Fatima Fertilizer Prospectus

FATIMA FERTILIZER COMPANY LIMITED

PRELIMINARY PROSPECTUS

For Issue of 200 million ordinary shares (10% of the total paid up capital) at par value of PKR 10/- share (the Floor Price) through the BOOK BUILDING PROCESS

Book Building portion of the Issue comprises of 150,000,000 shares (75% of the total Issue) General Public portion of the Issue comprises of 50,000,000 shares (25% of the total Issue)

BIDDING PERIOD DATES: From 11 January, 2010 to 13 January, 2010

(BOTH DAYS INCLUSIV E)

DATE OF PUBLIC SUBSCRIPTION: From 27 January, 2010 to 28 January, 2010 (BOTH DAYS INCLUSIVE) DURING BANKING HOURS

LEAD MANAGER & BOOK RUNNER

Book Build ing portion underwritten by:

General public portion underwritten by:

(To be filled in within 10 working days of closing of Bidding Period i.e before submission of applicat ion to the exchange for allocation of dates for publication of Prospectus and subscription of shares by the general public as required under clause 6 of Appendix-4 of the listing regulations)

The date of publication for th is Prospectus is:

18 January 2010

ADVICE FOR GENERAL PUBLIC THE INVESTORS AR E STRONGLY ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF TH IS

PROS PECTUS, ESPECIALLY THE RISK F ACTORS GIVEN AT PARA 5.16, BEFORE MAKING ANY INVESTMENT D ECISION.

SUBMISSION OF F ICTITIOUS AND MULTIPLE APPLICATIONS (MORE TH AN 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 MOR E THAN ONE BIDDING APPLICATIONS EXCEPT IN THE CASE OF REVISION OF BID. IF

AN INVESTOR SUBMITS MORE THAN ONE BIDDING APPLI CATIONS THEN ALL SU CH APPLICATIONS SHALL BE SUBJECT TO REJECTION

Initial Public O ffering of Fatima Fertil izer Company Limited

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GLOSSARY OF TECHNICAL TERMS

AHL Arif Habib Limited

BR Book Runner

CAGR Compound Annual Growth Rate

CAN Calcium Ammonium Nitrate

CDA Central Depositories Act, 1997 CDC/CDCPL The Central Depository Company of Pakistan Limited

CDM Clean Development Mechanism

CDS Central Depository System

CER Carbon Emission Reduction

CNCEC China National Chemical Engineering Corporation CNIC Computerized National Identity Card

CO2 Carbon Dioxide

Commission/SECP The Securities and Exchange Commission of Pakistan Company/FATIMA Fatima Fert ilizer Company Limited

CPM Crit ical Path Management CVT Capital Value Tax

DAP Di-Ammonium Phosphate

DPA Debt Payment Account DSRA Debt Service Reserve Account

ECC Economic Coordination Committee FAO Food and Agriculture Organization

FX Foreign Exchange

FYM Farm Yard Manure GDP Gross Domestic Product

GOP Government of Pakistan

HNWI High Net Worth Individual ICI International Chemical Industries

IPO Initial Public Offering Issue Issue of new shares by the Company

Issuer Fatima Fert ilizer Company Limited

ITO Income Tax Ordinance, 2001 KCI Potassium Chloride

KIBOR Karachi Inter Bank Offer Rate KSE/Stock Exchange Karachi Stock Exchange (Guarantee) Limited

LC Letters of Credit

LM & BR Lead Manager & Book Runner MMCFD Million Standard Cubic Feed Per Day

Mn Million MT Metric Ton

MTPA metric tons per annum


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NFDC National Fertilizer Development Centre

NP Nitro Phosphate

NPK Nitrogen Potassium Phosphate Ordinance The Companies Ordinance, 1984

PC Privatization Commission

PERT Project Evaluation and Review Techniques

PFA Project Funds Agreement

PFL Pakarab Fertilizers Lim ited PKR Pakistan Rupee(s)

S&W Stone & Webster Consultants Limited

SAFCO Saudi Arabian Fertilizer Company

SBP State Bank of Pakistan

SC Sojitz Corporation

SNGPL Sui Northern Gas Pipelines Limited WHT Withholding Tax


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DEFINITIONS

Application Money Bid Bidder Bid Amount Bid Collection Centre Bidding Form Bidding Period Bidding Process Ending Date Bidding Process Starting Date Book Build ing Book Build ing Account

The total amount of money to be paid by the bidder upon successful allotment of shares w hich is equivalent to the num ber of shares allotted to the bidder at the strike price. An indicat ion to make an offer during the bidding period by a bidder to subscribe to the Ordinary Shares of FATIMA at or above the floor price, including all the revisions thereto. Any prospective investor who makes a bid pursuant to the terms of the Preliminary Prospectus and the Bidding Form. The total amount of the bid placed by the bidder, i.e. num ber of shares multiplied by bid price. means pre-determined places where applications for bidding of shares are collected by the Book Runner on behalf of the Issuer/Offeror and may include offices of Corporate Brokerage Houses, Schedule Banks, Development Financial Institutions and Investment Finance Companies, subject to appointment of these inst itut ions as agent by the Book Runner through an agreement in writing for the purpose, with the consent of the I ssuers/Offerer.. The form used by a bidder to make a bid and which will be considered as the application for subscription of Ordinary Shares through the book building. The period during which bids for subscription of shares will be made by Institutional Investors and HNWIs. The Bidding Period commences on DD-MM-YYY and ends on DD-MM-YY. The date after which BR will not accept any bids for the Issue. The date on which BR shall start accepting bids for the Issue. A mechanism of price determination through which indicat ion of interest for subscription of shares Offered by the Company is collected from Inst itutional Investors and HNWIs. Through this process a book is built which gives an idea of demand for the shares at different price levels. The strike price is determined based on the price at which demand for shares at the end of book building period is sufficient to raise the required am ount. An account opened by the Company with the Collection Bank(s) for the Offer. The bidder will pay the margin


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Book Runner or BR Floor Price General Public General Public Offer Price High Net worth Individual (HNWI) Institutional Investors Lead Manager and Book Runner Limit Price Margin Money Offer Ordinary Shares Preliminary Prospectus

amount through demand draft, or pay order in favour of this account and the remainder of the application money, if any, shall be paid through this account after successful allocation of shares. Arif Habib Limited The minimum price set by the Company for issuance of shares which is PKR 10 per share. All individual and institut ional investors including both Pakistani (residents & non-residents) and foreign investors. The price at which ordinary shares are offered to general public. This price can be at or below the strike price. Individual investor who applies or bids for shares of the value of PKR 1,000,000/- or above in book building process. Both local and foreign institutional investors. Arif Habib Limited The maximum price a prospective institutional investor or HNWI is willing to pay for a share under the Book Building process. The partial or total am ount, as the case may be, paid by a bidder at the time of making a bid. Offer of 200,000,000 Ordinary Shares by Fatima Fertilizer Company Limited of PKR 10/- per share. The Offer constitutes 10% of the paid-up capital of the Company. Offer to Institutional Investors/HNWI: 150,000,000 Ordinary Shares - 75% of the total Offer size. Offer to General Public: 50,000,000 Ordinary Shares - 25% of the total Offer size. (For details please see Para 3.1) Ordinary Shares of FATIMA having face value of PKR 10 each unless otherwise specified in the context thereof. The preliminary Prospectus containing all the information and disclosures as required under the Companies Ordinance, 1984, approved by the Commission under sect ion 62 read with section 57 of the Companies Ordinance, 1984 and circulated to the Institutional


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Strike order Step bid Strike Price Subscription/Allot/Allotted

Investors and HNWIs for the Book Building Process. A bid for a specified number of shares at the strike price to be determined through the Book Building process. A series of limit bids at increasing prices. The price of share determined/discovered on the basis of the Book Building process and is the price at which the shares are issued to Institutional Investors and HNWI. The allotment of Ordinary Shares pursuant to the I ssue.


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TABLE OF CONTENTS

Part Contents Page No.

Part 1 Approvals and Listing on the Stock Exchanges 08 Part 2 Book Building Procedure 10 Part 3 Share Capital and Related Matters 22 Part 4 Underwriting, Commissions, Brokerage and other Expenses 29 Part 5 History and Prospects 31 Part 6 Financial Information 44 Part 7 Management 51 Part 8 Miscellaneous Information 58 Part 9 Application and Transfer Instructions 66 Part 10 B idding Form of Fatima Fertilizer Company Limited 70 Part 11 Signatories to the Prospectus 71 Part 12 Memorandum of Associat ion 72 Part 13 Application Form


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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 “SECP” or the “Commission”) as required under Section 57(1) of the Companies Ordinance, 1984 (the “Ordinance”) has been obtained by Fatima Fertilizer Company Limited (the “Company”) for the issuance, circulation and publication of this Prospectus. It must be distinctly understood that in giving th is approval, the SECP does not take any responsibility for the financial soundness of any scheme stated herein or for the correctness of any of the statements made or opinions expressed with regards to them. The SECP has not evaluated quality of the Offer, and its approval of the Prospectus 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 Offer before subscrib ing.

1.2 CLEARANCE OF PROSPECTUS BY THE KARACHI STOCK EXCHANGE (GUARANTEE) LIMITED

The Prospectus has been cleared by the Karachi Stock Exchange (Guarantee) Limited (“KSE”), in accordance with the requirements under their Listing Regulations. While clearing th is Prospectus, the Karachi Stock Exchange neither guarantees the correctness of the contents of this Prospectus nor the viability of the Company. The KSE has not evaluated the quality of the Offer, and its clearance should not be construed as any commitment of the same. The public/investors should conduct their own independent investigation and analysis regarding the quality of the Offer before subscrib ing.

1.3 FILING OF PROSPECTUS AND OTHER DOCUMENTS WITH THE REGISTRAR OF COMPANIES

The Company has filed with the Registrar, Companies Registrat ion O ffice Multan, as required under Section 57(3) and (4) of the Com panies Ordinance 1984, a copy of this Prospectus signed by all the Directors of the Company on behalf of the Company, along with the following Prospectus attached hereto:

a) Letter No. 443 dated September 28, 2009 from Auditors of the Company, A.F. Ferguson

& Co., 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 (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 Ordinance.


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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) Consent of Directors, Chief Executive and Company Secretary of the Company who have

consented to their respective appointments being 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 Sect ion 1 of Part 1 of the Second Schedule to the Ordinance.

1.4 LISTING AT THE KARACHI STOCK EXCHANGE

An Application has been made to the KSE for permission to deal in and for quotation of the shares of the Company. In accordance with the “Regulat ion for Future Trading in Provisional Listing Companies” of the KSE, the Company shall stand provisionally listed for trading and for quotation of its shares on the Stock Exchange, from the date of publicat ion of this Prospectus or any other date as may be specified by the Stock Exchange. If for any reason, the application for formal listing is not accepted by the KSE, the Company undertakes to publish immediately in the press a notice to that effect and thereafter to refund the applicat ion money to the applicants in pursuance of the Prospectus as required by the provisions of Section 72 of the Ordinance.


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PART 2

2 BOOK BUILDING PROCEDURES

2.1 BRIEF STRUCTURE OF THE ISSUE

The Present Issue

Fatima Fertilizer Company Limited (hereinafter referred as “the Company”), is issuing 200,000,000 Ordinary Shares of the face value of PKR 10 each for cash at par (“the Issue”). The issue constitutes 10% of total paid-up capital of the Company. The Issue is being made through the Book Building process with a floor price of PKR 10/- per share, whereby 75% of the total Issue size i.e. 150,000,000 Ordinary Shares of PKR 10 each will be issued through the book building process to Institutional Investors and High Net Worth Individuals (HNWI), while the remaining 25% of the total I ssue size i.e. 50,000,000 Ordinary Shares of PKR 10 each will be issued to the general public at or below the Strike Price. IN CASE THE COMPANY DOES NOT RECEIVE BIDS FOR THE MINIMUM NUMBER OF SHARES BEING OFFERED AT FLOOR PRICE, IT MAY WITHDRAW THE OFFER. In case the Company opts for withdrawal of the Offer, Margin money will be refunded to bidders within 03 working days of closing of the bidding period without any markup, interest, etc.

2.2 BOOK BUILDING PROCEDURES

Book building is a process whereby investors bid for a specific number of shares at various prices. The LM & BR, with the consent of the Company, sets a reference/floor price which is the lowest price an investor can bid at. An order book of bids from investors is maintained by the BR, which is then used to determine the strike price. For determination of the strike price “Dutch Auction Method” will be used.

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 Company intends to issue through the Book Building process is subscribed. Bidders can submit their bids at the allocated bidding centers in person or through facsimile.

A bid by a potential investor can be a “Limit Bid”, “Strike Bid” or a “Step B id”, 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 is willing to subscribe to the shares. For instance, a bidder may bid for 2 million shares at PKR 15 per share. Since the bidder has placed a limit price of PKR 15 per share, this indicates that he is willing to subscribe at or below PKR 15 per share.

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


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The bidders explicitly bid that they will be willing to buy say 2.0 million shares at the strike price determined through the Book Building Process.

Step Bid: A series of limit bids at different prices.

Under this bidding strategy, bidders place a number of limit bids at different price levels. The bidders may, for instance, make a bid for 2.0 million shares at PKR 15 per share, 1.5 million shares at PKR 16 per share and 1.0 million shares at PKR 17 per share.

Once the bid period is over and book has been built, the BR determines the strike price.

Successful bidders will be int imated about the strike price and num ber of shares allotted to them within two working days, subsequently successful institutional bidders shall deposit remaining money within three working days of closing of the bidding period.

2.3 LEAD MANAGER AND BOOK RUNNER

Arif Habib Limited has been mandated by the Company to act as a Lead Manager and Book Runner to this Issue, which is being made through the Book Building Process as laid out in Appendix 4 of the List ing Regulations of the KSE. Arif Habib Limited (“AHL”) is ranked among the premium brokerage houses in Pakistan and its Investment Banking team is among the most active in carrying out financial advisory services in Pakistan’s capital markets. Since 2006, as part of its business expansion strategy, AHL has further strengthened its corporate finance function to offer a fuller range of financial services to clients. The quantum of equity and tender offerings managed by AHL in recent years exceeds PKR 10.7 billion. During CY2007, AHL advised and arranged one-half of all the equity offerings at the KSE. Its expertise and strong delivery capacity act as catalysts in achieving the most value-additive investment solutions for clients. The spread of AHL’s corporate finance services includes public and private offerings of debt and equity securities, valuation, risk underwriting, restructurings, syndication, securitization, tender offerings and Sharia-compatible instruments. AHL corporate finance team comprises four qualified and well-experienced professionals with a sound project management and advisory record.

Address: Arif Habib Limited Arif Habib Centre, 23, M. T. Khan Road Karachi Attn: Mr. Kashif Suhail Attn: Mr. Usman Saeed Tel: +92-21-3241 5213, 3246 0717 Cell: +92333 234 6098 Fax: +92-21-3242 9653 Email: [email protected] [email protected]


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2.4 ROLE AND FUNCTIONS OF LEAD MANAGER AND BOOK RUNNER

The Lead Manager and Book Runner to the Issue:

i. ensures that all disclosures as required under the Companies Ordinance, 1984 and Appendix 4 of the List ing Regulations of the Karachi Stock Exchange have been made in the Prospectus;

ii. ensures 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. obtains on behalf of the Company, all approvals/consents/NOCs relating to the Issue;

iv. ensures that the preliminary Prospectus has been uploaded on its own as well as the Company’s website;

v. conducts awareness campaigns through presentations, meetings, road shows etc;

vi. establishes bid collection centers at the following addresses:

Karachi Attn: Mr. Kashif Suhail Attn: Mr. Usman Saeed Arif Habib Limited Arif Habib Centre 23, M. T. Khan Road Karachi. Tel: +92-21-3241 5213, 3246 0717 Cell: +92333 234 6098 Fax: +92-21-3242 9653 Email: [email protected] [email protected] Lahore Attn: Mr. Muhammad Nouman Direct: 042-3628 0857 Arif Habib Bank Limited Lahore Stock Exchange Branch Office No. 5, LSE Building 19, Aiwan e Iqbal Road Lahore. Tel: 042-628 0852-8, 042-627 1715-6 Fax: 042-628 0851


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Islamabad Attn: Ms. Sabahat Nazir Arif Habib Bank Limited Plot No. 6B, F-6 Super Market Islamabad. Tel: 051 2279168 - 70, Ext 224 Fax: 051-227 9166 Email: [email protected]

vii. collects bid applications and applications’ money, security, margin as the case may be from

the Institut ional Investors and HNWI in the manner as mentioned in the Appendix 4 of the List ing Regulations of the Karachi Stock Exchange.

viii. puts serial number, date and t ime on each bidding form at the time of collection of the same

from the bidders;

ix. vets the bidding applicat ions;

x. builds an order book showing demand for the shares at various prices;

xi. discovers the strike price at the close of the bidding period;

xii. enters into underwriting agreement with the Company; xiii. maintains record of the bids received for subscription of the shares.

xiv. circulates copies of the preliminary Prospectus and bidding form cleared by the Exchange

and approved by the Commission to the prospective Inst itut ional Investor and HNWI.

xv. publishes an advertisement, approved by the Commission, in one Urdu and one English daily Newspaper having wide circulation to invite the Institut ional investor and HNWI to participate in the bidding process.

2.5 OPENING AND CLOSING OF THE BIDDING PERIOD

The b idding period shall remain open for 3 working days commencing from the business hours at 09:30 a.m. on 11 January, 2010 and will close at 05:00 p.m. on 13 January, 2010 at the close of business hours.

BIDDING PROCESS STARTS ON

11 January 2010

BIDDING PROCESS ENDS ON

13 January 2010

*(Both Days Inclusive)


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2.6 ELIGIBILITY TO PARTICIAPTE IN BIDDING

Eligible investors who can place their bids in the Book Building process are “Institutional Investors” and “HNWI”.

Institutional Investors include both local and foreign institutional investors.

HNWI investors are individual investors who apply or bid for shares of value of PKR 1,000,000/ or above in the Book Building process.

2.7 INFORMATION FOR BIDDERS

The Preliminary Prospectus for issuance of Shares duly cleared by the Karachi Stock

Exchange and approved by SECP and the bidding form can be obtained from the Registered Office of FATIMA, AHL and the bid collection centers. Preliminary Prospectus can be at the website of BR and the Company.

Eligible investors who are interested in subscribing to the Ordinary Shares should approach

LM & BR at the addresses provided in Para 2.4 to register their Bids. THE BIDS SHOULD BE SUBMITTED ON THE PRESCRIBED BIDDING FORM IN PERSON OR

THROUGH FAX AT NUMBER: (Karachi) +92-21-3242 9653, (Lahore) +92-42-3628 0851, (Islamabad) +92-51-3227 9166.

2.8 BIDDING FORM AND PROCEDURE FOR BIDDING

Standardized bidding form has been prescribed by the BR. Bids shall be submitted at the bid collection centers in person or through fax (Karachi) +92-21-3242 9653, (Lahore) +92-42-3628 0851, (Islamabad) +92-51-3227 9166 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 collect ion of the same from the bidders. Upon completion and submission of the bidding form, the investors are deemed to have authorized the Company to make necessary changes in the preliminary Prospectus as would be required for filing the final Prospectus with the Stock Exchange and SECP, without prior or subsequent notice of such changes to the investor. The bidding procedure under the Book Building Process is outlined below:

i. Copy of approved preliminary Prospectus shall be circulated by the Company through LM & BR to prospective investors and a copy will also be placed on websites of the Company and BR.

ii. An advertisement, approved by the Commission, shall be published at least in one Urdu and one English daily Newspaper having wide circulat ion in the federal and all the provincial capitals, inviting the institutional investors and HNWI to participate in the bidding.

iii. A Book Building Account shall be opened by the Company for collection of bid amount.

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

v. Bids shall be submitted through the bid collect ion centers or through facsimile (Karachi) +92-21-3242 9653, (Lahore) +92-42-3628 0851, (Islamabad) +92-51-3227 9166 on the


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standard bidding form duly filled in and signed in duplicate. The addresses for the bid collection centers are given in Para 2.4.

vi. Bids can be placed at “limit price”, “strike order” or “step bid”.

vii. Bids/margin money shall be deposited through demand draft/pay order/cheque in favor of “In itial Public Offering of Fatima Fertilizer Company Limited – Book Building Account.”

viii. BR shall collect an am ount to the extent of 100% of the application money as bid/margin money in respect of bids placed by HNWIs.

ix. BR 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. BR may reject a bid p laced by an institutional investor/HNWI for reasons to be recorded in writing and the reasons should be disclosed to such bidder forthwith. Decision of BR shall not be challengeable by the b idder or its associates.

xi. The bidders will receive back the duplicate form upon submission of their bids which will be proof of their bid submission. In case of facsim ile, a copy of form with receiving will be faxed back to the bidder.

xii. Bidders can revise or withdraw their bids during the bidding period (for details please refer Para 2.12 and 2.14).

xiii. BR shall maintain record of the bids received.

xiv. BR shall ensure that all the bids received by the bid collection centers are entered into the system developed by the Exchange for the purpose of book building. The Exchange shall display live an order book showing the demand for shares at various prices. The order book should also show the revised bids and the bids withdrawn.

xv. At the close of the bidding period, the BR shall determine the strike price with the consent of the Company.

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

xvii. The successful bidders shall, within three working days of the closing of the bidding period, deposit the balance amount as consideration against allotment of shares.

xviii. Where a successful bidder defaults in payment of shares allotted to him, the margin money deposited by such bidder shall be forfeited.

xix. Margin money of unsuccessful bidders will be refunded within three working days of the close of the bidding period.

xx. Final allotment of shares out of the Book Building Issue shall be made after receipt of full subscript ion money from the successful bidders; however, shares to such bidders shall be dispatched or credited, as the case may be, at the time of transfer of shares out of the public portion of the Issue to successful applicants.

2.9 BOOK BUILDING AND GENERAL PUBLIC BANK ACCOUNT

The Com pany has opened two separate bank accounts for collection of applications’ money, one each for the Book Building portion and the Public portion of the Issue. The bidders shall draw demand draft/pay order in favor of “In itial Public Offering of Fatima Fertilizer Company Limited – Book Building Account” which has been opened at Arif Habib Bank Limited. The collection bank shall keep and maintain the bid money in the said account. Once the strike price is determined and allottees are finalized, the collection bank


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shall transfer the money of successful and accepted applications to the Company’s account(s) after obtaining NOC from KSE and manage refund of the bid money to unsuccessful bidders.

2.10 PAYMENT INTO THE BOOK BUILDING ACCOUNT

The bidders shall draw a demand draft/pay order favoring “In itial Public Offering of Fatima Fertilizer Company 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 BIDDING FORMS AT THE BID COLLECTION CENTER. ONLY PAY ORDER, BANK DRAFT, CHEQUE AND ANY OTHER APPROPRIATE INSTRUMENT ACCEPTABLE TO BR AND DRAWN IN FAVOR OF “INITIAL PUBLIC OFFERING OF FATIMA FERTILIZER COMPANY LIMITED – BOOK BUILDING ACCOUNT” ARE ACCEPTABLE. 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 methods.

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 5.0 million shares at a price of PKR 11 per share, then the total application money w ould amount to PKR 55 million. In such a case, (i) HNWI shall deposit PKR 55 million in the Book Building account as the bid amount which is 100% of PKR 55 million (ii) Institutional Investors shall deposit at least PKR 13.75 million which is 25% of PKR 55 million.

b. PAYMENT FOR STRIKE ORDERS

If investors are placing a “strike order”, then they shall deposit the margin m oney equal to the number of shares they are bidding for at PKR 10 per share assuming that strike price is discovered at PKR 10 per share.

For instance, if the investor is applying for 5.0 million shares then the total applicat ion money would be PKR 50 million. In such a case, (i) HNWI shall deposit PKR 50 million in the Book Building account as margin/bid amount which is 100% of PKR 50 million. (ii) Institutional Investors shall deposit PKR 12.5 million in the Book Building Account as margin amount which is at least 25% of PKR 50 million.

c. PAYMENT FOR STEP BIDS

If investors are placing a “step bid”, which is a series of limit prices, then they shall deposit the margin money based on the total number of limit prices which they are bidding for.

For instance, if the investor bids for 0.5 million shares at PKR 14 per share, 0.4 million shares at PKR 15 per share and 0.3 million shares at PKR 16 per share, then in essence the investor has placed one “step bid” or three “limit price” bids. The margin money would amount to Rs. 17.8 million, which is arrived at by multiplying number of shares with the price and aggregating all the three bids. In such a case, (i) HNWI shall deposit PKR 17.8 million in the Book Building account as margin/bid amount which is 100% of PKR 17.8 million. (ii) Institutional Investors shall deposit PKR 4.45 million in the Book Building account as margin money w hich is at least 25% of PKR 17.8 million.


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2.11 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.

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 Bidding Application by the foreign investors.

2.12 REVISION OF BIDS BY THE BIDDER

The bidders shall have the right to revise their bids any time during the bidding period. In case the bidders decide to revise their bid, they shall submit the revised bidding form along with the duplicate copy of bid application at any of the designated bid collection centers. The bidders shall collect the revised duplicate copy of bid application from the bid collection centre which shall indicate the new/revised bid price and number of shares. This can also be done through facsimile (Karachi) +92-21-3242 9653, (Lahore) +92-42-3628 0851, (Islamabad) +92-51-3227 9166.

2.13 REJECTION OF BIDS BY THE BOOK RUNNER

In terms of clause 8.4 of Annexure 4 of the listing Regulations of Karachi Stock Exchange, BR may reject a bid p laced by an institutional investor/HNWI for reasons to be recorded in writing and the reasons should be disclosed to such bidder forthwith. Decision of BR shall not be challengeable by the b idder or its associates.

2.14 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. In case bidder decides to withdraw a bid, a request shall be submitted for withdrawal of the bid along with the duplicate copy of bid application.

The Bidder shall collect back the duplicate copy of bid applicat ion from the concerned officer of BR and check that “Bid/Offer Withdrawn” stamp has been properly marked on both the original bid form and duplicate thereof along with proper date and t ime of withdrawal of bid and initials of the concerned officer.

2.15 WITHDRAWAL OF ISSUE BY THE COMPANY

According to clause 3.10 of Appendix 4 of the listing regulations of Karachi Stock Exchange, in case the Company does not receive bids for the minimum number of shares Offered at floor price, it may withdraw the Offer.

2.16 MECHANISM FOR DETERMINATION OF STRIKE PRICE

One Hundred & Fifty (150) million ordinary shares, which constitute 75% of the total issue size, would be offered to Inst itut ional Investors and High Net worth Individuals through the Book Building process. The remaining Fifty (50) million ordinary shares constituting 25% of the total issue size would be offered to the general public at or below the strike price determined through the Book Building process. The bidding period shall last for 5 working days for receiving the bids from potential investors. At the close of the bidding period, the strike price would be determined by the BR in consultation with the Company.

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

Quantity of shares being Offered: 150.00 million Ordinary Shares


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Floor price: PKR 10 per share Bidding Period: December 02, 2009 – December 06, 2009

Bidder Price (PKR per share)

Quantity (shares in million)

Cumulative number of

shares

Category of order

Date

Institution A 16.00 25.00 25.00 Limit price December 02, 2009 Institution B 14.00 37.50 37.50 Step bid December 03, 2009

Institution A 14 25 62.50 Revised bid December 04, 2009 HNWI A 13.50 43.75 106.25 Limit price December 03, 2009

Institution C 12.00 43.75 150.00 Limit price December 04, 2009

Institution E X 25.00 175.00 Strike order December 05, 2009

HNWI B 11.00 56.25 231.25 Limit price

Withdrawn Bid December 04, 2009

Institution B 11.00 50.00 281.25 Step bid December 05, 2009

Institution D 11.00 56.25 343.75 Limit price December 06, 2009

Setting Strike Price – On the basis of the figures provided in the above illustration, according to the Dutch Auction Method, the strike price would be set at PKR 12/- per share to sell the required number of 150.0 million ordinary shares. At PKR 16 per share, investors are willing to buy only 25 million shares. Since 125 million shares are still available, therefore the price will set lower. At Rs. 14 per shares, investors are willing to buy 37.50 millions shares. Since 87.50 million shares are still available, therefore, the price will set lower. At Rs. 13.50 per shares, investors are willing to buy 43.75 millions shares. Since 43.75 million shares are still available, therefore, the price will set lower. At Rs. 12 per shares, investors are willing to buy 43.75 millions shares. Since after bidding for 43.75 million shares at Rs. 12 per share no shares will be available, therefore, the strike price will be set at Rs. 12 per share for the entire lot of 150 million ordinary shares.

The bidders, who have submitted bids at prices above the strike price, will be issued shares at the strike price and the differential would be refunded. Investors, who have bid below PKR 12/- per share, do not qualify for allotment and their money would be refunded. For allotment of shares priority will be given to investors who placed higher bids. In case the number of shares bid for at the Strike Price and the number of shares bid for at Strike Order exceeds the available number of shares, then such available shares shall be allotted to the bidders who have made bids for shares at Strike Price and Strike Order, however, preference will be g iven to the bidder who has made the bid earlier..

2.17 BASIS OF ALLOTMENT OF SHARES

After the closure of bidding period, the BR will analyze the demand generated at various price levels. Only successful bidders shall be eligible for allotment of shares. Shares to successful bidders, out of the book building port ion, shall be dispatched/credited shares at the time of the dispatch/credit of shares out of the public portion.

2.18 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) w orking days of the close of the bidding period.

STRIKE PRICE DETERMINED THROUGH THE DUTCH AUCTION METHOD

TOTAL SHARES SUBSCRIBED


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2.19 UNDERWRITING

After determination of the strike price BR shall within two (2) working days of the closing of the bidding period enter into an underwriting agreement with the Company stating that it has underwritten the entire Book Building portion at the Strike price. The Underwriting Agreement would also disclose the number of shares underwritten, the rate and amount of the underwriting Commission/Fee to be charged.

2.20 PUBLICATION OF THE PROSPECTUS

The underwrit ing agreement for the public portion shall be finalized within ten (10) working days from closing of the bidding period.

The LM shall, on the same day or any other day but not later than the ten (10) working days from the closing of the bidding period, shall submit an application to KSE for allocation of dates for publicat ion of the final Prospectus and subscript ion of shares by the general public.

The final Prospectus in full or in abridged form m ust 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 of the publication of the final Prospectus but not earlier than seven days of such publication.

2.21 ADDRESSES OF BID COLLECTION CENTRES

Bid Collect ion Centers have been established at Karachi, Lahore and Islamabad to collect the bids for the Book Building Port ion of the I ssue of shares of Fatima Fert ilizer Company Limited in order to provide convenient access to bidders to participate in the bidding process. The bidding form can also be submitted through facsim ile at fax number (Karachi) +92-21-3242 9653, (Lahore) +92-42-3628 0851, (Islamabad) +92-51-3227 9166

Karachi Attn: Mr. Kashif Suhail Attn: Mr. Usman Saeed Arif Habib Limited Arif Habib Centre, 23, M. T. Khan Road 23, M. T. Khan Road Karachi. Tel: +92-21-3241 5213, 3246 0717 Cell: +92333 234 6098 Fax: +92-21-3242 9653 Email: [email protected] [email protected]

Lahore Attn: Mr. Muhammad Nouman Direct: 042-3628 0857 Arif Habib Bank Limited Lahore Stock Exchange Branch Office No. 5, LSE Building 19, Aiwan e Iqbal Road Lahore.


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Tel: 042-628 0852-8, 042-627 1715-6 Fax: 042-628 0851 Islamabad Attn: Ms. Sabahat Nazir Arif Habib Bank Limited Plot No. 6B, F-6 Super Market Islamabad. Tel: 051 2279168 - 70, Ext 224 Fax: 051-227 9166 Email: [email protected]


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2.22 STATEMENT BY THE COMPANY

Date: 29 October 2009

Ref: Fatima Fert/KSE/001

The General Manager, Karachi Stock Exchange (Guarantee) Limited, Stock Exchange Building, Stock Exchange Road, Karachi. Dear Sir, On behalf of the Company, we confirm that all material information as required under the Companies Ordinance, 1984 and the List ing Regulations of the Karachi Stock Exchange (Guarantee) Limited have been disclosed in the Prospectus and that whatever stated in the 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 FATIMA FERTILIZER COMPANY LIMITED

-Sd- -Sd-

Fawad Ahmed Mukhtar Iftikhar Mahmood Baig (Chief Executive Officer) (Company Secretary)


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2.23 STATEMENT BY LEAD MANAGER & BOOK RUNNER

21 October 2009 The General Manager, Karachi Stock Exchange (Guarantee) Limited, Stock Exchange Building, Stock Exchange Road, Karachi. Being mandated as Lead Manager and Book Runner to this public Issue of Fatima Fertilizer Company Limited, 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 (Guarantee) Limited have been disclosed in this Prospectus and that whatever stated herein and in the supporting documents is true and correct to the best of our knowledge and belief and that nothing has been concealed. On behalf of Arif Habib Limited:

-Sd-

Samad Habib Chief Executive Arif Habib Limited


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PART 3

3 SHARE CAPITAL AND RELATED MATTERS 3.1 SHARE CAPITAL

Shares Description Amount Authorized capital

2,500,000,000 Ordinary shares of Rs 10/- each 25,000,000,000

1,800,000,000 Issued, subscribed & paid up capital Ordinary shares of Rs 10/- each

18,000,000,000

The existing capital of the Company is

held as fo llows:

Directors

67,494,837 Muhammad Arif Habib 674,948,370 47,629,028 Fawad Ahmed Mukhtar 476,290,280 58,422,920 Fazal Ahm ed Sheikh 584,229,200 58,422,920 Faisal Ahmed Mukhtar 584,229,200 5,000 Nasir Butt 50,000 5,000 Samad A. Habib 50,000 5,000 Abad Khan 50,000

231,984,705 2,319,847,050 Associated Companies

900,000,000 Pakarab Fertilizers Limited 9,000,000,000 17,968,135 Reliance Weaving Mills Limited 179,681,350 150,731,084 Reliance Commodities (Pvt.) Limited 1,507,310,840 34,387,480 Fazal Cloth Mills Limited 343,874,800 139,570,865 Fatima Sugar Mills Limited 1,395,708,650 180,000,000 Arif Habib Securit ies Limited 1,800,000,000 1,422,657,564 14,226,575,640

Friends & Family Members

18,542 Aamir Naseem 185,420 5,373,907 Abbas Mukhtar 53,739,070 8,565,563 Abdullah Aamir 85,655,630 5,373,907 Ali Mukhtar 53,739,070 4,769,882 Ambreen Fawad 47,698,820 7,021,500 Amin Rehman 70,215,000 7,735,809 Asad M uhammad Sheikh 77,358,090 5,373,907 Fahad Mukhtar 53,739,070 5,157,206 Ibrahim Mukhtar 51,572,060 5,373,907 Meraj Fatima 53,739,070 5,157,206 Mohid Muhammad Ahmed 51,572,060 5,157,206 Muhammad Fazeel Mukhtar 51,572,060 7,735,809 Muhammad Mukhtar Sheikh 77,358,090

1 Nasim Beg 10


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1,205,899 Nighat Naseem 12,058,990 1,388,845 Rehman Naseem 13,888,450 8,213,326 Sadek Rehman 82,133,260

669,584 Sheikh Naseem Ahmed 6,695,840 8,565,563 Yousuf Aamir 85,655,630

52,500,162 Zetun Arif 525,001,620 145,357,731 1,453,577,310

*1,800,000,000 Total 18,000,000,000

Shares Present Issue Amount

The present Issue consists of 200 million ordinary shares of face value of PKR 10/- per shares to the general public. The issue constitutes 10% of the total paid up capital of the Com pany.

Book Building Portion

142,500,000 Shares Offered to institutions/ high-net-worth individuals (through the book building mechanism) of face value of PKR 10/- per share

1,425,000,000

7,500,000 Shares allocated to employees of the Company 75,000,000 150,000,000 Sub total 1,500,000,000

General Public Portion

47,500,000 General public 475,000,000 2,500,000 Shares allocated to employees of the Company 25,000,000

50,000,000 Sub total 500,000,000

2,000,000,000 Grand Total 20,000,000,000

* Including 225 mi llion shares issued by Pakarab Ferti li zers Limited to its shareholders as specie dividend. For detail please see Note No. (viii ).

Notes: (i). The spons ors of the Company shall at all times retain at least 25% of the capital of the Company;

(ii). The shares allotted to sponsors in e xcess of 25% shall not be saleable for a period of si x months from the date of public subscription;

(iii). The Commission, vide its letter No. SMD/Co.57(1)/05 /2009 dated December 18, 2 009 has give n relaxation to the Company from the requirements of Re gulation 6 A(2 ) of the Listing Regulations of the KSE under Regulation 6 A(6 ) thereof;

(iv). The shares allotted to investors other than the sponsors shall not be saleable and transferable for a period of si x months from the date of public subscription;

(v). The Commission, vide its letter (No.SMD/Co.57(1)/05 /2009 ) dated December 10, 2009 has give n relaxation to the Company from the requirements of 3(I)(iii) of the Companies (Issue of Capital) Rules, 1996 thereof;

(vi). The employees of the Company have been given a preferential allocation of 7,500,000 ordi nary shares under book building portion and 2,500,00 0 ordi nary shares under general public portion. Employees will subscribe their book building portion at the strike price determined at the close of bi dding period. Employees will also subscribe their public porti on on the day of subscription;

(vii). The shares subscribed by the employees of the Company shall not be saleable for a period of 6 months from the date of public subscription as per Listing Re gulation 6 (A)7 (ii);


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(viii). Pakarab Fertilize rs Limited has issued specie dividend to its shareholders in the year 2007 (75%), 2 008 (50%) a nd 20 09 (50%). These shares were allocated to the e xisting shareholders of PFL on pro-rate basis. Detail on shares allotment is mentioned in part (b) hereunder;

(ix). The Company has obtained a letter (re ference # KSE/SECP-12 948) dated December 17, 2009 from the Karachi Stock Excha nge (G) Limited stating that at least 30% of the plant and machinery has been installed and the last consignment of the plant and machinery is scheduled by October 2010;

(x). The Company will submit progress report on the implementation of its project, to the KSE and the SECP on quarterly basis, till its completion;

(xi). The shares allotted to investors, other than sponsors, shall not be saleable and transferable for a period of six months from the date of public subscription;

(xii). The Company and the Book Runner shall not accept bids from associated persons of the Company in excess of 5% of the shares of the book building portion of the offer;

(xiii). No distribution (including declaration and payment of divide nd) is allowed unless the Distribution Request in respect there of has been countersigned by the Age nt Bank. In this respect the Agent Bank is required to (in consultation with the Monitori ng Bank) countersign the Distribution Re quest, unless, having made such inquiries as it deems appropriate, it determines that the amount of distribution requested in the Distribution Request is not permitted to be withdrawn under Section 6.3.2 of the CTA or has not bee n correctly calculated in accordance with the terms of loan Agreement;

(xiv). The Sponsors have disbursed Rs. 4,000 million to the Company as shares subscription money against the issuance of cumulative re deemable/convertible Pre ference Shares as of November 2 009. Status of the approval of the proposed issue of prefe rence and their salient features are as under:

(a) Approval status:

The Board of Directors of Company in i ts meeting held on October 27, 2009 has recommended issuance of PKR 4,000 million cumulative redeemable/convertible preference shares. The issuance of these preference shares has been approved by the members in general meeting held on November 26, 2009 subject to approval of the Commission. The existing shareholders have, however, depos ited full contribution as advance against the proposed preference shares .

Salient features of the Preference Shares:

Company / Issuer Fatima Fertil i zer Company Limited (“F atima” o r “the Company”) a Publ ic Limited Company inco rporated in Pakistan under the Companies Ordinance, 1984.

Instrument Non-Voting, Non-Participatory, Convertible and Cumulative Preference Shares (“Preference Shares” or “PS”).

Purpose To finance the capital expenditure of the Company and other business permitted by its Memorandum and Articles of Association.

Proposed Investors Shareholders of the Company

Issue s ize PKR 4,000 mi llion

Face value PKR 10/- per share

Issue price PKR 10/- per share

Issue date D ate of disbursement of the PS funds

Dividend on PS Annualized cumulative dividends at Base rate + 3 % p.a.

The Base Rate is defined as 6-months Karachi Inter-Bank Offered Rate (“KIBOR”). KIBOR is defined as the Average rate, Ask Side, for the relevant tenor, as published on Reuters page KIBOR or as published by the Financial Markets Association of Pakistan in case the Reuters page is unavailable.

The dividend on PS wi ll be set on the last working day pre ceding the beginning of each year, for the profi t due for that year.


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(The average rate is the average rate of the particular day)

Accum ulation of Preferred Dividends

In case the profi ts in any year are insufficient to pay dividends on the PS, the dividend on PS (together with any pre viously accumulated and unpaid dividend) wi ll be accumulated and payable in next year.

There will be no compounding on the accumulated dividends.

No dividend on Ordinary Shares (OS) will be payable until all dividends on Preferred Shares, including any and all arrears, have been paid.

Call option and timing The Company may, at i ts option, redeem the PS at any time by giving at least 60 days prior written notice to the PS holders .

Call Price Means the price at which PS shall be redeemed and i t is the face value of the preference share.

Sinking fund The Company shall create a Sinking Fund reserve account from the profi ts of the Company. An y payments on accounts of the call option will only be made from the Sinking Fund reserve account created out of the profi ts of the Company. The Company wi ll build up the reserve account as it considers appropriate to ensure that i t is sufficient to service the exercise of Call Option.

Conversion Notice PS holders will have the option to serve a notice to con ve rt the PS into the OS of the company within the Conve rs ion Period by pro viding written notice to the Company. In this regard a 60 days prior written notice will be given to the Company.

Conversion Period The PS investors will have the option to serve the Convers ion Notice after the end of the 2 years from the Issue Date of PS.

Conversion Price The PS (at face value) will be convertible into OS at 20% discount on fair value of the ordinary share at the time of convers ion.

Fair value shall be the weighted average price of the ordinary shares as traded during the period of sixty days f rom the date of i ssuance of notice i f such ordinary shares are lis ted at that time, or as determined by one of the chartered accountant fi rms (i ) KPMG Taseer Hadi & Co, or (i i) Ford Rhodes Sidat H aider , as selected by the Company, within sixty days of i ssuance of conve rs ion notice i f such ordinary shares are not lis ted at that time.

Dividends (together with any pre viously accumulated and unpaid dividend) on the Preference Shares accrued till the date of redemption or convers ion shall be accumulated and be payable (whenever such dividend is declared and distributed by the Company at i ts discretion) to the Preference Shareholders existing at the date of such redemption or conversion.

Fair Value Fair value shall be the weighted average price of the ordinary shares as traded during the period of sixty days f rom the date of i ssuance of notice i f such ordinary shares are lis ted at that time, or as determined by one of the chartered accountant fi rms (i ) KPMG Taseer Hadi & Co, or (i i) Ford Rhodes Sidat H aider , as selected by the Company, within sixty days of i ssuance of conve rs ion notice i f such ordinary shares are not lis ted at that time.

Conversion Methodology The Company wi ll upon receiving the Conversion Notice from PS holders have the option to Call the PS for which Convers ion Notice has been issued and make payment to the PS investors th rough the Sinking Fund within 60 days of receiving the Con ve rsion Notice or issue OS to PS holders .

The con version of preference shares shal l be made at market value of ordinary shares (if listed) less 20% discount. Fo r example the market value of ordinary share is PKR 20 and discounted value is PKR 16 (20-20*20%) The number of ordinary shares wil l be equivalent to the value of preference shares (e.g PKR 4,000,000,000) divided by PKR 16 (i .e. discounted fair value of ordinary shares).


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H owever, redemption shall be on par value of preference shares .

Investor Rights Investors in this Issue will enjoy the following rights :

Preferred dividends Convers ion Option Preferential right of subscription to this issue will be available to the existing

ordinary shareholders i .e. the ordinary shareholders who are on the Company’s member’s register as on November 19, 2009.

The preference shareholders wil l have a right to receive annual and quarterly financial s tatements

Transferability Transferable

Conversion option in certain events

PS holder will have the option to convert the PS in to the OS of the Company in case any of the following event occurs :

1. If the Company pa ys dividend on common stock ahead of preference shares;

2. If the Company fa i ls to honor the con version right of the preference shareholders as mentioned in the “Convers ion Notice”, “Convers ion Period”, “Con ve rsion Price” and “Con ve rs ion Methodology” sections of this document.

In case of any of the above events , the Preferen ce Shares (at face value) will be converted into common shares @ 25% discount to the fair value of the ordinary shares at the time of convers ion.

In such event, fa ir value shall be ascertained as described in “Con version Price” above pro vided that the period for determining fair value i f ordinary shares are lis ted at that time shall be 60 days prior to occurren ce of foregoing event and for ascertaining fair value if ordinary shares of the Company are not li s ted shall be within 60 days after occu rren ce of the foregoing events .

Dividends (together with any previously accumulated and unpaid dividend) accrued ti l l the date of convers ion shall be accumulated and payable (whenever such dividend is declared and distributed by the Company at its discretion to the Preference Shareholders existing at the date of such convers ion.

Preferred Liquidation Rights

In case of liquidation, the PS holders shall be enti tled to preferred liquidation rights , prior to the O rdinary Shareholders.

Anti dilutive adjustm ent provision

If during the time between issuance of the PS and two years from the date of such issuance, the Company; a. Capital izes profit or reserves; (issue bonus shares); b. Issue ordinary shares by way of rights, except fo r i ssuance of ordinary shares

of up to face value of Rs . 2 bi llion, or 10% of paid up capital of the Company (determined after issuance of such shares), whichever i s higher, or ordinary shares as a result of Ini tial Public Offering or otherwise;

c. Merger with another Company. The conve rsion price will be subject to appropriate adjustment to reflect the change in intrinsic value of the ordinary shares .


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Illustration of Conversion of Preference Shares (PS) into Ordinary Shares (OS) in the Merged Entity

Number of shares Fair value per share

Fair value of equity

Ordinary shares of FFCL A * B = A*B Preference shares of FFCL C * (B*80%) = C*(B*80%) Total Fair Value of FFCL = A*B+C*(B*80%) MERGER WITH COMPANY - X D * E = D*E Value of merged ent ity A*B+C*(B*80%) + D*E = F Fair value of preference shareholders in merged entity

(A*B)*100 = G

F The discount percentage applicable to conversion of PS into OS of merged ent ity G*100 = H

20 Preference shares shal l be recorded at face value in merged entity redeemable at face value and convertible at a discount of H Per Share in merged entity.

Other Terms & Conditions Fatima undertakes the following:

1. It will report compliance of the State Bank of Pakistan’s Prudential Regulations until maturity of PS (i .e. ei ther PS have been redeemed or con verted to ordinary shares);

2. Issuance of PS has been approved b y the board of Fatima passed on October 27, 2009 via a Board Resolution and by the shareholders of Fatima through the appropriate shareholders ’ resolution(s) passed on November 26, 2009;

3. Obtain all relevant regulatory and corporate appro vals including but not limited to SECP.

(b) Details on Specie dividend paid by PFL to its existing shareholders:

Name @50%

21 Sep 09 M/s Ari f H abib Securi ties Limited 67,500,000 M/s Fatima Sugar Mills Limited 35,625,279 Mr. Muhammad Ari f Habib 25,312,438 Mrs. Zetun Arif 19,687,562 Mr. Fazal Ahmed Sheikh 15,471,618 Mr. Faisal Ahmed Mukhtar 15,471,618 M/s Fazal Cloth Mills Ltd 12,895,305 Mr. Fawad Ahmed Mukhtar 6,250,000 Mr. Rehman Naseem 1,349,050 Mr. Fahd Mukhtar 2,015,215 Mr. Al i Mukhtar 2,015,215 Mr. Abbas Mukhtar 2,015,215 Miss . Merai Fatima 2,015,215 Mrs. Amb reen Fawad 1,788,706 M/s Reliance Commodities (Pvt) Ltd 3,568,306 Mr. Muhammad Yousuf Amir 3,215,563 Mr. Abdul lah Amir Fazal 3,215,563


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Mr. Sadek Rehman 3,038,326 Mr. Amin Rehman Fazal 1,846,500 Mrs. Niqhat Naseem 452,212 Mr. Sh. Naseem Ahmad 251,094 Grand total 225,000,000 3.2 OPENING AND CLOSING OF THE PUBLIC SUBSCRIPTION PERIOD

The public subscription will open at the commencement of business hours on 27 January, 2010 and will close on 28 January, 2010 at the close of business hours.

3.3 INVESTOR ELIGIBILITY FOR PUBLIC ISSUE

Eligible investors include Pakistani citizens residing in Pakistan, companies, bodies corporate or other legal entit ies incorporated or established in Pakistan (to the extent permitted by their constitut ive documents and existing regulations as the case may be); provident/pension/gratuity funds/trusts (subject to the terms of their Trust Deed and existing regulat ions) and branches in Pakistan of companies and bodies corporate incorporated outside Pakistan.

3.4 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 applicat ion for subscription of 500 ordinary shares is PKR [●] (Issue Price x 500 Shares)

c) Applications for shares must be made for 500 shares or in mult iples 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 to be issued to the general public are sufficient for the purpose, all applications shall be accommodated.

f) If the shares applied for by such applicants are in excess of the shares Offered, the distribution shall be made by computer balloting, in the presence of the representative(s) of KSE in the following manner:

(i) If all the applicat ions for 500 shares can be accommodated, then all such applications shall be accommodated first. If all applicat ions for 500 shares can not be accommodated then balloting will be conducted among applications for 500 shares only.

(ii) If all the applications for 500 shares have been accommodated and shares are still available for allotment, then all applications for 1,000 shares shall be accommodated. If all applications for 1,000 shares can not be accommodated then balloting will be conducted among applicat ions for 1,000 shares only.


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(iii) If all applicat ions 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 can not be accommodated then balloting will be conducted among applications for 1,500 shares only.

(iv) If all applicat ions for 500 shares, 1,000 shares and 1,500 shares have been accommodated and shares are still available for allotment, then all applicat ions for 2,000 shares shall be accommodated. If all applicat ions for 2,000 shares can not be accommodated then balloting will be conducted among applicat ions for 2,000 shares only.

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

(a) If the remaining shares are sufficient to accommodate each application for over 2,000 shares, then 2,000 shares shall be allotted to each applicant and remaining shares shall be allotted on prorate basis.

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

g) If the Issue is over subscribed in terms of amount only, then allotment of shares shall be made in the following basis:

(i) First preference will be given to the applicants who applied for 500 shares; (ii) Next preference will be given to the applicants who applied for 1,000 shares; (iii) Next preference will be given to the applicants who applied for 1,500 shares; and then (iv) Next preference will be given to the applicants who applied for 2,000 shares.

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

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

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

k) The employees of the Company have been given a preferential allocation of 7,500,000 ordinary shares under book building portion and 2,500,000 ordinary shares under general public portion. Employees will subscribe their book building portion at the strike price determined at the close of bidding period. Employees will also subscribe their public port ion on the day of subscription;.

l) If the employee quota remains unsubscribed, the remaining shares will be allotted to the general public.

3.5 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.


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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 Company shall be liable to repay the money with surcharge at the rate of 1.5%, for every month or part thereof from the expiration of the 15th day and, in addition, to a fine not exceeding PKR 5,000/- and in case of continuing offense to a further fine not exceeding PKR 100/- per day after the said 15th day of which the default continues. Provided that the Company shall not be liable if he/she proves that the default in making the refund was not due to any misconduct or negligence on his/her part.

3.6 CREDIT AND DISPATCH OF SHARE CERTIFICATES

The Company will dispatch share cert ificates to successful applicants through their Banker 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 subscript ion, as per List ing Regulations of the Stock Exchanges.

Shares will be issued either in scrip-less form in the CDS of Central Depository Company of Pakistan Limited (“CDC”) or in the shape of physical scrips on the basis of option exercised by the successful applicants. Shares in the physical scrips shall be dispatched to the Bankers to the I ssue within thirty (30) days from the date of close of subscription list, whereas scripless shares shall be directly credited through book entries in the respective accounts maintained with the Central Depository Company of Pakistan (“CDCPL”) Limited. 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 makes a default in complying with the requirements of the List ing Regulations of the Stock Exchanges, it shall pay to the Stock Exchange a penalty of PKR 500/- per day or part thereof during which the default continues. The Stock Exchange may also notify the fact of such default and the name of the Com pany by notice and also by publication in its Ready-Board Quotation.

3.7 TRANSFER OF SHARES

3.7.1 Physical Scrips:

The Company shall not refuse to transfer any fully paid share unless the transfer deed for any reason is defect ive or invalid under the provisions of Section 77 of the Companies Ordinance, 1984, provided that the Company shall within 30 days from 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.

3.7.2 Transfer under book entry system:

The shares maintained with the CDS in the book entry form shall be transferred in accordance with the provisions of the Central Depositories Act, 1997 and the Central Depository Company of Pakistan Limited Regulat ions.


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3.8 SHARES ISSUED IN PRECEDING YEARS

The details of the shares Issued by the Company in preceding years are as follows:

No. of shares Par value Amount Consideration Date of Issue 7 10 70 Cash 15 Dec 2003

34,993 10 349,930 Cash 27 Feb 2004 70,420,470 10 704,204,700 Cash 29 Apr 2006

9,965,000 10 99,650,000 Cash 20 Oct 2006 494,609,178 10 4,946,091,780 Cash 21 Nov 2007 168,449,185 10 1,684,491,850 Cash 31 Dec 2007 150,000,000 10 1,500,000,000 Cash 16 Apr 2008 906,521,167 10 9,065,211,670 Cash 21 Sep 2009

1,800,000,000 10 18,000,000,000 Other than the above mentioned shares, there have been no other shares issued since its incorporation. No shares have been issued or agreed to be issued for consideration other than cash.

3.9 PRINCIPAL PURPOSE OF THE PUBLIC ISSUE

The principal purpose of the public issue is to partially meet the cost of the Company’s fertilizer project. The detail of the project is given under part-5 of the Prospectus. Further the management has decided to list the shares of the Company on the stock exchange to broaden its investors’ base and invite general public to participate in the profits of the Company by providing them with an avenue of investment in the Company.

3.10 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. Arif Habib Limited (AHL) is acting as Lead Manager and Book Runner. Mr. Samad A. Habib, the director and shareholder of the Company () is also director/CEO in AHL. Mr. Samad A. Habib may be interested in LM & BR fee to be paid to AHL.

3.11 DIVIDEND POLICY The rights in respect of capital and dividends attached to each share other than preference shares are and will be the same. The Company in its general meetings may declare dividends but no dividends shall exceed the amount recommended by the Directors. 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 dividends shall be paid otherwise than out of the profits of the Com pany for the year or any other undistributed profits. No unpaid dividend shall bear interest or mark-up against the Company. The dividend shall be paid within the period laid down in the Ordinance.


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3.12 ELIGIBILITY FOR DIVIDEND

The Company in this matter will follow the provisions of Section 92 (2) of the Companies Ordinance 1984, which reads as under:

"The shares being issued shall rank pari-passu with the existing shares of the class in all matters, including the right to such bonus or right issue and dividend as may be declared by the Company subsequent to the issue of such new shares".

3.13 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).

3.14 WITHHOLDING TAX ON DIVIDENDS

Dividend distribution to the shareholders will be subject to withholding tax under section 150 of the Income Tax Ordinance, 2001 at the rate of 10% as specified in part I, Division III of First Schedule to the said Ordinance or any time to time amendments therein. In terms of the provision of Section 8 of the said Ordinance, said deduction at source, shall be deemed to be full and final liability in respect of such profits.

3.15 EXEMPTION FROM CAPITAL GAINS

Capital gains derived from the sale of listed securities are not liable to income tax pursuant to Clause (110) of Part 1 of the Second Schedule of the Income Tax Ordinance, 2001. This exemption is presently available up to the tax year ending June 30, 2010.

3.16 DEFERRED TAXATION

Deferred tax is accounted for using the liability method in respect of all temporary differences at the balance sheet date between the tax base of assets and liabilities and their carrying amount. Deferred tax liabilities are recognized for all taxable temporary differences. Deferred tax assets are recognized for all deductible temporary differences to the extent that it is probable that the temporary difference will reverse in the future and the taxable profits will be available against which the temporary differences can be utilized. The carrying amount of deferred tax asset is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow deferred tax asset to be utilized. Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled, based on the tax rates that have been enacted or subsequently enacted at the balance sheet date.

The Company has booked no deferred tax asset/liability as of June 30, 2009.


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3.17 FEDERAL EXCISE DUTY, CAPITAL VALUE TAX (“CVT”) & WITHHOLDING TAX ON

SALE/PURCHASE OF SHARES

a) Following the announcement of the Federal Budget 2009-2010, the government has imposed 16% Federal Excise Duty (FED) on stock brokerage under the provision of Sect ion 7 of the Act S.R.O 475 (I)/2009 dated June 13, 2009 whereby value of excisable services for the purpose of levy of duty shall be the gross commission charged from clients in respect of purchase or sale of the shares in the Stock Exchanges. Moreover, it has been announced in the Federal Budget 2009-2010 that 0.02% Capital Value Tax (“CVT”) on transaction of shares of listed companies shall be abolished.

b) 0.01% Withholding Tax will be charged on the sale of all shares, Modaraba certificates

and instruments of redeemable capital as defined in the Ordinance.


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PART 4

4 UNDERWRITING, COMMISSIONS, BROKERAGE AND OTHER EXPENSES 4.1 UNDERWRITING

Book Build ing Portion Arif Habib Limited has been mandated to act as the Book Runner & Lead Manager to the Issue. The Book Runner will underwrite the Book Building Issue (port ion) of 150 million Ordinary Shares of the Issue within two (2) working days of the closing of the bidding period at the strike price determined through the book building process. In the opinion of the Directors, the resources of the Underwriter are sufficient to discharge their underwriting commitments. Public Portion The Public portion of the Offer of 50 million shares will be underwritten within ten (10) working days after the closing of bidding period. Names and number of shares underwritten by each of the underwriter shall be disclosed in the final Prospectus.

4.2 UNDERWRITING COMMISSION

The underwriter will be paid an underwriting commission at the rate of 0.25% on the amount of Book Building portion underwritten by the Book Runner. In addit ion to the underwriting comm ission, the Book Runner will be paid a take-up comm ission @ 1.00% of the amount taken up. The commission to be paid to the underwriters for underwrit ing the public portion shall be decided after the closing of the Book Building and will be disclosed in final Prospectus.

4.3 COMMISSION TO THE BANKERS TO THE ISSUE

Commission at the rate of 0.25% of the amount collected on allotment in respect of successful applicants will be paid by the Company to the Bankers to this Issue for services to be rendered by them in connection with this Public Issue, plus out-of-pocket expenses, if any.

4.4 BROKERAGE

For this I ssue, brokerage shall be paid to the members of KSE, LSE and ISE at the rate of 1.0% of the value of shares actually sold through them. No brokerage shall be payable in respect of shares taken up by the Underwriters by virtue of their underwriting commitments.


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4.5 LEAD MANAGER AND BOOK RUNNER REMUNERATION/EXPENSES

The Lead Manager and Book Runner will be paid remuneration of PKR 10 million excluding the underwriting commission & take-up commission for underwrit ing the Book Building Portion of the Issue.

4.6 PRELIMINARY EXPENSES

Preliminary expenses are estimated to be PKR 2,000,000/-. The breakup of these preliminary expenses is given below:

Particulars Amount (PKR) Printing of Memorandum and Articles of Association and other printing expenses

500,000

Marketing expenses 1,500,000 Total 2,000,000

4.7 ESTIMATED EXPENSES OF THE ISSUE

The expenses of this Issue are estimated to be PKR 67,250,000 (including underwriting and take-up commission).

Expense Rate Amount (PKR) Underwriting commission – book building 1.00% 15,000,000 Underwriting commission – general public 1.00% 5,000,000 Take up commission 1.50% 7,500,000 Bankers to the I ssue commission 0.25% 1,250,000 Brokerage to members of the stock exchange 1.00% 20,000,000 LM & BR fees 0.50% 10,000,000 Printing, publication and notice costs 1,000,000 KSE fees and list ing charges 2,500,000 CDC fees and deposits 100,000 CDC fresh Issue fees 100,000 SECP Application and processing fee 100,000 Legal & professional fees 1,000,000 Balloting agent 1,200,000 Marketing expenses 2,000,000 Miscellaneous cost 500,000

TOTAL 67,250,000


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PART 5

5 HISTORY AND PROSPECTS 5.1 THE COMPAN Y

Fatima Fertilizer Company Limited (“Fatima” or “the Company”), was incorporated in Pakistan on December 24, 2003 as a non-listed public company under the Companies Ordinance, 1984. The certificate of commencement of business was obtained on March 30, 2004. The registered office of the company is located at 2nd Floor, Trust Plaza, L.M.Q. Road Multan.

The main object of the Company is the production and sale of chemical fertilizers and its by-products. Other objects of the company have been set out in the Memorandum of Associat ion of the com pany.

5.2 THE SPONSORS

5.2.1 The Fatima Group The Fatima Group (FG) is one of the leading corporate groups in Pakistan. FG comprises of Pakarab Fertilizers Limited, Fatima Fertilizer Company Limited, Fatima Sugar Mills Limited, Reliance Weaving Mills Limited, Fazal Cloth Mills Limited, Reliance Commodities (Pvt.) Limited and Fatima Energy Lim ited. The individuals at the helm of affairs of FG are very well versed in all phases of running a business that is setting-up, operating and managing large industrial units and also enjoys good business relations with different trading houses all over the world. These factors have contributed significantly towards the progress of FG and the turnover has increased sharply over the years and has also acquired a sound segment of the international trade. FG has over the years acquired the experience of managing businesses in different sectors including Fert ilizer, Textile, Sugar, and Foreign Trade. The Sponsors have been engaged in various industrial and trading businesses since 1936 and over the years, the market reputation, financial standing, and strength of the Group has grown.

5.2.2 The Arif Habib Group The Arif Habib Group ranks amongst the fastest growing blue-chip conglomerates in Pakistan. It has an enviable brand franchise built on stakeholder trust, better returns for the public shareholder and its orientation towards continuous investment in staff, systems and service capacity. Good corporate governance and insistence on the voluntary adoption of global best practices are two additional themes that set the Group apart from its competitors. The Group operates through its holding company – Arif Habib Securities Limited (AHSL). AHSL is amongst the top performing companies listed at the Karachi Stock Exchange. On account of its good corporate performance, AHSL has won the prestig ious Top Companies Award in each year since its list ing at the KSE. The Group has, over the years, built up a strong capacity to identify and develop successful business ventures, implementing turnarounds, and generating super-normal returns in variety of market conditions. Its joint ventures with reputed business groups—both Pakistani


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and multi-national—are testaments of the Group’s ability to identify opportunit ies, assemble strong consortia, and create value for stakeholders. Many of the private equity investments made by the Group have involved participation in privatization of state owned enterprises. The financial and management strength of the Group enables it to qualify, on a stand-alone basis, as eligible bidder for big ticket privatizations. The Group has successfully acquired large fertilizer and cement plants through privat izations. Group entities operating across the entire spectrum of the Pakistan financial services industry provide unparalleled expertise and synergies that help ensure success of the sponsored ventures. The Group holds controlling or substantial interests in successful companies competing across the securit ies brokerage, investment and financial advisory, investment management, commercial banking, commodit ies, private equity, cement, real estate, steel, and fertilizer industries. The Group Chairman, Mr. Arif Habib has served as the President / Chairman of the Karachi Stock Exchange six times in the past, and has been instrumental in introducing a number of reforms including introduction of Central Depository System, computerized trading and risk management system. He is the Founding Member and Former Chairman of the Central Depository Company of Pakistan Limited. He has served as Member of the Privat ization Commission, Board of Investment, Tariff Reforms Commission and Securities & Exchange Ordinance Review Committee. The Arif Habib Group structure is mentioned as follows:


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5.3 THE PROJECT

Fatima Fertilizer Company Lim ited is a fully integrated fertilizer complex of Nitro Phosphate (NP), Nitrogen Potassium Phosphate (NPK), Calcium Ammonium Nitrate (CAN) and Urea plants with off sites and utilities. The Project envisages achieving an optimal balance between the production of NP, NPK, CAN and Urea, while aiming to fully exploit the synergies in marketing the four products. Fatima Fertilizer has signed a Gas Sale and Purchase Agreement (“GSPA”) with Mari Gas Company Limited, which was finally approved by Oil and Gas Regulatory Authority (“OGRA”). The tenor of GSPA is of ten years from the date of commissioning extendable for other periods as mutually agreed.

The price will be determined as per the provisions of the Fertilizer Policy 2001. For feed stock, the price is fixed at US cents 70 per MMBTU whereas the pricing for fuel gas will be the same as for other industrial consumers in the country. The total installed capacity of the project is 1.58 million tones. The required gas of 110 MMCFD has been allocated by Government of Pakistan from Mari Gas fields.

Total cost of the Project is US$ 701 million (Capital cost of per tons capacity of the Project comes to US$ 443) equivalent to Pak Rupees 59.24 billion, which has been financed through debt of PKR 33.00 billion and equity /subordinated loans of PKR 26.24 billion. The Sponsors have fully subscribed the ordinary share of PKR 18.00 billion and paid Rs. 4.00 billion to the Company as shares subscription money against the issuance of cumulative redeemable/convertible Preference Shares as of November 2009.

5.4 PROJECT LOCATION

The plant is located at Mukhtar Garh, Sadiqabad, Rahim Yar Khan, Punjab, Pakistan on an area of 948 Acres of freehold land.

5.5 PLANT CAPACITY

Brief design and projected capacity specification of the plants, the licensor/manufacturer and the orig ins are provided as follows:

Annual design

capacity (Mt.)

Licensor/manufacturer Mechanical Completion

Expected Commercial Production

Ammonia 500,000 Kellogg, U.K & Sojitz Corporation, Japan

Oct-2009 Dec-2009

Nitric Acid

500,000 UHDE, Germany Oct-2009 Jan-2010

Urea 500,000 Stamicarbon/Kawasaki/Sojitz Corporation, Japan

Oct-2009 Jan-2010

NP 360,000 CFIh, France Oct-2010 Jan-2011 CAN 420,000 UHDE, Germany Oct-2009 Nov-2009 NPK 300,000 CNCEC China & CFlh, France Oct-2010 Jan-2011

The commissioning of the Ammonia Plant (which required commencement of

provision of contractual quantities of natural gas by Mari Gas from the first delivery date under the GSPA), has commenced from Novem ber 27, 2009;

It is expected that such commissioning would be completed within December 2009;


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The commissioning of the Urea Plant, which is dependent on commissioning of the Ammonia Plant, is expected to commence in December 2009 or early January 2010, and upon successful commissioning of the Urea plant, commercial production is also expected to commence by end of January 2010;

Ammonia Plant and Nitric Acid Plant will produce intermediary products i.e Ammonia and Nitric Acid. The Urea Plant, CAN Plant, NP Plant and NPK Plant are dependant on Ammonia and/or Nitric Plant and these four plants can operate simultaneously/independently;

The CAN Plant has already commenced its production in November 2009.

5.6 PROJECT COST & MEANS OF FINANCING

The actual project cost incurred as of 30 June 2009 is PKR 48,242 million as against the total cost of PKR 59,238 million.

A brief summary of the Project cost is given below:

Description Estimated (PKR million)

Actual June 30, 2009 (PKR million)

%age of actual cost against

estimated Land 340 366 107%

Buildings and Structures 4,188 3,982 95% Plant and Equipment 44,693 36,562 82% Interest during Construction 7,350 4,456 61% Commitment/arrangement/ monitoring fee

569 494 87%

Working Capital, Pre-operating Expenses, fees, commissions and others

2,098 2,382 114%

Total 59,238 48,242 81%

Means of financing are as under:

Description Estimated (Rs) million

Actual June 30, 2009 (Rs) million

% of actual cost incurred against

estimated cost Equity

Ordinary Shares Sponsors

Issued, subscribed and paid up capital 18,000 8,935 Deposit for shares - 11,1031

18,000 20,038 IPO/Pre-IPO 2,000 - 20,000 20,038 100% Cumulative redeemable/convertible preference shares

4,000 -₂

Subordinated loans 2,238 -₃ 26,238 20,038 76%


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Debt Long Term Syndicated Loans 23,000 23,000 100% Commercial and new facility (CF & NF)⁵ 7,900 5,204⁴ 66% Pakarab Fertilizers Limited 2,100 - 33,000 28,204 85% Total 59,238 48,242 81%

1 The ordinary shares of Rs. 9,065 million out of the above balance have been issued by the Company subsequent to June 30, 2009 and the remaining balance of Rs. 2,038 million will be utilized for issuance of redeemable preference shares;

2. Deposit for cumulative redeemable/convertible preference shares;

3. Certain Letters of credit issued on behalf of Fatima have been guaranteed by Pakarab and it is intended that funding for their retirement shall be provided by Pakarab. On such retirement the funds advanced to Fatima shall be in the form of subordinated loans to Fatima. For details please refer to Para 8.11.3;

4. Includes payables for imported goods & services of PKR 1.3 billion and Mark-up on long term loans of PKR 2.3 billion capitalized in Plant and Machinery;

5. Syndicates include: Habib Bank Limited, National Bank of Pakistan, United Bank Limited, Allied Bank Limited and Faysa l Bank Limited.

5.7 PLANT AND MACHINERY

Plant and Machinery costs comprised of six main plants, Off-sites & utilities and engineering & project management services. World reputed firms have provided technical services for the integration and smooth operation of the whole complex. Detail of plant and machinery is as under:

Desc ription Design

capacity (MTPA)

Technology/Lice nsor/ Manufacturer/Supplie r

Estimated Cost (PKR Million)

%age Shipped/ arrive d at site

Value shipped/ arrived at site

%age Installed

Value Installed

Yet to be

shipped

Last shipment to arrive

NEW PLANT AND MACHINERY

Urea 500,000 Stamicarbon/Kawasaki/ Sojitz Corporation Japan 8,643 100% 8643 100% 8643 -

NP1 360,000 CFIh, France 4,385 0% - 0% - 4,385 October

2010 Offsite and Utilities2

7,011 99% 6941 97% 6,801 70 December 2009

Enginee ring Services

466

Storage Tanks

Ammonia-5,000 tons and Nitric Acid-7,600

m3

Officine Maraldi, Italy and Flow Serve, Austria

586 100% 586 100% 586 -

Project Management Services

Sojitz, Japan 618

Electric al and Instrume ntation²

2,502 98% 2452 98% 2,452 50 January

2010 Raw water pumping station²

KSB Pumps 509 98% 499 90% 458 10 November

2009

Product Handling system

CNCEC , China 1,560 100% 1560 83% 1,295 -

Miscellaneous 876 100% 876 100% 876 -

Capital Spares² 559 51% 254 0% - 305 June 2010

Railway Siding RAILCOP, SNGPL 881 88% 779 88% 779 102 June 2010

1 Plant a nd equipment including vessels, pipes, e xchanges and compressors 2 Small value items including spares for plant, valves, etc


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and Gas pipeline s3

REFURBISHED PLANT AND MACHINERY

Ammonia4 500,000 Kellogg, UK, Sojitz Corporation Japan 5,946 98% 5822 98% 5,822 124

December 2009

Nitric Acid⁴ 500,000 UHDE, Germany 3,494 99% 3459 99% 3,459 35 November

2009

CAN5 420,000 UHDE, Germany 1,273 99% 1260 99% 1,260 13 January

2010

NPK6 420,000 CNCEC China, CFIh France 548 89% 488 0% - 60

October 2010

Foreign Exc hange Rate variation cost Hedging Cost 4,836

Total 44,693 33,619 32,431 5,154

Note: Calculation of percentage of plant & machinery installed, shipped/arrived at si te and yet to be shipped:

Description Percentage

Plant & Machinery Shipped/arrived at si te (33,619 / 38,773a = 86.71%) 86.71%

Plant &Machinery to be shipped (5,154 / 38,773=13.29%) 13.29%

Plant & Machinery installed (32,431 / 38,773=83.64%) 83.64% a 44,693 – (466+618+4,836) = 38,773

Significant items included in offsite and utilities are as follow s:

Description Design

capacity Unit of

measurement Technology/Licensor/ Manufacturer/Supplier Condition

Estimated cost (PKR

million) Power Plant 56 MW GE Oil & Gas, Italy New 1,340

Heat Recovery Steam Generator

2X75 t/h Del Tek, China New 528

Cooling Tower 53,000 m3/h SPIG S.P.A. Piazza, Italy New 424

De-erator/Water Treatment

1,600 m3/hr Saline Water Systems, Italy

New 639

Nitrogen System 300 Nm3/h Linde Cryoplants, UK New 141

Pipes/Bulk Material etc New 2,620

Note 5.7.1: Imported Plant and Machinery constitutes about 98% of the total plant & machinery. Note 5.7.2: NP Plant constitutes 9.81% of the total cost of machinery.

3 Railway siding and accessories 4 Small value items like gaskets and spares etc 5 Small value items like shafts and valves etc 6 Structures, bolts, instrumentals and paints etc


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5.8 PLANT INFORMATION 5.8.1 Urea Plant

The new urea plant is based on latest Stamicarbon Technology System 2000 plus with patented safurax material using Total Recycle, carbon dioxide stripping with pool reactor process (approximately 66 percent of new Urea plants in the world are based on this technology). Kawasaki Plant Systems Ltd. Kobe, Japan, as the nominated subcontractor under the agreement with Sojitz has procured & supplied the plant and technology. M/s Stamicarbon is the licensor of Urea Plant in favor of FATIMA. Sojitz Corporation has supplied the Urea plant and provided the engineering services and process guarantees for Urea Plant.

5.8.2 NP Plant The plant is brand new and based on modern European technology. CFIH has significantly completed the basic engineering and detailed engineering is at advance stage of completion. When commissioned, the plant will be capable of producing 1200 MT of NP per day. Ordering of machines and equipments is being made on the basis of detailed engineering. The plant has been designed to use low grade rock phosphate in order to maximize profitability.

5.8.3 CAN Plant The CAN Granulation Plant was designed and manufactured by Uhde GmbH and has been relocated to Pakistan. The plant remained in operation from 2000 to 2002. Since the plant has actually been operated for only two years, it is still in very good condition. The production capacity of CAN granulated product is 1,400 MT per day.

5.8.4 NPK Plant It consists of an Ammonium Nitrate plant and a NPK granulation plant. The plant is based on latest pipe reactor technology and is being re-engineered, constructed and installed by CNCEC. The plant has the capacity to produce 1,000 MT per day of NPK fertilizer.

5.8.5 Ammonia Plant M/s. Kellogg, Brown and Root’s (“KBR”) has given license and also conducted basic engineering of Ammonia Plant under an agreement with Sojitz Corporation. The plant stopped production in 2000 due to economic reasons. When operational, the plant was producing 1,500 to 1,700 MT ammonia per day. Stone & Webster (Shaw Energy) has completed the detailed engineering of ammonia plant. The machines and equipment of Ammonia plant have been refurbished/ revamped by General Electric and Maintenance Partners. Refurbishment has substantially mitigated operational risks of the relocated plant. Sojitz Corporation has provided performance guarantee for the plant.

5.8.6 Nitric Acid plant The NA plant was designed and manufactured by Uhde GmbH, Germany and relocated to Pakistan. The plant remained operational up to 2002 after which it was shut down due to


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economic reasons. The plant is based on latest dual pressure UHDE technology and was designed by UHDE Germany. UHDE, the original manufacturer and licensor of the plant has re-engineered the plant for operation at FATIMA’s site conditions.

5.8.7 O & U/Power Plant/Water Treatment/boilers/ NitrogenAir etc. Plants and equipment that have been installed for O&U, power production, water treatment, boilers and Nitrogen air etc are all new.

5.9 Machinery Suppliers/Engineers Sojitz Corporation, Japan

The Sojitz Group was formed through the business integration between Nichimen Corporation and Nissholwai Corporation, two companies with over a century of history. Sojitz is one of the largest trader in the Asian region in areas extending to methanol, PTA, industrial salt, and the fertilizer businesses. Keeping in view rich profile of Sojitz Corporation in Chemical area, the contracts of manufacture and supply of new Urea Plant, basic engineering of Ammonia Plant and Project Management Services (PMS) were awarded to Sojitz Corporation. Sojitz Corporation is the licensor of MW Kellogg’s technology used in the Ammonia Plant and performance guarantor of Ammonia plant installed at Fatima Fertilizer.

M. W. Kellogg

M. W. Kellogg as the nominated subcontractor under the agreement between Sojitz Corporation and Fatima is on the leading edge of ammonia plant technology. M. W. Kellogg ammonia plants have long been recognized worldwide for their superior performance and serving as a cornerstone of the nitrogen fertilizer industry. M. W. Kellogg is renowned for designing ammonia plants that set industry standards for safety and reliability. All aspects of safety and reliability are thoroughly addressed in its design and operating procedures. This responsibility is incumbent on all disciplines during the Project execution. M.W Kellogg conducted the basic engineering of Ammonia Plant and Sojitz Corporation is the licensor of MW Kellogg’s technology used in the Ammonia Plant, and is the licensor and performance guarantor of Ammonia plant installed at Fatima Fert ilizer.

Stamicarbon of Netherland B.V Stamicarbon is the licensing subsidiary of DSM, a leading producer of life science products, performance material and industrial chemicals, headquartered in the Netherlands. The company sells license know-how and related services to the chemical process industry and has vast number of the projects in the diversified field including fertilizers, polyethylene, caprolactam, phenol, melamine, EPDM-rubber, mercury removal from gas condensates and butadiene to ethyl benzene. Stamicarbon specializes in the licensing of urea with more than 220 projects and a global share of nameplate capacity of approximately 70%, Stamicarbon is world market leader in Urea technology. Stamicarbon is Technology provider of Urea Plant for Fatima Fert ilizer.


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Kawasaki Plant Systems (KPS), Ltd., Kobe, Japan

Kawasaki internationally deals in Engineering, Manufacturing, Fixing, Maintaining and Selling of many kinds of plants. Its primary area of expertise revolves around guiding its customers about environment protection, , energy saving, higher productivity, overseas procurement, project management, quality control, examination & check-up, maintenance, and controlling system of technology. KPS, as the nominated subcontractor under the Sojitz Agreement, is responsible for Project Management Services (PMS) and procurement of Urea Plant with Sojitz Corporation.

China National Chemical Engineering Corporation (CNCEC), China CNCEC is a large comprehensive corporation directly administered by the State Council of China. The Company has diversified exposure in the fields of Fertilizer, Petrochemicals, Oil Refinery, Power, rubber, Fine Chemical and Mines etc. CNCEC has completed more than 90% projects of China’s chemical projects, 60% of petrochemical plants, 30% of refineries as well as a number of projects in power, construction, environment protection, etc. CNCEC is responsible for the Civil Construction, Mechanical Construction and Commissioning of Fat ima Project.

UHDE GmbH

With more than 2,000 plants to its credit, UHDE is one of the world’s leading engineering companies in the design and construction of chemical, refining and other industrial plants. UHDE has subsidiaries and associates located all over the w orld. This worldwide network with over 4,300 employees is active in a number of different fields like; fertilizer plants, refining technologies, organic intermediates and polymers, electrolysis plants, gas technologies, plants for oil, coal and residue gasification, coke plant technologies and pharmaceuticals. UHDE offers not only cost- effective high-tech solutions in industrial plant construction and the entire range of services associated with an EPC contractor but also comprehensive service packages for the entire life cycle of the plants. UHDE has been assisting Fatima in implementation of Nitric Acid (NA) and Calcium Ammonium Nitrate (CAN) Plants and is also helping with the implementation of Clean Development Mechanism (CDM) for Fatima Project and is providing technology and certain plant for the abatement of certain greenhouse gases.

Mitsubishi Corporation (MC), Japan MC is Japan’s largest general trading company (sogo shosha) with over 200 bases of operations in approximately 80 countries worldwide. Together with its over 500 group companies, MC employs a multinational workforce of approximately 48,000 people and has operating transactions of US$ 160 billion for the year 2005. MC has long been engaged in business with customers around the world in virtually every industry, including energy, metals, machinery, chemicals, food and general merchandise. MC has world experience of pollution abatement of N2O and NOx and has worked with the group for completion of project at Pakarab Fertilizers, which is first project in the country and second in the world in the fertilizer field.


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MC is assisting in im plementation and registration of Fatima CDM Project with United Nations.

5.10 BUILDINGS AND STRUCTURES Building and structure has been completed except for NP, NPK and Product Handling. The work at Product Handling is at advance stage of completion. Civil work at NP plant has also started. Actual cost incurred up till June 30, 2009 is PKR 3.982 billion representing 95% of the total estimated cost.

5.11 OFFSITES AND UTILITIES 5.11.1 Power

The plant has its own gas fired power generation facility of 56 MW, sufficient for power needs of the Project.

5.11.2 Gas Natural gas of 110 MMCFD has been allocated to the company from Mari Shallow Reservoir under Fertilizer Policy, 2001. Pipeline of 47 Km has been commissioned.

5.11.3 Water Line installation completed. Water filling of the line is started under gravity.

5.11.4 Raw Material

Fatima Fert ilizer complex requires basic raw materials like Natural Gas and Rock Phosphate.

- Natural Gas: its usage can be categorized into (a) as primary raw material for manufacturing of nitrogenous fertilizers and (b) as fuel to facilitate fertilizer manufacturing process. Long term gas supply agreement has been executed with Mari Gas Company Limited for uninterrupted gas supply. Furthermore, EPC contract has been executed with SNGPL to construct dedicated 20” gas pipeline of 47 km from Mari gas field to the complex which has been completed and commissioned.

- Phosphoric Acid / Rock Phosphate: Phosphate Fert ilizer manufacturing companies have been importing rock phosphate into Pakistan. Therefore handling facilit ies at ports already exist and Pakistan railways and road transporters are well experienced. Fatima Fertilizer does not foresee any problems in handling Rock Phosphate. It will provide all necessary facilities at its plant site for this purpose. The supply agreement for Rock Phosphate is under negotiation and is expected to be finalized short ly.


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5.12 PROJECT IMPLEMENTATION SCHEDULE

Acquisition of land Acquired Civil work 97% completed except NP and NPK plants Completion of arrival of machinery All plants 100% arrived at site except NP plant. Completion of erection/installation of machinery

All plants are 99% complete except NP and NPK plants

Plant Commissioning

The CAN plant has already been commissioned and has started its production. The Project will achieve commissioning of the Ammonia Plant by end of 2009 and of the Urea plant by January 2010;

Significant plants of O&U including power plant, Steam Generators, Nitrogen System, Natural Gas and water facilities have already commissioned;

The NP plant will be commissioned by fourth quarter of 2010 and subsequently the NPK plant will be commissioned.

The Mechanical Completion dates and expected Commercial production dates have been described in Para 5.5 above.

5.13 CURRENT STATUS

The Project except for the N P and NPK Plants is currently about 99% complete and pre commissioning and commissioning activities are progressing well as per schedule. Milestones like setting up and installat ion of the Fire water system, Natural Gas pipeline, raw water system and Power plant has been successfully com pleted and now water, gas and power is available at site. Different plants are at various stages of completion and about PKR 48 billion has already been invested in the Project. The Project has achieved significant progress and will achieve commissioning of the Ammonia, Urea CAN 2009. Significant plants of O&U have already commissioned. The NP plant will be commissioned by fourth quarter of 2010 and subsequently the NPK plant will be commissioned.

5.14 Clean Development Mechanism

The Management is endeavoring to get CDM Project of the Company registered with the United Nations for Carbon Credits to generate revenue from CERs. It is expected that about 1.3 Million CER’s per annum will be accrued from the start of the project up to 2020. MC is assisting in implementation and registration of Fatima CDM Project with United Nations. UHDE is providing technology and equipment and also helping with the implementation of Clean Development Mechanism (CDM) for Fat ima Project

5.15 SECTOR REVIEW The sector has witnessed a CAGR of 5.8% in the last 5 years and is expected to depict a m ore robust growth. Limited supply side internationally may also add to the growing prices of the fertilizers, which are already at their peak throughout the world, followed by closure of fertilizer plants in North America. Locally, industry is expected to prosper with prudent SBP policies supporting agriculture credit, increase in cult ivable land by construction of dams, canals and placement of tube-wells and higher support prices for the crops.


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UREA MARKET

281k tonnes was imported in 2006-07 to meet the 181 kt (2007-08) shortfall.

Local production was 4.7 million tonnes in 2006-07 versus 4.8 million Tonnes in 2005-06

Prices have increased at an average rate of 5.0% per annum in the last decade. Average price of Urea increased by 25.5% during 2007-08.

PHOSPHATES MARKET

Industry sales increased by 15-% in 2006-07 vs 2005-06. 23% in 2007-08 vs 2006-07.

Industry import of phosphates was 1,023 kT in 2006-07 to meet the local requirement. 1217 K (2007-08).

DAP prices averaged US$ 1,163.8 (2007-08).

Peer comparison:

Production capacity/ Current capacity (million tonnes)

FFC FFBL ENGRO Dawood Hercules

Pak Arab

Fatima Fertilizer

Urea 2.38 0.65 2.28 0.45 0.09 0.50 DAP - 0.68 - - - - CAN - - - - 0.45 0.42 NP - - - - 0.30 0.36 NPK - - 0.16 - - 0.30

Key financials 'million' FFC FFBL ENGRO Dawood Hercules

Pak Arab

Fatima Fertilizer

As on December 31, 2008 Total assets 31,919 46,772 60,289 25,630 45,523 48,783 Paid-up capital 6,790 9,341 2,970 1,094 3,000 8,935*** Total liability 19,634 36,285 9,125 8,247 20,442 28,938 Finance cost 3,847 2,792 1,509 901 2,296 5 Equity 14,140* 10,486 25,609** 17,382 11,976 19,884 Cash balances 8,873 7,942 1,872 934 85 235 *FFC equity is inclusive of bonus share **ENGRO's equity is inclusive of right shares *** Paid up capital of the Company as on June 30, 2009 is PKR 18 billion

Key ratios FFC FFBL ENGRO Dawood Hercules

Pak Arab

Fatima Fertilizer

Gross margin 40.40% 30.67% 26.57% 42.00% 66.23% N/A Net margin 21.33% 10.81% 18.18% 41.00% 37.54% N/A Return on equity (ROE) 53.11% 26.87% 16.56% 17.62% 59.20% N/A Debt:Equity 30:70 49:51 55:45 32:68 56:46 56:44 Current ratio 0.82 1.09 2.55 1.28 1.14 0.12 Total asset turnover 0.96 0.57 0.39 0.29 0.41 N/A Dividend yield 9.34 6.79 1.13 1.76 N/A N/A Price to earning 8.12 10 15.25 N/A N/A N/A

Sourc e: AHL Research


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5.16 RISK FACTORS

Apart from the above mentioned strengths, the management has also considered some other risk factors associated with the project. These risk factors and their mitigating factors are described as follows: Risk of Cost Overruns The Project cost of FATIMA is PKR 59,238 million out of which plant and equipment cost accounts for approximately PKR 43,812 million. As certain components of the Project cost were est imated based on certain assumptions, any change in these assumptions may result in increasing the Project cost in turn impacting the viability of the Project. Mitigant: Since the Project is nearing completion and most of the plant machinery and equipment other than for the NP Plant are already on the site, the risk of cost overrun is expected to be minimal. Risk of Delayed Implementation of the Project As the Project envisages supply of plant and machinery from different suppliers, delay or failure of commitment by any supplier or contractor to complete its assigned responsibility will lead to delay in the Project’s commissioning. Mitigant: Plant and machinery except for NP Plant is already on site and erections/installation of the plants other than NP and NPK Plants have been substantially completed; there is no risk of delay resulting from the shipping and supply. Risk of Inefficient Integration The Project entails setting up of an integrated fert ilizer complex which has been setup for production facilit ies for manufacturing 2 intermediate products i.e. ammonia and nitric acid, the production of which will have to be integrated with the production of end products i.e. Urea, NP, NPK and CAN. Any problem in the integration will impact the overall production of the plant. Mitigant: In order to minimize the integration problems, the Company has executed project management contracts with renowned and experienced com panies like Sojitz Corporation Japan, who are supported by Kawasaki Plant Services Japan as a nominated subcontractor. The experience of these companies is expected to result in smooth implementation of the Project. Further, construction of the entire Complex is entrusted to CNCEC. It is also pertinent to mention that the challenge of integration essentially lies in designing off-sites and utilities in a manner that all the six plants continue to operate at optimum capacity; otherwise all the six plants are capable of running on their own (apart from the Ammonia plant whose output is required for NA, Urea, NP, and CAN plants). The above measures serve to largely mitigate the integration problem related to the Project.


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Physical Damage and Loss of Property Risk There is a risk that the Project suffers physical damage as a result of an accident or otherwise, during construction Mitigants: Appropriate insurance covers are in place. The Sponsors have appointed Marsh, the world’s leading risk and insurance services firm as their insurance managers and obtained requisite project insurance during construction. Moreover, Miller Consulting Services has advised upon adequacy of types and quantum of insurance arrangements for the Project. Commissioning Risk The risk that the Complex once installed may not meet expected performance levels. Mitigants: The representatives of the licensors, integration engineers, re-engineering companies, vendors project management service providers and Stone & Webster (who are technical advisors to financial institut ions) are available during the construction phase of the Project. The performance tests are being conducted in the presence of the above mentioned experts. I f a test fails, remedies to a certain extent are available in the respective contracts in the form of liquidated damages and make good clauses. CNCEC is also responsible for commissioning the entire Project under the advice of the licensors and the integration engineer. Regulatory Risk Regulatory risk relates to uncertain GOP policies affect ing the industry in the future. Changes in the regulatory framew ork can greatly influence the performance of any sector. Mitigants: GOP has already developed Fertilizer Policy 2001 to promote this sector. Moreover, it is also expected that in order to support this new industrial segment and to promote local production of fert ilizer, the GOP may introduce further favorable regulatory framework which in return contribute towards agricultural growth of the country. Power Risk Electricity Shortage in the supply of electricity can adversely affect the production capacity of plant. Mitigants: The plant has its own gas fired power generation facility of 56 MW therefore the risk of shortage of electricity are minimal. Natural Gas

Natural gas is used as raw material in the production of fertilizer. Shortage in the supply of Natural gas can adversely affect the production capacity of plant.


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Mitigants: GOP has allocated 110 MMCFD gas to the company from Mari Gas Shallow Reservoir dedicated to fert ilizer sector for supply of gas without any interruption and curtailment. Instrument Specific Risks Under Subscription Risk This is the risk that the public offer may get under-subscribed on account of lack of investor interest. Mitigant: This risk is mitigated by strong performance of the fert ilizer sector in the past due to virtually guaranteed demand of fertilizer products. With striking demand outlook coupled with pro-agri government policies are likely to attract potential investors at large. Price Risk This is the risk that the share price of FATIMA will decline due to bearish trends at the Karachi Stock Exchange. In addition to that, this risk can get amplified if the Company fails to sustain its impressive growth. Mitigant: This risk is mitigated by recognizing the star performance of its parent company Pak Arab Fertilizer Limited, whose business model has been adopted for FATIMA as well. Moreover, production of specialized fertilizer product (CAN) will also distinguish the Company amongst its peers. Technological Obsolescence Risk

The Fertilizer companies’ profitability and competit iveness can be adversely affected by potential obsolescence of etymology process technology. Mitigant: The Company has put a fertilizer complex which runs on the latest technology. To meet the up coming challenges, the Company will keep on upgrading its plant through BMR and de-bottle necking process. Foreign Exchange risk Foreign exchange exposure may increase the cost of the project and might also affect the operational profitability. Mitigant: The Company has already purchased 92% of its plant and machinery whereas for the rest of the 8% of the plant and machinery and LCs has already been opened. Whereas the operational profitability will depend upon the regular revision of phosphoric rock prices. Liquidity Risk The company will not be able to meet its future funding requirements.


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Mitigant: In order to mit igate the liquidity risk the Company is listing itself at the Karachi Stock Exchange and offering its share to the general public. The Company is also arranging adequate amount of financing to meet its milestones. In future the Company will maintain adequate amount of cash and marketable securit ies. Economic Slowdown The growth of the agriculture sector is largely dependent upon the economic conditions prevailing in the country. An economic slow down in the country / region may adversely affect the growth and performance of the sector. Mitigant: Keeping in view the importance of fertilizer for agriculture sector, the short fall in demand and supply of the fertilizer and diversified product portfolio of the Company, will protect the sales of the Company from effects of economic slowdown Political Risk Any change in political structure will affect the performance of the Company and the fertilizer sector. Mitigant: Any Political changes will not effect the Company as all new fertilizer polices that are made on mutual understanding. It is stated that all material risks factors, with respect to th is Issue, have been disclosed and that nothing has been concealed.


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PART 6

6 FINANCIAL INFORMATION 6.1 Auditor’s report under section 53 (1) read with clause 28 of section 2 part I of the Second

Schedule to the Companies Ordinance, 1984, for the purpose of inclusion in the Prospectus of Fatima Fertilizer Company Limited -

September 28, 2009 442 The Board of Directors Fatima Fert ilizer Company Limited Multan. Gentlemen, CERTIFICATE UNDER SECTION 53(1) READ WITH CLAUSE 28(1) OF SECTION 2 OF PART 1 OF SECOND SCHEDULE TO THE COMPANIES ORDINANCE, 1984 We have audited the financial statements of Fat ima Fertilizer Company Limited for the periods ended June 30, 2007 to June 30, 2009. However, the financial statements of Fatima Fertilizer Company Limited for the years ended Decem ber 31, 2005 and December 31, 2006 have been audited by another firm of chartered accountants. In accordance with section 53(1) read with clause 28(1) of section 2 of Part 1 of Second Schedule to the Companies Ordinance 1984, we report that: (a) The assets and liabilities of Fatima Fertilizer Company Limited as at June 30, 2009;

and (b) Audited profit and loss accounts of Fatima Fertilizer Company Limited for the

periods ended December 31, 2006 to June 30, 2009 were as follows: SUMMARY OF ASSETS AND LIABILITES OF FATIMA FERTILIZER COMPANY LIMITED AS AT JUNE 30, 2009 Rupees in thousand ASSETS AND LIABILITES Non current assets Property plant and equipment 667,635 Capital work in progress 47,574,497 Long term loans and deposit 5,578 48,247,710


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Current Assets

Stores and spares 3,398 Loans, advances, deposits, prepayments and receivables 296,787 Derivative financial instruments 204 Cash and bank balances 234,515 534,904 Less: Current liabilities Trade and other payables 4,323,335 (3,788,431) 44,459,279

Represented by: Share capital and reserves: - I ssued, subscribed and paid-up capital 8,934,788 - Share deposit money 11,103,353 - Accumulated loss (193,667) 19,844,474 Long term liabilities - Long term loans – secured 24,578,662 - Retirement benefits 36,143 24,614,805 44,459,279


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PROFIT AND LOSS ACCOUNTOF FATIMA FERTILIZER COMPANY LIMITED FOR THE PERIOD ENDED JUNE 30, 2009

For the period

ended June 30, 2009

For the year Ended

Decem ber 31, 2008

For the period Ended December

31, 2007

For the period ended June

30, 2007

For the year Ended

Decem ber 31, 2006

(restated) Rupees in thousand Operating expenses Administrative expenses (43,238) (57,908) (11,366) (11,910) (18,907) Other operating income 7,852 56 70,010 - - Profit/(loss) from operations (35,386) (57,852) 58,644 (11,910) (18,907) Finance cost (4,995) (86,343) (430) (27,009) (1,904) Profit/(loss) before taxation (40,381) (144,195) 58,214 (38,919) (20,811) Taxation - - - - - Profit/(loss) after taxation (40,381) (144,195) 58,214 (38,919) (20,811)

We further state that:

(a) No dividend has been paid by Fatima Fertilizer Company Limited since its

incorporation on December 23, 2003. (b) Contingencies and commitments of the Company as at June 30, 2009 were as follows: (i) Post dated cheques not provided for in the financial statements, furnished by the

Company to the Collector of Customs to cover excess import levies on plant and machinery of Rs. 1.268 million. Liabilities under these post dated cheques can arise in respect of such plant and machinery which will be treated as part of cost of such plant and machinery.

(ii) Commitments in respect of:

Contracts for capital expenditures are Rs. 4,404.844 million Contracts for other than capital expenditure are Rs. 66.913 million.

The amount of future payments under non-cancellable operating leases and the period in which these payments will become due are as follows:

Rupees in thousand

Not later than one year 1,018 Later than one year and not later than five years - 1,018


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(c) The Company changed its accounting policy in June 30, 2007 regarding capitalization

of incidental operations and other administrative and general overheads. Therefore no profit and loss account was prepared prior to December 31, 2006.

(d) No financial statements have been audited by us subsequent to the audit of the

financial statement for the period ended June 30, 2009. Yours truly, Sd/- A.F. Ferguson & Co. Chartered Accountants


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6.2 SHARE BREAK-UP VALUE CERTIFICATE

September 28, 2009 441 The Board of Directors Fatima Fert ilizer Company Limited Multan Gentlemen CERTIFICATE ON BREAK-UP VALUE OF SHARES FATIMA FERTILIZER COMPANY LIMITED Based on the audited financial statements for the half year ended June 30, 2009, the break-up value of an ordinary share of Rs 10 each of Fatima Fertilizer Company Limited is Rs. 9.78 as computed below:

Issued, subscribed and paid up capital 8,934,788,000

Accumulated loss (193,667,000)

Total shareholders’ equity Rupees 8,741,121,000

Number of ordinary shares 893,478,833

Break-up value per share Rupees 9.78

Yours truly,

Sd/-

A.F. Ferguson & Co. Chartered Accountants


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MANAGEMENT NOTE The revised break up value of the Company is given under three scenarios below. Scenario “A” gives the break-up value on the basis of the 893,478,833 shares subscribed as at June 30, 2009. Furthermore, in Scenario “B”, the Com pany issued additional 906,521,167 million shares, making the total paid up shares up to 1,800,000,000. The Scenario “C” gives the break-up value on the basis of 2,000,000,000 shares subscribed. All the scenarios use accumulated loss of the Company as at June 30, 2009.

Scenario A – In itial paid up capital as at June 30, 2009 Issued, subscribed and paid up capital 8,934,788,000 Accumulated loss -193,667,000 Total shareholders’ equity Rupees 8,741,121,000 Number of ordinary shares 893,478,833 Break-up value per share Rupees 9.78 Scenario B – Additional equity injection Issued, subscribed and paid up capital 18,000,000,000* Accumulated loss -193,667,000 Total shareholders’ equity Rupees 17,806,333,000 Number of ordinary shares 1,800,000,000 Break-up value per share Rupees 9.89 * The Company’s enhanced paid up capital as on 30 September 2009

Scenario C – Post-IPO paid-up capital Issued, subscribed and paid up capital 20,000,000,000 Accumulated loss -193,667,000 Total shareholders’ equity Rupees 19,806,333,000 Number of ordinary shares 2,000,000,000 Break-up value per share Rupees 9.90


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

COMPANY


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PART 7

7 MANAGEMENT

7.1 BOARD OF DIRECTORS OF THE COMPANY

Name, Address & Personal Details

Designation Directorship in other companies

Muhammad Arif Habib 86/2, 10t h street, Khayaban-e-Sehr, Phase VI, DHA Karachi.

Chairman

Arif Habib Securit ies Limited Arif Habib Bank Limited Thatta Cement Company Limited Real State Modaraba Management

Company Limited Al-Ameera Arif Habib (Pvt.) Limited Pakistan Private Equity Management

Limited Arif Habib DMCC Pakistan Engineering Co. Limited Safe Mix Concrete Products (Pvt.) Limited Pakarab Fertilizers Limited Aisha Steel Mills Limited International Com plex Projects Limited Askari Siddiqsons Development Company

Limited Javedan Cement Limited Arif Habib Foundation Attock Refinery Limited

Fawad Ahmed Mukhtar 43-A, Qasim Road, Multan

Chief Executive/ Director

Pakarab Fertilizers Ltd Fazal Cloth Mills Ltd Reliance Weaving Mills Ltd Fatima Sugar Mills ltd Reliance Commodities (Pvt.) Ltd Farrukh Trading Co. (Pvt.) Ltd Fatima Energy Ltd Fatima Trading Co. (Pvt.) Ltd Air One (Pvt.) Ltd.

Fazal Ahm ed Sheikh 43-A, Qasim Road, Multan

Director

Pakarab Fertilizers Ltd Fazal Cloth Mills Ltd Reliance Weaving Mills Ltd Fatima Sugar Mills ltd Reliance Commodities (Pvt.) Ltd Fatima Energy Ltd Fatima Trading Co. (Pvt.) Ltd Air One (Pvt.) Ltd

Faisal Ahmed Mukhtar 43-A, Qasim Road, Multan

Director

Fatima Sugar Mills Limited Reliance Weaving Mills Limited Fazal Cloth Mills Limited Reliance Comm. (Pvt.) Limited


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Mukhtar Trading Co. (Pvt.) Limited Pakarab Fertilizers Limited Fatima Energy Limited Fatima Trading Co. (Pvt.) Limited Air One (Pvt.) Limited

Nasir Butt 172, Islam Block, Azam Gardens, Multan Road, Lahore

Director NIL

Samad A. Habib 86/2, 10t h street, Khayaban-e-Sehr, Phase VI, DHA Karachi.

Director

Arif Habib Limited Arif Habib Equity (Pvt.) Limited Rotocast Engg. (Pvt.) Limited Nooriabad Spinning Mills (Pvt.) Limited Real Estate Modaraba Management

Company Limited Arif Habib DMCC Pakarab Fertilizers Limited

Abad khan House No. 69/C, Tack Society, Lahore.

Director NIL

Masood Karim Shaikh Nominee Director(NBP)

Dewan Cement Limited National Assets Fullerton Management Co.

Limited Fauji Oil Terminal & Distribution Co. United National Bank England Nishat Power Limited Atlas Power Limited NBP Exchange Company Limited

7.2 OVER DUE LOANS

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

7.3 CASH DIVIDEND/BONUS PAID BY GROUP COMPANIES

Company 2004 2005 2006 2007 2008 2009

Pakarab Fertilizers Limited 80% Nil

80.17% Nil

Nil 2,562.1%B

Nil 303.7%B 75% SD*

Nil 50%B

50% SD

Nil 50% SD

Arif Habib Securities Limited 150% 150%B

100% 50%B

100% 66.66%B

75% 322%B

15% 25%B

Nil

Arif Habib Limited Nil Nil 100%B 100% 10%B

25% 25%B

15% 25%B

Arif Habib Bank Limited - - - 100% 25% 11.11%B

Nil

Arif Habib Investments Limited Nil Nil Nil Nil 50%B Nil

Fazal Cloth Mills Limited Nil 20%B 10%B 15%B Nil Nil

Reliance Weaving Mills Limited 10% 20%B

10% Nil

Nil 25%B

Nil Nil Nil

Pakistan Engineering Company Ltd. - - 30% 90% - 125%

Javedan Cement Limited 7.5% - - - - Nil *SD – Speci e Dividend


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7.4 PROFILE OF KEY MANAGEMENT PERSONNEL 7.4.1 Mr. Fawad Ahmed Mukhtar

Chief Executive Officer

Mr. Fawad Ahmed Mukhtar is the Chief Executive Officer (“CEO”) of Pakarab Fert ilizers Limited (PFL) and Fatima Fertilizer Company Limited. He has rich experience of manufacturing/industrial management. He received his Bachelors from Government College, Multan (BZU). He is also the director in the following companies:

Pakarab Fertilizers Ltd Fazal Cloth Mills Ltd Reliance Weaving Mills Ltd Fatima Sugar Mills ltd Reliance Commodities (Pvt.) Ltd Farrukh Trading Co. (Pvt.) Ltd Fatima Energy Ltd Fatima Trading Co. (Pvt.) Ltd Air One (Pvt.) Ltd.

7.4.2 Mr. Fazal Ahmed Sheikh Executive Director

Mr. Fazal Ahmed Sheikh is a Director of both PFL and FATIMA and looks after finance and administration matters of the companies. He holds a Bachelor of Economics Degree from the University of Michigan, USA. He is also the director in the following companies:

Pakarab Fertilizers Ltd Fazal Cloth Mills Ltd Reliance Weaving Mills Ltd Fatima Sugar Mills ltd Reliance Commodities (Pvt.) Ltd Fatima Energy Ltd Fatima Trading Co. (Pvt.) Ltd Air One (Pvt.) Ltd.

7.4.3 Mr. Muhammad Abad Khan

Advisor to CEO

Mr. Muhammad Abad Khan is a mechanical engineer from the University of Engineering & Technology, Lahore. He has experience of more than 50 years, having worked for major fertilizer companies in Pakistan like Fauji Fert ilizer Company Limited, Engro Chemicals Pakistan Limited, Fauji Fertilizer Bin Qasim Limited and PFL. He has received extensive training and availed useful learning opportunit ies in technical and managerial fields at home and abroad.

7.4.4 Mr. Iftikhar Mahmood Baig Finance, Corporate & Business Development

Mr. Iftikhar Mahmood Baig is a Chartered Secretary and has over 23 years experience in Corporate & Financial Management of Com panies. He is Company Secretary of FATIMA. He is also working as Company Secretary of PFL since its acquisition in 2005. Mr. Baig was pivotal in the acquisition of PFL and its subsequent turnaround. Mr. Baig is associated with


63

the Fatima Group since 1996 and held various middle and senior level management positions and now working as GM Corporate & Business Development of the Group. Operations Management Team

7.4.5 Mr. Muhammad Nasir Butt

Technical Director

Mr. Muhammad Nasir Butt is a senior fertilizer industry professional. Have served PFL as its Managing Director for nearly six years before privat ization and has served as Managing Director at Pak American Fertilizer Limited, Daudkhel, for three and half years and at Pak Saudi Fertilizer Limited for a year and a half. He has received nine months technical training in the fertilizer industry with M/s Saint Gobain of France and M/s Inventa of Switzerland. Fatima is the 2nd fert ilizer plant in Pakistan that produces CAN and NP so Mr. Butt’s training with International Chemical Industries (“ICI”) fertilizer plants, B illingam U.K, M/s UHDE of West Germany, and M/s Stamicarbon of Holland for running modern plants of NA and CAN is of immense value.

7.4.6 Mr. Arif-ur-Rehman

Project Director

Mr. Arif Ur Rehman is a chemical engineer and has over 26 years of experience in the fertilizer and petrochemical industries. He has been part of a number of successful projects from construction to commissioning and normal operation. These include Fauji Fertilizer plant in Goth Macchi, Fauji Fertilizer Bin Qasim and ICI, PTA Bin Qasim plants. He held various middle and senior level management posit ions before joining FATIMA in April 2007. He has had extensive foreign job assignments and has gone through numerous international technical and management training.

7.4.7 Mr. Eduard Horn

Operations Manager He is responsible for the overall operations of the project Mr. Eduard Horn is a Chemical Engineer and has over 30 years of experience in the fert ilizer industry ranging from the operation, maintenance and engineering of Ammonia plants through Urea and Ammonia Nitrate to NPK and liquid fert ilizers. For the past 18 years he has been the senior technical manager at the Gulf Petrochemical Industries Co., Bahrain ( GPIC) He has received extensive job training and availed useful learning opportunities in technical and managerial fields in various countries.

7.5 NUMBER OF DIRECTORS

Pursuant to Section 174 of the Ordinance, the number of directors of the Com pany shall not be less than seven. At present, the Company’s Board of Directors consists of eight directors including the Chief Executive & a Nominee Director from NBP.

7.6 QUALIFICATION OF DIRECTORS No person shall be appointed as a director of the Company who is ineligible to be appointed as director on any one or more of the grounds enumerated in Section 187 or any other law for the time being in force.


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7.7 REMUNERATION OF THE DIRECTORS

Pursuant to the Articles of Association of the Company, the remuneration of a Director for performing extra services, including holding of the office of Chairman, and the remuneration to be paid to any director for attending meetings of the Directors or a committee of Directors shall from time to time be determined by the Board of Directors in accordance with the law.

7.8 BENEFITS TO THE PROMOTERS AND OFFICERS No amount of benefits has been paid or given during the last year or is intended to be paid or g iven to any promoter or to any officer of the Company other than as remuneration for services rendered as whole-time executive of the Company and the rem uneration for services shall be borne by the Company.

7.9 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 w hole t ime service to the Company may also be deemed interested in the remuneration payable to them from the Company. The directors may also be deemed to be interested, to the extent of any shares held by each of them in the Company and the dividends to be declared on their shareholding in the Company. The director of the Com pany (Mr. Samad A. Habib) is also director/CEO in Arif Habib Limited.

7.10 INTEREST OF DIRECTORS IN PROPERTY ACQUIRED BY THE COMPANY None of the Directors of the Company have or had any interest in any property acquired by the Company.

7.11 ELECTION OF DIRECTORS The directors shall subject to the provision of Section 178 of the Ordinance fix the number of directors and the directors shall be elected by the members of the Company in General Meeting. The present directors of the Company were elected in the annual general meeting of the Company held on 30-04-2008. The next election of directors is due on or before 30-04-2011.

7.12 VOTING RIGHTS

The rights and privileges, including voting rights, attached to the ordinary shares of the Company are equal.

7.13 AUDIT COMMITTEE/CONSTITUTION OF AUDIT COMMITTEE Audit Committee of the Board has been formed to comply with the Code of Corporate Governance, which comprises of the following three directors. Majori ty of which are non-executives directors:

Mr. Fazal Ahmed Sheikh Mr. Abdus Samad Mr. M. Abad Khan


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7.14 INTERNAL AUDIT

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

7.15 BORROWING POWERS Subject to the provisions of the Ordinance, the Board of Directors may from time to time borrow any money for the purposes of the Com pany from its members or from any other person, firms, companies, corporations, Government Agencies, institutions or the directors may themselves lend moneys to the Com pany.

7.16 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 Com pany, and may exercise all such powers of the Company as are not by the Ordinance or any statutory modification thereof for time being in force, or by the Articles of Association, required to be exercised by the Company in General Meeting.

7.17 INDEMNITY

Section 103 of the Company’s Article of A ssociation reads as follows: “Every Director, Managing Director, Chairman, Manager or Officer of the company or any person (whether an officer of the com pany or not) employed by the company as Auditor or Advisor, shall be indemnified out of the funds of the Company against any liability incurred by him as such Director, Managing Director, Chairman, Manager, Officer, Auditor or A dvisor in defending and proceedings, whether civil or criminal, in which judgment is given in connection with any application of a provision of the Ordinance in which relief is granted to him by the Court.”

7.18 INVESTMENTS IN ASSOCIATED COMPANIES The Com pany has not made any investment in any of associated companies nor has any resolution been passed for investment in associated companies under Section 208 of the Ordinance.

7.19 INVESTMENT IN SUBSIDIARIES

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


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PART 8

8 MISCELLANEOUS INFORMATION

8.1 REGISTERED OFFICE/CORPORATE OFFICE

Head Office, 2nd Trust Plaza L.M.Q. Road Multan - Pakistan. Tel: 061 – 451 2031-451 3036 Fax: 061 – 451 1677-458 4288 URL: www.fatima-group.com E-mail: [email protected]

8.2 BANKERS TO THE ISSUE FOR BOOK BUILDING

Arif Habib Bank Limited

8.3 BID COLLECTION CENTRE

Karachi

Attn: Mr. Kashif Suhail Attn: Mr. Usman Saeed Arif Habib Limited Arif Habib Centre 23, M. T. Khan Road Karachi. Tel: +92-21-3241 5213, 3246 0717 Cell: +92333 234 6098 Fax: +92-21-3242 9653 Email: [email protected] [email protected]

Lahore

Attn: Mr. Muhammad Nouman Direct: 042-3628 0857 Arif Habib Bank Limited Lahore Stock Exchange Branch Office No. 5, LSE Building 19, Aiwan e Iqbal Road Lahore. Tel: 042-628 0852-8, 042-627 1715-6 Fax: 042-628 0851

Islamabad

Attn: Ms. Sabahat Nazir Arif Habib Bank Limited Plot No. 6B, F-6 Super Market Islamabad. Tel: 051 2279168 - 70, Ext 224 Fax: 051-227 9166 Email: [email protected]


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8.4 MAJOR BANKERS OF THE COMPANY

National Bank of Pakistan Habib Bank Limited United Bank Limited Allied Bank Limited Faysal Bank Limited Standard Chartered Bank

8.5 AUDITORS OF THE COMPANY

M/s. A.F. Fergusons & Co. Chartered Accountants 505-509, 5th floor Alfalah Building, PO BOX 39 Shahrah –e-Quaid-e-Azam Lahore, Pakistan. Phone: (042) 628 5078-85 Fax: (042) 628 5088 Website: [email protected]

8.6 BANKERS TO THE ISSUE

Arif Habib Bank Limited Bank Alfalah Limited The Bank of Punjab Bank AL Habib Limited Faysal Bank Limited First Dawood Islamic Bank Limited Habib Bank Limited Habib Metropolitan Bank Limited J.S. Bank Limited MCB Bank Limited United Bank Limited

8.7 LEGAL ADVISOR OF THE COMPANY M/s. Chima & Ibrahim 1-A/ 245, Tufail Road Lahore Cantt, Pakistan. Phone: (042) 3668 1265-67 Fax: (042) 3668 7790

8.8 LEGAL ADVISOR TO THE ISSUE

Mohsin Tayebaly & Co. Barristers & Advocates 2nd Floor Dime Centre, BC-4 Block 9 KDA Scheme 5, Clifton, Karachi. Phones: 5375658, 5375659 Fax: 5870240


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8.9 LEAD MANAGER AND BOOK RUNNER

Arif Habib Limited Arif Habib Centre 23, M. T. Khan Road Karachi. Tel: 92-21-3241 5213 Fax: 92-21-3242 9653 www.arifhabibltd.com

8.10 COMPUTER BALLOTER AND SHARES REGISTRAR

THK Associated (Pvt.) Limited Ground Floor, State Life Building No. 3 Dr. Ziauddin Ahmed Road Karachi. Phone: 021-111-000-322 Fax: 021 - 5655595


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8.11 MATERIAL CONTRACTS/DOCUMENTS

Sr. No

Party Name Description Date

1 Mari Gas Com pany Limited (MGCL)

Gas Sale and Purchase Agreement (GSPA) for 110 MMCFD Natural Gas from Mari Shallow Reservoir, as amended.

July 12, 2005

2 National Engineering Services Pakistan (Pvt) Limited (NESPAK)

For consultancy services April 07, 2006

3 Sojitz Corporation, Japan

For 1,500 MTPD urea plant and other technical services

June 27, 2006

4 China National Chemical Engineering Group Corporation (CN CEC)

For construction and installation of Ammonia, urea, NA, CAN, Utility and offsite plants and engineering & construction of NPK plant

September 18, 2006

5 Sui Northern Gas Pipeline Limited. (SNGPL)

For construction of 20’’ DIA X 47 KM gas pipeline from Mari Shallow Reservoir Gas Fields to Fatima Fertilizer Company Limited

November 02, 2006

6 National Bank of Pakistan Limited (NBP) As agent bank and Consortium

Long term syndicated loan and certain L/C facilities

November 25, 2006

7 Sojitz Corporation, Japan

For supply of 1,500 MTPD refurbished ammonia plant and sub-license of ammonia process

May 11, 2007

8

General Electric Oil and Gas ( GE) Nuovo Pignone S.P.A

Gas turbine generator packages and associated accessories

2007

9 Stone & Webster Management Consultants INC, USA

For the detailed engineering of relocated ammonia plant

January 25, 2008

10 Sui Northern Gas Pipeline Limited (SNGPL)

Construction of approximately 12 Km long water pipeline of 28” diameter from downstream flange of the Raw Water Pumping stations to the Raw water reservoir in side boundary wall of Fatima.

February 21, 2008


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11 China National Chemical Engineering Group Corporation (CN CEC)

Supply of product handling and storage system April 19, 2008

12 National Bank of Pakistan Limited (NBP) As agent bank and Consortium

Commercial and new facility including a syndicated loan and L/C facilities

March 06, 2009

13 CFI Holding Private Limited (CFIh)

Full Engineering Package and related services for the new Nitro Phos (NP) Plant

May 23, 2008

8.11.1 Syndicated term finances

Initial Debt Facility

Debt Facility Up to PKR 23,000 million

Currency Pakistan Rupee (“PKR”)

Lead Advisors and Arrangers (“Lead Arrangers”)

Habib Bank Limited (“HBL”) National Bank of Pakistan (“NBP”) United Bank Limited (“UBL”) Allied Bank Limited (“ABL”) Faysal Bank Limited (“FBL”) Standard Chartered Bank(“SCB”)

Agent Bank National Bank of Pakistan

Tenor One hundred and forty-four (144) months, inclusive of Grace Period.

Mark up Rate

Applicable up to COD (i.e. to be levied during the Grace Period): Base Rate p lus 335 bps per annum with no floor or cap.

Applicable after COD: Base rate p lus 300 bps per annum with no floor or cap

Base rate is defined as the average 6-month Karachi Inter Bank Offered Rate (“KIBOR”). KIBOR

is defined as the Average rate, Ask Side, for the relevant tenor, as published on Reuters page

KIBOR or as published by the Financial Markets Associat ion of Pakistan in case Reuters page is unavailable.

The Base Rate will be set on the last business day before the first drawdown and subsequently on the last business day prior to the beginning of each semi-annual period for the mark-up due at the end of that period (“Rate Setting Date”).

Principal Repayment

Not less then seventeen (17) consecutive, semi-annual installments, the first such installment falling due not later than the end of the forty-eighth (48th) month from the Facility Effective Date.


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Mark up Payments Semi-annually in arrears. The first Mark-up Payment shall fall due at the end of six (6) months from the Facility Effective Date and subsequently every six (6) months thereafter.

Security

Facility security includes:

a. First ranking hypothecation charge over all present and future fixed assets excluding land and building of Fatima Fertilizer with a margin;

b. First ranking mortgage over land and building of Fatima Fertilizer with a margin;

c. Assignment over Fatima Fertilizer's rights and benefits under all Project

agreements, any amendments thereto and any performance guarantees issued there under;

d. Lien over certain Project Accounts such as on (i) a Debt Service Reserve Account (“DSRA”) after the Commercial Operation Date, equal to six (6) month’s worth of mark-up and principal repayment installment to be funded or backstopped by a Standby Letter of Credit equaling six

(6) month’s worth of mark-up and principal repayment or any other cash equivalent security acceptable to the banks;

(ii) a Debt Payment Account (“DPA”) comprising of a balance equal to the upcoming installment amount (markup payment during the Availability Period and markup and principal repayment after the Availability Period). The DPA shall be maintained by the Agent Bank and amount held in the account will be reset to zero at each installment payment date. The am ount of the DPA to be built up in three (3) equal monthly installments on the fifteenth (15th) day of the fourth (4th), fifth (5th) and sixth (6th) months of every semi-annual installment period throughout the Tenor of the Facility. This account will be reset to zero at each installment payment date;

(iii) the Collect ion Account (CA)

(iv) certain reserve accounts under certain terms (including cost overrun reserve account, excess cash reserve account ), as applicable;

f. Assignment over all rights and benefits of Fatima Fertilizer under any and all project insurances and cut-through agreements for reinsurance;

and

g. Pledge of Certain Sponsors’ shares to the extent that will represent:

(i) 51% of the total shares of Fatima Fertilizer, and (ii) 51% of direct or indirect ownership and control, in favour of the Lenders throughout the Tenor of the Facility;

h. Personal Guarantees of three (3) sponsoring directors.


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8.11.2 Supplemental Debt Facility

Supplemental Debt Facility

Up to a maximum of PKR 10,000 Million

Currency Pakistan Rupee (“PKR”)

Lead Advisors and Arrangers (“Lead Arrangers”)

Habib Bank Limited (“HBL”)

National Bank of Pakistan (“NBP”)

United Bank Limited (“UBL”)

Allied Bank Limited (“ABL”)

Faysal Bank Limited (“FBL”)

Agent Bank National Bank of Pakistan

Tenor Maximum tenor (“Tenor”) not to exceed one hundred and twenty (120) months from the Facility Effective Date or November 30, 2018 whichever is earlier

Mark up Rate 6-month Karachi Inter Bank Offered Rate (“KIBOR”) plus 375 basis points per annum with no floor or cap

Principal Repayment

Not less than seventeen (17) consecutive, semi-annual installments, the first such installment shall fall due earlier of the end of 18t h month from the Facility Effective Date or the first installment payment of the initial debt Facility

Mark up Payments Semi-annually in arrears

Security

Facility security includes, on a pari-passu basis with the Existing Syndicate all Security provided to the Syndicate of financial institutions that have provided financing in terms of the Initial Debt Facility (“Original Facility Lenders”)

The following additional security has been provided to the financial institutions that have provided funds under the Supplemental Debt Facility “(Supplemental Facility Lenders”)

a. Pledge over 30% shares of PFL, held by certain mem bers of the Arif Habib Group and Fatima Group, to be in the custody of Security Trustee/Agent until cum ulative debt amount under the Original Facility and Supplemental Debt Facility reaches or falls below PKR 26,000 Million. The pledge over shares of PFL will not be available to the Original Facility Lenders

b. Personal Guarantees of Mr. Arif Habib, Mian Fazal A hmed Sheikh and Mian Fawad Ahmed Mukhtar in favor of Supplemental Facility Lenders throughout the Tenor of the Supplemental Debt Facility.

c. c. Hypothecation of certain current assets (excluding Project Accounts) in favour of Supplemental Facility Lenders with permission to create a senior charge of up to PKR 5,333 million in favour of financial inst itutions providing working capital financing to Fatima.


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8.11.3 Loan from Pakarab Fertilizers Limited

This loan facility of PKR 2.11 Billion has been obtained from Pakarab Fertilizers Limited till October 13, 2009. No security has been provided as the investor company is an associated company. The facility carries mark up at Base Rate + 250bps (with no floor and no cap) which will remain applicable up to five years and thereafter, mark-up would be equal to the borrowing cost of Pakarab. This loan is to be repaid no later than 2018.

8.12 UNDERWRITING AGREEMENTS

Names of Underwriter No. of Shares Amount

(PKR) Date

To be included in the Final Prospectus TOTAL

8.13 INSPECTION OF DOCUMENTS AND CONTRACTS

Copies of the Memorandum and Articles of Association, the audited financial statements, the Auditor’s Cert ificates, Information Memorandum, Appraisal Report, Financial Plan 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 during the bidding period/public subscription period.

8.14 LEGAL PROCEEDINGS

There are no legal proceeding pending against the Company and the Company has not init iated any legal proceedings against any party or person.

8.15 MEMORANDUM OF ASSOCIATION

The Memorandum of Association, inter alias, sets forth the objects for which the Company was incorporated and the business, which the Company is authorized to undertake. A copy of the Memorandum of Associat ion is annexed to this Prospectus.

8.16 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 ALLOTMENT INSTRUCTIONS

9.1 Eligible investors include:

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

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

outside Pakistan (to the extent permitted by their constitut ive documents and exist ing regulations, as the case may be);

d. Mutual Funds, Provident/pension/gratuity funds/trusts, (subject to the terms of the Trust Deed and existing regulations); and

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

9.2 APPLICATION MUST BE MADE ON THE COMMISSION’S APPROVED APPLICATION FORM OR

A LEGIBLE COPY THEREOF ON A PAPER OF A4 SIZE WEIGHING ATLEAST 62 GMS. 9.3 Copies of this Prospectus and applications forms can be obtained from members of Karachi

Stock Exchange (Guarantee) Limited, the Bankers to the Issue and their Branches, the Lead Manager & Book Runner, and the registered office of the Company. The Prospectus and the applicat ion form can also be dow nloaded from the following website: www.arifhabibltd.com and www.fatima-group.com.

9.4 The applicants opting for scripless form of shares are required to complete the relevant sect ions 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 applicat ion form and the information already held by CDS, the Company reserves the right to issue shares in physical form.

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

abbreviated. 9.6 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 applicat ion form.

9.7 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.


75

(ii) Original CNIC/Passport, along with one attested photocopy, m ust be produced for

verificat ion 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 verificat ion, be retained by the bank branch along with the application.

9.8 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 Mem orandum and Articles of Association or equivalent instrument/document. Where applicat ions 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

verificat ion to the banker to the Issue and the applicant's banker (if different from the banker to the I ssue) at the t ime of presenting the application. The attested copies, will after verification, be retained by the bank branch along with the application.

9.9 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. 9.10 Joint applicat ion in the name of more than two persons will not be accepted. In case of joint

applicat ion 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 applicat ion 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 applicat ion for the purpose of allotment of Shares.

9.11 Subscript ion money m ust be paid by cheque drawn on applicant's own bank account or pay

order/bank draft payable to one of the Bankers to the I ssue “A/C INITIAL PUBLIC OFFERING OF FATIMA FERTILIZER COMPAN Y LIMITED” and crossed “A/C PAYEE ONLY”.

9.12 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.

9.13 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.

9.14 Applications are not to be made by minors and/or persons of unsound mind. 9.15 Applicants should ensure that the bank branch, to which the application is submitted,

completes the relevant portion of the application form.


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9.16 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 num ber of Shares for which the application has been made.

9.17 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.

9.18 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 I ssue.

9.19 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.

9.20 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 9.21 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.

9.22 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

1. The minimum amount of application for subscription of 500 Shares is PKR [ ]/-. Applicat ion for Shares below the total value of PKR [ ]/- shall not be entertained.

2. 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.

3. Allotment/Transfer of Shares to successful applicants shall be made in accordance with the allotment criteria/ instructions disclosed in the Prospectus.

4. Allotment of Shares shall be subject to scrutiny of applications in accordance with the

criteria d isclosed in the Prospectus and/or the instructions by the Securities & Exchange Commission of Pakistan.


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5. Applications, which do not meet the above requirements, or applications which are

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

6. The Company will 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).

Bankers to the Issue

Code No. Bank 01 Ari f H abib Bank Limited

02 Bank Al falah Limited

03 Bank of Punjab

04 Bank Al -Habib Limited

05 Faysal Bank Limited

06 First Dawood Islamic Bank Limited

07 H abib Bank Limited

08 H abib Metropoli tan Bank Limited

09 J.S. Bank Limited

10 M CB Bank Limited

11 United Bank Limited

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


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PART 10

10 BIDDING FORM OF FATIMA FERTILIZER COMPANY LIMITED

(This space has been left blank intentionally)


79

PART 11

11 SIGNATORIES TO THE PROSPECTUS

__________________ Muhammad Arif Habib __________________ Fawad Ahmed Mukhtar ________________ Fazal Ahmed Sheikh _________________ Faisal Ahmed Mukhtar __________ M. Nasir Butt ___________ Abdus Samad ___________ M. Abad khan _________________ Masood Karim Shaikh Signed by the above in the presence of witnesses: _______________________ ____________________ Iftikhar Mahmood Baig Kashif Suhail CNIC: 36302-8145686-3 CNIC: 42201-8799408-7 Address: 140-Hassan Parwana Colony, Address: A-39, Block4/A, Multan. Gulshan-e-Iqbal, Karachi.

Date: Place:


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PART 12

12 MEMORANDUM OF ASSOCIATION

The Companies Ordinance 1984 Company Limited by Shares

MEMORANDUM OF ASSOCIATION

OF FATIMA FERTILIZER COMPANY LIMITED

I . The name of the Company is “FATIMA F ERTILIZER COM PANY LIMITED ”.

II. The Registered Office of the Company will be si tuated in the Province of Punjab.

III. The objects for which the Company is established are:

1. To enter into and carry on the business of manufacturing, producing, buying, selling importing and exporting or otherwise dealing in or with chemicals and fertilizers of any and all kinds, including, but without limiting the generality of the foregoing, arti ficial or natural fertilizers , compound, complex, ni trogenous, phosphatic and potassium fertilizers , ni tro phosphates , calcium, ammonium nitrate, urea, ni tric acid, hydrochloric acid, sulphuric and other acids, all chemicals produced with the help of sulphuric acid, ammonia and other derived produ cts of sulphuric acid and ammonia , ammonium, ammonium sulphate and other compounds of ammonia, oxygen, carbon dioxide and super phosphate, soil amendments , micronutrients , super-phosphates , phosphoric acid, intermediates , dips , sprays , vermifuges, fungicides , insecticides, herbicides , pesticides, medicines , animal feed supplements of any and all kinds and any products and by-products which may be derived, produced, prepared, de veloped, compounded, made or manufactured there from and any substance obtained by mixing any of the fo regoing with other substances and to preserve, pack and transport the said products ; to own, pu rchase or othe rwise acquire and to sell or otherwise dispose of any mines, manufactories , plant, machinery, appl iances, tools, supplies , materials , and any other property of any nature whatsoever, suitable, convenient or necessary for any of the purposes aforesaid or which may lawfully be used in connection therewith and to establish agencies and warehouses for the storage, sale and distribution of said products as incidental to the carrying on of any such bus iness and in connection therewith or as a part the reof, to carry on any bus iness , trade, or o ccupation necessary, convenient or useful therein or thereto, or which is or may be customarily carried on by others engaged in conducting a chemical or fertili zer business .

2. To purchase, manufacture, produ ce, refine, prepare, import, export, sell and general ly to deal in and use of heavy chemicals, fertili zers and all products and by-products thereof and to acquire, constru ct and operate or otherwise deal in such things as may furnish materials for the manufacture of all kinds of ferti li zers and to deal in such other chemicals and fertili zers as can be conveniently manufactured and calculated directly or indirectly to contribute to the general economy of the process and wil l aid in the economy of the operations or othe rwise enhance the profi ts of the Company and to do all things as may be proper or necessary in connection with the above or any of them.

3. To purchase or otherwise acquire, sell , supply, market, distribute, exchange, or otherwise dispose of import, expo rt, store, hold, package, transport, use, experiment with, handle, trade, dispense, apply and generally deal in substances used in the manufacture and treatment of chemicals , ferti lizers and chemical products and agricultural products and equipment and perform services and operations related thereto, and so far as may be conductive to the attainment of the said objects or as is convenient or advantageous in connection therewith.

4. To acquire and take over from National Fertili zer Corporation (NFC), the ferti lizer factory, godowns and other buildings and erections already buil t or now being built by the said Corpo ration under the name of FFCL with the land appertaining thereto and all the stock in trade, book debts , goodwi ll and all other assets and liabili ties in respect thereof and all the benefi ts of all subsisting contracts


81

and orders together with the rights and privileges relating to the said Ferti li zer Factory through Privatization process.

5. To establ ish, take or give on lease all sorts of fertili zer factories to carry on al l or any of the bus iness of manufacturing and sellers of and dealers and workers in fertili zer of all kinds of packing and other material including polythene, polyprop ylene, jute, Hessian cloth, gunny bags , paper bags and conveniences of all kinds.

6. To own, lease, license, purchase or otherwise acquire, maintain, work, gather, get in, and develop gas , minerals and chemicals and other substances of all kinds and to pipe, transport store, process , refine, treat, supply and deal in all such substances.

7. To carry on all or any of the business of chemists , druggists, chemical manufacturers , importers and exporters , manufacturers of and dealers in pharmaceutical and medicinal preparation.

8. To construct, own, pu rchase, acquire, lease, build, erect, install , establish, operate, manage and maintain plants , laboratories , equipment, apparatus and other facili ties for the manufacture, refining, process ing, s torage, sale and distribution of fertilizers and chemical products.

9. To carry on business in Pakistan or elsewhere as dealers , wholesalers , and retailers in drugs , chemicals patent medicines , dyes , dye-wares , colours , compounds, starch, s izing material and all other articles and things the business of which in the opinion of the Directors may be conveniently carried on and for that purpose to buy, sell, resell , import, e xport, orde r ou t and ob tain indents for and to act as agents and representatives for dealing in all in any of the abo ve produ cts , articles and things.

10. To purchase or otherwise acquire, become interested in, deal in and with, invest in, hold, sell , mortgage, pledge, or othe rwise dispose of, turn to account or realize, all forms of securi ties , including shares , bonds, debentures , notes, evidence of indebtedness , securi ties of any nature of form convertible into or exchangeable for other securi ties of any nature or fo rm, certi ficates of interest, participation certi ficates , and certi ficates evidencing shares of or interest in trusts and trusts estates or associations, certi ficates of trust of beneficial interests in trusts , mortgages and other instruments , securi ties and rights .

11. To carry on the bus iness of manufacturers , expo rters and importers and dealers in Petro-Chemicals , alkalis, essences, cordials, chemical , industrial and other preparations and articles of any kind whatsoever such as Urea Formidhide, Polyethylene, Polystrene, Polyster Fibre, Man-Made Fibre such as Nylon, Rayon and Glass Fibres, Mineral and other waters, cement, oils , paints, pigments and varnishes, paint and colour grinders , analytical chemists , drysalters , oil and colourmen, makers of and dealers in proprietary articles of all kind and of electrical , chemical , photographical, surgical and scientific appliances , apparatus and materials and any similar or a l lied business and either in connection with the said business or as distinct or separate bus iness .

12. To insti tute, participate in, or promote commercial , mercantile, financial and industrial enterprises and operations.

13. To acquire by purchase or otherwise, own, hold, buy, sell , conve y, lease, mortgage or encumber real estate and other property, at any place or places in Pakistan, or anywhere in the world, personal or mixed, and to survey, subdivide, plan, improve and develop lands for purposes of sale or o therwise, and to do and perfo rm all things needful and lawful for the de velopment and improvement of the same for residence, trade or business .

14. To supply any ci ties , towns, villages, communities, counties , and the inhabitants thereof, corporations, partnerships, individuals , places of amusement or exhibition, or any two o r more of ei ther or the same, with water, light, heat, gas and/or electric power, and to do any and all things incidental , necessary, and/or proper in furtherance of and/or in connection with the foregoing objects and purposes.

15. To apply for, obtain, register, purchase, lease or otherwise to acquire, and to hold, use, own, operate and introduce and to sell, assign or otherwise dispose of, any trade-marks, trade-names, copyrights , patents , inventions, improvements and secret pro cesses used in connection with or secured under entry of any certi ficate of trade-marks or otherwise, and to use, exercise, develop and grant licenses in respect of, or otherwise turn to account any such trade-marks , copyrights ,


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patents , licenses, processes and the l ike or any such p roperty o r rights , necessary or incidental thereto.

16. To purchase, take on lease, or tenancy or in exchange o r a l lotment or hire, or otherwise acquire, erect, maintain; equip, construct, reconstruct, repair, renovate, or adopt moveable or immoveable property including buildings , work, res idential bungalow, labour lines , quarters , offices , places of worship, schools , insti tutions, hospitals, dispensaries, canteens, recreation rooms, clubs , warehouses, godowns, workshops, mill structures, erections, foundries , engines , tools electric and telephone installations, accessories, implements , appliances , apparatuses , articles and other things found necessary or con venient for the pu rposes of the company or fo r the welfare of the employees of the company and also to expand the business of the company by purchasing , acquiring , getting transferred , adding to , altering , enlarging , all or any of the buildings , mills , factories, premises , places , being the property of the company on al l or any of the lands for the time being the property of the company or in possession of the company and by spending from time to time such sum or sums of money as may be necessary or expedient for improving , adding to , a ltering , repairing and maintaining the buildings, structures, machinery plant and property for the time being of the company and to sell or mortgage o r let out on hire or otherwise dispose of all or any portion of the same as may be thought desirable.

17. To buy, lease, sell , exchange or otherwise acquire and to construct, lay, maintain and operate pipelines and other conveyo rs for the transportation of gases , liquids, minerals and chemicals and other substances.

18. To construct, e rect and build structu res and buildings including, but without prejudice to the generality of the foregoing, factories , warehouses, workshops, offices, sheds, dwellings, s tores and any other works or con venience which may seem directly or indirectly condu cive to any of the objects of the Company.

19. To purchase, construct, improve, maintain, develop, work, manage, carry out, control and superintend any huts, markets , roadways, tramways, ra ilways, branches or sidings , bridges, reservoirs , canals, water courses , ferries, piers , hydraul ic works, electric works , telephone works , factories, bustees , villages , wharves , jetties, manufactories , warehouses, shops, s tores and other works and conveniences which may seem calculated directly or indirectly to advance the Company’s interest, and to contribute, subsidise, or otherwise assist or take part in construction, improvement, maintenance, working, management, carrying out, or control thereof.

20. To buy, sell, manufacture, s tore, repair, al ter, improve, exchange, hire, import, expo rt and deal in all factories, works, plant, machinery, tools, utensils , aircraft, vehicles , appliances , apparatus , products, materials , substances, articles and things capable of being used in any business which the Company is competent to carry on or required by any customers of or persons dealing with the Company or commonly dealt with by persons engaged in any such business or which may seem capable of being profitably dealt with in connection therewith and to manufacture, experiment with, render marketable and deal in all products of res idue and by-products incidental to or obtained in any of the business carried on by the Company.

21. To purchase, take on lease or tenancy or in exchange, hire, take options over or othe rwise acquire for any estate or interest whatsoever and to hold develop, work cultivate, deal with, dispose of and turn to account concessions, grants , decrees, licenses , privileges , claims, options, leases , property, moveable or immoveable, or rights or powers of any kind which may appear to be necessary or convenient for any business of the Company or for pu rposes of investment or re-investment and to purchase, charter, hire, build or otherwise acquire vehicles of any or every sort or description and to use the same for the carriage of merchandise or passengers of all kinds and to carry on the business of owners of trucks , lorries, motor-cars and air-craft in all or any of their respective branches.

22. to sell , exchange, mortgage or let on lease or ro yalty a ll or any of the property of the Company and to grant l icenses , easements , options or other rights over the same and to accept such cons ideration as my be thought fi t for the same.

23. To construct and provide or otherwise acquire, whether by purchase, lease or otherwise, residential accommodation for persons engaged in the business of the Company.

24. To provide the industrial classes with commodious and healthy lodgings and dwellings .


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25. To purchase natural gas , coal , diesel oil , petrol , timber, salt, kerosene oil, food grain and other cereal , edible oi l , plant, machinery, s tores , goods and merchandise, and to deal with and dispose of the same by sale or otherwise.

26. To manage, improve, farm, cultivate, maintain, lease, underlet, exchange, sell or otherwise deal with and dispose of all or any part of the lands and buildings or other real property of the Company, not required for the purposes of the Company.

27. To purchase, import or otherwise deal with any raw material and machinery, f rom any market whether in Pakistan or any part of the world.

28. To appropriate any part or parts of the property of the Company fo r the purposes of, and to build and let or sell , shops, offices and other places of business .

29. To advertise all or any of the manufactures or goods of the Company in any way that may be thought advisable, including the posting of bills in relation thereto, and the issue of books, pamphlets and price lists , and the conducting of competitions and the giving of prizes therefore.

30. To purchase or otherwise acquire and undertake the whole or any part of the bus iness , property, assets and liabilities of any person, fi rm, body or company carrying on any bus iness which the company is authorized to carry on , o r possessed of property suitable for the purpose of this Company.

31. To purchase, take on lease, or otherwise acquire any mines, mining rights and mateli ferous land in Pakistan or elsewhere and any interest therein, and to explore, work, e xercise, develop and turn to account the same.

32. To apply for and obtain any provisional orders of any Government department or Ministry for any of the purposes within the objects of this Company.

33. To support and subscribe to any chari table or public object, and any insti tution, society or club which may be for the benefi t of the Company or its employees or may be conne cted with any town or place where the Company carries on business; to give pensions, gratuities or charitable aid to any persons who may have been Directors of o r may ha ve served the Company, or to the wives , children, or other relatives or dependents of such persons; to make payments towards insurance, and to form and contribute to provide and benefi t funds for the benefi t of any such persons, or of their wives , children, or othe r relatives or dependents .

34. To p rocure the Company to be registered or recognized in any foreign country o r place and to take al l s teps which may be necessary or e xpedient to enable i t to carry on business there.

35. To enter into an y arrangement and to take all necessary o r p roper steps with the Government of Pakistan, and, with the approval of the Go vernment of Pakistan, with any pro vincial government or foreign government or publ ic authority, local, municipal or otherwise or with any corporation or private persons or al l or any of these for the purposes of directly or indirectly carrying out the objects of the Company o r effecting any modification in the consti tution of the Company or furthering the interests of the Company and to oppose any such steps taken by any other authority, fi rm or person which the Company considers likely, directly or indirectly, to p rejudice its interests , and to obtain from any such gove rnmental or other public authority an y charters, con tracts , decrees, rights, grants , loans, subsidies , privileges, concessions, indemnities, sanctions or consents as the Company may think proper.

36. To enter into partnership or into any arrangement for sharing profits , union of interest, co-operation, joint venture, reciprocal concession or amalgamation with any person or Company carrying on o r engaged in , or about to carry on o r engaged in any business or transaction which this Company is authorized to carry on o r engaged in , or any business or transaction capable of being conducted which may, directly or indirectly, benefi t this Company, and to lend money to, guarantee the contracts of , o r o therwise assist, any such person or company, and to take or otherwise acquire shares and securities of any such Company, and to sell , hold, re-issue with or without guarantee, or otherwise deal with the same.

37. To d raw, make, accept, discount, endorse, execu te or negotiate and issue cheques, promissory notes, bills of exchange, hundies, bill s of landing and other negotiable or transferable securi ties and to advance, deposit with or lend money, securi ties or property to such persons, fi rm or company


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and on such terms with or without securi ty, as the Company deems fit, but not to operate as a banking and/or investment company.

38. To expend money in experimenting on and testing and in improving or seeking to improve any patents , rights, inventions, discoveries , processes or information of the Company or which the Company may acquire or propose to acquire.

39. To form, incorpo rate or promote any company o r companies whether in Pakistan or in any foreign country, having amongst i ts or their objects the acquisi tion of all or any of the assets or control , management or development of the Company or any other ob jects or object which in the opinion of the Company could or might directly or indirectly assist the Company in the management of i ts business or the de velopment of i ts properties or otherwise prove advantageous to the Company and to pay all or any of the costs and expenses incurred in connection with any such promotion or incorporation and to remunerate any person or company in any manner it shall think fi t for services rendered or to be rendered in obtaining subscriptions for o r placing or assisting to place or to obtain subscription for or for guaranteeing the subscription of or the placing of any share in the capital of the Company o r any bonds, debentures , obligations or securi ties of any other company held or owned by the Company o r in which the Company may have an interest or the p romotion or formation of any other company in which the Company may have an interest subject to prior permiss ion of the Federal Government.

40. To take or otherwise acquire and hold shares, stock, debentures , debenture-stock and other securi ties whether convertible into shares to acquire and undertake the whole or any part of the shares , business , property or l iabili ties of any other company having objects a l together or in part similar to those of the Company o r ca rrying on any business capable of being conducted so as directly or indirectly to benefi t the Company.

41. To grant pens ions, allowances and bonuses to employees (including Directors) or ex-employees of the Company including payment of p remiums on li fe policies on employees or their dependents, to establish and operate Pro vident Funds for the same and to establish and support or aid any schools and any educational , scienti fic, li terary, rel igious or charitable insti tutions or trade societies whether such societies be solely connected with the trade carried on by the Company or not, an any club or other establishment calculated to advance the interests of the Company or i ts employees.

42. To pay any premiums or salaries and to pay for any prope rty rights or privi lege acquired by the Company or for services rendered in connection with the promotion of the objects or the business of the Company or in connection with the acquisi tion of any property, rights or p rivi leges for the Company or o therwise howsoever, ei ther wholly or partially in cash or in shares , bonds, debentures or other securi ties of the Company and to issue any shares , bonds, debentures or other securi ties , and to charge any such bonds, debentures or any part of the property of the Company.

43. To subscribe or guarantee money for any national , chari table, benevolent, public, general or useful object o r for any exhibition.

44. To aid, pecuniarily or otherwise, any association, body or movement having for an object the solution, settlement or surmounting of industrial or labour problems or troubles or the promotion of industry or trade.

45. To establish, provide, maintain and conduct or otherwise subsidize research laboratories and experimental workshops for scienti fic and technical research and experiments and undertake and carry on all scienti fic and technical researches, and tests of all kinds, to promote studies and research both scientific and technical investigation and invention by providing or assisting laboratories , workshops, libraries, lectures , meetings and conferences and by providing the remuneration of scienti fic or technical teachers and for providing for the award of scholarships , prizes, grants and bursaries to students or independent students or otherwise and generally to encourage, promote and reward studies , research, investigations, experiments , tests and inventions of any kind that may be considered likely to assist any of the business which the Company is authorized to carry on.

46. To pay all costs , charges and expenses which the Company may lawfully pay with respect to the formation and registration of the Company.


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47. To do all or any of the things herein in any part of the world either as principals, agents , trustees , contractors or othe rwise, and either alone or in conjunction with others .

48. To do all and everything necessary, suitable or proper o r incidental or condu cive to the accomplishment of any of the purposes or the attainment of any of the objects or the furtherance of any of the powers hereinbefore set forth, ei ther alone or in association with other corpo rate bodies , fi rms or individuals and to do every othe r act o r thing incidental or appurtenant to or arising out of or connected with the business or powers of the Company or part the reof, pro vided the same be lawful .

49. It is declared that notwithstanding anything contained in the foregoing objects clauses of this Memorandum of Association nothing contained therein shall be construed as empowering the Company to undertake or to indulge in business of banking, leasing, investment, lottery schemes, instalment schemes, etc. prepayment sales scheme, managing agency o r insurance bus iness directly or indirectly as restricted under the law or any unlawful operation.

IV. The liabili ty of the members is l imited.

V. The Autho rised Capital of the Company is Rs . 25,000,000,000 (Rupees twenty five bi llion) divided into 2,500,000,000 shares of Rs .10/- each with the rights , p rivi leges and conditions attaching thereto as are provided by the regulations of the Company for the time being, with power to increase and reduce the capital and to divide the shares in the capital for the time being into several classes .

We, the several persons whose names and addresses are subscribed below, are desirous of being formed into a company, in pu rsuance of this Memorandum of Association, and we respectively agree to take the number of shares in the capital of the Company as set opposite our respective names:

Name & Surname

(Present & Form er)

in F ull (In Block Letters)

Father’s/Husband’s Name in Full

Nationality With any Former

Nationality

Occupation Residential

Address

Number of

Shares taken

By each Subscriber

Signature

FAWAD AHMED MUKHTAR SHEIKH NIC 36302-2741274-7

Mian Mukhtar Ahmed Sheikh

Pakistani Industriali s t 43-A Qasim Road, Multan Cantt.

1 One

Sd-

FAZAL AHMED SHEIKH NIC 36302-0543241-9



1 One

Sd-

FAISAL MUKHTAR SHEIKH NIC 322-87-026025



1 One

Sd-

Mrs . FARUKH MUKHTAR SHEIKH NIC 36302-8330081-0



1 One

Sd-

AMANULLAH NIC 36302-046074-9

Haji H abib Ullah Pakistani Service (Private)

1936 Inside Pak Gate, Multan

1 One

Sd-


86

M.NASIR BUTT NIC 272-34-461719

ABDUL SATTAR Pakistani Service (Private)

172-Is lam Block, Azam Gardens,Multan Road, Lahore

1 One

Sd-

IFTIKHAR MAH MOOD BAIG NIC 36302-8145686-3

SULTAN AH MED BAIG

Pakistani Service (Private)

140-H assan Parwana Colony, Multan

1 One

Sd-

TOTAL 7 (Se ven) D ated the 16th day of December 2003. Witness to above Signature: Name: Address : NIC:

Documents

Fatima Fertilizer Prospectus