MERGER / AMALGAMATION

of

with and into

Karim Silk Mills Limited

Ghani Chemical Industries Limited

Notice of Extra-Ordinary General Meetingof

Ghani Chemical Industries Limited

Notice is hereby given that Extra Ordinary General Meeting (EOGM) of Ghani Chemical Industries Limited (the Company) will be held at its registered ofce 10-N, Model Town Ext., Lahore, on Wednesday June 09, 2021 at 11:00 A.M. to transact the following special business:

A. Special Business

To consider and approve the Scheme of Compromise, Arrangement and Reconstruction (the Scheme) for the merger and amalgamation of Karim Silk Mills Limited (KSML) with and into the Company (Ghani Chemical Industries Limited), in accordance with the Application/Petition Under Sections 279 to 283 and 285 of the Companies Act, 2017 moved by the Company and KSML in the Sindh High Court, Karachi in JCM 37 of 2007, by passing the resolution as proposed in the Statement Under Section 281 of the Companies Act, 2017 (“Act”) read with Statement of material facts Under Section 134(3) of the Act annexed to the notice of EOGM.

Notes:The shares transfer books of the Company will close from June 01, 2021 to June 08, 2021 (both days inclusive).1.

By order of the Board of Directors

Lahore:Dated: May 18, 2021

Farzand AliCompany Secretary

A member entitled to attend, speak and vote at the EOGM is entitled to appoint a proxy to attend, speak and vote instead of him/her. Proxies in order to be effective dully signed, lled and witnessed must be deposited at the registered ofce of the Company, situated at 10-N, Model Town Ext., Lahore, along with the attested copies of valid Computerized National Identity Card (CNIC) or Passport, not less than 48 hours before the meeting.

2.

Statement under section 281 of the Companies Act, 2017 read with Statement of material facts under Section 134(3) of the Act (the Statement) setting forth, inter alia, the terms of the Compromises, Arrangements and Reconstruction and explaining its effect, along with a copy of Scheme of Compromises, Arrangements and Reconstruction (the Scheme) is annexed with the notice of EOGM.

3.

Copies of the Scheme and the Statement can also be obtained, free of charge from the Registered Ofce.

Notice of EOGM with Statement and Merger Scheme is placed at Company's website i.e. www.ghaniglobal.com4.

A proxy form is attached with the Notice of EOGM.5.

STATEMENT UNDER SECTION 281 (1) (A) READ WITH SECTION 134(3) OF THE COMPANIES ACT, 2017

This Statement set out the material facts concerning the special business to be transacted at the EOGM of Ghani Chemical Industries Limited (the Company/ GCIL) and the terms of the Scheme of Compromises, Arrangements and Reconstruction (the Scheme) and explains its effect including the interest of the directors/ chief executive of the Company.

1. THE SCHEME:

Karim Silk Mills Limited (KSML) was incorporated on 23rd July, 1962 and its shares were quoted in Pakistan Stock Exchange Limited (PSX). The registered ofce of KSML is situated at 14/E, Writers Chamber, Mumtaz Hassan Road, Karachi. The KSML was formed to carry out its Principal activity of manufacturing and sale of fabric including processing of fabric. It suspended its operations in the year 1999 when it sold all its proper ty and assets in December 1999 and settled its total liabilities. The PSX suspended trading in the shares of the KSML on October 02, 2000 and the Company is delisted from Pakistan Stock Exchange Limited (PSX) with effect from March 26, 2012, which is persisting. In view of the above, a petition No. JM-37 was led by Securities and Exchange Commission of Pakistan for winding up of the company and the Honorable High Court of Sindh then passed an order dated October 10, 2008 appointing Ofcial Assignee as Ofcial Liquidator of the

GHANI CHEMICAL INDUSTRIES LIMITEDNOTICE OF EXTRA-ORDINARY GENERAL MEETING

company for winding it up. The majority shareholders of KSML have since been making concerted efforts without success for reviving the company.

GCIL has presented a draft Scheme of Compromise, Arrangement and Reconstruction for the merger, by way of amalgamation, of Karim Silk Mills Limited (KSML) with and into the Company. Simultaneously the CEO/majority shareholder of the KSML and the Company has led an Application/Petition under Sections u/s.279 to 283 and 285 of the Companies Act, 2017 in the High Court in JCM 37 of 2007. GCIL has led an application under Order 1 Rule 10 CPC to become a party to the proceedings in JCM 37 of 2007.

The Liquidator has by its Reference No. 8 of 2020 submitted its No Objection to the Scheme to the Hon'ble High Court in JCM 37 of 2007 for its approval. The SECP and PSX have given their conditional No objections in terms that the Company to seek removal of winding up order, compliance of Regulation 5.1.1 of the PSX Regulations so that PSX restore listing of the KSML and to comply SECP regulations including ling of pending auditing accounts for the periods 2015 to 2020, holding of pending Annual General Meetings for the period 2105 to 2020.

Subject to the sanction of the Honourable High Court of Sindh at Karachi (the Court), under the Scheme of Arrangement (the “Scheme of Arrangement”), Karim Silk Mills Limited (KSML) shall be merged / amalgamated with and into Ghani Chemical Industries Limited (GCIL) by transfer to and vesting in GCIL the whole of the undertaking and business of the KSML, together with all the properties, assets, rights, liabilities, quotas and obligations of every kind and description, as subsisting on July 01, 2020 or at such other date as may be sanctioned by the Court.

In consideration for the merger, shares of GCIL shall be issued to the Shareholders, being the registered shareholders of the KSML in the manner contemplated under the Scheme of Arrangement. Furthermore, all existing shares of the KSML shall stand cancelled. Subsequent to the sanction of the Scheme of Arrangement, the ordinary shares of GCIL are to be listed on the Pakistan Stock Exchange Limited, subject to compliance, by GCIL, with the applicable laws and fulllment of the necessary procedural and documentary requirements.

2. APPROVAL OF THE SCHEME:

Majority shareholders of the KSML and board of directors of GCIL have approved the Scheme. The resolution specied in this statement (being integral part of notice of AGM of the Company) has to be passed by the three fourth majority of the shareholders of the Company in the general meeting of the Company. Notice of AGM along with Statement under section 282 (1) (a) read with section 134 (30 of the Act, is being presented to members of the Company for consideration, adopting and approving the Scheme. The sanctioning of the Scheme and the making of other appropriate orders in connection therewith will be considered by the Honourable Court after members have approved the Scheme.

3. PROPOSED DRAFT RESOLUTION:

The following resolutions as special resolution are proposed to be passed by members of the Company, with or without modications, additions, or deletions to approve the Scheme:

“RESOLVED THAT subject to sanction by the Honourable Sindh High Court, Karachi, the Scheme of Compromises, Arrangements and Reconstruction (the Scheme) for the merger, by way of amalgamation, of Karim Silk Mills Limited (KSML) with and into Ghani Chemical Industries Limited (GCIL/ Company), along with all ancillary matters thereto, as placed before the Annual General Meeting of Ghani Chemical Industries Limited be and is hereby agreed, approved and adopted subject to any modication(s) or conditions as may be required by the Honourable Sindh High Court, Karachi.”

“FURTHER RESOLVED THAT Mr. Haz Farooq Ahmad, Chief Executive Ofcer and Mr. Farzand Ali, Company Secretary of the Company are singly authorized to make any amendment, modication, addition or deletion to the Scheme as may be directed by the Securities Exchange Commission of Pakistan (SECP) and/ or the Court or as may otherwise be considered expedient and such amendment, modication, addition or deletion shall be deemed to be have been approved as part of the special resolution without need of members to pass a fresh Special Resolution.”

4. FLING OF THE SCHEME:

A copy of the Scheme has been led with the Registrar, Company Registration Ofce, Securities and Exchange Commission of Pakistan, Lahore.

Ghani Chemical Industries Limited (GCIL)

“FURTHER RESOLVED THAT Mr. Haz Farooq Ahmad, Chief Executive Ofcer and Mr. Farzand Ali, Company Secretary of the Company are singly authorized to do all such acts, deeds, matters and things, as may be deemed necessary, proper or expedient for the purpose of giving effect to the aforementioned Resolutions on behalf of the Company in relation to the foregoing and to further sub-delegate any or all of his powers hereunder.”

5. PROPOSED TERMS:

The proposed terms of the Scheme drawn up and adopted by the majority shareholders of the KSML and Board of Directors of GCIL are contained in the Scheme enclosed herewith.

6. EFFECTS OF THE SCHEME:

On sanction of the Scheme by the Cour t, the KSML's entire assets, liabilities and entitlements including listing status will stand transfer to the GCIL and the KSML will wind up without liquidation.

7. SWAP RATIO

Pursuant to the Scheme, as consideration for the said transfers, GCIL shall issue at par and allot to the individual members of KSML one fully paid-up ordinary share of the par value of Rupees 10 each in the capital of GCIL for every two ordinary shares of Rupees 10 each held by them in the capital of KSML, as on a day to be xed by the Board of Directors of GCIL following the effective date.

8. FINANCIAL STATEMENTS

In compliance with Section 282 (2) (e) of the Companies Act, 2017, audited nancial statements (Balance Sheet and Prot and Loss Account) of the Company for the half year ended December 31, 2020 are attached herewith.

9. BUSINESS

GCIL is one of the largest manufacturer of industrial and medical gases having three state-of-the-art 110TPD ASU plants, out of which two are located in Phool Nagar, District Kasur and one at Port Qasim, Karachi. To meet the increased demand of industrial and medical gases, the company is setting up 4th 110TPD ASU plant in Port, Qasim, Karachi.

Karim Silk Mills Limited (KSML)

The Company was formed to carry out its Principal activity of manufacturing and sale of fabric including processing of fabric. It suspended its operations in the year 1999 and it sold all its property and assets in December 1999 and settled its total liabilities. Pakistan Stock Exchange (PSX) suspended trading in the shares of the Company on October 02, 2000 and the Company was delisted from Stock Exchange with effect from March 26, 2012 on appointment of liquidator by the Honourable Sindh High Court, Karachi.

10. BENEFITS OF THE SCHEME

The proposed merger/amalgamation of KSML with and into GCIL will rationalize business structure, combine the assets of the two companies and their members. This will also result in reducing cost of doing business, cutting down the reporting requirements, effective tax management to operational efciency and better protability in future. The shareholders of KSML will greatly benet from the merger / amalgamation, as they have not received any return for the past several years. Through this merger/ amalgamation, the KSML will be revived and shareholders of GCIL will get the benet of listing.

11. INTEREST OF DIRECTORS/ CHIEF EXECUTIVE/ MAJORITY SHAREHOLDERS

All the directors/ Chief Executive and majority shareholders of the Company interested in special resolutions to the extent of shares held by them. They have no other interest in the above special business and/ or resolution except as stated above and to the extent of their shareholdings.

12. FINANCIAL POSITION - PRE & POST MERGER

Balance sheet of GCIL & KSML as on December 31, 2020, the post-merger nancial position of GCIL as at January 01, 2021 based on Audited Accounts of the merging entities for the period ended December 31, 2020 are annexed hereto.

Financial Position

Lahore:Dated: May 18, 2021

By order of the Board of Directors

Farzand AliCompany Secretary

NOTE: During February 2021, share capital of Ghani Chemical Industries Limited increased from Rs. 1,150,000,000 to Rs. 1,535,250,000.

Ghani Chemical

Industries Limited

Karim Silk Mills

Limited

Ghani Chemical

Industries Limited

RupeesAssets

Non Current Assets

Property Plant & Equipments 3,959,004,000 3,959,004,000

Right of use assets 26,835,000 26,835,000

Intangible Assest 7,156,000 7,156,000

Investments 75,000 75,000

Long-term deposits 63,919,000

-

-

-

-

- 63,919,000

4,056,989,000 0 4,056,989,000

Current assets

Goodwil - - (4,875,000)

Stores, spares and loose tools 211,682,000 - 211,682,000

Stock in trade 66,258,000 - 66,258,000

Trade debts 606,251,000 - 606,251,000

Loans and advances 142,132,000 - 142,132,000

Deposits, prepayments and other

receivables 74,083,000 - 74,083,000

Tax refunds due from government 4,542,000 - 4,542,000

Advance income tax 337,397,000 - 337,397,000

Cash and bank balances 69,260,000 4,159 69,264,159

1,511,605,000 4,159 1,506,734,159

Total Assets 5,568,594,000 4,159 5,563,723,159

Equity and Liabilities

Share Capital and

Authorized share capital 1,600,000,000 10,000,000 1,610,000,000

Share Capital 1,150,000,000 9,750,000 1,154,875,000

Accumulated Loss - (9,745,841) (9,745,841)

Share premium 913,951,000 - 913,951,000

Shares Deposit Money 2,345,000 - 2,345,000

Loan From Directors 364,080,000 - 364,080,000

Unappropraited Prots 8,134,000 - 8,134,000

2,438,510,000 4,159 2,433,639,159

Non-Current Libilities

Long term nancing 556,249,000 - 556,249,000

Redeemable capital - Sukuk 487,500,000 - 487,500,000

Long term security deposits 50,397,000 - 50,397,000

Lease Liabilities 5,024,000 - 5,024,000

Deferred Liabilities 265,479,000 - 265,479,000

1,364,649,000 - 1,364,649,000

Current liabilities

Trade and other payables 313,278,000 - 313,278,000

Accrued prot 35,640,000 - 35,640,000

Short term borrowings 1,083,139,000 - 1,083,139,000

Current portion of long term

liabilities 275,854,000 - 275,854,000

Taxation 57,524,000 - 57,524,000

1,765,435,000 - 1,765,435,000

Total Libailities 3,130,084,000 - 3,130,084,000

Total Equity and Liabilities 5,568,594,000 4,159 5,563,723,159

Rupees

Post Merger

January 01, 2021

Pre Merger

December 31, 2020 (Audited)

Rupees

Folio No. ___________________

No. of Shares ________________

I / We ______________________________________________________________________________

of _______________________________________________________________________________

being member(s) of GHANI CHEMICAL INDUSTRIES LIMITED _____________________________

____________________________________________hereby appoint ______________________________

of ________________________________________________________________________________

failing him __________________________________________________________________________

Signed this day of , 20________ ________________ 21. Sign by the said Member Signed in the presence of; 1. Signature: 2. Signature: Name: Name: Address: Address: CNIC/Passport No. CNIC/Passport No.

Affix Revenue Stamp

as my / our proxy to attend, act and vote for me/ us on my/ our behalf at Extra-Ordinary General Meetings of the members of the Company to be held at 10-N, Model Town Ext., Lahore on June 09, 2021 at 11:00 A.M. and at any adjournment(s) thereof.

GHANI CHEMICAL INDUSTRIES LIMITED

FORM OF PROXY

EXTRA-ORDINARY GENERAL MEETING