Citi Pharma Limited Prospectus

ADVICE FOR INVESTORS INVESTORS ARE STRONGLY ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THIS PROSPECTUS, ESPECIALLY THE RISK FACTORS GIVEN AT SECTION 5 BEFORE MAKING ANY INVESTMENT DECISION. /Au– SUBMISSION OF FALSE AND FICTITIOUS APPLICATIONS IS PROHIBITED AND SUCH APPLICATIONS’ MONEY MAY BE FORFEITED UNDER SECTION 87(8) OF THE SECURITIES ACT, 2015.

INVESTMENT IN EQUITY SECURITIES INVOLVES A DEGREE OF RISK AND INVESTORS SHOULD NOT INVEST ANY FUNDS IN THIS OFFER UNLESS THEY CAN AFFORD TO TAKE THE RISK OF LOSING THEIR INVESTMENT. INVESTORS ARE ADVISED TO READ THE RISK FACTORS CAREFULLY BEFORE TAKING AN INVESTMENT DECISION IN THIS OFFERING. FOR TAKING AN INVESTMENT DECSION, INVESTORS MUST RELY ON THE EXAMINATION OF THE ISSUER AND THE OFFER INCLUDING THE RISK INVOLVED AS DISCLOSED IN THE SECTION 5 OF THIS PROSPECTUS

ADVICE FOR INSTITUTIONAL INVESTORS AND HIGH NET WORTH INDIVIDUAL INVESTORS SUBMISSION OF CONSOLIDATED BID AND MULTIPLE BID IS PROHIBITED AS PER PUBLIC OFFEERING REGULATION, 2018

PLEASE NOTE THAT A SUPPLEMENT TO THE PROSPECTUS SHALL BE PUBLISHED WITHIN THREE WORKING DAYS OF THE CLOSING OF THE BIDDING PERIOD WHICH SHALL CONTAIN INFORMATION RELATING TO THE STRIKE PRICE, THE OFFER PRICE, COMMITMENT BY THE SUCCESFUL BIDDERS FOR SUBSCRIBING THE UNDERSUBSCRIBED RETAIL PORTION, CATEGORY WISE BREAKUP OF THE SUCCESSFUL BIDDERS ALONG WITH NUMBER OF SHARES ALLOCATED TO THEM, DATES OF PUBLIC SUBSCRIPTION AND SUCH OTHER INFORMATION AS SPECIFIED BY THE COMMISSION.

CITI PHARMA LIMITED PROSPECTUS

INCORPORATION DATE AND PLACE: October 08, 2012 in Lahore, Pakistan | INCORPORATION NUMBER: 0081302|REGISTERED ADDRESS: 3.5 KM, Head Balloki Road, Phool Nagar, Kasur, Pakistan CONTACT NUMBER: +92 (42)-35316587 | WEB ADDRESS: http://citipharma.com.pk/ |EMAIL ID: [email protected]| CONTACT PERSON: Mr. Muhammad Riaz| ISSUE SIZE: This Issue consists of 72,692,000 Ordinary Shares (35% of the total post-IPO paid up capital of Citi Pharma Limited) of face value of PKR 10/- each. METHOD OF OFFERING: The entire issue will be offered through Book Building at a Floor Price of PKR 28/- per share (including premium of PKR 18/- per share) with a maximum price band of up to 40%. (Justification of premium is given under “Valuation Section” in Section 4A). The bidders shall be allowed to place bids for hundred percent (100%) of the Issue size and the Strike Price shall be the price at which the hundred percent (100%) of the Issue is subscribed. However, the successful bidders shall be provisionally allotted only seventy-five percent (75%) of the Issue size i.e. 54,519,000 shares and the remaining twenty five percent (25%) i.e. 18,173,000 shares shall be offered to the retail investors. In case retail portion of the Issue remains unsubscribed, the unsubscribed shares will be allotted to the successful bidders on pro rata basis. PUBLIC COMMENTS: The Draft Prospectus was placed on PSX’s website for seeking public comments from 07-04-21 to 15-04-21 and no comments were received from the general public. REGISTRATION OF ELIGIBLE INVESTORS: The registration of eligible investors will commence at 9:00am on 10th June, 2021 and will close at 3:00 pm on 16th June, 2021 BIDDING PERIOD DATES: From 15th June, 2021 to 16th June, 2021 (From: 9:00 am to 5:00 pm) DATE OF PUBLIC SUBSCRIPTION: From 23rd June, 2021 to 24th June, 2021 (both days inclusive) from: 9:00 am to 5:00 pm

Lead Manager & Book Runner Book Building Portion will be Credit Underwritten by

Bankers to the Book Building portion of the Issue: Faysal Bank Limited Bankers for the Retail portion of the Issue:

Habib Metropolitan Bank Faysal Bank Limited Meezan Bank Limited Bank Al Habib Limited Bank Alfalah Limited Limited Al Baraka Bank Pakistan Dubai Islamic Bank Pakistan Limited MCB Bank Limited United Bank Limited Soneri Bank Limited Habib Bank Limited Limited

For retail portion, Investors can submit application(s) through both electronic and physical mode. Electronic/online applications can be submitted through PSX’s e-IPO system (PES) and Centralized E-IPO system (CES) of Central Depository Company of Pakistan Limited (CDC)), PES can be accessed via web link https://eipo.psx.com.pk; and CES can be accessed via weblink www.cdceipo.com . Tutorial relating to submission of application through PES is available on https://eipo.psx.com.pk/EIPO/home/index For details, please refer to Section 13 of the Prospectus

Date of Publication of this Prospectus: 8th June, 2021 Prospectus, bidding form and Subscription Form can be downloaded from the following websites: https://www.psx.com.pk, http://www.topline.com.pk, http://citipharma.com.pk and www.cdceipo.com. For further queries you may contact Citi Pharma Limited: Company Secretary Mr. Mohammad Riaz; Phone: +92 333 4400548; E-mail: [email protected] and Chief Financial Officer Mr. Asif Iqbal; Phone: +92 331 4349782; E-mail: [email protected] Topline Securities Limited: Mr. Mustafa Zamin; Phone: +92 336 3945524; E-mail: [email protected] and Mr. Muhammad Saad Abdullah; Phone: +92 332 2049140; E-mail: [email protected]

The Company is proposed to be listed at the Pakistan Stock Exchange Limited

Citi Pharma Limited

Risk Disclosure:

1. The Company’ existing revenue is majorly through one API i.e, paracetamol. The Company is planning to expand its existing pharmaceutical capacities drastically and is also introducing new products. Recent sales trend of Company does not substantiate the said expansion and might lead to low convertibility of production to sales. 2. There is significant customer concentration risk as GlaxoSmithKline Pakistan Limited accounts for more than 50% revenue of the Company. 3. The Company does not have any agreement with major customers and the same may impact the revenue and profitability in long run. 4. The company does not have any agreement with suppliers(s) of raw material and the same may affect its supply chain. 5. The company has neither identified, nor entered into any agreement with suppliers(s) of Plant and Machinery, which may cause delay in commissioning the project.

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UNDERTAKING BY THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

February 12, 2021

WE RIZWAN AHMAD, THE CHIEF EXECUTIVE OFFICER AND ASIF IQBAL, THE CHIEF FINANCIAL OFFICER OF CITI PHARMA LIMITED CERTIFY THAT: 1. THIS PROSPECTUS CONTAINS ALL INFORMATION WITH REGARD TO THE ISSUER AND THE ISSUE, WHICH IS MATERIAL IN THE CONTEXT OF THE ISSUE AND NOTHING HAS BEEN CONCEALED IN THIS RESPECT; 2. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS TRUE AND CORRECT TO THE BEST OF OUR KNOWLEDGE AND BELIEF; 3. THE OPINIONS AND INTENTIONS EXPRESSED THEREIN ARE HONESTLY HELD; 4. THERE ARE NO OTHER FACTS, THE OMISSION OF WHICH MAKES THIS PROSPECTUS AS A WHOLE OR ANY PART THEREOF MISLEADING; AND 5. ALL REQUIREMENTS OF THE SECURITIES ACT, 2015; THE DISCLOSURES IN PUBLIC OFFERING REGULATIONS, 2017 FOR PREPARATION OF PROSPECTUS, RELATING TO DISCLOSURES AND APPROVALS HAVE BEEN FULFILLED. 6. NO CHARGES, FEE, EXPENSES, PAYMENTS ETC. HAVE BEEN COMMITTED TO BE PAID TO ANY PERSON IN RELATION TO THIS PUBLIC OFFERING EXCEPT FOR THOSE AS DISCLOSED IN THIS PROSPECTUS.

For and behalf of Citi Pharma Limited

-SD- -Sd- ______Rizwan Ahmad Asif Iqbal Chief Executive Officer Chief Financial Officer

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Note: This Supplement shall be published within 3 working days of the close of Bidding Period in at least all those newspapers in which the Prospectus of Citi Pharma Limited is published.

SUPPLEMENT TO THE PROSPECTUS

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

Citi Pharma Limited

▪ FLOOR PRICE: PKR 28/- PER SHARE ▪ STRIKE PRICE: PKR [●]/- PER SHARE ▪ ISSUE PRICE: PKR [●]/- PER SHARE ▪ PRICE BAND (MAXIMUM 40%): PKR 39.20/- PER SHARE

Note: Since this Issue is being made through 100% book building with 25% allocation to retail investors, therefore, underwriting of the retail portion is not required. In case the Issue remains unsubscribed, the unsubscribed shares shall be allotted to the successful bidders on pro rata basis. The successful bidders have already given undertakings to subscribe such unsubscribed shares on pro rata basis.

Category wise Breakup of Successful Bidders

S. No Category No. of Bidders No. of shares provisionally allocated Institutional Investors: 1 Commercial Banks ● ● 2 Development financial institutions ● ● 3 Mutual Funds ● ● 4 Insurance Companies ● ● 5 Investment Banks ● ● 6 Employees’ Provident / Pension Funds ● ● 7 Leasing Companies ● ● 8 Modarabas ● ● 9 Securities Brokers ● ● 10 Foreign Institutional Investors ● ● 11 Any other Institutional Investors ● ● Total Institutional Investors ● ●

Individual Investors: ● ● 12 Foreign Investors ● ● 13 Local ● ● Total Individual Investors ● ● GRAND TOTAL

The bidders shall give an undertaking along with the application that they would subscribe to the unsubscribed shares, if any, by the retail investors and their remaining bid money would remain deposited/ blocked till allotment of unsubscribed shares by the retail investors, if any, to them on pro- rata basis. In case the retail portion is fully subscribed, the bid money shall be immediately refunded or unblocked.

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Glossary of Technical Terms ACT Securities Act, 2015 API Active Pharmaceutical Ingredient APPL Askari Pharmaceuticals (Private) Limited AWT Army Welfare Trust BR Book Runner BSA Business Sales Agreement BVPS Book Value Per Share CAGR Compound Annualized Growth Rate CAM Complementary & Alternative Medicines CDA Central Depository Act, 1997 CDC / CDCPL Central Depository Company of Pakistan Limited CDC Regulations Central Depository Company of Pakistan Limited Regulations CDS Central Depository System CGMP Current Good Manufacturing Practices CNIC Computerized National Identity Card COGS Cost of Goods Sold COI Certificate of Incorporation CPI Consumer Price Index CPL Citi Pharma Limited Collection Banks (Book Building) Faysal Bank Limited Companies Act Companies Act, 2017 Commission / SECP Securities and Exchange Commission of Pakistan CRO Company Registration Office CUIN Computerized Unique Identification Number CVT Capital Value Tax DRAP Drug Regulatory Authority of Pakistan EPC Engineering, Procurement, and Construction EPS Earnings Per Share FBR Federal Board of Revenue FDA Federal Drug Administration FED Federal Excise Duty GDP Gross Domestic Product GNP Gross National Product GOP Government of Pakistan HVAC Heating, Ventilation, and Air Conditioning HNWI High Net Worth Individuals ISO International Organization for Standardization IP Intellectual Property ITO Income Tax Ordinance, 2001 KVA Kilo Volt Ampere LTFF Long Term Finance Facility Page 4 of 178

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Mn Million MNCs Multinational Companies MRP Maximum Retail Price MW Mega Watt NICOP National Identity Card for Overseas Pakistani NOC No Objection Certificate OPD Out Patient Department PIDE Pakistan Institute of Development Economics PPMA Pakistan Pharmaceuticals Manufacturing Association PACRA Pakistan Credit Rating Agency PKR or Rs. Pakistan Rupee(s) PSX / Exchange Pakistan Stock Exchange Limited SCRA Special Convertible Rupee Account SST Sindh Sales Tax TPD Tons per day TSL Topline Securities Limited UIN Unique Identification Number UN United Nations USD United States Dollar USP United States Pharmacopeia WAPDA Water and Power Development Authority WHT Withholding Tax YDL Yaqeen Developers Limited

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DEFINITIONS

Application Money In case of bidding for shares out of the Book Building portion, the total amount of money payable by a successful Bidder which is equivalent to the product of the Strike Price and the number of shares to be allotted.

Banker to the Book Building Any bank(s) with whom an account is opened and maintained by the Issuer for keeping the bid amount.

Faysal Bank Limited has been appointed, in this IPO, as the Banker to the Book Building.

Bid An indication to make an offer during the Bidding Period by a Bidder to subscribe to the Ordinary Shares of Citi Pharma Limited at a price at or above the floor price, including upward revisions thereto. An Eligible Investor shall not make a bid with price variation of more than 10% of the prevailing indicative strike price subject to a maximum price band of 40% of the Floor Price. Please refer to section 12 (iii) for details.

Bid Amount The amount equal to the product of the number of shares Bid for and the Bid price.

Bid Collection Center Designated offices of the Book Runner, and specified branches of the banker to the Book Building where bids are received and processed. For this Issue, addresses of the Bid Collection Centers are provided in Section 12 of this Prospectus

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

Bid Revision The Eligible Investors can revise their bids upward subject to the provision of regulation 10 (2) (iii) of the PO Regulations. The bids can be revised with a price variation of not more than 10% from the prevailing indicative Strike Price in compliance with Regulation 10 (2) (iii) of the PO Regulations.

As per regulation 10 (2) (vi) of the PO Regulations, the bidder shall not make downward revision both in terms of Bid Price and Bid Volume; Provided that in case of upward revision of the Bid Price, the number of shares Bid for i.e. Bid Volume may be adjusted ensuring that the bid amount or bid money remains the same.

As per regulation 10 (2) (vii) of the PO Regulations, the bidder shall not withdraw their bids.

Bidder An Eligible Investor who makes bids for shares in the Book Building process.

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

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

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The Bidding Period shall be of two working days, from 15th June, 2021 to 16th June, 2021 both days inclusive (daily from 9:00 a.m. to 5:00 p.m.).

Book Building A process undertaken to elicit demand for shares offered through which bids are collected from the Bidders and a book is built which depicts

demand for the shares at different price levels.

Book Building Account An account opened by the Issuer with the Collection Bank. The Bidder will pay the Margin Money / Bid Amount through demand draft, pay order or

online transfer in favor of this account as per the instructions given in section 12 (xv) of this Prospectus and the balance of the Application Money, if any, shall be paid through this account after successful allocation of shares under Book Building.

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

Book Runner A securities broker or a scheduled bank who holds a valid license from the Commission to act as an Underwriter and has been appointed as Book Runner by the Issuer.

Topline Securities Limited has been appointed as Book Runner for this Issue.

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

Collection Banks Faysal Bank Limited is the collection bank for the Book Building portion. For this purpose, Faysal Bank Limited has opened an account titled “Citi Pharma Limited - Book Building”, Number: PK05FAYS3040301000005274 at its Branch located at Ferozepur Road Branch, Lahore. The Collection Bank shall keep and maintain the bid money in the said account. Once the Strike Price is determined and lists of successful bidders and successful applicants/allotters are finalized and shares are credited to the successful bidders and applicants, the Lead Manager, after obtaining NOC from PSX, may request in writing to the Collection Bank for transfer of the money of successful and accepted applications to the Issuer’s account(s).

Company Citi Pharma Limited (the “Company” or “CPL”)

Company’s Legal Advisor Lexium (Attorneys at Law)

Commission Securities & Exchange Commission of Pakistan (“SECP”).

Consolidated Bids A bid which is fully or partially beneficially owned by persons other than the one named therein.

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Designated Institution Pakistan Stock Exchange Limited (“PSX”) is acting as the Designated Institution for this Issue and its Book Building system will be used for price discovery.

Dutch Auction Method The method through which Strike Price is determined by arranging all the Bid Prices in descending order along with the number of shares and the cumulative number of shares bid for at each Bid Price. The Strike Price is determined by lowering the price to the extent that the total number of shares Issued under the Book Building Portion are subscribed. e-IPO facility e-IPO refers to electronic submission of applications for subscription of securities offered in an IPO. The following systems are available for e-IPOs:

(i) PSX’s e-IPO System (PES): In order to facilitate investors, the Pakistan Stock Exchange Limited (“PSX”) has developed an e-IPO System (“PES”) through which applications for subscription of securities offered to the general public can be made electronically. PES has been made available in this Issue and can be accessed through the web link (https://eipo.psx.com.pk). Payment of subscription money can be made through 1LINK’s and NIFT’s member banks available for PES.

For making application though PES, investors must be registered with PES. The PES registration form is available 24/7, all throughout the year. Registration is free of cost and can be done by:

• the investor himself, or • the TREC Holder with whom the investor has a sub-account, or • the Bank with whom the investor has a bank account.

Tutorial relating to submission of application through PES is available on https://eipo.psx.com.pk/EIPO/home/index

Similarly, an e-IPO application can be filed by:

• the investor himself, or • the TREC Holder with whom the investor has a sub-account, or • the Bank with whom the investor has a bank account.

For further guidance and queries regarding PES, investors may contact PSX at phone number: 111-001-122, or contact Mr. Farrukh Shahzad at phone no. (021)-35274401-10 and email: [email protected].

Investors who are registered with PES can submit their applications through the web link, https://eipo.psx.com.pk, 24 hours a day during the subscription period which will close at midnight on 24th June, 2021.

(ii) Centralized e-IPO System (CES):

In order to facilitate investors, the Central Depository Company of Pakistan (“CDC”) has developed a Centralized e-IPO System (“CES”) through which applications for subscription of securities offered to the general public can be made electronically. CES has been made available in this Issue and can

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be accessed through the web link (www.cdceipo.com). Payment of subscription money can be made through 1LINK’s member banks available for CES, list of which is available on above website.

For making application though CES, investors must be registered with CES. Registration with CES is free of cost and can be done under a self- registration process by filling the CES registration form, which is available 24/7 all throughout the year. Investors who have valid Computerized National Identity Card (CNIC), bank account with any commercial bank, email address, mobile phone number and CDS Account (Investor account or sub account) may register themselves with CES.

In addition to the above, CDC has also introduced a new facility in CES through which sub-account holder(s) will request their respective TREC Holders who are Participants in Central Depository System (CDS) to make electronic subscription on their behalf for subscription of securities of a specific company by authorizing (adding the details of) their respective Participant(s) in CES. Consequently, authorized Participants will electronically subscribe on behalf of their sub-account holder(s) in securities offered through Initial Public Offerings (IPOs) and will also be able to make payment against such electronic subscriptions through all the available channels mentioned on CES only after receiving the subscription amount from the sub-account holder(s). To enable this feature, the CDS Participant may request CDC to activate his ID on the CES portal. The securities will be credited directly in Investors’ subaccount. In case the sub- account of the investor has been blocked or closed, after the subscription, then securities shall be parked into the CDC’s IPO Facilitation Account and investor can contact CDC for credit of shares in its respective account

Investors who do not have CDS account may visit www.cdcpakistan.com for information and details.

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

Investors who are registered with CES can submit their applications through the web link www.cdceipo.com 24 hours a day during the subscription period which will close at midnight on 24th June, 2021.

Eligible Investor An Individual and Institutional Investor whose Bid Amount is not less than the minimum bid size of PKR 1,000,000 (One Million Rupees only).

Floor Price The minimum price per share set by the Issuer in consultation with Lead Manager. For this Issue, Floor Price is PKR 28/- per share.

General Public All Individual and Institutional Investors including both Pakistani (residents & non-residents) and foreign investors.

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Initial Public Offer (IPO) Initial Public Offering or IPO means first time offer of securities to the general public.

Institutional Investors Any of the following entities:

▪ A financial institution; ▪ A company as defined in the Companies Act, 2017; ▪ An insurance company established under the Insurance Ordinance, 2000; ▪ A securities broker; ▪ A fund established as Collective Investment Scheme under the Non- Banking Finance Companies and Notified Entities Regulations, 2008; ▪ A fund established as Voluntary Pension Scheme under the Voluntary Pension System Rules, 2005; ▪ A private fund established under Private Fund Regulations, 2015; ▪ Any employee’s fund established for beneficial of employees; ▪ Any other fund established under any special enactment; ▪ A foreign company or any other foreign legal person; and ▪ Any other entity as specified by the Commission.

Issue Issue of 72,692,000 Ordinary Shares representing 35% of total post-IPO paid-up capital having a Face Value of PKR 10/- each. The entire issue will be offered through Book Building at a Floor Price of PKR 28/- per share Initially, 75% of the issue size or 54,519,000 Ordinary Shares will be allotted to Successful Bidders and 25% of the Issue or 18,173,000 Ordinary Shares will be offered to Retail Investors at the Strike Price. Any unsubscribed retail portion will be allocated to Successful Bidders on a pro-rata basis.

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

Issuer Citi Pharma Limited (the “Company” or “CPL”)

Key Employees Chief Executive Officer, Directors, Chief Financial Officer and Company Secretary of the Company.

Lead Manager Any person licensed by the Commission to act as a Lead Manager.

Topline Securities Limited has been appointed as Lead Manager by the Issuer for this Issue.

Limit Bid The bid at a Limit Price.

Limit Price The maximum price (up to 40% of the Floor Price) a prospective Bidder is willing to pay for a share under Book Building.

Listing Regulations Chapter 5 of the Rule Book of the Pakistan Stock Exchange Limited, titled ‘Listing of Companies and Securities Regulation’.

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https://www.psx.com.pk/psx/themes/psx/uploads/PSX_Rulebook_%28u pdated_on_March_31%2C_2021%29.pdf

Margin Money The partial or total amount, as the case may be, paid by a bidder at the time of registration as an Eligible Investor. The Book Runner shall collect full amount of the bid money as Margin Money in respect of bids placed by an individual investor and not less than twenty five percent (25%) of the bid money as Margin Money in respect of bids placed by an institutional investors or Book Runner may waive this margin requirement for institutional investors at its own discretion.

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

Ordinary Shares Ordinary Shares of 72,692,000 having face value of PKR 10.00/- each.

Price Band Floor Price with an upper limit of 40% above the Floor Price, allowing Bidder to make Bid at Floor Price or within the Price Band

Prospectus Prospectus means any document described or issued as a prospectus and includes any document, notice, circular, material, advertisement, and offer for sale document, publication or other invitation offering to the public (or any section of the public) or inviting offers from the public for the subscription or purchase of any securities of a company, body corporate or entity, other than deposits invited by a bank and certificate of investments and certificate of deposits issued by non-banking finance companies.

Registration Form The form which is to be submitted by the Eligible Investors for registration to participate in the Book Building process.

The period during which registration of bidders is carried out. The Registration Period registration period shall commence at least three working days before the start of the Bidding Period from 15th June, 2021 to 16th June, 2021 from 9:00 am to 5:00 pm and shall remain open till 3:00 pm on the last day of the Bidding Period.

PO Regulations The Public Offering Regulations, 2017

https://www.secp.gov.pk/document/s-r-o-296i-2017-public-offering- regulations-2017/?wpdmdl=41322&refresh=606fe123563631617944867

Related Employees Related Employees mean such employees of the Issuer, the Lead Manager, the Book Runner & the Underwriter, who are involved in the Issue. Please refer to section 3A for further details.

Sponsor A person who has contributed initial capital in the issuing company or has the right to appoint majority of the directors on the board of the issuing company directly or indirectly;

A person who replaces the person referred to above; and

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A person or group of persons who has control of the issuing company whether directly or indirectly.

Step Bid Step Bid means a series of limit bids at increasing prices. In case of a step bid the amount of each step will not be less than Rupees One Million (PKR 1,000,000/-).

Strike Price The price per ordinary share of the Issue determined / discovered on the basis of Book Building process in the manner provided in the Public

Offering Regulations 2017, at which the shares are Issued to the successful bidders. The Strike Price will be disseminated after conclusion of Book Building through publication in at least all those newspapers in which the Prospectus was published and also posted on the websites of the Securities Exchange, Lead Manager, Book Runner and the Company.

Supplement to the Prospectus The Supplement to the Prospectus shall be published within three (3) working days of the closing of the Bidding Period at least in all those newspapers in which the Prospectus was earlier published and disseminated through the Securities Exchange where shares are to be listed.

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

Interpretation:

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

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Table of Contents

1 APPROVALS AND LISTING ON THE STOCK EXCHANGE ...... 14 2 SUMMARY OF THE PROSPECTUS ...... 16 3 OVERVIEW, HISTORY AND PROSPECTS...... 24 3A SHARE CAPITAL AND RELATED MATTERS ...... 61 4 PRINCIPAL PURPOSE OF THE ISSUE AND FUNDING ARRANGEMENTS ...... 65 4A VALUATION SECTION ...... 79 5 RISK FACTORS ...... 83 6 FINANCIAL INFORMATION ...... 95 6A REVALUATION OF FIXED ASSETS ...... 127 6B DIVIDEND POLICY ...... 128 7 BOARD OF DIRECTORS AND THE MANAGEMENT OF THE COMPANY ...... 129 8 LEGAL PROCEEDINGS AND OVERDUE LOANS ...... 137 9 UNDERWRITING ARRANGEMENT, COMMISSIONS, BROKERAGE AND OTHER EXPENSES ...... 138 10 MISCELLANEOUS INFORMATION ...... 140 11 MATERIAL CONTRACTS ...... 142 12 BOOK BUILDING PROCEDURE / INSTRUCTIONS FOR REGISTRATION AND BIDDING 145 13 APPLICATION AND ALLOTEMENT INSTRUCTIONS FOR RETAIL PORTION ...... 158 14 SIGNATORIES OF THE PROSPECTUS ...... 167 15 MEMORANDUM OF ASSOCIATION ...... 168 16 REGISTRATION FORM ...... 173 17 BIDDING FORM ...... 174 18 PUBLIC SUBSCRIPTION FORM ...... 176

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1 APPROVALS AND LISTING ON THE STOCK EXCHANGE

APPROVAL OF THE SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN

Approval of the Securities & Exchange Commission of Pakistan (the "Commission" or the "SECP") under Section 87(2) of the Securities Act, 2015 read with Section 88(1) thereof, has been obtained by Citi Pharma Limited vide letter No. SMD/PO/SA-88/02/2021 dated 31st, May 2021 for the issue, circulation and publication of this offering document (hereinafter referred to as the “Prospectus”)

DISCLAIMER: IT MUST BE DISTINCTLY UNDERSTOOD THAT IN GIVING THIS APPROVAL, SECP DOES NOT TAKE ANY RESPONSIBILITY FOR THE FINANCIAL SOUNDNESS OF THE COMPANY AND ANY OF ITS SCHEMES STATED HEREIN OR FOR THE CORRECTNESS OF ANY OF THE STATEMENTS MADE OR OPINIONS EXPRESSED WITH REGARD TO THEM BY THE COMPANY IN THIS PROSPECTUS. SECP HAS NOT EVALUATED QUALITY OF THE ISSUE AND ITS APPROVAL FOR ISSUE, CIRCULATION AND PUBLICATION OF THE PROSPECTUS SHOULD NOT BE CONSTRUED AS ANY COMMITMENT OF THE SAME. THE PUBLIC / INVESTORS SHOULD CONDUCT THEIR OWN INDEPENDENT DUE DILIGENCE AND ANALYSIS REGARDING THE QUALITY OF THE ISSUE BEFORE BIDDING / SUBSCRIBING.

APPROVAL OF SECURITIES EXCHANGE

The Prospectus of the Company has been approved by PSX vide letter No. GEN-774 dated 26/04/2021 in accordance with the requirements of the Listing Regulations.

DISCLAIMER: PSX HAS NOT EVALUATED THE QUALITY OF THE ISSUE AND ITS APPROVAL SHOULD NOT BE CONSTRUED AS ANY COMMITMENT OF THE SAME. THE PUBLIC / INVESTORS SHOULD CONDUCT THEIR OWN INDEPENDENT INVESTIGATION AND ANALYSIS REGARDING THE QUALITY OF THE ISSUE BEFORE SUBSCRIBING. THE PUBLICATION OF THIS DOCUMENT DOES NOT REPRESENT SOLICITATION BY PSX. THE CONTENTS OF THIS DOCUMENT DO NOT CONSTITUTE AN INVITATION TO INVEST IN SHARES OR SUBSCRIBE FOR ANY SECURITIES OR OTHER FINANCIAL INSTRUMENT BY PSX, NOR SHOULD IT OR ANY PART OF IT FORM THE BASIS OF, OR BE RELIED UPON IN ANY CONNECTION WITH ANY CONTRACT OR COMMITMENT WHATSOEVER OF PSX. IT IS CLARIFIED THAT INFORMATION IN THIS PROSPECTUS SHOULD NOT BE CONSTRUED AS ADVICE ON ANY PARTICULAR MATTER BY PSX AND MUST NOT BE TREATED AS A SUBSTITUTE FOR SPECIFIC ADVICE. PSX DISCLAIMS ANY LIABILITY WHATSOEVER FOR ANY LOSS ARISING FROM OR IN RELIANCE UPON THIS DOCUMENT TO ANYONE, ARISING FROM ANY REASON, INCLUDING, BUT NOT LIMITED TO, INACCURACIES, INCOMPLETENESS AND / OR MISTAKES, FOR DECISIONS AND /OR ACTIONS TAKEN, BASED ON THIS DOCUMENT. PSX NEITHER TAKES RESPONSIBILITY FOR THE CORRECTNESS OF CONTENTS OF THIS DOCUMENT NOR THE ABILITY OF THE COMPANY TO FULFILL ITS OBLIGATIONS THEREUNDER. ADVICE FROM A SUITABLY QUALIFIED PROFESSIONAL SHOULD ALWAYS BE SOUGHT BY INVESTORS IN RELATION TO ANY PARTICULAR INVESTMENT.

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STATEMENT OF FILING OF PROSPECTUS & OTHER DOCUMENTS Citi Pharma Limited has filed with the Registrar of Companies as required under Sections 57 (1) of the Companies Act 2017, a copy of this Prospectus signed by all the Directors of the Company.

LISTING AT PSX The Application for listing has been made to Pakistan Stock Exchange Limited (“PSX”) for permission to deal in and for quotation of the shares of the Company. If for any reason the application for formal listing is not accepted by PSX or approval for formal listing is not granted by PSX before the expiration of twenty-one days from the date of closing of the subscription period / list or such longer period not exceeding forty-two days as may, within the said twenty-one days, be notified to the applicants for permission by the PSX, the Issuer undertakes that a notice to that effect will immediately be published in the press and will refund Application Money to the applicants without surcharge as required under the provisions of Section 69 of the Companies Act. If any such money is not repaid within eight (08) days after the Company becomes liable to repay it, the Directors of the Company shall be jointly and severally liable to repay that money from the expiration of the eight day together with surcharge at the rate of two percent (2.0%) for every month or part thereof from the expiration of the eight day and, in addition, shall be liable to a penalty of level 3 on the standard scale in accordance with the provisions of sub-section (2) of Section 69 of the Companies Act. As required under sub-section (3) of Section 69 of the Companies Act, the Application Money including the Bid Money, in case of Book Building, shall be deposited and kept in a separate bank account in a scheduled bank so long as the Company may become liable to repay it under sub-section (2) of Section 69 of the Companies Act; and, if default is made in complying with the said sub-section (3), the Company and every officer of the Company who authorizes or permits the default shall be liable to a penalty of level 2 on the standard scale.

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2 SUMMARY OF THE PROSPECTUS i. Primary business of the Issuer and the industry in which it operates:

Citi Pharma Limited (CPL, the Company or the Issuer) was incorporated as a private limited company in Pakistan (under the repealed Companies Ordinance, 1984, now Companies Act, 2017) on October 08, 2012. The current sponsors of CPL acquired the business operations of Askari Pharmaceuticals (Private) Limited (APPL) from Army Welfare Trust (AWT) through a Business Sales Agreement (BSA) in 2013. The operations of APPL were transferred into CPL which continued the principal business.

The principal business of CPL is manufacturing and sale of (i) Active Pharmaceutical Ingredients (APIs) and (ii) Pharmaceutical Formulation. The Company is one of the prominent API manufacturers in Pakistan. The registered office of the Company is situated at 3.5 KM, Head Balloki Road, Phool Nagar, Kasur; while the Head Office is situated at 588 Q Block, Johar Town, Lahore.

CPL is amongst the few current Good Manufacturing Practice (cGMP) compliant companies in Pakistan and has successfully passed 110 audits by pharmaceutical companies for vendor enlistment. It is standard practice for buyers of APIs in Pakistan to visit and audit the API producers before including them in their vendor list to ensure quality of material.

Active Pharmaceutical Ingredient (API) segment

APIs are substances used to manufacture Finished Pharmaceutical Products (FPP). For example, the API used in a painkiller is Paracetamol, which when mixed with other chemical salts creates renowned brands such as Panadol by GlaxoSmithKline Pakistan Limited and Tylenol by McNeil Consumer Healthcare.

Various chemical compounds are mixed together in several different stages to develop an API. In turn APIs are mixed with further chemical compounds to develop formulations.

List of API Products of CPL

List of Generic API products from CPL Category of Drug 1 Paracetamol Core Essential 1a Aspirin Derivatives Non-Essential 1b Ibuprofen Derivatives Essential 2 Amoxicillin Trihydrate/Penicillin Core Essential 3 Ciprofloxacin/Ciprofloxine Core Essential 3a Levofloxacin Hemihydrate Derivatives Essential 3b Norfloxacin Hcl Derivatives Non-Essential 4 Cefixime/Cephalosporin Core Essential 4a Cephradine Derivatives Non-Essential Note1: These are categorized as core or derivatives as separate capacities for core APIs can be identified whereas, the capacities for derivatives cannot be independently determined due to different manufacturing processes. However, both core and derivatives have similar properties and they are recognized by the same enzyme1. Core Drug: A drug whose chemical structure is independent and derived from the intended reactions of chemical molecules. Derivative Drug: A drug whose structure is related to core drug but the chemical and biological properties may be different. The purpose of deriving new drug in the same series is to optimize either efficacy or properties of general structure. Note2: Essential drugs, as defined by the World Health Organization (WHO), are the medicines that "satisfy the priority health care needs of the population". These are the medications to which people should have access at all times in sufficient amounts. The prices should be at generally affordable levels.

Pharmaceutical Formulation Segment

In the process of developing consumable medicines, APIs are mixed with other salts (Inactive ingredients) to produce formulations.

1Molecules, P.W. Atkins (W.H. Freeman and Co, New York, 1987) Pharmaceutical Chemicals in Perspective, Reuben and Wittkoff, (Wiley, New York, 1989) Page 16 of 178

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List of Formulation Products of CPL

S.no Name of Product Generic Name Product Category Usage Paracetamol, Dextromethorphan HBr, Chlorphenermine 1 Askprol C Tab Capsule Tablets Anti-inflammatory Maleate, Vitamin C, Pseudo Ephedrine Hcl. Tablets and 2 Askprol Paracetamol Anti-inflammatory Suspension Aminophyllin, Diphenlydramine Hcl Powder, Ammonium 3 Asovil Suspension Bronchospasm Chloride, Menthol Capsule and 4 Cefask Cefixime Antibiotic Suspension 5 Cingol Montelukast Tablets Asthma 6 Clopeg Clopidogrel Tablets Antiplatelet 7 Diaglim Glimepiride Tablets Diabetes 8 Duotec Ranitidine as Hcl Tablets Ulcers 9 Floxcip Ciprofloxacin-Hcl Tablets Antibiotic 10 Flurip Flurbiprofen Tablets Anti-inflammatory 11 Lenon Levofloxacin (as Hemihydrate) Tablets Antibiotic 12 Modopine Amlodipine Tablets Diabetes 13 Nimcox Nimesulide Tablets Anti-inflammatory Tablets and 14 Ponfab Mefenamic Acid Anti-inflammatory Suspension 15 Promy Omeprazole Capsule Gastroesophageal 16 Qunor Norfloxacin Tablets Antibiotic 17 Recoz Simvastatin Tablets Cholesterol Control

Some of the key pharmaceutical players in Pakistan, such as GlaxoSmithKline Pakistan Limited (GSK), The Searle Company Limited (Searle), Barret Hodgson Pakistan (Private) Limited (BHPL), Martin Dow Limited (MDL), and Sami Pharmaceuticals (Private) Limited (SPL) are procuring their APIs from CPL.

Revenue Break Up FY18 (Audited) FY19 (Audited) FY20 (Audited) (PKR '000’) % Gross (PKR '000’) % Gross (PKR '000’) % Gross Margins Margins Margins API 1,981,938 99% 12% 2,539,089 97% 12% 3,294,783 93% 11% Pharmaceutical Formulation 78,108 1% 39% 67,939 3% 34% 232,842 7% 38% Total Sales 2,003,334 100% 2,607,028 100% 3,527,625 100% Source: Audited Accounts of CPL and Company Management

Introduction to the Pharmaceutical Industry of Pakistan

The pharmaceutical market in Pakistan was worth approximately PKR 501 billion in 20202. In 2020, the industry witnessed a growth of 10.05% and posted a 4-year CAGR of 11.48% (2016-2020)1. At present, Pakistan produces a variety of medicines and meets more than 70% of the demand for domestic pharmaceutical products3. Majority of the raw material (i.e., 90-95%) for pharmaceutical industry either chemical molecules for APIs or semi-finished APIs for formulation is imported. For Pakistan, China and India serve as a popular import destination.

The pharmaceutical industry in Pakistan is highly competitive given that approximately 80% market share is held by the top 50 companies in terms of revenue4. As of April,’20, there are more than 650 manufacturing units and over 9000 actively marketed drugs3. The division of market share between local pharmaceutical companies and MNCs is roughly 31:693, respectively.

2 IQVIA Solutions Q42020 Report on Pharmaceutical Industry of Pakistan 3 Pakistan Pharmaceutical Manufacturers Association Website (PPMA) 4 PACRA Page 17 of 178

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Pricing Mechanism

During the years 2000 to 2013, the industry witnessed a regulatory price freeze, whereby the pharmaceutical companies in Pakistan were not allowed to increase the prices of medicines regardless of the increasing cost of production. This policy significantly dented the profitability of the pharma sector and was the lead cause of many MNCs exiting5.

In 2018, the Government of Pakistan devised the ‘Drug Pricing Policy’. Under this policy, the market retail price of pharmaceutical products has been linked to the Consumer Price Index (CPI). The drugs are broken into two categories with different caps on the increase in pricing of each type. Effective 1st July 2018, the manufacturers and importers of medicines have been allowed to increase the prices of their medicines annually without any prior approval based on the following criteria;

Effective 1st July, 2018, the manufacturers and importers may increase their MRPs of essential drugs equal to 70% increase in CPI (with a cap of 7%) and MRPs of all other drugs up to increase in CPI (with a cap of 10%)6.

Active Pharmaceuticals Ingredient (API) Industry

Pharmaceutical raw materials comprise of APIs, and excipients. Pakistan’s API production is very limited, with over 95% of total domestic API demand being catered by imports7; as the manufacturing and development of compact API molecules requires advance research and technology which is scarce in Pakistan, partly due to the fact that the research and development costs are not allowed to be passed on to the consumers. Pakistan only has a few API manufacturers compliant with international standards such as cGMP i.e, CPL and Pharmagen Limited.

API and Excipients attract custom duties and additional custom duties ranging from 5% to 25%. While the custom duties on import of chemical molecules for manufacturing of API range from 0% to 5%, which safeguards the local producers and makes local production more attractive as compared to their imported counter parts. The API manufacturers enjoy exemption on sales tax and additional sales tax on the import of chemical molecules for manufacturing of API8. These added benefits were provided by the Government to protect local industry, different SROs were issued from time to time (such as SRO 567(I)/2006 dated 5th June, 2006, SRO 476(I)/2011 dated 3rd June, 2011) that either exempt/reduced duties on raw material for APIs locally manufactured and/or increase duties on API that are produced locally.

Pakistan’s Top 5 APIs by revenue API manufactured by Name of API Estimated Annual Sales (PKR Mn) CPL Ceftriaxone 9,000  Cefxime 8,300  Omeprazole 7,200  Amoxicillin + Clavulanic acid 7,000  Ciprofloxacin 7,000  Source: Institute of Chartered Accounts of Pakistan (ICAP), Annual Report on Pharmaceutical Industry’18

Healthcare Sector

As a middle-income country, with a weak healthcare infrastructure and a population of around 225 million 9, Pakistan’s total healthcare spending is one of the lowest in the world. Cumulative health expenditures by Federal and Provincial Governments in FY19 increased to PKR 421.8 billion from PKR 416.5 billion last year, showing an increase of only 1.3%10. During FY20, the total public healthcare sector expenditures contribute 1.1% of the total GDP9.

5 Pakistan Institute of Development Economics Bulletin’20 6 Drug Pricing policy, 2018 7 JCR VIS Sector Update on Pharmaceuticals 8 FBR custom tariff 9 World Health Organization 10 Pakistan Economic Survey, 2020 Page 18 of 178

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ii. Names of the sponsors:

S. No. Names of Sponsors 1 Mr. Nadeem Amjad 2 Mr. Rizwan Ahmad 3 Mr. Muhammad Naeem 4 Mr. Naveed Amjad 5 Mr. Ateeq Ur Rehman Note: The sponsors of CPL, Mr. Nadeem Amjad, Mr. Rizwan Ahmad, Mr. Muhammad Naeem, Naveed Amjad, and Ateeq Ur Rehman are brothers. iii. Salient features of the issue including method of offering: Size of Offering: 72,692,000 shares Floor Price: PKR 28/- per share Total Capital to be raised at the Floor Price: PKR 2,035,376,000/- Total Capital to be raised at the Cap Price: PKR 2,849,526,400/- Method of Offering: 100% Book Building Method

This Issue consists of 72,692,000 Ordinary Shares (35% of the total post-IPO paid up capital of CPL) of face value of PKR 10/- each. The entire issue will be offered through Book Building at a Floor Price of PKR 28/- per share (including premium of PKR 18/- per share) with a maximum price band of up to 40%. The bidders shall be allowed to place bids for hundred percent (100%) of the Issue size and the Strike Price shall be the price at which the hundred percent (100%) of the Issue is subscribed. However, the successful bidders shall be provisionally allotted only seventy-five percent (75%) of the Issue size i.e., 54,519,000 shares and the remaining twenty five percent (25%) i.e. 18,173,000 shares shall be offered to the retail investors. In case retail portion of the Issue remains unsubscribed, the unsubscribed shares will be allotted to the successful bidders on pro rata basis. iv. Pre and post issue shareholding of the sponsors:

Sr. No. Sponsors Pre-issue Shareholding Post-issue Shareholding 1 Mr. Nadeem Amjad 40.0% 26.0% 2 Mr. Rizwan Ahmad 30.0% 19.5% 3 Mr. Muhammad Naeem 10.0% 6.5% 4 Mr. Naveed Amjad 10.0% 6.5% 5 Mr. Ateeq Ur Rehman 10.0% 6.5% TOTAL 100% 65% v. Principal Purpose of the Issue and Utilization of the Proceeds:

The principal purpose of the fresh equity issuance is to undertake expansion in the following segments:

1. API segment: In the wake of the COVID-19 pandemic, demand for Paracetamol witnessed a surge. Moreover, health awareness and health spending has also risen. Hence, CPL intends to expand their existing capacity of 3,600 tons per annum of Paracetamol to 6,000 tons per annum. Further to this, CPL plans to add new APIs to its existing product line, i.e. (i) Ascorbic Acid, (ii) Chloroquine Phosphate, and (iii) Hydroxychloroquine Sulfate; subsequently, these will also add formulation products of the same to the Company’s portfolio.

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2. In the Formulation Segment, the Company intends to build three manufacturing facilities taking total capacity to 200,000 vials/injectables11 per day, dry powder/suspension 60,000 bottles per day, capsules 4,200,000 per day, and tablets 4,500,000 per day. These include dedicated manufacturing lines for (i) Penicillin 12 , (ii) Cephalosporin and (iii) Psychotropic & Narcotics drugs13. As per guidelines of DRAP, a separate dedicated line is required to eliminate any chances of cross contamination.

CPL’s in-house engineering team shall be responsible for civil, electrical and mechanical work for both API and formulation. Further, they will also be responsible for procurement and installation of machinery for both the API and formulation.

Business Post Expansion Particulars Current Capacity Increase (%) Segment Capacity Paracetamol (In tons) API 3,600 6,000 67% Ciprofloxacin (In tons) API 300 300 Nil Cefixime Tri Hydrate (In tons) API 168 168 Nil Penicillin (In tons) API 600 600 Nil Ascorbic Acid (In tons) API - 1,200 N/A Chloroquine Phosphate (In tons) API - 50 N/A Hydroxychloroquine Sulfate (In tons) API - 50 N/A 200,000 Injectable Formulation - N/A Vials/day 20,000 60,000 Dry Powder / Suspension Formulation 300% Bottles/day Bottle/day Capsules Formulation 100,000/day 4,200,000/day 4,200% Tablets Formulation 2,000,000/day 4,500,000/day 225% Source: Company management Note1: Capacity of Aspirin, Ibuprofen, Levofloxacin Hemihydrate, Norfloxacin Hcl, and Cephradine cannot be independently disclosed. Note2: Capacity of specific formulation products cannot be disclosed as these are multi-product and involve varying processes of manufacturing Note3: API product and formulation products may have the same generic name

3. As part of CPL’s goal to create synergies and forward integration, it plans to build a 50-bed, state-of-the-art healthcare facility at main Gulberg III, Lahore. For this purpose, the Company has acquired a freehold land of 4- kanal at Hali Road, Lahore in Aug’17 at a price of PKR 264.2 million from internally generated funds. As part of the plan, the hospital facility will cater to the following segments: 1. Out Patient Department (OPD) – Consultancy Clinics 2. General Operations 3. Diagnostic Services (i.e, X-rays, Laboratory, MRI/CT scan)

11 Vial is a sealed glass container, used for liquid medication intended for parenteral administration (injection or infusion) that is meant for use in a single patient for a single case, procedure, injection. 12 Penicillin is part of the Company’s existing product portfolio for API 13 Cephalosporin and Psychotropic and Narcotics drugs shall be added to the Company’s product portfolio post expansion. Page 20 of 178

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Following is a brief break-up of utilization of the IPO proceeds:

Sources Expenditure Heads Particulars PKR Particulars PKR % API and Formulation Segment Civil Work of API Segment 150,000,000 7% Civil Work of Formulation Segment 250,000,000 12% IPO Procurement of Plant and Machinery for API Segment 405,194,500 20% 2,035,376,000 Proceeds Procurement of Plant and Machinery for Formulation Segment 307,630,000 15% Hospital Facility Civil Work of Hospital Building (incl. Electrical and Mechanical work) 668,000,000 33% Plant and Machinery for Hospital 254,551,500 13% TOTAL 2,035,376,000 Total Proceeds Utilized 2,035,376,000 100%

Note: The Entire Pharmaceutical project will be financed with the proceeds from the IPO (i.e, PKR 1,112.8 million) and for Hospital project only PKR 922.5 million will be financed through IPO proceeds and the remainder of PKR 503.4 million will be debt financed.

Following is a brief break-up of the Project financing:

Sources Expenditure Heads Particulars PKR Particulars PKR % API and Formulation Segment Civil Work of API Segment 150,000,000 6% Civil Work of Formulation Segment 250,000,000 10% Procurement of Plant and Machinery for API Segment 405,194,500 16% IPO Procurement of Plant and Machinery for Formulation Segment 307,630,000 12% 2,035,376,000 Proceeds Total Pharmaceutical Segment (A) 1,112,824,500 44% Hospital Facility Civil Work of Hospital Building (incl. Electrical and Mechanical work) 668,000,000 26% Plant and Machinery for Hospital 254,551,500 10% Hospital Project to be financed with IPO Proceeds 922,551,500 36% Plant and Machinery for Hospital 105,448,500 4% Fixture and Fitting 248,600,000 10% LTFF 503,449,000 Others 149,400,000 4% Hospital Project to be financed with Debt 503,449,000 20% Total Healthcare Segment (B) 1,426,000,000 56% TOTAL 2,538,824,500 Total Project Utilization (A+B) 2,538,824,500 100% Note: The Entire Pharmaceutical project will be financed with the proceeds from the IPO (i.e, PKR 1,112.8 million) and for Hospital project only PKR 922.5 million will be financed through IPO proceeds and the remainder of PKR 503.4 million will be debt financed.

Sources Expenditure Heads Particulars PKR (000) % Particulars PKR (000) % IPO Proceeds 2,035,376 80% For Hospital Segment 1,426,000 56% Borrowings 503,449 20% For Pharmaceutical Segment 1,112,825 44% TOTAL 2,538,825 100% TOTAL 2,538,825 100%

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Following is a brief break-up of Borrowings Facilities

Financial Institution Facility Mark-up Commission Tenor Limit (PKR Mn) Pak Brunei Investment Limited LTFF 6M Kibor + 2.50% 05 Years 500 Pak Brunei Investment Limited14 LTFF 3M kibor + 2.50% 04 Years 150 Total 650 Note: CPL has commitment of PKR 650 Mn in Long Term Financing Facilities (LTFF) from Pak Brunei Investment Limited against the requirement of PKR 503.449 Mn

Refer to Section 4A, titled ‘Valuation Section’, for details regarding the justification given by the Lead Manager in favour of the floor price of PKR 28 per share

vi. Qualified Opinion, if any, given by the auditor during the last five (5) financial years Nil

vii. Financial Information of the Company Refer to Section 6, titled ‘Financial Information’, for further details.

FY16 FY17 FY18 FY19 FY20 1HFY21 Particulars (000) (Audited) (Audited) (Audited) (Audited) (Audited) (Audited) a. Share Capital 450,000 450,000 450,000 450,000 450,000 450,000 b. Net Worth 608,190 693,081 809,947 837,751 983,386 1,861,215 c. Revenue 1,016,587 1,592,059 2,003,334 2,607,028 3,527,625 2,631,575 d. Gross Margin 13% 13% 13% 13% 12% 16% e. Operating Margin 6% 6% 7% 5% 7% 11% f. Profit after tax 54,712 84,891 116,866 27,804 145,635 168,535 g. Profit after tax margin 5% 5% 6% 1% 4% 6% h. Earning per share1 12.16 18.86 25.97 6.18 32.36 3.75 i. Earnings per share2 0.41 0.63 0.87 0.21 1.08 1.25 Breakup value per share1 (incl. j. 135.15 154.02 179.99 186.17 218.53 41.36 revaluation) Breakup value per share1 (excl. k. 135.15 154.02 179.99 186.17 218.53 25.60 revaluation) Breakup value per share2 (incl. I. 4.51 5.13 6.00 6.21 7.28 13.79 revaluation) Breakup value per share2 (excl. m. 4.51 5.13 6.00 6.21 7.28 8.53 revaluation) Total borrowings as per the balance n. 240,691 sheet3 418,652 473,487 338,144 459,877 613,647 o. Debt Service Coverage Ratio 2.69 3.62 3.77 2.06 1.76 2.06 p. Total debt to equity ratio 40% 60% 58% 40% 47% 33% q. Cash flow from operations 7,572 (2,199) 28,846 273,526 94,091 (105,397) 1EPS and BVPS based on outstanding shares at corresponding period end, i.e. 4,500,000 for FY16 to FY20 and for 1HFY21 45,000,000 2EPS and BVPS based on outstanding shares as at 25/01/2021, i.e. 135,000,000 3Total borrowings consists of Long-term Finance, Financial Lease Liabilities, Short Term Borrowings, and Current Portion of Long-Term Debt and Financial Lease

14 This facility is for PKR 150Mn from Pak Brunei Investment Limited, however only PKR 3,449,000 will be utilized to fund Hospital project Page 22 of 178

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viii. Summary table of outstanding legal proceedings other than the normal course of business

There are no outstanding legal or taxation proceedings involving the Issuer, its sponsors, substantial shareholders, directors and associated companies over which the Issuer has control.

Please refer to section 8 of this Prospectus, titled “Legal Proceedings and Overdue Loans”

ix. Refer to section 5 titled Risk Factors for details on risks associated with the Company and the Issue.

x. Summary of related party transactions for last 3 years

Transactions with related parties FY18 (Audited) FY19 (Audited) FY20 (Audited) Nadeem Amjad – Director Loan Outstanding1 59,200,000 17,200,000 17,200,000 Loan Repaid - (42,000,000) Rizwan Ahmad – Director Loan Outstanding1 38,000,000 - - Loan Repaid - (38,000,000) Muhammad Naeem – Director Loan Outstanding1 34,000,000 - - Loan Repaid - (34,000,000) Naveed Amjad Loan Outstanding1 560,000 - - Loan Repaid (560,000) Yaqeen Developers Limited – Associated

Company due to Common Directorship Investment in associated undertaking (14,900,000) (59,140,000) (82,720,000)

Source: Audited Accounts of the Company

1. These loans are interest free and were obtained from directors/investors of the company to meet working capital requirements, without any security and shall be payable on demand of lender

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3 OVERVIEW, HISTORY AND PROSPECTS i. Company details

Name Citi Pharma Limited Registration Number 0081302 Date of incorporation 08-10-2012 Date of commencement of business July 01, 201315 Date of conversion into public limited company 13-10-2020 Company overview & description of the business Brief history Askari Pharmaceuticals (Private) Limited (APPL) was set up by Army Welfare Trust (AWT) in 1990. The principal business of APPL was manufacturing and sale of pharmaceutical products, medical chemicals and botanical products. APPL commenced operations as an API manufacturer in 1996, with its state-of-the-art plant spread over 46.2 acres of land at 3.5 KM, Head Balloki Road, Phool Nagar, Kasur. In 2003, AWT set up another plant for secondary manufacturing, i.e pharmaceutical formulation at the same site.

In March 2013, the business operations of APPL were acquired for a total sum of PKR 429 Mn by the current sponsors of CPL including land, along with all its licenses and manufacturing rights through a business sales agreement.

Askari Pharmaceutical (Private) Limited acquisition by Citi Pharma Limited Break-Up Particular Land Building Plant & Machinery Vehicles Total PKR (000) 69,281 37,480 318,060 4,500 429,321

Citi Pharma Limited After the transfer of business from APPL, CPL continued the manufacturing and distribution of APIs and Formulations starting July 2013. The principal business activity of CPL is manufacturing and sale of pharmaceuticals, medical chemicals and botanical products. The Company is renowned in Pakistan for being the one of the prominent Active Pharmaceutical Ingredients (API) producer. CPL commenced its operations in 2013 with high grade APIs (i.e Paracetamol). Currently, the Company operates in two segments APIs and Pharmaceutical Formulation drugs.

The Company has a large client base, including many international and local pharmaceutical and healthcare companies (for e.g GlaxoSmithKline Pakistan Limited, The Searle Company Limited, Abbott Laboratories (Pakistan) Limited, and Novartis Pharmaceuticals Pakistan etc.).

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Active Pharmaceutical Ingredient (API) segment

Various chemical compounds are mixed together in several different stages to develop an API. In turn APIs are mixed with further chemical compounds to develop formulations.

List of Generic API products from CPL Category of Drug 1 Paracetamol Core Essential 1a Aspirin Derivatives Non-Essential 1b Ibuprofen Derivatives Essential 2 Amoxicillin Trihydrate/Penicillin Core Essential 3 Ciprofloxacin/Ciprofloxine Derivatives Essential 3a Levofloxacin Hemihydrate Core Essential 3b Norfloxacin Hcl Derivatives Non-Essential 4 Cefixime/Cephalosporin Core Essential 4a Cephradine Derivatives Non-Essential Source: Company Management, DRAP and WHO Note1: These are categorized as core or derivatives as separate capacities for core APIs can be identified whereas, the capacities for derivatives cannot be independently determined due to different manufacturing processes. However, both core and derivatives have similar properties and they are recognized by the same enzyme16. Core Drug: A drug whose chemical structure is independent and derived from the intended reactions of chemical molecules. Derivative Drug: A drug whose structure is related to core drug but the chemical and biological properties may be different. The purpose of deriving new drug in the same series is to optimize either efficacy or properties of general structure. Note2: Essential drugs, as defined by the World Health Organization (WHO), are the medicines that "satisfy the priority health care needs of the population". These are the medications to which people should have access at all times in sufficient amounts. The prices should be at generally affordable levels.

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16Molecules, P.W. Atkins (W.H. Freeman and Co, New York, 1987) Pharmaceutical Chemicals in Perspective, Reuben and Wittkoff, (Wiley, New York, 1989) Page 25 of 178

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Pharmaceutical Formulation Segment

In the process of developing consumable medicines, APIs are mixed with other salts (Inactive ingredients) to produce formulation. Currently, Paracetamol and Ciprofloxacin are two APIs that are also used internally for formulation segment and rest is procured from other suppliers. For FY20, 72 tons of Paracetamol and 5 tons of Ciprofloxacin was used internally. However, imported API consist of 5-10% of the total raw material used in formulation by the Company. Formulation products produced by the Company include:

CPL has an ISO certified and cGMP compliant facility where APIs and finished pharmaceutical products are produced.

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Current capacity and capacity utilized:

The current capacity per annum is 3,600 tons for Paracetamol, 600 tons for Amoxicillin, 300 tons for Ciprofloxacin, and 168 tons for Cefixime. Ample free land on the current premises is available for capacity enhancement and addition of new chemicals to the existing product line. A Quality Control Laboratory is situated at the plant site, and is equipped with modern instrumental facilities, providing infrastructure for research and development activities.

Production and Sales Volume for FY20 Production and Sales Volume for 1HFY21 S. Installed (In tons and Unit) (In tons and Unit) Particulars No capacity Capacity Sales Capacity Sales Production Production Utilization Volume Utilization Volume 1 Paracetamol (tons) 3,600 2,527 70% 2,525 1,545 86% 1,518 2 Ciprofloxacin (tons) 300 28 9% 26 20 13% 16 Penicillin/Amoxicillin 3 600 212 35% 207 170 57% 156 (tons) 4 Cefixime (tons) 168 16 10% 16 18 21% 16 5 Tablets (Units) 596,000,000 207,444,285 35% 198,506,456 23,063,413 8% 22,155,643 6 Capsules (Units) 29,800,000 5,306,477 18% 5,280,077 1,181,908 8% 1,176,028 7 Suspension (Units) 5,960,000 780,069 13% 535,456 551,520 19% 535,456 Source: Company management Note: Capacity of Formulation products is on annual basis (i.e., 298 days) Note: Capacity of Aspirin, Ibuprofen, Levofloxacin Hemihydrate, Norfloxacin Hcl, and Cephradine cannot be independently disclosed as they are derivatives of core APIs discussed above.

Justification of expansion given the apparent underutilization of capacities

Active Pharmaceutical Ingredients

Total API Production for Last 3 Years (In Tons) FY18 FY19 FY20 1HFY21 Paracetamol 2,778 2,399 2,527 1,545 Ciprofloxacin 68 45 28 20 Amoxicillin/Penicillin 72 56 212 170 Cefixime N/A 3 16 18

API Industry is usually characterized with the high investment and low margins (and hence requires large volumes to get the required margins). Moreover, approval process (from any formulation companies particularly if it is multinational company) is quite stringent and these factors act as entry barrier for new entrants. Likewise, it is difficult for any formulation company (if that company is buying bulk of API ingredient from particular API company) to change the source and allow other Company to step in.

The AWT plant was idle since 2009, and CPL with rigors Balancing, Modernization and Replacement (BMR) activities started production in from July’13. Moreover, as mentioned above, getting approvals from formulation pharmaceuticals (customers) even for a single molecule is a cumbersome process and developing customer base is time consuming process. CPL gradually developed its customers’ base and established its foothold in the market due to the fact that CPL had ample production capacity available.

In FY20 CPL achieved revenue of PKR 3.5 Bn from PKR 1.0 Bn in FY16, showcasing a CAGR growth of 36.4% (for the period FY16 to FY20). This high growth rate can be attributed to higher demand, increase in customer base and gradual addition of new APIs to the Company’s product portfolio.

Capacity FY16 FY17 FY18 FY19 FY20 1HFY21 Total Capacity 2,200 2,600 3,000 3,000 3,600 1,800 Total Production 1,868 2,545 2,778 2,399 2,527 1,545 Capacity Utilization 85% 98% 93% 80% 70% 86% Page 27 of 178

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As of 1HFY21 the total production of Paracetamol stood at 86% of total capacity. Subsequently, based on trend of increasing utilization and the future demand, especially in the wake of the COVID-19 Pandemic, the Company intends to further increase its capacity to 6000 tons. Moreover, Sales growth in Amoxicillin is very impressive and is expected that capacity utilization will rise substantially due to addition of Company’s new dedicated formulation line and addition of new customers.

Going forward, CPL management is confident that Cefixime and Ciprofloxacin categories will pick-up the same momentum as Paracetamol and Amoxicillin. In Ciprofloxacin, Amoxicillin and Cefixime, no capacity increase is planned and CPL is confident to keep the momentum due to the reasons as mentioned earlier.

Vendor enlistment for API supply is a tedious and time-consuming process, generally taking between two to three years-requiring multiple systems and quality audits. However, it is only possible to develop clientele if there is capability to supply consistently. CPL is planning to expand its operations by creating adequate capacity in anticipation for future demand. This scenario was witnessed in Paracetamol where production has gone up from 1,868 Tons in 2015 to 1,545 in 1HFY21 Tons (if annualized ~3,100 tons for FY21).

Due to COVID-19, Drug Regulatory Authority of Pakistan (DRAP), exercising its powers under Rule 26 of Drugs (LRA) Rules amended via SRO 713(1)/2018 dated 8th June, 2018, has made following decision in its meeting dated 3rd April, 2020 allowed to submit registration application for the following categories; 1. Chloroquine Phosphate 2. Hydroxychloroquine Sulfate 3. Lopinavir/Ritonavir 4. Oseltamivir 5. Ascorbic Acid

Particular Capacity (In Tons) per annum Ascorbic Acid 1,200 Chloroquine Phosphate 50 Hydroxychloroquine Sulfate 50

Citi Pharma Limited (being significant player in API industry) decided to play its role to combat COVID-19 and in the process of establishing API facility of the following: 1. Chloroquine Phosphate 2. Hydroxychloroquine Sulfate 3. Ascorbic Acid

Formulation Segment

Keeping in mind the higher margins on the formulations segment of the pharmaceuticals industry, CPL plans to increase its focus on this segment – that is likely to result in improvement of margins at gross and net level for the Company.

Given the future demand trends for formulations products, CPL’s management has identified the following products for expansion.

1. Cephalosporin 2. Penicillin 3. Psychotropic and Narcotics 4. Hydroxy Chloroquine Sulfate 5. Chloroquine Phosphate 6. Ascorbic Acid (Vitamin C)

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The process of introduction of pharmaceutical formulations products is a time-consuming process and requires at least 3 to 5 years creating demand and recognition for the products. This process requires acquainting the doctors with the drugs and their intended purposes, treatments, side-affects and letting them gain confidence. Therefore, quality of product is extremely important in a market where Doctors feel hesitant to prescribe new, untested medicine products.

In a recent development, DRAP has stated that Doctors should no longer prescribe medicines under the brands names but prescriptions should be written using the chemical compounds. CPL management feels that this measure alone will create momentum for their products, which will be focused towards providing quality medicines at affordable rates.

The Company intends to add capacities in the following lines.

Post Expansion Particulars Current Capacity Increase (%) Capacity Injectable - 200,000 Vials/day N/A Dry Powder / Suspension 20,000 Bottles/day 60,000 Bottle/day 300% Capsules 100,000/day 4,200,000/day 4,200% Tablets 2,000,000/day 4,500,000/day 225%

At present, the Company’s Formulations production facilities are operating at lower capacity utilization (overall). In order the ensure an extremely swift increase in capacity utilization, CPL intends to create synergies by using (i) Cefixime (current API) for Cephalosporin manufacturing, (ii) Amoxicillin (current API) for penicillin formulation. In- line with Company’s strategy the utility from formulation of cephalosporin and penicillin will also increase the production of both the APIs. Furthermore, the Company plans to add (iii) Psychotropic & Narcotics drugs formulation and (iv) Ascorbic Acid, Chloroquine Phosphate, and Hydroxy chloroquine; these will also increase the capacity utilization of overall formulation.

CPL has ample room to cater both the API and Formulation segment of both (i) Cefixime and (ii) Amoxicillin.

Capacity available Annual API Tablets/Capsules Total annual Particular Medicine USP for Formulation (In Capacity (In tons) per ton (per day) production tons) Cefixime Cephalosporin (500 mg) 168 50 2,000,000 100,000,000

Amoxicillin Penicillin (500 mg) 600 180 2,000,000 100,000,000 Note: The available API capacity for formulation is assumed at 30% pa.

In addition, the Company is in discussion with leading pharmaceutical players for third party branding, whereby the CPL will produce their products from API to Formulations and make sales of end products to the respective Companies.

In this regard, the Company has already entered into talks with leading pharmaceutical formulations manufacturers. Under the terms of these arrangements, CPL will procure all materials and additives to provide the desired property as per the formulation USP and desired brands will be sold to Pharmaceutical Company. This is expected to take the total capacity utilization to around (~50%-55%) of the post-expansion capacity of the formulations segment within 02 years and reach (~80%-100%) of the capacity utilization with 04 to 05 years’ time- frame.

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ii. Pattern of shareholding (Pre-IPO)

S. No Name Particulars Shares % 1 Mr. Nadeem Amjad Sponsor/ Chairman 53,999,988 40.0%

2 Mr. Rizwan Ahmad Sponsor/ CEO 40,500,000 30.0%

3 Mr. Muhammad Naeem Sponsor/ Director 13,500,000 10.0%

4 Mr. Naveed Amjad Sponsor 13,500,000 10.0%

5 Mr. Ateeq ur Rehman Sponsor 13,500,000 10.0%

6 Mr. Amir Zia Independent Director 3 0.00%

7 Mr. Rana Shakeel Shaukat Independent Director 3 0.00%

8 Mrs. Saira Aslam Non-Executive Director 3 0.00%

9 Mr. Zameer Ul Hassan Shah Executive Director 3 0.00%

135,000,000 100% Pattern of shareholding as of 03/Feb/2021

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iii. Key performance drivers

Key revenue drivers

Health awareness

In the wake of coronavirus pandemic of 2020, public awareness about the usage of conventional medicine has also risen. With the increase in healthcare focus and spending, the expenditure on medicine is expected to increase the demand of medicine and consequently, the demand for APIs is also expected to increase. Hence, this could be a major demand driver for the Company’s product.

Government’s expenditure on healthcare

Sale of medicine to the Government is a substantial chunk of the overall sales. According to Pakistan Pharmaceutical Manufacturers Association’s Annual Report 2017, estimates suggest that in developing countries like Pakistan, at least one third of the population is dependent upon access to essential drugs through the government sector17, while the rest is provided by the private sector. The National Drug Policy of 1997 promotes the use of medicines designated in the essential drug list by giving mandate to government and semi-government health organizations to procure medicines in bulk. The policy seemed in consonance with the populist aim of providing pharmaceutical products at affordable prices to the public. The reason quoted above will increase overall volumes for formulation in Pakistan; hence demand for APIs will also go up as the generic and OTC medicines have 91% market share of total products18.

Furthermore, CPL has also been associated with the district Governments in Punjab for the sale of formulation drugs (list of district Governments given in section 3 (xi)), with the increased focus of Government in healthcare, CPL is posed for higher formulation sales volumes.

Growing population

According to the World Bank, Pakistan’s population is growing at a rate of ~2% pa19. Similarly, the global population growth rate is estimated at ~1.1%19. The higher number of base populations will create demand for healthcare and pharmaceutical products.

Government initiatives

Government has started “Sehat Sahulat Program (Health Card)” covering all people living below poverty i.e. earning less than USD 2/day in Punjab, KPK, AJK, GB and 100% population coverage for newly merged districts of KPK and District Tharparker (Sindh) are covered. On Prime Minister’s special directives persons with disabilities (in AJK, GB, ICT, Punjab) and transgender community (across Pakistan), who are registered in NADRA and has special CNIC are also covered20. This wide coverage of Federal Government’s initiative will add a new demographic segment which was previously relying on substitute medicine such as ayurvedic and herbals medicine.

Expanding product portfolio

CPL is expanding its business segments and intends to increase its presence in formulation business where margins are relatively higher. Significant synergies are available to CPL since the company will use majority of its own APIs to feed the formulation products.

17 Pakistan Pharmaceutical Manufacturers Association Annual Report 2017 18 BMI pharmaceuticals & Healthcare Report Q2 2019 19 data.worldbank.org 20 https://www.pmhealthprogram.gov.pk/faqs/ Page 31 of 178

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Key cost drivers

Raw material

The largest cost driver for CPL is input costs accounting for averaging at ~87% of the Cost of Goods Sold (COGS) for last 5 year as per the audited accounts.

Types of raw materials used:

1. Raw material for active pharmaceutical ingredients (API); 2. Raw material for excipients (Cost of excipients is very low as compared to raw material for API and has non- material impact on total cost);

Majority of the raw materials used in APIs (or for excipients) are imported in Pakistan from China and India21. Excipients are substance used in formulation alongside APIs, included for the purpose of long-term stabilization, bulking up solid formulations that contain potent API in small amounts (thus often referred to as bulking agents). According to CPL’s Management, the Company imports 90% of its total raw material need. Ratio of the cost of imported raw material to sales is particularly high in APIs. Thus, exchange rate fluctuations play a key role in determination of profitability of the Company.

Fuel & Power Costs

Fuel and power costs account for approximately 8% of the total cost of goods sold (COGS) of CPL. As a standard practice in Pharmaceutical industry, the Company cannot use Methane gas as a burner fuel; hence, the boilers are fueled by wood / corn cubes.

CPL’s power consumption hovers around 1 Mega Watt for which the Company has sanctioned load of 1.5 Mega Watt from WAPDA in order to ensure smooth factory operations. The Company has also installed backup generator of 900 KVA.

Human Resource

Salaries and wages account for approximately 3% of the COGS of the Company. As salaries and wages take up a significant portion of the cost of sales, any shortage of skilled employees or an increase in minimum wages by the government will result in an increase in cost of labor. For FY20 the employee turnover rate was 33%, 108 employees left during the year.

Skilled Employees Unskilled Labour 128 292 As of June 30, 2020

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21 ResearchGate: Assessment of active pharmaceutical ingredients in drug registration procedures in Pakistan: implications for the future; Published online first: 25 November 2016 Page 32 of 178

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iv. Company Organogram

BOD

Audit Committee CEO HR Committee

CFO COO

Head of Internal Company Audit Secretary

Strategy Production - Production - Legal Treasury Supply Chain Internal Audit Formulation API Admin

Human Sales and Information Quality Engineering Corporate Financial Control Resource Marketing Technology Affairs Reporting

General Accounting

Taxation

Source: Company Management v. Key milestones

Years Events

1990 Project Initiated by Army Welfare Trust (AWT)

1993 Civil work and construction activity begins

1996 Askari Pharmaceutical (Private) Limited commenced commercial operations

2003 Formulation business is initiated

2012 Citi Pharma (Private) Limited gets incorporated Current sponsors acquire Askari Pharmaceuticals (Private) Limited through a Business Sales 2013 Agreement by virtue of which assets and manufacturing licenses of APPL were transferred to CPL.

2016 Expansion of Paracetamol Facility from 2,200 tons to 2,600 tons 2018 Expansion of Paracetamol Facility from 2,600 tons to 3,000 tons

2019 Expansion of Amoxicillin/Penicillin Facility from Installed Capacity of 250 tons to 600 tons.

2019 110 successful Audits by 360 Pharmaceutical Companies for vendor enlistment

2020 Expansion of Paracetamol Facility from 3,000 tons to 3,600 tons

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vi. Nature and location of company’s project

The manufacturing facility is fully owned by CPL and is located at 3.5 KM, Head Balloki Road, Phool Nagar, Kasur, 65 KM outside Lahore and spread over 46.2 acres of freehold land area with more than 527,384 Sq. Feet of covered area, (~26% of the total available area). The Company has sufficient land to expand their operations and the current expansions are being undertaken on the existing land.

In light of the lack of quality healthcare facilities in Lahore, the management of CPL has decided to set up a state of the art, 50 bed hospital facility in Gulberg III, Lahore. In this regard, CPL purchased a freehold land of 4 Kanal on Hali Road in Aug’17. The total purchase consideration paid for this was PKR 264.2 million and was financed through internal cash generation of the Company. vii. Infrastructure

The large freehold land area of 46.2 acres makes CPL one of the prominent pharmaceutical projects in Pakistan. Ample free land on the current premises is available for capacity enhancement and addition of new chemicals to the existing product line. As an ISO certified and cGMP compliant company, the facility is a unique site where APIs and finished pharmaceutical products are produced at the same time. In line with the international standards and guides from FDA and DRAP, the plant has separate dedicated facilities for API production, storage, packaging and other activities and a separate area for formulation business to eliminate any chances of cross contamination. Currently, CPL has 4 dedicated lines for APIs and 3 for formulation.

Active Pharmaceutical Ingredients (API) Facility

In API segment, the manufacturing facility has separate dedicated lines for (i) Paracetamol, (ii) Ciprofloxine, (iii) Cephalosporin, and (iv) Penicillin as per the cGMP standards to ensure that there is no possibility of cross contamination. Independent facilities for all three stages for (i) Inbound (ii) Process (iii) Outbound is developed for each molecule (category) to avoid cross contamination. Thus, availability of space is very critical in the diversification/expansion in this Industry.

Manufacturing of API involves reaction of chemical molecules (raw material) in a controlled environment with other catalysts. Raw materials are majorly imported in Pakistan. The manufacturing process of chemical molecules is a capital intensive and require advance research and development facility. CPL imports basic raw material and produces require APIs.

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Process flow of manufacturing of Paracetamol:

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Process flow of manufacturing of Ciprofloxacin

Q. Acid Condensation n-Butanol Piperazine

Purified Water Centrifugation

EDTA Refinement Purification Acetic Acid

Water for Washing Charcoal Fiterate

NaoH Ph Neutral Refined Cipro in Solution

35% Hcl Wet Cake Water/ Methanol Drying

Milling

Packing

Process flow of manufacturing of Cephalosporin/Cefixime

Methanol Coupling Reaction TEA Water

Ethyl Acetate 7 AVCA MBT Filteration Mica Ester

Activated Carbon Charcoal Treatment EDTA

5% HCl Filterate Cryctallization

Cefixime M Ester Centrifugation

Wet Cake Basification

EDTA Charcoal Treatment Activated Carbon Sodium Bisulphate

5% HCl Crystallization

Compaction Drying Micronization

Packing (Cefixime)

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Process flow of manufacturing of Penicillin

PHPG (Dry Dane’s Salt) RV-3 Methylene Chloride 6-APA MIXED RV-2 Pyridine MC ANHYDRIED 6-APA Dimethylacetamide (DMAc) TEA SOLUTION Pivaloyl Chloride PURIFIED WATER (TEA-COMPLEX) 2-EHA

RV-3 ACYLATION LIQUID NITROGEN

PURIFIED WATER RV-3 IPA HYDROLYSIS MC SPENT HCI

C01-/02 AMMONIUM HYDROXIDE CRYSTLLIZATION

CENTRIFUGATION IPA WASH EFFLUENT CF-(01-03) IPA SPENT

DRYING FBD- (01-03)

AMOXICILLINAMOXICILLIN TRIHYDRATE/PENICILLINTRIHYDRATE

Formulation Facility

Pharmaceutical formulation is the multistep process where the active drug is mixed with all other components by considering the factors of particle size, polymorphism, pH, and solubility and becomes the final beneficial medicinal product. Benefits and constraints of the active pharmaceutical ingredients (APIs), valuable excipients, associated interactions, and manufacturing procedure are the four basic components for a successful pharmaceutical formulation. The formulation often functions in a way that includes different dosage forms. The dosage form is the pharmaceutical drug product as marketed for use with a specific mixture of active ingredients and inactive components. It has to be a particular configuration (capsule shell, for example) and distributed into a particular dose.

CPL has three facilities manufacturing (i) Tablets, (ii) Capsules and (iii) Suspensions

Tablet Processing

1. Dispensing 2. Dry Mixing 3. Dry Granulation 4. Wet Granulation 5. Fluid Bed Dryer 6. Conical Dry Mill 7. Mixing 8. Compressing 9. Coating and Packaging

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Capsules Processing

1. Dispensing 2. Granulation 3. Final Mixing 4. In-capsulation 5. Polishing 6. Packaging

Suspension Processing

1. Granulation 2. Final Mixing 3. Bottle Blowing 4. Bottle Filling 5. Labeling and Packaging

Quality Control Laboratory

A Quality Control Laboratory is situated at the plant site, and is equipped with modern instrumental facilities, providing infrastructure for research and development activities. As Pharmaceutical is a highly regulated industry in terms of quality checks. As an API manufacturer, CPL before suppling APIs to formulation companies, goes through multiple rigorous quality check audit. Further, every batch before ready to supply goes through the quality controls as prescribed by the FDA and DRAP. The quality control lab serves a great purpose to the CPL’s business operation.

Fuel and Power

CPL has a 1.5MW load sanctioned from the WAPDA grid with dedicated feeders and transformers. In addition, the Company has a backup generator of 900KVA. The Pharma Industry is not fuel intensive and the total electricity need hovers around ~1MW. However, in line the with CPL’s expansion plan, the Company aims to take up the total sanctioned load to 2.5MW in the future (post expansion).

Furthermore, CPL has 3 Boilers having capacity of producing 96 tons of steam/day. In contrast current daily requirement of steam hovers between 75-80 tons. CPL’s boilers are fueled by wood/corn cubes and alternatively, are designed to run on coal too. However, due to local availability they are fueled by wood/corn cubes.

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viii. Plant layout

Source: Company Management

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ix. Products portfolio

API segment

1. Paracetamol, also known as acetaminophen, is a medication used to treat pain and fever. Paracetamol was first developed in 1877 and is the most commonly used medication for pain and fever across the world. It is on the World Health Organization's List of Essential Medicines. Paracetamol is available as a generic medication, with brand names including Tylenol and Panadol among others. 2. Penicillin/Amoxicillin is an antibiotic used to treat a number of bacterial infections. These include middle ear infection, strep throat, pneumonia, skin infections, and urinary tract infections, among others. It is taken orally, or less commonly by injection. Amoxicillin was discovered in 1958 and came into medical use in 1972. It is on the World Health Organization's List of Essential Medicines. It is one of the most commonly prescribed antibiotics in children. Amoxicillin is available as a generic medication. 3. Levofloxacin is used to treat a variety of bacterial infections. This medication belongs to a class of drugs known as quinolone antibiotics. It works by stopping the bacterial growth and is used to treat bacterial infections. It will not work for viral infections (such as common cold, flu). Levofloxacin was first approved by the FDA in 1996, and was approved in Canada and several South American countries soon after. 4. Cefixime/Cephalosporin, is an antibiotic medication used to treat a number of bacterial infections. Cefixime was patented in 1979 and approved for medical use in the United States in 1989. It is on the World Health Organization's List of Essential Medicines. It is available as a generic medication. 5. Ciprofloxacin is an antibiotic used to treat a number of bacterial infections. This includes bone and joint infections, intra-abdominal infections, certain type of infectious diarrhea, respiratory tract infections, skin infections, typhoid fever, and urinary tract infections, among others. Ciprofloxacin was patented in 1980 and introduced in 1987. It is on the World Health Organization's List of Essential Medicines and is classified as critically important for human medicine. It is available as a generic medication. 6. Cephradine is in a group of drugs called cephalosporin antibiotics. Cephradine fights bacteria in the body. Cephradine is used to treat infections caused by bacteria, including upper respiratory infections, ear infections, skin infections, and urinary tract infections. 7. Norfloxacin hydrochloride is a synthetic chemotherapeutic antibacterial agent occasionally used to treat common as well as complicated urinary tract infections. Norfloxacin is a broad-spectrum antibiotic that is active against both Gram-positive and Gram-negative bacteria. It functions by inhibiting DNA gyrase, a type II topoisomerase, and topoisomerase IV, enzymes necessary to separate bacterial DNA, thereby inhibiting cell division. 8. Aspirin is used to reduce fever and relieve mild to moderate pain from conditions such as muscle aches, toothaches, common cold, and headaches. It may also be used to reduce pain and swelling in conditions such as arthritis. Aspirin is known as a salicylate and a nonsteroidal anti-inflammatory drug (NSAID). It works by blocking a certain natural substance in your body to reduce pain and swelling. This effect reduces the risk of stroke and heart attack. 9. Ibuprofen is a nonsteroidal, anti-inflammatory drug (NSAID) class that is used for treating pain, fever, and inflammation. Ibuprofen was discovered in 1961 by Stewart Adams at Boots UK Limited and initially marketed as Brufen. It is available under a number of trade names, including Nurofen, Advil and Motrin. It was first marketed in 1969 in the United Kingdom and in the United States in 1974. It is on the World Health Organization's List of Essential Medicines. It is available as a generic medication.

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Formulation Segment

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x. Supply Chain

Sales and distribution network

API segment

Majority of the Raw materials (i.e. Para Amino Phenol, Colloidal Silicon Dioxide, Microcrystalline Cellulose 102 & 200 USP, and Magnesium Stearate) for API production is imported from China and rest procured locally. The raw material component from local source is very minimal. Lead time of imported raw material is 60-90 days with supplier’s credit being available to fund the working capital.

Independent facilities for all three stages for (i) Inbound (ii) Process (iii) Outbound is developed for each molecule (category) to avoid cross contamination. Thus, availability of space is very critical in the diversification/expansion in this Industry.

Purchase % of total RM S.No Type of Raw Material Supplier Amount in FY H.S. Code Purchases 2020 (PKR) Taixing Yangzi Pharm 1 Import - API - Para Ameno Phenol 29.54% 2922.2100 Chemical Co Ltd. China 985,352,374 Sinopharm Weiqida Import - API - 6. Aminopenicillin 2 Pharmaceutical Co. Ltd. – 14.97% 2934.9990 Acid (6.APA) 499,206,748 China

3 Import - API - Glacial Acetic Acid JL Corporation - South Korea 9.94% 2915.2100 331,524,390 Zhejiang Chemicals Import

4 Import - API - Q-Acid and Export Corporation – 3.96% 2903.2900 131,972,747 China Import - API - D(+)-4-

5 Hydroxyphenylglycine Methyl Deretil S.A. – Spain 3.45% 2922.4990 115,051,183 ester [D-HPGME] BASF Hong Kong Limited - 6 Import - API - Piperazine 1.16% 2935.9090 Hong Kong 38,719,923 Hubei Lingsheng

7 Import - API - 7-AVCA Pharmaceuticals Co. Ltd. - 1.09% 2915.1300 36,387,019 China Import - API - Isopropyl Alcohol YII-Diann Chemical Industry 8 0.40% 2929.9030 (IPA) Co. Ltd. - Taiwan 13,222,753 M. Union Chemicals Trading 9 Import -API - Methanol 0.31% 2905.1100 FZC - Ajman, UAE 10,259,872 Petrochem Middle East FZE - 10 Import - API - n.Butanol 0.15% 2905.1100 Dubai, UAE 4,972,598 Local - Formulation - Empty Hard

11 Gelatin D-Blue Cap & White Body Multi Caps, Lahore - Pakistan 0.03% Nil 880,530.00 Shell Size No. 2

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Process: Raw Material Independant facilities Institutional Sales Local : 05%~10% for Inbound, Processing Pharmaceultical Import : 90~95% and Outbound for each Companies molecule

Formulation segment

CPL intends to expand their “Formulations” business and create synergies with current business. CPL being the only API manufacturer also having formulation segment in the listed universe will have majority of the raw materials available in-house. In addition, the margins in formulations business are higher and will improve the Company’s topline. Successful operation of formulation segment is highly dependent on the sales and marketing activities which the Company conducts in tandem with the planned expansion.

Currently, Paracetamol and Ciprofloxacin are two APIs that are also used internally for formulation segment and rest is procured from other suppliers. For FY20, 72 tons of Paracetamol and 5 tons of Ciprofloxacin was used internally. However, imported API consist of 5-10% of the total raw material used in formulation by the Company.

Process: Raw Material Independant facilities Local : 90%~95% Distributors, for Inbound, Processing Pharmacies,Clinics Import : 05~10% and Outbound for each molecule

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xi. Customers of the Company No agreement with Customers: CPL does not have any long term or short term, material contracts with buyers.

Major customers of the Company as a percentage of total sales in the last 3 years are given below:

GlaxoSmithKline Pakistan Limited (GLAXO) has been a major customer of CPL with over 50% of total revenue in last 3 years. GLAXO has been one of the first few clients of CPL and is procuring from CPL since inception.

Active Pharmaceutical Ingredients

2020 Customer Name Country % of Total Sales GlaxoSmithKline Pakistan Limited Pakistan 52.50% Don Valley Pharmaceuticals Pakistan 1.58% Martin Dow Pakistan 1.26% Sami Pharmaceuticals Pakistan 0.85% Rasco Pharmaceuticals Pakistan 0.80% Selmore Pharma Pakistan 0.68% Bio-Labs (Pvt.) Limited Pakistan 0.62% Pliva Pharma Pvt. Ltd Pakistan 0.44% The Searle Company Pakistan 0.19% AGP Pharmaceuticals Pakistan 0.11% Others 34.37% Total 93.40%

2019 Customer Name Country % of Total Sales GlaxoSmithKline Pakistan Limited Pakistan 59.44% Martin Dow Pakistan 3.75% The Searle Company Pakistan 3.28% Pliva Pharma Pvt. Ltd Pakistan 1.67% Don Valley Pharmaceuticals Pakistan 1.66% Sami Pharmaceuticals Pakistan 0.98% AGP Pharmaceuticals Pakistan 0.67% Selmore Pharma Pakistan 0.3% Global Pharmaceuticals Pakistan 0.2% Rasco Pharmaceuticals Pakistan 0.16% Others 38.36% Total 97.39%

2018 Customer Name Country % of Total Sales GlaxoSmithKline Pakistan Limited Pakistan 56.85% Don Valley Pharmaceuticals Pakistan 2.12% Pliva Pharma Pvt. Ltd Pakistan 1.44% AGP Pharmaceuticals Pakistan 0.88% Sami Pharmaceuticals Pakistan 0.88% The Searle Company Pakistan 0.76% Rasco Pharmaceuticals Pakistan 0.72% Munawar Pharma Pakistan 0.20% Global Pharmaceuticals Pakistan 0.16% Page 44 of 178

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Selmore Pharma Pakistan 0.09% Others 39.90% Total 98.93%

Formulation

2020 Customer Name Country % of Total Sales Chief Executive Officer/ District Government (Gujranwala) Pakistan 0.37% Chief Executive Officer/ District Government (Jhelum) Pakistan 0.44% Chief Executive Officer/ District Government (Kasur) Pakistan 0.45% Chief Executive Officer/ District Government (Multan) Pakistan 0.17% Chief Executive Officer/ District Government (Rawalpindi) Pakistan 0.28% Chief Executive Officer/ District Government (Sargodha) Pakistan 0.22% Chief Executive Officer/ District Government (Sheikhupura) Pakistan 0.26% Medical Superintendent (Kasur) Pakistan 0.17% Nazir & Sons Pakistan 0.80% Others Pakistan 3.43% Total 6.60%

2019 Customer Name Country % of Total Sales Aamir Medicine Company Pakistan 0.11% Chief Executive Officer (Chakwal) Pakistan 0.05% Nazir & Sons Pakistan 1.05% Office of The Chief Executive/ District Government (DHA) BWN Pakistan 0.04% Office of The Chief Executive Officer/ District Government (BP) Pakistan 0.15% Office of The Chief Executive Rahim Yar Khan/ District Government Pakistan 0.15% PHFMC (Pakpattan) Pakistan 0.05% PHFMC (Rahim Yar Khan) Pakistan 0.13% Primary & Secondary Healthcare Department Pakistan 0.05% Others Pakistan 0.82% Total 2.61%

2018 Customer Name Country % of Total Sales Lassani Medicine & Co Pakistan 0.05% Pioneer Distributors Pakistan 0.04% Others Pakistan 0.03% Shakeel Enterprises Sahiwal Pakistan 0.03% Sncura Enterprises Pakistan 0.03% Dr. Ijaz Pharmaceuticals Pakistan 0.02% Usama Traders Pakistan 0.02% Mahmood Medicine Co Pakistan 0.02% Lucky Pharma Pakistan 0.02% Paaris Distributors Pakistan 0.02% Others 3.63% Total 3.90% Page 45 of 178

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xii. Demand for the products

API segment Historically, the growth rate in API segment has remained impressive. CPL deals in 9 primary APIs, including Paracetamol, Ciprofloxacin, Cefixime (Cephalosporin), and Amoxicillin (Penicillin). Consistent growth is achieved across the board in all segments mainly due to population growth, availability of health care facilities to the masses, awareness and increasing trend of prescription of generic salts from the practitioners. CPL has developed its expertise in research and development to develop more molecules within its production facilities. Recent COVID- 19 pandemic has also triggered sales growth in Paracetamol and Ciprofloxacin categories. However, margins in this segment are relatively low. Higher sales volume requires more working capital in this category, being a B2B segment where larger formulations’ producers take longer credit terms.

FY20 API Sales Break-Up Particular Paracetamol Ciprofloxacin Penicillin Cefixime Total Sales 1,942,726 142,255 847,927 361,876 3,294,783 COGS 1,778,579 129,067 731,810 303,972 2,943,428 Gross Profit 164,147 13,188 116,117 57,904 351,356 Gross Margin 8% 9% 14% 16% 11% % of total Sales 59% 4% 26% 11% 100%

The demand for API segment is also derived from growth in the formulation segment, which is dependent upon various factors such as healthcare awareness, introduction of new products, etc.

Formulation segment

CPL intends to expand its presence in the formulation segment and is aggressively working towards development of its own brands in various widely used prescriptions. The margins in this segment are relatively higher but being a new segment, sales volumes are expected to grow gradually by establishing an extensive distribution channel across Pakistan. Moreover, CPL product line will include injectables, capsules, syrups etc. This will be a B2B and B2C segment and demand of this segment is related to population increase, availability of health care facilities to the masses, awareness and many other factors, as already outlined above.

Hospital Facility

Healthcare in Lahore has multiple problems, many of which are common to other major cities of Pakistan as well. Some of these problems are:

1. Failure of the government sector to provide adequate health care. 2. Inadequate quality of technical support and personnel and sub-optimal nursing care. 3. The regulatory quality control compliance is weak as is the process of professional accountability in the healthcare sector.

Demand factor for Hospital Project:

Lahore is Pakistan’s 2nd most populous city and for a city of its size lacks the adequate healthcare infrastructure. Govt hospitals have not been modernized for at least 2 decades while the private hospitals are also not ample enough to satisfy the demand. In light of this, the management of Citi Pharma has decided to venture into the establishment and running of a 50 bedded hospital at Gulberg III, Lahore. As the city of Lahore has developed over time, there are no state-of-the-art hospitals established in the center of the town and nearest available facilities are either located at Jail Road on one side and Ferozepur Road on the other side. Hence, establishing a healthcare facility in the down-town area of Lahore serves 3 purposes:

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1. Less competition from Company’s view point 2. Additional revenue stream 3. Availability of healthcare infrastructure from the view point of Government as well as residents

In view of the above, the Company asked an external consultant Dimensions AQ Associates, to conduct the feasibility for a hospital project.

CPL has acquired a 4-Kanal plot in Gulberg, located ideally on Hali Road, opposite ChenOne and easily accessible from Canal Road and Liberty Market. CPL intends to set up a state of the art 50 bed hospital facility at this location to cater to the demands of a highly densely populated city. The major target market for the facility consists of residential areas in the vicinity of the hospital. Health care services that will be provided will also be determined by the need of the locality and its adjacent areas.

The Hospital project will be a general hospital, specifically focusing on 3 areas:

1. Outpatient department (OPD) Services / Consultancy clinics: in line with the demographic demand in the city of Lahore, owing to the location of hospitals. 2. General Operations including Gynecology 3. Diagnostics & Pharmacy – for any hospital, it is important to have a good diagnostic facility to be able to not only prescribe the issues but also provide best possible treatment. X`

As regards to the 2nd part of your questions, we believe in starting small and as we achieve desirable levels of success scaling up the operations. Therefore, at the moment we intend to establish a 50-bed facility, however in future we may consider to expand the facility based on the results from the first phase. xiii. Names of Competitors

There are no listed pharmaceutical companies deals in the API manufacturing. However, some unlisted competitors of CPL that deals in API sector are:

API Segment

Pharmagen Limited

Pharmagen Limited is an ISO 9001:2015 & ISO 14001:2015 and ISO 45001:2018 Certified (from “UKAS” United Kingdom Accreditation Services), GMP complying, Public Limited, Non-Quoted company, established in 1990. Pharmagen is one of the pioneer API manufacturers in Pakistan22.

Saakh Pharma (Pvt.) Limited

Established in 2014, Saakh Pharma is paving its way forward with the aim to manufacture Active Pharmaceutical Ingredients (API) of the highest quality to improve the world’s health standards.

The Company initially acquired a semi basic manufacturing facility by virtue of an acquisition agreement and added value in terms of increasing plant capacity, equipping the quality control department with modern apparatus and instruments, and providing different facilities at the plant area23.

Zafa Pharma (Pvt.) Limited

Founded in 1973 by Mr. Muhammad Amin Khan, ZAFA Pharmaceutical Laboratories (Private) Limited has become one of the top pharmaceutical companies in Pakistan.

22 https://www.pharmagen.com.pk/ 23 https://www.linkedin.com/company/saakhpharma/about/ Page 47 of 178

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ZAFA is also one of the Multinational Pharmaceutical Companies in Pakistan. ZAFA has set foot prints in various African, Middle Eastern and South American countries. Their present product range includes above 300 products.24

Some of the CPL’s listed competitors in the formulation segment are:

Formulation Segment

GlaxoSmithKline Pakistan Limited

Glaxo Laboratories Pakistan Ltd. was the first pharmaceutical company to be listed on the Pakistan Stock Exchange (formerly known as Karachi Stock Exchange) in 1951.

GSK Pakistan operates mainly in two industry segments: Pharmaceuticals (prescription drugs and vaccines) and consumer healthcare (over-the-counter-medicines, oral care and nutritional care). In Pakistan, the Company deals in Anti-infective, Respiratory, Vaccines, Dermatological, Gastrointestinal, Analgesics, Oncology, Urology, Central Nervous System, Allergy, Cardiovascular and Vitamins therapy areas.

Abbott Laboratories Pakistan Limited

Abbott Laboratories (Pakistan) Limited is a public limited Company incorporated in Pakistan on July 02, 1948, and its shares are quoted on Pakistan Stock Exchange. Abbott Laboratories (Pakistan) Limited is principally engaged in the manufacture, import and marketing of research based pharmaceutical, nutritional, diagnostic, diabetic care, hospital and consumer products.

AGP Limited

AGP Limited was incorporated as a public limited company in May 2014 under the repealed Companies Ordinance. The principal activities of the company include import, marketing, export, dealership, distribution, wholesale and manufacturing of pharmaceutical products.

Ferozsons Laboratories Limited

Ferozsons Laboratories Limited was incorporated as a private limited company on 28 January 1954 and was subsequently converted into a public limited company. Ferozsons Laboratories Limited is primarily engaged in the imports, manufacture and sale of pharmaceuticals products and medical devices.

Highnoon Laboratories Limited

Highnoon Laboratories Limited was incorporated as a private limited company in Pakistan in 1984 and converted into an unquoted public limited company in 1985. Highnoon Laboratories Limited is principally engaged in the manufacture, import, sale and marketing of pharmaceutical and allied consumer products.

IBL HealthCare Limited

IBL HealthCare Limited was incorporated in Pakistan as a private limited company on July 14, 1997. In November 2008 the Company was converted into public limited company. The principal activities of IBL HealthCare Limited include marketing, selling and distribution of healthcare products.

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Macter International Limited

Macter International Limited was incorporated in Pakistan in 1992 as a private limited company and was converted into a public limited company in 2011. The principal activity of the company is to manufacture and market pharmaceutical products.

Otsuka Pakistan Limited

Otsuka Pakistan Limited was incorporated in Pakistan as a public limited company. The company is engaged in the manufacturing, marketing and distribution of intravenous infusions and trading in pharmaceutical products, nutritional foods and medical equipment. The Company is an indirect subsidiary of Otsuka Pharmaceutical Company Limited, Japan.

Sanofi-Aventis Pakistan Limited

Sanofi-Aventis Pakistan Limited was incorporated in Pakistan in 1967 as a Public Limited Company. The company is a subsidiary of Sanofi Foreign Participations B.V., registered in Netherlands (the Parent Company). The Ultimate Parent of the Company is Sanofi S.A., France. It is engaged in the manufacturing and selling of pharmaceutical, consumer healthcare products and vaccines.

The Searle Company Limited

The Searle Company Limited was incorporated in Pakistan as a private limited company in October 1965. In November 1993, the company was converted into a public limited company. The Company is principally engaged in the manufacture of pharmaceutical and other consumer products. International Brands Limited is its holding company.

Wyeth Pakistan Limited

Wyeth Pakistan Limited is a public limited company incorporated in 1949. Pfizer Inc. is the ultimate parent of the Company. The company is engaged in import, marketing, distribution and sale of research based pharmaceutical products.

Hospital Segment

CPL’s listed competitors in the Hospital segment include:

Shifa International Hospitals Limited

Shifa International Hospitals Limited was incorporated in Pakistan on September 29, 1987 as a private limited company under the Companies Ordinance, 1984 (now the Companies Act, 2017) and converted into a public limited company on October 12, 1989.The principal activity of the company is to establish and run medical centers and hospitals in Pakistan. The Company is also running medical centers, pharmacies and Lab collection points in different cities of Pakistan25. xiv. Intellectual Property Rights

Citi Pharma Limited does not hold any intellectual property rights or patents to any APIs or formulation.

25 SHFA is not a competitor of CPL as of now; but will be post CPL’s hospital is in operation Page 49 of 178

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xv. Details of material property

CPL’s head office is spread over a 420.47 sq. meter area, situated in Johar Town, Lahore.

The manufacturing facility is spread over a 46.2 acres of total land area, out of which 527,384 Sq. feet of area is covered. The manufacturing facility is in line with international standards and is cGMP compliant; has separate Formulation units and separate API units for Paracetamol, Penicillin, Cephalosporin, and Ciprofloxine to avoid any possibility of cross contamination. The manufacturing facility has an integrated soft water facility, Electricity grid and generator facility.

CPL purchased a 4 – Kanal property in 2018 to establish a state-of-the-art healthcare facility in Gulberg III, Lahore. The total purchase consideration paid for this was PKR 264.2 million and was financed through internal cash generation of the company. xvi. Future prospects, demand outlook

CPL is one of the few API manufacturing companies in Pakistan. The Company’s Management is apt at adopting and utilizing new technology and committed to adherence to Good Manufacturing Practices (GMP). The Company is continuously striving to acquire the latest technological advancements as the Management realizes the importance of technology. This provides the Company with a key advantage that they are not only compliant with GMP standards but also have the latest production technology available.

With a historical 4 year compounded annual growth rate of around 36.5% per annum in sales value, the growth has remained impressive. Keeping this in mind, the Company is planning further growth in the API segment as an inherent demand for local API product exists. Any additions to API (whether in terms of new compounds or increase in the capacity of the existing product portfolio) will serve as Import substitution and be given preference by the local formulations’ players due to savings on custom duty and exchange rate parity, subject to quality check. The Company is planning to:

1. Increase production capacity in both API segment as well as Formulations (adding more products to the API i.e (i) Ascorbic Acid, (ii) Chloroquine Phosphate, and (iii) Hydroxychloroquine Sulfate and subsequent formulation of these APIs. 2. Company plans to add (i) Cephalosporin and (ii) Psychotropic and Narcotics to its formulation portfolio and to expand its existing production capacity for Penicillin 3. Set up a hospital facility in Lahore (as part of vertical diversification)

In order to project the future demand for the projections in both API and Formulation segments, the Company’s product development and sales teams have evaluated the market trends over past several years. Furthermore, this is substantiated through the fact that in 2016 the Company’s sales stood at PKR 1.016 billion and during the on- going year (9MFY21) the Company has already breached the PKR 4.01 billion mark in sales revenue and expects to close the year at PKR 6.2 billion in sales. This is a 5-year CAGR growth of 36.2%. However, taking a prudent view, the Company has taken an annual growth rate of 20% while developing its sales projections.

Furthermore, owing to the increased healthcare awareness, government focus on public healthcare, growth of pharmaceutical sector (~12% per annum) and import substitution thus relatively lower cost of production for local pharma producers are all factors expected to lead to an increase in demand for the Company’s product.

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xvii. Vendors to the issuer

The Company procures their chemical raw materials for the manufacturing of APIs from both international and local suppliers. However, the procurement ratio of local to international is 10:90.

The Company has not entered into a long-term or short-term contract with any supplier, guaranteeing specific procurement.

Purchase % of total RM S. No Type of Raw Material Supplier Amount in FY H.S. Code Purchases 2020 (PKR) Taixing Yangzi Pharm 1 Import - API - Para Ameno Phenol 985,352,374 29.54% 2922.2100 Chemical Co Ltd. - China Sinopharm Weiqida Import - API – 6-Aminopenicillanic 2 Pharmaceutical Co. Ltd. - 499,206,748 14.97% 2934.9990 Acid (6.APA) China 3 Import - API - Glacial Acetic Acid JL Corporation - South Korea 331,524,390 9.94% 2915.2100 Zhejiang Chemicals Import 4 Import - API - Q-Acid and Export Corporation - 131,972,747 3.96% 2903.2900 China Import - API – D (+)-4- 5 Hydroxyphenylglycine Methyl Deretil S.A. - Spain 115,051,183 3.45% 2922.4990 ester [D-HPGME] 6 Import - API - Piperazine BASF Hong Kong Limited 38,719,923 1.16% 2935.9090 Hubei Lingsheng 7 Import - API - 7-AVCA Pharmaceuticals Co. Ltd. - 36,387,019 1.09% 2915.1300 China Import - API - Isopropyl Alcohol YII-Diann Chemical Industry 8 13,222,753 0.40% 2929.9030 (IPA) Co. Ltd. - Taiwan M. Union Chemicals Trading 9 Import -API - Methanol 10,259,872 0.31% 2905.1100 FZC - Ajman, UAE Petrochem Middle East FZE - 10 Import - API - n.Butanol 4,972,598 0.15% 2905.1100 Dubai, UAE Local - Formulation - Empty Hard 11 Gelatin D-Blue Cap & White Body Multi Caps, Lahore - Pakistan 880,530.00 0.03% Nil Shell Size No. 2

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xviii. Vendors of Current Plant and Machinery

Date of Date of Description of Machinery Supplier Segment Order Quantity Value Delivery Placement Shanghai Xin Weisheng Ultrasonic Washing Machine Pharmaceutical Machinery Co Formulation 27/7/20 15/9/20 4 40,800,000 Ltd. China Shanghai Xin Weisheng Heated Air Circulation Tunnel Pharmaceutical Machinery Co Formulation 27/7/20 15/9/20 2 24,192,000 Dryer Ltd. China Shanghai Xin Weisheng Vial Filling and Stoppering Pharmaceutical Machinery Co Formulation 27/7/20 15/9/20 1 4,250,000 Machine (Vial 10ml & 15ml) Ltd. China Shanghai Xin Weisheng Vial Filling and Stoppering Pharmaceutical Machinery Co Formulation 27/7/20 15/9/20 1 2,550,000 Machine (Vial 10ml & 30ml) Ltd. China Shanghai Xin Weisheng Vial Capping Machine Pharmaceutical Machinery Co Formulation 27/7/20 15/9/20 2 6,800,000 Ltd. China NINGBO Fengya IMP and EXP Co Pulsating Vacuum Sterilizer Formulation 26/8/20 30/11/20 2 50,660,000 Ltd. China Clean Rooms for Machinery Vial Link-Link Purification Technology Filling, Stoppering Machine, Vial Formulation 3/6/20 13/02/21 2,894 24,696,000 Co Limited. China Capping Machine ZHEJIANG Tianhong Automated Capsule Filling Pharmaceutical Machinery Co Formulation 26/8/20 2/12/20 2 5,239,000 Machine Ltd. China Automated Blister Packing Ruian Huake Machinery Formulation 26/8/20 2/12/20 2 3,825,000 Machine Technology Co Ltd Ruian Jianghua Machinery Co Tropical Blister Packing Machine Formulation 26/8/20 2/12/20 1 4,647,500 Ltd. China Rotary Tablet Press Machine Shanghai Tianhe Pharmaceutical Formulation 15/07/20 25/1/20 1 1,659,900 ZP29D Machinery Co Ltd. China Rotary Tablet Press Machine Shanghai Tianhe Pharmaceutical Formulation 15/07/20 24/11/20 1 868,100 ZP29D Machinery Co Ltd. China Rotary Tablet Press Machine Shanghai Tianhe Pharmaceutical Formulation 15/07/20 5/1/21 3 11,900,000 ZP41A Machinery Co Ltd. China Jiangyin Xinan Machinery GK 200 Dry Type Pelletizer API 6/3/20 15/6/20 1 5,100,000 Manufacturing Co. Ltd Total 187,187,500

These machines were recently purchased during FY20 and FY21 of amounting PKR 187 Mn, in-line with the Company’s capital expenditure on plant equipment.

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xix. Approvals & certifications

Date of Certificates/ Approval Authority Products Validity Registration/Inspection1 Drug Manufacturing Drug Regulatory 27-Feb-13 API - Paracetamol Applied for Renewal* License Authority of Pakistan Drug Manufacturing Drug Regulatory 27-Feb-13 API - Aspirin Applied for Renewal* License Authority of Pakistan Drug Manufacturing Drug Regulatory API - Quinolone 27-Feb-13 Applied for Renewal* License Authority of Pakistan (Ciprofloxacin) Drug Manufacturing Drug Regulatory 3 Years from date of 24-Jul-18 API - Cephradine License Authority of Pakistan Inspection Drug Regulatory 5 Years from date of Manufacturing License 24-Jul-18 Formulation Authority of Pakistan Inspection Drug Manufacturing Drug Regulatory 3 Years from date of 24-Jul-18 API - Cephalexin License Authority of Pakistan Inspection Drug Manufacturing Drug Regulatory 3 Years from date of 24-Jul-18 API - Cefixime License Authority of Pakistan Inspection Certificate of Goods Drug Regulatory Tablets, Capsules and Oral 3 Years from date of Manufacturing 13-Jun-19 Authority of Pakistan Liquid Inspection Practice Drug Manufacturing Drug Regulatory 3 Years from date of 22-Dec-20 API - Ascorbic Acid License Authority of Pakistan Inspection Drug Manufacturing Drug Regulatory API - Chloroquine 3 Years from date of 22-Dec-20 License Authority of Pakistan Phosphate Inspection Drug Manufacturing Drug Regulatory API - Hydroxychloroquine 3 Years from date of 22-Dec-20 License Authority of Pakistan Sulphate Inspection Drug Manufacturing Drug Regulatory 3 Years from date of 22-Dec-20 API - Azithromycin License Authority of Pakistan Inspection Drug Manufacturing Drug Regulatory 2 Years from Date of 6-Jan-21 API - Penicillin Derivatives License Authority of Pakistan Inspection Drug Manufacturing Drug Regulatory API - Cephalosporin’s 2 Years from Date of 6-Jan-21 License Authority of Pakistan Derivatives Inspection General Products (Paracetamol, Ibuprofen, Drug Manufacturing Drug Regulatory 2 Years from Date of 6-Jan-21 Aspirin, Norfloxacin, License Authority of Pakistan Inspection Ciprofloxacin, Levofloxacin, ETC) International IS0 9001:2015 Organization for 10-Nov-20 API and Formulation Yearly Renewal Standardization International IS0 45001:2018 Organization for 10-Nov-20 API and Formulation Yearly Renewal Standardization International IS0 14001:2015 Organization for 10-Nov-20 API and Formulation Yearly Renewal Standardization 1 Date of Registration is the same as Date of Inspection

* Renewals of the certificates are under process. DRAP officials have visited and inspected the facility under renewals process. However, DRAP has issued renewal report and the Company expect the certificates of the same will be provided in the due course.

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xx. Group Structure of the Issuer

The Company has 7 associates only by virtue of common shareholding and 1 by the virtue of Investment and has no subsidiary.

Yaqeen Developers Limited

Yaqeen Developers Limited (YDL) is an associated company of CPL. CPL has a 22% shareholding in YDL. YDL is engaged in the business of real estate development. YDL being an associate of CPL, therefore Investment in YDL is accounted for using the equity method of accounting. Under the equity method, the investment is initially recognized at cost, and the carrying amount is increased or decreased to recognize the share of profit or loss of the associate after the date of acquisition, since all the expenses till June 30, 2020 amounting to PKR 164.45 million have been capitalized as the development cost of the project, therefore no revenues or expenses have been booked in the income statement. Consequently, no share of profit or loss of the associates has been recorded in the income statement of CPL.

Yaqeen Developers Limited (YDL) was incorporated on December 09, 2016 as a private limited company under the repealed Companies Ordinance, 1984, Now companies Act, 2017. The main objects of the Company are to carry on the business of development, construction of apartments, offices, shops, housing schemes, commercial plaza and any other kind of real estate activities. The registered office of the Company is 588-Q block, Johar Town, Lahore. YDL was converted into public limited company in December 2020.

Shareholders Share Held Percentage of Holding Nadeem Amjad 29,261,817 26% Rizwan Ahmed 29,261,817 26% Ateeq ur Rehman 29,161,817 26% Citi Pharma Limited 25,454,090 22% Muhammed Naeem 60,000 0% Naveed Amjad 60,000 0% Total Outstanding Shares 113,259,541 100%

YDL has acquired 1,406 Kanal of land in the Fateh Jan, near Islamabad Airport and is working on the “Mayfair Mangial Islamabad Project” (“Mayfair”).

All project related costs, (i.e. acquisition of land) have been capitalized to reflect the true cost of the project. No expenses were recorded as they were classified as the direct project related cost. Furthermore, YDL has not yet started commercial sales of the property. Hence CPL’s share of profit/loss from YDL has not been recorded in CPL’s statement of profit and loss.

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xxi. Details regarding associated companies of the issuer

A list of associated companies by virtue of common directorship/Investment is given below:

Cumulative Issuers Shares Nature of Name Nature of relation Name of Directors Status Holding Holding of Business Director Associated by Mr. Nadeem Amjad Real Estate Yaqeen Developers Limited Common Mr. Rizwan Ahmad 22% 78% Operational Developer Directorship Mr. Muhammad Naeem Mr. Rizwan Ahmad Associated by Citi Innovations (Pvt.) Mr. Nadeem Amjad Common - 100% Electronics Operational Limited Mr. Naveed Amjad Directorship Mr. Muhammad Naeem Associated by Wisdom Works (Pvt.) Mr. Nadeem Amjad Common - 100% Technology Dormant Limited Mr. Rizwan Ahmad Directorship Associated by Citi International Mining 8 Mr. Nadeem Amjad Mining & Common - 100% Dormant (Pvt.) Limited Mr. Rizwan Ahmad Extraction Directorship Associated by Mr. Nadeem Amjad G7 Connect (Pvt.) Limited Common - 60% Technology Dormant Mr. Rizwan Ahmad Directorship Associated by Mr. Nadeem Amjad Citi Essentials (Pvt.) Limited Common - 100% FMCG Operational Mr. Rizwan Ahmad Directorship Associated by Profitech Services Limited Common Mr. Amir Zia - 71% Consultancy Dormant Directorship Associated by Blue Moon City (Pvt.) Real Estate Common Mr. Rizwan Ahmad - 70% Operational Limited Developer Directorship

Note: As required under regulation 7 (8) of the PO Regulations, the Associated Companies and Associated Undertakings of the Issuer shall not in aggregate make bids in excess of ten (10%) percent of the shares offered through Book Building.

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xxii. Details of related parties’ transactions

Summary of related party transactions for last 3 years

Company due to Common Directorship Investments in associated undertakings (14,900,000) (59,140,000) (82,720,000)

Source: Audited Accounts of the Company 1. These loans are interest free and were obtained from directors/investors of the company to meet working capital requirements, without any security and shall be payable on demand of lender

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xxiii. Industry Overview

Global pharmaceutical industry

The global medicine trade has witnessed significant growth in the last 20 years. In terms of revenue, the Global Pharmaceutical companies closed 2019, with revenue totaling USD 1.25 trillion26. The North American markets have retained their position as leaders in the global pharmaceutical trade with a staggering 48.7% share of the global pie18. The Global Market was expected to close at 4.5 trillion doses and USD 1.4 trillion in 2020 a growth of ~29% from 201527.

A snapshot of the global market for pharmaceuticals, its value and distribution by country wise share in the year 2019 is given in the following graph.

In USD Millions

Source: Statista

Pakistan’s pharmaceutical sector

The Pakistan Pharmaceuticals Industry (“PPI”) contributes approximately 1.1% to the GDP of Pakistan 28 . The industry is characterized with strict regulations and controls on Registration and pricing of medicines. The industry is regulated by Ministry of National Health Services Regulations & Coordination (NHSR&C) and the Drug Regulatory Authority of Pakistan (“DRAP”). New medicines and drug manufacturing facilities are regulated and registered by DRAP which also controls the pricing of medicines and determination of maximum retail price (“MRP”) of all medicines marketed in Pakistan.

Pricing mechanism

During the years 2000 to 2013, the industry witnessed a regulatory price freeze, which means the pharmaceutical companies in Pakistan were not allowed to increase the prices of medicines regardless of the increasing cost of production. This policy significantly dented the profitability of the pharma sector and was the lead cause of many MNCs exiting. (Pakistan Institute of Development Economics)

26 https://www.statista.com/ 27 IMS report on global medicine use 2020 28 Pakistan Economic Survey 2020 Page 57 of 178

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From June’18, the annual increase in MRP of drugs has been linked with the Consumer Pricing Index (“CPI”). The drugs are broken into two categories with different caps on the increase in pricing of each type. Effective 1st July 2018, the manufacturers and importers of medicines were allowed to increase the prices of their medicines annually without any prior approval based on the following criteria;

Industry constituents PPI consists of Formulation Companies, API Manufacturers and Health Care Operations.

Active Pharmaceutical Ingredients Active Pharmaceutical ingredients (APIs) are substances used in the finished pharmaceutical product. 95% APIs used in Pakistan’s pharmaceutical industry are imported, with 90% of raw materials for APIs being imported from India and China.30

Industry dynamics Pakistan’s Pharma industry is estimated to be a USD 3.09 billion or PKR 501 billion industry32. The industry is growing with an annual growth of 10.05% in 2020 and a 4-year Compound Annual Growth Rate (“CAGR”) of 11.48% (2016 – 2020)31.

The Industry comprises of Local Pharmaceuticals and Multi-National Companies (“MNCs”). The MNCs hold a market share of ~31% with the remaining ~69% going to the local Pharmaceuticals. Out of approximately 650 registered Pharmas in Pakistan, only 31 are multinationals32.

Around 9000 drugs are actively marketed and sold at licensed pharmacies upon prescription. The Top 50 companies in terms of sales hold approximately 80% share of the industry revenues23. (PACRA)

29 Drug Pricing policy, 2018 30 ResearchGate: Assessment of active pharmaceutical ingredients in drug registration procedures in Pakistan: implications for the future; Published online first: 25 November 2016 31 IQVIA Pakistan Report, 2020 32 PACRA Page 58 of 178

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The Post Pandemic scenario

• Most pharma companies in Pakistan import a bulk of APIs from China and India. Following the COVID-19 pandemic, the import of APIs got affected, resulting in an increase in demand for local APIs33. • The pandemic has induced demand and panic buying of medicines coupled with higher hospitalizations. This has given rise to a shortage in APIs and Finished Products34. • Global health care spending has risen at an accelerated growth rate and will likely present many opportunities for the pharmaceutical sector27. Challenges to the industry

Complementary and alternative medicines (CAM) At present, there are an estimated 130,000 CAM service providers all over Pakistan. But they largely remain outside the ambit of regulations. Stringent regulations Regulations such as controlled pricing leads to undue regulatory hassle and are detrimental to the industry. Failure to enforce copyright and patent laws The failure to enforce copyright and patent laws is also thought to be another detriment to foreign investment coming into Pakistan’s pharma sector. Government’s regulation regarding pricing The local Pharma industry has suffered due to the government-imposed price freeze between 2001-2013; which means pharmaceutical companies could not increase of drugs regardless of increasing cost of production. However, from July’18, the annual price increase has been linked to CPI which separates caps for essential and non-essential drugs, irrespective of the increase in cost of production. Government’s regulation regarding research & development costs Research & Developments costs are not allowed to be passed on and hence Pakistani Pharmaceutical Companies have low R&D spends leading to less innovation and low number of new products Duty structure on pharmaceuticals

The custom duty structure on chemical molecules (raw material for API) ranges from 0% to 5%. The API manufacturers enjoy exemption on sales tax and additional sales tax on the import of chemical molecules for manufacturing of API. These added benefits were provided by the Government to protect local industry, different SROs were issued from time to time (such as SRO 567(I)/2006 dated 5th June, 2006, SRO 476(I)/2011 dated 3rd June, 2011) that either exempt/reduced duties on raw material for APIs locally manufactured and/or increase duties on API that are produced locally.

Add. S. No Type of Raw Material H.S. Code Custom Duty Custom Duty 1 Para Ameno Phenol 2922.2100 0.0% 0.0% 2 Glacial Acetic Acid 2915.2100 3.0% 3.0% 3 Q-Acid 2903.2900 0.0% 0.0% 4 Piperazine 2935.9090 0.0% 5.0% 5 n-Butanol 2905.1100 5.0% 0.0% 6 Methanol 2905.1100 0.0% 0.0% 7 7-AVCA 2915.1300 0.0% 0.0% 8 MICA Ester 2934.2000 0.0% 0.0%

33 DARU journal of Pharmaceutical Sciences publish by BioMed Central 34 IMS report on global medicine 2020 Page 59 of 178

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9 6-Aminopenicillanic Acid (6-APA) 2934.9990 0.0% 0.0% D(-)-4-Hydroxyphenylglycine Methyl ester 10 2922.4990 0.0% 0.0% (D-HPGME) 11 Isopropyl Alcohol (IPA) 2929.9030 0.0% 0.0% 12 Omeprazole Pellats 2933.3990 5.0% 5.0% 13 Mefenamic Acid 2922.2900 0.0% 0.0% 14 Methylene Chloride 2903.1200 0.0% 0.0% Source: Federal Board of Revenue, Custom Tariff 2020-21

While custom duties on APIs and Excipients are in the range from 5% to 25%. Additional custom duties are also levied to safeguard the local API manufacturers and making local production more attractive as compared to imported counter parts. The table below only shows duty structure for the APIs that the Company manufactures.

Add. S. No APIs (CPL) H.S. Code Custom Duty Custom Duty 1 Paracetamol 2924.2910 20.0% 7.0% 2 Ciprofloxacin 2933.5930 20.0% 7.0% 3 Cefixime 2941.9060 16.0% 4.0% 4 Amoxicillin Trihydrate 2941.1000 20.0% 7.0% Source: Federal Board of Revenue, Custom Tariff 2020-21

Duty structure on medical equipment

CPL plans to procure medical equipment locally for Hospital facility, as most of the medical equipment is locally available. However, in case of import, concessionary duties are applicable with the following conditions: 1. The project requirement shall be approved by the Board of Investment (BOI). 2. The goods shall not be sold or otherwise disposed of without prior approval of the FBR and the payment of customs-duties and taxes at statutory rates be leviable at the time of import.

S. No Particular H.S Code Custom Duty Medical Equipment 1 Dentist chairs. 9402.1010 5% 2 Medical surgical dental or veterinary furniture. 9402.9090 5% 3 Operating Table. 9402.9010 5% 4 Emergency Operating Lights. 9405.4090 5% 5 Hospital Beds with mechanical fittings. 9402.9020 5% 6 Cooling Cabinet. 9506.9100 5% Contrast Media Injections (for use in Angiography & MRI etc). 3824.9999 5% 7 3822.0000 5% Cardiology/Cardiac Surgery Equipment 1 Cannulas. 9018.3940 5% 2 Manifolds. 8481.8090 5% 3 Intra venous cannula i.v. catheter. 9018.3940 5% Disposable Medical Devices 1 Self-disabling safety sterile syringes. 9018.3110 5% 2 Insulin syringes. 9018.3110 5% Source: Federal Board of Revenue, Custom Tariff 2020-21

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3A SHARE CAPITAL AND RELATED MATTERS i. Share capital

Face Value No. of shares Shareholders Premium (PKR) Total (PKR) (PKR) AUTHORIZED CAPITAL 300,000,000 Ordinary shares of PKR 10/- each 10 - 3,000,000,000 ISSUED, SUBSCRIBED, & PAID-UP

CAPITAL Issued for Cash: ‘Ordinary Shares of 45,000,000 10 - 450,000,000 PKR 10/- each Issued as Bonus Shares: ‘Ordinary 90,000,000 10 - 900,000,000 Shares of PKR 10/- each 135,000,000 Total 10 - 1,350,000,000 ISSUED, SUBSCRIBED & PAID-UP CAPITAL OF Citi Pharma Limited IS HELD AS FOLLOWS: Shares held by Directors / Sponsors Face Value Premium No. of shares Total (PKR) of the Company (PKR) (PKR) 53,999,988 Mr. Nadeem Amjad 10 - 539,999,880 40,500,000 Mr. Rizwan Ahmad 10 - 405,000,000 13,500,000 Mr. Muhammad Naeem 10 - 135,000,000 13,500,000 Mr. Naveed Amjad 10 - 135,000,000 13,500,000 Mr. Ateeq Ur Rehman 10 - 135,000,000 Shares held by Directors 3 Mr. Amir Zia 10 - 30 3 Mr. Rana Shakeel Shaukat 10 - 30 3 Mrs. Saira Aslam 10 - 30 3 Mr. Zameer Ul Hassan Shah 10 - 30 135,000,000 Total Paid up Capital 10 1,350,000,000 PRESENT ISSUE OF ORDINARY SHARES Face Value Total Value No. of shares Allocation Premium (PKR) (PKR) (PKR) Allocations to Institutions / 54,519,000 Individual Investors through Book 10 18 1,526,532,000 Building process at Strike Price 18,173,000 General Portion 10 18 508,844,000 72,692,000 Total Issue size 10 18 2,035,376,000 Grand Total (Post-IPO) Paid-up 207,692,000 10 2,076,920,000 Capital

1. As per regulation 5(1) of the PO Regulations, the sponsors of the Company shall retain their entire shareholding in the Company for a period of not less than twelve months from the last date of public subscription; 2. As per regulation 5(2) of the PO Regulations, the sponsors of the Company shall retain not less than twenty five percent of the post issue paid up capital of the Company for not less than three financial years from the last date of the public subscription; 3. As per regulation 5(3) of the PO Regulations, the shares of the sponsors mentioned at (1) and (2) above shall be kept unencumbered in a blocked account with central depository;

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

S. No Name Particulars Shares % 1 Mr. Nadeem Amjad Sponsor/ Chairman 53,999,988 40.0%

2 Mr. Rizwan Ahmad Sponsor/ CEO 40,500,000 30.0%

3 Mr. Muhammad Naeem Sponsor/ Director 13,500,000 10.0%

4 Mr. Naveed Amjad Sponsor 13,500,000 10.0%

5 Mr. Ateeq ur Rehman Sponsor 13,500,000 10.0%

6 Mr. Amir Zia Independent Director 3 0.00%

7 Mr. Rana Shakeel Shaukat Independent Director 3 0.00%

8 Mrs. Saira Aslam Non-Executive Director 3 0.00%

9 Mr. Zameer Ul Hassan Shah Executive Director 3 0.00%

135,000,000 100% Note: Pattern of Shareholding of the issuer as of 03rd Feb 2021 iii. Number of shares held by the sponsor of the issuer that shall be kept in blocked form The sponsors of Citi Pharma Limited are Mr. Nadeem Ahmad, Mr. Rizwan Ahmad, Mr. Muhammad Naeem, Mr. Naveed Amjad, and Mr. Ateeq ur Rehman. They own 53,999,988, 40,500,000, 13,500,000, 13,500,000, and 13,500,000 shares, respectively. Such shares will be blocked as per Regulation 5(1) of Public Offering Regulations, 2017 for a period of 12 months. Also, as per regulation 5(2) of the PO Regulations, the sponsors of the Company shall retain not less than twenty five percent of the post issue paid up capital of the Company for not less than three financial years from the last date of the public subscription; iv. Breakup of allocation of present issue The current issue is being allocated in the following manner:

Description Number of shares Shareholding status (%)

*Allocated to General Public 72,692,000 100.0%

Post IPO, the share capital will increase from 135,000,000 ordinary shares to 207,692,000 ordinary shares. The free float status, post IPO, and is presented in the below table:

Description Number of shares Shareholding status (%) Held by Sponsors 134,999,988 65.00% Held by Others Directors 12 0.00% Held by General Public – Free Float 72,692,000 35.00% Total 207,692,000 100.0%

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v. Shares issued in preceding years

Date of Issuance / # No. of Shares Issued Consideration Total Value (PKR) Allotment 1 400,000 Cash 40,000,000 05-Oct-12 2 4,100,000 Cash 410,000,000 16-Mar-13 3 40,500,000 Stock Split - 07-Sept-20 4 90,000,000 Bonus 900,000,000 25-Jan-21 Total 135,000,000 1,350,000,000

Other than the above-mentioned shares, there has been no issuance of shares since incorporation of Citi Pharma Limited. Just before listing, the Company has revalued its property plant and equipment and has issued bonus shares of PKR 900 million against revaluation surplus and reserves. Bonus shares accounts to approximately 66.67% of total capital of Company. vi. Related employees of the Issuer, Lead Manager and Book Runner

▪ Related Employees of the Company, Citi Pharma Limited S. No Name Designation 1 Mr. Nadeem Amjad Chairman 2 Mr. Rizwan Ahmad Chief Executive Officer 3 Mr. Mohammad Naeem Director 4 Dr. Zameer Ul Hassan Director Operation 5 Mr. Asif Iqbal Chief Finance Officer 6 Mr. Muhammad Riaz Company Secretary 7 Mr. Hassan Raza Naqvi Treasury Manager 8 Mr. Jawad Ur Rehman Head of Quality Operations Source: Company Management

▪ Related employees of the Lead Manager & Book Runner to the Issue (Topline Securities Limited) S. No Name Designation 1 Mr. Mohammad Sohail Chief Executive Officer 2 Mr. Omar Salah Ahmed Head of Corporate Finance & Advisory 3 Mr. Muhammad Saad Abdullah Assistant Vice President, Corporate Finance & Advisory 4 Mr. Syed Mustafa Zamin Senior Associate, Corporate Finance & Advisory 5 Mr. Atif Zafar Director Research 6 Mr. Shankar Talreja Deputy Head of Research 7 Ms. Samar Iqbal Head of Foreign Sales 8 Mr. Kumail Raza Assistant Vice President – Equity Sales Source: Topline Securities Limited

Note: 1. As per regulation 7(9) of the PO Regulations the associates of the Lead Manager and the Book Runner shall not in aggregate make bids in excess of ten (10%) percent of the shares offered through Book Building. Provided that it shall not apply to such associates of the Lead Manager and the Book Runner that are Financial Institutions, Mutual Funds and Insurance Companies. 2. As required under regulation 20 (10) of the PO Regulations, Related Employees of the Issuer, Lead Manager and Book Runner to the Issue shall not participate in the bidding for shares.

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UNDERTAKING BY THE COMPANY AND ITS SPONSORS Pakistan Stock Exchange Stock Exchange Building Stock Exchange Road Karachi – 74000, Pakistan We, (1) Nadeem Amjad son of Shar Mohammad, and having home address at House No. 3-C, Model Town, Lahore, bearing CNIC Number 35202-5060989-7, (2) Rizwan Ahmed son of Shar Mohammad, having home address at House No. 3-C, Model Town, Lahore, bearing CNIC Number 35202-6462958-5, (3) Mohammad Naeem son of Shar Mohammad, having home address at House No. 3-C, Model Town, Lahore, bearing CNIC Number 35202-2835907- 9, (4) Naveed Amjad son of Shar Mohammad, having home address at House No. 3-C, Model Town, Lahore, bearing CNIC Number 35202-2896835-1, (5) Ateeq Ur Rehman son of Shar Mohammad, having home address at House No. 3-C, Model Town, Lahore, bearing CNIC Number 35202-2896835-1, do hereby state on solemn affirmation as under:

(1) That we are the sponsors and majority shareholders of CITI PHARMA LIMITED (the “Issuer”);

(2) That the IPO proceeds shall be utilized as per the purpose disclosed in the Prospectus.

-SD- -SD- …………………………………………………… …………………………………………………… Nadeem Amjad Rizwan Ahmed Chairman Chief Executive Officer

-SD- -SD- …………………………………………………… …………………………………………………… Mohammad Naeem Naveed Amjad Director Sponsor

-SD- …………………………………………………… Ateeq Ur Rehman Sponsor

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4 PRINCIPAL PURPOSE OF THE ISSUE AND FUNDING ARRANGEMENTS

i. Principal Purpose of the Issue

Citi Pharma Limited intends to issue 72,692,000 ordinary shares at a floor price of PKR 28/- per share to raise PKR 2,035.376 Million through this IPO at the Floor Price. The principal purpose of the issue is to make undertake following projects:

API segment: In the wake of the COVID-19 pandemic, demand for Paracetamol witnessed a surge. Moreover, health awareness and health spending has also risen. Hence, CPL intends to expand their existing capacity of 3,600 tons per annum of Paracetamol to 6,000 tons per annum. Further to this, CPL plans to add new APIs to its existing product line, i.e. (i) Ascorbic Acid, (ii) Chloroquine Phosphate, and (iii) Hydroxychloroquine Sulfate; subsequently, these will also add formulation products of the same to the Company’s portfolio.

Particular Capacity (In Tons) per annum Ascorbic Acid 1,200 Chloroquine Phosphate 50 Hydroxychloroquine Sulfate 50 Source: Company management

In the Formulation Segment, the Company intends to build three manufacturing facilities taking total capacity to 200,000 vials/injectables35 per day, dry powder/suspension 60,000 bottles per day, capsules 4,200,000 per day, and tablets 4,500,000 per day. These include dedicated lines for (i) Penicillin 36 , (ii) Cephalosporin and (iii) Psychotropic & Narcotics drugs37. As per guidelines of DRAP, in API manufacturing a separate dedicated line is required to eliminate any chances of cross contamination.

Healthcare: Establish a 50-bed state of the art healthcare facility at main Gulberg III, Lahore. For this purpose, the company has already acquired a 4-kanal plot at Hali Road, Lahore for a consideration of price of PKR 264.2 million. As part of the plan, the hospital facility will cater to the following segments: 1. Out Patient Department (OPD) – Consultancy Clinics 2. General Operations 3. Diagnostic Services (i.e., X-rays, Laboratory, MRI/CT scan) ii. Location of project

The expansion plan of Pharmaceutical project (i.e, API and Formulation) will be executed at CPL’s existing plant site in Kasur. The manufacturing facility is fully owned by CPL and is located at 3.5 KM, Head Balloki Road, Phool Nagar, Kasur, 65 KM outside Lahore and spread over 46.2 acres of freehold land area with more than 527,384 Sq. Feet of covered area, (~26% of the total available area).

CPL had purchased a freehold land of 4 Kanal on Hali Road in Aug’17 for hospital facility. The total purchase consideration paid for this was PKR 264.2 million and was financed through internal cash generation of the Company.

35 vial is a vial of liquid medication intended for parenteral administration (injection or infusion) that is meant for use in a single patient for a single case, procedure, injection. 36 Penicillin is part of the Company’s existing product portfolio 37 Cephalosporin and Psychotropic and Narcotics drugs shall be added to the Company’s product portfolio post expansion. Page 65 of 178

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iii. Additional Disclosures of the Project

Expansion of Paracetamol Plant

1. Capacity increase in Paracetamol’s existing plant

Category: API

Type of Investment Description Plant & Machinery Reactors, Fluid Bed Dryer

Dedicated Facility 1 for three new API Products:

1. Ascorbic Acid (Vitamin C)

Category: API and Formulation ▪ API ▪ Tablets ▪ Dry Powder

Type of Investment Description Building Dedicated building under construction Plant & Machinery Filling Machines, Packaging Machines, Reactors, Lab Equipment

2. Chloroquine Phosphate

Category: API and Formulation ▪ API ▪ Tablets ▪ Dry Powder

Type of Investment Description Building Dedicated building under construction process. Plant & Machinery Filling Machines, Packaging Machines, Lab Equipment

3. Hydroxychloroquine Sulfate

Category: API and Formulation ▪ API ▪ Tablets ▪ Dry Powder

Type of Investment Description Building Dedicated building under construction process. Plant & Machinery Filling Machines, Packaging Machines, Reactors, Lab Equipment, Boiler

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Raw Material for manufacturing of new APIs

Ascorbic Acid Chloroquine Phosphate Hydroxyl Chloroquine Sulfate • 2-Keto-L-Gulonic Acid • 1-chloro-4-Pentanone • 1-chloro-4-Pentanone • Organic Solvent • 4,7 Dichloro Quinoline • 4,7 Dichloro Quinoline • Surfactant • Organic Solvent • 2-(Ethylamino) Ethanol • Hydro Chloric Acid • Methanolic Ammonia • Organic Solvent • Hydrogen Chloride Gas • Reney Nickle • Reney Nickle • Methanol • Triethyl Amine • Triethyl Amine • Potassium Iodide • Potassium Iodide • Carbon Activated • Methanol /IPA • Phosphoric Acid • Carbon Activated • Mono Ethylene Glycol • Sulphuric Acid • Para-Toluene Sulphuric • Mono Ethylene Glycol Acid • Para-Toluene Sulphuric Acid • Ethyl Acetate/ • Ethyl Acetate/ Ethanol/ Ethanol/Methanol Methanol

Particular H.S Code Custom Duties 1-chloro-4-Pentanone 2930.9092 0% 2-(Ethylamino) Ethanol 2930.9093 0% 2-Keto-L-Gulonic Acid 2931.3999 0% 4,7 Dichloro Quinoline 2933.4920 0% Carbon Activated 3802.9000 3% Ethyl Acetate/ Ethanol/ Methanol 2905.1100 0% Methanol /IPA 2905.1100 0% Methanolic Ammonia 2814.2000 0% Mono Ethylene Glycol 2905.3100 0% Organic Solvent 2936.9000 0% Potassium Iodide 2827.5900 3% Reney Nickle 2936.9000 0% Surfactant 2936.9000 0% Triethyl Amine 2922.1500 0%

Note: For manufacturing of (i) (i) Ascorbic Acid, (ii) Chloroquine Phosphate, and (iii) Hydroxychloroquine Sulfate, above raw material will be imported from China.

Facility 2

1. Cephalosporin Products

Category: Formulation ▪ Dry Powder Vial Injectable ▪ Dry Powder Syrup ▪ Capsules

Type of Investment Description Building Dedicated building under construction process (including HVAC) Filling Machines, Packaging Machines, Capping Machine, HPLC Machines, Lab Plant & Machinery Equipment Page 67 of 178

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Facility 3

1. New dedicated facility for Psychotropic & Narcotics

Category: Formulation ▪ Tablets ▪ Dry Powder ▪ Capsules

Type of Investment Description Building Civil work will commence post-IPO Plant & Machinery Filling Machines, Packaging Machines, Lab Equipment

Facility 4

1. New dedicated facility for Penicillin Products

Category: Formulation ▪ Dry Powder Vial Injectable ▪ Dry Powder Syrup ▪ Capsules ▪ Tablets

iv. Civil work for new multi-purpose API Facility for 3 new APIs (i.e, Ascorbic Acid, Chloroquine Phosphate and Hydroxy Chloroquine Phosphate

Particular Coverage Area Sq. Civil Work Cost/ Construction Other Cost Total Civil Feet Sq. Feet Cost PKR (000)* PKR (000)** Cost Total 16,000 5,000 80,000 70,000 150,000 Note: CPL’s in-house engineering team shall be responsible for civil, electrical and mechanical work for both API and formulation. Further, they will also be responsible for procurement and installation of machinery for both the API and Formulations segment *This includes cost related to construction (i.e, Steel, cement, ceramics, fitting and labour) ** This cost includes Heating Ventilation and Air Conditioning and Contingencies.

v. Civil work for Formulation segment

Particular Coverage Area Construction Civil Work Other Cost PKR Total Civil Required APIs Sq. Feet Cost PKR Cost/Sq. Feet (000)** Cost (000)* Cephalosporin Cefixime 18,000 3,611 65,000 35,000 100,000 API-Zolpidem Psychotropic & Tartarate 5,000 3,500 17,500 32,500 50,000 Narcotics API-Alprozolam API- Bromezepam Penicillin Amoxicillin 25,000 3,500 87,500 12,500 100,000 Total 170,000 80,000 250,000 Note: CPL’s in-house engineering team shall be responsible for civil, electrical and mechanical work for both API and formulation. Further, they will also be responsible for procurement and installation of machinery for both the API and Formulations segment. *This includes cost related to construction (i.e, Steel, cement, ceramics, fitting and labour) ** This cost includes Heating Ventilation and Air Conditioning and Contingencies.

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vi. Basis of estimated for Plant and Machinery

Inflation adjusted Quoted Particular Currency Price in Quantity Price in PKR1 Total Value Contingencies2 Total Price base currency High performance Liquid USD 23,167 23,630 6 3,851,691 23,110,143 519,857 23,630,000 Chromatography HPLC Vial Capping USD 20,000 20,400 6 3,325,200 19,951,200 548,800 20,500,000 Machine Automated Capsule Filling USD 15,500 15,810 2 2,577,030 5,154,060 345,940 5,500,000 Machine Automated Blister USD 22,500 22,950 4 3,740,850 14,963,400 536,600 15,500,000 Packing Machine Tropical Blister USD 27,500 28,050 3 4,572,150 13,716,450 283,550 14,000,000 Packing Machine Rotary Tablet Press Machine USD 14,800 15,096 1 2,460,648 2,460,648 39,352 2,500,000 ZP29D Rotary Tablet Press Machine USD 23,500 23,970 3 3,907,110 11,721,330 7,278,670 19,000,000 ZP41A Pulsating Vacuum USD 298,000 303,960 3 49,545,480 148,636,440 1,363,560 150,000,000 Sterilizer Clean Rooms for Machinery Vial Filling, Stoppering USD 51 52 2,894 8,444 24,437,936 562,064 25,000,000 Machine, Vial Capping Machine HPLC USD 23,167 23,630 2 3,851,691 7,703,381 296,619 8,000,000 Reactors 10T PKRs. 13,000,000 13,000,000 12 13,000,000 156,000,000 3,794,500 159,794,500 Reactors 10T PKRs. 13,000,000 13,000,000 10 13,000,000 130,000,000 - 130,000,000 Reactors 7T PKRs. 10,400,000 10,400,000 8 10,400,000 83,200,000 3,200,000 86,400,000 Fluid Bed Dryer PKRs. 7,000,000 7,000,000 3 7,000,000 21,000,000 - 21,000,000 Boilers (trade-in- PKRs. 8,000,000 8,000,000 1 8,000,000 8,000,000 - 8,000,000 value) Various Lab Equipment PKRs. 24,000,000 24,000,000 24,000,000 24,000,000 - 24,000,000 Items Total 153,240,293 694,054,988 18,769,512 712,824,500 Note: Above list of Machinery is required for the proposed expansion plan. These are given to provide the basis of estimation for the new machinery; as CPL has not yet finalized the vendors for the supply of machinery proposed in the issue. 1 For estimation company has assumed PKR/USD parity at PKR 163 2 Contingencies have been added for imported machinery and for local it is included only where company has not received consensus quotation.

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vii. Details regarding purchasing Plant, Machinery & Equipment of Pharmaceutical Segment

Business Machinery Supplier Qty Value in PKR Segment Reactors 10T TBD API 12 159,794,500 Reactors 10T1 TBD API 10 130,000,000 Reactors 7T1 TBD API 8 86,400,000 Boilers TBD API 1 8,000,000 Fluid Bed Dryer TBD API 3 21,000,000 Subtotal for API (A) 405,194,500 Pulsating Vacuum Sterilizer TBD Formulation 3 150,000,000 Clean Rooms for Machinery Vial Filling, Stoppering Machine, Vial TBD Formulation 2,894 25,000,000 Capping Machine API and Lab Equipment* TBD 24,000,000 Formulation High performance Liquid Chromatography HPLC TBD Formulation 6 23,630,000 Vial Capping Machine TBD Formulation 6 20,500,000 Rotary Tablet Press Machine ZP41A TBD Formulation 3 19,000,000 Automated Blister Packing Machine TBD Formulation 4 15,500,000 Tropical Blister Packing Machine TBD Formulation 3 14,000,000 HPLC TBD Formulation 2 8,000,000 Automated Capsule Filling Machine TBD Formulation 2 5,500,000 Rotary Tablet Press Machine ZP29D TBD Formulation 1 2,500,000 Subtotal for Formulation (B) 307,630,000 Total (A+B) 712,824,500 Note: Order for these machineries will be placed post-IPO Note2: CPL does not intend to procure any machinery of second-hand nature in both APIs and formulations. TBD: To be decided, CPL will finalize the suppliers post-IPO Note3: Machinery of similar configuration and functioning is used in API manufacturing process. The machinery required for the proposed expansion plan is similar to the current machinery in use. As CPL has not yet finalized the vendors for the supply of machinery. A list of suppliers has been provided in section 3 (xvii) and section 4 (vi) from whom the Company has recently purchased (last 12 months) to reflect the close estimates of prices and possible vendors for the machinery in above table. 1 CPL intends to procure these machineries locally Note: CPL’s in-house engineering team shall be responsible for civil, electrical and mechanical work for both API and formulation. Further, they will also be responsible for procurement and installation of machinery for both the API and Formulations Segment. * These are general lab equipment and will utilized for both API and Formulation. These have been included in Plant & Machinery for Formulation Segment in the Utilization of IPO Proceeds table given in Section 2(v) and Section 4(xi)

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viii. Hospital Segment

The Company has awarded an Engineering, Procurement, and Construction (EPC) to Dimensions Engineers & Architects (Pvt.) Limited (Dimensions-AQ Associates) for the designing, construction, installation of equipment for their Hospital project. Dimensions-AQ Associates can award sub-contracts to the suppliers for procurement of equipment and installation.

Profile of Turnkey Contractor

Dimensions Engineers & Architects (Pvt.) Limited (Dimensions-AQ Associates): Dimensions Engineers & Architects (Pvt) Ltd. (DA) was established in 1985 with the name of Dimensions Associates and grew up to a leading Architectural, Structural, MEP, Engineering, Urban Design, Environmentalists, Long Spans Steel PEB Design and Turnkey Service Provider Company in Pakistan for well over 3 decades. Dimensions Engineers & Architects (Pvt) Ltd. has captured vast market and established a strong foothold in local market as well as in the international market, providing clients an easy access to our quality products. DA’s social responsibility is to deliver Solutions and Services with Professional Honesty and Speed. DA has worked on various hospital projects over the year, such as:

1. Riphah Educational Complex 386,500 Sq. Ft (Teaching Hospital), 100 Bed, Raiwind Road, Lahore 2. Nawaz Shareef Social Security Hospital, 500 Bedded Indoor Facilities, Multan Road, Lahore 3. Punjab Employees Social Security Hospital, 300 Bedded Facility, Faisalabad

PKR (000) Particular Total Assets 8,256 Net Worth 3,880 Total Liabilities 4,376

Name: Dimensions Engineers & Architects (Pvt.) Limited (Dimensions-AQ Associates) Address 1: 917-Q, M. A. Johar Town, Lahore – 54782 Tel: +92 (42) 460 2077 Website: www.dimenaims.com Email: [email protected]

Regulatory Approvals Required to establish hospital in Pakistan

The Company require following regulatory approvals to establish a healthcare facility:

Regulatory Approval Authority Status General Hospital Approval Pakistan Medical Dental Commission To be applied* To be applied post-completion of Drug Sale License Drug Regulatory Authority of Pakistan Hospital Building To be applied post-completion of To use X-ray Machine Pakistan Nuclear Regulatory Authority Hospital Building To be applied post-placement of General Registration Certificate Punjab Healthcare Commission hospital equipment License of Medical Facility in Automatic post issuance of Punjab Healthcare Commission Punjab Registration Certificate

Further to above mentioned approvals the hospital segment development will also require EPA certification from (Environment Protection Department – Government of Punjab) which will be applied simultaneously along with the approval of layout plan with relevant local land authorities (i.e, LDA).

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Salient Features of the Hospital Project (Floor Map)

No. of Floor Particular Plan Parking Basement 2 Diagnostics/Laboratory Basement 1 Admin Block Basement 1 Pharmacy/OPD/Emergency/Reception Ground Floor 1 Consultants/Clinics 1st Floor 1 Labour Room/Operation Theater 2nd Floor 1 Pediatrics/Operation Theater 3rd Floor 1 Hospital Rooms/ Nursing & Doctors Block 4th – 6th Floor 3 Total 11 Floors Note: CPL has awarded EPC contract to Dimensions-AQ Associates), will be responsible for the entire project from planning, designing, construction, installation of equipment. Dimensions-AQ Associates can award sub-contracts to assist them in completion of Hospital project Note: This is to clarify that Dimensions Engineers & Architects (Pvt.) Limited is not associated with CPL or any of its sponsors/directors.

ix. Estimated Hospital Cost

Estimated Cost (PKR 000) S. No Particular 1 Construction Works 405,600 2 Electrical Works 135,200 3 Mechanical Works 127,200 Sub Total (Civil Work for Hospital Building) 668,000 4 Medical Equipment 360,000 5 Fixture and Fitting38 248,600 6 Others39 149,400 Total 1,426,000 Note: CPL has awarded EPC contract to Dimensions-AQ Associates), will be responsible for the entire project from planning, designing, construction, installation of equipment. Dimensions-AQ Associates can award sub-contracts to assist them in completion of Hospital project.

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38 Including Hospital Beds and other general equipment (including fixture and fittings) 39 Including Design, Feasibility and contingency Page 72 of 178

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x. Details regarding purchasing Plant, Machinery & Equipment of Hospital Facility

Total Value Particular Quantity Rate (PKR) (PKR) HVAC System and Chillers 2 37,649,000 75,298,000 General X-ray Unit1 3 12,408,000 37,224,000 RO Plant 2 14,100,000 28,200,000 CTC SCAN / MRI1 2 14,100,000 28,200,000 Automatic Film Processor1 5 4,935,000 24,675,000 Mobile X -ray unit1 3 6,627,000 19,881,000 Screening unit1 1 16,920,000 16,920,000 Ultrasound Machines and Accessories1 2 7,050,000 14,100,000 ECG Monitor1 11 1,047,000 11,517,000 Anesthetic machine1 3 3,738,000 11,214,000 Autoclave, large1 2 5,335,000 10,670,000 Mobile X -ray unit with Image intensifier1 1 9,870,000 9,870,000 Mammography unit1 1 8,460,000 8,460,000 OPG Unit1 1 7,755,000 7,755,000 Operating theatre lamp, ceiling mounted1 3 2,213,000 6,639,000 Cold room Units1 2 2,820,000 5,640,000 Dental X-ray1 1 4,230,000 4,230,000 Ultra sound unit(general) 1 1 4,230,000 4,230,000 Anesthetic machine with ventilator1 1 3,738,000 3,738,000 Medical Imaging Machine & Accessories1 1 2,820,000 2,820,000 Operating light1 1 2,213,000 2,213,000 HIV screening machine/ Test kits1 1 2,115,000 2,115,000 Vital Signs Monitor1 3 705,000 2,115,000 Incubator, infant1 3 652,000 1,956,000 Defibrillator1 5 374,000 1,870,000 Ventilator, adult1 1 1,692,000 1,692,000 Indirect Opthalmoscope1 1 1,692,000 1,692,000 X-ray safe light1 6 282,000 1,692,000 Blood cell counter, Electrical1 2 706,000 1,412,000 Patient monitor1 2 650,000 1,300,000 Vacuum Plant1 1 1,339,500 1,339,500 Water de-ionizer1 2 634,500 1,269,000 Haemoglobinometer, electronic1 3 412,000 1,236,000 Ventilator, infant1 1 1,198,500 1,198,500 Eye examination microscope with tonometer1 1 1,198,500 1,198,500 Eye operation microscope1 1 1,057,500 1,057,500 Plant operating ophthalmology1 1 916,500 916,500 Audiometer, diagnostic1 1 846,000 846,000 Dental X-ray film processor 2 352,500 705,000 Microwave Diathermy 1 563,500 563,500 X-ray viewer (double screen) 4 83,000 332,000 Total 360,000,000 1 These equipment’s of total PKR 254,551,500 will be purchased from the IPO proceeds; and the reminder equipment of total PKR 105,448,500 will be purchased via debt financing Note: CPL has awarded EPC contract to Dimensions-AQ Associates), will be responsible for the entire project from planning, designing, construction, installation of equipment. Dimensions-AQ Associates can award sub-contracts to assist them in completion of Hospital project. Note2: CPL does not intend to procure any machinery of second-hand nature in hospital project. Page 73 of 178

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Note3: EPC contractor is responsible for the entire project from civil work to installation of equipment. For this purpose, Dimensions-AQ can award subcontracts to others. This is to clarify that during this project none of the subcontract will be awarded to the associate of CPL or its sponsors/directors.

xi. Details regarding Fixture and Fittings for Hospital Facility

Particular Value in PKR Computers / Laptops 15,000,000 Printers / Scanners / Fax 1,500,000 UPS 4,000,000 Networking /cable / Switch / Routers / Multiplex etc. 10,000,000 Software - Accounting + HMS (including direct implementation costs) 50,000,000 Tower 1,500,000 Server Room 10,000,000 Telephone Exchange 2,000,000 Accessories including Photocopiers & Peripherals 6,000,000 Back-up Generators 20,000,000 Office Furniture & Equipment / Conference Room (including Multi Media) 40,000,000 Fire Fighting Equipment + Security System 10,000,000 Work-shop Equipment & Tools 25,000,000 Clinics - Furniture + Fixtures 10,000,000 Kitchen / Appliances 10,000,000 Fork lifter + Store 5,000,000 Miscellaneous including Contingencies 28,600,000 Total 248,600,000 Note: CPL has awarded EPC contract to Dimensions-AQ Associates), will be responsible for the entire project from planning, designing, construction, installation of equipment. Dimensions-AQ Associates can award sub-contracts to assist them in completion of Hospital project. Note2: CPL does not intend to procure any fixture and fitting material of second-hand nature in hospital project. Note3: EPC contractor is responsible for the entire project from civil work to installation of equipment. For this purpose, Dimensions-AQ can award subcontracts to others. This is to clarify that during this project none of the subcontract will be awarded to the associate of CPL or its sponsors/directors.

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xii. Utilization of IPO proceeds

As per the Company’s strategic business plan, IPO proceeds shall be utilized as under:

Sources Expenditure Heads Particulars PKR Particulars PKR % API and Formulation Segment Civil Work of API Segment 150,000,000 7% Civil Work of Formulation Segment 250,000,000 12% Procurement of Plant and Machinery for API Segment 405,194,500 20% IPO 2,035,376,000 Procurement of Plant and Machinery for Formulation Segment 307,630,000 15% Proceeds Hospital Facility Civil Work of Hospital Building (incl. Electrical and Mechanical 668,000,000 33% work) Plant and Machinery for Hospital 254,551,500 13% TOTAL 2,035,376,000 Total Proceeds Utilized 2,035,376,000 100%

xiii. Following is a brief financing break-up of the project:

5. Sources Expenditure Heads Particulars PKR Particulars PKR % API and Formulation Segment Civil Work of API Segment 150,000,000 6% Civil Work of Formulation Segment 250,000,000 10% Procurement of Plant and Machinery for API Segment 405,194,500 16% IPO Procurement of Plant and Machinery for Formulation Segment 307,630,000 12% 2,035,376,000 Proceeds Total Pharmaceutical Segment (A) 1,112,824,500 44% Hospital Facility Civil Work of Hospital Building (incl. Electrical and Mechanical work) 668,000,000 26% Plant and Machinery for Hospital 254,551,500 10% Hospital Project to be financed with IPO Proceeds 922,551,500 36% Plant and Machinery for Hospital 105,448,500 4% Fixture and Fitting 248,600,000 10% LTFF 503,449,000 Others 149,400,000 4% Hospital Project to be financed with Debt 503,449,000 20% Total Healthcare Segment (B) 1,426,000,000 56% TOTAL 2,538,824,500 Total Project Utilization (A+B) 2,538,824,500 100%

Note: The Entire Pharmaceutical project will be financed with the proceeds raised from the IPO.

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xiv. Details of the Long-Term Financing Facilities to be availed by the Issuer:

Following is a brief break-up of the Borrowing Facilities

Financial Institutions Facility Mark-up Commission Tenor Limit (PKR Mn) Pak Brunei Investment Limited LTFF 6M Kibor + 2.50% 05 Years 500 Pak Brunei Investment Limited40 LTFF 3M kibor + 2.50% 04 Years 150 Total 650

CPL has commitment of PKR 650 Mn in Long Term Financing Facilities (LTFF) from Pak Brunei Investment Limited against the requirement of PKR 503.449 Mn xv. Percentage utilization of excess IPO funds

Excess funds, if any received in case the strike price is determined above the Floor Price shall be utilized for internal working capital or any other project of CPL, as may be decided by the board of Directors. The excess fund will not be invested in any associate companies of CPL.

Any excess fund raised, will be utilized in the following manner and on priority basis first company will pay-off its short-term borrowings and reminder will be injected in working capital requirement.

Particular Limit (PKR 000) Repayment of Short-term Borrowings 203,062 Working Capital Requirement (Current and Future Project) 611,088 Total 814,150 xvi. Implementation Schedule of Pharmaceutical Project

S. Completion Particulars Start Date Status No. Date 1 Civil Work of API Segment 3QFY21 2QFY22 Construction underway 2 Civil Work of Formulation Segment 3QFY21 2QFY22 Construction underway Order for machinery to be placed post- 3 Plant & machinery for API Segment 1QFY22 3QFY22 IPO Plant & Machinery of Formulation Order for machinery to be placed post- 4 1QFY22 1QFY23 Segment IPO 5 Trial Production of New APIs 3QFY22 3QFY22 Post installation of plant Trial Production of New Formulation 6 3QFY22 4QFY22 Post installation of plant Drugs 7 Commercial Production of New APIs 4QFY22 - Commercial Production of Formulation 8 4QFY22 - products (i.e Cephalosporin and Penicillin) Commercial Production of Psychotropic & 9 1QFY23 - Narcotics Drugs Facility

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xvii. Implementation Schedule of Hospital Project

Completion S. No. Particulars Start Date Status Date 1 Acquisition of Land 1QFY18 Already acquired a 4-Kanal Land 2 Completion of Civil Work 1QFY22 1QFY23 Currently in designing phase Order to be placed during 3 Procurement of Medical Equipment 3QFY22 1QFY23 construction of building Order to be placed during 4 Procurement of Fixtures and Fittings 4QFY22 1QFY23 construction of building 5 Commencement of Commercial Operation 1QFY23

As per clause (i) and (ii) of regulation 16 of the PO Regulations, the Company shall: 1. Report detailed break-up of the utilization of the proceeds of the issue in its post issue quarterly / half-yearly and annual accounts; till the fulfillment of the commitments mentioned in the prospectus, and;

2. Submit a half yearly progress report and annual progress report reviewed by the auditor providing the status of the commitments mentioned in the prospectus to PSX till the fulfillment of the commitments mentioned in the prospectus as per the format given in regulation 16 of the PO Regulations.

3. Submit a final report reviewed by the auditor after the fulfillment of the commitments given in the prospectus

(This space has been left Blank Intentionally)

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i. Pre and Post Expansion Capacity

Production and Sales Volume for FY20 (In Production and Sales Volume for FY20 S. Installed tons and Unit) (In tons and Unit) Particulars No capacity Capacity Sales Capacity Sales Production Production Utilization Volume Utilization Volume 1 Paracetamol (tons) 3,600 2,527 70% 2,525 1,545 86% 1,518 2 Ciprofloxacin (tons) 300 28 9% 26 20 13% 16 Penicillin/Amoxicillin 3 600 212 35% 207 170 57% 156 (tons) 4 Cefixime (tons) 168 16 10% 16 18 21% 16 5 Tablets (Units) 596,000,000 207,444,285 35% 198,506,456 23,063,413 8% 22,155,643 6 Capsules (Units) 29,800,000 5,306,477 18% 5,280,077 1,181,908 8% 1,176,028 7 Suspension (Units) 5,960,000 780,069 13% 535,456 551,520 19% 535,456

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4A VALUATION SECTION

CPL intends to issue 72,692,000 ordinary shares at a Floor Price of PKR 28/- per share, inclusive of a premium of 18/- per share. The Lead Manager has reviewed the business performance of the Company and in their opinion the Floor Price of PKR 28/- per share is justified on the basis of:

i. Strong product portfolio

CPL has a well-diversified product portfolio in both API and Formulations business. In APIs, the Company currently offers 9 products; the leading products are Paracetamol and Penicillin. Together the said two products account for 79% of the total sales in FY20.

In Formulations segment, the Company has a 17-product portfolio, ranging from tablets / capsules to suspension and dry powder.

Product-wise revenue breakup

Particular Numbers in PKR (000) Product Category FY20 (Audited) As % of Revenue Paracetamol API 1,942,726 55% Penicillin API 847,927 24% Cefixime Tri Hydrate API 361,876 10% Askprol Tablet Formulation 94,354 3% Others - 280,742 8% Total Sales 3,527,625 100% Source: Company Management

ii. Expanding into formulation segment

The Company is investing heavily into the formulation segment; creating synergies for the current API business. The main raw material for formulation business being available in-house will give CPL a major advantage over all other formulation sector competitors. Currently, CPL has a 17 products portfolio in formulation segment. As pharmaceutical formulation is a higher margin segment, the Company intends to increase its presence by introducing new products, thus increasing CPL’s gross and net margins.

iii. Entering into healthcare segment

The Company is entering into health care segment by establishing a 50 bed hospital facility in the heart of Lahore. Health care segment would further increase company’s margin.

iv. On way to become one of the leading player in the North Zone

Citi Pharma Limited, under its expansionary phase, plans to develop three dedicated units for value added products (i.e. Capsules, Tablets and Vials) taking total capacity to 200,000 vials per day, dry powder 60,000 bottles per day, 4.2 million capsules per day and 4.5 million tablets per day. This expansion, upon completion will establish CPL as one of the leading pharmaceutical production facilities in the Country.

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v. Customer base

CPL enjoys a long relationship with both local and MNC players operating in Pakistan. In the API segment, pharmaceutical companies undertake quality control audits prior to enlisting any suppliers on their authorized supplier panel. CPL has successfully passed audits of 360 pharmaceutical companies ensuring compliance of GMP

standards.

List of selected CPL’s Clients CPL’s selected of List

Source: Company Management vi. Financial highlight

During the period FY16-FY20, CPL’s revenue has increased at CAGR of 36.5%. This has been mainly due to volumetric growth and increase in clientele. CPL has managed to add more clients with efficient quality checks. The gross margins of the Company have remained at an average of 12.8% for the last 5 years. With the addition of formulation products (a higher margin segment) in the product portfolio, the margins are expected to increase in the coming future.

4,000 Revenue (Mn) 3,528 600 Gross Profit (Mn) 14% 13% 440 3,000 2,607 13% 400 2,003 13% 331 13% 2,000 1,592 263 208 13% 1,017 200 128 12% 13% 1,000

0 0 12% FY16A FY17A FY18A FY19A FY20A FY16A FY17A FY18A FY19A FY20A

400 EBITDA (Mn) 200 10% 303 Net Profit (Mn) 300 146 150 117 180 179 5% 200 6% 146 100 5% 85 5% 100 55 4% 100 50 28 1% 0 0 0% FY16A FY17A FY18A FY19A FY20A FY16A FY17A FY18A FY19A FY20A

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20% Return on Equity Return on Asset 16% 16% 10% 9% 8% 15% 13% 8% 6% 9% 10% 5% 5% 3% 2%

0% 0% FY16A FY17A FY18A FY19A FY20A FY16A FY17A FY18A FY19A FY20A

vii. Strong half year performance

Based on the half yearly financial accounts, CPL has recorded revenue of PKR 2,632 million; translating into a gross margin of 16%, due to better prices and higher volumes. The Company posted a net profit of PKR 169 million (EPS of PKR 1.25 calculated using outstanding number of shares of 135 Mn as at 25/01/2021. viii. Attractive valuation

Price as of Scrip Year End EPS P/E P/S P/B ROE (%) ROA (%) Year End AGP Dec 113.88 5.67 20.09 4.59 3.88 20.26% 16.04% ABOT Dec 755.37 13.28 56.88 2.45 5.53 31.32% 19.86% FEROZ Jun 330.39 13.11 25.20 1.85 2.16 7.98% 5.92% GLAXO Dec 191.83 9.55 20.09 1.67 3.79 20.08% 13.69% GSKCH Dec 265.13 10.74 24.69 1.90 6.90 26.12% 12.65% HINOON Dec 599.81 30.86 19.44 2.09 5.48 36.66% 25.92% IBLHL Jun 115.28 4.78 24.13 2.34 4.38 19.57% 12.55% MACTER Jun 152.28 4.44 34.41 1.08 5.12 16.24% 4.38% OTSU Jun 301.00 11.98 25.12 1.58 16.65 99.77% 9.21% SAPL Dec 757.34 51.12 14.81 0.52 1.60 11.40% 6.03% SEARL Jun 249.23 11.56 21.56 3.20 3.14 15.53% 7.42% WYETH Nov 1050.00 (92.28) N/A 1.60 1.53 -11.87% -7.98% Industry Avg. 26.04 1.99 4.75 Multiples CPL Jun 28.00 1.99 14.02 0.78 2.03 19.66% 9.99% Source: Company Accounts and Topline Research Note: As per trailing twelve-month numbers starting from Jan’20 to Dec’20 and prices as of i.e,31st Dec’20. AGP: AGP Limited, ABOT: Abbott Laboratories (Pakistan) Limited, FEROZ: Ferozsons Laboratories Limited, GLAXO: GlaxoSmithKline Pakistan Limited, GSKCH: GlaxoSmithKline Consumer Healthcare, HINOON: Highnoon Laboratories Limited, IBLHL: IBL Healthcare Limited, MACTER: Macter International Limited, OTSU: Otuska Pakistan Limited, SAPL: Sanofi-Aventis Pakistan Limited, SEARL: The Searle Company Limited, WYETH: Wyeth Pakistan Limited

CPL’s Floor Price of PKR 28/- per share, based on annual earnings for Trailing Twelve Months (TTM), translates to a trailing price to earnings (P/E) multiple of 14.02 times as compared to industry average of 26.04 times. Similarly, price to book value (P/B) multiple based on year period ended on Dec’20 book value translates into P/B multiple of 2.03 times as compared to industry average of 4.75 times. Moreover, the P/S multiple of the Company is 0.78 times as compared to industry average of 1.99 times.

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ix. Post IPO free float disclosure

Description Number of shares % Shareholding status Held by Sponsors 134,999,988 65.00% Held by Others Directors 12 0.00% Held by General Public – Free Float 72,692,000 35.00% Total 207,692,000 100.0%

x. Peer Group Comparison

Below is a table showing key valuation ratios of the Company and its competitors

Price as Sales Free Free Year Scrip of Year EPS2 Per BVPS3 P/E P/S P/B ROE ROA GPM NPM Float Float End 1 2 End Share (000) (%) AGP Dec 113.88 5.67 24.81 29.32 20.09 4.59 3.88 20.26% 16.04% 55.58% 22.85% 84,000 30% ABOT Dec 755.37 13.28 308.03 136.59 56.88 2.45 5.53 31.32% 19.86% 34.64% 12.85% 21,043 21% FEROZ* Jun 330.39 13.11 178.69 153.04 25.20 1.85 2.16 7.98% 5.92% 41.04% 8.88% 14,489 40% GLAXO Dec 191.83 9.55 114.87 50.67 20.09 1.67 3.79 20.08% 13.69% 21.47% 9.62% 51,876 16% GSKCH Dec 265.13 10.74 139.39 38.45 24.69 1.90 6.90 26.12% 12.65% 26.85% 6.36% 15,530 14% HINOON* Dec 599.81 30.86 287.52 109.37 19.44 2.09 5.48 36.66% 25.92% 49.00% 13.78% 13,845 40% IBLHL Jun 115.28 4.78 49.26 26.29 24.13 2.34 4.38 19.57% 12.55% 30.67% 9.03% 13,521 25% MACTER* Jun 152.65 4.44 141.22 29.83 34.41 1.08 5.12 16.24% 4.38% 37.05% 3.12% 11,743 30% OTSU Jun 301.00 11.98 190.74 18.08 25.12 1.58 16.65 99.77% 9.21% 28.25% 6.28% 605 5% SAPL Dec 757.34 51.12 1462.74 473.01 14.81 0.52 1.60 11.40% 6.03% 26.97% 3.49% 1,446 15% SEARL* Jun 249.23 11.56 77.99 79.42 21.56 3.20 3.14 15.53% 7.42% 50.20% 16.49% 108,018 45% SHFA* Jun 199.99 (1.36) 196.59 128.79 N/A 1.02 1.55 -1.06% -0.53% N/A -0.69% 34,086 55% - WYETH Nov 1,050.00 (92.28) 656.07 684.77 N/A 1.60 1.53 -7.98% -1.54% -14.07% 381 27% 11.87% CPL Jun 28.00 2.00 35.69 13.79 14.02 0.78 2.03 19.66% 9.99% 13.99% 5.60% 72,692 35% source: Company Accounts and Topline Research 1 Prices As of Dec’31st 2020 2 EPS and Sales per Share for trailing twelve months starting from Jan’20 to Dec’20. 3 Book Value per share as at 31st Dec’20 4 ROE is calculated by profit divided by average net equity (i.e, 31st Dec’19 and 31st Dec’20) 5 ROA is calculated by profit divided by average total assets of last two year (i.e, 31st Dec’19 and 31st Dec’20) 6 Gross and Net Margins are calculated for trailing twelve months starting from Jan’20 to Dec’20 * Consolidated Accounts AGP: AGP Limited, ABOT: Abbott Laboratories (Pakistan) Limited, FEROZ: Ferozsons Laboratories Limited, GLAXO: GlaxoSmithKline Pakistan Limited, GSKCH: GlaxoSmithKline Consumer Healthcare, HINOON: Highnoon Laboratories Limited, IBLHL: IBL Healthcare Limited, MACTER: Macter International Limited, OTSU: Otuska Pakistan Limited, SAPL: Sanofi-Aventis Pakistan Limited, SEARL: The Searle Company Limited, WYETH: Wyeth Pakistan Limited

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5 RISK FACTORS i. Internal risk factors

i. Business risk

Business risk is the possibility of the Company reporting lower than anticipated profits or loss due to factors such as: - Increase in input costs due to external factors, such as rupee depreciation, - Loss of reputation and - Decrease in sales volume or sales price

ii. Operational risk

Operational risk summarizes the uncertainties and hazards a business faces when it attempts to conduct its day-to- day business activities. A type of business risk, it can result from breakdowns in internal procedures, people and systems. A high turnover ratio of skilled staff, disruption in the Company’s supply chain, or inappropriate planning could be a major determinant to operational risk for the Company.

iii. Raw material procurement risk

API Segment is reliant on import of raw material (approximately 95% of the total raw material is imported from China and India). Hence, any increase in cost of procurement and/or disruption in procurement process such as import bans or disruption of freight from exporting countries could result in business losses. Majority of CPL’s raw material requirement is imported from China; any disruption in supply due to any reason can adversely impact the Company’s profitability.

iv. Credit risk

Credit risk represents the risk of financial loss due to the customer's failure to pay or meet contractual obligations. As at 31st December 2020, the total trade debt of the Company stands at PKR 278 million, and PKR 299 million as at year ended June 2020. However, as majority of the customers are institutional clients; none of the CPL’s customers have defaulted on their payments in past.

Liquidity Risk

Liquidity risk is the risk of being unable to meet financial obligations due to insufficient liquid assets. If CPL is unable to service its debt obligations in a timely manner or comply with various financial and other covenants, this would adversely affect the Company’s business prospects, operations and financial condition.

As per 1HFY21 accounts, total current assets of the Company stand at PKR 1,913 million against current liabilities of PKR 1,581 million with a current ratio 1.2x which means the Company has sufficient resources and ability to meet its current obligations.

v. Negative operating cash flow

The Company has reported negative operating cash flows of PKR 105 million for the half year period ended on 31st Dec 2020. This was mainly due the higher taxation and increase in stock in trade.

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vi. Product Concentration Risk

CPL’s two products i.e, Paracetamol and Penicillin are two main revenue drivers, comprising an aggregate of ~79% the annual sales of FY2020. Any material changes in either price or demand of these products can have an adverse impact on the Company’s sales.

vii. Vendor Concentration Risk

During FY20, CPL procured 29.5% (i.e Para Ameno Phenol) of total raw material from Taixing Yangzi Pharm Chemical Co Limited which is based in China which indicates vendor concentration risk.

Any issues in procuring raw materials for Paracetamol and Penicillin (a major revenue drivers) (i.e, Para Ameno Phenol and Aminopenicillin Acid) majorly imported from China can have an adverse impact on CPL’s profitability.

CPL does not have any long-term or short-term contracts with any supplier, any disruption of raw material supply would have an adverse impact on CPL’s bottom-line. viii. Customer Concentration Risk

CPL does not have any long-term/short-term contracts with any customer. Any shift by the customers may have an adverse impact on Company’s profitability. However, in Pharmaceutical industry, API suppliers goes through a rigorous process of scrutiny and quality checks, before enlistment on approved supplier list. The formulation companies cannot immediately change their supplier due to quality standards and approved medicinal formula by the regulatory authorities.

One major customer of the Company, GlaxoSmithKline Pakistan Limited (GSK) accounts for ~50% of the revenue in the last three financial years. This is a significant customer concentration risk, any disruption in sales to GSK could have an adverse impact on sales.

ix. Fuel & power risk

The Company relies mostly on WAPDA for the supply of electricity needed to run the operations. Any undue interruption in electricity from WAPDA may affect the Company’s production process.

The Company also relies on wooden chips / corn cubes for production of API. Any interruption/shortage in supply may affect the Company’s production process.

x. Risk of venturing into a new segment – Health Care

The Company plans to enter into a new segment of health care. For this CPL plans to establish a 50-bed state-of- the-art Hospital in Gulberg - III, Lahore. The sponsors of the company do not have any relevant expertise and experience to run a hospital. However, in order to successfully operate in this relatively new segment, the Company plans to hire consultant doctors in future to support and ensure effective operations.

xi. Risk of delay in commissioning the project

There could be delays in the commissioning of the Project due to unforeseen events. However, the Company has ample excess capacity in its major products to keep its operations running without any significant impact on the Company’s revenues in the short run.

For the expansion of both API and Formulation, CPL will finalize suppliers and will subsequently, place order of plant and machinery post-IPO, any delay in finalization of supplier or procurement of plant and machinery can delay the

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commissioning of project. Furthermore, this can also hinder the overall project cost, as the Company has not yet locked-in the prices of the plant and Machinery.

xii. Risk of Post-IPO order placement and procurement of machinery

CPL intends to place order for plant and machinery for both API and Formulation post IPO. Any delay in the IPO may have an adverse impact on the total project timeline.

Similarly, Hospital project is partially financed via IPO proceeds and construction work will commence post-IPO. Any delay in the IPO may have an adverse impact on the hospital project. xiii. Risk of non-compliance with regulation of SECP and PSX

In the event of non-compliance with any regulatory requirements of SECP or PSX, the Company may be placed on Defaulter Segment of PSX which may potentially hamper trading in the Company’s shares leading up to potential suspension in trading as well.

xiv. Risk of technological obsolescence

Technological obsolescence risk is the risk that a process, product, or technology used or produced by a Company will become obsolete, and thus no longer be competitive in the marketplace. This would reduce the profitability of the company.

If the plant and machinery/technology which the Company is currently using or importing under new Project becomes obsolete, the potential of higher costs that are associated with obsolete components can dent the Company’s profitability.

However, with the added focus of CPL in research and development, CPL has built an in-house expertise on both technical and mechanical grounds. This can mitigate technological obsolesce risk, as the company can develop fast utilization of new machinery due to better knowledge and understanding. ii. External risk factors

i. COVID 19 risk

In March 2020, the Government of Pakistan implemented a country wide lockdown in order to contain the spread of Covid-19 in the country resulting in operations being affected.

Any unprecedented increase in Covid-19 cases could lead to market closure/lockdown, which may potentially impact the sales and profitability of the Company and may also potentially impact the timelines for implementation of the Company’s expansion plan.

ii. Regulatory framework & Duty Structure:

The Government plays a major regulatory role and is responsible for strict enforcement of laws including those related to health care and pharmaceutical.

Regulatory risk encompasses change in the policies by the Government of Pakistan which may affect the industry in the future. Changes in regulatory framework such as imposition of changes in pricing formula orimport restrictions can greatly influence the performance of the industry as a whole. Subsequently, any increase in duties or withdrawal of exemptions (i.e., sales tax) on chemical molecules at import stage, would have an adverse impact

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on CPL’s profitability as the imports will become cheaper and will shrink the gap between the local and imported prices.

Duty Structure - Raw material for API: The custom duty structure on chemical molecules (raw material for API) ranges from 0% to 5%. The API manufacturers enjoy exemption on sales tax and additional sales tax on the import of chemical molecules for manufacturing of API. These added benefits were provided by the Government to protect local industry, different SROs were issued from time to time (such as SRO 567(I)/2006 dated 5th June, 2006 , SRO 476(I)/2011 dated 3rd June, 2011) that either exempt/reduced duties on raw material for APIs locally manufactured and/or increase duties on API that are produced locally.

Add. Custom S.No Type of Raw Material H.S. Code Custom Duty Duty 1 Para Ameno Phenol 2922.2100 0.0% 0.0% 2 Glacial Acetic Acid 2915.2100 3.0% 3.0% 3 Q-Acid 2903.2900 0.0% 0.0% 4 Piperazine 2935.9090 0.0% 5.0% 5 n-Butanol 2905.1100 5.0% 0.0% 6 Methanol 2905.1100 0.0% 0.0% 7 7-AVCA 2915.1300 0.0% 0.0% 8 MICA Ester 2934.2000 0.0% 0.0% 9 6-Aminopenicillanic Acid (6-APA) 2934.9990 0.0% 0.0% D(-)-4-Hydroxyphenylglycine Methyl ester (D- 10 2922.4990 0.0% 0.0% HPGME) 11 Isopropyl Alcohol (IPA) 2929.9030 0.0% 0.0% 12 Omeprazole Pellats 2933.3990 5.0% 5.0% 13 Mefenamic Acid 2922.2900 0.0% 0.0% 14 Methylene Chloride 2903.1200 0.0% 0.0% Source: Federal Board of Revenue, Custom Tariff 2020-21

Any increase in above duty structure can negatively impact the profitability of Company

Duty Structure - API

Add. Custom S.No Type of API H.S. Code Custom Duty Duty 1 Paracetamol 2924.2910 20.0% 7.0% 2 Ciprofloxacin 2933.5930 20.0% 7.0% 3 Cefixime 2941.9060 16.0% 4.0% 4 Amoxicillin Trihydrate 2941.1000 20.0% 7.0% Source: Federal Board of Revenue, Custom Tariff 2020-21

Any reduction in the above duties can directly affect the local API industry and hence, Company’s performance.

Risk of disruption of Supply:

The Company faces a risk of Imposition of ban on imports of raw materials for APIs by Pakistan government or trade barriers by countries which are primary suppliers to Pakistan. For e.g., in 2019 a complete ban was placed on imports from India which resulted in severe shortage of critical medicine. However, CPL does not procure any raw material from India.

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iii. Regulatory Approvals Required to establish hospital in Pakistan

The Company require following regulatory approvals to establish a healthcare facility:

Any delay in getting these approvals from the regulatory authority will have an adverse impact on the hospital project such as delay in commissioning of project and partial unavailability of service i.e X-ray.

iv. Pricing risk

In Pakistan, prices of all Pharmaceutical products are fixed by DRAP and cannot be changed unilaterally by the Pharmaceutical companies. Any new price or increase requires approval from the DRAP. Currently prices can be revised annually based on the CPI index. Introduction of any adverse pricing policies can significantly affect the Company’s operations.

v. Economic slowdown

Slowdown or deterioration of macroeconomic conditions as a whole could trigger reduction in disposable incomes and affecting consumer discretionary spending; thus, compelling consumers to switch to cheaper options to meet staple requirements. An economic slowdown may adversely affect the growth and performance of the healthcare and pharmaceutical sector as a whole. However, being an essential product, risk resulting from an economic slow-down is minimal.

vi. Risk from Complementary & Alternative Medicines

The Risk of people using Alternative medicines such as herbs and other alternative and unregistered medicines has largely materialized in Pakistan and is prevalent in all areas of Pakistan. This is especially true of rural areas where health facilities are either poor or non-existent, and low literacy levels mean that people are more likely to choose medicines without any evidence backing its efficacy; which is ultimately detrimental to the Company’s revenue.

vii. Foreign exchange risk

Being an importer of raw material for APIs, CPL is susceptible to variations in the forex rates. Any fluctuation in the dollar and uncertainty in foreign exchange markets might affect the Company’s margins and bottom-line.

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viii. Interest rate risk

The Company has entered into various financing agreements to finance its working capital requirements. Any increase in interest rates will increase the cost of borrowing for the Company and may adversely affect its profitability, as existing debts are based on floating rates.

ix. Threat of new Entrants

Pharmaceutical industry is a highly regulated sector where approvals from various regulatory agencies are required for drug usage. This approval process is an extremely time-consuming process. Any new entrant is required to seek all pre-requisite approvals and licenses from DRAP and other government agencies. Therefore, there is huge barrier to entry for any new entrant and threat of new entrants is very low.

x. Capital market risk

After being listed on the securities exchange, the price of the Company’s shares will be determined by market forces driven by socio-economic events (locally & internationally), capital & money market behavior, competitive scenarios and company performance. The value of share will be subject to fluctuation based on the combined impact of market forces identified above.

xi. Under-subscription risk

This is the risk that the public offering may get undersubscribed due to lack of interest from investors. The book building process shall be considered as cancelled if

- The Company does not receive bids for the number of shares allocated under the Book Building portion; - The Company does not receive at least 40 bids.

The bid money submitted by investors shall be refunded subsequently.

xii. Risk of Unforeseen Events There is risk of unforeseen events, such as Natural Disasters. Plant is located across a 46.2-acre land near Lahore that is at a risk of physical damage due to any natural disaster. Similarly, CPL is planning to establish a hospital in Gulberg, Lahore. The hospital building will be at a risk of physical damage due to natural disaster. However, both facilities are comprehensively insured.

Note: IT IS STATED THAT TO THE BEST OF OUR KNOWLEDGE AND BELIEF, ALL MATERIAL RISK FACTORS HAVE BEEN DISCLOSED AND THAT NOTHING HAS BEEN CONCEALED IN THIS RESPECT.

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

February 12, 2021 The Chief Executive Pakistan Stock Exchange Limited Stock Exchange Building Stock Exchange Road Karachi

We being the Chief Executive Officer and Chief Financial Officer of the Issuer accept absolute responsibility for the disclosures made in this Prospectus. We hereby certify that we have reviewed this Prospectus and that it contains all the necessary information with regard to the Issue and constitutes full, true and plain disclosures of all material facts relating to the Company and the issue being offered through this Prospectus and that nothing has been concealed. The information contained in this Prospectus is true and correct to the best of our knowledge and the opinions and intendeds expressed herein are honestly held. There are no other facts, the omission of which makes this Prospectus as a whole or any part thereof misleading.

For and behalf of Citi Pharma Limited

-SD- -SD- ______Rizwan Ahmed Asif Iqbal Chief Executive Officer Chief Financial Officer

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Undertaking by the Company and its Sponsors

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Statement by the Issuer

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

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

For and behalf of Citi Pharma Limited

-Sd- -Sd- ______Rizwan Ahmed Asif Iqbal Chief Executive Officer Chief Financial Officer Citi Pharma Limited Citi Pharma Limited

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Statement by Issuer on Investment in associated Companies

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Statement by Lead Manager/Consultant to the Issue:

Statement by Book Runner

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

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

For and behalf of Topline Securities Limited

-sd- ______Mohammad Sohail Chief Executive Officer Topline Securities Limited

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6 FINANCIAL INFORMATION i. Auditor certificate under Clause 1 of Section 2 Current auditor of Citi Pharma Limited (CPL) is Aslam Malik & Co. Aslam Malik & Co. was appointed from FY17. Aslam Malik & Co. current auditor of Company is a are Quality Control Review (QCR) rated audit firm, as per the list dated May 3, 2021, however, current QCR renewal is in process. As per the notice/announcement published by ICAP, if QCR validity of firm has expired, the QCR rating of the firm remains valid as the QCR renewal is in process. Prior to Aslam Malik & Co. Rafaqat Mansha Mohsin Dossani Masoom & Co. was the Company’s auditors.

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ii. Auditor certificate on issue, subscribed, and paid-up-capital of Citi Pharma Limited

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iii. Share breakup value certificate

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iv. Auditor Certificate for Director’s Loan

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v. 9MFY21 Management Accounts of Citi Pharma Limited

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vi. Summary of financial highlights of Citi Pharma Limited

The Complete audited statement of the Company can be accessed from http://citipharma.com.pk/investors.html

(PKR ‘000) 2016 2017 2018 2019 2020 1HFY21 Income Statement (Audited) (Audited) (Audited) (Audited) (Audited) (Audited) Sales 1,016,587 1,592,059 2,003,334 2,607,028 3,527,625 2,631,575 Cost of Goods Sold 888,624 1,383,574 1,740,554 2,276,272 3,087,944 2,221,331 Gross Profit 127,963 208,485 262,779 330,756 439,681 410,245 Operating Profit 65,914 99,662 135,481 136,427 258,476 286,715 EBITDA 100,244 146,434 179,781 178,807 303,098 297,725 Depreciation and Amortization 35,168 50,239 48,206 46,079 52,285 28,157 Financial Charges 10,364 11,305 14,709 18,465 43,924 16,577 Profit before Taxation 54,712 84,891 116,866 114,264 206,890 252,991 Taxation - - -41 86,459 61,255 84,457 Profit after Taxation 54,712 84,891 116,866 27,80442 145,635 168,535

Balance Sheet Non-Current Assets 519,771 509,530 748,969 915,983 1,077,613 1,806,474 Current Assets 441,684 667,323 736,905 402,290 1,393,73543 1,912,660 Total Assets 961,455 1,176,852 1,485,873 1,318,273 2,471,349 3,719,135 Paid-up Capital 450,000 450,000 450,000 450,000 450,000 450,000 Equity 608,190 693,081 809,947 837,751 983,386 1,861,21544 Short-Term Borrowings 156,751 342,909 411,886 205,161 203,063 297,618 Non-Current Liabilities 64,704 52,848 36,408 136,487 236,884 276,645 Current Liabilities 288,561 430,924 639,518 344,036 1,251,079 1,581,275 Stock-in-trade 161,740 149,293 205,457 102,040 891,723 1,453,43845 Trade debts 203,418 203,274 290,459 160,250 299,465 278,425 Trade and other payables 30,882 53,619 70,679 38,003 894,266 1,078,27746

Cash Flow Statement Operating Activities 7,572 (2,199) 28,846 273,526 94,091 (105,397)47 Investing Activities48 (158,878) (39,998) (287,207) (37,750) (200,577) (47,724) Financing Activities 76,740 177,962 174,656 (250,342)49 107,851 157,962 Net increase/(decrease) in Cash (74,566) 137,736 (83,704) (14,565) 1,365 4,841 Cash & Cash Equivalents at the end 48,613 186,348 102,644 88,079 89,444 94,285 of year

41 From FY14 to FY18, CPL was availing tax credit under section 65D of Income tax ordinance as the project was 100% equity financed 42 PAT for FY19 declined due to tax charges and increase in salary expense pertaining to introduction of cefixime 43 In FY19, the investment in YDL was clubbed in Advances and subsequently, theses were reclassified as investment in associate from FY20 as the management decided to allot shares against the said amount 44 For 1HFY21 the total equity increased due to the revaluation surplus of PKR 709 Mn 45 Stock in Trade witnessed a sharp surge during FY20 (up 774%) and 1HFY21, mainly due to higher production and sales volumes and in addition Company increased their raw material inventory level due to anticipated price hike. 46 Consequently, during FY20 payables also increased 2,353% in line with the inventory level and further also due to longer credit lines from the supplier in wake of COVID-19 pandemic. 47 Negative cash flow from operations is attributable to the investment in working capital (i.e, inventory) as the Company increased its stock level due the uncertainties arising from COVID-19 pandemic and higher tax payment 48 The outflow of funds from investing activities majorly pertains to continuous BMR and capital expenditure made by the Company. 49 These include repayment of Directors loan and short-term borrowing Page 122 of 178

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Cash at Bank 48,297 186,132 102,509 87,558 89,134 94,071 Capital Expenditure 158,878 37,280 286,342 36,568 115,191 47,724

Growth Sales Growth (%) 57% 26% 30% 35% 96% EBITDA Growth (%) 171% 21% -6% 52% 236% Net Profit Growth (%) 55% 38% -76% 424% 278% Margins Gross Margin (%) 13% 13% 13% 13% 12% 16% EBITDA Margin (%) 10% 9% 9% 7% 9% 11% Net Margin (%) 5% 5% 6% 1% 4% 6% Break-up Value per Share1 135.15 154.02 179.99 186.17 218.53 41.363 Break-up Value per Share2 4.51 5.13 6.00 6.21 7.28 13.79 Profitability and Earnings Ratios Profit after Tax 54,712 84,891 116,866 27,804 145,635 168,535 Earnings per Share1 12.16 18.86 25.97 6.18 32.36 3.75 Earnings per Share2 0.41 0.67 0.87 0.21 1.08 1.25 Return on Equity4 (%) 9% 13% 16% 3% 16% N/A Return on Asset5 (%) 6% 8% 9% 2% 8% N/A Balance Sheet Ratios Fixed Asset Turnover6 (x) 1.96 3.09 3.18 3.13 3.54 N/A Asset Turnover7 (x) 1.06 1.49 1.50 1.86 1.86 N/A Current Ratio (x) 1.53 1.55 1.15 1.17 1.11 1.20 Inventory Turnover (days) 66 41 37 25 59 N/A Receivables Turnover (days) 73 47 45 32 24 N/A Payables Turnover (days) 13 11 13 9 55 N/A

Leverage Ratios

Debt to Equity 40% 60% 58% 40% 47% 33% Debt to Total Capital 25% 36% 32% 26% 19% 16% EBITDA/Interest (x) 9.67 12.95 12.22 9.68 6.90 17.96 Interest Coverage9 (x) 6.28 8.51 8.95 7.19 5.71 16.26 (EBITDA - Capex) -58,634 109,155 -106,561 142,240 187,907 250,001 (EBITDA - Capex)/Interest (x) -5.66 9.66 -7.24 7.70 4.28 15.08 Number of Shares Outstanding 4,500,000 4,500,000 4,500,000 4,500,000 4,500,000 45,000,000 ______1 Based on number of shares at corresponding period end (4,500,000 of par value PKR 100 each) 2 Based on outstanding number of shares as at 25/01/2021, i.e. 135,000,000 of par value PKR 10 each and also include revaluation surplus 3 inclusive of revaluation surplus 4 Return of equity is based on profit after tax divided by average equity 5 Return on asset is based on profit after tax divided by average total assets 6 Fixed asset turnover is calculated by dividing revenue with average fixed assets 7 Asset turnover is calculated by dividing revenue with average total assets of the Company 8 Asset turnover is calculated by dividing revenue with average total assets of the Company 9 Interest coverage ratio is calculated by dividing EBIT by finance cost

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vii. Commentary on financial position and selected ratios

Revenue Growth:

For the period FY16 to FY20, CPL has posted a sales CAGR of 36.5%; mainly due to the higher volumes, increase in demand, higher prices, addition of new products/segments and addition of new customers.

Furthermore, during 1HFY21, CPL witnessed a surge 96% YoY surge in topline, mainly due to increase in demand due to COVID-19 (i.e, Paracetamol). In addition, higher prices led to better margins of 16% in 1HFY21 as compared to 12% during FY20.

Sales Volumes FY18 FY19 FY20 1HFY21 APIs (Tons) Paracetamol 2,769 2,344 2,525 1,518 Ciprofloxacin 68 45 26 16 Penicillin/Amoxicillin 59 56 207 156 Cefixime - 3 16 16 Formulation (Unit) Tablets 64,738,581 79,977,872 198,506,456 22,155,643 Capsules 2,251,942 1,950,888 5,280,077 1,176,028 Suspension 511,501 5,801 757,348 535,456

Profitability ratios:

For the period FY16 to FY20, CPL has posted a sales CAGR of 36.5%; mainly due to the higher demand, increase in prices and addition of new customers. This high growth in revenue translated into higher profitability; the profitability for the same period grew at 27.7% CAGR.

For FY19 net profit decreased to PKR 27.8 Mn, mainly attributable to tax charges and higher salary expenses pertaining to increase in no. of employees for cefixime. Previously, the Company was availing tax credit under section 65 (D) of Income Tax Ordinance, as the project was 100% equity financed.

The gross margins have remained range bound at 12.9% for the past 5 years. The margins of APIs are relatively lower; if compared to the pharmaceutical formulation manufacturers. The EBITDA of the Company grew 51.7% in FY20 due to 35.3% growth in revenue translating into higher operating profit.

Liquidity ratios:

CPL has maintained a comfortable cushion in terms of the liquidity, as the current ratio of the Company has been recorded at an average of 1.29x for the last 5 years.

In FY20 Advances, Deposits & Pre-Payments were up 118%, mainly due to two reasons (i) Increase in Advance tax because of an increase in value of imports. ii) A cash margin on LC on import was recorded/with-held by the bank that was subsequently released during 1HFY21.

Leverage ratios:

Debt to Equity ratio of the Company increased in FY20 to 47% from 40% in FY19 due to the increase in long term borrowings (new term finance agreement from Pak Brunai Investment Company) from PKR 73 million to PKR 165 million in FY20. However, the short-term borrowings have remained in line with the previous years.

During 1HFY21, debt to equity ratio of the Company has decreased to 33% from 47%. This decrease can be attributed to the increase in equity due to revaluation surplus of the PPE.

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Turnover ratios:

During FY20 CPL’s inventory turnover witnessed a sharp surge mainly due to the COVID-19 lockdowns, leading to increased lead times. However, prior to the pandemic the raw material prices were lower; hence, the Company increased their inventory level in anticipation of future pricing increments, ultimately reflecting increase in stock-in trade from 25 days in FY19 to 59 days in FY20.

The payable turnover, increased to 55 days in FY20 from 9 days in FY19, mainly due to longer credit lines from suppliers in wake of COVID-19 pandemic.

The cash conversion cycle of the Company has come down to 28 days from 69 days in FY20; showcasing efficient business operations.

Statement of Cash Flow:

Cash flow from Operations: Negative cash flow from operations in 1HFY21 is attributable to the investments in working capital (i.e, inventory) as the Company increased its stock level due the uncertainties arising from COVID-19 pandemic. This decision turns out to be beneficial for the Company, as during the said period, Country witnessed a non-supply of APIs from China for 6 weeks. Further, during 1HFY21 the higher taxes also dented the operating cashflow.

Cash flow from Investing Activities: The outflow of funds from investing activities majorly pertains to continuous BMR and capital expenditure made by the Company.

Cash flow from Financing Activities: During FY19, the outflow of PKR 250 Mn from financing activities include repayment of Directors loan (details provided in related party transaction table in section 2 and section 3) and short-term borrowing. viii. Summary of major revenue and expense items

Revenue Break Up FY18 (Audited) FY19 (Audited) FY20 (Audited) (PKR '000’) % Gross (PKR '000’) % Gross (PKR '000’) % Gross Margins Margins Margins API 1,981,938 99% 12% 2,539,089 97% 12% 3,294,783 93% 11% Pharmaceutical Formulation 78,108 1% 39% 67,939 3% 34% 232,842 7% 38% Total Sales1 2,003,334 100% 2,607,028 100% 3,527,625 100% 1 CPL’s biggest customer is GlaxoSmithKline Pakistan Limited with ~56.23% of the total sales in the last three years

Expense Break Up FY18 (Audited) FY19 (Audited) FY20 (Audited) (PKR '000’) % (PKR '000’) % (PKR '000’) % Raw Material Consumed1 (1,541,112) 89% (1,973,265) 87% (2,684,247) 87% Wood/Corn Cube2 (69,845) 4% (113,798) 5% (142,657) 5% Salaries (39,438) 2% (60,752) 3% (89,617) 3% Utilities (53,905) 3% (50,695) 2% (79,561) 3% Others (36,255) 2% (77,764) 3% (91,862) 3% Total COGS 1,740,554 100% 2,276,272 100% 3,087,944 100%

1 During FY20 CPL procured, 29.5% (i.e., Para Ameno Phenol) of total raw material from Taixing Yangzi Pharm Chemical Co Ltd. based in China.

2 Wood/Corn Cube is used by API manufacturers as a heating/fuel agent.

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ix. Summary of revenue on account of major product

Product-wise Revenue breakup Particular (000) Product Category FY20 (Audited) As % of Revenue Paracetamol API 1,942,726 55% Penicillin API 847,927 24% Cefixime Tri Hydrate API 361,876 10% Askprol Tablet Formulation 94,354 3% Other - 280,742 8% Total Sales - 3,527,625 100% x. Breakup of other income (expense) Other (Expenses) / Income (000) FY18 (Audited) FY19 (Audited) FY20 (Audited) Nature Profit on Deposit 4,755 4,769 7,466 Recurring Worker's Profit Participation Fund (6,276) (6,137) (11,101) Recurring Worker's Welfare Fund (2,385) (2,332) (4,027) Recurring Total (3,906) (3,700) (7,662)

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6A REVALUATION OF FIXED ASSETS During the 6-month period ended on December 31st, 2020, the revaluation of the Property Plant and Equipment of the Company was carried out on December 1st, 2020. The surplus on revaluation of the PPE was PKR 709,294,524. The revaluation of: - Plant Facility was done by Al- Hadi Financial and Legal Consultant for Factory Land, - 71 E Hali Road was done by A.J Valuers Associates (Pvt.) Limited, and - the Head Office was done by Jasper & Jasper. Break up of this revaluation surplus is given below;

Particular Amount

46.2 Acre Factory Land in Phool Nagar, Kasur 521,918,750

4-kanal Land for construction of Hospital in Lahore (71 E Hali Road) 83,309,000

Head Office of CPL on 420.47 sq. meter land (588 Q Block, Johar Town, 104,066,775 Lahore)

Revaluation Surplus - Net 709,294,524

Rationale for Revaluation of Land Assets were acquired in 2012 and are recoded at historical costs. Due to inflationary and development factors assets at historical values were not representing its true value. Thus, Management of the Company decided to incorporate revaluation (related to of land only) into books of accounts.

Issuance of Bonus Shares Disclosure Just before listing, the Company has revalued its property plant and equipment and has issued bonus shares of PKR 900 million against revaluation surplus and reserves. Bonus shares accounts to approximately 66.67% of total capital of Company. During 2HFY21, the Company has issued bonus shares worth PKR 400 million against the surplus on Revaluation thereby reducing the amount of the said surplus to PKR 309 million.

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6B DIVIDEND POLICY

The Company intends to follow a consistent profit distribution policy for its members, subject to profitability, availability of adequate cash flows, the Board’s recommendation and shareholders’ approval, where required. The rights in respect of capital and dividends attached to each ordinary share on offer are and will rank pari passu with sponsor shareholders. The Company in its general meeting may declare dividends but no dividend shall exceed the amount recommended by the Directors. Dividend, if declared in the general meeting, shall be paid according to the provisions of the Companies Act 2017. The Board of Directors may from time to time declare interim dividends as appear to it to be justified by the profits of the Company. No dividend shall be paid otherwise than out of the profits of the Company for the year or any other undistributed profits. No unpaid dividend shall bear interest or mark-up against the Company. The dividends shall be paid within the period laid down in the Companies Act. Under Section 242 of the Companies Act, any dividend payable in cash by a listed company, shall only be paid through electronic mode directly into the bank account designated by the entitled shareholder. Therefore, the applicants must fill-in the relevant part of the Shares Subscription Form under the heading, “Dividend Mandate”. Covenants/Restriction on Payment of Dividends: It is stated that there is no restriction on CPL by any regulatory authority, creditor, stakeholder etc. on the distribution and capitalization of its profits.

Eligibility for Dividend:

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

Cash Dividend Track Record (the company has not paid any cash dividend during the last five years)

FY16A FY17A FY18A FY19A FY20A

Cash & Stock Dividend Nil Nil Nil Nil Nil

DIVIDEND PAYOUT BY LISTED GROUP / ASSOCIATED COMPANIES CPL does not have any listed subsidiary or an associated company over which it has control.

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7 BOARD OF DIRECTORS AND THE MANAGEMENT OF THE COMPANY

Board of Directors of the Company are listed below: Period of Partnership/Directorship Name Address Designation CNIC Directorship in s in Other Companies CPL - Yaqeen Developers ltd. Chief - Citi Innovations (Pvt.) Ltd. Executive Citi Essentials (Pvt.) Ltd. Rizwan 3 C Model Town Officer & 35202-6462958-5 - Wisdom Works (Pvt.) Ltd.- Since Inception Ahmad Lahore Executive G7 Connect (Pvt.) Ltd. Director Blue Moon City (Pvt.) Ltd. Citi International Mining - Yaqeen Developers ltd. - Citi Innovations (Pvt.) Ltd. Chairman & Nadeem 3 C Model Town Citi Essentials (Pvt.) Ltd. Non-Executive 35202-5060989-7 Since Inception Amjad Lahore - Wisdom Works (Pvt.) Ltd. Director G7 Connect (Pvt.) Ltd. - Citi International Mining

Muhammad 3 C Model Town Non-Executive - Yaqeen Developers ltd. 3502-2835907-9 13/Oct/20 Naeem Lahore Director - Citi Innovations (Pvt.) Ltd.

H. No. 24-D, Independent Amir Zia Architect 35202-3036295-7 - Profitech Services Ltd. 13/Oct/20 Director Society, Lahore Rana H.No.262, Lane Independent Shakeel 2, Block-P, Johar 34602-0737441-9 None 02/April/20 Director Shaukat Town, Lahore Saira 3 C Model Town Non-Executive 35201-3753333-0 - Yaqeen Developers ltd. 13/Oct/20 Aslam* Lahore Director H.No. 797 Street Dr. Zamer Executive No. Sector I, 38302-1188338-9 - None 13/Oct/20 Ul Hassan Director Islamabad Note: Current Board of Directors of the Company were elected/re-elected on 28th October, 2019 * Mrs. Saira Aslam is the spouse of Mr. Rizwan Ahmed.

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PROFILES OF DIRECTORS 1- Mr. Nadeem Amjad (Chairman)

Mr. Amjad is also an early age entrepreneur with over 3 decades of profession business experience. Early on in his career, he has remained involved with trading businesses, dealing in Jewelry, Computer Micro-chips & Hardware, Telecommunications business.

He is a well-organized entrepreneur with an impeccable reputation of successful business ventures across the far east, middle east and Pakistan. He was the person behind the growth of the family businesses into various fields as well as geographies. He expanded the family business into the Hong Kong Real Estate business as well as hospitality.

He holds an MBA from University of London.

2- Mr. Rizwan Ahmad (CEO)

Mr. Rizwan Sheikh is the Chief Executive Officer of the Company. He is widely recognized as one of the leading thought leaders, entrepreneurs and Chief Executives in Pakistan’s pharma sector.

Mr. Sheikh entered into the world of business at an early age, when he joined the family telecommunications business under the name of Citi Phones (Pvt.) Limited. He gained considerable success as he graduated the business from a retailer to an importer. Later on, he joined the family business in Hong Kong and ventured into telecommunications, real estate, hospitality (restaurants) and pharma (API) trading. In 2007, Mr. Sheikh established a mobile phone manufacturing plant in Chinese province of Shenzhen and set up a trading company, “Discover Wireless” in Dubai, UAE. Since 2012, he has been spearheading CPL successfully, transforming the Company from a loss-making entity to a profitable one.

Mr. Rizwan holds an LLB (Bachelors of Law) from University of Punjab. After completing his bachelors, he studied law further from the University Law College.

Until recently, he was a Member Board of Management, Pakistan Drugs Testing and Research Center (a Government of Punjab undertaking), which is an independent contract research organization carrying out drugs’ testing and bioavailability/bioequivalence (BA/BE) studies and providing clinical, analytical and bio analytical chemistry services. He was also a member of the Expert Panel (Ministry of Health, Pakistan) for inspection of bioequivalence centers.

3- Mr. Amir Zia (Independent Director)

Mr. Zia is an independent director on the Board of Citi Pharma Limited. He is a Chartered Management Accountant by Qualification, having qualified CIMA – UK exams. Since qualifying, he has obtained vast experience in various strata of the field of finance including strategic planning, industry analysis, financial and economic analysis, project evaluation and management, treasury management as well as international trade and finance.

Mr. Zia previously served as the Group Chief Financial Officer of Treet Group of Companies and played an instrumental part in the expansion & diversification of Treet Corporation into various businesses and served on the Boards of almost all Treet Group entities including:

- Treet Corporation Limited Executive Director - Treet Holdings Limited Executive Director - Treet Battery Limited Executive Director - First Treet Manufacturing Modarba Limited Executive Director - Loads Limited Non-Executive Director - Renacon Pharma Limited Non-Executive Director - ZIL Limited Non-Executive Director - Systems Limited Non-Executive Director - Hi Tech Alloy Wheels Limited Non-Executive Director - Society for Cultural Education Secretary General / Director Page 131 of 178

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- Global Arts Limited Director - Treet HR Management (Private) Limited Director

He has also previously served as a member of the Listing Committee at the Pakistan Stock Exchange Limited and serves as the President of Institute of Professional Financial Managers.

4- Mr. Rana Shakeel Shaukat (Independent Director)

Rana Shakeel Shaukat is a Fellow Member of Institute of Chartered Secretaries and Managers and Certified Chartered Secretary. He is Chief Executive Officer of Fast-Tech Corporate Services (Private) Limited a Corporate Advisory Company. He is a seasoned professional having more than 25 years of diversified & accredited experience as Group Company Secretary in the listed entities from the business of Food Products, Blade Manufacturing, Textile, Appliances-Electronics and Auto Sectors and performed pivotal roles in day-to-day Secretarial, Legal Issues & Corporate Affairs including but not limited to Regulatory Compliance, Code of Corporate Governance, Legal Research & Documentation, Statutory Disclosures/ Regulatory Responses, and Advice, Opinion & Support to CEOs/BOD/HODs confidently with end-to-end responsibility. He has awarded Certificate from US Securities and Exchange Commission, Washington DC. USA in 2017.

5- Mrs. Saira Aslam (Non-Executive Director)

Mrs. Saira Aslam is an Bsc from Lahore Garrison College and is associated with CPL as a Director. She actively participates in the philanthropy in the city of Lahore and is considered to be one of the active philanthropists in the city.

6- Dr. Zameer Ul Hassan Shah (Director)

Dr. Shah is an experienced pharmaceutical sector professional with over 2 decades of experience in leading local and MNC companies. He is currently working as Director Operations of CPL and is in charge of all production related matters. Prior to joining CPL in 2002, Dr. Shah was involved with leading pharma sector players such as Global Pharmaceuticals (Pvt.) Limited, Caraway Pharmaceuticals, Cirin Pharmaceuticals Pvt. Limited, Merck Marker in Pakistan. He has also worked internationally with Tabuk Pharmaceutical Manufacturing Company – Riyadh, Saudi Arabia and Shifa Jeddah Polyclinics.

Throughout his career, he has been involved with the production of various penicillin, cephalosporin and psychotropic medicines.

He has completed his Master of Philosophy in Pharmaceutics from Gomal University (D.I. Khan). During his M. Phil, his thesis was on Bioequivalence Study of 400mg dispersible tablets (deferasirox) in comparison to Asurna 400 mg dispersible tablets by a leading MNC.

Following his M. Phil, he obtained a PhD in Pharmaceutics from Sargodha University.

7- Muhammad Naeem (Director)

He has more than 25 years of experience in retail sector, covering mostly electronic items and mobile phones. He serves as the Director of Citi Pharma Limited.

PROFILES OF KEY MANAGEMENT

1- Mr. Asif Iqbal (Chief Financial Officer)

Mr. Iqbal is the Chief Financial Officer at CPL. He holds extensive experience in both audit and finance. He specializes in the areas of corporate tax, audit and assurance and has previously been associated in various finance related roles, including:

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He is a member of Pakistan Institute of Public Finance Accountant and has cleared his CA Inter from Institute of Chartered Accountants of Pakistan.

2- Mr. Muhammad Riaz (Company Secretary)

Mr. Riaz is an MBA & LLB by qualification. He holds approx. 15 years of professional experience covering multifaceted concerns ranging from both the Public and the Private sectors of the economy. Areas of his professional experience & expertise include Direct & Indirect taxes, Corporate and Legal Services.

Positions previously held include:

• Senior Manager Corporate Affairs (Systems Limited) • Assistant Manager Corporate & Tax (KPMG Taseer Hadi & Co) • Corporate & Tax Executive (The TAQ Organization)

3- Mr. Jawad Ur Rehman Bajwa (Head of Quality Operations)

Mr. Bajwa is a PhD in Chemistry from G.C University Faisalabad. He has worked in various leading pharmaceutical companies in Pakistan conducting validation exercises, temperature mapping, quality audit and process controls.

Positions previously held include:

• Senior Manager Quality Operation (CSH Pharma Group) • Manager Quality Operations (Standpharm Pakistan Pvt. Ltd) • Manager Quality Operations (Citi Pharma Ltd) • DM Quality Assurance (Saffron Pharmaceuticals Pvt. Ltd)

4- Mr. Ghulam Mustafa (Production Manager)

Mr. Mustafa is a chemical engineer with over a decade’s professional experience. He holds extensive experience in pharmaceutical production and plant management as well as implementation of cGMP and GMP policies.

Positions previously held include:

• Sr. Executive (Pharmagen Limited)

5- Mr. Hassan Raza Naqvi (Treasury Manager)

Mr. Naqvi is a qualified Chartered Certified Accountant from the ACCA, UK and currently pursuing CFA qualification. He holds more than 10 years of local and international experience. He has thorough knowledge and expertise in Audit, Assurance, Risk Management and financial management:

Positions previously held include:

• Supervisory Senior (KPMG Taseer Hadi & Co) • Manager Financial Reporting (Techsac LLC Oman) • Senior Auditor (MCB Bank Limited)

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NUMBER OF DIRECTORS Pursuant to Section 154 of the Companies Act, 2017 a listed Company shall not have less than seven (7) directors. At present, the Board consists of 07 directors, including the Chief Executive Officer and two female directors.

QUALIFICATION OF DIRECTORS No person shall be appointed as a Director of the Company who is ineligible to be appointed as Director on any one or more of the grounds enumerated in Section 153 of the Companies Actor any other law for the time being in force.

REMUNERATION OF THE DIRECTORS As per the Article 88 and 89 any director who serves on any committee or who devotes special attention to the business of the Company, or who otherwise perform services which in the opinion of the directors are outside the scope of ordinary duties of a director, may be paid such extra remuneration as the Board of Directors may determine from time to time. The remuneration of a director for attending meetings of the Board shall from time to time be determined by the Board of Directors. Each director of the Company may, in addition to any remuneration receivable by him, be reimbursed his reasonable travelling and hotel expenses incurred in attending meetings of the Board of Directors or of the Company or otherwise whilst employed on the business of the Company. Remuneration to Directors in (PKR) FY 2018 FY 2019 FY 2020 Chief Executive Officer/Nadeem 1,800,000 2,700,000 3,250,000 Amjad

Mr. Rizwan Ahmed 1,500,000 1,945,000 2,600,000

Source: Company Accounts

BENEFITS TO PROMOTERS AND OFFICERS No benefit has been given or is intended to be given by the Company to the promoters and officers of the Company other than remuneration for services rendered by them as full-time executives of the Company.

INTEREST OF DIRECTORS The directors may be deemed to be interested to the extent of fees payable to them for attending the Board meetings. The Directors performing whole time services in the Company may also be deemed interested in the remuneration payable to them by the Company. The nominee directors have interest in the Company to the extent of representing the sponsors in the capital of the Company. Following directors are holding ordinary shares of the Company: Numbers of Value of Shares Name of Shareholder Designation Shares held held Mr. Nadeem Amjad Chairman 53,999,988 539,999,880 Mr. Rizwan Ahmad Chief Executive Officer 40,500,000 405,000,000 Mr. Muhammad Naeem Director 13,500,000 135,000,000 Mr. Amir Zia Independent Director 3 30 Mr. Rana Shakeel Shaukat Independent Director 3 30 Mrs. Saira Aslam Director 3 30 Mr. Zameer Ul Hassan Shah Director Operations 3 30 Source: Company Accounts

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ELECTION OF DIRECTORS The Directors of the Company are elected for a term of three years in accordance with the procedure laid down in section 159 of the Companies Act and Article 99. The Directors shall comply with the provisions of Sections 154 to 159 and Sections 161 and 167 relating to the election of Directors and matters ancillary thereto. Subject to the provisions of the Companies Act, the Company may from time to time increase or decrease the number of Directors. Any casual vacancy occurring on the Board of Directors may be filled up by the Directors, but the person so appointed shall be subject to retirement at the same time as if he / she had become a Director on the day on which the Director in whose place he / she is chosen was last elected as Director. The Company may remove a Director in accordance with the provisions of the Ordinance. The current Board of Directors were appointed on 28th October, 2019 and the next election is tentatively scheduled for 27th October, 2022

VOTING RIGHTS According to the Article 65, any rights or restrictions for the time being attached to any class or classes of shares, every member present in person (where all the participants of a general meeting can see each other) shall have, whether on a show of hands or on a poll, votes proportionate to the paid-up value of the shares or other securities carrying voting rights held by him according to the entitlement of the class of such shares or securities. Members may exercise voting rights at general meetings through electronic means if the Company receives the requisite demand for poll in accordance with the applicable laws. Every member present in person shall have one vote and upon a poll every member present in person or by proxy shall have one vote in respect of each share held by him.

AUDIT COMMITTEE The Board of Directors has set up an effective internal audit function managed by suitable qualified and experienced personnel who are conversant with the policies and procedures of the Company and are involved in the internal audit function on a full-time basis. The audit committee comprises of the following members: 1. Mr. Rana Shakeel (Independent Director) 2. Mr. Nadeem Amjad (Director) 3. Mr. Amir Zia (Independent Director)

HUMAN RESOURCE AND REMUNERATION COMMITTEE The Board of Directors has set up an effective Human Resources function managed by suitable and qualified personnel who are conversant with the policies & procedures of the Company and are involved in Human Resources function on a full-time basis. The human resource and remuneration committee comprises of the following members: 1. Mr. Zameer Ul Hasan Shah (Executive Director) 2. Mr. Saira Aslam (Independent Director) 3. Mr. Amir Zia (Independent Director)

BORROWING POWERS OF DIRECTORS As per the Article 123, the directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking, property and assets (both present and future) and to issue debentures, debenture stocks and other securities whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party. Page 135 of 178

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In regard to the issue of securities the directors may exercise all or any of the powers of the Company arising under Sections 66 of the Companies Act and in particular the directors may issue any security as defined in Section 2(1) (61) of the Companies Act or may issue any instrument or certificate representing redeemable capital as defined in section 2(1) (55) of the Companies Act. Debentures, debenture stocks, bonds and other securities may been made assignable free from any equities between the Company and the person to whom the same may be issued. Any debentures, debenture-stock, bonds or other securities may be issued at a discount, premium or otherwise, and with any provisions as to redemption, surrender, drawings and conversion into ordinary shares, provided that the Company shall not issue any debenture of whatever nature carrying voting right at any meeting of the Company, except the debentures convertible into ordinary shares which may carry voting rights not in excess of the voting right attached to the ordinary shares of equal paid up value. Issue of debentures by the Company shall be subject to the provisions of Section 63 to 66, 122 and 123 of the Companies Act.

POWERS OF DIRECTORS The control of the Company shall be vested in the Board of Directors and the business of the Company shall be managed by the Board of Directors who may exercise all such powers of the Company and do all such acts and things as may be exercised or done by the Company as by the Act or by Articles of the Company or by a special resolution expressly directed or required to be exercised or done by the Company.

CORPORATE GOVERNANCE The Company shall comply with all the rules and regulations applicable to the Company with regards to the Listed Companies (Code of Corporate Governance) Regulation, 2019. The Company shall also encourage representation of minority shareholders on the board of directors.

INVESTMENT IN ASSOCIATED COMPANIES The Company has sponsored Yaqeen Developers Limited. As of 1HFY21 audited accounts, CPL has invested PKR 255 million in Yaqeen Developers Limited; other than this, the Company has not acquired any Company nor has any resolution been passed for sponsoring or acquiring any associated Company.

CAPITALIZATION OF RESERVES Citi Pharma Limited has capitalized 70.5% of its reserves standing as at December 31st 2020 during FY21.

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8 LEGAL PROCEEDINGS AND OVERDUE LOANS

LEGAL PROCEEDINGS There are no outstanding legal or taxation proceedings involving the Issuer, its sponsors, substantial shareholders, directors and associated companies over which the Issuer has control.

OVERDUE LOANS There are no overdue loans (local or foreign currency) on the Company, its directors and its sponsors. The Company, its CEO, its directors and its sponsors, under the oath, undertake that they or their associated companies have no overdue payment to any financial institutions.

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9 UNDERWRITING ARRANGEMENT, COMMISSIONS, BROKERAGE AND OTHER EXPENSES

UNDERWRITING BOOK BUILDING PORTION Topline Securities Limited has been appointed as the Book Runner to the Issue. The Book Runner will credit underwrite 72,692,000 shares being offered for subscription through book building representing 100% of the Issue as required under regulation 7 (6) of the PO Regulations, with the limitations in effect that the Book Runner shall only underwrite the default portion of the Book Building, if any, at the Strike Price determined through the Book Building process. GENERAL PUBLIC PORTION The General Public Portion of the Issue has not been under written in terms of Regulation 7 (4) of the Regulations.

BUY BACK / REPURCHASE AGREEMENT The Book Runner in the capacity as underwriter of the book building portion has not entered into any buy back / re-purchase agreement with the company or any other person in respect of this issue of shares. Also, neither the Company nor any of its associates have entered into any buy back / re-purchase agreement with the book runner in the capacity as underwriter or its associates. The Company and its associates shall not buy back / re-purchase shares from the book runner and its associates taken up, if any, by it in capacity as the book runner.

COMMISSION OF THE BANKERS TO THE ISSUE Commission at the rate of 0.25% (inclusive of all taxes) of the amount collected on allotment in respect of successful applicants will be paid by the Company to the Bankers to the Issue for services to be rendered by them in connection with the Retail Portion of the Issue.

FEES AND EXPENSES FOR E-IPO SYSTEMS Commission on application received through the e-IPO systems of PSX and CDC will be paid to PSX and CDC which shall not be more than 0.8% of the amount of the successful applications. PSX and CDC will share the fee with other participants of the e-IPO system at a ratio agreed amongst them.

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

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ESTIMATED EXPENSES OF THE ISSUE Expenses to the Issue are estimated not to exceed PKR 74,249,038/-. The break-up of these preliminary expenses is given below:

Particulars Rate Expense (PKR) Lead Manager and Book Runner Fees1 1.5% 30,530,640 Commission to Bankers for General Public1 0.3% 1,526,532 PSX and CDC e-IPO Facility Charges 0.8% 4,070,752 PSX e-IPO Facility Charges 0.8% 4,070,752 Bankers to the Issue – Out of Pocket 420,000 TREC Holders' Commission1 1.00% 20,353,760 PSX Initial Listing Fees 1,500,000 PSX Services Fee 50,000 PSX Book Building Software charges 500,000 Transfer Agent and Balloting Agent 500,000 Marketing & Printing Expenses 5,000,000 CDC - Fresh Issue Fees1 0.16% 3,256,602 CDC - Annual Fees for Eligible Security (Listing Fees) 440,000 SECP IPO Application Processing Fee 200,000 SECP Supervisory Fee 10% of PSX Listing fee 150,000 Miscellaneous Expenses 1,000,000 Total 74,249,038 1Represent the maximum amount that is expected to be paid based on the Floor Price of PKR 28/- per share

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10 MISCELLANEOUS INFORMATION

REGISTERED OFFICE / CORPORATE OFFICE Citi Pharma Limited Corporate Office: 588-Q Block, Johar Town, Lahore. Plant site: 3 Km Head Balloki Road, Kasur Phone: 042-5316587-90 Website: http://citipharma.com.pk/ Email: [email protected]/

BANKER TO THE ISSUE FOR BOOK BUILDING Faysal Bank Limited

BANKERS TO THE ISSUE FOR GENERAL PORTION

1. Faysal Bank Limited 2. Habib Bank Limited 3. Soneri Bank Limited 4. Dubai Islamic Bank Limited 5. Habib Metropolitan Bank Limited 6. Bank Alfalah Limited 7. Al-Baraka Bank Pakistan 8. Meezan Bank Limited 9. Bank Al Habib Limited 10. United Bank Limited 11. MCB Bank Limited

BANKERS OF THE ISSUER

Sr. Name Address Telephone No. Email Address No. 1 Bank of Khyber Shah-Alam Branch, Lahore 0322-4432259 [email protected] 0334-4875853 2 Bank Al Habib Limited 13 G Johar Town Lahore 0321-4411149 [email protected]

3 Meezan Bank Limited Akbar Chowk Branch, 0334-1527853 [email protected] Lahore 4 Habib Bank Limited Liberty Market Branch 0300-9419993 [email protected]

5 Allied Bank Limited M.A Johar Town Branch 0321-4964273 [email protected]

6 Bank Alfalah Limited M.A Johar Town Branch 0333-4163151 [email protected]

7 The Bank Of Punjab Faisal Town Branch 0300-8407842 [email protected]

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AUDITORS OF THE COMPANY Name: Aslam Malik & CO. (Chartered Accountants) Address: Suite No. 19, FF Floor, Central Plaza, New Garden Town, Lahore Tel: 042-35858693 Email: [email protected]

LEGAL ADVISOR OF THE COMPANY & THE ISSUE Name: Lexium (Attorneys at Law) 61-C, Main Gulberg, Lahore Tel: 042-35870961 Email: [email protected]

LEAD MANAGER Topline Securities Limited 8th Floor, Horizon Towers Plot # 2/6, Block 3, Clifton, Karachi Tel: 021- 3530 3338-40 Fax: 021- 3530 3349 Email: [email protected] Website: www.Topline.com.pk

BOOK RUNNER Topline Securities Limited 8th Floor, Horizon Towers Plot # 2/6, Block 3, Clifton, Karachi Tel: 021- 3530 3338-40 Fax: 021- 3530 3349 Email: [email protected] Website: www.Topline.com.pk

COMPUTER BALLOTER & SHARES F.D Registrar Services (SMC-Pvt) Limited Suit 1705 – A. 17th Floor, Saima Trade Tower, I.I. Chundrigar Road, Karachi Tel: 021-3227 1905 Email: [email protected]

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11 MATERIAL CONTRACTS

i. Details of Short-Term Financing Facilities

Limit Utilized Limit (PKR Mark-up Sanctioned Expiry / Review Status Bank Facility as at June 30, Mn) Commission Year Year 20 (Mn) 50% of BOK Import LC 7th June, Renewal in Bank of Khyber 550 310.03 Schedule of 30th Nov, 2020 Limit Charges 2016 process*

3M Kibor + 7th June, Renewal in Bank of Khyber Istisna 100 98.91 30th Nov, 2020 300bps 2016 process* 0.2% per Bank Al Habib 13th March, Import LC 200 206.66 12th Sept, 2021 Limited Quarter 2018 3M kibor + Bank Al Habib Running 13th March, 25 - 12th Sept, 2021 Limited Finance 2.25% 2018

* These Bank of Khyber facilities have been extended till 31st May,2021. Post expiry will be extended for one year from the original expiry/renewal period (i.e, 30th Nov, 2020). ii. Details of Long-Term Financing Facilities

Limit Limit Utilized Mark-up Sanctioned Expiry / Review Bank Facility (PKR as at June 30th, Status Commission Year Year Mn) 20 (Mn) 3M Kibor + Diminishing 16th July, Expired during on- Bank of Khyber 84 3.5 16th July, 2020 Masharakah 300bps 2015 going financial year 3M Kibor + 26th Aug, Bank of Khyber Car Ijarah 9 1.6 26th Aug, 2019 Renewal in process 300bps 2016 Term 3M kibor + Bank Al Habib 13th March, 150 22.32 13th March, 2022 Limited Finance 2.25% 2018 Lease 6M Kibor + Bank Al Habib 13th March, 39.9 16.11 13th March, 2021 Renewal in process Limited Finance 2.5% 2018 Salary Bank Al Habib SBP 3% 2th June, 32.3 10.78 1th Jan, 2023 Limited Refinance 2020 Pak Brunei Term 3M kibor + 19th Dec, 150 85 19th Dec, 2023 Investment Limited Finance 2.50% 2019 Pak Brunei Term 3M kibor + 15th March, 100 65 15th March, 2023 Investment Limited Finance 2.50% 2019 Askari Bank Lease 6M Kibor + 17th Nov, 13.0 9.55 17th Nov, 2021 Limited Finance 2.5% 2016

* These Bank of Khyber facilities have been extended till 31st May,2021. Post expiry will be extended for one year from the original expiry/renewal period (i.e, 26th Aug)

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iii. Details of Long-Term Financing Facilities for Hospital Project

Financial Institution Facility Mark-up Commission Tenor Limit (PKR Mn) Pak Brunei Investment Limited LTFF 6M Kibor + 2.50% 05 Years 500 Pak Brunei Investment Limited50 LTFF 3M kibor + 2.50% 04 Years 150 Total 650

iv. Details of technical agreement

Dimensions Engineers & Architects (Pvt.) Limited under the project will provide:

This project will develop a template that will provide essential core clinical services along with facilities in key targeted areas. These services would be of the highest international standards comparable with the best in the world. They will consist of the following: 1. 50 inpatient beds 2. Outpatient services with leading Consultants from all key disciplines. 3. State of the art Diagnostic and Interventional Radiology 4. Highly advanced Laboratory services including some pioneering services like Molecular Pathology and Liquid Based Cytology. Frozen Section Histopathology and other less commonly available services will also be provided. 5. Fully Equipped Emergency Services (24hours) 6. ICU/CCU with ventilators attached with each bed 7. State of the art Operation Theatres. 8. Ambulatory Care/ Daycare services

The minimum land required for the project is 4-kanal which will be vertically developed. The said land has easy accessibility via established road network. The infrastructural requirements of the project mainly comprise of the construction of Emergency, ICU / CCU, Diagnostic Centre, Radiology Department, Surgical Consultancy, Medical Consultancy, Gynecology and Obstetrics, Canteen, Pharmacy, waiting areas, parking space and open space, etc.

50 This facility is for PKR 150Mn from Pak Brunei Investment Limited, however only PKR 3,449,000 will be utilized to fund Hospital project Page 143 of 178

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INSPECTION OF DOCUMENTS AND CONTRACTS Copies of the Memorandum and Articles of Association, the Audited Financial Statements, the Auditor’s Certificates, Information Memorandum and copies of the agreements referred to in this Prospectus may be inspected during usual business hours on any working day at the registered office of the Company from the date of publication of this Prospectus until the closing of the subscription list.

MEMORANDUM OF ASSOCIATION The Memorandum of Association, inter alia, contains the objects for which the Company was incorporated and the business which the Company is authorized to undertake. A copy of the Memorandum of Association is annexed to this Prospectus and with every issue of the Prospectus except the one that is released in newspapers as advertisement.

FINANCIAL YEAR OF THE COMPANY The financial year of the Company commences on July 1 and ends on June 30.

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12 BOOK BUILDING PROCEDURE / INSTRUCTIONS FOR REGISTRATION AND BIDDING

i. Brief Structure

The Present Issue The Issue comprises of 72,692,000 Ordinary shares of face value of PKR 10/- each, which constitutes 35% of the total post-IPO paid up capital of the Company. The entire Issue of 72,692,000 Ordinary Shares will be offered through Book Building process at a Floor Price of PKR 28/- per share. Initially, 75% of the issue size i.e. 54,519,000 Ordinary Shares will be allotted to Successful Bidders and 25% of the issue i.e. 18,173,000 Ordinary Shares will be offered to Retail Investors. Unsubscribed shares, if any, of the General Subscription portion will be allocated to Successful Bidders of the Book Building portion on a pro- rata basis. The Floor Price of PKR 28/- has a maximum Price Band of 40% above which no bid shall be accepted. At maximum Price Band, the highest strike price that can be bid for shall be PKR 39.20/- per share. The bidders shall give an undertaking along with the application that they would subscribe to the unsubscribed shares, if any, by the retail investors and their remaining bid money would remain deposited/ blocked till allotment of unsubscribed shares, if any, of the retail portion to them on pro-rata basis. In case the retail portion is fully subscribed, the bid money shall be unblocked within one (1) working day or refunded within three (3) working days of the closing of the public subscription. Within 3 working days of the closing of the Bidding Period, a Supplement to the Prospectus will be published in at least all those newspapers in which the Prospectus is published. The Supplement will contain information related to the Strike Price, the Offer Price, dates of the Public Subscription, and category wise break-up of the Successful Bidders. Format of the Supplement is given on page 3of this Prospectus. ii. Types of Bids and Procedure for making a Bid

Book Building is a process whereby investors bid for a specific number of shares at various prices. The Issuer sets a Floor Price, which is the minimum / lowest price a Bidder can bid at. An order book of bids is maintained by the Book Runner, which is then used to determine the Strike Price through the “Dutch Auction Method”. Under the Dutch Auction Method, the Strike Price is determined by lowering the Bid Price to the extent that the total number of shares issued through the Book Building process are subscribed.

A bid by a Bidder can be a “Limit Bid”, or a “Step Bid”, each of which are explained below: ▪ Limit Bid: Limit bid is at the Limit Price, which is the maximum price a Bidder is willing to pay for a specified number of shares. In such a case, a Bidder explicitly states a price at which he / she / it is willing to subscribe to a specific number of shares. For instance, a Bidder may bid for 1 million shares at PKR 39.20 per share, based on which the total Application Money would amount to PKR 39.2 million. In this case the Bid Amount will be also PKR 39.20 million. Since the Bidder has placed a Limit Bid of PKR 39.20 per share, this indicates that he / she / it is willing to subscribe the shares at a price up to PKR 39.20 per share.

▪ Step Bid: A series of Limit Bids at increasing prices. The amount of any individual step shall not be less than PKR 1,000,000. Under this bidding strategy, Bidders place a number of Limit Bids at different increasing price levels. A Bidder may, for instance, make a bid for 0.7 million shares at PKR 30.00 per share, 0.6 million shares at PKR 32.00 per share and 0.5 million shares at PKR 34.00 per share. Therefore in essence the Bidder has placed one Step Bid comprising of three Limit Bids at increasing prices. The Bid amount will be PKR 57.2 million. In case of individual Bidder, the Margin Money will be 100% i.e. PKR 57.2 million whereas in case of Institutional Bidders the Margin Money shall be 25% of the Bid amount i.e. PKR 14.3 million. Page 145 of 178

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RESTRICTIONS: (i) AN ELIGIBLE INVESTOR SHALL NOT: (a) MAKE BID BELOW THE FLOOR PRICE AND ABOVE THE UPPER LIMIT OF THE PRICE BAND; (b) MAKE BID FOR MORE THAN 10% OF THE SHARES ALLOCATED UNDER THE BOOK BUILDING PORTION UNDER THE BOOK BUILDING PORTION (c) MAKE A BID WITH A PRICE VARIATION OF MORE THAN 10% OF THE PREVAILING INDICATIVE STRIKE PRICE AS PER REGULATION 10(2)(iii) OF THE PO REGULATIONS (d) PLACE CONSOLIDATED BID (e) MAKE MORE THAN ONE BID SEVERALLY OR JOINTLY (f) MAKE DOWNWARD REVISION BOTH IN TERMS OF BID PRICE AND BID VOLUME; PROVIDED THAT INCASE OF UPWARD REVISION OF THE BID PRICE, THE NUMBER OF SHARES BID FOR I.E. BID VOLUME MAY BE ADJUSTED ENSURING THAT THE BID AMOUNT OR BID MONEY REMAINS THE SAME; AND (g) WITHDRAW BID

(ii) RELATED EMPLOYEES OF THE ISSUER, LEAD MANAGER AND THE BOOK RUNNER SHALL NOT PARTICIPATE IN THE BIDDING PROCESS.

(iii) NO PERSON SHALL TAKE PART IN THE BOOK BUILDING PROCESS, DIRECTLY OR INDIRECTLY SEVERALLY OR JOINTLY IN ANY MANNER OR ENGAGE IN ANY ACT OR PRACTICE WHICH CREATE A FALSE AND MISLEADING APPEARANCE OF ACTIVE BIDDING FOR RAISING OR DEPRESSING STRIKE PRICE IN THE BOOK BUILDING PROCESS.

(iv) AS PER REGULATION 7(8) OF THE PO REGULATION, THE ASSOCIATES OF THE ISSUER AS DISCLOSED IN THE PROSPECTUS SHALL NOT IN AGGREGATE MAKE BIDS IN EXCESS OF TEN (10) PER CENT OF THE SHARES OFFERED THROUGH BOOK BUILDING.

(v) AS PER REGULATION 7(9) OF THE PO REGULATIONS, THE ASSOCIATES OF THE LEAD MANAGER AND BOOK RUNNER SHALL NOT IN AGGREGATE MAKE BIDS IN EXCESS OF TEN (10) PERCENT OF THE SHARES OFFERED THROUGH BOOK BUILDING. LIST OF ASSOCIATED COMPANIES AND UNDERTAKINGS OF THE ISSUER, NAMES OF RELATED EMPLOYEES OF THE ISSUER, LEAD MANAGER AND BOOK RUNNERS ARE PROVIDED IN SECTION 3A (vi) Once the Bidding Period has lapsed and the book has been built, the, Strike Price shall be determined on the basis of Dutch Auction Method. Successful Bidders shall be intimated, within one (1) working day of the closing of the Bidding Period, about the Strike Price and the number of shares provisionally allotted to each of them. The bid money of bidders who have undertaken to subscribe the unsubscribed retail portion shall remain deposited or blocked till allotment of unsubscribed retail portion, if any, to them on pro-rata basis. Upon intimation by the Book Runner of the final allocation, successful institutional bidders shall deposit their balance margin money within (3) days of such intimation. Where a successful Bidder defaults in payment of shares allotted to him / her / it, the Margin Money deposited by such Bidder shall be forfeited to the Book Runner. As per regulation 9(16) of the PO Regulations, the successful bidders shall be issued shares at the time of issuance of shares to the retail investors. Shares to successful bidders shall be issued only in the form of book-entry through credit in their respective CDS accounts (Investors Account or Sub-Account). All the bidders shall, therefore, provide number of their CDS accounts in the bid application. The Bidders must fill-in the part of the Bidding Form under the heading, “Dividend Mandate” to enable the Company to directly credit their cash dividend, if any, in their respective International Bank Account Number (IBAN). iii. Mechanism for Determination of Strike Price

1. At the close of the bidding period, the Strike Price shall be determined on the basis of Dutch Auction Method by the Designated Institution. Under this methodology, the Strike Price is determined by lowering the price to the extent that the total shares offered under the Book Building Portion are subscribed.

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2. The Order Book shall display the bid prices in a tabular form in descending order along with the number of shares bid for and the cumulative number of shares at each price level. 3. As per the regulation 9(12) of the PO Regulation, in case all the bids made above the Strike Price are accommodated and shares are still available for allotment, such available shares will be allotted on proportionate basis against the bids made at the Strike Price. The mechanism for determination of the Strike Price can be understood by the following illustration: 1. Number of shares being Issued through the Book Building: 72,692,000, Ordinary Shares 2. Floor Price: PKR 28.00/-per Ordinary Share with maximum price band of 40% i.e. PKR 39.20 per share 3. Bidding Period: From June 15th, 2021 to June 16th, 2021 4. Bidding Time: 9:00am – 5:00pm 5. Bidding Revision Time (Upward Revision only): 9:00am – 5:00pm on all days Price Cumulative Number Bidder Quantity Category of Order (PKR/share) of shares Institution A 36 7,400,000 7,400,000 Limit Price Institution B 36.72 5,200,000 12,600,000 Limit Price HNWI A 37.45 8,000,000 20,600,000 Step Bid Institution C 38.20 3,800,000 24,400,000 Limit Price Institution D 38.97 10,500,000 34,900,000 Limit Price Institution E 39.20 3,500,000 38,400,000 Limit Price HNWI B 37.24 5,900,000 44,300,000 Limit Price HNWI A 37.98 1,892,000 46,192,000 Step Bid Institution F 36.72 3,300,000 49,492,000 Limit Price Institution G 36.09 5,300,000 54,792,000 Limit Price Institution H 35.50 3,500,000 58,292,000 Limit Price HNWI C 36.81 5,400,000 63,692,000 Limit Price Institution I 34.60 2,600,000 66,292,000 Step Bid Institution H 32.5 1,000,000 37,300,000 Limit Price HNWI D 34.35 2,200,000 68,492,000 Step Bid HNWI E 35.50 2,500,000 70,992,000 Limit Price Institution J 34.5 1,700,000 72,692,000 Step Bid HNWI E 29.5 900,000 73,592,000 Step Bid HNWI F 29 500,000 74,092,000 Limit Price HNWI G 29 500,000 74,592,000 Limit Price Strike Price Bid has been Total shares determined revised bid for at and through Dutch upwards and above the

Auction Method placed at PKR Floor Price 29.5

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 34.50 per share to sell the required quantity of 72,692,000 ordinary shares.

At PKR 36 per share, investors are willing to buy 7,400,000 shares. Since 65,292,000 shares are still available, therefore the price will be set lower.

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At PKR 36.72 per share, investors are willing to buy 5,200,000 shares. Since 60,092,000 shares are still available, therefore the price will be set lower. At PKR 37.45 per share, investors are willing to buy 8,000,000 shares. Since 52,092,000 shares are still available, therefore the price will be set lower. At PKR 38.20 per share, investors are willing to buy 3,800,000 shares. Since 24,400,000 shares are still available, therefore the price will be set lower. At PKR 38.97 per share, investors are willing to buy 10,500,000 shares. Since 37,792,000 shares are still available, therefore the price will be set lower. At PKR 39.20 per share, investors are willing to buy 3,500,000 shares. Since 34,292,000 shares are still available, therefore the price will be set lower. At PKR 37.24 per share, investors are willing to buy 5,900,000 shares. Since 28,392,000 shares are still available, therefore the price will be set lower. At PKR 37.98 per share, investors are willing to buy 1,892,000 shares. Since 26,500,000 shares are still available, therefore the price will be set lower. At PKR 36.72 per share, investors are willing to buy 3,300,000 shares. Since 23,200,000 shares are still available, therefore the price will be set lower. At PKR 36.09 per share, investors are willing to buy 5,300,000 shares. Since 17,900,000 shares are still available, therefore the price will be set lower. At PKR 35.50 per share, investors are willing to buy 3,500,000 shares. Since 14,400,000 shares are still available, therefore the price will be set lower. At PKR 36.81 per share, investors are willing to buy 5,400,000 shares. Since 9,000,000 shares are still available, therefore the price will be set lower. At PKR 34.60 per share, investors are willing to buy 2,600,000 shares. Since 6,400,000 shares are still available, therefore the price will be set lower. At PKR 34.35 per share, investors are willing to buy 2,200,000 shares. Since 4,200,000 shares are still available, therefore the price will be set lower. At PKR 35.50 per share, investors are willing to buy 2,500,000 shares. Since 1,700,000 shares are still available, therefore the price will be set lower At PKR 34.50 per share, investors are willing to buy 1,700,000 shares. Since after bidding for 1,700,000 shares at PKR 34.50 per share, no shares will be available therefore the Strike Price will be set at PKR 34.50 per share for the entire lot of 72,692,000 shares. The bidders who have placed bids at prices above the Strike Price (which in this illustration is PKR 34.50 per share), will become entitled for allotment of shares at the Strike Price and the differential would be refunded. In case all the bids made above the Strike Price are accommodated and shares are still available for allotment, such available shares shall be allotted against the bids made at the Strike Price on proportionate basis as per regulation 9(12) of the PO Regulations. The Bidders who have made bids below the Strike Price shall not qualify for allotment of shares and the Book Runner shall intimate the respective banks for unblocking their Bid Money within one (1) working day of the close of the bidding period as per regulation 9(13) of the PO Regulation and the refunds, where required to such bidders shall be made within three (3) working days from the close of the bidding period Since this Issue is being made through 100% book building, as per the regulation 7(4) of the PO Regulation, the Bidder shall be allowed to place bids for hundred (100%) percent of the issue size and the strike price shall be the price at which hundred (100%) percent of the issue size is subscribed. However, the successful bidders would be allotted and issued only seventy-five (75%) percent of the issue size and the remaining twenty-five (25%) percent would be offered to the retail investor. The bidders shall give an undertaking along with the application that they would subscribe to the unsubscribed shares, if any, out of the retail portion of the Issue and their remaining bid money would remain deposited/ blocked till allotment of such unsubscribed shares to them on pro-rata basis. Page 148 of 178

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The bid money of bidders shall remain deposited or blocked till allotment of unsubscribed shares, if any, to them on pro rata basis as per regulation 9(15) of PO Regulation.

In case retail portion of the Issue is fully subscribed, the bid money shall be unblocked within one (1) working day or refunded within three (3) working days of the closing of the public subscription. iv. Time frame for intimation to the successful bidders and mechanism for payment of the balance amount by the successful bidders

Successful bidders shall be intimated, within one (1) working day of the closing of the bidding period, the Strike Price and the number of shares provisionally allotted to each of them. Upon intimation by the Book Runner of the final allocation, successful institutional bidders shall deposit their balance margin money within (3) days of such intimation. Where a successful Bidder defaults in payment of shares allotted to it, the Margin Money deposited by such Bidder shall be forfeited to the Book Runner. v. Book Runner to the Issue Topline Securities Limited, having underwriting license, has been appointed by the Issuer as the Book Runner to this Issue.

Roles and Responsibilities of the Book Runner

The Book Runner to the issue shall be responsible to: 1. Ensure that necessary infrastructure and electronic system is available to accept bids and to conduct the whole Book Building process in a fair, efficient and transparent manner; 2. ensure blocking of bid and margin money of the Bidders in their respective accounts; 3. the Book Runner must be financially capable for honoring its commitments arising out of defaults by their investors, if any; 4. use the software provided by the Designated Institution for the Book Building on such terms and conditions as may be agreed with the Designated Institution through an agreement in writing; 5. ensure that the software used for Book Building is based on Dutch Auction Method for display of the order book and determination of the strike price; 6. ensure that the bidders can access to the System and can revise their bids electronically using the user ID and the password; 7. ensure that it has obtained list and Unique Identification Number (UIN) of the associates of the Issuer, the Lead Manager and all the related employees; 8. ensure that names and UIN of all the persons mentioned under section 3A are entered and capped in a manner as prescribed in the PO Regulations before commencement of the Bidding Period; 9. ensure that no bid or bids exceeding ten percent (10%), in aggregate, is or are made by the associated companies and associated undertakings of the Issuer; 10. ensure that no bid in aggregate exceeding five per cent (5%) is made by the associated companies and associated undertakings of the Lead Manager and the Book Runner; 11. enter into an underwriting agreement with the Issuer with respect to underwriting of the Book Building portion for covering the default risk; 12. establish bid collection centers at least in Islamabad, all the provincial capitals, Azad Kashmir and Gilgit/ Baltistan; 13. maintain record of all the bids received; and 14. Ensure that all the Bids received in the Bid Collection Centers are entered into the system developed by the Designated Institution for the purpose of Book Building within the prescribed time.

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The Book Runner have established bid collection centers at the following addresses (direct & fax numbers in all centers).

Bid Collection Centers The Book Runner has established bid collection centers at the following addresses: Karachi Topline Securities Limited Contact Officer: Syed Mustafa Zamin Mohammad Saad Abdullah Direct No.: 92-35303347/ +92 336 3945524 +92-35303347/+92 332 2049140 PABX No.: 92-35303339-40 Ext:151 92-35303339-40 Ext:151 Fax No.: 92-35303349 92-35303349 Email: [email protected] [email protected] Postal Address: 801, 8th Floor Horizon Tower, Block 3, Clifton, Karachi 801, 8th Floor Horizon Tower, Block 3, Clifton, Karachi

Karachi Faysal Bank Limited Contact Officer: Khurram Shakeel Riaz Uddin Direct No.: 0316-8880851 0316-8880851 Cell No: 0332-3371224 0321-2993800 Email: [email protected] [email protected] Postal Address: 11/13, Trade Centre, I.I Chundrigarh Road, Karachi 11/13, Trade Centre, I.I Chundrigarh Road, Karachi Lahore Islamabad Contact Officer: Mohamamd Rafaqat Ali Syed Dilshad Alam Cell No.: 042/37235810/0333-4388216 051-2610702/03215181690 Email: [email protected] [email protected] Postal Address: 43, Shahrah-e-Quaid-e-Azam, Lahore 15-West, Jinnah Avenue Blue Area, Islamabad Faisalabad Abbottabad Contact Officer: Zeeshan Pasha Muhammad Saleem Cell No.: 041-2409316/0300-6640074 0992-863326/0334-3809556 / 0344-6841492 Email: [email protected] [email protected] Postal Address: Civil Line, Main-Faisalabad 841 Farooqabad Main Mansehra Road, Abbottabad Peshawar Quetta Contact Officer: Adeel Ahmed Nasir Iqbal Cell No.: 091-5260488/0333-9131528 081-2840588/0345-8169184 Email: [email protected] [email protected] Postal Address: Fakhr-e- Alam Road Branch , Peshawar Cantt Shahrah-e-Adalat Road, Quetta Gilgit Mirpur Azad Kashmir Contact Officer: Muzfar Ahmad Adeel Azam Cell No.: 05811-457381/ 0346-3719228 / 0355-5431910 05827-445683/0346-6874713 Email: [email protected] [email protected] Postal Address: ZS Plaza, Shahrah-e-Quaid-e-Azam, Opposite Radio Mian Muhammad Road, Opposite Quaid e Azam Pakistan, Jutial, Gilgit. Stadium, Azad Kashmir vi. Roles and Responsibilities of the Designated Institution PSX being provider of the Book Building System (Designated Institution), shall ensure that Book Building System shall smoothly perform following functions: 1. Record name, UIN, National Tax Number (NTN), postal and email addresses, land line and cell numbers, International Bank Account Number (IBAN) and branch address and complete CDS Account Number (i.e. Investor Account Number or Sub-Account Number);

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2. Provide a mechanism for registration of the bidders before commencement of the bidding period till 03:00 p.m. on the last day of the Bidding Period and require the investors to provide at least such information as mentioned above; 3. Generate bidders’ Internet Protocol (IPs) address and keep record of all IP addresses from where the bids are placed; 4. Record the number of shares bid for, the Bid Price, type of the bid i.e. Limit Bid or Step Bid, date and time of the entry of the bid; 5. Display the bids revised, and date and time of upward revision; 6. Neither allow withdrawal of bid, nor accept the bids placed at a Bid Price that is below the Floor Price or above 10% of the Indicative Strike Price at any point of time and above the upper limit of the Price Band; 7. Display live the total number of shares offered for sale, the Floor Price, Price Band, total number of bids received, total number of shares bid for and the indicative Strike Price; 8. Build an order book showing demand for the shares at various price levels in a descending order along with the accumulated number of shares bid for and percentage of total shares offered under the Book Building Portion; 9. Discover the strike price at the close of the Bidding Period; 10. Generate alerts for the Bidders via Short Message Service (“SMS”) through cell phones and emails upon entry of the bid, at the time of upward revision of the bid, upon variation in the Indicative Strike Price and upon discovery of the strike price; and 11. Ensure that the system must provide the bidders the option to upward revise their bids online or through the Book Runner during the period permitted under these PO Regulations.

The Designated Institution shall ensure that:

─ identity of the bidder is not displayed; and ─ No bid is entered into the System after closing of the Bidding Period. vii. Roles and Responsibilities of the Issuer: The Issuer shall ensure that: 1. the Issuer, its sponsors, promoters, substantial shareholders, directors and associates shall have no over dues or defaults, irrespective of the amount, appearing in the report obtained from the credit information bureau; 2. the Issuer or its directors, sponsors or substantial shareholders should not have held the office of the directors, or have not been sponsors or substantial shareholders in any company: i. which had been declared defaulter by the securities exchange or futures exchange; or ii. whose TRE certificate has been cancelled or forfeited by the securities exchange; or iii. Which has been de-listed by the securities exchange due to non-compliance of its regulations. 3. The Lead Manager, Book Runner, Underwriter, Balloter and Share Registrar and Banker to the Issue, are appointed through separate agreements in writing. 4. It has submitted through its Lead Manager, an application along with draft prospectus for listing of its securities to the securities exchange. 5. It is in operations for at least 3 financial years. 6. It has profitable track record for at least 2 preceding financial years from its core business activities. 7. Not less than 51% of the shares of the Issuer are held by same persons for at least 2 preceding financial years. 8. Its breakup value/book value per share is not less than its face value per share. 9. The shares shall be issued in book-entry form only. viii. Opening and Closing of the Registration Period The Registration period shall be for Five (5) working days as under:

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15/06/2021 9:00am to 5:00pm 16/06/2021 9:00am to 3:00pm

ix. Opening and Closing of the Bidding Period The Bidding Period shall be for two working days as under:

15/06/2021 BIDDING PROCESS STARTS ON (9:00 AM to 5:00 PM) 16/06/2021 BIDDING PROCESS ENDS ON (9:00 AM to 5:00 PM)

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

xi. Information for Bidders 1. The Prospectus for Issue of Shares has been approved by PSX and SECP. The Prospectus, Registration Forms and the Bidding Forms can be obtained from the Registered Offices of TSL and the designated Bid Collection Centers. Prospectus, Registration Forms and Bidding Forms can also be downloaded from the following websites of the Lead Manager, Book Runner, the Company, PSX and CDC i.e. http://www.topline.com.pk/, http://citipharma.com.pk/, www.psx.com.pk & www.cdceipo.com;

2. Eligible Investors who are interested to participate in bidding for subscribing the Ordinary Shares of the Company should approach the Book Runner at the addresses provided in section 10 for registration for submitting their Bids. 3. The registration forms should be submitted on the prescribed format at the addresses provided in section 10 4. The bids should be submitted on the prescribed bidding form in person, through fax numbers given in section 10 or through the online system using the user id and password issued at the time of registration of eligible investor. 5. Registered investors can place and revise their bids upwards by accessing the designated institutions online portal for book building by using the user id and password communicated to them via email by PSX. 6. Each eligible investor shall only submit a single pay order, demand draft or evidence of online transfer of money along with the registration form. It may also be noted that only a single pay order, demand draft or evidence of online transfer of money shall be accepted by the book runner along with each additional payment form. 7. Eligible investors who are account holders of Faysal Bank Limited (the banker to the book building portion of the issue) can use the online transfer facility provided by Faysal Bank Limited to deposit their bid money to the book building account opened at Faysal Bank Limited. xii. Registration form and Procedure for Registration 1. A standardized Registration Form has been prescribed by the Issuer. The Registration Form shall be submitted, duly filled in, at the Bid Collection Centers in person on addresses given in section 10 on the standard Registration Form. The Registration Form shall be serially numbered at the bid collection centers and date and time stamped at the time of collection of the same from the Bidders.

2. Upon completion and submission of the Registration Form, the Bidders are deemed to have authorized the Issuer to make necessary changes in the Prospectus as would be required for finalizing and publishing the Supplement to the Prospectus in the newspapers in which Prospectus was published and filing the Supplement with PSX and SECP, without prior or subsequent notice of such changes to the Bidders. 3. The registration procedure under the Book Building process is outlined below: ─ The Registration period shall be for five (5) working days i.e. 10/06/2021 to 15/06/2021 from 9:00 AM to 5:00 PM and from 9:00 AM to 3:00 PM on 16/06/2021. ─ The Registration Form shall be issued in duplicate signed by the Bidder and countersigned by the Book Runner, with the first copy for the Book Runner and the second copy for the Bidder.

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─ The Registration Form shall be duly filled in and signed in duplicate and shall be submitted at the Bid Collection Centers in person, through representative or through fax on addresses and numbers given in section 10. ─ Upon registration of the bidders in the System, PSX shall assign and communicate the User ID and Password to the Bidders via email on the email address provided by them in the Registration Form. ─ The Book Runner may reject any bid for reasons to be recorded in writing provided the reason of rejection is disclosed to such bidder. Decision of the Book Runners shall not be challengeable by the Bidder or its associates. ─ Bid Amount / Margin Money shall be deposited along with the Registration Form through demand draft, pay order or online transfer through Bidder’s bank account only. In case of Online Transfer, the Bidders are requested to submit a bank receipt evidencing transfer of the bid money into the Issuer’s designated bank account. Please note that cash must not be deposited either directly or through online transfer in the Issuer’s designated bank account. ─ The pay order shall be made in favor of “CITI PHARMA LIMITED- Book Building”. For online transfer the payment shall be made into the account PK05FAYS3040301000005274 being maintained at Faysal Bank Limited in Ferozepur Road Branch, Lahore. Please note that online transfer facility shall only be allowed to Faysal Bank Limited customers. ─ Please note that third party instruments will not be accepted for Margin Money. o In case of intra city payment instruments, the bidders shall ensure that the payment instruments are made “Payable at any Branch”. Intra city payment instruments that are not made “Payable at any Branch” will not be accepted. ─ The Book Runners shall collect an amount of 100% of the Application Money as Margin Money in respect of bids placed by Individual Investors. ─ The Book Runners shall collect an amount of not less than 25% of the Application Money as Margin Money in respect of bids placed by Institutional Investors. ─ The Bidder shall provide a valid email address in the Registration Form so that the relevant ID and password can be emailed to them upon registration. ─ The Bidders can use the User ID and Password to independently place and upward revise their bids online. ─ The successful Bidders shall be issued shares only in the form of book-entry to be credited in their respective CDS accounts. All the bidders shall, therefore, provide their CDC account numbers in the bid application and Registration form. ─ The successful Bidders shall be paid cash dividend, if any announced by the Company, only through direct credit in their respective International Bank Account Number (IBAN). All the Bidders, therefore, must provide their IBANs in the Bid Application and Registration Forms. xiii. Procedure for Bidding 1. A standardized Bidding Form has been prescribed by the Issuer. 2. Registered Investors can submit their bids in person or through representatives at the Bid Collection Centers during the bidding dates or can place their bids online at https://bkb.psx.com.pk using the user ID and Password received by them over email upon registration with the Book Runner. 3. The bidding procedure under the Book Building process is outlined below: ─ Bids can be placed either at the “Limit Price” or as a “Step Bid”. The minimum size of a Limit Bid by an Eligible Investor shall not be less than PKR 1,000,000/- (Rupees One Million) and in case of a Step Bid, the amount of any step shall also not be less than PKR 1,000,000/- (Rupees One Million). ─ The investors may place their bids through any of the Bid Collection Centers established pursuant to the requirements of sub-regulation 10 of regulation 8 of the PO Regulations. Please see section 10 for addresses and contact detail of persons at the Bid Collection Centers. ─ The persons at the Bid Collection Centers shall vet the bid applications and accept only such bid applications that are duly filled in and supported by pay order, demand draft or a bank receipt evidencing transfer of the bid money into the Issuer designated bank account.

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─ On receipt of bid application in accordance with the aforementioned regulation, the Book Runner shall enter Bid into the System and issue to the Bidder an electronic receipt bearing name of the Book Runner, name of the bidding center, date and time. ─ The bidding shall commence from 09:00 a.m. and close at 05:00 p.m. on all days of the Bidding Period. The bids shall be collected and entered into the system by the Book-Runner till 05:00 p.m. on the last day of the bidding period. ─ The Bidders shall have the right to revise their bids upwards any time either manually through the Bid Collection Centers or electronically through direct access to the system till 05:00 p.m. on the last day of the Bidding Period. ─ The Bidders shall NOT make downward revision both in terms of Bid Price and Bid Volume provided that in case of upward revision of the Bid Price, the number of shares Bid for i.e. Bid Volume may be adjusted ensuring that the bid amount or bid money remains the same. ─ The Bidders shall not withdraw the Bids. ─ The Book Runner shall collect full amount of the Bid Amount as Margin Money in respect of bids placed by the High Net worth Individual and not less than twenty five percent (25%) of the Bid Amount as Margin Money in respect of bids placed by the Institutional Investors. However, book runner can waive this margin requirement for institutional investors at its own discretion ─ Payment of Margin Money shall be accepted only through demand draft, pay order or online transfer and third- party payment instruments shall not be accepted. ─ The Book Runner may on its own discretion accept a bid without Margin Money, provided the Book Building Portion is fully underwritten at least at the Floor Price by the Book Runner. ─ The Book Runner may reject any bid for reasons to be recorded in writing provided the reason of rejection is disclosed to such bidder. The decision of the Book Runner shall not be challengeable by the Bidder or its associates. ─ PSX shall, through the system, display live throughout the bidding period an order book in descending order showing demand for shares at various prices and the accumulated number of shares bid for along with percentage of the total shares issued (the “Order Book”). The Order Book should also show the revised bids and the bids withdrawn. The Order Book shall be accessible through websites of PSX. ─ At the close of the Bidding Period, the Strike Price shall be determined on the basis of the Dutch Auction Method. ─ Once the Strike Price is determined, all those Bidders whose bids are found successful shall become entitled for allotment of shares. ─ The Bidders who have made bids at prices above the Strike Price shall be allotted shares at the Strike Price. ─ In case all the bids made above the Strike Price are accommodated and shares are still available for allotment, such available shares will be allotted against the bids made at the Strike Price on proportionate basis as per regulation 9(12) of PO Regulations. The procedure for allotment of shares to successful Bidders is mentioned in Section 13 (xiii) of the Prospectus. ─ The Bidders who have made bids below the Strike Price shall not qualify for allotment of any Ordinary Shares and the Book Runner shall intimate their respective banks for unblocking their Bid Money within one (1) working day of the close of the bidding period and in case of refunds, the refund to such bidders shall be made within three (3) working days from the close of the bidding period. ─ Successful bidders shall be intimated, within one (1) working day of the closing of the bidding period, the Strike Price and the number of shares provisionally allotted to each of them. The successful bidders shall be intimated by the Book Runner of their final allocation after subscription of the retail portion of the Issue. ─ In case the retail portion of the Issue is not fully subscribed, the unsubscribed shares shall be allotted to the successful bidders on pro-rata basis. ─ In case the retail portion of the Issue is oversubscribed, the allotment shall be made in the manner given in section 13 (xxi).

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─ Upon intimation by the Book Runner of final allocation, successful institutional bidders shall deposit their balance margin within (3) days of such intimation. Where a successful Bidder defaults in payment of shares allotted to it, the Margin Money deposited by such Bidder shall be forfeited to the Book Runner. ─ Final allotment of shares out of the Book Building Portion shall be made after receipt of full subscription money from the successful Bidders; however, shares to such Bidders shall be credited at the time of credit of shares out of the retail portion. ─ The successful Bidders shall be issued shares only in Book Entry Form to be credited in their respective CDS Accounts. All the bidders shall, therefore, provide their CDS Account Numbers in the Registration Form. ─ The Designated Institution shall continue to display on its website, the data pertaining to the Book Building and determination of the Strike Price for a period of at least three working days after closure of the Bidding Period. ─ The Book-Runner shall ensure that subscription money received against the bids accepted shall not be released to the Issuer by the Banker to the Book Building Portion until: o credit of all shares allotted to retail investors; and o Issuance of NOC by the PSX. xiv. Payment for Book Building Portion

The Issuer has opened a bank account for collection of applications’ money related to Book Building Portion. The Bidders shall draw demand draft or pay order in favor of “CITI PHARMA LIMITED- Book Building “or online transfer of the Bid money into the respective Book Building account and submit the demand draft, pay order or bank receipt at the designated Bid Collection Centers either in person or through facsimile along with a duly filled in Registration Form. For online transfer the payment shall be made into the Account PK05FAYS3040301000005274 with the Account Title “CITI PHARMA LIMITED- Book Building “. Please note that online transfer facility shall only be allowed for customers. CASH MUST NOT BE SUBMITTED WITH THE BIDDING FORM/REGISTRATION FORM AT THE BID COLLECTION CENTER NOR DEPOSITED DIRECTLY OR VIA ONLINE TRANSFER IN THE ISSUER’S DEISGNATED BANK ACCOUNT. BID AMOUNT MUST BE PAID THROUGH PAY ORDER, BANK DRAFT OR ONLINE TRANSFER DRAWN / TRANSFER IN FAVOR OF ““CITI PHARMA LIMITED- Book Building “IN A MANNER ACCEPTABLE TO THE BOOK RUNNER. PLEASE NOTE THAT THIRD PARTY PAYMENT INSTRUMENTS WILL NOT BE ACCEPTED. The Collection Banks shall keep and maintain the bid money in the said account. Once the shares allotted under the retail portion have been credited, the Lead Manager, after obtaining NOC from PSX, may request in writing to the Banker to the Book Building Portion for transfer of the money of the successful and accepted applications to the Issuer’s account(s). PAYMENT PROCEDURE The payment procedures for a Limit Bid or a Step Bid are explained below: ▪ PAYMENT FOR LIMIT BID If investors are placing their bids as a Limit Bid then they shall deposit the Margin Money based on the number of shares they are bidding for at their stated bid price. For instance, if an investor is applying for 1 million shares at a price of PKR 30.00/- per share, then the total Application Money would amount to PKR 30 million. In such a case, (i) Individual Investor shall deposit PKR 30 million in the Book Building account as the bid amount which is 100% of PKR 30 million; and (ii) Institutional Investor shall deposit at least PKR 6.0 million in the Book Building account as the Margin Money which is 25% of PKR 30 million.

▪ PAYMENT FOR STEP BID If an investor is placing a Step Bid which is a series of Limit Bids at increasing prices, then he/she/it shall deposit the Margin Money / bid money based on the total number of shares he/she/it is bidding for at his/her/its stated bid prices. Page 155 of 178

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For instance, if the investor bids for 0.70 million shares at PKR 30.00/-per share, 0.60 million shares at PKR 31/-per share and 0.50 million shares at PKR 32/- per share, then in essence the investor has placed one Step Bid comprising three limit bids at increasing prices. The Application Money would amount to PKR 55.6 million, which is the sum of the products of the number of shares bid for and the bid price of each limit bid. In such a case, (i) Individual Investors shall deposit PKR 55.6 million in the Book Building Account as Margin Money which is 100% of PKR 55.6 million and (ii) Institutional Investors shall deposit at least PKR 13.9 million in the Book Building Account as Margin Money which is 25% of PKR 55.6 million. xv. Payment by Foreign Investors

Companies are permitted under paragraph 6 (with specific reference to sub para (B) (I)) of Chapter 20 of the State Bank of Pakistan’s (“SBP”) Foreign Exchange Manual (the “Manual”) to issue shares on repatriation basis to non- residents who are covered under paragraph 6 (A) of Chapter 20 of the Manual, i.e. (I) A Pakistan national resident outside Pakistan, (II) A person who holds dual nationality including Pakistan nationality, whether living in or outside Pakistan, (III) A foreign national, whether living in or outside Pakistan and (IV) A firm (including a partnership) or trust or mutual fund registered and functioning outside Pakistan, excluding entities owned or controlled by a foreign government, provided the issue price, is paid in foreign exchange through normal banking channel by remittance from abroad or out of foreign currency account maintained by the subscriber/purchaser in Pakistan. Non-residents who wish to bid for the subscription of shares being offered via book building can remit the subscription money through an Authorized Dealer directly to the book building accounts opened by the Company as given in section 13 (xiv)(3) of this Prospectus, however, those non-residents who wish to subscribe shares out of the general public portion may contact any of the bankers to the issue (retail portion) for taking instructions regarding payment of subscription money against shares offered to general public / retail investors. List of bankers to the Issue for retail portion is available on page 1 and section 13 of this Prospectus. The shares issued to non-resident shareholders shall be intimated by the Company to the designated Authorized Dealer, along with the documents prescribed in the Manual within 30 days of issue. Non-residents who are covered under paragraph 6 (A) of Chapter 20 of the Manual do not require SBP’s approval to invest in the shares being issued in terms of this Prospectus. Furthermore, under paragraph 7 (vii) of Chapter 20 of the Manual the Authorized Dealer shall allow repatriation of dividends, net of applicable taxes and proceeds on sale of listed shares (i.e. divestment proceeds) not exceeding the market value less brokerage/commission on provision of prescribed documents. Payments made by non-residents shall be supported by proof of receipt of foreign currency through normal banking channels. Such proof shall be submitted along with the Application by the non-residents. xvi. Procedure for Rejection of Bids In terms of regulation 9 (7) of the PO Regulations, the Book Runner may reject any Bid placed by a Bidder for reasons to be recorded in writing provided the reason of rejection is disclosed to such Bidder. Decision of the Book Runner shall not be challengeable by the Bidder or any of its associates. xvii. Time frame for upward revision of Bids by the Bidders The registered investors may revise their Bids upwards any time either manually through the Bid Collection Centers or electronically through direct access to the system till 05:00 p.m. on the last day of the Bidding Period. An investor will not be allowed to place or revise a bid with a price variation of more than 10% of the prevailing indicative strike price. NO DOWNWARD REVISION BOTH IN TERMS OF BID PRICE AND BID VOLUME IS ALLOWED PROVIDED THAT IN CASE OF UPWARD REVISION OF THE BID PRICE, THE NUMBER OF SHARES BID FOR I.E. BID VOLUME MAY BE ADJUSTED ENSURING THAT THE BID AMOUNT OR BID MONEY REMAINS THE SAME. HOWEVER NO WITHDRAWAL OF BID IS ALLOWED. xviii. Procedure for Withdrawal of Issue 1. In accordance with regulation 8 (16) of the PO Regulations, in case the Issuer does not receive bids for the number of shares allocated under the Book Building Portion at the Floor Price, the Issue shall be cancelled and the same shall be immediately intimated to the Commission and PSX and the Margin Money shall be refunded to the bidders immediately but not later than three (3) working days of the closing of the Bidding Period. 2. In accordance with regulation 8 (17) of the PO Regulation, the Book Building process will be considered as cancelled if the total number of bids received is less than forty (40).

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xix. Basis of Allotment of Shares

Bidders shall be allowed to place bids for one hundred percent (100%) of the Issue size and the Strike Price shall be the price at which one hundred percent (100%) of the Issue is subscribed via the Dutch Auction Method. Once the Strike Price is determined, all those Bidders whose bids have been found successful shall be provisionally allotted 75% of the Issue size i.e. 72,692,000 Ordinary Shares. In order to be a successful Bidder in the Book Building process, the bid price would either be higher than the Strike Price or at the Strike Price. For allocation of shares via Book Building, priority shall be given to the bids placed at the highest price. The bidders, who have made bids at prices above the Strike Price, will be provisionally allocated 75% of the shares successfully bid for, at the Strike Price. The differential between the bid price and Strike Price, would be refunded based on the total number of shares bid for. Bidders who had placed Bids at the Strike Price will be provisionally allotted seventy-five (75%) of the shares successfully bid for, at the Strike Price, on proportionate basis. Bids made below the Strike Price shall not qualify for allotment of shares and their Margin Money will be refunded. Final allotment of shares to the successful bidders would be determined after determination of the public response to the Retail Portion of the Issue. In the event the retail portion is undersubscribed, the unsubscribed portion would be allotted to the successful bidders, on a pro-rata basis as per regulation 11(5) of the PO Regulation. Excess funds, if any, would be refunded to the bidders after allotment of the unsubscribed shares. Final allotment of shares out of the Book Building portion shall be made after subscription of the retail portion and receipt of full subscription money from the successful Bidders; however, shares to such Bidders shall be issued simultaneously with issuance of shares to retail investors, in the form of book-entry to be credited in their respective CDS Accounts. All the Bidders shall, therefore, provide number of their respective CDS Accounts in the Bid application as required under regulation 9 (16) of the PO Regulations. xx. Refund of Margin Money The Bidders who have made Bids below the Strike Price shall not qualify for allotment of securities and the Book Runner shall intimate their respective banks for unblocking, where required, their Bid Money within one (1) working day of the close of the bidding period as required under regulation 9(13) of the PO Regulations and the refunds, where required to such bidders shall be made within three (3) working days from the close of the bidding period. The bid money of bidders who have undertaken to subscribe the unsubscribed retail portion shall remain deposited or blocked till allotment of shares of unsubscribed retail portion, if any, to them on pro-rata basis. xxi. Publication of Supplement to the Prospectus In accordance with regulation 11 (1) of the PO Regulations within three (3) working days of the closing of the Bidding Period, Supplement to the Prospectus shall be published at least in all those newspapers in which the Prospectus was earlier published and also disseminated through PSX. The Supplement to the Prospectus would contain information relating to the Strike Price, the Offer Price and Category-wise breakup of the successful Bidders along with the number of shares provisionally allocated to them. Format of the Supplement is given on page 3 of this Prospectus. Public subscription for the shares shall be held at any date(s) within thirty days (30) of the publication of the Prospectus but not earlier than seven (7) days of such publication.

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13 APPLICATION AND ALLOTEMENT INSTRUCTIONS FOR RETAIL PORTION

i. Eligible Investors Include:

1. Pakistani citizen’s resident in or outside Pakistan or Persons holding dual nationalities including a Pakistani nationality; 2. Foreign Nationals whether living in or outside Pakistan 3. Companies, bodies corporate or other legal entities incorporated or established in or outside Pakistan (to the extent permitted by their constitutive documents and existing regulations, as the case may be); 4. Mutual Funds, Provident / Pension / Gratuity Funds / Trusts, (subject to the terms of the Trust Deed and existing regulations); and 5. Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan.

APPLICATION MUST BE MADE ON SECP’s APPROVED APPLICATION FORM OR A LEGIBLE PHOTOCOPY THEREOF ON A PAPER OF A4 SIZE WEIGHING AT LEAST 62 GM ii. Copies of Prospectus

Copies of this Prospectus and Applications Forms can be obtained from PSX, the Bankers to the Issue and their branches, the Lead Manager, the Book Runner to the Issue and the registered office of the Company. The Prospectus and the Application Form can also be downloaded from the following websites: *http://www.topline.com.pk, http://citipharma.com.pk, www.psx.com.pk & www.cdceipo.com;

Shares against the successful and accepted applications shall be issued in the Book Entry Form only and will be credited into the Applicants CDS Account mentioned in the Application. The applicants, therefore, must provide detail of their CDS Account (investors Account or Sub-Account) in the Shares Subscription Form. Investors who do not have CDS account may visit www.cdcpakistan.com for information and details. For further guidance and queries regarding opening of CDS account, investors may contact CDC at phone Number: 0800 – 23275 (CDCPL) and e-mail: [email protected].

NAMES(S) AND ADDRESS (ES) MUST BE WRITTEN IN FULL BLOCK LETTERS, IN ENGLISH AND SHOULD NOT BE ABBREVIATED.

ALL APPLICATIONS MUST BEAR THE NAME AND SIGNATURE CORRESPONDING WITH THE ONE RECORDED WITH THE APPLICANT’S BANKER. IN CASE OF DIFFERENCE OF SIGNATURE WITH THE BANK AND COMPUTERIZED NATIONAL IDENTITY CARD (CNIC) OR THE NATIONAL IDENTITY CARD FOR OVERSEAS PAKISTANI (NICOP) OR PASSPORT, BOTH THE SIGNATURES SHOULD BE AFFIXED ON THE APPLICATION FORM.

OPENING AND CLOSING OF THE SUBSCRIPTION LIST The subscription list will open at the commencement of banking hours on 23/06/2021 and will close on 24/06/2021 at the close of banking hours. Please note that online applications can be submitted 24 hours during the subscription period which will close at 12:00 midnight on 24/06/2021. iii. E-IPO SYSTEM

e-IPO refers to electronic submission of applications for subscription of securities offered in an IPO. The following systems are available for e-IPOs:

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PSX’s e-IPO System (PES):

In order to facilitate investors, the Pakistan Stock Exchange Limited (“PSX”) has developed an e-IPO System (“PES”) through which applications for subscription of securities offered to the general public can be made electronically. PES has been made available in this Issue and can be accessed through the web link (https://eipo.psx.com.pk). Payment of subscription money can be made through 1LINK’s and NIFT’s member banks available for PES.

For making application though PES, investors must be registered with PES. The PES registration form is available 24/7, all throughout the year. Registration is free of cost and can be done by:

• the investor himself, or • the TREC Holder with whom the investor has a sub-account, or • the Bank with whom the investor has a bank account.

Similarly, an e-IPO application can be filed by:

• the investor himself, or • the TREC Holder with whom the investor has a sub-account, or • the Bank with whom the investor has a bank account.

For further guidance and queries regarding PES, investors may contact PSX at phone number: 111-001-122, or contact at phone (021)-35274401-10 and email: [email protected].

Investors who are registered with PES can submit their applications through the web link https://eipo.psx.com.pk 24 hours a day during the subscription period which will close at midnight on 24th June, 2021. iv. Centralized e-IPO System (CES):

The Central Depository Company of Pakistan Limited (CDC) in collaboration with 1Link (G) Limited (1Link) has developed a Centralized e-IPO System (CES) through which applications for subscription of securities offered to the general public can be made electronically. CES has been made available in this Issue and can be accessed through the web link (www.cdceipo.com). Payment of subscription money can be made through 1LINK’s member banks available for CES, list of which is available on the above-mentioned website. For making application though CES, investors must be registered with CES. Registration with CES is one-time activity, free of cost and a self-registration process by filling the CES registration form, which is available 24/7 all around the year. Investors who have valid Computerized National Identity Card (CNIC), International Bank Account Number (IBAN) with any of the commercial bank, email address, mobile phone number and CDS Account (Investor Account or sub Account) may registered themselves with CES.

In addition to the above, CDC has also introduced a new facility in CES through which sub-account holder(s) will request their respective TREC Holders who are Participants in Central Depository System (CDS) to make electronic subscription on their behalf for subscription of securities of a specific company by authorizing (adding the details of) their respective Participant(s) in CES. Consequently, authorized Participants will electronically subscribe on behalf of their sub-account holder(s) in securities offered through Initial Public Offerings (IPOs) and will also be able to make payment against such electronic subscriptions through all the available channels mentioned on CES only after receiving the subscription amount from the sub-account holder(s). To enable this feature, the CDS Participant may request CDC to activate his ID on the CES portal. The securities will be credited directly in Investors’ subaccount. In case the sub-account of the investor has been blocked or closed, after the subscription, then securities shall be parked into the CDC’s IPO Facilitation Account and investor can contact CDC for credit of shares in its respective account Investors who do not have CDS account may visit www.cdcpakistan.com for information and details. For further guidance and queries regarding CES and opening of CDS account, investors may contact CDC at phone Number: 0800 – 23275 (CDCPL) and e-mail: [email protected] or contact Mr. Farooq Ahmed Butt of CDC at Phone 021- 34326030 and email: [email protected].

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v. E-IPO Facilities by Bankers to the Issue

Currently, United Bank Limited (UBL) is providing e-IPO facilities to their respective accountholders. UBL account holders can use UBL Net Banking to submit their application via link http://www.ubldirect.com/corporate/ebank. Investors who are registered with CES or account holders of UBL can submit their applications through the above- mentioned links 24 hours a day during the subscription period which will close at midnight on 24/06/2021.

vi. APPLICATIONS MADE BY INDIVIDUAL INVESTORS

1. In case of individual investors, an attested photocopy of CNIC (in case of Resident Pakistanis) / NICOP or Passport (in case of Non-Resident Pakistanis) as the case may be, should be enclosed and the number of CNIC / NICOP / Passport should be written against the name of the applicant. Copy of these documents can be attested by any Federal / Provincial Government Gazette Officer, Councilor, Oath Commissioner or Head Master of High School or bank manager in the country of applicant’s residence. 2. Original CNIC / NICOP / Passport, along with one attested photocopy, must be produced for verification to the Banker to the Issue and the applicant’s banker (if different from the Banker to the Issue) at the time of presenting the application. The attested photocopy will, after verification, be retained by the bank branch along with the application. vii. APPLICATIONS MADE BY INSTITUTIONAL INVESTORS

1. Applications made by companies, corporate bodies, mutual funds, provident / pension / gratuity funds / trusts and other legal entities must be accompanied by an attested photocopy of their Memorandum and Articles of Association or equivalent instrument / document. Where applications are made by virtue of Power of Attorney, the same should also be submitted along with the application. Any Federal / Provincial Government Gazette Officer, Councilor, Bank Manager, Oath Commissioner and Head Master of High School or bank manager in the country of applicant’s residence can attest copies of such documents. 2. Attested photocopies of the documents mentioned in 8.7 (i) must be produced for verification to the Banker to the Issue and the applicant’s banker (if different from the Banker to the Issue) at the time of presenting the application. The attested copies, will after verification, be retained by the bank branch along with the application. viii. ADDITIONAL INSTRUCTIONS FOR INVESTORS

1. Only one application will be accepted against each account, however, in case of joint account, one application may be submitted in the name of each joint account holder. 2. Joint application in the name of more than two persons will not be accepted. In case of joint application each applicant must sign the application form and submit attested copies of their CNICs / NICOP / Passport. The share certificates will be dispatched to the person whose name appears first on the application form while in case of CDS, it will be credited to the CDS account mentioned on the face of the form and where any amount is refundable, in whole or in part, the same will be refunded by cheque or other means by post, or through the bank where the application was submitted, to the person named first on the application form, without interest, profit or return. Please note that joint application will be considered as a single application for the purpose of allotment of shares. 3. Subscription money must be paid by check drawn on applicant’s own bank account or pay order / bank draft payable to one of the Bankers to the Issue “Citi Pharma Limited - General Subscription” and crossed “A/C PAYEE ONLY”. 4. For the applications made through pay order / bank draft, it would be permissible for a Banker to the Issue to deduct the bank charges while making refund of subscription money to unsuccessful applicants through pay order / bank draft individually for each application. 5. The applicant should have at least one bank account with any of the commercial banks. The applicants not having a bank account at all (non-account holders) are not allowed to submit application for subscription of shares. Page 160 of 178

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6. Applications are not to be made by minors and / or persons of unsound mind. 7. Applicants should ensure that the bank branch, to which the application is submitted, completes the relevant portion of the Application Form. 8. Applicants should retain the bottom portion of their Application Forms as provisional acknowledgement of submission of their applications. This should not be construed as an acceptance of the application or a guarantee that the applicant will be allotted the number of shares for which the application has been made. 9. 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. 10. Bankers to the Issue are prohibited to recover any charges from the subscribers for collecting subscription applications. Hence, the applicants are advised not to pay any extra charges to the Bankers to the Issue. 11. 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. 12. Submission of false and fictitious applications is prohibited and such applications’ money may be forfeited under section 87(8) of the Securities Act, 2015.

ix. ADDITIONAL INSTRUCTIONS FOR FOREIGN / NON-RESIDENT INVESTORS’

1. In case of foreign investors who are not individuals, applications must be accompanied with a letter on applicant's letterhead stating the legal status of the applicant, place of incorporation and operations and line of business. A copy of Memorandum of Association or an equivalent document should also be enclosed, if available. Where applications are made by virtue of Power of Attorney, the same must be lodged with the application. Copies of these documents can be attested by the bank manager in the country of applicant's residence. 2. Foreign / resident should follow payment instructions given in Section 12(xv) of this Prospectus. x. CODE OF OCCUPATION OF INVESTORS / APPLICANTS

Code Occupation 01 Business 02 Business Executive 03 Service 04 Housewife 05 Household 06 Professional 07 Student 08 Agriculturist 09 Industrialist 10 Other

NATIONALITY CODE

Code Name of Country 001 U.S.A 002 U.K 003 U.A.E 004 K.S.A 005 Oman 006 Bangladesh 007 China 008 Bahrain

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009 Other xi. Minimum amount of Application and Basis for Allotment of Shares out of Retail Portion of the Issue

The basis and conditions for allotment of shares out of the Retail Portion of the Issue shall be as follows: 1. Application for shares must be made for 500 shares or in multiples of 500 shares only. Applications which are neither for 500 shares nor for multiples of 500 shares shall be rejected. 2. The minimum amount of application for subscription of 500 shares is the Issue Price x 500 shares. 3. Application for shares below the minimum amount shall not be entertained. 4. SUBMISSION OF FALSE AND FICTITIOUS APPLICATIONS IS PROHIBITED AND SUCH APPLICATIONS’ MONEY MAY BE FORFEITED UNDER SECTION 87(8) OF THE SECURITIES ACT, 2015. 5. If the shares offered to the general public are sufficient to accommodate all applications, all applications shall be accommodated. 6. In case retail portion of the Issue, remains unsubscribed, the unsubscribed shares shall be allotted to successful bidders at the strike price on pro-rata basis. 7. If the shares applied for by the general public are in excess of the shares allocated to them, the distribution shall be made by computer balloting, in the presence of the representative(s) of PSX in the following manner: ─ If all applications for 500 shares can be accommodated, then all such applications shall be accommodated first. If all applications for 500 shares cannot be accommodated, then balloting will be conducted among applications for 500 shares only. ─ If all applications for 500 shares have been accommodated and shares are still available for allotment, then all applications for 1,000 shares shall be accommodated. If all applications for 1,000 shares cannot be accommodated, then balloting will be conducted among applications for 1,000 shares only. ─ If all applications for 500 shares and 1,000 shares have been accommodated and shares are still available for allotment, then all applications for 1,500 shares shall be accommodated. If all applications for 1,500 shares cannot be accommodated, then balloting will be conducted among applications for 1,500 shares only. ─ If all applications for 500 shares, 1,000 shares and 1,500 shares have been accommodated and shares are still available for allotment, then all applications for 2,000 shares shall be accommodated. If all applications for 2,000 shares cannot be accommodated, then balloting will be conducted among applications for 2,000 shares only. ─ After the allotment in the above-mentioned manner, the balance shares, if any, shall be allotted in the following manner: ─ If the remaining shares are sufficient to accommodate each application for over 2,000 shares, then 2,000 shares shall be allotted to each applicant and remaining shares shall be allotted on pro-rata basis. ─ If the remaining shares are not sufficient to accommodate all the remaining applications for over 2,000 shares, then balloting shall be conducted for allocation of 2,000 shares to each successful applicants. 8. If the Issue is over-subscribed in terms of amount only, then allotment of shares shall be made in the following manner: ─ First preference will be given to the applicants who applied for 500 shares; ─ Next preference will be given to the applicants who applied for 1,000 shares; ─ Next preference will be given to the applicants who applied for 1,500 shares; ─ Next preference will be given to the applicants who applied for 2,000 shares; and then ─ After allotment of the above, the balance shares, if any, shall be allotted on pro rata basis to the applicants who applied for more than 2,000 shares. 9. Allotment of shares will be subject to scrutiny of applications for subscription of shares. 10. Applications, which do not meet the above requirements, or application which are incomplete, will be rejected

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xii. Facilities available to Non-Resident Pakistani and Foreign Investors

Non-residents who wish to bid for the subscription of shares being offered via book building can remit the subscription money through an Authorized Dealer directly to the book building account opened by the Company as given in section 13 (xiv)(3) of this Prospectus, however, those non-residents who wish to subscribe shares out of the general public portion may contact any of the bankers to the issue (retail portion) for taking instructions regarding payment of subscription money against shares offered to general public. List of bankers to the issue for retail portion is available on page 1 and section 13 of this Prospectus.

The shares issued/transferred to non-resident shareholders shall be intimated by the Company to the designated Authorized Dealer, along with the documents prescribed in the Manual within 30 days of issue/transfer. Non-residents who are covered under paragraph 6 (A) of Chapter 20 of the Manual do not require SBP’s approval to invest in the shares being issued in terms of this Prospectus. Furthermore, under paragraph 7 (vii) of Chapter 20 of the Manual the Authorized Dealer shall allow repatriation of dividends, net of applicable taxes and proceeds on sale of listed shares (i.e. divestment proceeds) not exceeding the market value less brokerage/commission on provision of prescribed documents. Payments made by non-residents shall be supported by proof of receipt of foreign currency through normal banking channels. Such proof shall be submitted along with the application by the non-residents. xiii. BASIS OF ALLOTMENT

The basis and conditions of transfer of shares to the General Public shall be as follows: 1. The minimum value of application will be calculated as Issue Price 500 shares. Application for amount below the minimum value shall not be entertained. 2. Application for shares must be made for 500 shares or in multiple of 500 shares only. Applications which are neither for 500 shares nor for multiples of 500 shares shall be rejected. 3. Allotment / Transfer of shares to successful applicants shall be made in accordance with the allotment criteria / instructions disclosed in the Prospectus. 4. Allotment of shares shall be subject to scrutiny of applications in accordance with the criteria disclosed in the Prospectus and / or the instructions by the Securities & Exchange Commission of Pakistan. 5. Applications, which do not meet the above requirements, or applications which are incomplete will be rejected. The applicants are, therefore, required to fill in all data fields in the Application Form. 6. The Company will credit shares in the CDS Accounts of the successful applicants. xiv. REFUND/UNBLOCKING OF SUBSCRIPTION MONEY TO UNSUCCESSFUL APPLICANTS

As per the regulation 11(4) of the PO Regulations, within ten (10) working days of the close of public subscription period the Shares shall be allotted and issued against the accepted and successful applications and the subscription money of the unsuccessful applicants shall be unblocked/ refunded. As per sub-section (2) of Section 68 of the Companies Act, if refund as required under sub-section (1) of Section 68 of the Companies Act is not made within the time specified hereinabove, the directors of the company shall be jointly and severally liable to repay that money with surcharge at the rate of two percent (2%) for every month or part thereof from the expiration of the fifteenth day and, in addition, shall be liable to a penalty of level 3 on the standard scale as defined in Section 479 of the Companies Act. Provided that the directors of the Company shall not

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be liable if it proves that the default in making the refund was not on their own account and was not due to any misconduct or negligence on their part.

xv. ISSUE AND CREDIT OF SHARE CERTIFICATES

Within ten (10) working days of the closing of public subscription period, the shares shall be allotted, issued and credited against the accepted and successful applications and the subscription money of the unsuccessful applicants shall be unblocked/refunded, as required under regulation 11(4) of the PO Regulations. Shares will be issued only in the book-entry form and will be credited into the respective CDS Accounts of the successful applicants. Therefore, the applicants must provide their CDS Account Number in the Shares Subscription Applicant. If the Company defaults in complying with the above requirements, it shall pay PSX a penalty of PKR 5,000 per day for every day during which the default continues. PSX may also notify the fact of such default and name of the Company by notice and also by publication in its ready-board quotation of the Stock Exchange. Name of the Company will also be notified to the TRE Certificate Holders of the PSX and placed on the web site of the PSX.

xvi. TRANSFER OF SHARES

The shares shall be transferred in accordance with the provisions of Section 74 of the Companies Act read with Section 75 thereof and the Central Depositories Act, 1997 and the CDCPL Regulations. xvii. LIST OF BANKERS TO THE ISSUE

Code Name of Bank 01 Faysal Bank Limited 02 Habib Bank Limited 03 United Bank Limited* 04 Meezan Bank Limited 05 Bank Al Habib Limited 06 Al Baraka Bank Pakistan 07 Soneri Bank Limited 08 Dubai Islamic Bank Limited 09 Habib Metropolitan Bank Limited 10 Bank Al Falah Limited 11 MCB Bank Limited *UBL is providing their own e-IPO facilities. Account holders of UBL may apply for subscription of shares electronically. xviii. MINIMUM AMOUNT OF APPLICATION

The minimum amount of application for General Public subscription can be for 500 shares, and multiples thereof.

xix. 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 their capacity as holder of Ordinary shares except from the shareholders who are also the Director of the company. Directors of the Company have interest to the extent of receiving remuneration for their role as Directors.

xx. ELIGBILITY FOR DIVIDEND

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xxi. DEDUCTION OF ZAKAT

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

Capital gains derived from the sale of listed securities are taxable in the following manner under section 37A of Income Tax Ordinance, 2001:

Sr. No. Capital Gain Tax for FY20 Filer Non-Filer 1 Applicable Capital Gain Tax Rate 15% 30%

Source: Income Tax Ordinance xxiii. WITHHOLDING TAX ON DIVIDENDS

Dividend distribution to shareholders will be subject to withholding tax under section 150 of the Income Tax Ordinance, 2001 as specified in Part III Division I of the First Schedule of the said ordinance or any time to time amendments therein. In terms of the provision of Section 8 of the said ordinance, said deduction at source, shall be deemed to be full and final liability in respect of such profits in case of persons only. Applicable withholding tax rate on dividend is 15% for filer and 30% for non-filer. xxiv. TAX ON BONUS SHARES

As per section 236M of the Income Tax Ordinance 2001, amended vide Finance Act 2018-19, tax on issue of bonus shares has been omitted and will not be applicable from 1st July 2018 and onwards.

xxv. INCOME TAX

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

Deferred tax is provided using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying amounts, for financial reporting purposes. Deferred tax liabilities are recognized for all taxable temporary differences and deferred tax assets are recognized for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, carry forwards of unused tax credits and unused tax losses can be utilized. The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed at each balance sheet date and are recognized to the extent that it has become probable that future taxable profits will allow deferred tax asset to be recovered. 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 tax rates (and tax laws) that have been enacted or substantively enacted at the balance sheet date. Deferred tax assets and deferred tax liabilities are offset only if there is a legally enforceable right to offset current tax assets and liabilities and they relate to the income tax levied by the same tax authority. As of June 30th, 2020, the Company has reported deferred tax liability of PKR 57,913,791.

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xxvii. SALES TAX

General Sales Tax is applicable as per Sales Tax Act, 1990 on supplies. Sales tax is applicable on services in accordance with Punjab Sales Tax on Services Act, 2012 by Punjab Revenue Authority and Sindh Sales Tax on Services Act, 2011 by Sindh Revenue Board. xxviii. SALES TAX ON SALE / PURCHASE OF SHARES

Under the Constitution of Pakistan and Articles 49 of the 7th NFC Award, the Government of Sindh, Government of Punjab, Government of Khyber Pakhtunkhwa and Government of Baluchistan have promulgated the Sindh Sales Tax on Services Act, 2011, Punjab Sales Tax on Services Act, 2012, Khyber Pakhtunkhwa Sales Tax on services through Khyber Pakhtunkhwa Finance Act, 2013 and the Baluchistan Sales Tax on services Act, 2015 respectively. The Sindh Revenue Board, the Punjab Revenue Authority, and the Khyber Pakhtunkhwa Revenue Authority and the Baluchistan Revenue Authority administer and regulate the levy and collection of the Sindh Sales Tax (“SST”), Punjab Sales Tax (“PST”), Khyber Pakhtunkhwa Sales Tax (“KST”) and Baluchistan Sales Tax (“BST”) respectively on the taxable services provided or rendered in Sindh, Punjab or Khyber Pakhtunkhwa provinces respectively. The value of taxable services for the purpose of levy of sales tax is the gross commission charged from clients in respect of purchase or sale of shares in a Stock Exchange. The above-mentioned Acts levy a sales tax on Brokerage at the rate of 13% in Sindh, 16% in Punjab and in Baluchistan and 15% in Khyber Pakhtunkhwa. Sales tax charged under the aforementioned Acts is withheld at source under statutory requirements.

xxix. TAX CREDIT FOR INVESTMENT IN IPO:

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

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

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14 SIGNATORIES OF THE PROSPECTUS

-sd- -sd- ______Nadeem Amjad Rizwan Ahmed Non-Executive Director/Chairman Chief Executive Officer

-sd- -sd- ______Mohammad Naeem Saira Aslam Non-Executive Director Non-Executive Director

-sd- -sd- ______Amir Zia Rana Shakeel Shaukat Independent Director Independent Director

-sd- ______Dr. Zameer UL Hassan Shah Executive Director

Signed by the above in presence of witnesses:

Witness 1: Witness 2: -sd- -sd- ______Asif Iqbal Mohammad Riaz Chief Financial Officer Company Secretary

8/03/2021

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15 MEMORANDUM OF ASSOCIATION

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16 REGISTRATION FORM

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17 BIDDING FORM

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18 PUBLIC SUBSCRIPTION FORM

SUBMISSION OF FALSE AND FICTITIOUS APPLICATIONS IS AN OFFENCE UNDER SECTION 87(7) OF THE SECURITIES ACT, 2015 AND SUCH APPLICATIONS' MONEY MAY BE FOREFIETED UNDER SECTION 87(8) OF THE SECURITIES ACT, 2015

INVESTMENT IN SECURITIES IS A HIGHLY RISKY BUSINESS. INVESTORS ARE, THEREFORE, ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THE PROSPECTUS ESPECIALLY THE RISK FACTORS BEFORE MAKING ANY INVESTMENT DECISION.

Citi Pharma Limited SUBSCRIPTION DATE From June 23, 2021 to June 24, 2021 APPLICATION FOR SUBSCRIPTION OF SHARES during banking hours As per the Section 72 of Companies Act, 2017, the Comany shall have shares in book-entry form only. Therefore, shares of Citi Pharma Limited shall only be issued in scrip-less form in the CDS of CDCPL (Refer to instruction No.3 on the reverse Broker’s Stamp & Code hereof)

CDC PARTICIPANT / ACCOUNT SUB ACCOUNT NUMBER HOUSE A/C NO. HOLDER ID PSX The Directors of Citi Pharma Limited OR Code 588, Q Block, Johar Town, Lahore, Pakistan CDC INVESTOR ACCOUNT CDC INVESTOR ACCOUNT Do you want to avail CDC's facility of IPO SERVICES ID NO. FACILITATION ACCOUNT

Yes No

1) I/We apply for the following number of Shares at Issue Price for the value indicated below: Banker's Stamp

No. of Shares Applied For Amount Payable in PKR Cheque/ Demand Draft/Pay Order No.

2) I/We agree to accept the same or any smaller number of Shares that may be allotted to me/us upon the terms as stated in the Prospectus. I/We authorize you to credit the For Bankers Bank Branch Code Shares to me/us pursuant to this application and if no Shares or a smaller number of Shares are allotted to me/us you are hereby authorized to return to me/us by cheque or Code other means my/our application money for the amount of Shares not credited to me/us.

For Pakistanis Application Serial No. Resident 01 Non-resident 02 3) DECLARATION I/We declare that: i) I am/We are national(s) of ______; ii) I am/We are not minor(s); iii) I/We have not made nor have I/we instructed any other person(s)/institution(s) to make any other application(s) in my/our name(s) or in the name of any other person on my/our behalf or in any fictitious name; iv) I/We agree to abide by the instructions provided with this application and in case of any information given herein being incorrect I/we understand that I/we shall not be entitled to the allotment of Shares if successful rather the application money shall be liable to confiscation if this declaration proves to be incorrect at any time. Yours faithfully,

Signature(s) a) b)

4) ALL DETAILS MUST BE WRITTEN IN B L O C K - L E T T E R S IN THE SPACES PROVIDED, LEGIBLY IN BLACK PEN a) Name in Full (as per CNIC)

Mr. Ms. Mrs Co. Please Tick

Father's/Husband's Name (as per CNIC)

Identity Number (CNIC/ Passport/ Registration No.) Identity Number (NTN*)

*INVESTORS ARE ENCOURAGED TO DISCLOSE THEIR NTN NUMBERS TO FACILITATE CITI PHARMA LIMITED TO CHECK STATUS OF THE SHARE HOLDERS AS TAX RETURN FILER OR NON FILER FROM THE ACTIVE TAXPAYERS LIST (ATL) AVAILABLE ON THE WEBSITE OF FBR. PLEASE NOTE THAT REDUCED TAX RATE OF 15.0% APPLIES TO FILERS AND OF 30.0% FOR NON FILERS ON PAYMENT OF CASH DIVIDEND DECLARED, IF ANY, BY THE COMPANIES.

Full Address (Including Email Adress)

Occupation Phone No. (Including Mobile Number) Muslim Non Muslim Code

International Bank Account Number (IBAN)

Bank Name

Branch Name & Address

Additional Information - For Non-Resident Pakistanies and Foreign Investors Only Date of Issue of Passport Place of Issue of Passport ― ― (DD-MM-YYYY) Corporate Business Letter enclosed Yes No Nationality Code Country of Residence

5) FOR JOINT HOLDER, IF ANY

b) Name in Full (as per CNIC)

Mr. Ms. Mrs Co. Please Tick Identity Number (CNIC/ Passport/ Registration No.) DIVIDEND MANDATE : Mark tick [ ✓ ] in the appropriate boxes Yes [ ] No [ ]

In order to enable the Company to credit the cash dividend declared, if any, by the Company, in Shareholder Holder bank account, instead through dividend warrants, please fill in the following boxes:

Title of Account

International Bank Account Number (IBAN)

Bank Name

Signature of the Applicant Branch Name and Address as per the Bank account (TO BE FILLED IN BY THE APPLICANT’S BANKER)

6) It is certified that the above-mentioned applicant(s) is/are maintaining account number as mentioned above at this bank branch and his/her/their particulars and signature(s) are correct and verified as per the bank's record and thier CNIC/Passport. It is further certified that only one application has been made in the name of the above account holder through this branch. We also confirm that the original CNIC/Passport has been seen by us.

Note: In case the subscription money is paid through a bank other than the Bankers to the Issue (through pay order or bank draft), this certification shall be provided by the manager of the bank where the applicant maintains his/her bank account. Bank’s Authorized Signatory Bank’s Rubber Stamp SPECIMEN SIGNATURE(S) OF THE APPLICANT NAME OF THE APPLICANT IN BLOCK LETTERS (AS PER CNIC) SPECIMEN SIGNATURE(S)

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Bankers to the Issue's Provisional acknowledgement of application for shares of Citi Pharma Limited Received from Mr/Ms/Mrs. ______application for______Shares.

Name of Bank Branch Code Application Serial No. Date of Receipt Signature of Authorized Representative & Rubber Stamp of ― ― Receiving Bank IMPORTANT: (i) This slip must be retained by the Applicant ii) Please read instructions provided with this application Page 176 of 178

Citi Pharma Limited

Page 177 of 178