling brand of steel bars in Pakistan for the past few decades, AMSL is one of the only companies in the industry to have nation-wide presence. With increased capacity utilization, the Company has also expanded its dealership network with retailers in Sindh and Punjab in order to have a wider footprint in the country’s demand centers. Positive Regulatory Developments The recent 15% regulatory duty on imports of steel bar bodes positive for domestic integrated re-rollers. However, imports present no threat to AMSL but it further strengthens the Company’s competitive position and pricing power amongst high quality steel bars. Secondary Market Dynamics The KSE 100 Index emerged as one of the best performing markets in the world with a gain of 27% in 2014. Despite this robust performance, P/E multiple for the Pakistan market stands at 9.93x for FY15, which is broadly at par with the historical multiple for this market and reasonable discount to the P/E multiple of MSCI Asia Pacific Index, excluding Japan. Factors driving the robust performance of equity markets in the last few years remain broadly in place (increasing economic confidence and foreign portfolio flows) and are expected to help unlock the capital gain potential in the Company, to the benefit of


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potential investors. In addition, MSCI Pakistan Index will be included in the 2016 Annual Market Classification Review for a potential reclassification to Emerging Markets Index category that will also help to increase international confidence in Pakistan capital markets. Quality Assurance AMSL continuously invests in quality assurance which enables the Company to maintain a well established reputation for manufacturing Hot Rolled Bars with dimensional accuracy, superior quality and delivering first class service to its customers. Lloyd’s Register Quality Assurance has certified AMSL’s manufacturing facility for the ISO 9001 Quality Management System. The Company’s products fulfill the following requirements of steel reinforced concrete:

High yield strength

High tensile strength with standard elongation

High bond strength

Uniformity in diameter, length and reliability

Consistency in weight

Furthermore, all products of AMSL are also approved and certified by Pakistan Standards Quality Control Authority (PSQCA) and conform to the British and American standards.

Strong Growth AMSL has continuously invested in capacity expansion to increase market share and maintain its leading role in the industry. The Company has posted an impressive Sales CAGR touching 30% in the last 5 years as top line increased from PKR 4.10bn in 2010 to PKR 11.96bn in 2014. A strong demand outlook over the next 5 to 10 years for the construction and cement industry correlate well with increased steel bar demand. The iron and steel sector was the best performing sector in LSM FY15 with a growth rate of 36% and industry experts believe this figure will rise in FY16. State-of-the-art Facilities

The latest Induction and Electric Refining Furnaces equipped with PLC power optimizers, give stable, reliable and most importantly, energy efficient output. The only scrap shear in Pakistan allows AMSL to lower its raw material and power costs, and improve productivity. The fully automated machine casts liquid metal into billets in varying sizes. Slag breaking and separator machine recovers ferrous metals from wastage to improve yield. Cranes with speed of 100 mtr / min, automated vibratory feeders and transfer trolleys with capacities of up to 28 tons are able to support the high production requirements of the plant. The Company uses state-of-the-art equipment and high degree of automation which leads to the production of high quality products that fall well within established international standards. Attractive Floor Price The Floor Price of PKR 24.00/- per share represents a value proposition based on existing trading multiples of the market. Currently the KSE 100 Index trades at a P/E of 10.60 times and P/B of 1.94 times respectively as per Bloomberg. The Company trailing Pre-IPO P/E and P/B multiple of 6.91 times and 0.99 times and Post IPO P/E and P/B of 9.21 times and


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1.32 times respectively indicate room for growth. The multiples are based on audited financial statements for the 9 months ended March 31, 2015.

Pre-IPO Post-IPO

No. of Shares 222,758,570 297,011,427 Total Equity (as at March 31, 2015)* PKR 5,410,056,183 PKR 7,192,124,751 EPS (for the 9 months ended March 31, 2015) PKR 2.60 PKR 1.95 Annualized EPS PKR 3.47 PKR 2.60 Book Value Per Share PKR 24.29 PKR 24.24 P/E 6.92x 9.22x P/B 0.99x 0.99x

*Post-IPO BVPS has been calculated after adding the proceeds of the IPO including share premium based on the floor price of PKR 24/- per share

Peer Group Analysis

The following is the peer group comparison of Amreli Steels Limited with other listed Companies:

For the 9 months ended March 31, 2015

Amreli Steels

Mughal Iron and

Steel Industries

International Steels

International Industries

Crescent Steel and

Allied Products

Aisha Steel Mills

Huffaz Seamless

Pipe Industries

No. of Shares (mn) 222.76 109.39 435.00 119.89 62.11 271.06 55.48

Price per Share (PKR)* 24.00 68.20 27.63 77.99 95.08 9.00 23.80

Market Capitalization 5,346 7,460 12,019 9,350 5,905 2,440 1,321

Total Assets 12,335 8,050 22,877 34,807 6,605 15,472 7,226

Total Liabilities 6,925 6,246 17,544 25,947 1,394 12,700 2,673

Total Equity 5,410 1,804 5,334 8,860 5,211 2,772 4,552

Revenue 10,585 7,972 12,834 25,037 1,883 6,670 1,359

Profit / (Loss) After Tax 580 478 (1.00) 172 68 (967) (19)

Earnings Per Share (PKR) 2.60 4.37 (0.00) 1.44 1.09 (3.57) (0.35)

Annualized EPS (PKR) 3.47 5.82 (0.00) 1.91 1.46 (4.76) (0.46)

Book Value Per Share (PKR) 24.29 16.49 12.26 73.90 83.90 10.23 82.05

Price to Earnings (x)** 6.92 11.72 N/A 40.73 65.26 N/A N/A

Price to Book Value (x) 0.99 4.14 2.25 1.06 1.13 0.88 0.29

Source: Company Financial Statements *Prices as at August 11, 2015 **Calculated on the basis of Annualized EPS of the Companies


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PART 4

4 UNDERWRITING, COMMISSIONS, BROKERAGE AND OTHER EXPENSES

4.1 UNDERWRITING

Book Building Portion AKD Securities Limited has been mandated as the Book Runner to the Issue. The Book Runner will underwrite the Book Building portion of the Issue which comprises 74.75% of 74,252,857 Ordinary Shares as required under Regulation 20(2)(viii) of the Regulations at the Strike Price determined through the Book Building process. In the opinion of the Directors, the resources of the Underwriters are sufficient to discharge their underwriting commitments / obligations. General Public Portion As required under Rule 4(iii) of the Companies (Issue of Capital) Rules, 1996, the General Public portion of the Issue of 18,750,000 Ordinary shares will be underwritten and within five (05) working days from the close of the Bidding Period, the names of the underwriters will be published in the Supplement to the Prospectus in at least in all those newspapers in which the Prospectus was earlier published and also disseminated through the Securities Exchange where shares are to be listed.

4.2 UNDERWRITING COMMISSION

Book Building Portion The Book Runner will be paid underwriting commission at the rate of 0.25% of the Book Building portion of the Issue. In addition to the underwriting commission, the Book Runner will be paid a take-up commission at the rate of 0.50% of the amount of shares taken up. General Public Portion The Underwriters will be paid an underwriting commission at the rate of 1.50% of the amount underwritten by them. In addition, a take-up commission at the rate of 2.00% shall be paid to the underwriters on the value of the shares to be taken-up by virtue of their respective underwriting commitments / obligations.

4.3 BUY BACK / REPURCHASE AGREEMENT

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

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


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4.4 COMMISSION TO THE BANKERS TO THE ISSUE

Commission at the rate of 0.60% of the amount collected on allotment in respect of successful applicants will be paid by the Company to the Bankers to the Issue for services to be rendered by them in connection with the public issue, plus out-of-pocket expenses, if any.

4.5 BROKERAGE

For this Issue, brokerage shall be paid to the TRE Certificate Holders of KSE, LSE and ISE at the rate of 1.00% of the value of shares (including premium if any) on successful applications. No brokerage shall be payable in respect of shares taken up by the Underwriters by virtue of their underwriting commitments.

4.6 ESTIMATED EXPENSES OF THE ISSUE

Expenses to the Issue are estimated not to exceed PKR 101,487,516/-. The break-up of these preliminary expenses is given below:

Expenses to the Issue Rate Amount (PKR)

Underwriting Commission - Book Building 0.25% 3,330,171

Underwriting Commission - General Public 1.50% 6,750,000

Take-up Commission - Book Building* 0.50% 6,660,343

Take-up Commission - General Public* 2.00% 9,000,000

Commission - Bankers to the Offer 0.50% 2,250,000

Out of Pocket Expense - Bankers to the Offer (including eIPO services) 800,000

TREC Holders of the Stock Exchanges 1.00% 17,820,686

Book Runners Fee 0.625% 8,325,429

Lead Management & Arrangement Fee 2.00% 35,641,371

Printing, Publication of Prospectus / Application Forms

2,000,000

KSE Listing Fee & Charges:

- Initial Listing Fee

2,500,000

- Annual Listing Fee

503,207

- Service Charges

50,000

KSE Software Charges for Book Building

500,000

CDC Fresh Issue Fee 0.16% 2,851,310

SECP Application & Processing Fees

200,000

Legal & Professional Charges

750,000

Balloters & Share Registrar Fees etc.

555,000

Miscellaneous Costs

1,000,000

Total 101,487,516

* These amounts represent the maximum possible costs under these heads based on Floor Price


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PART 5

5 OVERVIEW, HISTORY AND PROSPECTS

5.1 COMPANY HISTORY

The Amreli family has been in the business of steel manufacturing for over 50 years. The founders of Amreli Steels came to Karachi in 1946, from a small town called Amreli in Gujrat, India. They established themselves in a small shop in Karachi, dealing with nails, screws, files, wires and other hardware items. They then started manufacturing nails, rivets, screws and wires drawn from wire-rod.

During the 70s, they established a number of hot rolling mills to produce steel bars, angles, and T-iron. In 1973, they also started ship-breaking operations for taking out ship plates to roll into bars under the umbrella of Amreliwala Hardware Industries, a partnership concern. By the early 80s, and with the advent of strong increase in the quantity and quality of steel, AMSL scrapped all its manual re-rolling mills and imported a semi-automatic mill from the United Kingdom, manufactured by Danieli (Italy), one of the world’s best manufacturers of steel equipment. In 1984, Amreliwala Hardware Industries was converted into a Private Limited Company. In 1989, AMSL became the first company to introduce the concept of deformed steel bars in Pakistan and in 1991 the name of Amreliwala Hardware (Private) Limited was changed to Amreli Steels (Private) Limited. In 1993, AMSL produced 50,000 tons of steel bars for the first time in Pakistan’s history of making steel re-bars using European technology. In 2007, the Company acquired modern Italian and Chinese re-rolling technology which increased the production capability from 75,000 tons per annum to 180,000 tons per annum, the first company in Pakistan to have a capacity of this size. In 2008, AMSL became the first company to introduce Thermo Mechanical Treatment Technology in Pakistan. AMSL converted from a private limited company to a public limited company on May 11, 2009. The Company added another feather to its cap in 2009 by introducing earthquake resistant re-bars in Pakistan. Since its inception, AMSL has managed to build its reputation as one of the most trusted and reliable manufacturers of steel reinforcement bars in Pakistan. Not only does the Company takes pride in it being the largest steel bar manufacturer in the country, but the Amreli Steels brand has become synonymous with quality, strength and durability, making it the preferred choice of industry professionals today. AMSL is a dynamic and a mission-driven company that believes in strict adherence to its corporate values and code of ethics. Today, AMSL is one of the largest manufacturers of Steel Reinforcement Bars in Pakistan. The Company is headquartered in the industrial hub of Karachi. The Company operates a state-of-the-art Rolling Mill of 180,000 TPA capacity at S.I.T.E. Karachi and a modern Steel Melting Shop of 200,000 TPA capacity set-up at Dhabeji, Karachi. The integrated operation of melting and rolling facilities ensure regular supply of high quality billets required for production of high strength reinforcement bars and also add to the economic strength of the Company through value addition. AMSL is the backbone that supports some of the mega structures of Pakistan including famous landmarks, airports, infrastructures and other residential projects. Jinnah International Airport, Allama Iqbal International Airport, Aga Khan University and Hospital, MCB Tower, Ghazi Barotha Dam and the Northern Bypass are a few of many remarkable structures whose


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foundations were laid with AMSL re-bars and they continue to stand tall with pride as integral monuments adding value to the skylines of this nation. AMSL has created a strong culture based on values that have been a part of its long tradition. The hallmark of the Company’s success has been its reputation as an enterprise that generates and supports exceptional levels of opportunity, initiative and goodwill. The promoters have always believed in continuous growth, improvements and adoption of latest manufacturing techniques to maintain its leadership in producing best quality of products at optimum productivity and cost competitiveness. The Company’s high strength reinforcement bars ‘Xtreme G-500’ are the preferred choice of most of the reputed builders in the construction industry of Pakistan. Lloyd’s Register Quality Assurance has certified AMSL’s manufacturing facilities for the ISO 9001 Quality Management System. The products are also approved and certified by Pakistan Standards Quality Control Authority (PSQCA). The promoters of the Company believe in a ‘Clean & Green’ environment, contributing for the betterment of society in particular and the country in general. It has registered its plants under Self-Monitoring and Reporting Program (SMART) monitored by Pakistan Environmental Protection Agency under the umbrella of Ministry of Environment, Government of Pakistan. AMSL is also very active in the CSR sphere. It supports a complete primary school of approximately 150 students in Achar Salaar (a small town near the Steel Melt Shop) and the Hunar Foundation, a state-of-the-art vocational training institute certified by City and Guilds U.K. The Amreli Foundation also runs a full-fledged ladies tailoring unit in Dhabeji. The Company has received the prestigious 4th Consumer’s Choice Award by Consumer Association of Pakistan. Shareholding Pattern

Shareholders No. of Shares Holding (%)

Abbas Akberali 91,294,723 40.98%

Mahvash Akberali 55,732,930 25.02%

Hadi Akberali 37,419,212 16.80%

Shayan Akberali 35,694,840 16.02%

Kinza Shayan 1,746,383 0.78%

Salsabil Abbas Ali 866,982 0.39%

Mirza Qamar Beg 1,000 0.00%

Badar Kazmi 1,000 0.00%

Mariam Akberali 1,000 0.00%

Zafar Ahmed Taji 500 0.00%

Total 222,758,570 100.00%

Plant Location AMSL’s re-rolling facilities are located at D-89, Shershah Road, S.I.T.E., Karachi and the steel melting plant is located at Dhabeji, which is 16 km from Port Qasim, Karachi.


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Types and Sourcing of Raw Material There are five major types of raw meltable scrap used by AMSL to manufacture billets which are rolled to produce re-bars. The different types of scrap that are procured are as under:

HMS 1 – Non-galvanized Blackened Steel

HMS 2 – Galvanized Blackened Steel

Tin plate bundles

Blue bundles

Shredded

The Company imports scrap from well-established and reliable partners. Some of the major suppliers are mentioned in the table below:

Name of Supplier Tons Imported

Al Zarooni - UAE 23,542

Quality Metals - UAE 18,251

Stena - Sweden 10,121

Nortrade - Austrlia 26,284

Polcopper - Poland 27,419

Skrotfrag - Sweden 7,072

Stemcor - UK 8,345

Midas - UAE / South Africa 15,288

Resource Trading - Australia 285

Global Metcorp - UK 8,230

Reclamation - South Africa 4,015

Sims - UK 17,852

Vital Solutions – Singapore / UK 10,610

BFRS - UK 1,960

EMR - UK 12,017

TSR - Germany 1,005

MRC - Kuwait 5,079

Total 197,375

Three different types of alloys are used by the Company as raw material, which are imported from India and include the following:

Ferro Manganese

Ferro Silicon

Silicon Manganese

5.2 PLANT AND MACHINERY Steel Melting Plant at Dhabeji The Steel Melting Plant has a capacity of 200,000 tons of billets per annum, making it the largest private sector melting plant in Pakistan. This backward integration development encompasses a portion of the 65 acre leasehold land acquired by the Company at Dhabeji, which is 16 km from Port Qasim. The steel melting plant is based on induction furnace technology, which is considered to be the best suited electric steel making technology for the region. Most of the technology suppliers for the project are based out of India and Germany. The Company has continuously invested in technology. As a result, AMSL is the only company to have a Slag Breaking and Separator Machine that recovers ferrous metals from wastage to


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improve its yield. AMSL has one of the largest 1600 tons European scrap shearing machines in the subcontinent which provides efficiencies in scrap handling and processing costs. Foreign consultants provide design and engineering consultancy for the melting plant. These consultants have designed some of the largest plants in the world having capacity of over 3 million tons per year. The Induction Furnace technology the Company utilizes to manufacture billets is best suited for making deformed steel bars and has the following advantages:

Lower operational costs relative to other technologies because it does not require use of expensive electrodes, oxygen, or specialized refractory materials

Melting losses are lower than other technologies

Alloying is simple and accurate

Environmentally friendly as there is 80% less dust, 30% lower noise, and 80% lower slag generation

Electrical flickers that disturb the grid are non-existent Utilities

At Dhabeji, the Company is supplied with power by K-Electric from the national grid at 132KV/11KV with the transformer rating of 50/63 MVA which is more than sufficient to cater to the requirement of ASML’s existing operations and expansion plans. Further, the Company has laid one extra phase cable of 132KV to avoid single point of failure. The Company has a dedicated bay at K-Electric’s Dhabeji grid station, from which its dedicated power feeders transmit power at 132KV voltage to the grid station located at the site where it is stepped down to 11KV and is further lowered to various voltages as required by different plant and equipment. The gas supply line comes from a high pressure natural gas line which is along the National Highway. Pressure Reducing Station (PRS) is installed at the plant’s main premises to control the pressure as per the requirements. AMSL is currently using a gas pressure of 8 psig which is more than sufficient for its existing needs and will conveniently cater to the immediate expansion requirements. The Company has its own deep well bore and the quality of water is less than TDS value of 10,000 ppm. The high TDS water is processed to convert into soft water of TDS of less than 150 ppm through PLC based Reverse Osmosis Plant (ROP). The softened water is supplied through ROP to all process equipment of the mill. AMSL also has a water connection from KWSB as second option to avoid single point of failure so as to ensure availability of consistent and good quality water as per the requirement of the mill. As a CSR initiative, mineral water is provided to all workers and staff at Dhabeji. This is done by adding requisite quantity of mineral into the softened water through a processing system.


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Plant Specification

Steel Melt Shop – Plant Specification

Nameplate capacity 200,000 tons per annum

Name of Key Machineries Country of Origin Manufacturer

Pre-compression Scrap Shear (PC 1625) Italy Veezani

Scrap Bailing Press India Subha Internaltional

Vibratory Charger Feeders Thailand General Kinematics

Electrohydraulic Grabs Germany SMAG

Induction Furnaces (25 tons each) India Electrotherm

Ladle Refining Furnace India Doshi Technologies

Continuous Caster Machine India Concast

Spectrometers Germany Spectro Analytical

Slag Crushing Plant India Bhupindra Machines

Power Transformer China Hyosung Transformer Co.

Reverse Osmosis Plant USA Severn Trent

Electric Supply & Distribution System Pakistan AREVA

Fume Extraction System India Nikko System

Rolling Mill at S.I.T.E The re-rolling mill located in SITE, Karachi is one of the most modern and efficient re-rolling mills operating in the country. The rolling mill uses prime quality billets produced at the melt shop to produce reinforcement steel bars. With an installed capacity of 180,000 tons of re-bars per year, AMSL is the largest re-bar producer in the country and with a fully automatic and continuous rolling line; the plant is able to produce high quality re-bars in diameters ranging from 9.5mm to 40mm compliant to American and British standards. AMSL was the first company in Pakistan to introduce the Thermo Mechanically Treated re-bar technology which enabled the Company to produce high strength deformed re-bars based on specifications that meets international standards and benchmarks. The plant has the following technologically advanced features:

Straight rolling for better product control and efficiency

Special speed cascading systems for tension free rolling and dimensional accuracy

Sophisticated quenching equipment for producing high strength bars Utilities

The rolling mill is supplied with power from two dedicated feeders of K-Electric supplying power at 11 KV level. Each of these feeders originates at the K-Electric substation and terminates at the rolling mill with no other customers drawing power from these lines. Thus, there is one line in operation and one on standby for AMSL. In case any maintenance work needs to be done on one line, the spare feeder is energized and power is drawn from it. The Company also has standby generators for operation of all critical equipment as a backup in the event of any unforeseen disturbance to power supply. The capacity of generators is sufficient to run critical processes to protect the equipment. AMSL has made a deep tube well bore at the premises and is now working on installation of a Reverse Osmosis Plant.


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For gas supply, the Company has a Town Border Station (TBS) connected to the plant premises to ensure smooth pressure supply to the plant which enables it to run at the desired efficient parameters. AMSL has also installed a standby SNG plant which is used during occasional load shedding and low pressure on Sundays to cater to its production needs. Plant Specification

Rolling Mill –Plant Specification

Nameplate capacity 180,000 tons per annum

Name of Key Machineries Country of Origin Manufacturer

Reheating Furnace India Tenova Metals

Rolling Mill - Roughing Germany Krupp

Rolling Mill - Intermediate China Shougang

Rolling Mill - Finishing, TMT & Billet Shear Italy Siderplant

Entry & Exit Guides UK Hollteck

Workshop Machineries China Nantong rising

Turning Lathe AT 830 Italy Atomat Group

5.3 PRODUCTS OFFERED

AMSL product range comprises of the following products:

Xtreme Bars G-500 Xtreme G-500 is a high strength deformed rebar that is produced by using the “water quenching technology”. The specifications of the XTreme G-500 bars meet international standards and benchmarks and the sizes range from 9.5mm to 40mm in diameter. Features of X-treme G-500:

High design yield strength of 500 MPA

Requires 15% less steel in construction compared to grade 60-rebars available in the market

Superior bendability; can be safely bent without cracking

All bar sizes are rolled to a very close tolerance, which is possible due to the fully computerized and automatic rolling mill, so that customers get more meters of steel per ton

Descaled bars have better bonding with concrete and less wastage at site

The bars are safely weldable under field conditions

The bars are needle straight due to the continuous rolling facility deployed at AMSL No local product is currently available in the market that can match the above specifications. A growing number of international and local developers engaged in Pakistan now require re-bars that can meet these evolved criteria. The product has been registered with Pakistan Standards and Quality Control Authority. Deformed Steel Bars G-60 These are grade 60 steel bars that conform to ASTM A615 (American Standard for Testing and Materials) in sizes ranging from 10mm to 40mm in standard 12 meter lengths. Specific / customized lengths are also rolled depending on customer requirements. These bars are rolled from the billets manufactured by AMSL at its steel melt shop and are quality assured for consistency and reliability.


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5.4 NEW ROLLING MILL PROJECT AT DHABEJI

The Company has taken the decision to setup a new rolling mill at Dhabeji to expand its manufacturing facilities which achieved close to 100% capacity utilization in FY15. As of today, this will be the largest capacity rebar plant in Pakistan and will enhance AMSL’s steel melting capacity from 200,000 tons per annum to 350,000 tons per annum and re-rolling mills capacity from 180,000 tons per annum to 480,000 tons per annum. The estimated cost of the expansion plan is approximately PKR 3.38bn, which will in part be generated by the IPO (PKR 1.78bn on Floor Price) and balancing funds, if any, will be arranged through bank borrowings. Approval for financing of up to PKR 1.54bn for the project has been obtained from United Bank Limited.

Following are the benefits of the expansion plan:

The installation of the largest capacity rebar plant in Pakistan will give AMSL the benefits of globally competitive conversion costs and economies of scale

Productions of high quality products which will be in line with international standards

Optimum productivity and reduction of conversion costs through the following measures:

Using of long billets of higher weight will achieve high yields of up to 97% Hot link with continuous billet Caster of Steel Melt Shop will reduce natural gas

consumption in reheating of billets Reduction in scale loss Efficiency and control to achieve high productivity and high level of automation

according to international standards

Estimated Cost of New Project

PKR (mn)

Development of Acquired Land 1.6

Pre Fab Shed and Civil works 340

Furnace 417

Imported Mill Equipment 2,037

Project Related Utilities 68.4

Quality Control 5.4

Material Handling Equipment 84.9

Electricals 204.8

Work Shops and Tools 22.2

Weighing Scale 7.7

Networking (System Software and Hardware) 6.0

Consultants Fees 17.8

Initial Spares 103.0

General Expense 50.0

Office Equipment & Furniture 10

Total 3,376

The Company has already started working on the initial stages of the project. The Company has entered into an agreement with Primetals Technologies Italy S.r.l. for supply of brand new rolling mill machinery, which includes mechanical, electrical and automation equipment. Land preparation and soil investigation has been completed and forwarded to consultants for initial design of the rolling mill. Extension of workers’ and staff’s accommodation to accommodate new workers / staff has been finalized. Preliminary civil work including land leveling, electrical resistivity test, back filling and boundary wall work has started.


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Furthermore, the Company has also shortlisted suppliers who will be supplying the pre-fabricated building, re-heating furnace and cranes which are not part of the scope of Primetals Technologies Italy S.r.l. Various local civil contractors have been invited and are being evaluated for final selection of three civil contractors for the project site for the execution of work on 24 hour basis. The task of Project Design and Engineering for the new Rolling Mill has been assigned to the reputed Indian consultancy, Korus Engineering Solutions Pvt. Limited, engaged in the field of building steel plants in India and abroad. The Company has previously provided Consultancy and Detailed Engineering Services to AMSL for the up-gradation of their existing Rolling Mill from 65,000 TPA to 180,000 TPA and later for setting up the 200,000 TPA Steel Melt Shop at Dhabeji. The consultants shall be carrying out the detailed engineering of the project comprising of the following:

Developing plant and shop layouts

Design and supply of construction drawings for factory buildings, roads, drains and other civil and structural work

Design and supply of construction drawings for equipment foundation of plant and machinery, utility services, auxiliary services etc.

Preparing tender specifications for procurement of equipment, analysis of bids and assistance in finalizing the orders

Preparing tender specifications for installation of equipment, piping and cabling

Preparation of engineering drawings for electrical and utility services, including piping, cabling, earthing and lighting

Assistance in designer's supervision of work at the project site for civil and structure related work, and installation and commissioning of equipment

Utilities Dhabeji is an area of high power availability where K-Electric has excess power generation capacity and a dearth of customers in this area. As a result, stability and availability of power on the national grid in this area is exceptionally high. The advantage of drawing power directly from the national grid at 132 KV is that there is no power failure at this voltage level. Grid design always ensures that load is shed at the lowest voltages first in order to protect the integrity of the national power distribution system. The Company has invested heavily in infrastructure to enable it to tap directly into the national grid at this high voltage level which assures continuity and stability of power. The area AMSL is located in is of special importance as it is fed by the same high voltage feeders as KWSB’s pumping station, which supplies water to all of Karachi and companies like ICI’s PTA plant (now owned by Lotte Group) and Linde, both of which are continuous operation plants and cannot have interruptions to their power. These companies have been supplied power for years without interruptions. These factors further ensure the strategic importance of the grid in this area, which was a vital factor when the Company was selecting the site for the steel melt shop and its future expansion needs. AMSL is currently using a gas pressure of 8 psig from a high pressure natural gas line which is along the National Highway. This is more than sufficient for its existing needs and will conveniently cater to the immediate expansion requirements and has room for further expansion in future.


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Implementation Schedule

Task Activity Completion Date

Acquisition of land Already acquired

Contract finalization with equipment supplier July 2015

Layout finalization of equipment with auxiliaries Sep 2015

Opening of LCs for the import of machineries Sep 2015*

Basic calculations of mill operating parameters and equipment design

Dec 2015

Detail designing of equipment with general arrangement of drawing and loading for civil foundation and utility requirements

Apr 2016

Manufacturing of mechanical equipment Aug 2016

Civil foundations and shed erection Aug 2016

Delivery of mechanical equipment Sep 2016

Manufacturing of electrical equipment Aug 2016

Delivery of electrical equipment Sep 2016

Installation of mechanical equipment at project site Nov 2016

Installation of electrical equipment at site Nov 2016

Cold commissioning (dry run of all mechanical and electrical equipment )

Dec 2016

Hot commissioning (running of all mechanical and electrical equipment)

Apr 2017

Commercial production start May 1, 2017

*Subject to successful IPO at least 7 days before opening of LC

5.5 SECTOR OVERVIEW Steel is one of the most widely used metals in the world. The iron and steel industry fuels industrialization and plays a key role in the development of the economy. The international steel market remained volatile in the period 2012-13. However, demand for steel from China, one of the biggest steel markets, is expected to grow in the future to meet the growing need for buildings, infrastructure and transport1. Both developed and developing countries continue to demand steel to support sustainable development of their economy. Pakistan is a steel deficit country and is likely to witness increased demand mainly due to the focus of the Government on infrastructural projects, which will in-turn increase demand for steel. Furthermore, an improved business environment will lead to increased steel consumption, which will be beneficial for AMSL. The table below highlights steel consumption and production in Pakistan from 2009-20132. Domestic consumption of steel is much more than domestic production; hence there is room for domestic producers to increase steel production.

Thousand Tonnes 2009 2010 2011 2012 2013

Crude Steel Production in Pakistan 800 800 850 850 972

Steel Consumption in Pakistan 2950 2898 2800 3242 3503 Source: Steel Statistical Yearbook 2014

1 “Economic Sustainability” – World Steel Association (http://www.worldsteel.org/steel-by-topic/sustainable-steel/economic.html) 2 Steel Statistical Yearbook 2014


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Pakistan’s Gross Domestic Product has grown at an average rate of 5% over the last 60 years. Pakistan is still amongst the lowest per capita consumer of crude steel at 16.1 kg in comparison to regional average of 262.5kg and world average of 238.2kg.

5.6 FUTURE PROSPECTS

Pakistan’s economy is the 27th largest economy in the world according to Purchasing Power Parity3 and is rapidly growing. Pakistan is in the Next Eleven countries that along with BRIC have a high potential to become the world largest economies in the 21st century. It is the 44th largest economy in terms of nominal GDP4. The business environment of Pakistan is expected to improve in the future, which will be beneficial for the steel sector. Since Pakistan has a low per capita steel consumption, there is huge potential for growth in the steel sector. Other factors such as increased Government focus on infrastructural projects, political stability and improvement in law and order situation of the country will boost steel consumption and demand.

5.7 MAJOR CLIENTS

Major Clients of Amreli Steels Limited

Agha Khan Hospital Hilton Pharma Limited

Aisha Steel Mills Limited Hino Pak Motors Limited

Allama Iqbal International Airport Lahore Indus Motors Limited

Attock Cement Pakistan Limited Karachi Northern Bypass

Bestway Cement Liyari Express

Bismillah Group of Companies Lucky Cement Limited

Chapal Group of Companies Macheyara Group of Companies

China Harbour Engineering Company Meezan Bank Limited

China Nuclear Industrial Company MCB Bank Limited

The City School Pakistan Beverages Limited

Continental Biscuits Limited Saima Builders

D.G. Khan Cement Limited Serena Hotel Islamabad

Employee Old-age Benefits Institution Shaukat Khanum Hospital

Gawadar Deep Seaport Siemens Pakistan Eng. Company Limited

Giga Group of Companies Tapal Tea Pvt. Limited

Hilal Confectionary (Pvt.) Limited

5.8 RISK FACTORS

5.8.1 Business Risk

Decrease in demand for Company’s products may have an adverse impact on its profitability.

5.8.2 Risk of Physical Damage Risk of damage to Property, Plant and Equipment.

5.8.3 Foreign Exchange Risk Adverse foreign exchange movement .i.e. PKR depreciation will inflate the price of imports thus affecting the profitability of the Company.

3 CIA Fact Book 4 World Bank Data Bank


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5.8.4 Raw Material Supply / Price Risk Adverse price movement or non-availability of raw materials may deter smooth production.

5.8.5 Power Supply Risk The Company may not be able to operate at optimal capacity due to unavailability of electricity.

5.8.6 Operational Risk The Company may not have sufficient expertise to operate the project.

5.8.7 Competitor Risk

Competition from business competitors may create a hostile environment for the Company and result in business loss.

5.8.8 Risk of Technological Obsolescence The technology employed is or may become obsolete in the near future leaving the Company unable to deliver the required level of expertise and support for consistent growth.

5.8.9 Capital Market Risk

Price of shares will depend on the stock market behavior and performance of the Company. Hence, price may rise or fall and result in increase or decrease in the value of shares.

5.8.10 Diversification Risk Risk of being dependent on one particular buyer or market.

5.8.11 Regulatory Risk This is the risk that the regulatory policies unfavorable for the steel sector are imposed.

5.8.12 Under-subscription Risk There is a risk that the Public Issue may get under-subscribed on account of lack of investors’ interest.

NOTE: IT IS STATED THAT ALL MATERIAL RISK FACTORS HAVE BEEN DISCLOSED AND THAT NOTHING HAS BEEN CONCEALED IN THIS RESPECT.


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PART 6

6 FINANCIAL INFORMATION

6.1 AUDITORS REPORT UNDER CLAUSE 28 OF SECTION 2 OF PART I OF THE SECOND SCHEDULE

TO THE COMPANIES ORDINANCE, 1984 FOR THE PURPOSE OF INCLUSION IN THE PROSPECTUS OF AMRELI STEELS LIMITED


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6.2 SHARE BREAK-UP VALUE CERTIFICATE


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


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6.4 SUMMARY OF FINANCIAL HIGHLIGHTS

(Amounts in PKR mn) FY10 FY11 FY12 FY13 FY14 9MFY15

Sales 4,128 5,432 7,209 10,622 11,962 10,585

Gross Profit 425 473 981 1,161 1,372 1,694

Operating Profit 303 326 732 841 1,041 1,288

Profit before Taxation (24) 62 130 174 380 751

Profit after Taxation 104 2 90 121 252 580

Non-Current Assets 3,871 5,515 8,138 7,997 7,715 7,631

Current Assets 1,681 1,728 2,734 3,803 3,411 4,704

Total Assets 5,552 7,243 10,872 11,800 11,126 12,335

Non-Current Liabilities 1,318 2,151 3,149 2,634 2,980 2,312

Current Liabilities 1,790 1,851 3,215 4,557 3,308 4,613

Total Liabilities 3,107 4,003 6,364 7,191 6,288 6,925

Total Equity (with Revaluation Surplus) 2,445 3,240 4,508 4,609 4,839 5,410

Total Equity (w/o Revaluation Surplus) 1,452 2,265 2,373 2,544 2,879 3,522

6.5 FINANCIAL RATIOS

FY10 FY11 FY12 FY13 FY14 9MFY15

Gross Profit (%) 10.29% 8.70% 13.61% 10.93% 11.47% 16.00%

Operating Profit (%) 7.33% 6.01% 10.16% 7.92% 8.71% 12.17%

Net Profit (%) 2.51% 0.04% 1.25% 1.14% 2.11% 5.48%

Return on Equity (%) (with Revaluation Surplus) 4.24% 0.06% 2.00% 2.63% 5.22% 10.72%

Return on Equity (%) (w/o Revaluation Surplus) 7.14% 0.09% 3.79% 4.76% 8.77% 16.48%

Return on Assets (%) 1.87% 0.03% 0.83% 1.03% 2.27% 4.70%

Earnings Per Share (PKR) 0.72 0.01 0.40 0.54 1.13 2.60

Book Value Per Share (PKR) (with Reval. Surplus) 17.05 14.55 20.24 20.69 21.72 24.29

Book Value Per Share (PKR) (w/o Reval. Surplus) 10.12 10.17 10.65 11.42 12.92 15.81

No. of Shares (mn) 143.43 222.76 222.76 222.76 222.76 222.76


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PART 7

7 MANAGEMENT

7.1 BOARD OF DIRECTORS OF THE COMPANY

S. No. Name and Address Designation Directorship in Other Companies

1) Abbas Akberali House no. F-3/B, Block 4, Clifton, Karachi

Chief Executive Officer

Shershah Industries (Pvt.) Limited

2)

Badar Kazmi House no. 24/II, Khayaban-e-Muhafiz, Phase VI, DHA, Karachi

Director N/A

3) Zafar Ahmad Taji House no. 49, Z-Block, Phase III, DHA, Lahore

Director N/A

4)

Mirza Qamar Beg House no. 64/1, Street 25, Khayaban-e-Badban, Phase V, DHA, Karachi

Director N/A

5) Shayan Akberali House no. F-3/B, Block 4, Clifton, Karachi

Director Shershah Industries (Pvt.) Limited

6) Kinza Shayan House no. F-3/B, Block 4, Clifton, Karachi

Director N/A

7) Mariam Akberali House no. F-3/B, Block 4, Clifton, Karachi

Director N/A

7.2 OVER DUE LOANS

There are no overdue loans (both foreign and local currency) on the Company or its Directors.

7.3 DIVIDEND PAYOUT BY GROUP LISTED COMPANIES None of the group companies are listed on the Stock Exchange(s).

7.4 PROFILES OF DIRECTORS

Mr. Abbas Akberali - Chief Executive Officer Mr. Abbas Akberali founded Amreli Steels in 1972 and since then has led the Company to become the largest and most well-known steel bar manufacturers in Pakistan. Mr. Akberali brings unparalleled experience; with a metallurgical engineering background combined with an MBA from Columbia University, NY. He has also held leadership roles in the cement, ship breaking and metal recycling industries. He has played an influential role in driving reforms and policy aimed towards making Pakistan’s steel industry more competitive and sustainable. With a passion for educating Pakistan, Mr. Abbas Akberali is also a founding member of The Hunar Foundation and serves on the board of other notable non-profit organizations.


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Mr. Badar Kazmi - Independent Non-Executive Director Mr. Kazmi brings with him a wealth of experience spanning over 33 years including almost all facets of the banking industry of Pakistan, Middle East, South Asia and Africa. Mr. Kazmi started his career with BCCI in 1980 and worked for 11 years in Pakistan and the Middle Eastern Region. Mr. Kazmi joined Standard Chartered Group (SCB) in 1991 and held various positions including Regional Head of Global Markets for MESA (Middle East and South Asia) and Africa. In 2003, he was appointed as CEO of SCB Pakistan, a position he held till late 2010. In recognition for his services to banking in Pakistan, Mr. Kazmi was also decorated with the civil award ‘Sitara-e-Imtiaz’ by the President of Pakistan. Mr. Zafar Ahmed Taji - Independent Non-Executive Director Mr. Taji started his career in 1971 after completing his MBA from IBA, Karachi holding first position. Since then, he has spent 35 years with multinationals like Exxon Corp, Union Carbide of USA, British American Tobacco / Pakistan Tobacco and Interloop. Mr. Taji is also Certified Corporate Governance professional from IFC / PICG. Presently he is the Special Advisor to Directors of Sapphire Fibers. He has had the honor of being member of Prime Minister Pay and Pension Commission, Advisor to NAB for developing / implementing its Change Management Program, Advisor to Pakistan Air Force for resolving cultural issues of collaborating with China on developing JF 17s at Kamra Air Base, and HR Advisor to PCB for a number of years. He has also been Dean of Riphah University and Director General of NUST Business School. Mr. Mirza Qamar Beg - Independent Non-Executive Director Mr. Qamar Beg is a retired civil servant, who has served, inter alia, as Secretary Commerce, Chief Secretary Balochistan, and Chairman and CEO of Pakistan Steel. He served for six years, until 25 May 2015, on the Board of State Bank of Pakistan. He has also served on the Board of National School of Public Policy, and is member of Tax Reforms Commission and Broadening of Tax Base Committee. He is recipient of one of the highest civil awards of Italy. Mr. Shayan Akberali - Managing Director Mr. Shayan Akberali joined AMSL in 2002 after completing a Bachelor’s Degree in Electrical Engineering from Northwestern University, USA and working for Lehman Brothers, NY. Over the past decade, Mr. Akberali has played an integral role in expanding and professionalizing the Company in his various roles overseeing production, technical development and planning. Mr. Shayan was instrumental in expanding production capacity from 60,000 tons per year to 180,000 tons per year and is currently leading an expansion project to double capacity. Responsible for various company functions in his role as MD, Mr. Shayan has built a strong team of professionals that bring functional expertise as well as leadership to steer the Company to higher growth. Ms. Kinza Shayan - Non-Executive Director Ms. Kinza Shayan is a graduate in Management Sciences from SZABIST and is currently pursuing a diploma in sports nutrition. She also writes for various publications on fitness and nutrition and is currently gearing up to start her own business in the health sciences field.


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Ms. Mariam Akberali - Non-Executive Director Ms. Mariam Akberali brings great diversity to the board with experience in the food, restaurant, mental health, and education sectors in Pakistan. She has earned a degree in Psychology from Franklin & Marshall College, USA and is passionate about social entrepreneurship in Pakistan.

7.5 PROFILES OF OTHER KEY MANAGEMENT Mr. Hadi Akberali – Director Projects Mr. Hadi Akberali brings a mix of technical, management and leadership skills after completing a Bachelor Degree in Industrial Engineering from Northwestern University, USA and an MBA in Finance and Strategy from INSEAD, France. With over 8 years of experience in the steel industry, Mr. Hadi Akberali was instrumental in the Company’s vertical integration plans by spearheading the implementation of the billet manufacturing facility between 2008 and 2011. Currently, Mr. Akberali is responsible for implementation of a companywide SAP implementation project, Corporate Affairs, and new business ventures that can give AMSL competitive advantages. Mr. Fazal Ahmed – Director Finance Mr. Ahmed is an associate member of the Institute of Cost & Management Accountant of Pakistan. He has been associated with the Company since 2008. As a member of senior leadership team, he acts as a Partner to the CEO and an advisor to the divisional heads, evaluating and assisting them with their financial goals. Before joining AMSL in 2008, he was heading his own financial consulting and advisory firm. He was financial advisor to a Malaysian firm by the name MAXCORP, which was engaged in a number of large sized Real Estate projects in Pakistan. He arranged and structured financing for MAXCORP to develop Defence Country & Golf Club, Phase VIII, Karachi, and Mangla View Resorts near Mangla Dam. Mr. Ahmed carries with him professional experience of over 25 years in financial and accounting disciplines having served for more than 20 years as head of finance at different financial and manufacturing institutions across Pakistan. Mr. M. Anwar Kamal – Executive Director Marketing & Sales Mr. Kamal started his career in 1980 and since then has been working in Marketing & Sales in building material industry. Early in 1983, he joined Baluchistan Concrete and Blocks (A Habib Group Company) as sales officer and soon grew to become Manger Sales serving the Company up to 1986. Mr. Kamal joined AMSL in 1993 and served up to 2003 as Executive Manager Marketing and played a phenomenal role in the sales growth of the Company. From 2003 until 2011 he remained with Al-Abbas group as Head of Marketing and again in 2011 he rejoined AMSL as Executive Director Marketing & Sales. Mr. Khamis Abbas – Director Personnel & Administration Mr. Abbas did his L.L.B. from Karachi University and has more than 42 years of working experience, the last 23 of which are with Amreli Steels Limited. He is an expert on labour laws of Pakistan dealing specially issues related to industrial relations and Factories Act 1934. Before joining AMSL he worked with RCD Balls bearing Limited then a public listed company in different capacities last of which was Personnel & Administration Manager and Manager Factory.


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Mr. Shabbir Hussain – Executive Manager Plant & Production - Rolling Mill Mr. Hussain started his career at AMSL as an Electrical Engineer in 1984. Today, he is heading the Plant & Production at the Rolling Mill. Mr. Hussain has overall working experience of 38 years, out of which 29 years have been with AMSL. Mr. Noman Sajjad – Executive Manager Plant & Production - Steel Melt Shop Mr. Sajjad has done his BE in Mechanical Engineering, Masters in Energy System and Masters in Industrial Management from NED University. He has also done his MBA from IBA with majors in Marketing and HR. He is also a globally recognized and certified Project Management Professional. Mr. Sajjad has been associated with AMSL since 2006 and has overall working experience of 13 years. He has been instrumental in the erection of SMS at Dhabeji and runs the plant with great degree of efficiency. Mr. Zoeb Salemwala – Executive Manager Corporate Affairs Mr. Zoeb Salemwala currently heads the Corporate Affairs function at AMSL and is also the Company Secretary. He brings unique perspectives from his 25 years of experience in handling financial and taxation matters of corporate entities in hotels, advertising and the steel industry. Mr. Zoeb has worked in different departments across the Company and serves as an advisor to various functional leads. Mr. Darayus Charna – Executive Manager Marketing Mr. Darayus Charna joined AMSL in early 2009 and is overseeing the complete Marketing operations of the Company. He has over 30 years of work experience as divisional and country managers with reputed firms such as Sears Roebuck, USA and Boldson International Ltd, Hong Kong. Mr. Rafaqat Aziz LT COL (R) – Executive Manager, Logistics, Vigilance & Group Security Mr. Rafaqat Aziz is Graduate from Pakistan Military Academy. He is also qualified in defense procurement and IMO certified port & ship security officer. Mr. Rafaqat is associated with AMSL since 2006 and has overall experience of 38 years including 25 years of service in Pakistan Army. Mr. Jawaid Asghar – Executive Manager - Chief Information Officer Mr. Syed Javed Asghar has done his BE (Electronics) from NED University in 1992 and MS in Software Engineering in 1998 from SZABIST. He joined AMSL in 2013 as Chief Information Officer (CIO). He has overall 21 years of work experience with reputed firms such as Excide Pakistan Limited, Dream World Limited and Barrett Hodgson Pakistan Limited. As Chief Information Officer, Mr. Asghar has constructed a strong team in IT department recently and has successfully implemented SAP software at AMSL. Mr. Shahid Hussain – Senior Manager Finance Mr. Shahid Hussain is an associate member of the Institute of Cost & Management Accountant of Pakistan. In AMSL, he has been looking after the functions of Accounts and Finance since October 2010. Mr. Hussain has overall 17 years of practical experience in the field of Accounts and Finance. Previously, he has served for various well renowned organizations in financial and accounting disciplines. Mr. Hussain is a proud SAP power user.


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Mr. Farid Ahmed – Senior Manager HCR Mr. Farid Ahmed Taji has done his BBA in operation Management from University of Houston, Texas, USA. Mr. Farid is associated with AMSL since 2014 and has a unique professional experience of 9 years of working for financial investment company and FMGC across the globe. Prior to joining AMSL Mr. Farid had been associated with one of the largest Telecom Company in Pakistan as a HR Business Partner. Mr. Mohiuddin Minhaj Rafi Junaidy – Senior Manager Sales Mr. Minhaj is a Bachelor in Commerce from Jinnah Government College. Mr. Minhaj is associated with AMSL since 1998 and has overall work experience of 20 years. Mr. Ansar Hussain Rizvi – Senior Manager Production Mr. Ansar Hussain Rizvi has done a Diploma of Associate Engineer (Metallurgy). Mr. Hussain is associated with AMSL since 2006 and has overall work experience of 25 years in steel industry. Mr. Rizvi is a proud SAP power user. Mr. Taha Umer – Manager Finance Mr. Taha Umer is an associate member of Institute of Chartered Accountants of Pakistan (ICAP) with an experience of more than eight years (including the article ship period with Ernst & Young Ford Rhodes Sidat Hyder & Co. Mr. Taha is associated with Amreli Steels Limited since 2012 and has been instrumental in the areas of Financial Analyses, Management Reporting, Financial Management, Financial Modeling, Budgeting & Forecasting. He has previously served as Supervisor in the Assurance and also the Risk Advisory Services group of Ernst & Young Ford Rhodes Sidat Hyder. Mr. Nazeer Ahmed – Manager Accounts Mr. Nazeer Muhammad has overall 14 years of work experience. He is an associate member of Institute of Cost & Management Accountants of Pakistan. He has been working with AMSL since 2008 and responsible for day to day affairs of accounts department and liaison with external auditors for statutory audit. Prior to joining AMSL he had worked with organizations such as the Habib Motorcycles, Hasni Hosiery and Kohinoor Tea. Mr. Abdul Latif – Manager Production - Steel Melt Shop Mr. Abdul Latif has done his BE in Metallurgy. Mr. Latif is associated with AMSL since 2010 and has overall working experience of 11 years. Mr. Latif is a proud SAP power user. Mr. Syed Hammad Ali – Manager Maintenance Mr. Syed Hammad Ali has done his BE in Mechanical and M.E in manufacturing. Mr. Hammad is associated with AMSL Since 2012 and has overall working experience of 14 years in different industry sectors.

7.6 NUMBER OF DIRECTORS Pursuant to Section 174 of the Companies Ordinance, 1984 a listed Company shall not have less than seven directors. At present the Board consists of 7 Directors, including the Chief Executive Officer.


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7.7 QUALIFICATION OF DIRECTORS No qualification shares are prescribed for becoming a director of the Company. However as per section 187 of the Ordinance, the director is to be a member of the Company. This condition does not apply to the nominee directors.

7.8 REMUNERATION OF THE DIRECTORS Pursuant to the Article 82 of the Article of Association of the Company the remuneration of a Director for performing extra services including holding of the office of Chairman and remuneration to be paid to any Director for attending the meetings of the Directors or a committee of Directors shall from time to time be determined by the Board of Directors in accordance with the law.

7.9 BENEFITS TO PROMOTERS AND OFFICERS No amount of benefits has been paid or given during the last year or is intended to be paid or given to any promoter or to any officer of the Company other than as remuneration for services rendered as whole-time executive of the Company.

7.10 INTEREST OF DIRECTORS The directors may be deemed to be interested to the extent of fees payable to them for attending Board meetings. The Directors performing whole time services in the Company may also be deemed interested in the remuneration payable to them by the Company. The nominee directors have interest in the Company to the extent of representing the sponsors in the capital of the Company.

7.11 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.

7.12 ELECTION OF DIRECTORS The Directors of the Company are elected for a term of three years in accordance with the procedure laid down in section 178 of the Ordinance. The Directors shall comply with the provisions of Sections 174 to 178 and Sections 180 and 184 relating to the election of Directors and matters ancillary thereto. Subject to the provisions of the Ordinance, the Company may from time to time increase or decrease the number of Directors. Any casual vacancy occurring on the Board of Directors may be filled up by the Directors, but the person so appointed shall be subject to retirement at the same time as if he / she had become a Director on the day on which the Director in whose place he / she is chosen was last elected as Director. The Company may remove a Director in accordance with the provisions of the Ordinance. The present Directors of the Company were elected on March 24, 2015 for the period of three years.


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7.13 VOTING RIGHTS At any general meeting, a resolution put to the vote of the meeting shall, unless a poll is demanded, be decided on a show of hands unless a poll is (before or on the declaration of the result of the show of hands) demanded. Unless a poll is so demanded, a declaration by the chairman that resolution has, on a show of hands, been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the book of the proceedings of the Company shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favor of, or against, that resolution. A poll may be demanded only in accordance with the provision of Section 167 of the Ordinance. If a poll is duly demanded, it shall be taken in accordance with the manner laid down in Section 167 of the Ordinance and the result of the poll shall be deemed to be resolution of the meeting at which the poll was demanded.

7.14 INTERNAL AUDIT

The Board of Directors has setup an effective internal audit function managed by suitable qualified and experienced personnel who are conversant with the policies and procedures of the Company and are involved in the internal audit function on a full time basis.

7.15 HUMAN RESOURCE AND REMUNERATION COMMITTEE The Company has formed a Human Resources and Remuneration Committee comprising of the following members:

Shayan Akberali

Fazal Ahmed

Khamis Abbas

Farid Ahmed

7.16 BORROWING POWERS OF DIRECTORS Subject to the provision contained in the Article of Association of the Company, the Directors may exercise all the power of the Company to borrow money and to mortgage or charge its undertaking and property or any part thereof and to issue securities and debentures whether outright or as securities for any debt, liability or obligation of the Company or of any third party.

7.17 POWERS OF DIRECTORS The business of the Company shall be managed by the Directors, who may pay all expenses incurred in promoting and registering the Company, and may exercise all such powers of the Company as are required to be exercised subject to the Ordinance, the Articles of Association of the Company and any regulations prescribed by the Company in the General Meeting.

7.18 INVESTMENT IN SUBSIDIARIES The Company has not sponsored nor acquired any subsidiaries nor has any resolution been passed for sponsoring or acquiring any subsidiaries under Section 208 of the Ordinance.


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7.19 INVESTMENT IN ASSOCIATED COMPANIES

The Company has not sponsored nor acquired any associated Company nor has any resolution been passed for sponsoring or acquiring any associated Company under Section 208 of the Ordinance.

7.20 REVALUATION OF FIXED ASSETS

The Company performed revaluation of fixed assets on June 30, 2012 through independent valuation of Anjum Adil Associates and MYK Associates (Private) Limited. As of March 31, 2015 the revaluation of fixed assets, net of deferred tax amounted to PKR 1,888,377,905/- with the revalued amounts for the fixed assets, given below:

Asset Category: Building

Revaluer MYK Associates Private Limited

Address of Revaluer MYK House, 52-A, Block 'B' Street No.5, Sindhi Muslim

Cooperative Housing Society, Karachi.

Date of Revaluation Apr-2012

Locations A-18 S.I.T.E Karachi

Amount as per Valuation Report 49,121,071

Amount as per Audited Accounts* 104,256,000

* Difference is due to addition in assets post valuation


Revaluer Anjum Adil & Associates

Address of Revaluer A-1, Hilton, G-13, Block-9, Clifton, Karachi-75600.

Date of Revaluation Nov 2011

Locations D-89 Shershah Road, Karachi



*Represent WDV value as on March 31, 2015





Date of Revaluation April 2012

Locations F-295 S.I.T.E Area Karachi



Represent WDV value as on March 31, 2015





Locations Industrial land, at Deh Gharo, Tapo

Gharo, Taluka Mirpur Sakro, District Thatta, Sindh

Amount as per Valuation Report 1,159,196,000




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Asset Category: Plant & Machinery






Amount as per Audited Accounts* 2,388,470,268

* Difference is due to addition in assets post valuation Asset Category: Vezzani Shear



Date of Revaluation 18-Apr-2012


Gharo, Taluka Mirpur Sakro, District Thatta, Sindh.




Asset Category: Plant & Machinery Revaluer Anjum Adil & Associates






Amount as per Audited Accounts* 2,812,532,523


Asset Category: Land




Date of Revaluation Apr-2012

Locations A-18 S.I.T.E Karachi


Amount as per Audited Accounts 168,075,000



Address of Revaluer A-1, Hilton, G-13, Block-9, Clifton, Karachi-75600






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Locations F-295 S.I.T.E Area Karachi







Date of Revaluation 17-Apr-2012

Locations J-14 Sindh Industrial Trading Estate

Phase ll, Super Highway, Karachi.







Locations Industrial land at Deh Gharo, Tapo




7.21 CAPITALIZATION OF RESERVES

There has been no capitalization of reserves since the incorporation of AMSL.


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PART 8 8 MISCELLANEOUS INFORMATION

8.1 REGISTERED OFFICE / CORPORATE OFFICE

Amreli Steels Limited Plot No. A-18 S.I.T.E, Karachi

8.2 PLANT ADDRESS

Amreli Steels Limited (Rolling Mill) D-89, Shershah Road S.I.T.E., Karachi Amreli Steels Limited (Steel Melt Shop Dhabeji) Industrial Land Deh Gharo, Tapo Gharo Taluka Mirpur Sakro District Thatta, Sindh

8.3 BANKER TO THE ISSUE FOR BOOK BUILDING Bank Alfalah Limited

8.4 BANKERS TO THE ISSUE 1. Askari Bank Limited 2. Bank Alfalah Limited 3. Bank Al Habib Limited 4. Dubai Islamic Bank Limited 5. Faysal Bank Limited 6. Habib Bank Limited 7. Habib Metropolitan Bank Limited 8. MCB Bank Limited 9. Samba Bank Limited 10. Silk Bank Limited 11. Soneri Bank Limited 12. Summit Bank Limited 13. United Bank Limited

8.5 BID COLLECTION CENTERS

Karachi

Contact: Ms. Eliya Hamid Syed Direct No.: +92-21-3536-0533 PABX No.: +92-21-111-253-111 Ext. 694 Fax No.: +92-21-3537-4291, +92-21-3537-3211 Email: [email protected] Postal Address:

AKD Securities Limited 6th Floor, Continental Trade Centre Block 8, Clifton, Karachi



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Contact: Mr. Imran Karim Direct No.: +92-21-32426652 PABX No.: +92-42-111-253-111 Fax No.: +92(21) 32426429 Email: [email protected] Postal Address: AKD Securities Limited

529, 533-534,5th Floor Stock Exchange Stock Exchange Road, Karachi

Lahore Contact: Mr. Ehsan Ahmad Qureshi Direct No.: +92-42-36280742-4 PABX No.: +92-42-111-253-111 Mobile No.: +92-334-411-1253 Fax No.: +92-42-3628-0745 Email: [email protected] Postal Address: AKD Trade

Room No. 512/513, 5th Floor Lahore Stock Exchange Building, Lahore

Islamabad Contact: Mr. Khalid Hussain Direct No.: +92-51-2894325 Mobile No.: +92-332-212-5525, +92-333-532-6580 PABX No.: +92-51-289-4321 Fax No.: +92-51-289-4323 Email: [email protected] Postal Address: AKD Trade

303, 3rd Floor, ISE Tower Jinnah Avenue, Blue Area, Islamabad

Peshawar Contact: Mr. Saqib Sajjad Direct No.: +92-91-526-0073 PABX No.: +92-91-528-7051-7, Ext.125 Fax No.: +92-91-528-7058 Email: [email protected] Postal Address: Bank Alfalah Limited

Peshawar Main Branch 6-B, Islamia Road, Peshawar Cantt

Quetta Contact: Mr. Saghir Ahmed Direct No.: +92-81-282-8210 PABX No.: +92-81-111-777-786, Ext. 122 Email: [email protected] Postal Address: Bank Alfalah Limited

Quetta Main Branch Property No. 2-13/4, M.A. Jinnah Road Quetta







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8.6 BANKERS TO THE COMPANY 1. Al Baraka Bank Pakistan Limited 2. Askari Bank Limited 3. Bank Alfalah Limited 4. Bank Islami Pakistan Limited 5. Bank of Khyber 6. Bank of Punjab 7. Burj Bank Limited 8. Dubai Islamic Bank Pakistan Limited 9. Faysal Bank Limited 10. Habib Bank Limited 11. Habibsons Bank Limited 12. MCB Bank Limited 13. Meezan Bank Limited 14. NIB Bank Limited 15. Soneri Bank Limited 16. Standard Chartered Bank Pakistan Limited 17. United Bank Limited

8.7 AUDITORS OF THE COMPANY Ernst & Young Ford Rhodes Sidat Hyder 601, Progressive Plaza Beaumont Road 75530 Karachi Phone: +92-21-3565-0007 Fax: +92-21-3568-1965 Email: [email protected] Website: www.ey.com

8.8 LEGAL ADVISOR OF THE COMPANY & THE ISSUE Mohsin Tayebaly & Co. | Corporate Legal Consultants | Barristers & Advocates. 1st Floor, Dime Centre, BC-4 Block-9, KDA Scheme-5, Clifton, Karachi PABX: +92-21-111-682-529 Fax: +92-21-35870240

8.9 JOINT LEAD MANAGERS & ARRANGERS

AKD Securities Limited 602, 6th Floor, Continental Trade Centre Block – 8, Clifton, Karachi PABX: +92-21-111-253-111 Ext: 694 Fax: 92-21-3537-4291 Email: [email protected] Bank Alfalah Limited Bank Alfalah Building I.I. Chundrigar Road, Karachi PABX: +92-21-111-225-111 Fax: +92-21-3242-3617 Email: [email protected]

http://www.ey.com/




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8.10 BOOK RUNNER TO THE ISSUE AKD Securities Limited 602, 6th Floor, Continental Trade Centre Block – 8, Clifton, Karachi PABX: +92-21-111-253-111 Ext: 694 Fax: 92-21-3537-4291 Email: [email protected]

8.11 COMPUTER BALLOTER & SHARES REGISTRAR THK Associates (Pvt.) Ltd Head office Karachi 2nd Floor, State Life Building-3 Dr. Ziauddin Ahmed Road, Karachi 75530, Pakistan PABX: +92 (21) 111-000-322 Fax: +92 (21)35655595 Email: [email protected]

8.12 UNDERWRITING AGREEMENTS

S.No Underwriters No. of Shares Date of

Agreement

Total

8.13 DUE DILIGENCE REPORTS

S.No Underwriters Date of Agreement

8.14 MATERIAL CONTRACTS & DOCUMENTS

8.14.1 Details of Short-term Financing Facility

Funded Facilities - Short Term

Bank Facility Limit Mark up

Commission Date of

Agreement Expiry /

Review Date

Bank Alfalah Ltd.

Agreement for financing for short/medium/long term on mark-up basis (FATR)(LC-Sight)

PKR 500 Million 3M Kibor + 1.25% 27-Jun-14 31-Aug-15

Standard Chartered Bank Pakistan Ltd.

Loans against Trust Receipt (LATR) (LC-Sight)

PKR 500 Million 6M Kibor + 1.25% 1-Nov-14 31-Oct-15

Al Baraka Bank Pakistan Ltd.

General finance and collateral agreement (Murabaha) (LC-Sight)

PKR 500 Million Relevant K + 1.25% 7-July-15 One year

revolving line



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United Bank Ltd. Agreement for financing on Mark-up basis (FATR) (LC-Sight)

PKR 475 Million

1M Kibor + 1.25%

9-Sept-14 9-Sept-15

Meezan Bank Ltd. Master Murabaha facility agreement (FIM) (LC-Sight)

PKR 350 Million Relevant K + 1.25% 19-Jan-15 One year

revolving line

MCB Bank Ltd.

Agreement for financing for short/medium/long term on mark-up basis (FIM) (LC-Sight)

PKR 200 Million 3M Kibor + 1.25% 30-Jun-15 31-Aug-15

Askari Bank Ltd. Agreement for financing on Mark-up basis (FATR) (LC-Sight)

PKR 200 Million 3MK + 1.25% 28-Feb-14 28-Feb-17

Habib Bank Ltd.

Agreement for financing on Mark-up basis

- FIM(LC-Sight) - STDF - RF

PKR 400 Million PKR 200 Million PKR 100 Million

1MK + 1.50% 1MK + 1.50% 1MK + 1.50%

11-Jan-15 1-Mar-15 6-Jan-15

One year revolving line

NIB Bank Ltd.

Agreement for financing on Mark-up basis (FATR) (LC-Sight)

PKR 500 Million 3M Kibor + 1.50% 03-Feb-15 31-Mar-16

Dubai Islamic Bank Pakistan Ltd.

Master Murabaha Agreement (LC-Sight)

PKR 400 Million Relevant K + 1.70% 20-Nov-12 20-Nov-15

Bank Islami Pakistan Limited

Main Murhaba facility agreement(LC-Sight)

PKR 250 Million Relevant K + 1.75% 20-Jan-15 31-Dec-15

8.14.2 Details of Long-term Financing Facility

Funded Facilities - Long Term


Commission Date of

Agreement Expiry /

Review Date

United Bank Ltd Term Loan PKR 1,540 Million 6M Kibor + 1.50% 26-Jun-15 28-Feb-20

Habibsons Bank Ltd – UK

Term Loan USD 20 Million 3M Libor + 1.50% 25-Oct-10 08-Dec-16

Dubai Islamic Bank Pakistan Ltd

Term Loan PKR 400 Million 3M Kibor + 1.75% 25-Jun-14 25-Jun-19

MCB Bank Ltd Demand Finance PKR 200 Million 3M Kibor + 1.75% 25-June-14 25-June-19

Pak Oman Investment Co. Ltd.

Term Finance PKR 200 Million Relevant K + 1.75% 22-April-14 22-April-19

Burj Bank Ltd Musharakah Agreement PKR 200 Million 6M Kibor + 1.75% 14-May-14 14-May-19

Soneri Bank Ltd Loan Agreement PKR 200 Million 6M Kibor + 1.75% 24-Jun-14 24-Jun-19

Faysal Bank Ltd Sukkuk PKR 880 Million 3M Kibor + 2.50% 09-Dec-09 09-Dec-16

Habib Bank Ltd Term Finance PKR 500 Million 6M Kibor + 2.65% 28-Dec-10 16-Aug-17*

*Five year loan from date of disbursement.


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8.14.3 Details of Non-Funded Facilities

Non Funded Facilities


Commission Date

sanctioned Expiry /

Review Date

Habib Bank Ltd

Letter of Credit – Sight LC Sight – Machinery Guarantees

PKR 100 Million

PKR 50 Million

PKR 15 Million

0.15% P.Q.

0.15% P.Q.

0.15% P.Q.

16-Feb-15 30-Nov-15

Bank Islami Pakistan Limited

Letter of Guarantee PKR 34.71 Million As per SOC 05-May-15 31-Dec-15

8.15 COMPANY RELATED AGREEMENTS

Nature of the Agreement Party to the Agreement Date

Contract for supply of Liquid Oxygen at Dhabeji Linde Pakistan formerly

BOC Pakistan Limited August 06, 2010

Contract for Sanction of Load of 19.8 MW at 132 KV voltage level for Steel Melt Shop located at Dhabeji

K-Electric formerly KESC December 04, 2008

Contract for extension of loan from 19.8 MW to 28 MW K-Electric formerly KESC August 26, 2011

Contract for loading & unloading of Steel Scrap at Steel Melt Shop located at Dhabeji

M.Y. Khan Civil & Mechanical Contractors

October 01, 2014

Agreement for design and implementation of SAP project Abacus Consulting Technology (Pvt.)

Limited December 05, 2014

Contract for project design and engineering for the new rolling mill at Dhabeji

Korus Engineering Solutions (Pvt.) Limited

September 23, 2014

Supply of Rolling Mill Machinery Primetals Technologies

Italy S.r.l. July 27, 2015

8.16 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 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.

8.17 LEGAL PROCEEDINGS

There are ordinary litigations incidental to the business, to which the Company is a party. However, none of them have any material impact except for the matters disclosed below: SUIT NO. 2016 OF 2014 Ranyal Textile and Others VS Federation of Pakistan and Others This is a suit filed by the Company as plaintiff no. 2 before the High Court of Sindh challenging the Gas Infrastructure Development Cess Ordinance, 2014 and pending disposal of the suit, restraining the defendants from issuing any bill or raising / collecting any demand in relation to the Gas Infrastructure Development Cess. The Court has granted interim relief restraining


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the defendants from charging cess over and above PKR 13.00/- per MMBTU from the Company. The matter is pending for hearing of the applications. SUIT NO. 1499 OF 2014 Siddiqsons Limited and Others VS Federation of Pakistan and Others This is a suit filed by the Company being a natural gas consumer before the High Court of Sindh as plaintiff no. 19 challenging the levy of cess imposed under Gas Infrastructure Development Cess Act, 2011 and subsequent amendments made therein to enhance the rates through Finance Act 2012 and Finance Act 2014, seeking refund of amounts and rendition of accounts besides declaration and injunction. The Court has granted interim relief restraining the defendants from charging cess over and above PKR 13.00/- per MMBTU from the Company. The matter is pending for hearing of the applications. SUIT NO. 971 OF 2012 Standard Board (Pvt.) Limited and Others VS Federation of Pakistan and Others This is a suit filed by the Company being a natural gas consumer before the High Court of Sindh as plaintiff no.3 challenging the levy of cess imposed under Gas Infrastructure Development Cess Act, 2011 and the revision of rates of cess through Finance Act 2012, seeking refund of amounts and rendition of accounts besides declaration and injunction. The Court has granted interim relief restraining the defendants from charging cess over and above PKR 13.00/- per MMBTU from the Company. The matter is pending for arguments after hearing of the applications. REFERENCE NO. 14 OF 2012 State VS Sameen Asghar and Others This is a reference filed at Accountability Court No. 1V by NAB alleging Pakistan Steel Mill of extending unlawfully a free credit facility for 90 days to all its dealers and buyers across Pakistan in 2008- 2009 (on Deferred LC) and alleging Amreli Steels Limited along with other buyers to have taken undue advantage of the free credit facility. On an application moved by AMSL, the Honourable High Court Sindh directed vide its orders dated April 19, 2010 to deposit PKR 12.750 Million with Pakistan Steel Mill as security amount, with further directions to Pakistan Steel Mill to invest the amount in profit bearing Government Securities pending disposal of the suit/reference.

The matter is pending for hearing of the applications since the last 5 years. REFERENCE NO. 22 OF 2012 State VS Moin Aftab Shaikh and Others This is a reference filed at Accountability Court No. 1V by NAB alleging the Price Fixation Committee of Pakistan Steel Mill of reducing its product’s prices unauthorisedly and unlawfully, and alleging scores of consumers and dealers of Pakistan Steel Mills across Pakistan to have taken undue advantage of the reduced price.

The matter is pending for hearing of the applications since the last 5 years.


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8.18 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.

8.19 FINANCIAL YEAR OF THE COMPANY

The financial year of the Company commences on 1st July and ends on 30th June each year.


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PART 9

9 APPLICATION AND ALLOTMENT INSTRUCTIONS

9.1 Eligible investors include:

a. Pakistani citizens resident in or outside Pakistan or Persons holding two nationalities

including Pakistani nationality; b. Foreign Nationals whether living in or outside Pakistan c. Companies, bodies corporate or other legal entities incorporated or established in or

outside Pakistan (to the extent permitted by their constitutive documents and existing regulations, as the case may be);

d. Mutual Funds, Provident / Pension / Gratuity Funds / Trusts, (subject to the terms of the Trust Deed and existing regulations); and

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

9.2 APPLICATION MUST BE MADE ON THE COMPANY’S PRINTED FORM 9.2.1 Copies of this Prospectus and applications forms can be obtained from members of KSE, the

Bankers to the Issue and their Branches, the Joint Lead Managers, Arrangers & the Book Runner, and the registered office of the Company. The Prospectus and the Application Form can also be downloaded from the following websites:

www.bankalfalah.com, www.akdsecurities.net, www.amrelisteels.com

The applicants opting for scrip-less form of shares are required to complete the relevant sections of the application. In accordance with the provisions of the Central Depositories Act, 1997 and the CDCPL Regulations, credit of such shares is allowed ONLY in the applicant’s own CDC account. In case of discrepancy between the information provided in the application form and the information already held by CDS, the Company reserves the right to issue shares in physical form.

9.2.2 Name(s) and address(es) must be written in full block letters, in English and should not be

abbreviated. 9.2.3 All applications must bear the name and signature corresponding with that recorded with the

applicant's banker. In case of difference of signature with the bank and Computerized National Identity Card (CNIC) or National Identity Card for Overseas Pakistanis (NICOP) or Passport both the signatures should be affixed on the application form.

9.3 APPLICATIONS MADE BY INDIVIDUAL INVESTORS

(i) In case of Individual Investors, an attested photocopy of CNIC (in case of Resident

Pakistanis) / NICOP or Passport (in case of Non-Resident Pakistanis) as the case may be, should be enclosed and the number of CNIC / NICOP / Passport should be written against the name of the applicant. Copy of these documents can be attested by any Federal / Provincial Government Gazette Officer, Councilor, Oath Commissioner or Head Master of High School or bank manager in the country of applicant's residence.

(ii) Original CNIC / NICOP / Passport, along with one attested photocopy, must be produced

for verification to the Banker to the Issue and the applicant’s banker (if different from the

http://www.bankalfalah.com/




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Banker to the Issue) at the time of presenting the application. The attested photocopy will, after verification, be retained by the bank branch along with the application.

9.4 APPLICATIONS MADE BY INSTITUTIONAL INVESTORS

(i) Applications made by companies, corporate bodies, mutual funds, provident / pension /

gratuity funds / trusts and other legal entities must be accompanied by an attested photocopy of their Memorandum and Articles of Association or equivalent instrument / document. Where applications are made by virtue of Power of Attorney, the same should also be submitted along with the application. Any Federal / Provincial Government Gazette Officer, Councilor, Bank Manager, Oath Commissioner and Head Master of High School or bank manager in the country of applicant's residence can attest copies of such documents.

(ii) Attested photocopies of the documents mentioned in 9.4(i) must be produced for

verification to the Banker to the Issue and the applicant's banker (if different from the Banker to the Issue) at the time of presenting the application. The attested copies, will after verification, be retained by the bank branch along with the application.

9.5 Only one application will be accepted against each account, however, in case of joint

account, one application may be submitted in the name of each joint account holder.

9.6 Joint application in the name of more than two persons will not be accepted. In case of joint application each applicant must sign the application form and submit attested copies of their CNICs / NICOP / Passport. The share certificates will be dispatched to the person whose name appears first on the application form while in case of CDS, it 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.

9.7 Subscription money must be paid by cheque drawn on applicant's own bank account or pay order / bank draft payable to one of the Bankers to the Issue “IPO of Amreli Steels Limited” and crossed “A/C PAYEE ONLY”.

9.8 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.

9.9 The applicant should have at least one bank account with any of the commercial banks. The

applicants not having a bank account at all (non-account holders) are not allowed to submit application for subscription of Shares.

9.10 Applications are not to be made by minors and / or persons of unsound mind.

9.11 Applicants should ensure that the bank branch, to which the application is submitted, completes the relevant portion of the Application Form.

9.12 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.


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9.13 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.

9.14 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.

9.15 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.

9.16 Submission of false and fictitious applications is prohibited and such applications’ money may be forfeited under section 87(8) of the Securities Act, 2015.

9.17 ADDITIONAL INSTRUCTIONS FOR FOREIGN / NON-RESIDENT INVESTORS

a) 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.

b) Applicants may also subscribe using their Special Convertible Rupee Account (SCRA) as set out under the State Bank of Pakistan's Foreign Exchange Manual.

9.18 BASIS OF ALLOTMENT

The basis and conditions of transfer of shares to the General Public shall be as follows:

a) The minimum amount of application for subscription of 500 Shares is PKR [X]/-. Application for Shares below the total value of PKR [X]/- shall not be entertained.

b) Application for Shares must be made for 500 Shares or in multiple thereof only.

Applications, which are neither for 500 Shares nor for multiple thereof, shall be rejected.

c) Allotment / Transfer of Shares to successful applicants shall be made in accordance

with the allotment criteria / instructions disclosed in the Prospectus.

d) 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.

e) Applications, which do not meet the above requirements, or applications which are

incomplete will be rejected. The applicants are, therefore, required to fill in all data fields in the Application Form.

f) The Company will dispatch Shares to successful applicants through their Bankers to

the Issue or credit the respective CDS accounts of the successful applicants (as the case maybe).


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9.19 E-IPO Facilities In order to facilitate the investors, the Issuer has arranged provision of e-IPO facility through United Bank Limited (“UBL”) that is among the Bankers to the Issue. The accountholders of UBL can use UBL net-banking to submit their applications online via link:


The accountholders of UBL can submit their applications through these links 24 hours a day during the subscription period which will close at 12:00 midnight on October 29, 2015

9.20 BANKERS TO THE ISSUE

Code No. Banks

01 Askari Bank Limited

02 Bank Alfalah Limited

03 Bank Al Habib Limited

04 Dubai Islamic Bank Limited

05 Faysal Bank Limited

06 Habib Bank Limited

07 Habib Metropolitan Bank Limited

08 MCB Bank Limited

09 Samba Bank Limited

10 Silk Bank Limited

11 Soneri Bank Limited

12 Summit Bank Limited

13 United Bank Limited

9.21 CODE OF OCCUPATION

Code No. Occupation Code No. Occupation

01 Business 06 Professional

02 Business Executive 07 Student

03 Service 08 Agriculturist

04 Housewife 09 Industrialist

05 Household 10 Others

9.22 NATIONALITY CODE

Code No. Name of Country Code No. Name of Country

001 U.S.A 006 Bangladesh

002 U.K 007 China

003 U.A.E 008 Bahrain

004 K.S.A 009 Other

005 Oman



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PART 10

10 REGISTRATION FORM & BIDDING FORMS OF AMRELI STEELS LIMITED


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96


97


98


99


100


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PART 11

11 SIGNATORIES TO THE PROSPECTUS

Abbas Akberali -Sd-

Badar Kazmi -Sd-

Zafar Ahmed Taji -Sd-

Mirza Qamar Beg -Sd-

Shayan Akberali -Sd-

Kinza Shayan -Sd-

Mariam Akberali -Sd-

Signed by the above in the presence of witnesses:

-Sd- -Sd-

______________________________ ______________________________ Name: Taha Umer Name: M. Salman CNIC: 42201-2415927-1 CNIC: 42101-6249553-3 Address: Karachi, Pakistan Address: Karachi, Pakistan Date: June 15, 2015 Date: June 15, 2015


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PART 12

12 MEMORANDUM OF ASSOCIATION


103


104


105


106


107


108

PART 13

13 APPLICATION FORM


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amreli steel - final prospectus

Documents

bank alfalah limited

united bank limited

amreli steels limited

akd securities limited

issue price of pkr

total issue

post issue

book building portion