hascol petroleum limited preliminary … · askari bank limited kasb bank limited bank alfalah...

HASCOL PETROLEUM LIMITED

PRELIMINARY PROSPECTUS

THIS ISSUE CONSISTS OF 25,000,000 ORDINARY SHARES (27.59% OF THE POST ISSUE PAID UP CAPTAIL OF HASCOL PETROLEUM LIMITED) OF FACE VALUE OF PKR 10/‐ EACH

BOOK BUILDING PORTION OF THE ISSUE COMPRISES OF 18,750,000 ORDINARY SHARES (75% OF THE ISSUE) AT A FLOOR PRICE OF PKR 20/‐ PER SHARE (INCLUSIVE OF A PREMIUM OF PKR 10/‐ PER SHARE)

GENERAL PUBLIC PORTION OF THE ISSUE COMPRISES OF 6,250,000 ORDINARY SHARES (25% OF THE ISSUE) AT AN ISSUE PRICE OF PKR XX/‐ per share (INCLUSIVE OF A PREMIUM OF PKR XX/‐ PER SAHER)

BIDDING PERIOD DATES: From March 4, 2014 to March 5, 2014 (BOTH DAYS INCLUSIVE) FROM 9:00 A.M. TO 5:00 P.M.

DATE OF PUBLIC SUBSCRIPTION: FROM MM/DD/2014 TO MM/DD/2014 (BOTH DAYS INCLUSIVE) DURING BANKING HOURS

JOINT LEAD MANAGERS & ARRANGERS

BOOK RUNNER

BANKERS TO ISSUE Askari Bank Limited KASB Bank Limited Bank Alfalah Limited MCB Bank Limited Faysal Bank Limited Silk Bank Limited Habib Bank Limited Summit Bank Limited Habib Metropolitan Bank Limited United Bank Limited*

*In order to facilitate investors, United Bank Limited “UBL” is offering electronic submission of application (e‐IPO) to its accountholders. 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 MM DD, 2014.

BOOK BUILDING PORTION UNDERWRITTEN BY:

AKD Securities Limited

GENERAL PUBLIC PORTION UNDERWRITTEN BY: (TO BE FILLED IN WITHIN 10 WORKING DAYS OF CLOSING OF BIDDING PERIOD I.E. BEFORE SUBMISSION OF APPLICATION TO THE EXCHANGE FOR ALLOCATION OF DATES FOR PUBLICATION OF THE FINAL PROSPECTUS AND SUBSCRIPTION OF SHARES BY THE GENERAL PUBLIC AS REQUIRED UNDER CLAUSE 6 OF APPENDIX – 4 OF THE LISTING REGULATIONS OF KARACHI, LAHORE, AND ISLAMABAD STOCK EXCHANGE.)

The date of publication of this Prospectus is MM DD, 2014

For further queries you may contact: Hascol Petroleum Limited – Mr. Mohammad Ali Ansari; Phone: +92‐21‐111‐757‐757 Ext: 444; E‐mail: [email protected] AKD Securities Limited – Mohammad Yasir Khan; Phone: +92‐21‐111‐253‐111 Ext: 628; Email: [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 5.7 BEFORE MAKING ANY INVESTMENT DECISION.

SUBMISSION OF FICTITIOUS AND MULTIPLE APPLICATIONS (MORE THAN ONE APPLICATIONS BY SAME PERSON) IS PROHIBITED AND SUCH APPLICATIONS’ MONEY IS LIABLE TO CONFISCATION UNDER SECTION 18A OF THE SECURITIES AND

EXCHANGE ORDINANCE, 1969

ADVICE FOR INSTITUTIONAL INVESTORS AND HIGH NETWORTH INDIVIDUAL INVESTORS A SINGLE INVESTOR CANNOT SUBMIT MORE THAN ONE BIDDING APPLICATIONS EXCEPT IN THE CASE OF REVISION OF BID. IF AN INVESTOR SUBMITS MORE THAN ONE BIDDING APPLICATIONS THEN ALL SUCH APPLICATIONS SHALL BE SUBJECT TO REJECTION.

PreliminaryProspectus–HascolPetroleumLimited

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Statements on Issuer’s Absolute Responsibility:

The Issuer, having made all reasonable inquiries, accepts responsibility for the disclosures made in this Prospectus and confirms that: this Prospectus contains all necessary information with regard to the Issuer and the Issue,

which is material in the context of the issue and nothing has been concealed;

the information contained in the Prospectus is true and correct to best of our knowledge and belief;

the opinions and intentions expressed herein are honestly held; and

there are no other facts, the omission of which make this prospectus as a whole or any part

thereof misleading.

For and on behalf of the Issuer Hascol Petroleum Limited:

S/d ______________________ Mumtaz Hasan Khan Chief Executive Officer


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GLOSSARY OF TECHNICAL TERMS

AKDS AKD Securities Limited

AHLN Avais Hyder Liaquat Nauman Chartered Accountants

BR Book Runner

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

CF Company Financed

CNIC Computerized National Identity Card

Collection Bank Summit Bank Limited

Commission / SECP Securities and Exchange Commission of Pakistan

Company / HPL / Issuer Hascol Petroleum Limited

CRO Company Registration Office

FED Federal Excise Duty

GoP Government of Pakistan

HNWI High Net Worth Individual

HSD High Speed Diesel

HSFO High Sulphur Furnace Oil

IPO Initial Public Offering

IPP Independent Power Producer

Issue Initial Offering of Shares by the Company

ITO Income Tax Ordinance, 2001

KSE Karachi Stock Exchange Limited

LSE Lahore Stock Exchange Limited

ISE Islamabad Stock Exchange Limited

MDF Mid‐Dealer Financed

MS Motor Spirit

MT Metric Ton

NICOP National Identity Card for Overseas Pakistanis

NRL National Refinery Limited

OCAC Oil Companies Advisory Committee

OMC Oil Marketing Company

Ordinance Companies Ordinance, 1984

PAPCO Pak – Arab Pipeline Company Limited

PAIR Pak – Iran

PKR or Rs. Pakistan Rupee(s)

POL Products Petroleum, Oil & Lubricant Products

PRL Pakistan Refinery Limited

SCRA Special Convertible Rupee Account

TDF Total Dealer Financed

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 offer price and the number of shares applied for

Bid An indication to make an offer during the bidding period by a bidder to subscribe to the Ordinary Shares of Hascol Petroleum Limited at or above the floor price, including all the revisions thereto

Bidder Any eligible prospective investor who makes a bid

pursuant to the terms of the Preliminary Prospectus and the Bidding Form

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 Centre Pre‐determined places where applications for

bidding of shares are collected by the Book Runner on behalf of the Issuer and may include offices of Corporate Brokerage Houses, Schedule Banks, Development Financial Institutions and Investment Finance Companies, 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 at Para 2.5(b) (xv).

Bidding Form The form prepared by the Issuer for the purpose

of making bids which will be considered as the application for subscription of Ordinary Shares out of the Book Building portion

Bidding Period The period during which bids for shares of the

Company shall be made by Institutional Investors and HNWI Investors. The Bidding Period commences on March 4, 2014 and ends on March 5, 2014 (daily from 9:00 a.m. to 5:00 p.m.)


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Bidding Process Ending Date The date after which the Book Runner will not accept any bid for the Book Building portion of the Issue which shall be the last date of the Bidding Period

Bidding Process Starting Date The date on which Book Runner shall start

accepting bids for the book building portion of the issue

Book Building A mechanism of price determination through

which indication of interest for subscription of shares offered by the Issuer is collected from Institutional Investors and HNWI Investors. Through this process a book is built which gives an idea of demand for the shares at different price levels. The strike price is determined based on the price at which demand for shares at the end of book building period is sufficient to raise the required amount

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 cheque in favor of this account and the balance of the application money, if any, shall be paid through this account after successful allocation of shares

Book Runner AKD Securities Limited Company Legal Advisor Mohsin Tayebaly & Co. Company Financed Outlets The fuel stations of HPL that have been

constructed and commissioned by the Company with its own financial resources

Dutch Auction Method The method through which the strike price is

determined. Under this method, all the bids are arranged in descending order alongwith 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 Company through internet. In order to facilitate the investors, the Issuer has arranged provision of this facility through United Bank Limited that is among the Bankers to the Issue.


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UBL’s accountholders can use UBL net‐banking to submit their applications online via link http://www.ubldirect.com/corporate/ebank. Accountholders of UBL can submit their applications through the link 24 hours a day during the subscription period which will close at 12:00 midnight on MMDD, 2014

Final Prospectus A document containing all the information and

disclosures as required under the Companies Ordinance, 1984 together with disclosure of the strike price, results of the Book Building process, the date of publication of Prospectus and the date(s) for subscription of shares out of the general public portion

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

of shares which is PKR 20.00/‐ 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 & non‐residents) and foreign investors

General Public Issue Price The price at which ordinary shares of the

Company are issued to the general public. This price can be at or below the strike price

High Net worth Individual (HNWI) Individual investor who bids for shares of the

value of PKR 1,000,000/‐ or above Hospitality Agreement An agreement that allows an OMC to use another

OMC’s storage facilities based in a certain area or set of areas for the storage and handling of its own POL products against rent / royalty charges.

Institutional Investors Both local and foreign institutional investors Issue Initial Public Offer of 25,000,000 Ordinary Shares

representing 27.59% of the total post IPO paid‐up capital of the company having a face value of PKR10/‐ each.

Book Building Portion of the Issue comprises of

18,750,000 Ordinary Shares (75% of the Total Issue) at a Floor Price of PKR 20/‐ per share including premium of PKR 10/‐ per share.

General Public Portion of the Issue comprises of

6,250,000 Ordinary Shares (25% of the Total Issue) at a Strike Price of PKR [X]/‐ per share.


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IPO Initial Public Offering Issue Price The price at which Ordinary Shares of the

Company are issued to the General Public. The Issue Price is the Strike Price i.e. PKR [X]/‐ per share.

Joint Lead Managers & Arrangers AKD Securities Limited & Avais Hyder Liaquat

Nauman Chartered Accountants

Limit Price The maximum price a prospective institutional investor or HNWI Investor 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 Mid Dealer Financed Outlets The fuel stations of HPL that have been

constructed and commissioned jointly by the Company and by the dealer through their respective financial resources

Ordinary Shares Ordinary Shares of Hascol Petroleum Limited

having face value of PKR 10.00/‐ each unless otherwise specified in the context thereof

Preliminary Prospectus The preliminary Prospectus containing all the

information and disclosures as required under the Companies Ordinance, 1984, and Listing Regulation of the Stock Exchange approved by the Commission under Section 57(1) of the Companies Ordinance, 1984 and circulated amongst the Institutional Investors and HNWI Investors for bidding of shares out of the book building portion through the Book Building Process

Step Bid Step Bid means a series of limit bids at increasing

prices Strike Order A bid for a specified number of shares at the

strike price to be determined through the Book Building process

Strike Price The price of share determined/discovered on the

basis of book building process in the manner provided in the Listing Regulations of KSE, LSE & ISE at which the shares are issued to the successful bidders.


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Total Dealer Financed Outlets The fuel stations of HPL that have been constructed and commissioned by the Dealers with their own financial resources


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TABLE OF CONTENTS Part Content Page No. 1. Approvals and Listing on the Stock Exchange Page 09 2. Book Building Procedure Page 12 3. Share Capital and Related Matters Page 28 4. Underwriting, Commissions, Brokerage & Other Expenses Page 39 5. Overview, History and Prospects Page 42 6. Financial Information Page 49 7. Management Page 74

8. Miscellaneous Information Page 81 9. Application and Allotment Instructions 0 10. Application Form Page 95 11. Signatories to the Prospectus Page 96 12. Memorandum of Association Page 97


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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") as required under Section 57(1) of the Companies Ordinance, 1984 (the "Ordinance") has been obtained by Hascol Petroleum Limited (“HPL” or “the Company”) for the issue, circulation and publication of this 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 KARACHI STOCK EXCHANGE LIMITED, LAHORE

STOCK EXCHANGE LIMITED & ISLAMABAD STOCK EXCHANGE

The Prospectus has been cleared by the Karachi Stock Exchange Limited (“KSE”), Lahore Stock Exchange Limited (“LSE”) & Islamabad Stock Exchange (“ISE”), (collectively referred to as the “Stock Exchanges”) in accordance with the requirements of their Listing Regulations.

DISCLAIMER:

KSE,LSE & ISE have 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, LSE and ISE.

The contents of this document do not constitute an invitation by KSE, LSE and

ISE 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 the Stock Exchanges.

It is clarified that information in this Prospectus should not be construed as

advice on any particular matter by KSE, LSE and ISE and must not be treated as a substitute for specific advice.

KSE, LSE and ISE disclaim any liability whatsoever for any loss howsoever arising

from or in reliance upon this document to any one, arising from any reason,


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including, but not limited to, inaccuracies, incompleteness and/or mistakes, for decisions and/or actions taken, based on this document.

KSE, LSE and ISE neither take responsibility for the correctness of contents of

this document nor the ability of the Company to fulfill its obligations there under.

Advice from a suitably qualified professional should always be sought by

investors in relation to any particular investment.

1.3 FILING OF THE PROSPECTUS AND OTHER DOCUMENTS WITH THE REGISTRAR OF COMPANIES The Company has filed with the Registrar of Companies, Companies Registration Office, Securities & Exchange Commission of Pakistan, Karachi as required under Section 57(3) and (4) of the Companies Ordinance 1984, a copy of this Prospectus signed by authorized signatories on behalf of the Company, along with the following documents attached thereto: a) Letter dated January 22, 2014 from the Auditors of the Company, Grant Thornton

‐ Anjum Asim Shahid Rehman Chartered Accountants, consenting to the publication of their names in the Prospectus, which contains in Part 6 certain statements and reports issued by them as experts (for which consent has not been withdrawn), as required under Section 57(5) of the Companies Ordinance 1984.

b) Copies of Material Contracts and Agreements mentioned in Part 8 of this

Prospectus as required under Section 57(4) of the Companies Ordinance, 1984. c) Written confirmations of the Legal Advisor to this Issue and Bankers to this Issue,

mentioned in this Prospectus consenting to act in their respective capacities, as required under Section 57(5) of the Companies Ordinance, 1984.

d) Consents of Directors, Chief Executive and the Secretary of the Company who

have consented to their respective appointments made and their having been named or described as such Directors and Chief Executive in this Prospectus, as required under Section 57(3) of the Ordinance, read with sub‐clause (1) of clause (4) of Section 1 of Part 1 of the Second Schedule to the Ordinance.

1.4 LISTING AT KARACHI STOCK EXCHANGE, LAHORE STOCK EXCHANGE & ISLAMABAD

STOCK EXCHANGE LIMITED Applications have been made to the KSE, LSE and ISE 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 Exchanges, the Company undertakes to publish immediately in the press a notice to that effect and thereafter to refund the application money to the applicants without surcharge as required by the provisions of Section 72 of the Ordinance.


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

We being the Chief Executive Officer and Chief Financial Officer of the Company certify that the Prospectus constitutes full, true and plain disclosures of all material facts relating to the shares being offered through this prospectus and that nothing has been concealed. The information provided and disclosures made in this prospectus contain no misleading material. For and behalf of Hascol Petroleum Limited ‐Sd‐ ‐Sd‐ ____________________ _____________________ Mumtaz Hasan Khan Muhammad Ali Ansari 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 Issuer is issuing 25,000,000 Ordinary Shares of par value PKR 10/‐ each at a floor price of PKR 20/‐ per share (inclusive of a premium of PKR 10/‐ per share) aggregating to PKR 500,000,000 (the “Issue”). The Issue constitutes 27.59% 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 20/‐ per share inclusive of a premium of PKR 10/‐ per share, whereby 75% of the total issue size i.e. 18,750,000 Ordinary Shares will be issued through the Book Building process to Institutional Investors and High Net Worth Individuals (“HNWI”), while the balance 25% of the total Issue size i.e. 6,250,000 Ordinary Shares will be issued to the general public at or below the Strike Price.

2.2 BOOK BUILDING PROCEDURE

Book Building is a process whereby investors bid for a specific number of shares at various prices. The Joint Lead Managers & Book Runner, with the consent of Issuer, 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 price to the extent that the total number of shares that the Issuer intends to issue through the Book Building process is subscribed. However, while determining the strike price the bids placed through strike order are not taken into consideration. A bid by a potential investor can be a “Limit Bid”, “Strike 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 22 per share. Since the bidder has placed a limit price of PKR 22 per share, this indicates that he/she/it is willing to subscribe at or below PKR 22 per share.

Strike Order: A bid for a specified number of shares at the strike price to be

determined through the Book Building Process. In Strike Order the bidder explicitly states the number of shares he / she / it is

willing to subscribe at the Strike Price. For instance, a bidder may bid for 2.0 million shares at the strike price to be determined through the Book Building Process.


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Step Bid: A series of limit bids at increasing prices. The aggregate amount of step bid shall not be less than PKR 1,000,000/‐ and the amount of any step shall not be less than PKR 250,000/‐.

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 20 per share, 1.5 million shares at PKR 21 per share and 1.0 million shares at PKR 22 per share.

A SINGLE INVESTOR SHALL NOT MAKE MORE THAN ONE BIDS. HOWEVER, A BID CAN BE REVISED.

THE INVESTORS SHALL NOT PLACE CONSOLIDATED BIDS. A BID APPLICATION WHICH IS FULLY OR PARTIALLY BENEFICIALLY OWNED BY PERSONS OTHER THAN THE ONE NAMED THEREIN IS TO BE CONSIDERED AS CONSOLIDATED BID.

Once the bid period is over and book has been built, the Book Runner shall determine the strike price. Successful bidders shall be intimated, within two (2) working days of the closing of the bidding period, the strike price and the number of shares provisionally allotted to each of them. The successful institutional bidders shall, within seven (7) working days of the closing of the bidding period, deposit the balance amount as consideration against allotment of shares. Where a successful bidder defaults in payment of shares allotted to him / her / it, the margin money deposited by such bidder shall be forfeited to the Book Runner under clause 8.11 of Appendix 4 of the Listing Regulations of KSE & clause 8.10 of the Listing Regulations of LSE.

AS PER REGULATION 8.16 OF KSE, 8.15 OF LSE & 8.16 OF ISE LISTING REGULATIONS, THE SUCCESSFUL BIDDERS SHALL BE ISSUED SHARES IN THE FORM OF BOOK‐ENTRY SECURITIES TO BE CREDITED IN THEIR CDS ACCOUNTS. ALL THE INSTITUTIONAL AND HNWI INVESTORS SHALL, THEREFORE, PROVIDE THEIR CDC ACCOUNT NUMBERS IN THE BID APPLICATION.

2.3 JOINT LEAD MANAGERS AND ARRANGERS

AKD Securities Limited (“AKDS”) and Avais Hyder Liaquat Nauman Chartered Accountants

(“AHLN”) have been mandated by the Issuer to act as Joint Lead Managers and Arrangers to this Issue, which is being made through the Book Building process as laid out in Appendix 4 of the Listing Regulations of the KSE, LSE and ISE.

2.4 BOOK RUNNER

AKD Securities Limited (“AKDS”) has also been appointed by the Issuer as the Book Runner to this Issue.

2.5 ROLE AND FUNCTIONS OF JOINT LEAD MANAGERS AND BOOK RUNNERS

a) The Joint Lead Managers to the Issue shall:

i. conduct awareness campaigns through presentations, meetings, road shows etc.

jointly with Book Runner;


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ii. ensure that all disclosures as required under the Companies Ordinance, 1984 and the Appendix 4 of the Listing Regulations of the KSE, LSE and ISE have been made in the Prospectus;

iii. ensure that necessary infrastructure and electronic system / software is available

to collect bids and to carry out the Book Building process in a fair, efficient and transparent manner;

iv. obtain on behalf of the Issuer, all approvals / consents / NOCs relating to the

Issue;

v. publish an advertisement, approved by the Commission, in at least one Urdu and one English daily Newspaper having wide circulation in the Federal and all the provincial capitals, to invite the Institutional Investor and HNWI to participate in the bidding process; and

vi. ensure that the preliminary Prospectus will, after approval of the Commission, be

uploaded on the Book Runner’s as well as on the Company’s website.

b) The Book Runner to the Issue shall: i. conduct awareness campaigns through presentations, meetings, road shows etc.

jointly with Lead Managers;

ii. ensure that necessary infrastructure and electronic system / software is available to collect bids and to carry out the Book Building process in a fair, efficient and transparent manner;

iii. collect bid applications and applications’ money, security / margin as the case may

be, from HNWI and the Institutional Investors in the manner as mentioned in the Appendix 4 of the Listing Regulations of KSE, LSE and ISE;

iv. put serial number, date and time on each bidding application at the time of

collection of the same from the bidders;

v. vet the bidding applications; vi. build an order book showing demand for the shares at various prices; vii. discover the strike price at the close of the bidding period; viii. maintain record of the bids received for subscription of the shares;

ix. use the software for Book Building process developed by KSE, which is based on

Dutch Auction Methodology for display of the order book and determination of the strike price, on the terms and conditions as may be agreed in writing between KSE and the Book Runner;

x. for information of investors ensure that in addition to live display of the order

book on the website of KSE, also make live display of the same order book simultaneously on its own website till closing of the bidding period;


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xi. ensure that each bid application contains depository account number of the bidder maintained with CDCPL wherein shares shall be credited in case the bid is successful;

xii. not accept multiple bids i.e. more than one bid applications by the same person;

xiii. enter into an Underwriting Agreement with the Issuer;

xiv. circulate copies of the preliminary Prospectus cleared by the Stock Exchanges and

approved by the Commission along with the bidding forms to the prospective Institutional Investors and HNWIs;

xv. BR has established bid collection centers at the following addresses:

Karachi

Contact: Mr. Mohammad Yasir KhanDirect No.: +92‐21‐3537‐1303 Mobile No.: +92‐336‐822‐2016 PABX No.: +92‐21‐111‐253‐111 Ext. 628 Fax No.: +92‐21‐35374291, +92‐21‐3586‐7992 Email: [email protected] Postal Address: AKD Securities Limited

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

Lahore Contact: Mr. Ehsan Ahmad Qureshi Direct No.: +92‐42‐3628‐0742, +92‐42‐3628‐0743,

+92‐42‐3628‐0744 Mobile No.: +92‐334‐411‐1253 PABX No.: +92‐42‐111‐253‐111 Fax No.: +92‐42‐3628‐0745Email: [email protected] 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

xvi. Ensure that all the bids received by the bid collection centers are entered into the system developed by KSE for the purpose of Book Building. The Book Runner shall not accept and ENTER any bid after 5:00 p.m. during the days of the bidding period, except the last day when no fresh bid(s) shall be collected after 5:00 p.m. and the bid(s) collected thus far, shall be entered into the system by 7:00


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p.m. on the same day and thereafter no bid shall be entered into the system or be revised in any way and for any reason even if the bid applications have been received from the investors. Online revision will, however, be allowed to the bidder till 7:00 pm on the last day.

2.6 OPENING AND CLOSING OF THE BIDDING PERIOD

The bidding period shall remain open for [2 working days commencing from the business hours at 09:00 a.m. on MARCH 04, 2014 and will close at 05:00 p.m. on MARCH 05, 2014 at the close of business hours.

BIDDING PROCESS STARTS ON MARCH 04, 2014

BIDDING PROCESS ENDS ON MARCH 05, 2014

*(Both Days Inclusive)

2.7 ELIGIBILITY TO PARTICIPATE IN BIDDING Eligible investors who can place their bids in the Book Building process are Institutional Investors and HNWIs.

Institutional Investors include both local and foreign institutional investors

HNWI investors are individual investors who bid for shares of value of PKR 1,000,000/‐ (Pak Rupees One Million Only) or above in the Book Building process

2.8 INFORMATION FOR BIDDERS

The preliminary Prospectus for issue of shares has been duly cleared by KSE, LSE and ISE and approved by SECP.

The preliminary Prospectus and the bidding form can be obtained from the Registered Office of Hascol Petroleum Limited, AKDS, AHLN and the bid collection centers. Preliminary Prospectus 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.hascol.com.

Eligible investors who are interested in subscribing to the Ordinary Shares should approach the Book Runner at the addresses provided in paragraph 2.5 to register their Bids.

THE BIDS SHOULD BE SUBMITTED ON THE PRESCRIBED BIDDING FORM IN PERSON OR THROUGH FAX NUMBERS GIVEN IN PARAGRAPH 2.5.

2.9 BIDDING FORM AND PROCEDURE FOR BIDDING

a) Standardized bidding form has been prescribed by the Book Runner. Bids shall be

submitted at the bid collection centers in person or through fax number given in paragraph 2.5 on the standard bidding form duly filled in and signed in duplicate. The bidding form shall be serially numbered at the bid collection centers and date and time stamped, at the time of collection of the same from the bidders.


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b) Upon completion and submission of the bidding form, the bidders are deemed to have authorized the Issuer to make necessary changes in the preliminary Prospectus as would be required for finalizing and filing the final Prospectus with the KSE, LSE, ISE and the SECP, without prior or subsequent notice of such changes to the bidders.

c) The bidding procedure under the Book Building process is outlined below:

i. As required under clause 8.8 of Appendix 4 of the Listing Regulations of KSE, copy

of approved preliminary Prospectus shall be circulated by the Book Runner to a maximum number of the institutional investors and HNWIs, but not less than ten in each of the two categories inviting them for participation in the bidding process. Copy of the preliminary Prospectus will also be placed on the websites of the Company and AKDS.

ii. An advertisement, approved by the Commission, shall be published at least in one Urdu and one English daily newspaper having wide circulation in the Federal and all the provincial capitals, inviting the institutional investors and HNWIs for participation in the bidding.

iii. A Book Building Account shall be opened by the Issuer for collection of the bid amounts.

iv. The bidding form shall be issued in duplicate signed by the bidder and countersigned by the Book Runner, with first copy for the Book Runner, and the second copy for the bidder.

v. Bids shall be submitted through the bid collection centers or through fax numbers given in paragraph 2.5 on the standard bidding form duly filled in and signed in duplicate. The addresses for the bid collection centers are given in paragraph 2.5.

vi. Bids can be placed at “limit price”, “strike order” or “step bid”. vii. Bid money / margin money shall be deposited through demand draft, pay order or

cheque in favor of “Initial Public Offering of Hascol Petroleum Limited ‐ Book Building Account”.

viii. Book Runner shall collect an amount of 100% of the application money as bid money in respect of bids placed by HNWIs.

ix. 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.

x. Book Runner may reject a bid placed by an Institutional Investor / HNWI for reasons to be recorded in writing and the reasons should be disclosed to such bidder forthwith. Decision of the Book Runner shall not be challengeable by the bidder or its associates.

xi. Book Runner shall not accept the bids made at a bid price lower than the Floor Price.

xii. The Issuer and Book Runner shall not accept bids from associated persons of the Issuer in excess of five percent (5%), in aggregate, of the size of the Book Building portion. To check this threshold, the issuer shall provide to the Book Runner and the Book Runner shall obtain from the Issuer, list of associated persons of the issue before commencement of the bidding period and the Book Runner shall make sure that the said list has been provided to the employees deployed at the collection centers for collection of bids and entry thereof in the system.

xiii. The bidders will receive back the duplicate form upon submission of their bids which will be proof of their bid submission. The bidders shall not be provided with any receiving if a duly filled duplicate form is not submitted alongwith the bid.

xiv. Bidders can revise or withdraw their bids during the bidding period (for details please refer to paragraphs 2.13 and 2.15).


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xv. The bidders shall provide a valid email address in the bid form so that the relevant ID, password and form number can be emailed to them upon placement of the bid.

xvi. Book Runner shall maintain a record of the bids received / rejected / revised / withdrawn along with identities of the bidder and evidence of the amount received.

xvii. Book Runner shall ensure that all the bids received by the bid collection centers are entered into the system developed by KSE for the purpose of the Book Building according to the procedure given in paragraph 2.5 (b) (ix) and as per clause 8.6 of Appendix 4 of the Listing Regulations of KSE, LSE and ISE. The system shall be capable to display live an order book, in descending order with respect to the bid price, showing the demand for shares at various prices and accumulative number of shares bid for along with percentage of the total shares offered. The order book should also show the revised bids and the bids withdrawn.

xviii. At the close of the bidding period, the Issuer, in consultation with LM and BR shall determine the strike price on the basis of “Dutch Auction Method”.

xix. Successful bidders shall be intimated, within two (2) working days of the closing of the bidding period, the strike price and the number of shares provisionally allotted to each of them.

xx. The successful institutional bidders shall, within seven (7) working days of the closing of the bidding period, deposit the balance amount as consideration against allotment of shares.

xxi. Under rule 8.11 of the Listing Regulations of KSE, rule 8.10 of the Listing Regulations of LSE and 8.11 of the Listing Regulations of ISE, where a successful institutional bidder defaults in payment of shares allotted to it, the margin money deposited by such institutional bidders shall be forfeited by the Book Runner.

xxii. Margin money of unsuccessful bidders will be refunded within three (3) working days of the close of the bidding period.

xxiii. Final allotment of shares out of the Book Building portion shall be made after receipt of full subscription money from the successful bidders; however, shares to such bidders shall be issued at the time of issue of shares out of the general public portion of the issue to successful applicants.

xxiv. Associated persons or other related persons or parties of the Issuer shall not make bid(s) for shares in excess of 5%, in aggregate, of the Book Building portion of the Issue.

2.10 BANK ACCOUNT FOR BOOK BUILDING AND PUBLIC PORTION The Issuer has opened two separate bank accounts for collection of applications’ money, one each for the Book Building portion and the General Public portion of the Issue.

The bidders shall draw demand draft, pay order or cheque in favor of “Initial Public Offering of Hascol Petroleum Limited – Book Building Account” which has been opened at Summit Bank Limited (“Collection Bank”). The Collection Bank shall keep and maintain the bid money in the said account. Once the strike price is determined and list of allottees is finalized, the Joint Lead Managers, after obtaining NOC from KSE, LSE and ISE, may request in writing to the Collection Bank for transfer of the money of successful and accepted applications to the Issuer’s account(s) and advise for refund of the bid money to unsuccessful bidders.


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2.11 PAYMENT INTO THE BOOK BUILDING ACCOUNT The bidders shall draw a demand draft, pay order or cheque favoring “Initial Public Offering of Hascol Petroleum Limited – Book Building Account” and submit it at the designated bid collection center either in person or through facsimile along with a duly filled in bidding form.

CASH MUST NOT BE SUBMITTED WITH THE BIDDING FORM AT THE BID COLLECTION CENTER. BID AMOUNT MUST BE PAID THROUGH PAY ORDER, BANK DRAFT, CHEQUE OR ANY OTHER APPROPRIATE INSTRUMENT DRAWN IN FAVOR OF “INITIAL PUBLIC OFFERING OF HASCOL PETROLEUM LIMITED – BOOK BUILDING ACCOUNT” AND ACCEPTABLE TO THE BOOK RUNNER.

Since the investors can bid for shares through “limit price”, “strike order” or “step bid” therefore payment procedure is explained below for all the three (3) types of bids.

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 20 per share, then the total application money would amount to PKR 100 million. In such a case, (i) HNWIs shall deposit PKR 100 million in the Book Building account as the bid amount which is 100% of PKR 100 million; and (ii) Institutional investors shall deposit at least PKR 25 million in the Book Building account as the margin money which is at least 25% of PKR 100 million

b) PAYMENT FOR STRIKE ORDERS

If investors are placing a “strike order”, then they shall deposit the margin money / bid amount equal to the product of the number of shares they are bidding for and the Floor Price which in this case is PKR 20 per share.

For instance, if an investor is applying for 2.0 million shares then the total application money would be PKR 40 million. In such a case, (i) HNWIs shall deposit PKR 40 million as bid amount which is 100% of PKR 40 million and (ii) Institutional investors shall deposit at least PKR 10 million as margin money which is 25% of PKR 40 million.

In the event where limit and step orders are insufficient to determine price through the Book Building mechanism, all strike orders will be considered for allocation of shares at floor price. For details please refer to paragraph 2.16.

c) 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 is bidding for at his/her/its stated bid prices.

For instance, if the investor bids for 0.5 million shares at PKR 20 per share, 0.4 million shares at PKR 21 per share and 0.3 million shares at PKR 22 per share, then


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in essence the investor has placed one “step bid” comprising three limit bids at increasing prices. The application money would amount to PKR 25 million, which is the sum of the products of the number of shares bid for and the bid price of each limit bid. In such a case, (i) HNWIs shall deposit PKR 25 million in the Book Building Account as bid amount which is 100% of PKR 25 million and (ii) Institutional investors shall deposit at least PKR 6.25 million in the Book Building Account as margin money which is 25% of PKR 25.00 million.

2.12 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.

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 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) Equivalent / supporting documents: 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 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.


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2.13 REVISION OF BIDS BY THE BIDDER The bidders shall have the right to revise their bids any time during the bidding period up to 05:00 pm and on the last day till 07:00 pm. Online revision of the bids may be allowed to the bidders through system software. This will, however, be subject to the condition that the bidder shall comply with the requirements of bidding as disclosed under Appendix 4 of the Listing Regulations and any other condition or procedure disclosed in the Prospectus.

2.14 REJECTION OF BIDS BY THE BOOK RUNNER In terms of clause 8.4 of Appendix 4 of Listing Regulations of the KSE, LSE and ISE, Book Runner may reject a bid placed by an institutional investor / HNWI for reasons to be recorded in writing and the reasons should be disclosed to such bidder forthwith. Decision of Book Runner shall not be challengeable by the bidder or its associates.

2.15 WITHDRAWAL OF BIDS BY THE BIDDER

A bidder has the right to withdraw placed bid from the bidding system any time during the bidding period and on the last day till 05:00 pm. Online withdrawal of the bids may be allowed to the bidders through system software, however, no bid can be withdrawn after 5:00 pm on last day of bidding. This will, however, be subject to the condition that the bidder shall comply with the requirements of bidding as disclosed under Appendix 4 of the Listing Regulations of the Stock Exchanges and any other condition or procedure disclosed in the Prospectus.

2.16 WITHDRAWAL OF ISSUE BY THE ISSUER

a) According to clause 3.10 of Appendix 4 of the Listing Regulations of KSE, LSE and ISE,

in case the Issuer does not receive bids at or above the floor price for the minimum number of shares offered, it may withdraw the Issue. The decision of withdrawal shall be taken within a period not more than three (3) working days of the closing of bidding period.

b) The Issuer shall withdraw the Issue if the total bids received are less than fifteen. c) The withdrawal shall be immediately intimated to the Commission and the Stock

Exchanges. d) In case the Issue is withdrawn the margin money / bid amount will be refunded to

the bidders within three (03) working days of the decision of withdrawal without any markup, interest etc.

2.17 MECHANISM FOR DETERMINATION OF STRIKE PRICE a) At the close of the bidding period, the Issuer, in consultation with the Book

Runner shall determine the strike price on the basis of “Dutch Auction Method”. Under this methodology, the strike price is determined by lowering the price to the extent that the total number of shares offered are subscribed. However, while determining the strike price, the bids placed through strike order(s) shall not be taken into consideration.

b) The order book shall display the bids in a tabular form in descending order along with the number of shares bid for and the cumulative number of shares at each price level. The bids at strike orders shall, however, be displayed in the order book in the following manner:


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i. after the lowest limit bid, in case the limit bids placed are not sufficient for full allotment of the shares issued, or,

ii. immediately, after the limit bid at which all the shares offered can be allotted, in case the limit bids placed are sufficient for full allotment of the shares issued.

c) For the purpose of allotment of shares, the limit bid(s) made at the price determined / discovered as Strike Price and the bids placed as strike order shall be ranked equally and preference will be given to the bidder who has made the bid earlier.

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 will be refunded. The bidders, who have made bids below the strike price, shall not qualify for allotment of shares and their margin money shall be refunded.

The mechanism for determination of the strike price can be understood by the following illustration:

a) Number of shares being issued through the Book Building: 18,750,000 Ordinary Shares b) Floor Price: PKR 20 per share c) Bidding Period: March 04, 2014 – March 05, 2014

At PKR 23.00/‐ per share, investors are willing to buy only 3.00 million shares. Since 15.75 million shares are still available, therefore the price will set lower. At PKR 22.25/‐ per share, investors are willing to buy 2.50 million shares. Since 13.25 million shares are still available, therefore, the price will set lower. At PKR 22.00/‐ per share, investors are willing to buy 2.50 million shares. Since 10.75 million shares are still available, therefore, the price will set lower. At PKR 21.50/‐ per share, investors are willing to buy 3.00 million shares. Since 7.75 million shares are still available, therefore, the price will set lower.


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At PKR 21.25/‐ per share, investors are willing to buy 3.00 million shares. Since 4.75 million shares are still available, therefore, the price will set lower. At PKR 21.00/‐ per share, investors are willing to buy 5.00 million shares. Since after bidding for 5.00 million shares at PKR 21.00/‐ per share no shares will be available therefore the strike price will be set at PKR 21.00/‐ per share for the entire lot of 18.75 million shares The Bidders who have placed bids at prices above the strike price (which in this illustration is PKR 21.00/‐ per share), will become entitled for allotment of shares at the strike price and the differential would be refunded. Investors, who have bid below PKR 21.00/‐ per share, do not qualify for allotment and their money would be refunded. After allotment in the aforementioned manner 5.00 million shares are still available for allotment. These shares will be allotted to the Bidders who have placed limit bids at PKR 21.00/‐ and who have placed bids at the strike price. However, for the purpose of allotment of these 5.00 million shares preference shall be given to the Bidder who has placed the bid earlier. At this stage all those Bidders who have placed Strike Bids shall be allotted shares in terms of time priority against those Bidders who have placed limit bids at the price of PKR 21.00/‐ per share. All the Bidders who have placed Strike Bids and those Bidders who have placed Limit Bids at PKR 21.00 per share earlier than the other bidders shall be allotted the remaining 5 million shares to the extent of their order size or in proportion.

2.18 BASIS OF ALLOTMENT OF SHARES

After the closure of bidding period, the Book Runner will analyze the demand generated at various price levels. Only successful bidders shall be eligible for allotment and issue of shares. Final allotment of shares out of the Book Building portion shall be made after receipt of full subscription money from the successful bidders; however, shares to such bidders shall be credited at the time of issue of shares out of the public portion of the issue to successful applicants.

2.19 REFUND OF MARGIN MONEY

Investors who have bid lower than the strike price are not eligible for allotment of shares. Margin money of the unsuccessful bidders shall be refunded within three (3) working days of the close of the bidding period as required under clause 8.12 of Appendix 4 of the KSE Listing Regulations, clause 8.11 of the LSE Listing Regulations, and clause 8.12 of Appendix 4 of the ISE Listing 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.

2.20 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


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indicating the number of shares that the Book Runner would underwrite at the strike price and the Underwriting Commission / Fee to be charged.

2.21 PUBLICATION OF THE FINAL PROSPECTUS The underwriting agreement for the public portion shall be finalized within ten (10) working days from closing of the bidding period.

Upon finalization of the underwriting agreements, the Joint Lead Managers shall, within ten (10) working days from the date of closing of the bidding period, submit an application to the Stock Exchanges for allocation of dates for publication of the final Prospectus and subscription of shares by the general public.

The final Prospectus in full or in abridged form must be published within seventeen (17) working days of the closing of the bidding period in the manner as specified in Section 53 of the Companies Ordinance, 1984.

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

2.22 ADDRESSES OF BID COLLECTION CENTRES

Bid Collection Centers have been established at Karachi, Lahore and Islamabad to collect the bids for the Book Building portion of Hascol Petroleum Limited in order to provide convenient access to bidders to participate in the bidding process. Addresses, details of contact persons and fax numbers of the Bid Collection Centers are given in paragraph 2.5.


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2.23 STATEMENT BY ISSUER February 17, 2014 The Managing Director The Managing Director Karachi Stock Exchange Limited Lahore Stock Exchange Limited Stock Exchange Building Lahore Stock Exchange Building Stock Exchange Road 19 ‐ Khayaban‐e‐Aiwan‐e‐Iqbal Karachi Lahore The Managing Director Islamabad Stock Exchange Limited ISE Towers, 55 – B, Jinnah Avenue Islamabad On behalf of the Company, I confirm that all material information as required under the Companies Ordinance, 1984 and the Listing Regulations of the Karachi Stock Exchange Limited, the Lahore Stock Exchange Limited and the Islamabad Stock Exchange Limited has been disclosed in the Prospectus and that whatever is stated in Prospectus and the supporting documents is true and correct to the best of our knowledge and belief and that nothing has been concealed.

For and on behalf of, Hascol Petroleum Limited: ‐Sd‐

____________________ Mumtaz Hasan Khan Chief Executive Officer


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2.24 STATEMENT BY JOINT LEAD MANAGERS

February 17, 2014

The Managing Director The Managing Director Karachi Stock Exchange Limited Lahore Stock Exchange Limited Stock Exchange Building Lahore Stock Exchange Building Stock Exchange Road 19 ‐ Khayaban‐e‐Aiwan‐e‐Iqbal Karachi Lahore

The Managing Director Islamabad Stock Exchange Limited ISE Towers, 55 – B, Jinnah Avenue Islamabad Being mandated as Joint Lead Managers & Arrangers to this Initial Public Offering of Hascol Petroleum Limited through the Book Building process, we confirm that all material information as required under the Companies Ordinance, 1984 and Appendix 4 of the Listing Regulations of the Karachi Stock Exchange Limited, the Lahore Stock Exchange Limited and the Islamabad Stock Exchange Limited has been disclosed in this Prospectus and that whatever is stated in Prospectus and in the supporting documents is true and correct to the best of our knowledge and belief and that nothing has been concealed.

For and on behalf of, For and on behalf of, AKD Securities Limited: Avais Hyder Liaquat Nauman

Chartered Accountants: ‐Sd‐ ‐Sd‐

____________________ _______________________ Umair Aijaz, FCCA Liaquat Ali SVP / Head Partner Investment Banking


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2.25 STATEMENT BY THE BOOK RUNNER

February 17, 2014

The Managing Director The Managing Director Karachi Stock Exchange Limited Lahore Stock Exchange Limited Stock Exchange Building Lahore Stock Exchange Building Stock Exchange Road 19 ‐ Khayaban‐e‐Aiwan‐e‐Iqbal Karachi Lahore The Managing Director Islamabad Stock Exchange Limited ISE Towers, 55 – B, Jinnah Avenue Islamabad Being mandated as Book Runner to this Initial Public Offering of Hascol Petroleum Limited through the Book Building process, we confirm that all material information as required under the Companies Ordinance, 1984 and Appendix 4 of the Listing Regulations of the Karachi Stock Exchange Limited, the Lahore Stock Exchange Limited and the Islamabad Stock Exchange Limited has been disclosed in this Prospectus and that whatever is stated in Prospectus and in the supporting documents is true and correct to the best of our knowledge and belief and that nothing has been concealed.

For and on behalf of, AKD Securities Limited:

‐Sd‐

________________________ Umair Aijaz, FCCA SVP / Head Investment Banking


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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 150,000,000 Ordinary Shares of PKR 10/‐ each 1,500,000,000 ‐ 1,500,000,000

ISSUED, SUBSCRIBED & PAID UP CAPITAL OF THE COMPANY

64,540,000 Issued for Cash: Ordinary shares of PKR10/‐ each

645,400,000 3,300,000 648,700,000

1,060,000 Issued for consideration other than CashOrdinary shares of PKR 10/‐ each*

10,600,000 ‐

10,600,000

65,600,000 Total 656,000,000 3,300,000 659,300,000

Number of Shares

Face Value (PKR)

Premium (PKR)

Total (PKR)

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

Directors / Sponsors of the Company 34,387,567 Mr. Mumtaz Hasan Khan 343,875,670 3,300,000 347,175,67012,175,713 Fossil Energy (Pvt.) Limited 121,757,130 ‐ 121,757,1308,500,396 Marshal Gas (Pvt.) Limited 85,003,960 ‐ 85,003,960

400,005 Mr. Farooq Rahmatullah 4,000,050 ‐ 4,000,050 200,005 Mr. Saleem Butt 2,000,050 ‐ 2,000,050 90,005 Dr. Akhtar Hasan Khan 900,050 ‐ 900,050 3,000,005 Mr. Liaquat Ali 3,000,050 ‐ 3,000,050 5 Mr. Najmus Squib Hameed 50 ‐ 50 5 Mr. Sohail Hasan 50 ‐ 50

58,753,706 Shares Held by Sponsors / Directors 587,537,060 3,300,000 590,837,060

6,846,294 Other Shareholders** 68,462,940 ‐ 68,462,940

65,600,000 Existing Subscribed, Issued & Paid up Capital

656,000,000 3,300,000 659,300,000

Present Issue

Number of Shares

Face Value (PKR)

Premium (PKR)

Total (PKR)

The present Issue of 25,000,000 Ordinary Shares (27.59% of the post‐IPO paid‐up capital) having par value of PKR 10/‐ each is being made as under.

18,750,000 Allocation to Institutions / HNWI investors through Book Building process at a strike price of PKR x/‐ each

187,500,000 [x} [x]

6,250,000 General Public 62,500,000 [x] [x]

25,000,000 Total Present Issue 250,000,000 [x] [x]

90,600,000 Grand Total 906,000,000 [x] [x]

*The total capital issued against consideration other than cash amounted to PKR 10,600,000/‐ that was issued to Mr. Mumtaz Hasan Khan & Syed Nizam Ahmed Shah (ex‐shareholder) on December 8, 2004 for consultancy, feasibility study, travel and other expenses. The 1,060,000 ordinary shares issued against consideration other than cash were not issued against goodwill or other intangible assets.

**For further details, investors may refer to the Auditor Certificate dated January 28, 2014 given in Para 6.4 of the Prospectus.


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Notes: (i) The Sponsors shall at all times retain at least twenty five percent (25%) of the capital of

the Company;

(ii) As per Regulation No. 6(6)(i) of the KSE Listing Regulations, 6A(7)(i) of the LSE Listing Regulations & 6A(7)(i) of the ISE Listing Regulations, sponsor’s shareholding in excess of 25% shall not be saleable for a period of six months from the date of public subscription;

(iii) Shares held by the Shareholders other than the Sponsors & Directors of the Company shall not be saleable for a period of six months from the date of public subscription;

(iv) Shares issued for consideration other than cash worth PKR 10,600,000 were issued in

December 2004 against consultancy, feasibility study, travel and other expenses;

(v) The Company has never issued shares against goodwill and intangible assets except services.

3.2 OPENING AND CLOSING OF THE SUBSCRIPTION LIST

The subscription list will open at the commencement of banking hours on MM DD, 2014 and will close on MM DD, 2014 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 MM DD, 2014.

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. 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.


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Key Documents required for individuals are: 1. Account opening request 2. Passport / ID General documentation required for opening of SCRA account by corporate are: 1. Account opening request 2. Board Resolution & Signatories list 3. Passport / ID of Board of Directors 4. Passport / ID of all authorized signatories 5. Certificate of Incorporation (COI) Equivalent / supporting documents: Trade Registry Certificate, Business Registration Certificate, Certificate of Commencement of Business 6. Memorandum & Articles of Association 7. Withholding tax registration certificate / Certificate of country of domicile of client 8. Latest Annual Report 9. List of Board of Directors 10. List of Shareholders (>10% holdings) and key officers It is however pertinent to note that the procedure and requirements of each institution differs, hence it is advised to request the procedure from each relative institution.

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 FICTITIOUS AND MULTIPLE APPLICATIONS (MORE THAN ONE APPLICATIONS BY SAME PERSON) IS PROHIBITED AND SUCH APPLICATIONS’ MONEY SHALL BE LIABLE TO CONFISCATION UNDER SECTION 18‐A OF THE SECURITIES AND EXCHANGE ORDINANCE, 1969.

(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


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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.

(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


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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 he / she prove that the default in making the refund was not due to any misconduct or negligence on his / her 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 Regulations of KSE, LSE and ISE. Shares will be issued either in scrip‐less form in the CDS of CDCPL or in the shape of physical scripts on the basis of option exercised by the successful applicants. Shares in the physical scripts shall be dispatched to the Bankers to the Issue within thirty (30) days from the date of close of subscription list, whereas scrip less shares shall be directly credited through book entries 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 members 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.


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3.9 SHARES ISSUED IN PRECEDING YEARS

Serial No. No. of Shares

Issued Par Value(PKR)

Amount (PKR)

Consideration Date of Issue

1 2 10 20 Cash 24‐Mar‐01

2 99,998 10 999,980 Cash 23‐Dec‐02

3 8,840,000 10 88,400,000 Cash 8‐Dec‐04

4 1,060,000 10 10,600,000 Other Than Cash* 8‐Dec‐04

5 5,400,000 10 54,000,000 Cash 15‐Mar‐07

6 5,000,000 10 50,000,000 Cash 13‐Jun‐07

7 20,200,000 10 202,000,000 Cash 18‐Jun‐08

8 200,000 10 2,000,000 Cash 31‐Dec‐09

9 200,000 10 2,000,000 Cash 6‐Feb‐10

10 24,600,000 10 246,000,000 Cash 12‐Dec‐11

Total 65,600,000 656,000,000

*The total capital issued against consideration other than cash amounted to PKR 10,600,000/‐ that was issued to Mr. Mumtaz Hasan Khan & Syed Nizam Ahmed Shah (ex‐shareholder) on December 8, 2004 for consultancy, feasibility study, travel and other expenses. The 1,060,000 ordinary shares issued against consideration other than cash were not issued against goodwill or other intangible assets.

Other than the above mentioned shares, there has been no other issuance of shares since the incorporation of HPL. 3.11 PRINCIPAL PURPOSE OF THE ISSUE

The principal purpose of the Issue is to inject additional equity into the Company mainly for utilization in the completion of Machike Storage Facility, in Sheikhupura District of Punjab and for setting up new retail outlets across Pakistan. As per the Company’s plans, out of the total equity to be raised via issuance of 25 million shares at PKR 20/‐ per share:

PKR 200mn will be utilized for capital expenditure on the completion of Machike Storage Facility which includes purchase of pipelines, gensets, pumps, electrical equipment etc.

PKR 100mn will be utilized for the setting up and commissioning of new / under

construction retail fuel stations

The balance proceeds will be utilized for working capital requirements of the Company

3.12 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.


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3.13 DIVIDEND POLICY The rights in respect of capital and dividends attached to each share are and will be the same. The Company in its general meeting may declare dividends but no dividend shall exceed the amount recommended by the Directors. Dividend, if declared in the general meeting, shall be paid according to the terms of the provisions of the Ordinance. The Directors may from time to time pay to the members such interim dividends as appear to the Directors to be justified by the profits of the Company. No dividend shall be paid otherwise than out of the profits of the Company for the year or any other undistributed profits. No unpaid dividend shall bear interest or mark‐up against the Company. The dividends shall be paid within the period laid down in the Ordinance. Those applicants who intend that their cash dividend, if any, is directly credited in their Bank Account, must fill‐in the relevant part of the shares subscription Form under the heading, “Dividend Mandate Option”.

3.14 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.

3.15 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.

3.16 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:

Holding Period of Securities

S.No Tax Year Less than 6 months

More than 6 months but less than 12 months

More than 1 year

1. 2011 10.0% 7.5% 0%

2. 2012 10.0% 8.0% 0%

3. 2013 10.0% 8.0% 0%

4. 2014 10.0% 8.0% 0%

5. 2015 17.5% 9.5% 0%

6. 2016 ‐ 10.0% 0%

3.17 WITHHOLDING TAX ON DIVIDENDS

Dividend distribution to shareholders will be subject to withholding tax under section 150 of the Income Tax Ordinance, 2001 at the rate of 10% specified in Part 1 Division III of the First Schedule of the said Ordinance or any time to time amendments therein. In terms of


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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.

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 method, providing the temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and the amount used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realization or settlement of the carrying amount of assets and liabilities using tax rates enacted at the balance sheet date. Deferred tax asset is recognized only to the extent that it is probable that the future taxable profits will be available and credit can be utilized.

The Company has booked deferred tax asset of PKR 327.51 million as at December 31st 2013.

3.20 SALES TAX The Company is a Sales Tax registered entity that acts as a collection agent for Sales Tax on all sales made (Output Tax) and pays Sales Tax for all purchases made (Input Tax) from registered suppliers in accordance with the Sales Tax Act. The return of these Input Taxes and Output Taxes is filed and refund claims or payments are made to the Government in accordance with the balance of these taxes. As per the audited financial statements of December 31, 2013 the Company has Sales Tax Payable amounting to PKR 4.03 million.

3.21 SINDH SALES TAX ON SALE / PURCHASE OF SHARES Under the constitution of Pakistan and Articles 49 of the 7th NFC Award the Government of Sindh has promulgated the Sindh Sales Tax on Service Act, 2011 (Sindh Act No. XII of 2011) (the Act) which has taken effect from July 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 16%. 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.


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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. Time Limit for holding shares has been designated as 36 months to avail tax credit. The amount of investment, eligible for tax credit, is prescribed in Section 62 of the said Ordinance.

3.24 TAX CREDIT FOR ENLISTMENT Under Section 65C of the Income tax Ordinance, 2001, tax credit at 15% of the tax payable

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

3.25 JUSTIFICATION FOR PREMIUM

Rationale for the justification of premium is set out below: Growth Story: HPL has taken a time span of approximately 8 years to turn itself into a fully developed OMC. The sponsors of the Company have mostly invested the capital from their own resources and have now made the company capable running as a profitable and sustainable entity which can clearly be seen through the financial statements given in Para 6.1 of the Prospectus.

The construction of back‐end (storages) and front‐end (retail outlets) facilities has been a game changer for HPL as the functionality of these facilities have brought the Company’s sales volumes at an optimum level and further volumes can be generated as well. In addition to this, the local and the international brands such as Fuchs AG attached to the Company now carries significant business value and today HPL is known for its quality products and services. Growing Retail Network: The Company has a wide‐spread network of 210 fuel stations across Pakistan through which POL products are sold. The company plans to add 50 more retail outlets by the end of this year, moreover the Company plans to add 91 fuel stations by the end of 2016 which would further boast HPL’s sales of High Speed Diesel (“HSD”) and Motor Spirit (“MS”). The province‐wise break‐up of HPL’s 210 operational retail outlets is as follows:

Province Sindh Baluchistan Punjab KPK Azad Jamu Kashmir

Retail Outlets 72 7 98 30 3

Internationally Renowned Lubricant Provider: The Company has a strategic agreement with Fuchs Lubricants, one of the largest global manufacturer of lubricants based out of Fuchs Petrolub AG with its headquarters in Mannheim, Germany. This agreement allows HPL to manufacture, import, distribute and sell branded lubricating oils and greases in Pakistan. Fuel Supply Arrangements: HPL has established fuel supply arrangements, with all domestic refineries including Pak‐Arab Refinery, Attock Refinery, Pakistan Refinery


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Limited, Byco Petroleum Pakistan Limited and National Refinery. Apart from the fuel supply arrangements, HPL has developed a well‐managed supply chain structure through which its products are transferred to all parts of the country. The Company has also entered into the import market and has imported 3 cargos of Fuel Oil and Motor Gasoline during the current year. The Company has also set up a fully integrated import supply chain at both Kemari and Port Qasim. Shield Against Circular Debt: HPL has carried a very defensive commercial sales strategy during the past 3 years due to the rising issue of circular debt pertaining to the Oil & Gas and Power sectors of Pakistan. As an antidote to this risk, HPL has always secured its receivables from commercial sales to IPPs and other debt burdened institutions through irrevocable financial instruments. As a result of these prudent measures HPL has remained unharmed by the risk of circular debt and the resultant liquidity crunch faced by most OMCs.

Strategically Placed Storage Facilities: The Company, under agreements with other OMCs, uses 5 different storage facilities that are strategically located in different oil supply hubs of the country. Apart from this, HPL has recently commissioned its own storage Facility in Shikarpur, Sindh which is currently being fully utilized by the Company while HPL will also commission another storage facility at Machike in Sheikhupura District of Punjab this year. The operational support of these purpose built state‐of‐the‐art storage facilities will provide significant volumetric growth in the sales of High Speed Diesel & Motor Spirit. With the shortage of CNG in the country during the last 3 years the country‐wide volume of Motor Gasoline has doubled. HPL has hired a storage facility at Kemari on long‐term basis to manage the imported products and imported its first cargo in December 2013. The import facilities for fuel oil, motor gasoline and High Speed Diesel have placed the Company strategically in a very strong position for the security of its supplies. Sponsor Profile & Management Prowess: The main sponsor of HPL, Mr. Mumtaz Hasan Khan, has an experience of over 50 years in the Oil industry and has been associated with reputable brand names such as Burmah Shell. Over the years HPL has gathered a team of well experienced individuals who have significant expertise in the oil industry. The Company has a strong emphasis on recruiting and retaining the best professionals who play the pivotal role in this business model. The Management has a cumulative experience of 175 years pertaining to the Oil Marketing industry. Recent Growth Track‐Record: From 2010 onwards the company’s sales has increased tremendously at year on year basis. This growth has resulted in an increase of market share from 1.00% to 2.50% up to October 2013. (Source: OCAC Oil Report)

Year Sales of HPL

2010 PKR 9,202,000,000

2011 PKR 19,583,000,000

2012 PKR 29,775,000,000

2013 PKR 57,441,000,000

The current network of the Company has the capacity to further enhance the sales volumes after completion of the Machike Storage Facility based in Sheikhupura District of Punjab. Attractive Floor Price: The floor price of PKR 20.00 per share represents an attractive discount of 64.64% on CY13 P/E Multiple of HPL i.e. 3.36 times versus the P/E Multiple of KSE‐100 Index i.e. 9.49 times (Source: Bloomberg).


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Moreover, we have also undertaken relative valuation based on comparison of HPL with leading oil marketing companies of the country. For relative valuation we have considered the following companies:

Attock Petroleum Limited

Pakistan State Oil

Shell Pakistan Limited The following table highlights the financial highlights and trading multiples of the above mentioned OMCs in comparison with HPL:

Indicators PSO SHELL APL HPL

Retail Outlets 3,760 798 362 210

Sales (PKR in 000') 1,294,503,247 244,316,875 191,181,800 57,469,448

PAT/ (LAT) (PKR in 000') 12,557,945 (2,082,531) 3,906,534 391,252

Shares (No. of shares) 246,987,217 85,609,886 69,120,000 65,600,000

EPS (PKR per share) 50.84 (24.33) 56.52 5.96

Market Price (As at 31-Dec-13) 333.22 190.43 499.69 20.00*

Shareholder's Equity (PKR in 000') 61,887,604 6,175,590 14,043,457 1,443,540

Book Value (PKR per share) 250.57 72.14 203.18 22.01

P/ E Ratio 6.55 N/A 8.84 3.36

P/ B Ratio 1.33 2.64 2.46 0.91

Financial Reporting Date 30-Jun-13 31-Dec-12 30-Jun-13 31-Dec-13

The floor price of PKR 20.00 per share represents an attractive discount of 56.42% based on CY13 P/E Multiple of HPL of 3.36 times versus the Average P/E Multiple of the above mentioned OMCs of 7.70 times. Furthermore, when comparing the CY13 P/B Multiple of HPL of 0.91 times with the Average P/B Multiple of the above mentioned OMCs of 2.14 times, the P/B Multiple presents a discount of 57.54%.


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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 of 18,750,000 Ordinary Shares within two (2) working days of the closing of the bidding period as required under Clause 5 of Appendix 4 of the Listing Regulations of the Karachi Stock Exchange Limited, the Lahore Stock Exchange Limited and the Islamabad Stock Exchange Limited at the strike price determined through the Book Building process. In the opinion of the Directors, the resources of the Underwriters are sufficient to discharge their underwriting commitments / obligations. PUBLIC PORTION As required under Clause 6 of Appendix 4 of the Listing Regulations of Karachi Stock Exchange Limited, the Lahore Stock Exchange Limited and the Islamabad Stock Exchange Limited, the General Public portion of the Issue 6,250,000 ordinary shares will be underwritten as follows:

Name of Underwriter Number of Shares Underwritten Amount (PKR)

TOTAL

Names of the underwriters and number of shares underwritten by each of them along with the amount shall be disclosed in the final Prospectus. If, and to the extent, the Ordinary Shares underwritten are not subscribed and paid for in full by the closing date for the public subscription, the Underwriters in terms of the underwriting agreements will, within ____ days of being called upon to do so by the Company, (i) subscribe and take up against full payment in cash or (ii) procure subscribers to subscribe and take up against full payment in cash, the shares remained unsubscribed subject to the maximum number of the shares underwritten by each of them. In opinion of the Directors, the resources of the Underwriters are sufficient to discharge their underwriting commitments.

4.2. UNDERWRITING COMMISSION BOOK BUILDING PORTION The Book Runner will be paid book running fee and underwriting commission at the rate of 1.55% of the Book Building portion of the Issue.


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In addition to the underwriting commission, the Book Runner will be paid a take‐up commission at the rate of 2.00% 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.

4.4. COMMISSION TO THE BANKERS TO THE ISSUE Commission at the rate of 0.50% of the amount collected on allotment in respect of successful applicants will be paid by the company to the Bankers to the Issue for services to be rendered by them in connection with the public issue, plus out‐of‐pocket expenses, if any.

4.5. BROKERAGE For this Issue, brokerage shall be paid to the TREC Holders of KSE, LSE and ISE at the rate of 1.00% of the value of shares (including premium if any) actually sold through them. 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 42,638,917. The break‐up of these preliminary expenses is given below:

Expenses to the Public Issue Rate Amount (PKR)

Underwriting Commission – Book Building 0.75% 2,812,500

Underwriting Commission – General Public 1.50% 1,875,000

Take‐up Commission – Book Building* 2.00% 7,500,000

Take‐up Commission – General Public* 2.00% 2,500,000

Commission to Bankers to the Issue Including Out of Pocket Expense 0.50% 1,425,000

Brokerage to Members of Stock Exchanges* 1.00% 5,000,000

Book Runner Fee 0.80% 3,000,000

Joint Lead Management & Arrangement Fee 2.00% 10,000,000

Printing, Publication of Prospectus / Application Forms 2,000,000

KSE Initial Listing Fee 906,000


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KSE Annual Listing Fee 349,711

KSE Service Charges 50,000

KSE Book Building Software Charges 500,000

LSE Initial Listing Fee 906,000

LSE Annual Listing Fee 196,206

LSE Service Charges 50,000

ISE Initial Listing Fee 906,000

ISE Annual Listing Fee 55,000

ISE Service Charges 10,000

CDC Annual Fees for Eligible Security 67,500

CDC Fresh Issue Fee 680,000

SECP Application & Processing Fees 200,000

Legal & Professional Charges 500,000

Balloters & Share Registrar Fees etc. 150,000

Miscellaneous Costs 1,000,000

Total Expenses 42,638,917

* These amounts represent the maximum possible costs under these heads.


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PART 5 5. THE ISSUER

5.1. COMPANY HISTORY

Hascol Petroleum Limited (“HPL”) was incorporated in March, 2001 under the Companies Ordinance, 1984 primarily to take advantage of the petroleum sector deregulation and undertake a program for owning, leasing and renting oil storage facilities as well as importing petroleum products for its own account.

In February 2005 HPL was granted a full marketing license by the Government of Pakistan and since then HPL has been engaged in developing its retail network under the HASCOL brand and by 31st December 2013 HPL had commissioned two hundred and ten (210) retail outlets across Pakistan. The license was granted subject to few conditions which primarily were based upon the following:

Investment of not less than PKR 500mn

Development of Infrastructure including retail fuel stations and two storage installations

As at December 31, 2013 HPL’s investment in its fixed assets amounted to PKR 2,315 million while the Company operates through 210 retail fuel stations wide‐spread across Pakistan. Further to this, HPL has constructed and commissioned a state of the art storage installation at Shikarpur, Sindh while another purpose built installation is currently being constructed at Machike, in Sheikhupura District of Punjab. On June 17, 2013 the Oil & Gas Regulatory Authority (“OGRA”) vide their letter number OGRA – Oil – 19 – 3 (17) extended the oil marketing license up to May 31, 2014 subject to the development of HPL’s installation at Machike & Shikarpur. The Shikarpur installation of HPL has been completed and is being operated since March 2013 and the Machike installation on track for a scheduled completion at April 2014. With the completion of Machike storage facility the Company will be completing its development plan in compliance with OGRA’s directive and shall become entitled for a permanent oil marketing license. In order to further enhance its capacity the Company is also in the process of acquiring a land at Mehmood Kot, Punjab adjacent to Pak‐Arab Refinery Limited. This will facilitate the Company to cover its supply in the Southern Punjab envelope.

5.2. CURRENT SHAREHOLDING STRUCTURE

Serial Name of Shareholder Shares %

1 Mr. Mumtaz Hasan Khan – Chairman & CEO 34,387,567 52.42%

2 Fossil Energy (Pvt.) Limited 12,175,713 18.56%

3 Marshal Gas (Pvt.) Limited 8,500,396 12.96%

4 Other Shareholders 10,536,324 16.06%

Total Shares 65,600,000 100.00%

5.3. PRODUCTS OFFERED

HPL’s product mix includes petroleum products such as Motor Spirits (“MS”), Furnace Oil (“HSFO”), High Speed Diesel (“HSD”), Jet A‐1, Liquid Petroleum Gas (“LPG”), Super Kerosene Oil (“SKO”) and Lubricants. The Company is currently offering Petrol, Diesel


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under the Company’s own brand name as “Tiger Super” and “Rocket Diesel” and lubricants under the brand name of FUCHS. HPL has an arrangement with one of the leading lubricant manufacturers of Germany namely FUCHS International to manufacture/ import, distribute and sell FUCHS branded lubricating oil and grease in Pakistan. FUCHS is placed among top 10 lubricant manufacturers in the world that holds substantial portion of the global lubricant volumes. HPL is currently engaged in a sole strategic agreement with FUCHS International for the manufacture, import, distribution and sale of these products in Pakistan. The Company is also in contract with Orient Oils (Pvt.) Limited as it blending partner for lubricants in Pakistan. Furthermore, the Company has hospitality agreement with PSO for storage and handling of HPL’s POL products at Keamari & Shikarpur in Sindh and in Machike Chakpirana & Sihala in Punjab. Since April 2012, HPL has facilitated the conversion of 400 cars to LPG furthermore 15 Auto Max LPG stations have been setup in different parts of Sindh & Punjab. HPL currently has agreements with SSGC LPG (Pvt.) Limited, Marshal Gas (Pvt.) Limited and Burshane LPG (Pakistan) Limited for the supply of LPG to its facilities.

5.4. RETAIL OUTLETS

Hascol continues to move towards the growth of its distribution network based on the retail outlets, which are classified under the categories of Company Financed (“CF”), Mid‐Dealer Financed (“MDF”) and Total Dealer Financed (“TDF”). Currently the Company owns 210 retail outlets and the firm plans to expand its MS and HSD business by establishing more retail outlets in the coming years.

The detail of current retail outlets with respect to location is as follows:

Province Retail Outlets %

Sindh 72 34.30%

Baluchistan 7 3.30%

Punjab 98 46.70%

Khyber Pakhtun Khua 30 14.30%

Azad Jamu & Kashmir 3 1.40%

Total 210 100.00%

5.5 STORAGE FACILITIES

HPL currently uses various storage facilities under hospitality agreements with other OMCs at the following locations along with its own facilities at Machike (currently under development) and Shikarpur:

Serial Facility Ownership

1 Port Qasim, Sindh Long‐term agreement with VTT Port Qasim (Pvt.) Limited

2 Kemari, Sindh Long‐term agreement with Al‐Raheem Trading

3 Kemari Import Terminal, Sindh

Long Term Lease Agreement with Al‐Abbas Group

4 Shikarpur, Sindh HPL owned

5 Machike, District Sheikhupura, Punjab

HPL owned (under development)

6 Amangarh, District Nowshera, KPK

Long‐term lease agreement with an option to buy


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Port Qasim Installation The installation is located opposite the Pak – Arab Pipeline Company Limited (“PAPCO”) terminal and Adjacent to Bakri Terminal on 4 acre. The terminal will be used for Local and Imported HSD, would feed in to Karachi and Shikarpur. Furthermore collection has already been obtained from PAPCO. HPL expects through put from this location to be 30,000 MT. All necessary approvals from the relevant authorities have been obtained. HSD Tank 2 X 16200 MT

Kemari Installation Hascol Petroleum Limited has agreement term with Al Rahim Trading Co. (Pvt.) Limited (“ATC”). The storage tanks are connected to Keamari Port. The ATC is also connected to National Refinery Limited (“NRL”) and Pakistan Refinery Limited (“PRL”). HSD Tank 1X 2500 MT

HSFO Tank 1 X 8000 MT

MS Tank 1 X 450 MT

SKO & LDO 1 X 1200 MT

Kemari Import Terminal

Hascol Petroleum Limited has a long‐term agreement with Al‐Abbas Group. The storage

tanks are connected to the jetty located at Kemari Port. The total capacity of MS tanks at

this facility is of 13,000 MT.

Shikarpur Installation This is the HPL flagship facility that is spread over 8 acres of land at the cost of approximately PKR 400 Million. HSD Tank 1 X 6000 MT

MS Tank 1 X 500 MT

Machike Installation This state‐of‐the‐art storage facility is currently under development 9km from Sheikhupura ‐ Sargodha Road, opposite Parco Pumping Station # 4. HSD Tank 1 X 4000 MT

HSD Tank 1 X 2000 MT

MS /PMG 2 X 250 MT

SKO 2 X 250 MT

Firewater Tank 1 x 250 MT

Amangarh Installation Amangarh Depot is an HPL storage facility in Khyber Pakhtoon Khaw. It has the following storage facilities: HSD Tank 1 X 1200 MT

Lubricants Storage 1 X 300 MT


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Mehmoodkot

Gatti

Machike

Chaklala

Quetta

Tarujabba

Keamari

Shikarpur

ShershahVehari

NRL, PRL & BYCO

PARCO & Dhodak

ARL

Pipelines

•White Oil Pipeline

•PARCO Pipeline

•MFM Pipeline (Mehmoodkot Faisalabad Machike )

Local55%

Imports45%

Refined product

Local10%Imports

90%

Refined + Crude

Petroleum Infrastructure In Pakistan

Port Qasim

65% Demand in North

90% Supply from South

HPL Storage Facilities

Common User Facilities

Other OMCs Facilities

5.6 FUTURE PROSPECTS

HPL is a growth oriented Company that is focused on the organic growth of its wide‐spread retail presence and back‐end storage facilities. The Company successfully completed the construction of its Shikarpur storage facility in January 2013 and the installation became fully operational in March 2013. The project was completed at a total cost of PKR 350 million. In accordance with the Company’s expansion plan, the Machike facility is currently being constructed and would be completed by April 2014 with a total estimated cost of PKR 400 million which also includes the capital expenditure of PKR 200 million that would be done through the proceeds raised from the Initial Public Offering of the Company. Further to this, HPL also plans to add 50 more retail fuel stations across the country by the end of 2014 which includes 27 fuel stations in Sindh and 23 fuel stations in Punjab. The Company would be adding a total of 91 retail fuel stations by the end of the year 2016 in order to further expand its retail network for the sale of MS and HSD. The Company also plans to enhance its storage facilities in the coming future based on the growing demand of POL products and utilization of existing facilities. The Company has also signed a Technical Services Agreement (“TSA”) with Emirates National Oil Company (“ENOC”), UAE in order to start aircraft refueling services in Karachi.


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5.7 RISK FACTORS

The Company wishes to highlight the following major risk factors, which may affect the profitability of the Company:

5.7.1 BUSINESS RISK

The Company’s performance outlook, market activity and the larger economic picture influence the price of its stock. When the economy is expanding, the outlook for many companies will be good and the value of their stocks should rise. The opposite is also true. Usually, the greater the potential reward, the greater would be the risk. For small companies, startups, resource companies and companies in emerging sectors, the risks and potential rewards are usually greater. MITIGANT: The Company is expected to mitigate the impact of business risk by employing adequate risk management measures to ensure that exposures remain within prudent limits. In addition, disaster recovery plans should help mitigate the impact of risk arising from failure of infrastructure. Corporate governance shall also be employed to further facilitate this effort.

5.7.2 SUPPLY CHAIN RISK The back bone of any OMC is its supply chain. The smaller companies are dependent on the supplies from local refineries. Any disruption in the supply of local refineries will adversely affect the continuity of business. MITIGANT: The infrastructure of HPL has been developed keeping in view this life line risk of smaller OMCs. Two of its installations are connected to the port, via cross country White Oil Pipeline System and have the capacity to bring in the product from ME region and supply to the local market. The top management of the company has got a rich experience of trading internationally and have full resources to replace the local supplies with imported products and enhance its sales in case the local refineries are not able the meet the demand. Furthermore, HPL’s up country oil installations also have connectivity to the White Oil Pipeline System.

5.7.3 LOGISTICS RISK

The current un‐organized logistics system poses a serious threat to the oil marketing companies. This may result in temporary disruption of supplies to customers and retail outlets thereby affecting the profitability of the company. MITIGANT:

Currently the Company has 15 contractors to transport its product all over Pakistan thereby not depending on any singly hauler. HPL is developing a robust standardized logistic plan wherein professional haulers are under development and the supply envelops are being developed to optimize the usage of tank lorries thereby providing the fair return to the logistic companies.


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5.7.4 INFLATION RISK

The Company is open to inflation risk like that of the whole economy. Inflation risk may be translated to erosion of values vis‐à‐vis foreign currency exchange fluctuations. There is a possibility that the value of assets or income of the Company may decline as increasing inflation shrinks the purchasing power of the Pakistan Rupee. MITIGANT:

The company has got a fixed commission on its sale as notified by Ministry of Petroleum and all procurements made in USD are being taken care in the pricing structure notified by the Government as part of its selling price. Therefore, the company is not exposed to inflation risk due to foreign currency exchange fluctuations.

5.7.5 SHARE MARKET PRICE RISK

This is the risk that the share price of the Company may decline due to bearish trends at the Stock Exchange. In addition, the risk can get amplified if the Company fails to maintain satisfactory growth.

MITIGANT:

The offered price of the company’s share is well below the price quoted in peer group. Moreover, this risk is mitigated by impressive growth performance of the Company vindicated by the continuous robust infrastructural developments.

5.7.6 LIQUIDITY RISK & CIRCULAR DEBT ISSUE

All the major OMCs in Pakistan are under severe liquidity crisis due to the circular debt issue. Major contributors to this circular debt are payments from IPPs, airlines, public sector companies, tax authorities and Ministry of Petroleum.

MITIGANT: All sales are made to retail outlets against advance payments made at least one day prior to supply. HPL have got a very robust credit policy where in no product is supplied without the payment being secured against an irrevocable ‐ without recourse banking instrument. All IPPs and public sector companies are supplied strictly based on the above policy of the company. The Company’s sales tax is managed by supplying to zero tax rated entities and exporting the fuel oil to the bunker business. HPL has not yet started supplies to airlines and will have an appropriate policy at the time when this business segment will be started.

5.7.7 UNDER SUBSCRIPTION RISK

This is the risk that the Public Issue may get under‐subscribed on account of lack of investors’ interest.

MITIGANT:

The issue is priced at PKR 20/‐ per share. The Company has an impressive brand image along with well managed operations due to which the probability of under‐subscription is


48

therefore considered low. The public issue is fully underwritten by commercial banks and other financial institutions.

5.7.8 OMC LICENSE RISK

The OMC license of HPL has been extended up to May 31, 2014 by OGRA vide their letter number OGRA‐Oil‐19‐3(17) dated June 17, 2013 subject to development of the Company’s storage facilities at Machike and Shikarpur. Non‐compliance of the terms set by OGRA may result in imposition of a monetary fine as last year the fine imposed on the Company for non‐completion of both the depots was of PKR 6 million.

MITIGANT: HPL has fully complied with its development plan presented to OGRA as one of the depots located in Shikarpur is currently fully operational and came online in March 2013. The other depot located in Machike based out of Sheikhupura District in Punjab is also near to its completion and 80% of the work has already been completed by the Company. Monthly report to this effect has been filed with OGRA which has shown satisfaction on the progress of this project. Thus the Company believes this is not a risk factor impacting the continuity of its primary business. The maximum exposure to which the Company may be exposed to is imposition of monetary fine which also remains unlikely given the progress of Machike facility’s construction.

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 SECTION 53(1) READ WITH CLAUSE 28(1) AND 28(2) OF

SECTION 2 OF PART I OF THE SECOND SCHEDULE TO THE COMPANIES ORDINANCE, 1984 FOR THE PURPOSE OF INCLUSION IN THE PROSPECTUS OF HASCOL PETROLEUM LIMITED

6.1.1 Auditors Report on Standalone Basis


50


51


52


53


54


55


56


57


58


59

6.1.2 Auditors Report on Consolidated Basis


60


61


62


63


64


65


66


67


68

6.2 SHARE BREAK‐UP VALUE CERTIFICATE


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Management Note

The revised break‐up value of the Company as at December 2013 on the basis of post‐IPO paid up capital is given below: Issued, Subscribed & Paid‐up Capital PKR 906,000,000 Share Premium PKR 253,300,000 Revenue Reserve – Unappropriated Profit PKR 425,864,000

Total Shareholders’ Equity PKR 1,585,164,000

Revaluation Surplus PKR 358,376,000

Total Shareholders’ Equity & Revaluation Surplus PKR 1,943,540,000

Number of Ordinary Shares 90,600,000

Break‐up Value per Share without Revaluation Surplus PKR 17.50 Break‐up Value per Share with Revaluation Surplus PKR 21.45

The Company has supply contracts with all the refineries other than Byco Petroleum Limited that payments will be made through 21 days Letter of Credit. Hence, the increase in Trade Creditors in 2013 is due to increase in the LC lines and an approximately 100% increase in the company's sales. Simultaneously this increase has also resulted in the increase in ‘Stock in Trade’ and ‘Trade Debts’. Kindly note that the company does not offer any unsecured credit other than PKR 250 million allowed to its Franchise retail outlets. The debt for the Company mainly comprises of Fuel Oil supplied to IPP's against irrevocable bank guarantees because of which HPL is not a part of any circular debt issue as well.


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6.3 AUDITORS CERTIFICATE ON ISSUED, SUBSCRIBED, AND PAID‐UP‐CAPITAL OF THE COMPANY


71


72

6.4 AUDITOR CERTIFICATE FOR ISSUE OF SHARES FOR CONSIDERATION OTHERWISE THAN IN CASH


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6.5 SUMMARY FINANCIAL HIGHLIGHT FOR THE PRECEDING YEARS

2009 2010 2011 2012 2013

Net Sales 10,384 9,202 19,584 29,775 57,469

Sales Tax (1,303) (1,282) (2,513) (3,845) (7,650)

Other Revenue 34 28 23 62 47

Net Revenue 9,115 7,947 17,094 25,992 49,867

Cost of Sales (8,731) (7,738) (16,394) (24,996) (48,506)

Gross Profit 384 209 699 996 1,360

Profit Before Taxation 74 (282) 43 292 425

Profit After Taxation 101 (275) 82 218 392

Non Current Assets 737 1,016 1,214 1,916 2,648

Current Assets 551 966 1,136 2,595 6,707

Total Assets 1,288 1,983 2,350 4,511 9,355

Total Equity 380 111 440 660 1,085

Surplus on Revaluation 22 21 19 396 358

Long Term Liabilities 299 302 205 387 281

Current Liabilities 587 1,549 1,686 3,067 7,630

Total Equity & Liabilities 1,288 1,983 2,350 4,510 9,354

No. of Shares 40.60 41.00 65.60 65.60 65.60

Financial Highlights

(Amount in PKR mns)

* For the year ended December 31

st

6.6 FINANCIAL RATIOS FOR THE PRECEDING YEARS

2009 2010 2011 2012 2013

EPS (PKR) 2.39 (6.63) 1.94* 3.33 5.97

BVPS with Revaluation (PKR) 9.90 3.22 7.00 16.10 22.01

BVPS w/o Revaluation (PKR) 9.29 2.71 6.71 10.07 16.55

ROE (%) 26.52% ‐247.43% 18.53% 33.05% 36.07%

ROA (%) 7.82% ‐13.85% 3.47% 4.84% 4.19%

Financial Ratios

*The EPS of 1.94 is based on the total weighted average number of shares that is 42,145,753 Ordinary Shares as 24,600,000 Ordinary Shares were issued in December 2011.


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PART 7

7 MANAGEMENT

7.1 BOARD OF DIRECTORS OF THE COMPANY

Serial Name & Address Designation Directorship in Other

Companies

1)

Mr. Mumtaz Hasan Khan 1/2 A‐Street Off Khayaban‐e‐Shaheen, Phase‐V, DHA Karachi

Chairman & CEO / Director

Sigma Motors Limited EvoiceScribe (Pvt.) Limited

2)

Dr. Akhtar Hasan Khan 11‐D, Danepur Road, GOR‐1, Lahore

Director Sigma Motors Limited

3)

Mr. Najmus Saquib Hameed 18‐B‐II, 10th Street, Phase‐II, DHA, Karachi

Director NIB Bank Limited Sigma Motors Limited

4)

Mr. Farooq Rahmatullah 7 – Main Khayaban‐e‐Shamsheer, Phase‐V, DHA, Karachi

Director Pakistan Refinery Limited Faysal Bank Limited

5)

Mr. Liaquat Ali House No. SD‐53, Askari‐III Cantt., Karachi

Director Marshal Gas (Pvt.) Limited

6)

Mr. Sohail Hasan Bungalow No. 48, Khayaban‐e‐Shujaat, Phase‐VIII, DHA, Karachi

Director Habib Metropolitan Bank Limited

7)

Mr. Saleem Butt 77/1, Lane 20, Phase‐VII, DHA, Karachi

COO / Executive Director

Pakistan Refinery limited TRG Pakistan limited Sigma Motors Limited

7.2 OVER DUE LOANS

There are no overdue loans (local or foreign 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 PROFILE OF DIRECTORS

Mr. Mumtaz Hasan Khan – Chairman & C.E.O Mr. Mumtaz Hasan Khan has over 50 year of experience within the oil industry. He started his career with Burmah Shell Oil Storage and Distribution Company in May 1963. In January 1976 Mr. Mumtaz resigned from the post of International Sales Manager to join Pakistan Services Limited as Managing Director. Pakistan Services Limited was the owning company of four Intercontinental Hotel (now known as Pearl Continental Hotel) in Pakistan at that time. In 1980 Mr. Mumtaz left Pakistan Services Limited and moved to


75

`London. He established Hascombe Limited, which started trading in Crude Oil and Petroleum Products. Hascombe bought petroleum product from Middle Eastern sources and sold to international trading companies like Shell and Elf. Hascombe was also a major supplier of petroleum products to Pakistan during 1991 till 1996. In 2005 Hascol was granted an oil marketing license by the government of Pakistan in Pakistan. Hascol has established a network of 200 Petrol Pumps all across Pakistan including Azad Jamu and Kashmir. Mr. Mumtaz Hasan Khan is currently also serving as Chairman of Sigma Motors (Sole distributor of Land Rover vehicles in Pakistan). He is a Trustee of the Foundation of Museum of Modern Art (FOMMA) located in Karachi and the member of the Expert Energy Group which prepared Pakistan’s first Integrated Energy Plan in 2009. Dr. Akhtar Hasan Khan – Director Dr Akhtar Hasan Khan is a former civil servant. He retired as Secretary Planning for the Government of Pakistan. Dr. Akhtar holds a Masters in Public Administration from the University of Harvard and a PHD in economics from the TUFFs University in USA. Dr. Akhtar served as Secretary Education, Additional Secretary Finance, Additional Secretary Commerce and additional secretary ministry of production. Dr. Akhtar has served on the board of public organization such as Pakistan International Airline, National Development Finance Corporation, Pakistan Automobile Corporation and Chairman of the Pakistan Ghee Corporation. Dr Akhtar is the author of several publications; his recent book was called “the impact of privatization in Pakistan”. He is a Director of Sigma Motors Limited. Mr. Najmus Saquib Hameed – Director Mr. Najmus Saquib Hameed is the honorary Vice Chairman and C.E.O of Layton Rahmatullah Benevolent Trust (LRBT). LRBT is one of the largest charitable organizations in Pakistan providing free eye care to over 2 million patients through a network of 17 hospitals annually. He has over 47 year of experience in Senior Management position with multinational organization such as Unilever and Pakistan Tobacco where he retired as Chairman of the Company. Mr. Najmus Saquib holds a Master in International Relations and was a gold medalist at Institute of Business Administration (IBA). He has served as Chairman of the Cigarette Manufacturers Association and past Chairman Board of Governor at the Indus Valley School of Art and Architecture, Karachi. Mr. Najmus Saquib Hameed is currently serving on the board of NIB Bank Limited and Sigma Motors Limited. Mr. Farooq Rahmatullah – Director Mr. Rahmatullah is law graduate from the University of Peshawar. He joined Burmah Shell and Oil Distribution Company in 1968. Mr. Rahmatullah worked in various capacities with the organization i.e. Chemical, Human Resource, Marketing, Supply, Distribution and Retail. In 1994 Mr. Rahmatullah was transferred to Shell International London as Manager Business Strategy Division. He looked after various portfolios covering 140 countries. In 1998 he was transferred back to Pakistan as Head of Operations Shell Pakistan. Mr. Rahmatullah was also looking after Middle East and South Asia (MESA).In 2001 he was appointed managing director Shell Pakistan Limited a post he retired from in June 2006. Mr. Rahmatullah is credited with being the founding member of PAPCO (Pak Arab Pipeline Company limited). He has also served as the Director General of Civil Aviation Authority, Chairman of the Oil and Gas Development Authority, Chairman of LEADs. Since 2005 he has been chairman of the Pakistan Refinery Limited. He is currently serving on the Board of Director of Faysal Bank Limited, Society of Sustainable Development, and Resource Development Committee for the Agha Khan Hospital. He is also the Group Founding Member of the Pakistan Human Development Fund and a member of National


76

Commission of Government Reform and Member of the Pakistan stone Development Company. He is the Chairman of Pakistan Refinery Limited and Non‐Executive Director of Faysal Bank Limited. Mr. Liaquat Ali – Director Mr. Liaquat Ali is a Chartered Accountant by profession and a fellow member of the Institute of Charted Accountants of Pakistan (ICAP). He has over 18 years of experience in leasing and investment banking field and has completed numerous transactions including restructuring of companies, merger and Acquisition. Mr. Liaquat Ali is a member of one of the leading Chartered Accountant firm Avais Hyder Liaquat Nauman Chartered Accountants (AHLN). AHLN is a member of RSM international which is the 7th largest network of accounting and consulting firms in the world [1]. AHLN has offices in Lahore, Karachi, Peshawar, Faislabad, Islamabad, Quetta and Kabul (Afghanistan). He is also a member of the benevolent fund committee of ICAP. Mr. Sohail Hasan – Director Mr. Sohail is a Chartered Accountant and a member of the Institute of Chartered Accountants in England and Wales and the Institute of Chartered Accountants of Pakistan. He was a partner in a leading accounting firm A.F.Ferguson & Co for over 35 years and has also served as its senior partner. He has served as the member of the Provisional Financial Commission Punjab and is currently a member of the Corporate Law Review Commission of Pakistan. He is a Non‐Executive Director of Habib Metropolitan Bank Limited. Mr. Saleem Butt – Chief Operating Officer & Executive Director Mr. Saleem Butt has achieved a diversified 22 year career in Finance, Corporate Affairs, Supply Chain, Sales, Management, Human Resource, I.T and ERP implementation. Mr. Butt started to work as a Chartered Accountant for a firm which is now a part of Price Waterhouse Coopers. He then worked with various Shell Group of companies in Pakistan and overseas for 14 years. He was then offered a position with Emaar Pakistan a subsidiary of Emaar PJSC, U.A.E as Chief Operating Officer (COO). Mr. Butt is a Chartered Accountant and holds a Bachelor Degree in commerce from the University of Karachi. He received his fellowship from the Institute of Chartered Accountants of Pakistan in 2004. He also serves as non‐executive director on the boards of Pakistan Refinery Limited, TRG Pakistan Limited and Sigma Motors Limited.

7.5 PROFILE OF OTHER KEY MANAGEMENT PERSONNEL

Mr. Muhammad Ali Ansari ‐ Chief Financial Officer Mr. Muhammad Ali Ansari has over 10 year of experience and is a Chartered Accountant by profession. He started his career with A.F.Ferguson & Co and has been associated with Hascol Petroleum since December 2009.

Mr. Zafar Munshi ‐ General Manager Marketing & Retail Mr. Zafar Munshi has been associated with Hascol Petroleum Limited for about 9 year and has 20 years of experience in the oil industry. Mr. Aamir Millwalla ‐ General Manager Lubricant Mr. Aamir Millwalla is a sales expert in the field of petroleum product sales. Before joining Hascol in 2013 he was previously employed with Shell Pakistan.

[1] Survey by International Accounting Bulletin published on January 28, 2010


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Mr. Shamim Raza Naqvi ‐ General Manager Operations Mr. Naqvi is a seasoned petroleum industry expert with over 33 years of experience in this sector. He possesses around 30 years of diversified refinery experience in Pakistan Refinery Limited ranging from plant operations, economic analysis, procurement, logistics and commercials. Mr. Naqvi has also been associated to the OMC sector for the past 3 years prior to joining Hascol Petroleum. Ms. Abida Jan Muhammad ‐ Manager Human Resources Ms. Abida Jan Muhammad has worked in various human resource positions in Shell for 15 years. She was part of the transition of Pakistan Burmah Shell to Shell Pakistan and Shell Burshane to Shell Gas LPG (Pakistan) Limited. Ms. Abida worked as the Deputy Coordinator to the world representative of IUCN – World Conservative Union for three years. She joined Hascol in 2007 in the capacity of Manager Human Resource. Mr. Ahsan Abidi ‐ Head of Internal Audit Mr. Ahsan Abidi has over 35 year of experience working in the oil sector. He joined Hascol in August 2012, prior to working with Hascol Mr. Abidi had worked with the Overseas Oil Trading Company, Admore and Shell.

Mr. Imran Javed ‐ Head of Commercial Fuels Mr. Imran Javed has experience of more than 10 years of marketing Strategy, Supply Chain and Logistics. Mr. Javed has been handling IPP, CPP, Vessels and Port Bunking. Prior to working with Hascol Mr. Imran worked with Overseas Oil Trading Company and Admore. Mr. Muhammad Kashif ‐ Head of Information Technology Mr. Muhammad Kashif has experience of 15 years in Project Management, Information Technology and Business Administration. He is currently leading a project for Oracle JD Edward Enterprise one 9.0.

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.

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 Clause 68 of the Article of Association of the Company, unless determined by the Company in general meeting, every Director (including an alternate Director) shall be entitled to be paid as remuneration for his services for attending Board Meeting, a fee in such amount as may be fixed from time to time by the Board. Each Director (including each alternate Director), shall be entitled to reimburse his reasonable expenses incurred in consequence of his attendance at meeting of the Directors, or of Committees of Directors.


78

No remuneration is payable to non‐Executive Directors. However, Executive Directors, performing whole time duties, are paid remuneration as per the approval by the Board of Directors.

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 with the exception of HPL’s Term Agreement with Marshal Gas (Private) Limited for supply of LPG to its retails outlet(s) as one of the Directors in the Company is also a Director in Marshal Gas (Private) Limited.

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 September 5, 2011 for the period of three years.

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


79

the proceedings of the Company shall be conclusive evidence of the fact, without proof of the number or proportion of the votes recorded in favour of, or against, that resolution.

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 168 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 AUDIT COMMITTEE / CONSTITUTION OF AUDIT COMMITTEE Audit Committee of the Board is in place and the Terms of Reference are determined by the Board of Directors in accordance with the Listing Regulations of KSE, LSE & ISE to comply with the Code of Corporate Governance.

7.15 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.

7.16 BORROWING POWERS The Directors may from time to time at their discretion borrow and secure the payment of any sum or sums of money for the purposes of the Company and may themselves lend to the Company on security or otherwise subject to the provisions of Companies Ordinance, 1984.

However, under Clause 72 of the Article of Association of the Company, the Board may exercise all the powers of the company to borrow and mortgage or charge its undertaking, property and assets, (both present and future), and to issue debentures and other securities, whether outright or as collateral security 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 made an investment of PKR 97,798,000 in 9,779,800 Ordinary Shares of face value PKR 10.00 each in Hascombe Lubricants (Private) Limited (“HLL”) representing 100% of the share capital. Hascombe Lubricants is a dormant company and has been fully impaired in the financial statements of Hascol Petroleum Limited.

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.


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7.20 REVALUATION OF FIXED ASSETS

The Company revalued its office premises in June 2006 through M/s Iqbal Nanji & Company which resulted in surplus of PKR 18.88 million while the premises were revalued again in October 2007 by M/s Akbani & Javed Associates resulting in a surplus of PKR 39.70 million. In the year 2012 HPL revalued its fixed assets through M/s Asif Associates (Pvt.) Limited and the revalued amount of assets computed to PKR 1,172 million that resulted in a revaluation surplus (net of deferred tax) amounting to PKR 387 million. All of the above mentioned valuations have been conducted by independent valuators.


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PART 8

8 MISCELLANEUOS INFORMATION

8.1 REGISTERED OFFICE / CORPORATE OFFICE

Hascol Petroleum Limited The Forum, Suite #105 – 106 1st Floor, Khayaban‐e‐Jami Clifton, Karachi

8.2 MAJOR BANKS OF THE COMPANY

1. Allied Bank Limited 2. Askari Bank Limited 3. Bank Al‐Habib Limited 4. Habib Bank Limited 5. Habib Metropolitan Bank Limited 6. National Bank of Pakistan 7. Sindh Bank Limited 8. Soneri Bank Limited 9. Summit Bank Limited 10. United Bank Limited 11. First Women Bank Limited 12. MCB Bank Limited 13. Samba Bank Limited 14. Bank Alfalah Limited

8.3 AUDITORS OF THE COMPANY

Grand Thornton Anjum Asim Shahid Rehman Chartered Accountants

8.4 BANKERS TO THE ISSUE

1. Askari Bank Limited 2. Bank Alfalah Limited 3. Faysal Bank Limited 4. Habib Bank Limited 5. Habib Metropolitan Bank Limited 6. KASB Bank Limited 7. MCB Bank Limited 8. Silk Bank Limited 9. Summit Bank Limited 10. United Bank Limited

8.5 BANKER TO THE ISSUE FOR BOOK BUILDING

Summit Bank Limited Arif Habib Centre 23 – M.T. Khan Road Karachi


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8.6 LEGAL ADVISORS OF THE COMPANY

Mohsin Tayebaly & Co. Barriers & Advocates 2nd Floor, Dime Centre, BC‐4 Block‐9, KDA Scheme‐5, Clifton, Karachi PABX: +92‐21‐35375658, +92‐21‐35838077 Fax: +92‐21‐35870240 E‐mail: [email protected] Khalid A. Tanwari & Co. 506 – 507, Paradise Chambers Off Sharah‐e‐Iraq, Near Passport Office Saddar, Karachi Phone: +92‐21‐35656246 Fax: +92‐21‐35656247

8.7 LEGAL ADVISOR TO THE ISSUE

Mohsin Tayebaly & Co. Barriers & Advocates 2nd Floor, Dime Centre, BC‐4 Block‐9, KDA Scheme‐5, Clifton, Karachi PABX: +92‐21‐35375658, +92‐21‐35838077 Fax: +92‐21‐35870240 E‐mail: [email protected]

8.8 JOINT LEAD MANAGERS & ARRANGERS

AKD Securities Limited 602, 6th Floor, Continental Trade Centre Block – 8, Clifton, Karachi PABX: +92‐21‐111‐253‐111 Ext: 628 Fax: +92‐21‐35867992, +92‐21‐35374291 Email: [email protected] Avais Hyder Liaquat Nauman Chartered Accountants Suit No. 407, Progressive Plaza Beaumont Road, Karachi PABX: +92‐21‐35655975 Fax: +92‐21‐35655977 E‐mail: [email protected]

8.9 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: 628 Fax: +92‐21‐35867992, +92‐21‐35374291 Email: [email protected]


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8.10 SHARES REGISTRAR

Central Depositary Company of Pakistan CDC House 99‐B, Block‐B, SMCHS Sharah‐e‐Faisal, Karachi PABX: +92‐21‐111‐111‐500 Fax: +92‐21‐34326053 E‐mail: [email protected]

8.11 UNDERWRITING AGREEMENTS

S.No Underwriters No. of Shares Date of

Agreement

Total

8.12 DUE DILIGENCE REPORTS

S.No Underwriters Date of

Agreement

8.13 MATERIAL CONTRACTS & DOCUMENTS

8.13.1 Details of Medium‐term / Long‐term Financing Facility

S. No Bank Facility Amount

Facility Outstanding

Rate Date

Sanctioned Expiry Date

1

PAIR Investment Company Limited

PKR 100,000,000

PKR 58,333,335

3 ‐ Month KIBOR + 3.00%

April 2012 Sep 2015

2 First Women Bank Limited

PKR 200,000,000

PKR 163,636,364

6 ‐Month KIBOR + 3.00%

Dec 2012 Dec 2015

8.13.2 Details of Letter of Credit Facility

S. No Bank Facility Amount

Facility Utilized

Rate Date

Sanctioned Date of Expiry

1

Summit Bank Limited (Revolving Inland Letter of Credit)

PKR 1,725,000,000

PKR 1,459,000,000

0.10% p.q (Opening) 0.10% p.q (Retiring)

Dec 2013 Sep 2014

2

Summit Bank Limited (Revolving Foreign Letter of Credit)

PKR 524,000,000

PKR 0

0.10% p.q(Opening) 0.10% p.q (Retiring)

Nov 2013 Sep 2014

3

Habib Metropolitan Bank (Inland Letter of Credit)

PKR 600,000,000

PKR

598,000,000


Dec 2013 Jun 2014

4 First Women PKR PKR 0.05% p.q Dec 2012 Feb 2014


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Bank (Revolving Inland Letter of Credit)

300,000,000 299,000,000 (Opening)0.05% p.q (Retiring)

5

Askari Bank Limited (Foreign Letter of Credit)

PKR 50,000,000

PKR 0 0.25% Apr 2013 Apr 2014

6 Askari Bank Limited (Inland Letter of Credit)

PKR 250,000,000

PKR 248,000,000


Apr 2013 Apr 2014

8.14 COMPANY RELATED AGREEMENTS

Details of the following Company related agreements are given below:

Throughput Agreements

Storage Facility Agreements

Hospitality Agreements

Fuel Supply Agreements

Lubricant Import / Distribution Agreement

Lubricant Blending Agreement

LPG Supply Agreements

8.14.1 Throughput Agreements

Party to the Agreement Date Description

Pak Arab Pipeline Company Limited (PAPCO)

12 June 2009 Under the agreement HPL utilizes the PAPCO pipeline system for transporting their products from Karachi to upcountry. If the participants of the PAPCO system do not fully utilize the capacity of the system, the surplus capacity shall be made available to HPL. PAPCO is responsible for Marketing Company’s petroleum products in the system from the time the petroleum products enter the system at the point of entry until the petroleum products are delivered at the point of delivery. This agreement will remain in force as long as the system is in working order and in operation.

Mehmood Kot – Faisalabad – Machike (MFM) Pipeline Transportation Agreement

18 Sep. 2007 Under the agreement HPL is authorized to use the MFM Pipeline system constructed, own, operate and maintain by PARCO. The quantity of the Petroleum Products to be supplied by the HPL shall be determined on a pro rata basis according to the requirement/market share of the HPL. PARCO shall recover from HPL an amount equal to the cost of the


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Petroleum Product required for Line Fill proportional to the desired throughput of HPL. HPL shall pay to PARCO transportation charges as notified by Government of Pakistan from time to time on actual quantities delivered by PARCO at the point of delivery. HPL will use the MFM pipeline system to the extent that it is operative.

8.14.2 Storage Facility Agreements


Al‐Hamd Bulk Storage (Pvt.) Limited

1 Jan. 2013 HPL is interested to store Refinery Products, including HSFO, HSD & PMG at Al Hamd Terminal for onward delivery to their customers. Maintenance of storage facility in all respect is the responsibility of Al Hamd. Any loss of quantity and quality of products due to improper storage or negligence of handling shall be charged to Al Hamd. Storage charges will be paid within 14 days of the delivery of invoice.

VTT Port Qasim (Pvt.) Limited 18 Mar. 2013 Under the agreement HPL hasmanagement and control of two tanks of VVT Port Qasim connected with the PAPCO system for storing and transporting of their product including the permission to sub‐let the unutilized capacity. Management and Control of the Storage facility shall vest with HPL who shall operate the same in accordance with the standard procedures with its own staff. A representative of VTT may post to monitor the operations. HPL is permitted to install and display its own signage’s at the storage facility.

8.14.3 Hospitality Agreement


Pakistan State Oil Company Limited

13 Mar. 2013 Under the agreement HPL has opted Hospitality services from PSO at their Keamari, Shikarpur, Quetta, Machike, Sihala, Tarujabba & Chakpirana terminals for HPL's products namely HSD, PMG and SKO. Hospitality charges will be calculated on a monthly minimum guaranteed throughput volume of 2,500 MTs and


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any quantity over 2,500 MTs shall be charged on actual for HSD / SKO ‐ PKR 0.28/‐ per liter and for MS ‐ PKR 0.39/‐ per liter. In case of less than guaranteed throughput volumes of 2,500 MT in any month, then the tariff for that deficit in volume shall be charged at the rate of PKR 0.39/‐ per liter. The conversion factor applicable on the deficit volume would be of that HSD.

8.14.4 Fuel Supply Agreements


Pak ‐ Arab Refinery Limited 16 Sep. 2011 Under the agreement PARCO shall deliver the petroleum products to HPL at the delivery point as designated by HPL. Products include MOGAS, HOBC, SKP, HSD and FO. Requirement for each product can be changed with market demand. PARCO will charge Ex‐Refinery prices announced by OGRA plus all applicable taxes and duties

Byco Petroleum Pakistan Limited

16 Nov. 2011 Under the agreement BYCO shall supply the petroleum products to HPL including HSFO, HSD and PMG. Estimated monthly product requirement of HSD and PMG are 6,000 MT and 3,000 MT respectively while For HSFO, requirement will be parked by time to time. BYCO will charge Ex‐Refinery prices announced by OGRA including all applicable taxes and duties.

Attock Refinery Limited 28 Aug. 2007 ARL through its letter dated 28th August 2007 has agreed to supply petroleum products including PMG and HSD through pipeline at the designated storage depot of Hascol Petroleum Limited. Estimated monthly supplies of both the products are 50 Tons of PMG and 300 Tons of HSD. ARL will charge Ex‐Refinery prices announced by OGRA including all applicable taxes and duties

National Refinery Limited 23 June 2011 Under the MOU between NRL and HPL. NRL shall supply the petroleum products to HPL including but not limited to MOGAS and HSD. NRL will charge advance payment for the supply of the said products. NRL will


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charge Ex‐Refinery prices announced by OGRA including all applicable taxes and duties for the regulated products. For de‐regulated products, NRL will charge price as announced from time to time by NRL including all applicable taxes.

8.14.5 Lubricant Import / Distribution Agreement


Fuchs Oil Middle East Limited

30 Nov. 2005 FUCHS has granted License to manufacture, distribute, and sell its Products and to use the FUCHS trademark for the sale of products in the territory. FUCHS will provide HPL reasonable technical, research and development, marketing and management assistance necessary and for solving any reasonable problems with respect thereto. HPL shall use the trademarks in connection with the products by referring to ‘manufactured under license of FUCHS, Germany’ and in connection with its own corporate name.

8.14.6 Lubricant Blending Agreement


Orient Oils (Pvt.) Limited 13 Nov 2012 Under the agreement, HPL is interested for utilizing OOPL blending and testing facilities for the blending of 100,000 liters +(‐) 20% of HPL Lubricants. OOPL has agreed to supply or utilize the raw materials provided by HPL for blending of their brands in safe, efficient and economical manner.

8.14.7 LPG Supply Agreements


SSGC LPG (Pvt.) Limited SLL 11 Mar. 2013 SSGC has agreed to supply LPG to the designated retail outlets of HPL. HPL may also use SSGC LPG logo, under mutual consent of both the parties. SSGC will charge advance payment for the delivery of LPG. Price for LPG supply will be based on Local Producer Price of the respective month Plus agreed margin per MT (inclusive of all taxes and transportation).


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Burshane LPG (Pakistan) Limited

27 Apr. 2012 Burshane and HPL have an agreement for the Bulk supply of LPG in HPL’s designated LPG Auto Gas Outlets. Burshane will charge advance payment for the delivery of LPG. Price for LPG supply will be based on Local Producer Price of the respective month Plus agreed margin per MT (inclusive of all taxes and transportation).

Marshal Gas (Pvt.) Ltd 18 Apr. 2012 Marshal Gas and HPL entered in to an agreement for the bulk supply of LPG of 100 MT on monthly basis at the designated LPG Outlets of HPL. Marshal will charge advance payment for the delivery of LPG. Price for LPG supply will be based on Saudi Aramco price announced in the first week of every month Plus agreed margin per MT (inclusive of all taxes and transportation).

8.15 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.

8.16 LEGAL PROCEEDINGS

There are ordinary routine litigations incidental to the business, to which the Company or its subsidiary is a party. However, none of them have any material impact except for the matters disclosed in Auditor’s Report under section 53 (1) produced in Part 6.1 of this document.

8.17 OUTSTANDING PRICE DIFFERENTIAL CLAIMS

As per the deliberations of the main committee of the Oil Companies Advisory Committee (“OCAC”) held in their meeting number MCM‐168 dated September 20, 2007, the financial costs on outstanding Price Differential Claims (“PDC”) should be worked and billed to the GoP through OCAC by the OMCs on a regular basis. Although the company had billed PKR 65.97 million to the GoP / OCAC, the management had not accounted for its impact in its financial statements as the inflow of economic benefits though probable, is not virtually certain.

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.


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8.19 FINANCIAL YEAR OF THE COMPANY

The financial year of the Company commences from 1st day of January and ends on the 31st day of December each year.


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PART 9

9 APPLICATION AND TRANSFER INSTRUCTIONS

9.1 GENERAL INSTRUCTIONS

9.1.1 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.

9.1.2 APPLICATION MUST BE MADE ON THE COMPANY’S PRINTED FORM

9.1.3 Copies of this Prospectus and applications forms can be obtained from members of Karachi Stock Exchange Limited, Lahore Stock Exchange Limited and Islamabad Stock Exchange Limited, the Bankers to the issue and their Branches, the Joint Advisors & Arrangers & the Book Runner, and the registered office of the Company. The Prospectus and the application form can also be downloaded from the following website: www.akdsecurities.net and www.hascol.com

9.1.4 The applicants opting for scripless 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.

9.1.5 Name(s) and address (es) must be written in full block letters, in English and

should not be abbreviated.

9.1.6 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.

9.1.7 APPLICATIONS MADE BY INDIVIDUAL INVESTORS

(i) In case of individual investors, an attested photocopy of CNIC (in case of

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


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

produced for verification to the banker to the issue and the applicant’s banker (if different from the banker to the issue) at the time of presenting the application. The attested photocopy will, after verification, be retained by the bank branch along with the application.

9.1.8 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 Gazetted 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 8(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.

9.1.9 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.

9.1.10 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/Passport. The Shares 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.

9.1.11 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 “Initial Public Offering of Hascol Petroleum Limited” and crossed “A/C PAYEE ONLY”.

9.1.12 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.

9.1.13 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.


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9.1.14 Applications are not to be made by minors and / or persons of unsound mind. 9.1.15 Applicants should ensure that the bank branch, to which the application is

submitted, completes the relevant portion of the application form. 9.1.16 Applicants should retain the bottom portion of their application forms as

provisional acknowledgement of submission of their applications. This should not be construed as an acceptance of the application or a guarantee that the applicant will be allotted the number of Shares for which the application has been made.

9.1.17 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.

9.1.18 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.

9.1.19 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.

9.1.20 Submission of Fictitious and multiple applications (more than one application by

same person) is prohibited and such application money shall be liable to confiscation under section 18A of the Securities and Exchange Ordinance, 1969.

ADDITIONAL INSTRUCTIONS FOR FOREIGN / NON‐RESIDENT INVESTORS 9.1.21 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.

9.1.22 Applicants may also subscribe using their Special Convertible Rupee Account

(SCRA) as set out under the State Bank of Pakistan's Foreign Exchange Manual.

BASIS OF ALLOTMENT

9.1.23 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 [●]/‐. Application for Shares below the total value of PKR [●]/‐ 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.


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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).

9.2 BANKERS TO THE ISSUE

Code No. Banks

01 Askari Bank Limited

02 Bank Alfalah Limited

03 Faysal Bank Limited

04 Habib Bank Limited

05 Habib Metropolitan Bank Limited

06 KASB Bank Limited

07 MCB Bank Limited

08 Silk Bank Limited

09 Summit Bank Limited

10 United Bank Limited

9.3 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

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. 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 MMDD, 2014


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9.4 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. BIDDING FORM OF HASCOL PETROLEUM LIMITED

(this space has been left blank intentionally)


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PART 11

11. SIGNATORIES TO THE PROSPECTUS

Mr. Mumtaz Hasan Khan ‐Sd‐

Dr. Akhtar Hasan Khan ‐Sd‐

Mr. Najmus Saquib Hameed ‐Sd‐

Mr. Farooq Rahmatullah ‐Sd‐

Mr. Liaquat Ali ‐Sd‐

Mr. Sohail Hasan ‐Sd‐

Mr. Saleem Butt ‐Sd‐

Signed by the above in the presence of witnesses:

Sd/‐ Sd/‐ ______________________________ ______________________________ Name: Mohammad Ali Ansari Name: Asif Raza Designation: Chief Financial Officer Designation: Treasurer CNIC: 42101‐1396297‐7 CNIC: 42201‐3168380‐3 Address: 120/4, Khayaban‐e‐Rahat Address: L‐3, Block 11, Gulshan‐e‐Iqbal, Off 29th Street, Phase VI , DHA, Karachi Karachi Date: April 12, 2013 Date: April 12, 2013


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PART 12

12. MEMORANDUM OF ASSOCIATION


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