Offer for Sale of 50000000 Shares of Engro Polymer & Chemicals Limited

INVESTORS ARE ADVISED IN THEIR OWN INTEREST TO CAREFULLY READ THE CONTENTS OF THE OFFER FOR SALE DOCUMENT, ESPECIALLY THE RISK FACTORS AS HIGHLIGHTED IN PARA 4.5, BEFORE MAKING ANY INVESTMENT DECISION

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

OFFER FOR SALE OF 50,000,000 SHARES

ENGRO POLYMER & CHEMICALS LIMITED (Formerly Engro Asahi Polymer & Chemicals Limited)

At an Offer Price of PKR 18/- per share (Including Premium of PKR 8/- per share)

THIS IS NOT A PROSPECTUS BY ENGRO POLYMER & CHEMICALS LIMITED BUT AN OFFER FOR SALE BY

JS GLOBAL CAPITAL LIMITED OUT OF ITS SHAREHOLDING IN THE COMPANY TH THE SUBSCRIPTION LIST WILL INSHA’ALLAH OPEN AT THE COMMENCEMENT OF BANKING HOURS ON 9 JUNE 2008 AND TH WILL CLOSE ON 11 JUNE 2008 AT THE CLOSE OF BANKING HOURS UNDERWRITTEN BY National Bank Limited United Bank Limited Allied Bank Limited Faysal Bank Limited KASB Bank Limited IGI Investment Bank Limited First Dawood Investment Bank Ltd UBL Fund Managers Dawood Capital Management Limited Dawood Equities Limited B.R.R Investments (Pvt) Limited Novatex Limited

Date of Publication of this Offer for Sale Document is 31st May 2008

Offer for Sale of Shares

GLOSSARY OF TECHNICAL TERMS AND ABBREVIATIONS

The following definitions apply throughout this document, unless the context otherwise requires:

“Back Integration Project” Acquisition of capability to manufacture Vinyl Chloride Monomer, Ethylene Di Chloride, Chlorine and Caustic Soda “CDC” The Central Depository Company of Pakistan Limited

“CA” Chlor alkali

“Combined Cycle Captive Power 60 Mw combined cycle power plant Generation” “Directors” The directors of Engro Polymer & Chemicals Limited, the issuing Company, as described in this document

“EDC” Ethyl Di Chloride

“EPA” Environment Protection Agency “EPCL” or the “Company” Engro Polymer & Chemicals Limited

“ESOT” Employee Stock Ownership Trust “FMCG” Fast Moving Consumer Goods “ISE” Islamabad Stock Exchange

“JSGC” JS Global Capital Limited

“KSE” Karachi Stock Exchange (Guarantee) Limited

“LSE” Lahore Stock Exchange “NEQS” National Environmental Quality Standards ‘Offering Price” PKR 18 per Share (Inclusive of PKR 8 per share premium)

“Offeror” JS Global Capital Limited

“Offer for Sale Document” or This Offering Document “OFSD”

“Companies Ordinance” Companies Ordinance, 1984 (as amended)

“Offer for Sale” The Public Offer of 50 million Ordinary Shares to the general public

“PVC” Poly Vinyl Chloride

“PP & OFS” Private Placement of 24,725,909 Ordinary Shares of PKR 10/- per share at a price of PKR 18/- (including premium of PKR 8/- per share).

Offer For Sale of 50,000,000 Ordinary Shares of Engro Polymer & Chemicals Limited (Formerly Engro Asahi Polymer & Chemicals Limited) at an Offer Price of PKR 18/- per share (Including premium of PKR 8/- per share)

Offer for Sale of Shares

“PKR” or “Rs” The currency of the Islamic Republic of Pakistan

“SECP” Securities and Exchange Commission of Pakistan

“Shares” Ordinary Shares of face value of PKR 10 each in the capital of Engro Polymer & Chemicals Limited

“SMART” Specific, Measurable, Attainable, Realistic and Time bound “Tpa” Tons per annum

“VCM” Vinyl Chloride Monomer

Offer for Sale of Shares

TABLE OF CONTENTS Page No

1.0 APPROVAL AND LISTING ON STOCK EXCHANGE...... 5

2.0 SHARE CAPITAL AND RELATED MATTERS...... 7

3.0 COMMISSION, BROKERAGE AND OTHER EXPENSES ...... 17

4.0 HISTORY AND PROSPECTS ...... 19

5.0 FINANCIAL INFORMATION...... 32

6.0 MANAGEMENT AND RELATED MATTERS...... 41

7.0 MISCELLANEOUS INFORMATION...... 47

8.0 APPLICATION AND TRANSFER INSTRUCTIONS ...... 51

9.0 SIGNATORIES TO THE OFFER FOR SALE DOCUMENT...... 55

10.0 MEMORANDUM OF ASSOCIATION ...... 56

11.0 APPLICATION FORM ………………………………………………………………………………………………………….62

Offer for Sale of Shares

PART 1

1.0 APPROVAL AND LISTING ON STOCK EXCHANGE

1.1 Approval of the Securities & Exchange Commission of Pakistan

Approval of the Securities & Exchange Commission of Pakistan (“SECP” or the "Commission") as required under Section 62, read with Section 57, of the Companies Ordinance, 1984 (the "Companies Ordinance") has been obtained for the issuance, circulation and publication of this Offer for Sale Document (“OFSD”).

It must be distinctly understood that in giving this approval, the Commission does not take any responsibility for the financial soundness of any scheme or for the correctness of any of the statements made or opinions expressed with regard to them.

The SECP has not evaluated the quality of the offer, including the justification of the premium, and its approval of the Offer for Sale Document should not be construed as any commitment in respect of the same. The public/ investor should conduct their own independent investigation and analysis regarding the quality of the offer before subscribing.

1.2 Clearance of the Offer for Sale Document by Stock Exchange

The OFSD has been cleared by the Karachi Stock Exchange (Guarantee) Limited ("KSE") in accordance with the requirements under its Listing Regulations. While clearing the OFSD, KSE neither guarantees the correctness of the contents of the OFSD nor the viability of EPCL.

The KSE has not evaluated the quality of the offer, including the justification of the premium, and its clearance of the OFSD should not be construed as any commitment in respect of the same. The public/ investor should conduct their own independent investigation and analysis regarding the quality of the offer before subscribing.

1.3 Filing of Offer for Sale Document and other documents with the Registrar of Companies

On behalf of the Offeror, the Company has filed with the Registrar of Companies, Companies Registration Office (“CRO”), Karachi, as required under Sections 57(3) and (4) of the Companies Ordinance, a copy of this OFSD signed on behalf of the Offerors, together with the following documents attached thereto:

(a) A Letter dated April 23, 2008 from the Auditors of the Company, M/s. A. F. Ferguson & Co., Chartered Accountants consenting to the publication of their name in the OFSD, as required under Section 55 of the Companies Ordinance, which contains in Part 5 hereof certain statements and reports issued by them as experts (which consent has not been withdrawn) as required under Section 57(5) of the Companies Ordinance.

(b) Copies of material contracts and agreements mentioned in Part 7 of this OFSD under Section 57(4) of the Companies Ordinance.

(c) Written confirmations of the Auditor to the Company, Legal Advisor of the Company and Bankers to the Offer mentioned in this OFSD consenting to act in their respective capacities, as required under Section 57(5) of the Companies Ordinance.

Offer for Sale of Shares

(d) Consent of Directors and Chief Executive of the Company who have consented to their respective appointments being made and having been named or described as such Directors and Chief Executive in this OFSD, as required under section 57(3) of the Companies Ordinance read with sub-clause (1) of clause (4) of Section 1, of Part 1 to the Second Schedule of the Companies Ordinance.

1.4 Listing on the Stock Exchange

Application has been submitted to KSE for permission to deal in and quotation of the shares of the Company.

The Company shall stand listed provisionally for trading and for the quotation of its shares on KSE from the day of publication of OFSD or any other date as may be specified by KSE under the “Regulations for Futures Trading in Provisionally Listed Companies”.

If for any reason, the application for formal listing is not accepted by the KSE, the Offeror undertakes that a notice to that effect will be immediately published in the press, and thereafter to refund application money to the applicants in pursuance of this OFSD, as required under the provisions of Section 72 of the Companies Ordinance.

Offer for Sale of Shares

PART 2 2.0 SHARE CAPITAL AND RELATED MATTERS 2.1 Share Capital Number of Face Value (Rs.) Premium (Rs.) Total (Rs.) shares AUTHORIZED 700,000,000 Ordinary shares of Rs. 10/- each 7,000,000,000 - 7,000,000,000

ISSUED, SUBSCRIBED AND PAID-UP

520,367,677 Ordinary shares of Rs. 10/- each 5,203,676,770 1,071,341,416 6,275,018,186 The existing issued, subscribed & paid up capital of the Company is held as follows: SHAREHOLDERS Local Shareholders Sponsoring Shareholder 292,400,000 Engro Chemical Pakistan Limited 2,924,000,000 - 2,924,000,000 Other Shareholders 18,000,000 EPCL Employees Trust 180,000,000 - 180,000,000 273,378 First Dawood Investment Bank Limited 2,733,780 2,187,024 4,920,804 248,525 Dawood Capital Management Limited 2,485,250 1,988,200 4,473,450 248,525 Novatex Limited 2,485,250 1,988,200 4,473,450 223,673 Dawood Equities Limited 2,236,730 1,789,384 4,026,114 782,855 United Stock Advantage Fund 7,828,550 6,262,840 14,091,390 260,952 B.R.R Investments (Pvt.) Limited 2,609,520 2,087,616 4,697,136 1,388,889 National Bank of Pakistan 13,888,890 11,111,112 25,000,002 3,106,567 Allied Bank Limited 31,065,670 24,852,536 55,918,206 3,727,881 United Bank Limited 37,278,810 29,823,048 67,101,858 1,242,627 Jahangir Siddiqui & Company Limited 12,426,270 9,941,016 22,367,286 52,041,768 JS Global Capital Limited (‘JSGC’) 520,417,680 416,334,144 936,751,824 Sub Total (A) 3,739,456,400 508,365,120 4,247,821,520 Foreign Shareholders 57,000,000 Mitsubishi Corporation 570,000,000 - 570,000,000 76,200,000 International Finance Corporation 762,000,000 457,200,000 1,219,200,000 13,222,037 JS Private Equity Chemical Holdings Limited 132,220,370 105,776,296 237,996,666 Sub Total (B) 1,464,220,370 562,976,296 2,027,196,666

520,367,677 TOTAL (A+B) 5,203,676,770 1,071,341,416 6,275,018,186 PRESENT OFFER FOR SALE The present offer for sale of 50 million ordinary shares (9.61%) having par value of Rs 10/- each ( at an offer price of Rs. 18 per share inclusive of a premium of Rs. 8/-)is being made to the general public by an existing shareholder, JS Global Capital Limited

No. of shares Face Value Premium Total 50,000,000 To the general public 500,000,000 400,000,000 900,000,000 50,000,000 TOTAL 500,000,000 400,000,000 900,000,000

Offer for Sale of Shares

Notes

(i) As per Listing Regulation No. 6(A) (7) of the KSE, 24,725,909 shares subscribed by private placement investors (as defined in 2.8) will not be saleable for a period of six months from the last date of public subscription. (ii) The shareholders of the Company, in the Extraordinary General Meeting held on October 8, 2007, have approved an Employees’ Share Option Scheme (‘the Scheme’ or “ESOS”), for granting of options to its certain eligible employees up to 5,300,000 new ordinary shares, which is 1.02% of the existing paid up capital of the Company at a strike price of Rs. 22/- each. The Scheme is deemed to have been adopted on the date on which the Securities and Exchange Commission of Pakistan accords its approval, which is pending to date. (iii) The share options will be made available to existing and new employees of the Company who qualify to be eligible participants. Salient features of the scheme are:

• Date of Adoption of ESOS is the date on which it is approved by the SECP • Maximum number of options/shares to offered under ESOS is 5,300,000 • The offer price per share under ESOS is PKR 22 • Maximum number of options that can be given to an eligible employee are 1.2 million ordinary shares

2.2 Opening and Closing of Subscription List

THE SUBSCRIPTION LIST WILL "INSHA ALLAH" OPEN FOR THREE (3) DAYS AT THE COMMENCEMENT OF BANKING HOURS ON 9th JUNE 2008 AND WILL CLOSE ON 11th JUNE 2008 AT THE CLOSE OF BANKING HOURS.

2.3 Investor Eligibility

All Pakistani residents, provident funds/trusts, pension/gratuity funds (subject to the term of their trust deeds), financial institutions and companies, body corporate or other legal entities (to the extent permitted by their constitutive or corporate documents, as the case may be) are allowed to subscribe to the shares offered to the general public.

2.4 OFFER PRICE, MINIMUM AMOUNT OF APPLICATION AND BASIS OF ALLOTMENT OF SHARE

a) This offer is being made at a price of PKR 18/- per ordinary share of PKR 10/- each inclusive of premium of PKR 8/- share, but excluding the share transfer fee, which is to be paid by the applicants at the rate of fifteen (15) paisa per share in the case of physical transfer and one (1) paisa per share in the case of transfer under book-entry system in the Central Depository Company of Pakistan Limited (“CDC”).

b) Application must be made for 500 shares or in the multiples of 500 shares only. Applications which are neither for 500 shares nor for the multiples of 500 shares, shall not be entertained.

c) The minimum amount of application for subscription of 500 shares in the case of physical transfer is PKR 9,075/- and in case of transfer under book entry system is PKR 9,005/-.

d) Applications for shares below the value of PKR 9,075/- in case of physical transfer and PKR 9,005/- in case of transfer under book-entry system shall not be entertained.

Offer for Sale of Shares

e) FICTITOUS AND MULTIPLE APPLICATIONS (MORE THAN ONE APPLICATION BY A SINGLE APPLICANT) ARE PROHIBITED AND SUCH APPLICANTS’ MONEY SHALL BE LIABLE FOR CONFISCATION UNDER SECTION 18 – A OF THE SECURITIES AND EXCHANGE ORDINANCE, 1969.

f) If this Offer is oversubscribed the shares shall be allotted by conducting computer balloting in the presence of KSE representatives in the following manner:

i. If all applications for 500 shares can be accommodated, then all such applications shall be accommodated first. If all applications for 500 shares cannot be accommodated, then balloting will be held among the applications for 500 shares only.

ii. If all applications for 500 shares have been accommodated and shares are still available for allocation, then all applications for 1,000 shares will be accommodated. If all applications for 1,000 shares cannot be accommodated, then balloting will be conducted among applications for 1,000 shares only.

iii. If all applications for 500 shares and 1,000 shares have been accommodated and shares are still available for allocation, then all applications for 1,500 shares will be accommodated. If all applications for 1,500 shares cannot be accommodated, then balloting will be conducted among applications for 1,500 shares only.

iv. If all applications for 500 shares, 1,000 shares, and 1,500 shares have been accommodated and shares are still available for allocation, then all applications for 2,000 shares will be accommodated. If all applications for 2,000 shares cannot be accommodated, then balloting will be conducted among applications for 2,000 shares only.

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

1. If the remaining shares are sufficient to accommodate each application for over 2,000 shares, then 2,000 shares shall be allotted to each applicant and the remaining shares shall be allocated on a pro-rata basis.

2. If the remaining shares are not sufficient to accommodate all remaining applications for at least 2,000 shares, then balloting shall be conducted for allocation of 2,000 shares to the successful applicants. g) If the offer is oversubscribed in terms of amount only, then the allotment of shares shall be made on the following basis:

i. First preference will be given to applicants who applied for 500 shares;

ii. 2nd preference will be given to applicants who applied for 1,000 shares;

iii. 3rd preference will be given to applicants who applied for 1,500 shares; and then;

iv. 4th preference will be given to applicants who applied for 2,000 shares;

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

Offer for Sale of Shares i) Applications, which do not meet with the above requirements, or applications which are incomplete, will be rejected.

2.5 REFUND OF SUBSCRIPTION MONEY TO UNSUCCESSFUL APPLICANTS

The Company on behalf of the Offeror shall take decision within ten (10) days of the closure of subscription list as to which applications have been accepted or are successful. Refund of money in case of unaccepted or unsuccessful applications shall be made within ten (10) days of the date of such decision as required under the provisions of Section 71 of the Companies Ordinance.

As per the sub section (2) of Section 71 of the Companies Ordinance, if the refund as required under subsection (1) of Section 71 of the Companies Ordinance is not made within the time specified therein, The Offeror shall be liable to repay the money with surcharge at the rate of one and half percent for every month or part thereof, from the expiration of the 15th day, and in addition to a fine not exceeding PKR 5,000/- and in case of a continuing offence to a further fine not exceeding PKR 100/- for every day after the said 15th day on which the default continues.

Provided that the Offeror shall not be liable if it prove that the default in making the refund was not due to any misconduct or negligence on it’s part.

2.6 TRANSFER AND DISPATCH OF SHARE CERTIFICATES

The Company will dispatch physical share certificates to the successful transferees through the Bankers to the Offer or credit to the Central Depository System (“CDS”) account within thirty (30) days of the close of the public subscription list, as per Listing Regulations of the KSE.

Shares will be transferred either in scrip less form in the CDS of the CDC or in the shape of physical scrip’s on the basis of option exercised by the successful applicants. Shares in the physical scrip’s shall be dispatched to the Bankers to the Offer within (30) days from the date of close of public subscription list, whereas scrip less shares shall be directly credited through book-entry into the respective CDS accounts of the transferees maintained with the CDC.

The applicants, who opt for receipt of shares in scrip less form in the CDS, should fill in the relevant columns of the Application Form. In order to exercise the scrip less option, the applicants should have a CDS account on the subscription date.

If the Company defaults in complying with the requirements of Listing Regulations of KSE, it shall pay to KSE a penalty of PKR 500/- per day during which the default continues. KSE may also notify the fact of such default and the name of the Company by notice and also by publication in its Ready-Board Quotation.

Offer for Sale of Shares

2.7 TRANSFER OF SHARES

2.7.1 Physical Scrip

The Directors of the Company shall not refuse to transfer any fully paid shares unless the transfer deed is for any reason defective or invalid under the provisions of Section 77 of the Companies Ordinance, provided that the Company shall within thirty (30) days from the date on which the instrument of transfer was lodged with it, notify the defect or invalidity to the transferee who shall, after the removal of such defect or invalidity be entitled to re-lodge the transfer deed with the Company.

2.7.2 Under Book-Entry System

The shares maintained within CDS in the book-entry form shall be transferred in accordance with the provisions of the Central Depositories Act, 1997 (“CDA”) and the CDC Regulations.

2.8 SHARES ISSUED DURING PRECEDING YEARS

Sr. No Par Premium Par Value Premium Total Issued to Mode Consid Date of No. of Value (Rs.) Amount (Rs.) Amount (Rs) Amount (Rs) eration Issue Shares (Rs.) Issued 1 1 10/- 10 10 Shaukat irza Initial Issuance Cash October each 9,1997 2 1 10/- 10 10 Zaffar Ahmed Initial Issuance Cash October each Khan 9,1997 3 1 10/- 10 10 Asif Saeed Initial Issuance Cash October each 9,1997 4 1 10/- 10 10 S.M Pervez Initial Issuance Cash October each Ghias 9,1997 5 1 10/- 10 10 Asad Umar Initial Issuance Cash October each 9,1997 6 1 10/- 10 10 Morio Initial Issuance Cash October each Matsumoto 9,1997 7 1 10/- 10 10 Kiyoshi Initial Issuance Cash October each Miyagawa 9,1997 8 1 10/- 10 10 Shigenorii Initial Issuance Cash October each Ishizuki 9,1997 9 1 10/- 10 10 Akira Initial Issuance Cash October each Yamamura 9,1997 10 1 10/- 10 10 Hajime Koga Initial Issuance Cash October each 9,1997 11 18,749,995 10/- 187,499,970 187,499,970 Engro Rights Cash December each Chemicals 09, 1997 12 11,249,997 10/- 112,499,970 112,499,970 Asahi Glass Rights Cash December each 09, 1997 13 7,499,998 10/- 74,999,980 74,999,980 Mitsubishi Rights Cash December each 09, 1997 14 6,600,000 10/- 66,000,000 66,000,000 Engro Rights Cash August 3, each Chemicals 1998

15 3,960,000 10/- 39,600,000 39,600,000 Asahi Glass Rights Cash August 3, each 1998 16 2,640,000 10/- 26,400,000 26,400,000 Mitsubishi Rights Cash August 3, each 1998 17 12,500,000 10/- 125,000,000 250,000,000 Engro Rights Cash November each Chemicals 10, 1998

18 7,500,000 10/- 75,000,000 75,000,000 Asahi Glass Rights Cash November each 10, 1998 19 5,000,000 10/- 50,000,000 50,000,000 Mitsubishi Rights Cash November each 10, 1998 20 34,000,000 10/- 340,000,000 340,000,000 Engro Rights Cash December each Chemicals, 11, 1998 21 20,400,000 10/- 204,000,000 204,000,000 Asahi Glass Rights Cash December each 11, 1998 22 13,600,000 10 136,000,000 136,000,000 Mitsubishi Rights Cash December

Offer for Sale of Shares

each/- 11, 1998 23 17,150,000 10/- 171,500,000 171,500,000 Engro Chemical Rights Cash March 12, each 1999 24 10,290,000 10/- 102,900,000 102,900,000 Asahi Glass Rights Cash March 12, each 1999 25 6,860,000 10 68,600,000 68,600,000 Mitsubishi Rights Cash March 12, each/- 1999 26 90,000,000 10/- 900,000,000 900,000,000 Engro Rights Cash July 27, each Chemicals 2007 27 21,400,000 10/- 214,000,000 214,000,000 Mitsubishi Rights Cash July 27, each 2007 28 60,000,000 10/- 600,000,000 600,000,000 Engro Rights Cash September each Chemicals 4, 2007 29 18,000,000 10/- 180,000,000 180,000,000 EPCL Rights Cash September each Employees 4, 2007 Trust 30 76,200,000 10/- 6/- each 762,000,000 457,200,000 1,219,200,000 IFC Other than Cash November each Rights 30, 2007

273,378 10/- 8/- each 2,733,780 2,187,024 4,920,804 First Dawood Rights I Cash 31 each Investment January Bank Limited 14, 2008

32 248,525 10/- 8/- each 2,485,250 1,988,200 4,473,450 Dawood Capital Rights Cash January each Limited 14, 2008

33 248,525 10/- 8/- each 2,485,250 1,988,200 4,473,450 Novatex Limited Rights Cash January each 14, 2008

34 223,673 10/- 8/- each 2,236,730 1,789,384 4,026,114 Dawood Rights Cash January each Equities Limited 14, 2008

35 782,855 10/- 8/- each 7,828,550 6,262,840 14,091,390 United Stock Rights Cash January each Advantage 14, 2008 Fund

36 260,952 10/- 8/- each 2,609,520 2,087,616 4,697,136 B.R.R Rights Cash January each Investments 14, 2008 (Pvt.) Limited

37 1,388,889 10/- 8/- each 13,888,890 11,111,112 25,000,002 National Bank Rights Cash January each of Pakistan 14, 2008

38 3,106,567 10/- 8/- each 31,065,670 24,852,536 55,918,206 Allied Bank Rights Cash January each Limited 14, 2008

39 3,727,881 10/- 8/- each 37,278,810 29,823,048 67,101,858 United Bank Rights Cash January each Limited 14, 2008

40 1,242,627 10/- 8/- each 12,426,270 9,941,016 22,367,286 Jahangir Rights Cash January each Siddiqui & 14, 2008 Company Limited

41 52,041,768 10/- 8/- each 520,417,680 416,334,144 936,751,824 JSGC Rights Cash January each 14, 2008

42 13,222,037 10/- 8/- each 132,220,370 105,776,296 237,996,666 JS PE Rights Cash January each Chemical 14, 2008 Holdings

Total 520,367,677 5,203,676,770 1,071,341,416 6,275,018,186

Offer for Sale of Shares

2.9 PRINCIPAL PURPOSE OF THE OFFER FOR SALE

The Company has issued 1324,367,677 shares to different institutions and other subscribers to finance its project (refer to section 4.4.1 for details related to the expansion project). In order to provide a ready market for the trading of these shares held by institutional investors (including the offeror), the Offeror has decided to offer the shares to the general public. Additionally, the management of the company is of the opinion that listing would allow them more flexibility in tapping capital markets for future financing requirements

Moreover, it is intended to broaden the shareholder base by offering shares to the general public and to share the Company’s future prospects

2.10 INTEREST OF SHAREHOLDERS

None of the holders of the issued shares of the Company have any special or other interest in the property or profits of the Company other than as holders of the ordinary shares in the capital of the Company except the followings.

• National Bank of Pakistan, Allied Bank of Pakistan, United Bank Limited , Novatex, First Dawood Investment Bank, UBL Fund Managers, B.R.R Investments, Dawood Equities and Dawood Capital Management have also underwritten the Offer and are interested in the underwriting and take up commissions.

• The bankers to the Offer includes United Bank Limited which is also a shareholder of the Company and is interested in the banker’s commission. Both these categories of institutions will be paid the said interest by the Offeror and they have no other direct interest in the Company.

• National Bank of Pakistan, United Bank Limited and Allied Bank of Pakistan are also shareholders of the company and have provided debt facilities to the Company and are interested in receiving mark-up and repayment of principal upon maturity and have no other direct interest in the Company.

2.11 DIVIDEND POLICY

The rights in respect of the capital and dividends attached to each ordinary share would be the same. The Company in general meeting may declare dividends but no dividends shall exceed the amount recommended by the Directors. Dividend, if declared in the general meeting, shall be paid according to the terms of the provisions of the Companies Ordinance.

The Directors may from time to time pay the members such interim dividends as appear to the Directors to be justified by the profits of the Company. No dividend shall be paid otherwise than out of the profits of the Company for the year or any other undistributed profits. No unpaid dividend shall bear interest or mark-up against the Company.

1 The figure excludes 18,000,000 shares of EPCL Employees Trust , as these shares are exclusive of project equity

Offer for Sale of Shares

2.12 ELIGIBILITY OF DIVIDEND

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

2.13 DEDUCTION OF ZAKAT

Income distribution will be subject to the deduction of Zakat at source pursuant to the provisions of the Zakat and Ushr Ordinance, 1980 (XVIII of 1980) .

2.14 WITHHOLDING TAX ON DIVIDEND

Dividend distribution to the shareholders will be subject to withholding tax at source under section 150 of the Income Tax Ordinance, 2001 at the rate of 10% for all shareholders as per Division III of Part I of the First Schedule of the Income Tax Ordinance 2001 and will be deemed to be full and final liability in respect of such profits.

2.15 EXEMPTION FROM CAPITAL GAINS

Capital gains derived from the sale of listed securities are presently not liable to income tax, pursuant to Clause (110) of Part I of the Second Schedule of the Income Tax Ordinance, 2001. This exemption is presently available up to the income year ending June 30, 2008.

2.16 CAPITAL VALUE TAX (“CVT”) & WITHHOLDING TAX (“WHT”) ON SALE/PURCHASE OF SHARES

Pursuant to the provision of section 233(A) of the Income Tax Ordinance and Capital Value Tax (Finance Act 1989) the following charges are applicable on sale and purchase of securities:

• 0.02% CVT is being charged on the purchase value of shares, modaraba certificates, instruments of the redeemable capital as defined in the Companies Ordinance, 1984.

• 0.01% WHT is being charged on the sale value of shares, modaraba certificates, and instruments of redeemable capital as defined in the Companies Ordinance, 1984.

2.17 DEFERRED TAXATION

Deferred income tax is provided using the liability method on all temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilised.

Deferred income tax is determined using tax rates that have been enacted or substantially enacted by the balance sheet date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax is charged or credited in the profit and loss account.

The Deferred Tax liability amounting to Rs. 333,596,000 has been fully provided as at December 31, 2007.

Offer for Sale of Shares

2.18 Justification of Premium

The underwriters have given following justification of premium in their independent due diligence reports:

• 2The Company is the sole manufacturer of PVC resins in Pakistan with a 92% share of the local PVC resin market.

• The PVC market in Pakistan is expected to continue to grow at a healthy rate.

• Future cash flows of the Company will increase with incremental sales and cost efficiencies due to expansion and back integration project.

• The Company has a very strong management and human resource that have shown their capabilities in the past to run profitable business.

• EPCL is already established itself as a profitable venture. The capacity enhancements in PVC (from 100,000 Tpa to 150,000 Tpa) will ensure catering to the increasing demand with economies of scale thus increased revenues and higher profits.

• The Company will be producing 94,500 Tpa of Caustic Soda in future which will diversify its operations (for details please see Para 4.4). EPCL will have definite competitive advantage over its competitors in this market.

• The back integration project will make EPCL capable of producing Ethylene di chloride (EDC), VCM and Chlorine which are the raw materials to produce PVC resin. The back integration will result in cost efficiencies and higher profits.

• The expansion and back integration project will open up a number of new avenues for the Company to further diversify its business in future.

• In-house production of EDC and VCM will make the operations of the Company more flexible to deal with international cyclical price trends and make profitable transactions.

• The Company had an EPS of 1.64 and RoE of 8.15% as per audited financial statement for the year ended December 31, 2007.

• Domestic Sales of EPCL in 2000 was 37,000 Tpa which grew to 94,000 in 2007 which is a CAGR of 14.2%

• Its capacity utilization in 2007 stood at 94.3%.

• Combined Cycle captive power generation will derive relatively lower energy costs.

• The Company has made available to itself the expertise of 3Mitsubishi Corporation of Japan, a shareholder, with enormous amount of experience in petrochemicals.

• The brand name “Engro” is synonymous with sound ethical & astute business policies generating strong shareholder value.

2 Based on information provided by Engro Polymer & Chemicals Limited 3 Mitsubishi Corporation and EPCL have a contract through which procurement of VCM for EPCL is sourced through Mitsubishi

Offer for Sale of Shares

Historical Financial Performance of Engro Polymer & Chemicals Limited

PKR (million) 2003 2004 2005 2006 2007 Income Statement Net Sales 4,164 5,280 5,562 5,340 6,040 Gross Income 510 858 756 1,002 958 Financial Charges 144 78 72 66 41 Net Income 168 378 306 378 422 EPS 0.94 2.14 1.72 2.14 1.64 Balance Sheet Current Assets 1,578 1,710 1,488 1,806 4,651 Total Assets 4,332 4,134 3,780 4,260 9,464 Current Liabilities 1,506 1,476 1,248 1,746 1,505 Long Term Debt 1,152 708 450 222 1,370 Total Liabilities 2,664 2,244 1,782 2,214 3,232 Equity 1,668 1,890 1,998 2,046 5,177 Total Liabilities + Equity 4,332 4,134 3,780 4,260 8,409

Ratios Gross Margin 12% 16% 14% 19% 16% Net Margin 4% 7% 6% 7% 7% Current Ratio 1.0 1.2 1.2 1.0 3.1 LTD/Equity 0.4 0.3 0.2 0.1 0.3 Total. Liabilities/Net 1.6 1.2 0.9 1.1 0.5 Worth

Peer Analysis Ittehad Sitara EPCL Chemicals Chemicals Limited Limited 2007 2007 2007 962 2,049 Current Assets 4,651 Total Assets 3,533 6,385 9,464 Gross Profit 622 1,084 958 Operating Profit 438 854 618 Net Profit 137 373 422 EPS 3.81 20.11 1.64 Return on Equity (%) 18.0 19.4 8.15 Return on Assets (%) 5.8 5.8 4.45 P/E Multiple 10.10 9.33 10.97

Offer for Sale of Shares

PART 3 3 UNDERWRITING, COMMISSION, BROKERAGE AND OTHER EXPENSES

3.1 UNDERWRITING

The Present Offer of 50 million shares at a price of PKR 18/- per share has been fully underwritten as under:

Sr. No. Names of Underwriters No. of Shares Amount (Rs.)

1 First Dawood Investment Bank Limited 726,622 13,079,196 2 Dawood Capital Management Limited 751,475 13,526,550 3 Novatex Limited 751,475 13,526,550 4 Dawood Equities Limited 776,327 13,973,886 5 UBL Fund Managers 2,217,145 39,908,610 6 Faysal Bank Limited 2,500,000 45,000,000 7 KASB Bank Limited 4,545,455 81,818,190 8 IGI Investment Bank Limited 5,000,000 90,000,000 9 B.R.R. Investments (Pvt.) Limited 5,051,977 90,935,586 10 National Bank of Pakistan 5,347,305 96,251,490 11 Allied Bank Limited 9,393,433 169,081,794 12 United Bank Limited 12,938,786 232,898,148

TOTAL 50,000,000 900,000,000

If, and to the extent, shares hereby offered are not subscribed and paid for in cash in full by the closing of subscription list, the underwriters shall, within fifteen (15) days of being duly called upon by the Offerors to do so, subscribe and pay for or procure subscribers to subscribe and pay for in cash in full those shares not so subscribed, in proportion of their underwriting commitments.

In the opinion of the Offeror, the resources of the underwriters are sufficient to discharge their underwriting commitments.

3.2 BUY-BACK/ REPURCHASE AGREEMENT

The underwriters have not entered into any buy back/ re-purchase agreement oral or verbal with the offerors or any other person in respect of this public offer. Also the offeror or any of its associate has not entered into any buy back / repurchase agreement with the underwriters or any other person in respect of this offer.

3.3 UNDERWRITING COMMISSION

Underwriters have been paid underwriting commission @ 1.0% on the amount of Public Offering underwritten by them and the Offerors shall pay an additional take up commission @ 1.0% in respect of unsubscribed shares, if any, taken up by each of them by virtue of their underwriting commitments.

Offer for Sale of Shares

3.4 COMMISSION TO BANKERS TO THE OFFER

A commission at the rate of 0.50% of the amount collected on allotment in respect of successful applicants will be paid by the Offerors to the Bankers to the Offer for services to be rendered by them in connection with this Public Offer. No commission shall be paid to the Bankers in respect of shares taken up by the Underwriters by virtue of their underwriting commitments.

3.5 BROKERAGE

For the Public Offering, the Offerors will pay brokerage to the Members of the KSE, LSE and ISE at the rate of 1.00% of the value of shares (including premium) actually sold through them. No brokerage shall be paid to the Members in respect of shares taken up by the Underwriters by virtue of their underwriting commitments.

3.6 EXPENSES OF OFFER FOR SALE

The expenses of this Offer for Sale are estimated not to exceed Rs. 36.7 million out of which the listing fees of the KSE, processing fee of SECP and membership fees of CDC shall be borne by the Company while the balance of expenses shall be borne by the Offeror.

Expenses Category Rate Amount (Rs)

Commission to the Bankers to the Offer* 0.50% 4,500,000 Brokerage to the members of KSE, LSE and ISE* 1.00% 9,000,000 Underwriting Commission* 1.00% 9,000,000 Take up Commission* 1.00% 9,000,000 Listing Fee of the Karachi Stock Exchange 1,500,000 Central Depository Company charges 75,000 SECP Processing Fee 100,000 Printing & Publication of OFSD and Application Forms 1,500,000 Printing of Share Certificates and Transfer Deeds Professional services viz., Computer Balloting, Advertising and Other 2,000,000 Miscellaneous Expenses (Legal fees, traveling costs. etc.) Total 36,675,000 * Represents maximum possible expenses related to the Offer

Offer for Sale of Shares

PART 4 4 HISTORY AND PROSPECTS

4.1 History

Engro Polymer & Chemicals Limited (formerly Engro Asahi Polymer & Chemicals Limited) (“EPCL” or “the Company”) was incorporated in 1997 under the Companies Ordinance 1984. The principal activity of the Company is producing and marketing different grades of PVC resin. EPCL’s production facility is located at Port Bin Qasim Karachi, with a capacity to produce 100,000 tons per annum of PVC. In 2006 capacity utilization of EPCL’s plant was 97%, net profits for the year were PKR 381 million against revenues of PKR 5,249 million. In 2006 EPCL had a 492% market share of the domestic PVC resin market. In 2007 capacity utilization of EPCL’s plant was 94%, net profits for the year were PKR 422 million against revenues of PKR 6,040 million. For the year, EPCL had a 596.4% market share of the domestic PVC resin market.

Being the sole manufacturer of PVC resin in the country, EPCL’s PVC resin (sold under the brand name of SABZ) dominates the domestic market. In order for it to cater to the increasing domestic demand the Company is enhancing its PVC production capacity. In addition to this the Company is also setting up an integrated facility whereby the Company will have the capability to manufacture EDC, VCM, Chlorine and Caustic Soda. This will bring in cost efficiencies in the business and will also diversify the operations. The new facility is being set up adjacent to the existing facility in Port Bin Qasim (situated on an area measuring 30 acres leased from Port Qasim Authority). The Company has leased an additional 38 acres of land from Port Qasim Authority for its expansion and backward integration facilities. The land has been acquired under a 50 year lease agreement (For details please see para 4.4).

4.2 Shareholders

The major shareholder of the Company is Engro Chemical Pakistan Limited (‘ECPL’). ECPL was incorporated in 1965 and is currently amongst the largest fertilizer producers in Pakistan. ECPL primarily markets urea fertilizer manufactured at its plant at Daharki, Sindh. ECPL is also one of the largest importers of Phosphates and Potash fertilizer in the country. ECPL has a total asset base and net sales revenue of PKR 38,157 million (Dec 31, 2007) and PKR 23,138 million respectively (Dec 31 2007).

ECPL is listed on the Karachi, Lahore and Islamabad stock exchanges and has a total paid-up capital of PKR 1,934.69 million (Dec 31, 2007).1 As a testament to ECPL‘s blue chip corporate status, the Company has been a frequent winner of the Corporate Excellence Award of the Management Association of Pakistan as well as the Top 25 Companies’ Award of the Karachi Stock Exchange. Further, ECPL’s corporate and social responsibility initiatives have been recognized internationally at various forums. In addition to the core fertilizer business, ECPL has diverse business interests in PVC, bulk chemical storage, food processing and power generation. through various subsidiaries and joint ventures. Financial Snapshot Engro Chemical For the Year Ended December (PKR million) 2007 2006 2005

Revenue 23,183 17,602 18,276

Profit After Tax 3,155 2,547 2,319

Net Profit Margin (%) 13.6 14.5 12.7

4 Provided by Engro Polymer & Chemicals Limited 5 Provided by Engro Polymer & Chemicals Limited

Offer for Sale of Shares

Total Assets 15,481 15,981 14,112 Return On Equity (ROE) 25 27 31 %

Mitsubishi Corporation (MC) of Japan holds 11% stake in the Company. Mitsubishi is ranked 127th in the Fortune 500 6list of largest companies in the world. MC globally holds a significant position as Traders in Chemical industry. It also has stakes in many businesses all across the globe in such diverse industries like automobile manufacturing, chemicals, financial services, power generation, construction, hotels, etc.

Other institutional investor is International Finance Corporation (‘IFC’) with a stake of 15% in the share capital of EPCL.

4.3 Operations

EPCL has been producing PVC Resins from its current 100,000 Tpa capacity plant (made by Mitsui Corporation Japan) since 1999. A lot of effort was put up by the Company for the development of PVC market in Pakistan. This resulted in gradual increase in demand. EPCL has also contributed in developing its Customers and the necessary distribution chain. The success of the Company is reflected from its performance shown as below:

Operating Summary in 2000 2001 2002 2003 2004 2005 2006 2007 '000' tons

Production 65 69 84 90 87 91 97 94 Domestic Sales 37 58 66 67 66 72 85 94 Export Sales 26 12 16 25 17 22 5 -

Financial Summary in 2000 2001 2002 2003 2004 2005 2006 2007 Rs million

Net Sales Revenue 2,586 2,711 3,218 3,961 5,136 5,524 5,249 6,040 Operating Profit (109) 93 290 278 601 416 634 618 Profit After Tax (353) (171) 173 149 389 303 381 422 Shareholders Equity 1,421 1,249 1,423 1,571 1,871 1,996 2,048 5,177 EPS ( Rs. per share) (1.98) (0.96) 0.97 0.83 2.18 1.70 2.14 1.64

4.3.1 Major Customers

The customer base of the Company comprises of all categories of PVC application manufacturers. The largest domestic consumer is the Pipe Sector. This sector is showing strong growth on a consistent basis. This is because the PVC pipes are now increasingly used in housing and construction, water supply and sewerage, telecommunications and agriculture. The Company’s other customers include manufacturers of artificial leather, shoes, garden hoses, cable compounds, films, rigid sheets, etc.

6 Source: Fortune Magazine

Offer for Sale of Shares

Twist / Shrink Wrap Others 2% 5% Garden Ho se 6%

Rigid Sheet 3%

Compounding 6%

Film 3%

Pipes 57% Art. Leather 11%

Sh o es 7%

4.3.2 Pricing & Distribution

The Company generally sets its PVC prices on a bi-monthly basis. The pricing policy is governed by international prices, local market conditions and volume growth. Customers usually order on a spot basis. The sales of the Company are on cash or on secured credit basis. The credit sales are secured by letters of credit or bank guarantees. The Company also focuses strongly to provide technical support to its customers in order to bring efficiencies in their operations and also to improve quality of PVC products. Moreover the Company helps to educate the end consumer about PVC products. All this is reflected by the growth of PVC over the years in the domestic market. EPCL has also put forth a large effort to help educate farmers on the benefits of drip irrigation as a means to address water shortages and improve their productivity. The Company is also expanding its warehousing network to ensure that PVC stock is readily available in various key cities of the country. EPCL currently has six warehouses in five cities namely, Karachi, Lahore, Multan, Faisalabad Islamabad and Quetta.

Analyzing the robust growth of the industry together with the timely expansion plans being implemented by the Company, the future prospects of the Company fundamentally seems to be very strong.

4.3.3 Exports

The Company has established itself as a regular supplier to several businesses in the region thus establishing a strong customer base outside Pakistan. The international customer base is located in Sri Lanka, Bangladesh, UAE, Bahrain, etc. High Product quality coupled with the Company’s strategic geographical location has given the Company an advantage to successfully provide a level of exports at a competitive price. Currently, EPCL’s exports have been restricted due to domestic demand equalling production. However, post expansion EPCL will be fulfilling its export customers’ needs on a regular basis.

Offer for Sale of Shares

4.4 FUTURE PROSPECTS

Being the sole manufacturer of PVC resins in the country, its PVC resins (sold under the brand name of SABZ) dominate the domestic market. The Company holds a dominant position in the PVC resins market in Pakistan with its market share increasing year on year. The residual demand is filled through imports of PVC resin and scrap.

The Company is in the process of completing an Expansion and Back Integration project whereby it will setup a Chemical Complex spread over 68 acres ( the current production facility is spread over an area of 30 acres and the new facility is being built on an adjacent plot measuring 38 acres) of land in Port Bin Qasim. The project includes the enhancement of PVC production capacity from 100,000 Tpa to 150,000 Tpa with a back integrated facility to produce Vinyl Chloride Monomer, Ethlene Di Chloride, Caustic soda and Chlorine. A 60 MW combined cycle power plant is also being set up to cater to the power requirement of the complex. The project will bring in new technological know-how for the first time in Pakistan. The present operations of the Company will expand to new lengths as shown below:

Expansion and Back Integration e Textiles Soaps & Detergents Caustic Soda Water Treatment

Others

Salt Domestic

L Energy Chlorine EDC VCM PVC

Ethylene Export

Project to enable the Company to achieve competitive cost positions

With the current expansion scheme EPCL will be able to maintain its production capacity at a level where it can fully cater to the expected local demand for PVC resin in the future .Furthermore, additions to the Product Portfolio (described in para 4.4.1) will bring in diversification to the business and also the integrated operations will develop cost efficiencies.

Ethylene would be the main raw material to produce EDC and VCM which will be sourced from suppliers located in the Middle East. A facility for storing and handling of Ethylene is under construction at Engro Vopak Terminal Ltd. (EVTL), an associated concern of the Company. The core business of EVTL is to handle and store chemicals. EVTL has been providing its services to EPCL since 1999 for handling of VCM.

Offer for Sale of Shares

4.4.1 Expansion Project The Project consists of (i) Construction of an additional brand new plant to produce an additional 50,000 Tpa of PVC, increasing EPCL’s capacity to 150,000 Tpa; effective life of the plant is 20 years (ii) The dismantling, shipping and re-construction of a relocated second hand plant ( the plant was originally commissioned in 1970) from the US which has a capacity to produce 240,000 Tpa of EDC and 216,000 Tpa of VCM, the primary raw material for the PVC plants; the plant has been acquired at a competitive price and its effective life is 20 years(the effective life of the plant is based on the assessments conducted by engineers at EPCL, and policy of EPCL to follow the manufacturers recommendations and international best practices of plant maintenance) . (iii) Construction of a new chlor-alkali plant which will produce 94,500 Tpa chlorine, a primary raw material for EDC production, and 105,000 Tpa caustic soda as a saleable by-product and; effective life of the plant is 20 years (iv) Construction of a 60 MW combined cycle power plant to provide a reliable and efficient power source. effective life of the plant is 20 years Estimated Project Capital Structure

Project Debt/Equity in millions Debt USD PKR FCY Loan ( IFC) 60 3,660 LCY Loan (Local 90 5,490 Banks)

Project Debt 150 9,150 Equity Engro Chemical 24.6 1,500 Mitsubishi 3.5 214

IFC 20.0 1,220

PP 22.9 1,397 Project Equity 71 4,331

Total 221 13,481

7 Estimated Project Cost

Projected Actual till

Jan 08 In millions *USD PKR *USD PKR

Expansion of PVC Capacity 17.4 1,061.4 3.27 199 EDC-VCM Plant 34.3 2,092.3 14.6 890

Chlor Alkali Plant 43.3 2,641.3 5.9 360

Power Plant 35.9 2,189.9 5.6 342

**Utilities 22.2 1,354.2 2.5 152

***Off sites 1.9 115.9 3.5 213

****Owners Cost 11.7 713.7 6.3 384

*****Infrastructure 6.1 372.1 4.3 262 Taxes & Duties 19.3 1,177.3 1.5 91 Contingency 15.1 921.1 0 0 Interest During Construction 13.8 841.8 1.8 110

Total 221 13,481 49.27 3,003

7 The estimated project cots is based on assessments made by EPCL which maybe subject to change

Offer for Sale of Shares

* 1 USD = PKR 61 **Utilities includes demineralization unit, nitrogen generating unit, air compressors, cooling tower for cooling equipment, waste water treatment unit and chiller water unit ***Offsite include raw water pipeline and pumping facility, ethylene pipeline and natural gas line ****Owners cost includes salaries wages office equipment vehicles training traveling *****Infrastructure includes land site development buildings

Detail of Debt Fcy Loan Local Syndicate Loan Amount US$ 60,000,000 PKR 5,700,000,000 Tenor 10 Years 9 Years Principal Repayment 15 Half yearly installments 17 Semi annual installments Interest / Mark-up 2.6% to 3% above 6 Months LIBOR 2.25% p.a. + Base Rate (6 month KIBOR) Lender / Syndicate Members International Finance Corporation Allied Bank Limited, Habit Bank, Muslim Commercial Bank, National Bank Limited, United Bank Limited Agent Not Applicable United Bank Limited Maturity Date 2017 2017

Project Implementation Schedule Activity Completion Date / Status Acquisition of land Complete Kick off Engineering, Procurement and Construction Contracts Complete Initiation of land development / off-site work Complete EDC/VCM Plant dismantling Complete EDC/VCM Plant shipment Complete 50,000 Tpa PVC Plant commissioning September 2008 EDC/VCM Plant reconstruction December 2008 Utilities pre-commissioning January 2009 VCM Plant commissioning March 2009 Chlor Alkali and EDC commissioning May 2009 Commercial Production June 2009

Details of Plant & Equipment

S.No. Supplier Plant & Equipment

1 AGI Industries Inc. Supply of spare pump parts

2 The Revak Comp Spare Rotor Fabrication for Process Air Compressor PC-201

3 Selas Fluid Processing Corp. Radiant Section Material & T-Thermal Incinerator Refractory

4 Flow serve FSD Supply of Mechanical Seals

5 Koch Knight LLc Supply, Packing & Internals for HCL, Caustic Scrubber, Hot Quench

6 HANTECH LTD. Supply of Sparger for LTC Reactors

Offer for Sale of Shares

7 China Tianchen Chemical Engineering Procurement of PVC Plant Corporation 8 China Tianchen Chemical Engineering Procurement of Chlor Aklali Plant Corporation 9 China Tianchen Chemical Engineering Procurement of Demineralization unit Corporation 10 China Tianchen Chemical Engineering Procurement of Nitrogen generating unit Corporation 11 China Tianchen Chemical Engineering Procurement of Air compressors Corporation 12 China Tianchen Chemical Engineering Procurement of Cooling equipment Corporation 13 China Tianchen Chemical Engineering Procurement of water chilling units Corporation 14 China Tianchen Chemical Engineering Procurement of Waste Water treatment units Corporation 15 China Tianchen Chemical Engineering Procurement Power Plant Corporation 16 China Tianchen Chemical Engineering Procurement of certain equipments relating to EDC/VCM Plant Corporation 17 Asahi Kasei Chemicals Corp Japan Procurement of Electrolyzers and the Technical License relating to new Chlor Alkali Plant 18 International Process plants & Equipment EDC-VCM plant

19 Ineos Vinyls U.K. Limited Catalyst supply of chemicals for EDC-VCM

PROJECT LETTERS OF CREDIT ESTABILISHED

S.No. L/C# Amount Beneficiary Scope of Work

1 DCKRI 073336 $47,992.00 AGI Industries Inc. Supply of spare pump parts

2 DCKRI 073305 $247,360.00 The Revak Comp Spare Rotor Fabrication for Process Air Compressor PC-201 3 DCKRI 073337 $300,932.48 Selas Fluid Processing Corp. Radiant Section Material & T-Thermal Incinerator Refractory 4 DCKRI 073337 $270,100.00 Rework existing incinerator burner

5 DC KRI073044 $202,862.00 Flowserve FSD Supply of Mechanical Seals

6 DC KRI073045 $281,591.00 Koch Knight LLc Supply, Packing & Internals for HCL, Caustic Scrubber, Hot Quench 7 DCKRI072864 $276,999.00 HANTECH LTD. Supply of Sparger for LTC Reactors

8 DCKRI072698 $47,918.00 Siemens Energy and Repair of 9 Gas Analyzers Automation 9 DC KRI072443 $30,960.00 St. Gabriel Valve Services PSV Refurbishment

10 DCKRI 072122 $38,245.00 National Electric Motor Service Motor Reconditioning Work

11 DCKRI 072129 $25,939.00 ENGlobal Engineering, Inc. Instrumentation Engineering Support Services for DCS/EDS System 12 DCKRI 072125 $318,358.00 Control Valve Specialist , Inc. Refurbishment work of Control Valves and its instrumentation.

Offer for Sale of Shares

13 DCKRI 072123 $140,000.00 AGI Industries Inc. Refurbishment work for pumps & blowers

14 DCKRI072126 $41,612.00 Vector Electric & Controls Inc. Refurbishment of Reusable Critical Instruments

15 DCKRI071301 $298,500.00 Selas Fluid Processing Corp. Upgradation & Re-Engineering of the instrumentation and controls for incinerator system 16 DCKRI062371 $29,412.00 Selas Fluid Processing Corp. Engineering Services for Assessment of Formosa Plastics Corp.'s EDC/VCM Plant Incinerator 17 07SLC0010CBK0428 $81,431,390.00 China Tianchen Chemical Procurement of PVC-II, Chlor Aklali Plant and Utilities Engineering Corporation 18 10525FLC01310-07 $7,373,259.00 China Tianchen Chemical Procurement of certain equipments relating to Engineering Corporation EDC/VCM Plant 19 10525FLC00551-07 $8,644,248.00 Asahi Kasei Chemicals Corp Procurement of Electrolyzers relating to new Chlor Japan Alkali Plant 20 10525FLC00727-07 $462,857.40 Asahi Kasei Chemicals Corp Technical License for Electrolyzers relating to new Japan Chlor Alkali Plant Total $100,510,534.88

4.4.2 PVC INDUSTRY: PAKISTAN PVC demand in Pakistan has been steadily increasing from 62,000 TPA in 2000 to 120,000 Tpa in 2006, representing a 8CAGR of 11.4%. According to EPCL’s estimates, demand is projected to reach around 168,000 TPA in 2010, a CAGR of about 98.8% (a conservative estimate given the historic growth rate of 11.4 %.) In 2006, EPCL’s share in 10PVC resin market and 11PVC market including 12scrap was 92% and 75% respectively. Chart below shows the historic and projected breakdown of PVC demand in Pakistan.

180 160 140 120 100 80 60

Thousand Tons Thousand 40 20 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

EPCL Sales Imports Scrap Import

Source: EPCL (PVC demand figures for 2008, 2009,& 2010 have been projected by the company based on historic trends)

8 Provided by Engro Polymer Chemicals Limited 9 Provided by Engro Polymer Chemicals Limited 10 Refers to the market for new P VC resins fresh off the production line 11 Refers to the total market for PVC raw material (including PVC resins and scrap material) 12 Scrap consists of used PVC products (usually pipes) which are used as raw material instead of fresh PVC resin as a raw material

Offer for Sale of Shares

A correlation can be observed from the above table with respect to the growth of PVC industry and growth of EPCL, both of which happened simultaneously. The growth in demand for PVC has picked up since EPCL entered the market. The Company has made consistent and conscious efforts to encourage the use of PVC in Pakistan through a well thought out and coordinated business development strategy.

Pipes The most important sector for PVC resins in Pakistan is Pipes. PVC pipes are used primarily in the housing industry to supply water, transporting sewerage and electrical conduits. Pipe manufacturers consume 50% of resins sold domestically.

EPCL has played a critical role in encouraging and educating pipe manufacturers to enhance PVC pipe capacity on the supply side. Concurrently EPCL also interacted with water bodies, large housing schemes like DHA and other relevant bodies informing them of the advantages of using PVC pipes in their infrastructure, schemes/projects as opposed to other alternatives. This resulted in the increase of demand of PVC application. At the same time EPCL coordinated with its customers to timely enhance their capacities and capabilities. PVC pipe manufacturing capacity in the country has doubled in the last five years from 68,000 Tpa in 2002 to present capacity of 154,000 Tpa.

Housing A key sector for current and especially future growth of PVC consumption in Pakistan is the housing sector. According to the Ministry of Finance there is a deficiency of approximately 136 million houses in Pakistan and 50% of existing civil structures need major refurbishments to remain safe and sustainable structures. Recognizing this acute shortage the government has been encouraging FDI into this sector, foreign firms experienced in using PVC materials are expected to introduce the use of PVC window frames, doors, etc.

Business Diversification Caustic Soda is a saleable by-product resulting from the Chlorine production. The main consumer of caustic soda in Pakistan is the textile industry, where caustic is mainly used in the dyeing process, followed by soap and detergents industry and water treatment. 14Capacity increase in textiles has been significant in recent years, due to strong international demand. This in turn has increased the demand for caustic soda. Total caustic demand in Pakistan in 2005 was 250,000 tons, requiring import of caustic soda flakes as a result of limited production capacity. Importing caustic soda is not an option readily available to most consumers due to containment and logistical complexities.

Caustic soda demand is projected to grow to 418,000 Tpa by 201015, representing a CAGR of 11%, due to the expansion of the textile, soap and power related facilities in Pakistan. EPCL will be well placed to take advantage of this growth as domestic demand is expected to grow strongly in the times to come.

4.4.3 Competitive Advantage to EPCL EPCL is the sole manufacture of PVC resin in Pakistan. The Company has positioned itself as a customer oriented player supplying high quality product. EPCL continues to work with all stakeholders to enhance demand of PVC in the country. Having a manufacturing facility located in Pakistan, EPCL has a clear cut advantage over the traders importing the product as they are subject to increasing freight costs, financial costs, warehousing constraints and on top of it they do not have any control over the quality of the product they import. On the other hand EPCL has proper infrastructure to develop a long-term and value added relationship with its customers providing them technical and other after sales support.

Presently there are only two caustic soda producers (Sitara Chemical Industries Limited & Ittehad Chemicals Limited) in Pakistan. Both of these caustic soda producers are located in the north of the country. However, about

13 Pakistan Economic Survey 2006-2007,Ministry of Finance 14 According to Pakistan Economic Survey 2006-07 USD 6 billion have been invested into capacity enhancement/ up gradation of textile industry in Pakistan between 2000-2006 15 Source: EPCL

Offer for Sale of Shares

35-40% of the total country demand for caustic soda is in the south of Pakistan. The consumers in South have to incur a freight cost of US$ 35 per ton. EPCL, having its manufacturing facility in south will have an advantage over its competitors to provide better terms to the consumers, located in the south of the country, in terms of freight, delivery time and warehousing.

The biggest competitive advantage that EPCL will have will come from the value addition of Chlorine of which Caustic Soda is a by-product. Utilization of Chlorine and its disposal is the single most problematic area for the Caustic soda producers. The disposal of chlorine is a costly procedure as it has to be neutralized in order to be safe for disposal. For EPCL the value addition will come through its 100% utilization to produce PVC using its back integrated operations.

Manufacturing of Chlorine and Caustic soda is an energy intensive process. EPCL is setting up its own combined cycle power plant where the cost of energy will be much lower for those sourcing power from the grid.

EPCL will be at a significant cost competitive advantage compared to both the existing caustic manufacturers.

4.5 Risk Factors A. Risks Associated with the Company

4.5.1 EPCL may have over-estimated demand growth available in Pakistan causing a capacity overhang detrimental to its financial viability

EPCL intends to expand in a market where demand and growth have been stimulated largely by its own endeavors. These efforts have primarily centered on EPCL’s interaction with the end user and encouraging them to adopt PVC, as an example it has been constantly engaging various stakeholders in the country to increase the usage of PVC applications. There is a possibility that end users may not adopt PVC products at a timeline that is suitable for EPCL’s expansion project, which would render the expansion exercise untimely and risk the financial health of the expanded entity.

Mitigant The risk of a capacity overhang is minimal as EPCL’s current plant is working at almost 100% capacity. Actual historical growth from 2000 to 2006 has been at 13% CAGR whereas the growth assumed in future forecasts is only 8.8%.Historically, the proven demand for PVC in Pakistan provides enough market share for EPCL to capture after its enhanced capacity. Also EPCL, over the years, has established itself as a strong exporter of PVC resin. It has a strong customer base in the countries like Sri Lanka, U. A. E., Kuwait, Bangladesh, Bahrain, etc. Even if due to any reason the demand in Pakistan is not according to the plan, EPCL will be in a strong position to export the product at healthy margins.

4.5.2 Economic slow down / Demand Risk

The main drivers for PVC demand are the pipe and housing sectors. Any slowdown in these industries would adversely affect the demand for PVC. There is not enough capacity in the local pipe sector for manufacturing pipes with wider diameters required for water and sewerage transmission. Housing market is influenced by a number of factors not controllable by EPCL. Sudden dip in house prices may encourage people to buy rather than to construct, again hindering the use of PVC.

Mitigant New capacities for making larger diameter pipes are currently being installed, in addition there is a huge backlog of housing units in Pakistan and the sector is attracting a lot of FDI as well.. Also EPCL, over the years, has established itself as a strong exporter of PVC resin. It has a strong customer base in the countries like Sri Lanka, U. A. E., Kuwait, Bangladesh, Bahrain, etc. Even if due to any reason the demand in Pakistan is not according to the plan, EPCL will be in a strong position to export the product at healthy margins.

Offer for Sale of Shares

4.5.3 Disruption in supply of main raw materials

The main raw materials for the new backward integrated EPCL plant will be ethylene and raw salt. Ethylene is not produced in Pakistan and the viability of the project depends entirely on 100% import of ethylene from Middle Eastern sources. According to Goldman Sachs Ethylene prices peaked in 2006 and will begin to rationalize by 2008 owing to additional capacities coming online, primarily in the Middle East. However, demand for ethylene in domestic Middle Eastern economies is also growing, constraining the amount available to export. Any disruption in the supply of ethylene will have an adverse impact on the financial viability of EPCL.

Mitigant Ethylene prices peaked in 2006 due to tight supply and will begin to rationalize by end 2008 owing to additional capacities coming online, primarily in the Middle East. The risk of non availability is very low because surplus ethylene available through Iran, Qatar and Saudi Arabia will be sufficient to meet the requirements of EPCL. There is ample availability of raw salt in the country. The Company is already in negotiations with the major suppliers of the raw material and based on these discussions chances of non-availability of raw material are negligible.

4.5.4 Lack of Experience in operating chlor-alkali, EDC/VCM plants

Producing VCM locally will be a new exercise for EPCL. Operating the EDC/VCM and chlor-alkali plant requires new expertise, which are not presently available with EPCL. If anything goes wrong with the operations of these two plants it would adversely affect the production capability of EPCL plant.

Mitigant EPCL is in the process of acquiring trained personnel and also has made adequate arrangements to train and develop necessary competencies to manage and run the plants efficiently. Relevant EPCL staff will be trained at a facility in Italy for gaining first hand knowledge of operating the plants. In addition the facilitator will also provide on ground support in Pakistan in the initial periods of plants operations. EPCL has also hired people with experience of running such plants. Therefore, the risk of operational breakdown due to lack of knowledge is very low. The Company has proven in the past as well that it is capable of handling new technologies well when it had set up the PVC manufacturing facility in 1999 when there was no expertise available in Pakistan to operate the plant.

4.5.5 Correlation between prices of oil, ethylene and PVC

Historically, there has been a strong correlation between PVC prices and the price of oil. The main reason for this correlation has been the dependence of ethylene on the price of oil. Ethylene is produced through cracking of naphtha, a crude oil derivative. The recent spike in crude oil prices has put upward pressure on ethylene prices and its derivatives.

Mitigant The financials of the business will be affected by PVC-Ethylene margins rather than on PVC prices or Ethylene costs in isolation. Theoretically if Ethylene prices go up PVC prices will also go up therefore maintaining PVC- Ethylene margin in the close range. Presently high Ethylene prices are also due to the tight supply of Ethylene. Once the new capacities come on line Ethylene prices are expected to go down.

4.5.6 Risk of litigation by environmental groups & employees

The production process of PVC involves handling of dangerous materials that are hazardous to human health. The production process also produces some quantities of hazardous waste, which if not properly handled can lead to damage to humans as well as the environment. Proper hazard prevention measures for employees are important to ensure their safety. Besides, a proper emergency plan is also needed to ensure that resources are available to deal with any untoward incident. If such measures are not in place, then any mishap can lead to a situation where the Company may find itself at the receiving end of a legal process.

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Mitigant EPCL has always kept safety of its employees as the most important part of its core values. For this purpose there are well established and documented procedures in accordance with international best practices at EPCL. Additionally, EPCL follows the international environmental standards to ensure that all waste is treated so that there is no adverse effect on the environment. The Company has been winning a number of awards and recognitions from Government and Private authorities on Safety and Environment. Its operations since 1999 involved handling of dangerous chemicals where the Company has developed world class standards for safety and environment.

The plants have been designed to meet NEQS and World Bank effluent standards. EPCL is one of the early entrants on the SMART reporting progress of EPA and has an outstanding track record on environmental performance.

4.5.7 Technological Obsolescence Risk

The future prospects of the Company can be adversely affected by obsolescence of its production technology.

Mitigant

The PVC production technology is to convert VCM into PVC resins, whereas the other method of production is to use calcium carbide for the production of PVC resins. The VCM method used by the Company is the current technology for producing PVC resins across the world and the risk of technology being obsolesce is negligible.

B. Other Risks

4.5.8 Regulatory Risk

Changes in the regulatory framework can greatly influence the performance of the Company.

Mitigant

It is expected that in order to support local production of PVC, the GOP shall employ favorable rules and regulations.

4.5.9 Competition Risk

Addition of PVC resin and Caustic Soda facilities by competitors may increase level of competition.

Mitigant

The Company is currently the sole manufacturer of PVC resins in the country, equipped with market knowledge, strong distribution network, developed sales relationships, managerial & operational competencies associated with a pioneering entity.

In Caustic Soda production the Company would be the sole manufacturer in the south of the country with a more economical production model than existing competitors

4.5.10 Financial Projections Risk

There is a risk that the financial projections made by the Company are too optimistic and the actual performance maybe worse than the projected performance thereby creating financial difficulties

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Mitigant

The financial projections of the Company have been made after carrying out a detailed feasibility of the future business model of the Company. The assumptions and projections used in projecting the future financial performance of the Company have been done after making detailed analysis of historical as well as projected raw material costs, major operating costs and prices for PVC Resin and Caustic Soda, thus making sure that financial projections present a balanced view of future financial performance.

4.5.11 Geo Political Risks

Pakistan has been one of the fastest growing emerging economies in South Asia; however internal political instability and fluid geo political situation of regional environment can pose challenges for its economic growth. Systematic risks can create problems for any business.

Mitigant Subsequent political systems/regimes in Pakistan have encouraged a market-based competitive business environment in the country for the better part of two decades. Privatizations have been a mainstay of these regimes and even if a political event happens, the chances of any significant change in the way the economy is being run are very low. As for the PVC industry, in specific terms, the factors that are driving the growth of PVC in the country such as the refurbishment of water and sewerage distribution networks, construction of dwelling units, micro irrigation and installation of geo membranes for water conservation, etc will not be affected to a large extent.

4.5.12 Capital Market Risk

The Company is to be listed on the Karachi Stock Exchange. Share price performance would be dependent on both the performance of the exchange as well as the financial performance of the Company. Investors would be exposed to the risks associated with investing in equity markets.

Mitigant

The Karachi Stock Exchange has performed well over the last seven years and while there have been occasions of high volatility and erratic market movements; the trend has been positive and is expected to remain so. Based on a detailed study of the financial benefits of the expansion exercise the future profitability of the Company is expected to increase substantially.

4.5.13 Foreign Exchange Risk

Though majority of EPCL’s revenues will be in Pak rupees, it will be un-hedged against foreign exchange risk, primarily due to import of ethylene and repayment of foreign currency loans. Any untoward movement in the exchange rate can adversely affect profitability of EPCL.

Mitigant EPCL has access to various instruments to employ hedging if a need arises. In addition to this EPCL will be exporting its surplus capacities thus balancing some of the foreign exchange risk arising out of imports. Moreover management of Foreign exchange risk is part of Company’s pricing policy.

Note : It is stated that all material risk factors with respect to this offer for sale of shares has been disclosed and that nothing has been concealed

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PART 5

5 FINANCIAL INFORMATION

5.1 AUDITORS’ REPORT UNDER SECTION 53(I) READ WITH CLAUSE 28 OF SECTION 2 OF PART I OF THE SECOND SCHEDULE TO THE COMPANIES ORDINANCE, 1984, FOR THE PURPOSE OF INCLUSION IN THE OFFER FOR SALE DOCUMENT

The Company Secretary April 23, 2008 Engro Polymer and Chemicals Limited (formerly Engro Asahi Polymer and Chemicals Limited) D 0563 First Floor, Bahria Complex I M. T. Khan Road Karachi

Dear Sir

In accordance with section 53(1) read with clause 28 of section 2 of Part I of the Second Schedule to the Companies Ordinance, 1984, we report that:

1. The assets and liabilities of Engro Polymer and Chemicals Limited (formerly Engro Asahi Polymer and Chemicals Limited) (the Company) as per the audited financial statements as at December 31, 2007, 2006, 2005, 2004 and 2003 are as follows:

Engro Polymer and Chemicals Limited (formerly Engro Asahi Polymer and Chemicals Limited) December 31, December 31, December 31, December 31, December 31, 2007 2006 2005 2004 2003 Rupees in thousand ASSETS

Non-Current Assets

Property, plant and equipment 4,708,761 2,443,317 2,277,747 2,391,411 2,541,463 Intangible assets 6,914 2,188 843 1,563 2,233 Long term investment 50,000 50,000 50,000 50,000 50,000 Long term loans and advances 96,971 13,207 9,664 9,125 5,703 Deferred taxation - - - - 90,484 4,862,646 2,508,712 2,338,254 2,452,099 2,689,883 Current Assets

Stores and spares 95,719 87,280 86,689 81,621 85,204 Stock-in-trade 919,455 1,000,483 298,811 755,174 327,452 Trade debts - considered good, secured 178,472 136,783 358,046 213,699 240,879 Loans, advances, deposits, prepayments and other receivables 253,361 75,504 84,619 74,117 70,554 Taxation 38,012 23,234 31,093 10,048 21,294 Short term investments 2,914,504 96,928 253,375 272,537 349,046 Cash and bank balances 200,844 335,387 322,748 238,556 342,998 4,600,367 1,755,599 1,435,381 1,645,752 1,437,427

TOTAL ASSETS 9,463,013 4,264,311 3,773,635 4,097,851 4,127,310

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Share Capital 4,436,000 1,780,000 1,780,000 1,780,000 1,780,000 Share premium 425,216 - - - - Unappropriated Profit/ (Accumulated loss) 315,603 267,827 215,661 90,787 (208,889) 5,176,819 2,047,827 1,995,661 1,870,787 1,571,111

Advance Against Issue of Share Capital 1,054,353 - - - - Non-Current Liabilities

Long term finances and morabahas, secured 1,370,000 190,000 350,000 530,000 874,550 Long term loans, secured - 34,811 102,428 170,057 229,600 Deferred liabilities - Deferred taxation 333,596 226,668 65,411 49,876 - - Retirement and other service benefits 23,602 16,870 14,601 13,076 11,035 357,198 243,538 80,012 62,952 11,035 2,781,551 468,349 532,440 763,009 1,115,185 Current Liabilities

Current portion of - long term finances and morabahas 60,000 160,000 100,000 120,000 124,950 - long term loans 35,429 69,623 68,286 68,023 65,600 Short term finances, secured - 376,570 256,798 228,171 434,756 Trade and other payables 1,409,214 1,093,704 820,450 958,861 815,708 Dividend payable/proposed - 48,238 - 89,000 - 1,504,643 1,748,135 1,245,534 1,464,055 1,441,014

TOTAL EQUITY AND LIABILITIES 9,463,013 4,264,311 3,773,635 4,097,851 4,127,310

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2. The consolidated assets and liabilities of the Company and its subsidiary, Engro Polymer Trading (Private) Limited [formerly Engro Asahi Trading (Private) Limited] as per the audited financial statements as at December 31, 2007, 2006, 2005, 2004 and 2003 are as follows:

Engro Polymer and Chemicals Limited (formerly Engro Asahi Polymer and Chemicals Limited) and its subsidiary, Engro Polymer Trading (Private) Limited [formerly Engro Asahi Trading (Private) Limited]

December 31, December 31, December 31, December 31, December 31, 2007 2006 2005 2004 2003 Rupees in thousand ASSETS

Non-Current Assets

Property, plant and equipment 4,708,761 2,443,317 2,277,747 2,391,411 2,541,463 Intangible assets 6,914 2,188 843 1,563 2,233 Long term loans and advances 96,971 13,207 9,664 9,125 5,703 Deferred taxation - - - - 90,484 4,812,646 2,458,712 2,288,254 2,402,099 2,639,883 Current Assets

Stores and spares 95,719 87,280 86,689 81,621 85,204 Stock-in-trade 920,139 1,008,156 298,811 755,174 327,452 Trade debts - considered good, secured 178,472 136,783 358,046 213,699 240,879 Loans, advances, deposits, prepayments and other receivables 256,944 80,440 88,918 78,719 96,377 Taxation 37,911 23,169 30,385 9,122 21,291 Short term investments 2,914,504 96,928 253,375 272,537 349,046 Cash and bank balances 247,856 374,969 371,955 284,464 391,862 4,651,545 1,807,725 1,488,179 1,695,336 1,512,111

TOTAL ASSETS 9,464,191 4,266,437 3,776,433 4,097,435 4,151,994

EQUITY AND LIABILITIES

Share Capital 4,436,000 1,780,000 1,780,000 1,780,000 1,780,000 Share Premium 425,216 - - - - Unappropriated Profit/ (Accumulated loss) 316,412 268,530 218,427 91,638 (184,260) 5,177,628 2,048,530 1,998,427 1,871,638 1,595,740 Acvance Against Issue of Share Capital 1,054,353 - - - - Non-Current Liabilities

Current portion of - long term finances and morabahas 60,000 160,000 100,000 120,000 124,950 - long term loans 35,429 69,623 68,286 68,023 65,600 Short term finances, secured - 376,570 256,798 228,171 434,756 Trade and other payables 1,409,583 1,095,127 820,482 957,594 815,763 Dividend payable/proposed - 48,238 - 89,000 - 1,505,012 1,749,558 1,245,566 1,462,788 1,441,069

TOTAL EQUITY AND LIABILITIES 9,464,191 4,266,437 3,776,433 4,097,435 4,151,994

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3. The profit and loss account of the Company for the preceding five years ended December 31, 2007, 2006, 2005, 2004 and 2003 as per the audited financial statements are as follows:

Year ended December 31 2007 2006 2005 2004 2003 Rupees in thousand

Net Sales 6,032,708 5,238,331 5,474,175 5,099,886 3,938,445

Export rebate - 10,862 49,944 35,786 22,943 6,032,708 5,249,193 5,524,119 5,135,672 3,961,388

Cost of sales (5,074,530) (4,253,862) (4,770,914) (4,299,275) (3,500,130) Gross profit 958,178 995,331 753,205 836,397 461,258

Distribution, marketing and administrative expenses (390,366) (403,354) (331,341) (235,153) (190,451)

Other operating expenses (70,026) (49,442) (77,039) (31,317) (10,360)

Other operating income 119,440 91,766 71,222 59,899 31,790 Operating profit 617,226 634,301 416,047 629,826 292,237

Finance costs (41,409) (65,386) (70,267) (75,243) (137,043) Profit before taxation 575,817 568,915 345,780 554,583 155,194

Taxation (154,241) (187,449) (42,906) (165,907) (6,636) Profit for the year 421,576 381,466 302,874 388,676 148,558

Rupees Earning per share- Basic and diluted 1.64 2.14 1.70 2.18 0.83

4. The consolidated profit and loss account of the Company and its subsidiary, Engro Polymer Trading (Private) Limited [formerly Engro Asahi Trading (Private) Limited] for the preceding five years ended December 31, 2007, 2006, 2005, 2004 and 2003 as per the audited financial statements are as follows:

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Year ended December 31

2007 2006 2005 2004 2003 Rupees in thousand

Net Sales 6,039,535 5,343,117 5,474,175 5,099,886 3,950,543

Export rebate - 10,862 49,944 35,786 39,826 6,039,535 5,353,979 5,524,119 5,135,672 3,990,369

Cost of sales (5,081,697) (4,351,564) (4,770,914) (4,299,275) (3,500,130) Gross profit 957,838 1,002,415 753,205 836,397 490,239

Distribution, marketing and administrative expenses (390,779) (406,205) (331,341) (235,264) (198,987)

Other operating expenses (70,080) (49,792) (77,083) (31,398) (10,475)

Other operating income 120,913 94,423 74,332 35,733 31,790 Operating profit 617,892 640,841 419,113 605,468 312,567

Finance costs (41,419) (65,779) (70,267) (73,638) (138,971) Profit before taxation 576,473 575,062 348,846 531,830 173,596

Taxation (154,791) (195,659) (44,057) (166,932) (10,453) Profit for the year 421,682 379,403 304,789 364,898 163,143

Rupees Earning per share- Basic and diluted 1.64 2.13 1.71 2.05 0.92

5. The rates of the dividend declared / paid by the Company on ordinary shares for each of the preceding five years ended December 31, 2007, 2006, 2005, 2004 and 2003 is as follows:

Year Rate of Amount of dividend dividend (Rupees per (Rupees in share) thousand)

2007 2.64 626,676

2006 1.85 329,300

2005 1.00 178,000

2004 0.50 89,000 2003 Nil Nil

6. CONTINGENCIES AND COMMITMENTS

Contingencies

(a) Taxation

During the year 2003, the Assessing Officer (AO) while finalizing the assessment order for the year ended December 31, 2000 (Assessment year 2001 – 2002) had made addition to income of Rs. 144 million on the contention that the sales made by the Company to its wholly owned subsidiary, Engro Polymer Trading (Private) Limited [formerly Engro Asahi Trading (Private) Limited] were allegedly made on non-arm’s length basis. The Company’s appeal to the Commissioner of Income Tax (Appeals) against the above addition was decided in the Tax Department’s favour in 2004, against which the Company filed an appeal with the Income Tax Appellant Tribunal (ITAT). The ITAT in its

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order dated October 30, 2005 has set-aside the issue for re-examination by the AO. The management of the Company is confident that the ultimate outcome of the above would be in their favour and as such no provision for the same has been made.

Commitments

(a) Performance guarantees issued by banks on behalf of the Company as at December 31, 2007 amounted to Rs. 301.431 million.

(b) Contracts signed in respect of capital expenditure for expansion plan in respect of its existing plant and backward integration project, but not executed as at December 31, 2007 amounted to Rs. 7,897.193 million.

7. The shareholders of the Company, in the Extra Ordinary General Meeting held on October 8, 2007, have approved an Employees’ Share Option Scheme (the Scheme), for granting of options to its certain eligible employees upto 5,300,000 new ordinary shares. The Scheme is deemed to have been adopted on the date on which the Securities and Exchange Commission of Pakistan accords its approval, which is pending todate.

Yours truly

Sd/- A.F Ferguson & Co Chartered accountants

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5.2 SHARE BREAK-UP VALUE CERTIFICATE

The Company Secretary March 27, 2008 Engro Polymer and Chemicals Limited (formerly Engro Asahi Polymer & Chemicals Limited) D 0492 First Floor, Bahria Complex I M. T. Khan Road Karachi

Dear Sir

AUDITORS’ CERTIFICATE ON THE BREAK-UP VALUE OF SHARES

Based on the audited financial statements of the Company for the year ended December 31, 2007, the break-up value of an ordinary share of Rs. 10 each of the Company is Rs. 10.71 per share (Rupees ten and paisas seventy one only), as calculated below:

Rupees in thousand

Issued, subscribed and paid-up share capital 4,436,000 Unappropriated profit 315,603 4,751,603

Number of ordinary shares in issue 443,600,000

Rupees

Break-up value per share 10.71

Yours truly

Sd/-

A.F Ferguson & Co Chartered Accountants

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February 6, 2008 The Governing Board of Directors Karachi Stock Exchange (Guarantee) Limited KARACHI.

Dear Sirs

BREAK-UP VALUE OF SHARES

Based on the Management Accounts of the Company for month ended January 31, 2008, the break-up value of an ordinary share of Rs. 10 each of the Company is Rs. 11.5 per share (Rupees eleven and paisas fifty only), as calculated below:

Rupees in thousand

Issued, subscribed and paid-up share capital 5,203,677 Share Premium 425,216 Unappropriated profit 363,815 5,992,708

Number of ordinary shares in issue 520,367,677

Break-up value per share (Rupees) 11.5

Yours truly

Arshaduddin Ahmed Chief Financial Officer

Sd/-

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

January 29, 2008

The Board of Directors Engro Polymer and Chemicals Limited (Formerly Engro Asahi Polymer and Chemicals Limited) First Floor, Bahria Complex I M. T. Khan Road Karachi

Dear Sirs

AUDITORS’ CERTIFICATE ON ISSUED, SUBSCRIBED AND PAID-UP CAPITAL OF THE COMPANY AS AT JANUARY 29, 2008

We have verified from the books of account and other records of Engro Polymer and Chemicals Limited (formerly Engro Asahi Polymer and Chemicals Limited) that the issued, subscribed and paid-up capital of the Company as at January 29, 2008 was Rs. 5,203,676,770 divided into 520,367,677 ordinary shares of Rs. 10 each, issued for cash. The break-up of shareholding is as follows:

Number of Rupees Shares Directors - Mr. Asad Umar 1 10 - Mr. Asif Qadir 1 10 - Mr. Isar Ahmed 1 10 - Mr. Khalid Mansoor 1 10 - Mr. Khalid S. Subhani 1 10 - Mr. Masaharu Domichi 1 10 - Mr. Shabbir Hashmi 1 10 - Mr. Shahzada Dawood 1 10 - Mr. Takeshi Hagiwara 1 10 - Mr. Waqar Malik 1 10 10 100 Holding Company - Engro Chemical Pakistan Limited 292,399,992 2,923,999,920

Others Investors - Allied Bank Limited 3,106,567 31,065,670 - BRR Investment Bank Limited 260,952 2,609,520 - Dawood Capital Management Limited 248,525 2,485,250 - Dawood Equities Limited 223,673 2,236,730 - EPCL Employees Trust 18,000,000 180,000,000 - First Dawood Investment Bank Limited 273,378 2,733,780 - International Finance Corporation 76,200,000 762,000,000 - Jahangir Siddiqui and Company Limited 1,242,627 12,426,270 - JS Global Capital Limited 52,041,768 520,417,680 - JS Private Equity Chemical Holdings Limited 13,222,037 132,220,370 - Mitsubishi Corporation 56,999,998 569,999,980 - National Bank of Pakistan 1,388,889 13,888,890 - Novatex Limited 248,525 2,485,250 - United Bank Limited 3,727,881 37,278,810 - United Stock Advantage Fund 782,855 7,828,550 227,967,675 2,279,676,750

Total issued, subscribed & paid-up capital as at January 29, 2008 520,367,677 5,203,676,770

Yours truly A.F Ferguson & Co Chartered Accountants

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PART 6

6 MANAGEMENT AND RELATED MATTERS

6.1 Management of the Company

All policy related matters are managed by the Board of Directors, headed by the Chairman of the Board. At present, the Board comprises of 10 Directors including the CEO. The Directors are elected by the shareholders in accordance with the relevant provisions of the Companies Ordinance.

6.2 Board of Directors

Name & Address Designation Directorship in Other Companies in Pakistan

Mr. Asad Umar Chairman Engro Chemical Pakistan Limited President & Chief Executive Engro Foods Limited Engro Chemical Pakistan Ltd. Engro Vopak Terminal Limited 4th Floor, Executive Tower Engro Energy (Private) Limited DolmenCity,Block4 Oil & Gas Development Company Limited Marine Drive Clifton Engro Innovative Automation (Private) Limited Karachi Mr. Asif Qadir Chief Engro Asahi Trading (Private) Limited 1st Floor, Bahria Complex I Executive Engro Chemical Pakistan Limited 24, M. T. Khan Road Engro Energy (Private) Limited Plastics Technology Centre Synthetic Fibre Development & Application Centre Machine Tool Factory (Pvt.) Ltd.

Mr. Isar Ahmed Director Engro Chemical Pakistan Limited Group-Director Engro Foods Limited Strategy &Business Development Dawood Lawrencepur Limited The Dawood Group 11th Floor, Dawood Centre M. T. Khan Road

Mr. Shahzada Dawood Director Engro Chemical Pakistan Limited CEO & Vice Chairman Engro Vopak Terminal Limited Dawood Hercules Chemical Ltd. Engro Foods Limited 35-A, Empress Road Engro Energy (Private) Limited Lahore-54000 Central Insurance Company Dawood Hercules Chemicals Limited Dawood Lawrencepur Limited Inbox Business Technologies (Pvt.) Limited Sui Northern Gas Pipeline Limited

Mr. Masaharu Domichi Director Tri-Pack Films Limited. General Manager for Pakistan Mitsubishi Corporation

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2nd Floor, Bahria Complex I M. T. Khan Road Karachi

Mr. Takeshi Hagiwara Director None General Manager Chlor-Alkali Unit Commodity Chemicals Div. Mitsubishi Corporation 3-1, Marunouchi 2-Chome Chiyoda-Ku Tokyo 100-8086

Mr. Shabbir Hashmi Director Engro Chemical Pakistan Limited Representative Pakistan Actis LMKR Holdings (Pvt) Limited First Floor, Bahria Complex II M. T. Khan Road Karachi-74000

Mr. Waqar A. Malik Director ICI Pakistan Limited Chief Executive Pakistan PTA Limited ICI Pakistan Limited Pakistan Automobile Corporation Limited ICI House 5WestWharf Karachi

Mr. Khalid Mansoor Director Engro Chemical Pakistan Limited Chief Executive Officer Engro Energy (Private) Limited Engro Energy (Private) Ltd. 4th Floor, Executive Tower Dolmen City Block 4 MarineDrive Clifton Karachi

Mr. Khalid Siraj Subhani Director Senior Vice President Engro Chemical Pakistan Limited Manufacturing Engro Vopak Terminal Limited Engro Chemical Pakistan Ltd. 4th Floor, Executive Tower Dolmen City Block 4 Marine Drive Clifton Karachi

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6.3 Overdue Loans

There are no overdue loans of the Company or its directors.

6.4 Dividend Payouts by the Group’s Listed Companies

Dividend History 2007 2006 2005 2004 2003 Cash Bonus Cash Bonus Cash Bonus Cash Bonus Cash Bonus Engro 30% - 90% 110% 85% 80% Chemicals Limited

6.5 Profile of the Chief Executive

Asif Qadir Asif Qadir is President & Chief Executive of Engro Polymer & Chemicals Limited and director of Engro Chemical Pakistan Limited and Engro Energy (Pvt.) Ltd. He is also Chairman and Chief Executive of Engro Polymer Trading (Private) Limited. He has held key assignments with Exxon Chemical Canada and Engro Chemical and is a Chemical Engineer by qualification. He joined the EPCL Board in 1999. He is also President of the Management Association of Pakistan and member of the Executive Committee of the Overseas Investors Chamber of Commerce. Asif has a post qualification experience of 30 years

Profile of the Chief Financial Officer / Company Secretary

Arshaduddin Ahmed Arshad is a Chartered Accountant from Institute of Chartered Accountants of Pakistan and also holds a bachelors degree in Civil Engineering. Apart from Finance and Accounts, Arshad also has an experience of working in the operations of FMCG companies. Arshad has a post qualification experience of 10 years.

6.6 Profile of Chairman

Asad Umar (Chairman) Asad Umar is President and Chief Executive of Engro Chemical Pakistan Limited and Chairman of Engro Polymer & Chemicals Limited, Engro Vopak Terminal Limited, Engro Foods Limited, Engro Energy (Private) Limited, Engro Innovative Automation (Private) Limited and Advanced Automation LP. He is also a member of the Board of Directors of Oil & Gas Development Company Limited (OGDCL), Pakistan Business Council (PBC) and Member of the Board of Trustees of Lahore University Management Sciences (LUMS). He has held key assignments at Engro and with Exxon Chemical in Canada. He is a Masters in Business Administration. Asad has a post qualification experience of 23 years.

6.7 Number of Directors

Pursuant to Section 174 of the Companies Ordinance 1984, the number of directors of the Company shall not be less than Seven (7). The Board consists of ten (10) Directors.

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6.8 Qualification of Directors

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

6.9 Appointment/ Election of Directors

The Directors shall comply with the provisions of Sections 174 to 178, 180, and 184 of the Companies Ordinance, relating to the election of Directors and matters ancillary thereto. The present Directors of the Company were elected on March 19, 2008 for a term of three years.

6.10 Benefits of Promoters and Officers during the last two years

No amount or benefit has been paid or given within the last two years or is intended to be given to any promoter/ or officer of the Company otherwise than as remuneration for services rendered as whole time executives of the Company.

6.11 Remuneration of the Directors

The remuneration to be paid to the Directors for attending the meetings of the Directors or a committee of Directors shall be determined by the Board from time to time.

Any Director appointed to any executive office including for the purpose of Article 63 of the Articles of Association of the Company the office of Chief Executive or Chairman, or to serve in any Committee or to devote special attention to the business of the Company or who otherwise performs extra services, which in the opinion of the Directors are outside the scope of the ordinary duties of the Directors, may be paid such extra remuneration by way of salary, fees, percentage of profits or otherwise as shall from time to time be determined by the Board of Directors

6.12 Interest of Directors in Property Acquired by the Company

None of the Directors of the Company had or have any interest in any property acquired by the Company within the last two years or now proposed to be acquired by the Company.

6.13 Voting Rights

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

6.14 Audit Committee / Construction of Audit Committee

Board Audit Committee (BAC) is operational. The compliance with the Code of Corporate Governance in terms of formation of BAC is already there. The Board Audit Committee comprises of the following four non-executive directors:

Isar Ahmad (Chairman)

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Khalid Subhani Masaharu Domichi Shabbir Hashmi

The audit committee meeting is held on quarterly basis. This will continue to take place after the Company is listed on the Stock Exchange, as per provisions of the Code of Corporate Governance.

The Committee has its terms of reference which were determined by the Board of Directors in accordance with the guidelines provided in the Listing Regulations.

6.15 Internal Audit

The Board 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 internal audit has its terms of reference which were determined by the Board of Directors in accordance with the guidelines provided in the Listing Regulations

6.16 Powers of Directors

The business of the Company shall be managed by the Directors who may pay all expenses incurred in setting up and registering the Company and may exercise all such powers of the Company as are not by the Companies Ordinance or by any other law or the Articles of Association of the Company, required to be exercised by the Company in General Meeting subject nevertheless to any regulations of the Articles of Association of the Company, to the provisions of the Companies Ordinance and to such regulations being not inconsistent with the aforesaid regulations or provisions, as may be prescribed by the Company in General Meeting but no regulation made by the Company in General Meeting shall invalidate any prior act of the Directors which would have been valid if that regulation has not been made.

6.17 Borrowing Powers of Directors

Subject to the provisions contained in the Articles of Association of the Company, the Directors may exercise all the powers of the Company to borrow money and to mortgage or charge its undertaking property and uncalled capital, or any part thereof, and to issue securities and debentures whether outright or as security for any debt, liability or obligation of the Company or of any third party.

6.18 Indemnity

Every Director or officer of the Company and every person employed by the Company as auditor shall be indemnified out of the funds of the Company against all liability incurred by him as such Director, officer or auditor in defending any proceedings, whether civil or criminal, in which judgement is given in his favour, or in which he is acquitted, or in connection with any application under Section 488 of the Companies Ordinance in which relief is granted to him by the court.

Offer for Sale of Shares

6.19 Investment in Associated Companies

The Company has not invested in any of its Associated Companies other than the investment in its wholly owned subsidiary, details of which are given in Clause 6.20 below.

6.20 Investment in Subsidiary Companies

Investments Paid up Name of entity Related as Quantity capital Market Value 5,000,000 Rs. 50,000,000 Not applicable, Engro Polymer Trading (Private) Wholly Owned Ordinary Shares as the company Limited Subsidiary of Rs. 10/- each. is unlisted.

Offer for Sale of Shares

PART 7 7 MISCELLANEOUS INFORMATION

7.1 REGISTERED OFFICE/ OPERATIONS 1st Floor, Bahria Complex, OFFICE M.T. Khan Road Karachi Phone: [021] 111-411-411 Fax : [021] 5611690

7.2 BANKERS TO THE OFFER 1. Habib Bank Limited 2. United Bank Limited 3. MCB Bank Limited 4. JS Bank Limited 5. Deutsche Bank 6. KASB Bank Limited 7. Bank Alfalah Limited 8. Saudi Pak Commercial Bank 9. Bank Al Habib Limited 10. Habib Metropolitan Bank Limited

7.3 BANKERS TO THE COMPANY 1. Allied Bank Limited 2. Askari Commercial Bank Ltd 3. Bank Alfalah Limited 4. Bank Al Habib Limited 5. Citibank 6. Crescent Commercial Bank Limited 7. Faysal Bank Limited 8. Habib Bank Limited 9. HSBC 10. Meezan Bank 11. MCB Bank Limited 12. NIB Bank 13. Standard Chartered Bank Limited 14. United Bank Limited

7.4 AUDITORS A.F. Ferguson & Co. Chartered Accountants State Life Building No. 1 – C I.I. Chundrigar Road Karachi – 74000 Phone: [021] - 2426682-6 Fax: [021] – 2415007

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7.5 LEGAL ADVISOR Muhammad Yakub Kapadia Office No . 601, Sixth Floor Landmark Plaza Muhammad Bin Qasim Road Karachi – 75530 Phone: [021] - 2829023 Fax: [021] - 2627533

7.6 COMPUTER BALLOTER AND SHARES Ferguson Associates (Pvt) Ltd REGISTRAR State Life Building # 1-A, Ground Floor I.I Chundriger Road, Karachi, Pakistan Phone: 021-2422344 Fax: 021-2428310

7.7 Material Contracts / Documents

7.7.1 Underwriting Agreements

Sr. Underwriters for Underwriting of Present Offer for Agreement Amount (Rs.) No. Sale Ordinary Shares of Rs. Date 1 First Dawood Investment Bank Limited 13/12/2007 13,079,196 2 Dawood Capital Management Limited 13/12/2007 13,526,550 3 Novatex Limited 13/12/2007 13,526,550 4 Dawood Equities Limited 13/12/2007 13,973,886 5 United Stock Advantage Fund 13/12/2007 39,908,610 6 Faysal Bank Limited 13/12/2007 45,000,000 7 KASB Bank Limited 13/12/2007 81,818,190 8 IGI Investment Bank Limited 13/12/2007 90,000,000 9 B.R.R Investments (Pvt.) Limited 13/12/2007 90,935,586 10 National Bank of Pakistan 13/12/2007 96,251,490 11 Allied Bank Limited 13/12/2007 169,081,794 12 United Bank Limited 13/12/2007 232,898,148 Total 900,000,000

7.7.2 Due Diligence Reports

Sr. No. Name of the Institution 1 National Bank of Pakistan 2 United Bank Limited 3 Allied Bank of Pakistan 4 IGI Investment Bank 5 UBL Fund Managers 6 KASB Bank 7 First Dawood Investment Bank 8 Dawood Equities Limited

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9 Dawood Capital Management Limited 10 BRR investments (Pvt) Limited 11 Novatex Limited 12 Faysal Bank Limited

7.7.3 Project Related Agreements

Project related contract details

Party Nature of contract Contract Amount USD Asahi Kasei Chemicals Corporation Procurement of Electrolysers for CA 9,604,720 Asahi Kasei Chemicals Corporation License for Formula of CA 514,286 China National Chemical Engineering Group Engineering for PVC 2, PP,CA and Uty Corporation 6,412,930 China National Chemical Engineering Group Reconstruction of EDC / VCM Corporation 10,934,213 China National Chemical Engineering No.7 Construction related to PVC Back integration of PVC 2, Construction Company Limited PP,Ca and Uty 17,362,890 ENGlobal Engineering Engineering of Isometric drawings and P&ID for EDC/ VCM 172,125 Ineos Vinyls UK Ltd. Catalyst supply of a chemical for EDC/ VCM 893,751 Ineos Vinyls UK Ltd. Technical services for EDC/VCM 367,400 Ineos Vinyls UK Ltd. License Agreement For EDC / VCM 257,200 International Process plants & Equipment EDC/VCM Plant Purchase Price for Used EDC / VCM plant 4,500,000 Pioneer Maintenance Maintenance for dismantling, packaging and Shipment of EDC / VCM plant 5,785,960 Principal Builders Construction (rupee contract) 1,777,662 Rapid Builders Change Order (rupee contract) 120,759 SGS Inspection of EDC/ VCM plant in USA 82,000 China Tianchen Chemical Engineering Procurement of PVC 2, P,CA and Uty from China 89,781,025 Corporation

China Tianchen Chemical Engineering Procurement of Missing items of EDC / VCM 8,129,282 Corporation International Finance Corporation Loan Agreement 60,0000,000

Port Qasim Authority Land Lease Agreement (rupee) 152,000,000 *Local Syndicate Loan agreement (rupee) 5,700,000,000

* The syndicate includes National Bank of Pakistan, United Bank, Allied Bank, Habib Bank Limited and MCB Bank Limited

Offer for Sale of Shares

7.8 Inspection of Documents and Contracts

Copies of the Memorandum and Articles of Association, the audited financial statements, the Auditor’s Certificates, Information Memorandum and copies of agreements referred to in this OFSD 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 OFSD until the closing of the subscription list. 7.9 Legal Proceedings

There is no pending legal proceedings, other than ordinary routine litigation incidental to the business, to which the Company or any of its subsidiaries is a party except the followings:

• The Company has filed a case against the imposition by the Government of Sindh of the Infrastructure Fee / Cess on the import and export of goods from the Province by air or by sea routes. A stay order had been obtained restraining the defendant from collecting the Cess / Fee against a Bank Guarantee issued in favor of Excise and Taxation Department. The suit was decided in favor of the Government and the Company has filed an appeal against the order dismissing the suit. A stay has been granted in the appeal restraining the Government of Sindh from recovering the Infrastructure Fee / Cess. The management of the Company has continued to accrue such levy which as at December 31, 2007 has accumulated to Rs. 111.263 million.

7.10 Vendors

The Company has no vendors in term of clause 12 of Part I of the Second Schedule to the Companies Ordinance.

7.11 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 OFSD and with every issue of the OFSD except the one that is released in newspapers as advertisement. 7.12 Revaluation of Assets The Company has not carried out any revaluation of fixed assets

7.13 Capitalization The Company has not issued any bonus shares since its incorporation.

Offer for Sale of Shares

PART 8

8 APPLICATION AND TRANSFER INSTRUCTIONS

8.1 Eligible investors include Pakistani citizens resident in Pakistan, companies, bodies corporate or other legal entities incorporated or established in Pakistan (to the extent permitted by their constitutive documents and existing regulations as the case may be); Provident/ pension/ gratuity funds/ trusts (subject to the terms of their Trust Deed and existing regulations) and branches in Pakistan of companies and bodies corporate incorporated outside Pakistan.

8.2 Copies of this OFSD and application forms can be obtained from members of the KSE, the Bankers to the Offer and their Branches, the Lead Manager, and the registered office of the Company. The Offer Documents and the Application Form can also be downloaded from the following website:

8.3 APPLICATION MUST BE MADE ON THE COMPANY’S PRINTED FORM OR A LEGIBLE PHOTOCOPY THEREOF.

8.4 Applicants opting for scripless form of security are required to complete the relevant sections of the application. In accordance with the provisions of the Central Depositories Act, 1997 and the CDC regulations credit of such securities in book entry form is allowed ONLY in the applicant’s own CDC account. In case of discrepancy between the information provided in the Application Form and the information already held by the CDC, the Company reserves the right to issue share certificates in physical form.

8.5 Name(s) and address(es) must be written in full, in block letters, in English and should not be abbreviated. All applications must bear the signature(s) and address(es) corresponding with that recorded with the bank in that account. In case of difference of signature with the bank and the national identity card, both the signatures should be affixed on the application form.

8.6 An Attested copy of National Identity Card should invariably be enclosed and the number indicated against the name of applicant, except in case of the applications filed by the Investment Corporation of Pakistan on behalf of its account holders/investors. Copy of the National Identity Card can be attested by any Federal/Provincial Government gazette officer, Councilor, Bank Manager, Oath Commissioner or Head-Master of High School etc. Original National Identity Card, along with one attested photocopy, must be produced for verification to the branch at the time of presenting an application. The attested photocopy will, after verification, be retained by the bank branch along with the application.

i) Application must be made for 500 shares or in multiples of 500 shares only. Applications which are neither for the 500 shares nor for the multiples of 500 shares, shall not be entertained.

ii) Jumbo Certificates will be issued in accordance with the Shares applied to those successful applicants who have opted for shares in the form of physical certificates.

Offer for Sale of Shares

iii) Fictitious or multiple (more than one) applications are prohibited and such application money shall be liable to confiscation under Section 18A of the Securities and Exchange Ordinance, 1969.

8.7 i) Subscription money must be paid by cheque / bank draft drawn on applicant’s own account.

ii) All applications must bear the signature and address corresponding with that recorded with the bank in the applicant’s account.

iii) Only one application will be accepted against each account. In case of joint account, one application may be accepted in the name of a person shown as minor in the records of the bank.

8.8 Copies of the OFSD and application forms can be obtained from members of the Karachi Stock Exchange (Guarantee) Limited, the Bankers to the Offer and their designated branches and the Registered Office of the Company.

8.9 Payments should be in the form of cheques or drafts drawn payable to one of the Bankers of the Offer “A/C PUBLIC OFFER OF SHARES OF ENGRO POLYMER & CHEMCIALS LIMITED” and crossed, “A/C Payee Only” and must be drawn on a bank in the same town as the bank to which the application form has been sent.

8.10 Applications are not to be made by minors, foreign nationals (except by express permission of the State Bank of Pakistan), persons of unsound mind or firms or trusts. Applications made by companies and corporate bodies must be accompanied by a copy of their Memorandum and Articles of Association or equivalent instrument. Where applications are made by virtue of Power of Attorney, the instrument of Power of Attorney must be lodged with the application. Applications by foreign nationals and non-resident companies shall be accepted subject to existing laws and provided the subscription amount is paid by means of a remittance through banking channels or through other means permitted by the State Bank of Pakistan.

8.11 Joint applications from more than four persons will not be accepted. In case of joint applications each party must sign the application form and submit copies of attested National Identity Cards or Passport (in case of overseas Pakistanis). 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 respective CDS account and where any amount is refundable, in whole or in part, the same will be refunded by cheque and by post, or through the bank where the application was tendered, to the person named first on the application form, without interest, profit or return.

8.12 Applicants should ensure that the bank branch, on which their application is drawn, completes the relevant portion of the Application Form.

8.13 Applicants should retain the bottom portion of their application as provisional acknowledgment of submission of their application. This may be made available at the time of submission of the Application Form, or may be collected at a later time from the bank branch through which application was made. This should not be construed as acceptance of the application or a guarantee that the applicant will be allocated the number of shares for which the applicant has subscribed.

8.14 No receipt will be issued for payment made with an application but an acknowledgement will be forwarded in due course by issuance of share certificate in whole or in part or by refund of the money in case of unaccepted or unsuccessful applications. No interest or profit shall be payable in respect of the refund amount.

Offer for Sale of Shares

8.15 It would be permissible for a Banker to the Offer to refund subscription money unsuccessful applicants having a bank account in that bank by crediting such account instead of through cheque, pay order or bank draft. Applicants should therefore not fail to give their bank account numbers.

8.16 The transfer of shares to successful applicants shall be made in accordance with the criteria disclosed in this OFSD subject to the rules of the Securities and Exchange Commission of Pakistan.

8.17 Making of any false statement in the application or willfully embodying incorrect information therein will make the applicant or the bank liable to legal action.

8.18 The basis of the Offer for Sale of shares is as follows: a) This offer is being made at a price of Rs. 18 per ordinary share of Rs. 10 each, inclusive of a premium of Rs. 8 per share, but excluding the share transfer fee, which is to be paid by the applicant at the rate of 15 paisa per share in the case of physical transfer and 1 paisa per share in the case of transfer under book-entry system. b) Applications for shares must be made for 500 shares or in multiples of 500 shares. Applications which are neither for 500 shares nor for multiples of 500 shares shall be rejected. c) The minimum amount of application for subscription of 500 shares in the case of physical transfer is Rs. 9,075/- and in case of transfer under book entry system is 9,005/-. d) Applications for shares below the value of Rs. 9,075/- in case of physical transfer and 9,005/- in case of transfer under book-entry system shall not be entertained. e) Fictitious and multiple applications (more than one application per applicant) are prohibited and any such application money shall be liable to confiscation under Section 18-A of the Securities and Exchange Act, 1969.

f) If this Offer is oversubscribed the shares shall be allocated by conducting computer balloting in the presence of KSE representatives in the following manner:

Offer for Sale of Shares

v. After the allocation in the above mentioned manner, the balance shares, if any, shall be allocated in the following manner:

1. If the remaining shares are sufficient to accommodate each application for over 2,000 shares, then 2,000 shares shall be allocated to each applicant and the remaining shares shall be allocated on a pro-rata basis.

2. If the remaining shares are not sufficient to accommodate all remaining applications for at least 2,000 shares, then balloting shall be conducted for allocation of 2,000 shares to the successful applicants. g) If the offer is oversubscribed in terms of amount only, then the allocation of shares shall be made on the following basis:

i. First preference will be given to applicants who applied for 500 shares;

ii. Next preference will be given to applicants who applied for 1,000 shares;

iii. Next preference will be given to applicants who applied for 1,500 shares; and then;

iv. Next preference will be given to applicants who applied for 2,000 shares;

After allocation of the above, the balance shares, if any, shall be allocated on a pro-rata basis to the applicants who applied for more than 2,000 shares. h) Allocation of shares will be subject to scrutiny of the applications for subscription. i) Applications, which do not meet with the above requirements, or applications which are incomplete, will be rejected.

8.19 Bankers to the Offer

Code No. Banks 01 Habib Bank Limited 02 MCB Bank Limited 03 United Bank Limited 04 KASB Bank Limited 05 JS Bank Limited 06 Duetsche Bank 07 Saudi Pak Commercial Bank 08 Bank Al Habib Limited 09 Habib Metropolitan Bank 10 Bank Alfalah Limited

8.20 Code of Occupation 01 Business 02 Business Executive 03 Industrialist 04 House Wife 05 Student 06 Agriculturist

07 Household 08 Professional 09 Service 10 Others

Offer for Sale of Shares

PART 9

9 SIGNATORIES TO THE OFFER FOR SALE DOCUMENT

Signed as required by Section 62 of the Companies Ordinance, 1984, by

1. Mr. G.M. Malkani

2. Mr. Ilyas Ahmed

Signed by the above in the presence of witnesses:

Witness: Asad Nasir Address: House # E 2 Darakshan Villas, DHA Pahse VI Karachi NIC No: 42301-6645492-7

Witness: Moiz uddin Ahmed Address: House # 78 Street # 1 F-6/3 Islamabad NIC No: 61101-4002293-1

Dated: 31st May 2008

Place: Karachi

Offer for Sale of Shares

PART 10

10 MEMORANDUM OF ASSOCIATION

THE COMPANIES ORDINANCE 1984

COMPANY LIMITED BY SHARES

Memorandum of Association

ENGRO POLYMER & CHEMICALS

LIMITED

I.----The name of the Company is Engro Polymer & Chemicals Limited.

II. ---Registered Office of the Company will be situated in the Province of Sindh.

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

1. To manufacture, market and sell Polyvinyl Chloride (PVC), Vinyl Chloride Monomer (VCM), PVC compounds and other related Chemicals and any activities relating or ancillary thereto and/or in furtherance thereof, and to achieve the said objects to design, construct, own, operate, maintain and manage plants and facilities to manufacture such chemical compounds and any other chemicals or kinds of products.

2. To buy, manufacture, sell deal with, repair, service, overhaul, alter any machinery, component parts, accessories, equipment and fillings of all kinds for the things and purposes mentioned above or used in or capable of being used in or with the same or howsoever.

3. To manufacture and produce and either as principals, agents or contractors and to import or locally purchase any plant, machinery, equipment, goods and articles belonging to or any raw materials

Offer for Sale of Shares

required for any such business and all apparatus, appliances, accessories and things used or capable of being used in connection therewith or acquire any patents, inventions or privileges.

4. To carry on the business of mechanical engineers, electrical engineers, sanitary and water engineers and plumbers, brass-founders, metal workers, boilermakers, millwrights, machinists, smiths, and tool- makers and to buy, sell, transfer, manufacture, repair, convert, alter and deal in machinery implements, rolling stocks and hardware of all kinds.

5. To establish, provide, maintain and conduct, or otherwise subsidies research laboratories and experimental workshops for scientific and technical research, experiments and tests of all kinds and to promote studies and research, both scientific and technical, investigations and inventions by providing, subsidizing, endowing or assisting laboratories, workshop, libraries, research centers, lecturers, meetings and conferences and by providing remuneration and other benefits to scientific or technical professors or teachers and by providing for exhibitions, scholarships, prizes, awards and grants to students and others and generally to encourage, promote and test inventions of any kind that may be considered likely to assist any of the business and objects which the Company is authorized to carry on.

6. To buy, sell, manufacture, store, repair, alter, improve, exchange, import, export, and deal in all factories, work, plants, machinery, tools, utensils, appliances, apparatus, products, materials, substances, articles and things capable of being used in any business which this Company is competent to carry on or required by any customers of or persons dealing with the Company or commonly dealt with by persons engaged in any such business or which may seem capable of being profitably dealt with in connection therewith and to manufacture, experiment with, render marketable and deal in all products incidental to or obtained in any of the business carried on by the Company.

7. To advertise all or any of the businesses or manufactures and goods of the Company in any way that may be thought advisable, including the posting of bills in relation thereto, and the issue of books, pamphlets, brochures and price lists.

8. To acquire and undertake the whole or any part of the business, properties and liabilities of and enter into working arrangements of all kinds with other companies, corporations, firms or persons, and also to make and carry into effect schemes and arrangements with respect to union of interests or amalgamation, either in whole or in part, or any other arrangements with respect to union of interests or amalgamation, either in whole or in part, or any other arrangements with any other companies, corporations, firms or persons, including the acquisition of all or any portion of the shares of any company but not to act as an investment company.

9. To construct, erect and build structures and buildings, including, without prejudice to the generality of the foregoing offices, dwellings, storage tanks, pipelines, factories, warehouses, sheds stores, car parks, canteens, roads, ways, bridges and any other works or conveniences which may seem directly or indirectly conductive to any of the objects of the Company.

10. To own, acquire by lease or license purchase or otherwise acquire, maintain, work, gather, get-in, and develop farm for the cultivation of any agricultural produce, and to deal in all such products, but not to act as a leasing company.

Offer for Sale of Shares

l l. To construct, own, purchase, acquire by lease, build, erect, install, establish, operate, manage and maintain plants, laboratories, equipment, apparatus and other facilities for the manufacture, processing, storage, sale and distribution of all or any products whatsoever.

12. Subject to the provisions of Section 196(2)(e) of the Companies Ordinance 1984, to purchase or otherwise acquire, become interested in, to hold, sell, mortgage, pledge or otherwise dispose of, turn to account or realize upon, all forms of securities, including shares, stocks, bonds, debentures, notes, evidence of indebtedness, securities of any nature or form and convertible into or exchangeable for other securities of any nature or form and certificates of interest.

13. To manufacture, store, repair, alter, improve, exchange, hire, all factories, works, plants, machinery, tools, utensils, appliances, apparatus, products, materials, substances, articles and things capable of being used in the business of the Company.

14. To purchase, take on lease or tenancy or in exchange, take option over or otherwise acquire any estate or interest whatsoever and to hold, develop, work, cultivate, deal with, dispose of and turn to account concessions, grants, decrees, licenses, privileges, claims, options, property, movable or immovable or interest therein or rights or powers of any kind which may appear to be necessary or convenient for any business of the Company or for purpose of investment or reinvestment and to purchase, charter, hire, build or otherwise acquire vehicles of any or every sort or description and to use the same for the carriage of goods, merchandise of the Company.

15. To enter into working arrangements of all kinds with other companies, corporations, firms or persons, and also to make and carry into effect arrangements with respect to union of interests or amalgamation, either in whole or in part, or any other arrangements with any other companies corporations, firms or persons.

16. To promote and form other companies for all or any of the objects mentioned in this Memorandum or any extension thereof and to transfer to any such company all or any of the property of this Company, and to take or otherwise acquire and hold shares, debentures or other securities of any such company, and to otherwise assist any such company, but not to act as an investment company.

17. To apply for and obtain any provisional orders of any Government department or Ministry or other authority for any of the purposes within the objects of the Company.

18. To support and subscribe to any charitable or public object including donations to charitable and benevolent foundations and any institutions, society, or club or for any purpose which may be for the benefit of the Company or its employees, or may be connected with or for the benefit and welfare of any town or place where the Company carries on business, to give pensions, gratuities or charitable aid to any persons who may have been directors of or may have served the Company, or the wives, children, or other relatives or dependants of such persons, to make payments towards insurance, and to form and contribute to provident and benefit funds for the benefit of any such persons, or of their wives, children or other relatives or dependants.

Offer for Sale of Shares

19. To enter into any arrangement and to take all necessary or proper steps with the Government of Pakistan, and, with the approvals, of the Government of Pakistan where required, with any provincial or foreign government or public authority, local, municipal or otherwise or with any corporation or private persons or all or any of these for the purpose of directly or indirectly carrying out the objects of the Company or effecting any modification in the constitution of the Company or furthering the interests of the Company and to oppose any such steps taken by any other authority, firm or person which, the Company considers likely, directly or indirectly, to prejudice its interests, and to obtain and endeavor to obtain from any such government or other public authority any charters, contracts, decrees, rights, grants, loans, subsidies, privileges concessions, indemnities, sanctions or consents that the Company may think proper.

20. For the purposes of the Company only to draw, make, accept, discount, endorse, execute and issue promissory notes, bills of exchanges, hundies, bills of lading and other negotiable or transferable securities and to deposit with or advance money, securities or property to such persons, firm or Company and on such terms, with or without security as the Company deem fit, but in any event not to act as a banking, investment, leasing or a finance Company.

21. To open and operate accounts, overdraft accounts and cash credit, with or without security, to keep fixed and other deposits with banks, firms, corporations and institutions, loan offices and other concerns.

22. Subject to the provisions of Section 196(2)(e) of the Companies Ordinance 1984, to invest any moneys of the Company not for the time being required for any of the purposes of the Company in such investments (other than shares in the Company) as may be thought proper, and to hold, sell such investment, but not to act as an investment Company.

23. To borrow, raise or secure the payment of money in such manner as the Company shall think fit, and in particular by the issue of debentures or debenture-stock, perpetual or otherwise, charged upon all or any of the Company's property, both present and future, and to purchase, redeem and pay off any such securities.

24. To apply for, purchase or otherwise acquire and protect, prolong and renew whether in Pakistan or elsewhere any patents, patent rights, brevets d'invention, trade marks, licenses, protections, conclusions and the like conferring any exclusive or non-exclusive or limited right to use the same or any secret or other information as to any invention, process or privilege which may seem capable of being used for any of the purpose of the Company or the acquisition of which may seem calculated directly or indicrectly to benefit the Company and to use, exercise, develop, manufacture under grant licenses or privileges in respect of, or otherwise turn to account the property, rights and information so acquired and to carry on any business in any way connected therewith.

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

26. To form, incorporate or promote any company or companies whether in Pakistan or in any foreign country, having any objects or object which in the opinion of the Company could or might directly or indirectly assist the Company or otherwise prove

Offer for Sale of Shares

advantageous to the Company and to pay all or any of costs and expenses incurred in connection with any such promotion or incorporation and to remunerate any person or company in any manner it shall think fit for services rendered or to be rendered in obtaining subscriptions for or placing or assisting to place or to obtain subscription for or for guaranteeing the subscription of or the placing of any shares in the capital of the Company or any bonds, debentures, obligations or securities of the Company or any stock, shares, bonds, debentures, obligations or securities of any other company held or owned by the Company or in which the Company may have an interest, but not to act as an investment company.

27. To take or otherwise acquire and hold shares, stocks, debentures, debenture-stock in any other company having objects altogether or in part similar to those of the Company or carrying on any business capable of being conducted so as directly or indirectly to benefit this Company, but not to act as an investment company.

28. To enter into partnership or into any arrangement for sharing profits or into any union of interests, joint-venture, reciprocal concession or cooperation with any person or persons or company or companies carrying on or engaged in, or about to carry on or engage in or being authorized to carry on or be engaged in any business or transaction which this Company is authorised to carry on or engage in or any business or transaction capable of being conducted so as directly or indirectly to benefit this Company, but not to act as a managing agent.

29. To grant pensions, allowances and business to employees (including directors) or ex-employees of the Company including payment of premiums on life policies of employees or their dependents, to establish and support or aid any schools, and any educational, scientific, literary, religious or charitable institution or trade society, whether such societies be solely connected with the trade carried on by the Company or not, and any club or other establishment calculated to advance the interests of the Company or its employees.

30. To pay premiums or salaries and to pay for any property, rights, or privileges acquired by the Company or for services rendered in connection with the promotion of objects or the business of the Company or in connection with the acquisition of any property rights or privileges of the Company or otherwise howsoever, either wholly or partially in cash or in shares, bonds, debentures or other securities as fully paid up or with such amount credited as paid up thereon as may be agreed upon, and to charge any such bonds, debentures or other securities upon all or any part of the property of the Company, but not to act as an investment company.

31. To distribute all or any of the property, of the Company amongst the members, in species or kind, but so that no such distribution shall amount to an unlawful reduction of capital.

32. To subscribe or guarantee money for any national, charitable, benevolent, public, general or useful object or for any exhibition.

Offer for Sale of Shares

33. To establish and maintain agencies or branches or depots and to carry on business in any part of Pakistan or in any part of the world, and to take such steps as may be necessary to give the Company such rights or privileges in any part of the world as are possessed by local corporation or partnership firms as may be thought best.

34. To pay all costs, charges and expense of and incidental to the formation and registration of the Company.

35. To guarantee the performance of any contract of obligation and the payment of money by any persons or companies and generally to give guarantees and indemnities, but not to act as an investment, finance, leasing or banking Company.

36. To generate electric power for its own use and to sell, transfer and/or deliver electric power to other companies and entities and to build and maintain generation and distribution facilities together with ancillary works, cables, wires, lines, accumulators and other equipment required for all or any of the above purposes.

37. To do all or any of the above things in any part of' the world either as principals, agents, contractors or otherwise and either alone or in conjunction with others, but not to act as a managing agent.

38. To do all and every thing necessary, suitable or proper for the accomplishment of any of the purposes or the attainment of any of the objects or the furtherance of any of the powers hereinbefore set forth either alone or in association with other corporate bodies, firms or individuals and to do every other act or thing incidental or appurtenant to or arising out of or connected with the business or powers of the Company or any part thereof, provided the same is lawful.

------It is hereby undertaken that the Company shall not engage in the banking business, business of a finance or an investment or a leasing company, the business of a managing agent or that of developers and sale and purchase of plots of land/premises or any unlawful business and that nothing in the Objects Clause shall be construed to entitle it to engage in any such business.

It is expressly declared that the several sub-clauses of this clause and all the powers expressed therein are to be cumulative and in no case unless the context expressly so requires is the generality of any sub- clause to be narrowed or restricted by the name of the Company or by the particularity of expression in the same sub-clause or by the application of any rule of construction such as the ejusdem generis rule, and accordingly none of such sub-clauses or the objects therein specified or the power thereby conferred shall be deemed subsidiary or auxiliary merely to the objects mentioned in the first sub-clauses of this clause, but the Company shall have full power to exercise all or any of the powers conferred by any part of this clause in any part of the world, and notwithstanding that the business undertaking, property or acts proposed to be transacted, acquired, dealt with or performed do not fall within the objects of the first sub- clauses of this clause.

IV. The liability of members is limited.

V. The authorized share capital of the Company is Rs.7, 000,000,000 (Seven Billion) divided into 700,000,000 (Seven Hundred Million) shares of the nominal value of Rs.10.00 (Rupees ten) each with the rights, privileges and conditions attached thereto as are provided for the time being, with power to increase and reduce the capital of the Company and to divide the shares in the capital for the time being, into several classes.

Offer for Sale of Shares

FICTITIOUS AND MULTIPLE (MORE THAN ONE BY A SINGLE INVESTOR) APPLICATIONS ARE PROHIBITED AND SUCH APPLICANTS' MONEY SHALL BE LIABLE TO CONFISCATION UNDER SECTION 18-A OF THE SECURITIES AND EXCHANGE ORDINANCE, 1969.

ENGRO POLYMER & CHEMICALS LIMITED ("EPCL") (FORMERLY ENGRO ASAHI POLYMER & CHEMICALS LIMITED) APPLICATION FOR ORDINARY SHARES FOR COMPANY USE ONLY SUBSCRIPTION DATES DURING BANKING HOURS FROM 9th JUNE 2008 to 11th JUNE 2008 (Please refer for instructions) Chief Executive FOR BROKER EPCL For Banks Use Only BROKER STAMP 1st Floor, Bahria Complex I Date of Realization 24, M.T. Khan Road BROKER CODE Karachi (Please fill in any one of the applicable Category) Please tick one For BANKERS TO THE OFFER Physical at Rs. 18.15 each

CDC at Rs. 18.01 each Bank Code Branch Code Banker's Stamp SUB-ACCOUNT HOUSE/ CDC PARTICIPANT ID CDC INVESTOR A/C CDC INVESTOR A/C CDC Participant ACCOUNT No. SERVICES ID

CDC PARTICIPANT NAME Branch Serial No.

No. of Share Applied for 1) I/We enclose the sum of Rs.______being the amount payable on application for ______ordinary shares of Rs. 18.15 per share in case of shares in physical form and of Rs. 18.01 per share in case of deposit of shares into the CDS

Category of Application For 500 Shares For multiples of 500 shares

2) I/we apply for and request you to allot me/us the above number of ordinary share for the value indicated above and I/We agree to accept the same or any smaller number that may be allotted to me/us upon the terms of the Offer for Sale and subject to the Memorandum and Articles of Association of the Company. I/We authorize you to send the shares to me in pursuant to this application and incase no share are allotted to me/us you are hereby authorized to return to me/us by cheque or other means any application money by post at my/our own risk to the first address written below or to the bank through which I/We tendered this application

3) I/We DECLARE THAT: i) I AM/WE ARE NATIONAL(S) OF PAKISTAN; ii) I AM/WE ARE NOT MINOR(S); iii) I AM/WE HAVE NOT MADE NOR HAVE I/WE INSTRUCTED ANY OTHER PERSON(S)/INSTITUTIONS 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 PRINTED OVERLEAF AND IN CASE OF ANY INFORMATION GIVEN HEREIN BEING INCORRECT I/WE UNDERSTAND THAT I/WE SHALL NOT BE ENTITLED TO TRANSFER OF SHARES YOURS FAITHFULLY a) ______b) ______c) ______d) ______- Signature(s)

4) FULL NAME(S) & ADDRESS(ES) MUST BE WRITTEN IN BLOCK LETTERS. PLEASE ALSO INDICATE MR./MRS./MISS. BEFORE THE NAME(S) IN CASE OF DIFFERENCE OF SIGNATURE(S) WITH THE BANK AND ON CNIC, BOTH SIGNATURES SHOULD BE AFFIXED ON THIS FORM.

(a) Name in full (Mr/Miss/Mrs) Father's/Husband Name Banker's Name, Address & A/C No. Tick Whether Muslim Address

or Non Muslim Muslim CNIC/NICOP No. occupation code FOR JOINT HOLDERS (b) Name in full (Mr/Miss/Mrs) Father's/Husband Name Banker's Name, Address & A/C No. Tick Whether Muslim Address

or Non Muslim Muslim CNIC/NICOP No. occupation code occupation (c) Name in full (Mr/Miss/Mrs) Father's/Husband Name Banker's Name, Address & A/C No. Tick Whether Muslim Address

or Non Muslim Muslim CNIC/NICOP No. occupation code (c) Name in full (Mr/Miss/Mrs) Father's/Husband Name Banker's Name, Address & A/C No. Tick Whether Muslim Address

or Non Muslim Muslim CNIC/NICOP No. occupation code PLEASE INDICATE THE APPLICABLE CODE NUMBER OF OCCUPATION AS PER OVERLEAF (TO BE FILLED BY THE APPLICANT'S BANKER) I, ______Manager of ______("the Bank") certify that the Bank has not advanced any money for the purpose of this application/has advanced Rs. ______for the purpose of this application and that to the best of my knowledge and belief, the declaration of or on behalf of the applicants contained is sub-paragraph of paragraph 3 above is correct.

______Manager Signature SPECIMEN SIGNATURE(S) OF APPLICANT(S) OR OF THE BANKERS OR BROKER ON BEHALF OF THE APPLICANT(S) NAME(S) IN BLOCK LETTERS SPECIMEN SIGNATURE(S) (a) MR/MRS/MISS (a) (b) MR/MRS/MISS (b) (c) MR/MRS/MISS (c ) (d) MR/MRS/MISS (d)

………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

Banker to the offer provisional acknowledge of application for ordinary shares of ENGRO POLYMER & CHEMICALS LIMITED (FORMERLY ENGRO ASAHI POLYMER & CHEMICALS LIMITED Receive from ______application for ______shares Rs. 18.00 each

Name of Bank Branch CodeSerial No. Date of Receipt Signature & Rubber Stamp of Receiving Bank

Offer for Sale of Shares

APPLICATION AND TRANSFER INSTRUCTIONS 1. Eligible investors include: Pakistani citizens resident in Pakistan, Companies, bodies corporate or other legal entities incorporated or established in Pakistan (to the extent permitted by their constitutive or corporate documents, as the case may be); Provident/pension/gratuity funds/trusts, (subject to the terms of the Trust Deed and existing regulations); and Branches in Pakistan of companies and bodies corporate incorporated outside Pakistan 2. Copies of this OFSD and application forms can be obtained from members of the KSE, the Bankers to the Offer and their Branches, and the registered office of the Company and its branches. The Offer Documents and the Application Form can also be downloaded from the following website: 3. APPLICATION MUST BE MADE ON THE OFFERERS’ APPLICATION FORM OR A LEGIBLE PHOTOCOPY THEREOF 4. Applicants opting for scripless form of security are required to complete the relevant sections of the application. In accordance with the provisions of the Central Depositories Act, 1997 and the CDC regulations credit of such securities in book entry form is allowed ONLY in the applicant’s own CDC account. In case of discrepancy between the information provided in the Application Form and the information already held by the CDC, the Company reserves the right to transfer share certificates in physical form. 5. Name(s) and address(es) must be written in full block letters, in English and should not be abbreviated. (i) In case of resident Pakistanis, an attested copy of the Computerized NIC (“CNIC”) should be enclosed and the CNIC number indicated against the name of the applicant Copies of the CNIC can be attested by any Federal/Provincial Government gazetted officer, Councilor, Bank Manager, Oath Commissioner or Head Master of a high school, etc. (ii) Original CNIC, along with one attested photocopy, must be produced for verification to the branch at the time of presenting an application. The attested photocopy will, after verification, be retained by the bank branch along with the application. (iii) Only one application will be accepted against each account. In case of joint account, one application may be accepted in the name of a person shown as minor in the records of the bank. (iv) Joint applications from more than four persons will not be accepted. (v) In case of joint applications each party must sign the application form and submit copies of attested CNIC. 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 respective CDS account and where any amount is refundable, in whole or in part, the same will be refunded by cheque and by post, or through the bank where the application was tendered, to the person named first on the application form, without interest, profit or return. 6. Applications by Companies etc.: (i) Applications made by companies and corporate bodies, provident/pension/gratuity funds/trusts and other legal entities must be accompanied by a copy of their Memorandum and Articles of Association or equivalent instrument where applications are made by virtue of Power of Attorney, the same must be lodged with the application. Copies of such documents can be attested by any Federal Provincial Government gazetted officer, Councilor, Bank Manager, Oath Commissioner or Head Master of a high school etc. (ii) Attested copies of the documents mentioned above must be produced along with originals for verification to the branch at the time of presenting an application. The attested copies will, after verification, be retained by the bank branch along with the application. 7. (i) Subscription money must be paid by cheque drawn on applicant’s own account payable to one of the Bankers to the Offer “A/C OFFER FOR SALE OF SHARES OF ENGRO POLYMER & CHEMICALS LIMITED” and crossed, “A / C PAYEE ONLY” and must be drawn on a bank in the same town as the bank to which the application has been made. 8. Applications are not to be made by minors and persons of unsound mind. 9. Applicants should ensure that the bank branch, on which their payment is made, completes the relevant portion on the application form. 10. Applicants should retain the bottom portion of their application form as provisional acknowledgement of submission of their application. This may be made available at the time of submission of the application or may be collected at a later time from the bank branch through which they submitted their application. 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 applicant has subscribed. 11. No receipt will be issued for payment made with the application but an acknowledgement will be forwarded in due course either by issuance of shares in certificate in whole or in part or by the return of the money paid with the applications. The Bankers to the Offer will issue provisional acknowledgments for applications lodged with them. No interest or profit will be payable in respect of the refund amount. 12. It would be permissible for a Banker to the Offer to refund subscription money to unsuccessful applicants having an account in that 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. 13. Transfer of shares to successful applicants shall be made in accordance with the criteria disclosed in this OFSD subject to the rules of the Securities & Exchange Commission of Pakistan. 14. Making of any false statement in the application or willfully embodying incorrect information therein will make the applicant or the bank liable to legal action. 15. The basis for Offer for Sale of Shares is as follows: f) This offer is g) h) being made at a price of PKR 18/- per ordinary share of PKR 10/- each inclusive of premium of PKR 8/- share, but excluding the share transfer fee, which is to be paid by the applicants at the rate of fifteen (15) paisa per share in the case of physical transfer and one (1) paisa per share in the case of transfer under book-entry system in the Central Depository Company of Pakistan Limited (“CDC”). i) Application must be made for 500 shares or in the multiples of 500 shares only. Applications which are neither for 500 shares nor for the multiples of 500 shares, shall not be entertained. j) The minimum amount of application for subscription of 500 shares in the case of physical transfer is PKR 9,075/- and in case of transfer under book entry system is PKR 9,005/-. k) Applications for shares below the value of PKR 9,075/- in case of physical transfer and PKR 9,005/- in case of transfer under book-entry system shall not be entertained. l) FICTITOUS AND MULTIPLE APPLICATIONS (MORE THAN ONE APPLICATION BY A SINGLE APPLICANT) ARE PROHIBITED AND SUCH APPLICANTS’ MONEY SHALL BE LIABLE FOR CONFISCATION UNDER SECTION 18 – A OF THE SECURITES AND EXCHANGE COMPANIES ORDINANCE, 1969. f) If this Offer is oversubscribed the shares shall be allocated by conducting computer balloting in the presence of KSE representatives in the following manner: i. If all applications for 500 shares can be accommodated, then all such applications shall be accommodated first. If all applications for 500 shares cannot be accommodated, then balloting will be held among the applications for 500 shares only. ii. If all applications for 500 shares have been accommodated and shares are still available for allocation, then all applications for 1,000 shares will be accommodated. If all applications for 1,000 shares cannot be accommodated, then balloting will be conducted among applications for 1,000 shares only. iii. If all applications for 500 shares and 1,000 shares have been accommodated and shares are still available for allocation, then all applications for 1,500 shares will be accommodated. If all applications for 1,500 shares cannot be accommodated, then balloting will be conducted among applications for 1,500 shares only. iv. If all applications for 500 shares, 1,000 shares, and 1,500 shares have been accommodated and shares are still available for allocation, then all applications for 2,000 shares will be accommodated. If all applications for 2,000 shares cannot be accommodated, then balloting will be conducted among applications for 2,000 shares only. v. After the allocation in the above mentioned manner, the balance shares, if any, shall be allocated in the following manner: 1.If the remaining shares are sufficient to accommodate each application for over 2,000 shares, then 2,000 shares shall be allocated to each applicant and the remaining shares shall be allocated on a pro-rata basis. 2. If the remaining shares are not sufficient to accommodate all remaining applications for at least 2,000 shares, then balloting shall be conducted for allocation of 2,000 shares to the successful applicants. g) If the offer is oversubscribed in terms of amount only, then the allocation of shares shall be made on the following basis: i. First preference will be given to applicants who applied for 500 shares; ii. Next preference will be given to applicants who applied for 1,000 shares; iii. Next preference will be given to applicants who applied for 1,500 shares; and then; Iv. Next preference will be given to applicants who applied for 2,000 shares; After allocation of the above, the balance shares, if any, shall be allocated on a pro-rata basis to the applicants who applied for more than 2,000 shares. h) Allocation of shares will be subject to scrutiny of the applications for subscription. i) Applications, which do not meet with the above requirements, or applications which are incomplete, will be rejected.

16. The Company will dispatch share certificates to successful applicants through their Bankers to the Offer or credit the respective CDS accounts of the successful applicants (as the case may be).

17. Codes of Occupation: Code no. Occupation Code no. Occupation 01 Business 02 Business Executive 03 Industrialist 04 House Wife 05 Student 06 Agriculturist 07 Household 08 Professional 09 Service 10 Others

Offer for Sale of Shares

18. Bankers to the Offer: Code Name of Bank no. 01 Habib Bank Limited 02 MCB Bank Limited 03 United Bank Limited 04 KASB Bank Limited 05 JS Bank Limited 06 Duetsche Bank 07 Saudi Pak Commercial Bank 08 Bank Al Habib Limited 09 Habib Metropolitan Bank 10 Bank Alfalah Limited